United States Ex Rel. Gadbois v. PharMerica Corp. , 809 F.3d 1 ( 2015 )

United States Court of Appeals
For the First Circuit
No. 14-2164
UNITED STATES ex rel. ROBERT GADBOIS,
Plaintiff, Appellant,
STATES OF CA, CO, DE, FL, GA, HI, IL, IN, LA, MA, MI, MN, MT,
NV, NH, NM, NC, RI, TN, TX, VA, WI, ex rel. ROBERT GADBOIS,
Plaintiffs, Appellants,
STATE OF MARYLAND ex rel. ROBERT GADBOIS,
Plaintiff,
v.
PHARMERICA CORPORATION,
Defendant, Appellee,
CVS/CAREMARK CORPORATION; WALGREEN COMPANY; MEDCALL, LLC;
AND RITE AID CORPORATION,
Defendants.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Mary M. Lisi, U.S. District Judge]
Before
Howard, Chief Judge,
Selya and Stahl, Circuit Judges.
Robert L. Vogel, with whom Shelley R. Slade, Vogel, Slade &
Goldstein, LLP, Amato A. DeLuca, DeLuca & Weizenbaum, Ltd., Louise
A. Herman, and Law Offices of Louise A. Herman were on brief, for
appellants.
Jeremy M. Sternberg, with whom Ralph T. Lepore, III, Michael
R. Manthei, Robert M. Shaw, Nathaniel F. Hulme, and Holland &
Knight LLP were on brief, for appellee.
December 16, 2015
SELYA, Circuit Judge. In this qui tam action, the
district court dismissed the claims of the relator, Robert Gadbois,
for lack of subject matter jurisdiction. While his appeal of that
order was pending, subsequent events coalesced to dissolve the
jurisdictional impediment to the relator's action. He responded
to this development by broadening his appeal to include the
possibility of supplementing his pleadings. We conclude, as a
matter of first impression in this court, that Federal Rule of
Civil Procedure 15(d) is available to cure most kinds of defects
in subject matter jurisdiction. For prudential reasons, however,
we decline to order such supplementation here but, rather, vacate
the judgment below to allow the district court to consider the
relator's request for supplementation under Rule 15(d).
I. BACKGROUND
The relator formerly worked as a pharmacist for
PharMerica Corp. (PharMerica). In November of 2010, he filed this
qui tam action under seal in the District of Rhode Island. His
complaint alleged that PharMerica had committed numerous
infractions related to its distribution of prescription drugs to
long-term care facilities in violation of the False Claims Act
(FCA), 31 U.S.C. §§ 3729-3733, and several parallel state statutes.
The relator filed an amended complaint as of right in
May of 2011. More than two years elapsed before the United States
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elected not to intervene in the case. In short order, the affected
states took a similar stance.
The pleadings were unsealed and, in February of 2014,
the relator filed a second amended complaint with leave of court.
In due course, PharMerica moved to dismiss, asserting both lack of
subject matter jurisdiction and failure to state a claim upon which
relief could be granted. See Fed. R. Civ. P. 12(b)(1), (6).
PharMerica contended, inter alia, that the district court lacked
jurisdiction by virtue of the FCA's first-to-file bar, which
provides that if an action involving the same subject matter is
already pending, "no person other than the Government may intervene
or bring a related action based on the facts underlying the pending
action." 31 U.S.C. § 3730(b)(5). In support of this contention,
PharMerica highlighted similarities between the relator's action
and an earlier-filed action that was pending in the United States
District Court for the Eastern District of Wisconsin.
The district court, addressing only PharMerica's request
for dismissal under Rule 12(b)(1) and the first-to-file bar, laid
the allegations contained in the relator's second amended
complaint alongside the allegations contained in the Wisconsin
pleadings. It concluded that the two actions were based on
substantially the same facts and conduct. See United States ex
rel. Gadbois v. PharMerica Corp., No. 10-471, slip op. at 22-23
(D.R.I. Oct. 3, 2014) (unpublished). Consequently, the court —
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citing the first-to-file bar — dismissed the relator's FCA claim
for want of subject matter jurisdiction. See id. at 23. It then
declined to exercise supplemental jurisdiction over the relator's
state-law claims and dismissed those claims as well. See id.The relator timely appealed. During the course of
briefing, the tectonic plates shifted. First, the Supreme Court
handed down its decision in Kellogg Brown & Root Services, Inc. v.
United States ex rel. Carter, 135 S. Ct. 1970 (2015), which
construed the phrase "pending action" as used in 31 U.S.C.
§ 3730(b)(5). The Court held that, under the wording of the
statute, "an earlier suit bars a later suit while the earlier suit
remains undecided but ceases to bar that suit once it is
dismissed." Id. at 1978. Accordingly, the dismissal of a section
3730(b)(5) claim ordinarily should be without prejudice, because
the claim could be refiled once the first-filed action is no longer
pending. See id. at 1979.
Less than a month after the Court decided Carter, a
second development occurred: the Wisconsin action was settled and
dismissed. By then, the relator's appeal was already partially
briefed. Positing that these two developments — the Carter
decision and the dismissal of the Wisconsin action — had
significantly affected his case, the relator, in his reply brief
and by a separate motion to remand, sought to reformulate his
complaint on the fly. He requested, in the alternative, that we
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either deem his complaint supplemented with the additional fact
that the Wisconsin action was no longer pending or remand to the
district court with instructions to permit him to supplement his
complaint under Rule 15(d). In an opposition to the relator's
remand motion and at oral argument, PharMerica argued that neither
of these alternatives was appropriate.
II. ANALYSIS
The peculiar posture of this case makes it advisable for
us to consider the relator's procedural arguments first. If the
relator's second amended complaint is a legitimate candidate for
supplementation, that would obviate any need to address the degree
of similarity between that complaint and the pleadings in the
Wisconsin action. Thus, our starting point is the relator's
request for relief under Rule 15(d).
Rule 15(d) affords litigants a pathway for pleading "any
transaction, occurrence, or event that happened after the date of
the pleading to be supplemented." The rule shares the core
objective of the Civil Rules: "to make pleadings a means to achieve
an orderly and fair administration of justice." Griffin v. Cty.
Sch. Bd., 377 U.S. 218, 227 (1964); see Fed. R. Civ. P. 1. Rule
15(d) facilitates this objective by "promot[ing] as complete an
adjudication of the dispute between the parties as is possible."
6A Charles Alan Wright et al., Federal Practice and Procedure
§ 1504, at 245 (3d ed. 2010); see LaSalvia v. United Dairymen of
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Ariz., 804 F.2d 1113, 1119 (9th Cir. 1986). By the same token,
the Rule helps courts and litigants to avoid pointless formality:
although causes of action accruing after the institution of a
lawsuit usually can be filed as separate actions, supplementation
under Rule 15(d) is often a more efficient mechanism for litigating
such claims. See Predator Int'l, Inc. v. Gamo Outdoor USA, Inc.,
793 F.3d 1177, 1186-87 (10th Cir. 2015). It follows that
supplementation of pleadings is encouraged "when doing so will
promote the economic and speedy disposition of the entire
controversy between the parties, will not cause undue delay or
trial inconvenience, and will not prejudice the rights of any of
the other parties to the action." 6A Wright et al., Federal
Practice and Procedure § 1504, at 258-59.
PharMerica acknowledges these principles but insists
that they are trumped in this instance by the venerable rule that
"[j]urisdiction is determined based on whether it existed at the
time the plaintiff filed the original complaint." United States
ex rel. Estate of Cunningham v. Millennium Labs. of Cal., Inc.,
713 F.3d 662, 664 (1st Cir. 2013). Noting that we have described
the first-to-file bar as jurisdictional, see, e.g., United States
ex rel. Wilson v. Bristol-Myers Squibb, Inc., 750 F.3d 111, 117
(1st Cir. 2014), PharMerica suggests that the fact that the
relator's claim was barred when brought prevents him from using
Rule 15(d) to cure the jurisdictional defect. This suggestion is
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bolstered, PharMerica says, by the FCA itself, which provides that
no one can "bring" an action based on the same facts as those
undergirding a pending action. 31 U.S.C. § 3730(b)(5).
After careful consideration, we find PharMerica's
position untenable. We explain briefly.
Rule 15(d) prescribes that "[t]he court may permit
supplementation even though the original pleading is defective in
stating a claim or defense." This sentence was added to the rule
in 1963. It was designed to combat "the rigid and formalistic
view that where the original complaint fails to state a claim upon
which relief can be granted, leave to serve a supplemental
complaint must be denied." Fed. R. Civ. P. 15(d) advisory
committee's note to 1963 amendment. The new language was designed
to ensure that the amended rule would "give the court broad
discretion in allowing a supplemental pleading" so that plaintiffs
would not be "needlessly remitted to the difficulties of commencing
a new action even though events occurring after the commencement
of the original action have made clear the right to relief." Id.In keeping with this spirit of flexibility, courts
generally have read Rule 15(d) to include defects in subject matter
jurisdiction among the deficiencies that may be corrected through
a supplemental pleading. The Supreme Court has signaled its
approval of this praxis. See Mathews v. Diaz, 426 U.S. 67, 75 &
n.8 (1976) (recognizing that plaintiff had not satisfied "a
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nonwaivable condition of jurisdiction" before filing suit, but
noting that plaintiff had subsequently satisfied the condition so
"[a] supplemental complaint in the District Court would have
eliminated this jurisdictional issue"). The decision in Mathews
plainly implies that subject matter jurisdiction falls within the
cluster of defects that may be cured by a supplemental pleading
under Rule 15(d).
Our sister circuits have not hesitated to make this
implication explicit. See, e.g., Prasco, LLC v. Medicis Pharm.
Corp., 537 F.3d 1329, 1337 (Fed. Cir. 2008); Franks v. Ross, 313
F.3d 184, 198 (4th Cir. 2002); see also Hertz Corp. v. Enterprise
Rent-a-Car Co., 557 F. Supp. 2d 185, 191-92 (D. Mass. 2008). A
few illustrations suffice to make the point. For example, the
expiration of a jurisdictional waiting period can be shown through
a supplemental pleading in order to salvage an otherwise premature
complaint. See Feldman v. Law Enforcement Assocs. Corp., 752 F.3d
339, 345, 347-48 (4th Cir. 2014); Wilson v. Westinghouse Elec.
Corp., 838 F.2d 286, 290 (8th Cir. 1988). So, too, Rule 15(d) has
been viewed as an appropriate mechanism for pleading newly arising
facts necessary to demonstrate standing. See Northstar Fin.
Advisors, Inc. v. Schwab Invs., 779 F.3d 1036, 1044-45 (9th Cir.),
cert. denied, 136 S. Ct. 240 (2015).
The weight and consistency of these authorities
undermines PharMerica's attempt to elongate the reach of the
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familiar rule that jurisdiction is determined by the facts existing
at the time of filing an original complaint. As we previously
have explained, "[t]he letter and spirit of the [time-of-filing]
rule apply most obviously in diversity cases, where the rule
originated, and where heightened concerns about forum-shopping and
strategic behavior offer special justifications for it." ConnectU
LLC v. Zuckerberg, 522 F.3d 82, 92 (1st Cir. 2008) (citation
omitted). In federal question cases, however, "courts have been
careful not to import the time-of-filing rule indiscriminately."
Id. Where, as here, there are no allegations of manipulative abuse
of the rule, the time-of-filing rule is inapposite to the federal
question context.1 See id. at 92 & n.8.
Viewed against this backdrop, we think it manifest that
the relator's case is well suited to a motion for leave to
supplement. Developments occurring after the filing of the second
amended complaint — the Carter decision and the dismissal of the
Wisconsin action — have dissolved the jurisdictional bar that the
court below found dispositive. Although the order of dismissal
may have been proper at the time it was entered, the relator timely
1 Though we have at times referenced the time-of-filing rule
in federal question cases, see, e.g., Sallen v. Corinthians
Licenciamentos LTDA, 273 F.3d 14, 23 (1st Cir. 2001), those
references have invariably been in dictum. They are, therefore,
without any binding effect. See Dedham Water Co., Inc. v.
Cumberland Farms Dairy, Inc., 972 F.2d 453, 459 (1st Cir. 1992).
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appealed and the critical developments occurred during the
pendency of that appeal. Consequently, this case is analogous to
the cases in which a jurisdictional prerequisite (such as an
exhaustion requirement) is satisfied only after suit is commenced.
Under the circumstances, it would be a pointless formality to let
the dismissal of the second amended complaint stand — and doing so
would needlessly expose the relator to the vagaries of filing a
new action. We hold, therefore, that the relator's second amended
complaint is eligible for the proposed supplementation.2
This holding does not end our odyssey. Even though the
relator's second amended complaint is eligible for the proposed
supplementation, a question remains as to whether such
supplementation should be allowed. This question comes before us
in a curious posture. Typically, a motion for supplementation
will be proffered in the district court, and an appellate court's
role will be limited to examining whether the district court abused
its discretion in granting or denying the motion. See, e.g.,
Schwarz v. City of Treasure Island, 544 F.3d 1201, 1211 (11th Cir.
2008); Twin Disc, Inc. v. Big Bud Tractor, Inc., 772 F.2d 1329,
2 Because we conclude that a supplemental pleading can be used
to cure a jurisdictional defect, we have no need to consider the
relator's back-up argument that the first-to-file bar is not
jurisdictional in light of Carter and the recent decision in United
States ex rel. Heath v. AT&T, Inc., 791 F.3d 112, 119-21, 121 n.4
(D.C. Cir. 2015), petition for cert. filed, 84 U.S.L.W. 3179 (U.S.
Sept. 21, 2015) (No. 15-363).
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1338 (7th Cir. 1985). Here, however, the timing of the new
developments was such that the district court did not have an
opportunity to pass upon a motion to supplement.
The relator requests supplementation for the first time
on appeal, and he phrases his request in the alternative: he asks
that we either deem his second amended complaint supplemented
instanter or remand the case to the district court with
instructions to permit supplementation.
We reject the relator's first alternative out of hand.
Under Rule 15(d), the filing of a supplemental pleading is not
available to the pleader as a matter of right but, rather, is
subject to the court's discretion. See ConnectU, 522 F.3d at 90.
That discretion should normally be exercised in the
first instance by the district court, not by the court of appeals.
For this reason, we reject the relator's alternative request as
framed. It would completely frustrate the district court's ability
to exercise its discretion were we to remand with instructions to
permit supplementation. A remand makes sense here only if it is
for the purpose of allowing the district court to exercise its
discretion.
In the closely analogous circumstances of discretionary
amendments under Rule 15(a), we have emphasized the desirability
of allowing the district court to exercise discretion in the first
instance. See United States ex rel. Rost v. Pfizer, Inc., 507
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F.3d 720, 733-34 (1st Cir. 2007). Requests for supplementation
under Rule 15(d) are no different. Where, as here, the pleader is
not entitled to supplementation as a matter of right and we have
no firm indication as to how the district court would exercise its
discretion with respect to a Rule 15(d) motion, allowing the
district court to make the initial determination is the proper
course.
This conclusion is reinforced by the breadth of the
discretion inherent in Rule 15(d). As written, Rule 15(d) contains
no standards at all to guide the district court's analysis; it
merely authorizes the district court to permit service of a
supplemental pleading "on just terms." In an effort to fill this
vacuum and in keeping with the overarching flexibility of Rule 15,
courts customarily have treated requests to supplement under Rule
15(d) liberally. See, e.g., Walker v. United Parcel Serv., Inc.,
240 F.3d 1268, 1278 (10th Cir. 2001). This liberality is
reminiscent of the way in which courts have treated requests to
amend under Rule 15(a)'s leave "freely give[n]" standard. See,
e.g., Glatt v. Chi. Park Dist., 87 F.3d 190, 194 (7th Cir. 1996);
Quaratino v. Tiffany & Co., 71 F.3d 58, 66 (2d Cir. 1995); Mueller
Co. v. U.S. Pipe & Foundry Co., 351 F. Supp. 2d 1, 2 (D.N.H. 2005).
This does not mean, however, that motions for
supplementation should be granted automatically. For one thing,
it is implicit in the logic of Rule 15(d) that a motion to
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supplement may be denied where the referenced events occurred
before the filing of the original complaint.3 See Eid v. Alaska
Airlines, Inc., 621 F.3d 858, 874-75 (9th Cir. 2010). For another
thing, leave to supplement may be withheld when the request would
"unduly delay resolution of the case." Hall v. CIA, 437 F.3d 94,
101 (D.C. Cir. 2006); accord Schwarz, 544 F.3d at 1229; Weeks v.
N.Y. State (Div. of Parole), 273 F.3d 76, 88 (2d Cir. 2001); Twin
Disc, 772 F.2d at 1338. In the last analysis, a district court
faced with a Rule 15(d) motion must weigh the totality of the
circumstances, just as it would under Rule 15(a). See Palmer v.
Champion Mortg., 465 F.3d 24, 30-31 (1st Cir. 2006). Idiosyncratic
factors — say, the futility of supplementation, see Haggard v.
Bank of the Ozarks, Inc., 668 F.3d 196, 202 (5th Cir. 2012) (per
curiam); Motorola Credit Corp. v. Uzan, 388 F.3d 39, 65 (2d Cir.
2004), prejudice to the opposing party, see Walker, 240 F.3d at
1278-79, and unreasonable delay in attempting to supplement, see
Glatt, 87 F.3d at 194 — may suffice to ground a denial of a Rule
15(d) motion. Everything depends on context.
We recognize that a district court has a hands-on
familiarity with a case — a familiarity that an appellate court
3 For the sake of completeness, we note that a motion to
supplement that is in fact a motion to amend will ordinarily be
recharacterized and addressed under the correct rubric. See
McDonald v. Hall, 579 F.2d 120, 120 n.1, 121-22 (1st Cir. 1978)
(per curiam).
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cannot hope to replicate. Given this special coign of vantage, it
will almost always be advisable for the district court, not the
court of appeals, to pass judgment in the first instance on a
request for supplementation. See United States ex rel. D'Agostino
v. ev3, Inc., 802 F.3d 188, 195 (1st Cir. 2015) (expressing a
similar view with respect to Rule 15(a) motions). Rule 15(d)'s
unique mandate that supplementation of pleadings shall only be
allowed "on just terms" points us in the same direction.
Of course, vacating the judgment and remanding to the
district court to allow consideration of a motion to supplement
leaves the merits issues unresolved. But under the circumstances,
it would be imprudent to attempt to resolve them here. After all,
the case will change materially if the district court permits
supplementation of the second amended complaint. Consequently,
any disposition of the substantive issues raised in this appeal
would run the risk of being wholly advisory — and federal courts
are prohibited from rendering advisory opinions. See Hayburn's
Case, 2 U.S. (2 Dall.) 409 (1792); Osediacz v. City of Cranston,
414 F.3d 136, 139 (1st Cir. 2005).
III. CONCLUSION
We need go no further. For the reasons elucidated above,
we vacate the judgment of the district court and remand the case
so that the relator may file, within such time parameters as the
district court may set, a motion to supplement his second amended
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complaint. The district court shall pass upon that motion in due
season and, in the event that the court denies the motion, it may
reenter a judgment of dismissal.4 If, however, the court grants
the motion for supplementation, the case will proceed in the
ordinary course.
Vacated and remanded. No costs.
4 Although there may no longer be a barrier to the relator's
suit under the first-to-file bar, PharMerica may assert any number
of other defenses to the relator's proposed supplementation. For
example, PharMerica may argue that such supplementation would be
futile in light of the settlement in the Wisconsin action. See
United States ex rel. Chovanec v. Apria Healthcare Grp. Inc., 606
F.3d 361, 362, 365 (7th Cir. 2010) (noting that the circumstances
surrounding a lifting of the first-to-file bar may sometimes give
rise to other defenses to the action).
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