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Calanno v. Terra Vac Corp.

May 22, 2008

JACOB CALANNO, PLAINTIFF,
v.
TERRA VAC CORPORATION, ET. AL., DEFENDANT.



The opinion of the court was delivered by: Honorable Barry Ted Moskowitz United States District Judge

ORDER DENYING DEFENDANTS' MOTION TO DISMISS

On October 29, 2007, Plaintiff Jacob Calanno brought suit against Defendants Terra Vac Corporation and Terra-Vac Inc. alleging (1) violation of the False Claims Act; (2) misrepresentation to potential employers; and (3) libel and slander per se. Defendants have brought a motion to dismiss these three causes of action on various grounds pursuant to Federal Rule of Civil Procedure Rule 12(b)(6). For the reasons set forth below, the Court DENIES Defendants' motion to dismiss.

FACTUAL BACKGROUND

The following facts are taken from Plaintiff's Complaint. The Court makes no findings as to the truth of these allegations.

Plaintiff worked for a series of companies, including Defendants, which contracted with the U.S. Navy to perform environmental tasks at the El Centro Naval Air Facility ("Airbase.") By 2005, Plaintiff was a senior incinerator operator and field operations supervisor. As part of the contract with the Navy, Defendants dug wells and removed water which contained contaminant vapors such as lead, mercury, aviation fuel and sewage by use of "slurp tubes."

One of Plaintiff's duties was to separate and incinerate the contaminant vapors. The slurp tubes also brought up debris, which was trapped in a filter screen, and needed to be manually cleaned.

James Keegan, Defendants' project manager, directed Plaintiff to raise the slurp tubes three feet off the bottom of the wells. Raising the slurp tubes benefitted Defendants by reducing the debris trapped in the filter and thereby cutting filter supply costs and labor costs. It also, however, resulted in an inability to bring up the toxic vapors that Plaintiff was employed to incinerate. Keegan also ordered that the gas used for calibrating the meter that monitored contaminants be changed from methane to hexane, which artificially inflated the vapor removal performance numbers reported to the Navy. Defendants had a performance-based contract with the Navy and renewal of that contract was also based on performance. Keegan ordered the manipulation of the slurp tube and misrepresented the performance and effectiveness of the vapor removal to the Navy in order obtain a positive performance review and a renewal of Defendants' contract with the Navy.

In late September or early October 2005, Plaintiff discovered that Defendants' emission levels were not in compliance with regulations of the California Air Pollution Control Board. Plaintiff immediately reported this to Keegan on his daily report form.

Because Plaintiff believed that Defendants' were misrepresenting its emissions to the Navy, he informed the Navy of Defendants' fraudulent activities on October 5, 2005. Although Plaintiffs' report was anonymous, few, if any, other employees of Defendants could have known the facts contained in the anonymous report. The Navy subsequently hired Bechtel Co. to conduct an independent audit of Defendants' activities. Bechtel's report confirmed Plaintiff's concerns.

On October 26, 2005, Keegan informed Plaintiff that he was being terminated. His last day of work was October 28, 2005.

DISCUSSION

A motion to dismiss for failure to state a claim will be denied unless it appears that "no relief could be granted under any set of facts that could be proved consistent with the allegations." Hishon v. King & Spalding, 467 U.S. 69, 73 (1984); Fidelity Financial Corp. v. Federal Home Loan Bank of San Francisco, 792 F.2d 1432, 1435 (9th Cir. 1986).

A. False Claims Act

Defendants argue that Plaintiff's first cause of action should be dismissed because he failed to plead the elements required for retaliation under the False Claims Act. "Congress added 31 U.S.C. § 3730(h) to the [False Claims Act] in 1986 to protect 'whistleblowers,' those who come forward with evidence their employer is defrauding the government, from retaliation by their employer." U.S. ex. rel. Hopper v. Anton, 91 F.3d 1261, 1269 (9th Cir. 1996). Pursuant to 31 U.S.C. ยง 3730(h), the employee must show the following: "1) the employee must have been engaging in conduct protected under the Act; 2) the employer must ...


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