Carter v. Halliburton Co. et al
Filing
136
MEMORANDUM OPINION. Signed by District Judge James C. Cacheris on 02/17/16. (kgra, )
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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1:11-cv-0602 (JCC/JFA)
M E M O R A N D U M
O P I N I O N
This matter came before the Court on Relator Benjamin
Carter’s (“Relator”) Motion for Reconsideration of this Court’s
November 12, 2015 Memorandum Opinion (“November 12 Opinion”).
[Dkt. 129.]
Relator argues that an intervening change in law
indicates that the False Claims Act’s first-to-file bar would
not apply to his amended complaint.
Additionally, Relator seeks
clarification on whether the Court would deny leave to amend
based on three arguments that were raised, but not addressed, in
the November 12 Opinion.
As described below, those alternative
arguments would not preclude amendment, but the first-to-file
bar continues to make amendment futile.
I. Background
The Court’s many prior opinions describe the facts and
procedural history of this case in full.
1
That background is
presumed known and repeated here only to the extent necessary to
resolve the current motion.
On October 15, 2015, this Court held a hearing on how
this case should proceed on remand from the Court of Appeals for
the Fourth Circuit and the United States Supreme Court.
Defendants moved to dismiss the case with prejudice, arguing
that the False Claims Act’s first-to-file bar requires dismissal
and the statutes of limitations and repose would prevent the
filing of a new lawsuit.
Relator, by contrast, sought to amend
his complaint in the belief that, according to the Supreme
Court’s decision in this case, amendment would clear away the
first-to-file bar attached to the Original Complaint.
See
Kellogg Brown & Root Servs., Inc. v. United States ex rel.
Carter, 135 S. Ct. 1970 (2015) [hereinafter Kellogg].
The Court
agreed with Defendants and issued its November 12 Opinion
concluding that the first-to-file bar renders amendment futile.
Because this was a dispositive ground for denying leave to
amend, the Court did not address Defendants’ alternative
arguments that the statute of limitations, the statute of
repose, and the prejudice of delay should also preclude
amendment.
2
Relator motioned for the Court to reconsider its
denial of leave to amend,1 or in the alternative, to decide
whether Defendants’ alternative arguments have merit.
Relator
contends that such a clarification would promote judicial
economy by presenting a complete record and reduce the need for
additional motions practice if he successfully appeals to the
Fourth Circuit.
Defendants oppose this motion, arguing that
Relator seeks an advisory opinion that does not satisfy any of
the Rule 59(e) grounds for reconsideration.
For the following
reasons, the Court agrees with Relator that a clarification of
the November 12 Opinion is necessary to prevent manifest
injustice.
II. Standard of Review
Amending a judgment “is an extraordinary remedy that
should be applied sparingly.”
F.3d 369, 379 (4th Cir. 2012).
Mayfield v. NASCAR, Inc., 674
A court may amend a judgment
under Rule 59(e) “(1) to accommodate an intervening change in
controlling law; (2) to account for new evidence not available
at trial; or (3) to correct a clear error of law or prevent
manifest injustice.”
(4th Cir. 1993).
Hutchinson v. Staton, 994 F.2d 1076, 1081
Merely attempting to “reargue the facts and
law originally argued in the parties’ briefs,” however, is not a
proper use of Rule 59(e).
Projects Mgmt. Co. v. DynCorp Int’l,
1
Relator supplemented the motion to reconsider on December
18, 2015, based on the First Circuit’s opinion in United States
ex rel. Gadbois v. Pharmerica Corp., 809 F.3d 1 (1st Cir. 2015).
3
LLC, 17 F. Supp. 3d 539, 541 (E.D. Va. 2014) (quoting United
States v. Smithfield Foods, Inc., 969 F. Supp. 975, 977 (E.D.
Va. 1997)).
With those principles in mind, the Court turns now to
Relator’s arguments that a change in law and the need to prevent
manifest injustice support reconsideration in this case.
III. Analysis
A.
Intervening Change in Law
The Court first addresses Relator’s argument that the
First Circuit opinion in United States ex rel. Gadbois v.
Pharmerica Corp., 809 F.3d 1 (1st Cir. 2015), is an intervening
change in controlling law justifying reconsideration.
For
several reasons, Gadbois does not convince the Court to
reconsider its judgement that the first-to-file bar renders
amendment futile.
As an initial and dispositive point, Gadbois is not
“controlling law” for this Court.
Rule 59(e)’s “controlling
law” prong “refers specifically to binding precedent only.”
McNamara v. Royal Bank of Scotland Grp, PLC, No. 11-cv-2137,
2013 WL 1942187, at *3 (S.D. Cal. May 9, 2013).
Although the
Court may consider nonbinding opinions as persuasive authority,
they certainly do not “control” this Court’s decisions.
Thus,
Gadbois does not justify reconsideration under Rule 59(e).
Local 703 v. Regions Fin. Corp., No. CV 10-2847-IPJ, 2011 WL
4
See
4431154, at *1 (N.D. Ala. Sept. 7, 2011) (“[A] decision by the
Second Circuit Court of Appeals is not binding on this Court,
and therefore, is not an intervening change in controlling
law.”); D&D Assocs., Inc. v. Bd. of Educ. of N. Plainfield, No.
03-1026, 2009 WL 904054, at *2 (D.N.J. Mar. 31, 2009) (“[A]
decision that is not controlling precedent is not an intervening
change in the controlling law for purposes of a motion for
reconsideration.”).
Furthermore, even considering Gadbois, the Court would
have denied Relator’s motion to amend due to the first-to-file
bar.
In Gadbois, the First Circuit found that an FCA relator
could avoid the first-to-file bar by supplementing his complaint
to note that an earlier related case was dismissed.
809 F.3d at 3.
Gadbois,
The court reasoned that Federal Rule of Civil
Procedure 15(d)2 permits supplements to a complaint, even to
correct jurisdictional deficiencies.
Id. at 5.
Additionally,
the court noted that the “familiar rule that jurisdiction is
determined by the facts existing at the time of filing of an
original complaint” primarily governs in diversity jurisdiction
cases.
Id.
And, because Kellogg and the dismissal of the
2
Federal Rule of Civil Procedure 15(d) permits “a party
to serve a supplemental pleading setting out any transaction,
occurrence, or event that happened after the date of the
pleading to be supplemented.” Additionally, “[t]he court may
permit supplementation even though the original pleading is
defective in stating a claim or defense.” Fed. R. Civ. P.
15(d).
5
earlier-filed action “dissolved the jurisdictional bar that the
court below found dispositive,” dismissal and refiling would be
a “pointless formality.”
Id. at 6.
Therefore, the court
concluded that the first-to-file bar does not preclude
supplementing the complaint.
Despite its virtues, the Gadbois decision does not
directly address many of the concerns that influenced this
Court’s interpretation of the first-to-file bar.
First, Gadbois
referred to Kellogg as part of a shifting of “tectonic plates”
regarding the first-to-file bar.
Id. at 3.
The court’s
assessment of Kellogg, however, was very brief and failed to
consider the context of the Supreme Court’s analysis.
By
contrast, this Court’s November 12 Opinion relied upon the
nature of the circuit split motivating the Kellogg decision, the
Supreme Court’s statement of the issues before it, and the law
of this case and this circuit.
Second, Gadbois did not give
sufficient weight to the plain language of 31 U.S.C.
§ 3730(b)(5), which the Fourth Circuit has emphasized and this
Court considered dispositive.
Compare Gadbois, 809 F.3d at 4-5
(noting this argument but not addressing it at length), with
United States ex rel. Carter v. Halliburton, 710 F.3d 171, 183
(4th Cir. 2013) (“Following the plain language of the first-tofile bar, [relator’s] action will be barred by Duprey or the
Texas action if either case was pending when Carter filed
6
suit.”), United States ex rel. Shea v. Verizon Commc’ns, Inc.,
No. 09-1050, 2015 WL 7769624, at *10 (D.D.C. Oct. 6, 2015)
(“[T]he language of § 3730(b)(5) itself, nevertheless, requires
the Court to look to the moment when Plaintiff filed his initial
Complaint . . . .”), and United States ex rel. Branch
Consultants, L.L.C. v. Allstate Inc. Co., 782 F. Supp. 2d 248,
259 (E.D. La. 2011) (“The first-to-file bar . . . refer[s]
specifically to jurisdictional facts that must exist when an
‘action,’ not a complaint, is filed.”).
Third, the Gadbois
court believed it to be a “pointless formality” to require
dismissal and refiling.
Gadbois, 809 F.3d at 6.
In the present
case, however, dismissal and refiling could implicate
significant statute of limitations and repose problems.
This
posture made the Court mindful of developing an administrable
rule.
Accordingly, Gadbois would not persuade this Court to
grant Relator’s motion to amend or deny Defendants’ motion to
dismiss.
B.
Manifest Injustice
Relator also argues that failing to address
Defendants’ alternative arguments for denying amendment results
in a manifest injustice and justifies reconsideration or
clarification.
Specifically, Relator contends that leaving
these alternative arguments unresolved would provoke additional
motions practice on remand if he successfully appeals to the
7
Fourth Circuit.
For reasons that are unique to this case, the
Court agrees and will take this opportunity to clarify its
November 12 Opinion.
Before discussing Defendants’ alternative arguments
for denying amendment, the Court must explain why it is taking
this extraordinary step.
First, the Court notes that it is
regular and proper to leave alternative arguments unresolved
after a court finds a dispositive basis for resolving an issue.
See, e.g., Mueller v. AT&T Techs., Inc., No. 87-1545, 1987 WL
44601, at *2 (4th Cir. Aug. 21, 1987) (“We hold that the
district court correctly granted summary judgment on the latter
ground, and we need not consider the former ground.”); Sheppard
v. Geren, No. 1:07cv1279, 2008 WL 4919460, at *1 n.4 (E.D. Va.),
aff’d, 282 F. App’x 232 (4th Cir. 2008) (“As the Court concludes
that the instant complaint should be dismissed for lack of
jurisdiction, it is unnecessary to address whether plaintiff has
failed to state a claim upon which relief can be granted.”).
It
is also common, however, for courts to reach alternative grounds
for dismissal, even after concluding that jurisdictional
deficiencies exist.
See, e.g., Settlers Crossing, L.L.C. v.
U.S. Home Corp., 383 F. App’x 286, 288 (4th Cir. 2010)
(affirming district court’s finding of lack of subject matter
jurisdiction and alternative dismissal on the merits); Foxworth
v. United States, No. 3:13-cv-291, 2013 WL 5652496, at *4-6
8
(E.D. Va. Oct. 16, 2013) (“Accordingly, even if the Court found
jurisdiction to be proper, Foxworth’s Complaint fails to state a
claim upon which relief can be granted.”).
Thus, either course
is proper, and a court’s decision not to reach alternative
grounds is not a recognized basis for reconsideration.
The
circumstances of this case, however, are sui generis.
In March 2010, this case had completed discovery and
was poised for trial when the Government informed the Court of
an earlier pending case similar to Relator’s case.
Thus, after
proceeding through two motions to dismiss, two amended
complaints, and a contentious and protracted discovery period,
the Court granted Defendants’ third motion to dismiss.
dismissal occurred on May 10, 2010.
That
Since that time, the case
has undergone what the Supreme Court described as “a remarkable
sequence of dismissals and filings.”
1974.
Kellogg, 135 S. Ct. at
In short, this case has consumed an immense amount of
resources from the parties and the many courts that have sought
to resolve the disputes between these parties.
To the extent a
clarification of the November 12 Opinion will provide a more
direct route to finality in this case, it would be a manifest
injustice to deny that clarification.
The Court also notes that resolving the alternative
arguments for denying amendment does not prejudice either party.
The issues analyzed below were orally argued and fully briefed
9
in the memoranda on Defendants’ motion to dismiss and Relator’s
motion to amend.
Therefore, the Court will now clarify its
November 12 Opinion by addressing Defendants’ alternative
arguments for denying leave to amend.
C.
Amendment Under Rule 15(a)(2)
Federal Rule of Civil Procedure 15(a)(2) requires
courts to “freely give leave [to amend] when justice so
requires.”
Fed. R. Civ. P. 15(a)(2).
“This liberal rule gives
effect to the federal policy in favor of resolving cases on
their merits instead of disposing of them on technicalities.”
Laber v. Harvey, 438 F.3d 404, 426 (4th Cir. 2006).
In light of
that policy, courts should deny leave to amend in only three
circumstances: (1) bad faith on the part of the moving party;
(2) prejudice to the opposing party; or (3) futility.
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 prejudice and futility prevent
amendment in this case.
The Court agrees that the first-to-file
bar renders amendment futile.
The Court’s November 12 Opinion,
however, did not address whether the statutes of limitations and
repose also make amendment futile.
The Court also did not
address whether the amendment is prejudicial.
to those issues now.
1.
Prejudice
10
The Court turns
Although Relator substantially delayed in bringing
this motion, the prejudice from that delay does not justify
denying leave to amend.
If this case’s age is marked by the
months and years that have passed since the filing of the
original complaint, then the motion indeed comes late in this
case’s life.
Over four and a half years ticked away before
Relator motioned to amend.
But the passage of time seems a poor
indicator of the prejudice caused by permitting an amendment.
Cf. Scott v. Family Dollar Stores, Inc., 733 F.3d 105, 117-18
(4th Cir. 2013) (finding no prejudice in amended complaint filed
“over three years” after original complaint); A Helping Hand v.
Baltimore Cty., Md., No. CCB-02-2568, 2009 WL 5219725, at *1 (D.
Md. Dec. 3, 2009) (permitting amendment “years after” the
original complaint was filed).
The better measure of delay
appears to be the time remaining between the amendment and a
resolution of the case on the merits.
This point of reference
provides more insight into the defendant’s ability to properly
defend against the amended complaint.
Viewed from this
perspective, the present case has undergone substantial motions
practice, but remains far from mature in terms of resolution.
Defendants face no looming deadline of trial that might prevent
them from adequately responding to the amended complaint.
Thus,
although substantial time and opportunity for amendment has
passed, the Court finds no improper prejudice from this delay.
11
Furthermore, the substance of Relator’s amendments
should not surprise Defendants or undermine the many judicial
opinions shaping the scope of this case.
The amendments provide
details about award fee presentations Defendants allegedly made
in March and July 2005 and corresponding award payments of
$55,846,736 and $21,168,998 received in April and August 2005,
respectively.
(Am. Compl. ¶¶ 144-49, 161-79.)
These
presentations allegedly incorporated information about
Defendants’ “excellent work purifying water at the bases in Ar
Ramdi and Al Asad.”
(Id. ¶ 145.)
Similar allegations of award
fees related to these water purification tasks are plainly
present in the Original Complaint, where Relator described the
award fee process at length, (Compl. ¶¶ 140-49), noted that
fraudulent time recording can inflate the fee award, (id.
¶ 154), alleged that Defendants’ fraudulent claims resulted in
“an enhanced award fee under the contract,” (id. ¶ 167(e)), and
even claimed that Defendants “received $120 million in LogCAP
award fees” in 2006 alone, (id. ¶ 148).
In a prior opinion,
this Court interpreted the Original Complaint to allege a
connection between Defendants’ false claims and the award fees
cited in the Amended Complaint.
See Carter, No. 1:08cv1162,
2009 WL 2240331, at *7 (“[A] further result of these allegedly
false time cards and invoices, the government also paid
Defendants greater indirect costs, a higher base fee, and a
12
higher award fee.” (emphasis added))
Thus, the similarity
between the Original Complaint and the amendments further
persuade the Court of the absence of prejudice.
See Matrix Cap.
Mgmt. Fund, v. BearingPoint, Inc., 576 F.3d 172, 195 (4th Cir.
2009) (finding no prejudice where “Plaintiffs simply seek to add
specificity to scienter allegations in a situation where
defendants are aware of the circumstances giving rise to the
action”); Laber, 438 F.3d at 427 (“An amendment is not
prejudicial . . . if it merely adds an additional theory of
recovery to the facts already pled and is offered before any
discovery has occurred.”); Edwards v. City of Goldsboro, 178
F.3d 231, 244 (4th Cir. 1999); Davis v. Piper Aircraft Corp.,
615 F.2d 606, 613 (4th Cir. 1980) (“Because defendant was from
the outset made fully aware of the events giving rise to the
action, an allowance of the amendment could not in any way
prejudice the preparation of the defendant’s case.”).
2.
Futility
Turning to futility, Defendants argue that the Amended
Complaint is time barred by the statute of limitations and will
not relate back to the Original Complaint.
Additionally,
Defendants contend that the FCA’s ten-year statute of repose
bars the Amended Complaint and statutes of repose are
categorically not subject to relation back under Rule 15(c).
13
For the following reasons, the Court finds that these arguments
do not render amendment futile.
a)
Relation Back of Statute of Limitations
A claim barred by the applicable statute of
limitations is futile, and an untimely amendment can be denied
on that basis.
See United States v. Pittman, 209 F.3d 314, 317
(4th Cir. 2000).
Federal Rule of Civil Procedure 15(c),
however, allows an amended complaint to relate back to the date
the original complaint was filed when “the claim or defense
asserted in the amended pleading arose out of the conduct,
transaction, or occurrence set out—or attempted to be set out—in
the original pleading.”
Fed. R. Civ. P. 15(c)(2).3
“In this
circuit, it is well-settled that Rule 15 is chiefly concerned
with ensuring (i) that there is a factual nexus between the
amendments and the prior pleading, and (ii) that a defendant had
sufficient notice of these new claims such that he will not
suffer prejudice if the amendments are found to relate back.”
Vitullo v. Mancini, 684 F. Supp. 2d 747, 754 (E.D. Va. 2010).
In this case, the Original Complaint satisfies both of these
requirements.
Therefore, relation back is proper.
As described above, the amendments have a strong
factual nexus to the Original Complaint.
3
It is well recognized
The additional circumstances for relation back in Rule
15(c) are not applicable to this case.
14
that “amendments that do no more than restate the original claim
with greater particularly or amplify the details of the
transaction alleged in the proceeding fall within Rule
15(c)(1)(B).”
6A Charles Alan Wright, Arthur R. Miller & Mary
Kay Kane, Federal Practice and Procedure, § 1497 (3d ed. 2015).
Although Relator’s amendments might do slightly more than add
particularly, the facts in the Amended Complaint are directly
referenced or clearly alluded to in the Original Complaint.
Additionally, Defendants were on notice that Relator
would include portions of the award fees within its claims for
damages.
The Original Complaint stated explicitly that
Defendants’ “fraudulent claims resulted in . . . an enhanced
award fee under the contract.”
(Compl. ¶ 167(e).)
In 2009,
this Court interpreted these allegations to mean that as “a
further result of these allegedly false time cards and invoices,
the government also paid Defendants greater indirect costs, a
higher base fee, and a higher award fee.”
2240331, at *7 (emphasis added).
Carter, 2009 WL
Thus, even the Court
understood the Original Complaint to potentially implicate the
allegedly inflated fee awards Defendants received based on their
timecard and billing practices among Ar Ramadi and Al Asad ROWPU
employees.
Accordingly, Defendants were sufficiently on notice
of the new facts alleged.
Thus, the Amended Complaint would
relate back to the time of filing of the Original Complaint.
15
The relation-back doctrine, however, is not without
limitations.
Relation back may only save a claim that would
have been timely raised within the original complaint.
See
Williams v. Lampe, 399 F.3d 867, 870 (7th Cir. 2005) (“In order
to benefit from Fed. R. Civ. P. 15(c)’s ‘relation back’
doctrine, the original complaint must have been timely filed.”).
Some of Relator’s amendments allege acts occurring more than six
years before the Original Complaint was filed.
tolling, these claims would be untimely.
Absent equitable
Because the Court has
reserved its ruling on the application of equitable tolling to
this remanded case, however, the better practice at this stage
is to permit amendment and allow Defendants to raise statute of
limitations as an affirmative defense in a motion to dismiss.
b)
Effect of the Statute of Repose
Defendants next argue that amendment is futile because
relation back cannot apply to the FCA’s ten-year statute of
repose.
Defendants cite several cases supporting their
interpretation of Rule 15(c).4
Despite these persuasive
authorities to the contrary, the Court finds that the statute of
repose does not prevent relation back.
4
Defendants cite the following cases: Police & Fire Ret.
Sys. of City of Detroit v. IndyMac MBS, Inc., 721 F.3d 95 (2d
Cir. 2013); Bensinger v. Denbury Res. Inc., 31 F. Supp. 3d 503,
510 (E.D.N.Y. 2014); In re Lehman Bros. Sec. & Erisa Litig., 800
F. Supp. 2d 477, 483 & n.27 (S.D.N.Y. 2011); Resolution Tr.
Corp. v. Olson, 768 F. Supp. 283, 285 (D. Ariz. 1991).
16
Before diving into this issue, the Court will briefly
note the differences between a statute of limitations and a
statute of repose.
The Fourth Circuit has described statutes of
limitations as “primarily instruments of public policy and of
court management,” and aimed at the “prevention of stale
claims.”
1987).
Goad v. Celotex Corp., 831 F.2d 508, 511 (4th Cir.
As such, statutes of limitations “do not confer upon
defendants any right to be free from liability, although this
may be their effect.”
Id.
Statutes of repose, by contrast,
“make the filing of suit within a specified time a substantive
part of plaintiff’s cause of action.”
Id.
The purpose of a
statute of repose is then “primarily to relieve potential
defendants from anxiety over liability for acts committed long
ago.”
Id.
The Court finds little guidance from federal courts of
appeals as to whether a statute of repose may be avoided through
relation back.
Neither the parties nor the Court identified a
Fourth Circuit opinion considering the application of Rule 15(c)
to a statute of repose.
Defendants located a Second Circuit
opinion implying that Rule 15(c) could not apply to a statute of
repose without violating the Rules Enabling Act, 28 U.S.C.
§ 2972(b).
See Police & Fire Retirement Sys. of City of Detroit
v. IndyMac MBS, Inc., 721 F.3d 95, 109 (2d Cir. 2013).
The
Second Circuit, however, expressly declined to determine whether
17
Rule 15(c) was categorically inapplicable to statutes of repose.
See id. at 110 n.18 (“[W]e need not address this issue, or
whether Rule 15(c) allows ‘relation back’ of claims otherwise
barred by a statute of repose . . . .”).
Thus, Police & Fire
does not advance the Court’s analysis of Rule 15(c) very far.
Left to consider the issue as a matter of first
instance, district courts have reached conflicting opinions
about the application of Rule 15(c) to a statute of repose.
See
Acierno v. New Castle County, No. C.A. 92-385, 2000 WL 718346,
at *9 (D. Del. May 23, 2000) (“[T]here is disagreement over
whether relation back under Rule 15(c) is permissible when a
statute of repose otherwise prevents assertion of the claim.”).5
Some district courts have even applied relation back to a
statute of repose without any apparent concern that this use of
Rule 15(c) might be improper.
See, e.g., Jenkins v. Novartis
Pharm. Corp., No. 3:11-cv-342, 2013 WL 1760762, at *3 (E.D.
5
Compare Jenkins v. Novartis Pharm. Corp., No. 3:11-cv-342,
2013 WL 1760762, at *3 (E.D. Tenn. Apr. 24, 2013) (permitting
relation back of statute of repose), Reddick v. Bloomingdale
Police Officers, No. 96 C 1109, 2001 WL 630965, at *5 (N.D. Ill.
May 29, 2001) (same), Chumney v. U.S. Repeating Arms Co., Inc.,
196 F.R.D. 419, 428 (M.D. Ala. 2000) (same), and In re Sharps
Run Assocs., L.P., 157 B.R. 766, 784 (D.N.J. 1993) (same), with
Bensinger v. Denbury Res. Inc., 31 F. Supp. 3d 503, 510
(E.D.N.Y. 2014) (declining to apply relation back to avoid
statute of repose), In re Lehman Bros. Sec. & Erisa Litig., 800
F. Supp. 2d 477, 483 & N.27 (S.D.N.Y. 2011) (citing cases
concluding that Rule 15(c) does not apply to statute of repose),
and Resolution Tr. Corp. v. Olson, 768 F. Supp. 283, 285 (D.
Ariz. 1991).
18
Tenn. Apr. 24, 2013); Reddick v. Bloomingdale Police Officers,
No. 96 C 1109, 2001 WL 630965, at *5 (N.D. Ill. May 29, 2001).
After careful consideration, the Court concludes that the
statute of repose does not prevent relation back in this case.
Starting with the text of Rule 15(c), the rule makes
no distinction between statutes of limitations and statutes of
repose.
The Rule merely states that an “amendment to a pleading
relates back to the date of the original pleading when the
amendment asserts a claim or defense that arose out of the
conduct, transaction, or occurrence set out—or attempted to be
set out—in the original pleading.”
Fed. R. Civ. P. 15(c)(1)(B).
As other courts have found, the absence of limiting language
within Rule 15(c) indicates that it applies to statutes of
limitations and repose alike.
See Chumney, 196 F.R.D. at 428
(“[T]he language of Federal Rule 15(c) indicates that it applies
to both statutes of creation and statutes of
limitations . . . .”); In re Sharps Run Assocs., L.P., 157 B.R.
at 784 (“We also do not accept the assertion that calling a
statute one of repose rather than limitations automatically
proscribes relation back.
Certainly nothing in the language of
either Rule 15(c) or R. 4:9-3 suggests such a rule.”).
Furthermore, Defendants’ strict interpretation of Rule
15(c) would have anomalous results.
Under Defendants’
interpretation, an expired statute of repose would preclude all
19
amendments, regardless of the substance of the amendment.
Thus,
an amendment that does nothing more than add specificity or
clarify a complaint would not relate back.
Similarly, an
amendment that removed a cause of action would not relate back
to the original complaint.
These results strike the Court as
illogical and contrary to Rule 15(c)’s liberal policy of
resolving issues on the merits.
See Acierno, 2000 WL 718346, at
*9 (“The court shall permit the amended complaint to relate back
under Rule 15(c)(2) because doing so will further the federal
goal of deciding controversies on their merits.”); Chumney, 196
F.R.D. at 428 (permitting relation back, in part, because “the
policy behind Federal Rule 15(c) is not hindered by applying it
to statutes of creation”).
Lastly, the application of Rule 15(c) in this case
does not violate the Rules Enabling Act’s prohibition on rules
that “abridge, enlarge or modify any substantive right.”
U.S.C. § 2072(b).
28
Rules that “incidentally affect litigants’
substantive rights do not violate this provision if reasonably
necessary to maintain the integrity of that system of rules.”
Burlington N. R. Co. v. Woods, 480 U.S. 1, 5 (1987).
The effect
on Defendants’ substantive rights appear incidental here, as
Relator does little more than clarify and add specificity to his
Original Complaint and the substantive right of repose is fairly
critiqued as minimal in this case.
20
See Shadburne-Vinton v.
Dalkon Shield Claimants Trust, 60 F.3d 1071, 1074 (4th Cir.
1992) (treating statute of repose “the same as statutes of
limitations” despite the “substantive” nature of a statute of
repose).
Additionally, relation back appears reasonably
necessary to promote the “spirit of the Federal Rules of Civil
Procedure for decisions on the merits.”
U.S. 178, 182 (1962).
See Foman v. Davis, 371
Thus, even if relation back would affect
Defendants’ substantive rights, that effect would not violate
the Rules Enabling Act.
In summary, the Court finds no basis to reconsider its
November 12, 2015 holding that the first-to-file bar applies to
Relator’s current Complaint and would continue to apply to
Relator’s Amended Complaint.
Therefore, amendment is denied as
futile and Relator’s case is dismissed without prejudice.
Despite that holding, the Court finds it would cause a manifest
injustice to leave unresolved the alternative grounds for
denying amendment.
Accordingly, the foregoing discussion
modifies the Court’s November 12 Opinion to clarify that neither
prejudice, the statute of limitations, nor the statute of repose
defeat Relator’s motion to amend.
Therefore, if the first-to-
file bar did not to apply, Relator could amend.6
6
Nothing herein should be read to prevent Defendants from
motioning to dismiss the Amended Complaint for reasons not
inconsistent with this Opinion, should the Fourth Circuit remand
with instructions to amend.
21
IV. Conclusion
For the foregoing reasons, the Court will deny
Relator’s request for reconsideration.
But, the Court modifies
its November 12 Opinion as described above.
Relator’s case
remains dismissed without prejudice.
An appropriate order will issue.
February 17, 2016
Alexandria, Virginia
/s/
James C. Cacheris
UNITED STATES DISTRICT COURT JUDGE
22
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