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Tort – Defamation – Conspiracy – Government Contract Billing

A government contractor has absolute immunity from civil liability for defamation for statements about plaintiff’s billing practices in response to a government contracting officer’s immunity, and defendant contractor’s consultant agreement with plaintiff also allowed defendant’s contracts manager to make the statements, says an Alexandria U.S. District Court.

The court also dismisses plaintiff’s claim for statutory business conspiracy because plaintiff’s allegations fail to plausibly suggest a conspiracy under Va. Code § 18.2-499 and the parties’ consultant agreement allowed defendant to terminate its contract with plaintiff at will.

Under its government contract, defendant provided the Department of the Army with a performance management system program known as the Strategic Management System Program. Defendant entered into a contract with plaintiff to provide certain services on the contract. Beginning in 2008, a government contract manager suspected plaintiff was improperly billing the government for time he did not work. The manager provided a memorandum and supporting documents regarding what he deemed to be plaintiff’s purposeful financial misconduct, specifically, the falsification of invoices relating to the number of hours worked. On Nov. 13, 2008, defendant gave plaintiff a two-week written notice of intent to terminate their consultant agreement based on plaintiff’s fraudulent billings for work not actually performed.

The court dismisses the defamation claim. In Mangold v. Analytic Services, 77 F.3d 1442 (4th Cir. 1996), the 4th Circuit extended the doctrine of absolute immunity to private persons under contract with the government. As in Mangold, the allegedly defamatory statements here stemmed from an official government contract fraud inquiry. There was no ambiguity as to the government letter’s origin – it came from the program officer acting on behalf of the government – and purpose – to inquire into plaintiff’s alleged fraudulent billings. Also, the government required defendant contractor to report its findings if the allegations concerning plaintiff had merit.

Even if defendant does not enjoy absolute immunity, the court dismisses the defamation count because the consultant agreement contained an “ETHICS” provision that permitted defendant’s contracts manager to make the alleged defamatory statements at issue in this case.

The court also dismisses the business conspiracy claim. The complaint is devoid of factual allegations suggesting when or how defendant and the government official entered into an agreement to act jointly to maliciously injure plaintiff or his business. Where defendant was the government program’s prime contractor while plaintiff was merely a consultant hired at will, it is unclear what motive defendant would have to enter into an agreement with a government official to harm plaintiff or his business. The absence of any economic incentive for these two defendants suggests a lack of motive to injure plaintiff and his business. The court finds that a business conspiracy is implausible and insufficiently pled, and fails to satisfy the pleading standards of Twombly and Iqbal and Rule 9(b)’s particularity requirement.

Scharpenberg v. Carrington (Lee, J.) No. 1:09cv1058, Feb. 12, 2010; USDC at Alexandria, Va. VLW 010-3-079, 17 pp.

VLW 010-3-079

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