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Irving v. PAE Government Services, Inc.

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

April 11, 2017

JEFFRY IRVING, Plaintiff,
v.
PAE GOVERNMENT SERVICES, INC., et al., Defendants.

          MEMORANDUM OPINION

          T. S. Ellis, III United States District Judge.

         Plaintiff Jeffry Irving is a Virginia resident who sued his former employer, PAE Government Services, Inc. ("PAE"), a California corporation, and four of PAE's employees, alleging three causes of action: (i) retaliation for engaging in statutorily protected activity as defined by § 3730(h)(1) of the False Claims Act ("FCA"), (ii) violation of 42 U.S.C. § 1983 for discharging the plaintiff in retaliation for plaintiff exercising his constitutional right to free speech, and (iii) breach of an oral contract purportedly entered into on October 19, 2015.[1]At issue on this threshold partial motion to dismiss are the following potentially dispositive questions:

(i) does the FCA's retaliation provision permit a plaintiff to sue individual employees of the corporate employer, or is relief under the FCA's retaliation provision limited to the plaintiffs actual employer;
(ii) does a private company that contracts with the State Department to provide security services domestically and internationally act under color of state law when it discharges an employee; and
(iii) has plaintiff pleaded sufficient facts to demonstrate that (a) PAE entered into a binding oral contract on October 19, 2015, rather than an unenforceable agreement to agree, and (b) has plaintiff pleaded sufficient facts to demonstrate that defendant Easley intended to bind himself personally to the oral agreement purportedly reached on October 19, 2015.

         I.[2]

         Plaintiff is a former employee of PAE, a California corporation that provides goods and support services to the United States government domestically and abroad. Defendant Richard Greene ("Greene") is a Virginia resident who served as PAE's President of Global Logistics and Stability Operations. Defendant Janice Pfundheller ("Pfundheller"), a resident of the State of Washington, served as PAE's Vice President of Governance and Institutional Development. Defendant Kathleen Long ("Long"), a Virginia resident, was PAE's Director of Human Resources. And finally, defendant Stephen Easley ("Easley"), a Virginia resident, was a PAE Director responsible for implementing PAE's programs.

         Plaintiff worked as PAE's Deputy Program Manager and Chief of Security in Kabul, Afghanistan where he was responsible for, among other things, protecting State Department employees and other government assets. During the course of his employment with PAE, he allegedly complained six or more times to other senior-level employees at PAE (i) that PAE was fraudulently billing the State Department for more hours than its staff actually worked; (ii) that PAE procured inferior or non-compliant goods in breach of its contract with the State Department; (iii) that PAE failed to acquire and issue the proper type and number of weapons to its employees, in violation of its contract with the State Department; (iv) that PAE procured and used noncompliant body armor; (v) that PAE failed to follow mail handling laws and protocols; and (vi) that PAE misused government furnished equipment to conduct black market activity. After raising these concerns to PAE and State Department officials, plaintiff was formally terminated on October 20, 2015.

         Plaintiff alleges that on October 19, 2015, he met with Easley to discuss the terms of his discharge. At this meeting, plaintiff claims that Easley offered plaintiff his "normal salary (base salary with the additional 70% plus ups) and performance bonus through December 31, 2015 to complete [plaintiff|'s employment contract, [paid time off] and benefits (life [and] medical insurance) and positive professional referrals." The purported cash value of this offer was $85, 615.00 in addition to insurance benefits. Plaintiff claims he required Easley to repeat the terms of the agreement twice to ensure that plaintiff fully understood the offer. Following this, plaintiff purportedly accepted the oral offer. The next day, however, plaintiff claims he was presented with a written contract that differed substantially from what he claims to have been previously promised. Specifically, the written contract offered plaintiff no more than $11, 205.00 in cash compensation.

         In response to his termination, plaintiff filed this three-count complaint on December 30, 2016, alleging (i) that PAE and the individual defendants discharged him in retaliation for reporting alleged violations of the FCA, (ii) that PAE and the individual defendants discharged him for exercising his First Amendment rights, in violation of 42 U.S.C. § 1983, and (iii) that PAE and Easley breached the oral agreement that plaintiff, Easley and PAE reached on October 19, 2015.

         Defendants have now filed their partial motion to dismiss, which argues: (i) that Count One should be dismissed against the individual defendants because the FCA's retaliation provision provides a cause of action only against a plaintiffs employer, not against the employer's individual employees; (ii) that Count Two should be dismissed because in discharging plaintiff none of the defendants acted under color of state law; and (iii) that Count Three should be dismissed against PAE because plaintiff has failed to allege that an oral contract was reached on October 19, 2015, and against Easley, in his individual capacity, because plaintiff has failed to allege facts to support an inference that Easley, as an individual, intended to be a party to the contract and intended to assume personal liability for paying plaintiffs termination benefits.

         II.

         A motion to dismiss under Rule 12(b)(6), Fed. R. Civ. P., tests "the legal sufficiency of the complaint." In re Birmingham, 846 F.3d 88, 92 (4th Cir. 2017), as amended (Jan. 20, 2017) (citing Papasan v. Allain, 478 U.S. 265, 283 (1986)). A plaintiffs claims should be dismissed under Rule 12 unless the complaint "contain[s] sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting BellAtl Corp. v. Twombly, 550 U.S. 544, 570 (2007)). To survive a 12(b)(6) motion, a complaint must contain "more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Iqbal, 556 U.S. at 678.

         III.

         A.

         To begin with, defendants argue that plaintiffs FCA retaliation claim against the individual defendants must be dismissed because liability under the FCA extends to only the plaintiffs employer, not to individual supervisors or co-workers of the employee. In opposition, plaintiff asserts that, following the 2009 Amendment to 31 U.S.C. § 3730(h), defendants Easley, Greene, Pfundheller and Long may be held liable, in their individual, supervisory capacities, for retaliating against him in violation of the FCA. For the reasons that follow, the defendants are correct: the FCA, both before and after the 2009 Amendment, does not permit a plaintiff to sue individual employees of the corporate employer for retaliation.

         The FCA's whistleblower provision, as amended in 2009, currently provides that:

Any employee, contractor, or agent shall be entitled to all relief necessary to make that employee, contractor, or agent whole, if that employee, contractor, or agent 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 in furtherance of an action under this section or other efforts to stop 1 or more violations of this subchapter.

31 U.S.C. § 3730(h)(1) (emphasis added). In comparison, the pre-2009 version of the FCA's whistleblower provision stated:

Any employee who is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms or conditions of employment by his employer because of any lawful acts done by the employee on behalf of the employer or others in furtherance of an action under this section ... shall be entitled to all relief necessary to make the employee whole.

31 U.S.C. ยง 3730(h) (2003) (emphasis added). Thus, the 2009 Amendment expanded the universe of individuals who could sue under the FCA's retaliation provision from an "employee" to an "employee, contractor, or agent" and eliminated the reference to "employer." The 2009 Amendment did not, however, expand the universe of individuals a corporate employee could sue for ...


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