Amphastar Pharmaceuticals Inc. v. Aventis Pharma SA

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
AMPHASTAR Nos. 14-56382
PHARMACEUTICALS INC., 15-56209
Relator,
Plaintiff-Appellee, D.C. No.
5:09-cv-00023-MJG-OP
v.
AVENTIS PHARMA SA;
AVENTIS PHARMACEUTICALS
INC.; SANOFI-AVENTIS SA,
Defendants-Appellants.
AMPHASTAR No. 15-56122
PHARMACEUTICALS INC.,
Relator, D.C. No.
Plaintiff-Appellant, 5:09-cv-00023-MJG-OP
v.
OPINION
AVENTIS PHARMA SA;
AVENTIS PHARMACEUTICALS
INC.; SANOFI-AVENTIS SA,
Defendants-Appellees.
2 AMPHASTAR PHARM. V. AVENTIS PHARMA
Appeal from the United States District Court
for the Central District of California
Marvin J. Garbis, District Judge, Presiding by Designation
Argued and Submitted November 10, 2016
Pasadena, California
Filed May 11, 2017
Before: Diarmuid F. O’Scannlain and Johnnie B.
Rawlinson, Circuit Judges, and Rosemary Marquez,*
District Judge.
Opinion by Judge O’Scannlain
SUMMARY**
False Claims Act
In a qui tam suit under the False Claims Act, the panel
affirmed the district court’s dismissal of the action for lack of
subject matter jurisdiction; dismissed as moot the defendant’s
appeal from the district court’s denial of its motion for
summary judgment; reversed the district court’s denial of the
defendant’s motion for attorneys’ fees; and remanded the case
to the district court.
*
The Honorable Rosemary Marquez, United States District Judge for
the District of Arizona, sitting by designation.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
AMPHASTAR PHARM. V. AVENTIS PHARMA 3
The plaintiff alleged that by committing fraud against the
United States Patent and Trademark Office in a patent
application, the defendant obtained an illegal monopoly over
a drug and then knowingly overcharged the United States.
The panel held that the district court lacked subject matter
jurisdiction because the complaint was based on public
disclosures in the form of allegations of fraud, as well as
allegations of the underlying facts, in a prior patent
infringement suit. In addition, the plaintiff did not show that
it was the original source of the information on which its
allegations were based. The panel held that the plaintiff did
not show both that it had direct, firsthand knowledge of the
alleged fraud and that it obtained this knowledge
independently.
Reversing the denial of attorneys’ fees under the fee-
shifting provision of the False Claims Act, the panel held that
the district court had authority to award attorneys’ fees after
the dismissal of the action for lack of subject matter
jurisdiction. Agreeing with the Tenth Circuit, the panel held
that the fee-shifting provision provides an independent grant
of jurisdiction. In addition, the defendant was a prevailing
party. The panel concluded that the Supreme Court’s opinion
in CRST Van Expedited, Inc. v. E.E.O.C., 136 S. Ct. 1642(2016), effectively overruled the holding of Branson v. Nott,
62 F.3d 287 (9th Cir. 1995), that a defendant that wins
because the action is dismissed for lack of subject matter
jurisdiction is never a prevailing party. The panel remanded
for resolution of the attorneys’ fees issue.
4 AMPHASTAR PHARM. V. AVENTIS PHARMA
COUNSEL
Wayne R. Gross (argued), Evan C. Borges, Michael E. Lopez,
and Bret D. Hembd, Greenberg Gross LLP, Costa Mesa,
California, for Relator-Appellant/Appellee.
Mark A. Perry (argued) and Stephen C. Payne, Gibson Dunn
& Crutcher LLP, Washington, D.C.; M. Sean Royall, Tracey
B. Davies, and Olivia A. Adendoroff, Gibson Dunn &
Crutcher LLP, Dallas, Texas; for Defendants-
Appellants/Appellees.
OPINION
O’SCANNLAIN, Circuit Judge:
We must decide whether we have subject matter
jurisdiction over a corporate qui tam action1 under the False
Claims Act that accuses a competing company of committing
fraud against the United States.
I
This saga began in the early 1990s, when Aventis Pharma
S.A., (“Aventis”) a French pharmaceutical enterprise,2
1
A qui tam action is one in which a private party (the relator) brings
a lawsuit on behalf of the United States government alleging fraud in
return for a portion of any damages awarded. See 31 U.S.C. § 3730(b).
2
Aventis Pharma S.A. and Aventis Pharmaceuticals, Inc. (the
American subsidiary) merged with and into Sanofi-Aventis S.A. during
this litigation. The defendants-appellants are collectively referred to as
Aventis.
AMPHASTAR PHARM. V. AVENTIS PHARMA 5
developed a plan to sell the drug enoxaparin in the United
States under the brand name Lovenox. Enoxaparin is a
heparin-based blood thinner that was patented in Europe in
the 1980s as European Patent 40,144 (“EP144”). Eventually,
European authorities invalidated EP144 as lacking novelty.
A
In June 1991, Aventis applied to the U.S. Patent and
Trademark Office (“USPTO”) for a patent to cover a
supposedly new version of enoxaparin (“618 Product”).3
Aventis filed a New Drug Application (“NDA”) with the
Food and Drug Administration (“FDA”) a month later.
The initial versions of the NDA were rejected in part as
being “obvious in view of the prior art,” including EP144.
Aventis acknowledged that EP144 was prior art, but claimed
that the 618 Product was a different drug from the drug
produced by following EP144 (“EP144 Product”). After
several subsequent rejections, Aventis submitted a revised
NDA in 1993 supported by the expert declaration of Dr.
Andre Uzan, a French scientist. Dr. Uzan claimed that data in
Example 64 of the patent application, included in the revised
NDA, “clearly demonstrate[d]” that the 618 Product has a
longer half-life relative to the EP144 Product, and thus was
novel.
3
Referred to as the “618 Product” by previous courts because it was
eventually covered by Patent Number 5,389,618.
4
Example 6 of the patent application describes data from studies that
purport to show that the 618 Product has a significantly longer half-life
than the EP144 Product, enabling the same effect to be achieved with
lower dosages.
6 AMPHASTAR PHARM. V. AVENTIS PHARMA
The USPTO then approved the revised application and
issued Patent Number 5,389,618 (“618 Patent”)5 for the
618 Product in 1995, in large part because of Dr. Uzan’s
statements regarding Example 6. However, it turned out that
Dr. Uzan’s sworn declarations were incorrect. Dr. Uzan had
based his claim of a difference by comparing a 40mg dose of
the 618 Product with a 60mg dose of the EP144 Product, but
had not disclosed that different dosages were used in the
USPTO submissions. A dose-for-dose comparison would
have shown that the difference between the products was “not
statistically significant.” This error went undetected for years.
Meanwhile, after the 618 Patent was issued, Aventis listed it
in the FDA’s Orange Book, which invokes the protections of
the Hatch-Waxman Act. 21 U.S.C. § 355(j)(5)(B)(iii)
(requiring a generic drug competitor to certify that the patent
is either not infringed or invalid).
1
Amphastar Pharmaceuticals, Inc., (“Amphastar”) a U.S.-
based generic pharmaceutical firm founded in 1999 by Yong
Feng Zhang, decided that enoxaparin would be a good
prospect for a generic product, believing it might be possible
to develop a generic version by utilizing information from
EP144. Development work began in 2000 and included
experiments performed from 2000 to 2003 (“Pre-Litigation
Experiments”). The exact nature of the Pre-Litigation
Experiments is disputed, but they led to Amphastar’s being
able to manufacture a generic enoxaparin. Amphastar then
submitted an Abbreviated New Drug Application (“ANDA”)
to the FDA on March 4, 2003.
5
This patent was reissued as U.S. Reissue Patent No. 38,743 in 2005.
Both patents are collectively referred to herein as the “618 Patent.”
AMPHASTAR PHARM. V. AVENTIS PHARMA 7
Aventis responded to Amphastar’s ANDA by bringing
suit five months later, alleging that Amphastar and Teva
Pharmaceuticals were infringing on the 618 Patent.
Amphastar filed its Amended Answer and Counterclaim and
made no mention of the Example 6 error or the Pre-Litigation
Experiments.
After discovery was underway, Amphastar filed a motion
to amend its Answer and Counterclaim, stating, “based on
facts recently developed in this litigation, Amphastar has
added new affirmative defenses and several antitrust claims
to its answer and counterclaims.” Amphastar’s additions
included an affirmative defense alleging inequitable conduct
by Aventis in obtaining the 618 Patent. After Aventis filed a
motion to strike the amendments, Amphastar responded by
asserting: “As to the unenforceability of the ‘618 patent based
on inequitable conduct, all of the facts and evidence upon
which this affirmative defense is based are in the possession
and control of Aventis.” Amphastar did not mention the Pre-
Litigation Experiments when it listed the evidence on which
it based its inequitable conduct defense. Amphastar also
alleged antitrust violations.
2
Amphastar eventually prevailed in its patent infringement
litigation battle with Aventis.6 By the end of the litigation the
6
The initial 2003 patent infringement suit by Aventis led to the
finding, on summary judgment, that Amphastar’s affirmative defense on
inequitable conduct grounds succeeded because (1) Aventis’s false
representations and nondisclosures to the USPTO were material, and (2) it
had intent to deceive the USPTO. Aventis Pharma S.A. v. Amphastar
Pharm., Inc., 390 F. Supp. 2d 952 (C.D. Cal. 2005) (“Aventis I”). The
Federal Circuit affirmed in part but reversed in part. 176 Fed. App’x 117
8 AMPHASTAR PHARM. V. AVENTIS PHARMA
Federal Circuit had affirmed the district court’s conclusions
that: (1) Aventis made material nondisclosures and false
representations to the USPTO regarding the 618 Patent
application and (2) Aventis intended to deceive the USPTO.
Amphastar was thus able to produce generic enoxaparin
without fear of infringement—the 618 Patent was “found to
be unenforceable on the ground of inequitable conduct.”
However, Amphastar’s antitrust counterclaim was dismissed.
B
Amphastar then brought this qui tam action against
Aventis.7 Amphastar duly sent the statutorily required letter
to the United States Department of Justice, notifying it of its
intent to bring this action. Amphastar then filed its sealed
complaint on January 7, 2009, alleging that by committing
fraud against the USPTO, Aventis obtained an illegal
monopoly over enoxaparin and then knowingly overcharged
the United States. By committing such fraud, Amphastar
(Fed. Cir. 2006) (“Aventis II”) (affirming the material false representations
and nondisclosures finding, but vacating the intent to deceive conclusion
and remanding the case to the district court for a trial on the intent to
deceive issue).
On remand, the district court again found that Aventis did intend to
deceive the USPTO; this time the decision was affirmed on appeal.
Aventis Pharma S.A. v. Amphastar Pharm., Inc., 475 F. Supp. 2d 970, 994
(C.D. Cal. 2007) (“Aventis III”), aff’d, 525 F.3d 1334 (Fed. Cir. 2008)
(“Aventis IV”).
7
Said action was filed pursuant to 31 U.S.C. § 3730, which was
amended on March 23, 2010, but the amendments are not retroactive.
Graham Cnty. Soil & Water Conservation Dist. v. United States ex rel.
Wilson, 559 U.S. 280, 283 n.1 (2010). We analyze the statute as it existed
when Amphastar first filed its complaint in 2009.
AMPHASTAR PHARM. V. AVENTIS PHARMA 9
further alleged, Aventis knew the patent was invalid and thus
knowingly defrauded the United States. The complaint was
unsealed and the case proceeded in October 2011, after the
government declined to join the litigation.
1
On November 14, 2012, the district court ruled that
Amphastar’s complaint was based on public disclosures, and
therefore Amphastar had to show it was the “original source
. . . of the information on which the allegations are based.”
§ 3730(e)(4). Thereafter, Aventis filed a motion for summary
judgment contending Amphastar had failed to meet the
original source exception to the jurisdictional bar. To be an
original source of information underlying the complaint,
Amphastar needed to meet the pre-suit disclosure and “direct
and independent knowledge” requirements.
Aventis first argued that Amphastar had failed to disclose
enough information in its pre-suit disclosure letter. The
district court denied Aventis’s summary judgment motion on
this issue in a May 2014 ruling, but certified its ruling for
interlocutory appeal, which Aventis brought in No. 14-56382.
2
The district court then proceeded to the “direct and
independent knowledge” issue.8 It held a four-day evidentiary
8
Direct knowledge is firsthand knowledge of the alleged fraud
obtained by the relator’s own labor. United States v. Alcan Elec. & Eng’g,
Inc., 197 F.3d 1014, 1020 (9th Cir. 1999). Independent knowledge is
knowledge obtained by the relator before the evidence of the fraud was
10 AMPHASTAR PHARM. V. AVENTIS PHARMA
hearing to determine if Amphastar had direct and independent
knowledge of any of the information underlying its
allegations. The district court made various factual findings:
Amphastar had no knowledge of Example 6 being false
before the Aventis I litigation began; Zhang (Amphastar’s
CEO) was not a credible witness; Amphastar had engaged in
inconsistent actions regarding whether it had known of the
Example 6 error before the Aventis I litigation, and such
inconsistent actions undermined its argument. The district
court also concluded that Amphastar did not produce
enoxaparin by following EP144 in its Pre-Litigation
Experiments, but copied key information from Patent 618.
For all these reasons the district court held that Amphastar
had neither direct nor independent knowledge of any of the
elements of fraud supposedly committed by Aventis. The
district court then dismissed the case for lack of jurisdiction.
Aventis moved for attorneys’ fees, which motion was denied.
Amphastar timely appealed the dismissal of its qui tam
suit. Aventis timely cross-appealed the denial of attorneys’
fees.
II
On appeal, Amphastar contends that the district court
erred in dismissing its qui tam suit for lack of jurisdiction.9 It
disclosed to the public. United States ex rel. Devlin v. California, 84 F.3d
358, 361 n.5 (9th Cir. 1996).
9
Whether subject matter jurisdiction exists “is a question of law
reviewed de novo.” United States ex rel. Biddle v. Bd. of Trs. of Leland
Stanford, Jr. Univ., 161 F.3d 533, 535 (9th Cir. 1998). “The district
court’s findings of fact relevant to its determination of subject matter
jurisdiction are reviewed for clear error.” Id. District court evidentiary
AMPHASTAR PHARM. V. AVENTIS PHARMA 11
argues specifically that the district court erred in concluding
that the allegations of fraud had been publicly disclosed and
further erred in concluding that Amphastar was not “an
original source” of Aventis’s allegedly fraudulent actions.
31 U.S.C. § 3730(e)(4).
The relevant portions of Section 3730(e)(4) of the False
Claims Act state:
(e)(4)(A): No court shall have jurisdiction
over an action under this section based upon
the public disclosure of allegations or
transactions in a criminal, civil, or
administrative hearing . . . unless . . . the
person bringing the action is an original
source of the information.
(e)(4)(B): For purposes of this paragraph,
“original source” means an individual who
has direct and independent knowledge of the
information on which the allegations are
based and has voluntarily provided the
information to the Government before filing
an action under this section which is based on
the information.
If Amphastar’s allegations are based on publicly disclosed
information, the jurisdictional bar applies unless Amphastar
is an “original source.” To be an original source, Amphastar
rulings are reviewed for abuse of discretion. Gribben v. United Parcel
Serv., Inc., 528 F.3d 1166, 1171 (9th Cir. 2008). Other legal issues, such
as the attorneys’ fees issue, are reviewed de novo. See Salve Regina Coll.
v. Russell, 499 U.S. 225, 231 (1991).
12 AMPHASTAR PHARM. V. AVENTIS PHARMA
must demonstrate that: (1) it had direct and independent
knowledge of the information on which it based its
allegations, and (2) it satisfied the pre-suit disclosure
requirements by providing the necessary information to the
government before filing an action. Amphastar “bears the
burden of establishing subject matter jurisdiction by a
preponderance of the evidence.” Alcan, 197 F.3d at 1018.
A
Was the public disclosure bar triggered?
1
Transactions or allegations are disclosed if they can be
found in pleadings or other public filings. Hagood v. Sonoma
Cnty. Water Agency, 81 F.3d 1465, 1474 n.13 (9th Cir. 1996).
Our circuit interprets “allegations” to refer to direct claims of
fraud, and, we interpret “transaction to refer to facts from
which fraud can be inferred.” United States ex rel. Mateski v.
Raytheon Co., 816 F.3d 565, 571 (9th Cir. 2016). We have
adopted the reasoning of United States ex rel. Springfield
Terminal Railway Co. v. Quinn, which states that when a
critical mass of the underlying facts or of the allegations in
the qui tam complaint have been disclosed prior to the qui
tam complaint being filed, the public disclosure bar applies.
Mateski, 816 F.3d at 571 (citing 14 F.3d 645, 653–54 (D.C.
Cir. 1994)).
The Mateski court explained that if “X + Y = Z, Z
represents the allegation of fraud and X and Y represent its
essential elements.” Id. (quoting United States ex rel. Found.
Aiding the Elderly v. Horizon W., Inc., 265 F.3d 1011, 1015
(9th Cir. 2001), amended on denial of reh’g, 275 F.3d 1189AMPHASTAR PHARM. V. AVENTIS PHARMA 13
(9th Cir. 2001)). If the fraud allegations [Z] are disclosed, the
bar applies. Id. If enough of the underlying facts making up
the elements of fraud are disclosed, the bar applies. Id. “[I]n
a fraud case, X and Y inevitably stand for but two elements:”
the misrepresented facts [X] and the true facts [Y]. Id.(quoting Found. Aiding, 265 F.3d at 1015).
2
Amphastar argues that the allegations of fraud were never
publicly disclosed before it filed this qui tam action. It
concedes that general allegations of fraud were made in its
Aventis I Amended Answer and Counterclaim, but says these
past allegations never mentioned any false claims submitted
to or paid by the federal government and state governments.
Instead, its current allegations concern the fact that false
claims were submitted to one or another government,
allegations which were never made in any prior publicly
disclosed document.
However, “[a]n allegation need not include an express
reference to the [False Claims Act]” for the public disclosure
bar to apply. Alcan, 197 F.3d at 1019. Nor does a disclosed
allegation need to contain every specific detail to constitute
a disclosure. Id. (rejecting an argument the relator’s new
allegations are meaningfully different because the old
allegations “did not mention the [False Claims Act] and did
not include details of the violations”). Alcan involved a
situation where the publicly disclosed allegations “did not
mention any overcharging, false-invoicing . . . or any other
specific fraud on the government.” Id. Like Alcan, this is not
a case where the prior allegations concerned “a very different
problem” than the qui tam allegations. See Mateski, 816 F.3d
14 AMPHASTAR PHARM. V. AVENTIS PHARMA
at 574 (discussing the “substantially similar” spectrum)
(quoting Found. Aiding, 265 F.3d at 1016).
Amphastar’s Amended Answer and Counterclaim in the
2003 Patent Infringement case made nearly identical
allegations to those made here. It accused Aventis of
obtaining an invalid patent due to misrepresentations. It also
claimed that, despite knowing about these misrepresentations,
“Aventis has attempted to maintain or obtain a monopoly
over others” by doing things such as improperly listing the
Patent in the Orange Book. Finally, it alleged that “Aventis
has wrongfully derived, and will continue to wrongfully
derive, income and profits from this conduct.” The only new
allegation Amphastar makes in the instant case is that the
government also bought the drug while Aventis held its
illegal monopoly, but this is an obvious inference based on
the publicly disclosed allegations. The allegations in this case
are so “substantially similar” to the prior allegations that we
are satisfied the public disclosure bar applies. See Mateski,
816 F.3d at 573–74.
3
While the fraud allegations being disclosed are enough to
trigger the bar, Amphastar also failed to demonstrate that
both the misrepresented facts and the true facts were not
disclosed. This is also enough to trigger the bar on its own.
The misrepresented facts presented to the government (via the
USPTO) are that the 618 Product differed from the EP144
Product because the half-life of the products was different,
and thus Aventis held a valid patent—and, the true facts
(actual state of the world) are that Example 6 was false and
thus Aventis held an invalid patent, and this invalid patent
allowed Aventis unlawfully to charge monopoly prices to
AMPHASTAR PHARM. V. AVENTIS PHARMA 15
customers. In this case “the information publicly disclosed
. . . contained the material facts underlying [the relator’s]
allegation of fraud.” A-1 Ambulance Serv., Inc. v. California,
202 F.3d 1238, 1245 (9th Cir. 2000); see also Found. Aiding,
265 F.3d at 1015–17 (asking if the true state of the world was
disclosed (i.e. the defendant’s substandard care) and if the
misrepresented facts were disclosed (i.e. the false statements
to the government)).
The evidence that the misrepresented facts and the true
facts were actually disclosed is overwhelming. The qui tam
complaint alleges that: (1) Aventis intentionally made
material misrepresentations to the USPTO regarding whether
the 618 Product was novel relative to prior art, (2) such
misrepresentations allowed it fraudulently to obtain the
618 Patent, (3) Aventis then improperly listed the 618 Patent
in the FDA Orange Book, and (4) such listing allowed
Aventis to overcharge the government. The 2004 allegations10
that were publicly disclosed included all of these facts,
except, instead of mentioning overcharging the government,
they mentioned overcharging in general. While the Amended
Answer and Counterclaim did not specifically mention
Example 6, it did allege material misrepresentations
regarding “studies of the pharmacological properties of prior
art compounds, including half life.”
10
These include the Amended Answer and Counterclaim filed by
Amphastar and the Motion for Leave (After the Fact) to File its Amended
Answer and Counterclaim (Amend Motion) in Aventis I, which added new
affirmative defenses and several antitrust claims “based on facts recently
developed in this litigation.”
16 AMPHASTAR PHARM. V. AVENTIS PHARMA
4
Amphastar also argues that the district court erred because
it recited: “The ‘public disclosure’ standard is not intended to
be difficult to meet. Hagood, 81 F.3d at 1476 n.18 (noting
that courts often treat the ‘based upon public disclosure’ step
as a ‘quick trigger’ to arrive at the more exacting ‘original
source’ inquiry).” Amphastar Pharm., Inc. v. Aventis Pharma
S.A., No. EDCV-09-0023, 2012 WL 5512466, at *7 (C.D.
Cal. Nov. 14, 2012) (“Aventis V”). Mateski specifically
rejected a defendant’s argument that the “quick trigger”
language of Hagood means the courts should avoid
substantively analyzing a public disclosure issue. 816 F.3d at
577–78 (stressing the need to analyze the issue “with some
specificity”).
Even assuming the district court committed legal error by
failing to analyze this issue in enough detail, any error would
be harmless. We are satisfied that enough of the fraud
allegations, or alternatively, enough of the underlying facts,
were publicly disclosed such that the public disclosure bar
should have been triggered.
B
Since the public disclosure bar was triggered, did
Amphastar qualify as an original source?
1
The first prong of the original source analysis asks
whether Amphastar can show it had “knowledge that is both
direct and independent.” Devlin, 84 F.3d at 361 n.5. To prove
“direct” knowledge, Amphastar “must show that [it] had
AMPHASTAR PHARM. V. AVENTIS PHARMA 17
firsthand knowledge of the alleged fraud, and that [it]
obtained this knowledge through [its] own labor unmediated
by anything else.” Alcan, 197 F.3d at 1020. To prove
“independent” knowledge, relators have to show they had
relevant “evidence of fraud prior to the public disclosure of
the allegations.” Devlin, 84 F.3d at 361 n.5.
Amphastar claimed it learned that Example 6 was false
through its Pre-Litigation Experiments (direct) and knew this
information before the Aventis I disclosures (independent).11
Amphastar Pharm., Inc. v. Aventis Pharma S.A., No. EDCV-
09-0023, 2015 WL 4511573, at *6 (C.D. Cal. July 20, 2015)
(“Aventis VI”). Specifically, Amphastar argued that its Pre-
Litigation Experiments showed that it could create “a
bioequivalent enoxaparin with the same molecular weight and
half-life properties as” the 618 Product by just following
EP144. Id. Thus, Example 6, which showed a difference in
11
Amphastar also argues that it gained direct and independent
knowledge that Aventis committed fraud during the Aventis I discovery
process. However, this argument is not relevant to the original source
analysis. Even if Amphastar did gain knowledge of the fraud because of
the Aventis I discovery process, a relator’s involvement in prior litigation
that constituted a public disclosure does not make it an original source
when it learned of the alleged fraud solely through discovery of materials
that could potentially be accessed by the public. See, e.g., United States
ex rel. Kreindler & Kreindler v. United Techs. Corp., 985 F.2d 1148,
1158–59 (2d Cir. 1993); United States ex rel. Stinson, Lyons, Gerlin &
Bustamante, P.A. v. Prudential Ins. Co., 944 F.2d 1149, 1160–61 (3d Cir.
1991). To qualify as an original source Amphastar must show it gained
some direct and independent knowledge from its Pre-Litigation
Experiments, since this is the only non-Aventis I discovery source of
information from which it claims it gained direct and independent
knowledge. This is presumably why Amphastar devoted almost all of its
efforts at the July 2014 evidentiary hearing to proving that it learned
Example 6 was false because of its Pre-Litigation Experiments.
18 AMPHASTAR PHARM. V. AVENTIS PHARMA
half-life between the two products, must be false, it argued.
Id.2
So the crucial question is whether the district court’s
factual findings derived from the July 2014 evidentiary
hearing are clearly erroneous. The district court did a
thorough job developing the record—eight witnesses
(including four experts) testified, 300 exhibits were
submitted, and the transcript for the hearing exceeds 1,100
pages. The district court found that Amphastar had no
knowledge Example 6 was false before this fact was publicly
disclosed in the Aventis I litigation. Aventis VI, 2015 WL
4511573, at *6. The court concluded that Zhang’s testimony,
that he knew Example 6 of the 618 Patent application was
false before the Aventis I litigation began, was not credible.
Id. It also concluded that Amphastar had no direct or
independent knowledge that Aventis had made false reports
to the FDA about its manufacturing process. Id. at *14
(“Indeed, in argument, Amphastar acknowledged that its only
witness regarding its supposed ‘direct and independent
knowledge,’ Zhang, did not offer such evidence.”).
The district court rejected Zhang’s testimony that he
believed Example 6 was false before Aventis I for several
reasons. For example, there was no written documentation of
this seemingly important discovery. The only proof Zhang
offered was a single statement in his deposition that he
allegedly told two other people in passing, yet neither of these
people testified to confirm these alleged conversations. Id. at
*6. The court also concluded that the Pre-Litigation
Experiments did not actually produce enoxaparin by
following EP144, and thus did not demonstrate that Example
AMPHASTAR PHARM. V. AVENTIS PHARMA 19
6 was false—despite Zhang claiming this is how he first came
to believe it. Id. at *8.
Additional evidence supporting the district court’s
conclusion was the notebooks documenting the Pre-Litigation
Experiments; they provided critical evidence that Amphastar
ended up relying on the 618 Patent to create a generic
enoxaparin. Id. at *9–14.12 This greatly undermined
Amphastar’s argument that it was able to duplicate the
618 Product using just EP144 disclosures and thus proved to
itself that something was wrong with the 618 Patent.
Amphastar even conceded that it is “not challenging the
court’s factual findings regarding its pre-litigation
experiments.”
The district court was also deeply troubled (for good
reason) by Amphastar’s inconsistent prior statements about
when it discovered the Example 6 error. Amphastar did not
raise the Example 6 issue as a defense until a year after the
Aventis I litigation began. Aventis VI, 2015 WL 4511573, at
*7. When it did raise the defense, in its June 7, 2004 motion,
it recited, “based on facts recently developed in this litigation,
Amphastar has added new affirmative defenses [and several
counterclaims].” Id. (emphasis added by district court).
Amphastar did not list the supposedly important Pre-
Litigation Experiments among the evidence in support of its
June 2004 contentions. Id. Also, the pre-suit disclosure letter
written by Amphastar in 2008 and sent to the government
12
Amphastar originally produced copies of the notebooks
documenting the Pre-Litigation Experiments that were missing certain
pages. Id. at 9. However, Amphastar actually knew that the original
notebooks contained some of those pages and did not inform the court of
this discrepancy until it was caught. Id. at 9–11.
20 AMPHASTAR PHARM. V. AVENTIS PHARMA
before Aventis VI stated that “[d]uring Amphastar’s litigation
against Aventis, Amphastar discovered that Aventis has
committed frauds against [the United States], which have
resulted in false claims.” Id. at *8 (emphasis added by district
court).
All of Amphastar’s legal arguments regarding direct and
independent knowledge fail if the factual findings of the
evidentiary hearing stand. Amphastar argues the district court
incorrectly required Amphastar to show it had knowledge of
Example 6’s falsity and of Aventis’s intent to deceive.
Furthermore, the district court does use the phrases “false
statement” and “knowledge of the alleged fraud”
interchangeably, which is problematic. See, e.g., id. at *6.
Amphastar only needed to prove it had direct and
independent knowledge that Example 6 was false to be an
original source—the district court should have spoken with
more precision. Nevertheless, the factual conclusion that
Amphastar had no knowledge of the Example 6 issue before
it was disclosed makes this argument moot. Any error is
harmless if Amphastar fails to overturn the factual findings.
Amphastar was required to offer compelling proof the
district court erred to overcome the deferential clear error
standard that governs factual findings. Anderson v. City of
Bessemer, 470 U.S. 564, 573 (1985) (describing the “clearly
erroneous” standard). Yet, Amphastar does not even directly
challenge the district court’s factual findings, instead arguing
that the district court did not adequately consider its March
17, 2003, experiment in considering whether Amphastar
knew about the Example 6 issue through its own labor pre-
Aventis I. However, the district court clearly concluded that
no Pre-Litigation Experiment provided Amphastar this
information. It discussed all of the issues with the Pre-
AMPHASTAR PHARM. V. AVENTIS PHARMA 21
Litigation Experiments in general and then provided specific
examples. The district court is not required to list all one
hundred plus experiments and explain why each one did not
provide this information, but instead it is presumed to have
considered all the evidence unless something indicates
otherwise. See W. Pac. Fisheries, Inc. v. SS President Grant,
730 F.2d 1280, 1285 (9th Cir. 1984). Here, the district court
considered “the evidence” and reached the not clearly
erroneous conclusion that none of the Pre-Litigation
Experiments produced enoxaparin utilizing just EP144
disclosures. Aventis VI, 2015 WL 4511573, at *1, 8.
3
Amphastar further argues that the district court abused its
discretion by allowing Aventis to present an argument at the
evidentiary hearing that it copied 618 Patent processes in its
Pre-Litigation Experiments. Amphastar served interrogatories
to Aventis before the evidentiary hearing to disclose facts,
witnesses, and other items supporting its arguments. Aventis
did not disclose that it would make an argument that
Amphastar copied the 618 Patent in response to the
interrogatories or in its pre-evidentiary hearing brief.
Amphastar believes this theory, and any related contentions,
should have been excluded under Federal Rule of Civil
Procedure 37(c)(1), which states: “If a party fails to provide
information or identify a witness as required by Rule 26(a) or
(e), the party is not allowed to use that information . . . unless
the failure was substantially justified or is harmless.”
However, Amphastar waived this argument by failing to
raise it adequately below. Nowhere before the district court
did Amphastar make a Rule 37(c)(1) objection or ask that
evidence relating to the copying theory be excluded. At the
22 AMPHASTAR PHARM. V. AVENTIS PHARMA
evidentiary hearing’s closing arguments Amphastar did
mention being caught off-guard by the “copying” theory, but
got several facts wrong and never attempted to exclude the
theory or raise a Rule 37 objection. Amphastar did make a
cursory Rule 37(b)(2)(A)(ii) request for sanctions and an
objection in its post-hearing brief, alleging that “Aventis . . .
failed to provide a full and complete disclosure of its
contentions.” But no citation to Rule 37(c)(1) was made.
Assuming arguendo that this issue was not waived and
the district court did err, any error was harmless. Even if the
“copying” theory were excluded, the record would still
contain all of the other factual findings that indicate
Amphastar lacked direct and independent knowledge. The
inconsistencies, the notebooks, Zhang’s lack of
credibility—all would remain. Amphastar would still bear the
burden of prevailing on the jurisdictional bar issue. Alcan,
197 F.3d at 1018. It has not come close to doing so.13
III
In its cross-appeal, Aventis contends that the district court
erred in concluding it had no power to award attorneys’ fees
to Aventis, and we agree. The relevant fee-shifting provision
states:
13
Because we conclude that Amphastar is not an original source since
it lacks direct and independent knowledge of some of the information
upon which the qui tam allegations are based, we need not address, and
choose not to consider, Aventis’s interlocutory appeal (No. 14-56382).
That appeal raised the issue of whether the district court erred by
concluding that Amphastar’s pre-suit disclosure letter satisfied the pre-suit
disclosure requirement of § 3730(e)(4)(B). In light of our conclusions
above, the interlocutory appeal will be dismissed as moot. See Earth
Island Inst. v. U.S. Forest Serv., 442 F.3d 1147, 1157 (9th Cir. 2006).
AMPHASTAR PHARM. V. AVENTIS PHARMA 23
If the Government does not proceed with the
action and the person bringing the action
conducts the action, the court may award to
the defendant its reasonable attorneys’ fees
and expenses if the defendant prevails in the
action and the court finds that the claim of the
person bringing the action was clearly
frivolous, clearly vexatious, or brought
primarily for purposes of harassment.
31 U.S.C. § 3730(d)(4) (emphasis added).
A
The district court relied on Branson v. Nott, 62 F.3d 287,
293 (9th Cir. 1995), to conclude that as a matter of law
attorneys’ fees cannot be awarded under a fee-shifting statute
if the underlying claim was dismissed for lack of subject
matter jurisdiction. Aventis VI, 2015 WL 4511573, at *16.
Branson and its progeny set out a two-part test for
analyzing whether a district court can award attorneys’ fees
when the underlying action is dismissed for lack of subject
matter jurisdiction in a case such as this: (1) Does the fee-
shifting provision contain an independent grant of subject
matter jurisdiction? (2) If so, did the winning party “prevail?”
62 F.3d at 293.
First, we look to see if the fee-shifting provision
“provide[s] the district court with jurisdiction to grant an
attorney fee award where subject matter jurisdiction to hear
the underlying . . . claim is lacking.” Id. Sometimes the
answer is no. See, e.g., Zambrano v. I.N.S., 282 F.3d 1145,
1150 (9th Cir. 2002) (concluding that the fee-shifting statute
24 AMPHASTAR PHARM. V. AVENTIS PHARMA
“does not provide an independent grant of jurisdiction” and
therefore the district court lacks the jurisdiction to award
attorneys’ fees). Sometimes the answer is yes. See, e.g.,
Alaska Right to Life Political Action Comm. v. Feldman,
504 F.3d 840, 852 (9th Cir. 2007) (holding that we “may
award attorneys’ fees and costs even after dismissing for lack
of jurisdiction”). And sometimes the answer is yes, but only
with regard to the jurisdictional issues. Latch v. United States,
842 F.2d 1031, 1033 n.4 (9th Cir. 1988) (per curiam)
(explaining that 26 U.S.C. § 7430 allows fees to be awarded
to a defendant that “prevailed on the only issue over which
the district court properly had jurisdiction, i.e., the
determination that it had no jurisdiction”).
Second, “even if the district court had the jurisdiction to
impose . . . attorney’s fees [under the fee-shifting provision],
attorney’s fees are only available under that provision to a
party who has ‘prevailed’ on the merits.” Branson, 62 F.3d at
293. The district court skipped to the second-prong and
reasonably concluded that Branson controlled, Aventis did
not “prevail,” and it could not award attorneys’ fees. Aventis
VI, 2015 WL 4511573, at *16; see also Branson, 62 F.3d at
293 (“Where, as here, dismissal is mandated by a lack of
subject matter jurisdiction, a defendant is not a ‘prevailing’
party within the meaning of § 1988.”).
B
But, Branson’s analysis of the second-prong has been
called into question. In CRST Van Expedited Inc. v. E.E.O.C.
the Supreme Court explained that “a favorable ruling on the
merits is not a necessary predicate to find that a defendant has
prevailed.” 136 S. Ct. 1642, 1646 (2016). It reversed an
Eighth Circuit decision that declined to award attorneys’ fees
AMPHASTAR PHARM. V. AVENTIS PHARMA 25
because the defendant did not win “on the merits.” Id. at
1650, 1654. The court elaborated at length about why
defendants who prevail for various non-meritorious reasons
should still be deemed “prevailing part[ies].” Id. at
1651–54.14 In doing so it included an example where
defendants prevailed for jurisdictional reasons, id. at 1653,
and never indicated that jurisdictional and non-jurisdictional
victories should be treated differently. Finally, it made clear
that its reasoning applied to other fee-shifting statutes, stating
that “Congress has included the term ‘prevailing party’ in
various fee-shifting statutes, and it has been the Court’s
approach to interpret the term in a consistent manner.” Id. at
1646. For these reasons, we conclude that the Supreme Court
has effectively overruled Branson’s holding that when a
defendant wins because the action is dismissed for lack of
subject matter jurisdiction he is never a prevailing party. See
Miller v. Gammie, 335 F.3d 889, 899–900 (9th Cir. 2003) (en
banc) (explaining that a three-judge panel may no longer be
bound by prior circuit precedent if it is “effectively overruled
by subsequent Supreme Court decisions”).
With Branson out of the way, the question of whether
Aventis is a prevailing party is an easy one: Yes. Aventis has
14
The Supreme Court tells us that we should look to whether there
was a “material alteration of the legal relationship of the parties.” Id. at
1646. We should also look to whether deeming a party “prevailing” and
awarding fees for frivolous litigation furthers the purpose of the statutory
scheme. Id. at 1652. Given that the purpose of fee-shifting statutes is to
deter frivolous litigation, and since fees can only be awarded if the
plaintiff’s action is deemed frivolous, the answer is almost always yes. See
id. (“Imposing an on-the-merits requirement for a defendant to obtain
prevailing party status would undermine that congressional policy by
blocking a whole category of defendants for whom Congress wished to
make fee awards available.”).
26 AMPHASTAR PHARM. V. AVENTIS PHARMA
spent eight years, quite a bit of money, and quite a bit of
energy, fighting this lawsuit. This lawsuit has probably lasted
longer than the vast majority of lawsuits that are resolved on
the “merits.” If Amphastar brought a frivolous action, the
statutory scheme strongly indicates that this is the kind of
case for which fee awards should be available to deter future
frivolous plaintiffs. See CRST, 136 S. Ct. at 1652. Common
sense says that Aventis has won a significant victory and
permanently changed the “legal relationship of the parties.”
Id. at 1646.
C
Amphastar challenges whether § 3730(d)(4) contains an
independent grant of subject matter jurisdiction to award
attorneys’ fees. We have located independent grants in some
cases but not in others, as discussed above, but whether
§ 3730(d)(4) contains an independent grant of jurisdiction is
a matter of first impression for this circuit. When deciding
this question we have looked at the text and structure of the
statute. See Latch, 842 F.2d at 1033. We have also been more
willing to allow a district court to award attorneys’ fees when
the underlying issues concerned whether the district court had
jurisdiction—since a court always has jurisdiction to
determine its own jurisdiction. Id. at 1033 n.4.
Two courts in other circuits have addressed this question.
Both conclude that § 3730(d)(4) provides an independent
grant of jurisdiction to award attorneys’ fees even if the
underlying action is dismissed for lack of jurisdiction. See
United States ex rel. Grynberg v. Praxair, Inc., 389 F.3d
1038, 1055–58 (10th Cir. 2004); United States ex rel.
Atkinson v. Pa. Shipbuilding Co., 528 F. Supp. 2d 533, 540
(E.D. Pa. 2007). Both relied on the text and structure of the
AMPHASTAR PHARM. V. AVENTIS PHARMA 27
statute. Id. Atkinson observed that “[e]liminating jurisdiction
to award attorney fees and expenses in such cases would have
the illogical consequence of disallowing fees in cases
specifically identified by Congress as undesirable.” 528 F.
Supp. 2d at 539–40.
The False Claims Act jurisdictional bar covers a huge
number of cases. To rule that a district court cannot award
attorneys’ fees even when it determines that a Relator brought
a frivolous suit just because the jurisdictional bar applies
would undermine one of the key purposes of the 1986
amendments to the False Claims Act—“to discourage
‘parasitic’ suits brought by individuals with no information of
their own to contribute to the suit.”15 United States v. Johnson
Controls, Inc., 457 F.3d 1009, 1017 (9th Cir. 2006) (quoting
Seal 1 v. Seal A, 255 F.3d 1154, 1158 (9th Cir. 2001)). It is
consistent with the statutory scheme that Aventis can receive
attorneys’ fees from Amphastar if its claim was frivolous,
given the immense amount of resources and time this action
has cost everyone. Cf. CRST, 136 S. Ct. at 1652–53
(discussing how in the context of Title VII of the Civil Rights
Act, “significant attorney time and expenditure may have
gone into contesting the claim [in cases like these]” and
“Congress could not have intended to bar defendants from
obtaining attorney’s fees in these cases”).
Given Latch, the text and structure of the statute, and
Grynberg and Atkinson, we conclude that § 3730(d)(4)
contains an independent grant of subject matter jurisdiction
at least to the extent that a court is able to award attorneys’
15
Congress enacted two related provisions to further that goal in
1986: the public disclosure bar (§ 3730(e)(4)) and the attorneys’ fees
provision for prevailing defendants (§ 3730(d)(4)).
28 AMPHASTAR PHARM. V. AVENTIS PHARMA
fees even where the issue is whether the court had subject
matter jurisdiction at all.
D
We are persuaded that the district court had subject matter
jurisdiction over the attorneys’ fees issue and that Aventis is
the prevailing party. As such, the district court may award
attorneys’ fees to Aventis if it determines that Amphastar’s
claim “was clearly frivolous, clearly vexatious, or brought
primarily for purposes of harassment.” § 3730(d)(4).
IV
Amphastar’s allegations in this action were based on
publicly disclosed information, and it lacked the direct and
independent knowledge needed to be an original source. We
uphold the judgment of the district court in favor of Aventis
on the merits. However, because the False Claims Act’s fee-
shifting provision contains an independent grant of subject
matter jurisdiction and because a party who wins a lawsuit on
a non-merits issue is a “prevailing party,” the conclusion of
the district court that it could not award attorneys’ fees is
erroneous, and the case is remanded for resolution of the
attorneys’ fees issue.
Therefore, the judgment of the district court in No. 15-
56122 is AFFIRMED, the appeal in No. 14-56382 is
DISMISSED, the judgment in No. 15-56209 is
REVERSED, and the case is REMANDED for further
proceedings consistent with this opinion.