Jan 202015

In Carter, DOJ Finally Concedes That It Is Bound By Merits Dismissals in Non-Intervened Cases

Scott D. Stein
,

Though we wrote last week to summarize our take on the oral argument in Carter, this post focuses on a particular exchange in which the Assistant Solicitor General arguing on behalf of the United States conceded a key point that DOJ has, in the lower courts, resisted. When it comes to non-intervened qui tam cases, DOJ routinely argues that while it is entitled to any financial benefits accruing from such litigation, the United States is not bound by any judgment on the merits against the relator. In our experience, whenever DOJ files a Statement of Interest in a non-intervened case, it requests that if the district court dismisses the case against a relator on any grounds that such dismissal be without prejudice to the United States, theoretically allowing DOJ to pursue the same claims against the same defendants notwithstanding even a dismissal on the merits of the relator’s claims. Defendants are typically loathe to challenge the government’s request, perhaps due to a desire not to engage the United States any more than necessary in a non-intervened case, or the recognition that as a practical matter the odds of the government deciding to intervene in any particular case once an adverse ruling has been rendered against a relator are fairly small.

But an admission by the Associate Solicitor General arguing in Carter may require DOJ to change its position in the lower courts. In considering the application of the first-to-file bar to serial relators, several Justices appeared concerned about the prospect of serial liability if, as DOJ contends, the first-filed bar applies only when a first-filed case is still “pending.” That led to the following exchange:

JUSTICE SCALIA: Mr. Stewart, before your time runs out, what – what is the Government’s position on the — on the point raised by counsel for Respondent; namely, if there is a dismissal of — on the merits of a – a civil action, is the government barred from later bringing a different action on the same claim?

MR. STEWART: Yes, we would think we would be barred. We think that was Congress’s expectation in 1986 and that’s the understanding of the statute that we’ve been operating under; that is, our protection under the statute is that when a qui tam suit is filed, we have an initial opportunity to decide whether to intervene or not. Even if we initially decide not to intervene, we can move later to intervene for good cause shown and so if we initially think the relator can do a capable job but then we decide later, no, he can’t, our protection against the claim being badly litigated is that we can take over the suit, and if we don’t avail ourselves of that protection and the case is decided against us on the merits, then claim preclusion would apply.

This is the correct view of the law (see Federal Rule of Civil Procedure 41(b)), but yet it is contrary to the view that DOJ advocates in the lower courts. (As Ronald Mann wrote on SCOTUSBlog, the Justices appeared “surprised that the government took such a moderate view” – as were we) . What practical effect this admission will have remains to be seen, but we hope that it may inspire defendants (and courts) to cite this language in explaining why DOJ cannot claim to be unaffected by adverse judgments on the merits. Perhaps if DOJ fully internalizes the fact that it can no longer claim to be unaffected by adverse decisions in unmeritorious non-intervened cases, it will consider dusting off its little-used authority to cause such cases to be dismissed. If it doesn’t, then as the Assistant Solicitor General conceded, the United States appropriately will be bound by adverse judgments rendered against the private citizens it allows to litigate on its behalf.

Scott D. Stein

Chicago

sstein@sidley.com

You might also like
Supreme Court Mulls Scope of DOJ Dismissal Authority

On December 6, 2022, the Supreme Court heard oral argument in United States ex rel. Polansky v. Executive Health Resources, which presents the question of whether the government has the authority to dismiss a qui tam suit after initially declining to intervene, and if so, what standard of review applies to the government’s motion to dismiss.  Overall, the lines of questioning suggest that the Court will conclude that the government may dismiss qui tam suits after initially declining to intervene.  However, there was no clear consensus around how to define a judicially enforceable standard for evaluating the government’s dismissal authority.

Supreme Court Declines to Address Application of 9(b) to the FCA

Yesterday the Supreme Court denied cert in a trio of cases seeking clarification as to the pleading standard required in FCA cases under Rule 9(b).  The petitioners urged the Court to remedy what they characterized as a circuit split over how much detail whistleblowers and the government must supply about alleged false claims in order to survive a motion to dismiss.  As discussed further here, the Solicitor General opposed these cert petitions and argued that the circuits have “largely converged” in their application of Rule 9(b) to FCA complaints.

A variety of reasons exist for why a cert petition may fail to garner the requisite number of votes, and in declining to hear these cases, it is not clear whether the Court is convinced that there is uniformity (or at least not significant discord) among the courts of appeal on this issue.

Supreme Court Grants Certiorari to Resolve Circuit Split on the Government’s Authority to Dismiss FCA Cases Over Relators’ Objections

On June 21, 2022, the Supreme Court granted certiorari to resolve a Circuit split on the standard for evaluating the government’s authority to dismiss a qui tam over the relator’s objection.  As we have previously written (see here and here), various Circuits have adopted different standards.  The Supreme Court has agreed to review a decision of the Third Circuit affirming a district court’s grant of the United States’ motion to dismiss a qui tam.