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Potts v. Center for Excellence in Higher Education, Inc.

United States District Court, D. Colorado

March 24, 2017

DEBBI POTTS, a Colorado resident, Plaintiff,
v.
CENTER FOR EXCELLENCE IN HIGHER EDUCATION, INC., an Indiana Corporation f/k/a CollegeAmerica Denver, Inc., Defendants.

          ORDER

          R. Brooke Jackson United States District Judge

         This order addresses defendant's motion to dismiss [ECF No. 11]. For the reasons given below, the motion is GRANTED.

         BACKGROUND

         Debbi Potts worked as a campus director for CollegeAmerica, a predecessor to the Center for Excellence in Higher Education (“the Center”), for several years until resigning on July 16, 2012. ECF No. 1 at ¶¶ 7, 13. The Center operates a number of for-profit colleges in the United States. Id. ¶ 8. Ms. Potts claims she resigned because she was upset by the Center's business practices, which she believes violate Title IV of the Higher Education Act of 1965. Id. ¶ 13. A month later, the Center's Chief Executive Officer negotiated an agreement (“the Agreement”) with Ms. Potts regarding unpaid wages, unemployment compensation, and other employment matters. Id. ¶ 17. Under the Agreement, Ms. Potts received $7, 000 in exchange for a promise to (1) “refrain from . . . contacting any governmental or regulatory agency with the purpose of filing any complaint or grievance” concerning the Center's business practices; (2) “direct any complaints or issues against [the Center] that may arise with disgruntled staff, students, or the public at large to” the Center's complaint hotline; and (3) “not intentionally with malicious intent . . . disparage the reputation of” the Center. Id. ¶ 21; ECF No. 12 at 4. Nevertheless, on February 27, 2013 Ms. Potts filed a complaint with the Center's accrediting agency alleging that the Center provided false information to the agency in violation of the False Claims Act (“FCA”). ECF No. 1 at ¶ 22.

         On March 25, 2013 the Center filed a lawsuit in state court against Ms. Potts for breach of the Agreement. Id. ¶ 34. The Center initially claimed only that Ms. Potts violated the Agreement's non-disparagement provision by publishing written statements to another former employee of the Center. ECF No. 12 at 5. But when the Center later learned of Ms. Potts' report to the accrediting agency, it moved to amend its complaint. Id. Its motion was granted, and on February 4, 2014 the Center filed an amended complaint alleging that Ms. Potts also violated the Agreement by reporting the Center to the accrediting agency. ECF No. 1 at ¶¶ 36-37.

         On July 12, 2016 Ms. Potts filed suit in this Court claiming that the Center violated the FCA's anti-retaliation provision by harassing her with the state court lawsuit. Id. ¶ 1. Ms. Potts claims she engaged in protected activity when she reported the Center to its accrediting agency, and the Center unlawfully retaliated by amending its complaint to punish her for this protected activity. Id. ¶ 55-56. Defendants have responded with a motion to dismiss. ECF No. 11.

         STANDARD OF REVIEW

         To survive a 12(b)(6) motion to dismiss, the complaint must contain “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). While the Court must accept the well-pleaded allegations of the complaint as true and construe them in the light most favorable to the plaintiff, Robbins v. Wilkie, 300 F.3d 1208, 1210 (10th Cir. 2002), purely conclusory allegations are not entitled to be presumed true, Ashcroft v. Iqbal, 556 U.S. 662, 681 (2009). However, so long as the plaintiff offers sufficient factual allegations such that the right to relief is raised above the speculative level, he has met the threshold pleading standard. See Twombly, 550 U.S. at 556.

         ANALYSIS

         In support of its motion to dismiss, the Center argues: 1) the FCA's anti-retaliation provision does not apply to post-employment retaliation; 2) Ms. Potts' claim is barred by the statute of limitations; 3) Ms. Potts waived her right to bring an FCA retaliation claim; and 4) Ms. Potts fails to allege an element of her retaliation claim-that the Center knew she was acting in furtherance of the FCA by reporting the Center to the agency. ECF No. 12 at 2-3. I agree that the first argument is dispositive, so I need not address the Center's three other defenses.

         A. Post-Employment Retaliation.

         The FCA imposes liability on organizations that knowingly defraud the government. See 31 U.S.C. § 3729(a)(1)(A)-(B). Because employees are often in the best position to identify and report fraud, the FCA contains a whistleblower provision that protects them from retaliation by these organizations. Id. § 3730(h)(1). This anti-retaliation provision states:

Any employee, contractor, or agent shall be entitled to all relief necessary to make that employee, contractor, or agent whole, if that employee, contractor, or agent 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, contractor, agent or associated others in furtherance ...

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