United States of America et al v. Krause et al

Filing 55

ORDER denying 51 Motion to Amend or Correct the order on motion to dismiss. Signed by U.S. District Judge Charles B. Kornmann on 05/15/2018. (SAC)

UNITED STATES DISTRICT COURT

MAY 15
DISTRICT OF SOUTH DAKOTA

NORTHERN DIVISION

UNITED STATES OF AMERICA,ex rel.
DR. JOHN A. MILLIN; and
DR. JOHN A. MILLIN,individually,

1:17-CV-01019-CBK

Relator,
ORDER
vs.

LARRY F. KRAUSE,an individual; and
KRAUSE-ALLBEE TRUCKING,INC., a South
Dakota Corporation,
Defendants.

BACKGROUND

On May 4,2018, defendants filed a motion requesting this Court amend its prior order on
the defendants' motion to dismiss to certify two questions oflaw undecided in the Eighth

Circuit:(1) whether,the False Claims Act is subject to a six- or ten-year statute oflimitations
where the government declines to join a claim brought by a private party and (2) whether the
intracorporate conspiracy doctrine applies to bar conspiracy claims brought under the False
Claims Act. Relator opposes any such certification.
DECISION

I. Standard for Interlocutory Appeal Certification
Pursuant to 28 U.S.C. § 1292(b), when a district court issues an order "involv[ing] a
controlling question oflaw as to which there is substantial ground for difference of opinion" and

determines that "an immediate appeal from the order may materially advance the ultimate
termination of the litigation," an appeal may be taken from such order. Three criteria for

certification are required: "the district court must be of the opinion that(1)the order involves a

controlling question of law;(2)there is substantial ground for difference of opinion; and (3)
certification will materially advance the ultimate terrnination of the litigation." White v. Nix. 43
F.3d 374, 377(8th Cir. 1994)(internal citations omitted). While § 1292(b) provides an avenue
for interlocutory appeals,"[pjermission to allow interlocutory appeals should ... be granted

sparingly and with discrimination" as "most often such appeals resulfin additional burdens on
both the court and the litigants." Union Ctv. Iowa v. Piper Jaffrav & Co.. Inc., 525 F.3d 643,646
(8th Cir. 2008){per curiam). It has "long been the policy of the courts to discourage piece-meal

appeals." Id. (internal citations omitted). Further, § 1292(b) should be invoked "only in
extraordinary cases where decision of an interlocutory appeal might avoid protracted and

expensive litigation"; it was not "intended merely to provide review of difficult rulings in hard
cases." Id. (internal citations omitted). When requesting certification, the movant "bears the
heavy burden of demonstrating that the case is an exceptional one in which immediate appeal is
warranted." White. 43 F.3d at 376.

II. Defendants do not meet the requirements for certification under 1292(b)
Evaluating the three criteria for certification, this.Court finds that defendants have not
met their burden of demonstrating that the case warrants interlocutory appeal.
1. Controlling Question of Law: A controlling question of law "must raise some question of

law which governs at least a claim, if not the whole case or defense." 4 Am. Jur. 2d Appellate
Review § 120(2018). The question "need not be dispositive of the lawsuit in order to be

regarded as controlling." Id. A case must be sufficiently ripe to warrant certification, so that
certification does not result in "advisory opinions rendered on hypotheses" which evaporate "in
the light offull factual development"; as such, denial of certification is appropriate where the
factual basis of the claim is not sufficiently developed. Paschall v. Kansas Citv Star Co.. 605
F.2d 403,406 (8th Cir. 1979)(internal citations omitted). The questions defendants seek to

certify represent possible controlling questions oflaw governing both the conspiracy claim and
claims that antedate the six-year statute of limitations period. However,the factual record is not
sufficiently developed so that certification would not amount to a request for an advisory
opinion.

2. Substantial Difference of Opinion: As matters of first impression in the Eighth Circuit, on

which other circuits disagree, it is certain that a substantial difference of opinion could arise with
regard to both the limitations period and applicability of the intracorporate conspiracy doctrine to
the False Claims Act U.S. ex rel. Millin v. Krause. 2018 WL 1885672(D.S.D. 2018);see also
White. 43 F.3d at 378. However, the differences of opinion are not simply questions oflaw, but
also questions of fact, which I will later discuss. See, e.g., McCardle v. Mitchell School Dist..
2005 WL 1532597, *1 (D.S.D. 2005). The Court agrees with defendants that a substantial

difference of opinion exists with regard to at least one question which defendants seek to certify.
3. Materiallv Advance Outcome of Case: An interlocutory appeal pursuant to § 1292(b)
must materially advance the ultimate termination oflitigation. When litigation "will be

conducted in substantially the same manner regardless of[appellate] decision, the appeal cannot
be said to materially advance the ultimate termination of the litigation." White. 43 F.3d at 378.

Defendants have not met their burden of establishing that an interlocutory appeal satisfies this

criterion. Regardless of how the Eighth Circuit would decide the questions that defendants seek
to certify, a jury trial on substantially the same issues regarding defendants' false claims must

still transpire. Conducting discovery and trial as to farm operating plans and similar filings
received for ten years instead of six, as plaintiffs have noted, will not be substantially more
burdensome. The conspiracy claim is based on related factual allegations.

This Court further disagrees with defendants that, should they succeed on appeal affer
trial, a contrary ruling by the Eighth Circuit on either the statute of limitations or intracorporate
conspiracy questions would necessitate a retrial. The Court is cognizant of defendants' desire to
limit preventable litigation and similarly seeks to optimize judicial resources. With these
considerations in mind, the Court intends to carefully draft interrogatories for the jury that will

render retrial unneeessary. There is then little potential that eertification would avoid protracted
and expensive litigation, materially advance the ultimate termination oflitigation, or serve the
interests ofjudicial economy. Rather, were the Court to certify defendants' questions, multiple
hearings on the same issues, resulting in additional burdens on the court and litigants, are likely
to result.

There are other reasons why the motion should be denied. We are involved here not only
with literal readings of the statutes of limitations but also with substantial questions of equitable
estoppel due to claimed fraudulent concealment and questions of equitable tolling of any statute
of limitations under the alleged facts ofthis case, all of which must be construed at this point in

favor of Relator. There is no way that the United States Court of Appeals for the Eighth Circuit
is going to pass on these questions at this stage of the litigation. It would be, in my opinion, a
waste of time and money for the parties to certify what defendants seek to have certified. I. do not

believe that, in the nearly 23 years that I have been a United States District Judge, I have ever

certified a case of this nature for interlocutory appeal. We should proceed with discovery and,in
the absence of a settlement, proceed to try the case.
The motion at Doc. 51 should be denied.
ORDER

Now,therefore,
IT IS ORDERED:

1. Defendants' motion to amend or correct the order on motion to dismiss. Doc. 51, is
denied.

lis
dav I
Dated this I^ day of May,2018.
BY THE COURT:

CHARLES B. KORNMANN

United States District Judge