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United States ex rel. Carter v. Halliburton Co.

United States District Court, E.D. Virginia, Alexandria Division

November 12, 2015

HALLIBURTON CO., et al., Defendants

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          For Benjamin Carter, United States ex rel., Plaintiff: David Ludwig, LEAD ATTORNEY, Christina Maria Heischmidt, Dunlap Bennett & Ludgwig PLLC, Leesburg, VA USA; William Clifton Holmes, LEAD ATTORNEY, Dunlap, Grubb & Weaver PLLC, Leesburg, VA USA.

         For Halliburton Co., Kellogg Brown & Root Services, Inc., Service Employees International, Inc., Kbr, Inc., Defendants: John Martin Faust, Law Office of John M Faust PLLC, Washington, DC USA; Kathryn Bridget Codd, Tirzah Sungyeh Lollar, Vinson & Elkins LLP, Washington, DC USA.

         For United States of America, Interested Party: Richard W. Sponseller, United States Attorney's Office, Alexandria, VA USA.

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         James C. Cacheris, UNITED STATES DISTRICT JUDGE.

         For seven years, qui tam relator Benjamin Carter's allegations of defense contractors submitting false claims to the Government have been before this Court. The case has undergone " a remarkable sequence of dismissals and filings." Kellogg Brown & Root Servs., Inc. v. United States ex rel. Carter, 135 S.Ct. 1970, 1974, 191 L.Ed.2d 899 (2015). It is back now, on remand from the Fourth Circuit after the Supreme Court found that this Court erred by dismissing with prejudice under the False Claims Act's (" FCA" ), 31 U.S.C. § § 3729-3733, first-to-file bar. Consistent with the Supreme Court's opinion, this Court now dismisses Relator's case under the first-to-file bar, this time without prejudice.

         This matter came before the Court on Defendants Halliburton Company; Kellogg Brown & Root Services, Inc.; Service Employees International, Inc.; and KBR, Inc.'s (collectively " Defendants" ) motion to dismiss with prejudice. [Dkt. 99.] In response to that motion, Relator Benjamin Carter (" Relator" or " Carter" ) motioned to file an amended complaint. [Dkt. 105.] For the following reasons, the Court will deny Relator's motion to amend and will dismiss Relator's case without prejudice.

         I. Background

         The Court briefly discusses this case's " remarkable" history so as to frame the present motions.

         For four months in 2005, Carter worked for Defendants in a water purification unit employed to provide clean water to U.S. troops at war in Iraq. (Compl. [Dkt. 1] ¶ ¶ 1-3.) Carter alleges that during his time in Iraq, he never performed " actual water purification or testing duties." ( Id. ¶ ¶ 40, 43, 53.) Instead, Defendants' personnel allegedly required Carter and other employees to fill out timecards reporting twelve hours of water purification work a day when they actually performed zero. ( Id. ¶ ¶ 53-55.) Carter also alleges that it was " routine practice" to require " trade employees," such as him, to submit timecards totaling eighty-four hours per week, regardless of the actual work performed. ( Id. ¶ ¶ 60-61, 65-68.) Through these allegedly false reporting practices, Carter argues that false claims were submitted to the Government and paid to Defendants.

         Carter filed his original complaint under the False Claims Act in February 2006 in the U.S. District Court for the Central District of California. United States ex rel. Carter v. Halliburton Co., No. 06-cv-616 (C.D. Cal. filed Feb. 1, 2006). In November 2008, after two years of investigation, the case was transferred to this Court (" Carter I " ). United States ex rel. Carter v. Halliburton Co., No. 08-cv-1162 (E.D. Va. transfer Nov. 7, 2008). Shortly before Carter I' s trial date, the Government informed the parties of a pending case filed in 2005 with related allegations of false billing, United States ex rel. Thorpe v. Halliburton Co., No. 05-cv-8924 (C.D. Cal. filed Dec. 23, 2005). In response to Thorpe and the FCA's first-to-file bar, this Court dismissed Carter I without prejudice and Carter appealed that dismissal.

         During the pendency of Carter I' s appeal, Thorpe was dismissed for failure to prosecute. In response, Carter filed a new complaint (" Carter II " ), but he failed to dismiss his prior appeal. United States ex rel. Carter v. Halliburton Co., No. 10-cv-864 (E.D. Va. filed Aug. 4, 2010). Because Carter I and Carter II were substantively identical, this Court ruled that the still-pending appeal barred Carter II. Thus,

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 this Court dismissed Carter II without prejudice. 2011 WL 2118227, at *6. In response, Carter voluntarily dismissed his appeal in Carter I and again filed his complaint (" Carter III " ). United States ex rel. Carter v. Halliburton Co., No. 11-cv-602 (E.D. Va. filed June 2, 2011). Carter III is the case currently before this Court. But Carter III underwent its own lengthy procedural journey before arriving for these present motions.

         At the time Carter III was filed in June 2011, two cases alleging similar false billing by KBR were already pending in other courts: United States ex rel. Duprey, No. 8:07-cv-1487 (D. Md. filed June 5, 2007) (" Maryland Action" ) and a sealed action filed in Texas in 2007 (" Texas Action" ). Defendants motioned to dismiss Carter III, arguing again that the earlier-filed cases destroyed this Court's subject matter jurisdiction due to the first-to-file bar. This Court concluded that the Maryland Action was related to Carter's claims and was pending when Carter filed his suit. Thus, the Court dismissed Carter III for lack of jurisdiction under the first-to-file bar. Additionally, the Court found that most of Carter III' s allegations of false claims fell outside the FCA's six-year statute of limitations. In total, only $673.56 in allegedly false claims were issued within the six years prior to 2011. The Court, however, found that those claims would also be untimely if Carter tried to refile his case after dismissal. Therefore, the Court dismissed Carter III with prejudice. 2011 WL 6178878, at *12.

         Carter noticed an appeal to the Fourth Circuit arguing, first, that the Wartime Suspension of Limitations Act (" WSLA" ), 18 U.S.C. § 3287, tolled the statute of limitations on his claims. See United States ex rel. Carter v. Halliburton Co., 710 F.3d 171, 177 (4th Cir. 2013). The Fourth Circuit agreed and reversed this Court's statute of limitations conclusion by finding that the WSLA did toll the statute and thus Carter's claims were not time barred. Id. at 181.

         The Fourth Circuit then considered the effect of the first-to-file bar. By the time of appeal, the Maryland and Texas Actions had been voluntarily dismissed. Thus, Carter argued that those earlier-filed cases were no longer " pending" in a way that would bar his suit. The Fourth Circuit rejected this argument, noting that the " plain language of the first-to-file bar" required the court to " look at the facts as they existed when the claim was brought to determine whether an action is barred." Id. at 183. Because the Maryland and Texas Actions were " pending" when Carter III was filed, the subsequent voluntary dismissal of those cases did not remove the first-to-file bar. Thus, the Fourth Circuit agreed with this Court that the first-to-file bar precluded Carter III. Id.

         The Fourth Circuit then considered whether the earlier Actions would continue to bar related suits in perpetuity, even though those Actions were dismissed. The Fourth Circuit appears to have reached this question due to its interpretation that this Court dismissed Carter III with prejudice under a perpetual-bar theory. The Fourth Circuit concluded that dismissal with prejudice on first-to-file grounds was error because " once a case is no longer pending the first-to-file bar does not stop a relator from filing a related case." Id. Therefore, this Court should have dismissed without prejudice to permit Carter to refile. Id. The Fourth Circuit did not consider whether the statute of limitations would have barred refiling, likely because the court found the WSLA tolled the statute of limitations.

         This substantial litigation inertia carried Carter III all the way to the Supreme Court. Kellogg Brown & Root Servs., Inc. v. United States ex rel. Carter, 135 S.Ct. 1970, 191 L.Ed.2d 899

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 (2015) [hereinafter Kellogg ]. On the statute of limitations question, the Supreme Court agreed with this Court that " the WSLA does not suspend the applicable statute of limitations." Id. at 1978. This holding rendered all of Carter's claims time barred except for $673.56 of false billing. Thus, the Supreme Court proceeded to consider the application of the first-to-file bar on those remaining claims. Looking at whether dismissal with prejudice was required under the first-to-file bar, the Supreme Court asked " whether the False Claims Act's first-to-file bar keeps new claims out of court only while related claims are still alive or whether it may bar those claims in perpetuity." Id. at 1973. On this question, the Supreme Court " agree[d] with the Fourth Circuit that the dismissal with prejudice of respondent's one live claim was error" because a case is no longer " pending" once it has been dismissed. Id. at 1978-79. Thus, the Supreme Court reversed in part and affirmed in part and remanded the case. The Supreme Court never addressed the question of whether the statute of limitations or repose would preclude Carter from refiling after dismissal without prejudice.

         On remand, the Fourth Circuit considered the " only issue left for resolution . . . whether Carter timely filed his complaint under the principle of equitable tolling." United States ex rel. Carter v. Halliburton Co., 612 Fed.Appx. 180, 180 (4th Cir. 2015). Finding that Carter did not properly appeal the issue of equitable tolling, the Fourth Circuit granted the " extraordinary" remedy of summarily affirming this Court's decision not to equitably toll the statute of limitations. Id. at 180; see also 4th Cir. R. 27(f) (" Motions for summary affirmance . . . are reserved for extraordinary cases only and should not be filed routinely." ). The Fourth Circuit noted, however, that " the district court judgment was not wholly free from error, as 'dismissal with prejudice of respondent's one live claim' was 'not called for' under the first-to-file rule." Id. at 181 (quoting Kellogg, 135 S.Ct. at 1978-79). Therefore, the Fourth Circuit remanded the case to this Court. Id.

         After this labyrinthine course, Carter's case is before this Court again on Defendants' motion to dismiss with prejudice pursuant to the first-to-file bar and the statute of limitations and repose that Defendants argue would prevent Carter from refiling. In response, Carter argues the first-to-file bar no longer precludes his case and he seeks to revive his time-barred allegations through amendment, relation back, and equitable principles. For the following reasons, the Court will deny Carter's motion to amend and will dismiss this case without prejudice due to the first-to-file bar.

         II. Legal Standard

         Pursuant to Rule 12(b)(1), a claim may be dismissed for lack of subject matter jurisdiction. Defendants raising a 12(b)(1) challenge may contend that the complaint " fails to allege facts upon which subject matter jurisdiction may be based" or " that the jurisdictional allegations of the complaint were not true." Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982). In either case, the " burden of proving subject matter jurisdiction on a motion to dismiss is on the plaintiff, the party asserting jurisdiction." Id.

         Additionally, Rule 12(b)(6) allows a court to dismiss a suit which fails " to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6).[1] To survive a motion to dismiss under Rule 12(b)(6), a complaint must contain facts sufficient to

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" state a claim to relief that is plausible on its face." Bell A. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). When reviewing the complaint, the court " must accept as true all the factual allegations contained in the complaint" and " draw all reasonable inferences in favor of the plaintiff." E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 441 (4th Cir. 2011).

         III. Analysis

         The FCA's qui tam provision incentivizes citizens to report and prosecute knowingly false claims being submitted to the Government. The FCA, however, places limitations on qui tam suits to " prevent parasitic lawsuits based on previously disclosed fraud." Carter, 710 F.3d at 181 (citing United States ex rel. LaCorte v. SmithKline Beecham Clinical Labs., Inc., 149 F.3d 227, 233 (3d Cir. 1998)). The first-to-file bar, 31 U.S.C. § 3730(b)(5), is one such limitation. Section 3730(b)(5) " precludes a qui tam suit 'based on facts underlying [a] pending action." Kellogg, 135 S.Ct. at 1974. Specifically, the statute states the following: " When a person brings an action . . . no person other than the Government may intervene or bring a related action based on the facts underlying the pending action." § 3730(b)(5).

         In the present case, it is uncontested that the Maryland and Texas Actions were " pending" when Carter filed this suit in June 2011. Carter argues that those Actions no longer bar his suit because they were dismissed in October 2011 and March 2012, respectively, making them no longer " pending" under Kellogg' s recent definition of that term. Thus, in Carter's view, he may proceed to trial on his timely claims without dismissing his case or amending his complaint. As an alternative position, Carter argues that the ...

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