Lead Opinion
The False Claims Act (FCA) empowers private individuals acting on behalf of the government to bring civil actions against those that defraud the government. The FCA contains a provision, known as the “fírst-to-file” rule, which bars these private individuals, known as- relators, from bringing actions under the FCA while a related action is pending. In this case, back before this Court for a third time, we consider whether the fírst-to-fíle rule mandates dismissal of a relator’s action that ■ was brought while related actions were .pending, even after the related actions have been dismissed and the relator’s complaint has been amended, albeit without mention of the related actions. We conclude that it does.
I.
A.
The FCA imposes liability for knowingly presenting false'or fraudulent claims to the government of the United States for payment or approval. 31 U.S.C. § 3729(a)(1). “In adopting the FCA, ‘the objective of Congress was broadly to protect the funds and property of the government.’” United States ex rel Owens v. First Kuwaiti Gen. Trading & Contracting Co.,
Liability under the FCA is no small matter. An FCA violator may be held responsible for treble damages in addition to civil penalties. See 31 U.S.C. § 3729(a)(1). The FCA’s liability scheme is enforced through civil actions filed by the government, 31- U.S.C.. § 3730(a), as well as through civil actions—known as qui tarn actions—that are filed by private parties— known as relators—“in the name of the Government,” 31 U.S.C. § 3730(b)(1).
In a qui tam action under the FCA, a relator files the complaint under seal, and serves a copy of the complaint and an evidentiary disclosure on the government. 31 U.S.C. § 3730(b)(2). This procedure enables the government to investigate the matter, so that it may decide whether to take over the relator’s action or to instead- allow the relator' to litigate the action in the government’s place. See Smith v. Clark/Smoot/Russell,
“Although designed to incentivize whistleblowers, the FCA also seeks to prevent parasitic lawsuits based on previously disclosed fraud.” United Stales ex rel. Beauchamp v. Academi Training Ctr.,
B.
Appellees Halliburton Company; Kellogg Brown & Root Services, Inc.; KBR, Inc.; and Service Employees International, Inc. (collectively, “KBR”), are á group of defense contractors and related entities that provided logistical services to the United States military during the armed conflict in Iraq. From January to April 2005, Appellant Benjamin Carter worked for KBR at a water purification unit employed to provide clean water to American troops serving in Iraq.
In June 2011, Carter filed a qui tam complaint against KBR in the Eastern District of Virginia. See United States ex rel. Carter v. Halliburton Co. (the “Carter Action”), No. 11-cv-602 (E.D. Va. filed June 2, 2011). In his complaint, Carter alleged that KBR had violated the FCA by fraudulently billing the government in connection with its water purification services.
At the time the Carter .Action was brought, two allegedly related actions were already pending: United States ex rel. Duprey, No. 8:07-cv-1487 (D. Md. filed June 5, 2007) (the “Maryland Action”), and a sealed action filed in Texas, in 2007 (the “Texas Action”). However, the Maryland Action was dismissed in October 2011, and the Texas Action was dismissed in March 2012.
In November 2011, the district court ruled that the Maryland Action was related to the later-filed Carter Action, and that therefore the latter action was precluded by the first-to-file rule. The fact that the Maryland Action had been dismissed prior to the district court’s ruling on the Carter Action gave the court no pause, because it believed that' “whether a qui tam action is barred by [the first-to-file rule] is determined by looking at the facts as they' existed when the action was brought.” United States ex rel. Carter v. Halliburton Co. (Carter I), No. 1:11-cv-602,
Carter appealed the dismissal of the Carter Action to this Court. Carter’s appeal centered on first-to-file issues, as well as the possibility that the WSLA tolled the statute of limitations on his claims. Carter did not, however, contest the district court’s decision to assess .the first-to-file rule based on the facts as they existed at the time that the Carter Action was brought. i
This Court rejected the district court’s statute of limitations conclusion, reasoning that the WSLA applied to civil actions and suspended the time for filing the Carter Action. See Carter II,
We then addressed the first-to-file rule. We agreed with the district court that courts must “look at the facts as they existed when the claim was brought to determine whether an action is barred by the first-to-file bar.” Id. at 183. As such, we concluded that the Carter Action must be dismissed under the first-to-file rule, because the Maryland and Texas Actions were pending at the time the related Carter Action was brought. We clarified, however, that “once a case is no longer pending the first-to-file bar does not stop a relator from filing a related case.” Id. Applying this logic, and finding no statute of limitations issue, we ruled that the district court’s dismissal of the Carter Action should have been without prejudice instead of with; prejudice.
KBR subsequently petitioned the Supreme Court for certiorari. KBR’s petition challenged this Court’s holding in connection with the WSLA, as well as its holding that a relator could bring an FCA action after the dismissal of a related action. See Petition for a Writ of Certiorari at 1-4, Kellogg Brown & Root Servs., Inc. v. United States ex rel. Carter (Carter III), — U.S. —,
Carter opposed certiorari, insisting that this Court “correctly decided that the district court’s, jurisdictional dismissal of the case should have been without prejudice.” Brief in Opposition at 17, Carter III, — U.S. —,
The Supreme Court granted certiorari, and then affirmed in part and reversed in part this Court’s decision. See Kellogg Brown & Root Services, Inc. v. U.S., ex rel. Carter (Carter III), — U.S. —, 135
The Supreme Court acknowledged, however, that Carter had raised additional arguments that, if successful, could render at least one claim of his timely on remand. Accordingly, the Court proceeded to explore the potential application of the first-to-file rule. The Court held that the first-to-file rule does not keep later actions out of court in perpetuity, id. at 1978-79; rather, the rule only keeps later actions out of court if their earlier-filed counterparts are “pending,” which the Court defined to mean “[r]emaining undecided,” id. at 1979 (quoting Pending, Black’s Law Dictionary 1314 (10th ed. 2014)). The Supreme Court, therefore, agreed with this Court’s conclusion that, dismissal with prejudice of any timely aspect of the Carter Action was improper. The Court then remanded this case for further proceedings.
On remand, this Court addressed .an argument pressed by Carter that he could rely on the principle of equitable tolling to render the Carter Action timely. See United States ex rel. Carter v. Halliburton Co. (Carter IV),
We acknowledged, however, that the district court’s judgment was not entirely error-free, because dismissal with prejudice of the one claim Carter brought within the limitations period was not called for under the first-to-file rule. Id. at 181. We therefore remanded this case to the district court for further proceedings.
.On remand, Carter objected to the applicability of the first-to-file rule. Carter argued that the dismissals of the related Maryland and Texas Actions cured, any first-to-file defect in the Carter Action.
Carter also filed a motion to amend the Carter Action complaint under Federal Rule of Civil Procedure 15(a), and argued that an amendment would confirm the inapplicability of the first-to-file rule to the Carter Action. Carter’s proposed amendments, however, did not address the dismissals of the Maryland and Texas Actions, but instead centered on elucidating his damages theories with information that was available prior to the filing of the Carter Action.
Despite Carter’s objections, the district court on remand invoked the first-to-file rule and dismissed the Carter Action without prejudice. United States ex rel. Carter v. Halliburton Co. (Carter V),
The district court also rejected Carter’s .efforts to sidestep the first-to-file rule through amendment. Id. at 883. The court explained that Carter’s proposed amendment could not change the fact that the Carter Action was brought in violation of the first-to-file rule. Accordingly, the court denied Carter’s motion for amendment on futility grounds.
Subsequently, Carter requested reconsideration of the district court’s ruling pursuant to Federal Rule of Civil Procedure 59(e). For support, Carter cited United States ex rel. Gadbois v. PharMerica Corp.,
The district court denied Carter’s motion for reconsideration, explaining that Gadbois did not constitute new controlling law justifying reconsideration because it was decided outside this Circuit. United States ex rel. Carter v. Halliburton Co. (Carter VI),
Carter timely noticed an appeal of the district court’s rulings dismissing the Carter Action, denying Carter’s inotion for amendment, and denying Carter’s motion for reconsideration. We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1291.
II.
This Court “reviews a dismissal for lack of subject matter jurisdiction and questions of statutory interpretation de novo.” Carson,
III,
Although the Carter Action was brought while related FCA actions—namely the Maryland and Texas Actions—-were still pending, Carter argues that the intervening dismissals' of the latter actions dictate that the dismissal of the Carter Action on first-to-file grounds was unwarranted. We disagree.
A.
1.
The first-to-file rule provides that “[w]hen a person brings an action under [the FCA], no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.” 31 U.S.C. § 3730(b)(5). Our first decision in.this case held that courts must “look at the facts as they existed when the. claim was brought to determine whether an' action is barred by the first-to-file-bar.” Carter II,
The basis for the above-described holding was the relevant statutory text, which imposes a restriction on the “bring[ing]” of an “action.” 31 U.S.C. § 3730(b)(5). In ordinary parlance, one “bring[s] an action” by “institut[ihg] legal proceedings.” Bring an Action, Black’s Law Dictionary 231 (10th ed. 2014). Put another way, “[o]ne ‘brings’ ’an action by commencing suit.” United States ex rel. Chovanec v. Apria Healthcare Group, Inc.,
2.
Carter asserts that our prior holding that a first-to-file analysis turns on the set of facts existing at the time an FCA action was commenced. has been undermined by the Supreme Court’s intervening decision in this case. See Carter III,
As explained above, in our original decision in this case, we reversed the district court’s dismissal of the Carter Action with prejudice, and remanded with instructions to have the Carter Action dismissed without prejudice. The basis for our decision to dismiss was our view that Carter had violated the first-to-file rule by bringing the Carter Action while related FCA actions were still pending; the basis for our decision to dismiss without prejudice was our view that Carter could refile his case following the dismissals of earlier-filed, related FCA actions. See Carter II,
Carter then petitioned for certiorari, and the Supreme Court granted that petition. See Carter III,
The Supreme Court in Carter III did not reject, or even comment on, this Court’s holding that a court must “look at the facts as they existed when the claim was brought to determine whether an action is barred by the first-to-file bar.” Carter II,
Carter resists this conclusion, based on unreasonable readings of certain statements from Carter III. Carter first relies on the Supreme Court’s statement that “an earlier suit bars a later suit while the earlier suit remains undecided but ceases to bar that suit once it is dismissed.” Carter III,
We cannot support Carter’s reading. Instead, we read the above-described statement as simply providing that “an earlier suit bars the bringing of a later suit while the earlier suit remains undecided but ceases to bar the bringing of that suit once it is dismissed.” When read in this manner, this Court’s holding regarding the temporal dynamics of the first-to-file rule is left undisturbed.
In contrast, we cannot presume that the Supreme Court intended, with one ambiguous statement, to overrule this Court’s conclusion as to the proper temporal reference point for a first-to-file inquiry.
Next, Carter tries to rely on the Supreme Court’s statement that it “agree[s] with the Fourth Circuit that the dismissal with prejudice of [Carter’s] one live claim was error.” Carter III,
Accordingly, the Supreme Court’s decision in Carter III does not disturb our initial holding that the reference point for a first-to-file analysis is the set of facts in existence at the time that the action under review is commenced.
B.
Having discussed how this Court decides whether the first-to-file rule has been violated, we now turn to analyzing the sanction for a first-to-file violation. Our precedent on this issue is clear: The first-to-file rule is designed to restrict the bringing of certain types of suits, so when a relator brings an FCA action to court in violation of the first-to-file rule, “the court must dismiss the action.” Carson,
A court’s lack of discretion when it comes to sanctioning first-to-file violations was underscored in a recent Supreme Court decision. See Rigsby,
C.
Carter takes issue with the policy implications of holding (i) that the first-to-file rule is violated when an FCA action is brought while a related action is pending (regardless of the eventual outcome of the latter action), and (ii) that a first-to-file violation must be sanctioned with dismissal. Carter asserts that these holdings would compel a court,' sitting after the FCA’s limitations period has run, to dismiss a relator’s timely FCA action brought during the pendency of a then-pending, but since-dismissed, related action, and thereby expose the relator (if he or she sought to file a new complaint) to statute of limitations problems that the relator otherwise would not face. This arrangement, Carter contends, conflicts with the Supreme Court’s apparent policy preference for interpretations of the FCA that facilitate government recoveries. See Carter III,
This policy argument offers no basis for disregarding the first-to-file rule’s unambiguous statutory text. “Our job is to follow the text even if doing so will supposedly undercut a basic objective of the statute.” Baker Botts LLP. v. ASARCO LLC, — U.S. —,
We hasten to add that although our holding may reduce the number of duplica-tive actions that can survive the FCA’s limitations, this reduction should have no material effect on the Act’s objective of ensuring- that the government is put on notice of fraud. Such notice is already principally provided by first-filed actions. See Carson,
Finally, we note that KBR is not without policy arguments of its own. Were we to
D.
With this understanding in mind, we reiterate the conclusion of our initial decision in this case. See Carter II,
Because the Carter Action violated the first-to-file rule, and because the only remedy for such a violation is dismissal, the district court was correct to dismiss the Carter Action.
IV.
Carter argues that even if the dismissals of the Maryland and Texas Actions did not automatically cure the Carter Action’s first-to-file defect, his subsequent, Rule 15(a)-based proposed amendment to his Carter Action complaint would have done so. The district court rejected this argument, and consequently denied Carter’s proposed amendment. We affirm.
Rather than address any matters potentially relevant to the first-to-file rule, such as the dismissals of the Maryland and Texas Actions, the proposed amendment simply adds detail to Carter’s damages theories.
V.
Finally, Carter, contests the district. court’s denial of his Rule 59(e)-based motion for reconsideration. Finding no error in the district court’s denial, we affirm.
“Rule 59(e) m'otions can be successful in only three situations: (1) to accommodate an intervening change in controlling law; (2) to account for new evidence not available' at trial; or (3) to correct a clear error of law or prevent manifest injustice.” Zinkand v. Brown,
With respect to the first basis for reconsideration, Carter claims that the 2015 Gadbois decision—where the First Circuit held that an FCA action’s first-to-file defect can be cured- by a Rule 15(d) supplement clarifying that an earlier-filed, related action that gave rise to the defect has been dismissed—constitutes an intervening change in controlling law. See Gadbois,
First, as an out-of-circuit decision, Gad-bois cannot constitute controlling law in this Circuit. See McBurney v. Young,
Second, Gadbois is factually distinguishable. Gadbois only addressed a situation where the relator sought to revise an FCA complaint with information pertaining to the related action that gave rise to the first-to-file defect. Carter’s situation is different, because his proposed revision makes no mention of the related Maryland and Texas Actions. Thus, assuming for the sake of argument that Gadbois was correctly decided,
With respect to the'third basis for reconsideration, Carter argues that' the district court’s decision to dismiss the Carter Action and to deny his proposed amendment was clearly erroneous and manifestly unjust. Having concluded that the above-described decision was correct, we cannot agree with Carter’s argument.
Simply put, Carter was ineligible, for relief on a motion for reconsideration, and thus the district court did not err in denying him such relief.
VI.
This Court fully supports the FCA’s noble goal of protecting the government’s funds and property against fraud. At the same tipie, we must adhere to the statutory provisions and limitations that Congress put into place in pursuit of that goal. We do so in this case by holding that because the Carter Action violated the FCA’s first-to-file rule in a manner not cured by subsequent developments, the action must be dismissed. The district court’s judgments comport with this holding, and .they are therefore
AFFIRMED.
Notes
.We note briefly that two of our sister circuits have held that a first-to-file defect bears only on the merits of a relator’s action, rather than on a district court’s jurisdiction over it. See United States ex. rel. Hayes v. Allstate Ins. Co.,
. The Carter Action was not Carter’s first attempt to sue KBR under' the FCA. For a discussion of unsuccessful, pre-Carter Action suits brought by Carter against KBR, see United States ex rel. Carter v. Halliburton Co. (Carter II),
. Because it did not have to reach the issue, the district court reserved judgment on whether the Texas Action also precluded the Carter Action.
. In 2013, while the Supreme Court was still considering Carter’s petition for certiorari, Carter refiled his complaint in the Eastern District of Virginia. The district court, however, dismissed Carter’s 2013 complaint on first-to-file grounds, because it was brought while the Carter Action was still pending before the Supreme Court.
. This conclusion, we add, was consistent with the conclusions of widespread, pre-Carter III circuit case law. See, e.g., Walburn v. Lockheed Martin Corp.,
. Although Carter and his counsel referenced the dismissals of the Maryland and Texas Actions in their briefing and during oral arguments, these references do not rise to the level of proposed revisions to a complaint. See S. Walk at Broadlands Homeowners Ass’n, Inc. v. OpenBand at Broadlands, LLC,
. Because we need not do so, we decline to comment on the other reasons the district court identified as justifying its rejection of Carter's effort , to . circumvent ■ dismissal through amendment.
. But see United States v. Medco Health Solutions, Inc., No. 11-684-RGA,
Concurrence Opinion
concurring:
The False Claims Act’s “first-to-file” bar provides that “[w]hen a person brings-.-an action -under [the False Claims Act], no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.” 3LU.S.C. § 3730(b)(5). The district court dismissed relator Benjamin Carter’s (“Relator”) False Claims Act ■ complaint against - Defendant Halliburton - Co., and several of its subsidiaries, on grounds that at least two “related” actions were “pending” at the time Relator filed his original complaint. Following dismissal of all earlier-filed, related actions, Relator sought leave to amend his complaint to avoid preclusion under the first-to-file bar. Relator’s
I agree with the majority opinion’s conclusion that the dismissal of all earlier-filed, related actions does not, by operation of law, lift the first-to-file bar on a later-filed action. The majority opinion further concludes that the district court did not abuse its discretion in denying Relator leave to amend. I write separately to emphasize the narrow scope of that conclusion. In particular, the majority opinion finds that the district court did not reversibly err in denying Relator leave to amend solely on grounds that his proposed amendment did not “address any matters potentially relevant to the first-to-file rule, such as the dismissals of the [earlier-filed, related actions].” Ante at 210. To that end, the majority opinion does not' address, much less adopt, the district court’s reasoning that an amendment or supplement to a compláint cannot, as a matter of law, cure a first-to-file defect, id. at 211 n.8—a question that has divided district courts in this circuit and around the country, see United States ex rel. Wood v. Allergan, Inc., No. 10-CV-5645,