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Brach v. Conflict Kinetics Corp.

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

December 1, 2016



          T. S. Ellis, III United States District Judge

         This dispute arises from Plaintiff's brief employment with a defense contractor, during which plaintiff claims he discovered that his employer had been improperly billing the federal government for services that had not yet been delivered or provided. Plaintiff alleges that he reported his findings to his superiors and was fired as a result. Plaintiff subsequently pursued, unsuccessfully, an administrative Complaint of Reprisal with the Department of Defense, and then filed the first iteration of his complaint in this case, alleging retaliation, reprisal, improper denial of employment benefits, and wrongful denial of overtime pay. Shortly thereafter, the defense contractor's chief executive officer sent plaintiff several text messages that, in Plaintiff's view, were designed to discourage plaintiff from pursuing his claims in this case. Plaintiff then added in his Second Amended Complaint (“SAC”) two retaliation claims based on these text messages.

         Defendants filed a timely Rule 12(b)(6) motion to dismiss five of the six counts alleged in Plaintiff's SAC. Specifically, at issue are the following questions:

(i) Whether a supervisor, sued in his individual capacity, may be held liable either for retaliation under the False Claims Act (“FCA”), 31 U.S.C. § 3730(h), or for reprisal under the Defense Contractor Whistleblower Protection Act (“DCWPA”), 10 U.S.C § 2409;
(ii) Whether a plaintiff states a claim for wrongful denial of employment benefits and retaliation under the Employment Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1132(a) & 1140, if the complaint fails to allege the existence of a benefit plan to which ERISA may apply; and
(iii) Whether text messages, sent by a Plaintiff's former supervisor and threatening a countersuit, are actionable as retaliation in violation of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 215.

         A hearing on defendants' motion to dismiss was held, and two Orders subsequently issued, granting the motion in part and denying it in part. See Brach v. Conflict Kinetics Corporation, No. 1:16-cv-978 (E.D. Va. Nov. 18, 2016) (Doc 23); id. (E.D. Va. Nov. 21, 2016) (Doc. 24). This Memorandum Opinion further records the grounds for those rulings.



         Plaintiff, Cameron Brach (“Brach”), is a Virginia resident and military veteran with over eighteen years of experience as an operations director. From September 29, 2014 to August 9, 2015, Brach worked for defendant, Conflict Kinetics Corporation (“CKC”), a Virginia corporation that sells electronic firearms training devices and services to the United States military. Brach's supervisors included the two remaining defendants: (i) Brian Stanley (“Stanley”), a Virginia resident and CKC's chief executive officer, and (ii) Kathy Henderson (“Henderson”), a Virginia resident and CKC's Controller.

         During his employment, Brach allegedly worked several overtime shifts without receiving overtime pay and was denied unspecified employment benefits. Moreover, in May 2015, Brach allegedly discovered that CKC was improperly billing the United States Navy for services not rendered. Specifically, Brach contends that he conducted an invoice audit for CKC's contracts, which showed (i) that CKC had billed the Navy $16, 460 for pistols that CKC never delivered; and (ii) that CKC had billed the Navy roughly $400, 000 relating to installation services that CKC had not yet performed.[2] That same month, May 2015, Brach allegedly reported his findings to CKC executives both via email and in person. According to the SAC, CKC did not rectify the alleged overbilling, and instead, on August 9, 2015, terminated Brach's employment.

         On December 11, 2015, Brach filed an administrative Complaint of Reprisal with the Inspector General's Office at the Department of Defense. In a letter dated June 30, 2016, the Inspector General informed Brach that the Department of Defense had closed its investigation, effectively exhausting Brach's administrative remedies. On July 28, 2016, Brach filed the first iteration of the SAC.

         Thereafter, on August 7, 2016, Stanley sent Brach a text message stating:

C- I want to go on the record that I don't want to enter into a lawsuit war with you. I've done the math up and down and no matter who wins…. Only the lawyers actually win. If you win you'll eat it all up in the counter lawsuits. If I win all my proceeds will go to the lawyers and you won't be able to pay them anyway. I just want to be clear. I don't want to be involved in this.

         SAC Ex. 1. Ten days later, on August 17, 2016, Stanley sent Brach two more text messages:

o “Warm up your savings for the counter suit. Don't run out”; and o “I know your ego is crazy out of control but did you walk this through with Mandy? It's a gnarly gamble. No upside with a downside potential of loosing [sic] 100, 000.00.”

Id. Ex. 2.

         On August 23, 2016, Brach filed his first amended complaint, and thereafter, on October 11, 2016, Brach obtained leave to file the SAC, alleging six counts against CKC, Stanley, and Henderson:

(I) Retaliation in violation of the FCA, 31 U.S.C. § 3730(h), arising from Brach's termination after Brach allegedly discovered CKC's improper billing;
(II) Reprisal in violation of the DCWPA, 10 U.S.C § 2409, [3] also arising from Brach's termination;
(III) Wrongful denial of employment benefits in violation of ERISA, 29 U.S.C. § 1132(a);
(IV) Wrongful denial of overtime pay in violation of the FLSA, 29 U.S.C. § 207(a)(1);
(V) Retaliation in violation of the FLSA, 29 U.S.C. § 215, arising from Stanley's text messages; and
(VI) Retaliation in violation of ERISA, 29 U.S.C. § 1140, also based on the text messages.

         Defendants, pursuant to Rule 12(b)(6), Fed. R. Civ. P., jointly moved to dismiss Counts I, II, III, V, and VI. With respect to Counts I and II, defendants argue that Brach's FCA and DCWPA claims fail against defendants Stanley and Henderson because a supervisor in his individual capacity cannot be liable for retaliation under the FCA or DCWPA. Defendants argue that Count III fails because Brach never alleged the existence of an employee benefits plan to which ERISA may apply. Finally, regarding Counts V and VI-the retaliation claims based on Stanley's text messages-defendants contend that the messages are merely threats of countersuits during litigation, and therefore not actionable.[4]


         A district court should dismiss a complaint pursuant to Rule 12(b)(6), Fed. R. Civ. P., if, accepting all well-pleaded allegations in the complaint as true and drawing all reasonable factual inferences in the Plaintiff's favor, the complaint does not allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). The factual allegations cannot be mere speculation, and must amount to more than “a sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Importantly, neither a formulaic recitation of the elements of a cause of action nor unadorned conclusory allegations are sufficient to survive a Rule 12(b)(6) motion to dismiss. Twombly, 550 U.S. at 555; Iqbal, 556 U.S. at 678-79. Instead, the complaint must allege facts sufficient to “nudge claims across the line from conceivable to plausible.” Nemet Chevrolet, Ltd. v., Inc., 591 F.3d 250, 255-56 (4th Cir. 2009) (internal quotation marks and citations omitted).


         A. FCA Retaliation, 31 U.S.C. § 3730(h)

         Count I alleges that Brach was discharged because he had complained to his superiors that CKC was overbilling the United States Navy. Defendants have moved, pursuant to Rule 12(b)(6), Fed. R. Civ. P., to dismiss Brach's FCA Retaliation claim as against the individual defendants, Stanley and Henderson, on the ground that 31 U.S.C. § 3730(h)(1) authorizes relief only against an employer, and not against an individual supervisor sued in his individual capacity.[5]

The FCA provides a cause of action to any “employee, contractor, or agent” who is:
discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts done by the employee, contractor, agent or associated others ...

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