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Seventh Circuit Rejects FCA Retaliation Claim

On October 11, 2016, a three-judge panel of the Seventh Circuit Court of Appeals issued a ruling in United States ex rel. Uhlig v. Fluor Corp., affirming summary judgment against the relator in an FCA action where the government had declined to intervene. See generally 2016 WL 5905714, No. 14-2815 (7th Cir. Oct. 11, 2016).

The defendant had contracted with the US Army to perform electrical work at bases in Northern Afghanistan. It hired the relator, an electrician, as a foreperson for this work, but subsequently declined to renew his contract because he did not hold an electrician’s license. The relator then emailed the Defense Contract Management Agency, complaining that he was losing his job while other unlicensed electricians, who were Afghan nationals, were not. In a follow-up email, the relator alleged that the defendant company was committing fraud, and copied a website dedicated to “exposing . . . corporate greed among [defense] contractors.” The company then fired him on the grounds that sending his supervisor’s name and contact information violated its computer-use policy.

The relator filed FCA and retaliatory discharge claims, and the company successfully moved for summary judgment. The district court held that because the relator had no objective basis for asserting that the company had committed fraud, his emails did not constitute protected activity under the FCA.

On appeal, the relator argued that the company violated the FCA by “knowingly employing unlicensed electricians in breach of its contract and submitting invoices for the unlicensed services to the government for payment.” The Seventh Circuit disagreed, noting that the contract in question made electrician licenses optional, and the company had “independently decided to phase in a self-imposed requirement” that electricians such as the relator had to hold licenses. Because the company was accordingly in compliance with the contract, the Court reasoned, there was no false certification.

The Court then turned to the relator’s retaliation claim, noting that the determination of whether an employee’s conduct was protected turned in part on whether “a reasonable employee in the same or similar circumstances might believe that the employer is committing fraud against the government.” Citing the fact that he did not have “any firsthand knowledge of Fluor’s contract obligations to the Army,” the Court held that Uhlig had no reasonable basis for such a belief.

The primary lesson for FCA practitioners regarding retaliation claims is that even if a plaintiff subjectively believes a defendant is committing fraud, courts will not recognize protected activity if there is no reasonable basis for such a belief.

© 2019 McDermott Will & Emery

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