Reprinted with Permission from Law360
Disputes Heating Up Over Gov't Qui Tam Dismissal Authority
Law360 (February 15, 2019, 4:48 PM EST) --
Since the beginning of the Trump administration, and particularly in the last six months, the U.S.
Department of Justice has been exercising its authority to dismiss qui tam False Claims Act cases
with increasing frequency.[1] As relators have challenged the government’s efforts, disputes over
the scope of the government’s dismissal authority have arisen in at least a dozen cases in seven
districts around the country, and one of the disputes has already reached the U.S. Court of Appeals
for the Ninth Circuit.
These fights not only reflect the key considerations driving government dismissal motions, but also
raise fundamental legal issues about control over qui tam litigation — issues that are now likely to
be decided by many courts of appeal and, perhaps as early as next year, by the U.S. Supreme Court.
Those issues include:
1. How deferential should courts be in acting on government motions to dismiss pursuant to 31 U.S.Code Section
3730(c)(2)(A)? The government argues it has “unfettered discretion” to dismiss. The U.S. Court of Appeals for the District
of Columbia Circuit endorsed that test in Swift v. United States,[2] and the U.S. Court of Appeals for the Fifth Circuit and
the U.S. Court of Appeals for the Eighth Circuit have expressed sympathy for it.[3]
Relators instead rely on a formula adopted by the Ninth Circuit in United States ex rel. Sequoia Orange Co. v. Baird-
Neece Packing Corp.,[4] which requires the government to establish that its exercise of dismissal aut hority is “rationally
related to a legitimate governmental purpose.”[5] If the government does so, “the burden switches to the relator ‘ to
demonstrate that dismissal is fraudulent, arbitrary and capricious, or illegal.’”[6]
2. Under the Sequoia Orange test, what kind of evidentiary showing, if any, must the government make to establish that
dismissal would advance a legitimate governmental purpose?
3. If the government moves to dismiss after the court has denied the defendant’s motion to dismiss for failure to state a
claim, finding the allegations of the complaint legally sufficient to proceed, how should that affect the court’s resolution of
the government’s motion, particularly if it rests in part on the government’s determination that the claims are meritless?
4. Under the Sequoia Orange test, what must a relator establish to show that the government’s dismissal effort is
“fraudulent, arbitrary and capricious, or illegal”?
Jonathan Cedarbaum
