(CN) - Former employees may sue a company that provided security for the State Department in Afghanistan, on charges that it falsified workers' firearms performance tests, a federal judge ruled.
Robert Winston and Allan Wheeler worked as independent contractor-firearms instructors for Academi Training Center, which had a contract to provide security to State Department in Afghanistan.
All security personnel were required to take a weapons qualification test, and Academi submitted these results to the State Department under the terms of its contract.
As instructors, Winston and Wheeler recorded the performance of each person as they shot at targets on the firing range.
They claim that other Academi officials wrote down false numbers on the performance reports. Wheeler claims he was asked to complete a weapons qualification report using made-up numbers.
When they reported the fraud to their supervisor, they were fired and placed on the State Department's "Do Not Use" list, according to the complaint.
They sued for retaliation under the False Claims Act, in Alexandria, Va., Federal Court.
Academi sought arbitration, under the independent contractor agreements (ICA).
U.S. District Judge Liam O'Grady on Wednesday sided with the plaintiffs: "To stay or dismiss this action and send the parties to arbitration under the terms of the ICAs would be unfair to plaintiffs. The agreements are so substantively unconscionable, that the minor irregularities in how they were executed constitute sufficient procedural unconscionability to render the agreements unenforceable."
The agreements require the plaintiffs to pay all fees related to arbitration, regardless of the outcome, a provision that "frustrates the clear intent of Congress," O'Grady wrote.
Under the False Claims Act, attorney's fees may be recovered by successful plaintiffs.
In addition, the agreements specify that New York law shall govern any disputes between Academi and the contractor.
"But New York bears no reasonable relationship to any of the parties or to the purpose of the agreement. Academi is a Delaware corporation, headquartered in Virginia. It contracted with the plaintiffs, neither of whom is from New York, to train in North Carolina for the ultimate purpose of providing services overseas.
"Because neither the parties nor the ICAs have any connection [to] New York, the Court finds that it would be highly unusual for New York law to apply," O'Grady wrote.
O'Grady found "sufficient evidence in the record to show that both plaintiffs were rushed and pressured through the signing of their ICAs to support a claim of unconscionability - especially given the significant substantive unfairness of the agreements."
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