Virginia Lawyers Weekly

A qui tam relator’s failure to file his amended complaint under seal and submit it to the government in camera did not deprive an Alexandria U.S. District Court of subject matter jurisdiction, where the court already ordered the original complaint unsealed after the government had an opportunity to intervene.

Plaintiff filed his initial complaint in the matter under seal, and on Nov. 27, 2006, the court ordered the complaint unsealed and served on defendants by the relator, and that the seal be lifted as to all other matters occurring in the action. The complaint alleges two theories of fraudulent conduct related to IIF’s Federal Supply Schedule contracts with the U.S. Government Services Administration. The relator did not file the amended complaint under seal.

The case continued in active litigation for nearly a year. On May 6, 2008, relator and defendants reached a settlement in principle, which was memorialized in a “settlement agreement,” that was “void without Government approval.” The government objected to several aspects of this settlement in principle, including the percentage of the award the relator claimed entitlement to, and withheld its consent to settlement. The relator filed a series of motions seeking court determination as to the settlement issues. The court found that it lacked authority to enforce a settlement agreement in a qui tam case without the government’s consent.

Under the circumstances of this case, the filing and service requirements did not apply to the relator’s amended complaint. The filing and service requirements of 31 U.S.C. § 3730(b)(2) did not apply to the amended complaint.

In general, where the court already has unsealed the case and granted the relator leave to amend the complaint, the policy arguments supporting dismissal for failure to comply with the filing and service requirements no longer hold. In this case, the government already had the opportunity to review the complaint and factual disclosure statements. Indeed, the government reviewed the materials for almost six months before declining to intervene. The court unsealed the original complaint and all other matters occurring in this action on Nov. 27, 2006, after which time defendants filed and prevailed on a motion to dismiss the original complaint. Obviously, there was no risk that filing the amended complaint would tip off defendants as to the existence of an investigation given that they had been actively litigating the case for some time. Nor did the amended complaint add new substantive claims requiring further consideration by the government.

Motion to dismiss for lack of subject matter jurisdiction denied.

U.S. ex rel. Thomas M. Ubl v. IIF Data Solutions (O’Grady, J.) No. 1:06cv641, May 5, 2009; USDC at Alexandria, Va. VLW 009-3-263, 11 pp.

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