Carter v. Halliburton Co. et al
Filing
57
MEMORANDUM OPINION re: 11 MOTION to Dismiss Relator's Complaint by Halliburton Co., KBR, Inc., Kellogg Brown & Root Services, Inc., Service Employees International, Inc., 29 MOTION for Leave to File Sur-Reply by Benjamin Carter. (See Memorandum Opinion For Details). Signed by District Judge James C. Cacheris on 12/12/11. (nhall)
IN THE UNITED STATES DISTRICT COURT
EASTERN
DISTRICT OF VIRGINIA
Alexandria
UNITED
STATES
ex
FOR THE
Division
.&EDAC'J ED
rel.
BENJAMIN CARTER,
Plaintiff,
UNDER
SEAL
v.
l:llcv602
(JCC/JFA)
HALLIBURTON CO. ,
et
al. ,
DEC ] 2
Defendants.
c
MEMORANDUM
-
OPINION
This matter is before the Court on Defendants
Halliburton Company, KBR,
Inc.
Services,
and Service Employees International,
Inc. ("KBRSI"),
Inc.'s ("SEII")
[Dkt.
(collectively,
("KBR"), Kellogg Brown & Root
"Defendants"),
Motion to Dismiss
11] and Relator Benjamin Carter's ("Relator" or "Carter")
Motion for Leave to File a Sur-reply [Dkt. 29].
following reasons,
For the
the Court will grant Defendants'
Motion to
Dismiss and deny Relator's Motion for Leave to File a Sur-reply,
I. Background
A.
Carter
Action
The subject matter underlying this case is before the
court for a third time and involves the Defendants' alleged
fraudulent billing of the United States.
As
set forth below,
this case is identical to two earlier cases dismissed by this
1
17
Court and related to an earlier case filed in district court in
California.
1.
Carter's Allegations
In his Complaint, Carter brings a qui tarn action under
the False Claims Act, 31 U.S.C. §§ 3729 through 3733 (the
"FCA"), alleging that Defendants falsely billed the Government
for services provided to United States military forces serving
in Iraq.
Specifically, Carter alleges that Defendants
"knowingly presented [or caused to be presented] to an officer
or employee of the United States Government . . . false or
fraudulent claims for payment or approval" in violation of 31
U.S.C. § 3729(a)(1).
(Complaint [Dkt. 1] ("Compl.") W
157-58.)
Carter also alleges that "Defendants knowingly made, used, or
caused to be made or used,
false records or statements to get
false or fraudulent claims paid or approved by the Government"
in violation of 31 U.S.C. § 3729(a)(2).1
(Compl. M
192-93.)
These allegations stem from Carter's work as a Reverse
Osmosis Water Purification Unit ("ROWPU") Operator in Iraq from
mid-January 2005 until April 2005.
(Compl.
flfl 3, 41, 69.)
During that period, Carter worked at two camps, Al Asad and Ar
Ramadi.
(Compl. SIfl 41-42.)
1 Section 3729(a)(1) has been re-codified at 31 U.S.C. § 3729(a)(1)(A) and
section 3729(a)(2) has been re-codified at 31 U.S.C. § 3729(a)(1)(B).
2
Carter alleges that "the Al Asad Defendant ROWPU
employees were not engaged in any actual water purification
duties on discrete dates in January 2005," but nevertheless, the
"Al Asad ROWPU employees' time [was] billed under LOGCAP2 III" as
if they had been purifying water.
(Compl. Ill 130-31.)
Similarly, while working at Ar Ramadi, Carter was allegedly
"required to fill in timecards stating that he worked 12 hour[s]
a day, each day, with uniformity, on ROWPU functions," though
during this time Carter "actually worked 0 hours per day on
ROWPU functions."
(Compl. n
54-55.)
Carter also alleges that
all "trade employees" such as he were required to submit time
cards totaling "exactly 12 hours per day and 84 hours per week"
and that it was their "routine practice" to do so.
60-61,
(Compl. 55
65, 67-68.)
In essence,
Carter contends that Defendants had
knowledge that at the Ar Ramadi and Al Asad camps in Iraq, ROWPU
"personnel were not engaged in any water testing or purification
duties in support of the LOGCAP Contract," and "Defendants were
billing the Government for work that was not actually
performed."
(Compl.
51 163,
166.)
2 As noted in this Court's May 10, 2010 Memorandum Opinion in l:08cvll62,
LOGCAP III was the Logistics Civil Augmentation Program ("LOGCAP") contract
put out by the Department of Defense for civil logistical support for
military operations in Iraq, Afghanistan, and other countries.
3
2.
Procedural History
a.
2008 Carter
Carter filed an earlier case in this Court against
Defendants, Civil Action No. 08cvll62 (JCC/JFA)
("2008 Carter").
In May 2010, this Court dismissed 2008 Carter without prejudice
for lack of jurisdiction.
(I:08cvll62 [Dkt. 307].)
The Court
held that 2008 Carter was barred by § 3730(b)(5) of the FCA,
which bars a relator from "bring[ing] a related action based on
the facts underlying [a] pending action," known colloquially as
the FCA's "first-to-file bar."
31 U.S.C.
§ 3730(b)(5).
Relator filed 2008 Carter on February 1, 2006,
United States
District Court for the Central
in the
District of
California, with a first amended complaint filed on February 10,
2006.
(I:08cvll62 [Dkt.
5].)
this Court on November 3, 2008.
Carter 2008 was transferred to
(I:08cvll62
[Dkt.
73].)
This
Court dismissed Carter's first amended complaint in Carter 2008
on January 13, 2009,
90].)
granting leave to amend.
(I:08cvll62 [Dkt.
Carter filed a second amended complaint in Carter 2008 on
January 28, 2009.
(I:08cvll62 [Dkt. 92].)
Also of significance here is this Court's July 23,
2009 Order in Carter 2008 dismissing Counts 2 and 3 of Relator's
second amended complaint in their entirety,
dismissing Count 1,
alleging that Defendants knowingly submitted false claims to the
United States, except as it related to September 1, 2004 through
April 2005 for Ar Ramadi, and during January 2005 for Al Asad,
(See Memorandum Opinion ("Mem. Op.") at 19, 22, l:08cvll62 [Dkt.
121] (July 23, 2009)), and dismissing Count 4, alleging that
Defendants knowingly made or used false records or statements
material to a false claim, except as it related to the time
cards of the Ar Ramadi ROWPU employees from September 1, 2004 to
April 2005, (id. at 34)'.
b.
California Action
The first-filed "pending action" barring Carter 2008
was United States ex rel.
05cv08924
(CD. Cal.),
"California Action").
306]
Thorpe v,
Halliburton Co., No.
filed on December 23,
(Mem. Op. at 2, 15-19,
2005
(the
l:08cvll62 [Dkt.
(May 10, 2010).)
On March 23,
set for trial,
2010,
in the week before Carter 2008 was
the Department of Justice
("DOJ")
disclosed to
the parties the existence of the California Action.
Defendants
moved to dismiss Carter 2008 under § 3730(b)(5)'s first-to-file
bar, and this Court dismissed Carter 2008 without prejudice on
May 10, 2010.
(I:08cvll62 [Dkt. 307].)
After this Court dismissed Carter 2008, the California
Action was dismissed on July 30, 2010.
[Dkt.
16]
("Mem.")
at 4)
(Memorandum in Support
c.
2008 Carter Appeal
Relator filed a notice of appeal to the Fourth Circuit
on July 13, 2010.
(I:08cvll62 [Dkt. 325].)
dismiss the appeal on December 14, 2010.
Carter moved to
(Mem. at 4.)
The
Fourth Circuit dismissed the Carter 2008 appeal on February 14,
2011.
(I:08cvll62 [Dkt.
331,
d.
332].)
2010 Carter
Carter filed a second case in this Court on August 4,
2010, Civil Action No. 10cv864
(JCC/TCB)
("2010 Carter").
The
Court dismissed 2010 Carter in May 2011, again holding that the
case was barred by the FCA's first-to-file bar.
10-11, l:10cv864 [Dkt. 46]
(May 24, 2011).)
(Mem. Op. at
Specifically, the
Court noted that 2010 Carter was filed while the appeal in
Carter 2008 —
pending.
related,
(Id.
and,
thus,
(Id. at 10.)
Carter 2008 itself —
was still
Because the two cases were indisputably
the Court dismissed 2010 Carter without prejudice.
at 10-11,
13.)
e.
The Instant Action
Carter filed this case on June 2, 2011.
[Dkt. 1.]
The United States declined to intervene on August 23, 2011.
[Dkt. 3.]
This Court unsealed the Complaint on August 24, 2011.
[Dkt.
Carter's complaint in this case is identical to the
4.]
complaint filed in 2010 Carter and the second amended complaint
filed in 2008 Carter, except for its title, case number, and
signature block.
On October 21,
2011,
Defendants filed a Motion to
Dismiss the Complaint pursuant to Federal Rules of Civil
Procedure 12(b)(1)
and 12(b)(6).
[Dkt. 11.]
In their Motion,
Defendants argue, among other things, that this case not only
remains barred by the California Action, but is also barred by
United States ex rel. Duprey v. Halliburton,
8:07cvl487
(D. Md.)
Inc., et al.,
No.
(the "Maryland Action").
Carter filed an opposition to the Motion to
Dismiss on November 3, 2011.
[Dkt. 21.]
reply in support on November 8, 2011.
Defendants filed their
[Dkt. 25.]
Carter filed
a Motion for Leave to File a Sur-reply [Dkt. 29] on November 11,
2011,
which Defendants opposed [Dkt.
35] on November 16, 2011.
Carter filed a reply in support of his Motion for Leave to File
a Sur-reply on November 18,
Motion
to Dismiss
2011.
[Dkt.
and Carter's Motion
reply are before the Court.
for
38.]
Leave
Defendants'
to File a
Sur-
B.
Maryland Action
The Maryland Action alleges that Defendants "knowingly
presented, or caused to be presented, to an officer or employee
of the United States government,
payment or approval,
(Maryland Compl.
false or fraudulent claims for
in violation of 31 U.S.C.
(Mem. Ex. 4) 1 168.)
§ 3729(a)(1)."
The Maryland Relators
further allege that Defendants "knowingly made,
used, or caused
to be made or used, a false record or statement to get false or
fraudulent claims paid by the Government in violation of 31
U.S.C.
§ 3729(a)(2)."
(Maryland Compl.
Since at least March 2003,
5 171.)
Defendant KBR provided
shipping and transportation support for the United States
military in Iraq by operating a division known as the Theater
Transportation Mission ("TTM") pursuant to LOGCAP III.
(Maryland Compl. 51 6-7, 19-20.)
The Maryland Relator was
employed by Defendant KBR as a truck driver in the TTM division
and worked in Iraq from March 27, 2005 to January 15, 2006.
(Maryland Compl. 51 1, 22.)
The Maryland Relator alleges that
his section, as well as other sections in the TTM division,
inflated the hours on their time cards pursuant to an "unwritten
corporate policy" requiring all TTM drivers to enter "no fewer
than twelve hours of work per shift" and "to bill a minimum of
eighty-four (84) hours per week, notwithstanding the number of
hours actually worked."
(Maryland Compl.
15 23-26.)
In support of these allegations, the Maryland Relator
specifically claims that, while "[d]ayshift missions typically
ended at 1700 hours,
rather than the scheduled 1930 hours.
. . .
it was the regular practice of drivers, convoy commanders, and
foremen to include the un-worked balance of the full shift time,
up to 1930 hours, on their timesheets, even when completing the
shift early."
(Maryland Compl. 1 44.)
Moreover,
"most
dayshifts included a two (2) hour lunch break which was not
deducted from the time sheet," and "drivers would frequently
take a two (2) hour breakfast upon arrival at the duty location
while 'on-the-clock.'"
(Maryland Compl. 5 46.)
Convoy
commanders also allegedly "addfed] unnecessary hours to the time
their crew beg[an] preparations for the mission."
(Maryland
Compl. 5 48.)
Similar time card fraud allegedly occurred during
night shifts.
(Maryland Compl. 11 71—83).
The complaint cites
specific examples of truck drivers inflating the hours reported
on their time sheets and describes the methods they used to do
so.
(Maryland Compl. 55 84-94,
96-101,
102-04, 110, 118-19, 121-
30.)
The Maryland Relator alleges "systematic timesheet
fraud . . . occurring on a daily basis" throughout the duration
of his time in Iraq.
(Maryland Compl.
5 52.)
The Maryland
Relator also alleges,
based upon information and belief, that
"fraudulent timekeeping and billing practices continue to occur
9
to this day."
(Maryland Compl. 1 60.)
Moreover, "because it is
KBR's practice to occasionally transfer truck driving staff
between Iraq, Kuwait, and Afghanistan, it is the good faith
belief of [the Maryland Relator] that these particular
fraudulent timekeeping and billing practices are commonplace
throughout KBR's operations in Iraq, Kuwait, and Afghanistan."
(Maryland Compl.
5 61.)
10
11
II.
A.
Standard of Review
Subject Matter Jurisdiction
Pursuant to Rule 12(b)(1), a claim may be dismissed
for lack of subject matter jurisdiction.
12(b)(1).
Fed. R. Civ. P.
Defendants may attack subject matter jurisdiction in
one of two ways.
First,
defendants may contend that the
complaint fails to allege facts upon which subject matter
See Adams v. Bain, 697 F.2d 1213,
jurisdiction may be based.
1219 (4th Cir.
Supp. 2d 779,
1982); King v. Riverside Reg'1 Med.
780 (E.D. Va. 2002).
(E.D.
Va.
Virginia v.
211 F.
In such instances, all facts
alleged in the complaint are presumed to be true.
F.2d at 1219;
Ctr.,
United States,
Adams,
926 F. Supp.
697
537, 540
1995) .
Alternatively, defendants may argue that the
jurisdictional facts alleged in the complaint are untrue.
Adams,
697 F.2d at 1219; King,
situation,
"the Court may
211 F. Supp. 2d at 780.
In that
xlook beyond the jurisdictional
allegations of the complaint and view whatever evidence has been
submitted on the issue to determine whether in fact subject
matter jurisdiction exists.'"
Supp.
191
Virginia v.
at 540 (quoting Capitol Leasing Co.
(7th Cir.
370 F.3d 393,
1993));
398
see also Velasco v.
(4th Cir.
2004)
United States, 926 F.
v.
FDIC,
999 F.2d 188,
Gov't of Indonesia,
(holding that "the district
court may regard the pleadings as mere evidence on the issue and
12
may consider evidence outside the pleadings without converting
the proceeding to one for summary judgment")
(citations
omitted).
In either circumstance, the burden of proving subject
McNutt v. Gen.
matter jurisdiction falls on the plaintiff.
Motors Acceptance Corp., 298 U.S. 178, 189
(1936); Adams,
697
F.2d at 1219; Johnson v. Portfolio Recovery Assocs., 682 F.
Supp. 2d 560, 566 (E.D. Va. 2009) (holding that "having filed
this suit and thereby seeking to invoke the jurisdiction of the
Court,
Plaintiff bears the burden of proving that this Court has
subject matter jurisdiction").
B.
Failure to State a
Rule 12(b)(6)
Claim
allows a court to dismiss those
allegations which fail "to state a claim upon which relief can
be granted."
Fed. R. Civ. P. 12(b)(6).
A court may dismiss
claims based upon dispositive issues of law.
Spalding, 467 U.S. 69, 73 (1984).
Hishon v. King &
The alleged facts are
presumed true, and the complaint should be dismissed only when
"it is clear that no relief could be granted under any set of
facts that could be proved consistent with the allegations."
Id.
In deciding a 12(b)(6)
motion,
a court must first be
mindful of the liberal pleading standards under Rule 8, which
require only "a short and plain statement of the claim showing
13
that the pleader is entitled to relief."
Fed. R. Civ. P. 8.
While Rule 8 does not require "detailed factual allegations," a
plaintiff must still provide "more than labels and conclusions"
because "a formulaic recitation of the elements of a cause of
action will not do."
555-56 (2007)
Bell Atl. Corp. v. Twombly, 550 U.S. 54 4,
(citation omitted).
To survive a 12(b)(6)
motion,
"a complaint must
contain sufficient factual matter, accepted as true, to 'state a
claim to relief that is plausible on its face.'"
Ashcroft v.
Iqbal,
(quoting
556 U.S. 662, 129 S. Ct. 1937, 1949 (2009)
Twombly,
550 U.S. at 570).
"A claim has facial plausibility
when the plaintiff pleads factual content that allows the court
to draw the reasonable inference that the defendant
for the misconduct alleged."
Id.
However,
is
liable
"[t]hreadbare
recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice" to meet this standard,
id.,
and a plaintiff's "[f]actual allegations must be enough to
raise a right to relief above the speculative level . . . ."
Twombly,
550 U.S. at 555.
Moreover, a court "is not bound to
accept as true a legal conclusion couched as a factual
allegation."
Iqbal, 129 S.Ct. at 1949-50.
Ill. Analysis
Defendants argue that this Court should dismiss
Carter's Complaint because the Court lacks jurisdiction under
14
two provisions of the FCA: the FCA's "first-to-file" bar, 31
U.S.C. § 3730(b)(5),
(Mem. at 5-13), and the FCA's public
disclosure bar,3 31 U.S.C. § 3730(e)(4)(A), (Mem. at 16-22).
Second, Defendants argue that even if neither jurisdictional bar
applies, virtually the entire case must be dismissed due to the
FCA's six-year statute of limitations.
A.
The First-to-File
(Mem. at 13-16.)
Bar
Defendants first argue that this case remains barred
by the California Action,
even though the California Action was
dismissed prior to the filing of the instant complaint."
Defendants argue that aside from the California Action,
case is barred under the
first-to-file
Next,
this
rule
H^B^^H filed in Maryland
Section 3730(b)(5) of the FCA is "known colloquially
as the Act's first-to-file bar."
Grynberg v. Koch Gateway
Pipeline Co., 390 F.3d 1276, 1278 (10th Cir. 2004); Erickson ex
rel. United States v. Am. Inst, of Biological Sci's., 716 F.
Supp. 908, 918 (E.D. Va. 1989) (explaining that "this provision
establishes a first
in time rule").
The text of the first-to-
file bar provides that "[w]hen a person brings an action under
[the FCA], no person other than the Government may intervene or
bring a related action based on the facts underlying the pending
3 The Court does not address Defendants' public disclosure bar argument
because the Court need not reach that issue to dispose of Defendants' Motion
to Dismiss.
4 The Court need not resolve this issue,
as it concludes that Carter's action
is barred by the Maryland Action discussed herein.
15
action."
31 U.S.C. § 3730(b)(5).
jurisdictional in nature,
Section 3730(b)(5) is
and if an action based on the facts
underlying a pending case comes before the court, a court must
dismiss the later-filed case for lack of jurisdiction.
See
United States ex rel. Lujan v. Hughes Aircraft Co., 243 F.3d
1181,
1186-87
(9th Cir.
1.
2001).
Related Action
The Court is mindful that "[i]n a statutory
construction case, the beginning point must be the language of
the statute, and when a statute speaks with clarity to an
issue[,] judicial inquiry into the statute's meaning, in all but
the most extraordinary circumstance,
Dir., Office of Workers' Comp.
Cir. 2003)
is finished."
Program,
Ramey v.
326 F.3d 474,
476 (4th
(citing Estate of Cowart v. Nicklos Drilling Co., 505
U.S. 469, 475 (1992)).
"[I]n interpreting a statute a court
should always turn first to one, cardinal canon before all
others," and must presume that when Congress writes a statute,
it "says . . . what it means and means . . . what it says
there."
Conn.
Nat'l Bank v.
Germain,
503 U.S.
249,
253-54
(1992) .
Section 3730(b)(5)'s plain language unambiguously
establishes a first-to-file bar,
preventing successive Relators
from bringing related actions based on the same underlying
facts.
See Lujan, 243 F.3d at 1187.
16
Importantly, Congress
drafted the statute to bar all "related actions" not all
"identical actions," and thus a subsequent action may differ
from a first-to-file action, yet nevertheless be
jurisdictionally barred so long as it is considered a "related"
See Grynberg, 390 F.3d at 1279 (holding that "an
action.
identical facts test would be contrary to the plain meaning of
the statute, which speaks of 'related' qui tarn actions, not
identical ones.")
Some courts have held that "if the later-
filed complaint alleges the same type of wrongdoing as the
first,
and the first adequately alleges a broad scheme
encompassing the time and location of the later filed,
the fact
that the later complaint describes a different time period or
geographic location . . . does not save it from the absolute
first-to-file bar of § 3730(b)(5)."
United States ex rei.
Ortega v.
240 F.
(D.D.C.
Columbia Healthcare, Inc.,
Supp.
2d 8, 13
2003).
In determining if the actions are "related," courts
have adopted slight variations of a common approach:
§ 3730(b)(5) is an "exception-free" provision that bars
subsequently filed actions alleging the "same material elements
described in an earlier suit,
regardless of whether the
allegations incorporate somewhat different details."5
F.3d at
Lujan, 243
1189.
s Some Courts have required the same "type of fraud," see Grynberg, 390 F.3d
at
1280);
the same "essential facts," see United States ex rel.
17
LaCorte v.
In accordance with this Court's May 10, 2010
Memorandum Opinion in Carter 2008, the Court will apply the test
developed in Erickson ex rel.
United States v.
American
Institute of Biological Sciences, 716 F. Supp. 908 (E.D. Va.
1989).
That is, the Court will find that Carter's suit is
barred unless:
(1)
it is based on facts different
alleged in the prior suit; and,
(2) gives rise to separate and
distinct recovery by the government.
at 918.
from those
See Erickson, 716 F. Supp.
In determining whether the first-to-file bar applies,
the Court looks "at the facts as they existed at the time that
action was brought."
The Court
Grynberg,
first
390 F.3d at 1279.
examines whether
the
claims
are "based
on facts different from those alleged in the prior suit."
Erickson,
716 F. Supp. at 908.
While the Maryland Action focuses
on activities at Camp Anaconda
(see Maryland Compl. 55 65-70),
the Maryland Relator also alleges that fraudulent timekeeping
and billing practices are commonplace throughout KBR's
operations in Iraq (see Maryland Compl. 5 61), thus encompassing
SmithKline Beecham Clinical Labs,
the same "material elements of
149 F.3d 227,
232-33
fraud," see Lujan,
(3rd Cir.
1998));
or
243 F.3d at 1189).
6 Carter's complaint also names two other entities defendants -- KBRSI and
SEII -- both of which are indirect subsidiaries of KBR.
(Compl. 13 7-8.)
Complaints that allege the same material elements of fraud may be deemed
related even if they are asserted against different entities within the same
corporate structure.
See Grynberg, 390 F.3d at 1280 n.4; United States ex
rei. Hampton v. Columbia/HCA Healthcare Corp., 318 F.3d 214, 218 (D.C. Cir.
2003) .
18
Al Asad and Ar Ramadi.
The Maryland Action also alleges that
time sheet fraud was an "institutionalized" practice known
throughout KBR's corporate structure in Iraq and other
countries.
(Maryland Compl. 55 163, 165.)
Following this Court's July 23, 2009 Memorandum
Opinion in 2008 Carter,
the scope of Carter's claims has been
narrowed to the submission of fraudulent time sheets between
September 1, 2004 and April 2005 at Ar Ramadi and during January
2005 at Al Asad.
(Mem. Op. at 19, 22, 34, l:08cvll62 [Dkt.
121] (July 23, 2009).)
The Maryland Relator worked for KBR in
Iraq from March 27, 2005 to January 15, 2006 (Maryland Compl. 5
1)
While most of the Maryland Relator's
employment in Iraq was after the relevant time period in
Carter's case, the Maryland Action also states that KBR provided
support to the United States military in Iraq since at least
March 2003.
(See Maryland Compl. 1 19.)
Maryland Action alleges that Defendants'
Additionally,
time sheet fraud had
been "institutionalized" and was rooted in an "unwritten
19
the
corporate policy."
(See Maryland Compl. 55 24-26, 163, 165.)
see United States ex
rel. Chovanec, 606 F.3d 361, 364-65 (7th Cir. 2010) (finding
complaint alleging fraud in Illinois in 2002 related to
complaints alleging fraud in California and Kansas in the
1990s) .
a
relator cannot
avoid § 3730(b)(5)'s first-to-file by simply adding factual
details or geographic locations to the essential or material
elements" of the first-filed claims.
United States ex rel.
Branch Consultants, LLC v. Allstate Ins.
(5th Cir.
Co.,
560 F.3d 371,
378
2009).
These allegations certainly provide the Government with
knowledge of "the essential facts of a fraudulent scheme" and
20
"enough information to discover related frauds."
See Branch,
560 F.3d at 378 (quoting United States ex rel. LaCorte v.
SmithKline Beecham Clinical Labs., Inc., 149 F.3d 227, 234 (3d
Cir.
1998)).
This Court, however, previously rejected such
a distinction,
finding that 2008 Carter was related to the
California Action,
notwithstanding the fact that the California
Relators were a carpenter and a plumber.
16,
l:08cvll62
[Dkt.
306]
(Mem. Op. at 4-5, 15-
(May 10, 2010).)
"This is the 'same type of
wrongdoing,'
as seen in Carter's case,
albeit across a broader
7 Indeed, as noted in the previous footnote, other courts have found
complaints "related" even when they involve allegations against different
affiliated entities.
See Grynberg, 390 F.3d at 1280 n.4; Hampton, 318 F.3d
at
218.
21
spectrum of LOGCAP III tasks."
(Id.
(quoting Lujan, 243 F.3d at
1188) .)
Next the Court examines whether Carter's action "gives
rise to separate and distinct recovery by the government."
Erickson, 716 F. Supp. at 908.
The Court notes that the first
element of its inquiry, which has been answered affirmatively,
is the crucial one.
See Ortega, 240 F. Supp. 2d at 13.
"[A]n
examination of possible recovery merely aids in the
determination of whether the later-filed complaint alleges a
different type of wrongdoing on new and different material
facts."
Id.
See United States v. Apollo Grp.,
Inc.,
No.
3756623,
2009)
(finding that the
at *3 (S.D. Cal.
Nov.
6,
08 CV 1399,
earlier-filed action and later-filed action were
2009 WL
based on
the
same type of wrongdoing, and hence did not allege two different
fraudulent schemes that would give rise to separate and distinct
recovery).
See Ortega, 240 F.
Supp.
2d at 13 ("[T]he fact that the later complaint describes a
22
different time period or geographic location that could
theoretically lead to a separate recovery does not save it from
the absolute first-to-file bar of § 3730(b)(5).")
"[S]uch
duplicative claims do not help reduce fraud or return funds to
the federal fisc, since once the government knows the essential
facts of a fraudulent scheme, it has enough information to
discover related frauds."
234).
Id.
(quoting LaCorte, 14 9 F.3d at
Both elements of the Erickson test are therefore
satisfied.
Accordingly, the Court deems Carter's action related
to the Maryland HHH^^HH within the meaning of §
3730(b)(5).
2.
Pending Action
Section 3730(b)(5)'s plain language establishes a
first-to-file bar, preventing successive plaintiffs from
bringing suit while a related action is "pending."
Action was filed on June 5, 2007
The Maryland
(Mem. at 11), almost four years
before Carter filed the instant complaint on June 2, 2011.
The
Maryland Action was voluntarily dismissed without prejudice on
October 31, 2011,
after the Maryland Relator failed to serve his
complaint on the defendants.
(Opp. at 13 n.15; Reply at 8 n.8.)
However, whether a gui tarn action is barred by § 3730(b)(5)
determined by looking at the facts as they existed when the
action was brought.
Grynberg,
390 F.3d at 1279.
It is
undisputed that the Maryland Action was pending when Carter
23
is
filed the instant suit.
Thus the Maryland Action is deemed
pending for purposes of § 3730(b)(5), and Carter's action is
barred.
Having determined that Carter's suit is
barred by the Maryland Action,
the Court need not reach the
issue.
B.
Statute of
Limitations
Defendants also argue that Carter's claims are barred
by the statute of limitations.8
(Mem. at 13.)
Because Carter
has elected to re-file new actions rather than amend his prior
complaints,
to tolling.
Defendants contend that his claims are not subject
(Id.)
The FCA provides that a civil action under §
3730 may not be brought "more than 6 years after the date on
which the violation of §
3731(b)(1).9
3729 is committed."
31 U.S.C.
§
Defendants argue that a violation is committed for
6 The Court's conclusion that Carter's suit is precluded by the first-to-file
bar is, of course, dispositive.
The Court addresses Defendants' statute-oflimitations argument because, in addition to providing an independent basis
for dismissal of Carter's claims,
it bears on whether or not dismissal should
be with prejudice.
9 Section 3731(b)(2) provides for an alternative three-year limitations period
"after the date when facts material to the right of action are known or
reasonably should have been known by the official of the United States
charged with responsibility to act in the circumstances." 31 U.S.C. §
24
purposes of § 3731 when the claim for payment is submitted to
the Government.10
(Mem. at 14.)
Applying the six-year
limitations period from the date the false claims were
submitted,
Defendants contend that Carter's claims are time-
barred except as to $673.56 relevant to Count 4, which was
included on a public voucher submitted to the Government on June
15, 2005.
(Mem. at 15 & n.9.)
Carter's sole argument11 in
response is that the statute of limitations on all of his claims
is tolled by virtue of the Wartime Suspension of Limitations Act
("WSLA"), 18 U.S.C. § 3287.12
(Opp. at 19.)
3731(b)(2).
The Fourth Circuit, however, has held that § 3731(b)(2) extends
the statute of limitations beyond six years only in cases in which the United
States is a party.
United States ex rel. Sanders v. N. Am. Bus Indus., Inc.,
546 F.3d 288,
293
(4th Cir.
2008).
Since the United States has elected not
to intervene in this case, Carter is bound by the six-year limitations period
set forth in § 3731(b)(1).
10 The Fourth Circuit has not clarified when a violation is deemed to have
occurred under § 3731(b)(1).
A majority of courts have concluded that the
statute of limitations starts to run when a
Government.
false' claim is submitted to the
See United States ex re'l. Dugan v. ADT Sec. Servs., Inc., No.
DKC 2003-3485, 2009 WL 3232080, at *4 n.2 (D. Md. Sept. 29, 2009)
cases).
(citing
At least one district court in the Fourth Circuit has held that the
statute of limitations is six years from the date of filing a false claim.
See United States v. Shelburne, No. 09cv00072, 2010 WL 2542054, at *4 (W.D.
Va.
June 24,
2004).
11 In a footnote of his proposed sur-reply, and at oral argument, Carter also
argued that his claims should be equitably tolled.
For the reasons in
Section III.C, infra, Carter's Motion for Leave to File a Sur-reply is
denied.
for
In any event,
the Court notes that equitable tolling is "reserved
those rare instances where —
due to circumstances external to the
party's own conduct — it would be unconscionable to enforce the limitation
period against the party and gross injustice would result."
Harris v.
Hutchinson, 209 F.3d 325, 330 (4th Cir. 2000).
identical action —
Carter 2010 —
Here, Carter timely filed an
which was dismissed because he chose to
proceed while Carter 2008 was still on appeal, thereby triggering the firstto-file bar.
Thus, Carter cannot show that the instant suit is untimely due
to circumstances external to his own conduct, and equitable tolling is
inappropriate.
12 WSLA was reenacted as the Wartime Enforcement of Fraud Act of 2008
("WEFA").
See Wartime Enforcement of Fraud Act of 2008, S. Rep. No. 110-431
(2008).
For ease of reference, the Court refers to the statute as the WSLA,
as that is the name used in the parties' briefs and in the case law discussed
herein.
25
1.
Statutory Background
The WSLA was enacted in 1942,
and extended the time
prosecutors had to bring charges relating, to criminal fraud
offenses against the United States.
Wartime Enforcement of
Fraud Act of 2008, S. Rep. No. 110-431, at 2 (2008).
October 14, 2008,
Prior to
the WSLA provided that:
When the United States is at war the running
of any statute of limitations applicable to
any offense (1) involving fraud or attempted
fraud against the United States or any
agency thereof in any manner . . . shall be
suspended until three years after the
termination of hostilities as proclaimed by
the President or by a concurrent resolution
of Congress.
18 U.S.C.
§ 3287
(2008).
On October 14,
2008,
the Act was
amended to expand its operation to times "[w]hen the United
States is at war or Congress has enacted a specific
authorization for the use of the Armed Forces,
section 5(b)
of the War Powers Resolution
18 U.S.C. § 3287 (2011)
(emphasis added).
as described in
(50 U.S.C.
1544(b)).'
The amendment also
extended the suspension period until "5 years after the
termination of hostilities as proclaimed by a Presidential
proclamation, with notice to Congress,
resolution of Congress."
or by a concurrent
Id.
Courts are in conflict as to whether the postamendment WSLA should apply to offenses v/hich occurred before
26
passage of the 2008 amendments.13
Courts are also divided as to
whether the pre-amendment WSLA requires a formal declaration of
war or whether the authorized use of military force may also
suffice.1"
Because the Court concludes that neither the pre-
amendment nor the post-amendment version of the WSLA applies to
Carter's action —
i.e.,
a non-intervened civil FCA action —
the Court need not decide these
2.
issues.
Applicability of the WSLA
Civil
to Non-Intervened
FCA Actions
The issue before the Court is a
narrow one:
whether
the WSLA applies to civil FCA actions brought by a relator in
which
the Government
has declined
to
intervene.
Resolution
of
this issue requires the Court to interpret the WSLA —
specifically the meaning of the term "offense."
In keeping with
the principles of statutory construction discussed supra,
the
Court begins by looking at the plain language of the statute.
At oral argument, Carter argued that the statutory language
clearly applies to civil offenses against the United States,
13 Compare United States v. Anghaie, No. l:09-CR-37, 2011 WL 720044, at *2
(N.D. Fla. Feb. 21, 2011) (applying post-amendment WSLA to counts for which
the limitations period would have expired after the amendment) with United
States v.
W. Titanium,
Inc.,
No.
08-CR-4229,
2010 WL 2650224,
at *1,
3-4
(S.D. Cal. July 1, 2010) (applying pre-amendment WSLA to offenses that
occurred prior to the amendment) and United States v. Pearson, No. 2:09cr43,
2010 WL 3120038, at *1 (S.D. Miss. Aug. 4, 2010) (same)..
u Compare Anghaie, 2011 WL 720044, at *2 (pre-amendment WSLA requires
congressional declaration of war), Nestern Titanium, 2010 WL 2650224, at *3-4
(same) and United States v. Shelton, 816 F. Supp. 1132, 1135 (W.D. Tex.
1993)(Persian Gulf conflict not a "war" within meaning of the WSLA) with
United States v. Prosperi, 573 F. Supp. 2d 436, 455-56 (D. Mass. 2008)
(concluding that the United States was "at war" for purposes of the preamendment WSLA during the Afghanistan and Iraq conflicts that began in 2001
and 2002)
and Pearson,
2010 WL 3120038,
27
at *l-2
(same).
whether the United States is or is not a party.
disagrees.
The Court
The Court need only look at the definition of the
word "offense" to see that Carter is mistaken.
Dictionary defines "offense" as "[a]
crime, often a minor one."
2004).
Black's Law
violation of the law;
a
Black's Law Dictionary 1110 (8th ed.
The American Heritage Dictionary similarly defines
"offense" as, among other things,
"[a] transgression of law; a
crime" and lists "crime" as a synonym.
American Heritage
1992); see also
Dictionary of the English Language 1255 (3d ed.
Black's Law Dictionary 1110 ("The terms 'crime,'
'criminal offense,'
'offense,' and
are all said to be synonymous, and
ordinarily used interchangeably.")
Law § 3, at 4 (1989)).
(citing 22 C.J.S. Criminal
Black's includes an entry for the term,
"civil offense," but rather than provide a definition,
references "public tort."
Id. at 1111.
Thus,
it cross-
it is by no means
clear from the statutory language that the term "offense" as
used in the WSLA necessarily includes civil offenses, let alone
non-intervened civil
FCA actions.
Defendants argue that the applicability of the WSLA to
the FCA is doubtful,
133, 135 (D.C. Cir.
335 U.S.
895 (1948).
citing Marzani v.
1948),
United States,
168 F.2d
aff'd by an equally divided Court,
In Marzani,
a criminal case involving the
false statements clause from the criminal provisions of the
28
FCA,15 the D.C. Circuit held that the WSLA "does not apply to
offenses under the False Claims Act" —
a
conclusion which i t
believed necessarily followed from Supreme Court precedent.
Marzani first cited United States v. Noveck,
271 U.S. 201
(1926), a case in which the Supreme Court addressed whether the
predecessor statute to the WSLA applied to the crime of perjury
in an income tax return.
not,
The Supreme Court held that it did
because defrauding the United States is not an element of
the crime of perjury.
Noveck,
Marzani cited United States v.
criminal case which
matters in which
271 U.S.
Gilliland,
asked whether the
the
Government
proprietary interest.
at 203-04.
has
312 U.S.
FCA i s
Next,
86
(1941),
a
restricted to
some financial
or
The Supreme Court held that defrauding
the United States in a pecuniary or financial sense is not a
constituent ingredient of FCA offenses.
93.
Based on this line of cases,
Gilliland, 312 U.S. at
the D.C.
Circuit concluded
that since pecuniary fraud is not "an essential ingredient" of
offenses under the FCA,
F.2d at 136.
the WSLA does not apply.
See also Bridges v.
United States,
Marzani,
168
346 U.S. 209,
15 The FCA was enacted in 18 63 and provided both civil and criminal sanctions
for "false, fictitious, or fraudulent" claims submitted to the United States.
See Act of Mar. 2, 1863, ch. 67, 12 Stat. 696.
In 1874, the FCA's civil and
criminal provisions were severed, the civil penalties being codified in one
section of the United States Code and the criminal provisions in another.
See U.S. Rev. Stat. tit. 36, § 3490 (1875) (civil); id. tit. 70, § 5438
(criminal).
In 1982, Congress enacted legislation making the FCA's civil
provisions freestanding, without a cross-reference to a criminal statute.
See Pub.
L.
No.
97-258,
§ 3729,
96 Stat.
29
877,
978
(1982).
222 (1953) (applying similar reasoning to criminal charges
involving false statements under oath).
However, in United States v. Grainger, 34 6 U.S. 235,
243 n.14
(1953), also a criminal case, the Supreme Court
admonished that references made in cases arising under the false
statements clause, such as Marzani, should be read as referring
to that clause rather than to the false claims clause or the FCA
as a whole.
Unlike Marzani,
Grainger dealt with the false
claims clause, and involved offenses including the making of
claims upon the Government for payments induced by knowingly
false representations.
Id. at 242.
The Supreme Court noted
that this offense included more than the mere making of a false
statement,
id.,
and held that the WSLA therefore applied,
id. at
243.
Here,
false statements
however,
Carter alleges both false claims
(Count 4).
(Count 1)
and
The false statements at issue,
arise in the civil context and are therefore
distinguishable from those in Marzani.16
Defendants' alleged
fraud is decidedly pecuniary in nature — the falsification of
16 Indeed, the false statements clause from the criminal provisions of the
FCA, considered in Marzani, read as follows: "whoever shall knowingly and
willfully . . . make
. . . any false or fraudulent statements or
representations . . . in any matter within the jurisdiction of any department
or agency of the United States . . . shall be fined not more than $10,000 or
imprisoned not more than ten years, or both." 168 F.2d at 135 (citing 18
U.S.C. § 80, now 18 U.S.C. § 1001).
Conspicuously absent is a pecuniary
element.
The false statements clause from the civil provisions of the FCA,
relevant here, applies to "any person who knowingly makes, uses, or causes to
be made or used,
a
false record or statement material
fraudulent claim [for payment.)"
31 U.S.C. § 3729(b)
30
to a false or
(emphasis added).
time cards for purposes of fraudulently billing the Government.
Marzani, by contrast,
involved allegations that the defendants
had made false statements to government agencies in seeking
federal employment and lacked a pecuniary element.
For these
reasons, Marzani does not compel the conclusion that the WSLA is
inapplicable to Carter's false statement claim.
States v.
See United
Prosper!, 573 F. Supp. 2d 436, 441 (D. Mass.
2008)
(distinguishing Marzani and Bridges and holding that the WSLA
applied to criminal charges that defendants created false
reports in order to procure payment from the Government).
As Carter points out,
a handful of out-of-circuit
federal trial courts have concluded that the WSLA applies to
civil actions brought under the FCA.17
cases,
however,
relator.
In all but one of these
the United States was the party -- not a
In the lone case brought by a relator and in which the
United States declined to intervene,
United States ex rel.
McCans v. Armour & Co.,
546,
146 F. Supp.
550-51
(D.D.C. 1956),
the court found that after the 1944 amendment to the WSLA,
in
which Congress removed the term "now indictable," the statute
became applicable to civil actions, including those brought
under the FCA.
The court did not distinguish actions brought by
relators from actions in which the United States is a party.
As
17 See, e.g., United States ex rel. McCans v. Armour & Co., 14 6 F. Supp. 54 6,
550-51 (D.D.C. 1956); United States v. Temple, 147 F. Supp. 118, 120-21 (N.D.
111. 1956); United States v. Salvatore, 140 F. Supp. 470, 473 (E.D. Pa.
1956); Dugan & McNamara, Inc. v. United States,
CI.
1955);
(N.D.
United States v.
Strange Bros.
Iowa 1954).
31
127 F. Supp. 801, 803-04
Hide Co.,
123 F. Supp.
177,
184
(Ct.
it turns out, the court need not have decided the issue at all
because the relator exceeded even the WSLA's extended
limitations period.
Id. at 551.
The Fourth Circuit, on the other hand, has
distinguished FCA actions in the statute-of-limitations context
based on whether or not the United States is a party to the
action.
Inc.,
See United States ex rel. Sanders v. N. Am. Bus Indus.,
546 F.3d 288, 293 (4th Cir. 2008).
Indeed,
it is the
reasoning in Sanders that leads this Court to the conclusion
that the WSLA does not apply to non-intervened civil FCA
actions.
Sanders held that 31 U.S.C.
§ 3731(b)(2)
extends the
FCA's statute of limitations only in cases in which the United
States is a party.
546 F.3d at 293.
First,
Sanders stated that
any other reading of the statute would be problematic given that
Section 3731(b)(2) refers only to the United States —
to relators.
Id.
The WSLA likewise speaks in terms of the
United States, and does not mention relators.18
3287
(2011)
and not
See 18 U.S.C. §
(referring to offenses involving "fraud or attempted
fraud against the United States or any agency thereof")
(emphasis added).
Second,
the phrase "[a]
Sanders rejected the relator's argument that
civil action under section 3730" in the preface
to Section 3731(b)
includes all civil actions under the FCA."
18 The legislative history surrounding the 2008 amendment also omits reference
See S. Rep. No. 110-431.
Rather, the legislative history
speaks of prosecutors, investigators, and auditors.
See id. at 2.
to relators.
32
546 F.3d at 294.
The Fourth Circuit disagreed with the premise
that "'a civil action' must be read indiscriminately to
encompass all FCA claims in all contexts."
Id.
This Court
similarly finds that while the term "offense" in the WSLA may
include civil actions, it by no means must encompass all civil
actions.
Third, many of the "practical difficulties" discussed
in Sanders would arise were the WSLA deemed applicable to nonintervened civil FCA actions.
The Fourth Circuit recognized
that:
[Relator's]
.
.
.
reading of Section 3731(b)(2)
would allow relators
to
sit
on
their
claims for up to ten years before filing an
action and informing the government of the
material facts.
Indeed,
relators would have
a strong financial incentive to allow false
claims to build up over time before they
filed, thereby increasing their own
potential recovery.
Id. at 295.
In comparison, application of either version of the
WSLA to non-intervened civil
FCA actions could allow relators to
sit on their claims well in excess of ten years.
For example,
were this Court to take August 31, 201019 as the end of the war
in Iraq,
application of the pre-amendment WSLA to Carter's
claims would extend the limitations period to August 31, 2019 —
almost fourteen years after the final fraudulent claims
13 On August 31, 2010, President Obama declared "the end of our combat mission
in Iraq" in a nationally televised presidential speech.
See President Barack
Remarks by the President in Address to the Nation on the End of Combat
Operations in Iraq (Aug. 31, 2010), available at http://www.whitehouse.gov/thepress-office/2010/08/31/remarks-president-address-nation-end-combat-operationsObama,
iraq.
33
Defendants allegedly submitted to the Government.
The 2008
amendments to the WSLA, which extended the suspension period to
five years, would of course only serve to exacerbate the
problem.
As the Fourth Circuit admonished, "allowing relators
to sit on their claims "would undermine the purpose of the qui
tarn provisions of the FCA: to combat fraud quickly and
efficiently by encouraging relators to bring actions that the
government cannot or will not —
'to stimulate actions by
private parties should the prosecuting officers be tardy in
bringing the suits.'" Id.
v. Hess,
317 U.S. 537, 547
(quoting United States ex rel. Marcus
(1943)).
Application of the WSLA as
proposed by Carter would instead allow fraud to extend perhaps
indefinitely.20
Moreover, "a relator's failure to notify the
government promptly of FCA violations might also cause the
government to lose out on its ability to bring a criminal fraud
prosecution, which must be filed within five years of the
violation."
reasons,
Id.
(citing 18 U.S.C.
§§ 287,
3282).
For these
the Court concludes that the WSLA does not apply to the
instant suit —
that is, a civil FCA action brought by a
relator, in which the United States has opted not to intervene.
20 Indeed, in his proposed sur-reply and during oral argument, Carter asserted
that "war" has yet to conclude within the meaning of the WSLA.
Thus,
according to Carter, the statute of limitations on his claims still hangs in
a state of suspension.
34
For the foregoing reasons,
the Court concludes that
Carter's claims are time-barred except for the public voucher
for $673.56 relevant to Count 4.
Of course, this claim and
Carter's complaint as a whole are independently barred by
operation of the first-to-file bar.
Because the aforementioned
public voucher was submitted to the Government on June 2, 2005,
it too would be untimely were Carter to again file a new action.
And amendment of the complaint would provide no cure to the
Court's lack of jurisdiction by virtue of the first-to-file bar.
See United States ex rel.
Branch Consultants LLC v.
Allstate
Ins. Co., 782 F. Supp. 2d 248, 267-68 (E.D. La. 2011);
240 F. Supp. 2d at 14.
Ortega,
Accordingly, dismissal is with
prejudice.
C.
Motion for Leave to File Sur-reply
Carter moves to file a sur-reply to respond to "five
new arguments" raised in Defendants'
reply brief.
Leave to File Sur-reply [Dkt. 32] at 1.)
(Mot. for
These arguments
respond to Carter's contention, raised in his opposition brief,
that his claims are not barred by the statute of limitations
because the limitations period has been suspended by operation
of the WSLA.
A court has the discretion to allow a sur-reply where
a party brings forth new material or deploys new arguments in a
reply brief.
See, e.g.,
Lewis v. Rumsfeld,
35
154 F. Supp.
2d 56,
61 (D.D.C. 2001).
Where a party "seeks merely to re-open
briefing on the issues raised in [a] motion to dismiss and
challenge [the movant's] explanations of cited case law," a surreply should not be allowed.
Interphase Garment Solutions, LLC
v. Fox Television Stations, Inc., 566 F. Supp. 2d 460, 467 (D.
Md.
2008).
Carter, then, may not submit a sur-reply simply
because Defendants used their reply brief to further support an
argument made in their opening brief or to respond to new
arguments in Carter's opposition.
happened here.
Defendants raised the statute of limitations as
an issue in their opening brief.
brief paragraph,
the WSLA.
And that is precisely what
Carter then argued, in one
that his claims were not time-barred because of
And Defendants responded to that argument in their
reply brief.
Hence, none of the "new arguments" cited by Carter
are truly new.
That Carter chose to devote little time to his
discussion of the WSLA in his opposition brief does not entitle
him to file a sur-reply.
Accordingly, the Court will deny
Carter's motion.
36
IV.
Conclusion
For these reasons, the Court will grant Defendants'
Motion to Dismiss and deny Relator's Motion to File a Sur-reply.
This action is dismissed with prejudice.
An appropriate Order will issue.
/s/
November 29, 2011
Alexandria, Virginia
James C. Cacheris
UNITED STATES DISTRICT COURT JUDGE
37
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