Stewart v. Golden Victory Medical LLC

             UNITED STATES DISTRICT COURT                            
                DISTRICT OF MINNESOTA                                


Bryan Stewart,                         File No. 22-cv-2145 (ECT/LIB)      

  Plaintiff and Counter-Defendant,                                   

v.                                       OPINION AND ORDER                

Golden Victory Medical LLC,                                               

  Defendant and Counter-Claimant.                                    

________________________________________________________________________  
Emma Denny, HKM Employment Attorneys, LLP, Minneapolis, MN, and Artur Davis, 
HKM Employment Attorneys, Birmingham, AL, for Plaintiff Bryan Stewart.    

Defendant Golden Victory Medical LLC, pro se.                             


Plaintiff Bryan Stewart filed this lawsuit against Defendant Golden Victory Medical 
LLC alleging retaliation under the False Claims Act and breach of contract.  After less than 
a year, Golden Victory’s counsel moved to withdraw.  The motion was granted, but 
Magistrate Judge Brisbois ordered Golden Victory to retain new counsel within thirty days.  
Golden Victory has not retained new counsel or explained its failure to abide by that order.  
Because organizations are unable to represent themselves in court, Stewart requested, and 
received, an entry of default from the clerk’s office under Federal Rule of Civil Procedure 
55(a).  Stewart now moves for default judgment under Rule 55(b).          
The basic process for determining whether a default judgment should be entered is 
straightforward.    (1)  The  entry  of  default  means  that  “the  factual  allegations  of  the 
complaint, except those relating to the amount of damages, will be taken as true.”  10A 
C. Wright, A. Miller & M. Kane, Federal Practice and Procedure: Civil § 2688.1 (4th ed. 
& April 2023 Update) (footnotes omitted).  (2) Next, it must be determined whether the 
taken-as-true factual allegations of the complaint “constitute a legitimate cause of action, 

since a party in default does not admit mere conclusions of law.”  Marshall v. Baggett, 

 (8th Cir. 2010) (quoting Murray v. Lene, 

 (8th Cir. 
2010)).  (3) If the taken-as-true allegations of the complaint constitute a legitimate cause 
of action, then the amount of the default judgment must be ascertained.  See Hagen v. 
Sisseton-Wahpeton Cmty. Coll., 

 (8th Cir. 2000).       

                           I                                         
Start with the factual allegations of Stewart’s Complaint that will be taken as true.  
Golden Victory is a “privately held Nevada-based limited liability company that operates 
five clinics in four states” and specializes in mental-health services.  Compl. [ECF No. 1] 
¶ 7.  The co-owners of Golden Victory are Gabriel Luthor and Elizabeth Brown.  Id. ¶ 8.  

Approximately 65% of Golden Victory’s patients are Medicare or Medicaid beneficiaries.  
Id. ¶ 11.  The Centers for Medicare & Medicaid Services (“CMS”) provides “detailed 
criteria  for  the  reimbursement  of  providers  for  services  covered  by  Medicare  and 
Medicaid.”  Id. ¶ 12.                                                     
In  November  2021,  Stewart  entered  into  an  Employment  Agreement  (the 

“Agreement”) with Golden Victory.  See ECF No. 1-1.  Stewart, a nationally recognized 
expert in the field of health services management, was hired as the first Chief Executive 
Officer of Golden Victory.  Compl. ¶¶ 9–10.  After starting as Golden Victory’s CEO, 
Stewart quickly recognized flaws in the coding and billing processes at the organization’s 
clinics.  Id. ¶ 20.  In February 2022, he authorized Golden Victory’s general counsel to hire 
an independent third party to conduct a systematic audit of the organization’s coding and 
billing processes.  Id. ¶ 21.  Shortly thereafter, Stewart learned that one of Golden Victory’s 

clinics “had been notified in December 2021 by Medicare that the agency was suspending 
payments to the clinic due to evidence of overbilling.”  Id. ¶ 22.  Payments to the clinic 
were placed in escrow pending an inquiry by the CMS and Internal Revenue Service 
(“IRS”).  Id.  Luthor, Brown, and their personal attorneys had engaged with the government 
agencies for three months without informing Stewart about the inquiries.  Id. ¶ 23. 

On April 28, 2022, the third-party auditor presented an executive summary of the 
audit’s results to Stewart.  Id. ¶ 24.  The audit found sweeping errors, including: “coding 
and billing accuracy levels . . . in the 32.44% range, in comparison with an industry gold 
standard of 95%,” id. ¶ 25, inadequate documentation to support coding assignments, 
“frequent errors in the coding process for neurofeedback, and incorrect documentation of 

time  increments,”  id.  ¶  26.    The  report  also  found  clinics  incorrectly  coded 
nonphysician-provider services as physician services (allowing for a higher reimbursement 
rate), and misused the “incident-to” standard, a rule that allows nonphysician providers to 
bill at a higher rate when the initial patient visit is performed by a supervising physician, 
id. ¶¶ 13–16, 26.                                                         

Stewart recognized that these errors put Golden Victory at risk of civil and criminal 
liability,  “and  strongly  communicated  these  risks  in  [a]  May  4  virtual  call  with  the 
ownership.”  Id. ¶ 27.  He proposed an “aggressive remediation strategy, including a 
potential pause in billing activity until immediate corrective action could be put in place.”  
Id. ¶ 28.  “Luthor and Brown stunned Stewart with their lack of concern.”  Id. ¶ 29.  The 
owners claimed a prior audit contradicted the independent auditor’s findings, “but they 
declined to identify the auditor or share the findings.”  Id.  The owners also “rejected the 

idea of a billing pause as too costly.”  Id.                              
Undeterred,  Stewart  developed  a  “comprehensive  strategy”  to  mitigate  the 
compliance  issues.    Id.  ¶  30.    He  directed  the  executive  leadership  team  to  draft  a 
remediation plan and gave clinical staff a companywide briefing in a conference call on 
May 9.  Id. ¶ 30.  Stewart formally recommended to Luthor and Brown that Golden Victory 

terminate its relationship with its third-party billing company, but Luthor rejected this idea.  
Id. ¶ 31.                                                                 
While Stewart sought to mitigate the widespread billing irregularities, Golden 
Victory’s director of operations reported Stewart’s remediation efforts to Luthor and 
Brown.  Id. ¶ 33.  On a June 1, 2022 Zoom call, Brown told Stewart that he was being 

terminated immediately, citing allegations of “racism and sexism” and claiming Stewart 
had falsified timekeeping records.  Id. ¶ 34; see also ECF No. 58-1 at 33.1  Though the 
Complaint is not explicit on the point, Stewart made clear during his evidentiary-hearing 
testimony that he denies the allegations of racism and sexism leveled against him.  ECF 
No. 58-1 at 34–35, 44, 52.  Golden Victory did not follow its personnel handbook for 

investigating employee allegations, interview Stewart, or gather any evidence from him.  
Compl. ¶ 35.  Stewart was not given an opportunity to respond to these claims, which the 

1    Page cites are to CM/ECF pagination appearing in a document’s upper right corner, 
not to a document’s original pagination.                                  
owners presented to him “for the first time on the day of his termination.”  Id. ¶ 36.  After 
Stewart’s termination, Golden Victory abruptly halted the remediation process Stewart had 
launched to curb coding and billing irregularities.  Id. ¶ 41.            

Despite terminating Stewart over Zoom without prior notice, a written notice of 
termination purported to invoke § 14(a) of the Agreement, which provides for separation 
by mutual written agreement.  Id. ¶ 37.  Under the Agreement, Golden Victory could 
terminate Stewart without cause “provided the Company continue[d] to make [base salary] 
payments for six (6) or twelve (12) months respectively from the date of notice pursuant to 

this Section.”  ECF No. 1-1 § 14(c)(ii).  Stewart’s base salary was $250,000, but Golden 
Victory only offered Stewart a lump sum equaling eight-weeks’ pay, totaling roughly 
$38,461.00.  Compl. ¶ 39.                                                 
Stewart brought this two-count lawsuit on August 31, 2022.  See Compl.  Count I is 
a retaliation claim under the False Claims Act.  Id. ¶¶ 42–46.  Count II is a breach-of-

contract claim.  Id. ¶¶ 47–50.  Golden Victory counterclaimed for breach of contract and 
tortious interference with contract.  ECF No. 9.                          
In May 2023, Golden Victory moved to stay prosecution of the case because of an 
active federal investigation targeting Brown, Luthor, and Golden Victory.  ECF No. 19.  
The motion to stay was denied.  ECF No. 29.  Golden Victory’s attorney, Mr. Kallenbach, 

then moved to withdraw, stating Brown and Luthor refused to cooperate with him to defend 
the case.  ECF Nos. 30, 32.  On September 22, 2023, Magistrate Judge Brisbois granted 
the  motion  to  withdraw,  leaving  Golden  Victory  unrepresented.    ECF  No.  40.  
Mr. Kallenbach was ordered to serve Luthor and Brown a copy of the order as soon as 
practicable and to file a certificate of service.  Id. at 7.  Golden Victory was ordered to “[a]s 
soon as practicable thereafter and in any event by no later than thirty (30) days after service 
of the present Order . . . [to] have its substitute counsel enter a notice of appearance in the 

present action.”  Id.                                                     
Stewart applied to the clerk’s office for an entry of default in early December, ECF 
No. 43, and the clerk’s office entered default against Golden Victory on December 4, 2023, 
ECF No. 44.  Stewart then moved for default judgment.  ECF No. 45.  Mr. Kallenbach, 
however, did not initially receive notice of Judge Brisbois’s September 22, 2023 Order 

granting his motion to withdraw, instead only learning about the Order on December 13, 
2023.  ECF No. 51 at 1–2.  Mr. Kallenbach filed a certificate of service on January 3, 2024.  
ECF No. 52.  Golden Victory remains unrepresented.                        
                           II                                        
                           A                                         

Stewart’s first claim is for retaliation under the False Claims Act.  Enacted in 1863, 
the False Claims Act “was originally aimed principally at stopping the massive frauds 
perpetrated  by  large  contractors  during  the  Civil  War.”    United  States  v.  Bornstein, 

, 305 n.1, 309 (1976).  The FCA imposes liability on anyone who “knowingly 
presents, or causes to be presented, a false or fraudulent claim for payment or approval” or 

who “knowingly makes, uses, or causes to be made or used, a false record or statement 
material to a false or fraudulent claim.”  

(a)(1)(A)–(B).  For purposes of 
the statute, “knowingly” includes a person who “has actual knowledge of the information; 
acts in deliberate ignorance of the truth or falsity of the information; or acts in reckless 
disregard of the truth or falsity of the information.”  

(b)(1)(A)(i)–(iii).  
“The FCA attaches liability, not to the underlying fraudulent activity, but to the claim for 
payment.”  Olson v. Fairview Health Servs. of Minn., 

 (8th Cir. 2016).  

“Qui tam provisions permit private persons, relators, to sue for violations in the name of 
the United States and to recover part of the proceeds if successful.”  United States ex rel. 
Strubbe v. Crawford Cnty. Mem’l Hosp., 

 (8th Cir. 2019) (citing 

(b), (d)).                                                
To protect insiders who might be “reluctant to use these qui tam provisions due to 

fear of employer backlash, the False Claims Act protects whistleblowers from employer 
retaliation.”  United States ex rel. Reed v. KeyPoint Gov’t Sols., 

 (10th 
Cir. 2019).  The FCA protects employees from being discharged or otherwise retaliated 
against “because of lawful acts done by the employee . . . in furtherance of an action under 
this section or other efforts to stop 1 or more violations of this subchapter.”  

(h)(1).  To establish a retaliation claim under the FCA, a “plaintiff must prove that 
(1) the plaintiff was engaged in conduct protected by the [False Claims Act]; (2) the 
plaintiff’s employer knew that the plaintiff engaged in the protected activity; (3) the 
employer retaliated against the plaintiff; and (4) the retaliation was motivated solely by the 
plaintiff’s protected activity.”  Elkharwily v. Mayo Holding Co., 

 (8th 

Cir. 2016) (quoting Schell v. Bluebird Media, LLC, 

 (8th Cir. 2015)).  
The taken-as-true allegations establish a retaliation claim.              
(1) An employee’s activity is protected when the employee’s actions satisfy two 
conditions.  Schuhardt v. Wash. Univ., 

 (8th Cir. 2004).  First, “the 
employee’s conduct must have been in furtherance of an FCA action,” 

 or (after the 
2009 amendment to the FCA) the employee must “lawfully try to stop one or more 
violations of the Act . . . , without regard to whether their conduct advances a private or 

government lawsuit under the Act.” 2  Reed, 

.  Second, an employee must 
(1)  believe  in  good  faith;  and  (2)  “a  reasonable  employee  in  the  same  or  similar 
circumstances might believe, that the employer is possibly committing fraud against the 
government.”  Wilkins v. St. Louis Hous. Auth., 

 (8th Cir. 2002) (quoting 
Moore v. Cal. Inst. of Tech. Jet Propulsion Lab., 

 (9th Cir. 2002)).   

Stewart engaged in lawful acts to stop Golden Victory’s overbilling practices by 
authorizing an independent third party to conduct an audit, proposing a pause in billing 
activity,  recommending  the  owners  terminate  Golden  Victory’s  third-party  billing 
company, and directing the executive leadership team to draft a remediation plan.  And 
Stewart’s  subjective  belief  that  Golden  Victory  was  defrauding  the  government  was 

objectively reasonable, given pending government inquiries into Golden Victory’s billing 
practices and a 54-page independent report finding systematic billing and coding errors.  
See Lord v. Univ. of Mia., 

, 1311 (S.D. Fla. 2021) (concluding that a 
Chief Compliance Officer’s belief that a university laboratory was violating the FCA by 
overbilling Medicare, a belief grounded in a third-party report, was objectively reasonable); 

Elkharwily v. Mayo Holding Co., 

 (D. Minn. 2013) (alleged 

2    “The opposition clause was added by Congress in 2009, and the Eighth Circuit has 
not articulated a distinct test to determine when this clause is satisfied.”  Sherman v. 
Berkadia Com. Mortg. LLC, No. 4:17 CV 2183 RWS, 

, at *7 (E.D. Mo. 
Jan. 15, 2019), aff’d, 

 (8th Cir. 2020).                      
violations of Medicare and Medicaid, including overbilling and improper coding, could 
lead to a viable claim under the FCA).  Therefore, Stewart’s efforts to stop Golden 
Victory’s overbilling practices were protected under § 3730(h)(1).        

(2) Deciding if Stewart’s employer had notice of his protected conduct implicates a 
preliminary question—the heightened notice standard for compliance employees.  The 
Eighth Circuit has spoken little on the issue.  In a pre-amendment footnote, it reasoned that 
“[a]n employee tasked with the internal investigation of fraud against the government 
cannot bring a § 3730(h) action for retaliation unless the employee makes it clear that her 

actions go beyond the assigned task.”  Schuhardt, 

 n.2.  The Seventh Circuit 
has  described  the  reasoning  behind  this  rule.    When  a  compliance  employee  alerts 
supervisors to regulatory violations, this does “not necessarily put [the company] on notice 
that [the employee] was planning to take a far more aggressive step and bring a qui tam 
action against them or report their conduct to the government.”  Brandon v. Anesthesia & 

Pain Mgmt. Assocs., 

 (7th Cir. 2002).  In other words, an employee’s 
conduct within the scope of their duties generally does not put their employer on notice the 
employee is acting in furtherance of a qui tam action.  See Yuhasz v. Brush Wellman, Inc., 

 (6th Cir. 2003) (“[The plaintiff] was simply performing his ordinary 
duties as a supervisor of laboratory testing.  [The defendant] cannot be charged with notice 

on this basis.”).                                                         
But courts disagree whether the heightened standard survives the 2009 amendment 
to the FCA.  Since then, several courts have applied the heightened standard without 
analyzing this issue.  See, e.g., Tener v. Mercy Health Servs.-Iowa, Corp., No. 22-CV-
4025-CJW-MAR, 

, at *4 (N.D. Iowa July 27, 2022); United States ex 
rel. Campie v. Gilead Scis., Inc., 

 (9th Cir. 2017) (“Courts have held that 
when an employee is tasked with such investigations, it takes more than an employer’s 

knowledge of that activity to show that an employer was on notice of a potential qui tam 
suit.”); Omwenga v. United Nations Found., 

 (D.D.C. 2017).  The 
Tenth Circuit held the rule continues to apply, reasoning:                
     [I]n these decisions, we recognized that an employer might      
     reasonably presume that when a compliance employee reports      
     incidents of fraud she is just doing her job.  So to hold an    
     employer liable under the Act’s whistleblower provisions, our   
     pre-2009  precedent  required  a  compliance  employee  to      
     overcome that presumption by showing that she was engaging      
     in protected activity, not just doing her job.                  

     We think this reasoning has survived the 2009 amendment.        
     True, as we have explained above, that amendment expanded       
     the scope of protected activity and thus expanded the universe  
     of conduct that a relator may plead in giving the employer      
     notice of the protected activity.  But nothing about the 2009   
     amendment undercuts the rationale of our precedent addressing   
     compliance officers who are charged by their employer with      
     investigating fraud.  See United States ex rel. Campie v. Gilead 
     Scis., Inc., 

 (9th Cir. 2017) (deeming our pre-
     2009 Ramseyer decision “instructive,” in a post-amendment       
     context, on the point that compliance employees must do more    
     to show an employer’s knowledge), cert. denied, ––– U.S. –––    
     , 

, 

 (2019).                        

     In  sum,  to  state  a  retaliation  claim,  as  relevant  here,  an 
     employee’s  complaint  must  allege  facts  that  show  her     
     employer  knew  of  her  efforts  to  stop  a  False  Claims  Act 
     violation.    The  2009  amendment  left  intact  our  precedent 
     requiring  compliance  employees  to  do  more  than  other     
     employees to meet the notice element.                           
Reed, 

.  But other courts have questioned the continued soundness of the 
heightened standard.  After all, the rule was created to ensure “that the employer was on 
notice of an employee’s intentions of bringing or assisting in an FCA action, whereas the 

2009 amendments broadened the scope of the FCA’s whistleblower provision to protect 
against retaliation in cases where the employee was engaged in efforts to stop an FCA 
violation, even if those efforts were not necessarily in furtherance of an FCA claim.”  
United States v. N. Adult Daily Health Care Ctr., 

, 299 (E.D.N.Y. 
2016) (cleaned up); see also Malanga v. NYU Langone Med. Ctr., No. 14cv9681, 

, at *3 (S.D.N.Y. Nov. 12, 2015); Lord v. Univ. of Mia., No. 13-22500-CIV-
ALTONAGA/McAliley, 

, at *16–17 (S.D. Fla. Aug. 8, 2022).   
This questions need not be resolved here because, even if the heightened pleading 
standard applied, Stewart’s conduct was sufficient to put Golden Victory’s owners on 
notice that his activity was protected.3  “[T]o provide actual or constructive knowledge, 


3    There are sound reasons to think the heightened standard no longer applies.  Under 
the pre-amendment statute, the heightened notice standard made sense.  An employee’s 
performance of her monitoring and reporting activities would not “put defendants on notice 
that she was acting ‘in furtherance of’ an FCA action—e.g., that she was furthering or 
intending to further an FCA action rather than merely warning the defendants of the 
consequences of their conduct.”  U.S. ex rel. Ramseyer v. Century Healthcare Corp., 

 (10th Cir. 1996).  But after the 2009 amendment to the FCA, nothing 
stops a compliance employee’s acts, within the scope of her duties, from putting an 
employer on notice that her activities are efforts to stop a violation of the FCA.  When an 
employer is aware of ongoing FCA violations (or potential violations) and knows about an 
employee’s efforts to stop those violations, the better answer might be that the notice 
requirement is satisfied regardless of whether the employee’s efforts fall within the scope 
of her duties.  Regardless, as noted, there is no reason to resolve this question here, and 
doing  so  would  seem  especially  unwise  considering  the  one-sided  nature  of  the 
default-judgment motion.                                                  
employees must connect the alleged misconduct to fraudulent or illegal activity or the 
FCA.”  Strubbe, 

.  Stewart presented the results of the third-party audit to 
Luthor and Brown on a virtual call.  During that presentation, he strongly communicated 

the risks of civil and criminal liability.  The IRS and CMS inquiries also put the owners on 
notice that their billing practices exposed them to liability.  And not only did Stewart inform 
the owners directly about his ongoing remediation efforts, but a different member of the 
executive leadership team also reported this same information to the owners.  Compl. 
¶¶ 27–28, 31, 33.  Finally, as Golden Victory’s CEO, Stewart’s responsibilities were 

company-wide; he was not a traditional quality control or compliance employee, meaning 
his active efforts to resolve Golden Victory’s billing practices did not fall explicitly within 
his job duties.  See Lord, 

, at *16–17 (“Highly relevant to this analysis 
is the nature of Plaintiff’s executive roles at the University.  No manual dictated Plaintiff’s 
compliance responsibilities; he was a high-ranking executive with discretion to define his 

own role and set policy. . . .  And without any clear baseline for what Plaintiff’s ‘typical’ 
responsibilities were, the Court cannot lightly infer that any particular action he took to 
root out fraud was professionally unremarkable.”).                        
(3) “Retaliatory acts under the FCA include discharging, demoting, suspending, 
threatening, harrassing [sic], or otherwise discriminating against an employee.”  Strubbe, 

.  Here, this is satisfied by Golden Victory discharging Stewart.   
(4) Stewart must show his discharge “was motivated solely by [his] protected 
activity.”  Schell v. Bluebird Media, LLC, 

 (8th Cir. 2015).  “[A] 
finding of dual motive exonerates the employer.”  Norbeck v. Basin Elec. Power Coop., 

 (8th Cir. 2000).  Because Brown and Luthor terminated Stewart shortly 
after his efforts to stop widespread billing irregularities, rejected Stewart’s proposals to 
pause billing and terminate Golden Victory’s third-party billing company, and halted 

Stewart’s remediation initiatives after terminating him, the taken-as-true allegations satisfy 
causation.    And  Stewart  adequately  alleges  that  Golden  Victory’s  stated  reasons  for 
termination—accusations of workplace misconduct—were pretextual.  See Townsend v. 
Bayer Corp., 

 (8th Cir. 2014) (“When an employee presents evidence 
showing an employer’s stated reason for taking an adverse action against him is pretextual, 

such evidence also serves to prove retaliation.”).                        
                           B                                         
Stewart’s second cause of action is breach of contract.  Under Minnesota law, 
a breach-of-contract claim requires: “(1) a valid contract; (2) performance by the plaintiff 
of any conditions precedent; (3) a material breach of the contract by the defendant; and (4) 

damages.”  Russo v. NCS Pearson, Inc., 

 (D. Minn. 2006) (citation 
omitted); see Park Nicollet Clinic v. Hamann, 

 (Minn. 2011) (same).  
Deciding if Stewart’s Complaint meets all four elements requires interpreting the contract.  
“[T]he primary goal of contract interpretation is to determine and enforce the intent of the 
parties.”  Staffing Specifix, Inc. v. TempWorks Mgmt. Servs., 

 (Minn. 

2018) (alteration in original) (quoting Motorsports Racing Plus, Inc. v. Arctic Cat Sales, 
Inc.,  

  (Minn.  2003)).    “When  the  language  of  the  contract  is 
unambiguous, it should be given its plain meaning.”  Minn. Jud. Branch v. Teamsters 
Loc. 320, 

, 88 (Minn. Ct. App. 2022).                        
The Agreement, attached to the Complaint, is a valid employment contract.  See 
ECF No. 1-1; Compl. ¶ 9.                                                  
The  second  element,  performance  of  any  conditions  precedent,  requires  some 

analysis.  A condition precedent is “any fact or event, subsequent to the making of a 
contract, which must exist or occur before a duty of immediate performance arises under 
the contract.”  Nat’l City Bank of Minneapolis v. St. Paul Fire & Marine Ins., 

 (Minn. 1989).  “[I]f the event required by the condition does not occur, there [is] 
no breach of contract.”  Capistrant v. Lifetouch Nat’l Sch. Studios, Inc., 

 (Minn. 2018) (quoting 451 Corp. v. Pension Sys. for Policemen & Firemen, 

 (Minn. 1981)).  “[N]o particular code words [are] needed to form an express 
condition.”  Carl Bolander & Sons. v. United Stockyards Corp., 

 
(1974).                                                                   
Under  the  Agreement,  Golden  Victory  is  only  obligated  to  provide  severance 

compensation if Golden Victory terminates Stewart without cause.  ECF No. 1-1 § 14(c)(ii) 
(“In the event that [Golden Victory] provides notice of termination without cause, [Stewart] 
will receive as termination compensation . . . a Base Salary for a period of six (6) months 
from the date of notice.”).  The taken-as-true allegations describe a termination without 
cause.  Golden Victory fired Stewart relying on the pretext of misconduct.  See Compl. 

¶¶ 34–37, 41.  It invoked § 14(a) in its written notice of termination, id. ¶ 37, the provision 
governing a termination by mutual written agreement, despite unilaterally terminating 
Stewart, id. ¶ 34.  Because Golden Victory did not have a valid reason to terminate Stewart 
under the Agreement and its stated reasons for termination were pretextual, Stewart’s 
termination is best categorized as termination without cause under § 14(c).  Therefore, 
Golden Victory was required “to make payments for six . . . months . . . from the date of 
notice pursuant to this Section.”  ECF No. 1-1 § 14(c)(ii).               

Section  14(c)(iii)  provides  another  condition  to  Golden  Victory’s  severance 
obligation: “The right to the foregoing termination compensation . . . is subject to the 
Employee’s  execution  of  [Golden  Victory’s]  severance  agreement.”    ECF  No.  1-1 
§ 14(c)(iii).  The phrase “subject to” expressly conditions Golden Victory’s contractual 
duty to pay severance compensation on Stewart’s execution of Golden Victory’s severance 

agreement.  Therefore, it is fair to treat Stewart’s execution of the severance agreement as 
a condition precedent to Golden Victory’s contractual duty in § 14(c)(ii). 
Nonetheless, Stewart was excused from complying with this condition precedent 
because Golden Victory repudiated its contractual obligations.  “It is basic hornbook law 
that  an  unconditional  repudiation  of  a  contract,  either  by  words  or  acts,  which  is 

communicated to the other party prior to the time fixed by the contract for his performance 
constitutes an anticipatory breach.”  Matter of Haugen, 

, 79 n.6 (Minn. 
1979).  And “[i]t is elementary that a breach of a contract by one party excuses performance 
by the other.”  Soderbeck v. Ctr. for Diagnostic Imaging, Inc., 

 (Minn. 
Ct. App. 2010) (quoting Wasser v. W. Land Secs.,  

 (Minn. 1906)).  In 

other words, “a repudiation of the contract by one party relieves the other party of the duty 
to perform any conditions precedent that may exist to the performance of the repudiator.”  
13 Williston on Contracts § 39:39 (4th ed. May 2023 Update).  Golden Victory only offered 
Stewart $38,461 instead of the $125,000 it owed.  This offer repudiated its contractual 
obligation  to  pay  $125,000  in  severance  to  Stewart.    By  repudiating  its  contractual 
obligations,  Golden  Victory  breached  the  Agreement  and  excused  Stewart  from  the 
condition of executing the severance agreement.  Golden Victory’s failure to pay $125,000 

to Stewart is a material breach of the Agreement that caused damages—the failure to 
receive an amount owed.  Therefore, Stewart’s taken-as-true allegations satisfy all four 
elements of breach of contract.                                           
                          III                                        
Even  after  a  defendant’s  liability  is  established,  a  plaintiff  seeking  a  default 

judgment  “must  still  prove  its  actual  damages  to  a  reasonable  degree  of  certainty.”  
Everyday Learning Corp. v. Larson, 

, 818–19 (8th Cir. 2001).  “A district 
court may determine damages by computing from the facts of record the amount that the 
plaintiff is lawfully entitled to recover and enter judgment accordingly.”  Radisson Hotels 
Int’l, Inc. v. Fairmont Partners LLC, No. 19-cv-1176 (WMW/BRT), 

, at 

*2  (D.  Minn.  Feb.  10,  2020).    Stewart  requests  $898,333  in  backpay,  $55,612  in 
prejudgment interest on the backpay, $250,000 in emotional-distress damages, $25,662.50 
in attorneys’ fees, $5,902.65 in litigation costs, and $1,235,510.10 in liquidated damages 
under the False Claims Act.  ECF No. 57 at 26.  As for his breach-of-contract claim, Stewart 
seeks $125,000 in unpaid severance.  

.  Take each request in turn. 

(1) Stewart’s request for $898,333 in backpay will be granted in part.  Relief under 
the FCA “shall include . . . 2 times the amount of back pay.”  See 

(h)(2).  
Backpay is “[t]he wages or salary that an employee should have received but did not 
because of an employer’s unlawful action in setting or paying the wages or salary.”  
Backpay, Black’s Law Dictionary (11th ed. 2019).  In general, “[t]he back pay period 
begins with the date of lost earnings and ends on the date of the court’s decision, unless 
this period is terminated by some other event.”  2 Paul H. Tobias, Litigating Wrongful 

Discharge Claims § 8:9 (June 2023 Update).  “[M]easuring backpay always involves some 
level of speculation, and so backpay calculations ‘need not be precise; exactness is not 
expected.’”  Geraty v. Vill. of Antioch, No. 09 C 6992, 

, at *2 (N.D. Ill. 
Apr. 15, 2014) (quoting EEOC v. Custom Cos., Nos. 02 C 3768, 03 C 2293, 

, at * 12 (N.D. Ill. Mar. 8, 2007)).4                               

Normally, courts calculate backpay by relying on a plaintiff’s compensation history.  
See, e.g., E.E.O.C. v. MSDS Consultant Servs., LLC, No. 8:18-cv-02917-PX, 

, at *3 (D. Md. Dec. 22, 2021); Barnes v. Dep’t of Corr., No. 18-cv-105-jdp, 

, at *3 (W.D. Wis. Jan. 8, 2020); Phillips v. City of S. Bend, No. 3:15CV527-
PPS, 

, at *5–9 (N.D. Ind. May 1, 2018); Palmer v. Richard L. Schlott, 

Realtors, Inc., CIV. No. 88-4028 (CSF), 

, at *4 (D.N.J. June 20, 1990).  
That method runs into challenges here.  Stewart’s base salary for 2022 was $250,000, ECF 
No. 59-1 at 19, but he could have received an additional $250,000 if he met certain 


4    When awarding backpay under Title VII, “ambiguity in what the claimant would 
have  received  but  for  discrimination  should  be  resolved  against  the  discriminating 
employer.”  Pittington v. Great Smoky Mountain Lumberjack Feud, LLC, 

 (6th Cir. 2018) (quoting Rasimas v. Mich. Dep’t of Mental Health, 

, 628 
(6th Cir. 1983)); E.E.O.C. v. Wal-Mart Stores, Inc., No. 17-cv-739-jdp, 

, 
at *2 (W.D. Wis. Mar. 31, 2020) (same); Mead v. U. S. Fid. & Guar. Co., 

  (D.  Minn.  1977)  (same).    Although  the  False  Claims  Act  is  not  an 
anti-discrimination statute, because an award of backpay under the FCA serves a related 
make-whole purpose, it makes sense to apply a similar presumption here.   
incentive targets, 

  Those incentive targets included quarterly business goals and an end-
of-year growth target.  ECF No. 59-1 at 17; ECF No. 58-1 at 39.  For 2022, the quarterly 
incentive was $37,500 per quarter (for a maximum of $150,000), and his end-of-year 

incentive was $100,000.  ECF No. 59-1 at 17.  Although Stewart met his first quarterly 
goal for 2022, it is not clear whether he would have continued to meet his quarterly goals 
or meet his end-of-year target.  See ECF No. 58-1 at 36–40.  This means Stewart’s base 
pay was $250,000, but his maximum compensation for 2022 was $500,000.     
Dr. Jones, Stewart’s damages expert, calculates a backpay award based on the 

maximum.  See ECF No. 58-1 at 7–8.  That is speculative.  It is possible, but not reasonably 
certain, that Stewart would have received the $100,000 end-of-year incentive.  Stewart had 
only worked at Golden Victory for six months, so there is no compensation history of him 
receiving it.  Because Stewart was terminated in June, seven more months would have 
passed before it could be determined if he met or failed the requirements.  On the other 

hand, a backpay award based solely on Stewart’s $250,000 base salary would not be 
consistent  with  the  remedial  purpose  of  the  statute;  half  of  Stewart’s  potential 
compensation was based on incentives.  Moreover, Stewart achieved his first quarterly goal 
and anticipated meeting his remaining quarterly goals and end-of-year growth target.  ECF 
No. 58-1 at 36–40.  To balance these considerations, Stewart will be awarded backpay 

based on a $400,000 annual rate.  This accounts for the likelihood that he would have been 
paid considerably more than $250,000 in annual compensation but takes into consideration 
Stewart’s limited compensation history and the inability to determine that he would have 
received (or was likely to receive) the maximum compensation amount.5     
Therefore, Stewart will be awarded backpay as follows: $258,333.33 for 2022,6 

$400,000 for 2023, and $66,666.66 for 2024,7 for a total backpay award of $725,000.8 
(2) Stewart’s request for $55,612 in prejudgment interest will be granted in part.  
Section 3730(h) entitles Stewart to “interest on the back pay.”  

(h)(2).  
“The  appropriate  general  standard  for  the  rate  of  prejudgment  interest  on  [an  FCA 
plaintiff’s] back pay is the rate provided by 

(a).”  Wilkins v. St. Louis 

Hous. Auth., 

 (E.D. Mo. 2001), aff’d, 

 (8th Cir. 
2002).  Dr. Jones calculates the compound prejudgment interest rates on backpay as 
follows: 8.26% for 2022, 5.93% for 2023, and 0.81% for 2024.  ECF No. 58-1 at 9.  
Applying these rates to the backpay award results in the following amounts of prejudgment 



5    Stewart’s  backpay  award  will  not  include  any  pay  increases  because  there  is 
insufficient evidence in the record to conclude that Stewart would have received a pay 
increase, and if so, what that pay increase might have been.              

6    7/12 * $250,000 + $37,500 * 3.                                       

7    2/12 * $400,000.                                                     

8    The award of back pay will not be reduced because of a failure to mitigate.  First, 
“[t]he burden is upon the employer to prove a failure to mitigate.”  Townsend v. Bayer 
Corp., 

 (8th Cir. 2014).  By declining to defend this case, Golden Victory 
has not proven a failure to mitigate.  Second, efforts to mitigate need not be successful, 
“but must represent an honest effort to find substantially equivalent work.”  

 (quoting 
Hartley v. Dillard’s, Inc., 

 (8th Cir. 2002)).  The record reflects an 
honest, unsuccessful attempt to find substantially equivalent work.  ECF No. 58-1 at 43–
45 (testifying that he has applied to more than 400 jobs).                
interest: $21,338.33 for 2022, $23,720 for 2023, and $540 for 2024, for a total prejudgment 
interest award of $45,598.33.                                             
(3) Stewart’s request for $250,000 in emotional-distress damages will be granted.  

The False Claims Act entitles prevailing § 3730(h) plaintiffs to special damages, including 
emotional-distress damages.  

(h)(2); Townsend, 774 F.3d at 466–67.  “To 
prove emotional distress, medical or other expert evidence is not required.”  Hammond v. 
Northland Counseling Ctr., Inc., 

 (8th Cir. 2000).  A plaintiff’s own 
testimony can suffice.  

  “However, a plaintiff must offer specific facts as to the nature 

of his or her claimed emotional distress and its causal connection to the allegedly violative 
actions.”  

                                                            
Stewart testified that he experienced “surprise, shock, fear, disappointment, [and] 
depression,” after being terminated.  ECF No. 58-1 at 52.  He described long-lasting 
impacts,  including  insomnia,  id.  at  53,  depression,  id.  at  54,  the  stress  of  financial 

insecurity, id. at 53, and strained relationships with his family, id. at 53–54.  Based on my 
firsthand observations of Stewart’s testimony, I find him both credible and convincing.  
And other evidence in the record supports the requested award.  A letter from a close friend 
described Stewart “battling depression, anxiety, and a sense of hopelessness.”  ECF No. 
59-1 at 21.  His wife wrote, “I can’t even describe the amount of rejection and pain he has 

endured.  I’ve never seen him so discouraged and quite frankly hopeless, at times, about 
his future.  He has cried and had severe nightly insomnia and digestive issues regularly.”  
Id. at 23.  Although compensating emotional distress with dollars is always an inexact 
science, Stewart’s evidence is sufficient to award the requested $250,000.  See Townsend, 
774 F.3d at 466–67 (reducing an emotional-distress award to $300,000 based on similar 
evidence);  Bennett  v.  Riceland  Foods,  Inc.,  

,  551–53  (8th  Cir.  2013) 
(affirming an award of $300,000 to each of two individuals who “testified to depression, 

extreme stress, worry, and sleeplessness”); ECF No. 58-1 at 69–78 (three jury verdicts 
awarding similar or greater amounts of emotional-distress damages in similar types of 
cases).                                                                   
(4) Stewart’s request for $25,662.50 in attorneys’ fees will be granted in part.  Under 
the False Claims Act, relief “shall include . . . compensation for any special damages 

sustained  as  a  result  of  the  discrimination,  including  litigation  costs  and  reasonable 
attorneys’ fees.”  

(h)(2).  The FCA is unusual in that attorneys’ fees and 
litigation costs “are part and parcel” of special damages.  Hammond, 

 (8th 
Cir. 2000).  Nonetheless, an award of attorneys’ fees is determined by using the traditional 
lodestar method.  See Townsend v. Bayer Healthcare Pharms., Inc., No. 5:11CV00055 

JMM, 

, at *2 (E.D. Ark. Dec. 17, 2012), aff’d sub nom. Townsend v. 
Bayer Corp., 

 (8th Cir. 2014).                                
The party seeking attorneys’ fees has the burden of establishing that the fees sought 
are  reasonable  and  should  submit  evidence  supporting  the  rates  claimed  and  hours 
worked.  Hensley v. Eckerhart, 

, 433–34, 437 (1983).  The lodestar amount is 

calculated by “multipl[ying] the number of hours reasonably expended by reasonable 
hourly rates.”  Bryant v. Jeffrey Sand Co., 

 (8th Cir. 2019).  After the 
lodestar amount is determined, the court should consider whether it should be enhanced or 
reduced, which depends on the “important factor of the ‘results obtained.’”  Hensley, 

 (footnote omitted).  Trial-court judges need not “become green-eyeshade 
accountants.  The essential goal in shifting fees (to either party) is to do rough justice, not 
to achieve auditing perfection.  So trial courts may take into account their overall sense of 

a suit, and may use estimates in calculating and allocating an attorney’s time.”  Fox v. Vice, 

 (2011).                                                 
Evidence of reasonable rates includes affidavits describing the qualifications and 
experience of the attorneys working on the case, “affidavits from other lawyers opining on 
the reasonableness of rates,” and citations to fee awards in similar cases.  Bores v. Domino’s 

Pizza LLC, No. 05-cv-2498 (RHK/JSM), 

, at *6 (D. Minn. Oct. 27, 
2008).  “When determining reasonable hourly rates, district courts may rely on their own 
experience and knowledge of prevailing market rates.”  Hanig v. Lee, 

 
(8th Cir. 2005).                                                          
Stewart requests an hourly rate of $495 and $550 for two partners, $250 for an 

associate, and $125 for a paralegal.  ECF No. 58-1 at 2–3.  Stewart does not provide 
affidavits describing the qualifications and experience of the attorneys, affidavits from 
other lawyers opining on the reasonableness of the requested fees, or citations to fee awards 
in similar cases.  An “itemization of the time spent,” id. ¶ 4, describes the two partners, 
Emma Denny and Artur Davis, as having ten and sixteen years of experience, and the 

associate as having two years of experience, id. at 2–3.  Although the partners’ rates are 
not extraordinarily high for the Minnesota market, see Sanders v. BNSF Ry. Co., No. 17-cv-
5106 (ECT/JFD), 

, at *12 (D. Minn. Dec. 5, 2022) (finding $350 to 
$775 per hour reasonable); Fancher v. Klann, No. 13-cv-435 DSD/JJK, 

, 
at *2 (D. Minn. Apr. 21, 2015) (finding $225 to $650 per hour reasonable); Safelite Grp., 
Inc. v. Rothman, No. 15-cv-1878 (SRN/KMM), 

, at *7 (D. Minn. Aug. 
11, 2017) (finding $370 and $560 per hour reasonable), a slight reduction is appropriate to 

account for Stewart’s limited evidence to justify the partners’ rates.  Therefore, Ms. Denny 
and Mr. Davis’s rates will each be reduced by $50 to $445 per hour and $500 per hour.  
Based on my experience and familiarity with the market, I find that $250 for a second-year 
associate and $125 for a paralegal are reasonable hourly rates.           
Stewart’s counsel spent a total of 61.5 hours working on this case.  ECF No. 58-1 

at 2–3.  The total hours break down as follows: Artur Davis, 23.5 hours; Emma Denny, 20 
hours; Associate, 4.7 hours; Paralegal, 13.3 hours.  

  Having carefully reviewed the 
itemization of time spent, that amount of time was reasonable to file a complaint, respond 
to counterclaims, perform preliminary discovery, respond to Golden Victory’s motion to 
stay the case, and move for default judgment.                             

The lodestar amount is therefore calculated as follows: $500 x 23.5, $445 x 20, $250 
x 4.7, and $125 x 13.3, for a total award of $23,487.5.  Stewart has not requested any 
enhancement, and the lodestar amount will not be reduced sua sponte.      
(5) Stewart’s request for $5,902.65 in costs will be granted in part.  Although a 
prevailing § 3730(h) plaintiff is entitled to an award of “litigation costs,” courts have 

concluded this is limited to ordinary costs as defined by 

, the statute 
governing the taxation of costs.  See Neal v. Honeywell, Inc., 

 (7th Cir. 
1999); Kakeh v. United Plan. Org., 

, 17–18 (D.D.C. 2009); Thompson 
v. Quorum Health Res., LLC, No. 1:06-CV-168, 

, at *4 (W.D. Ky. May 
21, 2010).  This is consistent with the Eighth Circuit’s holding that without explicit 
statutory authority for the taxation of expenses as costs, “federal courts are bound by the 
limitations set out in 

 and § 1920.”  Johnson, Tr. of Operating Eng’rs Loc. 

#49 Health & Welfare Fund v. Charps Welding & Fabricating, Inc., 

 
(8th Cir. 2020) (quoting Crawford Fitting Co. v. J. T. Gibbons, Inc., 

 
(1987)).                                                                  
Section 1920 itemizes several types of expenditures a judge or clerk of court may 
tax  as  costs.    Section  1920(1)  provides  that  “[f]ees  of  the  clerk  and  marshal”  are 

recoverable, while § 1920(2) provides that “[f]ees for printed or electronically recorded 
transcripts necessarily obtained for use in the case” are recoverable.  Stewart’s filing fee 
and pro hac vice fee, totaling $502.00, will be awarded as taxable costs under § 1920(1).9  
See Craftsmen Limousine, Inc. v. Ford Motor Co., 

 (8th Cir. 2009) 
(“[P]ro hac vice fees are costs under 

.”).  Stewart’s costs for a transcript 

of the default-judgment hearing, in the amount of $244.40, will be awarded as taxable costs 
under  §  1920(2)  because  that  transcript  was  necessarily  obtained  for  Stewart’s 
supplemental brief.  See Nat’l Presto Indus., Inc. v. U.S. Merchs. Fin. Grp., Inc., No. 18-
cv-3321 (SRN/LIB), 

, at *17 (D. Minn. Nov. 17, 2023); ECF No. 55 
(ordering supplemental briefing).  The remaining requested costs are not taxable costs that 

can be awarded under § 1920.                                              


9    In  support  of  his  request  for  costs,  Stewart  filed  a  spreadsheet  titled  “HKM 
Employment Attorneys LLP Unbilled Charges.”  ECF No. 58-1 at 5.  The requested costs 
are categorized based on the descriptions included in that spreadsheet.   
However, expenses that are not taxable costs “may nevertheless be awarded if they 
are normally billed to clients.”  Miller v. Bd. of Regents of Univ. of Minn., 

, 597 (D. Minn. 2019); see also Charps, 

 (“Some expenses that the 

district court awarded as ‘costs’ might be awarded as attorney’s fees if they are separately 
billed under the prevailing practice in the local community.”).  Here, Stewart’s requested 
travel, lodging, and related expenses will be awarded as attorneys’ fees.  See Miller, 402 
F. Supp. 3d at 597 (granting a request for travel expenses as part of an attorneys’ fee 
award); Safelite, 

, at *4 (same).  These travel-related expenses total 

$1,409.68.  $9.55 will be awarded for shipping.  See Safelite, 

, at *4 
(granting delivery charges).  And another $369.22 will be awarded for third-party vendors 
proofreading and formatting filings.  It seems clear that these expenses saved time and 
money that would otherwise have been spent on a lawyer or paralegal doing the same work 
at a higher rate.                                                         

Stewart  also  requests  $142.80  for  “[c]lient  support  services”  and  an  $850.00 
“Admin Fee.”  Without more details about these fees, it is impossible to determine whether 
they are normally billed to clients and were reasonable.  Finally, Stewart requests $2,375.00 
in expert fees for the report of Dr. Jones.  ECF No. 58-1 at 5.  But “expert witness fees are 
generally not part of attorney’s fees.”  Charps, 

; but see Miller, 402 F. 

Supp. 3d at 597 (awarding expert fees as expenses that are normally billed to clients).  And 
because expert witness fees are also not available under § 1920, the costs for Stewart’s 
expert will not be awarded here.                                          
To summarize, $746.40 of Stewart’s requested costs will be awarded as taxable 
costs under § 1920, $1,788.45 of Stewart’s requested costs will be awarded as attorneys’ 
fees because they are expenses ordinarily billed to clients, and the remaining $3,367.80 

requested as costs will be denied because Stewart has not demonstrated they fall into either 
permissible category of recovery.                                         
(6) Stewart’s request for $1,235,510.10 in liquidated damages will be granted in 
part.  Stewart claims that “[a] prevailing plaintiff in an FCA case is entitled to liquidated 
damages in an amount equal to two times the award of back pay, interest on back pay, and 

compensation for any special damages . . . .”  ECF No. 57 at 26.  That’s not quite right.  
Section 3730(h)(2) provides:                                              
     Relief under paragraph (1) shall include reinstatement with the 
     same seniority status that employee, contractor, or agent would 
     have had but for the discrimination, 2 times the amount of back 
     pay, interest on the back pay, and compensation for any special 
     damages sustained as a result of the discrimination, including  
     litigation costs and reasonable attorneys’ fees.                

(h)(2).  Any interpretation of § 3730(h)(2) must heed the commands of 
punctuation.  Facebook, Inc. v. Duguid, 

 (2021).  Here, four items of 
relief  are  separated  by  a  comma:  reinstatement,  backpay,  interest  on  backpay,  and 
compensation for special damages.  The second item in that list is “2 times the amount of 
back pay.”  

(h)(2).  Because this form of relief is separated by commas in 
a series, the doubling language only applies to backpay, not prejudgment interest or special 
damages.  Other courts agree.  Neal, 191 F.3d at 831–32 (“The False Claims Act provides 
for both double back pay and other relief in the form of ‘special damages.’”); Wilkins, 198 
F. Supp. 2d at 1088–92 (doubling only backpay); Miniex v. Houston Hous. Auth., 

, 654–662 (S.D. Tex. 2019) (same); Kakeh v. United Plan. Org., 

 (D.D.C. 2009) (same).  Therefore, only Stewart’s backpay award will be 

doubled; he will be awarded an additional $725,000.                       
(7) Stewart’s request for $125,000 in severance pay will be denied.  As the Supreme 
Court has explained, it “goes without saying that the courts can and should preclude double 
recovery by an individual.”  E.E.O.C. v. Waffle House, Inc., 

 (2002) 
(quoting Gen. Tel. Co. of the Nw. v. E.E.O.C., 

 (1980)).  For this reason, 

“[f]airness requires that there be certain deductions and offsets in computing backpay 
rewards.”  Paul H. Tobias, Litigating Wrongful Discharge Claims § 8:14 (June 2023 
Update).  One such deduction is severance pay.  Id.; Smith v. World Ins. Co., 

 (8th Cir. 1994) (affirming jury instruction “to reduce the backpay award by the 
amount of the severance package”); Folz v. Marriott Corp., 

, 1017–18 

(W.D. Mo. 1984) (subtracting severance pay from backpay award); Stuart v. Normandy 
Osteopathic Med. Ctr. of St. Louis, Inc., No. 89-993C(1), 

, at *2 (E.D. 
Mo. May 8, 1990) (“Plaintiff does not dispute that his severance pay, his wages from 
DePaul  Hospital,  and  his  Subway  restaurant  salary  are  deductible  from  any 
potential back pay award.”).  Because severance pay is normally taken out of a backpay 

award, granting both after the fact would amount to double recovery.  And because backpay 
is doubled after reductions, Hammond, 218 F.3d at 891–92, awarding backpay (instead of 
severance) will result in a greater total damages award.                  
                          IV                                         
There is one final wrinkle—an entry of default judgment would not dismiss Golden 
Victory’s counterclaims.  See, e.g., Park Hosp. LLC v. Sangha Hosp., LLC, No. 18-cv-

2171, (NEB/ECW), 

, at *1 (D. Minn. Aug. 24, 2020) (separately 
granting default judgment and dismissing counterclaims).  And Stewart does not request 
dismissal  of  Golden  Victory’s  counterclaims.    See  ECF  No.  61  (proposed  order).  
Nonetheless, Rule 41(b) allows a court to dismiss a case sua sponte for failure to prosecute.  
Sterling v. United States, 

 (8th Cir. 1993).  As Rule 41(b) states, “[i]f the 

plaintiff fails to prosecute or to comply with these rules or a court order, a defendant may 
move to dismiss the action or any claim against it.”  Fed. R. Civ. P. 41(b).  “[D]ismissal 
with  prejudice  is  an  extreme  sanction  and  should  be  used  only  in  cases  of  willful 
disobedience of a court order or continued or persistent failure to prosecute a complaint.”  
Smith v. Gold Dust Casino, 

 (8th Cir. 2008) (quoting Givens v. A.H. 

Robins Co., 

 (8th Cir. 1984)).  Golden Victory was ordered to find new 
counsel in September 2023.  ECF No. 40.10  It has not done so.  Nor have the owners 
communicated with the Court pro se to explain their failure to retain new counsel.  And 
Golden Victory’s owners did not respond to Stewart’s motion for default judgment, which 
Stewart served in December 2023.  See ECF No. 50.  Golden Victory’s persistent failure 

to prosecute its counterclaims merits with-prejudice dismissal.           


10   The last time Golden Victory’s owners communicated with its counsel was March 
2023.  ECF No. 33 ¶¶ 5–10.                                                

Based on the foregoing, and on all the files, records, and proceedings herein, IT IS 
ORDERED THAT:                                                             

1.   Plaintiff  and  Counter-Defendant  Bryan  Stewart’s  Motion  for  Default 
Judgment [ECF No. 45] is GRANTED IN PART and DENIED IN PART.              
2.   Judgment is awarded to Stewart and against Defendant Golden Victory 
Medical LLC in the total amount of $1,821,620.68, to bear interest at the statutory rate 
from the date of judgment.  The award consists of:                        

     a.   $1,500,000 in backpay;11                                   
     b.   $45,598.33 in prejudgment interest;                        
     c.   $250,000 for emotional distress;                           
     d.   $25,275.95 in attorneys’ fees; 12 and                      
     e.   $746.40 in taxable costs.                                  

3.   Defendant Golden Victory Medical LLC’s Counterclaims are DISMISSED 
WITH PREJUDICE for failure to prosecute.                                  
       LET JUDGMENT BE ENTERED ACCORDINGLY.                          

Date: March 26, 2024               s/ Eric C. Tostrud                     
                              Eric C. Tostrud                        
                              United States District Court           


11   $725,000 x 2.                                                        

12   $23,487.5 + $1,788.45.                                               

             UNITED STATES DISTRICT COURT                            
                DISTRICT OF MINNESOTA                                


Bryan Stewart,                         File No. 22-cv-2145 (ECT/LIB)      

  Plaintiff and Counter-Defendant,                                   

v.                                       OPINION AND ORDER                

Golden Victory Medical LLC,                                               

  Defendant and Counter-Claimant.                                    

________________________________________________________________________  
Emma Denny, HKM Employment Attorneys, LLP, Minneapolis, MN, and Artur Davis, 
HKM Employment Attorneys, Birmingham, AL, for Plaintiff Bryan Stewart.    

Defendant Golden Victory Medical LLC, pro se.                             


Plaintiff Bryan Stewart filed this lawsuit against Defendant Golden Victory Medical 
LLC alleging retaliation under the False Claims Act and breach of contract.  After less than 
a year, Golden Victory’s counsel moved to withdraw.  The motion was granted, but 
Magistrate Judge Brisbois ordered Golden Victory to retain new counsel within thirty days.  
Golden Victory has not retained new counsel or explained its failure to abide by that order.  
Because organizations are unable to represent themselves in court, Stewart requested, and 
received, an entry of default from the clerk’s office under Federal Rule of Civil Procedure 
55(a).  Stewart now moves for default judgment under Rule 55(b).          
The basic process for determining whether a default judgment should be entered is 
straightforward.    (1)  The  entry  of  default  means  that  “the  factual  allegations  of  the 
complaint, except those relating to the amount of damages, will be taken as true.”  10A 
C. Wright, A. Miller & M. Kane, Federal Practice and Procedure: Civil § 2688.1 (4th ed. 
& April 2023 Update) (footnotes omitted).  (2) Next, it must be determined whether the 
taken-as-true factual allegations of the complaint “constitute a legitimate cause of action, 

since a party in default does not admit mere conclusions of law.”  Marshall v. Baggett, 

 (8th Cir. 2010) (quoting Murray v. Lene, 

 (8th Cir. 
2010)).  (3) If the taken-as-true allegations of the complaint constitute a legitimate cause 
of action, then the amount of the default judgment must be ascertained.  See Hagen v. 
Sisseton-Wahpeton Cmty. Coll., 

 (8th Cir. 2000).       

                           I                                         
Start with the factual allegations of Stewart’s Complaint that will be taken as true.  
Golden Victory is a “privately held Nevada-based limited liability company that operates 
five clinics in four states” and specializes in mental-health services.  Compl. [ECF No. 1] 
¶ 7.  The co-owners of Golden Victory are Gabriel Luthor and Elizabeth Brown.  Id. ¶ 8.  

Approximately 65% of Golden Victory’s patients are Medicare or Medicaid beneficiaries.  
Id. ¶ 11.  The Centers for Medicare & Medicaid Services (“CMS”) provides “detailed 
criteria  for  the  reimbursement  of  providers  for  services  covered  by  Medicare  and 
Medicaid.”  Id. ¶ 12.                                                     
In  November  2021,  Stewart  entered  into  an  Employment  Agreement  (the 

“Agreement”) with Golden Victory.  See ECF No. 1-1.  Stewart, a nationally recognized 
expert in the field of health services management, was hired as the first Chief Executive 
Officer of Golden Victory.  Compl. ¶¶ 9–10.  After starting as Golden Victory’s CEO, 
Stewart quickly recognized flaws in the coding and billing processes at the organization’s 
clinics.  Id. ¶ 20.  In February 2022, he authorized Golden Victory’s general counsel to hire 
an independent third party to conduct a systematic audit of the organization’s coding and 
billing processes.  Id. ¶ 21.  Shortly thereafter, Stewart learned that one of Golden Victory’s 

clinics “had been notified in December 2021 by Medicare that the agency was suspending 
payments to the clinic due to evidence of overbilling.”  Id. ¶ 22.  Payments to the clinic 
were placed in escrow pending an inquiry by the CMS and Internal Revenue Service 
(“IRS”).  Id.  Luthor, Brown, and their personal attorneys had engaged with the government 
agencies for three months without informing Stewart about the inquiries.  Id. ¶ 23. 

On April 28, 2022, the third-party auditor presented an executive summary of the 
audit’s results to Stewart.  Id. ¶ 24.  The audit found sweeping errors, including: “coding 
and billing accuracy levels . . . in the 32.44% range, in comparison with an industry gold 
standard of 95%,” id. ¶ 25, inadequate documentation to support coding assignments, 
“frequent errors in the coding process for neurofeedback, and incorrect documentation of 

time  increments,”  id.  ¶  26.    The  report  also  found  clinics  incorrectly  coded 
nonphysician-provider services as physician services (allowing for a higher reimbursement 
rate), and misused the “incident-to” standard, a rule that allows nonphysician providers to 
bill at a higher rate when the initial patient visit is performed by a supervising physician, 
id. ¶¶ 13–16, 26.                                                         

Stewart recognized that these errors put Golden Victory at risk of civil and criminal 
liability,  “and  strongly  communicated  these  risks  in  [a]  May  4  virtual  call  with  the 
ownership.”  Id. ¶ 27.  He proposed an “aggressive remediation strategy, including a 
potential pause in billing activity until immediate corrective action could be put in place.”  
Id. ¶ 28.  “Luthor and Brown stunned Stewart with their lack of concern.”  Id. ¶ 29.  The 
owners claimed a prior audit contradicted the independent auditor’s findings, “but they 
declined to identify the auditor or share the findings.”  Id.  The owners also “rejected the 

idea of a billing pause as too costly.”  Id.                              
Undeterred,  Stewart  developed  a  “comprehensive  strategy”  to  mitigate  the 
compliance  issues.    Id.  ¶  30.    He  directed  the  executive  leadership  team  to  draft  a 
remediation plan and gave clinical staff a companywide briefing in a conference call on 
May 9.  Id. ¶ 30.  Stewart formally recommended to Luthor and Brown that Golden Victory 

terminate its relationship with its third-party billing company, but Luthor rejected this idea.  
Id. ¶ 31.                                                                 
While Stewart sought to mitigate the widespread billing irregularities, Golden 
Victory’s director of operations reported Stewart’s remediation efforts to Luthor and 
Brown.  Id. ¶ 33.  On a June 1, 2022 Zoom call, Brown told Stewart that he was being 

terminated immediately, citing allegations of “racism and sexism” and claiming Stewart 
had falsified timekeeping records.  Id. ¶ 34; see also ECF No. 58-1 at 33.1  Though the 
Complaint is not explicit on the point, Stewart made clear during his evidentiary-hearing 
testimony that he denies the allegations of racism and sexism leveled against him.  ECF 
No. 58-1 at 34–35, 44, 52.  Golden Victory did not follow its personnel handbook for 

investigating employee allegations, interview Stewart, or gather any evidence from him.  
Compl. ¶ 35.  Stewart was not given an opportunity to respond to these claims, which the 

1    Page cites are to CM/ECF pagination appearing in a document’s upper right corner, 
not to a document’s original pagination.                                  
owners presented to him “for the first time on the day of his termination.”  Id. ¶ 36.  After 
Stewart’s termination, Golden Victory abruptly halted the remediation process Stewart had 
launched to curb coding and billing irregularities.  Id. ¶ 41.            

Despite terminating Stewart over Zoom without prior notice, a written notice of 
termination purported to invoke § 14(a) of the Agreement, which provides for separation 
by mutual written agreement.  Id. ¶ 37.  Under the Agreement, Golden Victory could 
terminate Stewart without cause “provided the Company continue[d] to make [base salary] 
payments for six (6) or twelve (12) months respectively from the date of notice pursuant to 

this Section.”  ECF No. 1-1 § 14(c)(ii).  Stewart’s base salary was $250,000, but Golden 
Victory only offered Stewart a lump sum equaling eight-weeks’ pay, totaling roughly 
$38,461.00.  Compl. ¶ 39.                                                 
Stewart brought this two-count lawsuit on August 31, 2022.  See Compl.  Count I is 
a retaliation claim under the False Claims Act.  Id. ¶¶ 42–46.  Count II is a breach-of-

contract claim.  Id. ¶¶ 47–50.  Golden Victory counterclaimed for breach of contract and 
tortious interference with contract.  ECF No. 9.                          
In May 2023, Golden Victory moved to stay prosecution of the case because of an 
active federal investigation targeting Brown, Luthor, and Golden Victory.  ECF No. 19.  
The motion to stay was denied.  ECF No. 29.  Golden Victory’s attorney, Mr. Kallenbach, 

then moved to withdraw, stating Brown and Luthor refused to cooperate with him to defend 
the case.  ECF Nos. 30, 32.  On September 22, 2023, Magistrate Judge Brisbois granted 
the  motion  to  withdraw,  leaving  Golden  Victory  unrepresented.    ECF  No.  40.  
Mr. Kallenbach was ordered to serve Luthor and Brown a copy of the order as soon as 
practicable and to file a certificate of service.  Id. at 7.  Golden Victory was ordered to “[a]s 
soon as practicable thereafter and in any event by no later than thirty (30) days after service 
of the present Order . . . [to] have its substitute counsel enter a notice of appearance in the 

present action.”  Id.                                                     
Stewart applied to the clerk’s office for an entry of default in early December, ECF 
No. 43, and the clerk’s office entered default against Golden Victory on December 4, 2023, 
ECF No. 44.  Stewart then moved for default judgment.  ECF No. 45.  Mr. Kallenbach, 
however, did not initially receive notice of Judge Brisbois’s September 22, 2023 Order 

granting his motion to withdraw, instead only learning about the Order on December 13, 
2023.  ECF No. 51 at 1–2.  Mr. Kallenbach filed a certificate of service on January 3, 2024.  
ECF No. 52.  Golden Victory remains unrepresented.                        
                           II                                        
                           A                                         

Stewart’s first claim is for retaliation under the False Claims Act.  Enacted in 1863, 
the False Claims Act “was originally aimed principally at stopping the massive frauds 
perpetrated  by  large  contractors  during  the  Civil  War.”    United  States  v.  Bornstein, 

, 305 n.1, 309 (1976).  The FCA imposes liability on anyone who “knowingly 
presents, or causes to be presented, a false or fraudulent claim for payment or approval” or 

who “knowingly makes, uses, or causes to be made or used, a false record or statement 
material to a false or fraudulent claim.”  

(a)(1)(A)–(B).  For purposes of 
the statute, “knowingly” includes a person who “has actual knowledge of the information; 
acts in deliberate ignorance of the truth or falsity of the information; or acts in reckless 
disregard of the truth or falsity of the information.”  

(b)(1)(A)(i)–(iii).  
“The FCA attaches liability, not to the underlying fraudulent activity, but to the claim for 
payment.”  Olson v. Fairview Health Servs. of Minn., 

 (8th Cir. 2016).  

“Qui tam provisions permit private persons, relators, to sue for violations in the name of 
the United States and to recover part of the proceeds if successful.”  United States ex rel. 
Strubbe v. Crawford Cnty. Mem’l Hosp., 

 (8th Cir. 2019) (citing 

(b), (d)).                                                
To protect insiders who might be “reluctant to use these qui tam provisions due to 

fear of employer backlash, the False Claims Act protects whistleblowers from employer 
retaliation.”  United States ex rel. Reed v. KeyPoint Gov’t Sols., 

 (10th 
Cir. 2019).  The FCA protects employees from being discharged or otherwise retaliated 
against “because of lawful acts done by the employee . . . in furtherance of an action under 
this section or other efforts to stop 1 or more violations of this subchapter.”  

(h)(1).  To establish a retaliation claim under the FCA, a “plaintiff must prove that 
(1) the plaintiff was engaged in conduct protected by the [False Claims Act]; (2) the 
plaintiff’s employer knew that the plaintiff engaged in the protected activity; (3) the 
employer retaliated against the plaintiff; and (4) the retaliation was motivated solely by the 
plaintiff’s protected activity.”  Elkharwily v. Mayo Holding Co., 

 (8th 

Cir. 2016) (quoting Schell v. Bluebird Media, LLC, 

 (8th Cir. 2015)).  
The taken-as-true allegations establish a retaliation claim.              
(1) An employee’s activity is protected when the employee’s actions satisfy two 
conditions.  Schuhardt v. Wash. Univ., 

 (8th Cir. 2004).  First, “the 
employee’s conduct must have been in furtherance of an FCA action,” 

 or (after the 
2009 amendment to the FCA) the employee must “lawfully try to stop one or more 
violations of the Act . . . , without regard to whether their conduct advances a private or 

government lawsuit under the Act.” 2  Reed, 

.  Second, an employee must 
(1)  believe  in  good  faith;  and  (2)  “a  reasonable  employee  in  the  same  or  similar 
circumstances might believe, that the employer is possibly committing fraud against the 
government.”  Wilkins v. St. Louis Hous. Auth., 

 (8th Cir. 2002) (quoting 
Moore v. Cal. Inst. of Tech. Jet Propulsion Lab., 

 (9th Cir. 2002)).   

Stewart engaged in lawful acts to stop Golden Victory’s overbilling practices by 
authorizing an independent third party to conduct an audit, proposing a pause in billing 
activity,  recommending  the  owners  terminate  Golden  Victory’s  third-party  billing 
company, and directing the executive leadership team to draft a remediation plan.  And 
Stewart’s  subjective  belief  that  Golden  Victory  was  defrauding  the  government  was 

objectively reasonable, given pending government inquiries into Golden Victory’s billing 
practices and a 54-page independent report finding systematic billing and coding errors.  
See Lord v. Univ. of Mia., 

, 1311 (S.D. Fla. 2021) (concluding that a 
Chief Compliance Officer’s belief that a university laboratory was violating the FCA by 
overbilling Medicare, a belief grounded in a third-party report, was objectively reasonable); 

Elkharwily v. Mayo Holding Co., 

 (D. Minn. 2013) (alleged 

2    “The opposition clause was added by Congress in 2009, and the Eighth Circuit has 
not articulated a distinct test to determine when this clause is satisfied.”  Sherman v. 
Berkadia Com. Mortg. LLC, No. 4:17 CV 2183 RWS, 

, at *7 (E.D. Mo. 
Jan. 15, 2019), aff’d, 

 (8th Cir. 2020).                      
violations of Medicare and Medicaid, including overbilling and improper coding, could 
lead to a viable claim under the FCA).  Therefore, Stewart’s efforts to stop Golden 
Victory’s overbilling practices were protected under § 3730(h)(1).        

(2) Deciding if Stewart’s employer had notice of his protected conduct implicates a 
preliminary question—the heightened notice standard for compliance employees.  The 
Eighth Circuit has spoken little on the issue.  In a pre-amendment footnote, it reasoned that 
“[a]n employee tasked with the internal investigation of fraud against the government 
cannot bring a § 3730(h) action for retaliation unless the employee makes it clear that her 

actions go beyond the assigned task.”  Schuhardt, 

 n.2.  The Seventh Circuit 
has  described  the  reasoning  behind  this  rule.    When  a  compliance  employee  alerts 
supervisors to regulatory violations, this does “not necessarily put [the company] on notice 
that [the employee] was planning to take a far more aggressive step and bring a qui tam 
action against them or report their conduct to the government.”  Brandon v. Anesthesia & 

Pain Mgmt. Assocs., 

 (7th Cir. 2002).  In other words, an employee’s 
conduct within the scope of their duties generally does not put their employer on notice the 
employee is acting in furtherance of a qui tam action.  See Yuhasz v. Brush Wellman, Inc., 

 (6th Cir. 2003) (“[The plaintiff] was simply performing his ordinary 
duties as a supervisor of laboratory testing.  [The defendant] cannot be charged with notice 

on this basis.”).                                                         
But courts disagree whether the heightened standard survives the 2009 amendment 
to the FCA.  Since then, several courts have applied the heightened standard without 
analyzing this issue.  See, e.g., Tener v. Mercy Health Servs.-Iowa, Corp., No. 22-CV-
4025-CJW-MAR, 

, at *4 (N.D. Iowa July 27, 2022); United States ex 
rel. Campie v. Gilead Scis., Inc., 

 (9th Cir. 2017) (“Courts have held that 
when an employee is tasked with such investigations, it takes more than an employer’s 

knowledge of that activity to show that an employer was on notice of a potential qui tam 
suit.”); Omwenga v. United Nations Found., 

 (D.D.C. 2017).  The 
Tenth Circuit held the rule continues to apply, reasoning:                
     [I]n these decisions, we recognized that an employer might      
     reasonably presume that when a compliance employee reports      
     incidents of fraud she is just doing her job.  So to hold an    
     employer liable under the Act’s whistleblower provisions, our   
     pre-2009  precedent  required  a  compliance  employee  to      
     overcome that presumption by showing that she was engaging      
     in protected activity, not just doing her job.                  

     We think this reasoning has survived the 2009 amendment.        
     True, as we have explained above, that amendment expanded       
     the scope of protected activity and thus expanded the universe  
     of conduct that a relator may plead in giving the employer      
     notice of the protected activity.  But nothing about the 2009   
     amendment undercuts the rationale of our precedent addressing   
     compliance officers who are charged by their employer with      
     investigating fraud.  See United States ex rel. Campie v. Gilead 
     Scis., Inc., 

 (9th Cir. 2017) (deeming our pre-
     2009 Ramseyer decision “instructive,” in a post-amendment       
     context, on the point that compliance employees must do more    
     to show an employer’s knowledge), cert. denied, ––– U.S. –––    
     , 

, 

 (2019).                        

     In  sum,  to  state  a  retaliation  claim,  as  relevant  here,  an 
     employee’s  complaint  must  allege  facts  that  show  her     
     employer  knew  of  her  efforts  to  stop  a  False  Claims  Act 
     violation.    The  2009  amendment  left  intact  our  precedent 
     requiring  compliance  employees  to  do  more  than  other     
     employees to meet the notice element.                           
Reed, 

.  But other courts have questioned the continued soundness of the 
heightened standard.  After all, the rule was created to ensure “that the employer was on 
notice of an employee’s intentions of bringing or assisting in an FCA action, whereas the 

2009 amendments broadened the scope of the FCA’s whistleblower provision to protect 
against retaliation in cases where the employee was engaged in efforts to stop an FCA 
violation, even if those efforts were not necessarily in furtherance of an FCA claim.”  
United States v. N. Adult Daily Health Care Ctr., 

, 299 (E.D.N.Y. 
2016) (cleaned up); see also Malanga v. NYU Langone Med. Ctr., No. 14cv9681, 

, at *3 (S.D.N.Y. Nov. 12, 2015); Lord v. Univ. of Mia., No. 13-22500-CIV-
ALTONAGA/McAliley, 

, at *16–17 (S.D. Fla. Aug. 8, 2022).   
This questions need not be resolved here because, even if the heightened pleading 
standard applied, Stewart’s conduct was sufficient to put Golden Victory’s owners on 
notice that his activity was protected.3  “[T]o provide actual or constructive knowledge, 


3    There are sound reasons to think the heightened standard no longer applies.  Under 
the pre-amendment statute, the heightened notice standard made sense.  An employee’s 
performance of her monitoring and reporting activities would not “put defendants on notice 
that she was acting ‘in furtherance of’ an FCA action—e.g., that she was furthering or 
intending to further an FCA action rather than merely warning the defendants of the 
consequences of their conduct.”  U.S. ex rel. Ramseyer v. Century Healthcare Corp., 

 (10th Cir. 1996).  But after the 2009 amendment to the FCA, nothing 
stops a compliance employee’s acts, within the scope of her duties, from putting an 
employer on notice that her activities are efforts to stop a violation of the FCA.  When an 
employer is aware of ongoing FCA violations (or potential violations) and knows about an 
employee’s efforts to stop those violations, the better answer might be that the notice 
requirement is satisfied regardless of whether the employee’s efforts fall within the scope 
of her duties.  Regardless, as noted, there is no reason to resolve this question here, and 
doing  so  would  seem  especially  unwise  considering  the  one-sided  nature  of  the 
default-judgment motion.                                                  
employees must connect the alleged misconduct to fraudulent or illegal activity or the 
FCA.”  Strubbe, 

.  Stewart presented the results of the third-party audit to 
Luthor and Brown on a virtual call.  During that presentation, he strongly communicated 

the risks of civil and criminal liability.  The IRS and CMS inquiries also put the owners on 
notice that their billing practices exposed them to liability.  And not only did Stewart inform 
the owners directly about his ongoing remediation efforts, but a different member of the 
executive leadership team also reported this same information to the owners.  Compl. 
¶¶ 27–28, 31, 33.  Finally, as Golden Victory’s CEO, Stewart’s responsibilities were 

company-wide; he was not a traditional quality control or compliance employee, meaning 
his active efforts to resolve Golden Victory’s billing practices did not fall explicitly within 
his job duties.  See Lord, 

, at *16–17 (“Highly relevant to this analysis 
is the nature of Plaintiff’s executive roles at the University.  No manual dictated Plaintiff’s 
compliance responsibilities; he was a high-ranking executive with discretion to define his 

own role and set policy. . . .  And without any clear baseline for what Plaintiff’s ‘typical’ 
responsibilities were, the Court cannot lightly infer that any particular action he took to 
root out fraud was professionally unremarkable.”).                        
(3) “Retaliatory acts under the FCA include discharging, demoting, suspending, 
threatening, harrassing [sic], or otherwise discriminating against an employee.”  Strubbe, 

.  Here, this is satisfied by Golden Victory discharging Stewart.   
(4) Stewart must show his discharge “was motivated solely by [his] protected 
activity.”  Schell v. Bluebird Media, LLC, 

 (8th Cir. 2015).  “[A] 
finding of dual motive exonerates the employer.”  Norbeck v. Basin Elec. Power Coop., 

 (8th Cir. 2000).  Because Brown and Luthor terminated Stewart shortly 
after his efforts to stop widespread billing irregularities, rejected Stewart’s proposals to 
pause billing and terminate Golden Victory’s third-party billing company, and halted 

Stewart’s remediation initiatives after terminating him, the taken-as-true allegations satisfy 
causation.    And  Stewart  adequately  alleges  that  Golden  Victory’s  stated  reasons  for 
termination—accusations of workplace misconduct—were pretextual.  See Townsend v. 
Bayer Corp., 

 (8th Cir. 2014) (“When an employee presents evidence 
showing an employer’s stated reason for taking an adverse action against him is pretextual, 

such evidence also serves to prove retaliation.”).                        
                           B                                         
Stewart’s second cause of action is breach of contract.  Under Minnesota law, 
a breach-of-contract claim requires: “(1) a valid contract; (2) performance by the plaintiff 
of any conditions precedent; (3) a material breach of the contract by the defendant; and (4) 

damages.”  Russo v. NCS Pearson, Inc., 

 (D. Minn. 2006) (citation 
omitted); see Park Nicollet Clinic v. Hamann, 

 (Minn. 2011) (same).  
Deciding if Stewart’s Complaint meets all four elements requires interpreting the contract.  
“[T]he primary goal of contract interpretation is to determine and enforce the intent of the 
parties.”  Staffing Specifix, Inc. v. TempWorks Mgmt. Servs., 

 (Minn. 

2018) (alteration in original) (quoting Motorsports Racing Plus, Inc. v. Arctic Cat Sales, 
Inc.,  

  (Minn.  2003)).    “When  the  language  of  the  contract  is 
unambiguous, it should be given its plain meaning.”  Minn. Jud. Branch v. Teamsters 
Loc. 320, 

, 88 (Minn. Ct. App. 2022).                        
The Agreement, attached to the Complaint, is a valid employment contract.  See 
ECF No. 1-1; Compl. ¶ 9.                                                  
The  second  element,  performance  of  any  conditions  precedent,  requires  some 

analysis.  A condition precedent is “any fact or event, subsequent to the making of a 
contract, which must exist or occur before a duty of immediate performance arises under 
the contract.”  Nat’l City Bank of Minneapolis v. St. Paul Fire & Marine Ins., 

 (Minn. 1989).  “[I]f the event required by the condition does not occur, there [is] 
no breach of contract.”  Capistrant v. Lifetouch Nat’l Sch. Studios, Inc., 

 (Minn. 2018) (quoting 451 Corp. v. Pension Sys. for Policemen & Firemen, 

 (Minn. 1981)).  “[N]o particular code words [are] needed to form an express 
condition.”  Carl Bolander & Sons. v. United Stockyards Corp., 

 
(1974).                                                                   
Under  the  Agreement,  Golden  Victory  is  only  obligated  to  provide  severance 

compensation if Golden Victory terminates Stewart without cause.  ECF No. 1-1 § 14(c)(ii) 
(“In the event that [Golden Victory] provides notice of termination without cause, [Stewart] 
will receive as termination compensation . . . a Base Salary for a period of six (6) months 
from the date of notice.”).  The taken-as-true allegations describe a termination without 
cause.  Golden Victory fired Stewart relying on the pretext of misconduct.  See Compl. 

¶¶ 34–37, 41.  It invoked § 14(a) in its written notice of termination, id. ¶ 37, the provision 
governing a termination by mutual written agreement, despite unilaterally terminating 
Stewart, id. ¶ 34.  Because Golden Victory did not have a valid reason to terminate Stewart 
under the Agreement and its stated reasons for termination were pretextual, Stewart’s 
termination is best categorized as termination without cause under § 14(c).  Therefore, 
Golden Victory was required “to make payments for six . . . months . . . from the date of 
notice pursuant to this Section.”  ECF No. 1-1 § 14(c)(ii).               

Section  14(c)(iii)  provides  another  condition  to  Golden  Victory’s  severance 
obligation: “The right to the foregoing termination compensation . . . is subject to the 
Employee’s  execution  of  [Golden  Victory’s]  severance  agreement.”    ECF  No.  1-1 
§ 14(c)(iii).  The phrase “subject to” expressly conditions Golden Victory’s contractual 
duty to pay severance compensation on Stewart’s execution of Golden Victory’s severance 

agreement.  Therefore, it is fair to treat Stewart’s execution of the severance agreement as 
a condition precedent to Golden Victory’s contractual duty in § 14(c)(ii). 
Nonetheless, Stewart was excused from complying with this condition precedent 
because Golden Victory repudiated its contractual obligations.  “It is basic hornbook law 
that  an  unconditional  repudiation  of  a  contract,  either  by  words  or  acts,  which  is 

communicated to the other party prior to the time fixed by the contract for his performance 
constitutes an anticipatory breach.”  Matter of Haugen, 

, 79 n.6 (Minn. 
1979).  And “[i]t is elementary that a breach of a contract by one party excuses performance 
by the other.”  Soderbeck v. Ctr. for Diagnostic Imaging, Inc., 

 (Minn. 
Ct. App. 2010) (quoting Wasser v. W. Land Secs.,  

 (Minn. 1906)).  In 

other words, “a repudiation of the contract by one party relieves the other party of the duty 
to perform any conditions precedent that may exist to the performance of the repudiator.”  
13 Williston on Contracts § 39:39 (4th ed. May 2023 Update).  Golden Victory only offered 
Stewart $38,461 instead of the $125,000 it owed.  This offer repudiated its contractual 
obligation  to  pay  $125,000  in  severance  to  Stewart.    By  repudiating  its  contractual 
obligations,  Golden  Victory  breached  the  Agreement  and  excused  Stewart  from  the 
condition of executing the severance agreement.  Golden Victory’s failure to pay $125,000 

to Stewart is a material breach of the Agreement that caused damages—the failure to 
receive an amount owed.  Therefore, Stewart’s taken-as-true allegations satisfy all four 
elements of breach of contract.                                           
                          III                                        
Even  after  a  defendant’s  liability  is  established,  a  plaintiff  seeking  a  default 

judgment  “must  still  prove  its  actual  damages  to  a  reasonable  degree  of  certainty.”  
Everyday Learning Corp. v. Larson, 

, 818–19 (8th Cir. 2001).  “A district 
court may determine damages by computing from the facts of record the amount that the 
plaintiff is lawfully entitled to recover and enter judgment accordingly.”  Radisson Hotels 
Int’l, Inc. v. Fairmont Partners LLC, No. 19-cv-1176 (WMW/BRT), 

, at 

*2  (D.  Minn.  Feb.  10,  2020).    Stewart  requests  $898,333  in  backpay,  $55,612  in 
prejudgment interest on the backpay, $250,000 in emotional-distress damages, $25,662.50 
in attorneys’ fees, $5,902.65 in litigation costs, and $1,235,510.10 in liquidated damages 
under the False Claims Act.  ECF No. 57 at 26.  As for his breach-of-contract claim, Stewart 
seeks $125,000 in unpaid severance.  

.  Take each request in turn. 

(1) Stewart’s request for $898,333 in backpay will be granted in part.  Relief under 
the FCA “shall include . . . 2 times the amount of back pay.”  See 

(h)(2).  
Backpay is “[t]he wages or salary that an employee should have received but did not 
because of an employer’s unlawful action in setting or paying the wages or salary.”  
Backpay, Black’s Law Dictionary (11th ed. 2019).  In general, “[t]he back pay period 
begins with the date of lost earnings and ends on the date of the court’s decision, unless 
this period is terminated by some other event.”  2 Paul H. Tobias, Litigating Wrongful 

Discharge Claims § 8:9 (June 2023 Update).  “[M]easuring backpay always involves some 
level of speculation, and so backpay calculations ‘need not be precise; exactness is not 
expected.’”  Geraty v. Vill. of Antioch, No. 09 C 6992, 

, at *2 (N.D. Ill. 
Apr. 15, 2014) (quoting EEOC v. Custom Cos., Nos. 02 C 3768, 03 C 2293, 

, at * 12 (N.D. Ill. Mar. 8, 2007)).4                               

Normally, courts calculate backpay by relying on a plaintiff’s compensation history.  
See, e.g., E.E.O.C. v. MSDS Consultant Servs., LLC, No. 8:18-cv-02917-PX, 

, at *3 (D. Md. Dec. 22, 2021); Barnes v. Dep’t of Corr., No. 18-cv-105-jdp, 

, at *3 (W.D. Wis. Jan. 8, 2020); Phillips v. City of S. Bend, No. 3:15CV527-
PPS, 

, at *5–9 (N.D. Ind. May 1, 2018); Palmer v. Richard L. Schlott, 

Realtors, Inc., CIV. No. 88-4028 (CSF), 

, at *4 (D.N.J. June 20, 1990).  
That method runs into challenges here.  Stewart’s base salary for 2022 was $250,000, ECF 
No. 59-1 at 19, but he could have received an additional $250,000 if he met certain 


4    When awarding backpay under Title VII, “ambiguity in what the claimant would 
have  received  but  for  discrimination  should  be  resolved  against  the  discriminating 
employer.”  Pittington v. Great Smoky Mountain Lumberjack Feud, LLC, 

 (6th Cir. 2018) (quoting Rasimas v. Mich. Dep’t of Mental Health, 

, 628 
(6th Cir. 1983)); E.E.O.C. v. Wal-Mart Stores, Inc., No. 17-cv-739-jdp, 

, 
at *2 (W.D. Wis. Mar. 31, 2020) (same); Mead v. U. S. Fid. & Guar. Co., 

  (D.  Minn.  1977)  (same).    Although  the  False  Claims  Act  is  not  an 
anti-discrimination statute, because an award of backpay under the FCA serves a related 
make-whole purpose, it makes sense to apply a similar presumption here.   
incentive targets, 

  Those incentive targets included quarterly business goals and an end-
of-year growth target.  ECF No. 59-1 at 17; ECF No. 58-1 at 39.  For 2022, the quarterly 
incentive was $37,500 per quarter (for a maximum of $150,000), and his end-of-year 

incentive was $100,000.  ECF No. 59-1 at 17.  Although Stewart met his first quarterly 
goal for 2022, it is not clear whether he would have continued to meet his quarterly goals 
or meet his end-of-year target.  See ECF No. 58-1 at 36–40.  This means Stewart’s base 
pay was $250,000, but his maximum compensation for 2022 was $500,000.     
Dr. Jones, Stewart’s damages expert, calculates a backpay award based on the 

maximum.  See ECF No. 58-1 at 7–8.  That is speculative.  It is possible, but not reasonably 
certain, that Stewart would have received the $100,000 end-of-year incentive.  Stewart had 
only worked at Golden Victory for six months, so there is no compensation history of him 
receiving it.  Because Stewart was terminated in June, seven more months would have 
passed before it could be determined if he met or failed the requirements.  On the other 

hand, a backpay award based solely on Stewart’s $250,000 base salary would not be 
consistent  with  the  remedial  purpose  of  the  statute;  half  of  Stewart’s  potential 
compensation was based on incentives.  Moreover, Stewart achieved his first quarterly goal 
and anticipated meeting his remaining quarterly goals and end-of-year growth target.  ECF 
No. 58-1 at 36–40.  To balance these considerations, Stewart will be awarded backpay 

based on a $400,000 annual rate.  This accounts for the likelihood that he would have been 
paid considerably more than $250,000 in annual compensation but takes into consideration 
Stewart’s limited compensation history and the inability to determine that he would have 
received (or was likely to receive) the maximum compensation amount.5     
Therefore, Stewart will be awarded backpay as follows: $258,333.33 for 2022,6 

$400,000 for 2023, and $66,666.66 for 2024,7 for a total backpay award of $725,000.8 
(2) Stewart’s request for $55,612 in prejudgment interest will be granted in part.  
Section 3730(h) entitles Stewart to “interest on the back pay.”  

(h)(2).  
“The  appropriate  general  standard  for  the  rate  of  prejudgment  interest  on  [an  FCA 
plaintiff’s] back pay is the rate provided by 

(a).”  Wilkins v. St. Louis 

Hous. Auth., 

 (E.D. Mo. 2001), aff’d, 

 (8th Cir. 
2002).  Dr. Jones calculates the compound prejudgment interest rates on backpay as 
follows: 8.26% for 2022, 5.93% for 2023, and 0.81% for 2024.  ECF No. 58-1 at 9.  
Applying these rates to the backpay award results in the following amounts of prejudgment 



5    Stewart’s  backpay  award  will  not  include  any  pay  increases  because  there  is 
insufficient evidence in the record to conclude that Stewart would have received a pay 
increase, and if so, what that pay increase might have been.              

6    7/12 * $250,000 + $37,500 * 3.                                       

7    2/12 * $400,000.                                                     

8    The award of back pay will not be reduced because of a failure to mitigate.  First, 
“[t]he burden is upon the employer to prove a failure to mitigate.”  Townsend v. Bayer 
Corp., 

 (8th Cir. 2014).  By declining to defend this case, Golden Victory 
has not proven a failure to mitigate.  Second, efforts to mitigate need not be successful, 
“but must represent an honest effort to find substantially equivalent work.”  

 (quoting 
Hartley v. Dillard’s, Inc., 

 (8th Cir. 2002)).  The record reflects an 
honest, unsuccessful attempt to find substantially equivalent work.  ECF No. 58-1 at 43–
45 (testifying that he has applied to more than 400 jobs).                
interest: $21,338.33 for 2022, $23,720 for 2023, and $540 for 2024, for a total prejudgment 
interest award of $45,598.33.                                             
(3) Stewart’s request for $250,000 in emotional-distress damages will be granted.  

The False Claims Act entitles prevailing § 3730(h) plaintiffs to special damages, including 
emotional-distress damages.  

(h)(2); Townsend, 774 F.3d at 466–67.  “To 
prove emotional distress, medical or other expert evidence is not required.”  Hammond v. 
Northland Counseling Ctr., Inc., 

 (8th Cir. 2000).  A plaintiff’s own 
testimony can suffice.  

  “However, a plaintiff must offer specific facts as to the nature 

of his or her claimed emotional distress and its causal connection to the allegedly violative 
actions.”  

                                                            
Stewart testified that he experienced “surprise, shock, fear, disappointment, [and] 
depression,” after being terminated.  ECF No. 58-1 at 52.  He described long-lasting 
impacts,  including  insomnia,  id.  at  53,  depression,  id.  at  54,  the  stress  of  financial 

insecurity, id. at 53, and strained relationships with his family, id. at 53–54.  Based on my 
firsthand observations of Stewart’s testimony, I find him both credible and convincing.  
And other evidence in the record supports the requested award.  A letter from a close friend 
described Stewart “battling depression, anxiety, and a sense of hopelessness.”  ECF No. 
59-1 at 21.  His wife wrote, “I can’t even describe the amount of rejection and pain he has 

endured.  I’ve never seen him so discouraged and quite frankly hopeless, at times, about 
his future.  He has cried and had severe nightly insomnia and digestive issues regularly.”  
Id. at 23.  Although compensating emotional distress with dollars is always an inexact 
science, Stewart’s evidence is sufficient to award the requested $250,000.  See Townsend, 
774 F.3d at 466–67 (reducing an emotional-distress award to $300,000 based on similar 
evidence);  Bennett  v.  Riceland  Foods,  Inc.,  

,  551–53  (8th  Cir.  2013) 
(affirming an award of $300,000 to each of two individuals who “testified to depression, 

extreme stress, worry, and sleeplessness”); ECF No. 58-1 at 69–78 (three jury verdicts 
awarding similar or greater amounts of emotional-distress damages in similar types of 
cases).                                                                   
(4) Stewart’s request for $25,662.50 in attorneys’ fees will be granted in part.  Under 
the False Claims Act, relief “shall include . . . compensation for any special damages 

sustained  as  a  result  of  the  discrimination,  including  litigation  costs  and  reasonable 
attorneys’ fees.”  

(h)(2).  The FCA is unusual in that attorneys’ fees and 
litigation costs “are part and parcel” of special damages.  Hammond, 

 (8th 
Cir. 2000).  Nonetheless, an award of attorneys’ fees is determined by using the traditional 
lodestar method.  See Townsend v. Bayer Healthcare Pharms., Inc., No. 5:11CV00055 

JMM, 

, at *2 (E.D. Ark. Dec. 17, 2012), aff’d sub nom. Townsend v. 
Bayer Corp., 

 (8th Cir. 2014).                                
The party seeking attorneys’ fees has the burden of establishing that the fees sought 
are  reasonable  and  should  submit  evidence  supporting  the  rates  claimed  and  hours 
worked.  Hensley v. Eckerhart, 

, 433–34, 437 (1983).  The lodestar amount is 

calculated by “multipl[ying] the number of hours reasonably expended by reasonable 
hourly rates.”  Bryant v. Jeffrey Sand Co., 

 (8th Cir. 2019).  After the 
lodestar amount is determined, the court should consider whether it should be enhanced or 
reduced, which depends on the “important factor of the ‘results obtained.’”  Hensley, 

 (footnote omitted).  Trial-court judges need not “become green-eyeshade 
accountants.  The essential goal in shifting fees (to either party) is to do rough justice, not 
to achieve auditing perfection.  So trial courts may take into account their overall sense of 

a suit, and may use estimates in calculating and allocating an attorney’s time.”  Fox v. Vice, 

 (2011).                                                 
Evidence of reasonable rates includes affidavits describing the qualifications and 
experience of the attorneys working on the case, “affidavits from other lawyers opining on 
the reasonableness of rates,” and citations to fee awards in similar cases.  Bores v. Domino’s 

Pizza LLC, No. 05-cv-2498 (RHK/JSM), 

, at *6 (D. Minn. Oct. 27, 
2008).  “When determining reasonable hourly rates, district courts may rely on their own 
experience and knowledge of prevailing market rates.”  Hanig v. Lee, 

 
(8th Cir. 2005).                                                          
Stewart requests an hourly rate of $495 and $550 for two partners, $250 for an 

associate, and $125 for a paralegal.  ECF No. 58-1 at 2–3.  Stewart does not provide 
affidavits describing the qualifications and experience of the attorneys, affidavits from 
other lawyers opining on the reasonableness of the requested fees, or citations to fee awards 
in similar cases.  An “itemization of the time spent,” id. ¶ 4, describes the two partners, 
Emma Denny and Artur Davis, as having ten and sixteen years of experience, and the 

associate as having two years of experience, id. at 2–3.  Although the partners’ rates are 
not extraordinarily high for the Minnesota market, see Sanders v. BNSF Ry. Co., No. 17-cv-
5106 (ECT/JFD), 

, at *12 (D. Minn. Dec. 5, 2022) (finding $350 to 
$775 per hour reasonable); Fancher v. Klann, No. 13-cv-435 DSD/JJK, 

, 
at *2 (D. Minn. Apr. 21, 2015) (finding $225 to $650 per hour reasonable); Safelite Grp., 
Inc. v. Rothman, No. 15-cv-1878 (SRN/KMM), 

, at *7 (D. Minn. Aug. 
11, 2017) (finding $370 and $560 per hour reasonable), a slight reduction is appropriate to 

account for Stewart’s limited evidence to justify the partners’ rates.  Therefore, Ms. Denny 
and Mr. Davis’s rates will each be reduced by $50 to $445 per hour and $500 per hour.  
Based on my experience and familiarity with the market, I find that $250 for a second-year 
associate and $125 for a paralegal are reasonable hourly rates.           
Stewart’s counsel spent a total of 61.5 hours working on this case.  ECF No. 58-1 

at 2–3.  The total hours break down as follows: Artur Davis, 23.5 hours; Emma Denny, 20 
hours; Associate, 4.7 hours; Paralegal, 13.3 hours.  

  Having carefully reviewed the 
itemization of time spent, that amount of time was reasonable to file a complaint, respond 
to counterclaims, perform preliminary discovery, respond to Golden Victory’s motion to 
stay the case, and move for default judgment.                             

The lodestar amount is therefore calculated as follows: $500 x 23.5, $445 x 20, $250 
x 4.7, and $125 x 13.3, for a total award of $23,487.5.  Stewart has not requested any 
enhancement, and the lodestar amount will not be reduced sua sponte.      
(5) Stewart’s request for $5,902.65 in costs will be granted in part.  Although a 
prevailing § 3730(h) plaintiff is entitled to an award of “litigation costs,” courts have 

concluded this is limited to ordinary costs as defined by 

, the statute 
governing the taxation of costs.  See Neal v. Honeywell, Inc., 

 (7th Cir. 
1999); Kakeh v. United Plan. Org., 

, 17–18 (D.D.C. 2009); Thompson 
v. Quorum Health Res., LLC, No. 1:06-CV-168, 

, at *4 (W.D. Ky. May 
21, 2010).  This is consistent with the Eighth Circuit’s holding that without explicit 
statutory authority for the taxation of expenses as costs, “federal courts are bound by the 
limitations set out in 

 and § 1920.”  Johnson, Tr. of Operating Eng’rs Loc. 

#49 Health & Welfare Fund v. Charps Welding & Fabricating, Inc., 

 
(8th Cir. 2020) (quoting Crawford Fitting Co. v. J. T. Gibbons, Inc., 

 
(1987)).                                                                  
Section 1920 itemizes several types of expenditures a judge or clerk of court may 
tax  as  costs.    Section  1920(1)  provides  that  “[f]ees  of  the  clerk  and  marshal”  are 

recoverable, while § 1920(2) provides that “[f]ees for printed or electronically recorded 
transcripts necessarily obtained for use in the case” are recoverable.  Stewart’s filing fee 
and pro hac vice fee, totaling $502.00, will be awarded as taxable costs under § 1920(1).9  
See Craftsmen Limousine, Inc. v. Ford Motor Co., 

 (8th Cir. 2009) 
(“[P]ro hac vice fees are costs under 

.”).  Stewart’s costs for a transcript 

of the default-judgment hearing, in the amount of $244.40, will be awarded as taxable costs 
under  §  1920(2)  because  that  transcript  was  necessarily  obtained  for  Stewart’s 
supplemental brief.  See Nat’l Presto Indus., Inc. v. U.S. Merchs. Fin. Grp., Inc., No. 18-
cv-3321 (SRN/LIB), 

, at *17 (D. Minn. Nov. 17, 2023); ECF No. 55 
(ordering supplemental briefing).  The remaining requested costs are not taxable costs that 

can be awarded under § 1920.                                              


9    In  support  of  his  request  for  costs,  Stewart  filed  a  spreadsheet  titled  “HKM 
Employment Attorneys LLP Unbilled Charges.”  ECF No. 58-1 at 5.  The requested costs 
are categorized based on the descriptions included in that spreadsheet.   
However, expenses that are not taxable costs “may nevertheless be awarded if they 
are normally billed to clients.”  Miller v. Bd. of Regents of Univ. of Minn., 

, 597 (D. Minn. 2019); see also Charps, 

 (“Some expenses that the 

district court awarded as ‘costs’ might be awarded as attorney’s fees if they are separately 
billed under the prevailing practice in the local community.”).  Here, Stewart’s requested 
travel, lodging, and related expenses will be awarded as attorneys’ fees.  See Miller, 402 
F. Supp. 3d at 597 (granting a request for travel expenses as part of an attorneys’ fee 
award); Safelite, 

, at *4 (same).  These travel-related expenses total 

$1,409.68.  $9.55 will be awarded for shipping.  See Safelite, 

, at *4 
(granting delivery charges).  And another $369.22 will be awarded for third-party vendors 
proofreading and formatting filings.  It seems clear that these expenses saved time and 
money that would otherwise have been spent on a lawyer or paralegal doing the same work 
at a higher rate.                                                         

Stewart  also  requests  $142.80  for  “[c]lient  support  services”  and  an  $850.00 
“Admin Fee.”  Without more details about these fees, it is impossible to determine whether 
they are normally billed to clients and were reasonable.  Finally, Stewart requests $2,375.00 
in expert fees for the report of Dr. Jones.  ECF No. 58-1 at 5.  But “expert witness fees are 
generally not part of attorney’s fees.”  Charps, 

; but see Miller, 402 F. 

Supp. 3d at 597 (awarding expert fees as expenses that are normally billed to clients).  And 
because expert witness fees are also not available under § 1920, the costs for Stewart’s 
expert will not be awarded here.                                          
To summarize, $746.40 of Stewart’s requested costs will be awarded as taxable 
costs under § 1920, $1,788.45 of Stewart’s requested costs will be awarded as attorneys’ 
fees because they are expenses ordinarily billed to clients, and the remaining $3,367.80 

requested as costs will be denied because Stewart has not demonstrated they fall into either 
permissible category of recovery.                                         
(6) Stewart’s request for $1,235,510.10 in liquidated damages will be granted in 
part.  Stewart claims that “[a] prevailing plaintiff in an FCA case is entitled to liquidated 
damages in an amount equal to two times the award of back pay, interest on back pay, and 

compensation for any special damages . . . .”  ECF No. 57 at 26.  That’s not quite right.  
Section 3730(h)(2) provides:                                              
     Relief under paragraph (1) shall include reinstatement with the 
     same seniority status that employee, contractor, or agent would 
     have had but for the discrimination, 2 times the amount of back 
     pay, interest on the back pay, and compensation for any special 
     damages sustained as a result of the discrimination, including  
     litigation costs and reasonable attorneys’ fees.                

(h)(2).  Any interpretation of § 3730(h)(2) must heed the commands of 
punctuation.  Facebook, Inc. v. Duguid, 

 (2021).  Here, four items of 
relief  are  separated  by  a  comma:  reinstatement,  backpay,  interest  on  backpay,  and 
compensation for special damages.  The second item in that list is “2 times the amount of 
back pay.”  

(h)(2).  Because this form of relief is separated by commas in 
a series, the doubling language only applies to backpay, not prejudgment interest or special 
damages.  Other courts agree.  Neal, 191 F.3d at 831–32 (“The False Claims Act provides 
for both double back pay and other relief in the form of ‘special damages.’”); Wilkins, 198 
F. Supp. 2d at 1088–92 (doubling only backpay); Miniex v. Houston Hous. Auth., 

, 654–662 (S.D. Tex. 2019) (same); Kakeh v. United Plan. Org., 

 (D.D.C. 2009) (same).  Therefore, only Stewart’s backpay award will be 

doubled; he will be awarded an additional $725,000.                       
(7) Stewart’s request for $125,000 in severance pay will be denied.  As the Supreme 
Court has explained, it “goes without saying that the courts can and should preclude double 
recovery by an individual.”  E.E.O.C. v. Waffle House, Inc., 

 (2002) 
(quoting Gen. Tel. Co. of the Nw. v. E.E.O.C., 

 (1980)).  For this reason, 

“[f]airness requires that there be certain deductions and offsets in computing backpay 
rewards.”  Paul H. Tobias, Litigating Wrongful Discharge Claims § 8:14 (June 2023 
Update).  One such deduction is severance pay.  Id.; Smith v. World Ins. Co., 

 (8th Cir. 1994) (affirming jury instruction “to reduce the backpay award by the 
amount of the severance package”); Folz v. Marriott Corp., 

, 1017–18 

(W.D. Mo. 1984) (subtracting severance pay from backpay award); Stuart v. Normandy 
Osteopathic Med. Ctr. of St. Louis, Inc., No. 89-993C(1), 

, at *2 (E.D. 
Mo. May 8, 1990) (“Plaintiff does not dispute that his severance pay, his wages from 
DePaul  Hospital,  and  his  Subway  restaurant  salary  are  deductible  from  any 
potential back pay award.”).  Because severance pay is normally taken out of a backpay 

award, granting both after the fact would amount to double recovery.  And because backpay 
is doubled after reductions, Hammond, 218 F.3d at 891–92, awarding backpay (instead of 
severance) will result in a greater total damages award.                  
                          IV                                         
There is one final wrinkle—an entry of default judgment would not dismiss Golden 
Victory’s counterclaims.  See, e.g., Park Hosp. LLC v. Sangha Hosp., LLC, No. 18-cv-

2171, (NEB/ECW), 

, at *1 (D. Minn. Aug. 24, 2020) (separately 
granting default judgment and dismissing counterclaims).  And Stewart does not request 
dismissal  of  Golden  Victory’s  counterclaims.    See  ECF  No.  61  (proposed  order).  
Nonetheless, Rule 41(b) allows a court to dismiss a case sua sponte for failure to prosecute.  
Sterling v. United States, 

 (8th Cir. 1993).  As Rule 41(b) states, “[i]f the 

plaintiff fails to prosecute or to comply with these rules or a court order, a defendant may 
move to dismiss the action or any claim against it.”  Fed. R. Civ. P. 41(b).  “[D]ismissal 
with  prejudice  is  an  extreme  sanction  and  should  be  used  only  in  cases  of  willful 
disobedience of a court order or continued or persistent failure to prosecute a complaint.”  
Smith v. Gold Dust Casino, 

 (8th Cir. 2008) (quoting Givens v. A.H. 

Robins Co., 

 (8th Cir. 1984)).  Golden Victory was ordered to find new 
counsel in September 2023.  ECF No. 40.10  It has not done so.  Nor have the owners 
communicated with the Court pro se to explain their failure to retain new counsel.  And 
Golden Victory’s owners did not respond to Stewart’s motion for default judgment, which 
Stewart served in December 2023.  See ECF No. 50.  Golden Victory’s persistent failure 

to prosecute its counterclaims merits with-prejudice dismissal.           


10   The last time Golden Victory’s owners communicated with its counsel was March 
2023.  ECF No. 33 ¶¶ 5–10.                                                

Based on the foregoing, and on all the files, records, and proceedings herein, IT IS 
ORDERED THAT:                                                             

1.   Plaintiff  and  Counter-Defendant  Bryan  Stewart’s  Motion  for  Default 
Judgment [ECF No. 45] is GRANTED IN PART and DENIED IN PART.              
2.   Judgment is awarded to Stewart and against Defendant Golden Victory 
Medical LLC in the total amount of $1,821,620.68, to bear interest at the statutory rate 
from the date of judgment.  The award consists of:                        

     a.   $1,500,000 in backpay;11                                   
     b.   $45,598.33 in prejudgment interest;                        
     c.   $250,000 for emotional distress;                           
     d.   $25,275.95 in attorneys’ fees; 12 and                      
     e.   $746.40 in taxable costs.                                  

3.   Defendant Golden Victory Medical LLC’s Counterclaims are DISMISSED 
WITH PREJUDICE for failure to prosecute.                                  
       LET JUDGMENT BE ENTERED ACCORDINGLY.                          

Date: March 26, 2024               s/ Eric C. Tostrud                     
                              Eric C. Tostrud                        
                              United States District Court           


11   $725,000 x 2.                                                        

12   $23,487.5 + $1,788.45.