UNITED STATES ex rel. BENJAMIN CARTER, Plaintiff-Appellant,
HALLIBURTON CO.; KELLOGG BROWN & ROOT SERVICES, INC.; SERVICE EMPLOYEES INTERNATIONAL INC.; KBR, INC., Defendants-Appellees. CHAMBER OF COMMERCE OF THE UNITED STATES OF AMERICA, Amicus Supporting Appellees.
Argued: March 22, 2017
from the United States District Court for the Eastern
District of Virginia, at Alexandria. James C. Cacheris,
Senior District Judge. (1:11-cv-00602-JCC-JFA)
Smart Stone, STONE & MAGNANINI LLP, Berkeley Heights, New
Jersey, for Appellant.
Patrick Elwood, VINSON & ELKINS LLP, Washington, D.C.,
Ludwig, DUNLAP, BENNETT & LUDWIG, PLLC, Leesburg,
Virginia; Robert A. Magnanini, STONE & MAGNANINI LLP,
Berkeley Heights, New Jersey, for Appellant.
D. Margolis, Jeremy C. Marwell, Tirzah S. Lollar, Ralph C.
Mayrell, VINSON & ELKINS LLP, Washington, D.C., for
Appellees. Kate Comerford Todd, Steven P. Lehotsky, U.S.
CHAMBER LITIGATION CENTER, Washington, D.C.; Jonathan S.
Franklin, Mark Emery, NORTON ROSE FULBRIGHT U.S. LLP,
Washington, D.C., for Amicus Curiae.
AGEE, WYNN, and FLOYD, Circuit Judges.
by published opinion. Judge Floyd wrote the opinion, in which
Judge Agee and Judge Wynn joined. Judge Wynn wrote a separate
False Claims Act (FCA) empowers private individuals acting on
behalf of the government to bring civil actions against those
that defraud the government. The FCA contains a provision,
known as the "first-to-file" rule, which bars these
private individuals, known as relators, from bringing actions
under the FCA while a related action is pending. In this
case, back before this Court for a third time, we consider
whether the first-to-file rule mandates dismissal of a
relator's action that was brought while related actions
were pending, even after the related actions have been
dismissed and the relator's complaint has been amended,
albeit without mention of the related actions. We conclude
that it does.
imposes liability for knowingly presenting false or
fraudulent claims to the government of the United States for
payment or approval. 31 U.S.C. § 3729(a)(1). "In
adopting the FCA, 'the objective of Congress was broadly
to protect the funds and property of the
government.'" United States ex rel. Owens v.
First Kuwaiti Gen. Trading & Contracting Co., 612
F.3d 724, 728 (4th Cir. 2010) (quoting Rainwater v.
United States, 356 U.S. 590, 592 (1958)).
under the FCA is no small matter. An FCA violator may be held
responsible for treble damages in addition to civil
penalties. See 31 U.S.C. § 3729(a)(1). The
FCA's liability scheme is enforced through civil actions
filed by the government, 31 U.S.C. § 3730(a), as well as
through civil actions-known as qui tam actions-that
are filed by private parties-known as relators-"in the
name of the Government, " 31 U.S.C. § 3730(b)(1).
qui tam action under the FCA, a relator files the
complaint under seal, and serves a copy of the complaint and
an evidentiary disclosure on the government. 31 U.S.C. §
3730(b)(2). This procedure enables the government to
investigate the matter, so that it may decide whether to take
over the relator's action or to instead allow the relator
to litigate the action in the government's place. See
Smith v. Clark/Smoot/Russell, 796 F.3d 424, 430 (4th
Cir. 2015); 31 U.S.C. § 3730(b)(4). A relator who brings
a meritorious qui tam action receives attorney's
fees, court costs, and a percentage of recovered proceeds.
See State Farm Fire & Cas. Co. v. United States ex
rel. Rigsby, 137 S.Ct. 436, 440 (2016); 31 U.S.C. §
designed to incentivize whistleblowers, the FCA also seeks to
prevent parasitic lawsuits based on previously disclosed
fraud." United States ex rel. Beauchamp v. Academi
Training Ctr., 816 F.3d 37, 39 (4th Cir. 2016). To that
end, the FCA contains strict limits on its qui tam
provisions, including a statutory "first-to-file"
rule. Under that rule, "[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." 31 U.S.C. §
3730(b)(5). "If a court finds that the particular action
before it is barred by the first-to-file rule, the court
lacks subject matter jurisdiction over the later-filed
matter, " and dismissal is therefore required.
United States ex rel. Carson v. Manor Care, Inc.,
851 F.3d 293, 303 (4th Cir. 2017).
Halliburton Company; Kellogg Brown & Root Services, Inc.;
KBR, Inc.; and Service Employees International, Inc.
(collectively, "KBR"), are a group of defense
contractors and related entities that provided logistical
services to the United States military during the armed
conflict in Iraq. From January to April 2005, Appellant
Benjamin Carter worked for KBR at a water purification unit
employed to provide clean water to American troops serving in
2011, Carter filed a qui tam complaint against KBR
in the Eastern District of Virginia. See United States ex
rel. Carter v. Halliburton Co. (the "Carter
Action"), No. 11-cv-602 (E.D. Va. filed June 2, 2011).
In his complaint, Carter alleged that KBR had violated the
FCA by fraudulently billing the government in connection with
its water purification services.
time the Carter Action was brought, two allegedly related
actions were already pending: United States ex rel.
Duprey, No. 8:07-cv-1487 (D. Md. filed June 5, 2007)
(the "Maryland Action"), and a sealed action filed
in Texas in 2007 (the "Texas Action"). However, the
Maryland Action was dismissed in October 2011, and the Texas
Action was dismissed in March 2012.
November 2011, the district court ruled that the Maryland
Action was related to the later-filed Carter Action, and that
therefore the latter action was precluded by the
first-to-file rule. The fact that the Maryland Action had
been dismissed prior to the district court's ruling on
the Carter Action gave the court no pause, because it
believed that "whether a qui tam action is
barred by [the first-to-file rule] is determined by looking
at the facts as they existed when the action was
brought." United States ex rel. Carter v.
Halliburton Co. (Carter I), No. 1:11-cv-602,
2011 WL 6178878, at *8 (E.D. Va. Dec. 12, 2011) (citation
omitted). Because the Maryland Action was pending on the date
the Carter Action was brought, the Carter Action ran afoul of
the district court's understanding of the first-to-file
the district court held that all but one of the Carter
Action's claims fell outside the applicable six-year
statute of limitations on civil actions. The court added that
all of the Carter Action's claims would fall outside the
limitations period if Carter were to refile his action.
Finally, the court explained that neither the Wartime
Suspension and Limitations Act (WSLA) nor the principle of
equitable tolling could toll the statute of limitations on
the Carter Action's claims. See id. at *8-12
& n.11. As such, the district court dismissed the Carter
Action with prejudice.
appealed the dismissal of the Carter Action to this Court.
Carter's appeal centered on first-to-file issues, as well
as the possibility that the WSLA tolled the statute of
limitations on his claims. Carter did not, however, contest
the district court's decision to assess the first-to-file
rule based on the facts as they existed at the time that the
Carter Action was brought.
Court rejected the district court's statute of
limitations conclusion, reasoning that the WSLA applied to
civil actions and suspended the time for filing the Carter
Action. See Carter II, 710 F.3d at 177-81. Thus, we
reversed the district court's holding that the claims in
the Carter Action were time-barred.
addressed the first-to-file rule. We agreed with the district
court that courts must "look at the facts as they
existed when the claim was brought to determine whether an
action is barred by the first-to-file bar." Id.
at 183. As such, we concluded that the Carter Action must be
dismissed under the first-to-file rule, because the Maryland
and Texas Actions were pending at the time the related Carter
Action was brought. We clarified, however, that "once a
case is no longer pending the first-to-file bar does not stop
a relator from filing a related case." Id.
Applying this logic, and finding no statute of limitations
issue, we ruled that the district court's dismissal of
the Carter Action should have been without prejudice instead
of with prejudice.
subsequently petitioned the Supreme Court for certiorari.
KBR's petition challenged this Court's holding in
connection with the WSLA, as well as its holding that a
relator could bring an FCA action after the dismissal of a
related action. See Petition for a Writ of
Certiorari at 1-4, Kellogg Brown & Root Servs., Inc.
v. United States ex rel. Carter (Carter III),
135 S.Ct. 1970 (2015) (No. 12-1497), 2013 WL 3225969.
Notably, KBR's petition never questioned this Court's
holding that the first-to-file analysis depends on the set of
facts in existence at the time an FCA action is filed.
opposed certiorari, insisting that this Court "correctly
decided that the district court's jurisdictional
dismissal of the case should have been without
prejudice." Brief in Opposition at 17, Carter
III, 135 S.Ct. 1970 (No. 12-1497), 2013 WL 4541112. He,
too, did not question this Court's decision to conduct
its first-to-file ...