MEMORANDUM AND ORDER ON MOTION TO AMEND COMPLAINT AND MOTION TO COMPEL ARBITRATION
This is a qúi tam action alleging the unlawful promotion of medically unnecessary replacements of devices in epilepsy patients. Relator Andrew Hagerty has brought suit against defendant Cyberonics, Inc., a company that manufactures and sells the Vagus Nerve Stimulator Therapy (“VNS”) system, a medical device used to treat refractory epilepsy and treatment-resistant depression.
The case was originally filed under seal on February 4, 2013. On October 29, 2013, the United States declined to intervene. The case was unsealed on December 5, 2013. On April 28, 2014, Cyberonics filed a motion to dismiss. Hagerty filed an amended complaint on May 19, 2014. On June 18, 2014, Cyberonics filed a second motion to dismiss for lack of subject-matter jurisdiction and failure to state a claim. On March 31, 2015, the Court granted that motion in part and denied it in part. It was granted
On May 13, 2015, Cyberonics filed a motion to compel arbitration and to dismiss the remaining two counts. On August 14, 2015, Hagerty moved for leave to file a second amended complaint.
For the following reasons, that motion will be denied, and defendant’s motion to compel arbitration will be granted. The case will be stayed pending the result of the arbitration process.
I. Background
On April 19, 2010, Andrew Hagerty applied for employment at Cyberonics, Inc., by submitting and signing an employment application (the “Employment Application”). (Magee Decl. Ex. 1). In the Employment Application, he represented that he had “read th[e] agreement” аnd that he “accept[ed] all the terms described” therein. (Id. at 22). The application terms included a dispute resolution clause that read as follows:
[I]n consideration for my submission and Cyberonics’ consideration of this application, Cyberonics and I agree to resolve any claims or disputes arising out of or relating to my application for employment or, if hired, my employment with or termination from Cyberonics exclusively by final and binding arbitration before a neutral arbitrator under the then current rules of the American Arbitration Association.
(Id. at 14).
In an April 20, 2010 letter (the “Offer Letter”), Cyberonics offered Hagerty “employment ... in the position of Associate Therapeutic Consultant [for the] Boston territory .... ” (Magee Decl. Ex. 2). On the same day, Hagerty signed the Offer Letter. (Id. at 3). The Offer Letter stated that “[i]n the event of a dispute concerning the employment offer or your employment relationship with Cyberonics, you and Cy-beronics agree to submit the matter to binding arbitration under the then current rules of the American Arbitration Association.” (Id. at 2). The Offer Letter stated that although the “letter is not intended to alter th[e] employment at will relationship in any way[,] [i]t does ... supersede any other written and/or verbal representations made by any representative of Cy-bеronics relative to your' employment with the Company.” (Id.).
On August 8, 2012, Hagerty filed a complaint against .Cyberonics, alleging wrongful termination (“Hagerty I”). Complaint, Hagerty v. Cyberonics, Inc., No. 1:12-cv-11465 (D.Mass. Aug. 8, 2012). Cyberonics contends that on January 31, 2013, it notified Hagerty’s- attorney that it believed that the claims asserted in Hagerty I were subject to binding arbitration. The complaint made no reference' to government health-care programs or the FCA, although it did contain allegations of fraud by Cyberonics against various physicians and patients. Id. It alleged one claim for breach of contract. Id.
On February 2, 2013, Hagerty voluntarily dismissed Hagerty I: On February 4, 2013, he filed the complaint in this case under seal. The complaint alleged, among other things, violations of the False Claims Act. The FCA claims were pursued by
On Octоber 29, 2013, the government filed a notice declining to intervene in this case. (Docket No. 12). On December 5, 2013, the case was unsealed.
On April 28, 2014, Cyberonics moved to dismiss for failure to state a claim. On May 19, 2014, Hagerty filed an amended complaint. It alleged violations of the False Claims Act, 31 U.S.C. § 3729(a) (Count 1); conspiracy to violate the FCA (Count 2); violations of various state analogues to the FCA (Counts 3 through 30); retaliatory discharge in violation of 31 U.S.C. § 3730(h) (Count 31); breach' of contract and breach of the implied covenant of good faith and fair dealing" (Count 32); and wrongful termination and retaliation in violation of public policy and the Massachusetts False Claims Act, Mass. Gen. Laws ch. 12, § 5J (Count 33).
On June 18, 2014, Cyberonics moved to dismiss the amended complaint for lack of subject-matter jurisdiction and failure to state a claim. That motion was granted in part and denied in part on March 31, 2015. It was granted as to the federal FCA claims (Counts 1 and 2), the state FCA claims (Counts 3 through 30), and the claim for breach of contract and breach of the implied covenant of good faith and fair dealing (Count 32), and denied as to the two remaining counts, the claims for retaliatory discharge in violation of 31' U.S.C, § 3730(h) (Count 31) and for wrongful termination and retaliation in violation of public policy and the .Massachusetts False Claims Act, Mass. Gen. Laws ch. 12 § 5J (Count 33).
On May 13, 2015, Cyberonics. filed a motion to compel arbitration and to dismiss the remaining two counts. At the hearing on the motion to compel arbitration, on July 22, 2015, Hagerty notified the Court of his intent to file a second amended complaint, On August 14, 2015, he moved to file a second amended complaint.
II. Hagerty’s Motion to Amend the Complaint
A. Legal Standard
Rule 15 of the Federal Rules of Civil Procedure addresses amendments to pleadings. Under Rule 15(a), a party may amend a “pleading” without leave of court in certain relatively narrow circumstances,
B. Analysis
Cyberonics contends that the motion tо amend should .be denied on the basis of futility and undue delay.
The Court ruled in March 2015 that 30 of the 33 counts in Hagerty’s first amended complaint did not meet the heightened pleading standard applied to FCA claims and its state-law analogues. Hagerty’s proposed second amended complaint seeks to add additional allegations to cure the deficiencies in the first amended complaint outlined by the Court. •
The second amended complaint, like the first, lacks allegations of a single specific false claim made to the government. It is also questionable whether it sufficiently alleges that any specific medical procedure, or any specific purchase of a battery or VNS system, was actually unnecessary. In any event, the Court need not reach the issue of futility because the motion will be denied on the independent basis of undue delay.
2. Undue Delay
In the First Circuit, it is well-established that “undue delay in moving to amend, even standing alone, may be ... an adequate reason [to deny a motion for leave, to amend].” In re Lombardo,
A “considerable” amount of time certainly passed here. Hagerty filed his initial compláint on August 8, 2012. He filed the present action on February 4, 2013. After Cyberonics filed a motion to dismiss, Hagerty amended the complaint on May 19, 2014. Cyberonics moved to dismiss the first amended complaint (actually, his third try at a complaint) on June 18, 2014. The Court ruled on that motion on March 31, 2015. Hagerty did not move for leavé to file a second amended complaint until August 14, 2015. That motion was filed (1) more than three years after Hagerty filed the initial lawsuit; (2) more than two and a half years after he filed the initial complaint in this case; (3) more than fourteen months after he filed the first amended complaint; (4) more than thirteen months after Cyberonics moved to dismiss the first amended complaint; and (5) more
Hagerty contends that he “promptly sought amendment following this Court’s articulation of the pleading standard it is applying [in] this case,” (Pl.’s Mem.' 11). He contends that any delay “is merely a reflection of a careful investigation and drafting process rather than of any undue delay.” (Id.). But Hagerty provides no satisfactory explanation as to -why he did not plead the new information at an earlier stage of litigation. Rather than including the additional information in the originаl complaint of the first amended complaint, Hagerty permitted the parties to file extensive briefing on the motion to dismiss, and allowed the Court to undertake the work of reaching a decision on that motion. Having lost that motion; Hagerty now seeks yet another chance, more than four months later.
The practice of waiting to amend a complaint until after the Court has ruled on a motion to dismiss is. troublesome, to say the least. As the First Circuit noted in ACA Financial Guaranty Corp. v. Advest, Inc.,
The plaintiffs argue that in the end, they were entitled to wait and see if their amended complaint was rejected by the district court before being put to the costs of filing a second amended com-, plaint. They claim this would promote efficiency in the judicial system. Plaintiffs have it exactly backwards- — their methodology would lead to delays, inefficiencies, and wasted work. The plaintiff^ do not get leisurely repeated bites at the apple, forcing a district judge to decide whether each successive -complaint was adequate .... Plaintiffs may not, having the needed -information, deliberately wait in the wings for a year and a half with another amendment to a complaint should the court hold the first amended complaint was insufficient. -Such an approach would impose unnecessary cоsts and inefficiencies on both the courts and party opponents. This court expressly disapproved a similar tactic in James [v. Watt,716 F.2d 71 (1st Cir.1983)], and we do so again. See id. at 78 (“Such a practice would dramatically undermine the ordinary rules governing the finality of judicial decisions, and should not be sanctioned, in the absence of compelling circumstances.” (citing 6 Wright & Miller, Federal Practice and Procedure § 1489 (1971))).
Here, Hagerty was “put on notice of the deficiencies in the complaint by the motion to dismiss. If [he] had something relevant to add, [he] should have moved to add it then.” Fire & Police Pension Ass’n of Colo. v. Abiomed, Inc.,
Hagerty contends that undue delay is not an independent basis to deny a motion to amend, in the absence of prejudice, citing Klunder v. Brown University,
Under the circumstances, Hagerty’s motion for leave to file a second amended complaint will be denied because of undue delay.
III. Cyberonics’ Motion Compel Arbitration and Dismiss the Remaining Two Counts
A. Legal Standard
The Federal Arbitration Act, 9 U.S.C. §§ 1-301, governs the enforcement of written arbitration agreements. See Circuit City Stores, Inc. v. Adams,
B. Analysis
Cyberonics has moved to compel arbitration and dismiss Counts 31 and 33 pursuant to the Federal Arbitration Act. It contends that a valid arbitration agreement exists between the parties, that Counts 31 and 33 fall within the arbitration agreement’s scope, and that it has not waived its right to compel arbitration.
1. Agreement to Arbitrate
To determine whether a valid agreement to arbitrate exists, federal courts generally “apply ordinary state-law principles that govern the formation of contracts.” First Options of Chi., Inc. v. Kaplan,
“Thus, the issue of whether the parties validly entered into an arbitration agreement depends on whether [defendant gave ‘some minimal level of notice to the employee that statutory claims are subject to arbitration.’ ” Id. (quoting Campbell,
In the present case, it is clear that there was an arbitration agreement. Both the Employment Application and the Offer Letter contain arbitration clauses. It is also clear from Hagerty’s signature that he consented to the agreements and that he had actual notice of their terms. His employment with Cyberonics from May 2010 to January 2012 was sufficient consideration to make the arbitration agreements enforceable.
The question of “whether a particular dispute is within the class of those disputes governed by the arbitration clause ... is а matter of federal law.” Century Indem. Co. v. Certain Underwriters at Lloyd’s, London,
The use of phrases such as “arising under” or “arising out of’ in an arbitration provision generally indicates an intent to arbitrate a broad scope of claims. Battaglia,
The two remaining claims in this case are for alleged retaliation in violation of the federal and Massachusetts FCAs. In the Employment Application, the parties agreed “to resolve any claims or disputes arising out of or relating to [Hagerty’s] application for employment or, if hired, [his] employment with or termination from Cyberonics exclusively by final and binding arbitration before a neutral arbitrator under the then current rules of the American Arbitration Association.” (Magee Decl. Ex. 1) (emphasis added). In the Offer Letter, the parties agreed that in “the event of a dispute concerning this employment offer or [Hagerty’s] employment relationship with Cyberonics, [Hagеrty] and Cy-beronics agree to submit the matter to binding arbitration under the then current rules of the American Arbitration Association.” (Mageé Decl. Ex. 2) (emphasis added).
Hagerty contends that the anti-retaliation claims do not fall within the scope of the arbitration clause because the clause does not contain “clear and unmistakable terms” evidencing an enforceable agreement to arbitrate the relevant statutory claims. He-cites Warfield v. Beth Israel Deaconess Medical Center, Inc.,
However, the court in Warfield incorrectly “applied] general principles of State contract law to determine whether a particular agreement requires arbitration of a claim.” Id. at 396,
However, and in any event, Warfield is readily distinguishable because the arbitration provision at issue in that, case was much narrower than the ones in the presr ent case. In Warfield, the parties agreed to arbitrate only claims or disputes “arising out of or in connection with the Agreement or its negotiations.” 454 Mass, at 392,
Hagerty also contends that the arbitration clause in the Offer Letter supersedes .the clause in the Employment Application, and the clause in the Offer Letter reflects an intent to have matters relating to the terms of the employment arbitrated (not disputes involving retaliation, termination or discrimination claims). He contends that the dispute here is not about the “employment offer” or the “employment relation; ship” because it is about thе lack of a relationship due to his termination.
As a preliminary matter, the Offer Letter states that it only supersedes “other written- and/or verbal representations made by any representative of Cyberonies .... ” Therefore, because the Employment Application’s arbitration clause is a mutual and reciprocal agreement between the parties, rather than a unilateral “representation made” by Cyberonies, the Employment Application is not superseded by the Offer Letter.
However, and in any event, Hagerty’s contention is unpersuasive. Without an employment relationship, there can be no termination. Therefore, it would make no sense for the parties to аgree to arbitration for matters arising out of their employment relationship, but to exclude matters relating to the termination of that relationship.
3. Waiver
“In considering whether a party has waived its arbitration right, courts are consistently mindful of the strong federal policy favoring'arbitration.” Creative Sols. Grp., Inc. v. Pentzer Corp., 252 F.3d 28, 32 (1st Cir.2001). “Waiver is not to be lightly inferred, and mere delay in' seeking [arbitration] without some resultant prejudice to a ‘party cannot carry the day.” Id. (quoting Page v. Moseley, Hallgarten, Estabrook & Weeden, Inc.,
Hagerty contends that Cyberonics has waived its right to arbitration by filing two motions to dismiss all of the claims before invoking its right to arbitration after the Court ruled the latter motion. The problem with Hagerty’s contention is that most of the claims in the present lawsuit were not arbitrable. It is' understandable that Cyberonics did not wish to bifurcate litigation. Cyberonics attempted to resolve all the claims with the motions to dismiss.
The two Eighth Circuit decisions that Hagerty cites in opposition to the motion to dismiss are readily distinguishable from the present case. In both of those cases, motions to dismiss were filed even- though every claim was within the scope of a valid arbitration agreement. See Hooper v. Advance Am. Cash Advance Ctrs. of Mo., Inc.,
On March 31, 2015, all the claims with the exception of the two retaliation claims were dismissed. After receiving an extension of time to file an answer, Cyberonics answered the complaint on April 28, 2015. In its answer, Cyberonics made clear that it believed thе remaining claims are “subject to binding arbitration.” On May 13, 2015, it filed the motion to compel arbitration. Under the circumstances, the delay
4. Proper Disposition of the Case :
Having determined that the arbitration provisions are enforceable, the Court must now determine the proper disposition of the case. Defendant contends that after granting its motion to compel arbitration, rather than granting a stay, the Court should dismiss the remaining two counts with prejudice. Relator contends that the Court should stay the proceedings pending arbitration.
“Where one side is entitled to arbitration of a claim brought in court, in this circuit a district court can,, in its discretion, choose to dismiss the lawsuit, if all claims asserted in the case are found arbi-trable.” Next Step Med. Co., Inc. v. Johnson & Johnson, Int'l,
IV. Conclusion
For the foregoing reasons, the motion for leave to file a second amended complaint by relator Andrew Hagerty is DENIED. Defendant’s motion to compel arbitration for Count 31 and Count 33 is GRANTED, and the case is STAYED pending the result.of the arbitration process. So Ordered.
Notes
. A party may amend a pleading once as a matter of course within “21 days after serving it,” or “if the pleading is one to which a responsive pleading is required, 21 days after service of a responsive pleading or 21 days after service of a motion under Rule 12(b), (e), or (f), whichever is earlier.” Fed, R. Civ, P. 15(a)(1).
. Nor is it a credible excuse that he did not anticipate the legal standard applied by the Court; it applied the well-established-pleading standard articulated by the. First Circuit in 2009 in United States ex rel. Duxbury v. Ortho Biotech Products, L.P.,
. Hagerty appears to argue that the "clear and unmistakable” standard adopted in War-field goes to validity, and not to scope. How
. There is language in a recent SJC case that suggests that Warfield may not be good law. In Machado v. System4 LLC,
. In response to the first motion to dismiss, Hagerty amended the complaint. Cyberonics then filed a second motion to dismiss. Therefore, the fact that Cyberonics filed two motions to dismiss (as opposed to one) is irrelevant,