Recent Fifth Circuit Decision Spotlights Perils of Complex Procedural Issues
On August 25, 2015, the Fifth Circuit vacated and remanded a district court’s order denying a relator’s Rule 60(b) motion for relief from dismissal based upon new evidence in the False Claims Act (FCA) case of United States ex rel. Gage v. Davis S.R. Aviation, LLC, No. 15-50141 (on appeal from Case No. 1:12-cv-00904-SS in the Western District of Texas). The district court had denied the Rule 60(b) motion because its underlying dismissal of the complaint was on appeal to the Fifth Circuit. In remanding, the Fifth Circuit held that the district court was required to consider the Rule 60(b) motion on its merits prior to denying it, and that not doing so was an abuse of discretion. Because the district court failed to consider the merits of the Rule 60(b) motion, it must now address that motion on remand even though, as a review of the pleadings demonstrates, there is little basis for relief.
The relator brought a complaint “concerning the salvaging of aircraft parts for resale to the Government,” alleging that the defendants violated the FCA by improperly repairing airplane parts from a crash prior to selling them to the government for use in military aircraft. The district court allowed the relator two amendments to his complaint, but even with those amendments, the relator could not present a viable false claims action. The district court stated that “[i]f there is a legitimate False Claims Act case buried underneath this mess, the Court cannot find it,” and dismissed the action based upon both the public disclosure bar and Rule 9(b) lack of particularity. The relator appealed the district court’s decision.
In addition to appealing the court’s decision, the relator filed a Rule 60(b) motion alleging he had new evidence, and thus the court should reconsider its decision dismissing the case. In that motion, the relator alleged that he had new information proving he was an original source, and that the public disclosure bar therefore did not preclude his claims. The relator did not address the district court’s dismissal based on lack of particularity, a fact which itself likely dooms the Rule 60(b) motion. Moreover, it is doubtful that the relator’s “new evidence” that he is an original source will survive scrutiny on the merits. The district court previously held that the relator’s claims substantially overlapped with claims from a previous case in which the relator served as an expert (and that relator learned the facts in his complaints through his work on that case). Relator’s Rule 60(b) motion did not address that holding at all. Instead, the relator alleged that his third amended complaint contained new facts about which the government was not previously aware. But these “new facts” were not new at all—they were information covered by a protective order from the previous case in which the relator served as an expert.
Although the relator’s Rule 60(b) motion is substantively deficient, the district court must now address its merits, including the “new” evidence purportedly precluding dismissal – all while the dismissal itself is on appeal at the Fifth Circuit. The result is additional expense, complexity, and delay in resolving this case.