United States District Court, D. South Carolina, Charleston Division
United States of America, ex rel., Elaine Van Voris, Peter Van Voris, and John Johnston, Plaintiffs/Relators,
GenPhar, Inc.; Jian-yun Dong a/k/a John Dong; Danher Wang; and Vaxima, Inc.; Defendants.
ORDER REPORT AND RECOMMENDATION (AS TO
PLAINTIFFS' RULE 41(A)(2) MOTION)
Kaymani D. West, United States Magistrate Judge.
matter is before the court on the motion of
Plaintiffs/Relators Elaine Van Voris, Peter Van Voris, and
John Johnston (collectively, “Relators” or
“Plaintiffs”) for an order voluntarily dismissing
all substantive claims of this qui tam case filed under the
False Claims Act, 31 U.S.C. §§ 3729 et
seq. (“FCA”). Pl. Rule 41(a)(2) Conditional
Request or Motion for Court Order of Dismissal of Claims
(“Motion for Voluntary Dismissal”), ECF No. 187.
Also pending is pro se Defendant Jian-yun Dong
(“Dong”)'s Motion for Recovery of Legal Fees.
ECF No. 194.
stated, Relators bring claims pursuant to the FCA alleging
fraudulent activity relating to the procurement of and use of
grant funds from the Army, Navy, and the National Institutes
of Health (“NIH”). See generally Compl.,
ECF No. 1. Although filed on January 2, 2009, the Complaint
was not served at that time and remained sealed until April
1, 2016. The case was stayed during much of this time.
the time this qui tam case was sealed and stayed, the
Government pursued a related criminal case against Defendants
GenPhar, Inc. (“GenPhar”); Vaxima, Inc.
(“Vaxima”); and Dong. The indictments on which
GenPhar, Vaxima, and Dong were prosecuted included many of
the same allegations found in the First Amended Complaint.
See, e.g., ECF No. 29 (Government's motion
seeking a stay explaining similarities between pending
criminal indictments and qui tam matter); ECF No. 30 (Order
previously staying this civil qui tam matter while the
criminal matters were pending, noting the
“Government's criminal case could make moot many
issues in the civil case[.]”).
prosecutions resulted in criminal convictions of GenPhar,
Vaxima and Dong. See U.S. v. John Dong, et al.
Criminal No. 2:11-cr-00511-DCN, ECF Nos. 556, 557 and 558
(verdicts); 556-1, 557-1, 558-1 (orders in support of
verdicts). Appeals of these verdicts are pending in the
Fourth Circuit. E.g., U.S. v. Vaxima, No. 17-4277
(4th Cir.); U.S. v. GenPhar, No. 17-4278 (4th Cir.);
U.S. v. Dong, No. 17-4268 (4th Cir.). As of the
writing of this Report, the Fourth Circuit had
administratively stayed the briefing scheduling pending its
ruling on a motion.
March 30, 2016, the date on which the court's stay ended,
the Government provided notice pursuant to 31 U.S.C. §
3730(b)(4)(B) that it would not intervene. ECF No. 69. In an
Order dated April 1, 2016, United States District Judge
Richard M. Gergel lifted the seal as to the Complaint and
“all other papers filed in this action” and
ordered that the Relators serve the Complaint upon Defendants
within 60 days of the Order. ECF No. 70. The Relators served
the Complaint on Defendants GenPhar, Dong, Vaxima, and Robert
Tex S. Small, Jr. (“Small”). The Relators
obtained a waiver of service from Defendant William T.
Ratliff, Jr. (“Ratliff”), who is now deceased,
and Ratliff's Estate is now a party Defendant. It does
not appear that Defendants Danher Wang or Heung Yueng Yeung
Dong, Small, Ratliff each filed motions to dismiss pursuant
to Rule 12(b)(6) of the Federal Rules of Civil Procedure,
which were granted in an Order issued by United States
District Judge Bruce Howe Hendricks on May 31, 2017. ECF No.
168; see also Report and Recommendations, ECF Nos.
136, 144. As recommended in those reports, the court's
order granted the motions to dismiss of Defendants Dong,
Small, and Ratliff, but held the dismissals “in
abeyance for a period of 14 days during which the Relators
may file an amended complaint addressing the issues outlined
in the Magistrate Judge's Reports.” ECF No. 168 at
filed a First Amended Complaint on June 5, 2017, including
GenPhar, Dong, Wang, and Vaxima as Defendants. ECF No. 173.
GenPhar filed an answer to the Amended Complaint. ECF No.
174. As discussed within, Dong has not filed an answer to the
Amended Complaint but has continued to be in communication
with the court regarding this matter. Vaxima has never
appeared in this matter, and a Clerk's Entry of Default
has been entered against it. ECF No. 128. Wang appears never
to have been served.
Status of pro se Defendant Dong
never filed a responsive pleading to the Amended Complaint.
Based on Relators' request and their counsel's
affidavit, ECF No. 177, the Clerk entered default as to Dong
on September 20, 2017. ECF No. 197. The Clerk of Court has no
discretion but to enter default as to a party that has
“failed to plead or otherwise defend” upon
affidavit of the party seeking affirmative relief.
Fed.R.Civ.P. 55(a) (providing the clerk “must enter the
party's default.”). That stated, the undersigned
notes Dong's repeated representations that he sought
extensions of time to respond from Relators' counsel, but
was told that counsel “cannot respond to an extension
for you personally.” See ECF No. 177-1 at 4.
Further, it appears that, upon being advised by Relators of
their agreement with the Government to dismiss the complaint
with prejudice, pro se Defendant Dong did not believe he was
required to file a response to the Amended Complaint.
See Dong's Status Report and Objections to
Plaintiffs' Request for Entering Default, ECF No. 185.
these facts, the undersigned finds it appropriate to consider
Defendant Dong's additional filings despite his
technically being in default.
the United States District Judge find it appropriate, she may
wish to relieve Dong from the entry of default for good cause
shown and grant him leave to file a responsive pleading at
this time. See Fed. R. Civ. P. 55(c). In any event,
this issue may be no more than academic should the District
Judge adopt the following Report and Recommendation. No
default judgment has been entered against Dong (or against
Vaxima),  and the dismissal Relators seek will be
Settlement Agreement between Relators and the Government
on their agreed-to settlement with the Government, Relators
now seek voluntary dismissal of their substantive claims.
Relators have reached a settlement agreement with the
Government in which Relators will be awarded 27% of any
proceeds obtained from Defendants as a result of their
criminal convictions and any related property forfeitures. A
copy of the agreement between Relators and the Government is
attached as an exhibit to Relators' Motion. See
Settlement Agreement (the “Agreement”), ECF No.
187-1. Notably, the Agreement required that Relators move for
dismissal of the Complaint in this matter with prejudice as
to Relators and without prejudice as to the Government.
Agreement 3. The Agreement noted that the Motion could be
conditioned upon the court's “not awarding to any
defendant any attorney's fees or court costs to be paid
by the Relators.” Id. at 4. The Agreement is
binding only if the Complaint is dismissed pursuant to
Relators' Motion to Dismiss. Id. The Agreement
further contemplates that the dismissal to ...