Levine et al v. Avnet, Inc. et al
Filing
56
MEMORANDUM OPINION & ORDER: It is ordered 1) Plaintiff-Relator Evan Levine's 32 MOTION for Hearing is GRANTED NUNC PRO TUNC; 2) United States' 20 MOTION to Dismiss is GRANTED; 3) This matter be and hereby is DISMISSED WITH PREJUDICE and 4) Separate Judgment shall enter concurrently herewith. Signed by Judge William O. Bertelsman on 4/1/2015.(TED)cc: COR
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF KENTUCKY
NORTHERN DIVISION AT COVINGTON
CIVIL ACTION NO. 2:14-cv-17 (WOB-CJS)
UNITED STATES OF AMERICA
EX REL. EVAN LEVINE
PLAINTIFF/RELATOR
VS.
AVNET, INC., ET AL.
DEFENDANTS
MEMORANDUM OPINION AND ORDER
This False Claims Act case is before the Court on the United
States’ Motion to Dismiss, Doc. 20.
I.
Factual and Procedural History
Relators Evan Levine and Keith McClellan filed this action, under
seal, on January 31, 2014, in the name of the United States pursuant
to
the
qui
tam
§ 3730(b)(1).
provision
Doc.
1,
of
the
Complaint.
False
Claims
On
September
Act,
12,
31
U.S.C.
2014,
the
Government notified the Court of its election to decline intervention.
Doc. 17.
The Court then ordered the complaint unsealed and served
upon the defendants by the relators.
Doc. 18.
On November 21, 2014,
the Government moved to dismiss the action, pursuant to 31 U.S.C.
§ 3730(c)(2)(A).
Doc. 20.
Shortly thereafter, McClellan voluntarily
dismissed his claims, leaving Levine as the sole relator.
Doc. 21.
Nearly a month after the Government moved to dismiss, the Defendants
were served with the complaint on December 18, 2014.
See Docs. 29,
30, 21, Returns of Executed Summonses.
On December 22, 2014, Levine filed a response in opposition to
the Government’s motion to dismiss, Doc. 33, and moved for a hearing
on that motion, Doc. 32.
The Court heard oral argument on March 12,
2015, and subsequently took the motion to dismiss under submission.
Having reviewed the filings and heard from the parties, the Court now
issues the following Memorandum Opinion and Order.
II.
Analysis
Levine asks the Court to deny the Government’s motion to dismiss
on two grounds.
dismiss
under
First, he argues that the Government may only move to
§ 3730(c)(2)(A)
pursuant to § 3730(c)(1).
if
it
has
intervened
in
the
action
Having declined to intervene in this case,
he argues, the Government may not dismiss.
Alternatively, should the
Court find that intervention is not necessary, Levine argues that the
Government must satisfy the “rational relation test” approved by the
Ninth Circuit in United States ex rel. Sequoia Orange Co. v. Baird–
Neece Packing Corp., 151 F.3d 1139 (9th Cir. 1998). Levine asserts
that the Government has failed to make such a showing and thus, that
the action should not be dismissed.
Neither the Supreme Court nor the Sixth Circuit has addressed
either of these issues directly.1
Thus, the Court examines each of
these issues without the benefit of controlling authority.
1
Though Relator does not cite it, the Court’s research uncovered the Sixth
Circuit case of United States ex rel. Poteet v. Medtronic, Inc., 552 F.3d 503
(6th Cir. 2009), where a relator appealed the dismissal of her complaint for
lack of subject-matter jurisdiction pursuant to the False Claims Act’s public
disclosure provision, 31 U.S.C. § 3730(e)(4)(A), and first-to-file provision,
31 U.S.C. § 3730(b)(5). In addition to challenging the jurisdictional bases
for dismissal, the relator asserted that the district court abused its
discretion by failing to provide her an evidentiary hearing pursuant to
§ 3730(c)(2)(A). In explaining why the relator was not owed a hearing, the
Sixth Circuit commented, “Section 3730(c)(2)(A) applies only when the
government has decided to “proceed[ ] with the action” and has assumed
“primary responsibility for prosecuting the action,” citing 31 U.S.C.
§ 3730(c)(1).
Id. at 519.
This statement does not alter the Court’s
conclusion, below, that the Government need not intervene to invoke
§ 3730(c)(2)(A) because the statement was made in response to an entirely
-2
A.
The Government Need Not Intervene to Dismiss
Section 3730(c)(2)(A)
states:
“The
Government
may
dismiss
the
action notwithstanding the objections of the person initiating the
action if the person has been notified by the Government of the filing
of
the
motion
and
the
court
has
provided
opportunity for a hearing on the motion.”
the
person
with
an
31 U.S.C. § 3730(c)(2)(A).
Levine argues that this provision, when read in context, only
applies
if
the Government
has
intervened
in
the action.2
At
the
hearing, Levine’s counsel also argued that dicta in a 2009 United
States Supreme Court case, U.S. ex rel. Eisenstein v. City of New
York,
556
U.S.
928
(2009),
demonstrates
that
dismissal
is
not
available to the Government without intervention.
In response, the Government argues that requiring intervention is
both contrary to the plain language of the statute and a premise that
has
been
summarily
rejected
by
the
courts
of
appeals
that
have
considered it.
The Court agrees with the Government.
a
court’s
“starting
point
is
the
In interpreting a statute,
language
employed
by
Congress.”
different question: whether a hearing is required to evaluate a motion to
dismiss for lack of subject-matter jurisdiction.
When the government moves
to dismiss pursuant to § 3730(c)(2)(A) as a matter of prosecutorial
discretion, it is assumed that the claim is jurisdictionally valid. Reading
§ 3730(c)(2)(A) to require a hearing when a court considers subject-matter
jurisdiction would lead to the absurd result of a relator being owed a
hearing when the government moves to dismiss on this ground, but not when the
defendant moves or when the court reviews subject-matter jurisdiction sua
sponte. Thus, the Court finds the Sixth Circuit’s dicta in Poteet unhelpful
in deciding this case.
2
Though Levine devoted limited attention to this argument in his Memorandum
in Opposition to the Government’s Motion to Dismiss, Doc. 33-1, this issue
was the primary focus of Levine’s counsel during oral argument.
-3
Chapman v. Higbee Co., 319 F.3d 825, 829 (6th Cir. 2003).
Moreover,
where a “statute’s language is plain, the sole function of the courts
is to enforce it according to its terms.”
Id. (citing United States
v. Ron Pair Enters., Inc., 489 U.S. 235, 241 (1989)).
Applying these
maxims here, the Court notes, first, that § 3730(c)(2)(A) does not
condition dismissal on intervention.
limiting
its
application
to
Nor does it include language
particular
circumstances.
Because
Congress included such limiting language in other paragraphs within
§ 3730(c), the Court assumes that it would have used such language in
paragraph (2), had it wished to so limit the provision.
See 31 U.S.C.
§ 3730(c)(1) (“If the Government proceeds . . . .”); id. § 3730(c)(3)
(“If
the
Government
elects
not
to
proceed
. . . .”);
id.
§ 3730(c)(4)(“Whether or not the Government proceeds . . . .”).
That the meaning of § 3730(c)(2) would be clearer if Congress had
prefaced the provision with “Whether or not the Government proceeds,”
as it did in paragraph (c)(4), does not give the Court license to
assume from the absence of this language congressional intent to limit
application of paragraph (c)(2) to one circumstance or the other.
Nor
does the Court have license to speculate as to which language Congress
would have chosen and to insert it on Congress’s behalf.
See Bates v.
United States, 522 U.S. 23, 29 (1997) (stating that courts “ordinarily
resist reading words or elements into a statute that do not appear on
its face”); Keene Corp. v. United States, 508 U.S. 200, 208 (1993)
(noting a court’s “duty to refrain from reading a phrase into the
statute when Congress has left it out”).
-4
The Court similarly declines to read into § 3730(c)(2) language
making
it
subject
to
§ 3730(c)(1)
because
plainly reveals only the opposite intent.
the
statute’s
language
Section 3730(c)(1) states:
If the Government proceeds with the action, it shall have
the primary responsibility for prosecuting the action, and
shall not be bound by an act of the person bringing the
action. Such person shall have the right to continue as a
party to the action, subject to the limitations set forth
in paragraph (2).
Narrowing the scope of paragraph (1) by making it “subject to the
limitations
in
paragraph
(2)”
in
no
way
indicates
that
Congress
intended to narrow the scope of paragraph (2) by making it subject to
the Government’s intervention as described in paragraph (1).
The
Court
subparagraphs
is
similarly
(2)(C)
and
unpersuaded
(2)(D)
would
by
be
Levine’s
rendered
argument
that
superfluous
if
intervention is not a prerequisite to the Government dismissing under
subparagraph (2)(A).
to
limit
the
Although subparagraphs (2)(C) (allowing a court
relator’s
participation
under
certain
circumstances
“[u]pon a showing by the Government”) and (2)(D) (allowing a court to
limit the relator’s participation under certain circumstances “[u]pon
a showing by the defendant”) logically apply when the Government has
intervened
and
assumed
primary
responsibility
for
prosecuting
the
action, the rights described in subparagraphs (2)(A) (the Government’s
right to dismiss) and (2)(B) (the Government’s ability to settle with
the defendant) logically apply regardless of whether the Government
has intervened.
See, e.g., United States ex rel. Smith v. Gilbert
Realty Co., 34 F. Supp. 2d 527 (E.D. Mich. 1998) (concluding that the
-5
government, after declining to intervene, had to satisfy conditions in
§ 3730(c)(2)(B) to settle the case).
Moreover, had Congress intended for these four rights to exist
only in cases where the Government intervened, Congress could have
easily signaled that by drafting them as subparagraphs of paragraph
(1).
Instead, in a section titled “Rights of the parties to qui tam
actions,” these four rights are listed as part of paragraph (2) –– the
structural equal of paragraphs (1), (3), (4), and (5).
Without clear
statutory language directing it to do so, the Court will not subjugate
paragraph (2) to paragraph (1).
The Court is also unpersuaded by Levine’s reliance on Eisenstein.
In Eisenstein, the Supreme Court addressed whether the government,
when it does not intervene, is a “party” to a False Claims Act case,
for
purposes
of
28
U.S.C.
§ 2107
and
Federal
Rule
of
Appellate
Procedure 4, pertaining to the amount of time allowed to file a notice
of appeal.
556 U.S. at 929, 932-37.
In explaining the False Claims
Act process, the Supreme Court stated:
If the United States declines to intervene, the relator
retains “the right to conduct the action.” § 3730(c)(3).
The United States is thereafter limited to exercising only
specific rights during the proceeding. These rights include
requesting service of pleadings and deposition transcripts,
§ 3730(c)(3), seeking to stay discovery that “would
interfere
with
the
Government's
investigation
or
prosecution of a criminal or civil matter arising out of
the same facts,” § 3730(c)(4), and vetoing a relator's
decision to voluntarily dismiss the action, § 3730(b)(1).
Eisenstein, Id. at 932.
Levine argues that because the Supreme Court
did not list dismissal among these rights, it is not available to the
government when it declines to intervene.
-6
This
statements
argument
are
is
dicta
flawed
and
in
not
currently before this Court.
several
made
in
respects.
response
First,
to
the
these
question
Second, the list is introduced with
“including,” which does not signal an exhaustive list.
See, e.g.,
BellSouth Telecomm., Inc. v. Ky. Pub. Serv. Comm’n, 669 F.3d 704, 713
(6th Cir. 2012)(explaining that the use of “includes” or “including”
“signal[s]
that
the
examples
are
‘illustrative
rather
than
exhaustive’”)(quoting Samantar v. Yousuf, 560 U.S. 305, 317 (2010))).
Finally, the comments were made in the context of a case where the
government had declined to intervene but was not opposed to the suit
proceeding, as evidenced by the United States’ request for continued
service of the pleadings in the case.
See id. at 930.
The Supreme
Court’s list in Eisenstein thus defines the role of the United States
in cases that proceed so that the Court can distinguish that role from
the role and functions of a “party.”
Discussion, in that context, of
the United States’ right to dismiss would not have been relevant.3
Thus, the Court concludes that intervention is not required for
the Government to dismiss pursuant to § 3730(c)(2)(A).
This
conclusion
is
consistent
with
the
weight
of
persuasive
authority, including Ridenour, one of the cases upon which Levine
relies in arguing that the Court should review the Government’s motion
to dismiss using the more onerous Sequoia standard.
See Ridenour v.
3
The D.C. Circuit recently considered a similar intervention-is-required
argument based on Eisenstein and also rejected it. See United States ex rel.
Schweizer v. Océ N.V., 677 F.3d 1228, 1233 (D.C. Cir. 2012) (stating that
“nothing” in Eisenstein contradicts the premise that the government need not
intervene before filing a motion to dismiss under § 3730(c)(2)(A)).
-7
Kaiser-Hill Co., 397 F.3d 925, 932 (10th Cir. 2005)(“We decline to
construe the FCA as requiring intervention for cause before dismissal
because a plain reading of the statute does not require it, canons of
statutory construction do not support such a result, and in our view,
such
a
reading
Sequoia
would
also
render
suggests
the
FCA
that
constitutionally
intervention
is
not
infirm.”).
necessary,
stating, in dicta, “This court has noted that § 3730(c)(2)(A) may
permit the government to dismiss a qui tam action without actually
intervening in the case at all.”
Sequoia, 151 F.3d at 1145 (citing
United States ex rel. Kelly v. Boeing Co., 9 F.3d 743, 753 n.10 (9th
Cir. 1993)).4
Finally, Swift v. United States, 318 F.3d 250 (D.C. Cir.
2003), which the Government argues controls this matter, unequivocally
4
The Kelly court made this suggestion while analyzing whether the qui tam
provisions of the False Claims Act violate the separation of powers
principle. In holding that the provisions do not violate the principle, the
Court focused on the mechanisms by which the Executive Branch retains control
over qui tam relators, including the government’s right to “move for
dismissal of a case which it believes has no merit.” Kelly, 9 F.3d at 753.
In mentioning this right, the Ninth Circuit discussed Juliano v. Fed. Asset
Disposition Ass’n, 736 F. Supp. 348 (D.D.C. 1990), aff’d 959 F.2d 1101 (D.C.
Cir. 1992), which interpreted § 3730(c)(2)(A) to allow dismissal even though
the government had not intervened. See id. at 753 n.10. The Ninth Circuit,
acknowledging that the question of intervention as a requirement to dismiss
was not directly before it, nonetheless found the Juliano court’s
interpretation “entirely appropriate” and stated that it “provides an
illustration of the meaningful control which the Executive Branch can
exercise over qui tam actions.” Id.
In addressing similar challenges to the constitutionality of the qui
tam provisions, both the Sixth Circuit and the Fifth Circuit also highlighted
the government’s right to dismiss as one of the Executive Branch’s necessary
means for exercising “sufficient control” over a qui tam action. See U.S. ex
rel. Taxpayers Against Fraud v. Gen. Elec. Co., 41 F.3d 1032, 1041 (6th Cir.
1994) (noting the government’s ability to “decide that [a] case should be
dismissed” as a means by which the Executive “retains ‘sufficient
control’”(citing Morrison v. Olson, 487 U.S. 654, 696 (1988))); accord Riley
v. St. Luke’s Episcopal Hosp., 252 F.3d 749, 753 (5th Cir. 2001)
(highlighting, in similar fashion, the government’s “unilateral power to
dismiss an action”).
-8
states that intervention is not required.5
See Swift, 318 F.3d at 251–
52 (rejecting a statutory argument nearly identical to Levine’s).
B. The Government Has an Unfettered Right to Dismiss this Action
Three courts of appeals have directly confronted the question of
what standard applies to a motion to dismiss brought by the government
pursuant to § 3730(c)(2)(A).
In 1998, the Ninth Circuit held, in
Sequoia, that the government must justify the dismissal by identifying
(1) a “valid government purpose” and (2) a “rational relation between
dismissal and accomplishment of the purpose.”
151 F.3d at 1145.
If
the government meets that test, the burden shifts to the relator “to
demonstrate that dismissal is fraudulent, arbitrary and capricious, or
illegal.”
Id.
Five years later, the D.C. Circuit decided Swift,
concluding that § 3730(c)(2)(A) “give[s] the government an unfettered
right to dismiss an action.”
318 F.3d at 252.
In the 2005 Ridenour
case, the Tenth Circuit applied the Sequoia test, distinguishing Swift
and Sequoia based on the timeframe in which the government moved to
dismiss.
Noting
. . . where
the
that
Swift
Government
has
“considered
not
the
previously
standard
intervened
to
apply
and
the
defendant has not yet been served,” and the case before it was “one in
which the defendants were served [as in Sequoia],” the Tenth Circuit
“look[ed]
to
the
Ninth
Circuit
for
guidance.”
397
F.3d
at
935.
Moreover, the Tenth Circuit specifically declined to decide “whether
5
The Swift court also noted that reading § 3730(c)(2)(A) to require
intervention elevates form over substance: If the statute required
intervention, the court “could construe the government’s motion to dismiss as
including a motion to intervene, a motion the district court granted by
ordering dismissal.”
Swift, 318 F.3d at 252.
This Court finds this
conclusion persuasive and deems it equally applicable in the instant case.
-9
§ 3730(c)(2)(A) gives the judiciary the right to pass judgment on the
Government's decision to dismiss an action where the defendant has not
been served and where the Government did not intervene in the action
. . . .”
The
D.C.
Circuit
considered
the
issue
again
in
2008,
extending Swift to cases where the government moves to dismiss after
the defendants have been served.
See Hoyte v. Am. Nat’l Red Cross,
518 F.3d 61, 64–65 (D.C. Cir. 2008).
In Hoyte, the D.C. Circuit also
clarified that the government has “virtually” unfettered discretion to
dismiss, leaving open the possibility that a court might depart from
the “usual deference” owed to the Government’s determination whether
an action should proceed in its name in “exceptional circumstances,”
such as a showing of fraud on the court.
518 F.3d at 65.
The Court agrees with the D.C. Circuit’s conclusions in Swift and
Hoyte
that
the
Government
dismiss the case.
has
a
“virtually
unfettered
right”
to
The statute’s plain language says nothing about the
Government needing to make any sort of showing to support its decision
to dismiss.
Instead, the statute states only two requirements: notice
and an opportunity for a hearing –– both of which have been satisfied
here.
Further, Levine has not argued that there has been fraud on the
court
or
any
other
“exceptional
circumstance”
review of the Government’s decision to dismiss.
warranting
stricter
Moreover, the Court
is reluctant to impute to § 3730(c)(2)(A) a more stringent standard of
review
because
doing
constitutional footing.
so
could
set
provision
on
questionable
See Riley, 252 F.3d at 753 (finding essential
-10
the
the government’s “unilateral power to dismiss an action” (emphasis
added)).
But even if the stricter Sequoia standard were to apply, the
Court concludes that the Government has made the required showing.
The Government asserts that dismissal will further its interest in
preserving scarce resources because the Government will not have to
expend time and funds monitoring Levine’s action.
Although Levine
counters that the resources needed to do so are de minimis and the
Government is not required to monitor them, see Doc. 55, Oral Arg. Tr.
18-19, 28,6 the Government’s interest in allocating its resources as it
sees fit has been validated on many occasions.
See, e.g., Heckler v.
Chaney, 470 U.S. 821, 831–32 (1985) (noting that an agency is “better
equipped than the courts to deal with the many variables involved in
the proper ordering of its priorities” and to decide “whether the
agency has enough resources to undertake the action at all”); Swift,
318 F.3d at 254 (“[T]he government’s goal of minimizing its expenses
is still a legitimate objective, and dismissal of the suit furthered
that objective.”); Ridenour, 397 F.3d at 936–37, 937 n.20 (recognizing
the government’s interest in avoiding diverting resources from other
projects as a rational reason to dismiss the case); Sequoia, 151 F. 3d
6
Although Levine correctly asserts that the Government is not legally
required to monitor qui tam actions, his suggestion that monitoring is
optional, or for the Government’s own edification, may not follow from a
practical standpoint.
In short, the Court finds nothing extravagant about
the Government’s self-imposed obligation to monitor the progress of a case
brought in its name, see 31 U.S.C. § 3730(b)(1), in which it is the “real
party in interest,” United States v. Healthcare Possibilities, P.S.C., 207
F.3d 335, 341–42 (6th Cir. 2000), and in which it may desire to intervene at
a later time.
-11
at
1146
costs”
(acknowledging
even
when
a
that
relator
the
government
litigates
consider them in deciding to dismiss).
an
incurs
action
“internal
and
can
staff
properly
Thus, the Court finds it
appropriate to dismiss this action.
III. Conclusion
Therefore,
having
conducted
a
hearing
and
the
Court
being
otherwise sufficiently advised,
IT IS ORDERED that
(1)
Plaintiff-Relator Evan Levine’s Motion for a Hearing, Doc.
32, be, and hereby is, GRANTED NUNC PRO TUNC;
(2)
The
United
States’
Motion
to
Dismiss,
Doc.
20,
be,
and
hereby is, GRANTED;
(3)
This matter be, and hereby is, DISMISSED WITH PREJUDICE;
and
(4)
A separate judgment shall enter concurrently herewith.
This 1st day of April, 2015.
-12
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