United States Ex Rel. Schweizer v. Océ N.V.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued January 13, 2012 Decided April 10, 2012

Reissued April 20, 2012

No. 11-7030

UNITED STATES EX REL. STEPHANIE SCHWEIZER,

APPELLANT

NANCY VEE,

APPELLEE

v.

OCÉ N.V., ET AL.,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 1:06-cv-00648)

Jason H. Ehrenberg argued the cause and filed the briefs

for appellant.

Douglas Letter, Attorney, U.S. Department of Justice,

argued the cause for appellee United States. With him on the

brief were Tony West, Assistant Attorney General, and Ronald

C. Machen Jr., U.S. Attorney. R. Craig Lawrence, Assistant

U.S. Attorney, entered an appearance.

Tillman J. Breckenridge argued the cause for appellees

2

Océ N.V., et al. With him on the brief were Tyree P. Jones Jr.,

and Michael B. Roberts. Altomease R. Kennedy, Herbert V.

McKnight Jr., and David W. Sanford entered appearances.

Before: SENTELLE, Chief Judge, GRIFFITH, Circuit

Judge, and RANDOLPH, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge

RANDOLPH.

RANDOLPH, Senior Circuit Judge: Stephanie Schweizer

sued Océ North America, Inc., her former employer, under the

False Claims Act’s qui tam and retaliation provisions, 31 U.S.C.

§ 3730(b) & (h). The government moved to dismiss the qui tam

claims after reaching a settlement agreement with Océ.1 The

district court granted the motion over Schweizer’s objection. It

then granted Océ summary judgment on the remaining

retaliation claim. We reverse and remand on all counts.

Océ sells copying and printing products. It had two

supply contracts with the General Services Administration: one

for copiers, printers, and document management software; the

other for larger digital printing systems. The contracts required

Océ to provide government customers with the same discount

offered to certain private sector purchasers. See 48 C.F.R. §

552.238-75. The contracts also required Océ to sell to the

government only goods made in the United States or other

countries designated under the Trade Agreements Act, 19 U.S.C.

§ 2501 et seq. We refer to these provisions as the price

reduction and country-of-origin clauses, respectively.

1

Schweizer’s complaint names as defendants Océ North

America, Inc. and three related companies, Océ-USA Holding, Inc.,

Océ N.V., and Océ Imagistics Inc. We refer to these entities

collectively as Océ.

3

Océ hired Schweizer in December 2004 to serve as a

“GSA contracts manager” in Arlington, Virginia. The position

required Schweizer to monitor Océ’s compliance with the

contracts described above. Other day-to-day responsibilities

included updating product listings, negotiating modifications

with the General Services Administration’s contracting officer,

and answering questions from Océ sales personnel. Ronald

Frost, Océ’s director of government contracting, oversaw

Schweizer’s work and served as her immediate supervisor.

In early 2005 Schweizer began to suspect that Océ was

violating the price reduction clauses.2 Through discussions with

several co-workers, she learned that Océ representatives had

been offering private sector customers significant ad hoc

discounts. Her further investigation revealed that Océ was not

passing these discounts on to the government, as the price

reduction clauses required. If accurate, these findings meant

that Océ regularly overcharged government agencies.

Schweizer sought to correct the violations, consistent

with her duties as GSA contracts manager. She provided Frost

with records documenting the private sector discounts, which

she said were causing Océ “not to be in compliance with the

[contracts].” Frost allegedly responded by forbidding Schweizer

from investigating the matter and stating that management

would “destroy” her if she disobeyed.

A second set of concerns arose in November 2005 as

Océ was planning to merge with Imagistics, a rival print and

document management company. In preparation for the merger,

2

The parties disagree about many of the facts that follow. We

review the record in the light most favorable to Schweizer, the non-

moving party. See Shaw v. Marriott Int’l, Inc., 605 F.3d 1039, 1044

(D.C. Cir. 2010).

4

Océ officials asked Schweizer to determine whether Imagistics’

products complied with the contracts’ country-of-origin clauses.

Schweizer replied that they did not. She explained in an e-mail

to Bryan Beauchamp, Océ’s vice president of business

development, that most Imagistics products were manufactured

in China, a country not certified under the Trade Agreements

Act. Beauchamp agreed with Schweizer’s assessment. Despite

this understanding, Frost directed Schweizer to add Imagistics’

products to Océ’s government contract listings just a few days

later. When Schweizer refused, Frost allegedly told her not to

pursue the issue any further and again threatened to “destroy”

her if she did not comply.

Schweizer did not heed Frost’s warning. Instead, she

contacted Beauchamp, Frost’s superior, in early December 2005.

Schweizer informed Beauchamp of Frost’s actions, her pricing

investigation, and her belief that Océ was violating the False

Claims Act. She also alleged that many of Océ’s own products

were made in China, rather than in the Netherlands as stated in

the contracts. Beauchamp referred Schweizer to Océ’s human

resources director, Gerald Whelan, who then directed her to

meet with in-house counsel, Dan Harper. That meeting resulted

in a further referral to Kenneth Weckstein, Océ’s outside

counsel for government contracting issues. In each of these

conversations Schweizer reiterated her claim that Océ was

violating the False Claims Act.

On December 6, 2005, Schweizer made a final,

emotional plea to Beauchamp. She complained that the

meetings with Whelan, Harper, and Weckstein were not

productive, and that Beauchamp was “her last hope in terms of

. . . saving the company” from “legal trouble.” Beauchamp

suspended Schweizer two days later, and terminated her

employment on December 15. In a letter memorializing these

actions, Beauchamp wrote that Schweizer had engaged in

5

“inappropriate communications with [her] colleagues and

supervisors”; “refused to follow orders”; ignored “the chain of

command”; and “failed to maintain necessary standards of

workmanship and productivity.” The letter added that Océ

would “continue to investigate” Schweizer’s “numerous

complaints . . . about illegal conduct,” including “fraud and

crimes” committed in conjunction with the company’s “Federal

Supply Schedule contract.” It closed by stating

While Océ’s initial response to your allegations

is that they are without basis, you may want to

bring your concerns to the attention of the

Inspector General at the U.S. General Services

Administration (“GSA”). Separately, Océ

intends to report your allegations to the GSA

Inspector General.

Schweizer filed a three-count complaint against Océ in

April 2006. The first two counts rely on the False Claims Act’s

qui tam provisions, which permit private citizen “relators” to sue

on behalf of the United States. See 31 U.S.C. §§ 3729(a),

3730(b) (2006).3 Count I alleges that Océ knowingly defrauded

federal agencies by misrepresenting the origin of its products

3

Congress has amended sections 3729 and 3730 several times

since Schweizer filed suit in 2006. See Dodd-Frank Wall Street

Reform and Consumer Protection Act, Pub. L. No. 111-203, §

1079A(c)(1) & (2), 124 Stat. 1376, 2079 (2010); Patient Protection

and Affordable Care Act, Pub. L. No. 111-148, § 10104(j)(2), 124

Stat. 119, 901 (2010); Fraud Enforcement and Recovery Act of 2009,

Pub. L. No. 111-21, § 4(a) & (d), 123 Stat. 1617, 1621-25. With one

exception not relevant here, none of the changes apply retroactively.

See Pub. L. No. 111-203, § 4; Pub. L. No. 111-21, § 4(f); see also

Graham Cnty. Soil & Water Conservation Dist. v. United States ex rel.

Wilson, 130 S. Ct. 1396, 1400 n.1 (2010). We therefore apply the

2006 version of the Act.

6

and by breaching its promise to provide the same discount

offered to private sector customers. See id. § 3729(a)(1)-(2).

Count II charges Océ with conspiring to do the same. See id. §

3729(a)(3).4 The third count states a claim for retaliation under

31 U.S.C. § 3730(h), which prohibits employers from

discriminating against an employee “because of lawful acts done

by the employee . . . in furtherance of an action under this

section, including investigation for, initiation of, testimony for,

or assistance in an action filed or to be filed under [§ 3730].”

Specifically, Count III asserts that Océ fired Schweizer as a

result of her pricing and product sourcing investigations.

Schweizer filed an amended complaint in December 2006,

which added Océ employee Nancy Vee as a co-plaintiff on

Counts I and II.

The government declined to intervene in the case after

conducting an extensive investigation of Schweizer’s qui tam

claims. See 31 U.S.C. § 3730(a) & (b)(2). Nonetheless, it

remained an active participant in settlement discussions. These

talks came to fruition in September 2009, when Océ, Vee, and

the government – but not Schweizer – reached an agreement to

dispose of Counts I and II. The agreement required Océ to pay

$1.2 million, plus interest, to the government, with nineteen

percent of that total set aside for Schweizer and Vee. In return,

Océ received a partial release from liability and a promise that

the government would move to dismiss Counts I and II of the

amended complaint. The government filed its notice of

4

Schweizer’s opening brief characterizes Count I as a Trade

Agreements Act claim and Count II as a pricing claim. Her reply brief

reverses course and associates Count II with the Trade Agreements

Act. Neither characterization is correct. Counts I and II both contain

pricing and Trade Agreements Act claims; the only difference

between them is the cause of action. Count I asserts violations of §

3729(a)(1) and (2), while Count II asserts violations of § 3729(a)(3).

7

intervention and corresponding motion to dismiss on September

8, 2009. Océ filed an answer later that day.

Schweizer opposed the settlement and the motion to

dismiss. She argued that the settlement understated the extent

of Océ’s violations, and thus could not satisfy the criteria set

forth in 31 U.S.C. § 3730(c)(2)(B). That provision allows the

government to “settle [a qui tam] action . . . notwithstanding the

objections of the person initiating the action if the court

determines, after a hearing, that the proposed settlement is fair,

adequate, and reasonable under all the circumstances.” Id. §

3730(c)(2)(B). The government offered two responses. First,

it asserted that the district court could dismiss Counts I and II

over Schweizer’s objection pursuant to § 3730(c)(2)(A) without

reviewing the settlement.5 Section 3730(c)(2)(A) states that

“[t]he Government may dismiss [a qui tam] action

notwithstanding the objections of the person initiating the action

if the person has been notified . . . of the filing of the motion [to

dismiss] and the court has provided the person with an

opportunity for a hearing on the motion.” In the alternative, the

government urged the district court to deem the settlement “fair,

adequate, and reasonable” under § 3730(c)(2)(B).

The district court dismissed Counts I and II after holding

a hearing. United States ex rel. Schweizer v. Océ N.V., 681 F.

Supp. 2d 64 (D.D.C. 2010). It declined to review the settlement,

concluding that § 3730(c)(2)(A) gave the government “an

unfettered right to dismiss” qui tam claims. 681 F. Supp. 2d at

65-66 (quoting United States ex rel. Hoyte v. Am. Nat’l Red

Cross, 518 F.3d 61, 65 (D.C. Cir. 2008) (quoting Swift v. United

5

The motion also invoked Federal Rule of Civil Procedure

41(a), which permits plaintiffs to “dismiss an action without a court

order by filing . . . a notice of dismissal before the opposing party

serves . . . an answer.” FED. R. CIV. P. 41(a)(1)(A)(i).

8

States, 318 F.3d 250, 252 (D.C. Cir. 2003))). Although this

approach bypassed § 3730(c)(2)(B), the district court read Hoyte

and Swift as requiring that result. 681 F. Supp. 2d at 66. The

expansive reading of § 3730(c)(2)(A) in those decisions, the

court explained, had “already effectively rendered . . . §

3730(c)(2)(B) a dead letter.” Id. To this the district court added

a second justification for ignoring § 3730(c)(2)(B): its probable

unconstitutionality. In the court’s view, § 3730(c)(2)(B)

impermissibly undermined the Executive’s power “to conduct

litigation on behalf of the United States” by giving courts the

last word on settlement. Id. at 67-68 (citing U.S. CONST. art. II,

§ 3 (The President “shall take Care that the Laws be faithfully

executed.”)).

As to Count III, Schweizer’s retaliation claim, Océ

moved for summary judgment and the district court granted the

motion. United States ex rel. Schweizer v. Océ N. Am., Inc., 772

F. Supp. 2d 174 (D.D.C. 2011). It held that Schweizer had not

put Océ on notice that she was acting in furtherance of a False

Claims Act suit. Id. at 178-81. The court based this conclusion

on precedent indicating that employees whose job

responsibilities include fraud prevention “must ‘overcome the

presumption that they are merely acting in accordance with their

employment obligations’ to put their employers on notice.”

United States ex rel. Williams v. Martin-Baker Aircraft Co., 389

F.3d 1251, 1261 (D.C. Cir. 2004) (quoting Yuhasz v. Brush

Wellman, Inc., 341 F.3d 559, 568 (6th Cir. 2003)). According

to the district court, Schweizer did not rebut this presumption –

and thus did not put Océ on notice – because “every step she

took in furtherance of her ‘fraud investigation’ was an act that

fell within her job description or was undertaken at senior

management’s express instruction.” 772 F. Supp. 2d at 179.

9

I

Schweizer argues that the district court erred in

dismissing her qui tam claims without determining whether the

settlement was “fair, adequate, and reasonable.” The quotation

comes from 31 U.S.C. § 3730(c)(2)(B): the “Government may

settle [a qui tam] action with the defendant notwithstanding the

objections of the person initiating the action if the court

determines, after a hearing, that the proposed settlement is fair,

adequate, and reasonable under all the circumstances.” The

government’s reply, and Océ’s, is that judicial approval of the

settlement is not required in light of 31 U.S.C. § 3730(c)(2)(A),

which states that the “Government may dismiss [a qui tam]

action notwithstanding the objections of the person initiating the

action if the person has been notified by the Government of the

filing of the motion and the court has provided the person with

an opportunity for a hearing on the motion.” We have held that

§ 3730(c)(2)(A) provides the government with “an unfettered

right to dismiss” qui tam claims, Swift, 318 F.3d at 252; see also

Hoyte, 518 F.3d at 65, and that the only function of a hearing

under § 3730(c)(2)(A) “is simply to give the relator a formal

opportunity to convince the government not to end the case,”

Swift, 318 F.3d at 253.

As a preliminary matter, Schweizer claims the

government may not invoke § 3730(c)(2)(A) because it never

properly intervened in the case. She points out that the Act

prescribes only two ways for the government to intervene:

during an initial sixty-day window (subject to extension by the

district court), § 3730(b)(4); or “at a later date upon a showing

of good cause,” § 3730(c)(3). Because the government declined

to intervene during the initial sixty-day period, and did not

invoke subsection (c)(3) or show good cause in its later filing,

it never became a party to the suit. Thus, Schweizer concludes,

the government could not properly move for dismissal.

10

Schweizer’s view of the Act’s intervention provisions is

not accurate. Intervention is necessary “only if the government

wishes to ‘proceed with the action.’” Swift, 318 F.3d at 251

(quoting 31 U.S.C. § 3730(b)(2) & (b)(4)(A)). Here, the

government did not seek to proceed with the qui tam portion of

the case; it sought to end it. It follows that the government did

not have to intervene before filing its motion. Swift, 318 F.3d at

251-52. Nothing in United States ex rel. Eisenstein v. City of

New York, 556 U.S. 928 (2009), which addressed the

government’s party status for purposes of the Federal Rules of

Appellate Procedure, is to the contrary. Nor does it matter that

the government moved to dismiss outside the initial sixty-day

intervention period. See Hoyte, 518 F.3d at 63-65.

The settlement agreement here falls squarely within §

3730(c)(2)(B): the government reached an agreement with the

defendant to “settle the action . . . notwithstanding the objections

of the person initiating the action.” In that circumstance, the

statute required the district court to “determine, after a hearing,

[whether] the proposed settlement [was] fair, adequate, and

reasonable under all the circumstances.” 31 U.S.C. §

3730(c)(2)(B). Océ and the government maintain that this

conclusion is at odds with the government’s “unfettered”

dismissal power recognized in Swift and Hoyte. If the decision

to dismiss is free from judicial review, they reason, the decision

to dismiss because of a settlement must be as well. The

argument has merit. Why should it be that before the

government may end a case by settling it with the defendant, the

court must approve the settlement if the relator objects, yet when

the government simply dismisses the action over the relator’s

objection, the court has no say in the matter? At least in a

settlement the relator’s efforts have some protection: he will

receive no less than fifteen percent of whatever monetary

recovery the government negotiates. See 31 U.S.C. § 3730(d).

But in a pure dismissal as in Swift the relator has no protection:

11

he is not entitled to compensation or judicial review of the

government’s decision.

The full answer to the government’s and Océ’s point is

simply that the language of § 3730(c)(2)(B) leaves no space for

their interpretation. Neither the government nor Océ attempts

to parse the statutory text. That § 3730(c)(2)(B) speaks in terms,

not of a settlement, but of a “proposed settlement,” signifies that

an agreement between the government and the qui tam

defendant needs judicial approval to become effective.

Otherwise it remains just a proposal. Also significant is the

absence of any language in § 3730(c)(2)(B) indicating that

judicial approval is necessary only in some special category of

cases. There are but two conditions to trigger the section’s

operation: (1) the government and the defendant agree to settle

the case and (2) the relator objects. Both conditions existed in

this case.

In addition, allowing dismissal without judicial review

of the settlement would render § 3730(c)(2)(B) a nullity and thus

contravene “the longstanding canon of statutory construction

that terms in a statute should not be construed so as to render

any provision of that statute meaningless or superfluous.” Beck

v. Prupis, 529 U.S. 494, 506 (2000); see also Abourezk v.

Reagan, 785 F.2d 1043, 1054 (D.C. Cir. 1986). The government

insists this is not so because, in most cases, the Attorney General

voluntarily “choos[es]” to follow § 3730(c)(2)(B). Only in

“unusual circumstances” does the Attorney General override it

by invoking § 3730(c)(2)(A).

We reject the government’s argument. Section

3730(c)(2)(B) contains no opt-out clause for rare cases or

unusual circumstances. It does not permit the Attorney General

to decide when there shall be a hearing on the settlement: the

statute says that the government “may” settle a matter over a

12

relator’s objection “if the court” holds a hearing and finds the

“proposed settlement” reasonable. The meaning is clear. The

government may not settle a case when the relator objects unless

the court approves the settlement. This is the way the Supreme

Court read the statute in Vermont Agency of Natural Resources

v. United States ex rel. Stevens, 529 U.S. 765 (2000). The Court

stated that § 3730(c)(2)(B) “prohibits the Government from

settling [a] suit over [a] relator’s objection without a judicial

determination of ‘fair[ness], adequa[cy] and reasonable[ness].’”

Id. at 772 (quoting 31 U.S.C. § 3730(c)(2)(B)).

Océ and the government claim that § 3730(c)(2)(B)

should apply only when the government asks to “mak[e] the

settlement part of the judgment in the case.” If the government

does not do so, they say, then § 3730(c)(2)(A) gives it an

unfettered right to dismiss the case. The argument draws upon

Kokkonen v. Guardian Life Insurance Co., 511 U.S. 375 (1994).

There the Court explained that when parties settle a suit filed in

federal court, they typically must resort to contract law

remedies, rather than court supervision, for enforcement of the

agreement. Id. at 380-81. The situation is “quite different,”

however, when “the parties’ obligation to comply with the terms

of [a] settlement agreement ha[s] been made part of the order of

dismissal – either by separate provision (such as a provision

‘retaining jurisdiction’ over the settlement agreement) or by

incorporating the terms of the settlement agreement in the

order.” Id. at 381. In those instances, “a breach of the

agreement would be a violation of the order, and ancillary

jurisdiction to enforce the agreement would therefore exist.” Id.

Limiting § 3730(c)(2)(B) to these circumstances, the argument

goes, would “protect[] the government’s right to . . . dismiss an

action when it chooses,” while also ensuring that §

3730(c)(2)(B) retains meaning when the government asks the

court to play a role in the settlement process. Océ Br. 36.

13

Even if we credited the argument, it would not help the

government or Océ. The government’s motion to dismiss

“request[ed] that the Court retain jurisdiction to . . . enforce the

terms of the settlement agreement by and between the parties.”

The district court granted the motion and its order expressly

“retain[ed] jurisdiction to determine the award to relator

Schweizer, if any, from the proceeds of the settlement.” These

developments put the district court’s power and prestige behind

the settlement agreement, thereby triggering § 3730(c)(2)(B)

even under the government’s and Océ’s interpretation of the

statute.

Océ offers another argument against applying §

3730(c)(2)(B): it says the provision violates the separation of

powers and is therefore unconstitutional. (The government does

not join in the argument.6) Although Océ seems to phrase its

constitutional claim as a facial challenge to § 3730(c)(2)(B), we

will treat it as if it were an as-applied challenge. See Texas v.

Johnson, 491 U.S. 397, 403 n.3 (1989).7

6

Océ has standing to make the argument. Judicial review of

the settlement agreement exposes Océ to a risk that the agreement will

be rejected and a larger sum required to dispose of the relators’ claims.

This qualifies as an injury in fact. Section 3730(c)(2)(B) causes the

injury because § 3730(c)(2)(A) would otherwise permit dismissal

without judicial scrutiny. And the injury is redressable by a ruling that

§ 3730(c)(2)(B) is unconstitutional. See Bond v. United States, 131 S.

Ct. 2355, 2365 (2011); FEC v. NRA Political Victory Fund, 6 F.3d

821, 823-24 (D.C. Cir. 1993).

7

Section 3730(c)(2)(B) is valid when the government

affirmatively seeks judicial involvement in the settlement process, as

described in greater detail below. Indeed, Océ’s brief concedes as

much. Thus, regardless whether one applies the “no set of

circumstances” test or the “plainly legitimate sweep” test for facial

invalidity, § 3730(c)(2)(B) survives. See Gen. Electric Co. v. Jackson,

14

According to Océ, “[t]he decision of when, and under

what circumstances, a False Claims Act action should be settled

falls within the core and exclusive powers of the Executive

Branch.” For support, Océ points to Article II, § 3, of the

Constitution, which states that the President “shall take Care that

the Laws be faithfully executed.” We mentioned the Take Care

Clause in Swift when we interpreted § 3730(c)(2)(A). Decisions

to dismiss under § 3730(c)(2)(A), we said, were analogous to

decisions not to prosecute, which are committed to the

Executive Branch’s absolute discretion. Swift, 318 F.3d at 252

(citing Heckler v. Chaney, 470 U.S. 821, 831-33 (1985)). Océ

asserts that settlement decisions should be treated no differently,

since they involve policy judgments ill-suited to judicial

resolution. And because § 3730(c)(2)(B) gives the judiciary

“the final word on settlement decisions,” Océ concludes that it

unconstitutionally deprives the government of sufficient control

over cases brought in its name. Océ Br. 42; see Morrison v.

Olson, 487 U.S. 654, 696 (1988).

Although decisions not to prosecute may be immune

from review, the same cannot be said of decisions to dispose of

a pending case. Compare Heckler, 470 U.S. at 833, with Rinaldi

v. United States, 434 U.S. 22, 29-30 & n.15 (1977). We

recognized this distinction in Swift, stating that some limitations

on the Executive Branch’s dismissal authority may be valid

“despite the separation of powers.” 318 F.3d at 252 (citing

United States v. Cowan, 524 F.2d 504, 513 (5th Cir. 1975)). For

instance, the government “might be subject to Rule 41(a)(2),”

which conditions dismissal “upon such terms and conditions as

the court deems proper,” if it filed a § 3730(c)(2)(A) motion

“after the complaint had been served and the defendant

610 F.3d 110, 117 (D.C. Cir. 2010) (quoting United States v. Stevens,

130 S. Ct. 1577, 1587 (2010)).

15

answered.” Id. at 252-53. Two factors make the case for

judicial review even stronger here.

First, judicial scrutiny of settlement agreements and

similar devices is fairly common. Federal Rule of Criminal

Procedure 48(a) permits the government to “dismiss an

indictment, information, or complaint” only “with leave of

court.” Courts have upheld this provision even though it

restricts executive authority and “vest[s] some discretion in the

court.” Rinaldi, 434 U.S. at 29 n.15; see also Cowan, 524 F.2d

at 513. Other examples include judicial oversight of plea

agreements, see FED. R. CRIM. P. 11(c)(3)(A) (“[T]he court may

accept the agreement, reject it, or defer a decision until the court

has reviewed the presentence report.”); antitrust consent decrees,

see 15 U.S.C. § 16(e)(1) (“Before entering any consent

judgment proposed by the United States under this section, the

court shall determine that the entry of such judgment is in the

public interest.”); class action settlements, see FED. R. CIV. P.

23(e) (“The claims, issues, or defenses of a certified class may

be settled, voluntarily dismissed, or compromised only with the

court’s approval.”); and settlements in shareholder derivative

suits, see FED. R. CIV. P. 23.1(c) (“A derivative action may be

settled, voluntarily dismissed, or compromised only with the

court’s approval.”). Océ claims these provisions are irrelevant

because they “protect other parties who are absent or potentially

lack the savvy or representation to protect themselves.” But §

3730(c)(2)(B) does similar work – it protects the relator.8

In any event, here the government invoked the court’s

supervisory powers. By urging the district court to “retain

8

Section 3730(c)(2)(B) may also serve a more diffuse set of

public interests. Cf. Rinaldi, 434 U.S. at 29 n.15 (indicating that

Federal Rule of Criminal Procedure 48 might prohibit dismissals

“prompted by considerations clearly contrary to the public interest”).

16

jurisdiction to . . . enforce the terms of the settlement agreement

by and between the parties,” the government consented to

judicial involvement in the settlement process. Cf. Kokkonen,

511 U.S. at 380-81. The same general principle – that a court

cannot become a partner in enforcement without first examining

the reasonableness of the request – applies when parties call on

courts to issue preliminary injunctions, see Mills v. District of

Columbia, 571 F.3d 1304, 1308 (D.C. Cir. 2009), and consent

decrees, United States v. Trucking Emp’rs, Inc., 561 F.2d 313,

317 (D.C. Cir. 1977).

We therefore hold that § 3730(c)(2)(B) is constitutional

as applied to this case. Since the district court dismissed Counts

I and II without finding the settlement agreement fair, adequate,

and reasonable, we reverse and remand the case for a §

3730(c)(2)(B) hearing.9

II

Schweizer also argues that the district court erred in

granting Océ summary judgment on her retaliation claim. Our

review is de novo. Bush v. District of Columbia, 595 F.3d 384,

387 (D.C. Cir. 2010).

Section 3730(h), added in 1986, was “designed to protect

persons who assist the discovery and prosecution of fraud and

9

The government contends that dismissal of Schweizer’s

Trade Agreements Act claims was proper because the settlement

agreement did not “release any of [the government’s] own claims

under that statute.” The parties have not fully developed this point in

their briefs, or explained why the government’s “own claims” – as

opposed to those of the relators – are relevant to the § 3730(c)(2)(B)

analysis. Accordingly, we leave this question open for the parties to

address on remand.

17

thus to improve the federal government’s prospects of deterring

and redressing crime.” Neal v. Honeywell Inc., 33 F.3d 860, 861

(7th Cir. 1994), abrogated on other grounds by Graham Cnty.

Soil & Water Conservation Dist. v. United States ex rel. Wilson,

545 U.S. 409, 416-17 (2005). At the time Schweizer’s claim

accrued, the provision read:

Any employee who is discharged, demoted,

suspended, threatened, harassed, or in any other

manner discriminated against in the terms and

conditions of employment by his or her

employer because of lawful acts done by the

employee on behalf of the employee or others in

furtherance of an action under this section,

including investigation for, initiation of,

testimony for, or assistance in an action filed or

to be filed under this section, shall be entitled to

all relief necessary to make the employee whole.

Such relief shall include reinstatement with the

same seniority status such employee would have

had but for the discrimination, 2 times the

amount of back pay, interest on the back pay,

and compensation for any special damages

sustained as a result of the discrimination,

including litigation costs and reasonable

attorneys’ fees. An employee may bring an

action in the appropriate district court of the

United States for the relief provided in this

subsection.

31 U.S.C. § 3730(h) (2006).

This language states two basic elements: (1) acts by the

employee “in furtherance of” a suit under § 3730 – acts also

known as “protected activity”; and (2) retaliation by the

18

employer against the employee “because of” those acts. United

States ex rel. Yesudian v. Howard Univ., 153 F.3d 731, 736

(D.C. Cir. 1998). For reasons we will explain in a moment, it is

important to recognize that when § 3730(h) speaks of acts “in

furtherance of an action under this section” it is not referring

only to qui tam actions. Section 3730 authorizes qui tam

actions, see 31 U.S.C. § 3730(b), but it also provides that “the

Attorney General may bring a civil action under this section,” id.

§ 3730(a). In other words, an employee’s actions may further a

qui tam suit or a suit by the United States under the False Claims

Act.

Decisions of this court and others have expounded on the

elements of a False Claims Act retaliation claim. We have, for

instance, divided the causation question into two parts: (1) did

“the employer ha[ve] knowledge the employee was engaged in

protected activity”; and (2) was the employer’s adverse action

against the employee “motivated, at least in part, by the

employee’s engaging in [that] protected activity.” Yesudian,

153 F.3d at 736 (quoting S. REP. NO. 99-345, at 35 (1986),

reprinted in 1986 U.S.C.C.A.N. 5266, 5300) (alteration in

original). The former, often referred to as a “notice”

requirement, recognizes that an employer cannot “possess the

retaliatory intent necessary to establish a violation of § 3730(h)”

unless it is “aware that the employee is investigating fraud.”

Martin-Baker, 389 F.3d at 1260-61 (quoting Yesudian, 153 F.3d

at 744); see also Robertson v. Bell Helicopter Textron, Inc., 32

F.3d 948, 952 (5th Cir. 1994).

To come within § 3730(h), an employee does not have

to alert his employer to the prospect of a False Claims Act suit.

Yesudian, 153 F.3d at 742. The employee has no obligation to

give such a warning because § 3730(h) does not require the

employee to “‘know’ that the investigation he was pursuing

could lead to a False Claims Act suit.” Id. at 741; see also

19

Childree v. UAP/GA AG CHEM, Inc., 92 F.3d 1140, 1145-46

(11th Cir. 1996); United States ex rel. Hopper v. Anton, 91 F.3d

1261, 1269 (9th Cir. 1996); Neal, 33 F.3d at 864. In terms of §

3730(h), an employee can be acting “in furtherance of an action

under this section” – can be engaging in protected activity –

although the employee is not contemplating bringing a qui tam

suit, is not even aware that there is such a thing as a qui tam

action, and has no idea whether his – the employee’s –

investigation or other acts, if made known to the government,

might cause the Attorney General to sue his employer under the

False Claims Act. From this, it follows that the employer may

incur liability under § 3730(h) even if the employer has no

inkling that a False Claims Act suit may be in the offing. As our

court stated in Yesudian, “the kind of knowledge the defendant

must have mirrors the kind of activity in which the plaintiff must

be engaged.” 153 F.3d at 742.

Some decisions have applied a different concept of

notice when employees claim that “performance of their normal

job responsibilities constitutes protected activity.”

Martin-Baker, 389 F.3d at 1261. In that situation, decisions

such as Martin-Baker10 hold that employees have not put their

employer on notice unless they “overcome the presumption that

they are merely acting in accordance with their employment

obligations.” Id. (quoting Yuhasz, 341 F.3d at 568). Although

the reasoning behind these rulings is not always fully spelled

out, it appears to proceed in three steps. One: only if the

employer is aware that its employee is engaging in, say, the

protected conduct of an investigation “in furtherance of” a False

10

See, e.g., Maturi v. McLaughlin Research Corp., 413 F.3d

166, 172-73 (1st Cir. 2005); Eberhardt v. Integrated Design &

Constr., Inc., 167 F.3d 861, 868 (4th Cir. 1999); United States ex rel.

Ramseyer v. Century Healthcare Corp., 90 F.3d 1514, 1522-23 (10th

Cir. 1996); Robertson, 32 F.3d at 951-52.

20

Claims Act suit can the employer fire the employee “because of”

the employee’s protected conduct. See, e.g., Martin-Baker, 389

F.3d at 1261. Two: an employer cannot be so aware if the

employee is just performing his job. See, e.g., Ramseyer, 90

F.3d at 1522-23.11 Three: therefore the employee must put his

employer on notice that he “was pursuing an FCA case” before

the employer “discharge[s]” him. Yuhasz, 341 F.3d at 567. Step

three presents some analytical difficulty in light of our holding

that an employee engages in protected conduct even if the

employee himself does not “‘know’ that the investigation he was

pursuing could lead to a False Claims Act suit.” Yesudian, 153

F.3d at 741.12

11

The notice requirement is derived from a Senate Judiciary

Committee Report. See, e.g., Yesudian, 153 F.3d at 736; Robertson,

32 F.3d at 951. The report cites cases involving other whistleblower

protection statutes as examples of the way in which § 3730(h) was

meant to operate. See S. REP. NO. 99-345, at 35, reprinted in 1986

U.S.C.C.A.N. at 5300. None of these cases impose a presumption like

the one described in Martin-Baker. For instance, in Mackowiak v.

University Nuclear Systems, Inc., 735 F.2d 1159, 1162-64 (9th Cir.

1984), the court held that 48 U.S.C. § 5851 – a whistleblower

protection provision in the Energy Reorganization Act – protects

compliance workers from retaliation regardless of whether they

contacted government regulators or departed from their usual job

duties. “[C]ontractors,” the court explained, “may not discharge

quality control inspectors because they do their jobs too well.” Id. at

1163; see also id. (noting that the plaintiff was “terminated, in part”

because of he was “very persistent” in performing job-related safety

functions).

12

The Fourth Circuit recognized the problem and sought to

solve it by holding that an employee “tasked with the internal

investigation of fraud” puts his employer on notice if he tells the

employer that its conduct is “illegal or fraudulent or recommend[s]

that legal counsel become involved.” Eberhardt, 167 F.3d at 868.

21

Nevertheless we must apply Martin-Baker to this case.

See LaShawn A. v. Barry, 87 F.3d 1389, 1395 (D.C. Cir. 1996)

(en banc). Like the employee in Martin-Baker and the other

employees in this line of cases from other circuits, Schweizer’s

job was to ensure compliance with government contracts. Her

retaliation claim therefore cannot succeed unless she alerted Océ

of her protected conduct by acting outside her normal job

responsibilities, notifying a party outside the usual chain of

command, advising Océ to hire counsel, or taking “any [other]

action which a factfinder reasonably could conclude would put

[Océ] on notice that litigation [was] a reasonable possibility.”

Martin-Baker, 389 F.3d at 1261-62 (quoting Eberhardt, 167

F.3d at 868).13 Since Schweizer’s case is here on appeal from a

grant of summary judgment, the question is whether there are

genuine issues of material fact with respect to notice (and thus

causation). Could a jury reasonably find that Océ discharged

Schweizer “because of lawful acts” she took “in furtherance of”

a False Claims Act suit? We believe the answer is yes when we

view the record in the light most favorable to Schweizer.

13

Eberhardt states that “an employee tasked with the internal

investigation of fraud against the government cannot bring a section

3730(h) action for retaliation unless the employee puts the employer

on notice that a qui tam suit under section 3730 is a reasonable

possibility.” 167 F.3d at 868. Other cases similarly have held that

employees must put their employer on notice of a potential qui tam

suit. See, e.g., Fanslow v. Chicago Mfg. Ctr., Inc., 384 F.3d 469, 483

(7th Cir. 2004); Brandon v. Anesthesia & Pain Mgmt. Assocs., 277

F.3d 936, 945 (7th Cir. 2002); Robertson, 32 F.3d at 951-52. As noted

above, these cases read § 3730(h) too narrowly. An employee acts “in

furtherance of an action under this section” if he advances a suit by the

Attorney General pursuant to § 3730(a) or a qui tam suit filed under

§ 3730(b). Thus, the employer need only have knowledge of actions

that would make either type of suit a “reasonable possibility.” See

Yesudian, 153 F.3d at 742.

22

Schweizer repeatedly disobeyed the orders of Frost, her

supervisor, to stop investigating Océ’s pricing and product

sourcing practices. She did so despite Frost’s warnings that the

company would “destroy” her if she did not comply.

Specifically, Schweizer contacted Beauchamp, Frost’s

supervisor, on two separate occasions in early December 2005.

The first time, she alleged a variety of specific False Claims Act

violations; the second time, she made an emotional plea to

“sav[e] the company” from “legal trouble” – a statement

Beauchamp knew involved “the contract[s]” and the company’s

“pricing policies.” The company fired Schweizer less than two

weeks later. In a letter explaining the decision, Beauchamp

stated that Schweizer was fired for several reasons, including

“refusing to follow orders” and ignoring “the chain of

command.” The letter also indicated that Océ would refer

Schweizer’s allegations to the General Services Administration

Inspector General for further review.

These facts, if proven, would be sufficient to support a

finding that Océ knew about Schweizer’s protected conduct and

fired her, at least in part, “because of” that conduct. See

Yesudian, 153 F.3d at 736. Schweizer’s actions were not of the

sort “typically [performed] as part of a contract administrator’s

job.” Martin-Baker, 389 F.3d at 1261 (quoting Robertson, 32

F.3d at 952). The company’s termination letter indicating that

Schweizer was fired for failing to follow orders and the chain of

command made precisely this point. As a result, Schweizer’s

factual allegations are sufficient to overcome “the presumption

that [she was] merely acting in accordance with [her]

employment obligations.” Id. (quoting Yuhasz, 341 F.3d at

568).

Océ argues that we should affirm on two other grounds.

First, it claims that Schweizer did not engage in protected

activity. The parties briefed this question in their summary

23

judgment filings. Although the district court did not reach the

issue, see 772 F. Supp. 2d at 180, the parties have again raised

it on appeal. We therefore may decide the issue. See Flynn v.

Dick Corp., 481 F.3d 824, 833 n.9 (D.C. Cir. 2007); Davis v.

U.S. Dep’t of Justice, 968 F.2d 1276, 1280 (D.C. Cir. 1992); see

also Singleton v. Wulff, 428 U.S. 106, 121 (1976).

According to Océ, Schweizer did not conduct her own

“meaningful investigation.” Instead, she merely “jumped to

conclusions and berated her superiors based on unfounded

assumptions.” From this Océ concludes that Schweizer did not

undertake actions “in furtherance of” a False Claims Act suit.

But on her version of the facts, Schweizer gathered evidence

that Océ defrauded federal agencies, shared that evidence with

her superiors, and warned them of potential False Claims Act

liability. Internal reporting of this kind is a classic example of

protected activity. See Yesudian, 153 F.3d at 741 n.9.

Accordingly, Océ is not entitled to summary judgment on

protected activity grounds.

Second, Océ asserts that Schweizer was fired for

legitimate, non-discriminatory reasons. Again, the district court

did not reach this question. 772 F. Supp. 2d at 180-81.

Although the parties have briefed the issue on appeal, their

arguments fail to address a basic question regarding the

appropriate legal standard: what are courts to do when an

employee has made out a prima facie case of retaliation, the

employer has offered a non-retaliatory motive for its actions,

and the employee has alleged that the employer’s proffered

motive is pretextual?

The familiar McDonnell Douglas burden-shifting

framework, see McDonnell Douglas Corp. v. Green, 411 U.S.

792 (1973), offers a possible solution. Under McDonnell

Douglas, an employee first must make out a prima facie case of

24

retaliation by showing “(1) that he engaged in statutorily

protected activity; (2) that he suffered a materially adverse

action by his employer; and (3) that a causal link connects the

two.” Jones v. Bernanke, 557 F.3d 670, 677 (D.C. Cir. 2009).

If the employee does so, then the burden shifts to the employer

to “produce admissible evidence that, if believed, would

establish that [its] action was motivated by a legitimate,

nondiscriminatory reason.” Carter v. George Washington Univ.,

387 F.3d 872, 878 (D.C. Cir. 2004) (quoting Teneyck v. Omni

Shoreham Hotel, 365 F.3d 1139, 1151 (D.C. Cir. 2004))

(alteration in original). Once that occurs, “the burden-shifting

framework disappears, and a court reviewing summary

judgment looks to whether a reasonable jury could infer . . .

retaliation from all the evidence.” Id.

The First Circuit recently held that the McDonnell

Douglas framework applies to § 3730(h) retaliation claims. See

Harrington v. Aggregate Indus.-Ne. Region, Inc., 668 F.3d 25,

30-31 (1st Cir. 2012).14 We agree with the First Circuit’s well-

reasoned opinion and adopt its approach here. Applying

McDonnell Douglas to Schweizer’s case, we believe that all of

the preliminary steps have been satisfied – Schweizer has set

forth a prima facie case of retaliation, and Océ has presented an

alternative, non-discriminatory basis for terminating her

employment. Thus, all that remains is the ultimate question

“whether a reasonable jury could infer . . . retaliation from all

the evidence.” Jones, 557 F.3d at 677 (quoting Carter, 387 F.3d

at 878) (alteration in original); see also Harrington, 668 F.3d at

14

Other circuits, while not always invoking McDonnell Douglas

by name, have adopted or alluded to a similar rule. See Scott v. Metro.

Health Corp., 234 F. App’x 341, 346 (6th Cir. 2007); Hutchins v.

Wilentz, Goldman & Spitzer, 253 F.3d 176, 186 (3d Cir. 2001);

Norbeck v. Basin Electric Power Coop., 215 F.3d 848, 850-51 (8th

Cir. 2000).

25

31 (“[T]o succeed . . . the [employee] must have adduced

sufficient evidence to create a genuine issue as to whether

retaliation was the real motive underlying his dismissal.”). The

parties have not briefed this question directly, so we remand it

to the district court for further consideration.

III

For the reasons given above, we reverse the district

court’s dismissal of Counts I and II and its grant of summary

judgment on Count III. The case is remanded for review of the

settlement agreement pursuant to 31 U.S.C. § 3730(c)(2)(B) and

consideration of the parties’ remaining summary judgment

arguments on Count III.

So ordered.