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Hickman v. Spirit of Athens Alabama, Inc.

United States District Court, N.D. Alabama, Northeastern Division

February 22, 2019

DANA HICKMAN and ROBBIN N. HINES, Plaintiffs,
v.
SPIRIT OF ATHENS ALABAMA, INC., Defendant.

          MEMORANDUM OPINION

          MADELINE HUGHES HAIKALA UNITED STATES DISTRICT JUDGE

         Defendant Spirit of Athens, Alabama, Inc. is a 501(c)(3) non-profit corporation that provides economic development services to the city of Athens, Alabama. Plaintiff Dana Hickman served as the executive director for Spirit of Athens, and plaintiff Robbin Hines served as Ms. Hickman's assistant until Spirit of Athens terminated both of the plaintiffs. The plaintiffs allege that Spirit of Athens terminated them because they voiced concerns about the organization's misuse of funds. Ms. Hickman and Ms. Hines bring this action against Spirit of Athens under the False Claims Act's anti-retaliation provision. 31 U.S.C. § 3730(h).

         “Liability under the False Claims Act arises from the submission of a fraudulent claim to the government” of the United States. Corsello v. Lincare, Inc., 428 F.3d 1008, 1012 (11th Cir. 2005). “Indeed, the ‘central question' regarding whether a relator's allegations state a claim [] is, did the defendant present (or caused to be presented) to the government a false or fraudulent claim for payment?” Urquilla-Diaz v. Kaplan Univ., 780 F.3d 1039, 1052 (11th Cir. 2015) (quoting Hopper v. Solvay Pharm., Inc., 586 F.3d 1318, 1326 (11th Cir. 2009)). In a motion to dismiss that it filed shortly after the plaintiffs filed their complaint, Spirit of Athens argued that it could not be sued under the False Claims Act because the corporation does not receive federal funds. (Doc. 6, p. 1). The Court denied Spirit of Athens's motion but ordered the parties to engage in limited discovery concerning the extent to which Spirit of Athens receives federal funds. (Doc. 16).

         Based on the information that the parties gathered during discovery, Spirit of Athens has renewed its argument. Spirit of Athens asks the Court to enter judgment in its favor pursuant to Rule 56 of the Federal Rules of Civil Procedure, arguing again that it is not subject to suit under the FCA. (Doc. 28). For the reasons discussed below, the Court finds that the plaintiffs cannot maintain their retaliation claim against Spirit of Athens because the plaintiffs have not engaged in activity that is protected under the FCA.

         I. SUMMARY JUDGMENT STANDARD

         “The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). To demonstrate that there is a genuine dispute as to a material fact that precludes summary judgment, a party opposing a motion for summary judgment must cite “to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials.” Fed.R.Civ.P. 56(c)(1)(A). When considering a summary judgment motion, a district court must view the evidence in the record and draw reasonable inferences in the light most favorable to the non-moving party. Asalde v. First Class Parking Sys. LLC, 898 F.3d 1136, 1138 (11th Cir. 2018). “The court need consider only the cited materials, but it may consider other materials in the record.” Fed.R.Civ.P. 56(c)(3).

         II. FACTUAL BACKGROUND

         Spirit of Athens is a non-profit corporation tasked with revitalizing downtown Athens, Alabama. (Doc. 25-1, p. 13; Doc. 25-2, p. 7, tp. 23; Doc. 27-9, p. 7, tp. 23). Spirit of Athens receives funding from the City of Athens; Limestone County, Alabama; TVA “in-lieu-of-taxes” funds; and membership dues. (Doc. 27- 9, p. 7, tpp. 22-23; Doc. 27-1, p. 8, tp. 26; Doc. 26-6, pp. 7, 15 (2014 tax return); Doc. 26-7, pp. 9, 32 (2015 tax return)).

         TVA “in-lieu-of-taxes” funds are funds that the Tennessee Valley Authority or TVA provides to states in which the TVA operates. The TVA is a federal corporation. 16 U.S.C. § 831. It is “the nation's largest government-owned power provider, ” supplying “electricity to local power companies and to large, energy-intensive industrial customers and federal facilities.” “Energy, ” Tennessee Valley Authority, available at https://www.tva.gov/About-TVA/TVA-at-a-Glance (last accessed Feb. 22, 2019). According to the TVA's website, the corporation is self-funded:

Initially, federal appropriations funded all TVA operations. Federal funding for the TVA power program ended in 1959, and appropriations for TVA's environmental stewardship and economic development activities were phased out by 1999. In 2014, TVA made its final scheduled repayment on Congress' original $1 billion investment in the TVA power system, but TVA continues to make annual payments on the government's remaining equity investment in TVA.
TVA is now fully self-financing, funding virtually all operations through electricity sales and power system bond financing. TVA sets rates as low as feasible and reinvests net income from power sales into power system improvements and economic development initiatives. TVA makes no profit and receives no tax money.

         “How We're Funded, ” TennesseeValleyAuthority, availableat https://www.tva.gov/About-TVA/TVA-at-a-Glance (last accessed Feb. 22, 2019).

         Rather than paying taxes on the income that it derives from sales of electricity, “to render financial assistance to those States and local governments in which the power operations of the Corporation are carried on and in which the Corporation has acquired properties previously subject to State and local taxation, ” the TVA provides a “percentage[] of the gross proceeds derived from the sale of power by the Corporation for the preceding fiscal year . . ., together with such additional amounts as may be payable pursuant to the provisions” of 16 U.S.C. § 831l, “said payments to constitute a charge against the power operations of the Corporation.” 16 U.S.C. § 831l. The payments that the TVA makes under § 831l are “in lieu of taxation, and the Corporation, its property, franchises and income, are expressly exempted from taxation in any manner or form by any State, county, municipality, or any subdivision or district thereof.” 16 U.S.C. § 831l.

         The State of Alabama receives “in-lieu-of-taxes” funds from the TVA. The state divides this money among the Alabama counties in which the TVA operates. A . C . § 40-28-2 (1975). By act of the Alabama Legislature, Spirit of LA ODE[1]

         Athens receives $5, 000 in TVA “in-lieu-of-taxes” funds annually. (Doc. 27-1, p. 11, tpp. 39-42; Doc. 27-1, p. 49 (in pp. 45-51); Doc. 27-1, p. 56 (in pp. 52-62)). Spirit of Athens's 2014 federal tax return indicates that Spirit of Athens received “in-lieu-of-taxes” funds directly from the TVA. (Doc. 26-6, p. 15).[2] Other documents in the record indicate that Limestone County received “in-lieu-of-taxes” funds from the TVA, and then the county dispersed TVA funds to Spirit of Athens. (See Doc. 27-1, pp. 63, 66, 73, 79, 86, 93).

         In January of 2016, Spirit of Athens hired Dana Hickman as its executive director. (Doc. 27-1, p. 5, tp. 13). A few months later, Spirit of Athens hired Robbin Hines to assist Ms. Hickman. (Doc. 27-3, p. 5, tpp. 13-14). When Ms. Hickman arrived at Spirit of Athens, the organization was experiencing financial difficulties. The IRS had questions about Spirit of Athens's 2013 and 2014 tax returns and had revoked Spirit of Athens's 501(c)(3) status. (Doc. 27-6, p. 13, tp. 47; see also Doc. 1, p. 6, ¶ 18).[3] As she began gathering documents for Spirit of Athens's accountant to prepare the corporation's 2015 federal and state tax returns, Ms. Hickman became concerned about financial discrepancies and irregularities that she observed. (Doc. 1).

         While the plaintiffs worked for Spirit of Athens, Spirit of Athens received one check from Limestone County for TVA in-lieu-of-taxes funds. (Doc. 27-1, pp. 8-9, tpp. 28-29; Doc. 27-3, p. 6, tpp. 18-19). Ms. Hines testified that while she and Ms. Hickman worked for Spirit of Athens, she heard that the TVA funds were federal funds. (Doc. 27-3, p. 8, tpp. 27-28). According to Ms. Hines, Jason Black, a Limestone County Commissioner, once stated that Spirit of Athens was to receive “some federal money from the TVA, we should be getting it soon, and not to feel bad that [the Commission] didn't vote for us to get money from the County for [an upcoming event] because we should be getting some federal money soon from TVA, and we could use that for [the event] because it is putting it back into the community.” (Doc. 27-3, p. 9, tpp. 29-30). Later Ms. Hines “[g]oogled TVA in lieu of tax, ” and found that this “was federal money.” (Doc. 27-3, p. 9, tp. 30). Ms. Hines then “just assumed that it was [federal money].” (Doc. 27-3, p. 9, tp. 34).

         Ms. Hickman also believed the TVA funds were federal funds. (Doc. 27-1, p. 10, tp. 33). Ms. Hickman stated: “when we receive a check that says in lieu of tax TVA, that spells to me federal money.” (Doc. 27-1, p. 10, tp. 36). Ms. Hickman explained: “[I] was associated with other ladies who were directors in this community or in our town … [and they] said that they received [TVA in-lieu-of-taxes] moneys, too. … [T]hey told me that it was federal money, so that's why I know that this is federal money.” (Doc. 27-1, p. 27, tp. 101).

         Ms. Hickman testified that Spirit of Athens could use the TVA funds “for anything that was within our scope of what we were going to do.” (Doc. 27-1, p. 9, tp. 30). To Ms. Hickman's knowledge, the TVA did not restrict the use of the in-lieu-of-taxes funds, and the TVA did not require an accounting of the funds after the TVA disbursed the funds. (Doc. 27-1, p. 9, tpp. 30-31). To Ms. Hickman's knowledge, Spirit of Athens did not submit a written request to the TVA for the in-lieu-of-taxes funds that the corporation received. (Doc. 27-1, pp. 9-10, tpp. 32-33). Ms. Hickman testified: “No. The way that all worked was that it was the law and it was - TVA would distribute the money to Spirit of Athens. So it wasn't something we had - that I had any - to go back to fill out any paperwork to say we are needing this money, we are asking for appropriations for that.” ...


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