United States District Court, E.D. Pennsylvania
UNITED STATES OF AMERICA ex rel. BRUCE BOISE, et al.
CEPHALON, INC., et al.
THOMAS N. O'NEILL, Jr., District Judge.
Plaintiffs Bruce Boise, Keith Dufour and Andrew Augustine bring this action against defendants Cephalon, Inc. and John Does #1-100 to recover damages and civil penalties on behalf of the United States as qui tam relators pursuant to the False Claims act, 31 U.S.C., §§ 3729 et. seq. (FCA) and analogous state laws. This matter comes before me on Cephalon's motion to dismiss plaintiffs' Fentora claims in their second amended complaint for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1) (Dkt. No. 78) and plaintiffs' response (Dkt. No. 89). Cephalon contends that § 373(0)(5) of the FCA, known as the "first-tofile" rule, bars (1) the addition of the claims of relators Augustine and Dufour to plaintiffs' second amended complaint with regard to the medications Fentora and Nuvigil; and (2) all of plaintiffs' claims with regard to the medication Provigil. For the reasons that follow, I will partially deny and partially stay Cephalon's motion.
In this action, plaintiffs allege that defendants violated the FCA by engaging in the offlabel marketing of various medications, providing kickbacks to physicians prescribing those medications and causing the submission of false claims and false statements to various state and federal programs, amongst other allegations. See generally Dkt. No. 69. On January 3, 2008, Boise filed the original complaint in this action alleging Cephalon's off-label promotion of the medication Fentora. See Dkt. No. 1 at ¶¶ 2, 3. On June 30, 2009, "Doe" commenced a separate action, United States ex rel. Doe v. Cephalon, Inc., No. 09-2926 (E.D. Pa.), by filing a complaint alleging Cephalon's off-label promotion of the medications Fentora and Provigil. See Dkt. 78, Ex. A. On January 14, 2010, in this action, Boise filed his first amended complaint alleging the off-label promotion of Provigil for the first time. See Dkt. No. 14 at ¶¶ 41-64. On Sept. 19, 2013, I dismissed the Doe action without prejudice upon Doe's motion to voluntarily dismiss the complaint. See No. 09-2926, Dkt. No. 44. On February 27, 2014, Boies filed an unopposed motion for leave to file a second amended complaint. See Dkt. No. 66. On February 28, 2014, I granted that motion. See Dkt. No. 67. On March 4, 2014, Boise filed a second amended complaint supplementing his allegations and adding relators Augustine and Dufour. See Dkt. No. 69.
STANDARD OF REVIEW
Federal Rule of Civil Procedure 12(b)(1) authorizes dismissal of a complaint for lack of subject matter jurisdiction. A motion under Rule 12(b)(1) may be treated as either a facial attack on the complaint or a factual challenge to the Court's subject matter jurisdiction. Gould Elecs., Inc. v. United States , 220 F.3d 169, 176 (3d Cir. 2000). A court reviewing a facial attack may consider only the allegations of the complaint and any documents referenced therein or attached thereto in the light most favorable to the plaintiff. Id . In reviewing a factual attack, a court may consider evidence outside the pleadings. Id.
A plaintiff bears the burden of persuasion when subject matter jurisdiction is challenged, but the legal standard for surviving a Rule 12(b)(1) motion is a low one. Kehr Packages v. Fidelcor, Inc. , 926 F.2d 1406, 1409 (3d Cir. 1991). "A claim may be dismissed under Rule 12(b)(1) only if it clearly appears to be immaterial and made solely for the purpose of obtaining jurisdiction' or is wholly insubstantial and frivolous.'" Gould , 220 F.3d at 178. Nevertheless, "dismissal for lack of jurisdiction is not appropriate merely because the legal theory alleged is probably false, but only because the right claimed is so insubstantial, implausible, foreclosed by prior decisions of this Court, or otherwise completely devoid of merit as not to involve a federal controversy." Kulick v. Pocono Downs Racing Ass'n , 816 F.2d 895, 899 (3d Cir. 1987), quoting Oneida Indian Nation v. Cnty. of Oneida , 414 U.S. 661, 666 (1974).
I. Augustine and Dufour's Claims
The FCA's first-to-file rule provides that: "[w]hen a person brings an action under this subsection, no person other than the Government may intervene or bring a related action based on the facts underlying the pending action." 31 U.S.C. § 373(0)(5). In construing the first-to-file rule, I am "mindful of the need to preserve a balance between the amendment's two competing goals" of providing "adequate incentives for whistle-blowing insiders" and the "discouragement of opportunistic plaintiffs" in qui tam actions. U.S. ex rel. LaCorte v. SmithKline Beecham Clinical Labs., Inc. , 149 F.3d 227, 234 (3d Cir. 1998).
Cephalon contends that the first-to-file rule not only applies when a party formally intervenes pursuant to Rule 24 of the Federal Rules of Civil Procedure or brings a separate related action but rather "equally applies when additional relators join an existing case." Dkt. No. 78 at 5. Thus, Cephalon argues that Augustine and Dufour's allegations regarding Fentora and Nuvigil are "based on the facts underlying" other pending actions and are barred by the first-to-file rule. In response, plaintiffs contend that as a threshold matter the first-to-file rule does not apply where a relator is joined to an existing action by amended complaint. See Dkt. No. 89 at 5, 12-14. Plaintiffs further contend that even if the first-to-file rule applies in their case, Augustine and Dufour's claims are not "based on facts underlying" pending actions and thus are not barred by the first-to-file rule.
In U.S. ex rel. Precision Co. v. Koch Indus., Inc, the Court of Appeals for the Tenth Circuit held that the addition of new relators by an amended complaint did not trigger the application of the first-to-file rule. 31 F.3d 1015, 1018 (10th Cir. 1994). The Tenth Circuit grounded its holding on its understanding that the meaning of "intervene" in § 3730(b)(5) carries the "plain legal meaning" of intervention under Rule 24. Id . at 1017. The Tenth Circuit reasoned that Congress intended only to ban the addition of relators who were "strangers" to the plaintiff, since a Rule 24 "intervenor need not have a relation to the original plaintiff' to intervene in an action. Id.
Some district courts have adopted Precision's textual analysis of § 3730(b)(5) and limited the first-to-file bar's applicability only to a later separate action or intervention under Rule 24. See United States v. Educ. Mgmt. Corp. , 871 F.Supp.2d 433, 459 (W.D. Pa. 2012) (declining to dismiss amendment to add relator since "[t]he plain text of § 3730(b)(5) does not apply to the unique procedural status of this case because [the new relator] is not intervening' or bringing a related action"); U.S. ex rel. Howard v. Lockheed Martin Corp., No. 99-285, 2011 WL 4348104, at *4 (S.D. Ohio Sept. 16, 2011) (following Precision's interpretation).
In contrast, district courts elsewhere have not uniformly followed Precision's analysis. Some courts have simply applied the § 3730(b)(5) bar to consolidated or amended complaints without providing any analysis of the provision's text. See U.S. ex rel. Nowak v. Medtronic, Inc. , 806 F.Supp.2d 310, 334 (D. Mass. 2011) (applying the first-to-file bar to relators joined through a consolidated complaint); Palladino ex rel. U.S. v. VNA of S. N.J., Inc. , 68 F.Supp.2d 455, 477 (D.N.J. 1999) (applying the first-to-file bar to a relator added by amended complaint). But see Howard, 2011 WL 4348104, at *4 (following Precision and noting "the Nowak court ...