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April 11, 2014
  United States of America v. Cellco Partnership
Headline: Parting company with the Fourth Circuit, D.C. Circuit holds that the False Claims Act's first-to-file rule barring subsequent related suits applies even when the first action is no longer pending.

Area of Law: False Claims Act

Issue Presented: Whether the first-to-file rule of the False Claims Act bars subsequent related claims even after the first action is no longer pending.

Brief Summary: Stephen M. Shea, a former telecommunications consultant, filed a qui tam complaint on behalf of the United States government against Verizon in 2007 (Verizon I) alleging that Verizon had charged the government certain taxes and surcharges contrary to federal regulations. The United States intervened, and the case settled in 2011. Shea filed a second qui tam action in 2009 and a second amended complaint in 2012 (Verizon II). The second action, closely related to the first, encompassed more contracts and more governmental agencies. The United States District Court for the District of Columbia dismissed Shea's complaint for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1). The court held that under the False Claim Act's (FCA) first-to-file bar, it did not have jurisdiction to hear a subsequent complaint. The first-to-file bar 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." The district court found that the government was already equipped to investigate the fraudulent scheme based on the complaint in Verizon I and dismissed Verizon II with prejudice.

The United States Court of Appeals for the District of Columbia Circuit affirmed, holding that (1) the complaint is "related" within the meaning of the FCA to the earlier action, (2) that the first-to-file bar applies to Shea even though he brought the first action, and (3) that the bar remains effective even after the first action is no longer pending. Although Verizon II alleged more fraudulent allegations than Verizon I, the court found that it essentially argued the same fraudulent scheme, and the original complaint served its purpose to put the government on notice to investigate all the allegations in Verizon II. Shea argued that the first-to-file bar only applies to litigants other than the relator who filed the original action. Not persuaded, the court found that the plain language stating "no person other than the Government" may intervene or bring a related claim includes the original relator. This provision of the FCA has two purposes, to encourage whistleblowers to file suit and to remove that incentive when the government is capable of pursuing suit itself.

Finally, Shea argued that the first-to-file bar is a temporal limit on related suits. He argued that by using the language "pending action," Congress intended to permit the second action so long as the first action is no longer pending. The D.C. Circuit rejected this argument, holding that the word "pending" merely identified the earlier action, as distinguished from the subsequent action, and did not literally require that the earlier action remain pending. The court used plain text, the absence of any temporal constraint in the statute, and policies undergirding the FCA in reaching this conclusion. The court recognized that three other circuits have suggested that "pending" means the opposite, but it determined that two of those decisions were dicta and the other, from the Fourth Circuit, did not directly compare the two conflicting constructions of the term. The D.C. Circuit acknowledged that its decision created a split with the Fourth Circuit but concluded that "pending" does not literally mean that the original action must be pending.

Circuit Judge Srinivasan concurred in part and dissented in part, agreeing that Verizon II was related to the prior action and that the first-to-file bar encompasses situations where the same relator files the second action but dissenting from the court's holding regarding the meaning of "pending."

For the full text of this opinion, please visit

Panel: Srinivasan, Edwards, and Sentelle.

Argument Date: November 16, 2013

Date of Issued Opinion: April 11, 2014

Docket Number: 12-7133

Decided: Affirmed

Case Alert Author: Joseph T. Maher, Jr.

Counsel: Christopher Mead and Mark London for appellant. Seth P. Waxman, Randolph D. Moss, and Brian M. Boynton for appellees.

Author of Opinion: Sentelle

Concurring in part, Dissenting in part by: Srinivasan

Case Alert Circuit Supervisor: Elizabeth Earle Beske, Ripple Weistling

    Posted By: Ripple Weistling @ 04/11/2014 04:35 PM     DC Circuit  

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