Hutchins v. Wilentz, Goldman & Spitzer

Opinions of the United
2001 Decisions States Court of Appeals
for the Third Circuit
6-13-2001
Hutchins v. Wilentz Goldman
Precedential or Non-Precedential:
Docket 98-6248
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Filed June 13, 2001
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 98-6248 & 98-6339
CHARLES T. HUTCHINS
v.
WILENTZ, GOLDMAN & SPITZER;
LOUIS DeLUCIA;
JOHN DOES "1" THROUGH JOHN DOES "3";
JOAN LAVERY
(Newark D.C. Civil No. 96-4678)
CHARLES T. HUTCHINS
v.
ABC CORP., SEALED
(Newark D.C. Civil No. 96-5988)
Charles T. Hutchins,
Appellant
On Appeal from the United States District Court
for the District of New Jersey
D.C. Civil Action Nos. 96-cv-04678 & 96-cv-05988
(Honorable Katharine S. Hayden)
Argued February 8, 2001
Before: SCIRICA, McKEE and STAPLETON, Circuit Judges
(Filed: June 13, 2001)
CHARLES T. HUTCHINS (ARGUED)
5011 Marshall Road
Farmingdale, New Jersey 07727
Appellant, Pro Se
MARIANNE E. MURPHY, ESQUIRE
(ARGUED)
Tompkins, McGuire, Wachenfeld &
Barry
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102
Attorney for Appellees,
Wilentz, Goldman & Spitzer,
Louis DeLucia, Joan Lavery
DOUGLAS HALLWARD-DRIEMEIER,
ESQUIRE (ARGUED)
DOUGLAS N. LETTER, ESQUIRE
MICHAEL E. ROBINSON, ESQUIRE
United States Department of Justice
Civil Division, Appellate Staff
601 D Street, N.W., Room 9106
Washington, D.C. 20530
Attorneys for Amicus Curiae-
Appellant, United States of
America
OPINION OF THE COURT
SCIRICA, Circuit Judge.
The principal issue on appeal is whether the submission
of fraudulent legal bills for approval to the United States
Bankruptcy Court violates the False Claims Act, 31 U.S.C.
S 3729. We hold the False Claims Act only prohibits
fraudulent claims that cause economic loss to the
government. We also hold that a r etaliatory discharge cause
of action under 31 U.S.C. S 3730(h) requires proof that the
employee engaged in "protected conduct" and that the
2
employer was on notice of the "distinct possibility" of False
Claims Act litigation and retaliated against the employee.
I.
Charles Hutchins was one of two paralegals in the
creditors' rights department of the New Jersey law firm of
Wilentz, Goldman & Spitzer from Mar ch 1993 to October
1995. On August 2, 1995, Louis T. DeLucia, a partner in
Wilentz, Goldman & Spitzer's creditors' rights department,
asked Hutchins to investigate certain client bills, with
particular attention to the "high costs" of certain
computerized research. After investigating the matter and
discussing it with the law firm's paralegal supervisor, Marie
Henneberry, Hutchins submitted a short memorandum to
DeLucia stating, "I was told that the fir m has a policy
whereby actual Westlaw and LEXIS expenses are multiplied
by 1.5 in order to arrive at the amount the client is invoiced
for." Hutchins also expressed concer n to Henneberry that
paralegals were being used to perfor m secretarial tasks
resulting in overcharging clients.
On September 22, 1995, over a month after submitting
his billing practices memorandum, Hutchins was
summoned by firm management to a meeting to discuss his
continued employment. Hutchins contends the lawfirm
wanted to fire him because of his "investigation" into their
fraudulent billing practices. Wilentz, Goldman & Spitzer
countered they were upset over Hutchins's relationships
with other firm employees, and wanted to discuss an
anonymous memorandum circulated in May 1995
containing disparaging comments about Andrew W agner,
the other paralegal in the creditors' rights department. The
law firm advised Hutchins that they believed he wrote the
memorandum. After denying involvement, Hutchins wr ote a
letter to Kim Haan, a paralegal in another department
whom he believed was the source of the accusation, stating,
You considered my prior uses of guerilla tactics against
the I.R.S., my ex-wife and her attorneys as evidence
that I wrote the . . . [disparaging memorandum]. The
I.R.S. has stolen my money, locked me up in court
battles for a decade, ruined a relationship/marriage
3
engagement, harassed me and filed hundreds of
thousands of dollars in tax liens against me. My ex-
wife and her attorneys used perjured testimony and
affidavits to induce the government courts to issue
restraining orders keeping me away fr om my children.
There just is no comparison between these
interferences with my money and my kids, and
someone propositioning a married woman in the office
. . . . After you've read Atlas Shrugged two or three
more times (I've read it five times) you may recognize
Rand's belief that free men have a moral duty to resist
abuses of government and to resist the ef forts of those
who misuse government agencies and gover nment
power for personal reasons. Her philosophy guides my
subtle warfare against tyrants. Its [sic] a great deal
more appropriate than blowing up federal buildings
. . . .
I suppose I would hope that if you learn anything from
all of this it would be not to be so quick to rush to
judgment about people . . . and that you would be
careful about what you say about people. The next
time you might injure someone less prepar ed to deal
with abuse, or the person you injure just mightfile a
defamation/slander lawsuit against you.
Haan reported to the firm personnel manager, Anne
Riegle, that she was "terrified" by the letter. Riegle noted
that Haan was "visibly upset" believing that Hutchins might
"do something to her." On Friday, September 27, 1997, the
law firm decided to terminate Hutchins as a result of "the
culmination of escalating problems with his superiors and
with staff."
When informed of the decision to terminate Hutchins,
Haan asked the law firm to wait until after the weekend to
inform him. Because she was taking the law school
admission test that weekend, Haan explained that she was
afraid Hutchins would attempt to disrupt her . She also
asked to be excused from work the following Monday and
Tuesday so that she would not be present when Hutchins
was discharged. Wilentz, Goldman & Spitzer agreed.
On Monday, October 2, 1995, Hutchins requestedfiles
from the accounting department reflecting the law firm's
4
billing of Westlaw and LEXIS expenses. The accounting
department denied him access. Two hours later , Hutchins
was informed that he was fired.
On October 18, 1995, Hutchins notified the United States
Trustee by sworn affidavit that he believed Wilentz,
Goldman & Spitzer had engaged in fraudulent and unlawful
billing practices. He filed a pro se qui tam complaint under
S 3729 of the False Claims Act alleging W ilentz, Goldman &
Spitzer submitted fraudulent billing statements to the
United States Bankruptcy Court and that the lawfirm
violated the whistleblower provisions of the False Claims
Act, 31 U.S.C. S 3730(h), by terminating his employment
because of his investigation into the firm's billing practices.
The District Court dismissed Hutchins's qui tam claim
under Fed. R. Civ. P. 12 (b)(6),1 and granted Wilentz,
Goldman & Spitzer summary judgment on Hutchins's
retaliatory discharge claim.2
II.
The District Court had jurisdiction over Hutchins's qui
tam and retaliatory discharge claims under 28 U.S.C.
S 1331. We have jurisdiction over the District Court's final
order dismissing his claims under 28 U.S.C.S 1291. We
exercise plenary review over the District Court's grant of
summary judgment on Hutchins's retaliatory discharge
claim and its dismissal of his qui tam claim under Fed. R.
Civ. P. 12 (b)(6). Liberty Lincoln-Mer cury, Inc. v. Ford Motor
Co., 171 F.3d 818, 822 (3d Cir. 1999); Malia v. Gen. Elec.
Co., 23 F.3d 828, 830 (3d Cir.), cert. denied, 513 U.S. 956
(1994).
_________________________________________________________________
1. United States ex rel. Hutchins v. W ilentz, Goldman & Spitzer, C.A. No.
96-5988, slip. op. at *4 (D.N.J. August 4, 1998) ("Hutchins I")
(dismissing
qui tam claim).
2. United States ex rel. Hutchins v. W ilentz, Goldman & Spitzer, C.A. No.
96-5988, slip. op. at *15-16 (D.N.J. September 8, 1998) ("Hutchins II")
(granting defendant summary judgment on retaliatory discharge claim).
5
III.
A.
The False Claims Act provides:
(a) Liability for certain acts - Any person who -
(1) knowingly presents, or causes to be pr esented, to
an officer or employee of the United States
Government or a member of the Armed For ces of the
United States a false or fraudulent claim for payment
or approval;
(2) knowingly makes, uses or causes to be made or
used, a false record or statement to get a false claim
or fraudulent claim paid or approved by the
Government;
(3) conspires to defraud the Government by getting a
false or fraudulent claim allowed or paid;
* * *
(7) knowingly makes, uses, or causes to be made or
used, a false record or statement to conceal, avoid,
or decrease an obligation to pay or transmit money
or property to the Government,
is liable to the United States Government for a civil
penalty of not less than $5,000 and not more than
$10,000, plus three times the amount of damages
which the Government sustains because of the act of
that person . . . .
31 U.S.C. S 3729. An action under the False Claims Act
may be commenced in two ways. The United States
Department of Justice may file suit to collect damages
suffered as the result of fraudulent claims which cause
government money to be expended from the United States
Treasury. Alternatively, a private plaintiff may bring a qui
tam action3 on behalf of the government to recover losses
_________________________________________________________________
3. In Vermont Agency of Natural Resources v. United States ex rel.
Stevens, 529 U.S. 765, 768 n.1 (2000) (inter nal citations omitted), the
United States Supreme Court set forth the historical foundations of the
6
incurred because of fraudulent claims. 31 U.S.C.
S 3730(b)(1). When a private plaintiff brings a qui tam
action, the government is permitted to intervene. But the
private plaintiff may continue his suit even if the
government declines to intervene. 31 U.S.C.S 3730(c)(1). If
the qui tam suit is ultimately successful, the private
plaintiff, known as a relator, is entitled to up to 30% of the
funds the government recovers. 31 U.S.C.S 3730(d).
B.
Relying on the qui tam provisions of the False Claims Act,
Hutchins filed suit alleging that Wilentz, Goldman &
Spitzer's submission of inflated legal bills to the United
States Bankruptcy Court violated S 3729(a)(1) of the False
Claims Act.4 To establish a prima facie case under the False
_________________________________________________________________
qui tam suit stating, "qui tam is short for the Latin phrase qui tam pro
domino rege quam pro se ipso in hac parte sequitur, which means ``who
pursues this action on Lord the King's behalf as well as his own.' The
phrase dates from at least the time of Blackstone." The Court further
explained,
Qui tam actions appear to have originated ar ound the end of the
13th century, when private individuals who had suf fered injury
began bringing actions in the royal courts on both their own and
the
Crown's behalf. Suit in this dual capacity was a device for getting
their private claims into the respected r oyal courts, which
generally
entertained only matters involving the Crown's interest.
Id. at 774 (internal citations omitted).
The Court noted that in the 14th century,
Parliament began enacting statutes that explicitly provided for qui
tam suits. These were of two types: those that allowed injured
parties to sue in vindication of their own inter ests (as well as
the
Crown's) . . . and . . . those that allowed informers to obtain a
portion of the penalty as a bounty for their infor mation (about
those
who transgressed against the king) even if they had not suffered
the
injury themselves.
Id. at 775 (internal citations omitted).
4. As noted, S 3729(a)(1) provides:
7
Claims Act a plaintiff must prove: (1) the defendant
presented or caused to be presented to an agent of the
United States a claim for payment; (2) the claim was false
or fraudulent; (3) the defendant knew the claim was false or
fraudulent; and (4) the United States suffer ed damages as
a result of the false or fraudulent claim. Young-Montenay,
Inc. v. United States, 15 F.3d 1040, 1043 (Fed. Cir. 1994)
(quoting Miller v. United States, 550 F .2d 17, 23 (Ct. Cl.
1977)). It is undisputed that the United States T rustee and
the United States Bankruptcy Courts are gover nment
agents for purposes of the False Claims Act. Additionally, it
is clear that inflating the Westlaw and LEXIS expenses was
unlawful under the Bankruptcy Code.
The crux of the dispute is whether the submission of
these fraudulent bills was a "false claim for payment or
approval" that caused damage to the United States
government. Focusing on the latter portion ofS 3729(a)(1),
Hutchins contends that even if no government money were
expended from the United States Tr easury in connection
with the law firm's inflated legal bills, the submission of
these bills for approval by the Bankruptcy Court violates
the False Claims Act.
Although not linguistically implausible, we find no
support for this reading from the jurisprudence interpreting
the False Claims Act. Rainwater v. United States , 356 U.S.
590, 592 (1958) ("It seems quite clear that the objective of
Congress was broadly to protect the funds and property of
the Government from fraudulent claims."); United States ex
rel. Marcus v. Hess, 317 U.S. 537, reh'g denied, 318 U.S.
799 (1943). Nor have we been able to find any case
establishing that a false statement to the gover nment which
does not cause the government economic loss gives rise to
False Claims Act liability. United States ex r el. Hopper v.
_________________________________________________________________
Any person who-
(1) knowingly presents, or caused to be pr esented, to an officer
or
employee of the United States Government, or a member of the
Armed Forces of the United States a false or fraudulent claim for
payment or approval . . . is liable . . . .
8
Anton, 91 F.3d 1261, 1266 (9th Cir . 1996) ("[T]he Act
attaches liability, not to underlying fraudulent activity, but
to the ``claim for payment.' ") (quoting United States v.
Rivera, 55 F.3d 703, 709 (1st Cir . 1995)), cert. denied, 519
U.S. 1115 (1997).
"Not all false statements made to the federal government
are claims within the meaning of the False Claims Act."
United States v. Greenberg, 237 F . Supp. 439, 442 (S.D.N.Y.
1965) (citing United States v. Howell, 318 F .2d 162 (9th Cir.
1963)). "Even under a somewhat broader definition, only
``actions which have the purpose and effect of causing the
government to pay out money are clearly``claims' within the
purpose of the Act.' " United States v. Lawson, 522 F. Supp.
746, 750 (D.N.J. 1981) (quoting United States v. Silver, 384
F. Supp. 617, 620 (E.D.N.Y. 1974), aff 'd, 515 F.2d 505 (2d
Cir. 1975)); see also United States v. Neifert-White Co., 390
U.S. 228, 233 (1968) (False Claims Act reaches to "all
fraudulent attempts to cause the Government to pay out
sums of money."). As the Supreme Court r ecognized in
United States v. McNinch, 356 U.S. 595, 599 (1958) (quoting
United States v. Tieger, 234 F.2d 589, 591 (3d Cir. 1956)),
" ``The conception of a claim against the government
normally connotes a demand for money or for some
transfer of public property.' " In McNinch, the Supreme
Court traced the legislative history of the False Claims Act
stating,
The False Claims Act was originally adopted following
a series of sensational congressional investigations into
the sale of provisions and munitions to the W ar
Department. Testimony before Congr ess painted a
sordid picture of how the United States had been billed
for nonexistent or worthless goods, charged exorbitant
prices for goods delivered, and generally r obbed in
purchasing the necessities of war. Congr ess wanted to
stop this plundering of the public treasury. At the
same time it is equally clear that the False Claims Act
was not designed to reach every kind of fraud practiced
on the Government.
Id. at 599; see also United States ex r el. Pogue v. Am.
Healthcorp., Inc., 914 F. Supp. 1507, 1512 (M.D.Tenn. 1996)
("The legislative history of the False Claims Act reveals that
9
it was designed to protect the Federal T reasury.") (citing S.
Rep. No. 99-345 at 4 (1986), reprinted in 1986 U.S.C.C.A.N.
5266, 5269).
In this regard, we believe Hutchins's r eading of the
statute expands the False Claims Act's scope of liability to
include actions not contemplated by Congress. His
argument neglects the statutory definition of the term
"claim" which provides,
For purposes of this section, "claim" includes any
request or demand whether under a contract or
otherwise, for money or property which is made to a
contractor, grantee, or other recipient if the United
States Government provides any portion of the money
or property which is requested or demanded, or if the
Government will reimburse such contractor , grantee, or
other recipient for any portion of the money or property
which is requested or demanded.
31 U.S.C. S 3729(c).
The False Claims Act seeks to redress fraudulent activity
which causes economic loss to the United States
government. As the Supreme Court held in Hess, the
purpose of the False Claims Act "was to pr ovide for
restitution to the government of money taken from it by
fraud." 317 U.S. at 551. It was not intended to impose
liability for every false statement made to the government.5
Costner v. URS Consultants, Inc., 153 F .3d 667, 677 (8th
Cir. 1998) ("[O]nly those actions by the claimant which have
the purpose and effect of causing the United States to pay
out money it is not obligated to pay, or those actions which
intentionally deprive the United States of money it is
lawfully due, are properly consider ed ``claims' within the
meaning of the FCA.").
_________________________________________________________________
5. Extending the False Claims Act to reach any false statement made to
the government, regardless of any impact on the United States Treasury,
would appear to impermissibly expand standing doctrine and essentially
permit any plaintiff to sue on behalf of the government when false or
misleading statements are made to any gover nment agent including the
courts, the legislature or any law enfor cement officer.
10
For these reasons, we hold the submission of false claims
to the United States government for appr oval which do not
cause financial loss to the government ar e not within the
purview of the False Claims Act. Tieger , 234 F.2d at 592
("The provision relating to the payment or approval of a
``claim upon or against' the Government r elates solely to the
payment or approval of a claim for money or pr operty to
which a right is asserted against the Government."). Unless
these claims result in economic loss to the United States
government, liability under the False Claims Act does not
attach. United States v. Bornstein, 423 U.S. 303, 309 n.4
(1976) (" ``The conception of a claim against the government
normally connotes a demand for money or for some
transfer of public property.' ") (quoting McNinch, 356 U.S. at
599).
C.
In dismissing plaintiff 's claims, the District Court stated
the Bankruptcy Court was merely acting as an intermediary
in approving defendant's false claims. The court noted, "[In
most False Claims Act actions] the intermediary [to whom
the defendants submitted false claims] has contr ol over
government funds for the purpose of pr operly reimbursing
a non-fraudulent party, and the suit is filed because the
funds wind up in the hands of an improper claimant."
Hutchins I, slip. op. at *4. The District Court noted that the
Bankruptcy Court, as intermediary, did not have similar
control over the funds. Permitting this claim, said the
District Court, would mean the False Claims Act would
"apply whenever an individual submits a gover nment-
approved false claim to a third party who happens to owe
an unrelated debt to a government agency." Id. at *4-5.
In its amicus curiae brief, the gover nment contends the
District Court improperly implied that a False Claims Act
plaintiff who alleges the defendant caused an intermediary
to submit a false claim on its behalf must establish that the
intermediary had control over the gover nment funds. To the
extent the District Court's opinion implies an "intermediary
control" requirement, we agr ee with the government that
the District Court erred. The proper inquiry under the False
Claims Act is not whether an intermediary controls
11
government funds for any period of time but whether the
defendant causes, or will cause, the intermediary to make
a false claim against the government r esulting in a financial
loss to the treasury. See, e.g., Neifert-White Co., 390 U.S. at
233; Rainwater, 356 U.S. at 591. Several cases recognize
that a plaintiff may assert a cause of action under the False
Claims Act even when an intermediary, such as a
subcontractor, is merely a conduit to the transfer of
government funds. See, e.g., Bor nstein, 423 U.S. at 309;
United States v. Ueber, 299 F.2d 310, 313 (6th Cir. 1962).
The intermediary need not have discretion over, or even
possession of, the government funds to establish that the
defendant violated the False Claims Act. Ther efore, we
reiterate that the proper inquiry under the False Claims Act
is whether the defendant made fraudulent claims that
caused economic loss to the United States Tr easury.
D.
On appeal, Hutchins contends Wilentz, Goldman &
Spitzer's submission of fraudulent legal bills to the
Bankruptcy Court constitutes a reverse false claim in
violation of S 3729(a)(7). He argues that if the government
were a creditor to a bankrupt estate, it would suffer
"economic loss" by reason of the estate paying inflated legal
bills.
The False Claims Act recognizes that a party may be
liable for a reverse false claim if he "knowingly makes, uses,
or causes to be made or used, a false recor d or statement
to conceal, avoid, or decrease an obligation to pay or
transmit money or property to the Gover nment." 31 U.S.C.
S 3729(a)(7). But in his complaint, Hutchins never asserted
a reverse false claim cause of action under 31 U.S.C.
S 3729(a)(7), nor did he allege the gover nment was a
creditor in any of the bankrupt estates in which Wilentz,
Goldman & Spitzer submitted inflated legal bills.
As noted, the District Court dismissed Hutchins's claim
on a Fed. R. Civ. P. 12(b)(6) motion. Our r eview therefore is
limited to reviewing the claims alleged in his complaint.6
_________________________________________________________________
6. See, e.g., Mahone v. Addicks Utility Dist. of Harris County, 836 F.2d
921, 935 (5th Cir. 1988) ("It is black-letter law that ``[a] motion to
dismiss
12
Because Hutchins did not plead this cause of action, nor
file a motion to amend his complaint to raise this cause of
action, we will not address his reverse false claim argument
on appeal.
IV.
Hutchins also alleges that Wilentz, Goldman & Spitzer
fired him in retaliation for his investigation and reporting of
fraud in violation of 31 U.S.C. S 3730(h). Section 3730(h)
provides:
Any employee who is discharged, demoted, suspended,
threatened, harassed, or in any other manner
discriminated against in the terms and conditions of
employment by his or her employer because of lawful
acts done by the employee on behalf of the employee or
others in furtherance of an action under this section,
including investigation for, initiating of, testimony for,
or assistance in an action filed or to be filed under this
section, shall be entitled to all relief necessary to make
the employee whole.
This so called "whistleblower" provision protects
employees who assist the government in the investigation
and prosecution of violations of the False Claims Act. Neal
v. Honeywell Inc., 33 F.3d 860, 861 (7th Cir. 1994).
Congress enacted S 3730(h) "to encourage any individuals
knowing of Government fraud to bring that information
forward." S. Rep. No. 99-345, at 4 (1986), reprinted in 1986
U.S.C.C.A.N. 5266. "[F]ew individuals will expose fraud if
they fear their disclosures will lead to harassment,
demotion, loss of employment or any other for m of
retaliation." Id. at 5300. Ther efore, S 3730(h) broadly
protects employees who assist the gover nment in
prosecuting and investigating False Claims Act violations.
A plaintiff asserting a cause of action underS 3730(h)
must show (1) he engaged in "protected conduct," (i.e., acts
_________________________________________________________________
for failure to state claim under Federal Rule Civil Procedure 12(b)(6) is
to
be evaluated only on the pleadings.' ") (quoting Jackson v. Procunier, 789
F.2d 307, 309 (5th Cir. 1986)); see also 5A Charles Alan Wright and
Arthur R. Miller, Federal Practice and Pr ocedure S 1356 (2d ed. 1990).
13
done in furtherance of an action under S 3730) and (2) that
he was discriminated against because of his "pr otected
conduct." United States ex rel. Y esudian v. Howard Univ.,
153 F.3d 731, 736 (D.C. Cir. 1998) (quoting S. Rep. No. 99-
345, at 35 (1986), reprinted in 1986 U.S.C.C.A.N. 5300). In
proving that he was discriminated against "because of "
conduct in furtherance of a False Claims Act suit, a plaintiff
must show that (1) his employer had knowledge he was
engaged in "protected conduct"; and (2) that his employer's
retaliation was motivated, at least in part, by the
employee's engaging in "protected conduct."7 Id.; see also
Zahodnick v. Int'l Bus. Machines Corp., 135 F .3d 911, 914
(4th Cir. 1997). At that point, the bur den shifts to the
employer to prove the employee would have been
terminated even if he had not engaged in the protected
conduct. Mikes v. Strauss, 889 F. Supp. 746, 754 (S.D.N.Y.
1995).
At issue here is whether Hutchins engaged in"protected
conduct," and whether Wilentz, Goldman & Spitzer was on
notice that he was pursuing (i.e., acting in furtherance of)
a False Claims Act suit and retaliated against him.
Hutchins claims he engaged in three activities that were
"protected conduct" that put his employer on notice that he
was investigating and pursuing a potential False Claims Act
suit. First, he cites the memorandum he wrote to Louis
DeLucia concerning the law firm's"practice" of
overcharging clients for Westlaw and LEXIS research costs.
_________________________________________________________________
7. The requirement that employers have knowledge that an employee is
engaged in "protected conduct" ensur es that S 3730(h) suits are only
prosecuted where there has been actual retaliation. Robertson v. Bell
Helicopter Textron, Inc., 32 F.3d 948, 951 (5th Cir. 1994) (quoting S.
Rep.
No. 99-345, at 5 (1986), reprinted in 1986 U.S.C.C.A.N. 5266, 5300), cert.
denied, 513 U.S. 1154 (1995). As the Court of Appeals for the Seventh
Circuit has noted, knowledge on the part of the employer is necessary
because,
Some employees will cry "fraud" to make pests of themselves, in the
hope of being bought off with higher salaries or more desirable
assignments. Others will perceive the disappointments of daily life
as "retaliation" and file suits that have some settlement value
because of the high costs of litigation and the possibility of
error.
Neal, 33 F.3d at 863.
14
Second, he points to his inquiry to Marie Henneberry, the
paralegal supervisor, about this billing practice as well as
the practice of using paralegals to perfor m secretarial
functions resulting in inflated client bills. Finally, he cites
his request for billing documents from the accounting
department.
In granting defendant's motion for summary judgment,
the District Court found Hutchins failed to engage in
"protected conduct" and that Wilentz, Goldman & Spitzer
was not on notice of potential False Claims Act litigation
when it fired him. The court found Hutchins's investigation
and reporting of the Westlaw and LEXIS billing practice was
not "protected conduct" because,
plaintiff only looked into the firm's research costs
because his supervisor, defendant DeLucia, asked him
to. The memo and all research involved, was therefore,
the product of a specific assignment given to him by
his supervisor. It was not the result of plaintiff 's
independent investigation prompted by a suspicion of
fraud upon the government.
Hutchins II, slip. op. at *13. Additionally, the court stated,
[T]he record is clear that at no point did plaintiff
complain or express any objection to the fir m's alleged
policy of inflating research costs. He merely performed
the limited billing research his supervisor asked of
him, wrote his findings down in an inter office memo,
and submitted it to DeLucia.
Id. at *15. Finally the court stated,
[Hutchins] fail[ed] to establish facts that demonstrate
he alerted his employer, or acted so as to put it on
notice, that he was investigating alleged wr ongdoings
and might be reporting them. Plaintiff 's assertions that
he knew about unlawful practices, standing alone,
without facts to support a finding that defendantfired
him in retaliation for investigating and possibly
reporting what he discovered, do not constitute enough
evidence to support his federal claim in this action.
Id. at *16.
15
A.
An employee must engage in "protected conduct" in order
to assert a claim under S 3730(h). In addr essing what
activities constitute "protected conduct," the "case law
indicates that ``protected [conduct]' r equires a nexus with
the ``in furtherance of ' prong of [a False Claims Act] action."
McKenzie v. Bellsouth Telecomm., Inc., 219 F.3d 508, 515
(6th Cir. 2000). This inquiry involves deter mining "whether
[plaintiff 's] actions sufficiently furthered ``an action filed or
to be filed under' the [False Claims Act] and, thus, equate
to ``protected [conduct].' " Id. at 516. Section 3730(h)
specifies that "protected conduct" includes "investigation
for, initiating of, testimony for, or assistance in" a False
Claims Act suit. 31 U.S.C. S 3730(h).
Determining what activities constitute "pr otected
conduct" is a fact specific inquiry. But the case law
indicates that "the protected conduct element . . . does not
require the plaintiff to have developed a winning qui tam
action . . . . It only requires that the plaintiff engage[ ] in
``acts . . . in furtherance of an action under[the False
Claims Act].' " Yesudian, 153 F.3d at 739 (quoting 31 U.S.C.
S 3730(h)). Under the appropriate set of facts, these
activities can include internal reporting and investigation of
an employer's false or fraudulent claims. Id. at 742 ("[It]
would [not] . . . be in the interest of law-abiding employers
for the [False Claims Act] to force employees to report their
concerns outside the corporation in or der to gain
whistleblower protection. Such a requir ement would bypass
internal controls and hotlines, damage corporate efforts at
self-policing, and make it difficult for corporations and
boards of directors to discover and corr ect on their own
false claims made by rogue employees or managers."); see
also Childree v. UAP/GA Chem, Inc., 92 F .3d 1140, 1146
(11th Cir. 1996), cert. denied, 519 U.S. 1148 (1997);
Hopper, 91 F.3d at 1269 ("[P]laintiff must be investigating
matters which are calculated, or reasonably could lead to a
viable [False Claims Act] action."); Neal, 33 F.3d at 864.
"Mere dissatisfaction with one's treatment on the job is not,
of course, enough. Nor is an employee's investigation of
nothing more than his employer's non-compliance with
federal or state regulations." Y esudian, 153 F.3d at 740
16
(citing Hopper, 91 F.3d at 1269); see also Zahodnick, 135
F.3d at 914 ("Simply reporting his concern of a mischarging
to the government to his supervisor does not suffice to
establish that Zahodnick was acting ``in furtherance of ' a
qui tam action."); United States ex r el. Ramseyer v. Century
Healthcare Corp., 90 F.3d 1514, 1523 (10th Cir. 1996).
As noted, employees need not actually file a False Claims
Act suit to assert a cause of action under S 3730. Requiring
an employee to actually file a qui tam suit would blunt the
incentive to investigate and report activity that may lead to
viable False Claims Act suits. The False Claims Act was
enacted to encourage parties to report fraudulent activity
and was intended to "protect employees while they are
collecting information about a possible fraud, before they
have put all the pieces of the puzzle together ." Yesudian,
153 F.3d at 740 (citing Neal, 33 F .3d at 864).
B.
As noted, the False Claims Act also requir es employees to
prove they were discriminated against"because of " their
"protected conduct." To meet this r equirement, a plaintiff
must show his employer had knowledge that he was
engaged in "protected conduct" and that the employer
retaliated against him because of that conduct. Several
courts of appeals have held that the knowledge pr ong of
S 3730 liability requires the employee to put his employer
on notice of the "distinct possibility" of False Claims Act
litigation. Yesudian, 153 F.3d at 740; Childree, 92 F.3d at
1146; Hopper, 91 F.3d at 1269; Neal, 33 F.3d at 864. We
agree with this formulation.
An employer's notice of the "distinct possibility" of False
Claims Act litigation is essential because without knowledge
an employee is contemplating a False Claims Act suit,
"there would be no basis to conclude that the employer
harbored [S 3730(h)'s] prohibited motivation [i.e.,
retaliation]." Mann v. Olsten Certified Healthcare Corp., 49
F. Supp. 2d 1307, 1314 (M.D. Ala. 1999). Courts have
recognized "the kind of knowledge the [employer] must have
mirrors the kind of activity in which the [employee] must be
engaged. What [the employer] must know is that[the
17
employee] is engaged in protected activity .. . -- that is, in
activity that reasonably could lead to a False Claims Act
case."8 Yesudian , 153 F.3d at 742.
"Merely grumbling to the employer about job
dissatisfaction or regulatory violations does not satisfy the
requirement - just as it does not constitute protected
conduct in the first place." Id. at 743. As one court has
stated, the inquiry into whether an employee puts his
employer on notice is
[w]hether the employee engaged in conduct fr om which
a fact finder could reasonably conclude that the
employer could have feared that the employee was
contemplating filing a qui-tam action against it or
reporting the employer to the government for fraud
. . . . [L]itigation . . . [is] a "distinct possibility" only if
the evidence reasonably supports such fear; if the
evidence does not support this fear, litigation would not
have been a distinct possibility.
Mann, 49 F. Supp. 2d at 1314; see also McKenzie, 219 F.3d
at 514-15; Yesudian, 153 F.3d at 741-45; Neal, 33 F.3d at
863-865.
Whether an employer is on notice of the "distinct
possibility" of False Claims Act litigation is also a fact
specific inquiry. While "[a]n employer is entitled to treat a
suggestion for improvement as what it purports to be rather
than as a precursor to litigation," Luckey v. Baxter
Healthcare Corp., 183 F.3d 730, 733 (7th Cir.), cert. denied,
528 U.S. 1038 (1999), the employer is on notice of the
"distinct possibility" of litigation when an employee takes
actions revealing the intent to report or assist the
government in the investigation of a False Claims Act
violation.
_________________________________________________________________
8. We note that the "protected conduct" and notice requirements are
separate elements of a prima facie case of r etaliation under S 3730. But
as several circuits have recognized, the inquiry into these elements
involves a similar analytical and factual investigation. See, e.g.,
Yesudian, 153 F.3d at 742.
18
Cow.
1.
In most retaliation cases under S 3730(h), the two critical
questions are (1) what sort of activity constitutes "protected
conduct," and (2) whether the employer was on notice that
the employee was engaging in "protected conduct."9
Because the inquiry into these questions is intensely
factual, we will examine reported cases that r eview whether
an employee engaged in "protected conduct" and whether
this conduct was sufficiently linked to the investigation of
a False Claims Act suit that it put the employer on notice
of the "distinct possibility" of litigation.
In Neal, 33 F.3d 860, an employee who worked at the
Joliet Army Arsenal Plant concluded her co-workers were
falsifying ammunition test data reports. She r eported this
activity to her supervisor and to her employer's office of
legal counsel. The employer's legal counsel then notified the
United States Army which conducted an investigation and
found plaintiff 's fraud allegations wer e true. The Court of
Appeals for the Seventh Circuit found the plaintiff engaged
in "protected conduct" and put her employer on notice of
the "distinct possibility" of False Claims Act litigation when
she reported the fraud to her employer's legal counsel.
Specifically, the court noted that plaintif f "conducted her
own investigation and reported her findings through
corporate channels, leading to two additional investigations:
one by [the defendant] and a second by the Ar my." Id. at
865.
In Yesudian, 153 F.3d 731, the Court of Appeals for the
D.C. Circuit found an employee of Howar d University who
_________________________________________________________________
9. As noted a prima facie case of retaliation under S 3730 requires proof
that the plaintiff (1) engaged in "pr otected conduct," (i.e., acts done
in
furtherance of an action under S 3730) and (2) that the plaintiff 's
employer discriminated him because of his "pr otected conduct." In
proving that he was discriminated against "because of " his activities in
furtherance of a False Claims Act suit, a plaintif f must show that (1)
his
employer had knowledge that he was engaged in "pr otected conduct";
and (2) that his employer's retaliation was motivated, at least in part,
by
the plaintiff 's engaging in "pr otected conduct."
19
worked in the purchasing department engaged in"protected
conduct" when he reported to upper-level University
officials that his supervisor was engaged in fraudulent
activity. The plaintiff reported, among other things, that his
supervisor submitted false time and attendance r ecords,
received bribes from vendors, and made payments to
vendors who did not provide services to the University. The
court held the plaintiff engaged in "pr otected conduct" and
put the University on notice of the "distinct possibility" of a
False Claims Act suit because he repeatedly advised his
superiors that he had evidence of false recor ds. He wrote
several letters to his supervisors and to the University
President and Vice-President detailing what he believed was
illegal conduct that fraudulently resulted in the loss of
government money. He also collected evidence from
employees to corroborate his claims and took photographs
of evidence. The Court of Appeals for the D.C. Cir cuit held
these reporting actions put the University administration,
and plaintiff 's immediate supervisors, on notice of the
"distinct possibility" of False Claims Act litigation. Id. at
744-45; see also Hopkins v. Actions, Incorp. of Brazoria
County, 985 F. Supp. 706, 709-10 (S.D.T ex. 1997) (holding
plaintiff who reported to chairman of company that
employees were illegally using Medicare funds for payroll
costs, as well as informed him that she intended to report
this activity to the government, engaged in"protected
conduct" that put employer on notice of the "distinct
possibility" of litigation).
Not all complaints by employees to their supervisors put
employers on notice of the "distinct possibility" of False
Claims Act litigation. In Robertson, 32 F .3d 948, the Court
of Appeals for the Fifth Circuit found an employee did not
engage in "protected conduct" nor did he put his employer
on notice of potential False Claims Act litigation when he
reported to his supervisors that the company was billing
the government for various helicopter pr ojects without
properly substantiating the charges. The court noted the
plaintiff "never used the terms ``illegal,' ``unlawful' or ``qui tam
action' in characterizing his concerns about[the] charges."
Id. at 951; see also Mann, 49 F. Supp. 2d at 1307.
In Zahodnick, 135 F.3d 911, the Court of Appeals for the
Fourth Circuit found a managing engineer at IBM whose
20
job duties included assembling cost information for
proposals to the Defense Intelligence Agency did not engage
in "protected conduct" and failed to put his employer on
notice of the "distinct possibility" of a False Claims Act suit.
In Zahodnick, plaintiff engineer r eported to his supervisor
that employees were overcharging the government for the
amount of time they worked on government pr ojects. The
court stated,
The record discloses that Zahodnick mer ely informed a
supervisor of the problem and sought confir mation that
a correction was made; he never informed anyone that
he was pursuing a qui tam action. Simply r eporting his
concern of mischarging to the gover nment to his
supervisor does not establish that Zahodnick was
acting "in furtherance of " a qui tam action.
Id. at 914 (citing Robertson, 32 F .3d at 951).
Last year in McKenzie, 219 F.3d 508, the Court of
Appeals for the Sixth Circuit held a dispatcher for
BellSouth, whose regular job duties included pr ocessing
complaints about telephone service and closing "trouble
reports" once telephone repairs wer e made, did not engage
in "protected conduct" nor put her employer on notice of
potential False Claims Act litigation when she complained
to her supervisors that BellSouth was falsifying r eports. It
was BellSouth's policy that if repairs wer e not made within
twenty-four hours of being reported, the customer was
entitled to a refund for the period of time that telephone
service was disrupted. Plaintiff alleged that various
employees falsified time reports when outages were
reported and when repairs were completed so that
BellSouth could avoid paying reimbursements to
customers, including several government agencies. Plaintiff
complained to her supervisors about this practice and on
one occasion showed her supervisor a newspaper article
about a consumer fraud investigation by the Florida state
attorney general. She also refused to falsify repair records.
The court found the plaintiff did not engage in "protected
conduct" reasoning that "when McKenzie br ought her
complaints to the attention of the BellSouth auditor and
her supervisors, legal action was not a reasonable or
distinct possibility . . . because [her complaints were] not
21
sufficiently connected to exposing fraud or false claims
against the federal government." Id. at 516-17. The court
stated the newspaper article McKenzie showed her
supervisor "did not relate to a qui tam action and only
discussed a consumer fraud investigation by the Florida
state attorney general." Id. at 518. Additionally, the article
was widely circulated and disseminated thr oughout the
office. The court also reasoned that "although the
newspaper article distributed and posted by McKenzie
shows awareness of consumer fraud, the ``in furtherance of '
language requires more than mer ely reporting wrongdoing
to supervisors." Id. at 516. The court stated that McKenzie's
"numerous complaints on the matter wer e directed at the
stress from and pressure to falsify records, not toward an
investigation into fraud on the federal gover nment." Id. at
517. Therefore, McKenzie did not put BellSouth on notice of
the "distinct possibility" that she might pursue a False
Claims Act suit or inform the government that BellSouth's
fraudulent conduct was causing an economic loss to the
government.
These cases are illustrative of the general rule that a
successful cause of action under S 3730 r equires an
employee to prove that he engaged in "pr otected conduct,"
that is conduct in furtherance of a False Claims Act suit,
and that his employer was on notice of the "distinct
possibility" of False Claims Act litigation and r etaliated
against him because of his "protected conduct." As noted,
this is a fact specific inquiry.
2.
Although reporting "fraudulent" and "illegal" activity to an
employer may satisfy the "protected conduct" and notice
requirements in many S 3730(h) cases, in some instances
where an employee's job duties involve investigating and
reporting fraud, the employee's burden of proving he
engaged in "protected conduct" and put his employer on
notice of the "distinct possibility" of False Claims Act
litigation is heightened. As the Court of Appeals for the
Fourth Circuit held in Eberhar dt v. Integrated Design &
Constr., Inc., 167 F.3d 861, 868 (4th Cir. 1999), "If an
employee is assigned the task of investigating fraud within
22
the company, courts have held that the employee must
make it clear that the employee's actions go beyond the
assigned task [in order to allege retaliatory discharge under
S 3730(h)]." The court stated that when an employee is
assigned the task of investigating fraud, "such persons
must make clear their intentions of bringing or assisting in
a [False Claims Act] action in order to overcome the
presumption that they are merely acting in accordance with
their employment obligations." Id. This r equirement is
consistent with the understanding that the employer must
be put on notice that the employee is contemplating a
potential False Claims Act suit before liability will attach
under S 3730(h).
In Ramseyer, 90 F.3d at 1523, the Court of Appeals for
the Tenth Circuit found a plaintif f who was the clinical
director of a mental health facility, whose r esponsibilities
included monitoring compliance with applicable Medicaid
requirements, did not engage in "pr otected conduct" when
she reported to her superiors that the facility was not
complying with various Medicaid requirements. The court
reasoned that these reports to her supervisors, without
more, did not put defendants on notice of a potential qui
tam suit because the reporting was part of plaintiff 's job
duties. The court stated,
Plaintiff never suggested to defendants that she
intended to utilize [their] non compliance in
furtherance of a [False Claims Act] action. Plaintiff gave
no suggestion that she was going to report such
noncompliance to government officials, nor did she
provide any indication that she was contemplating her
own qui tam action. Rather, the monitoring and
reporting activities described in plaintif f 's complaint
[i.e., reporting to her superiors] wer e exactly those
activities plaintiff was required to undertake in
fulfillment of her job duties, and plaintif f took no steps
to put defendants on notice that she was acting"in
furtherance of " a [False Claims Act ] action.
Id. at 1523 (internal citations omitted).
In Robertson, 32 F.3d at 952, the Court of Appeals for the
Fifth Circuit held a senior contract administrator with the
23
Army Helicopter Improvement Program, who was
responsible for ensuring that costs wer e properly charged to
the government and requests for additional government
funding were properly substantiated, did not engage in
"protected conduct" when he reported to his superiors that
certain requests for additional government funding were not
properly substantiated. In Robertson, plaintiff investigated
and tried to verify the requests for funding and over the
course of several months reported his findings to his
superiors. The court found this activity was not pr otected
because plaintiff " ``did nothing to r ebut his supervisor's
testimony regarding their lack of knowledge that he was
conducting investigations outside the scope of his job
responsibilities in furtherance of a qui tam action.' " Id.
(quoting district court opinion). The court r easoned that
plaintiff "never characterized his concer ns as involving
illegal, unlawful, or false-claims investigations . . . . [There
is] no evidence that [plaintiff] expr essed any concerns to his
superiors other than those typically raised as part of a
contract administrator's job." Id.
Even though an employee's job duties include
investigating or reporting fraud, the employee may still
engage in "protected conduct" and put his employer on
notice of the "distinct possibility" of False Claims Act
litigation. In Eberhardt, 167 F .3d at 868, the Court of
Appeals for the Fourth Circuit stated an employee can put
his employer on notice
by expressly stating an intention to bring a qui tam
suit, . . . [or by engaging in] any action which a fact
finder reasonably could conclude would put the
employer on notice that litigation is a reasonable
possibility. Such actions would include, but ar e not
limited to, characterizing the employer's conduct as
illegal or fraudulent or recommending that legal
counsel become involved. These types of actions ar e
sufficient because they let the employer know,
regardless of whether the employee's job duties include
investigating potential fraud, that litigation is a
reasonable possibility.
In Eberhardt, 167 F.3d at 868, a senior staff vice-
president whose job duties included organizing his
24
employer's accounting system engaged in "pr otected
conduct" and put his employer on notice of the"distinct
possibility" of False Claims Act litigation when he began
investigating his employer's charges to the United States
State Department for work not actually perfor med.
Although plaintiff 's job duties required him to investigate
fraud, the court found he engaged in "protected conduct."
The court reasoned plaintiff reported to his employer that
the charges were "illegal." Id. Additionally, he informed his
employer that it was advisable to obtain legal counsel. The
court concluded these activities were sufficient to put his
employer on notice of potential False Claims Act litigation.
Id.; see also Mann, 49 F. Supp. 2d at 1316 (employee whose
job duties included reporting and investigating compliance
with Medicare regulations did not put employer on notice of
False Claims Act litigation when she reported billing
overcharges to supervisor because this r eporting was part
of her regular job duties, however when she r eported this
information to her employer's legal department she engaged
in protected conduct).
D.
We fail to see how Hutchins engaged in "pr otected
conduct." Similarly, we do not believe that W ilentz,
Goldman & Spitzer was on notice of the "distinct
possibility" of False Claims Act litigation and r etaliated
against Hutchins because of his "protected conduct."
Hutchins never threatened to report his discovery of the
firm's Westlaw and LEXIS billing practices to a government
authority, nor did he file a False Claims Act suit until after
he was terminated. Childree, 92 F.3d at 1146. Furthermore,
Hutchins never informed his supervisors he believed this
billing practice was "illegal," Ramseyer , 90 F.3d at 1523, or
that the practice was fraudulently causing gover nment
funds to be lost or spent. Robertson, 32 F .3d at 951. Nor
did he advise his employer that corporate counsel be
involved in the matter. Eberhardt, 167 F.3d at 869. Rather,
in a single memorandum he stated, "I was told thefirm has
a policy whereby actual Westlaw and LEXIS expenses are
multiplied by 1.5 in order to arrive at the amount the client
is invoiced for." As held in Zahodnick , 135 F.3d at 914,
25
"simply reporting [a] concern of mischarging . . . does not
establish that [plaintiff] was acting in furtherance of a qui
tam action." Hutchins's memorandum mer ely stated, as a
matter of fact, the firm's policy of passing on Westlaw
charges to clients. The memorandum did not inform
Wilentz, Goldman & Spitzer that he intended to use this
information in furtherance of a qui tam action or that he
was going to report it to government authorities because he
believed the law firm was defrauding the government.
Robertson, 32 F.3d at 952; Mikes, 889 F. Supp. at 753
(plaintiff must show employer was on notice that she was
"laying the groundwork for legal action").
Nor did Hutchins's complaint to Marie Henneberry about
the practice of paralegals performing secretarial tasks put
the law firm on notice of the "distinct possibility" of False
Claims Act litigation. Hutchins approached Henneberry
only to "confirm basically that [another paralegal] had
talked to her about [using paralegals for secr etarial tasks],"
never advising Henneberry that he thought the practice was
illegal or fraudulently causing loss of gover nment funds.10
Similar to the plaintiff in Zahodnick, Hutchins "merely
informed a supervisor of a problem and sought
confirmation that a correction was made." 135 F.3d at 914.
As held in Luckey, "An employer is entitled to treat a
suggestion for improvement as what it purports to be rather
than a precursor to litigation." 183 F .3d at 733. Because
Hutchins's single discussion with Henneberry did not allege
fraud, illegality or a potential False Claims Act suit, we fail
to see how the conversation put Wilentz, Goldman &
Spitzer on notice of the "distinct possibility" of False Claims
Act litigation. McKenzie, 219 F.3d at 516 (plaintiff "must
sufficiently allege activity with a nexus to a qui tam action,
or fraud against the United States Government").
Hutchins claims that aside from his "r eporting" (the
memorandum to DeLucia and his conversation with
Henneberry), he was involved in the initial investigation of
a potential False Claims Act suit. See Y esudian, 153 F.3d at
740 (Section 3730(h) "protect[s] employees while they are
_________________________________________________________________
10. Hutchins told Henneberry that he thought the practice was
"unethical."
26
collecting information about a possible fraud, before they
have put all the pieces of the puzzle together ."). He
contends his discussion with Marie Henneberry about the
Westlaw and LEXIS charges and his r equest for billing
documents from the accounting department constituted
"investigation" that put Wilentz, Goldman & Spitzer on
notice of the "distinct possibility" of False Claims Act
litigation. We disagree.
Hutchins's "investigation" was in response to a specific
assignment from Louis DeLucia who asked him to
determine why certain clients' computerized r esearch costs
were so high. Hutchins's inquiry to Henneberry about the
practice was not the result of his independent suspicions
that the firm was involved in fraud. As held in Eberhardt,
167 F.3d at 868, if an employee is assigned the task of
investigating fraud within the company, that employee
must make it clear that his investigatory and r eporting
activities extend beyond the assigned task in or der to allege
retaliatory discharge under S 3730(h). We see no evidence
that Hutchins engaged in any conduct, beyond what was
specifically asked of him in accordance with his job duties,
that gave any indication that he was investigating fraud for
a potential False Claims Act suit. He did not communicate
that he was going to report the activity to government
officials nor that he was contemplating his own qui tam
suit. Robertson, 32 F.3d at 952. He did not use the terms
"illegal" or "fraud" nor did he attempt to discuss the billing
practice with corporate counsel. Eberhar dt, 167 F.3d at
869; Neal, 33 F.3d at 865. Rather , he merely performed the
task he was asked to complete by his supervisor . Ramseyer,
90 F.3d at 1523; Mann, 49 F. Supp. 2d at 1316.
Hutchins contends his "investigation" into W estlaw and
LEXIS billing was not part of his job duties. He ar gues that
unlike the plaintiffs in Robertson, Ramseyer and Eberhardt,
his job description as a paralegal did not contain
"monitoring or reporting" activities, nor was he a "fraud
investigator." Nonetheless, his inquiry into the Westlaw and
LEXIS billing was in furtherance of his job duties. Because
he performed the investigation at the direct request of his
supervisor, there was no reason to believe that Hutchins
would use the information he obtained to bring a qui tam
27
suit. Eberhardt, 167 F.3d 868 ("[An] employee must make it
clear that [his] actions go beyond the assigned task.");
Robertson, 32 F.3d at 952 (employee not engaged in
"protected conduct" because his "actions were consistent
with the performance of his [job] duty").
As S 3730(h) makes clear, without notice of an employee's
intent to file or assist in a False Claims Act suit, an
employer does not engage in prohibited r etaliatory conduct
under S 3730(h) when it terminates or demotes that
employee. McKenzie, 219 F.3d at 516. Here, Wilentz,
Goldman & Spitzer was not on notice that Hutchins was
contemplating a qui tam suit. Regardless of his job
description, Hutchins's "investigation" into the firm's billing
practice resulted from a direction fr om his employer.
Finally, we do not believe Hutchins's request for billing
documents from the accounting department was pr otected
investigatory conduct that put the law fir m on notice of the
"distinct possibility" of False Claims Act litigation and
therefore evidence that the law fir m retaliated against him.
As the record makes clear, W ilentz, Goldman & Spitzer
decided to fire Hutchins before he r equested these
documents. Because the law firm was unawar e of
Hutchins's request for these documents when it decided to
fire him, it did not retaliate against him in violation of
S 3730(h) because of his "investigation" into the firm's
accounting files.
Hutchins has failed to assert a prima facie case of
retaliatory discharge under S 3730(h). By failing to prove
that he engaged in "protected conduct" and that he put his
employer on notice of the "distinct possibility" of False
Claims Act litigation, Hutchins, as a matter of law, cannot
prove a violation of S 3730(h). W e agree with the District
Court that Wilentz, Goldman & Spitzer did not terminate
Hutchins in retaliation for his "investigation" in furtherance
of a False Claims Act suit.
V.
For the foregoing reasons, we will affir m the District
Court's dismissal of Hutchins's qui tam claims. We also will
28
affirm its grant of summary judgment for W ilentz, Goldman
& Spitzer on the retaliatory discharge claims.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
29