District Court Holds False Claims Act Applies to Employee Allegedly Terminated for Engaging in Protected Activity Against Unrelated Former Employer

by Littler
Contact

In a matter of first impression, the U.S. District Court for the Western District of Pennsylvania in Cestra v. Mylan Inc. No. 15-0873 (E.D. Pa., May 22, 2015) held that the antiretaliation provision of the False Claims Act applies to an employer who terminates an employee for engaging in protected conduct against an unrelated entity.  Although the plaintiff conceded his prior qui tam action against a former employer was wholly unrelated to the immediate defendant, the district court held that a plaintiff does not need to engage in protected activity against the actual defendant, just that the defendant retaliated against him as a result. The district court also recognized, however, that it was the first court to construe the False Claims Act’s (“FCA” or the “Act”) antiretaliation provisions in such a way, and therefore granted immediate interlocutory review of its order before the U.S. Court of Appeals for the Third Circuit.

The Complaint and District Court Decision

In 2010, the plaintiff filed a FCA claim against his then employer, Cephalon, Inc. (“Cephalon”).  The original complaint was filed under seal and the realtor only identified in subsequent pleadings as “John Doe.”  In 2011, the plaintiff began working for defendant Mylan Pharmaceuticals, Inc. (“Mylan” or the “Company”), which is entirely unrelated to Cephalon. 

On July 10, 2013, the United States unsealed the pleadings in the plaintiff’s case against Cephalon, and the plaintiff’s identity as the realtor in the case became public knowledge.  Approximately seven months later, the web page of Café Pharma, an informational website for the pharmaceutical industry, posted a link to an article regarding the Cephalon case that identified the plaintiff as a “whistleblower.”  The plaintiff alleges that upon seeing the article he immediately emailed his supervisors at Mylan, assuring them that he was not engaged in any form of whistleblowing against the Company.  The plaintiff also alleges that his repeated requests to meet with his supervisors to discuss his case against Cephalon were ignored and he soon became ostracized by the Company.  In May 2014, Mylan terminated the plaintiff’s employment citing performance issues.

On June 24, 2014, the plaintiff filed a FCA claim against Mylan in a Pennsylvania district court, alleging that Mylan violated the antiretaliation provisions of the FCA when it terminated him for bringing a qui tam action against his former employer.  Mylan then filed a motion to dismiss, which was heard by a Magistrate Justice.  On April 6, 2014, the Magistrate issued a report recommending that the court deny Mylan’s motion to dismiss, reasoning that the plaintiff need not plead that he engaged in protected activity against Mylan, but only that he engaged in protected activity under the FCA and that Mylan terminated him as a result.

Mylan then filed a timely objection to the Magistrate’s Report and Recommendation with the district court.  Mylan alternatively filed a motion for certification pursuant to 28 U.S.C. § 1292(b) requesting the court certify its order for immediate appeal to the Third Circuit if the court adopted the Magistrate’s Report and Recommendation. 

On May 22, 2015, the district court adopted the Magistrate’s Report and Recommendation, and denied Mylan’s motion to dismiss.  In its reasoning, the court stressed that the antiretaliation provision of the FCA is remedial in nature and that courts should therefore construe it broadly.  The court adopted the Magistrate’s interpretation that the antiretaliation protections should not be narrowly read to apply only in instances where a plaintiff engages in protected activity directly against the defendant.  Rather, the court concluded, entities may be liable under the FCA any time they retaliate against an employee for engaging in activity that is defined as protected conduct under the Act.  At the same time, however, the court also recognized that “[t]he parties have not identified, and the court’s research has not yielded, any authority in which a court has held that the antiretaliation provision of the FCA applies to an employer who fires an employee for engaging in protected conduct against an unrelated entity.”   As a result, the court also granted Mylan’s motion for immediate appeal and granted interlocutory review of its order before the Third Circuit, where the matter remains pending.

Impact on Employers

The Third Circuit’s pending decision on this matter may significantly impact companies’ overall exposure to FCA retaliation claims.  If the circuit court upholds the district court’s order, there is an argument that any individual who ever filed a qui tam action against an employer could in essence be in a perpetual state of protected activity.  This means companies could now be exposed to FCA suits not just from whistleblowers against their own entities, but also those who blew the whistle against wholly unrelated companies in years past.  Moreover, if an employee’s previous protected activity need not have any relation with its current employer, some companies may not even be aware of this additional litigation risk when making personnel decisions. 

It is also important to note that the plaintiff in Cestra v. Mylan, Inc. was a current employee, as opposed to a job applicant.  In contrast, in Vander Boegh v. EnergySolutions, Inc. 772 F.3d 1056 (6th Cir. 2014), the plaintiff claimed that he was denied a job because he engaged in FCA protected whistleblower activity at a prior job.  The Sixth Circuit dismissed the claim, holding that the plain language of the FCA’s antiretaliation provisions only apply to “employees” – not job applicants.  That being said, Cestra and other court decisions throughout recent years have commonly stressed the exceedingly “broad remedial scope” of federal whistleblower laws, and employers must remain cautious whenever dealing with these statues.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Littler | Attorney Advertising

Written by:

Littler
Contact
more
less

Littler on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.