United States Ex Rel. May v. Purdue Pharma L.P.
2013 U.S. App. LEXIS 24708
4th Cir.2013Background
- Mark Radcliffe (former Purdue district sales manager) executed a personal release in 2005 in exchange for enhanced severance and previously filed a qui tam FCA suit (Qui Tam I) that was dismissed and affirmed on grounds enforcing his Release.
- After Radcliffe’s appeal, Steven May (former Purdue sales rep) and Angela Radcliffe filed a new qui tam FCA suit (Qui Tam II) alleging substantially the same OxyContin marketing fraud as in Qui Tam I.
- Purdue moved to dismiss Qui Tam II as barred by res judicata, the FCA public-disclosure bar, and for failure to plead fraud with Rule 9(b) particularity; the district court dismissed on res judicata alone.
- The Fourth Circuit reviewed de novo whether Radcliffe’s prior judgment had preclusive effect and whether the public-disclosure bar applied, and considered which version (pre-2010 or 2010-amended) of § 3730(e)(4) governs.
- The court held the Release in Qui Tam I was personal to Mark Radcliffe and did not bind non-signatories; therefore Radcliffe’s judgment (enforcing the Release) could not preclude Qui Tam II under ordinary claim-preclusion principles as modified for consent judgments/releases.
- The court ruled the pre-2010 version of the public-disclosure bar applies (retroactivity principles) and remanded for the district court to determine whether the relators actually derived their knowledge from prior public disclosures (a jurisdictional fact under Fourth Circuit law).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Preclusive effect of Radcliffe decision (res judicata) | Radcliffe dismissal was jurisdictional re: standing, so not a judgment on the merits; Qui Tam II not barred | Radcliffe affirmed dismissal with prejudice; identical claims/real-party-in-interest (U.S.) mean preclusion applies | Release was personal to Radcliffe; consent-judgment preclusion limited to parties’ intent — Radcliffe does not bar non-signatories; res judicata dismissal vacated |
| Which version of § 3730(e)(4) applies (retroactivity) | 2010 amended statute applies because complaint filed after amendment | Pre-2010 statute applies because conduct occurred before amendment; presumption against retroactivity | Pre-2010 version applies; 2010 amendments would have impermissible retroactive effect here |
| Application of public-disclosure bar under pre-2010 § 3730(e)(4) | Allegations overlap with Qui Tam I so claims are barred; verbatim allegations show derivation | Relators attest they learned from Radcliffe and May’s own experiences, not public disclosure | Whether relators actually derived knowledge from a public disclosure is a factual, jurisdictional determination for the district court — remand for factfinding |
| Rule 9(b) pleading sufficiency and first-to-file bar | (Relators) seek leave to amend if necessary; first-to-file inapplicable because prior suit no longer pending | (Purdue) Complaint fails Rule 9(b); first-to-file should bar suit | Court declined to affirm on Rule 9(b) (leave to amend may be permitted) and held first-to-file inapplicable because Qui Tam I was no longer pending |
Key Cases Cited
- United States ex rel. Radcliffe v. Purdue Pharma L.P., 600 F.3d 319 (4th Cir. 2010) (prior appeal enforcing Radcliffe’s Release)
- United States ex rel. Siller v. Becton Dickinson & Co., 21 F.3d 1339 (4th Cir. 1994) (pre-2010 public-disclosure bar requires relator actually derived knowledge from disclosure)
- Landgraf v. USI Film Prods., 511 U.S. 244 (1994) (retroactivity presumption and test for impermissible retroactive effect)
- Graham Cnty. Soil & Water Conservation Dist. v. United States ex rel. Wilson, 559 U.S. 280 (2010) (2010 FCA amendments not to be applied retroactively to pending cases)
- Semtek Int’l, Inc. v. Lockheed Martin Corp., 531 U.S. 497 (2001) (a judgment on the merits under Rule 41 is not always entitled to claim-preclusive effect)
- United States ex rel. Vuyyuru v. Jadhav, 555 F.3d 337 (4th Cir. 2009) (public-disclosure derivation is jurisdictional fact; dismissal if even partly derived)
- United States ex rel. Carter v. Halliburton Co., 710 F.3d 171 (4th Cir. 2013) (first-to-file bar applies only while earlier case remains pending)