24 June 2022

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.

In the district court, the United States declined to intervene, but later moved to dismiss under 31 U.S.C. § 3730(c)(2)(A), which provides that the government “may dismiss the action notwithstanding the objections of the” relator, so long as the relator receives notice from the government and the court provides an opportunity to be heard.  After briefing and argument, the district court granted the government’s motion.

On appeal, the Third Circuit first addressed whether the government retained the authority to move to dismiss pursuant to § 3730(c)(2)(A) even though the government had declined to intervene.  Even after declining, the court reasoned, the government may intervene at any time, pursuant to § 3730(c)(3), upon a showing of good cause.  And having intervened, the government may move to dismiss at any time.

As for the standard to apply to the government’s motion to dismiss, the court adopted the Seventh Circuit’s approach: that to dismiss over a relator’s objection, the government must satisfy Federal Rule of Civil Procedure 41(a)’s standard for voluntary dismissals.  Applying this standard, the Third Circuit affirmed dismissal.

With the Third Circuit’s decision, the circuit split over the government’s dismissal authority stands as follows:

  • First and D.C. Circuits: The government has broad, “unfettered” authority to dismiss qui tams.
  • Third and Seventh Circuits: The government must satisfy Federal Rule of Civil Procedure 41(a)’s standard for voluntary dismissals.
  • Ninth Circuit and Tenth Circuits: The government must identify a “valid government purpose” and a “rational relation between dismissal and accomplishment of that purpose.”

Petitioning for certiorari, the relator asked the Supreme Court to decide the following question: “whether the government has authority to dismiss an FCA suit after initially declining to proceed with the action, and what standard applies if the government has that authority.”  The relator argued that once the government declines, a relator’s control of a qui tam is exclusive.  Though the government may later intervene, that intervention may not limit a relator’s statutory right to conduct an action that the government initially declined.

As for the standard that applies if the government does have the authority to move to dismiss after declining, the relator argued that the circuit split is “deep, obvious, and entrenched.”  Characterizing the First Circuit’s approach as distinct because it imposes limits on dismissal where the government violates the Constitution or perpetrates fraud on the court, the relator asserted that the Circuits are divided a “staggering four different ways.”  The relator urged the Supreme Court to grant certiorari so that parties and the courts need not “continue to waste countless hours and resources arguing over the appropriate standard.”

Opposing certiorari, the defendant and the United States noted that no circuit has ever adopted the relator’s understanding that the United States forfeits its authority to dismiss when it declines to intervene.  Indeed, the relator’s understanding, stripping the Executive Branch of its prerogative of directing FCA litigation, raises “grave constitutional concerns” under Article II of the Constitution (the “Take Care” clause), according to the defendant.  The relator “identifies no legal or practical justification,” the government added, “for singling out the right to seek dismissal under section 3730(c)(2)(A) as the one statutory right that the government irrevocably loses if it declines to intervene during the initial seal period.”

As for the circuit split on the standard that should apply to government motions to dismiss, the defendant and the government stressed that all courts of appeals that have considered this issue agree that such motions should receive substantial deference.  As such, both agreed that the split has had and will have little practical significance.  In fact, according to the defendant, “no court of appeals has ever held that a qui tam suit should proceed where the Government has sought dismissal.”

The Third Circuit’s opinion can be found here.  The relator’s petition for certiorari can be found here.  The United States’ brief in opposition can be found here.  The defendant’s brief in opposition can be found here.  The case will be briefed during the next term, meaning a decision can be expected sometime in or before June 2023.

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