USA, ex rel v. Bayer AG

Filing

UNPUBLISHED PER CURIAM OPINION filed. Originating case number: 1:12-cv-00773-LCB-JEP Copies to all parties and the district court/agency. [999738625].. [15-1459]

Appeal: 15-1459

Doc: 22

Filed: 01/20/2016

Pg: 1 of 9

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 15-1459

UNITED STATES OF AMERICA ex rel. JUAN N. WALTERSPIEL, M.D.,
F.A.A.P.,
Plaintiff - Appellant,
v.
BAYER AG; QUINTILES TRANSNATIONAL CORPORATION; JOHN DOE; JOE
DOE; JANE DOE,
Defendants - Appellees.

Appeal from the United States District Court for the Middle
District of North Carolina, at Greensboro.
Loretta C. Biggs,
District Judge. (1:12-cv-00773-LCB-JEP)

Submitted:

October 30, 2015

Decided:

January 20, 2016

Before KEENAN and HARRIS, Circuit Judges, and HAMILTON, Senior
Circuit Judge.

Affirmed by unpublished per curiam opinion.

Mick G. Harrison, Bloomington, Indiana, for Appellant. Kathleen
McDermott, Holly Barker, MORGAN LEWIS & BOCKIUS LLP, Washington,
D.C., for Appellees.

Unpublished opinions are not binding precedent in this circuit.

Appeal: 15-1459

Doc: 22

Filed: 01/20/2016

Pg: 2 of 9

PER CURIAM:
Juan N. Walterspiel, M.D., filed a five count complaint
under the False Claims Act (FCA), 31 U.S.C. §§ 3729-33 (2009)
(current version at 31 U.S.C. §§ 3729-33 (2012)), against Bayer
AG,

Quintiles

defendants.

Transnational

Corporation,

and

three

Doe

Walterspiel alleged that Bayer AG and Quintiles

conspired to falsify study data and that Bayer AG submitted the
falsified data to the Food and Drug Administration (FDA) as part
of an application for a six-month extension of its patent for
Ciprofloxacin

(Cipro).

Walterspiel

further

alleged

that

the

extension of Bayer AG’s patent for Cipro enabled Bayer AG to
sell

Cipro

at

a

higher

price

to

the

government

because

the

patent delayed the production and sale of less expensive generic
equivalents to Cipro.
A magistrate judge issued a recommendation concluding that
(1) Walterspiel’s complaint with respect to Quintiles failed to
satisfy Fed. R. Civ. P. 9(b)’s heightened pleading standard;
(2) Walterspiel’s “request” for leave to amend his complaint did
not comply with Fed. R. Civ. P. 7(b)(1) and M.D.N.C. Local R.
15.1 because he did not file a motion for leave to amend or a
proposed

amended

complaint;

and

(3)

Walterspiel

failed

to

complete service of process on Bayer AG and the Doe defendants.
Over Walterspiel’s objections, the district court adopted the
magistrate

judge’s

memorandum

recommendation
2

in

full

and

Appeal: 15-1459

Doc: 22

Filed: 01/20/2016

Pg: 3 of 9

dismissed Walterspiel’s action.

On appeal, Walterspiel argues

that (1) his complaint contained particularized facts to sustain
his claims against Quintiles under the FCA; (2) the district
court erred in not permitting him leave to amend his complaint
to cure any deficiency in his pleading; (3) the district court
erred in dismissing his claims against Bayer AG for failure to
complete service of process; and (4) the district court erred in
adopting

the

magistrate

judge’s

without addressing his objections.

report

and

recommendation

We affirm.

I
We turn first to the question whether Walterspiel properly
completed service of process on Bayer AG.

“In reviewing an

order to dismiss for insufficient service of process, we review
de

novo

the

determination

that

service

of

process

was

insufficient and we review for abuse of discretion the decision
to dismiss the complaint.”

Marshall v. Warwick, 155 F.3d 1027,

1030

Service

(4th

Cir.

1998).

of

process

on

a

foreign

corporation can be accomplished by serving either (1) an agent
of the corporation in the United States in accordance with forum
state service of process rules, in this case Indiana’s service
of

process

States

rules,

and

Constitution;

accordance

with

the

the
or

Due
(2)

Process
the

Hague

corporation

Service
3

Clause

of

the

United

overseas

Convention.

in
See

Appeal: 15-1459

Doc: 22

Filed: 01/20/2016

Pg: 4 of 9

Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694, 70508

(1988);

see

also

Fed.

R.

Civ.

P.

4(e)(1),

(f),

(h).

Walterspiel contends that he completed service of process by
both means.

We disagree.

Under Indiana Rule of Trial Procedure 4.6(A)(1), service of
process

on

a

foreign

organization

may

be

completed

“upon

an

executive officer thereof, or if there is an agent appointed or
deemed by law to have been appointed to receive service, then
upon such agent.”

Under Indiana law, the mere existence of a

parent-subsidiary relationship between two entities, even if the
subsidiary is wholly owned by the parent, is not sufficient to
render the subsidiary the parent’s agent for purposes of service
of process.

Gen. Fin. Corp. v. Skinner, 426 N.E.2d 77, 84 (Ind.

Ct. App. 1981).
of

the

parent

Instead, an unappointed subsidiary is an agent
for

purposes

of

service

of

process

when

the

subsidiary lacks a will of its own and operates at the direction
of

the

parent

instrumentality

company

such

of

foreign

the

that

the

subsidiary

corporation.”

is

Id.

a

“mere

at

85-86

(internal quotation marks omitted).
Based on the record, including the materials in the joint
appendix on appeal, we find no basis to conclude that Bayer AG
appointed Bayer Corporation as its actual agent for service of
process or that Bayer Corporation’s operations are sufficiently
controlled by Bayer AG to render Bayer Corporation Bayer AG’s
4

Appeal: 15-1459

agent

Doc: 22

as

a

evidence

Filed: 01/20/2016

matter

regarding

of

Pg: 5 of 9

Indiana

Bayer

law.

AG’s

In

actual

the

absence

control

of

over

any

Bayer

Corporation, as opposed to evidence merely showing that Bayer
Corporation

is

wholly

owned

by

Bayer

AG,

we

conclude

that

Walterspiel’s attempt to serve process on Bayer AG by way of
service on Bayer Corporation was ineffective.
Turning

to

Germany

via

service

of

Walterspiel’s

FedEx,

the

foreign

Hague

attempt

to

Service

Convention

corporations

serve

abroad.

Aktiengesellschaft, 486 U.S. at 698.

Bayer

AG

governs

in
the

Volkswagenwerk

Although Article 10(a) of

the Hague Service Convention states that the “Convention shall
not interfere with . . . the freedom to send judicial documents,
by postal channels, directly to persons abroad,” the Article
permits a “State of destination” to object to the delivery of
judicial documents by postal channels.
art.

10,

Nov.

objected

to

Authorities

15,

1965,

Article
to

See

Davies

F.Supp.2d

719,

722

U.S.T.

10(a),

execute

process.

20

Hague Service Convention

and

361,
has

requests

for

v.

&

n.6

Jobs
(E.D.

363.

Germany

established

international
Adverts

Va.

Central

service

of

GMBH,

94

Online,

2000).

has

Accordingly,

Walterspiel’s use of FedEx to complete service of process on
Bayer AG was ineffective under the Hague Service Convention.
Walterspiel
service

of

argues

process

that

properly,

even
the
5

if

he

failed

district

court

to

complete

abused

its

Appeal: 15-1459

Doc: 22

Filed: 01/20/2016

Pg: 6 of 9

discretion in dismissing his complaint.
the

time

of

the

district

court’s

We again disagree.

At

dismissal,

Walterspiel’s

litigation had been pending for over five years.

Furthermore,

the district court had inquired four times about Walterspiel’s
completion of service of process on Bayer AG, and Walterspiel
twice

represented

that

he

intended

to

hire

a

German

process

service to complete service of process in accordance with German
law.

Nothing in the record suggests Walterspiel undertook any

steps to act on his representation to the court.

Accordingly,

the district court did not abuse its discretion by dismissing
Walterspiel’s claims against Bayer AG and the Doe defendants for
failure to complete service of process. *

II
Having concluded that Walterspiel did not properly complete
service of process on Bayer AG, we turn to the district court’s
dismissal

of

Quintiles

under

Fed.

R.

Civ.

P.

12(b)(6).

We

review de novo a district court’s dismissal of an action under
Fed. R. Civ. P. 12(b)(6), accepting factual allegations in the
complaint as true and drawing all reasonable inferences in favor
*

We note that, contrary to Walterspiel’s contention on
appeal, the magistrate judge’s recommendation clearly states
that Fed. R. Civ. P. 4(m)’s 120-day time limitation for
completing service of process did not apply because Bayer AG was
a foreign corporation.

6

Appeal: 15-1459

of

Doc: 22

the

Filed: 01/20/2016

nonmoving

party.

Pg: 7 of 9

Kensington

Volunteer

Fire

Dep’t,

Inc. v. Montgomery Cty., 684 F.3d 462, 467 (4th Cir. 2012).

To

sustain an action under the FCA, “a plaintiff must allege four
elements: (1) a false statement or fraudulent course of conduct;
(2) made with the requisite scienter; (3) that is material; and
(4)

that

results

in

a

claim

to

the

Government.”

United

States v. Triple Canopy, Inc., 775 F.3d 628, 634 (4th Cir. 2015)
(brackets omitted), pet. for cert. filed, No. 14-1440 (June 8,
2015).
Claims brought under the FCA are subject to Fed. R. Civ. P.
9(b)’s “more stringent particularity requirement.”

Id.

“Rule

9(b) requires that an FCA plaintiff must, at a minimum, describe
the time, place, and contents of the false representations, as
well as the identity of the person making the misrepresentation
and what he obtained thereby.”

Id. (internal quotation marks

omitted).
Having reviewed Walterspiel’s complaint, we conclude that
it lacks particularized allegations regarding the claims Bayer
AG

made

complaint

to

the

fails

to

Government.
identify,

Specifically,
with

particularity,

Walterspiel’s
what

claims

Bayer AG made to the Government, the amount of the claims, or
the extent to which Bayer AG benefited from the alleged fraud it
perpetrated on the Government.

In an effort to overcome this

omission from his complaint, Walterspiel argues that we should
7

Appeal: 15-1459

Doc: 22

Filed: 01/20/2016

Pg: 8 of 9

adopt a “relaxed” pleading standard for claims involving fraud
when

the

defendants

are

in

exclusive

insufficiently alleged facts.

possession

of

the

This argument is not persuasive

because Quintiles, the only properly served defendant, was one
step removed from Bayer AG’s filing of claims on the Government,
and Walterspiel’s complaint lacks sufficient factual allegations
supporting the existence of a conspiracy between Bayer AG and
Quintiles that would place the relevant evidence regarding Bayer
AG’s

requests

possession.

for

payment

to

the

Government

in

Quintiles’

Therefore, we affirm the district court’s dismissal

of Walterspiel’s claims against Quintiles.

III
The district court denied Walterspiel’s request for leave
to amend his complaint because the request did not comply with
Fed.

R.

Civ.

P.

7(b)(1)

or

M.D.N.C.

Local

R.

15.1

when

Walterspiel filed neither a motion for leave to amend nor a
proposed amended complaint.

On appeal, Walterspiel fails to

present any challenge to the district court’s basis for denying
leave to amend.
court

abused

its

Walterspiel instead argues that the district
discretion

by

denying

him

leave

because an amendment would not have been futile.

to

amend

Pursuant to

Fed. R. App. P. 28, we conclude that Walterspiel has waived
appellate review of this issue.
8

See United States v. Bartko,

Appeal: 15-1459

Doc: 22

Filed: 01/20/2016

Pg: 9 of 9

728 F.3d 327, 335 (4th Cir. 2013) (holding that issue not raised
in opening brief, as required by Fed. R. App. P. 28(a)([8])(A),
is waived).

IV
Finally, Walterspiel argues that the district court erred
by

adopting

the

magistrate

judge’s

recommendation

specifically addressing his objections.

without

Walterspiel cites no

case law in support of his argument; 28 U.S.C. § 636(b)(1)(C)
(2012) merely requires the district court to make a “de novo
determination

of

those

portions

of

the

report

or

specified

proposed findings or recommendation to which objection is made.”
The district court complied with this requirement.

Accordingly,

we find no procedural error in the district court’s decision not
to address specifically Walterspiel’s objections.
Therefore,
order.
legal
before

we

affirm

the

district

court’s

judgment

and

We dispense with oral argument because the facts and
contentions
this

court

are

adequately

and

argument

presented

would

not

in
aid

the
the

materials
decisional

process.
AFFIRMED

9