UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
______________________________________
)
)
UNITED STATES OF AMERICA ex rel )
STEPHANIE SCHWEIZER, et al., )
Plaintiffs, )
) Civil Action No. 06-648 (RCL)
v. )
)
OCE NORTH AMERICA, INC., et al., )
Defendants. )
)
______________________________________)
MEMORANDUM OPINION
Before the Court is defendants Océ North America, Inc., Océ-USA Holding, Inc., Océ
Imagistics, Inc., and Océ N.V.’s Motion for Summary Judgment. Upon consideration of the
Motion, the Opposition thereto, the Reply brief, applicable law, and the entire record, the Court
will grant the Motion for the reasons that follow.
I. BACKGROUND
Defendant Océ North America, Inc. (“Océ”) hired plaintiff Stephanie Schweizer in
December 2004 as GSA Contracts Manager. Schweizer Dep. 131–34, July 21, 2010, ECF No.
103-4. Schweizer managed Océ’s Schedule 30 and 76 contracts with the U.S. General Services
Administration (GSA), which obligated Océ to supply printers and related products to the federal
government. Beauchamp Dep. 14, Aug. 3, 2010, EFC No. 103-8. Schweizer was responsible for
“daily management and oversight” to “maintain[] the integrity of all contracts” and “assure
contract compliance.” Ex. 2 to Frost Dep. at 2, Aug. 5, 2005, ECF No. 105-1 [hereinafter Job
Description]; Beauchamp Dep. 13–14. Her specific duties included being a point of contact for
salespersons, Schweizer Dep. 131, 150–51, and for government officials, Job Description at 7,
1
negotiating contract modifications, id. at 1, setting up and managing the GSA Advantage
Program (the government electronic buy board), id., supporting the field sales effort by—among
other things—developing price strategy, id. at 2, ensuring accuracy of product specifications and
prices listed in the contracts, Schweizer Dep. 150–51, understanding government contract law
and keeping abreast of new legislation, Job Description at 2, participating in the Coalition for
Government Procurement and other similar associations, id., coordinating with senior
management on GSA and related matters to assure contract compliance, id., and ensuring general
legal and contractual compliance, Schweizer Dep. 131, 171–72.
Schweizer reported directly to Ronald Frost, Océ’s Director of Government Contracting.
Frost Dep. 9. On occasion, Frost’s supervisor and Océ’s Vice President of Business
Development and Federal Sales, Bryan Beauchamp, assigned work to Schweizer directly. E.g.,
Schweizer Decl. ¶ 7, Sept. 20, 2010, ECF No. 105-5.
While performing her job, Schweizer began to suspect that Océ was defrauding the
federal government by deliberately failing to negotiate GSA contract modifications to reflect
commercial price discounts, in violation of the contracts’ price reduction clauses, and by
deliberately certifying that some products were manufactured in the Netherlands despite actually
being manufactured in China, in violation of the Trade Agreements Act, to which the Schedule
36 and 70 contracts were subject. Schweizer Decl. ¶¶ 4, 5, 7, 8.
Schweizer’s suspicions regarding price reduction clause noncompliance developed from
her monitoring the GSA Advantage Program and communicating about prices with coworkers,
including Accounts Managers Nancy Vee and Sue Wohlford, and with her supervisor, Frost. Id.
¶¶ 3-6. Vee told Schweizer that she had offered on several occasions prices different from the
established GSA contract prices, which Schweizer determined were not listed in GSA contract
2
modifications. Id. ¶ 4. Schweizer obtained by email Wohlford’s pre-sale pricing list, which
contained different pricing than was reported to the government or listed in the GSA Advantage
Program. Schweizer Dep. 272–74; Schweizer Decl. ¶ 5. Schweizer also found falsified
documents that Océ’s Contract Administrator, Kathleen Carey, had sent to the GSA. She
reported this to Frost, who told her he “didn’t want to talk about it” and “didn’t want to hear
about any documents that were falsified.” Schweizer Dep. 156–59. In another conversation with
Frost about “the corruption and the fraud in the company,” Schweizer warned Frost of the risk of
noncompliance with a GSA contract. Frost replied, “I know, that is one of the reasons why
you’re not to discuss these issues with anyone outside.” Schweizer Dep. 270–71.
Schweizer’s suspicions regarding Trade Agreements Act noncompliance developed from
her review at Vice President Beauchamp’s direction of Océ’s Security and Exchange
Commission (SEC) reports and product manufacturing information, Schweizer Dep. 228–31, and
conversations with coworkers and Frost, Pl.’s Am. Interrog. Resp. No. 4, July 20, 2010, ECF No.
105-4. Schweizer’s review revealed over three hundred products manufactured in China by
Imagistics, a company that Océ was planning to acquire. Schweizer Dep. 233. Coworkers told
Schweizer that Océ manufactured in China products that were listed on the GSA contract as
being manufactured in the Netherlands. Pl.’s Am. Interrog. Resp. No. 4. Frost told Schweizer
that Océ “had been manufacturing in China for years” and that if Schweizer continued to pursue
these issues, Océ “would ‘destroy’ her.” Id.
Schweizer decided that Océ’s noncompliance constituted illegal fraud and a False Claims
Act violation after speaking with Larry Allen, President of the Coalition for Government
Procurement. Schweizer Dep. 245–46. Allen told Schweizer she “could go to jail” if she placed
products manufactured in China on the GSA schedule. Id.
3
In early December 2005, Schweizer reported the Trade Agreements Act violations to
Vice President Beauchamp, characterizing them as False Claims Act violations. Pl.’s Am.
Interrog. Resp. No. 8. Beauchamp directed her to speak with Gerald Whelan, Océ’s Human
Resources Director. Id. Whelan then directed her to speak with Océ’s in-house counsel, Dan
Harper. Id. Harper directed her to speak with Océ’s outside counsel, Kenneth Weckstein, who
had more experience with government contracting. Id. In each conversation, Schweizer repeated
her belief that Océ was violating the False Claims Act by misrepresenting where its products
were manufactured. Id. On December 8, 2005, Frost notified Schweizer that she was suspended
without pay. Defs.’ Statement of Undisputed Material Facts ¶ 48, Sept. 1, 2010, ECF No. 103-2.
Later that month, Schweizer received a termination letter dated December 15, 2005, ascribing
her termination to unprofessional conduct and poor performance. Schweizer Dep. 300. The letter
explains that Schweizer’s employment was terminated because she “engaged in indecent conduct
(repeated cursing and yelling at other employees) . . . refused to follow orders from [her]
supervisor and acted insubordinately to [her] supervisor . . . [and] failed to maintain necessary
standards of workmanship and productivity.” Letter from B. Beauchamp 1–2, Dec. 15, 2005,
ECF No. 103-15. The letter further lists as grounds for dismissal Schweizer’s unfounded
allegations “that fraud and crimes had been committed by Mr. Frost.” Id.
A few months later, in April 2006, Schweizer filed a qui tam suit against Océ. Count I
alleges that Océ misrepresented its pricing practices, thereby not complying with its GSA
contracts’ price reductions clauses and overcharging the GSA in violation of the False Claims
Act, 31 U.S.C. § 3729(a)(1) and (2). Count II alleges that Océ violated § 3729(a)(1) and (2) by
misrepresenting where Océ manufactured its products and thereby not complying with the
contracts’ Trade Agreements Act clauses. Count III alleges that Océ fired Schweizer in
4
retaliation for her fraud investigation, violating § 3730(h), the FCA’s whistleblower protection
provision. Pl.’s Compl., Apr. 7, 2006, ECF No. 1. In December 2006, Schweizer’s coworker
Nancy Vee joined Schweizer in filing an amended complaint, adding Vee as a plaintiff. In
September 2009, the United States intervened in Counts I and II to request dismissal following
execution of a settlement agreement between the United States, Océ, and plaintiff Vee. In
January 2010, this Court granted the United States’ Motion to Dismiss Counts I and II with
prejudice, over Schweizer’s opposition, leaving only Schweizer’s Count III retaliation claim.
This Court now rules on Océ’s Motion for Summary Judgment on Count III and request for
attorneys’ fees and costs.
II. LEGAL STANDARD
The Court will grant a motion for summary judgment where a party shows “that there is
no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(c)(2). There is a genuine issue as to a material fact if “reasonable minds
could differ” as to that fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986), cited in
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). The burden is on the moving party to
demonstrate that there is an “absence of a genuine issue of material fact” in dispute. Celotex, 477
U.S. at 323. The Court will believe the evidence of the non-moving party and will draw all
reasonable inferences from the record in the non-moving party’s favor. Anderson, 477 U.S at
255. In addition, “the court may assume that facts identified by the moving party in its statement
of material facts are admitted, unless such a fact is controverted in the statement of genuine
issues filed in opposition to the motion.” D.D.C. LCvR 7(h)(1). To avoid summary judgment, the
non-moving party cannot merely raise “some alleged factual dispute”: the fact at issue must be
“material.” Id. at 247 (emphasis in original). A material fact is one “that might affect the
5
outcome of the suit under the governing law.” Id. at 248. Thus, summary judgment is appropriate
only where the non-movant fails to offer “evidence on which the jury could reasonably find for
the [non-movant].” Id. at 252.
III. DISCUSSION
A. The Court Will Grant Summary Judgment to Defendants.
1. The Elements of Retaliation Under the False Claims Act
The False Claims Act (FCA) prohibits employers from retaliating against employees
“because of lawful acts done by the employee . . . in furtherance of an action under this section,
including investigation for, initiation of, testimony for, or assistance in an action filed or to be
filed under this section.” 31 U.S.C. § 3730(h)(1) (2006). Such retaliation includes being
“discharged, demoted, suspended, harassed, or in any other manner discriminated against in the
terms and conditions of employment.” Id. An employee may bring an action to enforce this
subsection. Id. § 3730(h)(2). As the D.C. Circuit has explained:
[T]o prevail on a whistleblower claim, an employee must demonstrate that:
(1) he engaged in protected activity, that is, “acts done . . . in furtherance of
an action under this section”; and
(2) he was discriminated against “because of” that activity. To establish the
second element, the employee must in turn make two further showings. The
employee must show that: (a) “the employer had knowledge the employee was
engaged in protected activity”; and (b) “the retaliation was motivated, at least in part,
by the employee's engaging in [that] protected activity.”
Hoyte ex rel. United States v. Am. Nat’l Red Cross, 518 F.3d 61, 66 (D.C. Cir. 2008)
(citations omitted).
With regard to the second element of a claim under § 3730(h)—that the employer has
knowledge that the employee was engaged in protected activity—the D.C. Circuit has further
explained that “[p]laintiffs alleging that performance of their normal job responsibilities
6
constitutes protected activity must overcome the presumption that they are merely acting in
accordance with their employment obligations to put their employers on notice” that they are
engaged in protected activity. United States ex rel. Williams v. Martin-Baker Aircraft Co., 389
F.3d 1251, 1261 (D.C. Cir. 2004) (citations omitted). In other words, to prevail here, plaintiff
must establish that her internal reporting of Océ’s alleged FCA violation was beyond the scope
of her employment responsibilities and was sufficient to put Océ on notice that plaintiff was
engaged in activity protected by statute.
2. Analysis
In this case, the evidence shows that Schweizer failed to put Océ on notice that she had
gone beyond the scope of her employment duties and was engaged in activity protected under the
False Claims Act. In Martin-Baker, the D.C. Circuit’s leading opinion on the application of the
second prong of the Hoyte standard, the plaintiff was the chief contracts negotiator of Martin-
Baker Aircrafts. 389 F.3d at 1254. In this position, one of the plaintiff’s central job
responsibilities was to analyze pricing for products sold to the U.S. government. Id. at 1255. In
fulfilling this role, the plaintiff alerted his supervisor and the government that Martin-Baker’s
pricing violated its government contracts (and therefore the FCA). Id. at 1261. After being
terminated by Martin-Baker, the plaintiff brought suit alleging that his firing was in violation of
the FCA’s retaliation provision. Id. at 1255. On appeal, the D.C. Circuit concluded that when an
employee’s employment obligations include reporting potential fraud up the management chain,
that report—without more—does not satisfy the notice requirement. Id. at 1261. On the facts of
Martin-Baker, though, the Court concluded that the plaintiff did satisfy the notice requirement
when he went beyond his employment obligations by reporting his findings to the government
and advising the government to challenge Martin-Baker’s pricing. Id. Here, though, the evidence
7
demonstrates that—unlike the plaintiff in Martin-Baker—Schweizer took no action that would
have put Océ on notice that she was engaged in protected activity. Accordingly, summary
judgment for defendants is required.
Schweizer was a Contracts Manager responsible for ensuring legal and contractual
compliance. Schweizer Dep. 131, 171–72. In this capacity, every step she took in furtherance of
her “fraud investigation” was an act that fell within her job description or was undertaken at
senior management’s express instruction. For example, when Schweizer initially began to
investigate potential fraud at Océ by comparing Accounts Managers’ pricing with pricing listed
in the GSA contracts and the GSA Advantage Program, she was fulfilling her role in ensuring
the company’s compliance with the Schedules 36 and 70 GSA contracts. Job Description at 1–2;
Schweizer Dep. 150–51. In addition, Schweizer’s job description requires that she report any
suspected pricing issues to her direct supervisor, Job Description at 7, which she did, Schweizer
Dep. 156–58; Pl.’s Am. Interrog. Resp. No. 8. Furthermore, as Schweizer continued to report her
concerns up Océ’s chain of command, to human resources, in-house counsel, and outside
counsel—at management’s request—she acted solely within the context of her employment. Job
Description at 7. At no time did she inform anyone at Océ that she was acting pursuant to the
False Claims Act and or that she intended to file a claim under the Act unless the company
moved to resolve her concerns. 1 Indeed, even when Schweizer shared her concerns about Océ’s
alleged FCA violations to a professional contact at an outside organization, the Coalition for
Government Procurement, she was acting according to her job description, which required her to
1
The Court is well aware that a plaintiff need not state explicitly to her employer or anyone else her intention to file
a False Claims Act suit to put her employer on notice. United States ex rel. Yesudian v. Howard Univ., 153 F.3d
731, 743 (D.C. Cir. 1998) (“Threatening to file a qui tam suit or to make a report to the government . . . clearly is
one way to make an employer aware. But it is not the only way.”). The Court merely mentions this to emphasize that
Schweizer acted solely to perform her job responsibilities and not to make Océ aware that FCA litigation was a
reasonable possibility.
8
“participate in Coalition for Government Procurement” to stay educated on government contract
law. Job Description at 2. Tellingly, Schweizer’s own pleadings characterized her purported
investigation as an attempt to “bring the Océ GSA contracts into compliance.” Pl.’s Am. Compl.
¶ 51, Dec. 22, 2006, ECF No. 10. In sum, Schweizer has failed to produce any evidence
documenting that she acted outside her job description in any manner that should have put Océ
on notice that she was acting in furtherance of an FCA suit.
Rather than point the Court to evidence establishing that Océ was on notice, Schweizer
urges the Court to evaluate the notice requirement under the Fourth Circuit’s formulation of the
elements of a § 3730(h) claim rather than the D.C. Circuit’s standard set forth in Hoyte and
Martin-Baker. Pl.’s Opposition to Defs.’ Motion for Summary Judgment 14–16, Sept. 20, 2010,
ECF No. 105. In Eberhardt v. Integrated Design & Constr., Inc., the Fourth Circuit held that
“characterizing the employer’s conduct as illegal or fraudulent or recommending that legal
counsel become involved” is sufficient to constitute notice. 167 F.3d 861, 868–69 (4th Cir.
1999). Thus, Schweizer argues, under the Eberhardt construction, 2 her allegations of fraud to
Frost, Beauchamp, Whelan, and Harper would constitute notice because she used the words
“fraud” and “illegal” in addition to “noncompliant.” Pl.’s Opposition to Defs.’ Motion for
Summary Judgment 15.
The Court declines plaintiff’s invitation to broaden the scope of the notice requirement
beyond the clear limits set forth by the D.C. Circuit. In Martin-Baker, the D.C. Circuit declined
to extend whistleblower protection under the FCA to the extent set forth in Eberhardt, and
instead joined the Sixth Circuit in holding that “where plaintiff was ‘simply performing his
ordinary duties’ when he told employer that certifications were illegal and that other companies
2
Schweizer does not argue she satisfies the “recommending that legal counsel become involved” trigger, likely
because she did not instigate her meetings with Océ’s in-house or outside counsel; Océ did.
9
had incurred FCA liability for similar acts,” the employer was not on notice that plaintiff was
engaged in protected acts. Martin-Baker Aircraft Co., 389 F.3d 1251, 1261 (D.C. Cir. 2004)
(quoting Yuhasz v. Brush Wellman, Inc., 341 F.3d 559, 567 (6th Cir. 2003)). Indeed, the Sixth
Circuit in Yuhasz squarely considered and rejected the authority on which the Fourth Circuit
relied for its conclusion in Eberhardt that the words “illegal” and “fraudulent” carry a talismanic
power to constitute notice under the FCA. 341 F.3d at 567 (citing Robertson v. Bell Helicopter
Textron, Inc., 32 F.3d 948, 952 (5th Cir. 1994)). The Sixth Circuit held that “[t]he mere fact that
[plaintiff] told [his employer] that its certifications of compliance were ‘unlawful and illegal’
does not establish notice.” Id. The Court here is bound by the D.C. Circuit’s formulation of the
notice requirement, 3 and holds that Schweizer has not presented sufficient evidence to establish a
material dispute that Océ was on notice of any protected acts she had taken under the FCA when
it terminated her.
In light of the conclusion that there is no reasonable dispute as to whether Océ was on
notice of any protected activity in which Schweizer was engaged, the Court need not reach the
question of whether Schweizer has satisfied Hoyte’s first prong by producing evidence that, in
monitoring Océ’s GSA contracts’ compliance, she was engaged in acts in furtherance of an FCA
action. Nor does the Court need to consider the issue of causation—whether Océ terminated
Schweizer partly because of her protected activity—at this time.
3
In addition to Eberhardt, plaintiff points the Court to an earlier D.C. Circuit case in which the Court of Appeals
held that a whistleblower need not “report his allegations to the government--or to anyone outside of the employing
institution” to be engaged in acts done in furtherance of an FCA action. United States ex rel Yesudian v. Howard
Univ., 153 F.3d 731, 743 (D.C. Cir. 1998). The facts of Yesudian are distinguished from this case, Eberhardt, and
Martin-Baker, because the plaintiff in Yesudian was not responsible for oversight or compliance. The Court here is
thus bound by the Court of Appeals’ most recent discussion of the notice requirement in Martin-Baker.
10
B. The Court Will Deny Attorneys’ Fees to Defendants.
The False Claims Act permits a Court to award reasonable attorneys’ fees and expenses if
“the Government does not proceed with the action and the person bringing the action conducts
the action . . . the defendant prevails in the action and the court finds that the claim of the person
bringing the action was clearly frivolous, clearly vexatious, or brought primarily for purposes of
harassment.” 31 U.S.C. § 3730(d)(4) (2006). “The award of fees under the False Claims Act is
reserved for rare and special circumstances.” Pfingston v. Ronan Eng’g Co., 284 F.3d 999, 1006–
07 (9th Cir. 2002).
Schweizer’s FCA claim is not “clearly frivolous,” and defendants have not shown that it
was brought “primarily for the purposes of harassment.” Schweizer’s interactions with
coworkers and superiors and her discovery of pricing and manufacturing information while
performing her job made it reasonable—though not correct—to believe that litigation would
reveal evidence of fraud. Moreover, the United States did ultimately intervene in this case after it
reached a settlement with Océ concerning Schweizer’s allegations of fraud. Finally, Schweizer’s
reliance on the Fourth Circuit’s notice standard in pursuit of her retaliation claim—though
mistaken—does not constitute the sort of frivolity necessary to justify attorneys’ fees and
expenses.
IV. CONCLUSION
For the reasons stated herein, the Court will GRANT defendants’ Motion for Summary
Judgment on Count III of plaintiff’s Amended Complaint and will DENY defendants’ request to
award attorneys’ fees and costs.
A separate Order consistent with this Memorandum Opinion shall issue this date.
Signed by Royce C. Lamberth, Chief Judge, on March 25, 2011.
11