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Washington Whistleblower Uses State Supreme Court Ruling to Restore Retaliation Claims

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On September 29, 2015, a federal judge in Washington revived a state retaliation claim against a contractor accused of False Claims Act (FCA) violations, citing a recent Washington State Supreme Court ruling that overturned a previous decision that would have made the FCA retaliation provision the plaintiff’s sole avenue for relief.

Maxmillian Salazar III had sued federal fire-safety contractor Monaco Enterprises, Inc. under the federal False Claims Act based on allegations that the company overbilled the U.S. Government.  Salazar also alleged that Monaco fired him, in violation of Washington state common law, for reporting the overbilling.  In October 2011, the company had fired Salazar, its former Director of Application Engineering, after he reported overbilling he witnessed while performing work related to Monaco’s procurement process.

Under Washington state precedent in place since the decision in Cudney v. Alsco, Inc., 259 P.3d 244 (Wash. 2011), Salazar was barred from bringing the state retaliation claim because the FCA includes its own anti-retaliation provision (31 U.S.C. § 3730(h)).  Cudney held that a plaintiff could not bring a claim of wrongful discharge in violation of public policy under Washington state common law if an alternate remedy for the retaliatory filing existed under any state or federal statute.

However, on September 17, 2015, the state Supreme Court overturned Cudney in Rose v. Anderson Hay & Grain Co., 2015 WL 5455681 (Wash. Sept. 17, 2015).  In Rose, the Court held that a plaintiff did not have to establish that no alternate statutory remedies were available in order to pursue a common law claim of wrongful discharge.

In Salazar’s case against Monaco, Senior District Judge Lonny Sukooriginally ruled against Salazar in March 2014 based on the precedent established by Cudney.  But when Salazar sought to reinstate his state common law retaliation claim following the Rose decision, Judge Suko ruled that Cudney’s reasoning – under which the FCA would have provided the exclusive remedy available to Salazar for a retaliatory firing – was no longer valid.

In light of Rose and Judge Suko’s ruling in Salazar, other whistleblowers in Washington who received unfavorable decisions under the Cudney precedent may seek to have their claims reinstated.

The case is Maximillian Salazar III v. Monaco Enterprises Inc. et al., No. 2:12-cv-0186-LRS 2015 WL 5716000 (E.D. Wash. 2015).

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