Carter v. Halliburton Co. et al
Filing
30
MEMORANDUM OPINION. Signed by District Judge James C. Cacheris on 5/2/14. (gwalk, )
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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M E M O R A N D U M
1:13cv1188 (JCC/JFA)
O P I N I O N
At issue in this qui tam action brought under the
False Claims Act (“FCA”) is whether the FCA’s first-to-file bar
is triggered when an earlier-filed suit based on the same
material elements of fraud continues on direct review before the
Supreme Court.
After careful consideration of the parties’
arguments and applicable law, the Court concludes that the
first-to-file bar prohibits later-filed FCA actions while a
related case awaits a decision from the Supreme Court regarding
certiorari.
Currently pending is Defendants KBR, Inc., Halliburton
Company, Kellogg Brown & Root Services, Inc., and Service
Employees International, Inc.’s (collectively “Defendants”)
Motion to Dismiss.
[Dkt. 20.]
For the reasons that follow, the
Court will grant Defendants’ motion.
1
I. Background
The Court is well versed in the subject matter
underlying this case on account of its recurring appearance
before the undersigned.
In brief, Benjamin Carter (“Carter” or
“Plaintiff”) alleges that Defendants falsely billed the
government for services provided to United States military
forces in Iraq in violation of the FCA.
19.)
(Compl. [Dkt. 1] at 12-
These allegations stem from Carter’s work as a reverse
osmosis water purification unit operator from mid-January 2005
until April 2005.
(Id. at 12-13.)
Carter claims that
Defendants invoiced the United States for purification work
during this period although water purification did not begin
until approximately May 2005.
(Id. at 16.)
Carter maintains
that he and his fellow employees were instructed to submit time
sheets for purification work that was never in fact performed.
(Id. at 12-14.)
Carter also contends that, as part of an
overall scheme to overbill the government, Defendants required
all trade employees to submit time sheets totaling exactly
twelve hours per day regardless of the actual hours worked.
(Id. at 33.)
The procedural history of this case can only be
described as arduous.
Carter filed his original complaint under
seal on February 1, 2006, in the United States District Court
for the Central District of California.
2
See United States ex
rel. Carter v. Halliburton Co., No. 06–cv–0616 (C.D. Cal. filed
Feb. 1, 2006).
In May 2008, after extensive investigation, the
action was unsealed and transferred to this Court.
See United
States ex rel. Carter v. Halliburton Co., No. 1:08–cv–1162 (E.D.
Va. filed Feb. 1, 2006).
Upon transfer, Carter amended his
complaint.
By order dated January 13, 2009, the Court dismissed
Carter’s first amended complaint without prejudice for failure
to plead fraud with particularity.
(1:08-cv-1161 [Dkt. 90].)
Carter submitted a second amended complaint on January 28, 2009.
(1:08-cv-1161 [Dkt. 92].)
Defendants then moved to dismiss
Carter’s second amended complaint under Rules 9(b) and 12(b)(6)
of the Federal Rules of Civil Procedure.
105].)
(1:08-cv-1161 [Dkt.
Following a hearing on this matter, the Court dismissed
Counts 2 and 3 in their entirety, and temporally narrowed Counts
1 and 4.
(1:08-cv-1161 [Dkt. 122].)
At this point, Defendants
answered the remaining allegations and the case proceeded
through discovery.
In March 2010, one month before the scheduled trial
date, the Department of Justice contacted the parties and
informed them of a similar case pending in the United States
District Court for the Central District of California since
2005.
See United States ex rel. Thorpe v. Halliburton Co., No.
05–cv–08924 (C.D. Cal. filed Dec. 23, 2005).
3
Defendants then
moved to dismiss Carter’s suit under the FCA’s “first-to-file
bar,” which precludes related claims that have been previously
filed by another relator.
See 31 U.S.C § 3730(b)(5).
Finding
Defendants’ argument persuasive, the Court granted Defendants’
motion and dismissed Carter’s action without prejudice on May
10, 2010.
(1:08-cv-1161 [Dkt. 307].)
Carter filed a notice of
appeal to the Fourth Circuit on July 13, 2010.
(1:08-cv-1161
[Dkt. 325].)
On July 20, 2010, the District Court for the Central
District of California dismissed the Thorpe action.
In
response, Carter re-filed his complaint in this Court.
See
United States ex rel. Carter v. Halliburton Co., No. 1:10–cv–864
(E.D. Va. filed Aug. 4, 2010).
Carter simultaneously moved to
dismiss his pending appeal, which the Fourth Circuit granted on
February 14, 2011.
(1:08-cv-1161 [Dkt. 331].)
On May 24, 2011, the Court dismissed Carter’s 2010
complaint without prejudice on grounds that Carter had filed the
2010 case when the first suit remained pending on appeal,
thereby creating his own jurisdictional bar under the FCA’s
first-to-file provision.
(1:10-cv-864 [Dkt. 47].)
Carter did
not appeal this ruling.
On June 2, 2011, Carter again re-filed his complaint.
See United States ex rel. Carter v. Halliburton Co., No. 1:11–
cv–602 (E.D. Va. filed June 6, 2011).
4
After the case was
unsealed, Defendants moved to dismiss the action under the FCA’s
first-to-file bar and the FCA’s public disclosure bar.
U.S.C. §§ 3730(b)(5), (e)(4)(A).
See 31
Defendants further argued that
even if neither jurisdictional bar applied, virtually the entire
case must be dismissed under the FCA’s six-year statute of
limitations.
(1:11-cv-602 [Dkt. 16].)
On November 29, 2011, the Court granted Defendants’
motion, again holding that Carter’s claims were barred by the
FCA’s first-to-file bar.
(1:11-cv-602 [Dkt. 57].)
The Court
also found that Carter’s most recent complaint had been filed
beyond the FCA’s six-year statute of limitations and would be
time barred should it be re-filed.
After further concluding
that the Wartime Suspension of Limitations Act (“WSLA”) did not
apply to extend the limitations period, the Court dismissed the
case with prejudice.
(1:11-cv-602 [Dkt. 58].)
Carter timely noticed an appeal, and on March 18,
2013, the Fourth Circuit reversed in part and remanded the case
for further proceedings.
See United States ex rel. Carter v.
Halliburton Co., 710 F.3d 171 (4th Cir. 2013).
The Fourth
Circuit concluded that Carter’s complaint was not time barred
because “the WSLA applies to civil claims” filed by a relator
and the statute of limitations had been tolled by virtue of the
United States military conflict in Iraq.
Id. at 177-81.
The
court, however, went on to agree that the first-to-file bar
5
precluded Carter’s claims.
Id. at 181-81.
After noting that
the appropriate disposition in such circumstances is dismissal
without prejudice, the Fourth Circuit remanded the case for
consideration of the public disclosure bar because “[t]he
district court did not reach this argument.”
Id. at 183-84.
Following a status hearing on May 28, 2013, this Court
ordered supplemental briefing.
(1:11-cv-602 [Dkt. 80].)
After
considering the parties’ submissions, the Court denied
Defendants’ motion to dismiss based on the FCA’s public
disclosure bar.
Nevertheless, in accordance with the Fourth
Circuit’s ruling regarding the FCA’s first-to-file bar, the
Court dismissed Carter’s complaint without prejudice.
(1:11-cv-
602 [Dkt. 88].)
On June 24, 2013, Defendants filed a petition for
certiorari with the Supreme Court challenging, among other
things, the Fourth Circuit’s conclusion that the WSLA operates
to toll the statute of limitations in such cases.
On October 7,
2013, the Supreme Court invited the Solicitor General’s office
to file a response brief.
See Kellogg Brown & Root Servs., Inc.
v. United States ex rel. Carter, __ U.S. __, 134 S. Ct. 375
(2013).
To date, the Supreme Court has not ruled on Defendants’
petition.
Carter filed this case on September 23, 2013.
at 1.)
(Compl.
The instant complaint is identical to Carter’s prior
6
pleadings, with the exception of its title, case number, and
signature block.
Carter once more alleges that “personnel were
not engaged in any water testing or purification duties” and
“Defendants were billing the Government for work that was not
actually performed.”
(Id. at 34.)
Defendants have again moved to dismiss on
jurisdictional grounds.
(Defs.’ Mot. to Dismiss at 1.)
According to Defendants, because Carter’s 2011 action remains
pending before the Supreme Court, the first-to-file bar
precludes his claims.
(Defs.’ Mem. in Supp. [Dkt. 21] at 2-3.)
Defendants further argue that, even assuming this Court has
jurisdiction, the doctrine of res judicata precludes Counts 2
and 3 because the Court dismissed identical claims with
prejudice in 2009.
(Id. at 2.)
II. Analysis
Because of its effect on this Court’s jurisdiction,
the Court will first address Defendants’ contention that the
FCA’s first-to-file bar precludes Carter’s claims.
See Verosol
B.V. v. Hunter Douglas, Inc., 806 F. Supp. 582, 585 (E.D. Va.
1992) (commenting that “a court should consider [a] Rule
12(b)(1) challenge first since if it must dismiss the complaint
for lack of subject matter jurisdiction, the accompanying
defenses and objections become moot and do not need to be
determined.” (citation omitted)).
7
The FCA imposes civil liability on persons who
knowingly submit false claims to the government.
§§ 3729–33.
See 31 U.S.C.
To encourage the discovery of fraud that might
otherwise escape detection, the FCA allows private individuals,
acting as relators, to file qui tam actions on behalf of the
government.
See 31 U.S.C. § 3730(b).
In the event of success,
the relator can collect a portion of the proceeds along with
reasonable expenses and attorneys’ fees.
3730(d)(2).
See 31 U.S.C. §
“While encouraging citizens to act as
whistleblowers, the Act also seeks to prevent parasitic lawsuits
based on previously disclosed fraud.”
(citation omitted).
Carter, 710 F.3d at 181
“To reconcile these conflicting goals, the
FCA has placed jurisdictional limits on its qui tam provisions,
including § 3730(b)(5)’s first-to-file bar[.]”
Id.
The FCA’s first-to-file bar provides, in pertinent
part:
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).
“In other words, only one qui tam
action relating to a fraud is permitted to be pending at any
time.”
United States ex rel. Beauchamp v. Academi Training
Ctr., Inc., 933 F. Supp. 2d 825, 835 (E.D. Va. 2013).
“This
jurisdictional limitation is based on the sensible notion that
8
the first-filed action has already ‘provide[d] the government
notice of the essential facts of an alleged fraud,’ and thus,
the ‘first-to-file bar stops repetitive claims.’”
omitted).
Id. (citation
The FCA’s first-to-file bar has been described as “an
absolute, unambiguous exception-free rule.”
Carter, 710 F.3d at
181.
The Fourth Circuit recently confirmed that the firstto-file rule is a jurisdictional bar.
See Carter, 710 F.3d at
181; see also Beauchamp, 933 F. Supp. 2d at 835 (“The FCA’s
first-to-file bar deprives courts of subject matter jurisdiction
over later-filed FCA actions while an earlier-filed action based
on the same material elements of fraud remains pending.”).
Courts applying § 3730(b)(5) follow a two-step
analysis.
First, the court must determine whether the prior-
filed action was “pending” at the time the later-filed action
was brought.
Second, the court must decide whether the two
cases are “related.”
See Carter, 710 F.3d at 182; Grynberg v.
Koch Gateway Pipeline Co., 390 F.3d 1276, 1277 (10th Cir. 2004)
(noting that § 3730(b)(5) applies “so long as a subsequent
complaint raises the same or a related claim based in
significant measure on the core facts or general conduct relied
upon in the [pending] first qui tam action”); see also United
States ex rel. Palmieri v. Alpharma, Inc., 928 F. Supp. 2d 840,
851 n.14 (D. Md. 2013) (observing that a second-filed qui tam
9
action is permissible only when the first suit is no longer
pending and it was dismissed without prejudice).
Here, Defendants point to Carter’s identical 2011 case
as barring the present suit.
(Defs.’ Mem. in Supp. at 3.)
Defendants note that the 2011 case remained on review with the
Supreme Court when Carter filed this action.
(Id.)
Thus,
concludes Defendants, this action must be dismissed “for lack of
subject matter jurisdiction under the first-to-file bar.”
(Id.)
In other words, Defendants allege that Carter created his own
jurisdictional bar by filing the instant suit when his prior
case continued on appeal.
It is unchallenged that the instant case and the 2011
case are related under § 3730(b)(5).
See Carter, 710 F.3d at
182 (noting that a later case is “related” when it is “based
upon the ‘same material elements of fraud’ . . . even though the
subsequent suit may ‘incorporate somewhat different details.’”
(citation omitted)).
As Defendants correctly point out, the
complaint in this case is materially identical to Carter’s prior
pleadings.
See Grynberg, 390 F.3d at 1280 (finding two actions
related where they raised “the same essential claim”).
The only
dispute, therefore, is whether Carter’s 2011 case was “pending”
within the meaning of the first-to-file bar when this action was
initiated on September 23, 2013.
2.)
10
(See Pl.’s Opp’n [Dkt. 28] at
The issue of whether a related case on petition to the
Supreme Court is preclusive under the first-to-file bar appears
to be a question of first impression.
Accordingly, answering
this question requires the Court to first turn to the statute.
See Duncan v. Walker, 533 U.S. 167, 172 (2001) (noting that the
starting point for statutory interpretation is the language of
the statute itself).
When Congress does not expressly define a
statutory term or phrase, a court should “normally construe it
in accord with its ordinary or natural meaning.”
Smith v.
United States, 508 U.S. 223, 228 (1993); see also Sellan v.
Kuhlman, 261 F.3d 303, 311 (2d Cir. 2001) (“When Congress uses a
term of art . . . we presume that it speaks consistently with
the commonly understood meaning of this term.”).
Where “the
statute’s language is plain, ‘the sole function of the courts is
to enforce it according to its terms.’”
United States v. Ron
Pair Enters., Inc., 489 U.S. 235, 240 (1989) (citation omitted).
Congress provided no definition of the term “pending”
in § 3730; however, the word has a common meaning among lawyers
and judges.
When an action is appealed to a higher court, as is
the case here, it generally remains pending until the appeal is
disposed of.
See, e.g., de Rodulfa v. United States, 461 F.2d
1240, 1253 (D.C. Cir. 1972) (“An appeal is not a new suit in the
appellate court, but a continuation of the suit in the court
below . . . .
Thus the suit is pending until the appeal is
11
disposed of[.]” (citations and internal quotation marks
omitted)); Alaska Cent. Express, Inc. v. United States, 51 Fed.
Cl. 227, 229 n.1 (Fed. Cl. 2001) (noting that a number of
statutory schemes consider a case to be pending while on
appeal); Axel Johnson, Inc. v. Arthur Andersen & Co., 6 F.3d 78,
84 (2d Cir. 1993) (“[A] case remains ‘pending,’ and open to
legislative alteration, so long as an appeal is pending or the
time for filing an appeal has yet to lapse.”); In re Lara, 731
F.2d 1455, 1459 (9th Cir. 1984) (“Judgment does not become final
so long as the action in which it is entered remains pending,
and an action remains pending until final determination on
appeal.” (citations omitted)); Conopco, Inc. v. Roll Intern.,
231 F.3d 82, 94 (2d Cir. 2000) (“California law generally
considers a case pending, i.e., not final or conclusive, until
the appeal process is exhausted.”).
This understanding of the term is consistent with the
dictionary definitions to which courts often turn in the absence
of legislative definition.
See MCI Telecomms. Corp. v. Am. Tel.
& Tel. Co., 512 U.S. 218, 225 (1994).
Black’s Law Dictionary
defines “pending” as “[r]emaining undecided; awaiting decision.”
Black’s Law Dictionary 1169 (8th ed. 2004).
define the term similarly.
Other dictionaries
See Webster’s New World Dictionary
and Thesaurus 456 (1996) (“not decided; impending”); see also In
re Easthope, No. 06–20366, 2006 WL 851829, at *2 (Bankr. D. Utah
12
Mar. 28, 2006) (“These definitions indicate that a case is
pending only so long as there remains something left to
decide.”).
Thus, a commonsense reading of the word “pending” in §
3730(b)(5) requires the conclusion that a first-filed qui tam
action remains pending while on appeal.
To construe the term
otherwise, that is, to say that a qui tam suit is no longer
pending when it is on direct review, would distort the natural
meaning of the term.
See Bracey v. Luray, 138 F.2d 8, 10 (4th
Cir. 1943) (“It is elementary in the construction of statutes
that words are to be given their ‘natural, plain, ordinary and
commonly understood meaning,’ unless it is clear that some other
meaning was intended[.]” (citation omitted)); Conn. Nat’l Bank
v. Germain, 503 U.S. 249, 253-54 (1992) (“[I]n interpreting a
statute a court should always turn first to one, cardinal canon
before all others,” that when Congress writes a statute, it
“says . . . what it means and means . . . what it says there.”).
Moreover, this straightforward construction of the
term is fully consistent with the statute’s purpose and policy.
The first-to-file bar was enacted to, among other things,
“stop[] repetitive claims” and “prevent opportunistic successive
claims.”
Beauchamp, 933 F. Supp. 2d at 835 (citation omitted);
see also Palmieri, 928 F. Supp. 2d at 847 (“[T]he first-to-file
rule functions both to eliminate parasitic plaintiffs who
13
piggyback off the claims of a prior relator, and to encourage
legitimate relators to file quickly by protecting the spoils of
the first to bring a claim.
The rule also has the benefit of
preventing a double recovery against the defendant.” (citations
and internal quotation marks omitted)); United States ex rel.
LaCorte v. Wagner, 185 F.3d 188, 191 (4th Cir. 1999) (stating
that the first-to-file bar “struck a careful balance between
encouraging citizens to report fraud and stifling parasitic
lawsuits”).
Applying the first-to-file bar while a related case
remains on direct review forecloses the possibility of
duplicative lawsuits in the event of a remand, which, as noted
above, is exactly what congress hoped to avoid through this
statute.
See Beauchamp, 933 F. Supp. 2d at 385 (explaining that
under § 3730(b)(5) “only one qui tam action relating to a fraud
is permitted to be pending at any time”).
Adopting the opposite
conclusion, however, could result in multiple ongoing lawsuits
concerning the same subject matter and create confusion as to
when a second-filed qui tam action is properly before the court.
Such a result clearly flies in the face of congressional intent.
Walburn v. Lockheed Martin Corp., 431 F.3d 966, 971 (6th Cir.
2005) (“The first-to-file bar furthers the policy of the False
Claims Act in that [it] . . . stops repetitive claims.”).
Finally, the applicable case law, although sparse,
suggests that a relator’s pending appeal operates to bar any
14
successive related claims until the appeal is decided.
See
United States ex rel. May v. Purdue Pharma L.P., 737 F.3d 908,
920 (4th Cir. 2013) (noting that the first-to-file bar becomes
inapplicable when a related action has “been dismissed by the
district court, the dismissal has been affirmed by [the
applicable Court of Appeals], and certiorari has been denied by
the Supreme Court” (emphasis added)); see also Carter, 2011 WL
2118227, at *3-4.
Carter, nevertheless, argues that Defendants’ petition
for certiorari does not bar the instant suit because “[e]ven if
the [Supreme] Court granted [Defendants’] petition and issued an
opinion on the merits in favor of [Defendants], the Carter 2011
complaint would remain dismissed because the issues presented to
the Supreme Court could not result in an opinion that would
revive that complaint [in this Court].”
(Pl.’s Opp’n at 4.)
In
other words, Carter argues that a case should be deemed pending
when on appeal only if it is capable of returning to the
district court for further litigation.
(Id.)
While this
interpretation would undoubtedly avoid duplicitous lawsuits in
the district court, the Court is unpersuaded that Carter’s
position comports with the statute.
First, Carter’s argument asks the Court to depart from
the simple definition of pending described above in favor of a
test that requires the district court to independently determine
15
if a case on appeal is capable of further litigation.
Not only
does this create ambiguity, it necessitates yet another layer of
analysis when the first-to-file bar “‘is designed to be quickly
and easily determinable[.]’”
Palmieri, 928 F. Supp. 2d at 848
(quoting In re Nat. Gas Royalties Qui tam Litig. (CO2 Appeals),
566 F.3d 956, 964 (10th Cir. 2009)).
Moreover, courts to
address the first-to-file bar have repeatedly cautioned against
judicially created exceptions to the statute’s plain language.
See, e.g., United States ex rel. Lujan v. Hughes Aircraft Co.,
243 F.3d 1181, 1187 (9th Cir. 2001) (rejecting the relator’s
arguments “because they would require [the] court to read
exceptions into the [§ 3730(b)(5)’s] plain language”).
Carter’s
position lies directly contrary to this maxim, as it demands the
Court to disregard a common application of the term “pending” in
exchange for judicial review of an appellate court’s possible
rulings.
Similarly, permitting a first-filed qui tam action to
remain on appeal while another simultaneously proceeds in the
district court, as suggested by Carter, does not comport with
Congress’s strong intent to avoid parallel lawsuits.
The first-
to-file bar provides that once “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).
16
This
language is clear - if a qui tam action has been brought, no one
other than the Government may intervene or bring another related
action.
As noted by the Fourth Circuit, “[b]y drafting the
statute in such unequivocal language, Congress made the
strongest possible statement against private party intervention
in qui tam suits” or by extension bringing another related suit.
United States ex rel. LaCorte v. Wagner, 185 F.3d 188, 191 (4th
Cir. 1999).
Finally, although Carter’s proposed test would indeed
avoid competing lawsuits in the district court, he neglects to
consider the complications that could arise by permitting
simultaneous appellate review of a first-filed qui tam action.
For example, it is not hard to foresee the nightmare created if
this instant suit resulted in a verdict for Carter and the
Supreme Court later ruled that his 2011 case was filed outside
the limitations period.
Untangling such a mess would
undoubtedly result in peripheral litigation and the unnecessary
expenditure of judicial resources.
Such difficulties are easily
avoided by following the more straightforward definition of
pending described above.
In light of the foregoing, the Court finds that a
first-filed qui tam action remains “pending” within the meaning
of § 3730(b)(5) while a petition for certiorari remains before
the Supreme Court.
Accordingly, because Carter filed the
17
instant action when his prior identical case remained on appeal
to the Supreme Court, this case is barred by the FCA’s first-tofile bar and it will be dismissed. 1
III. Conclusion
For the foregoing reasons, the Court will grant
Defendants’ motion to dismiss.
An appropriate order will
follow.
May 2, 2014
Alexandria, Virginia
/s/
James C. Cacheris
UNITED STATES DISTRICT COURT JUDGE
1
Given this ruling, the Court will not address Defendants’ remaining
arguments. See Moore v. PYA Monarch, LLC, 238 F. Supp. 2d 724, 728 (E.D. Va.
2002) (“Because the Court finds the first argument to be dispositive of the
case, it need not address the remaining arguments.”); Verosol B.V., 806 F.
Supp. at 585 (commenting that if a court “must dismiss the complaint for lack
of subject matter jurisdiction, the accompanying defenses and objections
become moot and do not need to be determined”). Nevertheless, as Carter
concedes in his opposition, the doctrine of res judicata would in fact bar
any claims previously dismissed by this Court with prejudice. (Pl.’s Opp’n
at 2.)
18
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