1 IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

2 Opinion Number: _____________

3 Filing Date: October 24, 2018

4 NO. A-1-CA-36906

5 STATE OF NEW MEXICO ex rel.

6 HECTOR BALDERAS, ATTORNEY 

7 GENERAL,

8 Plaintiff-Appellee,

9 v.

10 BRISTOL-MYERS SQUIBB COMPANY,

11 SANOFI-AVENTIS U.S. LLC, SANOFI US 

12 SERVICES, INC. f/k/a SANOFI-AVENTIS 

13 U.S. INC., SANOFI-SYNTHELABO INC.,

14 and DOE DEFENDANTS 1 to 100,

15 Defendants-Appellants.

16 APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY

17 Sarah M. Singleton, District Judge Pro Tem

18 Office of the Attorney General

19 Consumer & Environmental Protection

20 P. Cholla Khoury, Assistant Attorney General

21 Santa Fe, NM

22 Robles, Rael and Anaya, P.C.

23 Marcus J. Rael, Jr.

24 Albuquerque, NM
1 Baron & Budd, P.C.

2 Daniel Alberstone

3 Jonas P. Mann

4 Peter KlausnerEncino, CA

5 Russell Budd

6 Dallas, TX

7 Jules Burton LeBlanc IV

8 Baton Rouge, LA

9 for Appellee

10 Arnold & Porter Kaye Scholer LLP

11 Kirk Ogrosky

12 Murad Hussain

13 Washington, DC

14 Anand Agneshwar

15 New York, NY

16 Modrall, Sperling, Roehl, Harris & Sisk, P.A.

17 Earl E. DeBrine, Jr.

18 Timothy C. Holm

19 Albuquerque, NM 

20 for Appellants
1 OPINION

2 VANZI, Chief Judge.

3 {1} In this interlocutory appeal, we consider whether a federal district court’s 

4 dismissal of qui tam claims for failure to state a claim bars the State from pursuing 

5 different claims arising from similar facts, where the State had not intervened in 

6 the qui tam action. We conclude that it does not and, therefore, affirm the denial of 

7 Defendants’ motion to dismiss. 

8 BACKGROUND

9 Qui Tam Actions

10 {2} In order to situate the facts leading to this appeal, we begin with an overview 

11 of qui tam actions generally and the relevant statutes that establish and govern 

12 them. “In a ‘qui tam action,’ a private plaintiff, . . . known as a ‘relator,’ brings suit 

13 on behalf of the government to recover a remedy for a harm done to the 

14 government.” 36 Am. Jur. 2d Forfeitures and Penalties § 83 (2018) (footnotes 

15 omitted). “He or she pursues the government’s claim against the defendant and 

16 asserts the injury in fact suffered by the government, which confers standing on the 

17 relator to bring the action as a representative of the [s]tate and as a partial assignee 

18 of the government’s claim.” Id. (footnotes omitted). A qui tam action arises only 

19 by statute, specifically authorizing a private party to sue on behalf of the 

20 government. Id. The federal False Claims Act (FCA) and state laws similar to it are 
2

1 typical qui tam statutes. See United Seniors Ass’n v. Philip Morris USA, 500 F.3d 

2 19, 24 (1st Cir. 2007) (stating that the FCA is a “typical and commonly-invoked 

3 qui tam action”). 

4 The FCA and the New Mexico Medicaid False Claims Act

5 {3} “The [FCA] prohibits false or fraudulent claims for payment to the United 

6 States, and authorizes civil actions to remedy such fraud to be brought by the 

7 Attorney General or by private individuals in the government’s name.” 32 Am. Jur. 

8 2d False Pretenses § 85 (2018); 31 U.S.C. §§ 3729-3733 (2012). Under the FCA, 

9 “[t]he Attorney General diligently must investigate a violation of the false claims 

10 statute[,]” and “[i]f the Attorney General finds that a person has violated or is 

11 violating such statute, the Attorney General may bring a civil action against the 

12 person.” 32 Am. Jur. 2d False Pretenses § 85; 31 U.S.C. § 3730(a). In addition, the 

13 FCA permits relators to “file qui tam civil actions on behalf of the United States 

14 for the making of a false claim against government funds.” 32 Am. Jur. 2d False 

15 Pretenses § 85; 31 U.S.C. § 3730(b). 

16 {4} Similarly, the New Mexico Medicaid False Claims Act (MFCA), NMSA 

17 1978, §§ 27-14-1 to -15 (2004), provides for liability where a person presents “a 

18 claim for payment under the medicaid program knowing that such claim is false” 

19 or otherwise defrauds the state through the state medicaid program. 

20 Section 27-14-4. Like the FCA, the MFCA requires the Human Services 
3

1 Department (HSD) to investigate suspected violations and permits HSD to bring a 

2 civil action. Section 27-14-7(A). In addition, the MFCA contains a qui tam 

3 provision that permits “[a] private civil action [to] be brought by an affected person 

4 for a violation of the [MFCA] on behalf of the person bringing suit and for the 

5 state.” Section 27-14-7(B). 

6 {5} Both the FCA and MFCA require a relator to provide a copy of the 

7 complaint and written disclosure of material evidence possessed by the relator to 

8 the government so that the government may determine whether there is substantial 

9 evidence that a violation has occurred. 31 U.S.C. § 3730(b)(2); § 27-14-7(C). The 

10 complaint is sealed for at least sixty days to allow the government to undertake 

11 such an investigation. 31 U.S.C. § 3730(b)(2); § 27-14-7(C). Upon completion of 

12 the investigation, the government may either “proceed with the action, in which 

13 case the action shall be conducted by the [g]overnment[,]” or decline to take over 

14 the action. 31 U.S.C. § 3730(b)(4); § 27-14-7(E). If the government declines to 

15 pursue the claims in the relator’s complaint, “the person who initiated the action 

16 shall have the right to conduct the action.” 31 U.S.C. § 3730(c)(3); § 27-14-8(D). 

17 Regardless of whether the government intervenes in the action, the relator may 

18 receive a portion of any ensuing recovery. 31 U.S.C. § 3730(d); § 27-14-9. 

19 {6} The FCA and MFCA differ in that, under the MFCA, the relator may 

20 continue the action only “[i]f the department determined that there is substantial 
4

1 evidence that a violation of the [MFCA] has occurred” and that “[i]f the 

2 department determines that there is not substantial evidence that a violation has 

3 occurred, the complaint shall be dismissed.” Section 27-14-7(C), (E)(2). 

4 The First Suit: In re Plavix Marketing, Sales Practice & Products Liability 

5 Litigation

6 {7} The first suit at issue was initiated in March 2011 by relator Elisa Dickson 

7 (Relator), who filed a complaint alleging that Bristol-Myers Squibb Company, 

8 Sanofi-Aventis U.S., LLC; Sanofi-Aventis U.S., Inc.; and Sanofi-Synthelabo, Inc., 

9 (Defendants), manufacturers and marketers of the prescription drug Plavix, 

10 promoted Plavix in violation of the FCA and various states’ similar fraud statutes, 

11 including New Mexico’s MFCA. See In re Plavix Mktg., Sales Practice & Prods.

12 Liab. Litig. (No. II) v. Bristol-Myers Squibb Co., ___ F. Supp. 3d ___, 2017 WL 

2780744, at *1-4 (D.N.J. 2017).113 Pursuant to the provisions of the MFCA, Relator 

14 served New Mexico with “a copy of the complaint and written disclosure of 

15 substantially all material evidence and information [Relator] possesses.” Section 

16 27-14-7(C). New Mexico declined to intervene in Relator’s suit and, therefore, 

17 declined to take over litigation of the MFCA claim. In re Plavix Mktg., 2017 WL 

18 2780744, at *2.

 

1Relator filed the initial complaint in Illinois, but the suit was transferred to 

the United States District Court for the District of New Jersey to be part of the 

Plavix Multi-District Litigation. Id. at *2.
5

1 {8} Relator filed several amended complaints. Id. In August 2015, the federal 

2 district court dismissed the New Mexico MFCA claim, among others, for failure to 

3 state a claim for relief. Id. A year later, in August 2016, Relator filed a fourth 

4 amended complaint reasserting the MFCA claim, among others. Id. at *3. On 

5 Defendants’ motion, the federal district court dismissed Relator’s fourth amended 

6 complaint in June 2017. Id. at *1, *3. Relator did not appeal the dismissal or 

7 request permission to amend the complaint again. This final dismissal is central to 

8 Defendants’ claim preclusion argument. 

9 The Second Suit: State of New Mexico ex rel. Hector Balderas, Attorney 

10 General v. Bristol-Myers Squibb, et al.

11 {9} Shortly after Relator filed the fourth amended complaint in In re Plavix

12 Marketing, but before its final dismissal, the New Mexico Attorney General (the 

13 State) brought the present action in the First Judicial District Court. The complaint 

14 alleges that “Defendants’ false, deceptive, and unfair labeling and promotion of 

15 their prescription antiplatelet drug Plavix” violated the New Mexico Unfair 

16 Practices Act (UPA), NMSA 1978, §§ 57-12-1 to -26 (1967, as amended through 

17 2009); the New Mexico Medicaid Fraud Act (MFA), NMSA 1978, §§ 30-44-1 to -

18 8 (1989, as amended through 2004); and the New Mexico Fraud Against 

19 Taxpayers Act (FATA), NMSA 1978, §§ 44-9-1 to -14 (2007, as amended through 

20 2015), as well as common law and equitable causes of action. The complaint did 

21 not allege violations of the MFCA.
6

1 {10} Defendants moved to dismiss the State’s complaint, arguing that the State 

2 had failed to state its claims. They also maintained that the suit should be 

3 dismissed without prejudice or stayed pending resolution of the In re Plavix

4 Marketing action and that the State was inappropriately splitting its claims. 

5 Without ruling on the substantive arguments in the motion, the state district court 

6 stayed the action pending the outcome of Defendants’ motion to dismiss in In re 

7 Plavix Marketing. Once the federal district court dismissed Relator’s fourth 

8 amended complaint, the state district court lifted the stay and ordered supplemental 

9 briefing on the impact of the dismissal of Relator’s claims on the State’s complaint 

10 and Defendants’ motion to dismiss. In supplemental briefing, Defendants argued 

11 that the doctrine of claim preclusion bars the State’s complaint. They also argued 

12 that, even if claim preclusion did not bar the State’s claims in their entirety, the 

13 claims based on the MFA and FATA should be dismissed for failure to state a 

14 claim for the same reasons relied on by the federal district court.

15 {11} The state district court granted in part and denied in part Defendants’ motion 

16 to dismiss for failure to state a claim. It found that the State’s MFA claim failed as 

17 a matter of law and that the economic loss doctrine barred the State’s negligence 

18 claim. It therefore dismissed those claims with prejudice. It found that the State 

19 had inadequately pleaded the UPA and equitable tolling claims but dismissed those 

20 claims without prejudice and ordered the State to file an amended complaint if it 
7

1 chose to rectify the deficiencies in the first complaint. The court found the 

2 remaining claims adequately pleaded. The State then filed its first amended 

3 complaint, which includes claims for violations of the UPA and FATA, as well as 

4 common law claims for fraud and unjust enrichment.

5 {12} In a separate order, the state district court denied Defendants’ motion to 

6 dismiss the State’s complaint on claim preclusion grounds. Although it stated that 

7 Relator’s claims had been dismissed “with prejudice,” it found that “[claim 

8 preclusion] does not apply here because the causes of action are not the same in the 

9 two suits” and that “[R]elator in [In re Plavix Marketing] did not assert any of the 

10 claims the State asserts in this case, but rather only a single New Mexico [MFCA] 

11 claim.” It also stated that “while [R]elator . . . stood in the shoes of the State of 

12 New Mexico for purposes of the New Mexico [MFCA] claim, [R]elator did not 

13 stand in the State’s shoes for purposes of the claims asserted by the State here.” 

14 Finally, the state district court concluded that “in a case such as this, where 

15 [R]elator’s claims were dismissed based on a failure to comply with the heightened 

16 pleading requirements of [Federal Rule of Civil Procedure] 9(b), and not based on 

17 the merits of the claim, it would be inappropriate to bar the State’s claims.”

18 {13} However, the state district court also found that “[r]egarding the application 

19 of [claim preclusion] only,” its order “(1) does not practically dispose of the merits 

20 of the action, (2) involves a controlling question of law as to which there is 
8

1 substantial ground for difference of opinion, and (3) an immediate appeal from this 

2 order or decision may materially advance the ultimate termination of the 

3 litigation.” See NMSA 1978, § 39-3-4(A), (B) (1999) (providing for interlocutory 

4 appeal of district court orders pursuant to this Court’s appellate jurisdiction). It 

5 therefore certified for interlocutory appeal the portion of the order pertaining to 

6 application of claim preclusion. This Court granted Defendants’ application for 

7 interlocutory appeal. See Rule 12-203 NMRA (governing interlocutory appeals). 

8 DISCUSSION

9 {14} The issue before the Court is whether the federal court’s dismissal of 

10 Relator’s MFCA claim precludes the State’s claims for violations of the UPA and 

11 FATA, as well as common law fraud and unjust enrichment. We review such 

12 questions of law de novo. Bank of N.Y. v. Romero, 2016-NMCA-091, ¶ 15, 382 

13 P.3d 991. In addition, “[b]ecause the prior action was in federal court, federal law 

14 determines the preclusive effect of a federal judgment.” Moffat v. Branch, 2005-

15 NMCA-103, ¶ 11, 138 N.M. 224, 118 P.3d 732; see Restatement (Second) of 

16 Judgments § 87 (1982) (“Federal law determines the effects under the rules of 

17 [claim preclusion] of a judgment of a federal court.”). However, this Court may 

18 rely on both federal and New Mexico law on claim preclusion because “[f]ederal 

19 law and New Mexico law are not divergent on claim preclusion doctrine, and both 
9

1 find the Restatement (Second) of Judgments . . . persuasive.” Moffat, 2005-

2 NMCA-103, ¶ 11.

3 General Claim Preclusion Law

4 {15} “[Claim preclusion] prevents a party or its privies from repeatedly suing 

5 another party for the same cause of action when the first suit involving the parties 

6 resulted in a final judgment on the merits.” Rosette, Inc. v. U.S. Dep’t of the 

7 Interior, 2007-NMCA-136, ¶ 33, 142 N.M. 717, 169 P.3d 704. Generally, the 

8 doctrine applies where “three elements are met: (1) a final judgment on the merits 

9 in an earlier action, (2) identity of parties or privies in the two suits, and (3) 

10 identity of the cause of action in both suits.” Id. When these elements are satisfied, 

11 the defense of claim preclusion bars relitigation not only of claims actually brought 

12 by the plaintiff and its privies, but also claims that could have been brought in the 

13 first action. Kirby v. Guardian Life Ins. Co. of Am., 2010-NMSC-014, ¶ 61, 148 

14 N.M. 106, 231 P.3d 87. 

15 {16} For claim preclusion to apply, the first suit must have ended in a “judgment 

16 on the merits.” Rosette, Inc., 2007-NMCA-136, ¶ 33. Generally, a dismissal for 

17 failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) is a 

18 “judgment on the merits” for purposes of claim preclusion. Federated Dep’t 
10

Stores, Inc. v. Moitie, 452 U.S. 394, 399 n.3 (1981).

2

1 Although this general rule is 

2 often stated broadly, it is not without nuance. Because “[a] motion to dismiss for 

3 failure to state a claim under Rule 1-012(B)(6) . . . tests the legal sufficiency of the 

4 complaint, not the facts that support it[,]” Wallis v. Smith, 2001-NMCA-017, ¶ 6, 

5 130 N.M. 214, 22 P.3d 682, the designation of such a dismissal as “on the merits” 

6 is something of a misnomer. In Kirby, the New Mexico Supreme Court explained 

7 that “[a] dismissal with prejudice is an adjudication on the merits only to the extent 

8 that when a claim has been dismissed with prejudice, the [final judgment on the 

9 merits] element of [claim preclusion] . . . will be presumed so as to bar a 

10 subsequent suit.” 2010-NMSC-014, ¶ 66 (emphasis added). This is so because “[i]f 

11 this were otherwise, plaintiffs could simply ignore dismissals and file the same 

12 claim as many times as they wished, so long as the claim never progressed to a 

13 determination of the substantive issues.” Id. Thus, the intent behind considering a 

14 Rule 12(b)(6) dismissal as “on the merits” is practical: to limit repetitive filings. 

15 See Kirby, 2010-NMSC-014, ¶ 66. Such a dismissal obviously does not involve “a 

16 judicial determination of” the actual merits. See id. ¶ 67. Conversely, “[t]he words 

17 ‘without prejudice’ when used in an order or decree generally indicate that there 

 

2

“Because the language of Rule 1-012 [NMRA] closely parallels that of its

federal counterpart, Rule 12 of the Federal Rules of Civil Procedure, we find

federal authority interpreting Rule 12 . . . instructive.” Doe v. Roman Catholic 

Diocese of Boise, Inc., 1996-NMCA-057, ¶ 5, 121 N.M. 738, 918 P.2d 17. We also 

cite to Rule 1-012(B)(6) NMRA and Federal Rule of Civil Procedure 12(b)(6) 

interchangeably. 
11

1 has been no resolution of the controversy on its merits and leave the issues in 

2 litigation open to another suit as if no action had ever been brought.” Bralley v. 

3 City of Albuquerque, 1985-NMCA-043, ¶ 18, 102 N.M. 715, 699 P.2d 646.

4 Defendants’ Arguments

5 {17} Defendants contend that the elements of claim preclusion are met here. 

6 Defendants argue that the In re Plavix Marketing dismissal was “on the merits” 

7 because Relator either failed to plead the requisite materiality under Universal 

8 Health Services, Inc. v. United States ex rel. Escobar, ___ U.S.___, ___, 136 S. Ct. 

9 1989, 2001-03 (2016), or failed to allege conduct recognized as violative of the 

10 FCA. See United States ex rel. Petratos v. Genentech Inc., 855 F.3d 481, 487 (3d 

11 Cir. 2017) (“A [FCA] violation includes four elements: falsity, causation, 

12 knowledge, and materiality.”); In re Plavix Mktg., 2017 WL 2780744, *8 (same).

13 They also claim that the State was in privity with Relator because Relator 

14 represented the State’s interests in the In re Plavix Marketing action. Finally, they 

15 argue that the State’s claims “arise out of a common nucleus of operative facts” 

16 related to Defendants’ marketing practices and, therefore, constitute the “same 

17 cause of action” as in In re Plavix Marketing. In sum, Defendants maintain that, as 

18 a privy to Relator, the State was required to bring all of its claims in In re Plavix

19 Marketing, and having failed to do so, the State must be barred from bringing them 

20 in a different suit.
12

1 Claim Preclusion in the Context of Qui Tam Actions

2 {18} We first observe that, as a general proposition, “[i]f [the relator] had litigated 

3 a qui tam action to the gills and lost, neither another relator nor the [government] 

4 could start afresh.” United States ex rel. Lusby v. Rolls-Royce Corp., 570 F.3d 849, 

5 853 (7th Cir. 2009). This is true because the relator sues on behalf of the 

6 government to vindicate the government’s interests, and, although the government 

7 is not a named party to the relator’s suit, it is a real party in interest. United States

8 ex rel. Eisenstein v. City of New York, 556 U.S. 928, 934 (2009) (stating that the 

9 government, although a real party in interest, is not a “party” to a qui tam action). 

10 {19} However, courts have also recognized that, under certain circumstances, the 

11 government’s role in vindicating public interests militates against preclusion of its 

12 claims. Cf. Nathan D. Sturycz, The King and I?: An Examination of the Interest 

13 Qui Tam Relators Represent and the Implications for Future False Claims Act 

14 Litigation, 28 St. Louis U. Pub. L. Rev. 459, 462-63 (2009) (noting that even 

15 though “[i]n the non-FCA context, the concepts of preclusion would normally 

16 prevent duplicative litigation[, a]pplication of preclusion [in FCA cases] is 

17 muddled . . . by the distinction between the interests represented in a prior private 

18 cause of action and those represented in FCA litigation”). Thus, courts have 

19 repeatedly found that suits by or on behalf of the government should not be 

20 precluded by certain actions of a private party, even when that party acts as a qui 
13

1 tam relator. This is especially true when the first suit is dismissed for reasons 

2 unrelated to the merits of the claims. 

3 {20} For example, federal courts have relied on the fact that a Rule 12(b)(6) 

4 dismissal is based only on the relator’s complaint, not the factual bases underlying 

5 the allegations, to hold that such a dismissal does not preclude the government’s 

6 claims when the government has not intervened. See, e.g., United States ex rel.

7 Williams v. Bell Helicopter Textron, Inc., 417 F.3d 450, 455-56 (5th Cir. 2005). 

8 {21} In Williams, the district court dismissed the relator’s FCA claims because 

9 the relator failed to plead them with sufficient particularity under Rules 12(b)(6) 

10 and (9)(b). Williams, 417 F.3d at 455. The district court dismissed the complaint 

11 with prejudice as to both the relator and the government, stating that it was 

12 “dismissing the claims against the government with prejudice because it believed 

13 ‘the United States has had ample opportunity to participate in the prosecution of 

14 those claims if [it] had any notion that any of them has the slightest merit,’ ” 

15 suggesting that the government’s failure to intervene indicated that it found the 

16 claims meritless. Id.

17 {22} The United States Court of Appeals for the Fifth Circuit reversed and 

18 modified the dismissal to be without prejudice as to the government. Id. at 456. 

19 First, the court dismissed as “unreasonable” any speculation about the 

20 government’s reasons for not intervening and the district court’s inference that the 
14

1 government would have intervened if it found the relator’s FCA claims 

2 “meritorious.” Id. at 455. It observed that the FCA requires the Attorney General to 

3 conduct an investigation of the relator’s allegations, but the FCA “does not require 

4 the government to proceed if its investigation yields a meritorious claim.” Id.

5 “Indeed, absent any obligation to the contrary, it may opt out for any number of 

6 reasons. For example, a decision not to intervene may ‘not necessarily be an 

7 admission by the [government] that it has suffered no injury in fact, but rather the 

8 result of a cost-benefit analysis.’ ” Id. (alterations omitted) (quoting United States 

9 ex rel. Berge v. Bd. of Trs. of the Univ. of Ala., 104 F.3d 1453, 1458 (4th Cir.

10 1997)). The court concluded, “[G]iven the Rule 9(b) deficiencies, the government 

11 may have determined that the costs associated with proceeding based on a poorly 

12 drafted complaint outweighed any anticipated benefits.” Williams, 417 F.3d at 455. 

13 {23} The Williams court then noted that a dismissal with prejudice as to the 

14 government would give private parties “perverse incentives” to file poorly drafted 

15 or improperly pleaded qui tam actions. Id. “By essentially requiring the 

16 government to intervene in order to avoid forfeiting any future claims against the 

17 defendant, private parties would have the added incentive to file FCA suits lacking 

18 in the required particularity, knowing full well that the government would be 

19 obligated to intervene and ultimately ‘fill in the blanks’ of the deficient complaint.” 

20 Id. It went on to state that the district court’s approach would allow “a relator, in 
15

1 the most egregious of circumstances, to make sweeping allegations that, while true, 

2 he is unable to effectively litigate, but which nonetheless bind the government, 

3 via [claim preclusion], and prevent it from suing over those concerns at a later date 

4 when more information is available.” Id. (internal quotation marks and citation 

5 omitted). It therefore concluded that the district court had abused its discretion by 

6 dismissing the complaint with prejudice as to the government. Id. at 456. 

7 {24} Without deciding the preclusive effect of a Rule 12(b)(6) dismissal on future 

8 related actions, but relying on Williams, the Eleventh Circuit also modified a 

9 district court’s dismissal for failure to state a claim to be without prejudice to the 

10 government. Urquilla-Diaz v. Kaplan Univ., 780 F.3d 1039, 1057 (11th Cir. 2015). 

11 A number of federal district courts have also followed Williams and held that a 

12 dismissal of a relator’s complaint for insufficient pleading should be without 

13 prejudice to the government. In each of these cases, the government had declined 

14 to intervene in the relators’ actions. See, e.g., United States v. KForce Gov’t Sols., 

15 Inc., No. 8:13-cv-1517-T-36TBM, 2014 WL 5823460, at *6 n.2, *9 (M.D. Fla. 

16 Nov. 10, 2014) (dismissing an FCA complaint for failure to satisfy the Rule 9 

17 pleading requirements and stating that dismissal is without prejudice to the 

18 government); United States ex rel. Boros v. Health Mgmt. Assocs. (Health Mgmt. 

19 I), No. 4:10-cv-10013-KMM, 2013 WL 12077816, at *1-2 (S.D. Fla. July 26, 

20 2013) (clarifying that dismissal was without prejudice to the government after the 
16

1 relator’s FCA complaint was dismissed for failure to state a claim); United States

2 ex rel. Banigan v. Organon USA, Inc., Civil Action H-08-3314, 2013 WL 

3 12142351, at *34 (S.D. Tex. Feb. 1, 2013) (agreeing that “the dismissal [for 

4 inadequate pleadings] should be without prejudice to the [government] because it 

5 has no involvement in preparing the complaint” and stating that “if the [c]ourt 

6 dismisses [the r]elators’ complaint on insufficient pleading grounds, the dismissal 

7 would not preclude the government from bringing or continuing an action 

8 involving the same or similar claims”); United States ex rel. Rostholder v. 

9 Omnicare, Inc., No. CCB-07-1283, 2012 WL 3399789, at *15 (D. Md. Aug. 14, 

10 2012) (stating that “[t]he government’s decision not to intervene . . . does not 

11 suggest that the government necessarily believed that no FCA case was viable . . . 

12 [and a]ccordingly, it would be inappropriate to dismiss with prejudice as to the 

13 [government] or as to the states or localities on whose behalf relator brought this 

14 claim” (emphasis added)), aff’d, 745 F.3d 694 (4th Cir. 2014). But see Lusby, 570 

15 F.3d at 853 (stating that the district court erred in ordering a qui tam complaint 

16 dismissed with prejudice to the plaintiff and without prejudice to the government, 

17 but holding that judgment in a private suit did not bar a later qui tam action). 

18 {25} Similarly, courts have dismissed a complaint with prejudice to the relator, 

19 but without prejudice to the government, where the relator failed to prosecute or 

20 acted improperly in litigation. See, e.g., United States ex. rel. Prince v. Va. Res. 
17

1 Auth., 2014 WL 3405657, at *3 (W.D. Va. July 10, 2014) (failure to 

2 prosecute), aff’d, 593 Fed. App’x 230 (4th Cir. 2015); United States ex rel. King v. 

3 DSE, Inc., No. 8:08-CV-2416-T-23EAJ, 2013 WL 610531, at *11 (M.D. Fla. Jan. 

4 17, 2013) (litigation misconduct); cf. United States ex rel. Vaughn v. United 

5 Biologics, L.L.C., ___ F.3d. ___, 2018 WL 5000074, at *5 (5th Cir. 2018) (stating 

6 that “when the case’s outcome is decided by the relator’s voluntary decision to 

7 quit, courts tend not to bind the [g]overnment to that decision automatically” and 

8 collecting cases).

9 {26} Although distinguishable on its facts, State ex rel. Peterson v. Aramark 

10 Correctional Services, LLC, 2014-NMCA-036, 321 P.3d 128, echoes the reasoning 

11 in Williams. In Peterson, this Court considered whether a summary judgment in 

12 the plaintiff’s personal injury suit barred the same plaintiff’s later qui tam action 

13 against the same defendant. 2014-NMCA-036, ¶¶ 1-2. Holding that it did not, this

14 Court noted that, as a qui tam relator, the plaintiff represented the state, rather than 

15 himself, and therefore, his capacity in the two suits was not the same and the “same 

16 parties or their privies” element of claim preclusion was not met. Id. ¶¶ 24, 33. In 

17 its analysis, this Court, like Williams, recognized that claim preclusion in the qui 

18 tam context could operate adverse to the public interest. Peterson, 2014-NMCA19 036, ¶ 30. It stated that “ ‘it would be inappropriate to snuff out the government’s 

20 interest [in the qui tam action] just because a potential relator thoughtlessly omitted 
18

1 a qui tam claim from a[n earlier] personal suit.’ ” Id. (alterations omitted) (quoting 

2 Lusby, 570 F.3d at 852). “[W]ere a personal lawsuit held to preclude a qui tam suit 

3 on claim preclusion grounds, the government would be incapable of vindicating its 

4 interest by bringing a new qui tam suit, either on its own or through another 

5 relator” because the government would be bound by the judgment in the personal 

lawsuit. Id.36

7 {27} Defendants argue that the Williams holding is inapposite for three reasons.

8 Defendants first argue that the United States Supreme Court’s decision in 

9 Eisenstein supersedes Williams. Defendants rely on the statement in Eisenstein that 

10 “the [government] is bound by the judgment in all FCA actions regardless of its 

11 participation in the case.” 556 U.S. at 936. But the Eisenstein Court was not 

12 considering the issue here; rather, the issue there was whether the government was 

13 a “party” to a privately initiated FCA action such that the private party could 

14 benefit from the longer period in which to appeal provided to the government 

15 under Federal Rule of Appellate Procedure 4(a)(1)(B). Eisenstein, 556 U.S. at 931. 

16 “The general rule is that cases are not authority for propositions not considered.” 

 

3Notably, although it was unnecessary for the Peterson Court to discuss this 

fact under the circumstances of that case, “the district court granted [the 

defendant’s] motion for summary judgment, and dismissed, with prejudice, all 

claims brought on behalf of [the qui tam p]laintiff, stating, however, that its order 

did not prejudice the [s]tate’s ability to bring a related action based on the same 

facts.” Id. ¶ 20.
19

1 Sangre de Cristo Dev. Corp. v. City of Santa Fe, 1972-NMSC-076, ¶ 23, 84 N.M. 

2 343, 503 P.2d 323. 

3 {28} In addition, the statement relied on by Defendants was a statement of the 

4 appellant’s argument, not a statement of law by the Court. See Eisenstein, 556 U.S. 

5 at 936 (“[P]etitioner relies on the fact that the [government] is bound by the 

6 judgment in all FCA actions regardless of its participation in the case.” (emphasis 

7 added)). “[I]n light of Eisenstein’s narrow holding—that the [g]overnment was not 

8 a ‘party’ for the purposes of [Rule] 4(a)(1)(B)—it would be inappropriate to 

9 interpret this passing observation so broadly.” Vaughn, 2018 WL 5000074, at *6 

10 (rejecting an argument that Eisenstein abrogated Williams); accord USA ex rel. 

11 Mastej v. Health Mgmt. Assocs. (Health Mgmt. II), No. 2:11-cv-89-FtM-29DNF, 

12 2014 WL 12616929, at *2 (M.D. Fla. June 10, 2014); Health Mgmt. I, 2013 WL 

13 12077816, at *1. Finally, as shown above, a number of federal courts have relied 

14 on Williams after Eisenstein was decided in 2009. But see Lusby, 570 F.3d at 853 

15 (stating that Eisenstein foreclosed dismissal without prejudice as to the 

16 government). 

17 {29} Defendants next argue that the policy considerations in Williams are 

18 inapposite because the MFCA “required New Mexico to determine whether there 

19 was substantial evidence of a violation . . . and to dismiss the claim if none 

20 existed.” They argue that this “obligation means that no qui tam complaint brought 
20

1 under the [MFCA] should ever receive the State’s approval to proceed if, like the 

2 [Williams] complaint, it is so facially deficient that it lacks substantial evidentiary 

3 support.” It is true that Section 27-14-7 requires that, when a claim is supported by 

4 substantial evidence, the state must either pursue the claim or permit the relator to 

5 pursue it. See § 27-14-7(E) (providing that if there is substantial evidence, the state 

6 “shall: (1) proceed with the action, in which case the action shall be conducted by 

7 the department; or (2) notify the court and the person who brought the action that it 

8 declines to take over the action” (emphasis added)). However, Defendants’ 

9 argument conflates a determination of evidence supporting a claim with a 

10 determination of the adequacy of the relator’s complaint. The state is required to 

11 determine only whether “there is substantial evidence that a violation has 

12 occurred,” not whether the relator’s complaint adequately alleges a violation. 

13 Section 27-14-7(C); see Wallis, 2001-NMCA-017, ¶ 6 (stating that “[a] motion to 

14 dismiss for failure to state a claim under Rule 1-012(B)(6) . . . tests the legal 

15 sufficiency of the complaint, not the facts that support it”). To hold that the state is 

16 required to involve itself in the articulation of the relator’s claims in the complaint 

17 is tantamount to requiring the state to intervene in the action. Such a result is 

18 contrary to the clear intent of the MFCA to deputize private parties to seek 

19 recovery on the state’s behalf. See Berge, 104 F.3d at 1458 (stating that “the plain 

20 language of the [FCA] clearly anticipates that even after the [government] has 
21

1 ‘diligently’ investigated a violation . . . , the [g]overnment will not necessarily 

2 pursue all meritorious claims; otherwise there is little purpose to the qui tam

3 provision permitting private attorneys general”); see Vaughn, 2018 WL 5000074, 

4 at *5 (citing Williams for the proposition that “the non-intervening [g]overnment 

5 should not be bound by the fate of an incompetent relator, lest it be forced to 

6 intervene in every action”); see also § 27-14-8(D) (“If the state elects not to 

7 proceed with the action, the person bringing the action shall have the right to 

8 conduct the action.”); cf. Williams, 417 F.3d at 455 (stating that the government 

9 might decline to intervene, even if there is evidence of a violation, because “the 

10 costs associated with proceeding based on a poorly drafted complaint [by the 

11 relator] outweighed any anticipated benefits”). 

12 {30} Finally, Defendants contend that Williams is factually distinguishable from 

13 the circumstances here. They argue that in Williams, the qui tam complaint was 

14 dismissed because it was “so deficient [under Rule 9(b)] that the court never 

15 reached the merits of the claim[,]” Williams, 417 F.3d at 456, whereas here 

16 Relator’s claim was instead dismissed based on the “heightened pleading standard 

17 for materiality under the FCA,” rather than the pleading requirements for fraud 

18 under Rule 9(b). In re Plavix Mktg., 2017 WL 2780744, *10. They point out that 

19 the federal district court found that Relator had “pleaded herself out of court” by 

20 alleging facts that negated an essential element of an FCA claim. Thus, because 
22

1 Relator “could not plead the required element of ‘materiality’ as a matter of law[,]” 

2 the dismissal was on the merits. 

3 {31} We do not read Williams as narrowly as Defendants. The Williams holding 

4 was not limited to the Rule 9(b) pleading standard. Instead, the core of the 

5 Williams holding is the failure to adequately plead an FCA claim under Rule 

6 12(b)(6), regardless of the standard applied. See Williams, 417 F.3d at 453 (stating 

7 that the defendant “moved to dismiss under Rule 12(b)(6) for failure to state a 

8 claim because the complaint did not comply with the requirements of Rule 9(b)”). 

9 The reasoning for the holding was that the government should not be bound by the 

10 relator’s weaknesses in pleading what might be a valid claim, whatever those 

11 weaknesses are. In other words, “[w]hy would Congress want [a poorly plead but 

12 meritorious] earlier suit to bar a later potentially successful suit that might result in 

13 a large recovery for the [g]overnment?” Kellogg Brown & Root Servs., Inc. v. 

14 United States ex rel. Carter, 135 S. Ct. 1970, 1979 (2015); see id. (rejecting an 

15 argument that “a first-filed suit would bar all subsequent related suits even if that 

16 earlier suit was dismissed for a reason having nothing to do with the merits”). 

17 Hence, even if the In re Plavix Marketing dismissal was not based on Rule 9(b), an 

18 issue we need not decide, Williams would still apply here. See KForce Gov’t Sols., 

19 2014 WL 5823460, at *9 (dismissing the relator’s complaint where “the facts . . . 
23

1 plead . . . preclude a claim under the FCA” with prejudice, but without prejudice as 

2 to the government). 

3 Dismissal of Relator’s Qui Tam Action Does Not Bar the State’s Claims

4 {32} The dismissal order in In re Plavix Marketing does not specify whether it is 

5 with or without prejudice to Relator or the government. In re Plavix Mktg., 2017 

6 WL 2780744, at *1, *23. Nevertheless, because the order did not provide for a fifth 

7 amendment and disposed of all of Relator’s claims, we construe it as an 

8 adjudication on the merits as to Relator, consistent with the general rule that a 

9 dismissal under Rule 12(b)(6) is an adjudication on the merits for claim preclusion 

10 purposes. Moitie, 452 U.S. at 399 n.3 (stating that “[t]he dismissal for failure to 

11 state a claim under Federal Rule of Civil Procedure 12(b)(6) is a judgment on the 

12 merits” (internal quotation marks and citation omitted)); see Kirby, 2010-NMSC13 014, ¶ 66 (stating that this approach prevents repetitive suits); Bralley, 1985-

14 NMCA-043, ¶ 14 (“An order dismissing a party’s entire complaint without 

15 authorizing or specifying a definite time for leave to file an amended complaint, is 

16 a final order for purposes of appeal.”). 

17 {33} However, for the reasons stated in Williams and its progeny, we construe the 

18 order as without prejudice to the government. Cf. Bralley, 1985-NMCA-043, ¶ 18 

19 (stating that “[t]he words ‘without prejudice’ when used in an order or decree 

20 generally indicate that there has been no resolution of the controversy on its merits 
24

1 and leave the issues in litigation open to another suit as if no action had ever been 

2 brought”). Thus, as to the State, the federal district court’s dismissal of Relator’s 

3 fourth amended complaint is not a “final judgment on the merits” for claim 

4 preclusion purposes. “Because the claim preclusion doctrine does not bar a 

5 subsequent lawsuit unless all [of the claim preclusion] elements are met, we do not 

6 consider the parties’ remaining claim preclusion arguments.” Peterson, 2014-

7 NMCA-036, ¶ 33. 

8 CONCLUSION

9 {34} Consistent with federal FCA and claim preclusion law, we construe the In re 

10 Plavix Marketing dismissal as without prejudice to the State’s claims, and, 

11 therefore, hold that the dismissal does not bar the State’s present claims under the 

12 UPA and FATA, as well as common law claims for fraud and unjust enrichment. 

13 Accordingly, we affirm the state district court’s denial of Defendants’ motion to 

14 dismiss. 

15 {35} IT IS SO ORDERED.

16 _________________________________

17 LINDA M. VANZI, Chief Judge

18 WE CONCUR:

19 _________________________________
25

1 J. MILES HANISEE, Judge

2 _________________________________

3 JULIE J. VARGAS, Judge