United States v. UCB, Inc.
970 F.3d 835
| 7th Cir. | 2020Background
- Relator CIMZNHCA, LLC (one of several Venari-created qui tam plaintiffs) sued pharmaceutical defendants alleging False Claims Act violations based on alleged Anti‑Kickback Statute–related payments and services tied to the drug Cimzia.
- The Department of Justice declined to intervene but filed a § 3730(c)(2)(A) motion to dismiss the relator’s suit, stating the claims lacked sufficient merit and dismissal served the public interest.
- The district court held a hearing, applied a Sequoia Orange–style rationality/arbitrary-and-capricious review, found the government’s dismissal irrational as to CIMZNHCA specifically, and denied the motion.
- The government appealed; the Seventh Circuit framed the appeal as an appeal of a denial of a motion to intervene and dismiss, resolving a jurisdictional question.
- The Seventh Circuit held the government must intervene to exercise dismissal rights under § 3730(c)(2)(A), treated the government’s filing as a motion to intervene-and-dismiss, applied Federal Rule of Civil Procedure 41 principles (subject to statutory and constitutional constraints), and concluded the government’s dismissal was permissible.
- Court ordered remand with directions to enter judgment dismissing the relator’s claims with prejudice as to the relator and without prejudice as to the United States.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Appellate jurisdiction over denial of gov’t § 3730(c)(2)(A) dismissal | Denial not appealable; Eisenstein means gov’t is non‑party absent intervention | Denial is appealable; treat as collateral order or as denial of intervention | Appealable: court construed government’s motion as motion to intervene + dismiss—denial of intervention is immediately appealable |
| Whether government must intervene before dismissing under § 3730(c)(2)(A) | Statute allows dismissal without formal intervention; Swift supports non‑intervention dismissal | § 3730(c) structure implies paragraph (2) operates only after the government proceeds (i.e., intervenes) | Government must intervene to exercise dismissal rights; motion construed as intervening to permit review and appeal |
| Proper standard of review for government dismissal under § 3730(c)(2)(A) | Apply Sequoia Orange two‑step (identify valid government purpose; rational relation) | Swift vested government with unfettered discretion; but Rule 41 principles govern once government intervenes | Sequoia/Swift dichotomy is false: governing standard is Rule 41(a) framework (subject to statute and constitutional limits); courts review for abuse of discretion/constitutional violation, not strict administrative reasoned‑decisionmaking |
| Merits: Was dismissal proper here? | Relator: gov’t showed only general, non‑particularized review; evidence of animus and lack of individualized justification; decision was arbitrary and capricious | Govt: consistent agency guidance and policy judgments supported dismissal; dismissal rational and lawful | Held for government: dismissal was rational and lawful under Rule 41 framework; district court erred—remand to enter judgment dismissing relator’s claims (prejudice to relator; without prejudice to U.S.) |
Key Cases Cited
- Swift v. United States, 318 F.3d 250 (D.C. Cir. 2003) (held government could dismiss qui tam suits without intervening)
- United States ex rel. Sequoia Orange Co. v. Baird‑Neece Packing Corp., 151 F.3d 1139 (9th Cir. 1998) (two‑step rationality test for gov’t dismissal)
- United States ex rel. Eisenstein v. City of New York, 556 U.S. 928 (2009) (government is a non‑party absent intervention for some procedural purposes)
- Heckler v. Chaney, 470 U.S. 821 (1985) (agency refusal to act generally committed to agency discretion; limited review)
- Vermont Agency of Nat. Res. v. United States ex rel. Stevens, 529 U.S. 765 (2000) (relator retains an interest in qui tam suits; limits on treating relator as mere agent)
- Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) (administrative law reasoned‑decisionmaking standard)
- County of Sacramento v. Lewis, 523 U.S. 833 (1998) (substantive due process requires conscience‑shocking conduct for relief)
- Yick Wo v. Hopkins, 118 U.S. 356 (1886) (arbitrary nonenforcement can violate due process)