Guo v. National Endowment for Democracy ( 2022 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA ex rel.
ZHI GUO, et al.,
Plaintiff-Relators,
Case No. 1:18-cv-02986 (TNM)
v.
NATIONAL ENDOWMENT FOR
DEMOCRACY, et al.,
Defendants.
MEMORANDUM OPINION
Zhi Guo and Pengcheng Si (collectively, Relators) move for default judgment in this qui
tam action against Defendants Princeton China Initiative (PCI), Independent Chinese PEN
Center (ICPC), Laogai Research Foundation (LRF), and Yu Zhang. 1 Defendants have not
appeared or participated in this suit. After reviewing Relator’s filings, the Court finds that they
have shown liability for most claims and have met their burden on damages for some claims.
The Court will thus grant in part and deny in part their motions for default judgment.
I.
In 1998, Congress began directing the State Department to set aside funding for
“nongovernmental organizations” devoted to “fostering democracy in China.” Compl. ¶ 21, ECF
No. 1. Congress has annually funded this China Democracy Program (CDP), allocating $215
million in 2018. See id. ¶ 23. According to the Complaint, this money passes through the
National Endowment for Democracy (NED), a nonprofit corporation chartered by Congress to
1
Guo and Si also sued the National Endowment for Democracy but have since dismissed all
claims against it. See Stipulation of Partial Dismissal, ECF No. 11.
1
encourage democracy abroad. See id. ¶ 17; 22 U.S.C. § 4411. NED “exercise[s] substantial day-
to-day control” over CDP funds and passes those funds onto entities who apply for them. Id.
¶ 74. Entities apply through a “formal NED-administered process.” Id. ¶ 27. To receive funds,
organizations must agree to special conditions and certify that they meet certain qualifications.
See id. ¶ 27–30.
Defendants here apply for and receive those funds. PCI, ICPC, and LRF are U.S.-based
nonprofits connected to a community of Chinese political dissidents. See id. ¶¶ 14, 15, 19. Both
ICPC and PCI have “entered into multiple contracts” with the Government for CDP funds. Id.¶¶ 14–15. LRF “was formerly funded” through CDP. Id. ¶ 19. Defendant Zhang is an officer of
ICPC who “resides in Sweden.” Id. ¶ 16.
Relators are “Chinese political dissidents and writers residing in the United States.” Id.
¶ 13. At times, Guo and Si have worked for or been linked to Defendants. From 2003–2007,
Guo helped ICPC to formulate its bylaws and other policies. Aff. of Zhi Guo ¶ 5, ECF No. 27-3
(Guo Aff.). He never asserts that the organization employed him or paid him for those services.
ICPC ultimately expelled him in 2007 after he questioned ICPC’s spending and accounting
practices surrounding the use of CDP funds. See Compl. ¶ 96. After Guo’s termination, Zhang
and other ICPC personnel wrote online posts on ICPC-related forums attacking him. See id. ¶
100.
Si began working for PCI and ICPC in 2008. See Decl. of Pengcheng Si ¶¶ 3, 12, ECF
No. 27-4 (Si Aff.). For ICPC, he performed administrative and IT-related duties, and for PCI, he
was a “cashier and administrative assistant.” Id. ¶ 13. Like Guo, Si discovered irregularities in
ICPC’s accounting of CDP funds, which he raised with ICPC’s board. See Compl. ¶ 102. He
also asked ICPC to change its financial practices. See id. ¶ 103. ICPC refused. See id. Si
2
observed similar behavior at PCI and told NED officials that ICPC and PCI were “defrauding”
the Government. Id. ¶ 112. Both organizations eventually fired Si—ICPC in March 2016 and
PCI in October 2017. See id. ¶¶ 107, 112. Si alleges that PCI fired him because LRF merged
with PCI and wanted to retaliate against him for his earlier qui tam lawsuit against LRF. See id.
¶ 115; see also Pengcheng Si v. Laogai Research Found., 71 F. Supp. 3d 73, 78 (D.D.C. 2014)
(accusing LRF of misusing federal grant funds). Si also alleges that ICPC and PCI still owe him
money for his work. See Compl. ¶¶ 118–19.
Relators filed this lawsuit in December 2018. They assert five claims under the False
Claims Act (FCA), which allows a private plaintiff to act as a qui tam relator on behalf of the
Government to recover damages and civil penalties. See id. ¶¶ 121–161; see also United States
ex rel. Bid Solve, Inc. v. CWS Marketing Grp., Inc., No. 19-cv-1861 (TNM), 2021 WL 4819899,
at *2 (D.D.C. Oct. 15, 2021). With their FCA claims, Relators bring other federal and state law
claims. Guo accuses ICPC and Zhang of defamation. See Compl. ¶¶ 162–166. Si accuses
ICPC, PCI, and LRF of violating the Fair Labor Standards Act (FLSA); LRF of tortiously
interfering with an economic relationship; and ICPC and PCI of breaching the implied covenant
of good faith and fair dealing. See id. ¶¶ 167–185. Because Relators sued under the FCA, the
Court sealed their Complaint while the United States considered whether to intervene. See 31
U.S.C. § 3730(b)(2).
The United States ultimately declined to intervene, leaving Relators to proceed alone.
See Notice of Election to Decline Intervention, ECF No. 12. No Defendants have appeared or
participated. The Clerk of Court thus entered default against each Defendant. See ECF No. 24
(ICPC and Zhang); ECF No. 25 (LRF); ECF No. 26 (PCI). In two motions, Relators now move
for default judgment. See Pls.’ Mot. for Default J. on Causes of Action 1, 2, 3, 4, and 5, ECF
3
No. 27 (Pls.’ FCA Mot.); Pls.’ Mot. for Default J. on Causes of Action 6, 7, 8, and 9, ECF No. 28
(Pls.’ Tort Mot.). As part of its consideration, the Court asked Relators for more information.
See Order, ECF No. 29. Relators have provided that information. See Response to Order to
Show Cause, ECF No. 30 (Show Cause Response). Their motions are now ripe for disposition. 2
II.
Federal Rule of Civil Procedure 55 establishes a two-step process for default judgments.
This process applies even in qui tam False Claims Act cases. See, e.g., U.S. ex rel. Landis v.
Tailwind Sports Corp., 324 F. Supp. 3d 67, 71 (D.D.C. 2018). First, the Clerk of Court enters a
default on the docket if the “party against whom a judgment for affirmative relief is sought has
failed to plead or otherwise defend.” Fed. R. Civ. P. 55(a). Then the plaintiff moves for a default
judgment under Rule 55(b).
Entry of a default judgment, however, “is not automatic.” Mwani v. bin Laden, 417 F.3d
1, 6 (D.C. Cir. 2005). First, the plaintiffs prove proper service of any defendants. See Salmeron
v. District of Columbia, 113 F. Supp. 3d 263, 269–70 (D.D.C. 2015). The Court then must
“conduct an inquiry into both liability and damages.” Bozzuto Contractors, Inc. v. Evans, No.
19-cv-3292 (TNM), 2021 WL 1564437, at *2 (D.D.C. Apr. 21, 2021) (cleaned up). On liability,
the defaulting defendant admits every well-pled allegation in the complaint. See id.Once liability is established, “the Court must make an independent evaluation of the
damages to be awarded.” Landis, 324 F. Supp. 3d at 71 (cleaned up). Plaintiffs must prove the
amount sought “to a reasonable certainty.” Bozzuto, 2021 WL 1564437, at *3 (cleaned up).
2
The Court has federal-question jurisdiction over Relators’ federal claims, see 28 U.S.C.
§ 1331, and supplemental jurisdiction over their state law claims, see id. § 1367(a).
4
Courts may rely on “detailed affidavits or documentary evidence” to determine the appropriate
sum. Boland v. Providence Const. Corp., 304 F.R.D. 31, 36 (D.D.C. 2014).
III.
Before liability, the Court analyzes service of process on Defendant Zhang. Through
proper service, plaintiffs provide legal notice to defendants. See Portillo v. Smith Commons DC,
LLC, No. 20-cv-49 (RC), 2021 WL 3287741, at *2 (D.D.C. Aug. 2, 2021). Thus, when a
plaintiff has not properly served a defendant, courts cannot issue default judgment. See Gates v.
Syrian Arab Repub., 646 F. Supp. 2d 79, 84 (D.D.C. 2009). The plaintiff has the burden to show
that service was proper. See Salmeron, 113 F. Supp. 3d at 267.
Federal Rule of Civil Procedure 4(e) says that to serve a U.S.-based person, a plaintiff
may deliver the service documents to the person; leave them at the person’s “dwelling or usual
place of abode with someone of suitable age and discretion who resides there”; serve the
person’s agent who may receive service of process; or follow the law for service “in the state
where the district court is located or where service is made.” Fed. R. Civ. P. 4(e).
Relators argue that they properly served Zhang under Federal Rule 4(e) when they
delivered service documents to ICPC’s address in Manassas, Virginia. See Return of
Service/Aff., ECF No. 17; Return of Service/Aff., ECF No. 18. Relators say that Zhang
“resided” at that address. See Show Cause Response at 5. 3 But their Complaint says that Zhang
“resides in Sweden.” Compl. ¶ 16. So service did not happen at Zhang’s “dwelling or usual
place of abode.” Fed. R. Civ. P. 4(e)(2)(B). And although Relators have shown that Emily
Wu—to whom they delivered the papers—is the registered agent for ICPC, see Pls.’ FCA Mot.,
3
All page citations refer to the pagination generated by the Court’s CM/ECF system and all
exhibit numbers refer to the numbered attachments to the CM/ECF filings.
5
Ex. 4, ECF No. 27-6, their documents do not establish that she is Zhang’s “agent authorized by
appointment or by law,” Fed. R. Civ. P. 4(e)(2)(C). Relators likewise do not allege that they
personally delivered the documents to Zhang. See id. 4(e)(2)(A).
With those service methods under Rule 4(e) foreclosed, Relators can rely only on state
law “in the state where the district court is located or where service is made.” Id. 4(e)(1).
Neither law helps here. Virginia does not allow service at an individual’s place of business. See
Va. Code Ann. § 8.01-296 (2021). 4 The District allows such service only “[i]f the court
determines that, after diligent effort, a party has been unable to accomplish service by” other
methods, all of which recite verbatim the methods in Federal Rule 4(e)(2). D.C. Super. Ct. Civ.
R. 4(e)(3). As discussed, Relators’ efforts under those methods failed as to Zhang. And in any
event, D.C. law requires plaintiffs seeking to serve a place of employment to first “file a motion
with an affidavit specifying” their “diligent efforts to serve by” the approved methods. Id.§ 4(e)(3)(C). Relators have filed no such affidavit. Thus, the state laws at issue do not save
Relators under Federal Rule 4(e).
More, Relators made no attempt to serve Zhang under the Rule that applies to him.
Federal Rule 4(f) provides multiple avenues of service on an individual living abroad. Plaintiffs
chose instead to proceed under the rule for serving a domestic individual, despite admitting that
Zhang resides in Sweden. See Compl. ¶ 16. They failed to effect service under that rule and
4
In their Show Cause Response, Relators cite a Supreme Court of Virginia case in which the
court upheld service “at a place where that party may receive mail.” Washington v. Anderson,
373 S.E.2d 712, 715 (Va. 1988). That case, however, concerned the delivery of service
documents to defendant’s conceded residence. See id. at 715. Zhang has no admitted residence
in Virginia. More, the court there interpreted a Virginia requirement that plaintiffs must mail
service documents only after posting those documents on the front door of defendant’s abode.
See id. (“Construing subitem (b) of subdivision (2) of § 8.01-296 . . . .”). Relators here never
attempted similar posting, making this case inapposite.
6
never attempted service under Rule 4(f). 5 The Court will therefore deny the motions for default
judgment against Zhang.
IV.
The Court next turns to Relators’ FCA allegations. Recall that by defaulting Defendants
admit every “well-pleaded allegation in the complaint.” Herbin v. Seau, 317 F. Supp. 3d 568,
573 (D.D.C. 2018) (cleaned up). To be well pled, Relators’ FCA allegations must meet the
heightened pleading standard of Federal Rule of Civil Procedure 9(b). See United States ex rel.
Cimino v. IBM, 3 F.4th 412, 421 (D.C. Cir. 2021). The Rule requires Relators to “state the time,
place[,] and content of the false misrepresentations, the fact misrepresented and what was
retained or given up as a consequence of the fraud.” United States ex rel. Williams v. Martin-
Baker Aircraft Co., 389 F.3d 1251, 1256 (D.C. Cir. 2004) (cleaned up). Courts have sometimes
“characterized [this] burden as providing the who, what, when, and where with respect to the
circumstances of the fraud.” Bid Solve, 2021 WL 4819899, at *2 (cleaned up).
A.
Relators first claim that ICPC and PCI presented false claims in violation of 31 U.S.C.
§ 3729(a)(1)(A). A person violates that provision if he “knowingly presents, or causes to be
presented, a false or fraudulent claim for payment or approval” by the Government. 31 U.S.C.
§ 3729(a)(1)(A). The FCA defines “knowingly” as having “actual knowledge” or acting “in
5
Relators respond that Zhang had actual notice of their suit because of the “factual
circumstances” surrounding service in Virginia. See Show Cause Response at 5. Relators
largely recycle arguments already rejected by the Court: No evidence shows that Wu “holds out
as [ ] Zhang’s resident agent,” and although Zhang listed a Virginia address on state corporate
filings, that does not signify that he resided at the address. Id. More, this case is unlike Ali v.
Mid-Atlantic Settlement Services, Inc., 233 F.R.D. 32 (D.D.C. 2006), cited by Relators. There,
the plaintiff delivered service documents to multiple residences of defendant and spoke with him
on the phone about efforts to serve him. See id. at 37–39. Relators have presented no evidence
like a phone call to show that Zhang knew about their lawsuit.
7
deliberate ignorance” or “reckless disregard of the truth or falsity of the information.” Id.§ 3729(b)(1)(A). And although ICPC and PCI submitted all claims for payment to NED, not
directly to the Government, the FCA covers false claims submitted to “a contractor, grantee, or
other recipient who has authority to use that money or property on the government’s behalf.”
United States v. Novo A/S, 5 F.4th 47, 50 (D.C. Cir. 2021) (quoting 31 U.S.C. § 3729(b)(2)); see
United States ex rel. Garbe v. Kmart Corp., 824 F.3d 632, 638 (7th Cir. 2016) (“FCA liability
attaches to any false claim to any entity—public or private—implementing a government
program or a program using government funds.”). Thus, false claims submitted to NED still
violate the FCA. 6
The Complaint includes several well-pleaded allegations against ICPC of false claims.
Relators allege that ICPC in 2015 “faked” a project coordinator position and reported to NED a
bogus salary for that position, creating $18,000 in payment. Compl. ¶ 38. Similarly, from 2013–
2015, ICPC submitted timesheets for two individuals that the company said it had employed for
CDP-related work. See id. ¶ 39. Those individuals “did not conduct any actual work,” yet NED
reimbursed ICPC for their services in the amount of $20,000 each per year. Id. And ICPC billed
CDP for a Hong Kong “satellite office” that was a bookstore used for personal use. Id. ¶ 41.
From 2012–2016, ICPC received $50,000 from CDP for this fake office. See id.Finally, ICPC billed CDP in 2015 for $80,000 that the company had distributed into
personal bank accounts. See id. ¶ 40. Although Relators do not allege that the actual claim itself
6
Relators also argue that NED is a quasi-governmental agency such that claims presented to it
are also presented to the Government. See Show Cause Response at 3. The United States filed a
brief asking the Court to reject that argument and to instead rely on the FCA’s statutory
provisions. See Statement of Interest, ECF No. 32. As discussed above, the Court agrees that
the FCA’s text suffices to show that claims made to NED still qualify as false claims under the
FCA.
8
was false, they do allege that by requesting reimbursement ICPC certified that it had
“maintain[ed] the funds in a restricted bank account.” Id. ¶ 52. And according to Relators, CDP
required a restricted bank account as a condition for funding. See id. ¶ 29. Thus, ICPC’s claim
for $80,000 impliedly represented that ICPC had complied with a material requirement of the
program. But ICPC had not complied. Implying compliance with a material requirement while
requesting funds like this is a false claim. See Universal Health Servs., Inc. v. United States, 579
U.S. 176, 190 (2016).
Relators also sufficiently allege that for each of these false claims ICPC knew of their
falsity. For several claims, Si aired his concerns that ICPC was fraudulently billing for CDP
funds. See Compl. ¶¶ 40–41. ICPC overruled him and directed the payments anyway. See id.For the other claims, Relators allege that Zhang knew that ICPC was faking details on particular
positions or employees before submitting reimbursement for their alleged services. See id.¶¶ 38–39. The Court imputes his knowledge to ICPC, his employer. See United States v.
DynCorp Int’l, LLC, 253 F. Supp. 3d 89, 103 (D.D.C. 2017). All told, Relators allege nine false
claims presented by ICPC with a value of $268,000. 7
The well-pleaded allegations also show PCI’s liability. Relators allege that, starting in
2010, PCI listed as its employee a freelance writer who was a friend to one of NED’s board
members. See Compl. ¶ 63. PCI claimed that it employed this person from 2010–2018 as a
researcher, see id. ¶ 64, though he “did not perform any actual work or services for PCI,” id.
¶ 63. PCI submitted “fake timesheets” to get reimbursement, id. ¶ 66, in the amount of $20,000
7
The Court treats as two false claims the allegations about the fake bookstore, see Compl. ¶ 41,
and the certification about bank accounts, see id. ¶ 40. And because Relators specify that ICPC
received funds over three years for the two fictional individuals, the Court treats those
allegations as six false claims—two each year for $20,000 at a time. See id. ¶ 39. Adding those
to the one claim about the fake employment position makes nine total false claims.
9
per year, see id. ¶ 64. And because Relators allege that PCI arranged this sham for a friend of a
NED board member, Relators have also alleged that PCI knew about the falsity of the submitted
claims. Thus, Relators allege that PCI presented eight false claims with a value of $160,000.
Some of the false claims allegations are not well-pled. For example, Relators allege that
ICPC wanted, as part of a “Writers in Prison” project, more CDP funding to help blog writers
detained by Chinese authorities. See Compl. ¶ 36. ICPC allegedly “buried” the requests for
these funds under permissible funding categories, like labor and travel expenses. Id. These
funds thus were gifts and donations to private persons—outlays prohibited by CDP’s
requirements. See id. ¶ 73. So far so good. But Relators say that ICPC submitted fraudulent
claims in this way “at least forty” times from 2008–2017. Id. ¶ 37. That final statement lacks
sufficient detail. Although Relators ably describe the overall scheme and “the fact
misrepresented,” Williams, 389 F.3d at 1256, they give scant details about when ICPC submitted
false claims associated with that scheme. Allegations of claims presented during an “open-ended
time span” do not meet the Rule 9(b) pleading requirement. See id. at 1257; see also Cimino, 3
F.4th at 424 (rejecting allegations of false claims presented “sometime during [an] agreement’s
five years”). Relators also do not say how much money ICPC allegedly presented for payment.
Without those details, Relators’ allegations about ICPC’s Writers in Prison project are not well-
pled and do not support liability.
So too for certain allegations against PCI. In some paragraphs of their Complaint,
Relators allege that PCI claimed money for fictitious employees and falsely certified that
particular individuals led branches of PCI that were not, in fact, branches. See Compl. ¶¶ 58–61.
Relators say that the Government relied on those misrepresentations to award grants to PCI. See
id. ¶ 61. But Relators provide little clarity about how much money PCI obtained under those
10
grants. The Complaint contradicts itself—one paragraph says PCI received “around less than 1
million dollars each year,” id. ¶ 60, and the next paragraph says they received “around $1 million
per year,” id. ¶ 61. The Court cannot fill in those details. Nor does the Complaint specify how
many claims PCI submitted. The Court holds that those allegations do not meet Rule 9(b)’s
heightened requirement.
The same is true for Relators’ statement that PCI “presented 50 false claims.” Pls.’ FCA
Mot. at 7. The Complaint says only that certain “false statements occurred at least fifty times.”
Compl. ¶ 89. False statements are not false claims, and in any event the Complaint does not
specify how much money PCI got from any related claims.
Finally, Relators allege that PCI sought reimbursement in 2011–2015 for two alleged
employees (named A and B) when they “had no real employment or service relationship with
PCI.” See id. ¶ 65. A and B were friends of NED board members. See id. Beyond that fact, the
details peter out. Relators say that PCI received “approximately $500,000 via A, B, and other
persons’ sham employment arrangement[s].” Id. (emphasis added). Because Relators add other
unnamed false employees to this statement, the Court cannot say how much of the $500,000
related to misrepresentations about A and B specifically. Relators do not identify any of the
“other persons.” Id. For this claim, Relators thus fail to allege details sufficient under Rule 9(b).
Although not all of Relators’ allegations support liability, some of them do. As to those
allegations, the Court will enter default judgment against ICPC and PCI for liability on Count I.
B.
Relators next allege that ICPC and PCI made false statements in violation of 31 U.S.C.
§ 3729(a)(2). See Compl. ¶¶ 126–131. That provision penalizes anyone who “knowingly
makes, uses, or causes to be made or used, a false record or statement material to” a false claim
11
paid or approved by the Government. 31 U.S.C. § 3729(a)(2). And a defendant who prepares a
misrepresentation about a claim yet fails to submit the claim can still be liable for a false
statement under the FCA. See United States v. Toyobo Co. Ltd., 811 F. Supp. 3d 37, 49 (D.D.C.
2011).
Relators’ Complaint sufficiently alleges several false statements. ICPC certified on
multiple forms that “experienced accounting persons” oversaw the organization’s financial
management. Compl. ¶ 42. But Zhang held that oversight role, and he “has little knowledge”
about accounting. Id. ICPC also said in multiple reports that Si led a compliance committee.
See id. ¶ 47. He did no such thing. See id. Relators allege that ICPC made these statements so
that it could “remain in CDP,” id. ¶ 42, and “retain money received from CDP,” id. ¶ 47, making
the statements “material to” any potential false claims, 31 U.S.C. § 3729(a)(2).
Much of the same holds for PCI. Although Relators have not alleged that a false claim
arose from PCI’s misrepresentations about its organizational structure, those same allegations
support that PCI “knowingly made a false” statement about its structure. Compl. ¶ 58. PCI lied
about its own branches and about who led those units. See id. ¶ 59. And according to Relators,
those lies allowed PCI to bypass the requirement that CDP money could flow only to
organizations, not individuals. See id. ¶ 57, 59. These misrepresentations were thus material for
any false claim.
PCI also made a false statement as part of a bid to construct a Chinese news website. See
id. ¶ 68. PCI said that H, a family member of PCI’s president, was an “IT network consultant”
on the project. Id. ¶ 68–69. PCI failed to disclose that relationship, thus circumventing the
material anti-nepotism condition. See id. ¶ 73(e). Relators allege that the president of PCI
12
directed this arrangement. See id. ¶ 68. His knowledge of its falsity can be imputed to the whole
company. See DynCorp, 253 F. Supp. 3d at 103.
The Court accordingly finds ICPC and PCI liable for false statements under the FCA and
will enter default judgment on Count II.
C.
Relators next allege that ICPC engaged in so-called reverse false claims, in violation of
31 U.S.C. § 3729(a)(1)(G). See Compl. ¶¶ 132–38. A reverse false claim occurs when a
“defendant’s alleged deception results in no payment to the Government when a payment is
obligated.” Hoyte v. Am. Red Cross, 518 F.3d 61, 67 (D.C. Cir. 2008) (cleaned up).
Relators’ allegations support ICPC’s liability for two reverse false claims. As a general
matter, ICPC certified that it would return any unspent or unobligated funds at the end of its
grants and “any remaining funds under one” of ICPC’s budget categories. Compl. ¶ 48.
Relators allege, however, that ICPC often moved funds between categories to avoid this
repayment obligation. See id. ¶ 49. That behavior contributed to the two reverse false claims.
First, in 2016 ICPC submitted a $9,000 receipt ostensibly showing that the organization had paid
an outside contributor with CDP funds. See id. ¶ 49. But the contributor never received the
money. See id. He asserted that ICPC had tricked him into signing the receipt and had
submitted that receipt “to avoid remitting money [ ] owed to CDP.” Id. The allegations thus
show that ICPC knowingly submitted a false receipt to avoid a repayment obligation.
Second, in January 2015 ICPC received word from NED that ICPC had accounted for
only $16,618 of a $100,000 grant. See id. ¶ 51. ICPC then “simply submitted a fraudulent report
that appeared as if ICPC full[y] spent all the granted money legitimately,” when actually “the
funds stayed in [ICPC’s] bank account unused” until the grant expired. Id. That is a reverse
13
false claim. ICPC again submitted a false statement to avoid paying back the grant money.
Because Relators give no reason to think ICPC’s accounting of the $16,618 was fraudulent, the
Court construes these allegations as of a reverse false claim in the amount of $83,382.
Other allegations do not support liability for reverse false claims. Relators emphasize
that ICPC did not disclose contributions from non-CDP sources. See id. ¶ 50. Relators say that
ICPC, as a condition of CDP, needed to report those contributions. See id. But Relators do not
say how failure to do so triggers an “obligation to” repay the Government, nor what amounts
ICPC would have to repay. 31 U.S.C. § 3729(a)(1)(G). The Court cannot speculate about those
details.
Relators also allege that ICPC failed in 2016 to repay funds after the organization split in
two. According to the hazy allegations, one side of the split took money from a restricted bank
account, and the other took the rest of the money in that account. See Compl. ¶ 53. The original
ICPC then allegedly failed to disclose these occurrences to NED or to the Government. See id.
¶ 54. Relators assert that they did this to avoid remitting $100,000, see id., but the details of this
entire affair are too sketchy for the Court to follow. The specified sums do not add up to
$100,000, and nowhere do Relators allege that any false statement over organizational structure
(if that is even what ICPC misrepresented) triggered an obligation to repay. Those allegations
thus do not support liability for a reverse false claim.
In sum, the Court will enter liability against ICPC on Count III for two reverse false
claims in the amount of $92,382.
D.
Relators also allege that ICPC and PCI conspired to commit the above violations of the
FCA, in violation of 31 U.S.C. § 3729(a)(1)(C). See id. ¶¶ 139–52. To plead an FCA
14
conspiracy, Relators must show that (1) “an agreement existed to have false or fraudulent claims
allowed or paid by the United States”; (2) ICPC and PCI “willfully joined that agreement”; and
(3) “one or more conspirators knowingly committed one or more overt acts in furtherance of” the
conspiracy’s object. United States ex rel. Miller v. Bill Harbert Int’l Const., Inc., 608 F.3d 871,
899 (D.C. Cir. 2010) (per curiam).
Relators’ conspiracy allegations focus mostly on NED, which is no longer a Defendant.
But ICPC and PCI do appear. They submitted their false claims and false statements “at the
direction of” NED. Compl. ¶ 88. Taken at face value, that statement alleges that ICPC and PCI
agreed with NED to violate the FCA. As for overt acts, Relators allege that NED “instructed”
ICPC and PCI to “bury their problematic expenses under other budget categories . . . so as to
hide [the] real spending at issue.” Compl. ¶ 89. That ICPC and PCI did so—as documented
throughout the Complaint—is an overt act in furtherance of their agreement with NED to violate
the FCA. See United States ex rel. Tran v. Comput. Scis. Corp., 53 F. Supp. 3d 104, 133 (D.D.C.
2014) (finding a well-pled FCA conspiracy when the complaint was “replete with” alleged
actions that parties took to advance a conspiracy). Based on those two allegations, which the
Court accepts as true and to which Defendants agree by default, the Court finds liability for
ICPC and PCI for conspiracy to violate the FCA.
The Court will enter default judgment against ICPC and PCI for liability on Count IV.
E.
The Court now assesses and awards damages for these FCA violations. First, civil
penalties. The FCA allows civil penalties “of $5,500 to $11,000 for each claim submitted.” See
Landis, 324 F. Supp. 3d at 74 (citing 31 U.S.C. § 3729(a)). The Court may determine the proper
amount. See Cook Cnty., Ill. v. United States ex rel. Chandler, 538 U.S. 119, 132 (2003). As
15
part of that determination, the Court considers the totality of the circumstances, including the
seriousness of the conduct, Defendants’ scienter, and the amount of damages suffered by the
United States from the misconduct. See Landis, 324 F. Supp. 3d at 74.
The Court awards the maximum penalty of $11,000. According to the Complaint,
Defendants’ conduct was “intricate, far-reaching” and involved multiple false claims and
statements. Accord United States ex rel. Miller v. Bill Harbert Const., Inc., 501 F. Supp. 2d 51,
56 (D.D.C. 2007). Relators also allege that Defendants tried to cover up their lies by moving
funds between budget categories, thereby avoiding detection by the Government. See id.(awarding maximum civil penalty amount when defendant created confusion by changing names
and shifting illegal profits “between contracts and companies so as to avoid detection”). More,
Defendants’ attempts to cook the books and bill the Government for fictitious employees are
particular indicators of egregious conduct. On similar facts, other judges in this district have
granted comparable civil penalties. See United States v. Speqtrum, Inc., No. 10-cv-2111 (JEB),
2016 WL 5349196, at *4 (D.D.C. Sep. 23, 2016).
Based on those decisions and the egregiousness of Defendants’ behavior, the Court will
award $11,000 for each false claim submitted. This decision is made on the Complaint’s
allegations—by defaulting, Defendants waived the chance to present mitigating evidence or to
rebut Relators’ representations about the fraudulent scheme. ICPC submitted nine false claims,
and thus will pay $99,000 in civil penalties. For its eight submitted false claims, PCI must pay
$88,000 in civil penalties.
Second, other FCA damages. On top of civil penalties, the FCA allows for treble
damages “which the Government sustains because of” a defendant’s actions. 31 U.S.C.
§ 3729(a). Generally, these damages “put[] the government in the same position as it would
16
have been” without the falsity of defendant’s claims. United States v. Sci. Apps. Int’l Corp., 626
F.3d 1257, 1278 (D.C. Cir. 2010). The proper amount is straightforward when defendants
provide goods with an ascertainable market value. Courts then calculate the difference in market
value between the delivered non-conforming product and a conforming product. See id. at 1278.
In cases like this one involving services, however, the damages suffered might be the full
value of payments made. Under this theory, the Government receives no value from the
defendant because, had it known about the fraud, the Government would have made no payments
at all. See id. at 1279. Relators argue that this is one of those cases. According to them,
Defendants’ fraud defeated CDP’s central purpose and violated relevant regulations so that the
State Department never would have paid Defendants. See Pls.’ FCA Mot. at 10–14. Their
actions “created an unalterable moral taint” on the services provided. Id. at 12.
The Court acknowledges that this theory is available to Relators. But to recoup on
default judgment all those funds, Relators must prove their amount to a reasonable certainty. See
Bozzuto, 2021 WL 1564437, at *3. Relators have not done so. Only one paragraph in Si’s
declaration asserts, without documentary evidence, that ICPC and PCI received a combined $6.7
million in CDP funds. See Si Aff. ¶ 25. In other words, Relators “simply list the dollar
figures . . . without any explanation as to their calculation.” GAG Enters., Inc. v. Rayford, 312
F.R.D. 230, 234 (D.D.C. 2015). As part of its independent inquiry into damages, the Court
cannot accept such perfunctory figures.
That said, Relators will recover some damages. The Complaint shows that ICPC
received $268,000 from its false claims and avoided paying $92,382 to the Government. Treble
that combined number is $1,081,146. The Court will award that amount for ICPC’s FCA
violations. As for PCI, it received $160,000 from its false claims. Following the same process,
17
the Court will award $480,000 for PCI’s FCA violations. See United States ex rel. Carmichael v.
Gregory, 270 F. Supp. 3d 67, 72 (D.D.C. 2017) (entering treble damages at default judgment for
FCA violations in the amounts received by defendants from their false claims).
Between these damages and civil penalties, ICPC is liable for $1,180,146, and PCI is
liable for $568,000 for their respective FCA violations.
V.
Si alleges that his firing by ICPC and PCI was retaliation for his investigation into and
complaints about the organizations’ FCA violations. 8 See Compl. ¶¶ 153–61. To state an FCA
retaliation claim, Si must show that (1) he engaged in protected activity and (2) that he was fired
“because of” that activity. Williams, 389 F.3d at 1260 (cleaned up). The second prong requires
a showing that Si’s employer knew about his protected activity and retaliated against him based,
at least in part, on his engagement in that activity. See United States ex rel. Yesudian v. Howard
Univ., 153 F.3d 731, 736 (D.C. Cir. 1998). Claims of FCA retaliation need only meet the
general pleading standard, not Rule 9(b). See Williams, 389 F.3d at 1260.
Si’s allegations support liability for FCA retaliation. Three times in 2015, Si wrote or
told members of ICPC’s board about the irregularities that he noticed. See Compl. ¶¶ 102–103.
He then reported his complaints to NED after ICPC did nothing in response. See id. ¶ 104. Si’s
reports no doubt comprise “lawful actions” to stop “[one] or more violations of” the FCA. 31
U.S.C. § 3730(h); see Pengcheng Si, 71 F. Supp. 3d at 99–101. And his discussions with ICPC
leadership show that ICPC knew that Si engaged in those lawful actions. See Pengcheng Si, 71
8
Guo brought the same claim against ICPC but later agreed to dismiss it. See Show Cause
Response at 6–7. The Court thus dismisses without prejudice that claim of retaliation.
18
F. Supp. 3d at 102 (finding allegations that relator openly questioned billing practice to corporate
officer supported inference that company knew about relator’s protected activity).
The only remaining question is whether ICPC fired him because of his complaints. Other
allegations confirm that it did. NED officials directed ICPC not to place Si in a position with
access to ICPC’s financial information, see Compl. ¶ 105, and asked ICPC to “take retaliatory
actions against [Si] for his complaint,” id. ¶ 106. And PCI’s president later told Si that NED
requested his firing—and ICPC complied—“because of his reporting about financial
irregularities.” Id. ¶ 108. So ICPC knew about Si’s protected activity and, as the Complaint
alleges, fired him “because of” it. Si has stated an FCA retaliation claim against ICPC.
Si’s allegations against PCI are lighter, but in the same vein. As with ICPC, NED
officials summoned PCI’s president to their office and “dictated” Si’s termination. Compl.
¶ 108. They said that Si had “embarrassed NED when he questioned” various financial
transactions. Id. ¶ 109. PCI thus knew about Si’s various reports to stop FCA violations—NED
had informed PCI’s president about them, and he in turn mentioned to Si that those actions led to
his firing by ICPC. See id. ¶ 108. When PCI fired Si in October 2017, it did so “because he
[had] voiced his concerns” about the organizations defrauding the government. Id. ¶ 112.
Admittedly, these allegations against PCI are not robust, especially when compared to the detail
with which Si pleads against ICPC. But given the lower pleading standard for this claim and
PCI’s default, the Court holds that Si has stated a retaliation claim against PCI. The Court will
enter default judgment against ICPC and PCI for liability to Si on Count V.
Which brings the Court to damages. A successful claim entitles Si to various forms of
relief, including “[two] times the amount of back pay, interest on the back pay, and
compensation for any special damages sustained as a result of the discrimination, including
19
litigation costs and reasonable attorneys’ fees.” 31 U.S.C. § 3730(h). As always on default
judgment, Si must prove the amount of damages to a reasonable certainty.
He has failed to do so. He requests $42,000 in lost wages, $12,000 in lost benefits
(presumably from what benefits PCI gave him), and “litigation costs.” Pls.’ FCA Mot. at 16. Si
gives no figure as to his litigation costs. His other requests are only slightly more supported. A
pay stub confirms that PCI paid him $1,750 per month. See Pls.’ FCA Mot., Ex. 3 at 2, ECF No.
27-5. And he says that he was unable to find similar “work-from-home” jobs for two years after
leaving PCI. Pls.’ FCA Mot. at 16. Two years at $1,750 per month indeed equals $42,000. As
for his benefits, Si says that PCI paid $500 a month, which equals $12,000 across the same two-
year period. See Si Aff. ¶ 5. But Si gives no argument for why the FCA compensates him for
two years. And Si’s affidavit implies that he took on “additional employment” after PCI fired
him. See id. ¶ 23. If that new job paid Si more, or gave him benefits in greater amount, his
“special damages” from the firing would be lower. 31 U.S.C. § 3730(h). Si thus has not proved
to a reasonable certainty that he is entitled to the requested damages. And without more, the
Court cannot award him any of the types of damages laid out in the FCA.
VI.
Rounding out the federal claims, Si alleges that ICPC, PCI, and LRF violated the FLSA.
See Compl. ¶¶ 167–72. Specifically, Si alleges that Defendants violated 26 U.S.C. § 207(a),
which requires payment at an enhanced rate for an employee’s overtime hours. See id. ¶ 169.
The allegation about ICPC is insufficient. Si never alleges that he worked any overtime
hours there. See Pls.’ Tort Mot. at 14–15. True, his motion says that ICPC violated § 206,
which requires a minimum wage for all hours worked. See id. at 8. But ICPC has conceded only
what is found in the Complaint, not a later motion. See Sanchez v. Devashish Hosp., LLC, 322
20
F.R.D. 32, 36 (D.D.C. 2017) (accepting facts in declaration “except to the extent that [it] seeks
relief beyond that sought in the Complaint” (cleaned up)). And the cause of action in the
Complaint pertains to overtime hours.
As for PCI, Si first argues that PCI and LRF were his joint employers. The Court agrees.
Si alleges that LRF merged with PCI “in or about 2017–2018,” which covers the period at issue.
Compl. ¶ 114. He also alleges that LRF “played an active part in terminating him.” Id. These
allegations support an inference that LRF “had [ ] control over the employment relationship”
between PCI and Si. Harris v. Med. Transp. Mgmt., Inc., 300 F. Supp. 3d 234, 243 (D.D.C.
2018). The following discussion of PCI’s liability thus also applies to LRF.
Si alleges that PCI “failed to pay [him] the wages he rightfully earned from October 2016
to September 2017.” Compl. ¶ 118. He also alleges that he is an eligible “employee” under
§ 207 and that PCI knew about his work from October 2016 to September 2017 but failed to pay
him. Id. ¶ 171. Although he provides no timesheets for those overtime hours, his motion
includes calculations of that time. See Pls.’ Tort Mot. at 14. Because PCI (or LRF) does not
respond to this action, the Court will accept Si’s calculations. See Sanchez, 322 F.R.D. at 36.
The Court accordingly holds that Si has stated a claim against PCI for a violation of § 207(a).
PCI is therefore liable for that violation. The Court will enter default judgment against LRF and
PCI for liability on Count VII.
As for damages, Si asserts that he worked eight overtime hours each month for nine
months. At $10.87 an hour—which is the figure proposed by Si—he earned $782.64. He is
entitled to that amount from PCI. The FLSA also mandates that same amount in liquidated
damages, see 26 U.S.C. § 216, unless PCI shows that it had “reasonable grounds” to think
nonpayment complied with the FLSA, id. § 260. Because PCI (and LRF) does not appear, Si is
21
entitled to liquidated damages of $782.64. See Ventura v. L.A. Howard Const. Co., 134 F. Supp.
3d 99, 105 (D.D.C. 2015). Si also requests prejudgment interest, but courts in this district “deny
prejudgment interest under [the FLSA] when a court awards a plaintiff the maximum amount of
liquidated damages.” Id. at 102, n.2 (citing Lopez v. Rodriguez, 668 F.2d 1376, 1381 n.10 (D.C.
Cir. 1981)).
On Si’s FLSA claim, the Court will award default judgment against PCI and LRF as to
liability and for damages of $1,565.28. As joint employers, PCI and LRF are jointly and
severally liable for that amount. See Ayala v. Tito Contractors, Inc., 82 F. Supp. 3d 279, 288
(D.D.C. 2015).
VII.
Now to Relators’ state law claims. Because the Court exercises supplemental jurisdiction
over those claims, it will apply D.C.’s choice-of-law rules for each claim. See Ideal Elec. Sec.
Co. v. Int’l Fidelity Ins. Co., 129 F.3d 143, 148 (D.C. Cir. 1997). The first step under those rules
is determining whether a true conflict exists between the laws of multiple jurisdictions. See
Krukas v. AARP, 376 F. Supp. 3d 1, 27 (D.D.C. 2019). A conflict does not exist when the
competing laws “are identical or would produce the identical result on the facts presented.” USA
Waste of Md., Inc. v. Love, 954 A.2d 1027, 1032 (D.C. 2008). And without a conflict, D.C. law
“applies by default.” Krukas, 376 F. Supp. 3d at 27. If there is a conflict, however, courts
“blend a governmental interests analysis with a most significant relationship test.” Oveissi v.
Islamic Repub. of Iran, 573 F.3d 835, 842 (D.C. Cir. 2009) (cleaned up). As discussed below,
the Court need not reach that second step for any claim.
22
A.
First is Guo’s defamation claim. See Compl. ¶¶ 162–166. He argues that ICPC defamed
him when it wrote blog posts that Guo “was an unethical person acting illegally to make
trouble.” Id. ¶ 163. Other published statements included that Guo was a “betrayer[ ] and
squealer[ ]” who caused financial troubles for ICPC. Id. ¶ 101. ICPC also claimed that Guo
“help[ed] the Chinese Communist Party.” Guo Aff. ¶ 12. He asserts that the statements were
“devastating” to his personal status in the Chinese dissident community. Id. ¶ 13. Dissident
organizations stopped inviting him to conferences, stopped accepting his articles, and generally
blocked him from their communities. See id. ¶ 14.
Guo is domiciled in New York. See id. at 1. The Court thus must first decide whether to
apply D.C. law or New York law. There is no conflict between the two jurisdictions. Each
requires (1) a false and defamatory statement (2) that is published (3) by a defendant whose fault
is at least negligent and (4) that is actionable as a matter of law or caused special harm. See
Kesner v. Dow Jones & Co., Inc., 515 F. Supp. 3d 149, 169–70 (S.D.N.Y. 2021); Kambala v.
Checchi & Co. Consult., Inc., 280 F. Supp. 3d 131, 140 (D.D.C. 2017).
Guo argues that some of ICPC’s statements are defamatory per se. Again, the laws do
not conflict. In the District, a defamatory per se statement makes the subject appear “odious,
infamous, or ridiculous.” Howard Univ. v. Best, 484 A.2d 958, 989 (D.C. 1984). New York
likewise labels a statement defamatory per se “if it tends to expose a person to hatred, contempt,
or aversion.” Geraci v. Probst, 938 N.E.2d 917, 922 (N.Y. 2010) (cleaned up). Finding no
conflict, the Court applies D.C. law. See Krukas, 376 F. Supp. 3d at 27.
On the first element, two of ICPC’s statements are defamatory. To be false and
defamatory, a statement must, at a minimum, “reasonably impl[y] false and defamatory facts.”
23
Farah v. Esquire Magazine, 736 F.3d 528, 534 (D.C. Cir. 2013) (cleaned up). The statements
that Guo “act[ed] illegally,” id. ¶ 163, and “help[ed] the Chinese Communist Party,” Guo Decl.
¶ 12, are “laden with factual content.” Ollman v. Evans, 750 F.2d 970, 980 (D.C. Cir. 1984).
And their content is verifiably false. 9 Guo did not act illegally when he reported concerns about
ICPC’s finances, see supra, nor could anyone believe that a dissident like Guo sought to help the
Chinese Communist Party when he made those reports. On the publication element, Guo alleges
that these statements appeared on “ICPC’s intranet discussion forums.” Compl. ¶ 101. That
communication to individuals other than Guo suffices for publication. See Zimmerman v. Al
Jazeera Am., LLC, 246 F. Supp. 3d 257, 273 (D.D.C. 2017). And ICPC acted negligently
because it failed to verify the truth of the statements before publishing them. Indeed, the
Complaint alleges that ICPC “executed a public campaign” against Guo, Compl. ¶ 163, and
“knew” that the statements “were false” when published, id. ¶ 164. ICPC concedes those
allegations by its default.
On the fourth element, Guo argues that ICPC’s statements constitute defamation per se.
The Court agrees. Statements that impute to the subject a “matter affecting adversely a person’s
fitness for trade, business, or profession” are defamatory per se. Carey v. Piphus, 435 U.S. 247,
262 n.18 (1978). Here, those who heard or read ICPC’s statements that Guo acted illegally and
helped the Chinese Communist Party would question Guo’s status as an opponent of the Chinese
government—the same government that imprisoned him for 18 years. See Guo Aff. ¶ 2. As his
decreased invitations to conferences and “pro-democracy events” attest, many in the Chinese
9
Guo says that other statements—that he is a betrayer and a squealer—were also defamatory.
The Court disagrees. Those words are “the sort of loose, figurative, or hyperbolic language
which would negate the impression” that the speaker is making a factual statement. Milkovich v.
Lorain Journal Co., 497 U.S. 1, 21 (1990).
24
dissident community broke their connections with him. Id. ¶ 14. Thus, ICPC’s statements made
Guo unfit for his chosen profession—spreading and endorsing opposition against the Chinese
government. Because Guo’s allegations meet the required elements of a D.C. defamation claim,
the Court will enter liability against ICPC on Count VI for the two defamatory statements.
Which brings the Court to damages. Guo requests both general damages and special
damages. See Pls.’ Tort Mot. at 6. General damages compensate a plaintiff for intangible
injuries, such as his reputational harm. See Restatement (Second) of Torts § 621 cmt. a (1977).
In contrast, special damages compensate losses of an “economic or pecuniary” nature. Id.
Because Guo has shown defamation per se, he does not have to prove general damages. See Dun
& Bradstreet, Inc. v. Greenmoss Builders, Inc., 472 U.S. 749, 757 (1985).
Guo requests $300,000 in special damages. See Pls.’ Tort Mot. at 6. How he reaches that
figure is confusing. He says that his income decreased by $120,000 in the three years after ICPC
fired him in 2007. See id. He then posits that “assuming a conservative loss of income of
$30,000 per year for ten years” after the firing, “that would equate to $300,000.” Id.The Court does not question Guo’s math, merely his rationale. For one thing, the
measure of damages does not begin when ICPC fired him, but when it defamed him. And
although he may state a defamation claim without alleging a time of defamation, see Kamabla,
280 F. Supp. 3d at 141, the Court cannot award appropriate damages without knowing when the
defamation occurred and for how long Guo felt its effects. The Complaint says that ICPC began
defaming him “[a]fter his expulsion,” but does not say when. Compl. ¶ 100. The Court thus
cannot assume, without more, that the defamation began in 2007 when ICPC fired him. And
even if it could, Guo offers only conclusory reasons for why the Court should compensate him
for ten years after that.
25
More, the $120,000 in lost income lacks any documentary support. Guo simply asserts
that ICPC’s defamatory statements caused the entire $120,000 in lost income. The Court needs
more. See LaRue v. Johnson, No. 16-cv-504 (EGS/RMM) 2018 WL 1967128, at *10 (D.D.C.
Feb. 22, 2018) (awarding specific damages on default judgment for lost income when plaintiff
submitted personal financial information about her business before and after defamation), report
and recommendation adopted, No. 16-cv-504 (EGS), 2018 WL 2561036 (D.D.C. Apr. 4, 2018).
Instead, Guo merely states a figure.
Despite those issues, the Court will award Guo special damages. He says that ICPC’s
defamation caused him “great anguish, pain, and mental suffering.” Guo Aff. ¶ 15. That distress
led to medical problems. He underwent multiple procedures, including a heart stent operation.
See id. He now takes ten pills a day. See id. All told, Guo says that he has incurred “medical
expenses of $55,000.” Id. ¶ 17. The Court finds that Guo has shown that ICPC’s defamation,
and Guo’s distress at his tarnished reputation, caused those medical injuries. The Court will
award him $55,000 in special damages. See Restatement (Second) of Torts § 623, cmt. a (1977)
(authorizing special damages for “emotional distress caused by [defamation] and any physical
harm resulting from [that] distress”).
For general damages to his reputation, Guo requests $200,000. See Pls.’ Tort Mot. at 8.
Courts have “substantial latitude” in determining the amount of general damages. Ingber v.
Ross, 479 A.2d 1256, 1265 (D.C. 1984). The Court considers “the seriousness of the defamatory
charge, the extent of distribution of the defamation, the extent to which the communication was
actually believed, and [the] plaintiff’s prominent and professional standing in the community.”
Id. (cleaned up). Sometimes, nominal damages sufficiently vindicate a reputational injury. See
Grossman v. Goemans, 631 F. Supp. 972, 974 (D.D.C. 1986).
26
ICPC’s statements accused Guo of illegal conduct and, worse for him, assisting the
Chinese government. ICPC disseminated those statements widely and the resulting backlash
against Guo isolated him from the professional community to which he has devoted himself “for
approximately 40 years.” Guo Aff. ¶ 3. The Court thus finds that nominal damages will not
adequately redress his harm. But the Court will not grant the requested $200,000 because Guo
fails to justify that figure beyond simply stating a dollar amount. Instead, the Court will follow
the award in LaRue and award Guo $40,000 in general damages for his isolation from “business
contacts” and his “lowered [ ] personal and professional standing in the community.” LaRue,
2018 WL 1967128, at *9.
B.
Next, Si claims that LRF tortiously interfered with his economic relationship with PCI.
See Compl. ¶¶ 173–80; Pls.’ Tort Mot. at 16. The Court first decides which law to apply: The
District’s or Virginia’s, where Si’s contract with PCI existed. Again, the laws do not conflict.
Both jurisdictions require (1) existence of a valid contract or business relationship; (2)
knowledge of the contract or relationship; (3) intentional interference with that relationship; and
(4) damages. See Whitt v. Am. Prop. Constr., P.C., 157 A.3d 196, 202 (D.C. 2017); Schaecher v.
Bouffault, 772 S.E.2d 589, 602 (Va. 2015). So the Court applies D.C. law.
The Court will enter liability against LRF. According to the conceded allegations, Si had
a “valid contract[]” with PCI, and LRF “had knowledge of” that contract. Compl. ¶ 174. For
interference, Si alleges that LRF “played an active part in” his termination from PCI, id. ¶ 114,
because LRF wanted to retaliate against him for his earlier suit against the organization, see id.
¶ 115. LRF undertook these actions—namely, “urging” PCI to fire him, Si Aff. ¶ 11—with
“knowing intent to harm” Si, Compl. ¶ 179. And Si also alleges that LRF’s actions caused loss
27
of income, damage to his reputation, and emotional distress. See id. ¶ 180. Si’s allegations thus
state a claim for tortious interference with a business relationship. The Court will enter default
judgment against LRF for liability on Count VIII.
Like many other claims, however, Si does not support his alleged damages. He suggests
that LRF’s interference caused him “a future wage and benefit loss.” Pls.’ Tort Mot. at 17. He
then asks for $54,000 in past damages and $36,000 in future damages. See id. These figures
have no documentary support. He says that they compensate his “having to take on additional
employment” and his “inconvenience, stress[,] and anxiety.” Id. But he offers no background as
to how he arrived at these numbers. His failure to explain them, or any other amount of damages
resulting from LRF’s interference, precludes an award of damages for this claim. See GAG
Enters., 312 F.R.D. at 234.
C.
Finally, Si alleges that ICPC and PCI breached the contractual implied covenant of good
faith and fair dealing. See Compl. ¶¶ 181–85. Again, the Court decides whether to apply the law
of the District or Virginia, where Si executed the contracts. See id. at 1 (noting Si’s Virginia
residency and the Virginia headquarters of both organizations).
As with Relators’ previous state law claims, the jurisdictional laws do not conflict. That
consensus is to Si’s detriment. The District “does not recognize a claim for breach of the implied
covenant of good faith and fair dealing when brought by an at-will employee.” Kerrigan v.
Britches of Georgetowne, Inc., 705 A.2d 624, 627 (D.C. 1997) (cleaned up); see also Vasquez v.
Whole Foods Market, Inc., 302 F. Supp. 3d 36, 62 n.10 (D.D.C. 2018) (same). Virginia similarly
does not allow that claim “in employment contracts.” Sickles v. Torres Adv. Enters. Solutions,
LLC, No. 11-cv-2224, 2020 WL 5530357, at *16 (D.D.C. Sept. 14, 2020) (quoting Devnew v.
28
Brown & Brown, Inc., 396 F. Supp. 2d 665, 671 (E.D. Va. 2005)). Si admits that his contracts
with ICPC and PCI were “at-will employment” contracts. Pls.’ Tort Mot. at 16.
Applicable law thus bars Count IX, and the Court will not enter default judgment on that
Count.
VIII.
For these reasons, the Court will grant in part and deny in part Relators’ motions for
default judgment. For liability, the Court will enter default judgment against ICPC on Counts I,
II, III, IV, V, and VI; against PCI on Counts I, II, IV, V, and VII; and against LRF on Counts VII
and VIII.
The Court will also award damages in these amounts: Against ICPC in the amount of
$1,275,146; against PCI in the amount of $569,565.28; and against LRF jointly and severally
with PCI in the amount of $1,565.28. A separate Order will issue.
2022.02.18
15:14:35 -05'00'
_____________________________
Dated: February 18, 2022 TREVOR N. McFADDEN, U.S.D.J.
29