09 June 2021

DOJ Opposes Supreme Court Review of Granston Dismissal Standard

On May 21, 2021, the Department of Justice filed a brief in opposition to a petition for writ of certiorari filed by the relator in U.S. ex rel. Cimznhca, LLC v. UCB, Inc.  The petition challenges the Seventh Circuit’s decision reversing the district court’s denial of the government’s motion to dismiss over the relator’s objection.  In reversing, the Seventh Circuit determined that, so long as relators have an opportunity to be heard under 31 U.S.C. § 3730(c)(2)(A), the government may dismiss qui tams when it satisfies the standard contained in Federal Rule of Civil Procedure 41(a)(1)(A)(i).  That rule provides that a plaintiff may dismiss an action by serving notice of dismissal any time before the opposing party serves either an answer or a motion for summary judgment.

DOJ’s brief first addressed the threshold issue of whether the Seventh Circuit had jurisdiction to hear the government’s appeal.  Ordinarily, circuit courts have jurisdiction only over final judgments (28 U.S.C. § 1291) and a few categories of interlocutory orders (28 U.S.C. § 1292).  Nevertheless, the government sought to establish jurisdiction here by arguing that the denial of the motion to dismiss was a “collateral order”—not a final judgment, but still appealable as a “final decision” within the meaning of § 1291.

Refusing to create a new category of appealable collateral orders, the Seventh Circuit construed the appeal as a motion to intervene and then to dismiss, explaining that an

[i]ntervenor comes between the original parties to ongoing litigation and interposes between them its claim, interest, or right, which may be adverse to either or both of them. . . .  That is exactly what the government wants to do here.

Because motions to intervene are appealable, the court had jurisdiction over the denial of the government’s motion to dismiss.

While urging the Supreme Court not to grant the petition, DOJ took issue with the Seventh Circuit’s rejection of the collateral order doctrine as a basis for jurisdiction.  The government had never sought to intervene, DOJ argued, and assuming otherwise “is contrary to the balance that Congress struck in the FCA, which gives the government a choice whether to seek party status.”

In any event, DOJ argued, the Seventh Circuit’s exercise of jurisdiction did not warrant Supreme Court review, despite the apparent circuit split created.  DOJ acknowledged that the Ninth Circuit, in Thrower v. Academy Mortgage Corp., recently refused jurisdiction over an appeal of a district court’s denial of the government’s motion to dismiss an FCA qui tam.  But the Ninth Circuit never addressed the jurisdictional rationale that the Seventh Circuit employed.  And though the Ninth Circuit expressly rejected the applicability of the collateral order doctrine, the Seventh Circuit never actually did.  Thus, with no genuine disagreement between the two circuits, DOJ argued, no circuit split existed for the Supreme Court to resolve.  Besides, the government’s motions to dismiss in these circumstances are denied so rarely that jurisdiction for the resulting appeals does not constitute an issue requiring the Court’s attention.

After addressing the appeals court’s jurisdiction, DOJ argued that the Seventh Circuit was correct to hold that the suit should be dismissed, such that Supreme Court review is not warranted.  DOJ acknowledged that in so holding, the Seventh Circuit had articulated a new standard for when the government may dismiss a qui tam over a relator’s objection—a standard “derived from the [FCA’s] good-cause standard for intervention and from provisions of the Federal Rules of Civil Procedure that govern plaintiffs’ dismissal motions.”  That standard differs from the standard established by two other circuits.  First, in the Ninth Circuit, the government must identify a “valid government purpose” for seeking dismissal, and then show “a rational relation between dismissal and accomplishment of the purpose.”  If the government does so, the burden shifts to the relator to demonstrate that “dismissal is fraudulent, arbitrary and capricious, or illegal.”  Second, in the D.C. Circuit, the government has “unfettered” discretion to dismiss FCA suits.

DOJ argued that the D.C. Circuit’s approach is the correct one.  The FCA’s specification that an FCA suit may be dismissed by “[t]he Government”—the Executive Branch, not the Judicial—suggests the absence of judicial constraint, DOJ argued.  That inference is strengthened, DOJ continued, by the Supreme Court’s “recognition that a decision not to prosecute is within the special province of the Executive Branch.”

Nevertheless, DOJ argued, the differences among the three approaches do not warrant Supreme Court review.  As a practical matter, the differences among the various standards “are very unlikely to be outcome-determinative, and multiple courts have found that particular FCA complaints could be dismissed without deciding precisely what standard applies.”  After all, all circuit courts to consider this issue agree that government motions to dismiss under § 3730(c)(2)(A) “should receive substantial deference.”  Even the most demanding standard, the Ninth Circuit’s, “gives the government wide latitude to dismiss an FCA case, comparable to the limited review that courts apply to substantive due process challenges to executive action.”

DOJ’s brief can be found here.

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