Fifth Circuit Holds It Lacks Subject Matter Jurisdiction To Review False Claims Act Retaliation Claim By Former Contractor Employee

• Published date: 25 March 2024
• Law Firm: Jenner & Block
• Author: Mr Moshe Broder, Shreve Ariail, Jeremy Gordon and Rachael J. Hanna

In a case that underscores the judiciary's deference to the executive branch's broad power to protect national security and control access to classified information, a three-judge panel of the US Court of Appeals for the Fifth Circuit affirmed a district court's decision that the court lacked subject-matter jurisdiction to consider a former employee's retaliation claim against a defense contractor under the False Claims Act ("FCA") because the government's decision to revoke his security clearance was the reason for his termination. The case, United States ex rel Johnson v. Raytheon, shows that courts are reluctant to second-guess national security decision-making even in the context of a private employment dispute.

Dana Johnson was employed by Raytheon as an engineer providing support to the Navy on an Advanced Sensor Technology ("AST") contract, a Special Access Program ("SAP") that requires that personnel hold top-secret security clearances. Johnson witnessed conduct that led him to believe that Raytheon had made fraudulent representations to the Navy, and Johnson reported his concerns to supervisors. Johnson claims that Raytheon then retaliated against him by reporting him to the Navy for suspected security violations, triggering a Navy investigation and then the government's revocation of his top-secret security clearance. After the Navy completed its investigation, Raytheon conducted its own disciplinary investigation based on the Navy's findings and terminated Johnson's employment, despite Johnson's claim that he could have been transferred to other projects that did not require a security clearance. Johnson filed a qui tam action on behalf of the United States and a retaliation claim under the FCA's whistleblower provision, which encourages those with knowledge of fraud against the government to come forward and provides various forms of relief if faced with retaliation. Johnson also alleges that he was qualified to work on other projects for Raytheon that did not require a security clearance, and therefore he should not have been terminated.

A majority of the judges agreed with the district court that it did not have subject matter jurisdiction to consider the merits of the case. The court reasoned that it could not scrutinize whether Raytheon's proffered reasons for monitoring, reporting, and ultimately terminating Johnson were pretextual. In this regard, considering these reasons would necessarily require scrutinizing the Department of Defense's ("DoD") reasons for revoking his security clearance. The Fifth Circuit cited Department of the Navy v. Egan, 484 U.S. 518 (1988), a case concerning a federal employee who held a position with the Navy that required a security clearance and who was consequently terminated when the Navy denied him a clearance. There, the Supreme Court held that the Merit System Protection Board lacked authority "to review the substance of an underlying decision to deny or revoke a security clearance in the course of reviewing an adverse action" taken against a federal employee. In Egan, the...