473 F. App'x 849
10th Cir.2012Background
- Relators filed a qui tam FCA action alleging EMC Corporation sold defective computers to government agencies and concealed defects.
- Before EMC was served, the government moved to dismiss under the first-to-file bar, § 3730(b)(5), after choosing not to intervene.
- The Wade complaint, filed earlier, allegedly asserted the same essential scheme and material elements as Relators’ complaint.
- The district court dismissed the action under § 3730(c)(2)(A) and, alternatively, on the first-to-file rule.
- The government sought to dismiss under § 3730(c)(2)(A) after notifying Relators and providing a hearing; the court addressed standards of review for such dismissal.
- The government had known of EMC allegations since 2004 and had settled those claims in the Wade action; dismissal aimed to avoid duplicative litigation with no further government recovery.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does first-to-file bar apply to bar later action? | Wade may be defective; Rule 9(b) should govern notice sufficiency. | Earlier Wade complaint suffices to bar later action regardless of 9(b). | Not reached; court disposed on § 3730(c)(2)(A) dismissal instead. |
| Whether § 3730(c)(2)(A) dismissal is proper when government moves before service and after notice? | Relators argue scrutiny should be Sequoia standard; action meritorious cannot justify dismissal. | Government may dismiss if rationally related to a valid governmental purpose; hearings are optional if substantial need shown. | Dismissal upheld under Sequoia standard; rational governmental purpose shown and relators failed to show fraud or caprice. |
| Is hearing required or adequate for § 3730(c)(2)(A) motions pre- or post-service? | Relators were entitled to a full evidentiary hearing. | Hearing not required absent substantial and particularized need; issues addressed at district court hearing. | Relators did not establish substantial need; hearing deemed adequate. |
Key Cases Cited
- Ridenour v. Kaiser-Hill Co., 397 F.3d 925 (10th Cir. 2005) (guides review standard for § 3730(c)(2)(A) dismissal after service)
- Sinochem Int’l Co. v. Malaysia Int’l Shipping Corp., 549 U.S. 422 (Supreme Court 2007) (permits non-merits dismissal when jurisdiction is uncertain)
- Sequoia Orange Co. v. Baird-Neece Packing Corp., 151 F.3d 1139 (D.C. Cir. 1998) (requires rational basis for government dismissal; burden shifting to relator)
- Ridenour v. Kaiser-Hill Co., 397 F.3d 925 (10th Cir. 2005) (establishes standard for government’s § 3730(c)(2)(A) dismissal)
- Grynberg v. Koch Gateway Pipeline Co., 390 F.3d 1276 (10th Cir. 2004) (endorses government interest in avoiding duplicative suits)
- Swift v. United States, 318 F.3d 250 (D.C. Cir. 2003) (discusses near-unreviewability of § 3730(c)(2)(A) dismissions)
- Hoyte v. Am. Nat’l Red Cross, 518 F.3d 61 (D.C. Cir. 2008) (applies Swift reasoning to served defendants)
- Lemmon v. Envirocare of Utah, Inc., 614 F.3d 1163 (10th Cir. 2010) (discusses Rule 9(b) relevance in FCA context)