by Ben Vernia | March 14th, 2013
On March 12, Judge Samuel Der-Yeghiayan granted the defense contractor’s motion to dismiss the fraud and retaliation claims a former manager brought against it, in U.S. ex rel. Marquis v. Northop Grumman Corp.. The manager, the director of the U.S. Air Force Quick Reaction Capability Support Center for 18 years, alleged that Northrop committed fraud by demoting his position from a direct report to a Vice President to one, and then two levels below a VP. He also alleged that the company retaliated against him in violation of the FCA and Illinois common law.
Judge Der-Yeghiayan found that the relator’s fraud allegations fell short for two reasons: First, the complaint alleged that the relator had reported the company’s conduct to the USAF, but the Air Force had investigated and continued to pay Northrop. Although his complaint left open the possibility that the company had submitted claims to the government prior to its receiving notice of the violations, it failed to sufficiently allege that this was the case. Second, the relator’s complaint lacked particularity under Fed. R. Civ. P. 9(b), the court concluded. Because the relator was the manager of the facility, the court reasoned, it could not relax the pleading standard. Judge Der Yeghiayan rejected the relator’s argument that the complaint sufficed to put Northrop on notice of his claims, reasoning that the particularity rule served other purposes, including requiring relators to conduct a greater pre-filing investigation in order to spare defendants allegations harmful to their reputations.
The court likewise found that the relator’s complaint fell short in pleading that Northop retaliated against him in violation of the FCA. Although the relator had alleged that he had notified management of the contract violations, he did not allege that he told his employer that he believed that fraud had occurred. In the absence of this, Judge Der-Yeghiayan reasoned, he had not alleged that Northrop was on notice of protected activity under the FCA.
In light of the dismissal of both FCA counts, Judge Der-Yeghiayan declined to exercise supplemental jurisdiction over the Illinois common law retaliation claim, and dismissed the entire case (the state-law claim without prejudice).