The State of New York Ex Rel Vinod Khurana v. Spherion Corp

Background

New York City hired contractors, including Spherion Corp., to develop CityTime, an automated timekeeping system for city employees. The opinion describes evidence that Mark Mazer, a Spherion employee, and others used their influence over the project to increase its cost, obtain kickbacks through staffing arrangements, and approve payment for hours consultants did not work. Several people involved in the scheme were later indicted, and Mazer and others were convicted.

Vinod Khurana, a former Spherion employee and California citizen, alleged that he discovered serious problems with the project while performing quality-assurance work beginning in 2004. He said he reported his concerns to superiors, including Mazer and Scott Berger, and later reported information to city officials and other Spherion employees after being told not to do so. Khurana alleged that he was demoted and eventually fired in retaliation for those reports. His remaining claims arose under the New York False Claims Act and the New York City False Claims Act. His earlier qui tam claims under those laws had been dismissed in 2016.

Spherion offered a different account. It argued that Khurana had only raised ordinary concerns about the project’s performance, rather than suspected fraud, and that it fired him for unrelated reasons, including lateness and delays in submitting timesheets.

Motion and Legal Standard

Spherion moved for summary judgment under Rule 56 of the Federal Rules of Civil Procedure. Summary judgment is appropriate when the evidence shows that no reasonable jury could find for the opposing party. Spherion argued that Khurana could not prove three parts of his retaliation claims: that he engaged in legally protected activity, that Spherion knew about that activity, and that the activity caused his termination.

The court viewed the evidence and reasonable inferences in Khurana’s favor, as required at the summary-judgment stage. Although the court described the evidence as somewhat thin, it concluded that the record was sufficient for a jury to decide the claims.

Court’s Analysis

The court first concluded that a jury could find that Khurana engaged in protected activity. His observations about the project’s unexplained delays, his reports that the City was being misled, and his discovery of Mazer’s conflicts of interest could support a finding that a reasonable person would suspect fraud. The court also concluded that a jury could find that Khurana’s internal reports and reports to city officials were intended to hinder possible false-claims violations.

The court further determined that a jury could find Spherion knew about Khurana’s protected activity. Khurana said he reported concerns to his superiors and to others, including statements that Mazer and Berger were misusing City funds. The court treated those facts as potentially sufficient for a jury to find the required knowledge.

On causation, the court found evidence from which a jury could conclude that Khurana’s protected activity was a cause of his termination. The record suggested that he was removed from one group after expressing concerns, that Berger later wrote that Khurana could be dismissed if he caused problems, and that Khurana continued making allegations about Mazer and Berger. The court also noted evidence casting doubt on Spherion’s explanation that Khurana was fired for lateness and late timesheets, including evidence that other consultants were not fired for similar conduct.

Disposition

The court denied Spherion’s motion for summary judgment. It ordered the parties to submit a proposed joint pretrial order and related materials within thirty days and to be prepared to begin trial shortly afterward unless the court ordered otherwise. The court also directed the parties to discuss settlement and consider a settlement conference before Magistrate Judge Wang, another court-appointed mediator, or a private mediator.