On August 4, 2020, the Ninth Circuit, in a decision authored by Judge Wardlaw, dismissed for lack of jurisdiction an atypical appeal filed by the Federal Government from a district court’s order denying the Government’s motion to dismiss a qui tam case filed under the False Claims Act (“FCA”). See United States v. United States ex rel. Thrower, No. 18-16408 (9th Cir. Aug. 4, 2020). Stay tuned, however, as the Ninth Circuit’s decision is unlikely to be the last appellate decision to address the issue.
In the underlying case, the Government, after declining to intervene in an action brought by a relator in the Northern District of California, later sought dismissal under 31 U.S.C. § 3730(c)(2)(A). Section 3730(c)(2)(A) provides that “[t]he Government may dismiss [a qui tam] action notwithstanding the objections of the [relator] if the [relator] has been notified by the Government of the filing of the motion and the court has provided the [relator] with an opportunity for a hearing on the motion.”
This case is one of several in which the Government has moved to dismiss qui tam actions consistent with principles enumerated in the so-called Granston Memo, named for its author, then-Department of Justice (“DOJ”) Civil Fraud Director Michael Granston, in January 2018. The Granston Memo encouraged DOJ attorneys to seek the dismissal of meritless qui tam actions that do not serve the Government’s interests due to concerns including the resources required to monitor meritless FCA cases and the potential for those cases to generate adverse decisions that negatively affect government enforcement. The memo further outlined a non-exhaustive list of factors that DOJ should use to determine whether to seek dismissal when it has otherwise declined to intervene, including: (1) curbing meritless qui tam cases; (2) preventing parasitic or opportunistic qui tam cases; (3) preventing interference with agency policies and programs; (4) controlling litigation brought on behalf of the United States; (5) safeguarding against classified information and national security interest; (6) preserving government resources; and (7) addressing egregious procedural errors.
The district court, however, denied the Government’s motion after concluding that the Government failed to meet its burden (established under earlier Ninth Circuit precedent) of demonstrating a valid governmental purpose related to the dismissal and because it failed to fully investigate the allegations of the amended complaint. Thereafter, the Government sought immediate appellate review of the district court’s denial under the collateral order doctrine, which is a narrow exception to the final judgment rule that otherwise requires parties to wait for a final judgment before appealing any district court ruling. However, in its recent decision, the Ninth Circuit dismissed the appeal and held that: (1) the jurisdictional question was an issue of first impression that had not been resolved by the Supreme Court; (2) the collateral order doctrine did not apply because the district court’s order did not decide important issues separate from the merits; and (3) where the Government has declined to intervene in an FCA case, the interest implicated by an erroneous denial of a government motion to dismiss is not sufficiently important to justify an immediate appeal under the collateral order doctrine.
As noted above, the Ninth Circuit is unlikely to be the last circuit court of appeals to address this unique jurisdictional issue. Another federal appellate court (the Seventh Circuit) is currently considering the same question in an appeal argued earlier this year. See United States v. CIMZNHCA, LLC, No. 19-2273 (7th Cir.). In the meantime, defendants faced with such qui tam actions are well advised to keep lines of communication with the Government open and advocate for such motions to dismiss when the facts and circumstances so warrant.