Fourth Circuit rejects retaliation claim in case involving Secret Service gun contract

by Ben Vernia | January 5th, 2011

On December 27, 2010, the Fourth Circuit Court of Appeals affirmed the dismissal of Mann v. Heckler & Koch Defense, Inc., a case brought under the antiretaliation provision of the False Claims Act, 31 U.S.C. § 3730(h).

Mann was an employee of Heckler & Koch, a maker of firearms. The firm entered a bid for a contract to supply rifles for a Secret Service counterassault team although its rifles as then manufactured lacked two features asked for in the bid: ambilevers (devices to permit the rifle to be used left-handed) and a two-stage match trigger. After filing the bid, Mann’s supervisor received aftermarket ambilevers from a consultant. Mann and the consultant believed the ambilevers to be inadequate, but Mann’s supervisor, bypassing normal bidding rules, provided them to a friend in the Secret Service in order to demonstrate the company’s ability to fulfill the requirement. The Secret Service ultimately rejected the company’s bid.

Mann complained internally about the company’s bid, and the company hired an outside attorney who performed an internal investigation. The attorney concluded that at worst, the supervisor’s conduct had violated federal bidding regulations, but that there had been no violation of the False Claims Act because the supervisor had not concealed his conduct.

Mann filed suit under the FCA and state law, arguing that he had been retaliated against. The company then terminated him, and the District Court dismissed his claims.

On appeal, the Fourth Circuit found that none of the three categories of Mann’s conduct comprised “protected activity” within the meaning of § 3730(h):

  • Opposition to the company’s bid – the Court agreed with the District Court that Mann’s opposition to the company’s efforts to win the contract was not protected activity, because the company’s conduct was “open and straightforward.” At best, the court reasoned, his opposition amounted to a difference of opinion on bid strategy, and not effort to prevent fraud. Similarly, his supervisor’s delivery of the ambilevers at most violated federal bidding regulations, but had no effect on the outcome, which was that the company lost the bid.
  • Investigation – The court found that Mann’s activities in the investigative phase revolved around conduct that was not fraudulent, so those activities were not protected by the FCA.
  • His retaliation claim – Mann had argued that activities to pursue his § 3730(h) claim were themselves protected, but the court disagreed. Relying on the Supreme Court’s decision in Graham Co. Soil & Water Conserv. Dist. v. U.S. ex rel. Wilson (which held that the statute of limitations in § 3730(b) was not applicable to retaliation claims under § 3730(h)), the Court concluded that activities to further a potential § 3730(h) claim could not themselves be the subject of a § 3730(h) claim. To rule otherwise, the Court reasoned, would open the floodgates of litigation of a wide variety of employment grievances having nothing to do with preventing government fraud.

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