Brutus Trading, LLC v. Standard Chartered Bank

• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
• Parties: Brutus Trading, LLC, Plaintiff-Appellant, v. Standard Chartered Bank, Standard Chartered PLC, Standard Chartered Trade Services Corporation, Defendants-Appellees, United States of America, Interested Third-Party Appellee.
• Decision Date: 21 August 2023
• Docket Number: 20-2578

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Brutus Trading, LLC, Plaintiff-Appellant,
v.
Standard Chartered Bank, Standard Chartered PLC, Standard Chartered Trade Services Corporation, Defendants-Appellees,

United States of America, Interested Third-Party Appellee.

No. 20-2578

United States Court of Appeals, Second Circuit

August 21, 2023

UNPUBLISHED OPINION

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT'S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION "SUMMARY ORDER"). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 21^st day of August, two thousand twenty-three.

Appeal from a judgment of the United States District Court for the Southern District of New York (Paul A. Engelmayer, Judge).

For Plaintiff-Appellant: ROBERT J. CYNKAR, McSweeney Cynkar & Kachouroff, PLLC, Great Falls, VA (Patrick M. McSweeney, McSweeney Cynkar & Kachouroff, PLLC, Powhatan, VA, on the brief).

For Interested Third-Party Appellee: JEAN-DAVID BARNEA (Benjamin H. Torrance, on the brief), Assistant United States Attorneys, for Damian Williams, United States Attorney for the Southern District of New York, New York, NY.

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PRESENT: RICHARD J. SULLIVAN, ALISON J. NATHAN, SARAH A. L. MERRIAM, Circuit Judges.

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the judgment of the district court is AFFIRMED.

Brutus Trading, LLC ("Brutus") - the qui tam relator that initiated this False Claims Act ("FCA") suit - appeals from the district court's decisions (1) granting the government's motion to dismiss the qui tam action, (2) dismissing Brutus's action without holding an evidentiary hearing, and (3) denying Brutus's motion for an indicative ruling under Rule 62.1 of the Federal Rules of Civil Procedure. We assume the parties' familiarity with the underlying facts, procedural history, and issues on appeal.

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Brutus's operative complaint alleged that Standard Chartered Bank, Standard Chartered PLC, and Standard Chartered Trade Services Corporation (collectively, "Standard Chartered") facilitated illegal banking transactions "on behalf of individuals, businesses, and financial institutions that were subject to U.S. economic sanctions because of their links to Iran." J. App'x at 60. The complaint further alleged that Standard Chartered defrauded the government by concealing the extent of its illegal activities when it entered into a deferred-prosecution agreement with various law-enforcement agencies in 2012. In addition, because Brutus believes that it provided the government with the information that led to a separate investigation and settlement with Standard Chartered in 2019, Brutus also claimed that it was entitled to a share of Standard Chartered's forfeiture payment from that settlement.

Although it initially declined to intervene, the government moved in November 2019 to dismiss Brutus's action under 31 U.S.C. § 3730(c)(2)(A). In its motion, the government argued that dismissal was appropriate because Brutus's factual allegations were unsupported, its legal theory was not cognizable, and the continuation of the suit would waste considerable government resources. Brutus filed a substantial memorandum of law in opposition, together with a number of

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exhibits, to which the government filed a reply, and Brutus then filed a sur-reply. The district court granted the motion on the papers without holding an evidentiary hearing. Brutus timely appealed.

While the appeal was pending, Brutus moved under Rule 62.1 for the district court to issue a ruling indicating its willingness to reopen the proceedings pursuant to Rule 60 but for the divestiture of jurisdiction that resulted from the appeal. Brutus argued that several Buzzfeed News articles postdating the dismissal constituted newly discovered evidence warranting relief from the judgment. The district court denied the motion, finding that the Buzzfeed News articles were inadmissible hearsay and, in any event, cast no doubt on its prior rulings.

In June 2022, also while this appeal was pending, the Supreme Court granted certiorari to resolve a circuit split regarding the standard that district courts should apply in ruling on motions to dismiss under section 3730(c)(2)(A). United States ex rel. Polansky v. Exec. Health Res., Inc., 142 S.Ct. 2834 (2022). We, in turn, entered an order holding Brutus's appeal in abeyance pending the Supreme Court's decision in Polansky. The Supreme Court issued its decision on June 16, 2023, holding that district courts should assess section 3730(c)(2)(A) motions using

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the standards provided by Federal Rule of Civil Procedure 41(a). See United States, ex rel. Polansky v. Exec. Health Res., Inc., 143 S.Ct. 1720, 1733-34 (2023). The parties thereafter filed supplemental briefs regarding the impact of the Supreme Court's decision on the pending appeal. We address each of Brutus's arguments in turn.^[1]

I. Dismissal under Section 3730(c)(2)(A)

Brutus contends that the district court erroneously granted the government's motion to dismiss under section 3730(c)(2)(A). We disagree. The FCA permits a relator to bring a qui tam action "in the name of the [g]overnment" against those who knowingly defraud the United States.

31 U.S.C. § 3730(b)(1). After such an action is filed, the government may intervene and litigate the case. Id. § 3730(b)(2). If the government intervenes, "it shall have the primary responsibility for prosecuting the action, and shall not be bound by an act of the person bringing the action." Id. § 3730(c)(1). Although

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the person who brought the qui tam action has the right to continue as a party after the government has intervened, "[t]he...