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United States ex rel Thomas v. AG

April 23, 2010


The opinion of the court was delivered by: Savage, J.


In moving to amend his complaint for the third time in this five-year old qui tam action, relator William A. Thomas ("Thomas") seeks to add numerous allegations regarding the relationship between the defendant Siemens AG, a German corporation, and the defendant Siemens Medical Solutions USA, Inc. ("SMS"), its United States subsidiary, which entered into the contracts with the government which are at issue in this False Claims Act case. He emphasizes that the amendments would add no new parties and no new claims or theories. Rather, he claims the proposed amendments are intended to provide more detail and evidence of the defendants' scheme to defraud the government garnered from the defendants' Rule 26 disclosures, and to remove "unessential" allegations regarding Siemens AG's criminality.

Opposing the motion, the defendants contend that Thomas inexplicably delayed the filing of his motion that is essentially based upon information that was publicly available years before the motion was filed, and amendment would place a burden on the court's case management and would prejudice them. They also argue that because the proposed third amended complaint fails to allege fraud with the particularity required by Rule 9(b) and does not satisfy the Twombly pleading requirements,*fn1 it is deficient. Defendant Siemens AG, in particular, strenuously argues that the proposed amendment is futile because it fails to set forth sufficient facts to make out a claim against it on an agency theory.


Thomas filed his original complaint under seal on September 2, 2004, in the District Court of the Virgin Islands, Civil Action No. 2004-116, naming Siemens AG and SMS as defendants. He filed his first amended complaint on August 18, 2006. After the government declined to intervene, the seal was lifted on January 23, 2008 and Thomas was ordered to serve the complaint. Thomas claims, without explanation, that he did not learn of the unsealing until October 2, 2008. On his motion, by order dated October 7, 2008, he was then permitted to amend his complaint and ordered to serve the defendants no later than February 2, 2009. He waited until January 29, 2009 to file his second amended complaint, which added Siemens Corporation as a defendant, more detailed allegations regarding his background, and information regarding the regulatory framework governing the case. He served Siemens Corporation and SMS, through their counsel, on February 2, 2009.

On January 26, 2009, just one week before the deadline to file and serve his amended complaint, Thomas requested additional time to serve Siemens AG through the Hague Convention, citing it as the exclusive means of serving Siemens AG. The following day, an order granting Thomas additional time to serve Siemens AG was entered.

Because Siemens AG is a German corporation, Thomas attempted to serve it pursuant to the Hague Convention protocol.*fn2 However, because the exhibits attached to the complaint had not been translated into German, the attempted service was rejected. Siemens AG has raised improper service as a basis for dismissal.*fn3

The action was transferred from the District Court of the Virgin Islands to this district on August 10, 2009. On October 21, 2009, a Rule 16 pretrial conference was held. Shortly after responding to the defendants' motions to dismiss the second amended complaint, Thomas filed his motion for leave to file a third amended complaint.


Keeping in mind that the purpose of Rule 15 of the Federal Rules of Civil Procedure is to have a case decided on the merits rather than on a technicality, leave to amend a pleading should be freely granted "when justice so requires." Shane v. Fauver, 213 F.3d 113, 115-17 (3d Cir. 2000) (quoting Fed. R. Civ. P. 15(a)); Berkshire Fashions, Inc. v. M.V. Hakusan II, 954 F.2d 874, 886-87 (3d Cir. 1992). Factors considered are undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by previously allowed amendments, undue prejudice to the opposing party, and futility of the amendment. Foman v. Davis, 371 U.S. 178, 182 (1982).

In listing the relevant factors, some cases use the disjunctive, creating the impression that any one of the factors alone justifies denying amendment. Cureton v. Nat'l Collegiate Athletic Ass'n, 252 F.3d 267, 272-73 (3d Cir. 2001) (citing Foman, 371 U.S. at 182). However, delay alone will not preclude amendment. It must be coupled with a resultant burden on the court, prejudice to the other party or the plaintiff has previously amended. Bjorgung v. Whitetail Resort, LP, 550 F.3d 263, 266 (3d Cir. 2008) (citing Cureton, 252 F.3d at 273). Prejudice to the non-moving party is the touchstone for the denial of an amendment, keeping in mind the goal of having cases decided on the merits. Amquip Corp. v. Admiral Insurance Co., 231 F.R.D. 197, 199 (E.D. Pa. 2005). Thus, we must balance the prejudice to the non-moving party if the motion is granted against the harm to the movant if leave is not granted. Id.

The delay inquiry focuses on the movant's motive for not amending sooner, and the prejudice analysis concentrates on the effect on the non-moving party. Adams v. Gould, Inc., 739 F.2d 858, 868 (3d Cir. 1984).

Undue Delay

To excuse his waiting until recently to seek a third amendment, Thomas argues that the information he wishes to add to his second amended complaint was first revealed in the defendants' Rule 26 disclosures, which he contends provided further details about the alleged scheme and the agency relationship between Siemens AG and the other two defendants.*fn4 Most of the information regarding Siemens AG and Siemens Corporation's corporate relationship and alleged control of their subsidiary was available to Thomas before he filed his original complaint and, at the latest, when he filed ...

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