921 F.3d 11
2d Cir.2019Background
- Movant Milton DaSilva, formerly an EOTech quality-control engineer, filed a qui tam FCA suit under seal in April 2014 alleging EOTech sold defective sights to the government.
- DaSilva had fled to Brazil after a separate Michigan criminal conviction; his fugitive status was not disclosed in the sealed complaint.
- The government raised ethical concerns about relator counsel representing a fugitive client and indicated it would move to dismiss if counsel would not withdraw; DaSilva’s counsel moved to voluntarily dismiss the qui tam action with the government’s consent in August 2014; the court dismissed it without prejudice.
- More than 14 months later the United States filed its own FCA suit against EOTech and settled for $25.6 million.
- DaSilva moved (in the government’s case) for a declaration that he was entitled to a relator’s share under 31 U.S.C. § 3730(c)(5), claiming (1) the government coerced his dismissal and (2) § 3730(c)(5) entitles him to a share even though his qui tam had been dismissed.
- The district court denied the motion; the Second Circuit affirmed, holding (a) no viable coercion claim and (b) § 3730(c)(5) applies only when a qui tam action was pending when the government elected an alternate remedy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether dismissal was coerced (i.e., involuntary) | DaSilva: counsel acted under "intense pressure" from the government and thus dismissal was coerced | Government: records show counsel voluntarily sought dismissal; communications reflected legitimate ethical concerns about a fugitive relator | Held: No coercion; dismissal was voluntary as reflected in the record and counsel's representations |
| Whether § 3730(c)(5) entitles a relator whose qui tam was dismissed before the government suit to a share | DaSilva: statute grants relator same rights in an alternate proceeding even if his qui tam was not pending | Government: § 3730(c)(5) requires a pending qui tam—an ‘‘alternate’’ implies a choice between existing options | Held: § 3730(c)(5) applies only where a qui tam action was pending when the government elected an alternate remedy; dismissed qui tams are treated as never filed |
| Whether a government § 3730(a) suit qualifies as an "alternate remedy" under § 3730(c)(5) | DaSilva: government suit should fall within "any alternate remedy" so relator is covered | Government: alternate remedy provision only triggers when government elects an alternate to an existing qui tam | Held: A government civil suit can be an "alternate remedy," but only if a qui tam was pending at the time the government chose it |
| Whether court should treat a voluntary Rule 41 dismissal as a nullity for purposes of relator rights | DaSilva: dismissal should not extinguish relator's ability to share | Government: Rule 41(a) dismissal without prejudice leaves action as if never filed; relator rights extinguished | Held: Voluntary dismissal without prejudice renders the prior qui tam a nullity for purposes of § 3730(c)(5); relator cannot reclaim share later |
Key Cases Cited
- United States ex rel. Eisenstein v. City of New York, 556 U.S. 928 (2009) (describing qui tam procedure and government intervention rules)
- Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765 (2000) (background on qui tam and relator role)
- United States ex rel. Babalola v. Sharma, 746 F.3d 157 (5th Cir. 2014) (interpreting § 3730(c)(5) to require a pending qui tam when government elects alternate remedy)
- United States ex rel. Bledsoe v. Community Health Systems, Inc., 342 F.3d 634 (6th Cir. 2003) (discussing alternate remedy as substitute for intervening in qui tam)
- United States ex rel. LaCorte v. Wagner, 185 F.3d 188 (4th Cir. 1999) (preserving rights of original qui tam plaintiffs when government pursues alternate remedy)
- United States ex rel. Barajas v. Northrop Corp., 258 F.3d 1004 (9th Cir. 2001) (explaining that government must choose between remedies and effect on relator rights)
- Cooter & Gell v. Hartmarx Corp., 496 U.S. 384 (1990) (court's post-dismissal authority and collateral consequences of dismissal)
- A.B. Dick Co. v. Marr, 197 F.2d 498 (2d Cir. 1952) (voluntary dismissal leaves proceedings as if suit never filed)