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Iovino v. Michael Stapleton Assocs., 2022 U.S. Dist. LEXIS 74754, 2022 WL 1213278 (W.D. Va. Apr. 25, 2022);

Iovino v. Michael Stapleton Assocs., 2022 U.S. Dist. LEXIS 153118, 2022 WL 3684624 (W.D. Va. Aug. 25, 2022)

The Department of State (“DoS”) contracted with Michael Stapleton Associates, Ltd. (“MSA”) to train explosive detection canines. In October of 2015, MSA hired Dr. Karen Iovino (“Iovino”) to work part time as a veterinarian. Iovino expressed concerns about MSA’s dogs being overworked and poorly sheltered. Iovino’s supervisor, Dr. Michael Ratcliff (“Ratcliff”), dismissed her concerns. Iovino claimed MSA’s employees committed time sheet fraud by taking unofficial paid time off and leaving early on Fridays but billing the DoS for the entire workday. She alleged that the DoS paid more than $170,000 a year for unworked hours. Iovino also claimed that she had worked more than 40 hours a week on multiple occasions, but was not paid overtime. Instead, MSA encouraged her to take unofficial paid time off. Iovino alleged that MSA abused its power in hiring and firing decision. Finally, Iovino noted that MSA’s program manager and Iovino’s supervisor, Zane Roberts, was suspended for 10 days and his responsibilities reduced when he shared Iovino’s concerns about the treatment of the dogs. On February 24, 2017, Ratcliff asked Iovino to work for MSA full-time after her part-time contract expired in August 2017.

On July 6, 2017, Iovino filed a whistle blower complaint with the DoS’s Office of the Inspector General (OIG), based on MSA’s time sheet fraud, dying canines, and abuses of power related to hiring and firing decisions. Eight days later, Ratcliff told Iovino that MSA had created a new, full-time veterinarian position instead of converting Iovino’s part-time position into a full-time position and that she would have to reapply for the full-time job. On August 4, 2017, Iovino was suspended without pay based on MSA’s belief that she had leaked confidential information. MSA allowed her part-time position to expire and hired someone else to fill her position. Iovino filed a retaliation complaint with the OIG, asserting that MSA’s choice to not convert her position to a full-time role was made in retaliation for her whistleblower complaint. The OIG agreed and MSA appealed. On October 30, 2019, the DoS reversed the earlier determination. Iovino then filed a complaint in the U.S. District Court. MSA moved to strike allegations in Iovino’s pleadings and argued that Iovino had not exhausted her administrative remedies with respect to her complaint.

Federal law prohibits government contractors from retaliating against employees who disclose information that the employee reasonably believes to be evidence of gross mismanagement of a government contract to a federal employee responsible for overseeing that contract. A complainant who believes she was retaliated against may submit a claim to the relevant executive agency’s Inspector General, who must investigate the claim and determine if the complainant was retaliated against. If relief is denied, the complainant will be deemed to have exhausted all administrative remedies and may file an action in the appropriate district court. On October 30, 2019, Iovino was denied relief by the DoS and, thus, had exhausted her administrative remedies with respect to the whistleblower retaliation complaint. Iovino’s complaint, however, contained 15 paragraphs that presented alternative theories of recovery that were not reasonably related to her OIG complaint that she was retaliated against solely for her whistleblower filing. Iovino had not exhausted the administrative process for these allegations, so the Court granted MSA’s motion to strike as to these 15 paragraphs.

As directed by the Court, Iovino filed an amended complaint. MSA filed its answer and counterclaim, alleging that Iovino breached her Non-Disclosure Agreement (“NDA”). Iovino moved to strike MSA’s affirmative defenses and moved to dismiss or, alternatively, for judgment on the pleadings. Iovino argued that MSA’s counterclaim does not state a plausible claim for breach of contract and, even if it did, the NDA was illegal on its face. A breach of contract action requires: (1) the existence of a contract; (2) the plaintiff’s performance pursuant to the contract; (3) the defendant’s breach of its contractual obligations; and (4) damages resulting from the breach. The Court held that MSA plausibly alleged these elements by alleging the existence of a contract (the NDA), that Iovino breached the NDA by her admitted disclosures to news outlets, and Iovino’s disclosures caused MSA financial and reputational harm of $2,000,000.00. The Court denied Iovino’s motion for judgment on the pleadings under her theory that the NDA was illegal under federal regulations.

PLDR Law Scott Kowalski 1 PLDR Law Mark Burgin 1

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