Filed: Apr. 04, 2019
Latest Update: Mar. 03, 2020
Summary: 17-0621 USA v. L-3 Communications EOTech, Inc. UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT - August Term, 2017 (Argued: January 18, 2018 Decided: April 4, 2019) Docket No. 17-0621 _ UNITED STATES OF AMERICA, Plaintiff-Appellee, - v. - L-3 COMMUNICATIONS EOTECH, INC., L-3 COMMUNICATIONS CORPORATION, PAUL MANGANO, Defendants. MILTON DaSILVA, Movant-Appellant.* _ Before: KATZMANN, Chief Judge, KEARSE and POOLER, Circuit Judges. * The Clerk of Court is directed to amend the official captio
Summary: 17-0621 USA v. L-3 Communications EOTech, Inc. UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT - August Term, 2017 (Argued: January 18, 2018 Decided: April 4, 2019) Docket No. 17-0621 _ UNITED STATES OF AMERICA, Plaintiff-Appellee, - v. - L-3 COMMUNICATIONS EOTECH, INC., L-3 COMMUNICATIONS CORPORATION, PAUL MANGANO, Defendants. MILTON DaSILVA, Movant-Appellant.* _ Before: KATZMANN, Chief Judge, KEARSE and POOLER, Circuit Judges. * The Clerk of Court is directed to amend the official caption..
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17-0621
USA v. L-3 Communications EOTech, Inc.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
------
August Term, 2017
(Argued: January 18, 2018 Decided: April 4, 2019)
Docket No. 17-0621
_________________________________________________________
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
- v. -
L-3 COMMUNICATIONS EOTECH, INC., L-3
COMMUNICATIONS CORPORATION, PAUL MANGANO,
Defendants.
MILTON DaSILVA,
Movant-Appellant.*
_________________________________________________________
Before: KATZMANN, Chief Judge, KEARSE and POOLER, Circuit Judges.
* The Clerk of Court is directed to amend the official caption to conform with
the above.
Appeal from an order of the United States District Court for the Southern
District of New York, Richard J. Sullivan, then-District Judge, denying nonparty-
movant's motion for a declaration that he is entitled to a share of the $25.6 million
received by the United States in the settlement of its action against the defendants
under the False Claims Act ("FCA"), 31 U.S.C. § 3729 et seq., brought after movant's
voluntary dismissal of a qui tam action, see id. § 3730(b), he had filed against two of the
defendants. The district court denied the motion on the ground that the FCA does
not entitle a private person to share in a recovery obtained by the government
through its pursuit of an "alternate remedy," see
id. § 3730(c)(5), in the absence of an
existing qui tam action. On appeal, movant argues principally that the court's ruling
conflicts with the language, purpose, and legislative history of the FCA. He also
contends that the dismissal of his qui tam action was in fact not voluntary but rather
was coerced by the government. We conclude that movant presented no viable basis
for claiming coercion and that the district court correctly ruled that he was not
entitled to share in the government's recovery in light of his prior voluntary dismissal
of his qui tam action. See United States v. L-3 Communications EOTech, Inc.,
232
F. Supp. 3d 583 (2017).
Affirmed.
2
JOSEPH N. CORDARO, Assistant United
States Attorney, New York, New York
(Joon H. Kim, Acting United States
Attorney for the Southern District of
New York, Christopher Connolly,
Assistant United States Attorney, New
York, New York, on the brief), for
Plaintiff-Appellee.
DANIEL W. WEININGER, Southfield,
Michigan, (Keith L. Altman, Excolo
Law, Southfield, Michigan, on the brief),
for Movant-Appellant.
KEARSE, Circuit Judge:
Movant Milton DaSilva appeals from an order of the United States
District Court for the Southern District of New York, Richard J. Sullivan, then-District
Judge, denying his motion for a declaration that, under the False Claims Act (or
"FCA"), 31 U.S.C. § 3729 et seq.--and in particular under § 3730(c)(5)--he is entitled to
a share of the $25.6 million received by the United States in settlement of the present
action brought by the government under the FCA against defendants L-3
Communications EOTech, Inc., L-3 Communications Corporation (collectively
"EOTech"), and Paul Mangano. The district court denied the motion on the ground
that, although DaSilva had brought a qui tam action against EOTech, he voluntarily
3
dismissed that action long prior to the government's initiation of its own suit, and that
given the absence of an ongoing qui tam action he had no entitlement under
§ 3730(c)(5) to a share of the government's recovery. On appeal, DaSilva contends
principally that the court's ruling conflicts with the language, purpose, and legislative
history of the FCA. He also argues that the court should not have viewed his
dismissal of the qui tam action as voluntary because his attorneys contended that the
dismissal was coerced by the government. We conclude for the reasons that follow
that DaSilva presented no viable basis for claiming coercion and that the district court
correctly ruled that he was not entitled to share in the government's recovery in light
of his voluntary dismissal of his qui tam action.
I. BACKGROUND
The False Claims Act, the most relevant provisions of which are set out
in greater detail in Part II below,
establishes a scheme that permits either the Attorney General,
§ 3730(a), or a private party, § 3730(b), to initiate a civil action
alleging fraud on the Government. A private enforcement action
under the FCA is called a qui tam action, with the private party
referred to as the "relator." . . . . When a relator initiates such an
4
action, the United States is given 60 days to review the claim and
decide whether it will "elect to intervene and proceed with the
action," §§ 3730(b)(2), (b)(4) . . . .
If the United States intervenes, the relator has "the right to
continue as a party to the action," but the United States acquires
the "primary responsibility for prosecuting the action."
§ 3730(c)(1). If the United States declines to intervene, the relator
retains "the right to conduct the action." § 3730(c)(3).
United States ex rel. Eisenstein v. City of New York, 556 U.S. 928, 932 (2009); see also
Vermont Agency of Natural Resources v. United States ex rel. Stevens,
529 U.S. 765, 768 n.1
(2000) ("Qui tam is short for the Latin phrase qui tam pro domino rege quam pro se ipso
in hac parte sequitur, which means 'who pursues this action on our Lord the King's
behalf as well as his own.'").
To incentivize private persons to uncover, report, and prosecute FCA
claims for the benefit of the United States, see, e.g., United States ex rel. Ladas v. Exelis,
Inc., 824 F.3d 16, 23 (2d Cir. 2016); United States ex rel. Dick v. Long Island Lighting Co.,
912 F.2d 13, 18 (2d Cir. 1990), the FCA provides that if a qui tam action is successful,
the relator will generally be entitled to receive a portion of the amount recovered
from the defendants, see 31 U.S.C. §§ 3730(d)(1)-(2) (typically 15-30% of the proceeds,
depending in part on whether the government has intervened and taken over
prosecution of the action, or instead has declined to intervene and left prosecution to
the relator).
5
The record as to the events leading to this appeal shows the following.
A. Events Surrounding DaSilva's 2014 Qui Tam Action
DaSilva was employed at EOTech as a quality control engineer from mid-
May to late June 2013. On August 13, 2013, through attorneys then representing him
in anticipation of filing a qui tam action against EOTech, DaSilva submitted to the
United States Attorney's Office for the Southern District of New York information
alleging EOTech's manufacture and knowing sale to the government of defective
holographic firearm sights, in violation of the FCA.
On August 22, 2013, DaSilva was convicted in a Michigan state court of
criminal conduct that both sides agree was unrelated to the alleged FCA violations
by EOTech. DaSilva was scheduled to be sentenced on September 25, 2013; however,
he did not appear for sentencing, having fled to Brazil.
Beginning in mid-January 2014, Solomon M. Radner, a Michigan attorney
representing DaSilva in his criminal proceeding, had ongoing communications with
an Assistant United States Attorney ("AUSA") with regard to DaSilva's allegations
against EOTech. Radner disclosed DaSilva's fugitive status to the AUSA, who
"responded that she had to first seek permission from her supervisors before speaking
6
to DaSilva because of his fugitive status." (Affidavit of Solomon M. Radner dated
April 14, 2016 ("Radner Aff."), ¶ 9.) After the AUSA received such permission,
Radner sent DaSilva's materials to the AUSA, and facilitated, inter alia, telephone
conferences between or among DaSilva, the AUSA, and other government officials.
In April 2014, DaSilva filed a qui tam complaint--under seal and in camera,
as required by 31 U.S.C. § 3730(b)(2)--in the United States District Court for the
Southern District of New York, represented by attorneys in New York and Florida
("qui tam counsel"). The complaint alleged, inter alia, that DaSilva was a resident of
Michigan; it made no mention of his fugitive status. The next business day, the
government sent Radner an email requesting a conference to discuss, inter alia, the
reason for characterizing DaSilva as a resident of Michigan, when he was known to
have fled the United States, and the propriety of having claims on behalf of the
United States prosecuted by a fugitive. (See Radner Aff. ¶ 28.)
DaSilva's qui tam action was assigned to District Judge Alison Nathan.
On July 8, 2014, the court issued an order stating principally as follows:
[T]he Government represents (among other things) that relator
plaintiff Milton DaSilva is currently wanted by Michigan
authorities after fleeing to Brazil prior to sentencing for certain
crimes he was convicted of in 2013. The Government indicates that
counsel for Mr. DaSilva have stated their intention to withdraw and
7
voluntarily dismiss this action if Mr. DaSilva did not surrender by June
23, 2014.
Given that that date has now passed, counsel for Mr.
DaSilva are hereby instructed to submit a status letter by July 18,
2014 indicating whether Mr. DaSilva remains a fugitive and, if so,
whether and when they plan to withdraw and dismiss this action.
If counsel do not submit a letter by July 18, the Court will dismiss
this case.
District Court Order dated July 8, 2014 ("July 2014 Order") (emphasis added).
Following entry of this order, both DaSilva's qui tam counsel and the
government made submissions to the district court. DaSilva's attorneys
requested that the Court not dismiss this case on the basis of
DaSilva's fugitive status despite their earlier representation to the
Government that they would voluntarily withdraw the complaint
if DaSilva did not surrender to Michigan authorities by June 23,
2014.
District Court Order dated August 14, 2014 ("August 2014 Order"). The government
responded and reiterated its concern as to the propriety of having the rights of the
United States represented by a fugitive. It had cited to DaSilva's attorneys a Michigan
bar governance principle that stated, "[a] lawyer may not aid or abet a client who has
chosen independently to become a fugitive from justice. The lawyer may not represent
the client in collateral or unrelated matters while the lawyer knows the client remains a
fugitive," Mich. Ethics Op. RI-160 (Apr. 14, 1993) ("Mich. Ethics Op. RI-160" or
8
"Michigan Ethics Opinion") (emphasis added). The government indicated to the court
"that it would move to dismiss if qui tam counsel refused to dismiss their complaint
voluntarily." August 2014 Order.
The court ordered that, "[s]ince qui tam counsel have neither withdrawn
their complaint nor indicated that DaSilva has surrendered, . . . the Government may
move to dismiss the complaint by August 31, 2014." Id. Before the government could
so move, however, DaSilva's qui tam counsel made a motion on August 19, 2014,
"request[ing] that th[e] action be voluntarily dismissed without prejudice . . . .
pursuant to Rule 41(a)(1)(A)(i) of the Federal Rules of Civil Procedure." (Relator's
Request For Voluntary Dismissal Without Prejudice Pursuant to Federal Rule of Civil
Procedure 41(a)(1)(A)(i) ("DaSilva Voluntary Dismissal Request") at 1.)
DaSilva's attorneys represented that the government had stated it would
inform the court of its consent to the voluntary dismissal, and the government
promptly so notified the court. On September 3, the court granted DaSilva's request:
In light of Relator Milton DaSilva's request on August 19,
2014 that this action be voluntarily dismissed, and the United
States's consent to voluntary dismissal on August 20, 2014, this
case is dismissed without prejudice. The case shall remain under
seal.
District Court Order dated September 3, 2014 ("September 2014 Order").
9
There were no further qui tam proceedings by DaSilva.
B. The Government's FCA Action
More than 14 months after DaSilva's voluntary dismissal, the
government on November 24, 2015, commenced its own False Claims Act lawsuit
pursuant to 31 U.S.C. § 3730(a)--the present action--against EOTech and Mangano.
This action was assigned to then-District Judge Sullivan. On the following day, with
the approval of the court, the parties settled the action, with defendants agreeing,
inter alia, that EOTech would pay the government $25.6 million.
On April 14, 2016, DaSilva filed--in the present action, i.e., the
government's § 3730(a) action that had been settled on November 25, 2015--the
motion giving rise to this appeal. He stated that he had "unquestionably filed a valid
qui tam lawsuit that was . . . dismissed without prejudice" "only after intense pressure
from the government." (DaSilva's Motion To Be Declared Eligible for Share of
Government's Recovery Under the False Claims Act ("DaSilva Eligibility Motion")
at 1; see, e.g., id. at 4 (after "immense pressure").) He cited the FCA provision which
states, inter alia, that "[n]otwithstanding subsection (b)"--the section that authorizes
a qui tam action--if the government pursues an "alternate remedy available to [it]," the
10
person who initiated the qui tam action "shall have the same rights in such proceeding
as such person would have had if the action had continued under this section,"
31 U.S.C. § 3730(c)(5) (emphasis added). DaSilva argued that the FCA "contains no
requirement that a relator's original claim continue or succeed in order for the relator
to share in fruits of the alternate remedy pursued by the Government" (DaSilva
Eligibility Motion at 2) and that he is thus entitled to a relator's share of the
government's settlement proceeds.
The government opposed the motion, disputing, inter alia, DaSilva's
interpretation of § 3730(c)(5). It argued that "section 3730(c)(5) unambiguously
requires a pending qui tam complaint in order for the government to elect an 'alternate
remedy,' and for the 'alternate remedy' provision to be triggered." (United States
Memorandum of Law in Opposition to DaSilva's Motion To Be Declared Eligible for
a Share of the Government's Recovery Under the False Claims Act at 10.)
The government cited authorities stating that an action that was
voluntarily dismissed without prejudice is treated as never having been brought, and
it denied that any undue pressure had been applied to cause DaSilva to dismiss the
2014 qui tam action. Given that such an action is brought in the name of the United
States, to remedy wrongs to the United States, DaSilva's fugitive status--undisclosed
11
in his qui tam complaint, which called him a resident of Michigan--caused the
government concern for whether its interests would be represented properly, and
warranted "inquir[y as to] whether the applicable rules of professional responsibility
permitted counsel to represent DaSilva in his qui tam action" (id. at 16). The
government stated that DaSilva's motion had not described--and could not point to--
any impropriety on the part of the government in raising its concerns.
C. The District Court's Denial of DaSilva's Motion for a Share
In an opinion dated February 3, 2017, reported at 232 F. Supp. 3d 583, the
district court denied DaSilva's motion to be declared eligible to share in the
government's recovery from EOTech. The court stated that although the FCA
"generally entitles a relator to a share of a recovery obtained by the government
through an 'alternate remedy' to the action initiated by the
relator," 232 F. Supp. 3d
at 584, "the terms of Section 3730(c)(5) unambiguously preclude" the award of such
a share to DaSilva, because prior to the government's bringing suit he had voluntarily
dismissed his qui tam action,
id. at 587. The court reasoned as follows:
By beginning with the phrase "[n]otwithstanding
subsection (b)," Section 3730(c)(5) makes clear that the "alternate
remedy" described in that section is an "alternate" to the
12
government's options listed in Section 3730(b). Specifically,
Section 3730(c)(5) governs the relator's rights when the
government "elect[s] to pursue its claim through any alternate
remedy," 31 U.S.C. § 3730(c)(5)--that is, an "alternate" to the
remedies set forth in Section 3730(b)(4), which are limited to (a)
intervening and "proceed[ing] with the [qui tam] action" or (b)
"declin[ing] to take over the action" and providing the relator with
"the right to conduct the action," 31 U.S.C. § 3730(b)(4). The
implication of this framework is clear: when there is no qui tam action
for the government to "take over," the government's filing of its own
action is not an "alternate" to taking over (or not taking over) a qui tam
action.
232 F. Supp. 3d at 587 (emphases ours).
The court noted that the effect of a voluntary dismissal without
prejudice, such as DaSilva's, is to
"le[ave] the situation as if the action never had been filed," 9 Charles
Alan Wright & Arthur R. Miller et al., Federal Practice and
Procedure § 2367 (3d ed. 2016), and "render[] the proceedings a
nullity," 8 Moore's Federal Practice § 41.40[9][b] (2016).
232 F. Supp. 3d at 588 (emphases ours). Thus,
[f]ramed in terms of the instant action, a dismissed qui tam suit does
not present the government with the choice between acting under
subsection (b)(4) or pursuing an "alternate remedy" authorized by
subsection (c)(5). Accordingly, the government's commencement
and settlement of this action was not an "alternate remedy" to
DaSilva's qui tam action because DaSilva had dismissed his action.
Id. at 587 (emphasis ours). The court concluded that
13
DaSilva's decision to voluntarily dismiss his qui tam action in 2014
precludes him from clambering back on board for a share of the
government's proceeds as though he had never dismissed his own
action. To hold otherwise would contradict the plain language of
Section 37[30](c)(5) and provide DaSilva with a windfall to which
he is not entitled under the statute.
Id. at 589 (emphases added).
II. DISCUSSION
On appeal, DaSilva contends principally that the district court's
interpretation of § 3730(c)(5) as not authorizing a private person to share in FCA
proceeds received by the government in its own suit unless he had a qui tam action
pending when the government commenced its suit is contrary to the plain language
of that subsection and conflicts with the purpose and legislative history of the FCA.
He also contends that his terminated qui tam action should not have been treated as
nonexistent, arguing that his dismissal of the action was not voluntary but rather was
coerced by the government.
We review for clear error findings of fact as to such questions as whether
DaSilva's attorneys were subjected to any pressure. We review de novo conclusions
14
of law, such as whether any such pressure was improper or amounted to coercion,
whether DaSilva's dismissal of the 2014 qui tam action without prejudice constituted
a voluntary dismissal within the meaning of the Rules of Civil Procedure, and
whether the government pursued an alternate remedy within the meaning of
31 U.S.C. § 3730(c)(5), so as to entitle DaSilva to share in that remedy's proceeds.
Preliminarily, we note that the record is opaque as to the authorization
for DaSilva's ability to seek relief in the present action. DaSilva referred to a need to
"reopen[]" the case (DaSilva Eligibility Motion at 16-17 (citing Fed. R. Civ. P. 60)). The
district court, denying the eligibility motion, stated that DaSilva should not be
allowed to "clamber[] back on board for a share of the government's proceeds as though
he had never dismissed his own action." 232 F. Supp. 3d at 589 (emphases added).
Whether the motion was treated as one under Fed. R. Civ. P. 60(b) to reopen the
government's action, although in that action DaSilva was neither "a party" nor "[a
party's] legal representative,"
id., or one to reopen DaSilva's own voluntarily
dismissed qui tam action, we conclude that it was meritless. We reject DaSilva's
challenges to the district court's order for the reasons that follow.
15
A. DaSilva's Unsupported Claim of Coercion
We deal first with DaSilva's contention that the dismissal of his 2014
qui tam action was improperly coerced, since well established legal principles and the
clarity of the record make its lack of merit obvious.
1. Voluntary Dismissal Principles
Rule 41(a) of the Federal Rules of Civil Procedure, subject to certain other
rules not pertinent here and to "any applicable federal statute," allows a plaintiff, by
filing either a stipulation of dismissal signed by all parties who have appeared or a
notice of dismissal before the opposing party has served either an answer or a motion
for summary judgment, to voluntarily dismiss his action without prejudice. Fed. R.
Civ. P. 41(a)(1)(A) and (B). As a general matter,
[a] first dismissal either by notice or stipulation under Federal
Rule 41(a)(1)(A) is without prejudice to the commencement of
another action, unless otherwise stated in the notice or stipulation
itself.
9 Wright & Miller, Federal Practice and Procedure § 2367, at 549 (3d ed. 2017) ("Wright
& Miller").
16
In the context of a qui tam action, this general Rule 41(a) framework is
subject to several constraints imposed by the FCA. First, the relator may not
voluntarily dismiss such an action without the written consent of the court and the
United States Attorney General. See 31 U.S.C. § 3730(b)(1). In addition, although the
voluntary dismissal is without prejudice to the commencement of a new action, a new
qui tam action is impermissible if it is based on allegations or transactions which, by
the time the new action is sought to be filed, "are the subject of a civil suit or an
administrative civil money penalty proceeding in which the Government is already
a party," id. § 3730(e)(3), or are the subject of another person's pending qui tam action,
see
id. § 3730(b)(5).
As to the usual effect of a Rule 41(a) dismissal--aside from a court's
inherent postdismissal authority to consider such collateral matters as the possibility
of sanctions, see, e.g., Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 395-97 (1990)--it is
hornbook law that "a voluntary dismissal without prejudice under Rule 41(a) leaves
the situation as if the action never had been filed," Wright & Miller § 2367, at 559 (emphasis
added); see, e.g., 8 Moore's Federal Practice § 41.34[6][d] (2018) (stipulation for dismissal
"without prejudice terminates the action as if it were never filed" (emphasis added)).
17
This long established principle has been recognized by this Circuit and
most others. See, e.g., A.B. Dick Co. v. Marr, 197 F.2d 498, 502 (2d Cir. 1952) ("voluntary
dismissal of a suit leaves the situation so far as procedures therein are concerned the
same as though the suit had never been brought"), cert. denied, 344 U.S. 878 (1952);
Bomer v. Ribicoff,
304 F.2d 427, 428 (6th Cir. 1962) (dismissal of an action without
prejudice leaves the situation the same as if the suit had never been brought); In re
Piper Aircraft Distribution System Antitrust Litigation,
551 F.2d 213, 219 (8th Cir. 1977)
(same); Beck v. Caterpillar, Inc.,
50 F.3d 405, 407 (7th Cir. 1995) (same); EEOC v. W.H.
Braum, Inc.,
347 F.3d 1192, 1201 (10th Cir. 2003) (same); In re Matthews,
395 F.3d 477,
480 (4th Cir. 2005) (same); Harvey Specialty & Supply, Inc. v. Anson Flowline Equipment,
Inc.,
434 F.3d 320, 324 (5th Cir. 2005) (same); City of South Pasadena v. Mineta,
284 F.3d
1154, 1157 (9th Cir. 2002) (same; "any future lawsuit based on the same claim [is] an
entirely new lawsuit" (internal quotation marks omitted)); Sandstrom v. ChemLawn
Corp.,
904 F.2d 83, 86 (1st Cir. 1990) (same; "the page is once again pristine").
As discussed further in Part II.B.2.c. below, this principle is applicable to
a voluntarily dismissed qui tam action. See Webster v. United States, 217 F.3d 843 (4th
Cir. 2000) (table),
2000 WL 962249 (July 12, 2000) ("Webster"). Citing, inter alia,
contemporaneous editions of Wright & Miller and Moore's Federal Practice, the Webster
18
court noted that "[a] voluntary dismissal without prejudice leaves the situation as if
the action never had been filed" (internal quotation marks omitted) and "renders the
proceedings a nullity" (internal quotation marks omitted). 2000 WL 962249, at *2. The
court ruled that "Webster c[ould ]not assert the rights of an original qui tam plaintiff
. . . because she abandoned those rights when she voluntarily dismissed her [prior
qui tam] suit."
Id.
2. The Record
In seeking to avoid this normal consequence of a voluntary dismissal,
DaSilva argues that the district court should not have found his dismissal voluntary
because he presented evidence that it was instead the result of impermissible coercion
by the government (see DaSilva brief on appeal at 23-27). The record does not support
this contention.
Before Judge Sullivan in the district court, the qui tam attorneys argued
that DaSilva had dismissed his qui tam action "only after intense pressure from the
government" (DaSilva Eligibility Motion at 1). In support of this assertion, they stated
as follows, citing portions of the Radner affidavit:
19
AUSA Nawaday claimed [DaSilva's] counsel was in violation of
ethical duties by representing [DaSilva] because he was a fugitive.
[Radner Aff.] ¶ 28. [DaSilva's] counsel was left with the belief that
if [DaSilva's] complaint were not dismissed, bar grievances would
be filed against [DaSilva's] counsel. Id. ¶ 31. Subsequently, under
immense pressure from AUSA Nawaday, [DaSilva] dismissed his
case with the consent of the Government and without prejudice
because of the alleged difficulties in prosecuting the case while
Mr. DaSilva remained out of the country avoiding unrelated
criminal matters in Michigan. Id. ¶ 33.
(DaSilva Eligibility Motion at 4.) The record citations in that argument support only
the proposition that Radner, in paragraph 31 of his affidavit, stated that "[b]ased upon
the communications with the New York U.S. Attorney's office it was my belief that
if [DaSilva] did not dismiss his action, bar grievances would be filed against
[DaSilva's] counsel" (Radner Aff. ¶ 31). Radner's paragraph 33--the only record item
cited in support of DaSilva's claim of "immense pressure"--stated in full as follows:
Counsel for DaSilva voluntarily dismissed the action on August 19,
2014, and the United States consented to such voluntary dismissal on
August 20, 2014. This case was then dismissed without prejudice
on September 3, 2014.
(Radner Aff. ¶ 33 (emphases added).)
The other paragraph of Radner's affidavit that was cited in the Eligibility
Motion's claim of immense and intense pressure stated as follows:
20
On April 25, 2014, DaSilva's qui tam complaint was filed.
On April 28, 2014, AUSA Nawaday stated in an email to
[DaSilva's] Counsel "Please let us know if you are available at 2
pm tomorrow to discuss the complaint with my colleague . . . and
me. Among other things, we would like to hear your position as
to why you chose to list Mr. DaSilva is listed [sic] as a resident of
Michigan in paragraph 17 and why representation of a fugitive in
a new civil matter, to assert claims on behalf of the United States,
complies with the applicable rules of professional conduct.
Thanks."
(Radner Aff. ¶ 28.)
Nothing other than paragraphs 28, 31, and 33 of the Radner affidavit was
cited to support DaSilva's claim of coercion.
In reality, the record forecloses any conclusion other than that the
dismissal was voluntary. DaSilva's attorneys did not contend that the government
had misquoted the Michigan bar governance principle that provided that, as to "a
client who has chosen independently to become a fugitive from justice," a "lawyer
may not represent the client in collateral or unrelated matters while the lawyer knows
the client remains a fugitive," Mich. Ethics Op. RI-160. And we have seen no
indication in the record that DaSilva's attorneys suggested to Judge Nathan that the
government lacked a legitimate concern about the propriety of (a) having the United
States represented by a fugitive who, in the words of his own attorneys, "remained
21
out of the country avoiding the unrelated criminal matters in Michigan" (DaSilva
Eligibility Motion at 4), and (b) having the government represented by his attorneys
who were thus apparently willing to proceed in violation of express ethical
constraints.
Although DaSilva on appeal complains that the government referred
only to the "syllabus" of the Michigan Ethics Opinion (or "Opinion"), and states that
"[a] closer reading of the [O]pinion's text would have revealed a more nuanced
picture" (DaSilva brief on appeal at 25), the record does not indicate that his counsel
proffered a "nuanced" reading to either Judge Nathan or Judge Sullivan. Nor is it
clear to us from our own reading of the complete text of the Michigan Ethics Opinion
that there is any reasonable basis for deeming the prohibition summarized in the
syllabus inapplicable to DaSilva's attorneys. The text described a client who was on
probation, who had removed his physical restraints and become a fugitive, and who
had asked his lawyer to assist him in asserting claims for the recovery of money and
property. The Opinion's conclusion was reported nearly verbatim in the syllabus,
which stated, inter alia, "the lawyer must counsel the client that the requested services
may not be performed while the client remains a fugitive. If the lawyer's attempts to convince
the client to come forward are unsuccessful, the lawyer must withdraw from representing the
client." Mich. Ethics Op. RI-160 (emphases added).
22
Nor did DaSilva's attorneys suggest that there was any error in Judge
Nathan's factual understanding that "counsel for Mr. DaSilva ha[d] stated [to the
government] their intention to withdraw and voluntarily dismiss this action if Mr.
DaSilva did not surrender by June 23, 2014," July 2014 Order (emphasis added); see
also August 2014 Order ("qui tam counsel" had made a "representation to the
Government that they would voluntarily withdraw the complaint if DaSilva did not
surrender" (emphasis added)). And when the August 2014 Order stated, in light of
the facts that DaSilva had not returned and qui tam counsel had not withdrawn the
complaint, that the government could move for dismissal, DaSilva's qui tam counsel
quickly filed a motion-- having been assured that the government would consent--
"request[ing] that th[e] action be voluntarily dismissed without prejudice . . . . pursuant
to Rule 41(a)(1)(A)(i) of the Federal Rules of Civil Procedure." (DaSilva Voluntary
Dismissal Request at 1 (emphasis added)).
DaSilva's Rule 41(a)(1)(A)(i) motion was granted in light of the United
States's consent and "[i]n light of Relator Milton DaSilva's request on August 19, 2014
that this action be voluntarily dismissed." September 2014 Order.
The record thus provides no basis for a finding that DaSilva had in effect
been coerced to abandon his qui tam action. Indeed, Radner's affidavit, after stating
23
that "Counsel for DaSilva voluntarily dismissed the action," went on to say that
"[n]othing in any of the orders prevented or precluded counsel for DaSilva to re-file
this claim," and that in fact counsel had
planned on refiling this action whether or not DaSilva returned.
However, for simplicity's sake, we were waiting for him to return.
(Radner Aff. ¶¶ 33, 34.)
In sum, the record cannot support the claim that DaSilva was unfairly
pressured to dismiss his qui tam action. The district court properly found that the
action was voluntarily dismissed. Given that the legal effect of such a dismissal is
that it is as if the action had never been filed, and given that DaSilva never filed a new
action, the district court correctly ruled that there was no qui tam action pending
when, more than 14 months later, the United States filed its own action against
EOTech.
B. DaSilva's Claim for a Share of the Proceeds from the
Government's FCA Action Against EOTech
As indicated at the outset of the Background section of this opinion, an
action under the FCA may be brought either by the government, in the name of the
United States, see 31 U.S.C. § 3730(a), or by a private person as the relator in a qui tam
24
action, see id. § 3730(b). The government has the right to intervene in a qui tam action.
See
id. §§ 3730(b)(2) and (b)(4). If the government intervenes, it takes on "the primary
responsibility for prosecuting the action,"
id. § 3730(c)(1); if it declines to intervene in
the qui tam action, "the person who initiated the action shall have the right to conduct
the action,"
id. § 3730(c)(3).
1. Shares of the Proceeds for the Qui Tam Relator
Section 3730(d), titled "AWARD TO QUI TAM PLAINTIFF," contains
several express provisions as to the relator's permissible share of the amount the
government is awarded in, or receives in settlement of, his qui tam action. That
subsection states in pertinent part as follows:
(1) If the Government proceeds with an action brought by a
person under subsection (b), such person shall . . . [generally] receive
at least 15 percent but not more than 25 percent of the proceeds of the
action or settlement of the claim, depending upon the extent to which
the person substantially contributed to the prosecution of the
action. . . . Any payment to a person under the [above] sentence . . .
shall be made from the proceeds. . . .
(2) If the Government does not proceed with an action under this
section, the person bringing the action or settling the claim shall
receive an amount which the court decides is reasonable for
collecting the civil penalty and damages. The amount shall be not
less than 25 percent and not more than 30 percent of the proceeds of the
action or settlement and shall be paid out of such proceeds. . . .
25
31 U.S.C. §§ 3730(d)(1)-(2) (emphases added). Each of these paragraphs provides that
the relator will also be entitled to reasonable attorneys' fees, expenses, and costs, but
to be paid by the defendants. See also id. § 3730(d)(3) (if the qui tam relator planned
and initiated the FCA violation on which the action was brought, his share of the
proceeds may be reduced; and if he is convicted of criminal conduct arising from his
role in the violation, he is to receive no share).
In sum, as most relevant here, under paragraph (1) of subsection (d),
when the government has intervened in (and thus takes over) the qui tam action
brought under "subsection (b)," the relator will generally be entitled to a share of
between 15% and 25% of what the government receives in the action or in settlement
of the claim. Under paragraph (2) of subsection (d), when the government has not
proceeded under "this section" (emphasis added)--i.e., it has neither intervened in the
§ 3730(b) qui tam action nor brought its own FCA action under § 3730(a), leaving it up
to the relator to conduct the qui tam action--the relator's share will generally be
between 25% and 30% of the proceeds of the qui tam action or settlement. But
§ 3730(d) does not make any provision for the qui tam relator to receive a share of
proceeds received by the government for violation of the FCA if the government has
26
not intervened in the qui tam action and has instead brought its own suit under
§ 3730(a). DaSilva contends that this scenario is one that is covered by § 3730(c)(5).
2. The Government's Pursuit of an "Alternate Remedy"
Section 3730(c), titled "RIGHTS OF THE PARTIES TO QUI TAM
ACTIONS," contains several provisions as to the conduct of qui tam actions: some
expressly applicable when the government has intervened, some expressly applicable
when it has not, and at least one applicable whether or not it has intervened.
Under paragraphs (1) and (2) of § 3730(c), if the government has
intervened and "proceeds with the action," it assumes primary responsibility for the
action, but the qui tam relator "ha[s] the right to continue as a party to the action,
subject to the limitations set forth in paragraph (2)," 31 U.S.C. § 3730(c)(1). Paragraph
(2) provides in part as follows:
(A) The Government may dismiss the action notwithstanding
the objections of the person initiating the action if the person has been
notified by the Government of the filing of the motion and the
court has provided the person with an opportunity for a hearing
on the motion.
(B) The Government may settle the action with the defendant
notwithstanding the objections of the person initiating the action if the
court determines, after a hearing, that the proposed settlement is
fair, adequate, and reasonable under all the circumstances. . . .
27
(C) Upon a showing by the Government that unrestricted
participation during the course of the litigation by the person
initiating the action would interfere with or unduly delay the
Government's prosecution of the case, or would be repetitious,
irrelevant, or for purposes of harassment, the court may, in its
discretion, impose limitations on the person's participation, such as--
(i) limiting the number of witnesses the person may
call; (ii) limiting the length of the testimony of such
witnesses; (iii) limiting the person's cross-examination of
witnesses; or (iv) otherwise limiting the participation by the
person in the litigation. . . .
31 U.S.C. §§ 3730(c)(2)(A)-(C) (emphases added).
Paragraph (3) of § 3730(c) deals with proceedings in the qui tam action
when the government has elected--as permitted in § 3730(b)(4)--"not to proceed with
the action." 31 U.S.C. § 3730(c)(3). Paragraph (3) provides in part that "the person
who initiated the action shall have the right to conduct the action," although the
government may be allowed to intervene later "upon a showing of good cause." Id.
Paragraph (4) of § 3730(c)--which we discuss further in Part II.B.2.c. below--provides
that "[w]hether or not the Government proceeds with the action," the government
may persuade the court to stay discovery by the qui tam relator if that discovery
"would interfere with the government's investigation or prosecution of a criminal or
civil matter arising out of the same facts."
Id. § 3730(c)(4).
28
Paragraph (5) of § 3730(c), on which DaSilva relies as authority for his
eligibility to share in the proceeds of the action brought by the government against
EOTech under § 3730(a), provides as follows:
(5) Notwithstanding subsection (b), the Government may elect
to pursue its claim through any alternate remedy available to the
Government, including any administrative proceeding to
determine a civil money penalty. If any such alternate remedy is
pursued in another proceeding, the person initiating the action shall have
the same rights in such proceeding as such person would have had if the
action had continued under this section. Any finding of fact or
conclusion of law made in such other proceeding that has become
final shall be conclusive on all parties to an action under this
section. For purposes of the preceding sentence, a finding or
conclusion is final if it has been finally determined on appeal to
the appropriate court of the United States, if all time for filing
such an appeal with respect to the finding or conclusion has
expired, or if the finding or conclusion is not subject to judicial
review.
31 U.S.C. § 3730(c)(5) (emphases added). Our Court has not previously had occasion
to interpret this section.
Several of our Sister Circuits have dealt with cases concerning the
meaning of § 3730(c)(5)'s "alternate remedy" clause. The consensus appears to have
been that § 3730(c)(5) is applicable only if, when the government chose to pursue any
alternate remedy, there was a qui tam action pending into which the government
could--alternatively--have intervened. See United States ex rel. Babalola v. Sharma, 746
29
F.3d 157, 162 (5th Cir. 2014) ("Babalola") (noting that "no circuit court has expressly
held that a qui tam action must be filed prior to the alternate remedy," but
"interpret[ing] other circuits' analyses of the alternate remedy provision as implicitly
recognizing that a qui tam suit must be filed before there is an alternate remedy,"
citing as examples United States ex rel. Bledsoe v. Community Health Systems, Inc., 342
F.3d 634, 647 (6th Cir. 2003) ("Bledsoe"); United States ex rel. LaCorte v. Wagner, 185 F.3d
188, 190 (4th Cir. 1999) ("LaCorte"); and United States ex rel. Barajas v. Northrop Corp.,
258 F.3d 1004, 1010 (9th Cir. 2001) ("Barajas")). See also Webster, 2000 WL 962249, at *2.
In Babalola, medical assistants who had practiced medicine in Nigeria
("the Assistants") sent an anonymous letter to the government in 2007 alleging, in
detail, that the defendants had submitted numerous fraudulent Medicare and
Medicaid claims. The government's investigation of these allegations (which
included contacting the theretofore anonymous Assistants to inquire whether they
had any knowledge about the allegations) resulted in the defendants' indictment in
July 2009, their guilty pleas in April 2010, and their sentences in February 2011 which
included orders to pay more than $43 million in restitution. See 746 F.3d at 159. In
November 2011, while the defendants' appeals from their sentences were pending
(the restitution ordered was later reduced to some $37.6 million), the Assistants filed
30
their FCA qui tam action based on the claims set out in their 2007 anonymous letter,
and they later moved under § 3730(c)(5) for a share of the government's recovery of
restitution in the criminal case. The government moved to dismiss the qui tam action
on the ground that the relators were not entitled to share in money pursued by the
government prior to their filing of the qui tam action. The district court granted the
government's motion; the court of appeals affirmed.
Examining the first sentence of § 3730(c)(5), which states that the
government may elect to pursue an FCA claim through any alternate remedy
available to it "[n]otwithstanding subsection (b)," and noting that "subsection (b) is . . .
the provision in § 3730 that allows a private person to file a qui tam action," the Fifth
Circuit stated that
this first sentence means that, notwithstanding that a private
person has filed a qui tam suit, the Government may elect to
pursue an alternate remedy to the qui tam suit. . . .
The word "alternate," as used in this context, is defined as
"a choice between two or among more than two objects or courses."
Webster's Third New International Dictionary (1993) at p. 63. We
agree with the district court's reasoning that for a remedy to be
"alternate" to the qui tam proceeding, there must have been two
proceedings from which to choose. Accordingly, we hold that the
qui tam proceeding must have been in existence at the time of the
Government's election of the alternate remedy.
Babalola, 746 F.3d at 161-62 (emphases ours).
31
In Webster, the plaintiff had initiated a qui tam action but had later
voluntarily--with the government's consent--dismissed the action without prejudice,
believing that the defendants would be impecuniated by criminal proceedings. The
government subsequently brought a civil action under § 3730(a), and Webster
attempted to intervene. The Fourth Circuit affirmed the denial of her motion to
intervene.
After applying § 3730(b)(5)--which provides that no person other than
the government is allowed to intervene in an action brought under subsection (b), i.e.,
in a private person's qui tam action--to bar a person also from intervening in an action
brought under subsection (a) by the government, see 2000 WL 962249, at *2, the court
rejected Webster's contention that she was entitled to share in any recovery by the
government under § 3730(c)(5):
That provision allows the government "to pursue its claim
through any alternate remedy available to the Government,
including any administrative proceeding to determine a civil
money penalty." If the government elects an alternate remedy,
"the person initiating the action shall have the same rights in such
proceeding as such person would have had if the action had
continued under this section." 31 U.S.C. § 3730(c)(5). Webster
maintains that the government's FCA suit is an alternate remedy
. . . . [W]e disagree. Section 3730(c)(5) "does not confer any rights on
would-be intervenors." LaCorte, 185 F.3d at 191. Rather, it "simply
preserves the rights of the original qui tam plaintiffs when the
32
government resorts to an alternate remedy in place of the original
action." Id. Webster cannot assert the rights of an original qui tam
plaintiff, however, because she abandoned those rights when she
voluntarily dismissed her [qui tam] suit . . . .
Webster, 2000 WL 962249, at *2 (emphases ours).
The court also rejected Webster's contention that her voluntary dismissal
should be disregarded, i.e., "that she should have the same rights" in the government's
suit "that she would have had in her own, had she not dismissed it," stating that
[r]equiring a qui tam plaintiff to make some effort to prosecute her
suit in order to participate in any ultimate recovery results in neither
unfairness nor the frustration of congressional policy. By barring
private persons from intervening in pending FCA actions or from
bringing related suits, section 3730(b) creates a race to the
courthouse: the winner of that race is the only person allowed to
participate in the government's recovery, thus providing incentive
to promptly report fraud. Once the race is won, however, the
winner is not free simply to claim the prize and go home. As we
and numerous other courts have observed, "[t]he history of the FCA
qui tam provisions demonstrates repeated congressional efforts to walk
a fine line between encouraging whistle-blowing and discouraging
opportunistic behavior." United States ex rel. Springfield Terminal Ry.
v. Quinn, 14 F.3d 645, 651 (D.C.Cir.1994). . . . As the government
points out, Webster's reading of the statute would allow a private party
to file a qui tam false claims suit with no intention of pursuing it,
dismiss the suit without prejudice, and then, when the government
chose to investigate and prosecute its own claim, clamber back on board.
The careful balance struck by Congress would be thrown awry if
individuals could stockpile potential qui tam claims while waiting
for more diligent plaintiffs to bring the case in earnest.
Webster, 2000 WL 962249, at *3 (emphases added).
33
While Babalola and Webster dealt directly with whether the "alternate
remedy" provision is applicable when there is no qui tam action pending, the courts
in Barajas and Bledsoe were focused more on whether the applicability of § 3730(c)(5)
depended on whether or not the government had intervened in the qui tam action--
and they concluded that it was applicable only if the government had not intervened,
see, e.g., Bledsoe, 342 F.3d at 647 ("We hold that 'alternate remedy' refers to the
government's pursuit of any alternative to intervening in a relator's qui tam action."
(emphasis added)); Barajas, 258 F.3d at 1010 (concluding that § 3730(c)(5)'s "use of the
term 'alternate remedy' makes clear that the government must choose one remedy or
the other"). While we are skeptical that § 3730(c)(5) is so limited, given other FCA
provisions that envision the government's pursuit of other proceedings even after it
has intervened in a qui tam action--for example, allowing the government to seek
stays of discovery by the relator in the qui tam action if that discovery "would interfere
with the Government's . . . prosecution of a . . . civil matter arising out of the same facts,"
"[w]hether or not the Government proceeds with the [qui tam] action," 31 U.S.C.
§ 3730(c)(4) (emphases added)--we agree with Babalola that Barajas and Bledsoe
implicitly considered an existing qui tam action to be a prerequisite to any recovery
under § 3730(c)(5).
34
All of these opinions found § 3730(c)(5) to be clear and unambiguous in
its availability only if there existed a pending qui tam action in which the government
could intervene. We reach the same ultimate conclusion in the circumstances here--
i.e., that § 3730(c)(5)'s "alternate remedy" provision does not entitle a person to a share
of the government's recovery if, at the time the government pursued its alternate
remedy, the person, having voluntarily dismissed his qui tam action, had no qui tam
action pending. We conclude that "alternate" has that meaning in light of § 3730(c)(5)
when "'read in [its] context and with a view to [its] place in the overall statutory
scheme,'" Sturgeon v. Frost, 136 S. Ct. 1061, 1070 (2016) (quoting Roberts v. Sea-Land
Services, Inc.,
566 U.S. 93, 102 (2012)). But our road to that conclusion is not so easy.
As discussed below, the word "alternate" appears in a section whose individual parts
are less than pellucid: some that are susceptible to more than one interpretation,
some that we think cannot have been meant literally, and some in which the same
words in successive sentences have demonstrably different meanings.
Although § 3730(c)(5) is set out in full earlier, we repeat its first three
sentences here, numbered, for ease of reference:
[1] Notwithstanding subsection (b), the Government may elect to
pursue its claim through any alternate remedy available to the
Government, including any administrative proceeding to
35
determine a civil money penalty. [2] If any such alternate remedy
is pursued in another proceeding, the person initiating the action
shall have the same rights in such proceeding as such person would have
had if the action had continued under this section. [3] Any finding of
fact or conclusion of law made in such other proceeding that has
become final shall be conclusive on all parties to an action under
this section.
31 U.S.C. § 3730(c)(5) (emphases added).
a. "Notwithstanding subsection (b)"
The very first clause of § 3730(c)(5), viewed on its own, is ambiguous.
"Notwithstanding subsection (b)" could mean either (1) notwithstanding what that
subsection authorizes or (2) notwithstanding any actions taken in accordance with
that subsection. If it meant solely the former, then no existing qui tam action would
be required in order to trigger the applicability of § 3730(c)(5). However, given
Congress's goal of encouraging private persons to assist the government, see, e.g.,
United States ex rel. Kelly v. Boeing Co., 9 F.3d 743, 748 (9th Cir. 1993) ("the entire
purpose of the FCA's qui tam provisions is to employ the help of individuals to
uncover fraud against the government"), and the first sentence's reference to remedies
that are "available to the Government" (emphasis added), we see no basis for inferring
that Congress intended § 3730(c)(5) to confer monetary rewards on persons who are
36
merely authorized to bring fraud suits in the name of the government but do not do
so. If a qui tam action is not pending, it is not available. No one is entitled to share in
the proceeds of the government's recovery by reason of a qui tam action that is merely
an inchoate possibility.
Thus, we interpret the "[n]otwithstanding" clause as meaning that what
follows it is to be given effect regardless of any actions taken in accordance with
subsection (b). If our focus were on actions of the government, we would thus
interpret this initial clause to mean notwithstanding which of the options presented
by subsection (b) was adopted by the government, which include opting to intervene
and declining to intervene, see 31 U.S.C. §§ 3730(b)(4)(A)-(B). A private person,
however, has no options under subsection (b) if he does not pursue his right to bring
a qui tam action.
b. "alternate"
Still focusing on § 3730(c)(5)'s first sentence, we note that the word
"alternate" is one we have not seen used in other statutory enactments focusing on
choices of remedies. However, "alternate" seems clearly to have been meant in its
common usage as a synonym of the more frequently used word "alternative," see
37
Webster's Third New International Dictionary 63 (2002) (defining "alternate" as, inter alia,
"a choice between two or among more than two objects or courses: alternative") (emphases
added). The implication that the government is expected to choose between or
among options that exist is reinforced by other language in the sentence, including
the reference to remedies that are "available to" the government. In addition, non-use
of the simple phrase "may pursue" in favor of the adopted phrase "may elect to
pursue" (emphasis added), likewise suggests a choice between existing options.
Giving effect to common meanings of "alternate" and "available," and to
the presence of other language implying choices between existing options, all
introduced by the phrase "[n]otwithstanding subsection (b)" which deals with qui tam
actions, we agree with the district court that § 3730(c)(5) was meant to allow the
government to choose between (1) exercising subsection (b) rights accorded to it with
respect to a qui tam action and (2) pursuing an alternate or substitute remedy. For
such a choice to be available, a qui tam action must have been in existence. But only
a person, not the government, can bring a qui tam action. If no qui tam action is
pending, a qui tam action remedy is thus not "available" to the government and is not
an "alternate" to any other remedy.
38
c. "any alternate remedy"
Section 3730(c)(5)'s first sentence allows the government to pursue "any
alternate remedy available to [it]" (emphasis added). The word "any" is all-
encompassing, but the intended scope of the phrase as a whole, despite its apparently
unbounded breadth, is not entirely clear. The means by which the government is
authorized to combat frauds include criminal prosecutions. Indeed, the principal
reason for the FCA requirement that a qui tam complaint initially be filed in camera
and under seal is to minimize the possibility "that a relator filing a civil complaint
would alert defendants to a pending federal criminal investigation," State Farm Fire
& Casualty Co. v. United States ex rel. Rigsby, 137 S. Ct. 436, 443 (2016). In Babalola,
discussed above, the court stated that it assumed arguendo that a criminal prosecution
could be considered an alternate remedy,
see 746 F.3d at 161 n.4, but it concluded that
the prosecution in question was in fact not alternate "because there was no qui tam
action pending at the commencement of the restitution proceeding,"
id. at 159. Yet it
is hardly clear that "any alternate remedy" was meant to include a criminal
prosecution, given that the second sentence of § 3730(c)(5) states that "[i]f any such
alternate remedy is pursued in another proceeding, the person initiating the action"--
i.e., the qui tam relator--"shall have the same rights in such proceeding as such person
39
would have had if the action had continued under this section" (emphases added).
We would find it difficult to infer that Congress intended a private qui tam relator to
be entitled to, for example, conduct discovery and cross-examine the witnesses in a
criminal prosecution.
Regardless, however, of whether "any alternate remedy" may include a
criminal prosecution, we think it clear from other FCA provisions that that phrase
was intended to include the government's authorization to bring a civil suit under
§ 3730(a). For one thing, if the government preferred not to intervene in an existing
qui tam action, it would seem perverse to exclude from the alternatives "available to
[it]" the judicial civil remedy that the government is explicitly authorized to pursue
in § 3730(a).
In addition, other FCA sections indicate that there is no impediment to
the government's commencement of its own action under § 3730(a) after a qui tam
action under subsection (b) has been brought. Paragraph (5) of subsection (b), for
example, provides in part that "[w]hen a person brings an action under this
subsection, no person other than the Government may . . . bring a related action based on
the facts underlying the pending action." 31 U.S.C. § 3730(b)(5) (emphasis added). That
this prohibition is only against persons "other than" the government seems to imply
40
that "the Government" indeed "may . . . bring a related action based on the facts
underlying" a "pending" qui tam action. Further, the paragraph immediately
preceding § 3730(c)(5) explodes any lingering supposition that the government is not
permitted to commence its own § 3730(a) action after a qui tam action has been
commenced. That (c)(4) paragraph, as mentioned previously, provides, in pertinent
part, that the government may obtain stays of discovery by the qui tam relator if that
discovery "would interfere with the government's . . . prosecution of a . . . civil matter
arising out of the same facts," 31 U.S.C. § 3730(c)(4) (emphases added). Given that the
FCA provides that "[i]n no event may a person bring an action under subsection (b)
which is based on allegations or transactions which are the subject of a civil suit or an
administrative civil money penalty proceeding in which the Government is already a
party," id. § 3730(e)(3) (emphases added), the government's prosecution of any "civil
matter arising out of the same facts" as the qui tam action,
id. § 3730(c)(4), would
necessarily have been initiated after the filing of the qui tam action.
In sum, while there may be some question as to the precise intended
scope of the phrase "any alternate remedy," we think it clear from the FCA as a whole
that the government may initiate its own suit under § 3730(a) even though there is a
pending qui tam action. The government's suit--in contrast to an inchoate qui tam
41
action--may properly be considered an "alternate [available] remedy" within the
meaning of § 3730(c)(5).
d. "this section" in § 3730(c)(5)'s Second Sentence
vs "this section" in § 3730(c)(5)'s Third Sentence
Section 3730(c)(5)'s second sentence provides that, in the government's
pursuit of an alternate remedy in another proceeding, "the person initiating the action
shall have the same rights in such proceeding as such person would have had if the
action had continued under this section." Although the phrase "this section," viewed
by itself, is literally broader than subsection (b), it is, in § 3730(c)(5)'s second sentence,
limited by the fact that the rest of the sentence speaks in precise terms of "the action"
that was "initiat[ed]" by "the person," which can only refer to the qui tam action
authorized by subsection (b). Thus, in this second sentence of § 3730(c)(5), "the
action" that could be "continued under this section" must mean could be continued
as a qui tam action.
The third sentence of § 3730(c)(5) also uses the term "this section," but
does so in a way that is not tied to a qui tam action. It states that any final "finding of
fact or conclusion of law made in" the government's alternate remedy proceeding
"shall be conclusive on all parties to an action under this section" (emphasis added).
42
As this third sentence speaks in terms of "an action under this section" (emphasis
added) and does not, like the second sentence, use the more restrictive phrases "the
action" and initiated by "the person," we interpret "this section" in the third sentence
to refer to the whole of § 3730.
e. "if the action had continued under this section"
Finally, the second sentence of § 3730(c)(5), in stating that "the person
initiating the action shall have the same rights in such proceeding as such person
would have had if the action had continued under this section," is not, on its own,
entirely clear. DaSilva contends that the "if the action had continued" clause itself
expressly hypothesizes that the qui tam action had been terminated, and since his
action was terminated, he should be entitled to a share of the government's settlement
received in its § 3730(a) action. Although Babalola opines that the language "would
have had if the action had continued under this section" clearly indicates "that the
original qui tam action did not continue," 746 F.3d at 161 (internal quotation marks
omitted), for two reasons we do not equate not-continued here with terminated.
First, while some unadorned variations of the word "continued," such as
"continuance" and "discontinuance," are legal terms of art, see, e.g., Black's Law
Dictionary 387 (10th ed. 2014) (defining "continuance" as, inter alia, "[t]he adjournment
43
or postponement of a trial or other proceeding to a future date"); id. at 563 (defining
"discontinuance" as, inter alia, "[t]he termination of a lawsuit by the plaintiff"), the
word "continued" itself is not defined in that dictionary. Nor, in § 3730(c)(5), is it
unadorned. Section 3730(c)(5) grants rights as "if the action had continued under this
section" (emphasis added), phrasing consistent with a mere pause in the qui tam action
in order to allow the government's pursuit of its alternate remedy.
Second, we view any interpretation of "if the action had continued" to
imply that the qui tam action had in fact been terminated as foreclosed by the third
sentence of § 3730(c)(5). This third sentence provides that any final findings of fact
in the alternate remedy proceeding "shall be conclusive on all parties to an action
under this section." But the alternate remedy proceeding's findings and conclusions
could have no such effect in an action that had already ended. Thus, we conclude
that § 3730(c)(5) refers to qui tam actions that were pending when the government
considered its alternatives and that continued in existence--albeit likely stayed--while
an alternate to participation in the qui tam action was pursued.
***
In sum, we conclude that § 3730(c)(5), read as a whole and in light of
other unambiguous provisions in the FCA, entitles a person who brought a qui tam
44
action to share in the recovery gained by the government in a proceeding it has
pursued as an alternative to the qui tam action, if the relator's qui tam action was
pending when the government was choosing what course to pursue.
DaSilva argues that this interpretation will allow the government
unfairly to intervene in qui tam actions, have those actions dismissed, and then bring
its own action, thereby depriving the qui tam relators of any right to share in the
proceeds gained by the government. The FCA itself, however, includes some
safeguards against unfairness by providing for example, that a qui tam action may not
be dismissed by the government without notice to the relator and, if the relator
objects, without the court's affording "an opportunity for a hearing," 31 U.S.C.
§ 3730(c)(2)(A). And it provides that the government may not settle the action over
the relator's objections unless "the court determines, after a hearing, that the proposed
settlement is fair, adequate, and reasonable under all the circumstances." Id.
§ 3730(c)(2)(B).
But the record before us presents neither the unfairness hypothesized by
DaSilva nor a settlement or dismissal over a relator's objections. DaSilva's qui tam
action was voluntarily dismissed on motion of his attorneys in light of the Michigan
Ethics Opinion prohibiting an attorney from representing in collateral matters a client
45
the lawyer knows remains a fugitive. That voluntary dismissal made DaSilva's action
a nullity and left him with no vestige of qui tam relator status. As there was no
existing qui tam action because DaSilva voluntarily dismissed his action, § 3730(c)(5)
does not entitle him to share in the government's recovery in its own subsequent
proceeding.
CONCLUSION
We have considered all of DaSilva's arguments on this appeal and have
found them to be without merit. The district court's order denying his motion to
share in the government's recovery is affirmed.
46
