Court Opinion

ID: 9904997
Source: CourtListenerOpinion
Date Created: 2023-11-28 17:00:46.687803+00
Date Added: 2024-06-11T09:22:06.895239
License: Public Domain

22-2656
United States ex rel. Weiner et al. v. Siemens AG et al.

                                                In the
                     United States Court of Appeals
                                  For the Second Circuit
                                           ______________

                                         August Term, 2022

                 (Argued: June 7, 2023            Decided: November 28, 2023)

                                       Docket No. 22-2656
                                      ____________________

UNITED STATES OF AMERICA EX REL. CLIFFORD WEINER, STATE OF NEW YORK EX REL.
                             CLIFFORD WEINER,

                                         Plaintiffs-Appellants,

                                                    v.

       SIEMENS AG, SIEMENS INDUSTRY, SIEMENS SCHLESINGER ELECTRIC, LLC,

                                         Defendants-Appellees. *

                                      ____________________

Before: CARNEY and ROBINSON, Circuit Judges. †

*
 The Clerk of Court is directed to amend the official case caption as set forth above.
†
 Circuit Judge Rosemary S. Pooler, originally a member of the panel, died on August 10, 2023.
The two remaining members of the panel, who are in agreement, have decided this case. See 28
U.S.C. § 46(d); 2d Cir. IOP E(b).
              The False Claims Act (“FCA”), 31 U.S.C. §§ 3729–32, provides
       that when a private person brings an action under the FCA on behalf
       of the federal government, the “complaint shall be filed in camera,
       shall remain under seal for at least 60 days, and shall not be served on
       the defendant until the court so orders.” Id. § 3730(b)(2). Alleging
       violations of the FCA, Relator Clifford Weiner brought a complaint in
       the United States District Court for the Southern District of New York,
       which the district court (Carter, J.) dismissed for untimely service of
       process. Relator argues that because the district court never expressly
       ordered him to serve Defendants in accordance with Section 3730, the
       clock for service of process never began to run, and dismissal for
       untimely service was improper. Agreeing with Relator, we VACATE
       the district court’s judgment and REMAND the case for further
       proceedings consistent with this opinion.
                               ____________________

                            MAX RODRIGUEZ (Adam Pollock, Agatha M. Cole, on the
                            brief), Pollock Cohen LLP, New York, N.Y., for Relator

                            WENDY H. SCHWARTZ (Travis A. Gonyou, on the brief),
                            Binder & Schwartz LLP, New York, N.Y., for Defendants-
                            Appellees ‡
                                ____________________

Per curiam:

       The False Claims Act (“FCA”), 31 U.S.C. §§ 3729–32, creates civil liability for

those who knowingly submit “a false or fraudulent claim for payment or

approval” to the federal government. 31 U.S.C. § 3729(a)(1)(A). The FCA contains

‡
 Siemens AG, a foreign corporation, is also a named defendant in this case, but counsel for
Defendants-Appellees listed above assert that they do not represent Siemens AG, and no other
counsel has appeared on behalf of that entity.
                                                2
a qui tam provision, allowing private persons (known as relators) to file complaints

on the government’s behalf. Id. § 3730(b)(1); see generally State Farm Fire & Cas. Co.

v. United States ex rel. Rigsby, 580 U.S. 26, 29 (2016). Section 3730 of the FCA

instructs that such a complaint “shall be filed in camera, shall remain under seal

for at least 60 days, and shall not be served on the defendant until the court so

orders.” 31 U.S.C. § 3730(b)(2). It also provides that a defendant is not “required

to respond” to a qui tam complaint “until 20 days after the complaint is unsealed

and served upon the defendant pursuant to Rule 4 of the Federal Rules of Civil

Procedure.” Id. § 3730(b)(3).

      This appeal presents a narrow question: Under Section 3730, when does the

service-of-process clock begin to tick? Relator Clifford Weiner argues that the

service-of-process period does not begin until the district court explicitly orders

service. Defendants-Appellees Siemens Industry, Inc., and Siemens Electrical,

LLC (collectively, “Defendants”) contend that the service period begins

automatically when the district court unseals a complaint.

      The answer is clear. Because the statute prohibits a relator from serving a

qui tam complaint “until the court so orders,” the service-of-process clock does not

begin until a district court expressly authorizes service. Id. § 3730(b)(2). Here,

                                          3
having never issued such an order, the district court (Carter, J.) exceeded the

permissible bounds of its discretion by dismissing the case for insufficient service

of process. We thus VACATE the district court’s judgment and REMAND the case

for further proceedings consistent with this opinion.

                                BACKGROUND

      I.     Procedural History

      Relator instituted this action on behalf of the United States and the State of

New York on February 23, 2012.           He complained that Defendants made

misrepresentations to the New York City Department of Environmental Protection

with the intention of having their claims “paid or approved” by the United States

in violation of the FCA and New York’s False Claims Act. In accordance with the

FCA, the complaint was filed in camera and placed under seal for a preliminary

period of sixty days. See id.

      Initially, this litigation proceeded in the normal course. The United States

and the State of New York obtained several extensions of the sealing period to

determine whether either would take the lead role in the case by intervening.

Approximately nine months after the complaint was filed, the United States

declined to intervene. New York continued to request extensions for almost two

                                         4
years, but the case did not stagnate during this time. For example, while the action

was sealed, the district court authorized limited disclosures to the New York City

Law Department, the Corporation Counsel of the City of New York, Defendants,

and an attorney named Peter H. Woodin, whom the City of New York and

Defendants had selected as a mediator in hopes of reaching a settlement.

       On December 11, 2015, after considering a letter motion from the City of

New York, the district court declined to exercise supplemental jurisdiction over

the state law claims.1 In its order dismissing the state law claims, the district court

instructed that “[t]he seal shall remain in place pending a status conference, to be

requested by Relator, regarding Relator’s intent to continue to pursue the United

States’ claims against Defendants.”            Relator responded to the district court’s

instruction with silence.

       The case then languished. After almost three years of inaction, the United

States wrote to the district court on June 22, 2018, requesting that the suit be

unsealed. Four days later, the district court signed an order unsealing Relator’s

complaint, the court’s orders, and the United States’ letter in which it declined to

1Relator brought claims in state court as well as in federal court. See City of New York v. Siemens
Elec., LLC, 107 N.Y.S.3d 827 (Sup. Ct. 2019).
                                                5
intervene. Over a year passed, however, before the district court docketed the

unsealing order in August 2019. In September 2020, after another year slipped by

without any action, the district court directed the parties to file a status report.

Later that same month, Relator advised the court in writing that he was ready to

effectuate service “immediately after such an order” by the district court. App’x

at 82–83.

      II.    Decision Below

      Defendants then moved to dismiss Relator’s complaint for insufficient

service of process and failure to prosecute, citing the age of the proceedings.

United States ex rel. Weiner v. Siemens AG, No. 12-cv-1466, 2021 WL 3544718, at *1

(S.D.N.Y. Aug. 10, 2021), reconsideration denied, 2022 WL 4467051 (S.D.N.Y. Sept.

26, 2022). On August 10, 2021, the district court granted in part and denied in part

Defendants’ motion. The district court rejected Defendants’ contention that it is

“well-settled that the service period begins immediately at the unsealing of the

complaint,” id. at *3, explaining its view that “it is not clear from existing law and

court practice whether an express order to serve defendants is required for the

service period to begin,” id. at *5. Nevertheless, it held, because Relator had not

served Defendants in the preceding nine years, there was “no way for this Court

                                          6
to determine that service was not untimely.” Id. The district court then declined

Relator’s request for either an extension for “good cause” shown under Rule 4(m)

or a discretionary extension of the service period, and dismissed the action for

insufficient service of process.

      Defendants’ motion to dismiss under Rule 41 for failure to prosecute proved

a different story. The district court reasoned that Relator did not have sufficient

notice that the case might be subject to dismissal on this ground, suggesting that

Relator may not have “intentionally or willfully failed to pursue this case.” Id. at

*7. And although the case had been pending for years, the district court found that

the action had not wasted judicial resources because the court had “only reviewed

a handful of submissions and held a telephone conference.” Id. On balance, the

district court determined, dismissal with prejudice for failure to prosecute under

Rule 41 was “too extreme.” Id.

      After his request for reconsideration of that order was denied, Relator

timely appealed.

                                   DISCUSSION

      We review a district court’s dismissal for insufficient service of process and

failure to prosecute for an abuse of discretion. See Gerena v. Korb, 617 F.3d 197, 201

                                          7
(2d Cir. 2010); United States ex rel. Drake v. Norden Sys., Inc., 375 F.3d 248, 254 (2d

Cir. 2004). “A district court has abused its discretion if it has (1) based its ruling

on an erroneous view of the law, (2) made a clearly erroneous assessment of the

evidence, or (3) rendered a decision that cannot be located within the range of

permissible decisions.” Lynch v. City of New York, 589 F.3d 94, 99 (2d Cir. 2009)

(internal quotation marks omitted). A question of statutory interpretation is a

legal question that we review de novo. See In re: Vitamin C Antitrust Litig., 8 F.4th

136, 142 (2d Cir. 2021).

      I.     Service of Process

      The parties’ debate centers on whether the Rule 4(m) service of process clock

begins to run when the district court unseals a qui tam action under the FCA even

if the district court does not issue an order authorizing service. Relator argues that

under Section 3730, he was not permitted to serve Defendants in the absence of a

court order. Because the district court never issued such an order, Relator reasons,

the service clock has not yet started. Defendants, meanwhile, read Section 3730 to

suggest that the service period commences automatically whenever a complaint is

unsealed. Because the complaint was unsealed in 2019, they maintain, the service

period has long since lapsed.

                                          8
      Our analysis starts with the text of Section 3730. As noted above, that section

provides that a qui tam complaint alleging violations of the FCA “shall be filed in

camera, shall remain under seal for at least 60 days, and shall not be served on the

defendant until the court so orders.” 31 U.S.C. § 3730(b)(2). The FCA further

provides that the defendant is not required to “respond to any complaint filed

under this section until 20 days after the complaint is unsealed and served upon

the defendant pursuant to Rule 4 of the Federal Rules of Civil Procedure.” Id. §

3730(b)(3). Rule 4, in turn, instructs that the court must dismiss an action or order

that service be made within a specified time when a plaintiff has not served a

defendant “within 90 days after the complaint is filed,” unless the plaintiff shows

“good cause” for the failure. Fed. R. Civ. P. 4(m).

      Where statutory text is “unambiguous, our inquiry begins with the statutory

text, and ends there as well.” Nat. Ass’n of Mfrs. v. Dep’t of Defense, 583 U.S. 109,

127 (2018) (internal quotation marks omitted). Section 3730(b)(2) forbids a relator

from serving a qui tam complaint on the defendant “until the court so orders.” 31

U.S.C. § 3730(b)(2). With this language, Congress provided unambiguously that a

relator may not lawfully serve process without a court order authorizing service.

                                          9
See id. Thus, it is only when a district court expressly “orders” a relator to serve a

defendant that the Rule 4 period begins.2

       Defendants point to the next subsection, Section 3730(b)(3), which states that

“[t]he defendant shall not be required to respond to any complaint filed under this

section until 20 days after the complaint is unsealed and served upon the defendant

pursuant to Rule 4 of the Federal Rules of Civil Procedure.” Id. § 3730(b)(3)

(emphasis added).          In Defendants’ telling, Section 3730(b)(3)’s reference to a

complaint being “unsealed and served” suggests that the time for service of

process begins automatically when a district court unseals a complaint. But we

cannot read Section 3730(b)(3) to provide implicitly that the service period begins

automatically at unsealing given that Section 3730(b)(2) explicitly commands that

service is authorized only upon a court order. Indeed, such a reading would

render the plain language of Section 3730(b)(2) superfluous. Me. Cmty. Health

Options v. United States, 140 S. Ct. 1308, 1323 (2020) (observing that the Supreme

Court “hesitates to adopt an interpretation of a congressional enactment which

2 Because the FCA repeatedly refers to the service period set by the Federal Rules of Civil
Procedure, we reject Relator’s suggestion that the Rule 4(m) limitation does not apply under
Section 3730. See 31 U.S.C. § 3730(b)(3); United States ex rel. Polansky v. Exec. Health Res., Inc., 599
U.S. 419, 436 (2023) (“[T]he FCA’s many cross-references to the [Federal Rules of Civil Procedure]
suggest that their application is the norm.”).
                                                10
renders superfluous another portion of that same law.” (internal quotation marks

omitted)). Our reading of Section 3730(b)(3), in contrast, is in harmony with the

plain meaning of Section 3730(b)(2): the Rule 4(m) period begins only after a court

expressly orders service, and a defendant is not required to respond to a complaint

until 20 days after the complaint is served in accordance with these rules. See 32

U.S.C. § 3730(b)(2)–(3).

      Although our inquiry need not go any further, see Nat. Ass’n of Mfrs., 538

U.S. at 127, we observe that this plain language reading accords with the statute’s

purpose. The predominant purpose of the FCA’s qui tam provision is to incentivize

private persons “privy to a fraud on the government to blow the whistle on the

crime.” United States v. Northrop Corp., 59 F.3d 953, 963 (9th Cir. 1995); see Senate

Judiciary Committee, False Claims Amendments Act of 1986 (“1986 Senate

Report”), S. Rep. No. 345, 99th Cong., 2d Sess. 2–3 (1986), reprinted in 1986

U.S.C.C.A.N. 5266, 5267 (“The Committee’s overall intent in amending [Section

3730] is to encourage more private enforcement suits.”). A construction that does

not require explicit authorization to serve could lead relators to misunderstand

when their authority to serve begins and, therefore, when it ends, potentially

leaving a litigant without recourse if a court dismisses the complaint for want of

                                         11
service and never reaches the merits. Thus, in addition to being at odds with the

statutory language, Defendants’ reading would operate in derogation of the

statutory purpose.

      Defendants resist, pointing to a small portion of the FCA’s legislative

history. In a 1986 Senate Report, the Committee on the Judiciary explained that

the rights of a defendant would not be adversely affected by a sealed and unserved

complaint, reasoning that “[o]nce the court has unsealed the complaint, the

defendant will be served as required under Rule 4 of Federal Rules of Civil

Procedure.” 1986 Senate Report, 1986 U.S.C.C.A.N. 5266, 5289. To be sure, the

drafters of the FCA may have expected unsealing and service orders to be issued

concurrently. See id. Indeed, the practice of many district courts appears to be to

concurrently order unsealing and service. See Siemens AG, 2021 WL 3544718, at *4

n.3 (collecting cases). But whatever the expectations of the drafters, a “statute’s

legislative history cannot overcome the plain meaning of the text.” J.S. v. New York

State Dep't of Corr. & Cmty. Supervision, 76 F.4th 32, 38 (2d Cir. 2023).

      Defendants also retreat to the absurdity doctrine. They assert that our

reading of the FCA produces absurd results because “if a court unseals a qui tam

action without expressly ordering service, the litigation enters what amounts to a

                                          12
state of suspended animation—extending for months, or years, or decades—

during which time the plaintiff is relieved of any duty to prosecute.” Appellees’

Br. at 25. Even under our interpretation of Section 3730, however, relators are not

relieved of their duty to prosecute an action. In fact, relators who sit on a case for

months after service is authorized without moving to prosecute it could very well

face involuntary dismissal under Rule 41.                See United States ex rel. Pervez v.

Maimonides Med. Ctr., 415 F. App’x 316, 317 (2d Cir. 2011) (summary order).

Defendants’ appeal to absurdity has no traction.

       Congress unambiguously instructed that relators may not serve process

without a court order authorizing service. See 31 U.S.C. § 3730(b)(2). Given the

plain text of Section 3730, and given that the district court here did not issue an

order authorizing service, the district court committed legal error by dismissing

Relator’s complaint for insufficient service of process. 3

3Defendants cite three unpublished district court opinions in support of their reading: United
States ex rel. Pervez v. Maimonides, No. 6 Civ. 4989, 2010 WL 890236 (S.D.N.Y. Mar. 9, 2010), aff’d
on other grounds, 415 F. App’x 316 (2d Cir. 2011) (summary order)); United States ex rel. Howard v.
Life Care Ctrs. of Am., Inc., No. 1:03-cv-41, 2005 WL 2674939 (E.D. Tenn. Oct. 20, 2005); and U.S.
ex rel. Mallavarapu v. Acadiana Cardiology, LLC, No. 04-732, 2010 WL 3896425 (W.D. La. Aug. 16,
2010), adopted as modified, 2010 WL 3896422 (W.D. La. Sept. 30, 2010). In these cases, they say,
the district courts found the Rule 4(m) service period to begin with an unsealing order that
made no mention of authorizing service. In Howard, however, the court expressly directed
service when it unsealed the complaint. See Howard, 2005 WL 2674939, at *2 (“Plaintiff was over
four months late in serving the complaint and summons after the Court unsealed the complaint
                                                   13
       II.     Failure to Prosecute

       We next turn to this appeal’s second (and subsidiary) question: whether we

can affirm the dismissal on alternative grounds. Although the district court

declined to dismiss the complaint under Federal Rule of Civil Procedure 41(b) for

Relator’s failure to prosecute, Defendants assert that we may nonetheless affirm

on this basis. They cite Relator’s inactivity over the course of several years,

asserting his delay has caused Defendants such prejudice that dismissal is the only

appropriate remedy. In response, Relator rests on the district court’s analysis

rejecting Defendants’ arguments in the first instance.

       Under Rule 41(b), a district court, in its discretion, may dismiss an action for

a plaintiff’s want of prosecution. See Minnette v. Time Warner, 997 F.2d 1023, 1027

(2d Cir. 1993). Such a dismissal is a “harsh remedy,” however, and is reserved for

“extreme situations.” Id. In conducting the Rule 41(b) inquiry, district courts

consider whether:

and ordered Plaintiff to serve Life Care.”). And in Mallavarapu, the action was stayed—and
service was explicitly prohibited—by order of the court in light of parallel criminal proceedings.
See Mallavarapu, 2010 WL 3896425, at *16 (“The record is clear that the case against the Patel
defendants was stayed by order of the court presiding over both the instant case and the
criminal proceeding since May of 2006.”). The district court decision in Pervez does support
Defendants’ position, but there—as with the other two decisions that Defendants cite and which
align with our view—the court did not meaningfully engage with the statutory interpretation
question that we now confront. In any event, these cases do not bind this Court.
                                               14
      (1) the plaintiff’s failure to prosecute caused a delay of significant
      duration; (2) plaintiff was given notice that further delay would result
      in dismissal; (3) defendant was likely to be prejudiced by further
      delay; (4) the need to alleviate court calendar congestion was carefully
      balanced against plaintiff’s right to an opportunity for a day in court;
      and (5) the trial court adequately assessed the efficacy of lesser
      sanctions.

Drake, 375 F.3d at 254. In reviewing a district court’s decision to dismiss under

Rule 41(b), we evaluate the record in its entirety because “[n]o one factor is

dispositive.” Id.

      As Defendants’ arguments indicate, Relator’s extreme delay in pursuing

this action could have justified the district court’s dismissal of the complaint under

Rule 41(b). But Defendants have not identified an error of law or an erroneous

factual finding embedded in the district court’s decision denying Rule 41(b)

dismissal. See Lynch, 589 F.3d at 99 (outlining the abuse of discretion standard).

Nor have they shown that the district court’s conclusion fell outside of the range

of permissible decisions. See id. Specifically, as the district court noted, Relator

was not given express notice that his delays could result in dismissal, and the court

had not devoted substantial resources to the action. See Siemens, 2021 WL 3544718,

at *7; Drake, 375 F.3d at 254. Under these circumstances, we cannot say that

dismissal was the only permissible outcome. We decline to affirm on this basis.

                                         15
                               CONCLUSION

      For the foregoing reasons, we VACATE the district court’s judgment and

REMAND the case for further proceedings consistent with this opinion.

                                      16