False Claims Act Update: Third Circuit Widens First-to-File Circuit Split

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Last week, in the In re Plavix decision, the Third Circuit addressed the question of whether relators can be added or substituted in an amended complaint and, in the process, weighed in on whether the first-to-file bar is jurisdictional. Widening an existing circuit split on the issue, the court held that the first-to-file bar is nonjurisdictional and that a first-to-file challenge must be brought in a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). The court also concluded that a substituted relator is not an intervening party under the False Claims Act and therefore may join the litigation in an amended complaint.

The FCA’s First-to-File Bar

The False Claims Act (FCA) provides that “[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.”

Courts are split on whether the first-to-file bar is jurisdictional or nonjurisdictional. As the Third Circuit explains in the In re Plavix decision, the distinction matters because the plaintiff bears the burden of persuasion on jurisdiction, and jurisdictional challenges can be raised at any time. Additionally, defendants may sometimes submit evidence when challenging subject-matter jurisdiction. On the other hand, the defendant bears the burden to show that a complaint fails to state a claim under Rule 12(b)(6), and, on a motion to dismiss, the court must take the allegations in the complaint as true.

In re Plavix Marketing, Sales Practices & Products Liability Litigation

Three relators formed a partnership to bring a qui tam lawsuit, but eventually the partnership deteriorated. In the second amended complaint, one relator was substituted for another. The defendants filed motions to dismiss under Rules 12(b)(1) and 12(b)(6), arguing that the addition of a new partner was equivalent to a nonparty intervening in the case — a violation of the FCA’s first-to-file bar. The district court agreed and dismissed the relators’ complaint. The defendants appealed, and, in In re Plavix, the Third Circuit answered the threshold question of whether the first-to-file bar is jurisdictional and whether a new relator is an intervenor under the FCA.

Third Circuit Holds First-to-File Challenges Are Not Jurisdictional

Before addressing the question of what it means to “intervene” under the FCA, the court needed to resolve whether first-to-file challenges are jurisdictional (brought under 12(b)(1)) or nonjurisdictional (brought under 12(b)(6)). The Third Circuit joined the D.C. Circuit, First Circuit, and Second Circuit in holding that the first-to-file bar is not jurisdictional. The court relied on the Supreme Court’s “clear statement” rule, which provides that unless Congress states clearly that a rule is jurisdictional, it should be treated as nonjurisdictional. See Sebelius v. Auburn Reg’l Med. Ctr., 568 U.S. 145, 153 (2013); see also Fort Bend Cty. v. Davis, 139 S. Ct. 1843, 1850 (2019).

Noting that several of the contrary circuit cases predate these Supreme Court cases, the Third Circuit explained that there is no language in the FCA that plainly shows that Congress intended for the first-to-file bar to have jurisdictional consequences, and, in fact, the statutory language suggests the opposite. First, the court explained that the intervention bar applies only when a party attempts to intervene in, or bring a suit alleging the same conduct as, an existing action. The Third Circuit also observed that if Congress had intended for the first-to-file bar to be jurisdictional, it would have placed it on other sections of the statute that address jurisdiction and were added at the same time.

New Relators Are Not Intervenors

Shifting to the merits of the case, the Third Circuit interpreted the meaning of “intervene” in the FCA. The court explained that “intervene” literally means “[t]o come between in action; to interfere, [or] interpose.” Often, intervention is not at the behest, or even with the acquiescence, of the existing parties. The court contrasted intervention with other means of entering litigation, such as joinder or impleader. The court emphasized that the difference between intervention and these other methods is that intervention requires an action by an outside party. The court concluded that Congress would not have used the specific verb “intervene” to broadly cover all means of entering a lawsuit, regardless of who initiated the entry. As the court stated, “[i]f Congress had wanted the first-to-file bar to reach more broadly, it would have said so. But it chose a ‘narrower’ term (intervention), and we must ‘respect, not disregard,’ that choice.”

Key Takeaways

  • Defendants in the Third Circuit must raise first-to-file challenges in a Rule 12(b)(6) motion to dismiss. Failure to do so risks waiving the defense, and defendants bear the burden to prove that the first-to-file bar requires dismissal of the case

  • In re Plavix ushers in a narrow interpretation of the first-to-file bar’s meaning of “intervene.” Relators may swap or include new relators in an amended complaint without violating the first-to-file bar.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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