Hinson v. Microwave Techniques, LLC

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KATHLEEN HINSON and BRENT HINSON, Plaintiffs, v. MICROWAVE TECHNIQUES, LLC, Defendant.

No. 2:22-cv-00114-JDL

United States District Court, D. Maine

March 29, 2023

ORDER

JON D LEVY CHIEF U.S. DISTRICT JUDGE

In their Complaint filed in this Court on April 25, 2022 (ECF No. 1), Plaintiffs Kathleen and Brent Hinson allege that their former employer, Microwave Techniques, LLC (“Microwave”) terminated their employment because of their whistleblowing activities in violation of the Maine Whistleblowers' Protection Act (“MWPA”), 26 M.R.S.A. § 833 (West 2022), and the Maine Human Rights Act (“MHRA”), 5 M.R.S.A. § 4633 (West 2022). The Hinsons further allege that Microwave violated the anti-retaliation provision in the False Claims Act (“FCA”), 31 U.S.C.A. § 3730(h) (West 2022) by retaliating against them because of their efforts to stop a violation of the FCA. Microwave has moved to dismiss the Complaint (ECF No. 8), contending that (1) the Hinsons have failed to state an FCA retaliation claim and (2) because the FCA retaliation claim is the only claim presenting a federal issue, the accompanying state law claims should be dismissed without prejudice.

United States Magistrate Judge Karen Frink Wolf filed her Recommended Decision (ECF No. 16) on November 21, 2022, pursuant to 28 U.S.C.A. § 636(b)(1)(B) (West 2022) and Fed.R.Civ.P. 72(b).

The Magistrate Judge recommended that the Court dismiss the Hinsons' FCA retaliation claim for failure to state a claim and that the Court should decline to exercise supplemental jurisdiction over the state law claims in the absence of the FCA retaliation claim. The Hinsons objected to the Recommended Decision on December 2, 2022 (ECF No. 17), and Microwave filed a Response to the Objection on December 16, 2022 (ECF No. 18). I held a hearing on the Motion to Dismiss and the Recommended Decision on February 15, 2023 (ECF No. 20).

After reviewing and considering the Magistrate Judge's Recommended Decision, together with the entire record and the attorneys' arguments at the February 15, 2023, hearing, I have made a de novo determination of all matters adjudicated by the Magistrate Judge. For the reasons explained below, I disagree with the Magistrate Judge's conclusions that the Hinsons have failed to state an FCA retaliation claim and that the Hinsons' state law claims should be dismissed.

I. BACKGROUND

A. Factual Background

The factual background is drawn from the well-pleaded allegations in the Complaint, which are treated as true when deciding a motion to dismiss, Douglas v. Lalumiere, No. 2:20-cv-00227-JDL, 2022 WL 860248, at *1 (D. Me. Mar. 23, 2022).

Microwave manufactures and develops radio frequency components, and it has contracts with the U.S. Government and other government contractors to produce radio frequency equipment that contains or is based on national security secrets. One of the conditions of these contracts is that Microwave “represents and warrants to the [G]overnment that it will manufacture and produce radio frequency equipment that contains and/or is based on national security secrets on premises with the necessary and required security clearance.” ECF No. 1 at 4, ¶ 29. Microwave is paid by the Government for fulfilling its contracts.

Kathleen and Brent Hinson were employed as Radio Frequency Engineering Technicians in Microwave's Gorham facility.^[1] Although some individuals at that facility had security clearances, including the Hinsons and the Lab Manager, the facility itself did not have an Information System Security Clearance and was not accredited for classified testing of radio frequency equipment. During the Hinsons' employment, Microwave was trying to get an Information System Security Clearance for the Gorham lab. A separate Microwave facility in Nashua, New Hampshire, had the required security clearance.

In May 2020, Brent witnessed the Lab Manager testing radio frequency equipment on an “unclassified” analyzer in the Gorham facility, even though the testing involved secret frequencies whose disclosure to an enemy could threaten national security. ECF No. 1 at 5, ¶ 44. The testing was done out in the open, and people who did not have security clearances could see the testing and the secret frequencies. This unsecure testing violated the terms and conditions of Microwave's contracts with the U.S. Government. Upon the Hinsons' information and belief, Microwave never intended to comply with the contract terms requiring it to maintain the proper security clearance at the premises where it manufactures and develops radio frequency equipment based on national security secrets.

Brent told the Lab Manager that the testing was “wrong and illegal.” ECF No. 1 at 6, ¶ 59. Despite this warning, the Lab Manager continued to test units using secret frequencies at the Gorham facility. In June 2020, Brent reported the testing to the Facility Security Officer (“FSO”), who confirmed that Microwave's contracts require Microwave to comply with security protocols and protect the secrecy of the frequencies. The FSO asked Brent to “keep records about what [the Lab Manager] was doing that was illegal, how often, where, and who was around when he conducted the tests.” ECF No. 1 at 7, ¶ 66. Brent subsequently kept in touch with the FSO about his concerns.

In July or August 2020, the Lab Manager asked Brent to participate in illegal testing and to stop reporting him to the FSOs. He repeated this request multiple times. Brent did not agree to perform the tests or to stop reporting the Lab Manager. As the FSO instructed, Brent “kept track” of the Lab Manager's illegal testing. ECF No. 1 at 8, ¶ 82. The Lab Manger then harassed the Hinsons, and Kathleen reported the harassment and illegal testing to Human Resources. The Vice President of Human Resources and Safety in Microwave's New Hampshire office told Kathleen that she knew that illegal testing could result in “serious legal action and the loss of orders.” ECF No. 1 at 9, ¶ 91. Despite the Hinsons' reports, the Lab Manager continued to conduct what the Hinsons believed to be illegal tests and the Lab Manager put even less effort into protecting the secrecy of the frequencies.

The Hinsons also internally reported the testing to another FSO as well as Microwave's CEO. The Hinsons also reported the testing to the FBI and repeatedly called the Department of Defense (“DOD”) to report that Microwave was not doing anything to stop the illegal testing. On March 3, 2021, they filed an online complaint with the DOD. Agents from the FBI and NCIS eventually came to speak to the Hinsons at their home to get information about the alleged illegal testing.

As their reporting continued, the Lab Manager continued to harass the Hinsons. In February 2021, the Hinsons were also issued “Employee Improvement Plans” that contained false allegations about their workplace conduct, even though, under Microwave's employee policy, the Hinsons should have been issued a verbal warning first. ECF No. 1 at 9, ¶ 98. The Hinsons told the Vice President of Human Resources that the Employee Improvement Plans were issued in retaliation for their reporting activities and that the Lab Manager continued to conduct illegal testing. On March 17, 2021, the Hinsons received positive performance reviews.

On March 19, 2021, during a heated disagreement with the Hinsons, the Lab Manager told the Hinsons that he knew that they had reported him to the FBI and the DOD. He also told the Plaintiffs to stop calling Human Resources and that Human Resources “was not going to protect [them].” ECF No. 1 at 14, ¶ 133(b). He told the Hinsons to leave the premises for the rest of the day. After the argument, the Vice President of Human Resources advised the Hinsons to leave for the day.

The Vice President of Human Resources ultimately terminated the Hinsons on March 23, 2021. During their termination meeting, the Hinsons were told that the new FSO and an owner of Microwave, both of whom knew about the Hinsons' reporting, had made the decision to terminate their employment. The Hinsons were also told that they could not go back into the Gorham facility because of the pending FBI investigation into the Lab Manager's alleged illegal testing.

B. Procedural History

On April 25, 2022, the Hinsons filed a two-count Complaint against Microwave (ECF No. 1). Count I alleges a violation of the MHRA, 5 M.R.S.A. § 4633, and the MWPA, 26 M.R.S.A. § 833.^[2] Count II alleges a violation of the FCA's anti-retaliation provision, 31 U.S.C.A. § 3730(h). In support of Count II, the Hinsons state they believe that Microwave “was defrauding the United States Government by billing and taking payment from the United States Government but failing to provide what was promised, namely compliance with the contractual requirements to protect classified frequencies.” ECF No. 1 at 18, ¶ 158. The Hinsons admit that they could not “identify all of those false claims for payment that were caused by [Microwave's] conduct” because “[t]he false claims were presented by [Microwave's] employees and agents, and Plaintiffs do not have access to the records of all such false or fraudulent statements, records, or claims.” ECF No. 1 at 18, ¶ 159.

The Complaint averred two independent bases for federal subject-matter jurisdiction: (1) diversity of citizenship over all of the claims, see 28 U.S.C.A. § 1332 (West 2022), and (2) federal question jurisdiction over the FCA retaliation claim, with supplemental jurisdiction over the remaining state claims, see 28 U.S.C.A. §§ 1331, 1367 (West 2022).

On May 23, 2022, Microwave filed a Motion to Dismiss (ECF No. 8). In the motion, Microwave argues that the Hinsons have failed to state an FCA retaliation claim because the Complaint fails to allege that the...