Late last month, the Supreme Court issued a unanimous, two-part decision that clarified the meaning of the term “offense” as used in the Wartime Suspension of Limitations Act (“WSLA”), and the term “pending” as used in the first-to-file doctrine. The Court held that (i) the suspension of the statute of limitations under the WSLA applies only to criminal offenses; and (ii) a qui tam suit brought under the False Claims Act ceases to be “pending” once that suit is dismissed. Kellogg Brown & Root Servs., Inc. v. U.S. ex rel. Carter, No. 12-1497 (May 26, 2015).
During the second Iraq War in 2005, Plaintiff worked for KBR as a water-purification operator. He subsequently brought suit in Carter I alleging that KBR fraudulently billed the United States for water-purification services that were either inadequate or never performed. Shortly before trial, the court dismissed Carter I after learning that a similar, earlier-filed suit was pending in the Central District of California. That case was later dismissed, prompting Carter to re-file his complaint (Carter II). The district court dismissed Carter II under the first-to-file rule because Carter I, his earlier-filed case, was still pending on appeal. The Plaintiff voluntarily dismissed his Carter I appeal, and then re-filed for a third time (Carter III). The district court dismissed Carter III under the first-to-file doctrine because two similar cases were filed at some point during the dismissal of Carter I and the filing of Carter III, though both of these cases were later dismissed. The district court also ruled that Carter III was time-barred because the statute-of-limitations suspension available under the WSLA applied only to criminal offenses against the government rather than the civil wrongdoing the Plaintiff alleged. The Fourth Circuit reversed and the Supreme Court granted certiorari.
Writing for a unanimous court, Justice Alito first recounted the statutory and legislative history behind the WSLA. He wrote that the WSLA and its predecessor statutes suspended the statute of limitations for frauds perpetrated during a time of war. He also observed that over time, the definition of war and the number of years after a war for which the suspension was available had changed, but that the WSLA and its predecessors had uniformly used the term “offenses” to describe the types of frauds that suspended the statute. The Court then noted that “offenses” is used most commonly to refer to crimes rather than civil wrongdoing, and that Congress had placed the WSLA in Title 18 of the U.S. Code, the title reserved for criminal offenses. Ultimately, the Court wrote that “even if there were some ambiguity in the WSLA’s use of that term, our cases instruct us to resolve that ambiguity in favor of the narrower definition,” id. at 10, or in this case, finding that Congress intended offenses as used in the WSLA to be defined as criminal fraud.
The Court also addressed what constitutes a “pending action” for purposes of barring a later-filed suit. Here, KBR argued that the two similar cases filed before Carter III were still “pending” even though both had later been dismissed. The Court quickly denied such an interpretation of the first-to-file rule, explaining that such a reading “would bar all subsequent related suits even if that earlier suit was dismissed for a reason having nothing to do with the merits.” Id. at 12. The Court therefore affirmed the Fourth Circuit, and held that “a qui tam suit under the FCA ceases to be ‘pending’ once it is dismissed.” Id. at 13.
Although Carter seemingly ends further litigation about the meaning of “offense” or “pending,” the Court expressly declined to consider whether “claim preclusion may protect defendants if the first-filed action is decided on the merits.” Id. at 12-13. Following Carter, we should expect to see this issue litigated with increased frequency in the lower courts.
