ORDER

T. S. Ellis, III, United States District Judge.

In this False Claims Act ("FCA")1 and state law wrongful discharge action, the relator, Stephen Bachert, brought suit on behalf of the United States against Triple Canopy, Inc ("defendant"). Specifically, Bachert alleges that defendant submitted false claims to the U.S. State Department related to a contract to provide security services at the U.S. Embassy in Baghdad, Iraq. Bachert further alleges that defendant retaliated against him by transferring him, assigning him to a lesser paying job, and constructively discharging him, in violation of both the FCA's anti-retaliation provision2 and the public policy of Virginia. Defendant now seeks summary judgment on each of Bachert's claims.

The matter has been fully briefed and argued and is now ripe for disposition.

I.

Of course, entry of summary judgment is appropriate only where there are no genuine disputes of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Thus, it is important to identify the record facts as to which no genuine dispute exists. In this regard, Local Rule 56(B) and the Rule 16(b) Scheduling Order issued in this case direct a movant for summary judgment to include in his submission a separately captioned section listing in numbered-paragraph form all material facts as to which the movant contends no genuine dispute exists; the nonmovant must then respond to each paragraph citing admissible record evidence to establish a genuine dispute of material fact. See United States ex rel. Bachert v. Triple Canopy, Inc., No. 1:16-cv-456 (E.D. Va. Nov. 8, 2017) (Order). Defendant complied with Local Rule 56(B) and the Scheduling Order. Bachert, however, did not comply, instead submitting his own list of undisputed facts. Accordingly, the following statement of undisputed material facts is based on defendant's statement of undisputed facts. Bachert's separate statement of undisputed facts and the record has also been scoured for facts that might be viewed as in conflict with the facts stated here.

II.

The FCA prohibits any person from "knowingly present[ing], or caus[ing] to be presented a false or fraudulent claim for payment," or "knowingly mak[ing], or caus[ing] to be made or used a false record or statement material to a false or fraudulent claim." 31 U.S.C. § 3729(a)(1)(A), (B). The Fourth Circuit has held that a relator attempting to demonstrate that a defendant is liable under the FCA must show:

United States ex rel. Harrison v. Westinghouse Savannah River Co. (Harrison II), 352 F.3d 908, 913 (4th Cir. 2003). Where, as here, a relator proceeds on an implied false certification theory, the Supreme Court requires that "at least... two conditions [must be] satisfied: first, [a] claim does not merely request payment, but also makes specific representations about the goods or services provided; and second, the defendant's failure to disclose noncompliance with material statutory, regulatory, or contractual requirements makes those representations misleading half-truth." Universal Health Services, Inc. v. United States ex rel. Escobar, ___ U.S. ___, 136 S.Ct. 1989, 2001, 195 L.Ed.2d 348 (2016).

Further, the Fourth Circuit has held "that in the context of the civil [FCA] the determination of materiality, although partaking of the character of a mixed question of fact and law, is one for the court." United States ex rel. Berge v. Bd. of Tr. of the Univ. of Alabama, 104 F.3d 1453, 1460 (4th Cir. 1997). Importantly, the Supreme Court reaffirmed this principle in Escobar, rejecting the "assertion that materiality is too fact intensive for courts to dismiss [FCA] cases ... at summary judgment." Escobar, 136 S. Ct. at 2004 n. 6. The FCA defines "material" to mean "having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property." 31 U.S.C. § 3729(b)(4). The Supreme Court in Escobar also made clear that "[t]he materiality standard is demanding" and that a statutory, regulatory, or contractual requirement is "material" only if it affects "the likely or actual behavior of the recipient of the alleged misrepresentation." Id. at 2002. Accordingly, Justice Thomas, writing for the unanimous Supreme Court, explained that

Id. According to the Supreme Court, "[w]hether a provision is labeled a condition of payment is relevant, but not dispositive of the materiality inquiry" and proof of materiality can include evidence of the defendant's knowledge that "the government consistently refuses to pay claims in the mine run of cases based on noncompliance with the particular statutory, regulatory, or contractual requirement." Id. at 2001, 2003.

Here, Bachert's claim fails because the undisputed record evidence in this case demonstrates that defendant's alleged false certification was not material to the government's decision to pay defendant under the Base Contract. To begin with, the alleged falsehoods at issue in this case — the alleged failure to inspect a handful of weapons and falsification of the accompanying inspection records — are the kind of "minor or insubstantial" noncompliance that Escobar advises are not material. Defendant's Base Contract governed substantial services defendant provided to the State Department globally, and the State Department issued numerous task orders related to the Base Contract. Fields' inspection records, the reports of a single armorer at a single base, are insubstantial in relation to the overall size of the Base Contract, and therefore it strains credulity to believe that those inspection reports were a factor in the government's decision to make payment on the contract. At best, Bachert has identified a limited number of instances where Fields failed to inspect weapons or catalog inspections out of a total of 1,700 weapons for which defendant's employees were responsible. Connolly Decl. at 37-38. Even if every weapons inspection by Fields was improper, review of defendant's labor invoices demonstrates that Fields' services accounted for only three-tenths of one percent of the total labor invoice to the government under the Base Contract. That invoice does not include other expenses billed to the government. No reasonable factfinder could conclude that these types of minor missteps in a small number of inspections, even assuming they occurred, would have impacted the government's decision to pay defendant under the Base Contract. See United States ex rel. Owens v. First Kuwaiti Gen. Trading & Co., 612 F.3d 724, 729 (4th Cir. 2010) (finding no materiality where billing for substandard concrete work was a small portion of a $600 million project, noting that "[i]t would be remarkable if, on a project of this ... scale, there were not some issues that quality control personnel would want to bring to supervisors' attention.").3

The record evidence in this case also makes clear that the State Department considered the allegations regarding Fields to be immaterial. Escobar teaches that this is an important factor in the assessment of materiality. There, the Supreme Court reasoned that where "the Government pays a particular claim in full despite its actual knowledge that certain requirements were violated, that is very strong evidence that those requirements are not material." 136 S.Ct. at 2003. Significantly, since Escobar, circuit courts have uniformly recognized that "continued payment by the federal government after it learns of the alleged fraud substantially increases the burden on the relator in establishing materiality." United States ex rel. Harman v. Trinity Indus. Inc., 872 F.3d 645, 663 (5th Cir. 2017).4 Precisely this occurred here, as it is undisputed:

It is also undisputed that the State Department never asked for any money back from defendant upon learning of Bachert's allegations. Instead, the State Department repeatedly renewed defendant's Base Contract and TO-5 every time it had the option to do so, even after it learned of Bachert's allegations. This evidence is undisputed and insurmountable; no reasonable jury could conclude that the alleged falsehoods related to Fields' inspections were material to the government's decision to pay defendant. Accordingly, defendant's motion for summary judgment on count I must be granted.

III.

Count II of the SAC alleges that defendant retaliated against Bachert for making complaints about Fields and the armory, in violation of the FCA's anti-retaliation provisions. 31 U.S.C. § 3730(h). Under § 3730(h), an employee may bring a retaliation claim against an employer who retaliates against the employee for the employee's "lawful acts ... in furtherance of [a qui tam] action under this section or other efforts to stop 1 or more violations of [the FCA]." Id. A claim for retaliation requires a plaintiff to establish three elements: (i) that the plaintiff engaged in a protected activity, (ii) that the employer knew about the plaintiff's protected activity, and (iii) that the employer took adverse action against plaintiff as a result of the protected activity. Glynn v. EDO Corp., 710 F.3d 209, 214 (4th Cir. 2013). Importantly, a plaintiff need not prove an underlying FCA violation because, as the Supreme Court has explained, § 3730(h) protects an employee's conduct "even if the target of an investigation or action to be filed was innocent." Graham Cnty. Soil & Water Conservation Dist. v. U.S. ex rel Wilson, 545 U.S. 409, 416, 125 S.Ct. 2444, 162 L.Ed.2d 390 (2005).

Defendant does not contest that Bachert engaged in protected activity and that defendant knew of Bachert's protected activities. Nor does defendant dispute that Bachert's removal from Task Order 5 and the subsequent failure to place Bachert in a new position was an adverse employment action. Instead, defendant's primary contentions are (i) that Bachert cannot allege that he was constructively discharged, and (ii) that defendant had a legitimate non-discriminatory reason for failing to place Bachert in a new position, namely that Bachert was the junior armorer and the only available armorer vacancy needed to be given to Fields on account of Fields' seniority.

With respect to Bachert's constructive discharge claim, a reasonable jury could conclude that Bachert was constructively discharged. The Fourth Circuit has held that "[a]n employee is entitled to relief absent a formal discharge, `if an employer deliberately makes the working conditions intolerable in an effort to induce the employee to quit.'" Honor v. Booz-Allen & Hamilton, Inc., 383 F.3d 180, 186 (4th Cir. 2004) (quoting Martin v. Cavalier Hotel Corp., 48 F.3d 1343, 1354 (4th Cir. 1995)). To prove constructive discharge, Bachert must show (i) deliberateness of the employer's action, and (ii) intolerability of the working conditions." Whitten v. Fred's Inc., 601 F.3d 231, 248 (4th Cir. 2010). Importantly, "[d]emotion can constitute a constructive discharge, especially where the demotion is essentially a career-ending action or a harbinger of dismissal." Carter v. Ball, 33 F.3d 450, 459 (4th Cir. 1994) (citing Jurgens v. E.E.O.C., 903 F.2d 386, 391-92 (5th Cir. 1990)). Bachert has presented evidence that he was removed from paid work as a senior armorer and was then offered only positions that would have amounted to demotions with reduced pay. The Fourth Circuit has recognized that demotions of this type may constitute constructive discharge. See id. Bachert also presents evidence that this action was motivated by discriminatory animus, thus allowing a jury to conclude that defendant acted intentionally to subject Bachert to intolerable working conditions. See infra. Defendant argues that defendant offered Bachert these positions to help him because no other armorer positions were available, but a reasonable jury could conclude, based on Bachert's account and the record evidence, that defendant constructively discharged Bachert by subjecting him to demotions. Accordingly, summary judgment on the constructive discharge portion of Bachert's FCA claim is inappropriate at this stage.

Given that defendant has proffered a legitimate non-discriminatory reason, the burden shifts back to Bachert to establish that there is a genuine dispute of material fact as to whether defendant's stated reason was pretextual. See McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973).5 Bachert meets this burden. To begin with, there is direct evidence in the record that the decisionmakers may have had retaliatory animus against Bachert, which may have motivated their decisonmaking. Specifically, in emails discussing Bachert's complaints, one of defendant's program managers emailed other members of the management team about Bachert, and stated that he found Bachert "loathsome" and that he wanted to "cut him off at the knees[,]" but that he worried that terminating Bachert might "look retaliatory in nature and he'd cry to OIG and/or HR." Apr. 3, 2015 Email from Lauria to Johnson at SBTC-5597-98. In another email, Lauria stated that he believed Bachert "was on a crusade to have Mr. Fields removed and Bachert seen as the savior of the armory[.]" May 29, 2015 email by F. Lauria, at SBTC-23406-23407. Defendant does not address this evidence in its brief, simply reiterating instead that defendant's decision was reasonable. Further, defendant argued in the summary judgment hearing that the context shows that these statements were not retaliatory, but deciding what these statements meant and to whom or what they referred is precisely the kind of determination best left to a jury.

In addition to this direct evidence of retaliatory animus, Bachert has also demonstrated that defendant has no written policy regarding seniority preference for any positions, and there was no recorded discussion among the decisionmakers about seniority preferences when the decision was made to place Fields instead of Bachert in the only open armorer position. The lack of contemporary documentation, together with the lack of a formal seniority policy and the contemporaneous statements of defendant's decisionmakers showing animus towards Bachert based on his protected activity, presents a jury issue, namely whether the proffered seniority justification for failure to place Bachert in a new armorer role was the real reason Bachert was not placed in a new armorer position or whether it was a post hoc justification asserted by defendant for the first time only in this litigation. See E.E.O.C. v. Sears Roebuck and Co., 243 F.3d 846 (4th Cir. 2001) (a factfinder could infer from the fact that an employer's reasons for termination or failure to hire are articulated only long after the termination suggest pretext).6 Accordingly, there is a genuine dispute of material fact as to whether defendant's adverse action was motivated by seniority preference or by retaliatory animus, and as such defendant's motion for summary judgment on Bachert's retaliation claim must be denied.

IV.

Bachert concedes that his Virginia wrongful termination claim in count III fails because Virginia courts have not recognized constructive discharge claims.7 As such, defendant's motion for summary judgment on Bachert's Virginia constructive discharge claim must be granted.

Accordingly, for the reasons stated above, and for good cause shown,

It is hereby ORDERED that defendant's motion for summary judgment is GRANTED IN PART and DENIED IN PART (Doc. 66). It is GRANTED with respect to count I (FCA) and count III (state constructive discharge and DENIED with respect to count II (FCA retaliation).