First Circuit Permits Supplementation of Complaint to Cure First-to-File Jurisdictional Defects
The FCA first-to-file bar provides that if an action involving the same subject matter is already pending, “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). Courts are thus deprived of jurisdiction to entertain opportunistic qui tam lawsuits based on facts similar to an already-filed lawsuit. In May 2015, the United States Supreme Court ruled that the term “pending action” in the statute refers to an action that is undecided; awaiting decision. Kellogg Brown & Root Servs., Inc. v. United States ex rel. Carter, 135 S. Ct. 1970, 191 L. Ed. 2d. 899 (2015). The Supreme Court held that, under the wording of the statute, “an earlier suit bars a later suit while the earlier suit remains undecided but ceases to bar that suit once it is dismissed.” Id. at 1978. As a result of the holding in Carter, the First Circuit released an unpublished decision on December 16, 2015, ruling that a qui tam relator could cure a first-to-file jurisdictional defect by supplementing his complaint under FRCP 15(d), where the previously pending action had been settled and dismissed while the relator’s appeal was pending. United States ex rel. Gadbois v. PharMerica Corp., No. 14-2164, 2015 U.S. App. LEXIS 21841 (1st Cir. R.I. Dec. 16, 2015).
In Gadbois, the U.S. District Court for the District of Rhode Island found that Gadbois’ qui tam action was barred under the first-to-file rule as a result of an earlier-filed action in the U.S. District Court for the Eastern District of Wisconsin, which the court found was based on, substantially, the same facts and conduct as alleged by Gadbois. United States ex rel. Gadbois v. PharMerica Corp., No. 10-471, 2014 U.S. Dist. LEXIS 185085 (D.R.I. Oct. 3, 2014). Consequently, the district court dismissed Gadbois’ FCA claims for want of subject matter jurisdiction. Gadbois appealed to the First Circuit. While the appeal was pending, two significant events occurred. First, the Supreme Court handed down the above-mentioned decision in Carter. Second, the Wisconsin lawsuit was settled and dismissed. Consequently, Gadbois requested that the First Circuit either deem his complaint supplemented with the information that the Wisconsin lawsuit had been dismissed, or remand the action to the district court with instructions that the district court permit him to supplement his complaint pursuant to FRCP 15(d).
FRCP 15(d) affords litigants a pathway for pleading a “transaction, occurrence, or event that happened after the date of the pleading to be supplemented.” The First Circuit held as a matter of first impression that FRCP 15(d) is available to cure most kinds of defects in subject matter jurisdiction, including under the circumstances presented. For prudential reasons, however, the First Circuit declined to order supplementation. Instead, it vacated the district court’s prior ruling to allow the district court to consider the relator’s request for supplementation under FRCP 15(d). In doing so, the First Circuit stressed the lower court’s wide discretion to permit or deny supplementation.
Litigants are not permitted to supplement their pleadings as a matter of right under FRCP 15(d). However, where earlier-filed qui tam actions are dismissed while the relator’s action is pending, FRCP 15(d), and the Court’s holding in Gadbois, provide relators with a potentially more efficient and less cumbersome means of reviving the previously-barred action.