17-2191-cv United States of America ex rel. Wood v. Allergan, Inc.
17‐2191‐cv United States of America ex rel. Wood v. Allergan, Inc.
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
August Term 2017
(Argued: February 7, 2018 Decided: August 9, 2018)
Docket No. 17‐2191‐cv
UNITED STATES OF AMERICA EX REL. JOHN A. WOOD, Plaintiff‐Appellee,
COMMONWEALTH OF MASSACHUSETTS, STATE OF MONTANA, DISTRICT OF COLUMBIA, STATE OF INDIANA, STATE OF NEW YORK, COMMONWEALTH OF VIRGINIA, STATE OF LOUISIANA, STATE OF DELAWARE, STATE OF MINNESOTA, STATE OF OKLAHOMA, STATE OF MICHIGAN, STATE OF HAWAII, STATE OF NORTH CAROLINA, STATE OF CALIFORNIA, STATE OF GEORGIA, STATE OF TENNESSEE, STATE OF FLORIDA, STATE OF WISCONSIN, STATE OF NEW MEXICO, STATE OF ILLINOIS, STATE OF NEVADA, STATE OF CONNECTICUT, STATE OF NEW JERSEY, STATE OF TEXAS, STATE OF COLORADO, STATE OF RHODE ISLAND, Plaintiffs, v.
ALLERGAN, INC., Defendant‐Appellant,
ALLERGAN PLC, Defendant.*
* The Clerk of Court is directed to amend the caption as set forth above.
ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
Before: WALKER, LYNCH, and CHIN, Circuit Judges.
Interlocutory appeal from an opinion and order of the United States
District Court for the Southern District of New York (Furman, J.), holding that a
violation of the False Claims Actʹs first‐to‐file bar, which prohibits the filing of a
ʺrelated actionʺ when a False Claims Act case is ʺpending,ʺ 31 U.S.C. §§ 3729(a),
3730(b)(5), can be cured by the filing of an amended complaint after the first‐filed
related action is no longer pending.
REVERSED AND REMANDED.
DEREK T. HO, Kellogg, Hansen, Todd, Figel & Frederick, P.L.L.C, Washington, D.C. (Sherrie R. Savett, Berger & Montague, P.C., Philadelphia, Pennsylvania, W. Scott Simmer, Thomas J. Poulin, Simmer Law Group P.L.L.C., Washington, D.C., on the brief), for Plaintiff‐Appellee.
JEFFREY S. BUCHOLTZ (Paul Alessio Mezzina, Christopher R. Healy, on the brief), King & Spalding L.L.P., Washington, D.C., for Defendant‐ Appellant.
SARAH CARROLL (Douglas N. Letter, Michael S. Raab, Charles W. Scarborough, on the brief), for Chad A.
Readler, Acting Assistant Attorney General, United States Department of Justice, Civil Division, Washington, D.C., for Amicus Curiae the United States, in support of Allergan, Inc.
Steven P. Lehotsky, Warren Postman, U.S. Chamber Litigation Center, Inc., Washington D.C.; John P. Elwood, Ralph C. Mayrell, Vinson & Elkins LLP, Washington, D.C., for Amicus Curiae the Chamber of Commerce of the United States, in support of Allergan, Inc.
Jacklyn N. DeMar, Taxpayers Against Fraud Education Fund, Washington, D.C.; Jennifer M. Verkamp, Maxwell S. Smith, Morgan Verkamp LLC, Cincinnati, Ohio, for Amicus Curiae Taxpayers Against Fraud Education Fund, in support of John A. Wood.
CHIN, Circuit Judge:
In this qui tam action, the relator, plaintiff‐appellee John A. Wood,
contends that defendant‐appellant Allergan, Inc. (ʺAllerganʺ), a pharmaceutical
company, violated the False Claims Act (the ʺFCAʺ), 31 U.S.C. § 3729 et seq.,
through a kickback scheme that caused the United States (the ʺGovernmentʺ),
state governments, and the District of Columbia to make overpayments of
Medicare, Medicaid, and other benefits.
Wood, however, was not the first relator to sue Allergan under the
FCA based on this alleged scheme. Consequently, the district court (Furman, J.) 3
found that Woodʹs complaint violated the FCAʹs ʺfirst‐to‐file bar,ʺ which
prohibits a person from bringing a ʺrelated actionʺ when an FCA suit is
ʺpending.ʺ 31 U.S.C. § 3730(b)(5).
In this interlocutory appeal, the issue presented ‐‐ a question of first
impression for this Court ‐‐ is whether a violation of the FCAʹs first‐to‐file bar
can be cured by the filing of an amended or supplemented complaint after the
first‐filed related action is no longer pending. We hold that a violation of the
first‐to‐file bar cannot be remedied by amending or supplementing the
complaint. Accordingly, we reverse and remand with instructions for the district
court to dismiss the Third Amended Complaint ‐‐ the operative complaint ‐‐
without prejudice.
BACKGROUND
1. Statutory Background
The FCA imposes significant penalties on any person who
ʺknowingly presents, or causes to be presented, a false or fraudulent claim for
payment or approvalʺ to the Government or any person who ʺknowingly makes,
uses, or causes to be made or used, a false record or statement material to a false
or fraudulent claim.ʺ 31 U.S.C. § 3729(a)(1)(A)‐(B).
Rather than rely solely on federal enforcement of these provisions,
Congress decided to deputize private individuals, encouraging them to come
forward with claims on behalf of the Government in the form of qui tam suits.
Qui tam provisions are not new to federal law, appearing as early as the first
Congress. J. Randy Beck, The False Claims Act and the English Eradication of Qui
Tam Legislation, 78 N.C. L. REV. 539, 554 n.54 (2000). In fact, the FCA and its qui
tam provisions emerged ʺmidway through the Civil War, in response to frauds
perpetrated in connection with Union military procurement.ʺ Id. at 555.
Under the FCAʹs qui tam provisions, ʺa private party, called the
relator, challenges fraudulent claims against the [G]overnment on the
[G]overnmentʹs behalf, ultimately sharing in any recovery.ʺ United States ex rel.
Shea v. Cellco Pʹship, 863 F.3d 923, 926 (D.C. Cir. 2017); see 31 U.S.C. § 3730(b). The
relator may be awarded up to thirty percent of the proceeds ultimately
recovered. 31 U.S.C. § 3730(d). Relators need not allege personal injury but
instead sue ʺto remedy an injury in fact suffered by the United States.ʺ Vt.
Agency of Nat. Res. v. United States ex rel. Stevens, 529 U.S. 765, 771 (2000). The
Government may intervene in any qui tam action, taking over from the relator,
and, in that event, limiting the relatorʹs share of the recovery to at most twenty‐
five percent. 31 U.S.C. § 3730(b)(2), (d)(1).
The FCA provides that a ʺcopy of the complaint . . . shall be served
on the Government.ʺ Id. § 3730(b)(2). ʺThe complaint shall be filed in camera,
shall remain under seal for at least 60 days, and shall not be served on the
defendant until the court so orders. The Government may elect to intervene and
proceed with the action within 60 days after it receives both the complaint and
the material evidence and information.ʺ Id. Moreover, the ʺGovernment may,
for good cause shown, move the court for extensions of the time during which
the complaint remains under seal.ʺ Id. § 3730(b)(3). ʺBefore the expiration of the
60‐day period or any extensions,ʺ however, the Government shall ʺ(A) proceed
with the action, in which case the action shall be conducted by the Government;
or (B) notify the court that it declines to take over the action, in which case the
person bringing the action shall have the right to conduct the action.ʺ
Id. § 3730(b)(4).
The FCA includes several other limiting provisions, in part a
response to the possibility that the large profits available to qui tam relators
created ʺthe danger of parasitic exploitation of the public coffers.ʺ United States
ex rel. Springfield Terminal Ry. Co. v. Quinn, 14 F.3d 645, 649 (D.C. Cir. 1994). To
limit such abuses, Congress established several restrictions on FCA qui tam
actions. State Farm Fire & Cas. Co. v. United States ex rel. Rigsby, 137 S. Ct. 436, 440
(2016). One of these provisions, known as the ʺfirst‐to‐file bar,ʺ provides that
ʺ[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.ʺ 31 U.S.C. § 3730(b)(5) (emphasis added). ʺThe command is
simple: as long as a first‐filed complaint remains pending, no related complaint
may be filed.ʺ United States ex rel. Batiste v. SLM Corp., 659 F.3d 1204, 1210 (D.C.
Cir. 2011). The first‐to‐file bar ensures that only one relator shares in the
Governmentʹs recovery and encourages potential relators to file their claims
promptly. See United States ex rel. LaCorte v. SmithKline Beecham Clinical Labs., Inc.,
149 F.3d 227, 234 (3d Cir. 1998).
2. Factual Background
Allergan is a pharmaceutical company that develops, manufactures,
and markets health care products, including products relevant to cataract
surgeries. Wood, a former Allergan employee, alleges that in the course of his
employment he became aware that, from at least 2003 through 2011, Allergan
provided large quantities of free medical products to physicians to entice them to
prescribe Allergan drugs, specifically to cataract patients, many of whom were
beneficiaries of government‐funded health programs (e.g., Medicaid and
Medicare). Wood contends that certain products were given to physicians who
promised to begin prescribing or to increase their orders of Allergan products.
Wood claims, inter alia, that these acts caused Medicare and Medicaid providers
to present false claims for payment for Allergan drugs to the Government in
violation of the FCA.
Wood filed this action, on behalf of the Government, twenty‐five
states, and the District of Columbia, on July 26, 2010. At the time, two other
actions alleging similar FCA violations were pending. First, in October 2008, a
relator filed an action in the United States District Court for the District of New
Jersey alleging that Allergan induced physicians to prescribe Allergan‐brand
cataract products by sending them, inter alia, free surgical kits. See United States
ex rel. Lampkin v. Johnson & Johnson, Inc., No. 08‐CV‐5362 (D.N.J.). Second, in
January 2010, a second relator filed a similar lawsuit against Allergan, in the
United States District Court for the District of Columbia, concerning the
distribution of free patient kits.1 See United States and District of Columbia ex rel.
Caryatid, LLC v. Allergan, Inc., No 10‐CV‐46 (D.D.C.). Wood filed the instant
action on July 26, 2010, while both of these actions were pending, but under seal.
On July 27, 2011, the Caryatid complaint was unsealed. On February 16, 2012, the
United States declined to intervene and requested that the Lampkin complaint be
unsealed. Subsequent to Woodʹs filing, both Caryatid, on January 23, 2012 and
Lampkin, on December 14, 2012, were dismissed, for failure to properly serve
Allergan.2
In March 2016, the Government declined to intervene in this action
and the case was unsealed. On May 23, 2016, Wood filed the Third Amended
Complaint. Allergan moved to dismiss the Third Amended Complaint on
August 4, 2016.
As relevant to this appeal, Allergan argued that Wood violated the
first‐to‐file bar and that therefore the action should be dismissed pursuant to
1 There are several different names used by the various relators that appear to refer to the same set of products. Wood uses the term ʺCustomer Care Kit,ʺ while Lampkin uses ʺsurgical kitʺ and Caryatid uses ʺpatient kit.ʺ All refer to a similar set of post‐cataract treatment products, namely sunglasses, dressings, and carrying cases. 2 In Lampkin, though the claims against Allergan were dismissed for failure to serve, the claims against two other defendants, Alcon, Inc. and Alcon Laboratories, Inc., were dismissed for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). 9
Federal Rule of Civil Procedure 12(b)(1) or alternatively 12(b)(6). See United
States ex rel. Wood v. Allergan, Inc., 246 F. Supp. 3d 772, 782, 788 n.7 (S.D.N.Y.
2017). The district court first determined that at the time of the filing of the
lawsuit there was at least one pending related action (Lampkin), which had since
been dismissed. Id. at 791. The district court next concluded that the first‐to‐file
bar is not jurisdictional, and the action need not be dismissed pursuant to Rule
12(b)(1).3 Id. at 794. Finally, the district court held that the first‐to‐file bar did not
require dismissal of Woodʹs claims as there were no pending related actions
when the complaint was amended (i.e., the Third Amended Complaint), and
therefore Woodʹs claims could proceed. Id. at 799 n.16. Noting that this final
question was one of first impression for this Court, the district court granted
leave for Allergan to file an interlocutory appeal. We accepted review.
DISCUSSION
ʺWe review de novo the denial of a motion to dismiss pursuant to
Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which
relief can be granted.ʺ Drimal v. Tai, 786 F.3d 219, 223 (2d Cir. 2015). ʺTo survive
3 This Court has since confirmed that the first‐to‐file bar is not jurisdictional. United States ex rel. Hayes v. Allstate Ins. Co., 853 F.3d 80, 86 (2d Cir. 2017) (ʺ[A] district court does not lack subject matter jurisdiction over an action that may be barred on the merits by the first‐to‐file rule.ʺ). 10
a motion to dismiss, a complaint must contain sufficient factual matter, accepted
as true, ʹto state a claim to relief that is plausible on its face.ʹʺ Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
We consider first the threshold question of whether the first‐to‐file
bar applies to this case. We conclude that it does. We then turn to the principal
question on appeal: Whether a violation of the FCAʹs first‐to‐file bar can be
cured by an amended pleading. We conclude that it cannot.
1. Does the First‐to‐File Bar Apply?
Wood contends that the first‐to‐file bar does not apply to his claims
and asks this Court to affirm on the alternate grounds that his claims were the
first to adequately allege a claim for relief under the FCA. Wood makes two
arguments: First, the fraud he alleges is broader and more detailed than the
earlier‐filed suits and thus the actions are not related; and, second, the earlier‐
filed complaints were deficiently pled and, accordingly, do not trigger the first‐
to‐file bar.
ʺA second action is ʹrelated,ʹ within the meaning of [Section
3730(b)(5),] if the claims incorporate ʹthe same material elements of fraudʹ as the
earlier action, even if the allegations incorporate additional or somewhat
different facts or information.ʺ United States ex rel. Heath v. AT&T, Inc., 791 F.3d
112, 121 (D.C. Cir. 2015) (quoting United States ex rel. Hampton v. Columbia/HCA
Healthcare Corp., 318 F.3d 214, 217 (D.C. Cir. 2003)). In other words, to be related,
the cases must rely on the same ʺessential facts.ʺ United States ex rel. Wilson v.
Bristol‐Myers Squibb, Inc., 750 F.3d 111, 117 (1st Cir. 2014) (collecting cases). If the
first‐filed complaint ensures that the Government ʺwould be equipped to
investigateʺ the fraud alleged in the later‐filed complaint, then the two cases are
related within the meaning of Section 3730(b)(5). Heath, 781 F.3d at 121.
Though Woodʹs allegations may be more detailed than those
asserted in Lampkin, the two cases in essence alleged very similar kickback
schemes. See id. at 122 (citing cases where a second complaint ʺmerely added
additional facts or widened the circle of victims of the same fraudulent conductʺ
and thus, were related).4 Lampkin and Wood both allege a scheme where
Allergan provided free cataract surgery recovery kits to induce increased use of
Allergan products. Compare Lampkin, No. 08‐cv‐5362 (D.N.J), Dkt. No. 1 at 4‐5
(Allergan ʺpaid kickbacks to doctors nationwide in the form of free surgical kits
that have a greater than nominal value. These free and valuable surgical kits
4 As Lampkin was the first‐filed action and one related action will do, we need not consider whether Caryatid is also a related action under Section 3730(b)(5). 12
were routinely offered and delivered to physicians to induce the physicians to
refer or arrange for a health care item or service to be provided and reimbursed
by a federal health care insurance program. . . .ʺ), with Wood, 10‐cv‐5645
(S.D.N.Y.), Dkt. No. 38 at 2 (ʺAllergan successfully induced ophthalmologists,
including cataract surgeons, by providing, at no cost, a suite of cataract surgery‐
related goods, including prescription drugs, patient post‐surgery supplies,
physician‐branded pre‐printed prescription pads and prescription pad imprint
stamps. . . .ʺ).5 Accordingly, the district court properly concluded that Lampkin
and Wood are related actions.
Next, Wood urges this Court to adopt the Sixth Circuitʹs approach in
Walburn v. Lockheed Martin Corp., which held that an earlier‐filed complaint that
was ʺlegally infirm under [Federal Rule of Civil Procedure] 9(b)ʺ fails to bar a
ʺlater‐filed action despite the fact that the overly‐broad allegations of the [first‐
filed] complaint ʹencompassʹ the specific allegations of fraud madeʺ by the later‐
5 The Lampkin complaint was not included in the appellate record. On considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), however, we may consider documents ʺof which a court may take judicial notice.ʺ Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007); see also Goel v. Bunge, Ltd., 820 F.3d 554, 559 (2d Cir. 2016) (noting that we may look at ʺmatters of which judicial notice may be takenʺ when considering motions to dismiss under Rule 12(b)(6) (internal quotation marks omitted)). 13
filed complaint. 431 F.3d 966, 973 (6th Cir. 2005). We are not persuaded.
ʺNothing in the language of Section 3730(b)(5) incorporates the particularity
requirement of Rule 9(b), which militates against reading such a requirement
into the statute.ʺ Batiste, 659 F.3d at 1210. Rule 9(b) and Section 3730(b)(5) serve
different purposes, the former intending to protect defendants in fraud cases
from ʺfrivolous accusationsʺ and the latter designed to reward a qui tam relator
for putting the Government on notice of a potential fraud without the dilution of
ʺcopycat actions that provide no additional material information.ʺ Id.
Additionally, the Sixth Circuitʹs rule would require one court to
evaluate the sufficiency of a complaint pending before another court, creating a
precarious dynamic. Id.; see also United States ex rel. Branch Consultants v. Allstate
Ins. Co., 560 F.3d 371, 378 n.10 (5th Cir. 2009) (ʺThe sufficiency of the [earlier]
complaint under Rule 9(b) is a matter for [the court the complaint is before] to
decide in the first instance.ʺ). To illustrate the problem, consider how the
following scenario could play out if Woodʹs (and the Sixth Circuitʹs) view were
adopted: Suppose a relator in New Jersey files a complaint alleging a fraud.
Several months later, a relator in New York files a similar complaint. The New
York district court may then, before the New Jersey court has evaluated the
sufficiency of the complaint before it, conclude that the New Jersey complaint is
deficiently pled and allow the New York action to proceed. Later, the New
Jersey court may reach the opposite conclusion, allowing what it has determined
to be a sufficient complaint to also proceed. Such a system would be
unworkable.
Accordingly, we agree with the district court that the first‐to‐file bar
applied here. See Wood, 246 F. Supp. 3d at 792 (ʺ[A]s long as Lampkin was a
ʹpending action,ʹ . . . as it was when Wood filed his original complaint (and first
two amended complaints), the first‐to‐file bar applied.ʺ).
2. Can a Violation of the First‐to‐File Bar Be Cured?
Wood next contends that even if a ʺrelated actionʺ was ʺpendingʺ
when he initially filed his complaint, once the related action was dismissed and
no longer ʺpending,ʺ he was entitled to file an amended or supplemental
complaint to cure the violation of the first‐to‐file bar. The issue may be
significant because of the statute of limitations: If a violation of the first‐to‐file
bar cannot be cured by the filing of an amended or supplemental complaint after
the earlier related action is no longer pending, the statute of limitations may run
on the later‐filed case before the first‐filed case has been disposed of. See 31
U.S.C. § 3731(b).6
We are not the first court to be presented with this question: The
First and D.C. Circuits have considered it and come to different conclusions.
Compare Shea, 863 F.3d at 926(dismissing amended complaint as blocked by first‐
to‐file bar), with United States ex rel. Gadbois v. PharMerica Corp., 809 F.3d 1, 4‐5
(1st Cir. 2015) (finding defendantʹs position that supplementation cannot cure
first‐to‐file defect ʺuntenableʺ); see also United States ex rel. Chovanec v. Apria
Healthcare Grp., Inc., 606 F.3d 361, 362 (7th Cir. 2010) (in deciding whether a
complaint filed in violation of first‐to‐file bar should be dismissed with or
without prejudice, noting that ʺʹa related action based on the facts underlying the
pending actionʹ must be dismissed rather than stayedʺ). The Fourth Circuit has
held that the first‐to‐file bar requires dismissal of a later‐filed action even if the
6 Section 3731(b) provides that: A civil action under section 3730 may not be brought ‐‐ (1) more than 6 years after the date on which the violation of section 3729 is committed, or (2) more than 3 years after the date when facts material to the right of action are known or reasonably should have been known by the official of the United States charged with responsibility to act in the circumstances, but in no event more than 10 years after the date on which the violation is committed, whichever occurs last. 16
first‐filed action is dismissed while the later‐filed action is still pending; it has not
decided whether amending or supplementing a complaint after dismissal of the
first‐filed action allows the later‐filed action to proceed. United States ex rel.
Carter v. Halliburton Co., 866 F.3d 199, 212 (4th Cir. 2017) (Wynn, J. concurring),
cert. denied, ‐‐ S. Ct. ‐‐, 2018 WL 587746 (mem.) (June 25, 2018) (ʺ[T]he majority
opinion does not address, much less adopt, the district courtʹs reasoning that an
amendment or supplement to a complaint cannot, as a matter of law, cure a first‐
to‐file defect.ʺ); see also United States ex rel. Lujan v. Hughes Aircraft Co., 243 F.3d
1181, 1188 (9th Cir. 2001). We agree with the D.C. Circuit and conclude that
Woodʹs ʺaction was incurably flawed from the moment he filed it.ʺ Shea, 863
F.3d at 930.
When answering questions of statutory interpretation, we begin
with the language of the statute. Saks v. Franklin Covey Co., 316 F.3d 337, 345 (2d
Cir. 2003) (ʺEvery exercise in statutory construction must begin with the words of
the text.ʺ). If the statutory language is unambiguous, ʺwe construe the statute
according to the plain meaning of its words.ʺ Nwozuzu v. Holder, 726 F.3d 323,
327 (2d Cir. 2013). We discern plain meaning by ʺlooking to the statutory scheme
as a whole and placing the particular provision within the context of that
statute.ʺ Saks, 316 F.3d at 345. Only when the terms are ambiguous or unclear do
we consider legislative history and other tools of statutory interpretation.
Nwozuzu, 726 F.3d at 327.
We begin with the language of the statute. Section 3730(b)(5) provides:
When a person brings an action under this subsection, 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).
By its express terms, then, no private individual ʺmay . . . bring a
related actionʺ when an FCA action is ʺpending.ʺ While the statute does not
include a provision mandating dismissal when there is a violation, the clear
import of the language is that dismissal is required. ʺAs a general rule, if an
action is barred by the terms of a statute, it must be dismissed.ʺ Hallstrom v.
Tillamook Cty., 493 U.S. 20, 31 (1989). Accordingly, absent any exceptions, when a
plaintiff fails to heed a ʺclear statutory command,ʺ the district court ought to
dismiss the suit. See McNeil v. United States, 508 U.S. 106, 113(1993) (holding that
an action must be dismissed when statutory exhaustion requirement was not met
until after action was filed). Indeed, when the Supreme Court recently held that
a violation of the FCAʹs sealing requirement did not require dismissal, it gave
Section 3730(b)(5) as an example of one of ʺa number of provisions [in the FCA]
that do require, in express terms, the dismissal of a relatorʹs action.ʺ Rigsby, 137
S. Ct. at 442‐43; accord Shea, 863 F.3d at 929 (noting that the Supreme Court
ʺspecifically cited section 3730(b)(5) ‐‐ the first‐to‐file bar ‐‐ as an example of a
provision explicitly requiring dismissal. In the ordinary course, then, the
existence of a pending qui tam action should occasion the dismissal of a related
action.ʺ (citation omitted)). Under the terms of the statute, dismissal is the
obvious response to an improperly filed action ‐‐ to permit the action to continue
would be to ignore the violation.
Woodʹs position that a violation of the first‐to‐file bar can be cured
by the filing of an amended pleading is inconsistent with the language of the
statute. In essence, he argues that Section 3730(b)(5) provides that ʺ[w]hile
another action is pending, no person other than the Government may continue to
prosecute a related action,ʺ and contends that a second action can simply be
stayed until the first‐filed action is no longer pending. Chovanec, 606 F.3d at 362.
But that is not what the statute says. See id. Rather, the statute bars a person
from bringing ‐‐ not continuing to prosecute ‐‐ a related action during the
pendency of an FCA case, see 31 U.S.C. § 3730(b)(5) (ʺWhen 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.ʺ
(emphasis added)), and it makes no provision for a stay of proceedings until the
prior‐filed action is resolved. The first‐to‐file bar is thus clear: an action cannot
be brought while a first‐filed action is pending.
In construing the term ʺbring,ʺ we ʺproceed under the assumption
that the statutory language, unless otherwise defined, carries its plain meaning,ʺ
Chen v. Major League Baseball Props., Inc., 798 F.3d 72, 76 (2d Cir. 2015) (internal
quotation marks omitted); see also Kellogg Brown & Root Servs., Inc. v. United States
ex rel. Carter, ‐‐ U.S.‐‐, 135 S. Ct. 1970, 1978 (2015) (seeing ʺno reason not to
interpret the term ʹpendingʹ in the FCA [31 U.S.C. § 3730(b)(5)] in accordance
with its ordinary meaningʺ). To ʺbring an actionʺ is to ʺinstitute legal
proceedings.ʺ Blackʹs Law Dictionary 231 (10th ed. 2014); see also Goldenberg v.
Murphy, 108 U.S. 162, 163 (1883) (ʺA suit is brought when in law it is
commenced.ʺ). Legal proceedings are instituted by the origination of formal
proceedings, such as the filing of an initial complaint. See Serna v. Law Office of
Joseph Onwuteaka, P.C., 732 F.3d 440, 451 (5th Cir. 2013) (Smith, J., dissenting) (ʺIn
the context of federal law, a suit is brought . . . by filing a complaint with the
court.ʺ (citing Fed. R. Civ. P. 3) (internal quotations marks omitted)). Therefore,
amending or supplementing a complaint does not bring a new action, it only
brings a new complaint into an action that is already pending. Chovanec, 606 F.3d
at 362 (statutes structured in the form ʺʹdo not bring an action untilʹ . . . are
understood to forbid the commencement of a suit; an action . . . ʹbroughtʹ while
the condition precedent is unsatisfied must be dismissed rather than left on iceʺ).
The statutory command is not ambiguous: a claim is barred by the
first‐to‐file bar if at the time the lawsuit was brought a related action was
pending. Accordingly, even after Wood filed the Third Amended Complaint, his
action still violated the first‐to‐file bar because he instituted legal proceedings, by
filing the initial complaint, while a related action was pending.7
As Wood suggests, it is true that deficiencies in a complaint can
often be cured by amendment. See Mathews v. Diaz, 426 U.S. 67, 75 n.9 (1976)
(citing 28 U.S.C. § 1653). The problem for Wood, however, is that an amended or
7 As we decide that Wood cannot remedy a first‐to‐file defect by amendment or supplementation, we need not address Woodʹs argument that his Third Amended Complaint relates back for statute of limitations purposes. We do note, however, that this suggestion betrays the internal inconsistency in Woodʹs position and indicates that, though he wishes to proceed on the amended complaint, he still understands his action to have been brought at a time when it was in violation of the first‐to‐file bar. 21
supplemental pleading cannot change the fact that he brought an action while
another related action was pending, as is prohibited by the first‐to‐file bar. See
United States ex rel. Shea v. Verizon Commcʹns, Inc., 160 F. Supp. 3d 16, 30 (D.D.C.
2015), affʹd, Shea, 863 F.3d 923 (ʺThe first‐to‐file bar prohibits bringing a ʹrelated
action,ʹ not a related complaint. . . . No matter how many times [a later‐filing
relator] amends his Complaint, it will still be true that he brought a related action
based on the facts underlying the then pending action.ʺ (emphasis in original)
(internal quotation marks, brackets, and citation omitted)).
The statutory scheme as a whole, and the placement of Section
3730(b)(5) within the context of the FCA, confirms what the language plainly
states. A rule that would permit a violation of the first‐to‐file bar to be cured by
the filing of an amended or supplemental pleading would pose serious
administrative concerns and disrupt the orderly operation of the FCA. As the
D.C. Circuit explained, for example, ʺif a relator brings suit while a related action
is pending, her ability to proceed with her action upon the first‐filed suitʹs
completion could depend on the pure happenstance of whether the district court
reached her case while the first‐filed suit remained pending.ʺ Shea, 863 F.3d at
930. That could create anomalous results among similarly situated relators based
on the idiosyncrasies of the judge the case is before or the district the case is in.
Shea went on to illustrate:
For instance, imagine a situation in which relators A, B, and C each file a qui tam action alleging the same fraud. Relator A reaches the courthouse first and his action therefore goes forward. Relator B reaches the courthouse second, but the district court determines his suit is blocked by the first‐to‐file bar and thus dismisses it per the ordinary course. Relator C files last, and shortly thereafter, the first‐filed action is dismissed. But suppose relator C filed her suit so late in the game that the district court fails to dismiss her action before dismissing the first‐filed suit. Under [Woodʹs] proposed rule, relator C would receive a windfall: she, unlike relator B, could simply amend her existing complaint and thereby secure herself pole position in the first‐to‐file queue. Relator C would jump past relator B for the opportunity to proceed with her suit (and to share in the governmentʹs reward).
Id. (citation omitted).
Woodʹs proposed interpretation of the rule also has the potential to
create problematic inefficiencies. For example, a district court may hold related
cases indefinitely awaiting the potential dismissal of the first‐filed action. See id.
at 929 (ʺʹ[I]f an action is barred by the terms of the statute, it must be dismissedʹ
rather than left on ice.ʹʺ (quoting Hallstrom, 493 U.S. at 31)). Additionally, courts
would face a wave of problematic questions. For example, if the first‐filed action
is dismissed while the second‐to‐file and third‐to‐file actions are still pending,
who gets to proceed as the new first‐filed case? Is it the first to amend the
complaint or the second to have filed the initial complaint? If the amended
complaint relates back to the time of filing, then could the third‐to‐file move
forward only to be stopped again once the second‐to‐file amends? These sorts of
questions illustrate the conundrum posed by the rule endorsed by the district
court. Such a system would also essentially make any statute of limitations
obsolete. Relators could simply file unlimited related actions and keep each one
ʺon iceʺ until the case before it is dismissed, allowing the next case to take its
turn. See Chovanec, 606 F.3d at 362 (ʺThen § 3730(b)(5) would do nothing to block
an infinite series of claims; me‐too actions could proliferate, provided only that
the copycat asked for a stay until the action ahead of it in the queue had been
resolved.ʺ). That would force defendants to defend the same claim again and
again.
Finally, although we need not rely on legislative history because the
statutory language and scheme are clear, the legislative history also undercuts
Woodʹs position. Allowing a first‐to‐file defect to be ʺcuredʺ by amending or
supplementing a complaint contravenes the FCAʹs purpose. Indeed, even if, as
the district court noted, ʺthe primary, if not sole, purpose of the first‐to‐file rule is
to help the Government uncover and fight fraud,ʺ it is unlikely that Congress
intended to do so in an inefficient manner prone to anomalous outcomes. Wood,
246 F. Supp. 3d at 798; see also Campbell v. Redding Med. Ctr., 421 F.3d 817, 823 (9th
Cir. 2005) (noting that the 1986 Amendments to the FCA, which introduced the
first‐to‐file bar, were intended to ʺencourage more private enforcement suitsʺ
(quoting S. REP. No. 99‐345, at 23‐24 (1986), reprinted in 1986 U.S.C.C.A.N. 5266,
5288‐89)). ʺCongress presumably would not have intended a relatorʹs fate to
depend on chance considerations such as the extent of a particular courtʹs
backlog and the timeliness of a particular courtʹs entry of a dismissal.ʺ Shea, 863
F.3d at 930.8 Perhaps some relators may be barred from bringing meritorious
claims when their actions are dismissed and then blocked by the statute of
limitations. That risk, however, is always present when there is a statute of
8 When considering the purpose of the first‐to‐file bar. we note that the Government agrees with our reading of the statute and urges dismissal of the action ‐‐ perhaps a significant consideration, as the FCA is designed to promote the Governmentʹs interest. See Brief of the United States as Amicus Curiae. Though at oral argument before the district court the Government supported Wood, it has changed its stance on appeal, now arguing that ʺ[t]he plain text of the statute compelsʺ the conclusion that such actions be dismissed, as they will, even after amending or supplementing the complaint, have been brought while another related action was pending. Id. at 1.
limitations, and it is weighed against countervailing concerns of Congress. See id.
at 932.
Wood, recognizing these practical concerns, argues that the rule we
endorse today would deter relators from coming forward with claims. That,
however, is unlikely. Because many claims remain under seal for a long time,
relators are aware that their claims may very well be barred by the time they get
to the courthouse, and our answer to the question before us today does not
significantly alter the incentive structure to which would‐be relators have
become accustomed. The FCAʹs scheme is difficult for relators, who may
substantially invest in claims, only to find out that a recently unsealed complaint
blocks their action, months if not years down the road. This, however, is how
Congress designed the statutory scheme, and it is carefully calibrated to strike
ʺthe golden mean between adequate incentives for whistle‐blowing insiders . . .
and discouragement of opportunistic plaintiffs.ʺ Springfield Terminal Ry. Co., 14
F.3d at 649. Additionally, in many circumstances, absent a statute of limitations
issue, the relator will be able to re‐file her action, without violating the first‐to‐
file bar.
Lastly, Wood asks us to consider whether equitable tolling should
apply to his claim. It is very well possible that a future court would consider
Woodʹs claim equitably tolled. It is not, however, a matter for this Court to
consider at this time. Equitable tolling is not of concern in this case where the
first‐to‐file bar, rather than the statute of limitations, is preventing Woodʹs claim
from proceeding. See Shea, 863 F.3d at 932 (expressing ʺno view on the potential
applicability of equitable tolling principles if [the relator] refiles his actionʺ).
Accordingly, we conclude that a first‐to‐file violation cannot be
cured by amending or supplementing a complaint, even when the first‐filed case
is no longer pending, and that actions brought in violation of that rule should be
dismissed without prejudice.
CONCLUSION
For the reasons set forth above, we REVERSE and REMAND the
case with instructions to dismiss the action without prejudice.