Can a relator's complaint be amended to include relators not named in the original pleading? Increasingly, federal courts have answered "no"—and the Ninth Circuit's decision last month in United States ex rel. Volkhoff v. Janssen Pharmaceuticals, 945 F.3d 1237, is consistent with this trend. The district court in Volkhoff dismissed an amended complaint under the False Claims Act's " first-to-file" bar because the sole relator named in the amendment was not listed in the initial complaint. The Ninth Circuit then dismissed the appeal of that dismissal for lack of appellate jurisdiction. But in so doing, the Ninth Circuit favorably cited the lower court's conclusion that the first-to-file bar prohibits new relators from jumping into existing FCA cases. Id. at 1240.
The original complaint named Alexander Volkhoff, LLC (Volkhoff LLC) as the sole relator. The government declined to intervene, and the defendants moved to dismiss. For strategic reasons (apparently an effort to preserve an FCA retaliation claim), relator's counsel filed an amended complaint that dropped any reference to Volkhoff LLC and instead listed "Jane Doe" as the only relator. The district court dismissed the amended complaint under the first-to-file bar's provision that states "no person other than the Government may intervene" in an existing FCA action. The court explained that because Jane Doe was "not named as a relator in the original complaint," she "had no power to file the amended complaint, and could not intervene because of the first-to-file rule." United States ex rel. Doe v. Janssen Pharm., 2018 WL 5276291 at *2 (C.D. Cal. Apr. 19, 2018). The court rejected Doe's argument that she should be permitted to proceed because she and Volkhoff LLC were "the same person." It held instead that Doe and Volkhoff LLC were "distinct persons," and that there is no "unity of identity" exception to the "exception-free" first-to-file bar. Id. at *3.
Volkhoff LLC—rather than Jane Doe—appealed the district court's decision. The Ninth Circuit dismissed the appeal for lack of jurisdiction, because Volkhoff LLC's "activity in the case all but ceased" with the amended complaint's filing, 945 F.3d at 1242, so its appeal violated "the general rule that only parties to a lawsuit may appeal," id. at 1241. Although addressing the different issue of appellate jurisdiction rather than the first-to-file bar, the Ninth Circuit favorably noted how "the district court's application of the first-to-file bar to dismiss the [amended complaint] was premised upon on its finding that Volkhoff LLC, the initial sole relator, had been completely replaced by Jane Doe, the second sole relator." Id. at 1242.
Although the Ninth Circuit did not directly weigh in on the merits of the first-to-file issue, its decision has the effect of preserving, if not elevating, the district court's decision for future private intervention cases. It is also a stark reminder that Congress set clear rules about who can bring a qui tam action, and that gamesmanship to evade those rules is risky business.
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