United States ex rel. Carter v. Halliburton Co.
866 F.3d 199
4th Cir.2017Background
- Benjamin Carter (relator) filed a qui tam FCA suit against KBR in June 2011 alleging fraudulent billing for water-purification services in Iraq; two related qui tam suits (Maryland and Texas) had been filed earlier and were pending when Carter filed.
- The district court dismissed Carter’s complaint under the FCA’s first-to-file bar and on statute-of-limitations grounds; this Court and the Supreme Court subsequently reviewed and remanded portions of the case (procedural history includes multiple appeals and remands).
- This Court previously held that the first-to-file inquiry looks to facts as they existed when the later suit was "brought." The Supreme Court agreed that an earlier suit ceases to be "pending" once dismissed but did not address the preexisting temporal-reference holding.
- On remand the earlier-filed Maryland and Texas actions had been dismissed; Carter moved to amend his complaint (Rule 15) but did not allege or supplement with facts about those dismissals.
- The district court denied amendment as futile and dismissed Carter’s complaint without prejudice under the first-to-file rule; Carter appealed and sought reconsideration relying in part on the First Circuit’s Gadbois decision.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Temporal reference for first-to-file analysis | The Court should consider events after filing (e.g., later dismissals) when assessing first-to-file | The relevant facts are those existing when the later suit was brought | Court: first-to-file looks to facts as they existed when the action was commenced; post-filing events do not cure the violation |
| Whether dismissals of earlier suits cure a first-to-file defect | Dismissals of the earlier suits cured the defect and allow the later suit to proceed | A suit brought while a related suit was pending violates the statute regardless of later dismissal | Court: Subsequent dismissal of earlier-filed suits does not retroactively cure a first-to-file violation |
| Remedy for a first-to-file violation | Carter argued dismissal with prejudice was improper; some policy arguments urged flexibility | KBR urged dismissal is required by statute and defendant repose must be protected | Court: Statute mandates dismissal for first-to-file violations; courts lack discretion to salvage the improperly brought action |
| Ability to amend/supplement to cure defect | Carter argued a Rule 15 amendment/supplement could cure the defect (citing Gadbois) | KBR argued Carter’s proposed amendment did not address the earlier suits and thus could not cure the defect | Court: Amendment was properly denied as futile because Carter’s proposal did not allege facts about the earlier suits’ dismissals and therefore did not cure the bar |
Key Cases Cited
- United States ex rel. Carson v. Manor Care, Inc., 851 F.3d 293 (4th Cir.) (first-to-file violation deprives district court of jurisdiction; dismissal required)
- United States ex rel. Carter v. Halliburton Co., 710 F.3d 171 (4th Cir. 2013) (earlier Fourth Circuit decision: first-to-file looks to facts at time of filing)
- Kellogg Brown & Root Servs., Inc. v. United States ex rel. Carter, 135 S. Ct. 1970 (U.S. 2015) (Supreme Court: an earlier qui tam ceases to be "pending" when dismissed; did not displace temporal rule)
- State Farm Fire & Cas. Co. v. United States ex rel. Rigsby, 137 S. Ct. 436 (U.S. 2016) (distinguishes FCA provisions that mandate dismissal from those left to district court discretion)
- United States ex rel. Gadbois v. PharMerica Corp., 809 F.3d 1 (1st Cir. 2015) (held a Rule 15(d) supplement could cure a first-to-file defect by alleging dismissal of earlier suit)
- Feldman v. Law Enforcement Associates Corp., 752 F.3d 339 (4th Cir. 2014) (supplemental complaints can cure jurisdictional defects by alleging subsequent facts)