Seventh Circuit Rejects False Claims Act and Retaliation Claims Premised on Purported Contractual Violations

In United States ex rel. Uhlig v. Fluor Corp., et al., No. 14-2815 (7th Cir. Oct. 11, 2016), the Seventh Circuit affirmed the grant of summary judgment in favor of Fluor Corporation (“Fluor”) in an FCA action premised on alleged contract violations and whistleblower retaliation.  The decision sets a relatively high bar for proving the existence of “protected” whistleblower activity and is particularly helpful for defendants seeking to defeat retaliation claims under the FCA.

Fluor contracted with the United States Army in 2007 to provide it with electrical engineering services in Afghanistan.  As part of the contract, Flour agreed to submit a plan delineating its electricians’ qualifications.  Notably, the plan contemplated that Fluor would hire “helpers” and “journeymen,” and defined journeymen as workers with “verifiable minimum experience and/or [who] hold[] a universally accepted certification, license and/or degree.”

In 2010, Fluor hired Eric Uhlig as a journeyman on a temporary basis.  Shortly after, the company announced a requirement that all American journeymen possess a state-issued electrician’s license.  Uhlig, an American, did not have such a license and thus was not eligible to continue his work as a journeyman.  The company, therefore, revoked Uhlig’s classification and reclassified him as a “helper.”  Even though he was reclassified, Uhlig nonetheless believed that Fluor routinely assigned him tasks that only a journeyman could perform.

Uhlig assumed that the licensing requirement must have derived from Fluor’s contract with the United States Army.  According to Uhlig, Fluor breached that contract when it allowed him to perform journeymen work without a license and then submitted false invoices to the government for that unlicensed work.

Uhlig later complained about Fluor’s conduct in several emails to its Human Resources Department.  Notably, in one email, he copied individuals outside of Fluor and shared non-public information.  One week later, Fluor terminated Uhlig based on violations of the company’s computer-use policy.

Uhlig filed a False Claims Act case, which included a retaliation claim, against Fluor in the United States District Court for the Central District of Illinois.  The district court granted summary judgment, and Uhlig appealed.

In reviewing the lower court’s decision, the Seventh Circuit first concluded that Uhlig failed to present evidence of a false claim.  Uhlig alleged that Fluor was contractually required to hire only licensed journeymen; however, the court concluded that the contract with the United States Army did not require licensing.  Instead, it provided a range of options for validating journeymen’s qualifications, only one of which involved licensing.  Fluor’s election to require licensing did not mean it was contractually required to do so.  Accordingly, the district court rejected Uhlig’s False Claims Act claim.

The court then turned to Uhlig’s retaliation claim and held that the retaliation claim cannot proceed because Uhlig did not show that a reasonable employee in Uhlig’s position would have believed Fluor was defrauding the government.  As a result, his conduct was not “protected activity” that could give rise to a retaliation claim under the False Claims Act.