The Tenth Circuit’s recent decision in United States ex rel. Little v. Triumph Gear Sys., Inc. refines its definition of “intervene” in light of the Supreme Court’s decision in United States ex rel. Eisenstein v. City of New York. In doing so, the Tenth Circuit also seems to indicate that the original filing by the initial relator equates to a public disclosure, thus precluding subsequent relators who do not meet the requirements of 31 U.S.C. 3730(e)(4)(A).

Background

The defendant was a government contractor that manufactured aerospace gear systems.^[1] The initial complaint, filed by Joe Blyn and three “John Does,” claimed the defendant violated the False Claims Act.^[2] Before the initial complaint could be served plaintiff’s counsel of record, Donald Little filed an amended complaint that named himself and a third person, Kurosh Motaghed, as the sole relators.^[3] All references to Mr. Blyn and the John Does were inexplicably removed from the complaint.^[4] The new relators amended the complaint twice more, and the defendant filed a motion to dismiss on multiple grounds, including that the district court lacked jurisdiction over the amended complaint under the FCA’s first-to-file rule.^[5]

The district court denied the defendant’s motion to dismiss, citing the Tenth Circuit’s decision in Precision Company v. Koch Industries, Inc.^[6] The district court determined that Little and Motaghed were not considered “interveners” for the purpose of § 3730(b)(5). Because they intervened through Fed. R. Civ. P. 15, and not Fed. R. Civ. P. 24^[7] on appeal, the Tenth Circuit distinguished this case from Precision and reversed the district court’s decision, stating that the first-to-file rule bars the new relators because they were not added by an existing plaintiff.^[8] Rather, Little and Motaghed added themselves and completely removed the initial relator.^[9] The Tenth Circuit’s decision not only clarifies the definition of “intervene” and an intervener’s ability to amend the initial complaint but raises the public disclosure bar that a plaintiff must clear.

Analysis 

Neither the Tenth Circuit, nor the district court, were able to ascertain why Mr. Blyn vanished from the action entirely. In fact, the Tenth Circuit noted that Little, “simply substituted his name for Blyn’s without regard for the resulting incongruities.”^[10] In respect to the second relator, “none of the amended complaint’s substantive allegations pertain to Motaghed, despite his status as a putative relator.”^[11] This wholesale removal of the initial relator required the court to determine how the two new relators could be considered to have “intervened” as contemplated in § 3703(b)(5) of the FCA.

The Tenth Circuit did not have to delineate between addition and intervention Rules 15 and 24.^[12] Little and Motaghed entered the action through no procedural method the court could identify.^[13] The court indicated that, because Fed. R. Civ. P. 15(a)(1) only allows amendments by parties and not non-parties, Little and Motaghed, as non-parties, had no right to amend the complaint.^[14]

Practical Takeaways

The Tenth Circuit’s justification for avoiding a debate between Rule 15 addition and Rule 24 intervention seems to indicate that relators, who attempt to intervene in this rather unique situation, are not an original source of the allegations and therefore cannot survive the public disclosure bar. Additionally, the Tenth Circuit has indicated that, in light of the Supreme Court’s decision in Eisenstein, the Tenth Circuit’s previous decision in Precision may no longer be good law.

If you have any questions, please contact:

• David Honig at dhonig@hallrender.com or (317) 977-1447;
• Matthew Schappa at mschappa@hallrender.com or (317) 429-3604; or
• Your regular Hall Render attorney.