Tenth Circuit Upholds Dismissal upon Government’s Motion

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In United States ex rel. Wickliffe v. EMC Corporation (April 4, 2012), the Tenth Circuit upheld the dismissal of a relator’s complaint under 31 U.S.C. § 3730(c)(2)(A), which permits the government to dismiss a relators’ complaint under the False Claims Act “notwithstanding the objections of the person initiating the action if the person has been notified by the Government of the filing of the motion and the court has provided the person with an opportunity for a hearing on the motion.” The relator opposed the government’s motion to dismiss.

Avoiding the question of whether the proper standard for assessing the government’s motion turned on whether the complaint had already been served, the Tenth Circuit applied the test set forth in United States ex rel. Sequoia Orange Co. v. Baird-Neece Packing Corp., 151 F.3d 1139, 1147 (9th Cir. 1998), which examines whether “the government offers reasons for dismissal that are rationally related to a legitimate government interest.” If the government offers such reasons, the burden shifts to the relator to show that the dismissal is arbitrary and capricious, fraudulent, or illegal.

The court found that the government easily satisfied its burden of showing that dismissal was appropriate in Wickliffe, since the government was already aware of the information disclosed in the complaint through its own investigation and had already entered into a settlement agreement with the defendant. Indeed, the settlement agreement precluded the government from recovering under the qui tam action.

The relators argued that the dismissal was arbitrary and capricious because their complaint, and not the government’s independent investigation, was the impetus for the settlement. The relators therefore argued that they were entitled to a qui tam award. Regardless of the merit in the relators’ arguments, the court held that the dispute over the award was not sufficient to prevent the government from exercising its statutory authority to dismiss the complaint. As the court recognized, the government may dismiss even meritorious complaints if doing so advances a rational government interest. Wickliffe confirms again that the government’s authority to control False Claims Act suits is almost unlimited.