United States v. Sanofi-Aventis U.S. LLC (In re Plavix Mktg., Sales Practices & Prods. Liab. Litig. (NO. II))

974 F.3d 228

IN RE: PLAVIX MARKETING, SALES PRACTICES AND PRODUCTS LIABILITY LITIGATION (NO. II)

United States of America; State of California; State of Colorado; State of Connecticut; State of Delaware; District of Columbia; State of Florida; State of Georgia; State of Illinois; State of Indiana; State of Iowa; State of Louisiana; Commonwealth of Massachusetts; State of Michigan; State of Minnesota; State of Montana; State of Nevada; State of New Jersey; State of New York; State of North Carolina; State of Oklahoma; State of Rhode Island; State of Tennessee; Commonwealth of Virginia; State of Washington; State of Wisconsin, ex rel. JKJ Partnership 2011 LP

v.Sanofi-Aventis U.S. LLC; Sanofi-Aventis U.S. Services, Inc.; Aventis, Inc.; Aventis Pharmaceuticals, Inc.; Bristol-Myers Squibb Company; Bristol-Myers Squibb Sanofi Pharmaceuticals Holding Partnership

JKJ Partnership 2011 LLP, Appellant

No. 18-2472

United States Court of Appeals, Third Circuit.

Argued: June 25, 2020

Filed: September 1, 2020

William H. Narwold, Mathew P. Jasinski [ARGUED], Motley Rice, 20 Church Street, One Corporate Center, 17th Floor, Hartford, CT 06103

W. Scott Simmer, Baron & Budd, 600 New Hampshire Avenue, Suite 10-A, Washington, DC 20037, Counsel for Appellant

Anand Agneshwar [ARGUED], Arnold & Porter Kaye Scholer, 250 West 55th Street, New York, NY 10019

Murad Hussain, Kirk Ogrosky, Arnold & Porter Kaye Scholer, 601 Massachusetts Avenue, N.W., Washington, DC 20001

Gavin J. Rooney, Lowenstein Sandler, One Lowenstein Drive, Roseland, NJ 07068, Counsel for Appellees

Before: JORDAN, BIBAS, and NYGAARD, Circuit Judges

OPINION OF THE COURT

BIBAS, Circuit Judge.

To intervene is to butt in, not to be dragged in or to replace an existing party to a lawsuit. But no one butted in here. Three people formed a partnership to sue several pharmaceutical companies as a qui tam relator under the False Claims Act. When one of them left the partnership and was replaced, that change amounted to forming a new partnership. The companies moved to dismiss because the Act's first-to-file bar stops a new "person" from "interven[ing] or bring[ing] a related action based on the [same] facts." 31 U.S.C. § 3730(b)(5). But the verb "intervene" means to inject oneself between two existing parties, as under Federal Rule of Civil Procedure 24. The new partnership did not do that, but instead came in as the relator.

Still, the District Court ruled for the companies, based mainly on a dictum from a Supreme Court case. But that case involved a very different issue, and the Court's opinion never considered the issue here. Because the Act's plain text bars only intervention or bringing a related suit, we will vacate and remand.

I. BACKGROUND

A. The partnership and the complaints

In 2011, Jeffrey Stahl, Kelly Evans, and John Venditto formed a Delaware limited liability partnership named JKJ (after their three first initials). Venditto and Stahl were doctors, and Evans was a former sales representative at Sanofi-Aventis. The partnership's sole purpose was to prosecute a qui tam False Claims Act suit against Sanofi-Aventis and Bristol-Myers Squibb, two pharmaceutical companies that developed and marketed the anti-clotting drug Plavix. So JKJ filed this suit in federal district court.

The gist of the suit was that Sanofi and Bristol had promoted Plavix to treat a broad range of patients, even though they knew that many of them would reap little if any benefit. Sanofi and Bristol's marketing, JKJ alleged, caused many false claims to be submitted for federal and state healthcare reimbursement. JKJ alleged False Claims Act claims on behalf of the United States, as well as claims on behalf of dozens of states under their own qui tam statutes.

The complaints named JKJ as the sole plaintiff-relator. While the early complaints discussed the three partners’ backgrounds, they did not name them, using pseudonyms instead. The United States declined to intervene in the suit.

By 2016, the partners’ relations had apparently soured. Venditto left and was replaced by Dr. Paul Gurbel. The second amended complaint, the one at issue, was filed in 2017 and names all three partners. But it still names JKJ as the sole relator. The partners viewed the old JKJ partnership as the same entity as the new one. That theory would be tested in this suit's pinball journey among three different state and federal courts.

B. District Court proceedings

Sanofi and Bristol moved to dismiss, invoking the False Claims Act's first-to-file bar. 31 U.S.C. § 3730(b)(5) ; see United States ex rel. JKJ P'ship 2011, LLP v. Sanofi Aventis, U.S., LLC (In re Plavix Mktg., Sales Practices & Prods. Liab. Litig. (No. II)) , 315 F. Supp. 3d 817, 821–22 (D.N.J. 2018) ( In re Plavix I ). Sanofi and Bristol's theory was that New JKJ was a different legal entity from Old JKJ, so its effort to pursue the suit as the relator amounted to an "interven[tion]" banned by the first-to-file bar. See In re Plavix I , 315 F. Supp. 3d at 830.

The District Court agreed and dismissed the suit. In a careful and comprehensive opinion, it thoroughly analyzed Delaware partnership law, concluding that Old JKJ and New JKJ were distinct legal entities. In re Plavix I , 315 F. Supp. 3d at 830–34. Because the two entities were different, the District Court held that New JKJ's presence violated the first-to-file bar. Id. at 834–35. It relied heavily on a Supreme Court decision, United States ex rel. Eisenstein v. City of New York , 556 U.S. 928, 933–35, 129 S.Ct. 2230, 173 L.Ed.2d 1255 (2009), which it read as holding that when-ever a nonparty tries to join a qui tam False Claims Act suit, it is "interven[ing]" within the meaning of the first-to-file bar. See Plavix I , 315 F. Supp. 3d at 834–35. It also relied on a recent Tenth Circuit decision that read Eisenstein the same way. Id. at 835–36 (discussing United States ex rel. Little v. Triumph Gear Sys., Inc. , 870 F.3d 1242 (10th Cir. 2017) ). Because the District Court read Eisenstein ’s rule as barring a new relator from replacing an old one in an amended complaint, it dismissed JKJ's suit. Id.

C. Delaware Supreme Court proceedings

The partnership appealed to us. Recognizing the important role that Delaware partnership law plays here, we certified three questions to the Delaware Supreme Court. The Delaware Supreme Court accepted the certification and assisted us by answering them. First, it agreed with the District Court that Old JKJ and New JKJ were distinct partnerships. United States ex rel. JKJ P'ship 2011 LLP v. Sanofi-Aventis U.S. LLC , 226 A.3d 1117, 1123 (Del. 2020) ( In re Plavix II ). Second, it could not answer whether Old JKJ survived long enough to file the complaint now before us. Id. at 1133. But it noted that the second amended complaint named the three partners as Stahl, Evans, and Gurbel, so that complaint must have been filed by New JKJ. Id. Third, it explained that Old JKJ could not keep prosecuting the litigation as part of the winding-up process. Id. at 1135–36. It did not see how liquidation could be "[ ]consistent with continuing with carrying on the business for which the Partnership was established." Id. at 1135. With these state-law issues addressed, the case is before us again.

II. THE FIRST-TO-FILE BAR IS NOT JURISDICTIONAL

First off, the parties dispute whether the first-to-file bar is jurisdictional. Sanofi and Bristol say that it is and thus that their motion to dismiss falls under Federal Rule of Civil Procedure 12(b)(1). But JKJ suggests that a qui tam complaint that violates § 3730(b)(5) merely fails to state a claim and thus that the motion falls under Rule 12(b)(6).

The distinction sometimes matters. First, the plaintiff bears the burden of persuasion on jurisdiction, while the burden of showing that a complaint fails to state a claim falls on the defendant.

Davis v. Wells Fargo , 824 F.3d 333, 349 (3d Cir. 2016). Second, a defendant challenging subject-matter jurisdiction may sometimes submit evidence, while on Rule 12(b)(6) we must take the complaint's well-pleaded allegations as true. Id. Finally, jurisdiction may be challenged at any time, even sua sponte by the court. See Fed. R. Civ. P. 12(h)(3). But the failure-to-state-a-claim defense is waived if not raised "before the close of trial." 5C Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 1392, at 530 (3d ed. 2004).

Our sister circuits are split on this question. The lower-numbered circuits treat the first-to-file bar as not jurisdictional. See United States ex rel. Heath v. AT&T, Inc. , 791 F.3d 112, 120–21 (D.C. Cir. 2015) ; United States ex rel. McGuire v. Millenium Labs., Inc. , 923 F.3d 240, 250–51 (1st Cir. 2019) ; United States ex rel. Hayes v. Allstate Ins. Co. , 853 F.3d 80, 85–86 (2d Cir. 2017) (per curiam). The higher-numbered circuits take the opposite view, mainly in older opinions. See United States ex rel. Carter v. Halliburton Co. , 710 F.3d 171, 181 (4th Cir. 2013) ; United States ex rel. Branch Consultants v. Allstate Ins. Co. , 560 F.3d 371, 376–77 (5th Cir. 2009) ; Walburn v. Lockheed Martin Corp. , 431 F.3d 966, 970 (6th Cir. 2005) ; United States ex rel. Lujan v. Hughes Aircraft Co. , 243 F.3d 1181, 1187–89 (9th Cir. 2001) ; Grynberg v. Koch Gateway Pipeline Co. , 390 F.3d 1276, 1278 (10th Cir. 2004). As the Third Circuit, our number falls in the middle.

We hold that the first-to-file bar is not jurisdictional. As the Supreme Court has recently instructed, unless Congress states clearly that a rule is jurisdictional, we will treat it as nonjurisdictional. Sebelius v. Auburn Reg'l Med. Ctr. , 568 U.S. 145, 153, 133 S.Ct. 817, 184 L.Ed.2d 627 (2013) ; see, e.g. , Fort Bend County v. Davis , ––– U.S. ––––, 139 S. Ct. 1843, 1850, 204 L.Ed.2d 116 (2019). The contrary circuit cases mostly predate these Supreme Court cases and do not apply the Court's clear-statement rule. Sanofi and Bristol point to no language in § 3730(b)(5), nor do we see any, that "plainly show[s] that Congress imbu...