Litton Whistle-Blower Plans Appeal of Suit’s Dismissal : Courts: A judge says the former employee failed to present enough evidence to show that the firm knew about the embezzlement she reported.

A U. S. District Court judge has dismissed Litton Industries Inc. from a lawsuit claiming that it knew about fraud by one of its employees--who was later convicted of embezzlement--but the whistle-blower who filed the suit said she plans to appeal.

Judge Manuel L. Real ruled last month that the whistle-blower, former Litton employee Mary Ann E. Rohan, 57, of Reseda, failed to present enough evidence to show that Litton knew or should have known about the embezzlement. The suit sought $21 million in damages.

Real’s ruling allows Rohan to pursue the portion of the suit applying to the former co-worker, Robert John Newbert of Canoga Park, who recently was released from a federal prison in Las Vegas, where he served 13 months of a 16-month sentence.

Newbert, who worked as a senior planner in the engineering department of Litton’s Guidance and Control Systems division in Woodland Hills, pleaded guilty in October, 1990, to two counts of making false statements, and he admitted embezzling more than $200,000 from the company. Newbert agreed to reimburse Litton $215,000.

Rohan’s attorney, Louis J. Cohen of Encino, said he may drop the suit against Newbert so that he can quickly appeal Real’s ruling. Otherwise, Real could rule that Rohan must complete her suit against Newbert before appealing the dismissal of the action against Litton.

Litton denies that it knew of Newbert’s activities. “What was really going on here was that the company was a victim of the employee’s embezzlement,” Litton attorney Carolyn B. Kuhl said.

Rohan worked as an accounting clerk at Litton’s Woodland Hills plant from February to July, 1989, when, Rohan alleged in court documents, she was forced to take a medical leave of absence after Litton harassed her for exposing the embezzlement. In an interview, Rohan, who had also worked at Litton from 1981 to 1983, alleged that she was assigned menial tasks such as counting nickels from vending machines.

While working at Litton, Rohan repeatedly alerted her supervisors to what she considered improper and unusual requests by Newbert for cash reimbursements, according to court documents. Among other things, Newbert asked for money for materials that he never purchased or which had already been charged to a government contract, Rohan said in the lawsuit.

For example, Newbert would submit generic invoices of the type sold in stationery stores even though Litton required all receipts to be imprinted with the name of the company requesting payment, Rohan said in court documents. But Rohan said her supervisors looked the other way when she told them about the receipts.

In a deposition in a related case, Newbert admitted that he did favors for employees who helped him get cash. Among other things, he said he gave an employee Lakers basketball tickets that he had been given by a vendor.

“It was a thing like, ‘You do this for me, and don’t worry. I’ll take care of whatever it is you need to have done,’ ” Newbert said in the deposition, which was given last month.

The government launched an investigation after Rohan called a U. S. Defense Department fraud hot line in May, 1989, to report Newbert’s activities. An audit by the Defense Contract Audit Agency corroborated many of the irregularities that Rohan claimed in court documents to have tried, in vain, to point out to her supervisors.

After Newbert’s conviction, Rohan sued Litton in February, 1991, under the federal False Claims Act, which Congress amended in 1986 to empower citizens to blow the whistle on defense contractors whom they suspect of defrauding the government. In exchange for cooperating, whistle-blowers are entitled to an informer’s fee of 15% to 25% of any damages awarded.

While most false claims lawsuits allege wrongdoing by defense contractors, Rohan’s suit concerned an individual--Newbert--who, acting on his own, defrauded the company of taxpayer dollars.

However, “if a contractor acts in reckless disregard of the truth or falsity of invoices, then they are liable as if they had done it themselves,” said Cohen, who specializes in defense industry whistle-blower lawsuits.