Kellogg Brown & Root Servs., Inc. v. United States ex rel. Carter
| Decision Date | 26 May 2015 |
| Docket Number | No. 12–1497.,12–1497. |
| Citation | 575 U.S. 650,191 L.Ed.2d 899,135 S.Ct. 1970 |
| Parties | KELLOGG BROWN & ROOT SERVICES, INC., et al., Petitioners v. UNITED STATES, ex rel. Benjamin CARTER. |
| Court | U.S. Supreme Court |
John P. Elwood, Washington, DC, for the petitioners.
David S. Stone, Short Hills, NJ, for the respondent.
Malcolm L. Stewart for the United States as amicus curiae, by special leave of the Court, supporting the respondent.
John M. Faust, Law Office of John M. Faust, PLLC, Washington, DC, John P. Elwood, Counsel of Record, Craig D. Margolis, Jeremy C. Marwell, Tirzah S. Lollar, Kathleen C. Neace, Vinson & Elkins LLP, Washington, DC, for Petitioners.
Thomas M. Dunlap, David Ludwig, DunlapWeaver PLLC, Leesburg, VA, David S. Stone, Counsel of Record, Robert A. Magnanini, Amy Walker Wagner, Jason C. Spiro, Stone & Magnanini LLP, Short Hills, NJ, for Respondent Benjamin Carter.
Wars have often provided "exceptional opportunities" for fraud on the United States Government. See United States v. Smith, 342 U.S. 225, 228, 72 S.Ct. 260, 96 L.Ed. 252 (1952). "The False Claims Act was adopted in 1863 and signed into law by President Abraham Lincoln in order to combat rampant fraud in Civil War defense contracts." S.Rep. No. 99–345, p. 8 (1986), 1986 U.S.C.C.A.N. 5266, 5273. Predecessors of the Wartime Suspension of Limitations Act were enacted to address similar problems that arose during the First and Second World Wars. See Smith, supra, at 228–229, 72 S.Ct. 260.
In this case, we must decide two questions regarding those laws: first, whether the Wartime Suspension of Limitations Act applies only to criminal charges or also to civil claims; second, 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.
The False Claims Act (FCA) imposes liability on any person who "knowingly presents ... a false or fraudulent claim for payment or approval," 31 U.S.C. § 3729(a)(1)(A), "to an officer or employee of the United States," 3729(b)(2)(A)(i). The FCA may be enforced not just through litigation brought by the Government itself, but also through civil qui tam actions that are filed by private parties, called relators, "in the name of the Government." § 3730(b).
In a qui tam suit under the FCA, the relator files a complaint under seal and serves the United States with a copy of the complaint and a disclosure of all material evidence. § 3730(b)(2). After reviewing these materials, the United States may "proceed with the action, in which case the action shall be conducted by the Government," or it may "notify the court that it declines to take over the action, in which case the person bringing the action shall have the right to conduct the action." § 3730(b)(4). Regardless of the option that the United States selects, it retains the right at any time to dismiss the action entirely, § 3730(c)(2)(A), or to settle the case, § 3730(c)(2)(B).
The FCA imposes two restrictions on qui tam suits that are relevant here. One, the "first-to-file" bar, precludes a qui tam suit "based on the facts underlying [a] pending action." § 3730(b)(5) (emphasis added). The other, the FCA's statute of limitations provision, states that a qui tam action must be brought within six years of a violation or within three years of the date by which the United States should have known about a violation. In no circumstances, however, may a suit be brought more than 10 years after the date of a violation. § 3731(b).
The Wartime Suspension of Limitations Act (WSLA) suspends the statute of limitations for "any offense" involving fraud against the Federal Government. 18 U.S.C. § 3287. Before 2008, this provision was activated only "[w]hen the United States [was] at war." Ibid. (2006 ed.). In 2008, however, this provision was made to apply as well whenever Congress has enacted "a specific authorization for the use of the Armed Forces, as described in section 5(b) of the War Powers Resolution ( 50 U.S.C. 1544(b) )." Ibid . (2012 ed.).
Petitioners are defense contractors and related entities that provided logistical services to the United States military during the armed conflict in Iraq. From January to April 2005, respondent worked in Iraq for one of the petitioners as a water purification operator. He subsequently filed a qui tam complaint against petitioners (Carter I ), alleging that they had fraudulently billed the Government for water purification services that were not performed or not performed properly. The Government declined to intervene.
In 2010, shortly before trial, the Government informed the parties about an earlier filed qui tam lawsuit, United States ex rel. Thorpe v. Halliburton Co ., No. 05–cv–08924 (C.D.Cal., filed Dec. 23, 2005), that arguably contained similar claims.
This initiated a remarkable sequence of dismissals and filings.
The District Court held that respondent's suit was related to Thorpe and thus dismissed his case without prejudice under the first-to-file bar. Respondent appealed, and while his appeal was pending, Thorpe was dismissed for failure to prosecute. Respondent quickly filed a new complaint (Carter II ), but the District Court dismissed this second complaint under the first-to-file rule because respondent's own earlier case was still pending on appeal. Respondent then voluntarily dismissed this appeal, and in June 2011, more than six years after the alleged fraud, he filed yet another complaint (Carter III ), and it is this complaint that is now at issue.
Petitioners sought dismissal of this third complaint under the first-to-file rule, pointing to two allegedly related cases, one in Maryland and one in Texas, that had been filed in the interim between the filing of Carter I and Carter III . This time, the court dismissed respondent's complaint with prejudice. The court held that the latest complaint was barred under the first-to-file rule because the Maryland suit was already pending when that complaint was filed. The court also ruled that the WSLA applies only to criminal charges and thus did not suspend the time for filing respondent's civil claims. As a result, the court concluded, all but one of those claims were untimely because they were filed more than six years after the alleged wrongdoing.
The Fourth Circuit reversed, rejecting the District Court's analysis of both the WSLA and first-to-file issues. United States ex rel. Carter v. Halliburton Co., 710 F.3d 171 (2013). Concluding that the WSLA applies to civil claims based on fraud committed during the conflict in Iraq,1 the Court of Appeals held that respondent's claims had been filed on time. The Court of Appeals also held that the first-to-file bar ceases to apply once a related action is dismissed. Since the Maryland and Texas cases had been dismissed by the time of the Fourth Circuit's decision, the court held that respondent had the right to refile his case. The Court of Appeals thus remanded Carter III with instructions to dismiss without prejudice.
After this was done, respondent filed Carter IV , but the District Court dismissed Carter IV on the ground that the petition for a writ of certiorari in Carter III (the case now before us) was still pending.
We granted that petition, 573 U.S. ––––, 134 S.Ct. 2899, 189 L.Ed.2d 853 (2014), and we now reverse in part and affirm in part.
The text, structure, and history of the WSLA show that the Act applies only to criminal offenses.
The WSLA's roots extend back to the time after the end of World War I. Concerned about war-related frauds, Congress in 1921 enacted a statute that extended the statute of limitations for such offenses. The new law provided as follows: "[I]n offenses involving the defrauding or attempts to defraud the United States or any agency thereof ... and now indictable under any existing statutes, the period of limitations shall be six years." Act of Nov. 17, 1921, ch. 124, 42 Stat. 220 (emphasis added). Since only crimes are "indictable," this provision quite clearly was limited to the filing of criminal charges.
In 1942, after the United States entered World War II, Congress enacted a similar suspension statute. This law, like its predecessor, applied to fraud "offenses ... now indictable under any existing statutes," but this time the law suspended "any" "existing statute of limitations" until the fixed date of June 30, 1945. Act of Aug. 24, 1942, ch. 555, 56 Stat. 747–748.
As that date approached, Congress decided to adopt a suspension statute which would remain in force for the duration of the war. Congress amended the 1942 WSLA in three important ways. First, Congress deleted the phrase "now indictable under any statute," so that the WSLA was made to apply simply to "any offense against the laws of the United States." 58 Stat. 667. Second, although previous versions of the WSLA were of definite duration, Congress now suspended the limitations period for the open-ended timeframe of "three years after the termination of hostilities in the present war as proclaimed by the President or by a concurrent resolution of the two Houses of Congress." Ibid . Third, Congress expanded the statute's coverage beyond offenses "involving defrauding or attempts to defraud the United States" to include other offenses pertaining to Government contracts and the handling and disposal of Government property. Ibid ., and § 28, 58 Stat. 781.
Congress made more changes in 1948. From then until 2008, the WSLA's relevant language was as follows:
"When the United States is at war the running of any statute of limitations applicable to any offense (1) involving fraud or attempted fraud against the United States or any agency thereof in any manner, whether by conspiracy or not ... shall be suspended until three years after the termination of hostilities as proclaimed by the President or by a concurrent resolution of Congress." Act of June 25,...
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