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Herndon v. Science Applications International Corp.

July 10, 2007

MARY ANNE HERNDON, ON BEHALF OF THE UNITED STATES OF AMERICA, PLAINTIFF,
v.
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION, A DELAWARE CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Hon. Roger T. Benitez United States District Judge

ORDER GRANTING AMENDED COMPLAINT WITH DEFENDANT'S MOTION TO DISMISS PLAINTIFF'S FIRST LEAVE TO AMEND [Doc. No. 26]

Plaintiff Mary Anne Herndon ("Herndon") seeks relief under the False Claims Act ("FCA"). She alleges that Defendant Science Applications International Corporation ("SAIC") committed fraud against the United States government by falsely representing in their contract negotiations and billing certifications that SAIC was in compliance with age discrimination laws. Presently before this Court is SAIC's Motion to Dismiss Herndon's First Amended Complaint ("FAC"). For the following reasons, the Court hereby GRANTS SAIC's Motion to Dismiss and GRANTS Herndon leave to amend on or before August 10, 2007.

BACKGROUND

On December 13, 2005, Herndon filed her initial Complaint, which alleged inter alia that SAIC violated the FCA, 31 U.S.C. § 3729. On July 27, 2006, SAIC moved to dismiss Herndon's initial Complaint for: 1) failure to adhere to the pleading requirements established by Federal Rules of Civil Procedure 9(b); and 2) for failure to state a claim under the FCA. On October 31, 2006, this Court granted SAIC's motion to dismiss pursuant to Rule 9(b). Herndon was granted leave to amend and subsequently filed the FAC.

The following facts are taken from Herndon's FAC, and only the relevant facts are stated.*fn1

The Court makes no factual determinations at this stage.*fn2

Herndon is now sixty-two years old. She commenced her employment with SAIC in 1979. She is a well qualified employee with a Ph.D. in Computer Science and extensive experience in government contracting. Over the years, she has held high-level positions and had top-level security clearance and full access to SAIC's Intelligence Group's files. In 2004, she was promoted to Vice President-Quality in charge of process improvement for SAIC's Intelligence Group.

Herndon alleges that in March 2005 SAIC enacted a "Succession Planning Policy" within the Intelligence Group with the purpose and effect to discriminate against high-level employees over the age of fifty-five. Herndon further alleges that as part of this Succession Planning Policy, she was reviewed using the Individual Summary Forms chart, which included pictures and the dates of birth of individual employees. Additionally, she alleges that SAIC engaged in other discriminatory actions against her, including: 1) not inviting her to the Intelligence Group offsite meetings of senior staffers; 2) not approving the Process Improvement Plan she prepared for the Intelligence Group; 3) eliminating her position and advising her to look for a replacement job at SAIC (a job that did not exist); 4) excluding her from the Engineering Edge Alliance meetings; 5) not allowing her to participate in the spring 2005 International Process Research Consortium; 6) not repairing or replacing her computer; 7) ignoring her complaints of discrimination; and 8) ultimately terminating her employment with SAIC in September 2005.

Identical to her initial Complaint, the FAC contains one single claim against SAIC for fraud in government contracting under the FCA. Herndon alleges that starting on March 3, 2005, SAIC, expressly, impliedly, and by reference, represented to the U.S., in contracts, in billing, in certifications, in assurances, in progress reports, in the negotiation of contracts, and otherwise, that it did not and does not discriminate based on age and that it complies with non-discrimination laws . . . [when SAIC implemented its age-discriminatory Succession Planning Policy and discriminated based on age.]

She further alleges that SAIC made these false representations through information on SAIC's public website, posters posted at various areas of SAIC, presentations SAIC made to U.S. contract officials, SAIC's membership of organizations that advocate ethical practices in business activities to the U.S. government, and SAIC's various assurances of compliance. According to Herndon, the government relied on SAIC's false representations in entering into all post-March 2005 contracts and in making payments to SAIC under those contracts.

ANALYSIS

A. Legal Standard

SAIC moves to dismiss Herndon's FAC pursuant to the pleading requirements of Rule 9(b) and pursuant to 12(b)(6) for failure to state a claim upon which relief can be granted.

Under the FCA, it is unlawful for any person to "knowingly present[], or cause[] to be presented, a false or fraudulent claim for payment or approval" by the government or "knowingly make[], use[], or cause[] to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the government." 31 U.S.C. § 3729(a). Further, the FCA allows a "qui tam plaintiff" (also known as a "relator") to bring a civil action for herself and the United States government, in the name of the government. United States v. Johnson Controls, Inc., 457 F.3d 1009, 1012 n.2 (9th Cir. 2006). In construing the scope of the FCA, Congress has emphasized that the FCA should be broadly construed to reach all types of fraud that might result in financial loss to the ...


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