Opinion ID: 2510469
Heading Depth: 1
Heading Rank: 8

Heading: Good cause standards

Text: Once filed, the Attorney General may dismiss a privately instigated false claims action only with leave of the court and for good cause. [37] The private plaintiff must be notified of the Attorney General's motion to dismiss and be given an opportunity to oppose it and to present evidence at the hearing. [38] With the imposition of a good cause standard and notice and opportunity to oppose requirements, two potentially competing concerns are reconciled: the important public policy underlying the FCA's objective to encourage private persons to blow the whistle, by granting them monetary incentives and certain protections against retaliation in exchange for exposing fraud against the government, is balanced against the constitutional concerns implicated when a private party is allowed to conduct actions on behalf of the State, an act usually reserved to the executive branch. [39] Thus, the Attorney General can move to dismiss a false claims action at any point in the litigation, but, to prevent a private plaintiff from being denied the possibility of receiving an award for his efforts for improper reasons, the Attorney General must have a good cause basis for dismissal. This court has not addressed good cause dismissal situations arising under the FCA. In Laraway v. Sutro & Co., Inc., [40] however, a California Court of Appeal examined a good cause for dismissal requirement under California's FCA, similar to the standard at issue here. [41] The California appellate court based its analysis, in part, on the Ninth Circuit's interpretation of the federal dismissal provision in United States v. Baird-Neece Packing Corp. (Sequoia), [42] despite the federal provision's lack of any good cause language. [43] In Sequoia, the Ninth Circuit recognized that the government's ability to dismiss a false claims action is broad but not unrestricted, noting that a private plaintiff in a federal false claims action must be afforded notice of the government's motion and an opportunity for a hearing before the action is dismissed. [44] The court then examined the parties' relative positions in false claims actions and the legislative intent regarding the federal FCA provision. [45] Noting that the government's dismissal of false claims actions has been likened to its prosecutorial discretion to enforce federal laws, the Ninth Circuit concluded that a substantive due process analysis must be applied by the courts to determine whether an action may be dismissed: the government's reasons for dismissal must be rationally related to a valid government purpose. [46] If the government satisfies that requirement, the burden is shifted to the private plaintiff `to demonstrate that dismissal is fraudulent, arbitrary and capricious, or illegal.' [47] If the plaintiff fails to do so, the court must dismiss the false claims action, whether or not it has merit. The Ninth Circuit noted in Sequoia that this standard upholds the separation of powers doctrine, rejecting the suggestion that the judiciary's authority to approve or reject the dismissal of false claims actions impermissibly interferes with the executive branch's prosecutorial authority. [48] In Laraway, the California Court of Appeal did not rely solely on Sequoia but also recognized that the meaning of the California FCA's good cause requirement must be determined through principles of statutory construction. Accordingly, the court also looked at the meaning of good cause in other contexts, the purpose of the FCA, [49] and legislative intent. Like the Sequoia court, the Laraway court concluded that a false claims complaint may be dismissed by the government when the dismissal is rationally related to a legitimate government purpose, and not arbitrary, capricious, made in bad faith, based on improper or illegal motives, founded on an inadequate investigation, or pretextual. [50] The California court further indicated that, when considering the government's reasons for dismissal, the district courts should consider any matter relevant to the issue, including the relative merits of the action, the interest of the qui tam plaintiff, the purposes underlying the False Claims Act, and the potential waste of government resources. [51] We conclude that this test applies to Nevada's FCA. [52] Accordingly, when exercising its discretion to dismiss a false claims action for good cause, [53] the district court should apply the burden-shifting test articulated in Laraway.