Sorenson v. Wadsworth Brothers Construct ( 2022 )

FILED
Appellate Case: 21-4005 Document: 010110736374 United States CourtPage:
Date Filed: 09/09/2022 of Appeals
1
Tenth Circuit
September 9, 2022
PUBLISH Christopher M. Wolpert
Clerk of Court
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
UNITED STATES OF AMERICA ex
rel. KELLY E. SORENSON,
Plaintiff - Appellant,
v. No. 21-4005
WADSWORTH BROTHERS
CONSTRUCTION COMPANY, INC.,
Defendant - Appellee.
Appeal from the United States District Court
for the District of Utah
(D.C. No. 2:16-CV-00875-CW)
Russell T. Monahan, Cook & Monahan, LLC, Salt Lake City, Utah, for Plaintiff-
Appellant.
Wilford A. Beesley, III (Jonathan T. Tichy with him on the brief), Wilford
Beesley, P.C., Salt Lake City, Utah, for Defendant-Appellee.
Before BACHARACH, BRISCOE, and MURPHY, Circuit Judges.
MURPHY, Circuit Judge.
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I. INTRODUCTION
Kelly Sorenson, acting as a qui tam relator, brought suit on behalf of the
United States against his former employer, Wadsworth Brothers Construction
Company (“Wadsworth”), under the provisions of the False Claims Act (“FCA”),
31 U.S.C. §§ 3729-33. Sorenson alleged Wadsworth, a contractor working on a
federally funded transportation project, falsely certified its compliance with the
prevailing-wage requirements of the Davis-Bacon Act, 40 U.S.C. §§ 3141-48.
The district court granted Wadsworth’s Fed. R. Civ. P. 12(b)(6) motion as to the
following claims in Sorenson’s complaint: (1) Claim 1, alleging Wadsworth
presented to the government a false claim, see 31 U.S.C. § 3729(a)(1)(A);
(2) Claim 2, alleging the use or making of a false record to obtain payment on a
false claim, see id. § 3729(a)(1)(B); and (3) Claim 3, alleging a conspiracy to
defraud, see id. § 3729(a)(1)(C). 1 The district court concluded Sorenson’s
complaint failed to satisfy the demanding materiality standard set out by the
Supreme Court in Universal Health Services, Inc. v. United States ex rel.
Escobar, 579 U.S. 176, 192–96 (2016). Thereafter, the district court granted
summary judgment to Wadsworth on Sorenson’s Claim 5, a retaliation claim
based on the whistleblower provisions of 31 U.S.C. § 3730(h). The district court
1
The complaint also included a Claim 4, alleging Wadsworth made a false
receipt with the intent to defraud the government. See 31 U.S.C. § 3729(a)(1)(E).
Sorenson conceded Wadsworth’s motion to dismiss Claim 4, and the validity of
that claim is not before this court on appeal.
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concluded Sorenson failed to put Wadsworth on notice his protected activities
were related to purported violations of the FCA and, in addition, failed to
demonstrate Wadsworth’s actions were retaliatory.
Sorenson appeals the dismissal of Claims 1, 2, and 3 and the grant of
summary judgment to Wadsworth on Claim 5. This court exercises jurisdiction
pursuant to 28 U.S.C. § 1291 and affirms the orders of the district court. 2
II. DISCUSSION
A. The Rule 12(b)(6) Issues
1. Background
a. Statutory Background
I. The FCA
The FCA imposes liability for “fraudulent attempts to cause the government
to pay out sums of money.” United States ex rel. Reed v. KeyPoint Gov’t Sols.,
923 F.3d 729, 736 (10th Cir. 2019) (quotation omitted). It permits the recovery
of civil penalties and treble damages from anyone who, inter alia, (1) “knowingly
2
Sorenson also challenged a district court order awarding Wadsworth its
attorney’s fees. This court ordered Sorenson to show cause why this aspect of his
appeal should not be dismissed for lack of jurisdiction because he failed to file a
separate notice of appeal after the district court entered a final order setting the
amount of fees. See Art Janpol Volkswagen, Inc. v. Fiat Motors of N. Am., Inc.,
767 F.2d 690, 697 (10th Cir. 1985). Sorenson conceded this court “lacks
jurisdiction with regard to the issue of attorney’s fees.” Given this well-taken
concession, we dismiss for lack of jurisdiction Sorenson’s challenge to the
district court’s award of attorney’s fees in Wadsworth’s favor.
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presents . . . a false or fraudulent claim for payment or approval,” 31 U.S.C.
§ 3729(a)(1)(A), or (2) “knowingly makes, uses, or causes to be made or used, a
false record or statement material to a false or fraudulent claim,” id.§ 3729(a)(1)(B). The FCA also imposes liability on anyone who “conspires to
commit a violation” of the provisions of § 3729(a)(1). Id. § 3729(a)(1)(C).
Falling within the umbrella of liability created by § 3729(a)(1) are “false
certifications.” Universal Health, 579 U.S. at 180–81, 186–87. A false claim
within the meaning of § 3729(a)(1) can be either factually false or legally false.
United States ex rel. Polukoff v. St. Mark’s Hosp., 895 F.3d 730, 741 (10th Cir.
2018). This case involves allegations of legal falsity. Legally false requests for
reimbursement “generally require knowingly false certification of compliance
with a regulation or contractual provision as a condition of payment.” Id.The FCA’s provisions can be enforced in two ways. “[T]he [g]overnment
itself may sue the alleged false claimant to remedy the fraud.” Reed, 923 F.3d at
736 (quotation omitted); see also 31 U.S.C. § 3730(a). Alternatively, “a private
person (the relator) may bring a qui tam suit on behalf of the government and also
for herself alleging that a third party made fraudulent claims for payment to the
government. As a bounty for identifying and prosecuting fraud, relators get to
keep a portion of any recovery they obtain.” Reed, 923 F.3d at 736 (quotations
omitted); see also 31 U.S.C. § 3730(b), (d).
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Importantly, the liability imposed by § 3729(a)(1) is predicated on a
“rigorous” materiality requirement. Universal Health Servs. 579 U.S. at 192. “A
misrepresentation about compliance with a statutory, regulatory, or contractual
requirement must be material to the Government’s payment decision in order to
be actionable under the [FCA].” Id. And, the mere fact “the Government
designates compliance with a particular statutory, regulatory, or contractual
requirement as a condition of payment” is not enough, standing alone, to render a
misrepresentation material. Id. at 194. Likewise, the mere fact the government
could opt not to pay if it knew about a defendant’s noncompliance does not, in
itself, establish materiality. Id. And, “minor or insubstantial” noncompliance
with statutory, regulatory, or contractual requirements is immaterial. Id.
In sum, when evaluating materiality under the [FCA], the
Government’s decision to expressly identify a provision as a
condition of payment is relevant, but not automatically dispositive.
Likewise, proof of materiality can include, but is not necessarily
limited to, evidence that the defendant knows that the Government
consistently refuses to pay claims in the mine run of cases based on
noncompliance with the particular statutory, regulatory, or
contractual requirement. Conversely, if the Government pays a
particular claim in full despite its actual knowledge that certain
requirements were violated, that is very strong evidence that those
requirements are not material. Or, if the Government regularly pays
a particular type of claim in full despite actual knowledge that
certain requirements were violated, and has signaled no change in
position, that is strong evidence that the requirements are not
material.
Id. at 194–95 (footnote omitted).
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ii. The Davis-Bacon Act
The Davis-Bacon Act governs federally funded construction contracts.
Int’l Bhd. of Elec. Workers, Local 113 v. T & H Servs., 8 F.4th 950, 953 (10th
Cir. 2021). It is “a minimum wage law designed for the benefit of construction
workers.” United States v. Binghamton Constr. Co., 347 U.S. 171, 178 (1954).
The Act protects “local wage standards by preventing contractors from basing
their bids on wages lower than those prevailing in the area” where the work is to
be done. Univs. Research Ass’n, Inc. v. Coutu, 450 U.S. 754, 773–74 (1981)
(quotation omitted); see T & H Servs., 8 F.4th at 953 (citing 40 U.S.C. § 3142). It
requires contractors on most federally funded building projects to pay employees
minimum wages based on the Department of Labor’s (“DOL”) determination of
prevailing wages “for the corresponding classes of laborers and mechanics
employed on projects of a character similar to the contract work in the civil
subdivision of the State in which the work is to be performed.” 40 U.S.C.
§ 3142(b). 3 Notably, payment of Davis-Bacon wages is jobsite and task specific,
not project related. The Act mandates payment of Davis-Bacon wages only to
“mechanics and laborers employed directly on the site of the work.” Id. at
3
The DOL “has a robust system authorized by the Davis-Bacon Act and
DOL regulations promulgated thereunder for determining job classifications for
Davis-Bacon work and resolving disputes over classifications.” T & H Servs.,
8 F.4th at 953 (citing, inter alia, 29 C.F.R. Parts 1, 5–7). The entire process of
establishing Davis-Bacon minimum wages is described in detail in T & H Servs.,
8 F.4th at 953–56.
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§ 3142(c)(1). The applicable regulation defines the term “site of work” as “the
physical place or places where the building or work called for in the contract will
remain; and any other site where a significant portion of the building or work is
constructed, provided that such site is established specifically for the performance
of the contract or project.” 29 C.F.R. § 5.2(1)(l). Because the applicable
statutory and regulatory provisions focus on the jobsite, work that is only
tangentially related to the site is not covered by the prevailing-wage requirement.
See, e.g., 29 C.F.R. § 5.2(j)(2) (“[T]he transportation of materials or supplies to
or from the site of the work by employees of the . . . contractor . . . is not”
covered by the statutory requirement to pay Davis-Bacon wages).
This court has noted the “elaborate administrative scheme” created by the
Davis-Bacon Act and its implementing regulations “is meant to provide
consistency and uniformity” in “the administration and enforcement of the . . .
Act, and balances the interests of contractors and their employees.” T & H Servs.,
8 F.4th at 957 (quotation omitted). 4
4
As explained in T & H Servs., DOL calculates Davis-Bacon wages based
on two components: prevailing-wage determinations made by the DOL and
worker-category determinations made by a contracting officer. 8 F.4th at 953–54.
To balance the interest of contractors and employees, category determinations
must generally be challenged in administrative proceedings before the contract is
awarded. See id. at 954. At least two courts have concluded that FCA claims
involving alleged Davis-Bacon misclassifications, as opposed to other kinds of
alleged Davis-Bacon misrepresentations, might implicate the primary jurisdiction
doctrine. See United States ex rel. Sheet Metal Workers Int’l Assoc. v. Horning
(continued...)
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Enforcement of the Davis-Bacon Act is the responsibility of
both the contracting agency and the DOL. Employees can submit
complaints regarding alleged violations of the Davis-Bacon Act to
the contracting officer, who can investigate and take action against
an offending contractor, and refer disputes to the DOL. . . . The
procedures by which the DOL resolves such disputes, which are set
forth in 29 C.F.R. § 5.11, include notification of the affected parties
by the Administrator of the DOL Wage and Hour Division, potential
referral to an administrative law judge for factfinding, and eventual
appeal of Administrator decisions to the [administrative review
board].
Id. at 956-57 (citations and footnotes omitted). 5 Enforcement and transparency
are also furthered by requirements that (1) DOL promulgate regulations
mandating “that each contractor and subcontractor each week must furnish a
statement on the wages paid each employee during the prior week,” 40 U.S.C.
§ 3145; and (2) contractors submit to the contracting agency weekly payrolls
4
(...continued)
Invs., LLC, 828 F.3d 587, 592 (7th Cir. 2016) (noting doctrine of primary
jurisdiction might come into play when a Davis-Bacon claim is based on
misclassification); United States ex rel. Wall v. Circle C Constr., LLC, 697 F.3d
345, 354 (6th Cir. 2012) (same). But cf. United States ex rel. Int’l Bhd. of Elec.
Workers v. Farfield Co., 5 F.4th 315, 322 (3d Cir. 2021) (considering a Davis-
Bacon misclassification claim without considering the issue of primary
jurisdiction).
5
Although not determinative of the issues on appeal, Sorenson used this
very administrative scheme. He sought payment of additional wages in
administrative proceedings before the Utah Labor Commission. The Commission
determined Wadsworth underpaid Sorenson $2581.62 in Davis-Bacon wages. On
Wadsworth’s appeal, however, a Utah state court set aside the Labor
Commission’s conclusions and found that Wadsworth’s “timecards and timecard
coding” accurately reflected the amount of work Sorenson undertook on Davis-
Bacon jobsites.
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along with a certification that those payrolls comply with the requirements of the
Act, 29 C.F.R. § 5.5(a)(3)(ii).
Violations of the Act “can result in withheld payments, contract
termination, and debarment.” T & H Servs., 8 F.4th at 956 (citing 40 U.S.C.
§§ 3142–44; 29 C.F.R. §§ 5.9, 5.12; 48 C.F.R. §§ 22.406–9, 22.406–11). “If
withheld sums are insufficient to adequately compensate employees who have
been underpaid, the Act also creates a limited right of action for employees to sue
on the ‘payment bond’ that government contractors must post for ‘the protection’
of workers.” Id. (citing, inter alia, 40 U.S.C. § 3144(a)(2)).
b. Factual Background
The following factual allegations (as opposed to “legal conclusions,”
“naked assertions,” or “conclusory statements”) set out in Sorenson’s complaint
are taken as true for purposes of analyzing the propriety of the district court’s
grant of Wadsworth’s Rule 12(b)(6) motion. See Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555–57 (2007).
I. Factual Allegations re violations of Davis-Bacon
In 2012, Salt Lake International Airport (the “Airport”) received a nine
million dollar federal grant for improvements. Using those federal funds, the
Airport solicited bids for construction of a deicing pad. Consistent with a
condition of the grant, the Airport required that contractors awarded the contract
certify employees were paid in compliance with the Davis-Bacon Act. This
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information was contained in the bid-solicitation documents. Wadsworth was the
low bidder on the project, and it and the Airport entered into a contract.
Wadsworth began construction work on the deicing project in early 2013
and employed Sorenson as a truck driver from September 1, 2014 until November
14, 2014. On each day Sorenson “worked on the [d]eicing project, [he] was
required to swipe his work identity badge into the security system of the Airport
to obtain access to the Airport property.” In addition to his regular rate of pay,
Sorenson was entitled to an additional $10.53 per regular hour worked on the
Davis-Bacon jobsite. Almost immediately after being employed by Wadsworth,
Sorenson noticed discrepancies in his pay. He spent approximately three days
working on another “federally funded” highway project during this time frame.
Although employed exclusively on the “federally funded” projects, Sorenson’s
pay reflected substantial work on non-Davis-Bacon jobsites. Wadsworth
employees, on and off of the deicing project, told Sorenson it was a standard
practice for Wadsworth to shave Davis-Bacon time off of “federal projects” and
that it did so to undercut other bidders on such projects.
Sorenson learned Wadsworth created time sheets showing he worked jobs
outside of the deicing and federal highway projects. Several time sheets
contained Sorenson’s forged signature. Wadsworth also had Sorenson sign time
sheets and, after he had done so, would enter jobsite codes that were not
previously on the time sheets. This would make it appear as though Sorenson was
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working off the deicing project site. Indeed, Sorenson’s time sheets and pay stubs
include entries indicating he was not working at the deicing project; records
obtained from the Airport, however, show he swiped into the Airport security
system to work.
When Wadsworth paid Sorenson some additional wages due under the Act,
the wages were paid as a “Union Benefit.” The Union Benefits were then sent by
Wadsworth to its “Profit Sharing” plan. The amounts sent to the Profit Sharing
plan did not equal the Davis-Bacon wages Sorenson was due. Moreover, the
account used by Wadsworth for the Profit Sharing plan is commingled with
Wadsworth’s general funds. Wadsworth uses Alliance Benefit Group
(“Alliance”) to administer its Profit Sharing plan. The purpose of using Alliance
is to obscure the Davis-Bacon wages actually due Wadsworth’s employees to
cause confusion amongst those employees.
ii. Allegations as to Materiality
Certification to the United States of compliance with the Davis-Bacon Act
is a prerequisite to Wadsworth’s payment under the construction contract.
“Wadsworth performed work at the deicing project since the project’s inception
and, therefore, has submitted invoices to include certified payrolls up the supply
chain and, inevitably, to the federal government for expenses including
Sorenson’s wages, and have been paid in relation to those invoices as a result of
the governments reliance on their certifications of Davis-Bacon Act compliance.”
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To increase its profits, Wadsworth represented to the federal government on each
of its invoices involving Sorenson that the wages Wadsworth paid Sorenson
complied with the Davis-Bacon Act, and it “possibly” made the same
representations regarding other employees’ wages as well. Wadsworth did so
despite actually knowing it did not pay Sorenson in accord with applicable
Davis-Bacon requirements. As a result of these misrepresentations, the federal
government has been damaged by paying Wadsworth monies Wadsworth was not
entitled to receive.
c. Procedural Background
The district court dismissed Sorenson’s Claims 1, 2, and 3 in a brief order.
It determined that Universal Health Services directly controlled the disposition of
Wadsworth’s motion to dismiss. That was so, the district court concluded,
because Sorenson’s complaint advanced no basis for a finding of materiality other
than “that certification of compliance with the Davis-Bacon Act is a prerequisite
to the payment” of Wadsworth’s invoices. Universal Health Services specifically
held that such an allegation was insufficient to establish materiality. 579 U.S. at
194. The district court further determined Sorenson’s allegations as to
Wadsworth’s claimed violations of the Davis-Bacon Act were so conclusory that
they failed to allege a false or fraudulent act. See Dist. Court Rule 12(b)(6) Order
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at 9 (“[Sorenson’s] complaint fails to establish that [Wadsworth] made fraudulent
misrepresentations under the FCA.”). 6
2. Analysis
a. Standard of Review
This court reviews de novo a district court’s Rule 12(b)(6) dismissal in a
qui tam proceeding. United States ex rel. Lemmon v. Envirocare of Utah, Inc.,
614 F.3d 1163, 1167 (10th Cir. 2010). The relevant question is “whether enough
facts have been pled to state a plausible claim.” Id. “While a complaint attacked
by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a
plaintiff’s obligation to provide the grounds of his entitlement to relief requires
more than labels and conclusions, and a formulaic recitation of the elements of a
cause of action will not do. Factual allegations must be enough to raise a right to
relief above the speculative level.” Bell Atl. Corp., 550 U.S. at 555 (quotations,
alterations, and citation omitted); see also Iqbal, 556 U.S. at 679 (“Determining
6
Sorenson appears to suggest the import of the district court’s language is
unclear. See Sorenson’s Opening Brief at 24 (“The District Court did not
expound upon its conclusion about how the Plaintiff’s Complaint failed to
establish a fraudulent misrepresentation, nor did the District Court determine how
the allegations raised in the Plaintiff’s Complaint failed to establish the necessary
elements under the FCA.”). This court disagrees. The meaning of this language
is clear on its face. In any event, in an order granting Wadsworth its attorney’s
fees, the correctness of which is not before this court on appeal, see supra n.2, the
district court interpreted its own Rule 12(b)(6) order as standing for the
proposition that Claims 1, 2, 3, and 4 set out in Sorenson’s complaint were so
“conclusory” and “unsupported” as to be implausible.
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whether a complaint states a plausible claim for relief will . . . be a
context-specific task that requires the reviewing court to draw on its judicial
experience and common sense. But where the well-pleaded facts do not permit
the court to infer more than the mere possibility of misconduct, the complaint has
alleged—but it has not shown—that the pleader is entitled to relief.” (quotations,
alterations, and citation omitted).
b. Discussion
This court need not make any grand pronouncements about the general
materiality of Davis-Bacon violations to resolve Sorenson’s appeal. Instead, it is
enough to note that this particular complaint—bereft of critical facts as to the
alleged Davis-Bacon violation and limited to nothing more than a naked assertion
that truthful certification of Davis-Bacon compliance is a precondition to
payment—fails to state a material misrepresentation for purposes of the FCA.
As should be clear from the recitations set out above, the factual
underpinning of the complaint’s overarching allegations of Davis-Bacon false
certifications could hardly be more limited. As explained above, payment of
Davis-Bacon wages is jobsite and task specific, not project related. Nevertheless,
Sorenson’s complaint does not identify the relevant Davis-Bacon jobsite for the
deicing project or, for that matter, any other Wadsworth construction project. He
alleges he worked on Airport property and swiped into the Airport security system
to work, but the complaint does not identify where at the Airport the deicing pad
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was being constructed, nor does it allege that Sorenson’s work was performed at
that location. Sorenson’s allegation that he worked on the deicing project does
not establish that his work occurred at the jobsite for that project. Furthermore,
the complaint does not indicate what tasks Sorenson performed for his work,
whether at the jobsite or otherwise. The complaint’s only allegation regarding the
nature of Sorenson’s work is the allegation that he worked as a truck driver. Far
from establishing Sorenson’s entitlement to Davis-Bacon wages, however, this
allegation only raises the question whether Sorenson fell within a class of workers
outside the coverage of the Act. See 29 C.F.R. § 5.2(j)(2) (providing that truck
drivers who transport “supplies to or from the site of the work” are generally not
covered by the Act). Sorenson’s allegations regarding his other work are even
more limited. He alleges he worked on a highway project and repeatedly refers to
his work, and the work of others, as occurring on “federally funded” projects, but
these allegations do not establish either that this work occurred on a Davis-Bacon
jobsite or that it involved the type of labor covered by the Davis-Bacon Act, 7 and
the complaint is otherwise silent on this point. 8
7
Indeed, given the record in this case, one could easily surmise, as did the
district court when it ordered Sorenson to pay Wadsworth’s attorney’s fees, that
the language used in Sorenson’s complaint amounted to an attempt to obscure,
rather that elucidate, the underlying facts of the case.
8
“[FCA] plaintiffs must . . . plead their claims with plausibility and
particularity under Federal Rules of Civil Procedure 8 and 9(b).” Universal
(continued...)
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At most, Sorenson’s complaint arguably supports the inference that
Wadsworth failed to pay Sorenson (and some unnamed quantity of other
Wadsworth employees whose jobsites and tasks are unclear) an undisclosed
quantum of Davis-Bacon wages, then fraudulently certified its compliance with
the Act. See Dist. Ct. 12(b)(6) Order at 7 (recognizing that, at most, Sorenson’s
complaint asserted a naked violation of the Davis-Bacon Act by asserting
Wadsworth violated § 3729(a)(1)(A) and (B)). The FCA, however, is not simply
some “all-purpose antifraud statute or a vehicle for punishing garden-variety
8
(...continued)
Health, 579 U.S. at 195 n.6. As it relates to claims for fraud under the FCA, Rule
9(b) requires a plaintiff to “show the specifics of a fraudulent scheme and provide
an adequate basis for a reasonable inference that false claims were submitted as
part of that scheme.” Lemmon, 614 F.3d at 1172. “Practically speaking, FCA
claims comply with Rule 9(b) when they provide factual allegations regarding the
who, what, when, where and how of the alleged claims.” Polukoff, 895 F.3d at
745(quotation and alteration omitted). The district court excused Sorenson from
pleading with particularity some technical information exclusively in the control
of Wadsworth. See Dist. Ct. Rule 12(b)(6) Order at 12 (citing Polukoff, 895 F.3d
at 745 (“[W]e excuse deficiencies that result from the plaintiff’s inability to
obtain information within the defendant’s exclusive control.”)). There is strong
reason to doubt the application of the Polukoff exception here given that Sorenson
extensively litigated the very issues at play in this case in administrative
proceedings before the Utah Labor Commission. Even setting aside the question
of whether he was excused from pleading certain technical information
exclusively in Wadsworth’s control, Sorenson identifies no excuse for his failure
to set out even minimal details about the tasks he (and unnamed others) undertook
while employed by Wadsworth and the location where he (and unnamed others)
performed those tasks. Cf. Lemmon, 614 F.3d at 1172 (holding that a false
certification claim satisfied the requirements of Rules 8(a) and 9(b) based on the
complaint’s extensive allegations as to the who, what, when, where, and how of
the alleged false certifications, including details about each specific violation).
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breaches of contract or regulatory violations.” Universal Health Servs., 579 U.S.
at 194 (quotation and citation omitted). Instead, it was enacted for the purpose of
stemming “massive frauds perpetrated by large contractors.” United States v.
Bornstein, 423 U.S. 303, 309 (1976). To be clear, the “FCA does not impose
liability for any and all falsehoods,” United States ex rel. Janssen v. Lawrence
Mem’l Hosp., 949 F.3d 533, 540 (10th Cir. 2020), and is “not an appropriate
vehicle for policing technical compliance with administrative regulations,” United
States ex rel. Burlbaw v. Orenduff, 548 F.3d 931, 959 (10th Cir. 2008). And this
court has made clear that whether an alleged instance of noncompliance with
statutory, regulatory, or contractual requirements “goes to the very essence of the
bargain or is only minor or insubstantial” is a relevant consideration in the
“holistic” inquiry into the FCA’s materiality requirement. Janssen, 949 F.3d at
541 (quotations omitted).
This consideration is particularly meaningful here in light of the paucity of
information provided by Sorenson’s complaint. The complaint is bereft of details
from which any estimate of the quantum of alleged underpayments could be made,
and thus there is no indication as to whether the amount involved is minor or
significant. 9 Furthermore, there are absolutely no allegations in Sorenson’s
9
Although the complaint alleges that, in addition to his regular rate of pay,
Sorenson was entitled to an additional $10.53 per regular hour worked on the
Davis-Bacon jobsite, the court cannot begin to estimate the quantum of alleged
(continued...)
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complaint indicating how DOL handles false certifications of Davis-Bacon wages,
whether with regard to Wadsworth specifically or contractors generally. See
Universal Health Servs., 579 U.S. at 194–95 (noting that such information is
relevant to the question of materiality). Nor is there any indication in Sorenson’s
complaint whether DOL was aware of Wadsworth’s alleged Davis-Bacon
violations and, if so, whether it continued to enter into contractual arrangements
with Wadsworth. See id.; see also United States ex. rel. Thomas v. Black &
Veatch Special Projects Corp., 820 F.3d 1162, 1174 (10th Cir. 2016) (holding
that when the government learns of alleged noncompliance with contractual
requirements but continues to award the contractor work on federally funded
projects, the government’s inaction is strong evidence of immateriality).
Sorenson’s complaint asserts nothing more than a naked Davis-Bacon
violation and that Davis-Bacon compliance is a condition to Wadsworth’s right to
payment under the deicing contract. To hold that such a complaint satisfies the
FCA’s rigorous materiality requirement would make a mockery of Universal
Health Services. The district court did not err in concluding Sorenson’s
9
(...continued)
underpayments without additional details regarding the specific jobsites and tasks
at issue. As noted previously, the complaint fails to establish that Sorenson’s
work occurred on a Davis-Bacon jobsite or that it involved the type of labor
covered by the Davis-Bacon Act.
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complaint fails to satisfy the FCA’s “demanding” materiality standard. See
Universal Health Servs., 579 U.S. at 194–95. 10
10
Sorenson’s reliance on the Third Circuit’s decision in United States ex
rel. International Brotherhood of Electrical Workers v. Farfield Co., 5 F.4th 315(3d Cir. 2021), is entirely misplaced. That case involved a full-blown trial before
a special master. Id. at 328. Thus, evidence as to the issue of materiality was
extensively developed. Id. at 342–48. Importantly, the Third Circuit referred to
specific trial evidence in concluding that the Davis-Bacon violation there, valued
at $150,000, was neither minor nor insubstantial. Id. at 346–48. Here, as noted
above, Sorenson’s allegations relating to the magnitude of the violation are so
limited and opaque that they do not plausibly indicate something more than a
minor or insubstantial violation. Furthermore, the record evidence in Farfield
Company specifically demonstrated that the defendant construction company’s
leadership believed DOL would put it out of business if it learned of the
company’s actions because of the company’s history of Davis-Bacon violations.
Id. at 345. Here, Sorenson simply alleged accurate certification was a
prerequisite to payment, without any allegations suggesting that DOL would have
even refused payment if it learned of the alleged violations here, much less taken
more drastic action.
It is certainly true that Farfield Company contains an extensive discussion
and analysis of the Davis-Bacon regulatory scheme and, following that analysis,
concludes the entirety of the scheme supports the conclusion that false Davis-
Bacon certifications are material. Id. at 343–45. There are, however, two
significant problems with Sorenson’s reliance on this aspect of Farfield
Company’s analysis. First, none of this analysis is hinted at in his complaint, nor
is it set out in his response to Wadsworth’s motion to dismiss. Instead, in the
district court proceeding he stood on the allegation that materiality was
established simply because accurate certification was a precondition to payment.
“Absent compelling reasons, we do not consider arguments that were not
presented to the district court.” Crow v. Shalala, 40 F.3d 323, 324 (10th Cir.
1994). Second, as already discussed above, Farfield Company’s analysis of the
issue of materiality did not begin and end with an analysis of the statutory
scheme. 5 F.4th at 342–48. Instead, it was merely one consideration that was
part of a holistic analysis of the existence of materiality. As explained
extensively above, there is simply nothing else in Sorenson’s complaint that could
be considered as part of the necessary holistic analysis.
(continued...)
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B. The Grant of Summary Judgment
Sorenson brought a claim of FCA retaliation under the provisions of
31 U.S.C. § 3730(h). Section 3730(h)(1) allows an employee to recover from his
employer if he “is discharged . . . or in any other manner discriminated against in
the terms and conditions of employment because of [his] lawful acts done . . . in
furtherance of an action under this section or other efforts to stop 1 or more
violations of [the FCA].” To prevail on a § 3730(h)(1)-based claim of retaliation,
Sorenson must show: (1) he engaged in protected activity, (2) Wadsworth was put
on notice of that protected activity, and (3) Wadsworth retaliated against him
because of that activity. Reed, 923 F.3d at 764. The district court granted
summary judgment in Wadsworth’s favor on both the second and third showing
required by Reed. We agree no reasonable jury could find Sorenson connected
his Davis-Bacon complaints to the FCA, and thus a jury could not find that
Wadsworth was put on notice of the protected activity. This court affirms the
district court’s grant of summary judgment entirely on that basis and does not
10
(...continued)
Thus, in contrast to Sorenson’s assertions, Farfield Company does not
advance his cause at all. Instead, it points to the utter shortcomings of the factual
allegations in Sorenson’s complaint. It also serves to delimit the extent of our
decision today. We do not hold that a false certification of Davis-Bacon
compliance can never constitute a violation of the FCA. We hold simply that the
exceedingly threadbare complaint before this court is insufficient to satisfy the
FCA’s materiality requirement.
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consider the district court’s alternative basis for granting Wadsworth summary
judgment on Sorenson’s FCA retaliation claim.
1. Summary Judgment Standard
This court “review[s] the grant of summary judgment de novo, applying the
same legal standard used by the district court and examining the record to
determine if any genuine issue of material fact was in dispute; if not, we
determine if the substantive law was correctly applied.” Thomas, 820 F.3d at
1168 (quotation and alterations omitted) In so doing, “we view the factual record
and draw all reasonable inferences therefrom most favorably to [Sorenson] as the
nonmoving party.” Id. (quotation omitted).
2. Relevant Factual Background
Viewing the record in Sorenson’s favor, the relevant facts—those relating
to whether Wadsworth was put on notice that Sorenson was engaging in conduct
protected by the FCA—are as follows. Shortly after he began working as a
Wadsworth truck driver, Sorenson began speaking with “several people” about his
suspicion Wadsworth was not paying him in accordance with the Davis-Bacon
Act. He spoke with his supervisor, Steven Hall, approximately two weeks after
he received his first paycheck and questioned Hall as to why he was not receiving
his full wages under the Act. Hall replied “that this was the way it was” and told
Sorenson “to let it go or they will fire you.” Sorenson had a similar conversation
with Hall two weeks later. Sorenson indicated he had talked to his co-workers
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and found out Wadsworth “was shorting Davis-Bacon wages on all of their
federal contracts.” Hall responded as follows: “I understand that it is what it is,
and it’s not right, but just shut up and stop making waves.” Approximately one
week later, Sorenson met with Hall’s supervisor, Frank Barney, and again asked
why he was not receiving his full wages under the Act. Barney told Sorenson he
“was getting all the Davis-Bacon wages that he was going to get.” Barney also
told Sorenson to stop discussing the issue with his co-workers.
Following these meetings, Sorenson was told not to come in to work for
three days. He returned to work on October 30, 2014, and worked without
incident until November 8, 2014, when he became “very ill.” Sorenson left the
jobsite early and was told he could not return to work until he received two
doctors’ notes. Sorenson obtained the required releases on November 11, 2014,
and returned to work on November 14, 2014. When he arrived, he was informed
that everyone was laid off and was sent home.
3. Analysis
Sorenson asserts the district court misconstrued this court’s decision in
Reed and that, properly read, Reed supports his argument that the evidence
summarized above would allow a reasonable jury to conclude Wadsworth was on
notice he was engaging in activity protected by the FCA. For those reasons set
out below, Sorenson’s arguments in this regard are entirely unconvincing.
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Reed began its analysis of the notice requirements of FCA retaliation
claims by noting that prior to 2009 a circuit split existed over “what conduct
qualified as ‘in furtherance of’ a qui tam action.” 923 F.3d at 764. Our court,
like several others, “interpreted that language to mean that protected activity
encompassed conduct preparing for a private qui tam action or assisting in an
action brought by the government.” Id. at 764–65 (quotation omitted). Under
that reading of § 3730(h), “an employee who . . . reported a False Claims Act
violation to her supervisor but did not pursue a qui tam action had not engaged in
protected activity.” Id. at 765. Other circuits had a more expansive catalog of
activities that were protected under § 3730(h). Id. Congress resolved this split in
2009 and 2010 by amending the FCA to protect “‘lawful’ acts ‘in furtherance of’
either ‘an action’ under the Act ‘or other efforts to stop 1 or more violations of’
the Act.” Id. (quoting 31 U.S.C. § 3730(h)(1)) (emphasis omitted). Reed makes
clear that in analyzing whether any defendant is put on notice an employee was
engaging in activity protected by the FCA, courts must keep in mind the expanded
universe of protected activities. See id. at 765–66. With that in mind, Reed
moved on to begin the process of “defining the boundaries of what constitutes
protected efforts to stop a violation of the [FCA].” Id. at 766–67. And,
determinative of the issue on appeal, Reed held that, to satisfy the notice
requirement, “a relator’s actions still must convey a connection to the [FCA].”
Id. at 767 (citing United States ex rel. Grant v. United Airlines Inc., 912 F.3d
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190, 202 (4th Cir. 2018) (noting that “plaintiff’s actions need not lead to a viable”
qui tam action, but “they must still have a nexus to an FCA violation”); United
States ex rel. Booker v. Pfizer, Inc., 847 F.3d 52, 59 n.8 (1st Cir. 2017)
(explaining that a relator’s “activities must pertain to violations” of the Act)).
“After all, the text of [§ 3730(h)(1)] says the ‘other efforts’ must be ‘to stop 1 or
more violations of [the False Claims Act].’” Id. (alteration in original).
Reed is directly on point and demonstrates Sorenson failed to produce
sufficient evidence from which a jury could conclude Wadsworth was on notice
Sorenson’s activities were part of an effort to stop violations of the FCA.
Sorenson’s inquiries to both Hall and Barney were specifically and distinctly
related to his wages. He certainly stated to Hall and Barney that Wadsworth was
not paying its employees consistently with the Davis-Bacon Act. But non-
compliance with the wage requirements of the Act does not, standing alone, relate
to potential violations of the FCA. Importantly, Sorenson has not identified a
single case standing for the proposition that merely informing an employer it is
not complying with a statutory, regulatory, or contractual requirement—whether
through ignorance, by accident, or with intent—is enough to establish a nexus to
the FCA. Under the rule posited by Sorenson, the anti-retaliation provisions of
the FCA would be, in effect, incorporated into the entire body of the federal
statutory and regulatory code. Reed clearly, and quite properly, rejects such an
approach as unhinged from the FCA’s requirement that protected activity must be
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to prevent “violations of the False Claims Act.” 923 F.3d at 767 (quotation and
alterations omitted).
III. CONCLUSION
For those reasons set out above, the orders of the United States District
Court for the District of Utah dismissing Sorenson’s Claims 1, 2, and 3, and
granting summary judgment to Wadsworth on Sorenson’s Claim 5 are hereby
AFFIRMED.
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