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United States ex rel. Garzione v. PAE Government Services, Inc.

United States District Court, E.D. Virginia, Alexandria Division

February 25, 2016



Anthony J. Trenga United States District Judge

In this False Claims Act ("FCA") case, relator plaintiff Anthony Garzione alleges that defendant PAE Government Services, Inc. ("PAE") intentionally overcharged the United States Department of State ("DOS" or the "Government") for bottled water supplied to various facilities in Iraq, then terminated plaintiff in retaliation for questioning the propriety of the subcontractor selection process. PAE moves to dismiss this action pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b) on the grounds that, as alleged, it did not violate the FCA as a matter of law and that plaintiffs investigation concerning the bidding process did not constitute protected activity. For the reasons stated below, the Motion to Dismiss will be granted.


Unless otherwise noted, the following facts are as alleged in plaintiffs Amended Complaint [Doc. No. 15] ("Compl.").

At all material times herein, plaintiff was employed at PAE as a Program Subcontracts Manager. In July 2013, DOS awarded PAE an "indefinite-delivery, indefinite quantity" Prime Contract known as "SAQMMA-13-D-0120" (the "Prime Contract"). Under the Prime Contract, PAE was to provide "life support and logistical function" at various DOS sites in Iraq, including embassies, consulates, and Government encampments. Compl. ¶¶ 7-8. Specifically, its contractual responsibilities included "the procurement of food and supplies, storage, preparation, serving, and cleaning of food facilities, among other life support and logistical duties." Id. ¶ 10. PAE selected Taylors International Services, Inc. ("Taylors") as the subcontractor to provide food supplies in support of a program called "BAGHDAD LiFE SUPPORT SERVICES ("BLiSS") under section B.7 of the Prime Contract. Id. ¶ 22. Under its originally awarded subcontract, Taylors provided a relatively small quantity of bottled water as part of its provision of food services. Id. ¶23. However, from July 2013 until July 2014, the Department of Defense's Defense Logistics Agency ("DLA") provided most of the bottled water to the Government for use at the facilities in Iraq. Id. ¶ 24.

During the summer of 2014, DLA announced that it would cease providing bottled water for the Iraqi sites after December 31, 2014. Id. ¶ 25. Following that announcement, the Government issued a Task Order or contract modification under the Prime Contract for PAE to provide any required bottled water not supplied by DLA and specified minimum standards for the bottled water. Id. ¶¶ 26-28. Around July or August 2014, PAE issued a request for bid proposals for a limited supply of 4, 000 bottles of water for quality testing from potential subcontractors interested in obtaining the subcontract to provide the bottled water previously supplied by DLA. Id. ¶ 29. Plaintiff was not involved in issuing this request for bids. Id. ¶ 30. However, "in July or August [he] was asked by Taylors's [sic] representatives what became of the bidding process, " then thereafter "investigated bottled water supplier options" and "reviewed the bids to supply the 4, 000 bottles of water from nine or so potential suppliers." Id. ¶¶ 30-33. Those bids included a quoted price from Taylors of $3.65 per case of "Pearl brand water, " a quoted price from Pearl itself of $3.50 per case, [1] and a quoted price from AWI of $1.18 per case. Id. ¶ 34.

In September 2014, PAE "submitted a response to the DOS' Task Order [to PAE] naming Taylors as the subcontractor that would supply bottled water." Id. ¶43. PAE also issued a "Notice to Proceed" to Taylors for the procurement of bottled water through the end of November 2014, without a specified amount. Id. ¶ 38; see also [Doc. No. 19, Ex. C]. Taylors provided bottled water under the Prime Contract in September, October, and November 2014; Taylors billed PAE for the bottled water at $3.65 per case, and accordingly PAE filed claims with the Government for the bottled water. Compl. ¶¶ 46, 48.

Plaintiff questioned PAE supervisors about Taylors' selection given that its quoted price was higher than that offered by the other suppliers and was told that "Taylors was simply best suited to receive the contract." Id. ¶¶ 40-41. Thereafter, and despite PAE's already-issued subcontract award to Taylors, plaintiff "informed his supervisor that he intended to reissue the competition for bottled water suppliers for the longer term contract that would apply after November 2014." Id. ¶ 42. Towards that end, he inquired as to the feasibility of adding Pearl as a subcontractor and continued soliciting bottled water bids in Fall 2014 for the longer term contract that would cover the period after November 2014, anticipated to last for up to four years, with additional option years. Id. ¶¶50, 52, 55, 70. On December 2, 2014, plaintiff arranged to have another vendor, AWI, deliver water for testing and on December 3, 2014 issued a Notice to Proceed to Taylors to test the water supplied by AWI. Id. ¶¶ 66-67. At this point, PAE supervisors intervened and confirmed that Taylors had been selected to supply the bottled water for the period after November 2014 as well. Id. ¶ 70.

Throughout the fall of 2014, plaintiff expressed concerns over Taylors' selection because of its price relative to other bidders. He understood, however, that "PAE had awarded the contract through November 30 under pressure to fill the void left by the Defense Logistics Agency stopping deliveries and accordingly, Taylors had been selected since they were the primary subcontractor providing food services." Compl. ¶¶ 40, 58-60, 65, 69. Plaintiffs supervisors originally indicated that they understood his concerns and goals, but by November 2014, they "began treating Garzione with extreme hostility." Id. ¶¶ 61, 100-25. Specifically, PAE's Director of Iraq Operations told plaintiff to "not interfere with the bottled water contract or other contracts." Id. ¶ 119. Plaintiff "reported this abusive behavior to PAE supervisors, but they refused to address it." Id. ¶ 121. Meanwhile, plaintiff continued to solicit other subcontractors for the post-2014 contract period, and "complain[] to his supervisors" only to be "ignored." Id. ¶ 69. After plaintiff "repeatedly" questioned his supervisors about the Taylors subcontract, expressed concern as to the price of bottled water under that subcontract, and solicited other bids, he was treated in a hostile manner at work, "exclude[d]... from meetings and communications, " had his responsibilities removed, and was finally terminated in February 2015, purportedly based on internal performance reviews. Id. ¶¶112-25.

Plaintiff originally filed his Complaint on June 30, 2015 [Doc. No. 1] and amended it on December 8, 2015 [Doc. No. 15].[2] In essence, and as discussed below, plaintiff claims that PAE violated the FCA when it filed claims for payment under the Prime Contract that included requests for payment of costs incurred for bottled water supplied by Taylors and also when it terminated him after questioning Taylors' selection.


A motion to dismiss a complaint under Federal Rule of Civil Procedure 12(b)(6) should be granted unless the complaint "state[s] a claim to relief that is plausible on its face." United States v. Triple Canopy, 775 F.3d 628, 634 (4th Cir. 2015) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)); see also Bell All. Corp. v. Twombly, 550 U.S. 544, 563 (2007). This "requires a plaintiff to demonstrate more than 'a sheer possibility that a defendant has acted unlawfully.'" Francis v. GiacomellU 588 F.3d 186, 193 (4th Cir. 2009) (quoting Iqbal, 556 U.S. at 678).

In considering a Rule 12(b)(6) motion, the Court must construe the complaint, read as a whole, in the light most favorable to the plaintiff and take the facts asserted therein as true. LeSueur-Richmond Slate Corp. v. Fehrer, 666 F.3d 261, 264 (4th Cir. 2012). In addition to the complaint, the Court may also examine documents "attached to the motion to dismiss, so long as they are integral to the complaint." Philips v. Pitt Cty. Mem 7 Hosp., 572 F.3d 176, 180 (4th Cir. 2009) (citing Blankenship v. Manchin, 471 F.3d 523, 526 n.l (4th Cir. 2006)).

The general pleading standard requires that the complaint contain "a short and plain statement of the claim showing that the pleader is entitled to relief... [and that] give[s] the defendant fair notice of what the claim is and the grounds upon which it rests." Anderson v. SaraLee Corp., 508 F.3d 181, 188 (4th Cir. 2007) (internal quotations omitted); see also Fed. R. Civ. P. 8(a)(2). Twombly established that the "plain statement" must "possess enough heft"-that is, "factual matter"-to set forth grounds for the plaintiffs entitlement to relief "that is plausible on its face." 550 U.S. at 557, 570. The complaint must contain sufficient factual allegations that, taken as true, "raise a right to relief above the speculative level" and "across the line from conceivable to plausible." Walters v. McMahen, 684 F.3d 435, 439 (4th Cir. 2012) (internal citations and quotations omitted). Put another way, the facial plausibility standard requires pleading of "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Robertson v. Sea Pines Real Estate ...

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