UNITED STATES EX REL. JOHN DOE v. CREDIT SUISSE AG; UNITED STATES OF AMERICA
No. 22-1054
United States Court of Appeals, Fourth Circuit
August 29, 2024
Before GREGORY and QUATTLEBAUM, Circuit Judges, and FLOYD, Senior Circuit Judge
PUBLISHED
Argued: May 8, 2024 Decided: August 29, 2024
Affirmed by published opinion. Senior Judge Floyd wrote the opinion in which Judge Gregory joined in full and Judge Quattlebaum concurred in the judgment. Judge Quattlebaum wrote a separate opinion dissenting in part and concurring in part.
ARGUED: Jeffrey A. Lamken, MOLOLAMKEN, LLP, Washington, D.C., for Appellant. Stephanie Robin Marcus, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C.; Matthew Scott Owen, KIRKLAND & ELLIS LLP, Washington, D.C., for Appellees.
ON BRIEF: Jeffrey A. Neiman, Fort Lauderdale, Florida, Jeffrey E. Marcus, Brandon S. Floch, MARCUS NEIMAN RASHBAUM & PINEIRO LLP, Miami, Florida, for Appellant. Brian M. Boynton, Principal Deputy Assistant Attorney General, Charles W. Scarborough, Civil Division, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C.; Jessica D. Aber, United States Attorney, OFFICE
FLOYD, Senior Circuit Judge:
A decade ago, the bank Credit Suisse pleaded guilty to conspiracy to aid U.S. taxpayers in filing false income tax returns. Under a plea agreement, Credit Suisse paid a criminal fine of some $1.3 billion and promised to work with the government to prevent customers from shielding offshore assets. John Doe, a former employee of Credit Suisse, filed this action alleging the bank failed to disclose its continued criminal conduct to the United States and thus avoided paying a larger penalty. Doe brought the action as a qui tam suit, meaning he sued on the government‘s behalf, alleging violations of the False Claims Act. The United States, as the real party in interest, moved to dismiss the action pursuant to
I.
The False Claims Act (“FCA“) imposes civil liability for presenting false or fraudulent claims for payment to the federal government.
The case originated in a federal investigation into tax offenses, after which the U.S. Department of Justice charged Credit Suisse with one count of conspiracy for helping U.S. citizens shield assets and income from the Internal Revenue Service (“IRS“). In 2014, Credit Suisse accepted a plea agreement in which it pleaded guilty to the conspiracy charge, represented that its criminal conduct had ended in 2009, and agreed to pay criminal fines and restitution to the government totaling some $2 billion.
Doe‘s qui tam action, filed in 2021, alleged that Credit Suisse failed to disclose certain criminal conduct to the United States, thereby shielding itself from additional criminal penalties. Doe alleged that Credit Suisse continued to conspire with U.S. customers to conceal assets from the IRS even after the bank pleaded guilty. Doe claimed that Credit Suisse obtained a “$1.3 billion discount” on its criminal penalty by lying to a federal district court during the plea hearing. Opening Br. 12.
The government declined to intervene initially and soon thereafter moved to dismiss before any answer or summary judgment motion was filed.2 The government sought dismissal because it concluded that Doe‘s allegations failed to state a claim cognizable under the FCA and that continued litigation of the action would “impair ongoing activity related to Credit Suisse‘s obligations under the plea agreement, strain Government resources, and intrude upon the Government‘s privileged or protected information.” J.A. 266. Doe opposed the motion and requested an evidentiary hearing, contending that the government‘s reasons for wanting dismissal were improper. The district court denied Doe‘s request for a hearing and dismissed the action on the pleadings. The district court granted the dismissal because (1) Doe had not stated a claim under the FCA since Credit Suisse had no pre-existing obligation to pay additional penalties to the government and (2) the government had discretion to dismiss the action voluntarily under Rule 41 for the reasons it stated, including conserving government resources and preserving its ability to continue monitoring Credit Suisse.
The government argues this case should be affirmed on (2) alone: the court properly dismissed the action on the government‘s motion and no in-person hearing was required. The government urges that this Court need not reach (1) and decide
Credit Suisse agrees with the government‘s position but argues this case can and should be affirmed on (1): Doe‘s allegations were not cognizable under the FCA. The bank says it had no established duty to pay a higher criminal fine than the sentence required and that Doe‘s allegations were purely speculative (i.e., had Credit Suisse disclosed the information, it would have faced a steeper fine). Credit Suisse further argues that Doe has failed to identify a false statement in the plea agreement or colloquy and that Doe‘s claim is time-barred in any event. Credit Suisse agrees with the government that an in-person hearing is not required or warranted in this case.
After Doe appealed to this Court, the case was placed in abeyance pending the Supreme Court‘s decision in Polansky. The Supreme Court in Polansky issued two holdings, neither of which directly resolves this appeal. First, it held that the government may seek dismissal of an FCA action over a relator‘s objection as long as the government intervened at some point during the litigation, whether at the outset or later on. Polansky, 599 U.S. at 430. Second, the Court held that district courts faced with a motion to dismiss from the government should apply the rule generally governing the voluntary dismissal of suits:
But Polansky did not address the question presented here: What procedures satisfy the “hearing” requirement of
II.
The applicable standard of review is not entirely clear from the case law. Doe and the government both say this Court should review de novo the district court‘s grant of the government‘s motion to dismiss under the FCA. They cite out-of-circuit cases in support of de novo review. See Borzilleri v. Bayer Healthcare Pharm., 24 F.4th 32, 45 (1st Cir. 2022); Chang v. Children‘s Advocacy Ctr. of Del., 938 F.3d 384, 386 (3d Cir. 2019). But the First Circuit appeared to question the appropriateness of de novo review, and the Third Circuit did not explain why de novo review applied. See Borzilleri, 24 F.4th at 45 n.11 (“Both parties appear to assume we will apply de novo review to the district court‘s decision on the government‘s motion to dismiss. Without the benefit of briefing on this subject, and in the absence of a developed consensus on this issue in our sister circuits, we make no judgment on the appropriateness of that assumption.“); Chang, 938 F.3d at 386.
Credit Suisse says the applicable standard of review is abuse of discretion and cites Polansky, 599 U.S. at 429. See also Polansky, 599 U.S. at 438 (“A district court‘s
We assume, without deciding, that our review is de novo. We save this question for another day since we would affirm under either standard of review.
III.
The district court satisfied the “hearing” requirement by considering the parties’ written submissions, and dismissal was appropriate since Doe did not raise a colorable claim that doing so would violate his constitutional rights. Again, the relevant FCA section states: “The Government may dismiss the action notwithstanding the objections of the person initiating the action if the person has been notified by the Government of the filing of the motion and the court has provided the person with an opportunity for a hearing on the motion.”
Because Doe has not raised any colorable claim that his due process or equal protection rights have been violated, the district court‘s dismissal was proper. Instead, Doe‘s only claimed error is, essentially, that the government sought dismissal for reasons he disagrees with. But the purpose of a qui tam suit is to “vindicate the Government‘s interests.” Id. at 438. In Polansky, the Supreme Court said the government merely needs to provide reasons for its assessment that the suit would not “vindicate” its interests, and “[a]bsent some extraordinary circumstance, that sort of showing is all that is needed for the Government to prevail.” Id. Keep in mind that Polansky dealt with
That still leaves the question of the meaning of “hearing” in
First, other courts that have considered this question—several district courts and the Second Circuit in an unpublished opinion—have found that written submissions can satisfy the hearing requirement. Brutus Trading, LLC v. Standard Chartered Bank, No. 20-2578, 2023 WL 5344973, at *2 (2d Cir. Aug. 21, 2023) (“Here, the district court met the hearing requirement by carefully considering the parties’ written submissions.“); United States ex rel. Vanderlan v. Jackson HMA, LLC, No. 3:15-CV-767, 2020 WL 2323077, at *7–8 (S.D. Miss. May 11, 2020) (collecting cases).
Second, this Court and others have found that the word “hearing” in a nearby part of
Third, Polansky confirmed that the government is entitled to “substantial deference” in opting to dismiss a qui tam action, which is litigated on behalf of and in the name of the government. 599 U.S. at 437. Even at the post-answer stage, when a dismissal requires a court order, a district court must “think several times over before denying a motion to dismiss.” Id. at 438. Here, deference owed to the government is even greater because the government moved for dismissal at the pre-answer stage—when no court order is required and when “the district court has no adjudicatory role.” Id. at 436 n.4. It would be illogical to require district courts to hold live, in-person evidentiary hearings when they have “no adjudicatory role” to play.
Doe has not made a colorable claim that the dismissal infringed upon his due process or equal protection rights; had Doe made such a claim, the district court might have decided to hold an in-person hearing. Instead, Doe only claims that the government‘s “true motive for dismissal, at least in part, was to insulate itself from scrutiny about its inadequate 2014 investigation of Credit Suisse.” Opening Br. 23. But that allegation, even if Doe could support it, does not establish a colorable constitutional violation warranting a hearing. Doe essentially wants to continue to press his qui tam suit as a means to second-guess and pry into the government‘s prosecutorial decisions. We reject the suggestion that a relator is entitled to a formal, in-person hearing “to convince the government not to end the case.” United States v. UCB, Inc., 970 F.3d 835, 850 (7th Cir. 2020) (quoting Swift v. United States, 318 F.3d 250, 253 (D.C. Cir. 2003)).
The district court noted the government‘s valid reasons for moving to dismiss the action and properly granted the motion after considering Doe‘s opposition brief. The government explained that litigating Doe‘s suit “would infringe on privileged information relating to prosecutorial decision-making and protected and inadmissible plea negotiations.” JA 244. In addition,
Lastly, we decline Credit Suisse‘s invitation to reach the merits of the district court‘s ruling. There is no need to address whether Doe validly stated a reverse FCA claim. The district court‘s consideration of the parties’ arguments—even without an actual hearing—was enough to satisfy the strictures of
IV.
For the foregoing reasons, the judgment of the district court is affirmed.
AFFIRMED
QUATTLEBAUM, Circuit Judge, dissenting in part and concurring in part and in the judgment:
I disagree with my friends in the majority that a district court‘s decision based on the papers submitted by the parties satisfies
In reaching this conclusion, the Court seemed to recognize that applying
The Court of Appeals briefly addressed the purpose of a hearing when dismissal is sought before an answer is filed. In that context,
Rule 41 entitles the movant to a dismissal; the district court has no adjudicatory role. So what is the court supposed to do at the hearing the FCA requires? The Third Circuit suggested thatRule 41 ‘s standards “rest atop the foundation of bedrock constitutional constraints on Government action.” So a hearing, whether pre- or post-answer, might inquire into allegations that a dismissal “violate[s] the relator‘s rights to due process or equal protection.” But because Polansky has not raised a claim of that sort, we do not consider the circumstances in which, or procedures by which, a court should find the Constitution to prevent the Government from dismissing a qui tam action.
Id. at 437 n.4 (emphasis added) (internal citations omitted).
Nothing in Polansky suggests a court may forgo the FCA‘s hearing requirement. To the contrary, the decision seems to assume a hearing will take place. This tells me that under
Besides, Congress may have had reasons for requiring hearings not expressed in the statute. For example, perhaps the hearing is designed to promote transparency, requiring the government to explain, and answer questions about, the decision to dismiss. Or perhaps the hearing is to at least ensure that the dismissal does not offend the constitutional issues identified in Polansky. But regardless, Congress mandated a hearing. Courts should not judicially write that requirement out of the FCA. In my view, the district court erred in not holding a hearing on the government‘s motion to dismiss.
That said, we must still consider whether that error was harmless—as we must do for all errors. See