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FCA Qui Notes
July 12, 2019

EDVA Latest to Weigh in on Standard for Evaluating Granston Motions to Dismiss—Straddles the Line Between Swift and Sequoia

Qui Notes: Unlocking the False Claims Act

As battles rage in a series of False Claims Act cases about the appropriate standard for assessing "Granston" motions to dismiss (i.e., motions under 31 U.S.C. § 3730(c)(2)(A)), the U.S. District Court for the Eastern District of Virginia quietly stepped into the fray. In United States ex rel. Henneberger v. Ticom Geomatics, Inc., 1:16-cv-670 (E.D. Va. June 12, 2019), the court granted the government's motion to dismiss over the relator's objection, "find[ing] itself predominantly aligned" with the Swift "unfettered right" to dismiss approach, but nonetheless conducted a Sequoia-type analysis.

The relator in Henneberger alleged that the defendant knowingly misrepresented "the applicability and the accuracy of its geolocation technology" sold to the government, which allegedly resulted in unintended deaths. The government moved to dismiss, stating that it investigated the relator's claims and "determined that Relator lacks specific knowledge of exactly what representations were made, when they were made, to whom they were made, and precisely how they are false"; "is unable to identify which of the[] contracts, if any, are implicated by his allegations"; and nearly all of the contracts at issue were awarded after the relator left the defendant's employment. The government argued that allowing the case to proceed would impose "a significant burden" on the government, requiring it to monitor the litigation, respond to discovery requests from both parties, and present witnesses on materiality for each of the 19 contracts at issue.

In granting the government's motion, the court noted the circuit split regarding the standard for evaluating "Granston" motions to dismiss. As we have previously written, at least two circuits and a handful of district courts have applied the standard set out in Sequoia Orange Co. v. Gaird-Neece Packing Corp., 151 F.3d 1139 (9th Cir. 1998), which requires the government to show (1) a valid government purpose and (2) a rational relation between that purpose and the requested dismissal. Other courts have applied the D.C. Circuit's approach in Swift v. United States, 318 F.3d 250 (D.C. Cir. 2003), which holds that the government has an "unfettered right" to dismiss that is essentially unreviewable. The Henneberger court "predominantly aligned [itself] with the views of the D.C. Circuit in Swift," but downplayed the significance of the split, writing that the Sequoia standard "is not inconsistent with this construction since a court would always have the authority to prevent a perversion of the law through a fraudulent, corrupt, or improper purpose." The court went on to conduct a Sequoia-type analysis, holding that the potential cost to the government of responding to discovery requests when it believes the relator's case to be meritless "is clearly a legitimate purpose for seeking dismissal."

As courts continue to grapple with the Swift/Sequoia split, we will put Henneberger somewhere in the middle, leaning toward Swift. Stay tuned to Qui Notes for further updates on this important issue.

© 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.