Report and Recommendation I. INTRODUCTION A round June 2015, plaintiff Charles Shi noticed that his employer, Moog Control System (Shanghai) Co. Ltd. (“Moog Shanghai”), was buying parts for United States military airplanes from a Chinese supplier that was cutting corners and hiding the fraud with false documentation. Plaintiff became concerned that the defective parts could have catastrophic consequences for anyone operating the airplanes after they were delivered to the United States Department of Defense. Plaintiff raised his concerns with his immediate supervisor and was ignored. Plaintiff went up the corporate ladder and raised his concerns with officials at Moog Shanghai’s parent company, Moog Inc. (“Moog”) in Elma, New York. An internal investigation ensued that at least partially substantiated plaintiff’s concerns but downplayed any impact on safety. Plaintiff then alerted the CEO of Moog to the problem. One day after contacting the CEO, plaintiff was fired. Plaintiff now brings suit against Moog and Moog Shanghai for retaliatory discharge in violation of the False Claims Act (“FCA”), 31 U.S.C. §§3729-3731. Moog has appeared in the case; Moog Shanghai has not. Following transfer to this District from the Middle District of Florida, Moog filed a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure. (Dkt. No. 19.) In short, Moog argues that plaintiff has not adequately pled how poor quality parts from a parts supplier in China could lead to a fraudulent claim for payment on the United States. Moog argues further that it could not have retaliated against plaintiff because plaintiff did not adequately inform it of the possibility of litigation under the FCA. Finally, Moog argues that all of the events that plaintiff has alleged occurred in China and that the FCA has no extraterritorial effect there. Plaintiff counters that his amended complaint, the current operative pleading, sets forth how the fraud that he admittedly uncovered in China would ultimately have domestic effect in the United States, making extraterritoriality a non-issue. Plaintiff also asserts that he has pled cognizable efforts to stop FCA violations and that Moog was aware of his efforts no later than the time of the internal investigation. District Judge Lawrence J. Vilardo has referred this case to this Court under 28 U.S.C. §636(b). (Dkt. No. 30.) The Court has deemed the motion submitted on papers under Rule 78(b). For the reasons below, the Court respectfully recommends denying Moog’s motion. II. BACKGROUND This case concerns allegations1 that Moog and Moog Shanghai fired plaintiff because he complained about defective parts making their way into airplanes built for the United States Department of Defense. Plaintiff is a resident of China. From 2006 until January 13, 2016, plaintiff worked as a Supply Chain Manager in the Aircraft Group at Moog Shanghai. Moog Shanghai is a subsidiary of Moog Controls Hong Kong Ltd., a Hong Kong corporation. The Hong Kong corporation, in turn, is a subsidiary of Moog, which is headquartered in Elma, New York. Based on a Department of Labor document in the record, the relationship between the corporate entities mentioned above looks something like this: (Dkt. No. 19-4 at 21.) The amended complaint contains little detail about what Moog actually does for the Department of Defense, but a basic supply and manufacturing chain is apparent. Moog Shanghai obtains airplane parts from various Chinese companies. Moog Shanghai, with some level of coordination or supervision from Moog, then manufacturers airplanes as a subcontractor of The Boeing Company (“Boeing”). Whether Moog and its subsidiaries manufacture the unspecified airplanes in whole or in part is not clear from the amended complaint. Ultimately, though, Boeing delivers the finished airplanes to the Department of Defense under various contracts that Boeing has with the federal government. The events that led to this litigation began in 2015 and related to one particular parts supplier for Moog Shanghai, a company called Suzhou New HongJi Precision Parts Co., Ltd. (“NHJ”). NHJ made spoiler blocks for Moog’s airplanes: Spoiler blocks hold the spoiler actuator, which in turn control[s] an airplane’s spoilers. Spoilers are metallic flaps that deploy from an airplane’s wing to create drag and reduce speed. Flight spoilers are deployed mid-flight to control the lateral movement of the aircraft. Ground spoilers, used in conjunction with flight spoilers, are deployed during landing to slow the aircraft after returning to the ground. Spoiler blocks are considered a Single Point of Failure (hereinafter “SPOF”) component due to the fact that failure of such a piece could lead to a catastrophic failure and fatal crash. Spoiler blocks are classified as safety critical components. NHJ also manufactures safety sensitive parts including the manual release, unions, transfer tubes, springs, pins, brackets, and connector plates for securing electrical wires. (Dkt. No. 9 at 6.) Around June 2015, plaintiff became concerned that NHJ was passing along “counterfeit parts” to Moog Shanghai at full price and falsifying related documentation — presumably to create a false impression that the parts met necessary specifications. By “counterfeit,” plaintiff appears to mean that “NHJ outsourced Moog machined parts to an unknown supplier and that [the] NHJ subcontractor did not properly bake parts both before and after the cadmium plating process, and forged production process cards, and the improperly baked parts consisted of four different part numbers.” (Id. at 12.) The amended complaint is not quite clear as to how plaintiff first noticed a potential problem, but around June 2015, he “noted a complete loss of material traceability, which included a pattern of unapproved metals, metallurgical processes, failure to properly document the source of metals used in production, and falsification of such records.” (Id. at 7.) Plaintiff alerted his immediate supervisor, Joe Zou, and “suggested changes to the relationship with NHJ to remedy illegal manufacturing processes.” (Id.) Zou “refused to conduct an investigation into Plaintiff’s concerns and discouraged Plaintiff from any further investigation or disclosures.” (Id. at 8.) Zou’s refusal to investigate prompted plaintiff to push his concerns up Moog’s corporate structure. On August 7, 2015, plaintiff sent an email message to Kevin Walek, Moog’s Global Supply Chain Director at headquarters in Elma. An internal investigation ensued. The internal investigation found evidence of false documentation that concealed substandard manufacturing. (Id. at 10.) Nonetheless, officials at Moog and Moog Shanghai downplayed the problem. Zou “knew of traceability issues, but dismissed them without action because he believes the illegal practice is widespread among other Chinese manufacturers and was not serious enough to warrant his attention.” (Id.) Other officials “failed to discover any reason that a part may be ineffective, and falsely characterized all parts by NHJ as minor parts without a substantial impact on safety.” (Id.) In response, plaintiff informed Zou and others that he intended to notify the Federal Aviation Administration. (Id.) On January 12, 2016, plaintiff relayed his concerns by email to John Scannell, Moog CEO. (Id.) On January 13, 2016, Zou fired plaintiff. (Id.) Plaintiff was induced to sign a termination agreement on the pretense that his termination was part of a corporate restructuring. (Id. at 11.) The restructuring never happened. (Id.) Plaintiff was under contract through December 31, 2019. (Id.; see also Dkt. No. 24-1 at 3.) Plaintiff commenced this case by filing his original complaint in the Middle District of Florida on January 11, 2019. (Dkt. No. 1.) On March 11, 2019, plaintiff filed his amended complaint (Dkt. No. 9) and asked to have the case transferred to this District (Dkt. No. 10). The amended complaint contains one claim of retaliation in violation of the FCA. According to plaintiff, he “was acting in furtherance of efforts to stop potential violations of the FCA — namely, the delivery of airplanes to the United States Department of Defense containing substandard materials and illegal defects from counterfeit parts manufactured by NHJ.” (Dkt. No. 9 at 13.) Nonetheless, “[p]laintiff’s actions in bringing the truth about Defendants’ fraud to the attention of his superiors caused a hostile work environment that led to retaliatory termination for Plaintiff.” (Id.) Moog filed the pending motion on June 20, 2019. According to Moog, plaintiff “alleges no facts linking NHJ’s alleged fraudulent sale of parts to the submission of any suspected or actual false claims for payment to the United States. Nor does Shi allege that he was investigating any such false claims.” (Dkt. No. 19-1 at 6.) Specifically, “The crux of [plaintiff's] concerns related to NHJ’s supposedly illegal and deficient manufacturing processes for commercial airplane parts it was supplying to defendants, and possible collusion between Zou and NHJ. Shi admits he was concerned only with the ‘issue of traceability and potentially fraudulent documentation.’ Docket No. 9 42. These factual statements make clear that Shi’s concern was not ‘the employer’s knowing submission of false or fraudulent claims for payment to the government.’ At most, they suggest Shi was attempting to expose a fraud on defendants themselves and ensure the supplier’s compliance with FAA regulations. This is not FCA-related conduct or inquiry and, thus, is not protected.” (Id. at 16 (citation omitted).) Moog argues further that plaintiff did not engage in protected conduct because the amended complaint contains “no alleged communications or other disclosures pleaded that would have reasonably put Moog on notice that Shi was contemplating a qui tam action against it. He never complained or raised concerns that Moog was actually or potentially perpetrating a fraud on the government and, without this information, Moog could not have formed the retaliatory intent required by the FCA.” (Id. at 19; see also Dkt. No. 29 at 6-7.) Moog also notes that plaintiff’s assertions contain factual contradictions and that the FCA does not authorize the damages that plaintiff has requested. Finally, Moog argues that all events relevant to plaintiff’s retaliation claim occurred in China and that the FCA lacks extraterritorial reach. Plaintiff opposes the pending motion in all respects. Plaintiff notes that the fraud that he allegedly uncovered “showed that airplane parts supplied by Defendant Moog, Inc. to Boeing and ultimately to the United States Department of Defense were at risk for possible catastrophic failures. See Am. Compl. 32-40. The United States government was paying for airplanes that, because of Defendant’s intentional and/or reckless conduct, were at risk for possible catastrophic failures due to fraudulent and illegal manufacturing processes. See Am. Compl. 32-40.” (Dkt. No. 28 at 5.) Plaintiff next argues that protected conduct under the FCA does not require a formal inquiry under that statute or an explicit intent to start one: Defendant also argues that the Amended Complaint fails because Shi fails to allege any FCA-related inquiry or conduct. This argument misreads the Amended Complaint and misstates the law. The plain text of the statute as well as the legislative history show that the 2009 amendments to the False Claims Act statute sought to define broadly what constitutes “protected activity.” The new statutory language under Section 3730(h) makes it clear that Section 3730(h) protects not only actions taken in furtherance of a potential FCA claim, but also steps taken to remedy fraud through other means, such as internal reporting and refusal to participate in the illegal activity. See 155 Cong. Rec. E1295, E1300 (daily ed. June 3, 2009) (extension of remarks) (statement of Cong. Berman). (Id. at 6.) The assertions in the amended complaint, according to plaintiff, “adequately allege that Moog, Inc. was aware that he was engaged in protected conduct.” (Id. at 7.) As for retaliatory motive, “[o]n January 12, 2016, Plaintiff expressed his concerns regarding the illegal manufacturing via email to John Scannell, CEO of Moog, Inc. See Am. Compl. 68. This email was first sent to Moog, Inc.’s HR department as was their policy. See Am. Compl. 68. The very next day, on January 13, 2016, Plaintiff was terminated.” (Id. at 12.) Finally, plaintiff stresses that extraterritoriality will not be an issue here: Shi was employed by Moog, Inc. from 2006 until his termination on January 13, 2016. See Am. Compl. 12. Moog, Inc. is headquartered in New York. See Am. Compl. 14. As part of his employment duties, Shi was in charge of overseeing the Supply Development Engineers for Moog, Inc. in the People’s Republic of China. See Am. Compl. 10. Shi reported to Moog, Inc. corporate offices in Elma, New York. See Am. Compl. 11. Shi initially reported the fraud to his direct supervisor, Joe Zou, who relocated from Moog, Inc.’s New York office in 2013 to serve as Moog, Inc.’s Asia Supply Chain Manager. See Am. Compl.
