Joseph Chalifoux v. BAE Systems, Inc. and ATR International, Inc.

2021 DNH 004

• Court: District Court, D. New Hampshire
• Decided: January 6, 2021
• Docket: 20-cv-401-PB
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Joseph Chalifoux Case No. 20-cv-401-PB v. Opinion No. 2021 DNH 004

BAE Systems, Inc. and ATR International, Inc.

MEMORANDUM AND ORDER

Joseph Chalifoux filed suit against BAE Systems, Inc.

(BAE), a defense contractor, and ATR International, Inc. (ATR),

a staffing agency. Chalifoux seeks relief for violations of the

anti-retaliation provision of the False Claims Act (FCA), 31

U.S.C. § 3730 (Count I), the anti-retaliation provision of the

Fair Labor Standards Act (FLSA), 29 U.S.C. § 215 (Count II), the

New Hampshire Whistleblower Protection Act, N.H. Rev. Stat. Ann.

§ 275-E:1 et seq. (Count III), and the New Hampshire common law

right to protection from wrongful termination (Count IV). BAE

has moved to dismiss Count I, arguing that Chalifoux did not

engage in conduct that is protected by the FCA’s anti-

retaliation provision. ATR joins in BAE’s motion and also seeks

to dismiss the remaining counts against it, arguing that

Chalifoux’s complaint does not sufficiently allege that ATR

retaliated against him or was involved in his termination. For

the following reasons, I grant defendants’ motions to dismiss Count I and deny ATR’s motion to dismiss the complaint’s three

remaining counts.

I. BACKGROUND

A. FACTUAL BACKGROUND

Chalifoux was jointly employed by BAE and ATR from March 1,

2018 until May 22, 2018. Am. Compl. ¶¶ 9, 13. During that time

he worked as a Technical Recruiter, enlisting workers for open

positions at BAE. Am. Compl. ¶ 17. BAE managed his day-to-day

duties and reported his hours to ATR who then paid him. Am.

Compl. ¶¶ 14, 15, 19. BAE initially allowed Chalifoux to work

from home every other Friday. Am. Compl. ¶ 24.

One of Chalifoux’s assignments was to help fill a “Tech 1”

position for Sharon Stehlik, the hiring manager for that

position. Am. Compl. ¶¶ 32-33. Chalifoux sent Stehlik several

qualified applicants, but she only reviewed the materials for

one, known by the initials J.B. Am. Compl. ¶¶ 34-36. Chalifoux

noted that J.B. was far less qualified than the other

applicants. Am. Compl. ¶ 38. J.B., a member of the military

Reserves, was a security guard with no college degree and very

little relevant experience for the Tech 1 position. Am. Compl.

¶¶ 38-40. Other applicants had college and master’s degrees and

years of relevant experience. Am. Compl. ¶ 41. Several were

veterans. Am. Compl. ¶ 42. Nevertheless, Stehlik eventually

hired J.B. for the role. Am. Compl. ¶ 43.

2 Chalifoux was concerned that Stehlik’s decision to hire

J.B. without considering other, more qualified applicants

violated federal statutes, regulations, and Executive Orders

that require government contractors to both take affirmative

measures to promote the hiring of qualified veterans and

consider all qualified applicants for vacant positions. Am.

Compl. ¶¶ 44, 47. When Chalifoux presented his concern to his

superior at BAE, Alina Ernest, she initially agreed that Stehlik

had acted improperly. Am. Compl. ¶ 50. The next day, however,

Ernest sent Chalifoux an email questioning whether he had in

fact worked all of the hours listed on his timecard for that

week. Am. Compl. ¶ 52. Although Chalifoux later attempted to

explain why his timecard was accurate, Ernest rejected his

explanation, deducted two hours from his timecard and revoked

his work from home privileges. Am. Compl. ¶ 59.

Chalifoux believed Ernest reduced his pay and revoked his

work-from-home privileges in retaliation for complaining about

Stehlik’s decision to hire J.B. without considering other

qualified candidates. Am. Compl. ¶ 60. In an attempt to pursue

his concerns, Chalifoux spoke with Jennifer Boyd, a Human

Resources Business Partner at BAE, on May 4 and May 8. Am.

Compl. ¶¶ 60-61. Chalifoux also reached out to ATR, emailing

Michael Gonzalez on May 9 about his reduced pay and asking ATR

for protection from potential retaliation. Am. Compl. ¶ 63.

3 Shirlyn Santos, a Human Resources Specialist at ATR, contacted

Chalifoux on May 10, 2018, asking for information about his pay

reduction and his retaliation concerns. Am. Compl. ¶ 65. On

May 14, Annie Eller, with ATR’s Human Resources Production

Branch, also informed Chalifoux that she was in contact with

Boyd at BAE about Chalifoux’s concerns. Am. Compl. ¶ 69.

That same day, Clairise Tillman, a Human Resources Analyst

at BAE, requested that Chalifoux enter disposition codes for the

Tech 1 position to explain why each candidate for the position

had or had not been selected. Am. Compl. ¶¶ 70, 72. Chalifoux

believed that, by entering disposition codes for the rejected

candidates’ applications, he was implying that they had been

considered when he knew they had not. Am. Compl. ¶¶ 71-72.

Chalifoux forwarded Tillman’s request to Ernest, repeating his

concerns about the application process for the Tech 1 position.

Am. Compl. ¶ 73. He informed her that he had originally entered

“Not Selected” because none of the available codes were

accurate. Am. Compl. ¶ 73. Ernest ordered Chalifoux that same

day to select another code and stated that he could use the code

“met basic qualifications, not most qualified” for the rejected

candidates. Am. Compl. ¶ 74. Chalifoux believed this code to

be inaccurate because the other candidates were more qualified

than J.B. Am. Compl. ¶ 74.

4 On May 21, Chalifoux again emailed Eller at ATR, to update

her on the status of his employment at BAE and to determine how

ATR would protect him from further retaliation. Am. Compl. ¶

77. The next day, Chalifoux met with Boyd in her office. Am.

Compl. ¶ 81. Eller participated by telephone. Am. Compl. ¶ 81.

During the meeting, Boyd informed Chalifoux that Stehlik’s

hiring of J.B. had been investigated, Stehlik was found to have

acted appropriately, and J.B. was the most qualified candidate

for the position. Am. Compl. ¶ 82. She also noted that

Chalifoux had started work at 6:00AM one day and informed him

that that was too early to start work without her permission.

Am. Compl. ¶ 82. She then terminated his employment. Am.

Compl. ¶ 82.

ATR continued to place employees at BAE after Chalifoux was

terminated. It never investigated Chalifoux’s retaliation

complaint and it never demanded that BAE take corrective action.

It also refused to assign Chalifoux to positions with other

companies. Am. Compl. ¶¶ 84-85.

II. STANDARD OF REVIEW

To withstand a motion to dismiss under Rule 12(b)(6), a

plaintiff’s complaint must include factual allegations

sufficient to “state a claim to relief that is plausible on its

face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Under

5 this standard, the plaintiff must plead “factual content that

allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Id. (quoting

Twombly, 550 U.S. at 556). Plausibility demands “more than a

sheer possibility that [the] defendant has acted unlawfully,” or

“facts that are merely consistent with [the] defendant’s

liability.” Id. (quoting Twombly, 550 U.S. at 557) (internal

quotation marks omitted). Although the complaint need not set

forth detailed factual allegations, it must provide “more than

an unadorned, the-defendant-unlawfully-harmed-me accusation.”

Id. (quoting Twombly, 550 U.S. at 555).

In evaluating the pleadings, I excise any conclusory

statements from the complaint and credit as true all non-

conclusory factual allegations and reasonable inferences drawn

from those allegations. Ocasio-Hernandez v. Fortuno-Burset, 640

F.3d 1, 12 (1st Cir. 2011). I “may also consider ‘facts subject

to judicial notice, implications from documents incorporated

into the complaint, and concessions in the complainant’s

response to the motion to dismiss.’” Breiding v. Eversource

Energy, 939 F.3d 47, 49 (1st Cir. 2019) (quoting Artuert-Velez

v. R.J. Reynolds Tobacco Co., 429 F.3d 10, 13 n.2 (1st Cir.

2005)).

6 III. ANALYSIS

BAE contends that Chalifoux’s FCA retaliation claim is

defective because he fails to allege that he engaged in conduct

protected by the FCA. ATR joins in BAE’s challenge and also

argues that Chalifoux’s remaining claims against it are doomed

because he has not sufficiently alleged that ATR retaliated

against him or was otherwise responsible for his termination. I

address each argument in turn.

A. False Claims Act Claim

The First Circuit has explained that “to prevail on a False

Claims Act retaliation claim, a plaintiff must show that 1) the

employee's conduct was protected under the FCA; 2) the employer

knew that the employee was engaged in such conduct; and 3) the

employer discharged or discriminated against the employee

because of his or her protected conduct.” United States ex rel.

Karvelas v. Melrose-Wakefield Hosp., 360 F.3d 220, 235 (1st Cir.

2004). “In order to satisfy the first element of a cause of

action under 31 U.S.C. § 3730(h), a plaintiff must demonstrate

that he or she engaged in activity protected under the FCA.

This element of a retaliation claim does not require the

plaintiff to have filed an FCA lawsuit or to have developed a

winning claim at the time of the alleged retaliation. Rather,

an employee's conduct is protected where it involves ‘acts done

. . . in furtherance of’ an FCA action.” Id. at 236 (quoting 31

7 U.S.C. § 3730(h)). The First Circuit has defined conduct “in

furtherance” of an action under the FCA “as conduct that

reasonably could lead to a viable FCA action.” Id. “[I]n other

words, investigations, inquiries, testimonies or other

activities that concern the employer’s knowing submission of

false or fraudulent claims for payment to the government.” Id.

at 237.

Defendants target the first element of Chalifoux’s FCA

retaliation claim.1 They argue that Chalifoux’s complaints about

applicants for the Tech 1 position and his refusal to enter

false disposition codes for the unsuccessful candidates do not

qualify as protected conduct under the FCA because they are not

tied to a claim for payment by BAE. To support their position,

defendants invoke a body of First Circuit law which recognizes

that a complaint about a contractor’s failure to abide by

contract terms or comply with federal regulations does not

qualify as protected conduct unless the complaint is linked to

false or fraudulent claims for payment. Guilfoile v. Shields,

913 F.3d 178, 187 (1st Cir. 2019); United States ex rel. Booker

1 Defendants also allege that Chalifoux failed to satisfy the other elements of an FCA retaliation claim. I need not consider those argument because I conclude that Chalifoux has failed to allege that he engaged in conduct protected by the FCA.

8 v. Pfizer, Inc., 847 F.3d 52, 60 (1st Cir. 2017); Karvelas, 360

F.3d at 237.

Chalifoux responds by claiming that his resistance to BAE’s

regulatory violations is protected by the FCA because it

reasonably could have led to the exposure of a larger plot by

BAE to submit false claims. Chalifoux’s argument proceeds in

several steps. First, he asserts that BAE’s contracts with the

government include “equal opportunity clauses” that require BAE

to consider every qualified candidate before it fills a vacant

position. Next, he contends that BAE fraudulently induced the

government to agree to the contracts by falsely representing

that it intended to fulfill its equal opportunity obligations.

He then claims that BAE’s contracts are themselves false claims

under the FCA. Finally, he argues that the contracts, BAE’s

fraudulent representations that it had complied with its equal

opportunity obligations, and its creation of false records to

conceal its misconduct can all therefore serve as grounds for

viable FCA claims.

I reject Chalifoux’s argument because it is based on the

mistaken premise that BAE’s contracts with the government

constitute claims under the FCA. “The False Claims Act imposes

civil liability on ‘any person who . . . knowingly presents, or

causes to be presented, a false or fraudulent claim for payment

or approval.’” Universal Health Serv., Inc. v. United States ex

9 rel. Escobar, 136 S.Ct. 1989, 1999 (2016) (quoting 31 U.S.C. §

3729(a)(1)(A)). Entering into a contract with the federal

government is not the same as presenting a claim for payment to

the government.2

Although promissory fraud can be a viable theory of common

law fraud, it must be grounded in a claim for payment when it

serves as the basis for an FCA claim. See Karvelas, 360 F.3d at

225 (“Not all fraudulent conduct gives rise to liability under

the FCA.”). Indeed, as the First Circuit has reiterated time

and again, “[T]he statute attaches liability, not to the

underlying fraudulent activity or to the government’s wrongful

payment, but to the ‘claim for payment.’” Id. (quoting United

States v. Rivera, 55 F.3d 703, 709 (1st Cir. 1995)). Thus, “a

defendant violates the FCA only when he or she has presented to

the government a false or fraudulent claim, defined as ‘any

request or demand . . . for money or property’ where the

government provides or will reimburse any part of the money or

2 Chalifoux finds support for his interpretation of the statute in a decision from the District of Maine, Manfield v. Alutiiq Int’l Sols., Inc., 851 F. Supp. 2d 196, 203 (D. Me. 2012) (“The contract itself constitutes a claim for payment, insofar as it recites the obligations of each party to one another”). However, this decision was handed down before the Supreme Court’s decision in Escobar, in which the Court clarified the meaning of “false or fraudulent claims” under the FCA, and without the benefit of briefing by the parties on the statutory language at issue.

10 property requested.” Karvelas, 360 F.3d at 225 (quoting 31

U.S.C. § 3729(c)). Because Chalifoux has not tied his

promissory fraud argument to a demand by BAE for payment, he has

not sufficiently alleged that his resistance to BAE’s regulatory

violations and contractual breaches reasonably could have led to

an FCA action against BAE. Accordingly, I grant defendants’

motions to dismiss Chalifoux’s FCA retaliation claim.3

3 Although Chalifoux might be able to link his promissory fraud theory to a demand by BAE for payment, he would have to allege and ultimately prove that the fraud he cites is material to the government’s payment decision. See 31 U.S.C. § 3729(b)(4) (defining “material” as “having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property; see also United States ex rel. Hendow v. University of Phoenix, 461 F.3d 1166, 1174 (9th Cir. 2006) (“the promissory fraud theory requires that the underlying fraud be material to the government’s decision to payout moneys to the claimant”); United States ex rel v. Stephens Institute, 909 F.3d 1012, 1018- 19 (9th Cir. 2018) (applying Hendow post Escobar); United States v. Strock, 982 F.3d 51 (2d Cir. 2020) (rejecting argument that “materiality must be assessed primarily with regard to government’s decision to award contracts” and holding instead that “the government’s ‘payment decision’ under Escobar encompasses both its decision to award a contract and its ultimate decision to pay under that contract”); but cf. Scollick ex rel. United States v. Narula, No. 14-cv-1339, 2020 WL 6544734 at *8 (D.D.C. Nov. 6, 2020) (“Escobar’s materiality standard applies only to False Claims Act suits alleging falsity under the implied false certification theory of falsity”). As the Supreme Court has noted, this standard is “demanding.” Escobar, 136 S. Ct. at 2003. “A misrepresentation cannot be deemed material merely because the government designates compliance with a particular statutory, regulatory, or contractual requirement as a condition of payment. Nor is it sufficient for a finding of materiality that the government would have the option to decline to pay if it knew of the defendant’s noncompliance.” Id. Because Chalifoux has not attempted to connect his complaints about BAE’s regulatory violations to the submission of fraudulent claims, and because this issue as not

11 B. Remaining Claims Against ATR

ATR also moves to dismiss Chalifoux’s other three claims

against it: a retaliation claim under the FLSA; a claim under

New Hampshire Whistle Blower Protection Act; and a wrongful

termination claim under New Hampshire common law. It argues

that these claims fail even if Chalifoux faced unlawful

retaliation from BAE because Chalifoux “does not allege that ATR

terminated, retaliated, or took actionable adverse employment

action against [him].” Doc. No. 30 at 4. I disagree.

Chalifoux alleges that ATR refused to place him with other

companies in retaliation for his complaints about BAE’s alleged

misconduct. An employer’s complete refusal to assign work to an

employee plainly can qualify as a constructive discharge. A

constructive discharge, in turn, can support FLSA retaliation,

Bartolon-Perez v. Island Granite & Stone, Inc., 108 F.Supp.3d

1335, 1340 (S.D. Fla. 2015), and Whistleblower Protection Act

claims. It can also serve as the foundation for a wrongful

termination claim. Karch v. BayBank FSB, 147 N.H. 525, 536

(N.H. 2002). Accordingly, I am not persuaded by ATR’s motion to

dismiss these claims.4

been adequately briefed by the parties, I need not speculate about whether he could meet this demanding standard. 4 Chalifoux also alleges that ATR can be held liable for failing

to take affirmative steps to protect Chalifoux from retaliation by BAE. See e.g. Burton v. Freescale Semiconductor Inc., 798 F.3d 222, 229 (5th Cir. 2015). Because I deny ATR’s motion to

12 IV. CONCLUSION

For the foregoing reasons, I grant defendants’ motions to

dismiss Count I (Doc. Nos. 28 and 30) and deny ATR’s motion as

it pertains to Counts II, III, and IV.

SO ORDERED.

/s/ Paul Barbadoro Paul Barbadoro United States District Judge January 6, 2021

cc: Allan Keith Townsend, Esq. Courtney H. G. Herz, Esq. Michael D. Ramsdell, Esq. Eulalio J. Garcia, Esq. Tara E. Lynch, Esq.

dismiss for other reasons, I need not address his argument at this stage in the proceedings.