United States: Third Circuit Requires But-For Causation For False Claims Act/Off Label Retaliatory Claim

Last Updated: January 10 2018
Article by Stephen J. McConnell

Today we are talking about a case that is not exactly in the heartland of what we generally examine. It is not a product liability or mass tort case. But it is reasonably close. It is kind of an off label promotion/False Claims Act case. Okay, let's admit what it really is: a wrongful discharge/employment case. The plaintiff alleged that she was constructively discharged because she blew the whistle on what she perceived to be unlawful off label promotion. The notion of causation is front and center. The causation issue is always near and dear to our defense hearts.

And yet. And yet. Not so long ago we watched a mock jury reach agreement that whether or not the product caused the plaintiff's injury, the mock jurors were hell-bent on awarding damages. The jury decided that there were things about the company's conduct that could be improved, and their verdict would set such improvements in motion. Swell. The mock jurors were essentially mocking the jury instructions. Causation-schmausation. We shudder at the realization that real, not mock, jurors also do this. Every. Damned. Day.

Today's case is also literally near to us, because it was authored by the Third Circuit, which is just down the street from several of us DDL blogsters. It is also apparently a decision of first impression on the appellate level — that a "but for" (and not a lesser "motivating factor") causation standard is necessary for FCA retaliatory discharge claims. So sit back and take in this DDL-adjacent blogpost, wherein we lay out a significant ruling on a significant issue by a significant court.

The case is DiFiore v. CSL Behring, LLC, 2018 U.S. App. LEXIS 92 (3d Cir. Jan. 3, 2018), and is primarily focused on the federal False Claims Act (FCA) anti-retaliation provision protecting employee-whistleblowers who engage in activity protected by the FCA.The district court granted summary judgment in favor of the employer on the wrongful discharge claim because the plaintiff had failed to show constructive discharge as a matter of law. Then the FCA retaliation claim proceeded to trial. The judge instructed the jury that the FCA retaliation provision required that protected activity be the "but-for" cause of adverse actions against the employee. In the jury instruction, the judge listed some, but not all, of the alleged adverse actions. The jury found in favor of the employer. On appeal, the employee raised three arguments: (1) the court improperly granted summary judgment on the state law wrongful discharge claim; (2) the but-for causation standard for retaliation was too exacting; and (3) the court erred by not listing all the alleged adverse actions in its jury instruction. That middle issue is the reason you are reading about the DiFiore case on the DDL. Otherwise, you'd have to run to an Employment Discrimination Law (EDL) blogpost to find out about it.

The Third Circuit rejected these arguments and affirmed the decisions below. We will get to the Third Circuit's analysis momentarily, but let's first supply a bit more background. The plaintiff in DiFiore had risen to Director of Marketing. That's a pretty high position for a whistle-blower. The plaintiff took issue with what she saw as off-label marketing strategies, such as reference to off label sales in forecasts. The plaintiff expressed her concerns to her supervisors, and she claimed in her lawsuit that the company initiated a third-party compliance audit in part because of her complaints. So far so good. But the plaintiff contended that, as a consequence of her protected conduct, she suffered several adverse employment actions, including warning letters about her interactions with other employees and failure to pay off her company credit card charges, an uncharacteristically poor performance review, deteriorating relationships with supervisors, diminution of duties, removal from a committee, and a Performance Improvement Plan (PIP) that she interpreted to be a death knell. The PIP required improvement the designated areas within 45 days or she could be subject to discipline up to and including termination. According to the plaintiff, most employees hit with a PIP were eventually terminated. After receiving the PIP, the plaintiff reached out to a supervisor and an HR employee and requested a meeting to discuss an amicable separation. The meeting was canceled for unspecified reasons. Then the plaintiff resigned. Then the plaintiff sued.

1. Wrongful discharge

The plaintiff in DiFiore was not actually fired, so she needed to allege constructive discharge. Under Pennsylvania law, constructive discharge occurs when working conditions "are so intolerable that a reasonable employee is forced to resign." The court concluded that while the plaintiff might have been subjected to difficult or unpleasant working conditions, those conditions fell well short of being unbearable. You might (certainly a plaintiff lawyer would) suggest that the difference between unpleasant and unbearable could be a jury question. But the court emphasized that the plaintiff "did not sufficiently explore alternative solutions or means of improving her situation. She made no attempt to comply with the PIP." She chose to resign rather than reschedule the canceled meeting. None of that was disputed. Based on those facts, the court held that no reasonable jury could find constructive discharge.

2. But-for Causation for Retaliation

This is the issue that most interests us. We more than occasionally noodle over False Claims Act cases, off label promotion, and a little thing called causation. Under the FCA's anti-retaliation provision, an employee is entitled to relief if she was "discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts" conducted in furtherance of an FCA action. 31 U.S.C. § 3730(h)(1). The district court (we are in an Inn of Court with this Judge, and he is lightning smart and relentlessly fair, by the way) ruled that the plaintiff was required to show that her protected activity was the "but-for" cause of an adverse action. Thus, that standard found a home in the jury instructions. The plaintiff in DiFiore argued that a lower standard applies and she should have been required to prove only that her protected activity was a "motivating factor" in the adverse actions taken by the employer. That "motivating factor" resides as dicta in an earlier Third Circuit decision, but in the meantime SCOTUS came out with a pair of decisions interpreting identical "because of" language in similar statutes (ADEA and Title VII) to require that illegal motive (age-ism or retaliation) be the "but-for" cause of the employer's adverse action. Even if the earlier Third Circuit "motivating factor" language was not mere dicta, the intervening SCOTUS precedents controlled (there was no need for an en banc call), so the district court got it right. The jury was properly instructed, and the defense verdict was affirmed. Lesson for DDL practitioners: even if you do not do much employment work, remember that statutory "because of" language translates into a but-for standard.

3. Listing of adverse employer actions

The plaintiff contended that the district court's inclusion of only four of the alleged adverse employer actions in the jury instructions—the two warning letters, the mid-year performance review, and the PIP—may have confused the jurors and led them to believe that they were not permitted to consider evidence of other incidents beyond those four events. But the Third Circuit took in the totality of the circumstances below, including that the district court correctly instructed the jury that its determination should take into account the totality of the circumstances. The district court instructed the jury that the four events occurred "among other things." The district court's list was, on its face, illustrative, not exhaustive. It is hard to say that the district court got it wrong, and it is impossible to say that the omission of certain examples was prejudicial. The district court's failure to follow the plaintiff's list exactly could not be a basis for reversal.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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