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March 14, 2001


The opinion of the court was delivered by: Patel, Chief Judge.


Plaintiff/relator W. Lee McVey instituted this qui tam action against defendants Board of Regents of the University of California ("Board") dba Lawrence Livermore National Laboratory ("Livermore") and David K. Johnson ("Johnson") (collectively "defendants"), alleging violations of the False Claims Act, 31 U.S.C. § 3729 et seq. ("FCA"), and 42 U.S.C. § 1983 ("Section 1983"). On September 5, 2000, the Court dismissed with prejudice McVey's FCA claim against the Board pursuant to Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000).*fn1 Remaining in the case are McVey's FCA claims against Johnson, and retaliation claims under the FCA and Section 1983 against both the Board and Johnson. McVey has stipulated that he seeks only prospective relief for the retaliation claims. Defendants bring this motion to dismiss the remaining claims. Having considered the parties' arguments and submissions, and for the reasons set forth below, the court enters the following memorandum and order.


Livermore is a federally-funded research and development facility under the auspices of the United States Department of Energy ("DOE"). Livermore is operated by the Board pursuant to a cost-reimbursement contract with DOE. Under the contract, the Board bills DOE for the costs incurred for the benefit of DOE research, plus an additional fee. Under federal regulations governing the contract, Livermore may only bill DOE for costs that are "reasonable," "allowable" and in conformance with contract terms.

In 1988, Livermore suffered a three-day power outage. Concerned with the impact of such a massive power failure on a critical research facility, Congress appropriated funds to upgrade the reliability and safety of Livermore's power system. Johnson, in his position as Division Leader at Livermore's Plant Engineering in the Electric Utilities Division, headed the upgrade project, known as the Electric Power System Replacements and Upgrade Line Item Project ("EPSRU"). In 1990, Livermore hired McVey to serve as Electric Utility System Manager for its Electrical Utilities Division. In that position, McVey was responsible for the operation and maintenance of Livermore's electrical utilities system. McVey worked on EPSRU under Johnson's direct supervision.

McVey alleges that between 1991 and the present, Livermore, through Johnson, incurred and billed to DOE costs that Johnson knew or should have known were unjustified and unnecessary. Among the costs were those for installation, of a differential fast-transfer relay system, modifications to prevent the accidental tripping of circuit breakers, modifications and design of a 115kV ring-bus substation, modifications of a battery failure protection system, purchase of a new software system and travel costs.

McVey avers that he complained directly to Johnson about these expenses, and when Johnson failed to take action, reported his concerns to Johnson's supervisor, Charles Cain ("Cain"). When Cain did not do enough to satisfy McVey, McVey contacted the DOE Inspector General. The Inspector General ordered an external review of the fast-transfer relay system.*fn2 McVey continued his internal complaints and also contacted the United States Attorney's office. McVey claims that due to his whistleblower actions, he suffered retaliatory action from Livermore and Johnson, including transfer to the Maintenance Engineering and Production Control Division, a purported demotion, and denial of the opportunity for upward mobility and for future income gains.

In December 1998, McVey instituted this action under seal. On April 20, 1999, the United States Government decided not to intervene. On April 21, 1999, the court ordered the complaint unsealed and served on defendants.


McVey alleges that: (1) Johnson violated the FCA through falsely charging the federal government for unnecessary and wasteful engineering modifications; and (2) Johnson and the Board violated the FCA's whistleblower provision, 31 U.S.C. § 3730 (h), and Section 1983 by taking employment actions aimed at chilling McVey's First Amendment right to free speech and punishing him for raising spending concerns. McVey seeks monetary and punitive damages, back pay and injunctive relief reinstating him to his former position with appropriate promotions and salary increases.

Defendants seek to dismiss the complaint for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure ("F.R.C.P.") 12 (b)(1) and failure to state a claim pursuant to F.R.C.P. 12(b)(6). Defendants contend that McVey cannot bring retaliation causes of action against the Board or Johnson as the Board is a state agency and Johnson a state official and therefore both are immune from this type of action under the Eleventh Amendment. Johnson also individually argues that the FCA claim should be dismissed because no fraud took place; rather, he and McVey merely disagree regarding engineering decisions. Johnson also seeks dismissal of the FCA claim based on failure to plead fraud allegations with sufficient particularity in violation of F.R.C.P. 9(b).

I. Legal Standard

A. Federal Rule of Civil Procedure 12(b)(1)

F.R.C.P. 12(b)(1) allows a party to challenge a federal court's jurisdiction over the subject matter of the complaint. A complaint will be dismissed if, looking at the complaint as a whole, it appears to lack federal jurisdiction either facially or factually. See Thornhill Publ'g Co., Inc. v. General Tel. & Elec. Corp., 594 F.2d 730, 733 (9th Cir. 1979). In considering a motion to dismiss for lack of subject matter jurisdiction, the court must ...

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