Carter v. Halliburton Co. et al
Filing
124
MEMORANDUM OPINION. Signed by District Judge James C. Cacheris on 11/12/2015. (dvanm, )
IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF VIRGINIA
Alexandria Division
UNITED STATES ex rel.
BENJAMIN CARTER,
Plaintiff,
v.
HALLIBURTON CO.,
et al.,
Defendants.
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1:11cv602 (JCC/JFA)
M E M O R A N D U M
O P I N I O N
For seven years, qui tam relator Benjamin Carter’s
allegations of defense contractors submitting false claims to
the Government have been before this Court.
The case has
undergone “a remarkable sequence of dismissals and filings.”
Kellogg Brown & Root Servs., Inc. v. United States ex rel.
Carter, 135 S. Ct. 1970, 1974 (2015).
It is back now, on remand
from the Fourth Circuit after the Supreme Court found that this
Court erred by dismissing with prejudice under the False Claims
Act’s (“FCA”), 31 U.S.C. §§ 3729-3733, first-to-file bar.
Consistent with the Supreme Court’s opinion, this Court now
dismisses Relator’s case under the first-to-file bar, this time
without prejudice.
This matter came before the Court on Defendants
Halliburton Company; Kellogg Brown & Root Services, Inc.;
1
Service Employees International, Inc.; and KBR, Inc.’s
(collectively “Defendants”) motion to dismiss with prejudice.
[Dkt. 99.]
In response to that motion, Relator Benjamin Carter
(“Relator” or “Carter”) motioned to file an amended complaint.
[Dkt. 105.]
For the following reasons, the Court will deny
Relator’s motion to amend and will dismiss Relator’s case
without prejudice.
I.
Background
The Court briefly discusses this case’s “remarkable”
history so as to frame the present motions.
For four months in 2005, Carter worked for Defendants
in a water purification unit employed to provide clean water to
U.S. troops at war in Iraq.
(Compl. [Dkt. 1] ¶¶ 1-3.)
Carter
alleges that during his time in Iraq, he never performed “actual
water purification or testing duties.”
(Id. ¶¶ 40, 43, 53.)
Instead, Defendants’ personnel allegedly required Carter and
other employees to fill out timecards reporting twelve hours of
water purification work a day when they actually performed zero.
(Id. ¶¶ 53-55.)
Carter also alleges that it was “routine
practice” to require “trade employees,” such as him, to submit
timecards totaling eighty-four hours per week, regardless of the
actual work performed.
(Id. ¶¶ 60-61, 65-68.)
Through these
allegedly false reporting practices, Carter argues that false
claims were submitted to the Government and paid to Defendants.
2
Carter filed his original complaint under the False
Claims Act in February 2006 in the U.S. District Court for the
Central District of California.
United States ex rel. Carter v.
Halliburton Co., No. 06-cv-616 (C.D. Cal. filed Feb. 1, 2006).
In November 2008, after two years of investigation, the case was
transferred to this Court (“Carter I”).
United States ex rel.
Carter v. Halliburton Co., No. 08-cv-1162 (E.D. Va. transfer
Nov. 7, 2008).
Shortly before Carter I’s trial date, the
Government informed the parties of a pending case filed in 2005
with related allegations of false billing, United States ex rel.
Thorpe v. Halliburton Co., No. 05-cv-8924 (C.D. Cal. filed Dec.
23, 2005).
In response to Thorpe and the FCA’s first-to-file
bar, this Court dismissed Carter I without prejudice and Carter
appealed that dismissal.
During the pendency of Carter I’s appeal, Thorpe was
dismissed for failure to prosecute.
In response, Carter filed a
new complaint (“Carter II”), but he failed to dismiss his prior
appeal.
United States ex rel. Carter v. Halliburton Co., No.
10-cv-864 (E.D. Va. filed Aug. 4, 2010).
Because Carter I and
Carter II were substantively identical, this Court ruled that
the still-pending appeal barred Carter II.
dismissed Carter II without prejudice.
Thus, this Court
2011 WL 2118227, at *6.
In response, Carter voluntarily dismissed his appeal in Carter I
and again filed his complaint (“Carter III”).
3
United States ex
rel. Carter v. Halliburton Co., No. 11-cv-602 (E.D. Va. filed
June 2, 2011).
Court.
Carter III is the case currently before this
But Carter III underwent its own lengthy procedural
journey before arriving for these present motions.
At the time Carter III was filed in June 2011, two
cases alleging similar false billing by KBR were already pending
in other courts: United States ex rel. Duprey, No. 8:07-cv-1487
(D. Md. filed June 5, 2007) (“Maryland Action”) and a sealed
action filed in Texas in 2007 (“Texas Action”).
Defendants
motioned to dismiss Carter III, arguing again that the earlierfiled cases destroyed this Court’s subject matter jurisdiction
due to the first-to-file bar.
This Court concluded that the
Maryland Action was related to Carter’s claims and was pending
when Carter filed his suit.
Thus, the Court dismissed Carter
III for lack of jurisdiction under the first-to-file bar.
Additionally, the Court found that most of Carter III’s
allegations of false claims fell outside the FCA’s six-year
statute of limitations.
In total, only $673.56 in allegedly
false claims were issued within the six years prior to 2011.
The Court, however, found that those claims would also be
untimely if Carter tried to refile his case after dismissal.
Therefore, the Court dismissed Carter III with prejudice.
WL 6178878, at *12.
4
2011
Carter noticed an appeal to the Fourth Circuit
arguing, first, that the Wartime Suspension of Limitations Act
(“WSLA”), 18 U.S.C. § 3287, tolled the statute of limitations on
his claims.
See United States ex rel. Carter v. Halliburton
Co., 710 F.3d 171, 177 (4th Cir. 2013).
The Fourth Circuit
agreed and reversed this Court’s statute of limitations
conclusion by finding that the WSLA did toll the statute and
thus Carter’s claims were not time barred.
Id. at 181.
The Fourth Circuit then considered the effect of the
first-to-file bar.
By the time of appeal, the Maryland and
Texas Actions had been voluntarily dismissed.
Thus, Carter
argued that those earlier-filed cases were no longer “pending”
in a way that would bar his suit.
The Fourth Circuit rejected
this argument, noting that the “plain language of the first-tofile bar” required the court to “look at the facts as they
existed when the claim was brought to determine whether an
action is barred.”
Id. at 183.
Because the Maryland and Texas
Actions were “pending” when Carter III was filed, the subsequent
voluntary dismissal of those cases did not remove the first-tofile bar.
Thus, the Fourth Circuit agreed with this Court that
the first-to-file bar precluded Carter III.
Id.
The Fourth Circuit then considered whether the earlier
Actions would continue to bar related suits in perpetuity, even
though those Actions were dismissed.
5
The Fourth Circuit appears
to have reached this question due to its interpretation that
this Court dismissed Carter III with prejudice under a
perpetual-bar theory.
The Fourth Circuit concluded that
dismissal with prejudice on first-to-file grounds was error
because “once a case is no longer pending the first-to-file bar
does not stop a relator from filing a related case.”
Id.
Therefore, this Court should have dismissed without prejudice to
permit Carter to refile.
Id.
The Fourth Circuit did not
consider whether the statute of limitations would have barred
refiling, likely because the court found the WSLA tolled the
statute of limitations.
This substantial litigation inertia carried Carter III
all the way to the Supreme Court.
Kellogg Brown & Root Servs.,
Inc. v. United States ex rel. Carter, 135 S. Ct. 1970 (2015)
[hereinafter Kellogg].
On the statute of limitations question,
the Supreme Court agreed with this Court that “the WSLA does not
suspend the applicable statute of limitations.”
Id. at 1978.
This holding rendered all of Carter’s claims time barred except
for $673.56 of false billing.
Thus, the Supreme Court proceeded
to consider the application of the first-to-file bar on those
remaining claims.
Looking at whether dismissal with prejudice
was required under the first-to-file bar, the Supreme Court
asked “whether the False Claims Act’s first-to-file bar keeps
new claims out of court only while related claims are still
6
alive or whether it may bar those claims in perpetuity.”
1973.
Id. at
On this question, the Supreme Court “agree[d] with the
Fourth Circuit that the dismissal with prejudice of respondent’s
one live claim was error” because a case is no longer “pending”
once it has been dismissed.
Id. at 1978-79.
Thus, the Supreme
Court reversed in part and affirmed in part and remanded the
case.
The Supreme Court never addressed the question of whether
the statute of limitations or repose would preclude Carter from
refiling after dismissal without prejudice.
On remand, the Fourth Circuit considered the “only
issue left for resolution . . . whether Carter timely filed his
complaint under the principle of equitable tolling.”
United
States ex rel. Carter v. Halliburton Co., 612 F. App’x 180, 180
(4th Cir. 2015).
Finding that Carter did not properly appeal
the issue of equitable tolling, the Fourth Circuit granted the
“extraordinary” remedy of summarily affirming this Court’s
decision not to equitably toll the statute of limitations.
Id.
at 180; see also 4th Cir. R. 27(f) (“Motions for summary
affirmance . . . are reserved for extraordinary cases only and
should not be filed routinely.”).
The Fourth Circuit noted,
however, that “the district court judgment was not wholly free
from error, as ‘dismissal with prejudice of respondent’s one
live claim’ was ‘not called for’ under the first-to-file rule.”
7
Id. at 181 (quoting Kellogg, 135 S. Ct. at 1978-79).
the Fourth Circuit remanded the case to this Court.
Therefore,
Id.
After this labyrinthine course, Carter’s case is
before this Court again on Defendants’ motion to dismiss with
prejudice pursuant to the first-to-file bar and the statute of
limitations and repose that Defendants argue would prevent
Carter from refiling.
In response, Carter argues the first-to-
file bar no longer precludes his case and he seeks to revive his
time-barred allegations through amendment, relation back, and
equitable principles.
For the following reasons, the Court will
deny Carter’s motion to amend and will dismiss this case without
prejudice due to the first-to-file bar.
II.
Legal Standard
Pursuant to Rule 12(b)(1), a claim may be dismissed
for lack of subject matter jurisdiction.
Defendants raising a
12(b)(1) challenge may contend that the complaint “fails to
allege facts upon which subject matter jurisdiction may be
based” or “that the jurisdictional allegations of the complaint
were not true.”
1982).
Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir.
In either case, the “burden of proving subject matter
jurisdiction on a motion to dismiss is on the plaintiff, the
party asserting jurisdiction.”
Id.
Additionally, Rule 12(b)(6) allows a court to dismiss
a suit which fails “to state a claim upon which relief can be
8
granted.”
Fed. R. Civ. P. 12(b)(6).1
To survive a motion to
dismiss under Rule 12(b)(6), a complaint must contain facts
sufficient to “state a claim to relief that is plausible on its
face.”
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).
When reviewing the complaint, the court “must accept as true all
the factual allegations contained in the complaint” and “draw
all reasonable inferences in favor of the plaintiff.”
E.I. du
Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 441
(4th Cir. 2011).
III. Analysis
The FCA’s qui tam provision incentivizes citizens to
report and prosecute knowingly false claims being submitted to
the Government.
The FCA, however, places limitations on qui tam
suits to “prevent parasitic lawsuits based on previously
1
During the October 15, 2015 hearing before this Court,
Defendants framed their motion to dismiss as simultaneously a
12(b)(1) motion to dismiss for lack of subject matter
jurisdiction and a 12(b)(6) motion to dismiss for failure to
state a claim. The Fourth Circuit considers the first-to-file
bar to be jurisdictional. See Carter, 710 F.3d at 181 (“Section
3730(b)(5) is jurisdictional and if an action is later filed
that is based on the facts underlying the pending case, the
court must dismiss the later case for lack of jurisdiction.”).
Thus, this motion proceeds principally as a 12(b)(1) motion.
Even if the first-to-file bar were to sound in nonjurisdictional
terms, however, the result in this case would not change. See
United States ex rel. Heath v. AT&T, 791 F.3d 112, 119 (D.C.
Cir. 2015) (“Even if the district court wrongly characterized
its dismissal as jurisdictional, we could sustain that judgment
for failure to state a claim under Rule 12(b)(6).”). Thus, the
Court presents both standards here.
9
disclosed fraud.”
Carter, 710 F.3d at 181 (citing United States
ex rel. LaCorte v. SmithKline Beecham Clinical Labs., Inc., 149
F.3d 227, 233 (3d Cir. 1998)).
The first-to-file bar, 31 U.S.C.
§ 3730(b)(5), is one such limitation.
Section 3730(b)(5)
“precludes a qui tam suit ‘based on facts underlying [a] pending
action.”
Kellogg, 135 S. Ct. at 1974.
Specifically, the
statute states the following: “When a person brings an
action . . . no person other than the Government may intervene
or bring a related action based on the facts underlying the
pending action.”
§ 3730(b)(5).
In the present case, it is uncontested that the
Maryland and Texas Actions were “pending” when Carter filed this
suit in June 2011.
Carter argues that those Actions no longer
bar his suit because they were dismissed in October 2011 and
March 2012, respectively, making them no longer “pending” under
Kellogg’s recent definition of that term.
Thus, in Carter’s
view, he may proceed to trial on his timely claims without
dismissing his case or amending his complaint.
As an
alternative position, Carter argues that the now dismissed
Actions would not bar his suit if he filed an amended complaint.
The Court will consider these arguments in turn.
A.
Automatic First-Filer Status
Carter’s argument that he can proceed with his current
complaint unimpeded by the dismissed Maryland and Texas Actions
10
relies on his interpretation of the Kellogg holding, which
reads: “a qui tam suit under the FCA ceases to be ‘pending’ once
it is dismissed.”
(Pl.’s Mem. in Opp’n at 4 (quoting Kellogg,
135 S. Ct. at 1979).)
In Carter’s view, this holding means that
“once an earlier suit is dismissed it ceases to bar the later
suit which then rises to the status of first-to-file.”
Mem. in Opp’n at 5.)
(Pl.’s
In other words, Carter believes the
dismissal of the earlier Actions automatically advanced him to
the first-filer position, even though he filed this case when
those Actions were pending in 2011.
For the following reasons,
Carter interprets Kellogg too broadly.
The law of this case and Fourth Circuit precedent are
contrary to Carter’s automatic-first-filer argument.2
The law of
the case doctrine “posits that when a court decides upon a rule
of law, that decision should continue to govern the same issues
in subsequent stages in the same case.”
TFWS, Inc. v. Franchot,
572 F.3d 186, 191 (4th Cir. 2009) (quoting United States v.
Aramony, 166 F.3d 655, 661 (4th Cir. 1999)).
2
Additionally,
Additionally, Relator conceded at the October 15, 2015 oral
argument that he cannot cite any pre-Kellogg case that
interpreted the first-to-file bar to automatically disappear
when the earlier-filed case is dismissed. Courts appear to have
resoundingly rejected that argument before Kellogg was decided.
See United States ex rel. Palmieri v. Alpharma, Inc., 928 F.
Supp. 2d 840, 850 (D. Md. 2013) (“Precedent uniformly supports
the view that the subsequent dismissal of a first-filed qui tam
action, without more, cannot cure the filing of a second qui tam
action while the first action was pending.”).
11
“once the decision of an appellate court establishes the law of
the case, it ‘must be followed in all subsequent proceedings in
the same case in the trial court or on a later appeal.’”
(quoting Aramony, 166 F.3d at 661).
Id.
The law of the case must be
followed unless “(1) a subsequent trial produces substantially
different evidence, (2) controlling authority has since made a
contrary decision of law applicable to the issue, or (3) the
prior decision was clearly erroneous and would work manifest
injustice.”
Id. (quoting Aramony, 166 F.3d at 661).
Looking to the prior proceedings in this case, it is
clear this Court applied the first-to-file bar at the time a
complaint was filed.
The prior opinion dismissing this case
stated that “whether a qui tam action is barred by § 3730(b)(5)
is determined by looking at the facts as they existed when the
action was brought.”
2011 WL 6178878, at *8 (citing Grynberg v.
Koch Gateway Pipeline Co., 390 F.3d 1276, 1279 (10th Cir.
2004)).
The Fourth Circuit endorsed this view on appeal when it
rejected the exact argument Relator makes here.
The Fourth
Circuit stated that “[f]ollowing the plain language of the
first-to-file bar, Carter’s action will be barred by Duprey or
the Texas action if either case was pending when Carter filed
suit.”
Carter, 710 F.3d at 183.
The Fourth Circuit was
explicit in this analysis, saying “we look at the facts as they
existed when the claim was brought to determine whether an
12
action is barred by the first-to-file bar.”
Id.
The Fourth
Circuit applied this standard to reach the same conclusion as
this Court; Carter’s claim is barred by the earlier-filed
Actions pending at the time Carter filed his suit in 2011.
Id.
The Fourth Circuit’s endorsement of this Court’s statement of
the law created the law of this case and this Circuit.
Under
that law, the Court consider whether the first-to-file bar
applies at the time a suit is filed, not mid-course whenever an
earlier suit is dismissed.
Relator argues that the Court is not bound by the law
of the case or Fourth Circuit precedent because the Supreme
Court’s Kellogg decision is controlling contrary authority on
the issue.3
See TFWS, Inc., 572 F.3d at 191 (noting an exception
to the law-of-the-case doctrine when “controlling authority has
since made a contrary decision of law applicable to the issue”).
That argument is contradicted by a proper reading of Kellogg,
the state of the law at the time Kellogg was decided, and a
sister court’s recent interpretation of Kellogg.
3
The Court notes that Carter’s early interpretation of
Kellogg was directly opposed to the argument he makes now. In
an August 11, 2015 letter to this Court regarding a proposed
briefing schedule, Carter’s attorney wrote that “the District
Court is obligated to follow the Supreme Court and Fourth
Circuit’s directives to dismiss the matter without prejudice.”
(August 11, 2015 Letter [Dkt. 96] at 2.)
13
The Supreme Court’s statement of the issues before it
in Kellogg indicates the narrow nature of its holding.
The
Supreme Court framed the issue as “whether the False Claims
Act’s first-to-file bar keeps new claims out of court only while
related claims are still alive or whether it may bar those
claims in perpetuity.”
Kellogg, 135 S. Ct. at 1973.
This
statement indicates the Supreme Court was considering whether
“new claims” would be barred by dismissed cases.
The issue
statement does not purport to address what effect a dismissal
has on existing claims that were previously barred.
Viewed in
this context, the holding that “a qui tam suit under the FCA
ceases to be ‘pending’ once it is dismissed” does not support
Carter’s argument that an existing case may proceed to trial
automatically when a first-filed suit is dismissed.
The state of the law on the meaning of “pending”
before the Kellogg decision sheds additional light on how to
interpret the Supreme Court’s holding.
In Carter III, the
Fourth Circuit considered Relator’s argument that “the district
court erred when it dismissed his complaint with prejudice on
the ground that his action was forever barred” by the Maryland
Action.
Carter, 710 F.3d at 183.
The Fourth Circuit agreed
with Relator, concluding that “once a case is no longer pending
the first-to-file bar does not stop a relator from filing a
14
related case.”
Id.
Thus, dismissal under the first-to-file bar
should be without prejudice so as to permit a possible refiling.
Thirteen months after the Fourth Circuit rejected the
perpetual-bar theory in Carter, the Court of Appeals for the
D.C. Circuit reached the opposite conclusion.
In United States
ex rel. Shea v. Cellco Partnership, the D.C. Court of Appeals
held that “the first-to-file bar applies even if the initial
action is no longer pending.”
Shea, 748 F.3d 338, 344 (D.C.
Cir. 2014), vacated by 135 S. Ct. 2376 (2015).
To the Shea
court, “pending” meant that a first-filed action forever barred
all subsequent related cases, even after the first-filed case
was dismissed.
Because of this interpretation, the Shea court
affirmed the district court’s dismissal with prejudice under the
first-to-file bar.
Id.
The Shea holding created a 3-1 circuit
split on the issue of whether a first-filed suit continues to
bar all new suits in perpetuity, even after the first-filed suit
is dismissed.
Id.
The Supreme Court’s holding in Kellogg is best viewed
as a response to this circuit split and the arguments actually
litigated before the Fourth Circuit in Carter III.
The Supreme
Court said it “agree[d] with the Fourth Circuit that the
dismissal with prejudice of respondent’s one live claim was
error.”
Id. at 1979.
The Supreme Court did not, however,
comment on or displace the Fourth Circuit’s conclusion that “we
15
look at the facts as they existed when the claim was brought to
determine whether an action is barred by the first-to-file bar.”
Carter, 710 F.3d at 183.
When viewed in the proper context, it
is clear that Kellogg did not alter the law of this case or the
law in the Fourth Circuit.
Thus, the dismissal of the earlier
Actions does not automatically advance Carter’s case to firstfiler status.
The one other district court known to have considered
this issue after Kellogg supports this interpretation of the
Supreme Court’s holding.
The Supreme Court granted certiorari
in the Shea case discussed above and remanded for proceedings
consistent with Kellogg.
United States ex rel. Shea v. Cellco
P’Ship, 135 S. Ct. 2376 (2015).
On remand, the U.S. District
Court for the District of Columbia considered the effect of
Kellogg and concluded that “[a]lthough several aspects of the
first-to-file bar have recently been clarified by the Supreme
Court and our Court of Appeals, its essence remains welldefined: Plaintiffs, other than the Government, may not file FCA
actions while a related action is pending.”
United States ex
rel. Shea v. Verizon Comm’ns, Inc., No. 09-1050, slip op. at 2526 (D.D.C. Oct. 6, 2015).
Thus, the temporal focus of the
first-to-file bar remains the time a later suit is filed.
Because of this, the Shea court dismissed the relator’s action
without prejudice, even though the first-filed suit was no
16
longer pending.
Id. at 29.
This Court agrees with the outcome
in Shea and follows the same course here.
In light of the foregoing, this Court must apply
Fourth Circuit precedent and the law of this case to the current
motion to dismiss.4
Under that law, the Court considers whether
Relator’s case was barred at the time he filed suit.
It is
uncontested that the Maryland and Texas Actions were pending at
that time.
Nothing in the Supreme Court’s decision leads the
Court to find that the subsequent dismissal of a first-filed
suit automatically advances Carter III to first-filer status
without any action by Carter.
Therefore, the Court rejects
Carter’s argument for jurisdiction on this ground.
B.
Motion to Amend
In a variation of the same argument, Carter asserts
that his case would “certainly elevate” to first-filer status if
he amended his complaint.
(Pl.’s Mem. in Opp’n at 5.)
Accordingly, Carter seeks to amend his complaint under two
theories.
First, he claims an “absolute right to amend his
complaint for the first time as a matter of course” under Rule
4
Plaintiffs do not argue that the law of this case should
change due to new evidence or because the law is clearly
erroneous and results in a manifest injustice. See TFWS, Inc.
v. Franchot, 572 F.3d 186, 191 (4th Cir. 2009) (listing
exceptions to the law of the case doctrine). Those exceptions
do not apply in this case as there has been no trial to produce
new evidence and the law in this case has not been shown to be
clearly erroneous or manifestly unjust.
17
15(a)(1)(B)’s 21-day amendment window.
Mot. to Amend at 6.)
(Pl.’s Reply in Supp. of
Second, in the alternative, Relator
requests leave of court to file an amended complaint under Rule
15(a)(2).
(Id. at 7.)
Defendants counter that 15(a)(1)(B) does not grant
leave to amend because that right “expired 21 days after KBR
filed its original motion to dismiss in October 2011.”
Reply in Supp. of Mot. to Dismiss at 32.)
(Defs.’
Furthermore,
Defendants argue that the Court should not grant leave to amend
under 15(a)(2) because any amendment would be futile, and
Carter’s delay in seeking leave to amend would prejudice
Defendants and the Court.
(Id. at 34.)
As discussed below,
amendment is not proper under 15(a)(1)(B) or 15(a)(2).
i.
Amendment as a Matter of Right
Under Federal Rule of Civil Procedure 15(a)(1)(B), a
plaintiff may amend his complaint once as a matter of course
within “21 days after service of a responsive pleading or 21
days after service of a motion under Rule 12(b), (e), or (f),
whichever is earlier.”
Neither side could produce a case
indicating determinatively whether a Plaintiff retains this
right to amend in response to a second 12(b) motion made years
after the filing of the initial complaint.
For the following
reasons, the Court finds that 15(a)(1) does not permit such an
amendment as a matter of right.
18
Relator claims that “every court which has dealt with
this issue has upheld the right to amend as a matter of course
in response to a motion to dismiss.”
(Pl.’s Reply at 7.)
Carter’s cited cases, however, all involved timely amendments
made in response to a first defensive action.
None of the cases
in Carter’s memoranda are informative of the question of when
the 21-day amendment period begins in cases involving multiple
motions to dismiss.5
Thus, the Court looked elsewhere to resolve
this issue and found guidance in the text of the rule, district
court opinions addressing analogous amendment issues, and the
policies underlying the 21-day amendment period.
All of these
sources indicate that amendment is not proper under 15(a)(1)(B).
5
United States ex rel. D’Agostino v. EV3, Inc., No. 14-2145,
2015 WL 5719707, at *3-4 (1st Cir. Sept. 30, 2015) (Pl.’s Reply
to Motion to Amend at 6) (rejecting argument that 2009 amendment
created cumulative right to amend as matter of course); Melvin
v. Social Sec. Admin, No. 5:14-cv-170-F, 2015 WL 5089054, at *5,
8 (E.D.N.C. Aug. 27, 2015) (Pl.’s Reply to Motion to Amend at 7)
(recognizing amendment as matter of course in response to first
motion to dismiss and denying leave for second amendment as
futile in response to second motion to dismiss); In re MI
Windows & Doors, Inc. Prods. Liability Litig., 908 F. Supp. 2d
720, 724 (D.S.C. 2012) (Pl.’s Reply to Motion to Amend at 7)
(denying Plaintiff’s amendment as a matter of course because
“there is simply no way that the amended complaint can be deemed
to have been filed within 21 days of the filing of either the
original complaint or the motion to dismiss”); J.S. ex rel.
Simpson v. Thorsen, 766 F. Supp. 2d 695, 700 (E.D. Va. 2011)
(Pl.’s Reply to Motion to Amend at 7) (noting plaintiff filed
amendment as matter of course in response to defendant’s first
and only motion to dismiss); Heinz Kettler GMBH & Co. v. Razor
USA, LLC, 750 F. Supp. 2d 660, 667 (E.D. Va. 2010) (Pl.’s Reply
to Motion to Amend at 7) (treating motion to amend as motion to
supplement and granting leave to supplement).
19
The text of the rule states that a party may amend a
pleading requiring a response, like a complaint, “21 days after
service of a responsive pleading or 21 days after service of a
motion under 12(b), . . . whichever is earlier.”
P. 15(a)(1).
Fed. R. Civ.
From the committee notes, it is clear that this
rule does not grant a cumulative right to amend after both a
responsive pleading and a 12(b) motion.
The commentary states,
“[t]he 21-day periods to amend once as a matter of course after
service of a responsive pleading or after service of a
designated motion are not cumulative.
If a responsive pleading
is served after one of the designated motions is served, for
example, there is no new 21-day period.”
advisory committee’s 2009 note.
Fed. R. Civ. P. 15
Thus, the text of the rule and
the advisory committee notes strongly suggest that a party does
not get multiple 21-day periods to amend.
Additionally, several courts have considered how to
apply Rule 15(a)(1) when multiple defendants file separate
motions to dismiss.
Those courts concluded that “the twenty-one
day period to amend as a matter of course begins on the date of
the earliest defensive action.”
See, e.g., Williams v. Black
Entm’t Television, Inc., No. 13-cv-1459, 2014 WL 585419, at *4
(E.D.N.Y. Feb. 14, 2014) (quoting Schneider v. Cnty. of
Sacramento, No. 2:12-cv-2457, 2013 U.S. Dist. LEXIS 97295, at *2
(E.D. Cal. July 10, 2013)); see also Kieffer v. Tundra Storage
20
LLC, No. 14-3192 ADM/LIB, 2015 WL 5009012, at *3 (D. Minn. Aug.
21, 2015) (“The 21-day period to amend therefore began to run on
April 13 and did not reset when subsequent pleadings and motions
were filed.”); Trujilo v. City of Newton, No. 12-2380-JAR-DJW,
2013 WL 535747, at *1 (D. Kan. Feb. 12, 2013) (“The advisory
committee notes make clear that the ‘whichever is earlier’
language in Rule 15(a)(1) is not intended to be cumulative.”).
The policies underlying Rule 15(a)(1) also support the
conclusion that the 21-day period to amend as a matter of right
began when Defendants filed their first motion to dismiss.
In
2009, Rule 15(a) was changed to limit the time to amend as a
matter of course after a 12(b) motion to 21 days.
Under the
former rule, the right to amend terminated upon the filing of a
responsive pleading.
See Domino Sugar Corp. v. Sugar Wkrs.
Local Union 392, 10 F.3d 1064, 1068 n.1 (4th Cir. 1993)
(“[U]nder Fed. R. Civ. P. 15(a), a complaint may be amended
without leave of the court when the defendant has not filed a
responsive pleading.”).
A 12(b) motion attacking the complaint,
however, was not considered a “responsive pleading.”
Id.
Thus,
a plaintiff could sometimes retain the right to amend even after
a case was dismissed.
See Fed. R. Civ. P. 15 advisory
committee’s 2009 note (“The right to amend survived beyond
decision of the motion unless the decision expressly cut off the
right to amend.”).
To address the concern from such late
21
amendments, the 21-day window was created to “force the pleader
to consider carefully and promptly the wisdom of amending to
meet the arguments in the motion.”
Id.
Thus, the current 21-
day amendment window advances the goal of “expedit[ing]
determination of issues that otherwise might be raised
seriatim.”
Fed. R. Civ. P. 15 advisory committee’s 2009 note.
That goal is antinomical with Relator’s request to amend nearly
four years after he responded to Defendants’ first motion to
dismiss.
In light of the foregoing, the time period for
amending the complaint as a matter of course under 15(a)(1)
began when Defendants filed their first motion to dismiss on
October 21, 2011.
[Dkt. 10.]
The current motion to dismiss,
filed nearly four years later on August 17, 2015, did not create
a cumulative 21-day period for amendment.
Therefore, the Court
determines that Plaintiff has not timely amended his complaint
under 15(a)(1)(B).
Thus, the Court will consider the motion to
amend as a request for leave to amend under Rule 15(a)(2).
ii.
Amendment Under Rule 15(a)(2)
Under Rule 15(a)(2), a court “should freely give leave
[to amend] when justice so requires.”
Fed. R. Civ. P. 15(a)(2).
“[L]eave to amend a pleading should be denied only when the
amendment would be prejudicial to the opposing party, there has
been bad faith on the part of the moving party, or the amendment
22
would be futile.”
Johnson v. Oroweat Foods Co., 785 F.2d 504,
510 (4th Cir. 1986) (citing Foman v. Davis, 371 U.S. 178, 182
(1962)).
Defendants argue that leave to amend is not proper
because an amendment would be futile and prejudicial.
Specifically, Defendants argue that any amendment would not
remove the first-to-file bar and that the statute of limitation
and repose would render any amendment untimely.
Relator rebuts
that an amendment would not be futile because amending his
complaint would allow him to avoid the first-to-file bar and the
doctrine of relation back would make his amended complaint
timely.
For the following reasons, the Court finds that
amendment would not cure the first-to-file bar.
Therefore, the
Court would continue to lack jurisdiction over Relator’s amended
complaint, making amendment futile.
Because this is a
sufficient ground to decide this issue, the Court does not
consider Defendants’ alternative futility and prejudice
arguments.
A court should only deny an amendment due to futility
“when the proposed amendment is clearly insufficient or
frivolous on its face.”
Id.
The standard for futility is the
same as for a motion to dismiss under Rule 12(b)(6).
See United
States ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d
370, 376 (4th Cir. 2008) (affirming denial of motion to amend
23
because “proposed amended complaint does not properly state a
claim under Rule 12(b)(6) and lacks sufficient particularity
under Rule 9(b)”).
For example, courts have found amendment to
be futile when the amended claims would be time-barred and would
not relate back to the original filing, see Barnes v. Prince
George’s Cnty., 214 F.R.D. 379, 380-82 (D. Md. 2003), and when
an immunity would bar the amended complaint, see Perkins v.
United States, 55 F.3d 910, 917 (4th Cir. 1995); Woods v.
Bennett, No. 2:12-03592, 2013 WL 4779018, at *4 (S.D.W. Va.
Sept. 5, 2013).
Amending the complaint would not cure the first-tofile bar and therefore is futile.
As the earlier discussion
made clear, the law in this case and the Fourth Circuit requires
this Court to “look at the facts as they existed when the claim
was brought to determine whether an action is barred by the
first-to-file bar.”
Carter, 710 F.3d at 183.
Accordingly, “if
an action is later filed that is based on the facts underlying
the pending case, the court must dismiss the later case for lack
of jurisdiction.”
Id. at 181.
Furthermore, as discussed above,
the Supreme Court affirmed the Fourth Circuit’s ruling with
respect to the first-to-file bar.
1979.
See Kellogg, 135 S. Ct. at
Therefore, the Supreme Court did not alter the law of the
case governing the temporal focus of the first-to-file analysis.
24
Relator, however, cites two district court cases from
this circuit that applied the first-to-file analysis at the time
a relator filed an amended complaint.
See United States ex rel.
Kurnik v. PharMerica Corp., No. 3:11-cv-1464, 2015 WL 1524402
(D.S.C. Apr. 2, 2015); United States ex rel. Palmeri v.
Alpharma, Inc., 928 F. Supp. 2d 840 (D. Md. 2013).
One of those
cases, Kurnik, was decided after the Fourth Circuit decided
Carter III.
Kurnik distinguished Carter III by noting that no
amended complaint was before the Fourth Circuit.
Kurnik, 2015
WL 1524402, at *6.
It is true that the Fourth Circuit did not have to
consider how an amended complaint affects the first-to-file
analysis.
None-the-less, the plain text of the first-to-file
statute convinces the Court that “the filing of an amended
complaint does not create an exception to the time-of-filing
rule.”
United States ex rel. Moore v. Pennrose Props., LLC, No.
3:11-cv-121, 2015 WL 1358034, at *13 (S.D. Ohio Mar. 24, 2015).
At least three recent district courts to consider the issue
agree.
See United States ex rel. Shea v. Verizon Comm’ns, Inc.,
No. 09-1050, slip op. at 25-26 (D.D.C. Oct. 6, 2015) (“The only
way to cure this particular defect is for the Court to dismiss
Plaintiff’s action—not merely his Complaint—so that he may file
a new action now that Verizon I is no longer pending.”); Moore,
2015 WL 135804, at *13; United States ex rel. Branch Consultants
25
v. Allstate Ins. Co., 782 F. Supp. 2d 248, 259-64 (E.D. La.
2011) (finding that amending a complaint could not cure firstto-file bar).
The jurisdictional nature of the first-to-file
bar and policy concerns also support that conclusion.
Thus, the
Fourth Circuit’s statement remains controlling; “we look at the
facts as they existed when the claim was brought to determine
whether an action is barred by the first-to-file bar.”
Carter,
710 F.3d at 183.
The plain text of the first-to-file statute indicates
that an amendment will not cure the first-to-file bar.
That
statute reads as follows: “When a person brings an action under
this subsection, no person other than the Government may
intervene or bring a related action based on the facts
underlying the pending action.”
31 U.S.C. § 3730(b)(5).
Thus,
the statute plainly bars a person from “bring[ing] a related
action.”
Id.
A plaintiff does not “bring an action” by
amending a complaint, “[o]ne brings an action by commencing
suit.”
United States ex rel. Chovanec v. Apria Healthcare Grp.
Inc., 606 F.3d 361, 362 (7th Cir. 2010).
The Fourth Circuit, in
this very case, stated that “[f]ollowing the plain language of
the first-to-file bar, Relator’s action will be barred by
[earlier cases] if either case was pending when Relator filed
suit.”
Carter, 710 F.3d at 183 (emphasis added).
Furthermore,
in the post-Kellogg case of Shea, the district court noted that
26
“the language of § 3730(b)(5) itself . . . requires the Court to
look to the moment when Plaintiff filed his initial Complaint.”
Shea, No. 09-1050, slip op. at 27 (emphasis added).
“[W]hen the
statute’s language is plain, the sole function of the courts—at
least where the disposition required by the text is not absurd—
is to enforce it according to its terms.”
Crespo v. Holder, 631
F.3d 130, 133 (4th Cir. 2011) (quoting Lamie v. United States
Tr., 540 U.S. 526, 534 (2004)).
Thus, the first-to-file statute
is sufficiently plain to provide an independent basis to
conclude that “[n]o matter how many times Plaintiff amends his
Complaint, it will still be true that he ‘br[ought] a related
action based on the facts underlying the [then] pending
action.’”
Shea, No. 09-1050, slip op. at 29 (reaching this
holding despite nonjurisdictional treatment of first-to-file bar
in D.C. Circuit).
Additional reasons also persuade this Court
of the soundness of applying the first-to-file bar at the time
the initial complaint was filed.
In this Circuit, the first-to-file bar is
jurisdictional.
See Carter, 710 F.3d at 182 (“Section
3730(b)(5) is jurisdictional and if an action is later filed
that is based on the facts underlying the pending case, the
court must dismiss the later case for lack of jurisdiction.”)6
6
All circuit courts to consider the issue except one appear
to agree that the first-to-file bar is jurisdictional. See Ven27
It is consistent with a jurisdictional limitation to apply the
first-to-file bar at the time the initial complaint is filed,
rather than when the complaint is amended.
See Carter, 710 F.3d
at 183 (“[W]e look at the facts as they existed when the claim
was brought to determine whether an action is barred by the
first-to-file bar.”); Grynberg v. Koch Gateway Pipeline Co., 390
F.3d 1276 (10th Cir. 2004) (“[W]hether § 3730(b)(5) barred [the
relator’s] qui tam action by looking at the facts as they
existed at the time that action was brought.”); Morongo Band of
Mission Indians v. Ca. State Bd. of Equalization, 858 F.2d 1376,
A-Care of the Fla. Keys, Inc. v. Baxter Healthcare Corp., 772
F.3d 932, 936 (1st Cir. 2014) (“The ‘first-to-file’ rule is, at
least in this Circuit, jurisdictional.”); United States ex rel.
Branch Consultants v. Allstate Ins. Co., 560 F.3d 371, 376 (5th
Cir. 2009) (referring to “the FCA’s first-to-file jurisdictional
bar”); Grynberg v. Koch Gateway Pipeline Co., 390 F.3d 1276,
1279 (10th Cir. 2004) (“This provision is a jurisdictional limit
on the courts’ power to hear certain duplicative qui tam
suits.”); United States ex rel. Lujan v. Hughes Aircraft Co.,
243 F.3d 1181, 1186 (9th Cir. 2001) (conducting jurisdictional
analysis for first-to-file question). The only circuit to
decide otherwise is the Court of Appeals for the D.C. Circuit,
which recently relied on the text of the first-to-file statute
and the order in which the Supreme Court considered the issues
in Kellogg to conclude that the first-to-file bar is
nonjurisdictional. See United States ex rel. Heath v. AT&T,
Inc., 791 F.3d 112, 121 (D.C. Cir. 2015) (“The first-to-file
rule is not jurisdictional . . . .”). Despite this recent
circuit split, this Court finds no authority to deviate from
clearly established circuit precedent absent contrary
controlling law on the issue. The Court does not find such
controlling law in Kellogg’s consideration of the WSLA before
the first-to-file bar, as the Fourth Circuit also addressed the
WSLA first in Carter despite referring to § 3730(b)(5) as
jurisdictional.
28
1381 (9th Cir. 1988) (“In determining federal court
jurisdiction, we look to the original, rather than to the
amended, complaint.
Subject matter jurisdiction must exist as
of the time the action is commenced.”).
Relator contends, however, that a court may assess
jurisdiction at the time a complaint is amended because an
amendment is a “subsequent event of jurisdictional
significance.”
(See Pl.’s Mem. in Opp’n at 7 (quoting Palmieri,
928 F. Supp. 2d at 850).)
At first blush, the Supreme Court
decision of Rockwell International Corp. v. United States
appears to support Relator’s argument.
In that opinion, the
Supreme Court stated that “when a plaintiff files a complaint in
federal court and then voluntarily amends the complaint, courts
look to the amended complaint to determine jurisdiction.”
U.S. 457, 473-74 (2007).
549
At least two district courts have
looked to this language when concluding that a relator may avoid
the first-to-file bar by amending.
See Kurnik, 2015 WL 1524402,
at *5; Palmeri, 928 F. Supp. 2d at 851.
Upon close inspection,
however, Rockwell does not persuade this Court to assess the
first-to-file bar at the time of an amended complaint.
In Rockwell the Supreme Court considered the
application of another jurisdictional limitation in the FCA, the
public disclosure bar.
Under that bar, federal courts have no
jurisdiction over qui tam suits “based upon the public
29
disclosure of allegations or transactions ‘unless the action is
brought by the Attorney General or the person bringing the
action is an original source of the information.’”
Rockwell,
549 U.S. at 460 (quoting 31 U.S.C. § 3730(e)(4)(A)).
The
relator in Rockwell amended his complaint during the case.
The
relator then asked the Court to consider only his initial
complaint to determine whether he was an original source.
at 473.
Id.
The Supreme Court instead determined that it would
consider “(at a minimum) the allegations in the original
complaint as amended.”
Id.
This statement, however, did not
interfere with the “rule that subject-matter jurisdiction
‘depends on the state of the things at the time of the action
brought.’”
Id. (quoting Mullan v. Torrance, 22 U.S. 534, 539
(1824)).
Two recent district court opinions have convincingly
concluded that Rockwell does not make an amended complaint the
relevant point of focus for the first-to-file bar.
See Moore,
2015 WL 1358034, at *15; Branch, 782 F. Supp. 2d at 261-62.
As
those opinions make clear, Rockwell demonstrates that a
plaintiff may “amend himself or herself out of jurisdiction by
withdrawing allegations that appeared in the original
complaint,” but did not state that a court may acquire
jurisdiction through amendment.
See Moore, 2015 WL 1358034, at
*15; Branch, 782 F. Supp. 2d at 261.
30
In other words, “Rockwell
does not suggest that a plaintiff can establish jurisdiction by
amendment when jurisdiction did not previously exist.”
782 F. Supp. 2d at 261-62.
Branch,
Furthermore, in Rockwell
jurisdiction depended upon the actual substance of the
complaint’s allegations.
In the first-to-file context, however,
the timing of the filing carries the weight of jurisdictional
relevance.
See Moore, 2015 WL 1358034, at *15 (making this
distinction).
Thus, the Court agrees with Branch and Moore that
the Supreme Court’s statements in Rockwell are inapplicable to
the first-to-file context; the relevant point of jurisdictional
focus for first-to-file remains the time the initial complaint
is filed.
Lastly, the Court finds that allowing a relator to
avoid the first-to-file bar by amending would interfere with the
efficient operation of qui tam suits.
As noted in Branch,
allowing a relator to avoid § 3730(b)(5) by amending could
prevent the timely resolution of meritorious claims.
782 F. Supp. 2d at 263.
Branch,
This could occur where a relator files
a skeletal complaint to secure a place in the “jurisdictional
queue . . . only to then file an amended complaint after
actually becoming an original source, and thereby trump any
meritorious, related actions that were filed in the meantime.”
Id.
Contrary to this undesirable outcome, keeping the emphasis
31
on the time the initial complaint was filed “has the advantage
of simplicity.”
Id. at 264.
In summary, the Court agrees with Moore, Branch, and
Shea that an amended complaint does not save a qui tam suit that
was barred when the relator filed the initial complaint.
Therefore, regardless of the substance of the amendments, Carter
can only cure the first-to-file bar that attached at the time he
filed the initial complaint by dismissing the case.
In other
words, any amendment would be futile and not proper under Rule
15(a)(2).
C.
Statute of Limitations and Equitable Tolling Arguments
Under the belief that his case is not barred by
§ 3730(b)(5), Relator argues that equitable principles should
“either toll the statute of limitations or provide for relationback in order to allow Relator to proceed on the merits with
respect to all of his claims.”
(emphasis added).)
(Pl.’s Mem. in Opp’n at 9
This argument is rendered moot by the
Court’s denial of leave to amend and its conclusion that the
first-to-file bar requires dismissal without prejudice.
D.
Dismissal Without Prejudice
In Defendants’ memoranda in support of this motion,
they argued that the “only question remaining” for this Court to
resolve on remand is whether this case “must be dismissed with
prejudice because Benjamin Carter is barred from refiling by the
32
False Claims Act’s statutes of limitations and repose.”
Mem. in Supp. at 1.)
(Defs.’
In the 2011 opinion dismissing with
prejudice, this Court stated that even Relator’s timely
allegations of $673.56 in claims made on June 15, 2005, “would
be untimely were Carter to again file a new action.”
6178878, at *12.
2011 WL
Nearly four years have passed since the Court
made that statement.
With the passage of time, the FCA’s 10-
year statute of repose may have arisen to create an additional
bar on Relator’s refiling.
See 31 U.S.C. § 3731(b); Kellogg,
135 S. Ct. at 1974 (“In no circumstances, however, may a suit be
brought more than 10 years after the date of a violation.”
(citing § 3731(b))).
Defendants ask us to consider the merits
of these limitations and conclude that Relator’s refiling will
be time-barred.
Thus, Defendants asks the Court to dismiss this
case with prejudice due to the statutes of limitations and
repose.
In contrast, Relator argues that discussion of these
issues “would be improper until Relator re-filed, since this
Court is not in a position to provide advisory opinions on
issues that are not squarely before it.”
(Pl.’s Mem. in Opp’n
at 14.)
Despite Defendants’ compelling briefing on the issue,
the Court views its role within this remand as more limited than
Defendants suggest.
Having determined that jurisdiction is
lacking, the Court will not now reach out to opine on whether
33
refiling would be barred by the statutes of limitations or
repose.
See Keys v. Donahoe, No. 14 C 1297, 2014 WL 7332826,
at *3 n.5 (N.D. Ill. Dec. 19, 2014)(“[D]efendants argue that Ms.
Keys’ case, even if refiled, would be subject to dismissal on
the basis of judicial estoppel and sovereign immunity.
We do
not express any view on those arguments; however, Ms. Keys may
wish to consider them in deciding whether she wishes to refile
her complaint.”); Schaefer v. Aetna Life & Cas. Co., 910 F.
Supp. 1095, 1104 (D. Md. 1996) (dismissing without prejudice and
declining to “reach, discuss, and/or decide any of defendants’
positions as to certain non-jurisdictional issues such as
limitations”).
Therefore, the Court dismisses this case without
prejudice pursuant to the first-to-file bar.
IV.
Conclusion
For the reasons set forth above, the Court will deny
Relator’s motion to amend and will dismiss this case without
prejudice.
An appropriate order will follow.
November 12, 2015
Alexandria, Virginia
/s/
James C. Cacheris
UNITED STATES DISTRICT COURT JUDGE
34
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