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Eric W. Payne v. District of Columbia

March 29, 2011


The opinion of the court was delivered by: Paul L. Friedman United States District Judge


This matter is before the Court on defendants' motion to dismiss and plaintiff's motion for leave to file a second amended complaint. The Court heard oral argument on these two motions on March 25, 2011, and took them under advisement. Upon review of the parties' papers, the oral arguments presented by counsel, the relevant legal authorities, and the entire record in this case, the Court will grant in part and deny in part defendants' motion to dismiss and will deny plaintiff's motion for leave to file a second amended complaint.*fn1


The District of Columbia Office of the Chief Financial Officer ("OCFO") is "responsible . . . for the supervision and operation of the procurement process for the D.C. Lottery and Charitable Games Board . . . ." Am. Compl. ¶ 3. Plaintiff Eric W. Payne began his career with the OCFO as an Assistant General Counsel in August 2004. Id. ¶ 5. Subsequently, in May 2006, Mr. Payne became the Director of Contracts for the OFCO. Id. ¶ 10. Then, in December 2006, Mr. Payne was appointed as a member of the District of Columbia Procurement Reform Task Force and "was also asked to represent the OCFO in crafting a response to an independent review of District procurement practices conducted by the Federal Government Accountability Office . . . ." Id. ¶ 13. As an Assistant General Counsel and then as the Director of Contracts, Mr. Payne "was responsible for advising, reviewing and opining on the legal sufficiency of all OCFO procurement related actions, including contracts submitted for D.C. Council review and approval." Id. ¶ 5.

As Mr. Payne describes, in late 2005 and early 2006, "there were a series of security breaches that occurred involving the D.C. Lottery and the printing of fraudulent lottery tickets." Am. Compl. ¶ 18. Mr. Payne was asked to assist defendant Dr. Natwar Gandhi, the District's Chief Financial Officer, "in crafting a response to each security issue" and to take appropriate action with respect to the contractor supplying the operating system, Lottery Technology Enterprises ("LTE"). Id. A subsequent investigation by an independent firm uncovered a security flaw in the system that allowed fraudulent lottery tickets to be printed. Id. ¶ 20. "Following these security breaches, Dr. Gandhi instructed [Mr. Payne] to terminate the contract with LTE and specifically stated that he wanted to have this contract end 'as quickly as possible.'" Id. ¶ 21.

Mr. Payne then began the procurement process for a new lottery contract. See Am. Compl. ¶¶ 22, 24. According to Mr. Payne, Dr. Gandhi expressly directed him not to select LTE as the vendor for the new contract. Id. ¶ 23. Mr. Payne, however, "refused to follow the CFO's directive and informed him that he could not legally pre-determine th[e] contract award and that the decision would have to be based on the merits as delineated in the Request for Proposals . . . ." Id. ¶ 24.

After the contract bidding ended on September 20, 2007, the District received two contract bids, one from LTE and another from W2I. Am. Compl. ¶ 26. "LTE, the incumbent, was a joint venture comprised of New Tech Games, Inc., Opportunity Systems, Inc., and GTECH Corporation. W2I, the other offeror, was a joint venture comprised of W2Tech, LLC and Intralot." Id. An independent panel within the OCFO examined these two bids and concluded that the W2I offer "was the most advantageous for the District." Id. ¶ 27. Mr. Payne then conducted an independent review and concluded that "W2I offered a technically superior proposal saving the District more than $40,000,000 over the next 10 years over the current LTE contract." Id. ¶ 28. Mr. Payne informed Dr. Gandhi and other senior staff of the solicitation results in January 2008 and "formally issued a contract award decision [to W2I] thereafter." Id. ¶ 29.

Subsequently, Mr. Payne alleges, Dr. Gandhi's General Counsel informed Mr. Payne that the contract "would be approved by utilizing a D.C. Council process in contravention of the law." Am. Compl. ¶ 30. It later appeared clear to Mr. Payne that certain D.C. Councilmembers were opposed to the proposed contract because of the involvement of W2Tech. Id. ¶ 31. And, according to Mr. Payne, various senior staff, including Dr. Gandhi, subsequently instructed Mr. Payne "to either reconsider his award decision or to cancel the proposed contract award and re-open the solicitation process." Id. ¶ 33. Mr. Payne says that he repeatedly advised all parties that there was no legal basis for either action. Id. Eventually, the D.C. Council voted and disapproved the contract. Id. ¶ 59.

In the meantime, on April 9, 2008, Mr. Payne met with OCFO officials regarding information technology contracts. Am. Compl. ¶ 34. During the course of this meeting, according to Mr. Payne, "an egregious instance of contractor fraud was brought" to the attention of Mr. Payne and his supervisor, Paul Lundquist, the Executive Director of the Office of Management and Administration. Id. They both agreed that Mr. Payne "should take the unprecedented step of reporting his concerns to the Office of Integrity and Oversight ("OIO"), the OCFO's internal security arm." Id. Mr. Payne and Mr. Lundquist "believed that OCFO's management intentionally circumvented [the] District's contract procurement rules and regulations, and failed to prevent waste and fraudulent practices." Id.

Mr. Payne reported his concerns to the OIO - which, he alleges, then resulted in a series of retaliatory actions and ultimately Mr. Payne's termination. See Am. Compl. ¶¶ 36, 66. Mr. Payne asserts that when Dr. Gandhi found out that Mr. Payne had filed a complaint with the OIO, Dr. Gandhi immediately met with Mr. Lundquist and Mr. Lundquist's supervisor, Angell Jacobs, "and instructed . . . that [Mr. Payne's] tenure within the OCFO needed to end as soon as practicable." Id. ¶ 36. Then, Mr. Payne asserts, in April or May 2008 a retaliatory complaint was lodged against him by Dr. Gandhi's General Counsel, id. ¶ 37;

Mr. Payne was subsequently informed in June 2008 that criminal investigations had been launched against him, id. ¶¶ 48, 51; and Mr. Payne was no longer assigned any meaningful tasks. Id. ¶ 56. While these purported retaliatory actions were taking place, Mr. Payne was asked to "sign and backdate" various procurement contracts, but Mr. Payne refused to do so, "noting that such signatures after the fact of the contract were illegal." Id. ¶ 64.

Mr. Payne was terminated, effective immediately, during a meeting on January 9, 2009. Am. Compl. ¶ 66. The human resources director, two armed security guards, the deputy human resources director, Mr. Lundquist, and his assistant all "stood prominently and publicly in [Mr. Payne's] small office and supervised his removal." Id. ¶ 67. Since Mr. Payne's termination, he alleges that the OCFO "made several defamatory statements about [him] to the public through major area newspapers," id. ¶ 68, which "impugned [his] reputation and marketability in the work place." Id. ¶ 69. The Washington Post article at issue included a statement from Mr. Payne that he and other D.C. officials were pressured to reopen the lottery contract for bids, as well as a statement in response from the CFO's office that "'[n]o member of the City Council or their staffs nor anyone from the executive branch has made any attempt to influence the [contract bidding process] in any way . . . .'" See Mot., Ex. A, Tim Craig & Nikita Stewart, Rule Changes May Help LTE Keep Contract, WASH. POST, Apr. 20, 2009; see Am. Compl. ¶ 68. Mr. Payne asserts that this latter statement "was false and effectively stated that [Mr. Payne] lied about . . . facts." Am. Compl. ¶ 68.

Mr. Payne filed his complaint in this Court on April 30, 2010 against the District of Columbia and Dr. Gandhi. Prior to any action by defendants, Mr. Payne filed an amended complaint on May 26, 2010. Mr. Payne's amended complaint states five claims arising from his termination: constitutional defamation, in violation of 42 U.S.C. § 1983 (Count I); retaliatory termination, in violation of the D.C. False Claims Act, D.C. Code § 2-308.16 (Count II); retaliatory termination, in violation of the D.C. Whistleblower Protection Act, D.C. Code § 1-615.51, et seq. (Count III); wrongful termination against public policy (Count IV); and intentional infliction of emotional distress (Count V).*fn2

Defendants have filed a motion to dismiss for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure. After briefing on this motion was complete, Mr. Payne filed a motion for leave to file a second amended complaint under Rule 15.


A. Rule 12(b)(6)

Rule 12(b)(6) of the Federal Rules of Civil Procedure allows dismissal of a complaint if a plaintiff fails "to state a claim upon which relief can be granted." FED. R. CIV. P. 12(b)(6). "Federal Rule of Civil Procedure 8(a)(2) requires only 'a short and plain statement of the claim showing that the pleader is entitled to relief,' in order to 'give the defendant fair notice of what the . . . claim is and the grounds upon which it rests . . . .'" Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)); see also Erickson v. Pardus, 551 U.S. 89, 93-94 (2007). Although "detailed factual allegations" are not necessary to withstand a Rule 12(b)(6) motion to dismiss, Bell Atlantic Corp. v. Twombly, 550 U.S. at 555, the complaint "must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (citation omitted).

On a motion to dismiss under Rule 12(b)(6), the Court "must accept as true all of the factual allegations contained in the complaint." Erickson v. Pardus, 551 U.S. at 94; see also Bell Atlantic Corp. v. Twombly, 550 U.S. at 555. The complaint "is construed liberally in the [plaintiff's] favor, and [the Court should] grant [the plaintiff] the benefit of all inferences that can be derived from the facts alleged." Kowal v. MCI Commc'ns Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994). Nevertheless, the Court need not accept inferences drawn by the plaintiff if those inferences are unsupported by facts ...

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