United States, et al. v. John McAvoy, et al., 20-10604 (11th Cir.)

Order Vacating 3-Panel Opinion

MAR 9, 2022 | REPUBLISHED BY LIT: MAR 10, 2022

Before  WILLIAM  PRYOR,  Chief  Judge,  WILSON,  JORDAN, ROSENBAUM, JILL PRYOR, NEWSOM, BRANCH, GRANT, LUCK, LAGOA, and BRASHER, Circuit Judges. BY THE COURT:

A judge of this Court having requested a poll on whether this appeal should be reheard en banc, and a majority of the judges of this Court in active service having voted in favor, the Court sua sponte ORDERS that this appeal will be reheard en banc. The panel’s opinion is VACATED.

United States, et al. v. John McAvoy, et al., 20-10604 (11th Cir.)

3-Panel Opinion authored by Judge Moody, Jr.

DEC 30, 2021 | REPUBLISHED BY LIT: MAR 10, 2022

Before ROSENBAUM, TJOFLAT, Circuit Judges, and MOODY,* District Judge.

MOODY, District Judge:

The False Claims Act (31 U.S.C. § 3729 et. seq.) allows a per- son, known as a Relator, to bring an action on behalf of the Gov- ernment to recover damages for making a false or fraudulent claim for payment from the United States (a qui tam action).

The Government, even after initially declining to intervene, may dismiss the suit over the Relator’s objection with notice and an opportunity for a hearing.

This appeal raises two issues:

(1) whether the Government must first formally intervene upon a showing of good cause prior to filing a motion to dismiss,

and

(2) what standard of review is the Court to use at the hearing.

Because we have previously determined that the Government does not have to formally intervene before filing a motion to settle a qui tam action, and because the reasoning is the same for dismissals, we hold that the Government does not have to formally intervene before moving to dismiss a qui tam case even though it had earlier declined to intervene.

And while the statute requires that a proposed settlement be “fair, adequate, and reasonable,” the statute is silent as to any such requirement for dismissals.

We therefore conclude that decisions to dismiss are within the province of the Executive Branch subject only to limits imposed by the Federal Rules of Civil Procedure, a statute, or the Constitution.

Here, when the Relators filed their initial complaint, the United States declined to intervene.

The Relators then filed an amended complaint adding additional defendants, some of which were Government employees in their individual and official capacities. The United States, upon further consideration, determined that the action should be dismissed. It then filed its motion to dis- miss without first filing a motion to intervene in the case.

Relators contended that the United States was not a party unless it first formally intervened “for good cause” under § 3730(3) and therefore had no standing to file a motion to dismiss. And, if the Court were to consider the Government’s motion, it should require the Government to show

(1) a valid government purpose for the dismissal

and

(2) a rational relation between the dismissal and accomplishing that purpose.

Then, if the Government were to satisfy this two-step test, the Relators acknowledged, to avoid dis- missal, they must then show that the motion was fraudulent, arbi- trary and capricious, or illegal. This is the framework adopted in the Ninth Circuit. See United States ex rel. Sequoia Orange Co. v. Baird-Neece Packing Corp., 151 F.3d 1139, 1145 (9th Cir. 1998).

The District Court followed our earlier decision in United States v. Everglades College, Inc., 855 F.3d 1279 (11th Cir. 2019), and concluded that the United States was not required to move to intervene before filing a motion to dismiss.

The Court entered judgment dismissing the case. The Relators appealed. We have jurisdiction under 28 U.S.C. § 1291.

The False Claims Act provides in pertinent part:

(c) Rights of the parties to qui tam actions.

(1) If the Government proceeds with the action, it shall have the primary responsibility for prose- cuting the action, and shall not be bound by an action of the person bringing the action. Such person shall have the right to continue as a party to the action, subject to the limitations set forth in paragraph (2).

(2)(A) The Government may dismiss the ac- tion notwithstanding the objections of the per- son 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.

(B) The Government may settle the action with the defendant notwithstanding the objec- tions of the person initiating the action if the court determines, after a hearing, that the proposed settlement is fair, adequate, and reasonable under all the circumstances. Upon showing good cause, such a hearing may be held in camera. 31 USCA § 3730(c)(1) and (2)(A) and (B).

The statute is silent con- cerning whether the Government must formally intervene before filing a motion to dismiss and does not inform the court what standard the Government must meet to obtain a dismissal.

Our sister circuits vary in their approaches to these questions1 (but the ultimate results seem to be the same).

We have previously addressed this issue in the context of a motion by the Government to approve a settlement. The reasoning applies as well to dismissals:

We hold that, in this case, the United States did not need to satisfy the good-cause intervention requirement for qui tam actions under 31 U.S.C.§ 3730(c)(3) because that subsection applies only when the government intervenes for the purpose of actually proceeding with the litigation—not when it is stepping in only for the purpose of settling and ending the case.

Because intervention was not required, we need not concern ourselves with whether the requirements of § 3730(c)(3), which addresses late intervention by the government for the purpose of continuing the litigation, have been met.

A straightforward reading of the text supports this conclusion. First, subsection (b)(2) expressly links intervention to the government’s decision to “proceed with the action.” § 3730(b)(2) (“The Government may elect to intervene and proceed with the action….” (emphasis added)).

Second, in subsections (c)(2)(A) and (B), the statute spells out the circumstances in which the government may settle or dismiss a qui tam case, and neither subsection conditions the government’s rights on formally intervening in the case.

Instead, they provide in unequivocal terms that “the Government may settle

In the context of dismissals, the court need only “provide[ ] the [relator] with an opportunity for a hearing,” § 3730(c)(2)(A); and with settlements, the court must “determine, after a hearing, that the proposed settlement is fair, adequate, and reasonable under all the circumstances,” § 3730(c)(2)(B).

We decline to import the good-cause intervention requirement from sub- section (c)(3) into these provisions which specifically govern dismissals and settlements.

Everglades College, Inc., 855 F.3d at 1285–1286 (footnotes omitted).

As we said in Everglades, when the Government moves to dismiss an action after having declined to intervene, it need provide the Relator only notice and a hearing. After all, it is the Government’s claim and the Government’s damages. The decision to dismiss the case for the Government’s damages lies within the prosecutorial discretion of the Executive Branch.

That is not to say the Government’s authority is boundless. The decision to dismiss must not be based on a constitutionally impermissible standard such as race, religion, other arbitrary classification, or vindictiveness.

Bordenkircher v. Hayes, 434 U.S. 357, 98 S. Ct. 663, 54 L. Ed. 2d 604 (1978); Wayte v. United States, 470 U.S. 598, 608, 105 S. Ct. 1524, 1531, 84 L. Ed. 2d 547 (1985) (“As we have noted in a slightly different context, however, although prosecutorial discretion is broad, it is not unfettered. …[T]he decision to prosecute may not be deliberately based upon an unjustifiable standard such as race, religion, or other arbitrary classification, in- cluding the exercise of protected statutory and constitutional rights.”) (internal citations omitted).

Once the Government has placed its motion before the Court, it must exercise its executive authority in accordance with the Federal Rules of Civil Procedure (41 and 11), other applicable statutes, and the Constitution. It may not violate either the Equal Protection or the Due Process Clause.

As the Seventh Circuit2 noted, these are generous limits that would be breached rarely if ever. United States ex rel. Cimznhca, L.L.C. v. UCB, Inc., 970 F.3d 835, 852 (7th Cir. 2020).

Eleventh Circuit issue a conflicting opinion. We subscribe to daily opinions – on March 1, 2022, we did not receive any newsletter, the day this opinion was released. https://t.co/hxzAF1mq9M #Liars

— lawsinusa (@lawsinusa) March 2, 2022

Accordingly, where the government’s conduct does not bump up against the Rules, the statute, or the Constitution, the notice and hearing under § 3730(c)(2)(A) serve no great purpose.

But that will not be true in every case.

Our reading of § 3730(c)(2)(A) does not render its process futile as a general matter.

Rather, this particular relator simply had no substantive case to make at the hearing to which the statute entitled it.

Whenever a party has the right to invoke the court’s aid, it has the obligation to do so with at least a non-frivolous expectation of relief under the governing substantive law. Fed. R. Civ. P. 11(b).

That is not always possible, but that does not make the right meaningless.
Cimznhca, L.L.C., 970 F.3d at 853.

The Relators in this case argue that the Government failed to meet even this low bar.

They contend the dismissal was an abuse of executive power because it was based not on the merits of the case, but because of its alleged animosity to the individual Relators.

This contention was rejected by the District Court.

It determined that the Government offered multiple valid reasons to dismiss the case, including, among others, that it did not believe it had been damaged and that it was concerned that the action could damage diplomatic relations with Honduras.

We agree with the District Court.

The decision of the District Court is AFFIRMED.