The Third Time's (Not) the Charm: Rule 41(a)'s Two-Dismissal Rule Applies to Refiled Qui Tam Actions
In a story with a familiar start but a twist ending, an Arizona clinical laboratory recently faced two identical qui tam lawsuits by two separate relators. The defendant moved to dismiss the second relator's suit under the False Claims Act's first-to-file bar, because the first-filed suit was still pending in court. The second relator, Arizona Medical Billing Inc. (AMB), stipulated to the dismissal, which was entered without prejudice. A year later, the first-filed relator also voluntarily dismissed her complaint. At that point, AMB re-filed its complaint, commencing a third qui tam suit. But earlier this month, in Arizona Medical Billing Inc. v. FSIX LLC, et al., No. CV-17-04742, 2019 WL 467079 (Feb. 6, 2019, D. Ariz.) (AMB), the court granted the defendant's motion to dismiss AMB's new suit with prejudice—not under the first-to-file rule, but under Federal Rule of Civil Procedure 41(a)(1)(B)'s "two-dismissal" rule, which treats a plaintiff's second voluntary dismissal as precluding future suits involving the same claims. The court concluded that the rule applied because the prior qui tam suits all belonged to the same "common plaintiff": the United States, which never intervened but had consented to the prior dismissals.
Rule 41(a)(1)(B) states that a voluntary dismissal is usually "without prejudice" unless the notice or stipulation of dismissal "states otherwise." However, if "the plaintiff" previously dismissed a lawsuit involving "the same claim," then "a notice of dismissal operates as an adjudication on the merits." In other words, under Rule 41's two-dismissal rule, a plaintiff can usually get one free pass to voluntarily dismiss and refile their case. If the plaintiff files a second time, that's it—a second voluntary dismissal is a merits adjudication (i.e., with prejudice).
In AMB, the court explained that although Rule 41(a) talks about "the plaintiff," the different relators didn't matter because they brought identical claims and the government was the "common plaintiff" in both earlier suits. Relators can only bring qui tam actions on the government's behalf, and 31 U.S.C. § 3730(b)(1) lets them voluntarily dismiss those actions only with the government's written consent. Because of the government's statutory obligation to weigh in on the two prior dismissals, the AMB court agreed that the government had played an "active role" as the "primary plaintiff" for purposes of Rule 41(a). As a result, the two voluntary dismissals barred any more bites at the apple. Government lawyers take note: if you're going to weigh in on whether a qui tam case can proceed, make sure you keep track of your relators.
© Arnold & Porter Kaye Scholer LLP 2019. All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.