Earlier this month, a federal district court in California dismissed relators’ retaliation claims because they rested on an unduly expansive interpretation of 31 U.S.C. § 3730(h). Both the plaintiff bringing the claim (a company) and defendants against whom it was asserted (several individuals) did not fall within the statute’s scope, the court held. United States v. Kiewit Pac. Co., No. 12-CV-02698-JST, 2014 WL 1997151, — F. Supp. 2d — (N.D. Cal. May 14, 2014).
The case arose out of a highway expansion project in Los Angeles jointly funded by the United States and the state of California. Kiewit was the primary contractor on the project. Relators were subcontractors—individuals and their respective companies who supplied materials for mechanically stabilized earth (“MSE”) wall panels. After several wall panels failed, investigations ensued and this case followed. Relators alleged that, among other things, Kiewit falsely certified compliance with MSE project specifications in exchange for government funds, and Kiewit and individual Kiewit employees retaliated against relator SSL, LLC (one of the subcontractors).
The court dismissed the retaliation claims with prejudice. First, the court held that relator SSL, LLC, could not bring a retaliation claim because the statute does not extend protection to non-individuals, or “entity plaintiffs.” 2014 WL 1997151, at *10-11. Relator’s argument was a simple textual one: section 3730(h) allows any “employee, contractor, or agent” to sue, and the ordinary meaning of “contractor” covers SSL. But the court held that the entirety of 3730(h) and its legislative history foreclosed SSL’s broad reading. To begin with, the types of relief available to successful plaintiffs under section 3730(h)(2), like back pay and reinstatement, were all “directed to individual plaintiffs, not entities.” Id. And the legislative history confirmed the point: in adding “contractors” and “agents” to the list of potential plaintiffs, Congress made clear that it merely intended to sweep in persons or individuals who were not technically “employees” but who had a contractual or agent relationship with an employer. Id. “Nothing suggest[ed] it was Congress’ intent also to broaden the retaliation entitlement to entity plaintiffs.” Id.
The court took a comparably narrow view of who may be sued under the statute. Prior to 2009, section 3730(h) allowed any employee subject to retaliatory conduct “by his or her employer” to sue. Id. at *11. When Congress amended the provision to include “contractor[s]” and “agent[s]” alongside “employee[s],” it simultaneously did away with the reference to conduct “by his or her employer.” Id. Relator argued that this change—and the plain meaning of the current provision—expanded the class of potential defendants to anyone engaging in retaliatory conduct and therefore authorized claims against individual Kiewit employees. Id. Again, the court disagreed. Because the predominant view before 2009 limited liability to the whistleblower’s employer, the court held that Congress would not have overruled that long line of cases and expanded the scope of False Claims Act liability without saying so. Instead, the reason for the deletion was most likely that the provision could no longer refer only to the whistleblower’s “employer” because it now applied to entities with a contractual or agency relationship with the whistleblower. Id. at *12. The court thus concluded that “the 2009 amendment did not expand liability to individuals such as the individual Defendants named here, e.g., coworkers, supervisors, or corporate officers who are not employers, or who lack a contractor or agency relationship with the plaintiff.” Id.
This decision imposes important limits on retaliation claims and may be looked to in future cases, particularly since the court found no case law addressing whether non-individuals can sue for retaliation, 2014 WL 1997151, at *10, and recognized express disagreement with its interpretation regarding putative defendants, id. at *12 n.5.