Quintin J. Schwartz, Sr. worked for Document Reprocessors of New York, Inc. (DRNY) for over 28 years, eventually becoming its General Manager. DRNY specialized in recovering and restoring books, documents, and other media damaged by disasters such as floods and fires. Eric Lundquist served as CEO, and Muriel Lundquist as Vice President and Secretary.
In 2011, DRNY obtained a General Services Administration (GSA) Federal Supply Schedule contract, which required compliance with prevailing wage and benefit standards under the Davis-Bacon Act and related statutes. These requirements applied to federally funded projects. DRNY gained credibility through its GSA approval and used this status in marketing.
After Hurricane Sandy in 2012, DRNY secured an $8–10 million contract with Jersey City, New Jersey, to restore government records. In 2017, Jersey City awarded DRNY a renewed contract funded by FEMA. This renewed contract was subject to Davis-Bacon Act prevailing wage requirements. By 2018, disputes arose within DRNY regarding compliance with those requirements. While some company officials believed prevailing wages applied, the Lundquists asserted they did not because the contract was with Jersey City rather than directly with the federal government.
Schwartz raised concerns, refused to certify compliance, and pressed for corrective action. In November 2019, internal emails revealed DRNY was not meeting prevailing wage obligations. Schwartz continued to object and refused to sign submissions to the GSA. On February 19, 2020, DRNY terminated his employment.
Schwartz filed a qui tam action under the False Claims Act (FCA) in March 2020, alleging DRNY and the Lundquists falsely certified compliance with the Davis-Bacon Act and other prevailing wage requirements. He also brought a retaliation claim, alleging his termination was due to his efforts to stop violations. The United States declined to intervene, and the case proceeded with Schwartz as relator.
The defendants moved to dismiss, arguing the complaint lacked the particularity required under Federal Rule of Civil Procedure 9(b). The U.S. District Court for the Western District of New York considered whether Schwartz sufficiently alleged that false claims were submitted to the government.
The court held that the amended complaint did not plausibly allege that DRNY submitted requests for payment containing material misrepresentations. While it was reasonable to infer DRNY submitted claims to Jersey City for FEMA-funded work, Schwartz did not allege facts showing those claims included express false certifications of prevailing wage compliance. The complaint also lacked allegations that prevailing wage compliance was material to Jersey City’s payment decisions. As a result, the court dismissed the FCA fraud claim.
On the retaliation claim, the court applied Rule 12(b)(6)’s plausibility standard rather than Rule 9(b)’s heightened requirement. It found Schwartz adequately alleged that he engaged in protected conduct under the FCA, that the defendants knew of his conduct, and that his termination was retaliatory. The court denied dismissal of the retaliation claim.
On September 19, 2023, the U.S. District Court for the Western District of New York granted in part and denied in part the defendants’ motion to dismiss. The court dismissed Schwartz’s FCA fraud claim but allowed his retaliation claim to proceed.
If you are involved in disputes, compliance issues, or certifications tied to the Davis-Bacon Act, Whitcomb, Selinsky PC assists with matters concerning prevailing wage requirements and government contracts. Reach out to contact us to learn how our team can help with your Davis-Bacon Act concerns.