Oct 162017

Tenth Circuit Bars Attorney’s Attempt To Step In As A Relator To Save Complaint Barred By First-to-File

Kristin Graham Koehler and Kristen A. Knapp
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Last month, in United States ex rel. Little et al. v. Triumph Gear Systems, Inc., the Tenth Circuit answered in important question about the interplay between Federal Rule of Civil Procedure 15 regarding leave to amend parties, and the FCA’s first-to-file bar.  The specific question before the court was whether the FCA’s first-to-file rule precludes a non-party from intervening in a pending qui tam action by seeking leave to amend under Rule 15.  The Tenth Circuit held that it does. 

The case concerns allegedly uninspected aerospace gear systems manufactured by Triumph and sold to the Government.  The original complaint, filed in October 2012, named Joe Blyn, an independent contractor for Triumph, and three John Does, as the relators.  The original complaint listed Donald Little as Blyn’s counsel.  In July 2013, Little filed an amended complaint with himself and Kurosh Motaghed as the realtors and made no mention of Blyn or the three John Does.  Instead, the complaint frequently substituted Little’s name for Blyn’s “without regard for the resulting incongruities” as the Tenth Circuit pointed out.

Triumph argued that the FCA’s first-to-file rule barred the substitution of Little and Motaghed for Blyn.  31 U.S.C. § 3730(b)(5).  The first-to-file rule prohibits “person[s] other than the Government” from “intervene[ing] or bring[ing] a related action based on the facts underlying the pending action,” 31 U.S.C. § 3730(b)(5).  In reversing the district court, the Tenth Circuit held that the district court had erred when it concluded that Little and Motaghed entered the suit through a Rule 15 amendment.  Rule 15 allows a party to “amend its pleading once as a matter of course within … 21 days after serving it.” The Court held that because Little and Motaghed were not able to be added to the pending suit under Rule 15, their addition was in fact, a prohibited intervention under 31 U.S.C. § 3730(b)(5).

Applying the first-to-file rule, the Tenth Circuit found that Little’s substitution of himself and Motaghed as relators was not a Rule 15 amendment.  As the Court explained, in line with prior holdings, while “Rule 15 governs the addition of a party,” United States ex. rel. Precision Co. v. Koch Indus., Inc., 31 F.3d 1015 (10th Cir. 1994); “Little and Motaghed, as non-parties, had no right to amend the complaint under Rule 15.”  Accordingly, the present case was distinguished from Precision because in Precision “the existing plaintiff added the new relators,” whereas here, non-parties sought to become the sole relators.

Notably, the Court rejected Little and Motaghed’s contention that they were actually two of the three John Doe relators and that by filing the amended complaint they did not intervene but merely “reveal[ed] their identities.”  The Court reasoned that even if Little and Motaghed were two of the John Does “that fact wouldn’t protect their claims from the first-to-file rule” because “[t]he Federal Rules of Civil Procedure make no provision for suits by persons using fictitious names or for anonymous plaintiffs.” (internal quotations and citations omitted).  As a result, “the original complaint failed to commence the action with respect to them.” (internal quotations and citations omitted).

The Tenth Circuit’s holding is important because it prevents potential new plaintiff-relators from making an end run around the FCA’s first-to-file rule by asserting they were John Doe relators who are merely revealing their identities at a later date or by otherwise trying to enter a FCA lawsuit via amendment.

The Tenth Circuit decision can be found here.

Kristin Graham Koehler

Washington, D.C.

kkoehler@sidley.com

Kristen A. Knapp

Washington, D.C.

kknapp@sidley.com

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