Levitt v. Sonardyne, Inc.

918 F.Supp.2d 74

Eric Stephen LEVITT, Plaintiff,

v.SONARDYNE, INC., and Sonardyne International, Ltd., Defendants.

No. 2:12–cv–00032–JAW.

United States District Court, D. Maine.

Jan. 15, 2013.

Arthur J. Greif, Julie D. Farr, Gilbert & Greif, P.A., Bangor, ME, for Plaintiff.

Michelle Y. Bush, S. Mason Pratt, James R. Erwin, Pierce Atwood LLP, Portland, ME, W. Carl Jordan, Vinson & Elkins LLP, Houston, TX, for Defendants.

ORDER ON MOTION TO DISMISS AND MOTION FOR LEAVE TO AMEND

JOHN A. WOODCOCK, JR., Chief Judge.

In this Maine Whistleblowers' Protection Act and Maine Human Rights Act claim, the Plaintiff claims he was fired for blowing the whistle on his employer's sales of diver detection equipment to China—sales the Plaintiff thought were illegal and unsafe. The Defendants move to dismiss the Plaintiff's Complaint for failure to state a claim upon which relief can be granted. The Plaintiff moves for leave to amend his complaint to cure the deficiencies asserted by the Defendants. The Court concludes that the Plaintiff's proposed amended complaint states a claim upon which relief can be granted and grants him leave to amend.

I. STATEMENT OF FACTSA. Procedural History

On November 21, 2011, Eric Stephen Levitt filed a complaint in Maine Superior Court, Knox County, against Sonardyne, Inc. (Sonardyne), and Sonardyne International, Ltd. (Sonardyne International). Compl. (ECF No. 2–2). Sonardyne filed a notice of removal in this Court on January 27, 2012. Notice of Removal (ECF No. 1). Sonardyne and Sonardyne International answered the Complaint on February 6, 2012. Def. Sonardyne, Inc.'s Answer to Pl.'s Compl. (ECF No. 9); Def. Sonardyne International, Ltd.'s Answer to Pl.'s Compl. (ECF No. 10). Sonardyne International amended its answer on March 16, 2012. Def. Sonardyne International Ltd.'s First Am. Answer to Pl.'s Compl. (ECF No. 21). On March 19, 2012, the Defendants jointly filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). Defs.' Mot. to Dismiss (ECF No. 22) ( Defs.' Mot.). Mr. Levitt responded on March 26, 2012. Pl.'s Mem. of Law in Opp'n to Defs.' Mot. to Dismiss (ECF No. 24) ( Pl.'s Opp'n ). The Defendants replied on April 4, 2012. Defs.' Reply in Support of Mot. to Dismiss (ECF No. 25) ( Defs.' Reply ).

On October 23, 2012, the Court issued an Order disapproving a contingent request for leave to amend tucked away in Mr. Levitt's opposition to the motion to dismiss, and imposing an expedited schedule for the Plaintiff to file a proper motion for leave to amend if he so chose. Order on Request for Leave to Amend (ECF No. 30); Am. Order on Request for Leave to Amend (ECF No. 31) (correcting typographical error). Mr. Levitt moved for leave to amend his Complaint on October 30, 2012; attached to his motion was a proposed amended complaint. Pl.'s Mot. for Leave to Amend His Compl. (ECF No. 32) ( Pl.'s Mot.); id. Attach. 1, First Am. Compl. and Demand for Jury Trial (ECF No. 32–1) ( First. Am. Compl.). The Defendants responded on November 6, 2012. Defs.' Opp'n to Pl.'s Mot. for Leave to Amend His Compl. (ECF No. 33) ( Defs.' Opp'n ). Mr. Levitt replied on November 9, 2012. Pl.'s Reply Mem. in Support of His Mot. for Leave to Amend His Compl. (ECF No. 34) ( Pl.'s Reply ).

B. Eric Stephen Levitt's Allegations

In his First Amended Complaint, Mr. Levitt alleges the following facts. Sonardyne and Sonardyne International hired Eric Stephen Levitt in April 2008 to work as Business Development Manager for a diver detection program that both companies were attempting to sell to the United States Navy and others. First Am. Compl. ¶ 7. Mr. Levitt, during his employment, became aware that the Defendants were selling diver detection technology equipment for civilian use to Chinese companies affiliated with the People's Republic of China (China), and that the Defendants were selling to China for military use diver detection technology virtually identical to the diver detection technology already sold to the United States Navy. Id. ¶¶ 13, 15. Naval vessels may be vulnerable to shaped charges that an adversary attaches to their hulls for later explosion and diver detection technology is vital to ward off such attachments. Id. ¶ 14. If a military rival of the United States has the same diver detection technology as the United States, that rival can devise a means to disable or circumvent that sensitive technology. Id.

Mr. Levitt complained to the Defendants that they “were engaging in illegal conduct by selling this identical military use diver detection technology to [China].” Id. ¶ 16. He complained to them “about this sales practice which he had reasonable cause to believe would put at risk the lives of American sailors should [another country] be able to use such technology to circumvent the diver detection technology then in place on American naval vessels.” Id. ¶ 17.

The Defendants told him that they were not engaged in an illegal or unsafe practice because they were selling a “different and less capable” technology to China; Mr. Levitt continued to complain about “what he reasonably believed to be an illegal and unsafe sales practice” without effect. Id. ¶¶ 18–19. In July 2010, Mr. Levitt “became aware that the assurances he had received from Defendants that no violation of American law and no business practice potentially unsafe to American naval personnel was occurring were incorrect.” Id. ¶ 20. He then “raised these issues of illegality and safety with greater urgency with his direct supervisor, Rob Balloch.” Id.

Growing frustrated, in August 2010, Mr. Levitt reported what he believed to be unsafe and illegal conduct to “individuals who were cooperating with the United States Naval Criminal Investigation Service (NCIS).” Id. ¶ 21. He had learned that NCIS was interviewing people close to the diver detection program for possible illegal dealings by the Defendants, specifically with respect to China. Id. ¶ 22. He also learned that the U.S. government was investigating whether federal funds given to Sonardyne to develop the diver detectiontechnology for the U.S. Navy were being illegally used to develop the system sold to the Chinese. Id. Mr. Levitt further discovered during his employment that the Defendants “had illegally misrepresented to both the United Kingdom and the United States the capabilities and alleged civilian only use of the diver detection system it was selling to [China] so as to obtain an improper characterization that the diver detection system was not export controlled.” Id. ¶ 23. He became aware that the sales to China were being investigated by the United Kingdom Ministry of Defence and by NCIS as “constituting a potential violation of international law enforceable in both jurisdictions.” Id. ¶ 24. He became aware that the Defendants had represented to the Ministry of Defence and NCIS that the equipment sold to China was for commercial use only, when in fact it was being sold for military use. Id. ¶ 25.

Also in August 2010, Mr. Levitt was informed by his contact with the United States Navy, Jim Pollock, that if the Defendants were selling the identical diver detection system to the Chinese military, this sales practice would be both illegal and unsafe to American naval personnel. Id. ¶ 26. Mr. Pollock asked Mr. Levitt to obtain assurances from the Defendants that they were indeed selling for commercial use only a less capable system to China. Id. ¶ 27. Mr. Pollock, on or about September 18, 2010, asked Mr. Levitt to provide the United States Navy and NCIS an outline of the differences between the diver detection systems sold to China and to the United States Navy. Id. ¶ 28. Mr. Levitt sought the requested information directly from management of the Defendants, who responded by refusing to produce complete and clear delineations of the differences between the two systems. Id. ¶ 29.

Mr. Levitt's belief that the sales practices of the Defendants were unsafe was based on his knowledge that, were any rival military to know the precise parameters of the diver detection system protecting American naval vessels, that rival military might devise a means to disable or circumvent that technology and thereafter mold shaped charges to the hulls of U.S. naval vessels to later sink the vessels, endangering naval personnel on board. Id. ¶ 30. His belief that the sales were illegal and a violation of export laws, Wassenaar Arrangement, and military procurement laws in the United States was based on his knowledge that the sales were being investigated by NCIS and by the Ministry of Defence on these grounds, and on representations made to him by Mr. Pollock. Id. ¶¶ 31–32.

The Defendants became aware, through their employee John Ramsden, that Mr. Levitt had received a field report from a Sonardyne engineer describing the capabilities of the system sold to the Chinese military, and Mr. Ramsden likely knew that Mr. Levitt was about to share this report with Mr. Pollock and NCIS. Id. ¶ 35. The Defendants fired Mr. Levitt on October 15, 2010; Mr. Ramsden and Mr. Balloch, of Sonardyne International, delivered the news.

Mr. Levitt claims he was fired in retaliation for his complaints, and argues that his firing violated the Maine Whistleblowers' Protection Act (MWPA) and the Maine Human Rights Act (MHRA). Id. ¶¶ 36–37. He seeks compensatory and punitive damages, alleging that the Defendants acted in reckless disregard of his rights under the MWPA and MHRA. Id. ¶¶ 38–39.

II. THE PARTIES' POSITIONSA. The Defendants' Motion

In their motion to dismiss Mr. Levitt's initial Complaint, the Defendants contend that Mr. Levitt has not alleged any facts showing that he had reasonable cause to believe that Sonardyne's sales of diver detection technology to Chinese companies were unlawful. Defs.' Mot. at 1. According to the Defendants, Mr. Levitt's allegations therefore show that his claim is “at best, merely possible, not plausible,” as it must be to get past the pleading stage. Id. at...