Hawkins v. Man Tech International Corporation ( 2020 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
____________________________________
)
UNITED STATES OF AMERICA ex rel. )
LARRY HAWKINS, et al., )
)
Plaintiffs, )
)
v. ) Civil Action No. 15-2105 (ABJ)
)
MANTECH INTERNATIONAL )
CORPORATION, et al., )
)
Defendants. )
____________________________________)
MEMORANDUM OPINION
Larry Hawkins, William Randall Hayes, Clinton Sawyer, James Locklear, and Kent Nelson
brought this lawsuit against their former employer, ManTech Telecommunications and
Information Systems Corporation (“ManTech”), and its parent corporation, ManTech International
Corporation, alleging four violations of the False Claims Act on behalf of the United States, 31
U.S.C. § 3729 (2012), and a violation of the Trafficking Victims Protection Reauthorization Act
(“TVPRA”). 18 U.S.C. § 1581 et seq. (2012). The second amended complaint alleges that
ManTech submitted claims to the United States government that were false in several respects: the
number of labor hours employees reportedly worked; the data entered into a system called “SAMS-
E”; the qualifications of the employees; and the company’s compliance with the TVPRA. Second
Am. Compl. [Dkt. # 30] (“SAC”) ¶¶ 22–145; 265–90. Plaintiffs also allege that ManTech violated
the TVPRA when it forced them to work under the threat of serious harm and the threatened abuse
of legal process. Id. ¶¶ 146–263.
1
Defendants moved to dismiss all the counts pursuant to Federal Rules of Civil Procedure
9(b), 12(b)(1), and 12(b)(6). Defs.’ Mot. to Dismiss the Second Am. Compl. [Dkt. # 41] (“Defs.’
Mot.”); Defs.’ Mem. of Law in Supp. of Defs.’ Mot. [Dkt. # 41] (“Defs.’ Mem.”). Plaintiffs
opposed the motion, Pls.’ Opp. to Defs.’ Mot. [Dkt. # 43] (“Pls.’ Opp”).
For the reasons stated below, defendants’ motion will be granted as to Counts II, III, and
V. It will be denied as to Counts I and IV.
BACKGROUND
I. The Contract
On May 31, 2012, the U.S. Army awarded Contract No. W56HZV-12-C-0127 (the
“Contract”) 1 to ManTech Telecommunications and Information Systems Corporation, a wholly
owned subsidiary of ManTech International Corporation. SAC ¶ 5; Contract [Dkt. # 30] at 6. The
Contract provided for “logistics sustainment and support” for Mine Resistant Ambush Protected
vehicles (“MRAPs”). Contract at 6. These vehicles were developed and designed to protect U.S.
military personnel from improvised explosive device attacks and ambushes. Id. ¶ 2. Troops in
MRAPs are fourteen times more likely to survive the blast than those riding in other vehicles, and
they have saved thousands of lives. Id. ¶ 4. The Contract provided for MRAP repair facilities in
Kuwait City, Kuwait. Id. ¶ 5.
The Contract had an original value of $823,446,067.28 for “services consisting of
maintenance and repair of MRAP vehicles” with a completion date of November 26, 2012. SAC
1 Plaintiffs have attached what they believe to be is a publicly-available copy of the Contract.
Plaintiffs stated that they have requested a copy of the Contract from defendants, but defendants
have refused. SAC at 6 n.1.
2
¶ 23. It also offered successive contract options, which brought the total value of the Contract to
$2.85 billion. Id.
The Contract provided for a “phase in” period that would start at the date of contract award
and end no later than 180 days after. SAC ¶ 24. This period was compensated on a “firm fixed-
price” basis. Id. After the phase-in period came the “early operational readiness” period, which
was compensated on a “cost-plus fixed fee level-of-effort” basis. Id. ¶ 25. This would begin after
the phase in period but could not exceed 180 days after contract award. Id.
The Contract also included an “operational readiness” period which also began after the
phase-in period and ran until January 13, 2013. SAC ¶ 28. Following the operational readiness
period, the Contract would proceed to the “operational readiness option period.” Id. ¶ 29. There
were four option periods (three 12-month options and one 10-month option). Id. Each of these
options would be compensated on a cost-plus fixed-fee level-of-effort basis. Id. These periods all
included work directives from the government regarding which labor categories were to be used
and estimates of labor hours to be expended. Id. ¶¶ 25, 28, 29. The government exercised all four
of the Contract options. Id. ¶ 32; Contract at 7.
II. Factual and Procedural History
Plaintiffs, all U.S. citizens, were employed by ManTech and stationed at the Kuwait
Maintenance Sustainment Facility (“KMSF”). SAC ¶ 6. Plaintiff Larry Hawkins was employed
by ManTech at the KMSF from September 18, 2012 to May 30, 2015. Id. ¶ 12. Plaintiffs Randall
Hayes and Kent Nelson worked at the KMSF from October 2012 to May 2013. Id. ¶¶ 13, 16.
Plaintiffs Clinton Sawyer and James Locklear worked at the KMSF from November 2012 to May
2013. Id. ¶¶ 14, 15.
3
Plaintiffs were hired to perform engineering services pursuant to the Contract. SAC ¶¶ 12–
16. Plaintiffs’ employment contracts committed them to ManTech for two years, id. ¶ 160, and
provided financial penalties for early termination in the form of reimbursement for the costs
incurred for sponsorship of the employee in Kuwait (approximately $15,000) and the employee’s
training and certification. Id. ¶¶ 160–62.
In May 2013, Hayes, Sawyer, Nelson, and Locklear were fired from ManTech on the
grounds that the labor hours they reported were too low. SAC ¶¶ 66, 67, 69, 71, 73. Hawkins left
ManTech in May 2015. Id. ¶ 12. 2
Plaintiffs filed their initial qui tam complaint on December 4, 2015, alleging that
defendants were in violation of the False Claims Act, the Trafficking Victims Protection
Reauthorization Act, and contract law. Compl. [Dkt. # 1] ¶¶ 1–3. While the complaint remained
under seal, the United States investigated plaintiffs’ allegations regarding the False Claims Act
violations. Notice of Election to Decline Intervention [Dkt. # 14].
On September 7, 2017, the United States filed a notice of its decision to decline
intervention. Id. at 1. In accordance with the government’s notice, the Court entered an order on
September 13, 2017 unsealing plaintiffs’ complaint and other relevant documents, ordering service
of all papers upon the United States pursuant to 31 U.S.C. § 3730(c)(3), and ordering that should
the plaintiffs or defendants propose that this action be dismissed, settled, or otherwise resolved,
2 In their opposition to the motion to dismiss, plaintiffs contend that they were all terminated
for low labor hours, but the second amended complaint does not contain facts regarding Hawkins’s
termination.
4
the Court would solicit the written consent of the United States before ruling or granting its
approval pursuant to § 3730(b)(1). 3 Order [Dkt. # 15] at 1–2.
Plaintiffs filed an amended complaint on February 5, 2018, framing their claim specifically
as a qui tam action under the provisions of the False Claims Act. See Am. Compl. [Dkt. #26].
Plaintiffs notified the government, and it reviewed the proposed amended complaint to determine
whether it stated any new allegations necessitating intervention. Not. of Proposed Am. Compl.
[Dkt. # 25]. The United States determined no further investigation on its part was necessary, and
it again declined to intervene. Id. at 1. Plaintiffs amended their complaint a second time, and again
gave notice to the United States. See SAC. Their second amended complaint omitted the breach
of contract claim. See id. The United States again declined intervention on August 23, 2018.
Notice Regarding Proposed Second Am. Compl. [Dkt. # 33].
Plaintiffs’ second amended complaint, filed on June 19, 2018, asserts four claims on behalf
of the United States under the False Claims Act, and one claim on behalf of themselves under the
Trafficking Victims Protection Reauthorization Act. SAC ¶¶ 6, 19, 26, 32. On January 4, 2019,
defendants moved to dismiss the complaint. See Defs.’ Mot.
3 Section 3730(b)(1) provides that a private action under the False Claims Act “may be
dismissed only if the court and the Attorney General give written consent to the dismissal and their
reasons for consenting.” This provision does not apply in this circumstance, because it “pertains
only to voluntary dismissals, and does not prevent a court from dismissing an action, without
prejudice, without obtaining the consent of the Attorney General.” United States ex re. Conteh v.
IKON Office Solutions, Inc., 27 F. Supp. 3d 80, 84 n.3 (D.D.C. 2014), citing United States ex rel.
Baggan v. DME Corp., No. 96–1983, 1997 WL 600569, at *3 n. 6 (D.D.C. Sept. 22, 1997); see
United States ex rel. Mergent Servs. v. Flaherty, 540 F.3d 89, 91 (2d Cir. 2008); Minotti v. Lensink,
895 F.2d 100, 103–04 (2d Cir. 1990).
5
STANDARD OF REVIEW
In evaluating a motion to dismiss under either Rule 12(b)(1) or 12(b)(6), the Court must
“treat the complaint’s factual allegations as true and must grant plaintiff ‘the benefit of all
inferences that can be derived from the facts alleged.’” Sparrow v. United Air Lines, Inc., 216
F.3d 1111, 1113 (D.C. Cir. 2000) (internal citation omitted), quoting Schuler v. United States, 617
F.2d 605, 608 (D.C. Cir. 1979); see also Am. Nat’l Ins. Co. v. FDIC, 642 F.3d 1137, 1139 (D.C.
Cir. 2011), quoting Thomas v. Principi, 394 F.3d 970, 972 (D.C. Cir. 2005). Nevertheless, the
Court need not accept inferences drawn by the plaintiff if those inferences are unsupported by facts
alleged in the complaint, nor must the Court accept plaintiff’s legal conclusions. Browning v.
Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002).
I. Rule 12(b)(1) Standard
Under Rule 12(b)(1), the plaintiff bears the burden of establishing jurisdiction by a
preponderance of the evidence. See Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992); Shekoyan
v. Sibley Int’l Corp., 217 F. Supp. 2d 59, 63 (D.D.C. 2002). Federal courts are courts of limited
jurisdiction and the law presumes that “a cause lies outside this limited jurisdiction.” Kokkonen v.
Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994); see also Gen. Motors Corp. v. EPA, 363
F.3d 442, 448 (D.C. Cir. 2004) (“As a court of limited jurisdiction, we begin, and end, with an
examination of our jurisdiction.”). “[B]ecause subject-matter jurisdiction is ‘an Art[icle] III as
well as a statutory requirement . . . no action of the parties can confer subject-matter jurisdiction
upon a federal court.’” Akinseye v. District of Columbia, 339 F.3d 970, 971 (D.C. Cir. 2003),
quoting Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702 (1982).
When considering a motion to dismiss for lack of jurisdiction, unlike when deciding a
motion to dismiss under Rule 12(b)(6), the court “is not limited to the allegations of the complaint.”
6
Hohri v. United States, 782 F.2d 227, 241 (D.C. Cir. 1986), vacated on other grounds, 482 U.S.
64 (1987). Rather, “a court may consider such materials outside the pleadings as it deems
appropriate to resolve the question [of] whether it has jurisdiction to hear the case.” Scolaro v.
D.C. Bd. of Elections & Ethics, 104 F. Supp. 2d 18, 22 (D.D.C. 2000), citing Herbert v. Nat’l
Acad. of Scis., 974 F.2d 192, 197 (D.C. Cir. 1992); see also Jerome Stevens Pharms., Inc. v. FDA,
402 F.3d 1249, 1253 (D.C. Cir. 2005).
II. Rule 12(b)(6) Standard
“To survive a [Rule 12(b)(6)] motion to dismiss, a complaint must contain 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 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). In Iqbal,
the Supreme Court reiterated the two principles underlying its decision in Twombly: “First, the
tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable
to legal conclusions,” and “[s]econd, only a complaint that states a plausible claim for relief
survives a motion to dismiss.” Id. at 678–79, citing Twombly, 550 U.S. at 555–56.
A claim is facially plausible when the pleaded factual content “allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 678, citing
Twombly, 550 U.S. at 556. “The plausibility standard is not akin to a ‘probability requirement,’
but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id., quoting
Twombly, 550 U.S. at 556. A pleading must offer more than “labels and conclusions” or a
“formulaic recitation of the elements of a cause of action,” id., quoting Twombly, 550 U.S. at 555,
and “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory
statements, do not suffice.” Id., citing Twombly, 550 U.S. at 555.
7
When considering a motion to dismiss under Rule 12(b)(6), the Court is bound to construe
a complaint liberally in the plaintiff’s favor, and it should grant the plaintiff “the benefit of all
inferences that can be derived from the facts alleged.” Kowal v. MCI Commc’ns Corp., 16 F.3d
1271, 1276 (D.C. Cir. 1994), citing Schuler, 617 F.2d at 608. Nevertheless, the Court need not
accept inferences drawn by the plaintiff if those inferences are unsupported by facts alleged in the
complaint, nor must the Court accept plaintiff’s legal conclusions. See id.; see also Browning, 292
F.3d at 242. In ruling upon a motion to dismiss for failure to state a claim, a court may ordinarily
consider only “the facts alleged in the complaint, documents attached as exhibits or incorporated
by reference in the complaint, and matters about which the Court may take judicial notice.”
Gustave-Schmidt v. Chao, 226 F. Supp. 2d 191, 196 (D.D.C. 2002), citing EEOC v. St. Francis
Xavier Parochial Sch., 117 F.3d 621, 624–25 (D.C. Cir. 1997).
III. Rule 9(b) Standard
To withstand a motion to dismiss for failure to state a fraud claim, including a claim under
the False Claims Act, the plaintiff must meet the pleading standard set out in Federal Rule of Civil
Procedure 9(b), which provides that “a party must state with particularity the circumstances
constituting fraud or mistake.” Fed. R. Civ. P. 9(b); see also Universal Health Servs., Inc. v.
United States ex rel. Escobar (“Escobar”), 136 S. Ct. 1989, 2004 n.6, (2016) (“False Claims Act
plaintiffs must also plead their claims with plausibility and particularity under Federal Rules of
Civil Procedure 8 and 9(b).”); United States ex rel. Totten v. Bombardier Corp. (“Totten I”), 286
F.3d 542, 551–52 (D.C. Cir. 2002) (“[B]ecause the False Claims Act is self-evidently an anti-fraud
statute, complaints brought under it must comply with Rule 9(b).”). This heightened pleading
standard is designed to “discourage[ ] the initiation of suits brought solely for their nuisance value,
and safeguard[ ] potential defendants from frivolous accusations of moral turpitude,” as well as
8
“guarantee all defendants sufficient information to allow for preparation of a response.” United
States ex rel. Heath v. AT & T, Inc. (“Heath”), 791 F.3d 112, 123 (D.C. Cir. 2015) (first alteration
in original), quoting United States ex rel. Williams v. Martin–Baker Aircraft Co., Ltd.
(“Williams”), 389 F.3d 1251, 1256 (D.C. Cir. 2004).
The plaintiff must plead with sufficient particularity “the time, place and content of the
false misrepresentations, the fact misrepresented and what was retained or given up as a
consequence of the fraud.” Williams, 389 F.3d at 1256, quoting Kowal, 16 F.3d at 1278; see
also United States ex rel. Shea v. Cellco P’ship (“Shea”), 863 F.3d 923, 936 (D.C. Cir. 2017). In
other words, the plaintiff must provide the “who,” “what,” “when,” and “where” with respect to
the circumstances of the fraud, so that the defendant is put on “fair notice of the fraud of which it
is accused.” See Heath, 791 F.3d at 124.
ANALYSIS
Defendants contend first that the second amended complaint fails to state a claim under the
False Claims Act, because the it lacks plausible allegations of falsity, materiality, and scienter.
Defs.’ Mem. at 13–26. Second, they argue that plaintiffs have failed to plead the claims with
particularity. Id. at 8–13. Third, in connection with the allegation of fraud related to the
qualifications of ManTech’s employees, defendants argue that the “public disclosure bar,” found
in 31 U.S.C. § 3730(e)(4), applies and requires the dismissal of the claims. Id. at 26–33. With
respect to the Trafficking Victims Protection Reauthorization Act claim, defendants argue that
plaintiffs have failed to state a claim under the act, id. at 33–42, and that the claim is preempted
by the Defense Base Act. Id. at 42–45.
9
I. False Claims Act Violations
A. Legal Background
The False Claims Act (“FCA”), permits private individuals, called relators, to bring actions
on behalf of the United States, against those who have allegedly submitted false claims for payment
to the federal government. Escobar, 136 S. Ct. at 1993. The FCA statute gives rise to several
distinct theories of liability. A defendant may be liable under the “presentment clause,” if it
“knowingly presents, or causes to be presented, a false or fraudulent claim for payment or
approval.” 31 U.S.C. § 3729(a)(1)(A). Alternatively, a defendant may be liable under the “false
statement clause” if it “knowingly makes, uses, or causes to be made or used, a false record or
statement material to a false or fraudulent claim,” § 3729(a)(1)(B). The “presentment clause,”
§ 3729(a)(1)(A), and “false statement clause,” § 3729(a)(1)(B), have always been
“complementary,” as they were “designed to prevent those who make false records or statements
to get claims paid or approved from escaping liability solely on the ground that they did
not themselves present a claim for payment or approval.” United States ex rel. Totten v.
Bombardier Corp. (“Totten II”), 380 F.3d 488, 501 (D.C. Cir. 2004) (emphasis in original).
Plaintiffs bring their FCA claims under both of these clauses.
To bring a claim under the presentment clause of the FCA, a relator must allege facts that
plausibly show that: (1) the defendant submitted “a claim to the government,” (2) “the claim was
false,” and (3) “the defendant knew that the claim was false.” United States ex rel. Davis v. District
of Columbia, 793 F.3d 120, 124 (D.C. Cir. 2015), citing United States ex rel. Hampton v.
Columbia/HCA Healthcare Corp., 318 F.3d 214, 218 (D.C. Cir. 2003). The falsehood must also
be material to the government’s decision to pay in order to be actionable under the FCA. Escobar,
10
136 S. Ct. at 1996; see also United States v. Sci. Applications Int’l Corp. (“SAIC”), 626 F.3d 1257,
1269 (D.C. Cir. 2010).
Similarly, to state a claim under the false statement clause in section 3729(a)(1)(B), “a
plaintiff must allege that (1) the defendant made or used a ‘record or statement’; (2) the record or
statement was false; (3) the defendant knew it was false; and (4) the record or statement was
‘material’ to a false or fraudulent claim.” United States ex rel. Keaveney v. SRA Int’l, Inc., 219 F.
Supp. 3d 129, 153 (D.D.C. 2016), quoting United States ex rel. Hood v. Satory Global, Inc., 946
F. Supp. 2d 69, 85 (D.D.C. 2013). While the elements of the presentment provision and false
statement provision are almost the same, the false statement provision “requires evidence that the
defendant made a false statement to the government, as opposed to the submission of a false claim
for payment.” Pencheng Si v. Laogai Research Found., 71 F. Supp. 3d 73, 91 (D.D.C. 2014).
Both the presentment clause and the false statement clause of the FCA require proof of
falsity, materiality, and scienter. §§ 3729(a)(1)(A)–(a)(1)(B).
i. Falsity
“In the paradigmatic case, a claim is false because it ‘involves an incorrect description of
goods or services provided or a request for reimbursement for goods or services never provided.’”
SAIC, 626 F.3d at 1266, quoting Mikes v. Straus, 274 F.3d 687, 697 (2d Cir. 2001), abrogated on
other grounds by Escobar, 136 S. Ct. 1989. This scenario has been referred to as a “factually
false” claim. United States ex rel. Barko v. Halliburton Co. (“Barko”), 241 F. Supp. 3d 37, 49–50
(D.D.C. 2017), aff’d 709 Fed. App’x 23 (D.C. Cir. 2017), citing United States v. Kellogg Brown
& Roots Servs., Inc., 800 F. Supp. 2d 143, 154 (D.D.C. 2011).
Alternatively, an FCA complaint may allege that a claim submitted to the government was
“legally false,” when the plaintiff “proceed[s] under the so-called ‘certification’ theory of
11
liability.” Barko, 241 F. Supp. 3d at 50; SAIC, 626 F.3d at 1266. Under this theory, “the falsity
of a claim for payment rests on a false representation of compliance with an applicable federal
statute, federal regulation, or contractual term.” United States ex rel. McBride v. Halliburton
Co. (“McBride”), 848 F.3d 1027, 1031 (D.C. Cir. 2017) (internal quotation marks and citations
omitted). “False certifications can be either express or implied.” SAIC, 626 F.3d at 1266. “An
express false certification ‘occurs when a claimant explicitly represents that he or she has complied
with a contractual condition, but in fact has not complied.’” Barko, 241 F. Supp. 3d at 49, quoting
Kellogg Brown, 800 F. Supp. 2d at 154; see Mikes, 274 F.3d at 698. “An implied false certification
occurs when the claimant makes no affirmative representation but fails to comply with a
contractual or regulatory provision where certification was a prerequisite to the government action
sought.” Barko, 241 F. Supp. 3d at 50 (internal citation omitted); see McBride, 848 F.3d at 1031.
The implied false certification theory can be a basis for liability where two conditions are satisfied:
“[F]irst, the claim does not merely request payment, but also makes specific representations about
the goods or services provided; and second, the defendant’s failure to disclose noncompliance with
material statutory, regulatory, or contractual requirements makes those representations misleading
half-truths.” Escobar, 136 S. Ct. at 2001.
ii. Materiality
The FCA also requires proof that the allegedly false representations were material, defined
as “having a natural tendency to influence, or be capable of influencing, the payment or receipt of
money or property.” 31 U.S.C. § 3729(b)(4). The materiality inquiry “look[s] to the effect on the
likely or actual behavior of the recipient of the alleged misrepresentation,” Escobar, 136 S. Ct. at
2002, and the Supreme Court has explained the standard is a “demanding” one:
12
The False Claims Act is not “an all-purpose antifraud statute,” or a vehicle
for punishing garden-variety breaches of contract or regulatory violations.
A misrepresentation cannot be deemed material merely because the
Government designates compliance with a particular statutory, regulatory,
or contractual requirement as a condition of payment. Nor is it sufficient
for a finding of materiality that the Government would have the option to
decline to pay if it knew of the defendant’s noncompliance.
Id. at 2003 (internal citations omitted). The Court added that materiality cannot be found where
noncompliance is minor or insubstantial. Id.
The Supreme Court has enumerated several factors to be considered when determining
whether materiality has been established, but it cautioned that “materiality cannot rest on ‘a single
fact or occurrence as always determinative.’” Id. at 2001, quoting Matrixx Initiatives Inc. v.
Siracusano, 563 U.S. 27, 39 (2011). First, “the Government’s decision to expressly identify a
provision as a condition of payment is relevant, but not automatically dispositive.” Id. at 2003.
Second, “evidence that the defendant knows that the Government consistently refuses to pay
claims in the mine run of cases based on noncompliance with the particular statutory, regulatory,
or contractual requirement” supports a materiality finding. Id. “Conversely, if the Government
pays a particular claim in full despite its actual knowledge that certain requirements were violated,
that is very strong evidence that those requirements are not material.” Id. Finally, “if the
Government regularly pays a particular type of claim in full despite actual knowledge that certain
requirements were violated, and it has signaled no change in position, that is strong evidence that
the requirements are not material.” Id. at 2003–04.
Furthermore, the Supreme Court rejected the assertion that materiality is “too fact
intensive” for a court to dismiss an FCA claim on a motion to dismiss, in light of the rigorous
materiality standard and the heightened pleading standards applicable to FCA claims. Id. at 2004
n.6.
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iii. Scienter
With regard to the scienter requirement, the FCA defines “knowing” and “knowingly” to
mean that a defendant has “(i) actual knowledge of the information; (ii) acts in deliberate ignorance
of the truth or falsity of the information; or (iii) acts in reckless disregard of the truth or falsity of
the information.” § 3729(b)(1). For implied false certification claims, the plaintiff must show that
the defendant must have known both “(1) that it violated a contractual obligation, and (2) that its
compliance with that obligation was material to the government's decision to pay.” SAIC, 626
F.3d at 1271.
The heightened pleading standards in Rule 9(b) apply to all the elements of an FCA claim.
Escobar, 136 S. Ct. at 2004 n.6. While Rule 9(b) permits scienter to be pled generally, courts
require “plaintiffs to plead the factual basis which gives rise to a strong inference of fraudulent
intent.” United States v. Comstor Corp., 308 F. Supp. 3d 56, 88 (D.D.C. 2018), quoting United
States ex rel. Tessler v. City of New York, 712 Fed. Appx. 27, 29 (2d Cir. 2017). Like the
materiality requirement, the scienter requirement is “addressed through strict enforcement,” SAIC,
626 F.3d at 1270, and is “rigorous,” in order to allay “concerns about fair notice and open-ended
liability.” Escobar, 136 S. Ct. at 2002.
Applying these legal principles, the Court finds that Count I states a claim under the FCA,
but Counts II, III, and V do not.
14
B. Count I: Defendants’ motion to dismiss will be denied because plaintiffs have
stated a claim under the FCA, and the claim is pled with particularity.
In Count I, plaintiffs allege that ManTech intentionally both underreported and
overreported direct labor hours, in violation of the Contract, to achieve different goals. 4 SAC ¶ 47.
Plaintiffs allege that: (1) ManTech managers would order employees to use inaccurate labor codes
to classify time spent on Mine Resistant Ambush Protected vehicles, thereby deflating their direct
labor hours to conceal inefficiencies; and (2) ManTech would alter timesheets to reflect higher or
lower labor hours and reported those inaccurate hours to the United States. Id. ¶ 55.
Defendants moved to dismiss this claim on two grounds: First, they argue that the claim
is not pled with particularity as required by Federal Rule of Civil Procedure 9(b). Defs.’ Mem. at
8–13. Second, they argue that plaintiffs have not sufficiently stated the elements of a claim under
the False Claims Act, and therefore it must be dismissed pursuant to Federal Rule of Civil
Procedure 12(b)(6). Id. at 13–33.
To comply with Rule 9(b), a plaintiff must generally set forth “the time, place and content
of the false misrepresentations, the fact misrepresented and what was retained or given up as a
consequence of the fraud,” Kowal, 16 F.3d at 1278 (quoting United States ex rel. Joseph v.
Cannon, 642 F.2d 1373, 1385 (D.C. Cir. 1981), and “identify individuals allegedly in the fraud.”
Untied States ex rel. Williams v. Martin-Baker Aircraft Co., 389 F.3d 1251, 1256 (D.C. Cir. 2004).
In other words, plaintiffs must provide the “who,” “what,” “when,” and “where” with respect to
the circumstances of the fraud, so that the defendant is put on “fair notice of the fraud of which it
is accused.” See Heath, 791 F.3d at 124. While Rule 9(b) requires that the plaintiffs “state with
4 Plaintiffs allege that both overreporting and underreporting occurred because ManTech
wanted both to appear to be efficient in order to obtain successive contract awards and to inflate
the amount of effort expended in certain categories to ensure full contract payment. SAC ¶ 47.
15
particularity the circumstances constituting fraud,” id. at 123, they are not required “to plead
representative samples of claims actually submitted to the government [because that] would
require relators, before discovery, to prove more than the law requires to be established at trial.”
Id. at 126.
Defendants submit that the complaint falls short because plaintiffs have not identified who
perpetrated the fraud and how the false certifications were linked to payments made by the U.S.
government. Defs.’ Mem. at 9. They also point out that there are no allegations in the complaint
regarding the allegedly false invoices ManTech submitted. Id. at 10.
The Court finds that plaintiffs have pled the circumstances of the fraud with sufficient
particularity to withstand the motion. First, they have sufficiently alleged that contract payments
were premised, at least in part, on the direct labor hours expended. The Contract here was a level-
of-effort cost-plus-fixed-fee contract. See Contract at 5. Federal regulations require that in this
type of contract, “[t]he contractor . . . provide a specified level of effort, over a stated period of
time, on work that can be stated only in general terms; and . . . [t]he Government . . . pay the
contractor a fixed dollar amount.” SAC ¶ 26, citing 48 C.F.R. § 16.207-1. 5 Furthermore, “[t]he
product of the [firm-fixed-price, level-of-effort term] contract is usually a report showing the
results achieved through application of the required level of effort. However, payment is based on
the effort expended rather than on the results achieved.” Id. ¶ 27, citing 48 C.F.R. § 16.207-2. In
5 Section 1.104 of the Federal Acquisition Regulation (“FAR”) provides that the FAR
applies to all acquisitions as defined in part 2 of the FAR, except where expressly excluded. Part
2 defines “acquisition” as “the acquiring by contract with appropriated funds of supplies or
services (including construction) by and for the use of the Federal Government through purchase
or lease, whether the supplies or services are already in existence or must be created, developed,
demonstrated, and evaluated.” Thus, the FAR applies to this Contract.
16
this type of contract, “[t]he required level of effort is identified and agreed upon in advance.” § 16-
207-3.
According to the Solicitation, 6 the maximum number of direct labor hours to be ordered
during the Contract was 32,108,513. Solicitation § H.13 at 51. In the event that less than 100%
of the established level of effort is actually expended by the completion date of the contract, the
government will have the option of either requiring the contractor to continue performance until it
reaches 100% at no increase in the fee of the Contract or effecting a reduction in the fixed fee by
the percentage by which the total hours is less than the established level of effort. Id. § H.13 at
51. Thus, if the direct labor hours reported were lower than projected, the government would be
entitled to a pro-rated reimbursement of the fixed-fee specified in the contract. Id. And, if labor
hours were overreported, as is alleged here, it is plausible that ManTech was overpaid since the
government may have been entitled to reimbursement.
In addition, section B.2(a) of the Contract provided that “subsequent awards” would be
priced in part based on the company’s actual experience.
The estimated cost and fixed fee for each applicable Early Operational
Readiness, Operational Readiness Base Option, and Operational Readiness
Option CLIN [(“Contract Line Item”)] shall be calculated from the labor
rates found in the tab “Cost Rate by Labor Category” tab, column P,
“Composite Cost Per Hour $”, multiplied by the number of hours the
Government requires for that labor category. The total estimated cost for
each CLIN will then be calculated by summing all hours by labor category
and the associated estimated labor cost from the “Cost Rate by Labor
Category” for each CLIN. The fixed fee shall be calculated from the
“Summary of Fee Rate by Performance Period” tab, column B, Fee per
6 While plaintiffs do not attach the Solicitation to the second amended complaint, defendants
pointed the Court to a copy of the Solicitation, see Defs.’ Mem. at 4 n.2, and the Court may
consider it on a motion to dismiss without converting the motion to one for summary judgment
since it has been incorporated into the second amended complaint. Hinton v. Corr. Corp. of Am.,
624 F. Supp. 2d 45, 46 (D.D.C. 2009) (collecting cases).
17
Hour as shown in Attachment 12, multiplied by the number of hours
required on that CLIN by the Government.
Contract at 85. In other words, the fixed fee for each period depended on the number of labor
hours to be expended during that period multiplied by the cost, and to calculate cost, the
government would use “actual incurred costs that are averaged by labor category for the most
recent month or by using the labor rates provided in Attachment 12 for each of the labor categories,
performance locations, and hours specified.” SAC ¶ 36, citing Section H.11(a) of the Contract.
Thus, the number of labor hours reported could affect the fees charged in subsequent periods, and
it is plausible that inflating the amount of labor hours led to costs that were higher than they should
have been.
Furthermore, ManTech was required to certify the number of labor hours expended.
Pursuant to section H.11(b) of the Contract: “If Contractor performance is considered satisfactory
by the Contracting Officer, the fixed fee is payable at the expiration of the period(s) of performance
as set forth in the applicable CLIN upon Contractor certification that the quantity of labor hours
specified in the contract has been expended in performing the contract work.” SAC ¶ 37. Section
H.11(f) also required the contractor to provide the total number of man-hours of direct labor,
including the number of hours in each labor category, and required the contractor to notify the
government when it had reason to believe that the level of effort needed to finish the period of the
Contract would be greater than estimated. Id. ¶ 38.
18
Read together, the Solicitation and Contract provisions give rise to the plausible inference
that payment for the Contract was premised, at least in part, on the number of direct labor hours
reported to the government. 7
Second, plaintiffs have sufficiently alleged that ManTech did in fact falsely report or
falsely categorize its employees’ labor hours in submissions to the government. Plaintiff Hayes
alleges that his supervisor, Bud Delano, ordered him and other employees to misreport their labor
hours. SAC ¶ 61. When Hayes refused, id. ¶¶ 61–63, he was demoted, and his replacement
instructed his subordinates to misreport their time. Id. ¶¶ 64–65. Plaintiff Sawyer describes a
similar experience; he attended a meeting in March 2013 where he was instructed by his manager,
Scott Campbell, to falsify labor hours and mischaracterize the hours he expended. Id. ¶ 72.
Plaintiff Hawkins had significant prior experience as a mechanic on the MRAPs, and his
employer frequently asked him to attend meeting with Army contracting officers as a “substitute
supervisor.” SAC ¶ 51. He began attending these meetings in February 2013, and the complaint
alleges that he was present when ManTech managers deliberately lied to government officials
regarding the efficiency of the ManTech employees and the amount of labor hours reported. Id.
¶¶ 53, 57, 58. Hawkins also alleges that he witnessed managers alter the record of employees’
labor hours:
ManTech managers had predetermined the “appropriate” amount of direct-
hour time that should be spent on a vehicle. If the time actually spent
servicing a vehicle was above the target time, the ManTech managers would
either eliminate hours or reclassify the hours from direct-labor to indirect
labor. If the time actually spent servicing a vehicle was below the target
7 ManTech states that hours were both underreported and overreported. The hours were
allegedly underreported to cover up inefficiencies, and thus the government awarded ManTech
successive contract option. At summary judgment, plaintiffs will have to establish particular
instances of either overreporting or underreporting and demonstrate what impact that had on the
government’s payments.
19
time, the ManTech managers would either reclassify indirect labor hours as
direct labor hours or increase the hours recorded on the timesheet.
Id. ¶ 56.
Plaintiff Sawyer was able to obtain a document reflecting the number of his labor hours
reported to the United States, and it reported that on some days he worked more hours than he
actually did: it was reported that he worked 34 hours on December 22, 2011; 25 hours on July
30, 2011; 22.5 hours on August 24, 2011, and 24.5 hours on September 29, 2011. 8 SAC ¶ 79.
Plaintiffs allege that defendants were contractually required to certify to the government
the correct amount of direct labor hours that their employees expended, and that the Contract based
the government’s payment in part on the number of labor hours expended. SAC ¶ 82. While
specific invoices are not identified, the Court finds that plaintiffs have pled sufficient facts to give
rise to the inference that requests for payment or invoices based on false direct labor hours were
submitted to the government. Thus, the complaint sufficiently alleges the “how” and “what” of
the claim.
Furthermore, plaintiffs have also sufficiently set forth when the fraud took place. They
allege that the fraud occurred during the “phase in” period (180 days after contract award which
was May 31, 2012); the “early operational readiness” period (after the phase in period but not to
exceed 180 after contract award); the “operational readiness” period (after phase-in until January
13, 2013); and the four successive option periods (after operational readiness for three 12-month
periods and one 10-month period). SAC ¶¶ 24, 25, 28, 29. Plaintiffs also alleged that managers
instructed misreporting of hours in the spring of 2013. See id. ¶¶ 56, 72.
8 Sawyer has alleged that he began working at ManTech in November 2012, SAC ¶ 14, but
the time he cites to is from 2011. It is unclear to the Court whether this is a typo or whether his
misreported hours indeed occurred in 2011.
20
While plaintiffs do not identify specific individuals who submitted the number of labor
hours to the government, that is not required to survive a motion to dismiss because the alleged
fraud occurred at the corporate level – it was defendant ManTech that was required to certify to
the government the number of direct labor hours expended. See Heath, 791 F.3d at 125 (finding
that the relator did “identify a specific actor – AT&T. . . . The complaint makes clear, in other
words, that corporate levers were pulled; identifying precisely who pulled them is not an exorable
requirement of Rule(9)(b) in all cases.”). And, plaintiffs have identified specific managers who
instructed employees at ManTech to misrepresent their hours. SAC ¶¶ 60, 72.
Finally, plaintiffs allege that the fraud took place in Kuwait.
Because plaintiffs have identified the who, what, when, where, and how of the fraud,
plaintiffs have pled this FCA claim with sufficient particularity to satisfy Rule 9(b), and the Court
will not dismiss Count I on this basis.
Plaintiffs have also sufficiently pled each element of an FCA violation. First, plaintiffs
have alleged that defendants made false statements to the government. Plaintiffs proceed on both
a factual false theory and false certification theory. They allege that defendants submitted the
incorrect number of hours to the U.S. Government. SAC ¶ 47 (“Depending on ManTech’s needs,
ManTech either overreported direct labor hours or underreported direct labor hours by encouraging
its employees to mischaracterize direct labor hours as indirect labor hours (and vice versa).”). And
they allege that by accepting the Government’s exercise of the Contract options, defendants falsely
certified that it was in compliance with the contractual requirements. Id. ¶ 40 (“Moreover, by
accepting the successive Contract Options, ManTech certified that it was in compliance with all
material requirements of the Contract and in compliance with federal and state laws and
regulations.”). Under either theory, plaintiffs have alleged the falsity needed to state a claim under
21
the FCA. Plaintiffs’ second amended complaint details a scheme in which ManTech would
encourage its employees to incorrectly classify their hours or to increase or decrease their hours.
SAC ¶¶ 57–81. Those allegations, coupled with the allegation that “ManTech made certifications
to the U.S. by requesting and receiving payments that were premised on labor hours,” id. ¶ 82,
support the inference that the hours reported by ManTech to the U.S. Government were false.
Second, plaintiffs have sufficiently pled materiality. They point to the provisions in the
Contract that required defendants to submit labor hours; the provisions that detail how the actual
number of labor hours expended bore upon the fixed cost of the Contract; and how the number of
direct labor hours would affect the value of Contract options and/or any entitlement to
reimbursement. SAC ¶¶ 26–32. These contractual requirements support the inference that the
number of labor hours reported were material to the government’s payments to ManTech.
Finally, plaintiffs have alleged the requisite scienter to sustain their claim. They allege that
ManTech managers would order employees to misreport and miscategorize their time. SAC ¶¶ 55,
60, 72. They also allege that ManTech management falsely reported labor hours at meetings with
Army officials. Id. ¶¶ 53, 57. These allegations support the inference that ManTech managers
knew that the labor hours were false. This is enough to show, at least, that “the company acted
recklessly” based on “the actions of employees or [the company’s] systems and structure.” SAIC,
626 F.3d at 1276.
In sum, assuming the truth of the allegations in the complaint and resolving all inferences
in favor of the plaintiffs, as the Court must do at this stage, the Court finds that plaintiffs have
sufficiently pled a violation of the FCA in Count I, and defendants’ motion to dismiss will be
denied as to this Count.
22
C. Count II: Plaintiffs fail to state a claim under the False Claims Act regarding
inputting incorrect data into the SAMS-E system.
In Count II, plaintiffs allege that defendants violated the FCA by intentionally and/or
recklessly submitting inaccurate data into the “SAMS-E” system, which was a “comprehensive
system for tracking the life cycle of critical hardware.” SAC ¶¶ 87, 89. Plaintiffs allege that
defendants were required to submit employees’ labor hours and the time codes associated with
those hours into the SAMS-E system. Id. ¶¶ 99–100. They assert that defendants entered hours
that were either false in amount or category, as described in Count I, into the SAMS-E system. Id.
¶¶ 102–05.
Plaintiffs explain, at length, why the SAMS-E system is important to the U.S. Military:
• “Soldiers use SAMS-E to track asset and equipment life, order parts,
interface with related logistics systems and much more. . . . The system
also enables effective Force and Fleet sustainment operations at the national
level through consolidated equipment maintenance data.” Id. ¶ 91.
• “SAMS-E . . . generates . . . reports of record numbers [including]
maintenance requests, preventive maintenance schedules, equipment
inspection and maintenance worksheets, historical records or logbooks,
equipment maintenance records, shop property accounts, oil analysis
records, and equipment operation permits, among other things.” Id. ¶ 92.
• “SAMS-E is materially important to the government because it allows DoD
to compile equipment readiness reports to provide operational command
and control support to military decision-making.” Id. ¶ 93.
• “Accurate SAMS-E reporting is a critical instrument for Army and DoD
commanders to assess overall readiness of U.S. military forces.
Maintaining accurate SAMS-E reporting is mission-critical for U.S.
military forces engaged in combat, as failure to maintain accurate reporting
can jeopardize the efforts and lives of U.S. troops on the front lines.” Id.
¶ 97.
23
Plaintiffs allege that the U.S. government experienced financial injury when defendants
“pollut[ed] SAMS-E with corrupted data,” thereby wasting the money that the U.S. had spent in
providing ManTech with the SAMS-E reporting system. SAC ¶ 105. They allege that:
ManTech made implicit certifications to the U.S. by requesting and
receiving payments that were premised on compliance with material
requirements of the Contract and applicable Kuwaiti, U.S., and state laws
and regulations. By knowingly entering false data, ManTech knew it was
not in compliance with such material and legal requirement; thus, such
requests for payment constituted false claims for payment.
Id. ¶ 110.
What is missing from plaintiffs’ allegations about the SAMS-E system, however, is how
the system itself is relevant to the contractor’s claims for payment or payments made by the United
States to ManTech. Both the presentment and false statement clauses of the FCA require that the
alleged false representation be material to the government’s decision to pay. But the complaint
contains no allegation that the SAMS-E system was the method by which ManTech certified its
number of direct labor hours as it was required to do under Contract. Indeed, plaintiffs emphasize
that the purpose of the SAMS-E system was not to measure compliance with the Contract and to
remit payments, but to supply data so that the military could accurately measure the readiness of
U.S. forces and equipment. Thus, there is no allegation that supports an inference that payment
was induced by the false data entered into SAMS-E.
Because the complaint does not tie the SAMS-E system to the Contract or the requirements
for payment, so there is no basis to find the alleged false data entries were material, and defendants’
motion to dismiss Count II will be granted. See Kellogg Brown & Root, 800 F. Supp. 2d at 155; see
also Escobar, 136 S. Ct. at 2003.
24
D. Count III: Plaintiffs fail to state a claim under the False Claims Act regarding
representations made about the qualifications of ManTech employees.
Plaintiffs allege that ManTech falsely certified the qualifications of its mechanics who did
not have the requisite engineering experience to the United States “to get claims paid or approved
by the U.S. government in violation of 31 U.S.C. § 3729(a)(1)(B).” SAC ¶ 137.
Plaintiffs assert that the “Contract required ManTech to staff the KMSF with mechanics
and technicians who were adequately trained to efficiently and effectively provide MRAP repair
and maintenance services.” SAC ¶ 118, citing Solicitation at 107 (stating that ManTech was
required to either submit a certification of training from MRAP-University (“MRAP-U”) or a
waiver to MRAP-U training). But according to the complaint, some of those who had been hired
had been fast food employees, beauticians, and youth offenders, who did not have the requisite
engineering experience. Id. ¶¶ 127, 133–34. These unqualified workers, plaintiffs contend, would
work inefficiently, which would result in “significant overbilling and excess and unnecessary costs
being submitted to, and paid by, the U.S. Government.” Id. ¶ 139. They allege that had the United
States known that ManTech had hired unqualified personnel, “the U.S. would have cancelled the
Contract and denied ManTech further payment.” Id. ¶ 140. Furthermore, plaintiffs allege that
ManTech would hire individuals who had “engaged third-parties to take and pass the mechanic
competency test.” Id. ¶ 131.
With respect to this count, defendants argue first that plaintiffs cannot predicate a qui tam
claim on material that was already publicly disclosed, and second, that plaintiffs have failed to
25
state a claim under the FCA. Because the Court finds that plaintiffs failed to state a claim under
the FCA, it need not analyze whether the public disclosure bar applies. 9
Plaintiffs are proceeding on an implied false certification theory, under which “the falsity
of a claim for payment ‘rests on a false representation of compliance with an applicable federal
statute, federal regulation, or contractual term.’” McBride, 848 F.3d at 1031, quoting SAIC, 626
F.3d at 1266. The implied certification theory can be a basis for liability “where two conditions
are satisfied: first, the claim does not merely request payment, but also makes specific
9 The FCA states:
The court shall dismiss an action or claim under this section, unless opposed
by the Government, if substantially the same allegations or transactions as
alleged in the action or claim were publicly disclosed—
(i) in a Federal criminal, civil, or administrative hearing in which the
Government or its agent is a party;
(ii) in a congressional, Government Accountability Office, or other
Federal report, hearing, audit, or investigation; or
(iii) from the news media,
unless the action is brought by the Attorney General or the person bringing
the action is an original source of the information.
31 U.S.C.A. § 3730(e)(4)(A).
This provision was amended in 2010. The pre-2010 version was expressly jurisdictional,
while the provision today states only that a court must dismiss a case falling under the public
disclosure bar. “Thus, when the amended version of § 3730(e)(4)(A) applies, public disclosure
does not deprive the Court of subject matter jurisdiction, but merely deprives the plaintiff of his
claim.” United States ex rel. Shea v. Verizon Commc’ns, Inc., 160 F. Supp. 3d 16, 24 (D.D.C.
2015), aff’d sub nom. United States ex rel. Shea v. Cellco P’ship, 863 F.3d 923 (D.C. Cir. 2017);
see United States ex rel. Oliver v. Philip Morris USA Inc., 826 F.3d 466, 470–71 (D.C. Cir. 2016)
(discussing whether the court had subject matter jurisdiction under the public bar provision for a
claim that was filed in 2008). Here, the post-2010 public disclosure bar provision applies, and
thus, it is not a matter of subject matter jurisdiction.
26
representations about the goods or services provided; and second, the defendant’s failure to
disclose noncompliance with material statutory, regulatory, or contractual requirements makes
those representations misleading half-truths.” Escobar, 136 S. Ct. at 2001.
Escobar involved the Medicaid program, which required facilities to have certain clinicians
on staff and delineated the licensing requirements for those positions. Universal Health Services
Inc. submitted claims for Medicaid reimbursement to the government using payment codes that
corresponded to specific counseling services. Id. at 1998. The reimbursement claims also
contained the National Provider Identification (“NPI”) numbers of staff members who provided
those services; NPI numbers can only be obtained if the staff members have certain qualifications
and licenses. Id. The relators in Escobar qui tam case alleged that the staff members did not have
the qualifications and licenses that they impliedly represented they had by submitting NPI numbers
with the reimbursement claims. Id. at 2000. The Court held that the relators stated a claim under
the FCA when they alleged that Universal Health misled the government into believing that the
staff had certain qualifications, and thereby misrepresented its compliance with the mental health
facility requirements, which, they alleged, were so central to the contract that Medicaid would not
have paid the claims had it known of the violations. Id. at 2004.
Here, plaintiffs do not point to any “specific representations about the goods or services”
that were submitted to the government in ManTech’s requests for payment. Id. at 2001. Plaintiffs
generally allege that employees were not qualified because they had certain backgrounds, and that
their deficiencies in experience resulted in “significant overbilling and excess and unnecessary
costs.” SAC ¶ 139. But, unlike in Escobar, where the claims containing fraudulently obtained
NPI numbers implicitly misrepresented the clinician’s qualifications, here, plaintiffs do not point
27
to any representations about employee qualifications – implicit or explicit – contained in
ManTech’s claims for payment. Escobar, 136 S. Ct. at 1997.
Nor have plaintiffs alleged facts that would demonstrate defendants’ alleged
noncompliance was material to the government’s decision to pay. As stated above, the FCA’s
“materiality requirement is demanding.” Id. at 1994. Materiality “cannot be found where
noncompliance is minor or insubstantial” and “the Government’s decision to expressly identify a
provision as a condition of payment is relevant, but not automatically dispositive.” Id. at 2003.
Here, the facts alleged do not indicate that the provision of the Solicitation requiring
MRAP-U certified mechanics – or a waiver of MRAP-U training – is a condition of payment under
the Contract as opposed to a contractual obligation. “The False Claims Act is not ‘an all-purpose
antifraud statute,’ or a vehicle for punishing garden-variety breaches of contract or regulatory
violations.” Escobar, 136 S. Ct. at 2003, quoting Allison Engine Co. v. United States ex rel.
Sanders, 553 U.S. 662, 672 (2008). Plaintiffs provide no support for their allegation that the U.S.
government would have cancelled the Contract or any payments had they known about the
qualifications of the personnel ManTech hired – particularly since a waiver would have sufficed
under the contract – and plaintiffs did not identify any instances in which the government declined
payment when it learned about the background of employees. Also, plaintiffs do not allege that
any of the MRAP vehicles were improperly repaired or maintained as a result of the unqualified
workers. See United States ex rel. Hutchins v. DynCorp Int’l, Inc., 342 F. Supp. 3d 32, 57 (D.D.C.
2018) (finding relators did not state a claim under the FCA when they alleged that the contractor
hired unqualified employees because they did not explain how the contractor’s “internal hiring
decisions were material to the decisions of the Army” and no performance issues were alleged).
28
Count III also fails because it is not pled with sufficient particularity. Plaintiffs do not
specify a time frame for this particular fraud (although in their opposition, they generally allege
that it was for the duration of the contract), and plaintiffs do not provide sufficient detail about
how the fraud was perpetrated, such as whether ManTech submitted false waivers of MRAP-U
Training requirements or whether employees simply did not go through the necessary training.
Plaintiffs allege that sometimes ManTech would hire individuals who had “engaged third-parties
to take and pass the mechanic competency test,” SAC ¶ 131, but plaintiffs do not allege when this
occurred, or through what means the false claim was submitted to the government. Furthermore,
plaintiffs do not come forward with any factual allegations supporting their conclusory assertion
that ManTech was aware that employees had not taken the test themselves.
For these reasons, plaintiffs have failed to state an FCA claim under the implied false
certification theory in Count III, and the claim will be dismissed without prejudice.
E. Count V: Plaintiffs fail to state a claim under the False Claims Act regarding
defendants’ alleged failure to comply with the Trafficking Victims Protection
Reauthorization Act.
Plaintiffs allege that defendants violated the FCA when they committed violations of the
Trafficking Victims Protection Reauthorization Act (“TVPRA”), and then requested and accepted
payments under the Contract, thereby falsely implying certification of its compliance with TVPRA
obligations. SAC ¶¶ 284, 287.
The second amended complaint cites 22 U.S.C. § 7104(g), which provides that any contract
entered into by the federal government and a private entity must include the condition that the
government is authorized to terminate the Contract if the subcontractor uses forced labor in the
performance of the contract. SAC ¶ 265. In the Solicitation for the Contract at issue here, section
C-3 stated that contractors were not allowed to confiscate passports, and if they had to do so for
29
administrative purposes, they would only be able to hold them for the “shortest period of time
reasonable.” Id. ¶ 271, citing 48 C.F.R. 5152.222-5900 (incorporated into the Contract on page
55). The Solicitation also provides that “[t]he United States Government has adopted a zero-
tolerance policy regarding trafficking in persons.” Id. ¶ 272, citing FAR 52.222-50(6).
Furthermore, the Federal Acquisition Regulations (“FAR”), which are incorporated into the
Solicitation, prohibit the use of forced labor, and provide that a violation of this provision of the
FAR may result in removal from the contract. Id. ¶¶ 273, 275. The Contract added more
specificity: it stated that failure to comply with the Trafficking in Persons policy could result in,
among other things: suspension of contract payments, subcontractor termination, loss of fee for
the performance period in which the contractor was non-compliant, and termination of the contract.
Id. ¶ 277. The Contract also provided that the contractor had an affirmative duty to advise the
government if it learned of any violations of trafficking laws. Id. ¶ 271.
With that as the background, plaintiffs premise Count V on the “implied false certification”
theory underlying Count IV: that “when a defendant submits a claim, it impliedly certifies
compliance with all conditions of payment,” and an undisclosed violation of a material statutory,
can be “a misrepresentation that renders the claim ‘false or fraudulent’ under § 3729(a).” Escobar,
136 S. Ct. at 1995, quoting § 3729(a)(1)(A). As noted above, the implied false certification theory
can be a basis for liability where two conditions are satisfied: when the claim makes specific
representations about the goods or services provided; and the defendant’s failure to disclose
noncompliance with material statutory, regulatory, or contractual requirements renders those
representations to be misleading. Id. at 2001.
The Contract at issue here conditions payment upon compliance with the TVPRA, but as
the Supreme Court noted, this is “relevant[] but not automatically dispositive” of materiality. Id.
30
at 2003. Defendants argue that their obligations under the TVPRA were not material because they
did not “go to the very essence of the bargain” between the government and ManTech. Defs.’
Mem. at 23–24. But, taking the allegations in the complaint in the light most favorable to plaintiffs,
the Court finds that plaintiffs have sufficiently pled materiality. Both the federal regulations and
the Contract emphasize that noncompliance with the TVPRA is not “minor or insubstantial.”
Escobar, 136 S. Ct. at 2003. The statute and the Contract impose an affirmative duty to report any
known violations, and both specifically identify withholdings of payments as a sanction. Contract
at 297. These allegations support the inference that TVPRA violations were material to the
government’s payments.
But, as in Count III, where plaintiffs’ claim fall short is that it does not point to “specific
representations” made to the United States that were rendered misleading by the alleged TVPRA
violations. Escobar, 136 S. Ct. at 2001. There is no allegation in the second amended complaint
that defendants made any representations in their invoices or requests for payments that would be
inconsistent with, or made misleading by, any alleged violations of the TVPRA.
Plaintiffs concede that they were not privy to invoices or certification statements made by
ManTech to the government. Pls.’ Opp. at 38. But they maintain that certification was required
under the law and the Contract; that they have sufficiently alleged violations of the TVPRA; that
ManTech received payments from the U.S. government; and had the government known of the
alleged trafficking violations, it could have terminated the Contract or withheld payment. Id.
Plaintiffs argue that those facts give rise to a plausible inference that ManTech made false claims
to the United States in its requests for payments. But the heightened pleading standard required at
this stage and Supreme Court precedent require more. Because plaintiffs allege only that ManTech
31
submitted requests for payment that did not disclose its violations of the TVPRA, this Count will
be dismissed without prejudice for failure to state a claim under the FCA.
II. Count IV: Plaintiffs state a claim under the Trafficking Victims Protection
Reauthorization Act.
Plaintiffs allege that when defendants confiscated their passports, did not obtain proper
work visas for them, forced them to go on “visa runs” to neighboring countries, and threatened to
impose exorbitant fees if they terminated their employment contracts early, defendants obtained
their labor by force in violation of the Trafficking Victims Protection Reauthorization Act. 10
The TVPRA states:
(a) Whoever knowingly provides or obtains the labor or services of a person
by any one of, or by any combination of, the following means—
(1) by means of force, threats of force, physical restraint, or threats of
physical restraint to that person or another person;
(2) by means of serious harm or threats of serious harm to that person
or another person;
(3) by means of the abuse or threatened abuse of law or legal process;
or
(4) by means of any scheme, plan, or pattern intended to cause the
person to believe that, if that person did not perform such labor or
services, that person or another person would suffer serious harm or
physical restraint,
shall be punished as provided under subsection (d).
10 The TVPRA is a criminal statute, but an individual who is a victim of trafficking “may
bring a civil action against the perpetrator (or whoever knowingly benefits, financially or by
receiving anything of value from participation in a venture which that person knew or should have
known has engage in an act in violation of this chapter) in an appropriate district court of the
United States and may recover damages and reasonable attorneys fees.” 18 U.S.C. § 1595(a).
32
18 U.S.C. 1589(a). 11
Plaintiffs allege that defendants violated the statute through “threats of serious harm” and
“abuse or threatened abuse of law or legal process.” Pls.’ Opp. at 33–34. “Serious harm” is defined
to include “any harm, whether physical or nonphysical, including psychological . . . harm, that is
sufficiently serious, under all of the surrounding circumstances, to compel a reasonable person of
the same background . . . to continue performing labor or services in order to avoid incurring that
harm.” 18 U.S.C. § 1589(c)(2). The TVPRA defines “abuse or threatened abuse of law or legal
process” as “the use or threatened use of a law or legal process, whether administrative, civil, or
criminal, in any manner or for any purpose for which the law was not designed, in order to exert
pressure on another person to cause that person to take some action or refrain from taking some
action.” § 1589(c)(1).
11 Plaintiffs also claim a violation of § 1592, which states:
(a) Whoever knowingly destroys, conceals, removes, confiscates, or possesses
any actual or purported passport or other immigration document, or any other actual or
purported government identification document, of another person—
(1) in the course of a violation of section . . . 1589 . . .;
(2) with intent to violate section . . . 1589 . . .; or
(3) to prevent or restrict or to attempt to prevent or restrict, without lawful
authority, the person's liberty to move or travel, in order to maintain the
labor or services of that person, when the person is or has been a victim of
a severe form of trafficking in persons, as defined in section 103 of the
Trafficking Victims Protection Act of 2000
shall be fined under this title or imprisoned for not more than 5 years, or
both.
Thus, a violation of § 1592 is predicated on a violation of § 1589. See Lagayan v. Odeh, 199 F.
Supp. 3d 21, 29 (D.D.C. 2016).
33
The legislative history of the provision reflects that the TVPRA was meant “to address the
increasingly subtle methods of traffickers who place their victims in modern-day slavery, such as
where traffickers . . . restrain their victims without physical violence or injury.” H.R. Rep. No.
106–939, at 101 (2000) (“Conf. Rep.”). In adopting a broad definition of “serious harm,” Congress
stated that “prosecutors will not have to demonstrate physical harm or threats of force against
victims’ to prove liability under § 1589.” Id.; see also Lagayan v. Odeh, 199 F. Supp. 3d 21, 28
(D.D.C. 2016) (“No allegation of actual physical harm or an explicit threat of such harm is required
to make out such a claim.”).
The D.C. Circuit has not interpreted the term “serious harm,” but applying these principles,
other courts have held that severe financial harm could suffice. See, e.g., United States v. Dann,
652 F.3d 1160, 1170–71 (9th Cir. 2011) (employer’s threat that a foreign worker would owe
$8,000 if she quit constituted threat of “serious harm” under the TVPA); Paguirigan v. Prompt
Nursing Employment Agency LLC, 286 F. Supp. 3d 430, 437–38 (E.D.N.Y. 2017) (where the
contract provided for a $25,000 termination fee, court found that the fee constituted “serious harm”
and therefore, plaintiff stated a claim under the TVPA); see also Javier v. Beck, No. 13CV2926,
2014 WL 3058456, at *6 (S.D.N.Y. July 3, 2014) (threatened enforcement of $15,000 confession
of judgment constitutes threat of serious harm); Nunag–Tanedo v. E. Baton Rouge Par. Sch. Bd.,
790 F. Supp. 2d 1134, 1146 (C.D. Cal. 2011) (threatened payment of $10,000 constitutes threat of
serious harm).
“The linchpin of the serious harm analysis under § 1589 is not just that serious harm was
threatened but that the employer intended the victim[s] to believe that such harm would befall”
them if they left employment. Muchira v. Al–Rawaf, 850 F.3d 605, 618 (4th Cir. 2017), quoting
Dann, 652 F.3d at 1170. In considering whether the employer intends the victims to believe they
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cannot leave, the Court must “consider the particular vulnerabilities of a person in the victim’s
position,” though the victim’s acquiescence must be objectively reasonable under the
circumstances. Id., citing United States v. Rivera, 799 F.3d 180, 186–89 (2d. Cir. 2015). “No
matter how unpleasant the work, or the conditions under which services are provided, the critical
inquiry for the purposes of the TVPA is whether a person provides those services free from a
defendant’s physical or psychological coercion that as a practical matter eliminates the ability to
exercise free will or choice.” Muchira v. Al-Rawaf, No. 1:14-CV-770 AJT/JFA, 2015 WL
1787144, at *6 (E.D. Va. Apr. 15, 2015), aff’d, 850 F.3d 605 (4th Cir. 2017), as amended (Mar.
3, 2017).
Here, plaintiffs allege that defendants confiscated their passports, SAC ¶¶ 181, 209, 216,
219, and that they were required to sign an employment contract that committed them to ManTech
for twenty-four months and carried significant financial penalties for early termination:
Due to significant cost for sponsorship (up to and exceeding $10,000 per
person for the first year and $5,000 for the second year), [the employee]
agrees to commit to a minimum period of employment (deployment) of 24
months or the completion of the contract whichever comes first. Once the
process is completed, should [the employee] decide to terminate
employment, or are terminated for any reason, voluntary or involuntary,
prior to completing 24 months (non-consecutive) of “boots on the ground”
(BOG) service, [the employee] [is] responsible for costs incurred and will
be required to reimburse the cost to obtain a work visa. In this event,
ManTech will make a determination of financial obligation based on current
circumstances. Reimbursable costs include all expenses related directly
and indirectly to the sponsorship, including travel, lodging, per diem,
medical exam(s), background investigation and administration/
administrative fees. If terminated, you may also be responsible for
employment and deployment costs as described in the Offer Addendum, as
well as costs related to any training or certification process provided to you
as part of your employment, including employment related expenses
described in the Offer Addendum.
35
Id. ¶ 160 (emphasis in original), citing Ex. 2, Employment Contract Excerpts. The employment
contract also provided that “[i]n the event that [the employee] fails to complete an assigned training
course or fail to complete an obligated employment period under this contract and defined in this
offer, [the employee] will be required to reimburse prorated costs related to the training and
certification process.” Id. ¶ 162 (emphasis in original), citing Ex. 2, Employment Contract
Excerpts. Thus, plaintiffs allege that if they left their employment, they would face significant
financial penalties. Id. ¶ 161.
Plaintiffs also allege that at no time “during the relevant period of this complaint did
ManTech obtain visa 18s or work authorizations in Plaintiffs’ names.” SAC ¶ 171. Plaintiffs
could not obtain the proper work visa without ManTech’s active participation in the process, and
this meant they were required to live in Kuwait illegally. Id. ¶ 172. Furthermore, plaintiffs
maintained that ManTech “abused Kuwaiti immigration laws” by demanding that plaintiffs go on
“visa runs” in Bahrain, “for the purpose of obtaining fresh ‘tourist’ visa stamps in their passports.”
Id. ¶¶ 155, 174–75 (describing the visa runs). Plaintiffs were aware that they were working in
Kuwait illegally, and they assert that they reasonably believed and feared that they could be
arrested by Kuwaiti officials for immigration violations. Id. ¶¶ 168, 195. They also asserted that
they feared that if they did not go on visa runs or work overtime, ManTech would either terminate
them (which could carry harsh economic consequences) or report them to Kuwaiti officials. Id.
¶¶ 156, 225.
According to plaintiffs, because they were residing illegally in the country, and feared that
they would be reported or fired, they could not complain about the working conditions they
experienced. SAC ¶¶ 156, 168, 249. They also asserted that they were forced to work in an
environment filled with chemicals and toxic fumes that was devoid of the proper safety precautions
36
required by law. Id. ¶¶ 226–34, 241–44, 246. And, plaintiffs allege that because they lacked
protection of any country’s laws, and because they could not advocate for their rights to fair wages
because they lived in fear of arrest, they were required to work very difficult schedules without
any overtime pay. Id. ¶¶ 253–63.
Defendants argue that plaintiffs fail to state a claim under the TVPRA because plaintiffs
were not “personally threatened with deportation or any other adverse legal consequences by
ManTech in order to induce them to take, or refrain from taking, some action.” Defs.’ Mem. at
35. But as plaintiffs point out, the TVPRA does not require explicit threats. It is enough that the
employer intended the victims to believe that serious harm would befall them if they left. Muchira,
850 F.3d at 618.
Defendants also point out that plaintiffs were not particularly vulnerable victims because
some relators had worked in military facilities in Kuwait before they worked for ManTech. Defs.’
Mem. at 41. It is true that in determining whether a defendant’s intent has been established, the
Court must consider “the particular vulnerabilities of a person in the victim’s position.” Muchira,
850 F.3d at 618. But while those facts may be taken into consideration at a later point in the
proceedings, they are not enough to render the allegations insufficient on their face when one reads
the complaint in the light most favorable to the plaintiffs.
In light of the facts in the complaint, and drawing all inferences in favor of the plaintiffs,
the Court finds that plaintiffs have stated a plausible claim under the TVPRA. They allege that
they feared that if they had left their employment, they would have faced serious harm in the form
of high financial penalties or arrest by local authorities. Plaintiffs allege that defendants
maintained possession of their passports, required the “visa runs,” and did not complete the steps
to enable them to remain in Kuwait legally. Plaintiffs were told that if they complained, they
37
would be fired or reported to authorities. In light of the broad scope of § 1589, the Court finds that
these facts are enough to state a claim under this provision.
Defendants contend that to the extent that plaintiffs seek damages under the TVPRA for
the harm they suffered due to the work conditions, the Court lacks subject matter jurisdiction over
the claim because it is preempted by the Defense Base Act. Defs.’ Mem. at 42–45.
The Defense Base Act, 42 U.S.C. § 1651 et seq. (2012), was enacted in 1941 to provide
relief to employees of government contractors who experienced death or injury while
accompanying military forces overseas. 12 The Base Act builds upon and incorporates provisions
of the Longshore Act, which was enacted to provide workers’ compensation coverage to maritime
employees. See 42 U.S.C. § 1651(a); 33 U.S.C. § 902(3). As with the Base Act, Congress passed
the Longshore Act “to strike a balance between the concerns of [the employees] on the one hand,
and their employers on the other.” Morrison–Knudsen Constr. Co. v. Dir., Office of Workers’
Comp. Programs, 461 U.S. 624, 636 (1983). “Employers relinquished their defenses to tort
actions in exchange for limited and predictable liability,” and employees accepted “limited
recovery because they receive prompt relief without the expense, uncertainty, and delay that tort
actions entail.” Id.
Both the Longshore Act and the Base Act contain exclusivity provisions stating that
employer liability under the statutes “shall be exclusive and in place of all other liability.” 33
U.S.C. § 905(a) (Longshore Act); 42 U.S.C. § 1651(c) (Base Act). Contrary to defendants’
contention, Defense Base Act preemption is not a jurisdictional issue. Sickle v. Torres Advanced
12 The Defense Base Act does not define injury, but the Longshore Act defines injury as
“accidental injury or death arising out of and in the course of employment, and such occupational
disease or infection as arises naturally out of such employment or as naturally or unavoidably
results from such accidental injury.” 33 U.S.C. § 902(2).
38
Enter. Sols., LLC, 884 F.3d 338, 345 (D.C. Cir. 2018). “Rather, preemption forecloses a plaintiff
from stating a legally cognizable claim for recovery. . . . Preemption under the Base Act . . . speaks
to the legal viability of a plaintiff’s claim, not the power of the court to act.” Id.
The Defense Base Act provides that its workers’ compensation benefit scheme “shall be
exclusive and in place of all other liability of” employers and contractors to “employees (and their
dependents) coming within the purview of this chapter, under the work[ers’] compensation law of
any State, Territory, or other jurisdiction.” 42 U.S.C. § 1651(c). “Express preemption under that
provision thus is limited to claim ‘under the work[ers’] compensation law of any State, Territory,
or other jurisdiction.’” Sickle, 884 F.3d at 347, quoting § 1651(c). Here, plaintiffs’ claim arises
under the TVPRA, not under any workers’ compensation scheme.
But, the Defense Base Act also incorporates the exclusivity provision of the Longshore
Act, which makes exclusive “an employer’s liability as prescribed in Section 904 of the Longshore
Act.” Id., quoting 33 U.S.C. § 905(a). Section 904 makes employers liable for compensation
payable related to medical treatment, disability, and death. § 904, citing § 907, § 908, and § 909.
In their second amended complaint, plaintiffs have alleged that they experienced injury due to their
workplace environment and seek restitution under the TVPRA relating to physical, psychiatric, or
psychological medical care plaintiffs sought for those injuries. SAC ¶¶ 226–63. It is unclear to
the Court how chemical exposure damages flow from the trafficking violation. And, in their
opposition to the motion to dismiss, plaintiffs also argue that any injuries from the working
conditions have not yet manifested since the “damage inflicted from chronic exposure to
potentially . . . deadly . . . fumes might not manifest for years.” See Pls.’ Opp. at 37. So, at this
point, it is not clear that plaintiffs intend to, or would be entitled to, recover for any injuries
sustained in the workplace. But, in addition to the chemical exposure damages, plaintiffs also seek
39
restitution in the form of lost wages arising out of the alleged trafficking violation, because they
were allegedly forced to work overtime with no additional pay. And that kind of harm is not
preempted by the DBA.
Thus, the TVPRA claim may move forward, and as plaintiffs’ claim is more fully
developed, the issue of DBA preemption may be revisited. At this point, plaintiffs’ claim will not
be dismissed based on DBA preemption, but at the summary judgment stage, plaintiffs must clarify
the nature of their claimed damages. Therefore, defendants’ motion to dismiss claim IV will be
denied without prejudice.
CONCLUSION
For the foregoing reasons, defendants’ motion to dismiss is granted as to Counts II, III,
and V and denied as to Counts I and IV.
A separate order will issue.
AMY BERMAN JACKSON
United States District Judge
DATE: January 28, 2020
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