Nov 202015

On Remand, Carter District Court Ruling Raises More First-to-File Questions

Scott D. Stein and Neil Nandi
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As we reported previously, earlier this year the Supreme Court held in Kellogg Brown & Root Services, Inc. et al. v. U.S. ex rel. Carter that the FCA’s first-to-file bar ceases to apply once a first-filed suit is dismissed.   Notwithstanding that ruling, which ostensibly favored the relator, the district court on remand recently dismissed the case, again on first-to-file grounds.  On remand, Carter argued that because the first-filed case that had preceded the filing of his case had since been dismissed, the Supreme Court’s decision suggested that the first-to-file bar no longer applied and therefore his case should not have been dismissed.  The district court, however, disagreed with Carter’s interpretation of the Supreme Court opinion that “an existing case may proceed to trial automatically when a first-filed suit is dismissed.”  Pointing to the U.S. District Court for the District of Columbia’s opinion in United States ex rel. Shea v. Verizon Communications, Inc., which stated that “Plaintiffs, other than the Government, may not file FCA actions while a related action is pending,” the district court held that because there was a first-filed case pending at the time that Carter filed his case, the first-to-file bar applied.  In other words, the filing of Carter’s case was per se improper because a case was already pending when Carter filed his suit.  The fact that the first-filed case was later dismissed would not, the district court concluded, operate to save from dismissal a case that was barred by the first-to-file bar at the time it was filed.

The court also refused to permit Carter to file an amended complaint because, even if amended, the complaint was still initially filed when other suits were pending and the first-to-file rule thus barred it: “no matter how many times Plaintiff amends his Complaint, it will still be true that he brought a related action based on the facts underlying the then pending action.” (quotation omitted).  The court expressed concern that adopting an alternative rule would “interfere with the efficient operation of qui tam suits.”

The district court’s opinion leaves the door open for Carter to file a new complaint, though whether that complaint would be viable given the passage of time remains to be seen.  The district court pointedly refused “to opine on whether refiling would be barred by the statutes of limitations or repose.”  The answer to that question by the Carter district court and others will largely determine how much of a real impact the Supreme Court’s first-to-file ruling will have on the viability of second-filed cases in the future.

A copy of the district court’s opinion can be found here.

Scott D. Stein

Chicago

sstein@sidley.com

Neil Nandi

nnandi@sidley.com

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