SCOTUS CASES TO WATCH: DECIDED
By Brett Mittler
Kellogg Brown & Root v. United States
A decision in this case was issued on May 26, 2015. The questions presented were:
Whether the Wartime Suspension of Limitations Act (WSLA) applies to claims of civil fraud brought by private realtors, and is triggered without a formal declaration of war, in a manner that leads to indefinite tolling. WSLA is a criminal code provision that tolls the statute of limitations for "any offense" involving fraud against the government when the U.S. is at war.
Whether, contrary to the conclusion of numerous courts, the False Claims Act's (FCA) so called "first-to-file" bar (which creates a race to the courthouse to reward realtors who promptly disclose fraud against the government, while prohibiting repetitive, parasitic claims) functions as a "one-case-at-a-time" rule allowing an infinite series of duplicative claims, so long as no prior claim is pending at the time of filing.
Kellogg Brown & Root Services, Inc. ("KBR") provided logistical services to the U.S. military in Iraq under a multiyear government contract. Benjamin Carter, the respondent, was stationed at Ar Ramadi and Al Assad military bases in Iraq, near Fallujah, where he worked for a contactor as a water purification operator. From January 2005 to April 2005 he witnessed KBR bill the U.S. government for purifying and testing contaminated water from the Euphrates River, when this testing did not in fact occur. American troops were showering and brushing their teeth in contaminated water and exposing themselves to serious health risks. Shortly after, KBR received a $55 million dollar award for excellent water testing and purification services. Carter filed a qui tam suit against the petitioners, in a case know as Carter I.
In 2010, before the trial was set to start, the government informed both parties that an earlier qui tam suit, United States ex. Rel. Thorpe v. Halliburton Co., contained similar claims. Under the FCA, this was in violation of the "first-to-file" bar and it was therefore dismissed by the District Court. Carter filed a new complaint, in what is known as Carter II, but this was also dismissed as Carter I was still pending on appeal. The respondent voluntarily withdrew his appeal and in June 2011, more than six years after the alleged incident in Iraq, he filed a third appeal known as Carter III, which is the case now in question.
After Carter III was filed, the petitioners sought dismissal of the case under the first-to-file rule because there were two cases in two different states (Maryland and Texas) that had been filed while Carter waited to file again. The District Court dismissed the complaint with prejudice as the Maryland suit was pending when the latest complaint was filed. Additionally, the District Court held that the WSLA applies only to criminal cases and that the respondent's civil claims were untimely as the matter in question occurred outside of the FCA’s six year statute of limitations.
The Fourth Circuit reversed, rejecting the District's Court's interpretation of both the first-to-file and WSLA issues. They concluded that the WSLA does, in fact, apply to civil cases as well, so the case was filed on time. The Court of Appeals also held that the first-to-file rule ceases to apply once a case was dismissed. Since the Fourth Circuit's decision came at a time when both the Maryland and Texas cases were dismissed, the court held that the respondent had the right to refile his case and remanded Carter III with instructions to dismiss without prejudice.
Respondent then filed Carter IV, only to find that the case was again dismissed because the petition for a writ of certiorari in Carter III was still pending. The Supreme court granted the petition for Carter III to be heard, reversing and affirming in part.
In a unanimous decision written by Justice Alito, the Supreme Court reasoned that the FCA's first-to-file bar keeps new claims out of court only while pending claims are still alive, not in perpetuity. They read the statute to conclude that the term "pending," in this case, was in accordance with an ordinary dictionary definition, not a synonym for "first-filed." The Supreme Court held that respondent Benjamin Carter had a right to refile his case because he did not violate the FCA first-to-file bar. However, the Court reversed the appellate ruling that the WSLA applied to both criminal and civil cases, stating it only applied to criminal cases, not the civil claim brought by Carter in this instance.
Brett Mittler is the Division's fall intern.