False Claims Act Developments
Third Circuit Holds that False Claims Act First-to-File Bar is Not Jurisdictional
On September 1, 2020, the US Court of Appeals for the Third Circuit held that the False Claims Act (FCA) first-to-file bar, 31 U.S.C. § 3730(b)(5), is not jurisdictional. The first-to-file bar prohibits a “person” from “interven[ing] or bring[ing] a related action based on the [same] facts” as an FCA action that is already pending, and can provide a ground for dismissal if a defendant is already facing a similar action brought by a plaintiff-relator who filed suit earlier in time. Defendants have sometimes argued that the bar is jurisdictional—which would mean that Rule 12(b)(1) applies, not Rule 12(b)(6) for failure to state a claim, that the plaintiff bears the burden of proof on whether jurisdiction exists, and that early discovery may be available on the jurisdictional question.
The Third Circuit highlighted a circuit split in which the DC Circuit, First Circuit, and Second Circuit have all held that the bar is not jurisdictional, while the Fourth Circuit, Fifth Circuit, Sixth Circuit, Ninth Circuit, and Tenth Circuit have all held that the bar is jurisdictional. In holding that the bar is not jurisdictional, the Third Circuit noted the Supreme Court’s instruction that, “unless Congress states clearly that a rule is jurisdictional, we will treat it as nonjurisdictional.” The court emphasized that the first-to-file bar contains no language indicating that it is jurisdictional.
Applying Rule 12(b)(6), the court then addressed defendants’ arguments that dismissal was appropriate because the original relator, a partnership, had undergone changes that rendered it a different partnership and thus a new relator to an already-pending suit. While the court held that the first-to-file bar precludes new relators from intervening in other parties’ suits or bringing their own separate suits based on the same facts, it held that the bar does not preclude parties from amending a complaint to add, remove, or swap relators. Although the court vacated the dismissal order, it remanded the case for the district court to consider several factors that could bear on whether the plaintiff-relator was a proper relator.
The case is In re: Plavix Marketing, Sales Practices and Prod. Liability Litig., 2020 WL 5200681, --- F.3d--- (3d Cir. Sept. 1, 2020).
FCPA & Anti-Bribery News
DOJ Announces $60 Million Civil Forfeiture Settlement and Guilty Plea in 1MDB Investigation
On August 31, 2020, DOJ announced the guilty plea of an American businesswoman from Hawaii in connection with her role in a scheme to facilitate an unregistered lobbying campaign of the Trump Administration and DOJ on behalf of foreign principals. According to DOJ, in exchange for millions of dollars, the defendant and others covertly sought to influence senior US government officials regarding a pending DOJ investigation and the extradition of a foreign national. As part of the guilty plea, the defendant admitted that, between March 2017 and January 2018, she and others agreed to lobby the President of the United States, the Attorney General, and other high-level officials in the administration and DOJ to drop civil forfeiture proceedings and a criminal investigation into the embezzlement of billions of dollars from 1Malaysia Development Berhad (1MDB), a strategic investment and development company owned by the Government of Malaysia.
See here for the DOJ press release.
In related news, on September 2, 2020, DOJ announced that it had reached a settlement in its civil forfeiture cases against assets acquired by Riza Aziz using funds allegedly embezzled from 1MDB and laundering through financial institutions in various international jurisdictions. DOJ estimates that the assets are worth more than $60 million, bringing the total recovered in the 1MDB scheme to nearly $1.1 billion to date.
See here for the DOJ press release.