Sana Kappouta v. Valiant Integrated Services ( 2023 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
SANA KAPPOUTA, No. 21-56310
Plaintiff-Appellant, D.C. No. 3:20-cv-
01501-TWR-BGS
v.
VALIANT INTEGRATED OPINION
SERVICES, LLC, a Virginia limited
liability company; THE
ELECTRONIC ON-RAMP, INC., a
Maryland corporation; DOES, 1-20,
inclusive,
Defendants-Appellees.
Appeal from the United States District Court
for the Southern District of California
Todd W. Robinson, District Judge, Presiding
Argued and Submitted December 5, 2022
Pasadena, California
Filed February 21, 2023
2 KAPPOUTA V. VALIANT INTEGRATED SERVICES
Before: Paul J. Kelly, Jr., * Sandra S. Ikuta, and Morgan
Christen, Circuit Judges.
Opinion by Judge Kelly
SUMMARY **
Labor Law
The panel affirmed the district court’s dismissal of Sana
Kappouta’s action under the Defense Contractor
Whistleblower Protection Act against Valiant Integrated
Services, LLC, and The Electronic On-Ramp, Inc.
Kappouta alleged that while at a bar at the U.S. embassy
compound in Baghdad, Iraq, she was shoved by an
intoxicated co-worker. After she reported the incident, her
employer attempted to transfer her to a different
position. After initially refusing the transfer, she was fired.
The panel held that to survive a motion to dismiss under
the Defense Contractor Whistleblower Protection Act, 10
U.S.C. § 4701(a)(1)(A), a plaintiff must plausibly allege
that: (1) she made a disclosure that she reasonably believed
was evidence of a violation related to a Department of
Defense contract; and (2) her employer discharged,
*
The Honorable Paul J. Kelly, Jr., United States Circuit Judge for the
U.S. Court of Appeals for the Tenth Circuit, sitting by designation.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
KAPPOUTA V. VALIANT INTEGRATED SERVICES 3
demoted, or otherwise discriminated against her because of
that disclosure.
As to the first element, the panel held that Kappouta did
not plausibly allege a reasonable belief that her complaint
about the shoving incident encompassed one of the acts
described in § 4701(a)(1)(A)-(C), which include a violation
of law related to a Department of Defense contract. The
panel held that, in the context of a defense contract, a
violation of law is related to the contract if it is related to the
purpose of the contract or affects the services provided by
the defense contractor to the Department of Defense. A
disclosure is protected if a disinterested observer with
knowledge of the operative facts would reasonably conclude
that the disclosure evidences a violation of law related to a
defense contract in this manner. The panel concluded that,
under this standard, Kappouta’s complaint failed to allege a
sufficient nexus between the shove and the Department of
Defense-Valiant contract.
COUNSEL
Derek J. Angell (argued), Roper PA, Orlando, Florida; John
L. Holcomb, Jr., Obagi Law Group PC, Los Angeles,
California; Zein E. Obagi, Jr., Obagi Law Group PC,
Redondo Beach, California; for Plaintiff-Appellant.
Matthew S. Hellman (argued), Jenner & Block LLP,
Washington, D.C.; Kirsten Spira and Sati Harutyunyan,
Jenner & Block LLP, Los Angeles, California; Gary L.
Eastman and Sara Gold, Eastman IP, San Diego, California;
for Defendants-Appellees.
4 KAPPOUTA V. VALIANT INTEGRATED SERVICES
OPINION
KELLY, Circuit Judge:
While at a bar at the U.S. Embassy compound in
Baghdad, Iraq, Plaintiff-Appellant Sana Kappouta was
shoved by an intoxicated co-worker but was not injured. She
was reluctant to report the incident, but she eventually
acquiesced to requests of the State Department and her
employer. Concededly because of her report, Ms.
Kappouta’s employer attempted to transfer her to a different
position. After initially refusing the transfer, she was fired.
Ms. Kappouta filed suit under the Defense Contractor
Whistleblower Protection Act (DCWPA), 10 U.S.C.
§ 4701. 1 The district court dismissed her complaint without
prejudice, allowing leave to amend. Ms. Kappouta then
waived the right to amend, contending that additional facts
were either unnecessary or could not be pled in good faith
and requested the district court enter final judgment. This
appeal followed. Our jurisdiction arises under 28 U.S.C.
§ 1291, and we affirm.
I. Background
We describe the well-pled facts alleged in Ms.
Kappouta’s complaint, which we assume to be true at the
motion to dismiss stage. See Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555 (2007). We also notice the factual findings in
the Office of Inspector General report (OIG Report) attached
to, and referenced in, Ms. Kappouta’s complaint. See United
1
Ms. Kappouta filed suit under 10 U.S.C. § 2409, which has since been
renumbered as 10 U.S.C. § 4701. The current section of the Code is cited
in this opinion.
KAPPOUTA V. VALIANT INTEGRATED SERVICES 5
States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). But we
are not bound to accept as true the legal conclusions included
therein. See Ashcroft v. Iqbal, 556 U.S. 662, 679, 681
(2009).
Ms. Kappouta worked as a linguist for Valiant Integrated
Services, LLC (Valiant), 2 pursuant to a United States
Department of Defense (DoD) contract. While at Valiant,
she worked and resided at a U.S. Embassy compound in
Baghdad, Iraq. On December 7, 2017, after work hours, at
the Embassy bar, Ms. Kappouta’s co-worker, Sarah Maher,
shoved her and nearly knocked her down.
Later that evening, Ms. Kappouta recounted the incident
to her supervisor/Valiant employee Parween Babani, who
was a friend of Ms. Maher. Ms. Babani urged Ms. Kappouta
not to “make any problems,” positing that Ms. Maher was
intoxicated.
The next morning, embassy Regional Security Officers
(RSOs) from the State Department contacted Ms. Kappouta
and pressured her to make a formal complaint about the
incident. Ms. Kappouta initially declined, expressing fear of
retaliation and losing her job. RSOs then reported the
incident to Valiant management, including Oscar Ortiz, who
again pressured Ms. Kappouta to report, assuring her she
would not be retaliated against. On December 12, 2017, Ms.
Kappouta provided a written statement to RSOs including
2
Ms. Kappouta’s complaint names both Valiant and The Electronic On-
Ramp, Inc. (EOR) as her employers. But the OIG Report indicates she
is a subcontractor of Valiant. Neither defendant contested Ms.
Kappouta’s employment status at the district court, nor is such a
challenge raised on appeal. In any event, Ms. Kappouta’s technical
employment status is relevant only for background and not to the issue
before us.
6 KAPPOUTA V. VALIANT INTEGRATED SERVICES
the fact that she had been asked to do so and that it was
intended “just for the records and not as a report.” On
December 13, 2017, Ms. Kappouta emailed EOR
management to inform them of the assault and express her
concern about retaliation for the RSO report.
Ms. Babani also submitted her account of the events,
confirming that Ms. Kappouta had told her about the shove
the night of December 7, but stating that “she did not see Ms.
Maher touch Ms. Kappouta or do anything wrong” and
“insinuat[ing] that Ms. Kappouta was drunk at the time.”
Between January 10 and January 12, 2018, Mr. Ortiz and
Ms. Babani decided that Ms. Kappouta should be transferred
to a position in Basra, Iraq. According to the complaint, Mr.
Ortiz admitted that the decision to transfer Ms. Kappouta
was based on her cooperation in the investigation.
On January 28, 2018, Mr. Ortiz, Ms. Babani, and Chief
Shanklin met with Ms. Kappouta to tell her for the first time
about the transfer, which they informed her was at the behest
of Ms. Kappouta’s Army unit. Ms. Babani threatened that if
Ms. Kappouta did not accept the transfer, she would lose her
job.
Ms. Kappouta next went to Army officials, with whom
she worked on the DoD-Valiant contract. They confirmed
that the Army had not requested her transfer and that it was
at Valiant’s direction. Ms. Kappouta responded with her
belief that it was retaliatory. On January 29, 2018, Ms.
Kappouta met with Mr. Ortiz to accept the transfer, but was
told instead she was being terminated. The stated basis for
her discharge: Ms. Kappouta’s refusal to accept the transfer
and her “jump[ing] the line of command” to complain to
Army personnel.
KAPPOUTA V. VALIANT INTEGRATED SERVICES 7
Ms. Kappouta first submitted a complaint to the DoD
Office of the Inspector General (OIG), initiating an
investigation. The OIG prepared a report (OIG Report),
finding Ms. Kappouta’s claim meritorious and
recommending she be reinstated. Ms. Kappouta then filed
suit under the Defense Contractor Whistleblower Protection
Act (DCWPA), 10 U.S.C. § 4701, alleging she was
terminated in retaliation for making protected disclosures
under the Act. Valiant filed a motion to dismiss for failure
to state a claim pursuant to Federal Rule of Civil Procedure
12(b)(6). The district court held that Ms. Kappouta had not
alleged a protected disclosure, given the lack of (a) a legal
violation contemplated by the whistleblower statute and (b)
nexus between the shove and the DoD-Valiant contract.
II. Discussion
We review the grant of a motion to dismiss de novo and
may affirm on any basis supported by the record. ASARCO,
LLC v. Union Pac. R.R. Co., 765 F.3d 999, 1004 (9th Cir.
2014). Under § 4701(a)(1)(A), “[a]n employee of a
contractor . . . may not be discharged, demoted, or otherwise
discriminated against as a reprisal for disclosing to a person
or body . . . information that the employee reasonably
believes is evidence of . . . a violation of law, rule, or
regulation related to a Department contract (including the
competition for or negotiation of a contract) or grant.” 10
U.S.C. § 4701(a)(1)(A). Therefore, to survive a motion to
dismiss under the DCWPA, a plaintiff must plausibly allege
that: (1) she made a disclosure that the plaintiff “reasonably
believe[d]” is evidence of a violation related to a DoD
contract; and (2) her employer discharged, demoted, or
otherwise discriminated against her because of that
disclosure.
8 KAPPOUTA V. VALIANT INTEGRATED SERVICES
No one contests that Ms. Kappouta’s complaint has
adequately alleged that she suffered an adverse employment
action based on her compliance with an internal
investigation. At the pleading stage, Ms. Kappouta has
plausibly alleged she was transferred (and ultimately
discharged) because of one or more reports she made about
the shove. Therefore, the question remains whether she has
plausibly alleged a reasonable belief that her complaint
about the shoving incident encompassed one of the acts
described in § 4701(a)(1)(A)–(C).
To give rise to whistleblower protection in this context,
the disclosure must be one that the plaintiff reasonably
believes is related to an act described in § 4701(a)(1)(A)–
(C):
• “Gross mismanagement of a Department
of Defense contract or grant,
• a gross waste of Department funds,
• an abuse of authority relating to a
Department contract or grant,
• [] a violation of law, rule, or regulation
related to a Department contract . . . .
• [or] [a] substantial and specific danger to
public health or safety.”
10 U.S.C. § 4701(a)(1)(A)–(C).
Our task is to interpret the meaning of “a violation of law
. . . related to a Department contract,” an issue few courts
have had occasion to address. Although the caselaw is
limited in this regard, we have interpreted “related to” in
other contexts as bearing a significant relation to. California
KAPPOUTA V. VALIANT INTEGRATED SERVICES 9
Trucking Ass’n v. Bonta, 996 F.3d 644, 656 (9th Cir. 2021)
(quoting Morales v. Trans World Airlines, Inc., 504 U.S.
374, 390 (1992)) (interpreting the FAAAA; distinguishing
“significant[] relat[ion]” from “tenuous, remote, or
peripheral connection”); Dilts v. Penske Logistics, LLC, 769
F.3d 637, 643 (9th Cir. 2014) (quoting Rowe v. N.H. Motor
Transp. Ass’n, 552 U.S. 364, 371 (2008)) (same). Likewise,
in interpreting the Contract Disputes Act, the Federal Circuit
has recognized that the phrase “relating to the contract”
necessarily implies “some relationship to the terms or
performance of [that] contract.” Todd Const., L.P. v. United
States, 656 F.3d 1306, 1312 (Fed. Cir. 2011) (quoting
Applied Cos. v. United States, 144 F.3d 1470, 1478 (Fed.
Cir. 1998)). In the context of a defense contract, we
conclude a violation of law is related to the contract if it is
related to the purpose of the contract or affects the services
provided by the defense contractor to the DoD. And a
disclosure is protected if a disinterested observer with
knowledge of the operative facts would reasonably conclude
that the disclosure evidences a violation of law related to a
defense contract in this manner. See Coons v. Sec’y of U.S.
Dep’t of Treasury, 383 F.3d 879, 890 (9th Cir. 2004).
Ms. Kappouta theorizes that the shove constituted an
assault in violation of 18 U.S.C. § 113(a)(5), which makes
simple assault a crime in certain federal jurisdictions. In her
view, violation of this statute is tantamount to a “violation of
law” contemplated by the Act. 10 U.S.C. § 4701(a)(1)(A).
Defendants contend Ms. Babani’s conduct does not rise to
the level of unlawful behavior contemplated by the DCWPA
and, further, bears no relation to the DoD-Valiant contract.
At this stage, we need not decide whether the underlying
facts could constitute a simple assault. Nor is it necessary to
determine whether a violation of 18 U.S.C. § 113(a)(5) could
10 KAPPOUTA V. VALIANT INTEGRATED SERVICES
ever give rise to whistleblower protection. Rather, we are
obligated to affirm dismissal of the complaint because it fails
to allege a sufficient nexus between the shove and the DoD-
Valiant contract. Stated another way, the allegations in the
complaint do not encompass a disclosure sufficiently related
to the DoD-Valiant contract to give rise to DCWPA
protection. In this way, the statute necessarily limits the
scope of claims giving rise to protection under the Act.
Thus, we decline to address defendants’ broader argument
that the conduct and resulting disclosure could never come
within the protection of the Act.
Ms. Kappouta argues that the assault was related to the
contract and that she plausibly alleged her reasonable belief
that it was job-related and also related to the DoD-Valiant
contract. Defendants contend Ms. Kappouta argues
reasonable belief for the first time on appeal and therefore
has forfeited this argument. Indeed, Ms. Kappouta’s
opposition to the motion to dismiss does not elucidate her
belief that her disclosure was related to the contract. Instead,
the opposition relies on conclusions to this effect arrived at
by the OIG, which we do not accept as fact. In any event,
our review is of the well-pleaded facts in the complaint, and,
as addressed below, the facts alleged do not plausibly
demonstrate an objectively reasonable belief that the
disclosure shared a nexus with the contract.
The statutory text makes clear that this standard is a
relatively forgiving one. That is, Ms. Kappouta need only
plead a “reasonable belief” that her disclosures were
protected, and that belief need not be correct. See Van
Asdale v. Int’l Game Tech., 577 F.3d 989, 1001 (9th Cir.
2009) (considering a different whistleblower statute that
protects disclosures the plaintiff “reasonably believes”
encompass a violation of law). However, the belief must be
KAPPOUTA V. VALIANT INTEGRATED SERVICES 11
objectively reasonable. See id. (interpreting the reasonable
belief requirement as including both a subjective and
objective component). And, on the facts alleged, the
disclosures concerning the shoving incident were, at best,
only tenuously related to the defense contract.
In support of the nexus requirement, the complaint cites
to several provisions required by regulation to be included in
the DoD-Valiant contract: (1) a clause establishing an ethical
code of conduct, requiring “due diligence to ‘prevent and
detect criminal conduct’” and “commitment to compliance
with the law”; (2) a further requirement of disclosure to an
agency OIG “whenever a principal, employee, agent, or
subcontractor . . . has committed a violation of Federal
criminal law involving fraud, conflict of interest, bribery, or
gratuity violations found in Title 18 U.S.C. or a violation of
the civil False Claims Act”; (3) a reporting system for
“instances of ‘improper conduct,’” “instructions that
encourage employees to make such reports,” and “provide
for disciplinary action” for such conduct “or for failing to
take reasonable steps to prevent such conduct”; and, (4) an
“internal control system . . . to ensure timely reporting . . .
of specific criminal violations under Title 18 U.S.C., or
violation of the False Claims Act.”
Taking each provision in turn, no reasonable observer
would think that the incident described in the complaint
would implicate the clause requiring Valiant to exercise due
diligence to “prevent and detect criminal conduct.” Nor
would a reasonable observer conclude that the incident
qualifies as a “violation of Federal criminal law involving
fraud, conflict of interest, bribery or gratuity” or a “violation
of the civil False Claims Act.” Although the shove may have
been an instance of “unethical” or “improper conduct,” or
even arguably a criminal violation under Title 18, possibly
12 KAPPOUTA V. VALIANT INTEGRATED SERVICES
implicating the internal control system (Ms. Kappouta could
and did report the incident to Embassy security), the
complaint does not contain any plausible allegation that it is
of the sort triggering the mandatory reporting of specific
criminal violations under Title 18 of the U.S. Code or the
False Claims Act. Moreover, the theoretically applicable
provisions are either so tenuously related or vague that to
accede to their application in this instance would render any
complaint of interpersonal disagreement protected under
§ 4701, a result plainly not intended by the statute. In
essence, Ms. Kappouta asks us to find that because the
dispute was between employees of a contractor, it is thereby
related to the contract. We decline to adopt such a broad
interpretation.
Our conclusion that the disclosure must demonstrate a
tangible connection to the purpose of the contract is reflected
in the statutory text and comports with the analysis this and
other courts have applied in analogous situations.
Section 4701 describes “mismanagement of a Department of
Defense contract,” waste of Department funds,” “abuse of
authority relating to a Department contract,” and
“violation[s] of law . . . related to a Department contract.”
10 U.S.C. § 4701(a)(1)(A) (emphasis added). Congress
reminds us of the limits of the statutory scope at each step.
To this end, one district court recognized that descriptions of
“persistent sexual harassment,” while conceivably
pertaining to a violation of law, failed on the grounds that
the disclosures were not related to a government contract to
provide security services. Sargent v. Pompeo, No. 19-cv-
00620, 2020 WL 5505361, at *15 (D.D.C. Sept. 11, 2020).
By contrast, the Fourth Circuit found the DCWPA to be an
appropriate avenue for relief when employees raised
concerns that a contractor was intentionally submitting bids
KAPPOUTA V. VALIANT INTEGRATED SERVICES 13
with deflated estimated labor costs (that would ultimately
result in cost overruns) to win contracts. United States ex
rel. Cody v. Mantech Int’l, Corp., 746 F. App’x 166, 181
(4th Cir. 2018). And in Coons, this court determined
disclosures regarding a possible fraudulent tax refund were
protected under the Whistleblower Protection Act given that
they concerned the “mission” of the IRS — to collect taxes.
383 F.3d at 890. Though the Whistleblower Protection Act
does not contain the same nexus requirement as that of the
DCWPA, see 5 U.S.C. § 2302(b)(8)(A)(i)–(ii), it contains
the same reasonable belief requirement, see Coons, 383 F.3d
at 890, and in Coons, we considered it significant that the
disclosure related to the agency’s function.
Along these same lines, as Ms. Kappouta candidly
admits, the incident at the bar bears no relation to her
everyday job duties, that is, to perform linguist services
pursuant to Valiant’s contract with the Department. Todd
Const., L.P., 656 F.3d at 1312 (“[R]elating to the contract”
necessarily implies “some relationship to the terms or
performance of [that] contract.”). Without some relation to
the services Ms. Kappouta, and thereby Valiant, was
contracted to provide, it is difficult to imagine a relation to
the contract itself. Here, the facts as pled concern a personal
dispute (outside of working hours, for that matter), and do
not sufficiently allege — nor would any reasonable observer
believe — that they implicated the DoD-Valiant contract.
Although Valiant’s actions may be unwise or unjust, the
DCWPA is simply not the appropriate avenue for recourse
based on what was pled here. Were we to so hold, any
dispute that might constitute a violation of the law,
regardless of a reasonable belief about the nexus to a
contract, would be actionable, a result plainly not
contemplated by the Act. See Sargent, 2020 WL 5505361,
14 KAPPOUTA V. VALIANT INTEGRATED SERVICES
at *15 (“To expand the reach of [the National Defense
Authorization Act] to encompass any” violation of law
“occurring within the context of a federal contract would
stretch the statute’s text beyond its plain meaning.”).
Congress has told us that “violation of law” precipitates
statutory protection only if the plaintiff reasonably believes
the violation is related to a defense contract. 10 U.S.C.
§ 4701(a)(1)(A). After having declined the opportunity to
amend her complaint, Ms. Kappouta fails to allege such a
reasonable belief.
AFFIRMED.