United States Ex Rel. Schweizer v. Océ North America, Inc.

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
)
UNITED STATES ex rel. )
Stephanie Schweizer et al., )
)
Plaintiffs, )
)
v. ) Civil No. 06-648 (RCL)
)
OCÉ NORTH AMERICA, INC. et al., )
)
Defendants. )
)
MEMORANDUM OPINION
Plaintiff Stephanie Schweizer was terminated after notifying supervisors about her
company’s violation of government contracts. She subsequently brought these allegations to the
government, which ultimately reached a proposed settlement with the company—a settlement of
which Ms. Schweizer would stand to receive a certain percentage. In this lawsuit, she challenges
the settlement, and alleges that she was terminated in retaliation for her whistle-blowing. The
case is before the Court on remand to determine whether the settlement is “fair, adequate, and
reasonable” after a hearing pursuant to 31 U.S.C. § 3730(c)(2)(B), and to rule on “the ultimate
question [of] ‘whether a reasonable jury could infer . . . retaliation from all the evidence.’” U.S.
ex rel. Schweizer v. Océ N.V., 677 F.3d 1228, 1237, 1241 (D.C. Cir. 2012), rev’g 681 F. Supp. 2d
64 (D.D.C. 2010), and rev’g 772 F. Supp. 2d 174 (D.D.C. 2011). Because the Court finds the
proposed settlement is “fair, adequate, and reasonable,” the government’s motion to dismiss Ms.
Schweizer’s qui tam claims, ECF No. 63, is GRANTED. Because a reasonable jury could infer
that Ms. Schweizer’s termination was retaliatory, defendants’ supplemental motion for summary
judgment, ECF No. 124, as to Ms. Schweizer’s retaliation claim is DENIED.
I. BACKGROUND
A. Factual Background
In late 2004, plaintiff Stephanie Schweizer went to work for defendant Océ North
America, a private company, supervising its fulfillment of certain government contracts. U.S. ex
rel. Schweizer, 677 F.3d at 1229-30. Contracts between Océ and the General Services
Administration contained “price reduction” clauses, requiring Océ to provide government
customers with the same discount offered to certain private sector purchasers. Id. at 1229 (citing
48 C.F.R. § 552.238–75). These contracts also contained “country-of-origin” clauses, requiring
Océ to sell to the government only goods made in the United States or other countries designated
under the Trade Agreements Act, 19 U.S.C. § 2501 et seq. Schweizer, 677 F.3d at 1229.
1. Ms. Schweizer’s Prima Facie Case of Retaliation
The Court of Appeals, reviewing the same record in the light most favorable to Ms.
Schweizer (the non-movant), found that Ms. Schweizer had successfully set forth a prima facie
case of retaliatory termination:
In early 2005 Schweizer began to suspect that Océ was violating the price
reduction clauses. Through discussions with several co-workers, she learned that
Océ representatives had been offering private sector customers significant ad hoc
discounts. Her further investigation revealed that Océ was not passing these
discounts on to the government, as the price reduction clauses required. If
accurate, these findings meant that Océ regularly overcharged government
agencies.
Schweizer sought to correct the violations, consistent with her duties as
GSA contracts manager. She provided [her immediate supervisor, Ronald] Frost
with records documenting the private sector discounts, which she said were
causing Océ “not to be in compliance with the [contracts].” Frost allegedly
responded by forbidding Schweizer from investigating the matter and stating that
management would “destroy” her if she disobeyed.
A second set of concerns arose in November 2005 as Océ was planning to
merge with Imagistics, a rival print and document management company. In
preparation for the merger, Océ officials asked Schweizer to determine whether
Imagistics’ products complied with the contracts’ country-of-origin clauses.
Schweizer replied that they did not. She explained in an e-mail to Bryan
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Beauchamp, Océ's vice president of business development, that most Imagistics
products were manufactured in China, a country not certified under the Trade
Agreements Act. Beauchamp agreed with Schweizer’s assessment. Despite this
understanding, Frost directed Schweizer to add Imagistics’ products to Océ’s
government contract listings just a few days later. When Schweizer refused, Frost
allegedly told her not to pursue the issue any further and again threatened to
“destroy” her if she did not comply.
Schweizer did not heed Frost’s warning. Instead, she contacted
Beauchamp, Frost’s superior, in early December 2005. Schweizer informed
Beauchamp of Frost’s actions, her pricing investigation, and her belief that Océ
was violating the False Claims Act. She also alleged that many of Océ's own
products were made in China, rather than in the Netherlands as stated in the
contracts. Beauchamp referred Schweizer to Océ’s human resources director,
Gerald Whelan, who then directed her to meet with in-house counsel, Dan Harper.
That meeting resulted in a further referral to Kenneth Weckstein, Océ’s outside
counsel for government contracting issues. In each of these conversations
Schweizer reiterated her claim that Océ was violating the False Claims Act.
On December 6, 2005, Schweizer made a final, emotional plea to
Beauchamp. She complained that the meetings with Whelan, Harper, and
Weckstein were not productive, and that Beauchamp was “her last hope in terms
of . . . saving the company” from “legal trouble.” Beauchamp suspended
Schweizer two days later, and terminated her employment on December 15. In a
letter memorializing these actions, Beauchamp wrote that Schweizer had engaged
in “inappropriate communications with [her] colleagues and supervisors”;
“refused to follow orders”; ignored “the chain of command”; and “failed to
maintain necessary standards of workmanship and productivity.” The letter added
that Océ would “continue to investigate” Schweizer's “numerous complaints . . .
about illegal conduct,” including “fraud and crimes” committed in conjunction
with the company’s “Federal Supply Schedule contract.” It closed by stating
While Océ's initial response to your allegations is that they are without
basis, you may want to bring your concerns to the attention of the
Inspector General at the U.S. General Services Administration (“GSA”).
Separately, Océ intends to report your allegations to the GSA Inspector
General.
Schweizer, 677 F.3d at 1230-31.
2. Océ’s Alternative, Non-Discriminatory Basis For Termination
The Court of Appeals also found, based on the same record before this Court, that Océ
had “presented an alternative, non-discriminatory basis for terminating her employment.” Id. at
1241. Because the circuit did not describe this in detail, this opinion will review the evidence
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regarding Ms. Schweizer’s conduct in the months leading up to her termination that provides the
defendant with an alternative, non-discriminatory basis for termination.
i. Ms. Schweizer’s Alleged Failure to Timely Complete Her Duties
In early 2005, Ms. Schweizer was tasked with facilitating the novation of a contract.
Def.’s Statement of Undisputed Material Facts ¶ 10, ECF No. 124; Schweizer Dep., Ex. D,
176:2-6. In August, Mr. Frost reprimanded Ms. Schweizer for failing to complete this task in a
timely manner and reassigned it to her co-worker, Kathleen Carey. Def.’s Statement ¶¶ 10-11;
Pl.’s Resp. to Def.’s Statement ¶ 11; Schweizer Dep. 176:7-10 (acknowledging that Mr. Frost
“repeatedly” asked her about the status of her completing the assignment.); id. at 201:1-14
(acknowledging that Mr. Frost communicated to her that she needed to process contract
modifications in a more timely manner, and that if a contract modification couldn’t be completed
within 48 hours, she was to let him know so he would “know what was going on”).
ii. Ms. Schweizer’s Unexcused Absence
Ms. Schweizer failed to report to work on Monday, October 10. Mr. Frost e-mailed her
to learn why she was absent. Ms. Schweizer responded the next day, stating that she believed
(mistakenly) that the company had been closed for a holiday. Defs.’ Statement ¶¶ 24-25; Pl.’s
Resp. ¶¶ 24-25. The Court takes judicial notice of the fact that October 10, 2005 was Columbus
Day, a federal holiday. See 2005 Federal Holidays,
http://archive.opm.gov/Operating_Status_Schedules/fedhol/2005.asp (last accessed, June 18,
2013).
iii. Ms. Schweizer’s Conflicts With Co-Workers
In the Spring of 2005, Ms. Schweizer complained to Mr. Frost on several occasions that
her co-worker Kathleen Carey was “sabotaging her work.” Pl.’s Resp. ¶ 12; see also Def.’s
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Statement ¶ 12. The parties dispute the nature of this complaint and how it was received.
Compare Def.’s Statement ¶ 12 (“[I]n Spring 2005, approximately once per week, Schweizer
began making vague allegations that other employees were sabotaging her work: yelling and
using offensive language as she did so. In response to each report, Frost asked Schweizer to
provide details or some evidence that her co-workers were taking the actions of which she
accused them. Schweizer never provided that information.”), with Pl.’s Resp. ¶ 12 (denying that
Ms. Schweizer made such reports once per week or that she used offensive language or yelled;
explaining that Ms. Carey wrongly altered some of Ms. Schweizer’s completed work; and
insisting that Ms. Schweizer provided specific evidence in support of her allegations to Mr. Frost
on each occasion).
In April 2005, Ms. Schweizer had a discussion with Mr. Frost about her co-worker Lee
Metzger and whether he had been “spreading rumors” about her. Pl.’s Resp. ¶ 14; see also
Def.’s Statement ¶¶ 13-14. The parties disagree about the circumstances of this discussion.
Compare Def.’s Statement ¶¶ 13-15 (stating that after Schweizer “went into Frost’s office and
announced her intent to lodge a formal complaint against Lee Metzger,” whom she accused of
“spreading rumors and speaking disparagingly about [her] to other employees,” Frost
“investigated the matter and could not find any support for Schweizer’s allegations.”), with Pl.’s
Resp. ¶¶ 13-15 (stating that Schweizer was “called into Frost’s office” where Frost and another
co-worker informed her that Metzger was “spreading rumors about her” and “asked her to file a
complaint” but that Schweizer “did not want to file a complaint”).
In May 2005, Ms. Schweizer had a confrontation with her co-worker Kathleen Carey
regarding alleged negative comments she had made about Ms. Schweizer’s performance. Pl.’s
Resp. ¶ 16; Def.’s Statement ¶ 16. During the confrontation, Ms. Carey called Mr. Frost. Pl.’s
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Resp. ¶ 17; Def.’s Statement ¶ 17. Ms. Schweizer later repeated this complaint about Ms. Carey
to Mr. Frost, and further alleged that Ms. Carey had “entered into her office to modify
documents affiliated with the GSA Schedule contracts.” Pl.’s Resp. ¶ 19. On September 2, Ms.
Schweizer had a “heated discussion” with Mr. Frost in his office in which she “raised [her]
voice” while telling Mr. Frost that Ms. Carey “has falsified documents to the government” and
that “[i]t was a very serious problem that he” did not “want to dwell on this.” Schweizer Dep.
162:4, 163:15-164:2, 170:3-4. During the meeting, Mr. Frost told Ms. Schweizer that there were
aspects of her performance that needed improvement, and that “he was not pleased.” Schweizer
Dep. 199:2-11. Following this meeting, Mr. Frost sent Ms. Schweizer home for the day and e-
mailed her documenting the incident, stating:
Your behavior . . . in my office this day is un . . . acceptable. I have asked you on
numerous occasions to move forward and lets get busy on our hard work at hand.
You continue to come in my office to discuss the same issues. I do not . . . accept
that behavior. If you can move forward and work on the task at hand please do so
if not please let me know immediately. I asked you to leave the building and cool
off. If you can[‘]t then you need to go home and think about it over the weekend.
I will not continue to spend valuable time on the same issues.
Email re: Friday, Dated Sept. 2, 2005, 11:53 AM, from Ronald Frost to Stephanie Schweizer,
Defs.’ Ex. J, ECF No. 124-10; see also Schweizer Dep. at 162:17-163:4 (authenticating the
document). The parties disagree regarding the other circumstances of these events. Compare
Def.’s Statement ¶¶ 16-21 (stating that Schweizer initially “verbally and physically confronted
Carey”; that, when called by Ms. Carey, Mr. Frost confirmed that she had not denigrated Ms.
Schweizer; that, after this call to Mr. Frost, Ms. Schweizer proceeded to “yell and curse” at Ms.
Carey; that Ms. Schweizer subsequently complained to Mr. Frost that Ms. Carey had “falsif[ied]
documents and br[oken] into [Ms.] Schweizer’s office to destroy evidence of her undermining
activities, and to take paper from her printer”; and that, in September, Ms. Schweizer “threw a
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screaming tantrum in Frost’s office” alleging that her co-workers were “sabotaging her work”),
with Pl.’s Resp. ¶¶ 16-20 (stating that Ms. Carey provoked the confrontation by sending Ms.
Schweizer “multiple emails suggesting that she was not doing her job”; that Ms. Schweizer
“approached Carey and requested that she stop suggesting that Schweizer is not doing her job”;
that, when Ms. Carey called Mr. Frost, he “agreed with Schweizer that Carey had made negative
comments about Schweizer” (emphasis added); and that Ms. Schweizer never accused Ms. Carey
of taking paper from her printer or breaking into her office).
In November, Ms. Schweizer had a conversation with her co-worker Lee Metzger after
she had heard others making comments about “[Mr. Metzger’s] comments about her.” See Email
Chain re: Tues. Nov 22nd Issues, between Stephanie Schweizer and Ronald Frost, Dated Nov. 23,
2005, Defs.’ Ex. M, ECF. No. 124-13; but see Schweizer Dep. 316:3-317:8 (reviewing without
confirming or denying the authenticity of the document, nor accuracy of the statements). In a
subsequent e-mail sent by Mr. Frost to Ms. Schweizer regarding this conversation, Mr. Frost
wrote that Mr. Metzger had called him to complain that Ms. Schweizer had “initiated” a
“confrontation” in his office; that he had “no idea what prompted this but again this has caused a
riff [sic] in the office”; that the confrontation was “out of line”; that he had previously “cautioned
and counseled” her on her “chain of command and also on not creating unwarranted issues in the
office that have no basis,” and that he had told her “on numerous occasions that if [she] ha[d]
issues to bring them to [him].” Defs.’ Ex. M. Ms. Schweizer explained her conversation with
Mr. Metzger in her e-mail response to Mr. Frost, stating “I don’t appreciate his behavior and un
professionalism [sic]. . . . I have a right to tell him to lay off and that is all I did.” Id. (emphasis
added).
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iv. The Termination
Mr. Frost claims that he held a face-to-face meeting with Ms. Schweizer on November 29
during which he informed her that he was going to work with the human resources department to
prepare a “letter of concern” to address Schweizer’s “abusive conduct and poor work
performance.” Defs.’ Statement ¶ 27. Ms. Schweizer denies this meeting occurred. Pls.’ Resp.
¶ 27. Two days later, Mr. Frost e-mailed Jerry Whelan, Director of Human Resources, with a
draft letter (to be sent to Ms. Schweizer) listing several problems with her performance, and
stating that if her performance did not improve “substantially within thirty days,” her
employment might be terminated. E-mail re: draft of issues to write Stephanie up, from Ronald
Frost to Jerry Whelan, dated Dec. 1, 2005, 12:17 PM, Defs.’s Ex. N, ECF No. 124-14. A few
days later, Ms. Schweizer called Bryan Beauchamp, Mr. Frost’s supervisor. Defs.’ Statement ¶¶
35-38. Ms. Schweizer later acknowledged that she was “utterly distraught” and “absolutely
devastated” when she made the call, and that she had “probably had a glass or two of wine.”
Schweizer Dep. 280:20-21, 281:1-2; see also id. at 280:3-8 (“Q: Were you drunk? A: I wouldn’t
say that. I was utterly, utterly devastated. Q: You say you wouldn’t say that. Were you impaired?
A: I was impaired by my devastation.”). Ms. Schweizer discussed the alleged violations of the
GSA contract, and complained to Mr. Beauchamp that “they were going to fire [her] and . . . that
they were going to try to destroy [her], as Mr. Frost said they were going to do.” Schweizer Dep.
281:10-13; Def.’s Statement ¶ 37. Otherwise, the parties sharply disagree about the subject of
the conversation. Compare Defs.’ Statement ¶¶ 35-38 (stating that Ms. Schweizer called
Beauchamp “as her last hope”; that Beauchamp believed that she was inebriated or “not in a
clear mental state”; that she accused Mr. Frost of carrying on an affair with a former employee;
that she told him that her co-workers “were saying that Beauchamp was a racist”; and that she
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referred to “people that you can’t see but talk to you”), with Pl.’s Resp. ¶ 36-38 (stating that Ms.
Schweizer informed Beauchamp “of the detailed allegations of fraud that she made to Océ’s
outside counsel,” and disputing the remainder of Mr. Beauchamp’s testimony regarding the
conversation as “self-serving”).
A few days later, Schweizer was suspended with pay. See Letter from Bryan Beauchamp
to Stephanie Schweizer, Dated Dec. 15, 2005, Def.’s Ex. P, ECF No. 124-14; Schweizer Dep.
286:9-12. A week later, Mr. Beauchamp sent a letter to Ms. Schweizer terminating her
employment. Def.’s Ex. P. The letter noted that Ms. Schweizer was an employee at will, and
thus could be terminated for “any reason or no reason, consistent with public policy.” Def.’s Ex.
P. Nonetheless, the letter summarized the events described above, 1 and then stated which of
Océ’s Standards of Conduct Ms. Schweizer allegedly violated:
Among other things, you have engaged in indecent conduct (repeated cursing and
yelling at other employees). You have refused to follow orders from your
supervisor and acted insubordinately to your supervisor. And you have failed to
maintain necessary standards of workmanship and productivity. . . .
Defs.’ Ex. P.
1
The letter summarizes those events as follows:
On Tuesday, December 6, 2005, you called me and we spoke for more than 30 minutes.
During that call you were incoherent and you cursed repeatedly. Based on this unprofessional
conduct, I took action to suspend you with pay until a decision was made about whether further
action was necessary. . . .
Your call . . . was not the first time that you acted unprofessionally . . . . On several occasions
since at least April 2005, you have been counseled about inappropriate communications with your
colleagues and supervisions. Despite the counseling and warnings, the complaints about your
behavior have continued. In September, you screamed and cursed at Ron Frost in the office. On
several occasions you screamed and cursed at Kathy Carey. These incidents were witnessed by
other employees. After the September incident with Mr. Frost, he sent you home for the day. He
also sent you an email on September 2, 2005, noting that unprofessional conduct would not be
tolerated. You received another warning after your enraged and unprofessional confrontation with
Lee Metzger on November 22, 2005. Your subsequent outburst with me indicates that you did not
take seriously Mr. Frost’s prior admonitions.
Defs.’ Ex. P.
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v. Océ’s Disclosure to GSA
On the same day Mr. Beauchamp sent the termination letter to Ms. Schweizer, Océ’s
corporate counsel sent the Inspector General of the GSA a letter notifying them that Ms.
Schweizer had reported “wrongdoing” regarding two contracts, but insisting that there was “no
reason to believe that there has been any wrongdoing regarding” those contracts. Letter from
Scott R. Hawthorn to Brian D. Miller, Dec. 15, 2005, Defs.’ Ex. Q, ECF No. 124-17.
vi. Océ’s Employee Discipline and Termination Policy
Océ’s Human applicable Resources Policy provides that:
[U]nless the conduct in question is extreme, an individual’s employment is not to
be terminated before he/she is given a chance to correct the behavior. . . .
If, however, after investigating considering the circumstances, the Company
determines that the conduct in question is condemnable, then the individual’s
employment is terminated without being given a chance to correct the behavior. .
..
While the severity of the conduct and other relevant considerations may result
in an escalation of the process, normally the initial appropriate corrective is
either a verbal or written reprimand. If there is a reoccurrence of the conduct, the
Company escalates the corrective action to the next level.
Human Resources Policy #5.2, Effective Date 12/1/03, Def.’s Ex. G, ECF No. 124-7. The
Addendum to this policy further provides:
[A]ny act which causes, or might cause harm to the Company or its employees, or
which interferes with the rights or property interests of the Company or its
employees, may subject the offender to disciplinary action which may include
discharge, depending on the severity of the infraction.
The following list is not meant to be all-inclusive, but it contains examples
which experience has shown violate the general principles stated above. . . .
...
2. Fighting, assault, threatening or causing bodily injury to others.
3. Criminal, immoral, or indecent conduct.
4. Refusal to accept or follow orders from proper authority, or any other form
of insubordination, such as cursing a supervisor.
...
10. Careless or inefficient performance of duties, including failure to maintain
standards of workmanship or productivity.
...
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13. Excessive absence or tardiness, failure to report to work without a
satisfactory reason, or failure to report absence or tardiness.
...
17. Sexual or abusive harassment of fellow employees.
Id.
B. Procedural Background
Schweizer filed a three-count complaint against Océ in April 2006. The first two
counts rely on the False Claims Act’s qui tam provisions, which permit private
citizen “relators” to sue on behalf of the United States. . . . The third count states a
claim for retaliation under [the same statute], which prohibits employers from
discriminating against an employee “because of lawful acts done by the employee
. . . in furtherance of an action under this section.” . . . . Specifically, Count III
asserts that Océ fired Schweizer as a result of her pricing and product sourcing
investigations. Schweizer filed an amended complaint in December 2006, which
added Océ employee Nancy Vee as a co-plaintiff on Counts I and II.
The government declined to intervene in the case after conducting an
extensive investigation of Schweizer’s qui tam claims. . . . Nonetheless, it
remained an active participant in settlement discussions. These talks came to
fruition in September 2009, when Océ, Vee, and the government—but not
Schweizer—reached an agreement to dispose of Counts I and II. The agreement
required Océ to pay $1.2 million, plus interest, to the government, with nineteen
percent of that total set aside for Schweizer and Vee. [See Settlement Agreement
3, ECF No. 68-1.] In return, Océ received a partial release from liability and a
promise that the government would move to dismiss Counts I and II of the
amended complaint. [Id.] The government filed its notice of intervention and
corresponding motion to dismiss on September 8, 2009. [ECF Nos. 63 & 64.]
Schweizer, 677 F.3d at 1231-32 (some internal quotations and citations omitted). The settlement
agreement further provides that the allocation of the nineteen percent between Ms. Schweizer
and Ms. Vee shall be determined by this Court. See Settlement Agreement 3, ECF No. 68-1. At
the hearing conducted on July 10, 2013, the Court learned that the settlement has already been
paid, and an allocation between the two plaintiffs has already been made.
This Court dismissed Counts I and II without evaluating the proposed settlement, finding
that “the government has an unfettered right to dismiss’ a qui tam suit,” U.S. ex rel. Schweizer v.
Océ, N.V., 681 F. Supp. 2d 64, 65 (D.D.C. 2010) (quoting Hoyte v. Am. Nat’l Red Cross, 518
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F.3d 61, 65 (D.C. Cir. 2008), and granted Océ’s motion for summary judgment on Count III,
finding that Ms. Schweizer had failed to engage in any protected activity upon which a
retaliation claim might have been built. U.S. ex rel. Schweizer v. Océ N. Am., Inc., 772 F. Supp.
2d 174 (D.D.C. 2011).
The Court of Appeals reversed on all counts. Schweizer, 677 F.3d 1228. The circuit held
that it was error to dismiss the qui tam claims without determining whether the proposed
settlement agreement was “fair, adequate, and reasonable” after a hearing pursuant to 31 U.S.C.
§ 3730(c)(2)(B). Schweizer, 677 F.3d at 1237. And, the circuit held that Ms. Schweizer had
successfully stated a prima facie retaliation claim, and that Océ had presented “an alternative,
non-discriminatory basis for terminating her employment,” leaving only “the ultimate question
whether a reasonable jury could infer retaliation from all the evidence.” Id. at 1241 (internal
modifications and quotations omitted).
A hearing on the proposed settlement pursuant to 31 U.S.C. § 3730(c)(2)(B) was
conducted on July 1, 2013. A hearing on the retaliation claim was conducted on July 10, 2013.
II. LEGAL STANDARD
A. 31 U.S.C. § 3730(c)(2)(B) (False Claims Act Settlement Approval)
Subsection 3730(c)(2)(B) of Title 31 of the U.S. Code provides that the government may
settle a false claims action with the defendant “notwithstanding the objections of the person
initiating the action if the court determines, after a hearing, that the proposed settlement is fair,
adequate, and reasonable under all the circumstances.” The determination of whether a False
Claims Act settlement is “fair, adequate, and reasonable under all the circumstances” is
apparently one of first impression in this circuit. Other courts have looked for guidance to
principles governing judicial review of class action settlements under the Federal Rules of Civil
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Procedure, which provide that if a settlement proposal “would bind class members, the court may
approve it only after a hearing and on finding that it is fair, reasonable, and adequate.” Fed. R.
Civ. P. 23(e)(2) (emphasis added); see U.S. ex rel. Nudelman v. Int’l Rehab. Associates, Inc., 00-
cv-1837, 2004 WL 1091032, at *1 n.1 (E.D. Pa. May 14, 2004) (finding, as a matter of first
impression, that since Congress borrowed the key language of 31 U.S.C. § 3730(c)(2)(B) from
the rule governing judicial review of class action settlements, courts evaluating proposed False
Claims Act settlements should apply the same factors they use in evaluating proposed class
action settlements); see also U.S. ex rel. Resnick v. Weill Med. Coll. of Cornell Univ., 04-cv-
3088, 2009 WL 637137, at *2 (S.D.N.Y. Mar. 5, 2009) (following the Nudelman approach). At
the July 1, 2013 hearing, both parties urged the Court to adopt this approach. The Court will do
so.
While there is “no single test” for class action settlement approval under Rule 23(e) in
this jurisdiction, courts look to the following factors: “(a) whether the settlement is the result of
arm’s length negotiations; (b) the terms of the settlement in relation to the strengths of plaintiffs’
case; (c) the status of the litigation proceedings at the time of settlement; (d) the reaction of the
class [here, of the relator]; and (e) the opinion of experienced counsel.” In re LivingSocial Mktg.
& Sales Practice Litig., 11-cv-0745, 2013 WL 1181489, at *7 (D.D.C. Mar. 22, 2013) (Huvelle,
J.) (citing In re Lorazepam & Clorazepate Antitrust Litig., 205 F.R.D. 369, 375 (D.D.C. 2002)
(Hogan, C.J.) (collecting cases)).
Ms. Schweizer’s counsel raised one important additional issue regarding 31 U.S.C. §
3730(c)(2)(B) at the July 1, 2013 hearing that is also apparently of first impression in this circuit.
Is a plaintiff-relator who objects a proposed False Claims Act settlement reached between the
government and the defendant entitled to full-blown discovery on her claims in order to prove
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that the settlement in inadequate? The provision requiring the hearing provides no such right on
its face, see § 3730(c)(2)(B) (“The Government may settle the action with the defendant
notwithstanding the objections of the person initiating the action if the court determines, after a
hearing, that the proposed settlement is fair, adequate, and reasonable under all the
circumstances.”). Moreover, allowing full-blown discovery as of right would risk transforming
the § 3730(c)(2)(B) hearing into a trial on the merits of plaintiff’s claims and the government’s
estimations of the litigation risks. It would put the cart before the horse, in essence making trial
a precondition of settlement. Given both the lack of textual support for discovery rights at this
stage and the difficulties posed by imposing these costs the Court declines to read such a right
into the statute.
The hearing guaranteed to plaintiff-relators under § 3730(c)(2)(B) does not give them the
right to try their cases on the merits prior to settlement. Rather, it serves a more limited purpose
of forcing the government to provide some reasoning behind its decision to settle the case and
giving the plaintiff-relators an opportunity to direct the court’s attention to facts or allegations
that would suggest the settlement was not “fair, adequate and reasonable under all the
circumstances,” for instance, collusion between the government and the defendant, or significant
and unexplained discrepancies between the strength of plaintiffs’ case and the settlement.
The Court does not decide here that discovery is never warranted at this stage of
proceedings, only that a plaintiff-relator is not entitled to full-blown discovery at this stage as of
right. A court may, for example, determine that the government has not adequately explained its
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reasoning behind the settlement, and may order some limited discovery prior to a §
3730(c)(2)(B) hearing. 2 See, e.g., Nudelman, 2004 WL 1091032, at *1 n.1.
B. Summary Judgment
Summary judgment should be granted when “the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). A fact is
material if it could affect the outcome of the case. Id. A dispute is genuine if the “evidence is
such that a reasonable jury could return a verdict for the nonmoving party.” Id. The “evidence
of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor.”
Id. at 255. The non-movant, however, must establish more than “the existence of a scintilla of
evidence” in support of his position. Id. at 252.
C. 31 U.S.C. § 3730(h) (False Claims Act Retaliation)
At the time Ms. Schweizer’s claim accrued, 31 U.S.C. § 3730(h) provided that “[a]ny
employee who is discharged . . . by . . . her employer because of lawful acts done by the
employee . . . in furtherance of an action under this section . . . shall be entitled to all relief
necessary to make the employee whole.” 31 U.S.C. § 3730(h) (2006). “This language states two
basic elements: (1) acts by the employee ‘in furtherance of’ a suit under § 3730—acts also
known as ‘protected activity’; and (2) retaliation by the employer against the employee ‘because
of’ those acts.” Schweizer, 677 F.3d at 1237 (quoting United States ex rel. Yesudian v. Howard
Univ., 153 F.3d 731, 736 (D.C. Cir. 1998)). The Court of Appeals has further divided the
second element into two prongs: “(1) did ‘the employer have knowledge the employee was
engaged in protected activity’; and (2) was the employer’s adverse action against the employee
2
Notably, at the July 1, 2013 hearing, plaintiff-relator’s counsel conceded that their predecessors as relator’s counsel
had full access to a vast array of documents from the government and defendant at the time the settlement was
reached.
15
‘motivated, at least in part, by the employee’s engaging in that protected activity.’” Id. (quoting
Yesudian, 153 F.3d at 736) (alterations omitted).
The McDonnell Douglas burden-shifting framework governs § 3730(h) retaliation claims.
Id. at 1240-41 (citing McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973)). Thus, the
plaintiff must first state a prima facie case of retaliation by showing “(1) that [s]he engaged in
statutorily protected activity; (2) that [s]he suffered a materially adverse action by his employer;
and (3) that a causal link connects the two.” Id. at 1240 (quoting Jones v. Bernanke, 557 F.3d
670, 677 (D.C. Cir. 2009)). If she does so, “the burden shifts to the employer to ‘produce
admissible evidence that, if believed, would establish that [its] action was motivated by a
legitimate, nondiscriminatory reason.’” Id. at 1240-41 (quoting Carter v. George Washington
Univ., 387 F.3d 872, 878 (D.C. Cir. 2004)). “Once that occurs, ‘the burden-shifting framework
disappears, and a court reviewing summary judgment looks to whether a reasonable jury could
infer . . . retaliation from all the evidence.’” Id. at 1241 (quoting Carter, 387 F.3d at 878).
There is some confusion as to the nature of the causation requirement for this type of
retaliation claim. May a plaintiff succeed by showing that retaliation was merely one of several
“motivating factors” behind the adverse action? Or must she show that retaliation was a “but-for”
cause of the adverse action? The circuit has endorsed the mixed-motive interpretation, finding
that the plaintiff may succeed by showing that the adverse action was “motivated, at least in
part, by the employee’s engaging in that protected activity.” Schweizer, 677 F.3d at 1237
(emphasis added). Notably, this interpretation rests on the Senate Report, not the text of the
statute. See id. (quoting Yesudian, 153 F.3d at 736 (quoting S. Rep. No. 99–345, at 35, reprinted
in 1986 U.S.C.C.A.N. at 5300)); see also Fanslow v. Chicago Mfg. Ctr., Inc., 384 F.3d 469, 485
16
(7th Cir. 2004) (endorsing the mixed-motive standard for this provision); Norbeck v. Basin Elec.
Power Co-op., 215 F.3d 848, 851 (8th Cir. 2000) (same).
The Supreme Court’s more recent text-driven interpretation of Title VII’s antiretaliation
provision casts doubt on this reading. See Univ. of Tex. Sw. Med. Ctr. V. Nassar, No. 12-484,
slip op. (June 24, 2013). The provision at issue in Nassar prohibits employers from
discriminating against employees “because” they engaged in protected activities under that
statute. 3 See 42 U.S.C. § 2000e-3 (emphasis added). The Court concluded that this language
precluded mixed-motive retaliation claims, relying in part on its interpretation of a similarly
worded provision in the Age Discrimination in Employment Act (ADEA). Nassar, No. 12-484,
slip op. at 9-13 (discussing Gross v. FBL Financial Services, Inc., 557 U.S. 167 (2009)). In the
ADEA case, the Court interpreted 29 U.S.C. § 623(a), which makes it unlawful for an employer
to take adverse action against an employee “because of such individual’s age,” and concluded
that the plain meaning of that statute precluded mixed-motive claims, and meant that plaintiff
had the burden to establish that age was the “but-for” cause of the employer’s adverse action.
Gross, 557 U.S. at 176; see also id. at 179 (“[T]he ADEA must be ‘read . . . the way Congress
wrote it.’” (quoting Meachum v. Knolls Atomic Power Laboratory, 554 U.S. 84, 102 (2008))).
The Court in Nassar closely followed the textualist reasoning of its opinion in Gross: “[g]iven
the lack of any meaningful textual difference between the text in this statute and the one in
3
The provision provides in full:
It shall be an unlawful employment practice for an employer to discriminate against any of his
employees or applicants for employment, for an employment agency, or joint labor-management
committee controlling apprenticeship or other training or retraining, including on-the-job training
programs, to discriminate against any individual, or for a labor organization to discriminate
against any member thereof or applicant for membership, because he has opposed any practice
made an unlawful employment practice by this subchapter, or because he has made a charge,
testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under
this subchapter.
42 U.S.C. § 2000e-3.
17
Gross, the proper conclusion here, as in Gross, is that Title VII retaliation claims require proof
that the desire to retaliate was the but-for cause of the challenged employment action.” Nassar,
slip op. at 11-12; see also id. at 20 (“Title VII retaliation claims must be proved according to
traditional principles of but-for causation . . . [which] requires proof that the unlawful retaliation
would not have occurred in the absence of the alleged wrongful action or actions of the
employer.”).
The combined lesson of Nassar and Gross is clear: where Congress has given plaintiffs
the right to sue employers for adverse actions taken against them by their employers “because
of” X, plaintiffs may succeed only by showing that X was a “but-for” cause of the adverse
action, not merely one of several “motivating factors.” Notwithstanding the circuit’s statements
to the contrary in this case, because the False Claims Act’s retaliation provision includes the
same key language as the Title VII retaliation provision recently interpreted by the Supreme
Court in Nassar, and the ADEA discrimination provision interpreted in Gross, the Court must
apply the same heightened causation standard here. To succeed on her claim, a plaintiff must
show that retaliation for protected activities was a “but-for” cause of the adverse action. 4
III. ANALYSIS
Ms. Schweizer’s qui tam claims (Counts I & II) are dismissed. Her retaliation claim
(Count III) survives.
A. Ms. Schweizer’s Qui Tam Claims Are Dismissed Because The Government’s
Proposed Settlement is “Fair, Adequate, and Reasonable”
At the section 3730(c)(2)(B) hearing conducted on July 1, Ms. Schweizer had the
opportunity to present arguments to support her contention that the proposed settlement was not
“fair, adequate, and reasonable.” The Court was not convinced by these arguments. It now
4
At the hearing conducted on July 10, 2013 plaintiff’s counsel conceded this point.
18
approves the proposed settlement, and dismisses Ms. Schweizer’s qui tam claims. As noted
above (and as conceded by both parties during the July 1, 2013 hearing), the Court bases its
conclusion on an evaluation of the proposed settlement under the five factors used by courts in
this Circuit to evaluate class action settlements.
1. Arm’s Length Negotiations
A “presumption of fairness, adequacy, and reasonableness may attach to a class
settlement reached in arm’s length negotiations between experienced, capable counsel after
meaningful discovery.” In re Vitamins Antitrust Litig., 305 F. Supp. 2d 100, 104 (D.D.C. 2004)
(Hogan, C.J.) (quotations and citations omitted). The same is true of arm’s length negotiations
between the government and a defendant of potential qui tam claims.
In this case, there is no evidence in the record regarding the nature of bargaining between
the government and Océ regarding the terms of the settlement. That said, Ms. Schweizer does
not allege any collusion, and concedes that the settlement was reached after a very extensive
investigation by the government. Accordingly, this factor supports approval of the settlement.
2. Terms of the Settlement in Relation to the Strengths of Plaintiffs’ Case
The benefits to the relators must be “considered in juxtaposition with the risks attendant
to continued litigation of this matter.” In re LivingSocial Mktg., 2013 WL 1181489, at *9 (citing
In re Lorazepam & Clorazepate Antitrust Litig., 205 F.R.D. 369, 377 (D.D.C. 2002) (Hogan,
C.J.)).
In a sealed filing, United States’ Resp. to Relator Schweizer’s Objection, ECF No. 72,
and in open court at the July 1, 2013 hearing, the government provided an extensive and detailed
account of its decision to settle the case and of its calculations of the ultimate settlement. The
government conducted an extensive investigation into these claims, employing GSA auditors,
19
attorneys from the U.S. Attorney’s Office and from the Commercial Litigation Section of the
Department of Justice. The government collected over 80 boxes of internal Océ documents,
conducted numerous interviews, performed audits, and issued an inspector general subpoena.
Using this information it had gathered, the government assessed the value of claims, assessed a
variety of litigation risks specific to each claim, and came up with a figure for a settlement.
Specifically, the government determined that it might be able to prevail on some of the pricing
claims, but would not likely prevail on the TAA claims. Under the TAA claims, the government
found that Océ had documentation showing the company had taken significant (and costly) steps
to ensure TAA compliance, and that had received an advisory opinion from U.S. Cusoms and
Border Protection that would undermine the government’s claims. The government also noted,
at the July 1 hearing, that at the time of settlement, TAA claims were a developing area of the
law, and the government was eager to avoid bringing close or difficult cases to litigation that
might risk making “bad law” for them. Under the pricing claims, the government found that
these might be meritorious, but that the two GSA contracting officers who would be trial
witnesses provided testimony that would undermine the claims significantly. The government
assembled theses assessments and came up with a settlement figure equal to a little more than
single damages on the claims the government believed it might be able to prevail on at trial.
At the July 1 hearing, and in a sealed memorandum, Relator’s Reply to DOJ Resp., ECF
No. 78, Ms. Schweizer disputed the government’s judgments of the strength of her claims, and
the risks of litigation. She seemed to suggest that, if allowed to proceed to trial, she would
certainly prevail on all of her claims and that any discount of the full damages she would be
entitled to.
20
The Court does not have enough information to make a complete assessment of the merits
of plaintiff’s claims, or of the government’s assessment of those claims—but it need not do so in
order to find this factor weighs in favor of approving the settlement. It finds that the
government’s assessments of the strength of plaintiff’s claims and the attendant litigation risks
are based on a significant investigative effort on their part, are sufficiently detailed and
comprehensive, and that Ms. Schweizer’s arguments fail to identify any significant flaw in the
government’s reasoning. Accordingly, the Court finds that this factor weighs in favor of the
settlement.
3. The Status of the Litigation Proceedings at the Time of Settlement
Courts also “consider whether counsel had sufficient information, through adequate
discovery, to reasonably assess the risks of litigation vis-a-vis the probability of success and
range of recovery.” In re LivingSocial Mktg., 2013 WL 1181489, *9 (quoting Cohen v. Chilcott,
522 F. Supp. 2d 105, 117 (D.D.C. 2007) (quoting In re Lorazepam & Clorazepate Antitrust
Litig., MDL 1290, 2003 WL 22037741, *4 (D.D.C. June 16, 2003) (Hogan, C.J.))).
In this case, the government’s proposed settlement was made after an extensive
investigation into Ms. Schweizer’s claims, conducted by GSA auditors and attorneys from the
U.S. Attorney’s Office and from the Commercial Litigation Section of the Department of Justice,
involving extensive document review, as well as interviews with a variety of potential witnesses.
Accordingly, the government had adequate information to make an informed judgment regarding
the settlement. The Court finds this factor weighs in favor of the settlement.
4. The Reaction of the Relator
This factor is less useful in the context of a proposed qui tam settlement, where an
objecting relator is a necessary predicate to this very analysis, than in the context of a proposed
21
class action settlement, where the number of objections filed by class members may vary
considerably. Nonetheless, the Court notes that, of the two relators, one has objected, and one
has consented to the settlement. Accordingly, this factor is in equipoise.
5. The Opinion of Experienced Counsel
Finally, Courts in this jurisdiction have noted that “[t]he opinion of experienced counsel
‘should be afforded substantial consideration by a court in evaluating the reasonableness of a
proposed settlement.’” In re LivingSocial Mktg., 2013 WL 1181489, *10 (quoting Meijer, Inc. v.
Warner Chilcott Holdings Co. III, 565 F.Supp.2d 49, 58 (D.D.C. 2008) (quoting Lorazepam,
2003 WL 22037741, at *6)). In this case, this factor does not weigh in either direction.
***
Weighing all five factors together, the Court finds that they tilt in favor of finding the
settlement was fair, adequate and reasonable. Accordingly, the Court will approve the
settlement, and grant the government’s motion to dismiss the case.
B. Ms. Schweizer’s Retaliation Claim Survives Summary Judgment
On Ms. Schweizer’s retaliation claim, the Court must only decide “the ultimate question
whether a reasonable jury could infer retaliation from all the evidence.” Schweizer, 677 F.3d at
1241. The issue is whether there is a genuine issue of material fact as to whether retaliation was
a “but-for” cause of Océ’s decision to terminate Ms. Schweizer.
Over the course of 2005, Ms. Schweizer found and reported violations of federal
contracts by her employer, ultimately leading to the $1.2 million settlement reached between the
government and Océ, approved today. In the same period, she also engaged in a variety of
questionable and perhaps unprofessional conduct.
22
As the circuit found, Ms. Schweizer’s asserted link between her protected activity and her
termination is supported by direct as well as circumstantial evidence. Circumstantially, her
protected activities occurred in close temporal proximity to her termination and ultimately led to
her employer paying a very substantial settlement. More directly, Ms. Schweizer alleges that her
supervisor, Mr. Frost, attempted to stifle her protected activities by making threatening
statements. After Ms. Schweizer brought violations to Mr. Frost, he allegedly “forb[ade] [her]
from investigating the matter and stat[ed] that management would ‘destroy’ her if she
disobeyed.” Schweizer, 677 F.3d at 1230. And later, when she raised concerns about another set
of violations, Mr. Frost “allegedly told her not to pursue the issue any further and again
threatened to ‘destroy’ her if she did not comply.” Id.
In response, Océ’s evidence documents Ms. Schweizer’s erratic behavior over the same
period, and shows that they may well have had a good reason to discipline, or even terminate,
Ms. Schweizer. However, this evidence cannot eliminate any genuine issue of material fact as to
whether Océ’s desire to retaliate against Ms. Schweizer for her protected activities was a “but-
for” cause of her termination. Notably, several of the events Océ points to as evidence of Ms.
Schweizer’s behavioral problems triggering her legitimate dismissal itself include
whistleblowing activities. Océ concedes that Ms. Schweizer discussed the allegations regarding
the GSA contracts during her phone conversation with Mr. Beauchamp in the days immediately
before her suspension. Def.’s Statement ¶ 37. And, according to Ms. Schweizer’s account of her
“heated discussion” with Mr. Frost on September 2, she complained that her coworker Ms. Carey
had “falsified documents to the government.” See Schweizer Dep. 163:17-18. It may be the
case that the whistleblowing aspect of these conversations were insignificant, and that her
termination would have occurred without the potentially (and ultimately successful) costly
23
allegations against Océ that she raised. However, that is a determination for the jury, not this
Court.
On this record, Ms. Schweizer’s claim survives summary judgment. A reasonable jury
could make infer that retaliation was a “but-for” cause of her termination. Océ’s motion for
summary judgment is DENIED.
IV. CONCLUSION
The government’s motion to dismiss the qui tam claims is GRANTED. Océ’s
supplemental motion for summary judgment as to the retaliation claim is DENIED. An Order
shall issue with this opinion.
Signed by Royce C. Lamberth, Chief Judge, on July 19, 2013.
24