United States District Court, D. Massachusetts
Talwani United States District Judge
in the above-captioned case have filed cross-motions for
summary judgment [#51] and partial summary judgment [#54].
The Magistrate Judge to whom these motions were referred
found the record's factual disputes to preclude summary
judgment and has recommended that the motions be denied.
Report and Recommendation [#86]. Defendants lodge the sole
objection [#87], to which Plaintiff has replied. [#89].
challenge the report's findings only as they pertain to
Count II of Plaintiff's Amended Complaint [#34].
Defendants dispute the conclusion that the record contains
evidence from which a jury could find for Plaintiff on the
“protected conduct” element of Plaintiff's
False Claims Act retaliation claim under 31 U.S.C. §
3730(h). This court thus reviews that portion of the
Magistrate Judge's report de novo. Fed.R.Civ.P.
contend that the Bank engaged in a multi-step process
designed to ensure it classified the subject loans properly
and that Plaintiff “was aware of at least some of these
steps . . . before he first registered his complaints about
the loans.” Defendants' Objections 7 [#87]. They
argue that the relevant, material, undisputed facts thus
prove that Plaintiff could not have had an objectively
reasonable basis to believe that the Bank was knowingly
summary judgment stage, this court reviews the disputed facts
in the non-movant's favor. Plaintiff, in his sworn
declaration, explains he was a Senior Vice President of
Defendant Blue Hills Bank, serving in the years preceding his
termination as Treasurer and as Controller/ SVP of Finance.
Waiting Decl. ¶ 1 [#54-1]. He describes his intimate
involvement with the Bank's participation in the
Treasury's Small Business Lending Fund program, including
those portions involving reports submitted to the government
for purposes of determining funds owed to the government.
Id. at ¶¶ 24-26. He describes how, in his
judgment, Defendants not only failed to comply with rules
governing the Small Business Lending Fund program, but also
how the Chief Financial Officer, after being alerting of this
noncompliance, brushed Plaintiff off and instructed him to
carry out the noncompliant activity anyway. Id. at
¶ 29. Plaintiff describes further how he observed the
CFO direct staff to reclassify loans despite internal
accounting systems making them ineligible. Id. at
¶ 53. Plaintiff contends (based on purportedly personal
knowledge), that the persistent and deliberate
misclassification of loans allowed the Defendants to reduce
their financial obligations to the Treasury. Id. at
¶¶ 33-40. After substantial internal complaint,
Plaintiff alerted the Federal Reserve and FDIC to his
concerns. Id. at ¶¶ 41-49.
conduct is that which “reasonably could lead
to a viable FCA action.” United States ex rel.
Karvelas v. Melrose-Wakefield Hosp., 360 F.3d 220, 236
(1st Cir. 2004) (emphasis added) (stating further that this
standard “is most consistent with the broad
interpretation for protected activity under § 3730(h)
urged by the legislative history . . . .”). A plaintiff
claiming retaliation for his protected activity need not
prove an actual FCA violation, however, and an employer, even
if innocent of the FCA violation, may not retaliate against
an employee for engaging in protected conduct. Graham
County Soil & Water Conservation Dist. v United
States ex rel. Wilson, 545 U.S. 409, 416 &
n.1 (2005) (noting that Karvelas and other decisions
“properly recognized that proving a violation of [31
U.S.C.] § 3729 is not an element of a § 3730(h)
cause of action.”). Accordingly, the question before
the court is not whether Defendants knowingly violated the
FCA, but only whether Plaintiff can establish an objectively
reasonable basis for his belief that Defendants did so.
Magistrate Judge concluded, the record, construed in
Plaintiff's favor, forecloses ruling as a matter of law
that Plaintiff's conduct is not protected. A jury may
indeed infer from the record that Plaintiff reasonably
believed Defendants were knowingly misclassifying loans to
gain pecuniary advantage from the government, despite being
aware of some of the steps taken by the Bank to classify
loans properly. For example, Plaintiff states he personally
told the CFO of the misclassifications, and the CFO ordered
that said conduct continue unabated. Waiting Decl. ¶ 29
[#54-1]. A jury may find that Plaintiff reasonably concluded
that continued regulatory noncompliance (resulting in false
claims) after notice of such noncompliance, indicated
deliberate noncompliance. While Defendants may
proffer ample evidence at trial contradicting Plaintiff's
version of events, the question of whether Plaintiff engaged
in protected conduct is for the jury to decide.
having reviewed the remainder of the Magistrate Judge's
Report and Recommendation, the court hereby ACCEPTS
and ADOPTS the report, and DENIES both Plaintiff's
Motion for Partial Summary ...