David Lillie v. Mantech Int l Corp., et al

Filing 23

MINUTES OF DEFENDANT MANTECH INTERNATIONAL CORPORATION'S MOTION TO DISMISS PLAINTIFF' FIRST AMENDED COMPLAINT 19 Hearing held before Judge Christina A. Snyder. In accordance with the foregoing the Court GRANTS in part and DENIES in part defendant's motion to dismiss. Specifically, the Court DENIES defendant's motion to dismiss plaintiffs' first, second, and third claims. The Court GRANTS defendant's motion to dismiss plaintiff's fourth, fifth, and sixth claims and DISMISSES those claims WITHOUT PREJUDICE. If plaintiff believes that he may cure the deficiencies in his claims for breach of contract, breach of implied-in-fact contract, and breach of the implied covenant of good faith and fa ir dealing, he is hereby granted thirty days (30) in which to file an amended complaint addressing the deficiencies in those claims. Failure to file an amended complaint may result in dismissal of these claims with prejudice. Court Reporter: Laura Elias. (lom) Modified on 8/15/2017 (lom).

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES - GENERAL
‘O’
2:17-cv-02538-CAS(SSx)
Date August 14, 2017
DAVID LILLIE v. MANTECH INT’L. CORP. ET AL.

Present: The Honorable

CHRISTINA A. SNYDER

Catherine Jeang
Deputy Clerk

Laura Elias
Court Reporter / Recorder

N/A
Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

Esperanza Anderson

Alison Davis

Proceedings:

I.

DEFENDANT MANTECH INTERNATIONAL
CORPORATION’S MOTION TO DISMISS PLAINTIFF’S FIRST
AMENDED COMPLAINT (Dkt. 19, filed June 30, 2017)

INTRODUCTION

On April 3, 2017, plaintiff David Lillie (“plaintiff”) filed this action against his
former employer, ManTech International Corporation (“defendant” or “ManTech”) and
Does 1-20. Plaintiff alleges claims for (1) retaliation in violation of the False Claims Act,
31 U.S.C. § 3730(h), (2) retaliation in violation of the Defense Contractor Whistleblower
Protection Act, 10 U.S.C. § 2409, (3) retaliation in violation of California Labor Code
section 1102.5, (4) breach of contract, and (5) breach of the implied covenant of good
faith and fair dealing. Dkt 1. The gravamen of plaintiff’s complaint is that defendant
terminated his employment because he reported unauthorized access to
“classified/proprietary” information owned by a third-party government contractor.
After defendant moved to dismiss the complaint for failure to state a claim under
Federal Rule of Civil Procedure 12(b)(6), plaintiff timely filed the operative first
amended complaint on June 16, 2017, which added a separate claim for breach of
implied-in-fact contract. Dkt. 17 (“FAC”). On June 30, 2017, defendant filed the instant
Rule 12(b)(6) motion to dismiss. Dkt. 19 (“Mtd.”). On July 24, 2017, plaintiff filed his
opposition, dkt. 21 (“Opp’n”), and defendant filed its reply on July 31, 2017, dkt. 22
(“Reply”).

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES - GENERAL
‘O’
2:17-cv-02538-CAS(SSx)
Date August 14, 2017
DAVID LILLIE v. MANTECH INT’L. CORP. ET AL.

Having carefully considered the parties’ arguments, the Court rules as follows.
II.

BACKGROUND
Plaintiff alleges the following facts.

ManTech had a contract to provide services to the California Institute of
Technology’s Jet Propulsion Lab (“JPL”), a federally funded research and development
center. FAC at 1. In February 2007, ManTech hired plaintiff as a senior engineer to
provide support in fulfillment of the “NASA [National Aeronautics and Space
Administration] Jet Propulsion Laboratory and California Institute of Technology
Reliability Engineering Support Services (‘RESS’) contract.”1 Id. ¶¶ 2, 14. Plaintiff
directly supported several JPL projects, including the Mars Science Laboratory, the Soil
Moisture Active Passive project, and the Juno project (a Jupiter orbiter mission). Id. ¶
15. In this capacity, plaintiff performed various tasks related to assessing the reliability
of electronic systems, and used several computer aided engineering tools including
Mathcad. Id. ¶ 16.
Although plaintiff had received positive performance evaluations and healthy pay
increases, “things changed . . . after he found it necessary to raise concerns about
ManTech’s failure to comply in material respects with federal contract rules relating to its
performance under sensitive United States government procurement contracts.” Id. ¶¶
20, 22, 23. On July 28, 2014, plaintiff attended a “kick-off” meeting for a task related to
the JPL Mars InSight Mission. Attendees at the meeting included Linda Facto (“Facto”),
the JPL Mars Insight Mission Assurance Manager, and Chau Brown (“Brown”), the JPL
Mars Insight Reliability Lead. At an impromptu meeting held immediately thereafter,
Facto clearly stated that JPL’s contract with a third-party government contractor
specifically excluded other contractors, including but not limited to ManTech, from
accessing the third-party contractor’s “classified/proprietary” documents. Id. ¶ 25. 2

1

The FAC does not specifically describe the contractual relationships between
NASA, the California Institute of Technology, JPL, and ManTech. In its motion to
dismiss, defendant states that plaintiff was employed as a “systems engineer assigned to
provide engineering support on a subcontract relating to the [‘RESS’] prime contract
between JPL and [‘NASA’].” Mtd. at 2.
2

The identity of the third-party contractor is not specified in the FAC.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES - GENERAL
‘O’
2:17-cv-02538-CAS(SSx)
Date August 14, 2017
DAVID LILLIE v. MANTECH INT’L. CORP. ET AL.

However, plaintiff informed Brown that he required the third-party contractor’s Mathcad
files to assist in completing an assignment. Id. ¶ 26.
On or about August 7, 2014, Brown contacted the third-party contractor and
requested access to the Mathcad files, but the request was denied. On September 1, 2014,
JPL’s Ernest Fierheller found copies of the files and placed them on a shared server.
Plaintiff was told he could use the files even though the third-party contractor had
expressly denied Brown’s request for the same files. Id. ¶ 26. On September 5, 2014,
Facto also requested and was denied permission to use the files by the third-party
contractor. She forwarded the third-party contractor’s response to Brown, in which the
third-party contractor asserted that other contractors are prohibited from viewing the
proprietary documents pursuant to its contractual agreement with JPL. This information
was not provided to plaintiff, and Brown told him to “go ahead and use the files.” Id. ¶
27.
Plaintiff utilized the Mathcad files for his assignment in support of the Mars
InSight Mission and forwarded a draft of his report to Brown at JPL. On October 7,
2014, plaintiff learned that he had never been authorized to access the Mathcad files
when Brown demanded that he remove references to the files from his report. Plaintiff
emailed Brown to ask if he had permission to use the files, and Brown responded: “Don’t
know . . . I do not think it will be an issue.” Id. ¶ 28. Plaintiff was deeply troubled by
this response and understood that he was required by federal law to report any matters
that could affect his security clearance. Id. ¶¶ 28, 30. Plaintiff notified JPL’s Ethics
Enforcement Division of an apparent cover-up of conduct he “reasonably believed to be
fraudulent” and in violation of restrictions on the third-party contractor’s sensitive
information. Id. ¶¶ 28, 49. He also wrote to his supervisor at ManTech, Erik Berg
(“Berg”), requesting that management get involved, but received no response. Id. ¶¶ 29,
59. Plaintiff alleges, on information and belief, that Berg somehow discovered plaintiff
had reported the issue to JPL’s Ethics Enforcement Division. Id. ¶ 31.
Plaintiff alleges “Brown covered up the fact that a contractor (ManTech) was given
third-party government contactor proprietary documents by JPL, with full knowledge this
act was in violation of federal law as well as JPL’s contractual agreement.” Id. ¶ 32.
Plaintiff “feared that ManTech was presenting claims for payment to the government and
certifying its compliance with all relevant rules and regulations notwithstanding its
willful non-compliance.” Id. ¶ 33. Plaintiff further alleges that he “refused to participate
in the cover-up of ManTech[’]s unlawful use of classified information/documents” and

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES - GENERAL
‘O’
2:17-cv-02538-CAS(SSx)
Date August 14, 2017
DAVID LILLIE v. MANTECH INT’L. CORP. ET AL.

“refused to participate in activity that would result in violations of federal law,
specifically the accessing of classified/proprietary documents without permission.” Id. ¶¶
59, 60.
Plaintiff alleges that his “employment relationship was governed, in relevant part,
by ManTech’s contractual agreements with its employees, including but not limited to the
Standards of Ethics and Business Conduct.” Id. ¶¶ 65, 69. These Standards allegedly
“required employees to alert ManTech to ethical problems or compliance issues,
agreeing, in exchange, that they will not suffer retaliation for raising such concerns.” The
Standards specifically provide: “As part of our Standards and in accordance with our
policies, ManTech pledges to protect any employee making a good faith report from any
type of retaliatory action.” Id. ¶ 65. The Standards further provide that “ManTech and
its employees are required by law to protect U.S. Government classified information, as
well as many forms of technical and sensitive Government data. . . . You should contact
your facility security office or the Corporate Security Department with any questions or
to report a potential or actual violation of the security regulations and/or laws relating to
the handling of classified or non-classified Government information.” Id. ¶ 66.
On October 17, 2014, Berg sent plaintiff home without pay, advising him to use a
floating holiday for that day’s pay. Id. ¶ 34. On November 14, 2014, ManTech notified
plaintiff that he had been retroactively placed on furlough due to a funding reduction on
the RESS contract. Id. ¶ 35. He was placed on indefinite furlough on December 22,
2014. Id. ¶ 37. Concerned that ManTech’s furlough decision was retaliatory, plaintiff
contacted Congresswoman Judy Chu, whose office encouraged JPL’s human resources
department to conduct an internal investigation. JPL conducted a five-week investigation
and concluded that violations of non-disclosure agreements had occurred, but that
plaintiff’s conduct was blameless. Id. ¶ 38. Plaintiff also filed a reprisal claim with the
NASA Office of Inspector General. However, on January 17, 2017, plaintiff was notified
that the NASA Office of Inspector General would take no action to investigate his claims.
Id. ¶ 57. On January 23, 2015, ManTech notified plaintiff that his employment would
terminate on February 6, 2015. Id. ¶ 42.
III.

LEGAL STANDARD

A motion pursuant to Rule 12(b)(6) tests the legal sufficiency of the claims
asserted in a complaint. Under this Rule, a district court properly dismisses a claim if
“there is a ‘lack of a cognizable legal theory or the absence of sufficient facts alleged

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES - GENERAL
‘O’
2:17-cv-02538-CAS(SSx)
Date August 14, 2017
DAVID LILLIE v. MANTECH INT’L. CORP. ET AL.

under a cognizable legal theory.’” Conservation Force v. Salazar, 646 F.3d 1240, 1242
(9th Cir. 2011) (quoting Balisteri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir.
1988)). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need
detailed factual allegations, a plaintiff’s obligation to provide the ‘grounds’ of his
‘entitlement to relief’ requires more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do.” Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 555 (2007). “[F]actual allegations must be enough to raise a
right to relief above the speculative level.” Id.
In considering a motion pursuant to Rule 12(b)(6), a court must accept as true all
material allegations in the complaint, as well as all reasonable inferences to be drawn
from them. Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998). The complaint must be
read in the light most favorable to the nonmoving party. Sprewell v. Golden State
Warriors, 266 F.3d 979, 988 (9th Cir. 2001). However, “a court considering a motion to
dismiss can choose to begin by identifying pleadings that, because they are no more than
conclusions, are not entitled to the assumption of truth. While legal conclusions can
provide the framework of a complaint, they must be supported by factual allegations.”
Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009); see Moss v. United States Secret Service,
572 F.3d 962, 969 (9th Cir. 2009) (“[F]or a complaint to survive a motion to dismiss, the
non-conclusory ‘factual content,’ and reasonable inferences from that content, must be
plausibly suggestive of a claim entitling the plaintiff to relief.”). Ultimately,
“[d]etermining whether a complaint states a plausible claim for relief will . . . be a
context-specific task that requires the reviewing court to draw on its judicial experience
and common sense.” Iqbal, 556 U.S. at 679.
IV.

DISCUSSION

Defendant filed the instant Rule 12(b)(6) motion requesting that this Court dismiss
the FAC in its entirety. Defendant argues that plaintiff has failed to allege sufficient facts
to support any of his statutory retaliation claims or a breach of any contractual obligation.
Mtd. at 1. The Court will address plaintiff’s claims in turn.
A. False Claims Act Retaliation
Defendant moves to dismiss plaintiff’s False Claims Act (“FCA”) retaliation claim.
The FCA imposes civil liability on “any person who . . . knowingly presents, or causes to
be presented, a false or fraudulent claim for payment or approval” to the government. 31

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES - GENERAL
‘O’
2:17-cv-02538-CAS(SSx)
Date August 14, 2017
DAVID LILLIE v. MANTECH INT’L. CORP. ET AL.

U.S.C. § 3729(a)(1). “In an archetypal qui tam False Claims action, such as where a
private company overcharges under a government contract, the claim for payment is itself
literally false or fraudulent. The [FCA], however, is not limited to such facially false or
fraudulent claims for payment.” United States v. Univ. of Phx., 461 F.3d 1166, 1170 (9th
Cir. 2006) (citing United States ex rel. Hopper v. Anton, 91 F.3d 1261, 1266 (9th Cir.
1996).) For example, under a false certification theory of FCA liability, a claim “can be
false where a party merely falsely certifies compliance with a statute or regulation as a
condition to government payment.” Id. at p. 1171. Under any theory, the essential
elements of FCA liability are: “(1) a false statement or fraudulent course of conduct, (2)
made with scienter, (3) that was material, causing (4) the government to pay out money
or forfeit moneys due.” Id. at 1174.
To protect employees who expose fraudulent claims against the government, the
FCA includes a whistleblower protection provision that authorizes a cause of action for
any employee who “is discharged, demoted, suspended, threatened, harassed, or in any
other manner discriminated against in the terms and conditions of employment because of
lawful acts done by the employee . . . in furtherance of an action” under the FCA or
“other efforts to stop” FCA violations. 31 U.S.C. § 3730(h). “A plaintiff alleging a FCA
retaliation claim must show three elements: (1) that he or she engaged in activity
protected under the statute; (2) that the employer knew the plaintiff engaged in protected
activity; and (3) that the employer discriminated against the plaintiff because he or she
engaged in protected activity.” Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097,
1103 (9th Cir. 2008) (citations omitted.) Although “[s]pecific awareness of the FCA is
not required. . . . [T]he plaintiff must be investigating matters which are calculated, or
reasonably could lead, to a viable FCA action.” Hopper, 91 F.3d at 1269. Thus, “an
employee engages in protected activity where (1) the employee in good faith believes,
and (2) a reasonable employee in the same or similar circumstances might believe, that
the employer is possibly committing fraud against the government.” Moore v. Cal. Inst.
of Tech. Jet Propulsion Lab., 275 F.3d 838, 846 (9th Cir. 2002).3
Defendant argues that plaintiff fails to state a claim for retaliation in violation of
the FCA because he did not allege facts sufficient to show that he engaged in protected

3

“[A] FCA retaliation claim ‘does not require a showing of fraud and therefore
need not meet the heightened pleading requirements of Rule 9(b).’ ” Mendiondo, 521
F.3d at 1103 (9th Cir. 2008) (quotation omitted).

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES - GENERAL
‘O’
2:17-cv-02538-CAS(SSx)
Date August 14, 2017
DAVID LILLIE v. MANTECH INT’L. CORP. ET AL.

activity under the statute. Mtd. at 4-6. Specifically, defendant argues that the FAC’s
conclusory allegations are insufficient to support an inference that plaintiff reasonably
believed JPL or ManTech submitted false or fraudulent claims to the government. Mtd.
at 6. However, reading the FAC in the light most favorable to plaintiff and drawing all
reasonable inferences from its allegations, the Court concludes plaintiff has alleged facts
sufficient to demonstrate he was engaged in activity protected under the FCA.
Plaintiff alleges that ManTech’s unauthorized access to the third-party contractor’s
“classified/proprietary” information violated both federal contract rules and JPL’s
agreement with the third-party contractor. FAC ¶¶ 23, 32. He alleges that JPL’s Brown
engaged in a cover-up by ordering plaintiff to delete references to the information with
“full knowledge” that the use of the information “was in violation of federal law as well
as JPL’s contractual agreement.” Id. ¶ 32. Plaintiff alleges that he reported the issue to
both his supervisor at ManTech, Berg, and JPL’s Ethics Enforcement Division. Id. ¶¶ 28,
29. Plaintiff further alleges, on information and belief, that Berg somehow discovered
plaintiff had reported the issue to JPL’s Ethics Enforcement Division. Id. ¶ 31. Based on
the foregoing, plaintiff alleges that he “feared that ManTech was presenting claims for
payment to the government and certifying its compliance with all relevant rules and
regulations notwithstanding its willful non-compliance.” Id. ¶ 33. These factual
allegations are sufficient to allege that plaintiff was engaged in FCA-protected activity,
namely, he in good faith believed, and a reasonable employee in similar circumstances
might believe, that defendant was possibly committing fraud against the government by
falsely certifying its compliance with federal contract rules. See Moore, 275 F.3d at 846.
Defendant does not argue that plaintiff failed to satisfy the other two elements of
an FCA retaliation claim. Nevertheless the Court concludes that plaintiff’s allegations
are sufficient at this stage to allege that ManTech knew or reasonably should have known
the plaintiff was engaged in protected activity and discriminated against him for that
reason. See Mendiondo, 521 F.3d at 1103. Plaintiff’s alleged complaints to his
supervisor at ManTech and JPL’s Ethics Enforcement Division would have put ManTech
on notice that plaintiff was engaged in efforts motivated by an objectively reasonable
belief that ManTech was possibly committing fraud against the government. See Moore,
275 F.3d at 846. Moreover, the proximity between plaintiff’s complaints and his
subsequent furlough and termination is sufficient at this stage to support the allegation
that plaintiff was discharged because of his protected activity. See, e.g., U.S. ex rel.
Hagerty v. Cyberonics, Inc., 95 F. Supp. 3d 240 (D. Mass. 2015), aff’d sub nom. Hagerty
ex rel. United States v. Cyberonics, Inc., 844 F.3d 26 (1st Cir. 2016).

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES - GENERAL
‘O’
2:17-cv-02538-CAS(SSx)
Date August 14, 2017
DAVID LILLIE v. MANTECH INT’L. CORP. ET AL.

Accordingly, defendant’s motion to dismiss is DENIED as to plaintiff’s first claim
for retaliation in violation of the FCA.
B. Defense Contractor Whistleblower Protection Act
Defendant next moves to dismiss plaintiff’s claim under the Defense Contractor
Whistleblower Protection Act (“DCWPA”), which prohibits retaliation against
employees of defense and aerospace contractors who report certain types of misconduct.
See 10 U.S.C. § 2409(a)(1). Under that statute, “[a] employee of a contractor [or]
subcontractor . . . may not be discharged, demoted, or otherwise discriminated against as
a reprisal for disclosing . . . information that the employee reasonably believes is
evidence of . . . [g]ross mismanagement,” “gross waste of funds,” “abuse of authority,” or
“a violation of law, rule, or regulation related to” a Department of Defense or NASA
contract or grant. Id. The DCWPA protects such disclosures to, among others, “[a]
Member of Congress,” “[a]n Inspector General,” and “[a] management official or other
employee of the contractor . . . who has a responsibility to investigate, discover, or
address misconduct.” Id. § 2409(a)(2).
The elements of a DCWPA retaliation claim mirror those under the FCA: a
plaintiff must establish that “(1) he engaged in ‘protected activity’; (2) his employer
knew or was reasonably on notice that he was engaged in protected activity; and (3) his
employer took adverse action against him as a result of his protected activity.” United
States ex rel. Cody v. Mantech Int’l Corp., 207 F. Supp. 3d 610, 621 (E.D. Va. 2016).
Although the case law interpreting the scope “protected activity” under 10 U.S.C. § 2409
is limited, “given the DCWPA’s statutory language (‘disclosing . . . a violation of law,
rule, or regulation’), the DCWPA would appear to include as ‘protected activity’ any
conduct protected under the FCA.” Id. Moreover, “protected activity under the
DCWPA would include a ‘disclosure’ that places an employer on objectively reasonable
notice that what is being disclosed is a ‘violation of a law, rule, or regulation related to a
Department [of Defense or NASA] contract (including the competition for or negotiation
of a contract) or grant.” Id. at 623 (quoting 10 U.S.C. § 2409(a)(l)).
Defendant contends that plaintiff’s allegations fail to establish that he was engaged
in protected activity under the DCWPA. Defendant argues that “[s]imply reporting a
possible ethical violation or breach of a contractual obligation . . . does not suffice to
establish that Plaintiff was disclosing a violation of law, rule or regulation.” Mtd. at 8.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES - GENERAL
‘O’
2:17-cv-02538-CAS(SSx)
Date August 14, 2017
DAVID LILLIE v. MANTECH INT’L. CORP. ET AL.

However, plaintiff also alleges that defendant failed to comply with federal contract rules
by accessing the third-party contractor’s “classified/proprietary” information without
authorization, and that JPL’s Brown engaged in a cover up with full knowledge that this
conduct violated federal law. FAC ¶¶ 23, 25, 32. Plaintiff further alleges that he
reported the issue to Congresswoman Judy Chu’s Office and filed a complaint with the
NASA Office of Inspector General. FAC ¶¶ 38,57. These allegations are sufficient to
demonstrate that plaintiff disclosed “a violation of law, rule, or regulation related to” a
NASA contract to several appropriate persons and entities, and consequently was
engaged in protected activity under the DCWPA. See 10 U.S.C. §§ 2409(a)(1)-(2). As
with the FCA retaliation claim, the Court concludes plaintiff’s allegations are sufficient at
this stage to demonstrate that defendant knew or was reasonably on notice that plaintiff
was engaged in protected activity and took adverse action against him as a result.
Accordingly, defendant’s motion to dismiss is DENIED as to plaintiff’s second
claim for retaliation in violation of the DCWPA.
C. California Labor Code Section 1102.5 Retaliation
Defendant moves to dismiss plaintiff’s claim for retaliation in violation of Labor
Code § 1102.5. This whistleblower statute provides, in relevant part, that “[a]n employer
. . . shall not retaliate against an employee for disclosing information . . . to a government
or law enforcement agency [or] to a person with authority over the employee or another
employee who has the authority to investigate, discover, or correct the violation or
noncompliance . . . if the employee has reasonable cause to believe that the information
discloses a violation of state or federal statute, or a violation of or noncompliance with a
local, state, or federal rule or regulation.” Cal. Lab. Code, § 1102.5(b). The statute
further provides that “[a]n employer . . . shall not retaliate against an employee for
refusing to participate in an activity that would result in a violation of state or federal
statute, or a violation of or noncompliance with a local, state, or federal rule or
regulation.” Id. § 1102.5(c). To establish a prima facie case of retaliation under §
1102.5(b), a plaintiff must show that: (1) he engaged in protected activity; (2) his
employer thereafter subjected him to an adverse employment action; and (3) a causal link
between the two. Soukup v. Law Offices of Herbert Hafif, 39 Cal. 4th 260, 287–88, 139
P.3d 30, 48 (2006).
Defendant argues that plaintiff fails to state a claim under this whistleblower
statute because “he did not make disclosures to a government or law enforcement agency

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES - GENERAL
‘O’
2:17-cv-02538-CAS(SSx)
Date August 14, 2017
DAVID LILLIE v. MANTECH INT’L. CORP. ET AL.

as required under section 1102.5.” Reply at 10; Mtd. at 8-9. This contention relies on a
prior version of section 1102.5(b), which prohibited retaliation only where the employee
disclosed violations to a government or law enforcement agency. However, amendments
enacted in 2013 expanded the scope of protected activity under section 1102.5(b), which
now includes disclosures “to a person with authority over the employee or another
employee who has the authority to investigate, discover, or correct the violation or
noncompliance.” See Robles v. Agreserves, Inc., 158 F. Supp. 3d 952, 1007 (E.D. Cal.
2016). In the FAC, plaintiff alleges that he “complained to his direct supervisor, Erik
Berg, and also complained to JPL’s Ethics Enforcement of ManTech’s unlawful use of
classified information/documents. At all times, JPLs Ethics Enforcement had the
authority to prevent ManTech from improperly accessing and using the classified
information/documents.” FAC ¶ 59. These allegations are sufficient to allege that
plaintiff was engaged in protected activity under section 1102.5(b).
The FAC also alleges that plaintiff “refused to participate in activity that would
result in violations of federal law, specifically the accessing of classified/proprietary
documents without permission.” FAC ¶ 60. Plaintiff contends that this seemingly
conclusory statement mirroring the language in section 1102.5(c) is supported by the
allegation that he refused to delete references to the third-party contractor’s protected
files from his report, and then reported Brown’s purported cover-up attempt to his
supervisor at ManTech and JPL’s Ethics Enforcement Division. Opp’n at 12. The FAC
does not specifically allege that plaintiff refused to comply with Brown’s request that he
delete references to the protected files. However, the FAC’s allegations support a
reasonable inference that once plaintiff discovered he was not authorized to access the
files, he effectively refused to participate in activity he alleges violated federal law by
lodging complaints with both his supervisor at ManTech and the JPL Ethics Enforcement
Division. Consequently, the FAC also sufficiently alleges that plaintiff was engaged in
protected activity under section 1102.5(c). As with the other statutory retaliation claims,
the Court also concludes the allegations are sufficient at this stage to satisfy the other two
elements of a prima facie case for retaliation under Labor Code § 1102.5. See Soukup,
39 Cal. 4th at 287–88.
Accordingly, defendant’s motion to dismiss is DENIED as to plaintiff’s third
claim for retaliation in violation of Labor Code § 1102.5.4

4

In opposition to defendant’s motion to dismiss, plaintiff argues for the first time
that he was retaliated against for disclosing ManTech’s misappropriation of the third 
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES - GENERAL
‘O’
2:17-cv-02538-CAS(SSx)
Date August 14, 2017
DAVID LILLIE v. MANTECH INT’L. CORP. ET AL.

D. Breach of Contract and Breach of the Implied Covenant of Good Faith and
Fair Dealing Claims
Defendant moves to dismiss plaintiff’s claims for breach of contract, breach of
implied-in-fact contract, and breach of the implied covenant of good faith and fair
dealing. Mtd. at 9-12. All of these claims are based on plaintiff’s allegation that his
“employment relationship was governed, in relevant part, by ManTech’s contractual
agreements with its employees, including but not limited to the Standards of Ethics and
Business Conduct.”5 FAC ¶¶ 65, 69, 78. Plaintiff contends this policy document created
an enforceable contract by “requir[ing] employees to alert ManTech to ethical problems
or compliance issues, agreeing, in exchange, that they will not suffer retaliation for
raising such concerns.”6 Id. ¶¶ 65, 69, 78. Plaintiff alleges that defendant breached this

party contractor’s trade secrets in violation of the California Uniform Trade Secrets Act,
Cal. Civ. Code § 3426 et seq. Opp’n at 1-7. In light of the Court’s order denying
defendant’s motion to dismiss plaintiff’s statutory retaliation claims, the Court need not
reach this assertion.
5
The FAC references ManTech’s Standards of Ethics and Business Conduct
extensively but the document was not attached as an exhibit. See FAC ¶¶ 65, 66, 69.
Defendant attached a copy of the document with a supporting affidavit to its motion to
dismiss. Mtd. Ex. A. In ruling on a Rule 12(b)(6) motion, a court generally cannot
consider material outside of the complaint. See Branch v. Tunnell, 14 F.3d 449, 453 (9th
Cir. 1994). A court may, however, consider exhibits submitted with the complaint. See
id. at 453–54. Also, a court may consider documents which are not physically attached to
the complaint but “whose contents are alleged in [the] complaint and whose authenticity
no party questions.” Id. at 454. Because the FAC relies on the contents of ManTech’s
Standards of Ethics and Business Conduct and plaintiff does not dispute the authenticity
of the version attached to defendant’s motion, the Court will consider defendant’s
attached exhibit.
6

The Standards of Ethics and Business Conduct notes that “ManTech and its
employees are required by law to protect U.S. Government classified information, as well
as many forms of technical and sensitive Government data” and informs employees that
they should contact a security officer “to report a potential or actual violation of the
security regulations and/or laws relating to the handling of classified or non-classified
Government information.” FAC ¶ 66; Mtd. Ex. A at 7. The document further states that

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES - GENERAL
‘O’
2:17-cv-02538-CAS(SSx)
Date August 14, 2017
DAVID LILLIE v. MANTECH INT’L. CORP. ET AL.

contractual obligation by terminating his employment “for reporting the unlawful use of
classified information and documents both internally at ManTech and to JPL Ethics
Enforcement.” Id. ¶ 74. However, as defendant argues in its motion to dismiss, the
Standards of Ethics and Business Conduct also contains an express disclaimer, which
states, under the heading “No Rights Created,” that “[t]he Standards of Ethics and
Business Conduct . . . are not intended to and do not create obligations to or rights in any
employee.” Mtd. Ex. A at 9. Defendant argues that this disclaimer forecloses plaintiff’s
breach of contract and implied covenant claims as a matter of law. Mtd. at 9-12.
“California law presumes at-will employment where contract terms do not specify
otherwise.” Xin Liu v. Amway Corp., 347 F.3d 1125, 1138 (9th Cir. 2003). Although “a
company policy, such as that evidenced in a handbook or employer policy memorandum,
may give rise to a contract between employer and employee,” Karrer v. Best Buy Co.,
No. LA CV 11-07697 JAK, 2012 WL 1957586, at *3 (C.D. Cal. May 24, 2012), courts
have generally held that a policy containing an express disclaimer creates no enforceable
contractual rights. For example, in Bianco v. H.F. Ahmanson & Co., 897 F. Supp. 433
(C.D. Cal. 1995), the court concluded an employee handbook was not a contract based on
the following statement: “The language used in this Handbook is not intended to
constitute or create, nor is it to be construed to constitute or create, the terms of an
employment contract between the Company and/or its affiliates and any of its
employees.” Id. at 439. The court observed: “ ‘It is the most fundamental principle of
contract law that there can be no legally enforceable obligation without a promise, a
commitment to future behavior.’ An employee handbook which states on its face that it
‘is not intended to constitute or create, nor is it to be construed to constitute or create, the
terms of an employment contract’ cannot be a promise or a commitment to future
behavior.” Id. at 439-440; see also Ashbey v. Archstone Property Management, Inc., No.
SACV 12–0009 DOC (RNBx), 2012 WL 1269122, *6 (C.D. Cal. Apr. 13, 2012)
(“several California courts and district courts in California hold that no contract is created
where an employer’s documents state that its handbook does not create contractual rights,
even if an employee signs a form agreeing to adhere to the employment handbook’s
policies”).

“[a]ll ManTech employees are required . . . to report potential violations of these
Standards. As part of our Standards and in accordance with our policies, ManTech
pledges to protect any employee making a good faith report from any type of retaliatory
action.” FAC ¶ 65; Mtd. Ex. A at 4.   

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES - GENERAL
‘O’
2:17-cv-02538-CAS(SSx)
Date August 14, 2017
DAVID LILLIE v. MANTECH INT’L. CORP. ET AL.

Plaintiff’s claim for breach of contract alleges that the purported agreement not to
retaliate against good faith complainants was express and memorialized in ManTech’s
Standards of Ethics and Business Conduct. FAC ¶ 65; Opp’n at 12. But in view of the
express disclaimer in the Standards of Ethics and Business Conduct, plaintiff cannot state
a claim for breach of contract because the document created no enforceable contractual
rights. Plaintiff also alleges that defendant breach an implied-in-fact contract because he
“reasonably relied on the policies in the Standards of Ethics and Business Conduct, as the
terms and conditions of his employment.” FAC ¶ 65. Although an implied-in-fact
contract may be established by examining the “totality of the circumstances” surrounding
the parties’ conduct, see Foley v. Interactive Data Corp., 47 Cal. 3d 654, 681, 765 P.2d
373, 388 (1988), plaintiff cannot state a claim for breach of implied contract by relying
exclusively on a policy document containing an express disclaimer. Finally, plaintiff’s
claim that defendant breached the implied covenant of good faith and fair dealing also
necessarily fails because the covenant is an implied contract term, and plaintiff cannot
allege the existence of either an express or implied contract based solely on the policy
document. See Guz v. Bechtel Nat. Inc., 24 Cal. 4th 317, 349–50, 8 P.3d 1089, 1110
(2000).7
Accordingly, defendant’s motion to dismiss is GRANTED as to plaintiff’s fourth,
fifth, and sixth claims for breach of contract, breach of implied-in-fact contract, and
breach of the implied covenant of good faith and fair dealing.
V.

CONCLUSION

In accordance with the foregoing the Court GRANTS in part and DENIES in part
defendant’s motion to dismiss. Specifically, the Court DENIES defendant’s motion to
dismiss plaintiffs’ first, second, and third claims. The Court GRANTS defendant’s
motion to dismiss plaintiff’s fourth, fifth, and sixth claims and DISMISSES those claims
WITHOUT PREJUDICE. If plaintiff believes that he may cure the deficiencies in his

7

Even though plaintiff fails to state a claim for breach of contract based on the
allegations in his complaint, the Court construes those allegations to be more in the
nature of a tort claim for wrongful discharge in violation of public policy. See Tameny v.
Atl. Richfield Co., 27 Cal. 3d 167, 610 P.2d 1330 (1980). An employer’s obligation to
refrain from discharging an employee in violation of public policy does not depend on the
terms and conditions of the employment contract. See Foley, 47 Cal. 3d at 667–68.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES - GENERAL
‘O’
2:17-cv-02538-CAS(SSx)
Date August 14, 2017
DAVID LILLIE v. MANTECH INT’L. CORP. ET AL.

claims for breach of contract, breach of implied-in-fact contract, and breach of the
implied covenant of good faith and fair dealing, he is hereby granted thirty days (30) in
which to file an amended complaint addressing the deficiencies in those claims. Failure
to file an amended complaint may result in dismissal of these claims with prejudice.
IT IS SO ORDERED.
00
Initials of Preparer

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:
CMJ

04

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