Court Opinion

ID: 3163348
Source: CourtListenerOpinion
Date Created: 2015-12-16 21:00:23.550595+00
Date Added: 2024-06-11T11:57:42.238421
License: Public Domain

United States Court of Appeals
                       For the First Circuit

No. 14-2164

                UNITED STATES ex rel. ROBERT GADBOIS,
                        Plaintiff, Appellant,

  STATES OF CA, CO, DE, FL, GA, HI, IL, IN, LA, MA, MI, MN, MT,
   NV, NH, NM, NC, RI, TN, TX, VA, WI, ex rel. ROBERT GADBOIS,

                       Plaintiffs, Appellants,

              STATE OF MARYLAND ex rel. ROBERT GADBOIS,

                             Plaintiff,

                                 v.

                       PHARMERICA CORPORATION,

                        Defendant, Appellee,

    CVS/CAREMARK CORPORATION; WALGREEN COMPANY; MEDCALL, LLC;
                    AND RITE AID CORPORATION,

                             Defendants.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF RHODE ISLAND

              [Hon. Mary M. Lisi, U.S. District Judge]

                               Before

                        Howard, Chief Judge,
                  Selya and Stahl, Circuit Judges.

     Robert L. Vogel, with whom Shelley R. Slade, Vogel, Slade &
Goldstein, LLP, Amato A. DeLuca, DeLuca & Weizenbaum, Ltd., Louise
A. Herman, and Law Offices of Louise A. Herman were on brief, for
appellants.
     Jeremy M. Sternberg, with whom Ralph T. Lepore, III, Michael
R. Manthei, Robert M. Shaw, Nathaniel F. Hulme, and Holland &
Knight LLP were on brief, for appellee.

                        December 16, 2015
            SELYA, Circuit Judge.         In this qui tam action, the

district court dismissed the claims of the relator, Robert Gadbois,

for lack of subject matter jurisdiction.          While his appeal of that

order was pending, subsequent events coalesced to dissolve the

jurisdictional impediment to the relator's action.              He responded

to this development by broadening his appeal to include the

possibility of supplementing his pleadings.              We conclude, as a

matter of first impression in this court, that Federal Rule of

Civil Procedure 15(d) is available to cure most kinds of defects

in subject matter jurisdiction.         For prudential reasons, however,

we decline to order such supplementation here but, rather, vacate

the judgment below to allow the district court to consider the

relator's request for supplementation under Rule 15(d).

I.   BACKGROUND

            The    relator   formerly    worked    as    a   pharmacist   for

PharMerica Corp. (PharMerica).      In November of 2010, he filed this

qui tam action under seal in the District of Rhode Island.                His

complaint    alleged     that   PharMerica     had      committed   numerous

infractions related to its distribution of prescription drugs to

long-term care facilities in violation of the False Claims Act

(FCA), 31 U.S.C. §§ 3729-3733, and several parallel state statutes.

            The relator filed an amended complaint as of right in

May of 2011.      More than two years elapsed before the United States

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elected not to intervene in the case. In short order, the affected

states took a similar stance.

             The pleadings were unsealed and, in February of 2014,

the relator filed a second amended complaint with leave of court.

In due course, PharMerica moved to dismiss, asserting both lack of

subject matter jurisdiction and failure to state a claim upon which

relief could be granted.         See Fed. R. Civ. P. 12(b)(1), (6).

PharMerica contended, inter alia, that the district court lacked

jurisdiction by virtue of the FCA's first-to-file bar, which

provides that if an action involving the same subject matter is

already pending, "no person other than the Government may intervene

or bring a related action based on the facts underlying the pending

action."   31 U.S.C. § 3730(b)(5).      In support of this contention,

PharMerica highlighted similarities between the relator's action

and an earlier-filed action that was pending in the United States

District Court for the Eastern District of Wisconsin.

             The district court, addressing only PharMerica's request

for dismissal under Rule 12(b)(1) and the first-to-file bar, laid

the   allegations    contained    in   the   relator's   second   amended

complaint alongside the allegations contained in the Wisconsin

pleadings.      It concluded that the two actions were based on

substantially the same facts and conduct.         See United States ex

rel. Gadbois v. PharMerica Corp., No. 10-471, slip op. at 22-23

(D.R.I. Oct. 3, 2014) (unpublished).         Consequently, the court —

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citing the first-to-file bar — dismissed the relator's FCA claim

for want of subject matter jurisdiction.                 See id. at 23.           It then

declined to exercise supplemental jurisdiction over the relator's

state-law claims and dismissed those claims as well.                        See id.

             The relator timely appealed.                 During the course of

briefing, the tectonic plates shifted.                  First, the Supreme Court

handed down its decision in Kellogg Brown & Root Services, Inc. v.

United States ex rel. Carter, 135 S. Ct. 1970 (2015), which

construed    the   phrase      "pending       action"    as    used    in    31   U.S.C.

§ 3730(b)(5).       The Court held that, under the wording of the

statute, "an earlier suit bars a later suit while the earlier suit

remains    undecided     but    ceases    to     bar    that    suit    once       it   is

dismissed."    Id. at 1978.       Accordingly, the dismissal of a section

3730(b)(5) claim ordinarily should be without prejudice, because

the claim could be refiled once the first-filed action is no longer

pending.     See id. at 1979.

             Less than a month after the Court decided Carter, a

second development occurred: the Wisconsin action was settled and

dismissed.     By then, the relator's appeal was already partially

briefed.      Positing that these two developments — the Carter

decision     and   the   dismissal       of    the     Wisconsin      action       —    had

significantly affected his case, the relator, in his reply brief

and by a separate motion to remand, sought to reformulate his

complaint on the fly.          He requested, in the alternative, that we

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either deem his complaint supplemented with the additional fact

that the Wisconsin action was no longer pending or remand to the

district court with instructions to permit him to supplement his

complaint under Rule 15(d).    In an opposition to the relator's

remand motion and at oral argument, PharMerica argued that neither

of these alternatives was appropriate.

II.   ANALYSIS

           The peculiar posture of this case makes it advisable for

us to consider the relator's procedural arguments first.     If the

relator's second amended complaint is a legitimate candidate for

supplementation, that would obviate any need to address the degree

of similarity between that complaint and the pleadings in the

Wisconsin action.    Thus, our starting point is the relator's

request for relief under Rule 15(d).

           Rule 15(d) affords litigants a pathway for pleading "any

transaction, occurrence, or event that happened after the date of

the pleading to be supplemented."        The rule shares the core

objective of the Civil Rules: "to make pleadings a means to achieve

an orderly and fair administration of justice."    Griffin v. Cty.

Sch. Bd., 377 U.S. 218, 227 (1964); see Fed. R. Civ. P. 1.     Rule

15(d) facilitates this objective by "promot[ing] as complete an

adjudication of the dispute between the parties as is possible."

6A Charles Alan Wright et al., Federal Practice and Procedure

§ 1504, at 245 (3d ed. 2010); see LaSalvia v. United Dairymen of

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Ariz., 804 F.2d 1113, 1119 (9th Cir. 1986).             By the same token,

the Rule helps courts and litigants to avoid pointless formality:

although causes of action accruing after the institution of a

lawsuit usually can be filed as separate actions, supplementation

under Rule 15(d) is often a more efficient mechanism for litigating

such claims.       See Predator Int'l, Inc. v. Gamo Outdoor USA, Inc.,

793   F.3d    1177,   1186-87   (10th   Cir.   2015).       It    follows   that

supplementation of pleadings is encouraged "when doing so will

promote      the   economic   and   speedy    disposition    of    the   entire

controversy between the parties, will not cause undue delay or

trial inconvenience, and will not prejudice the rights of any of

the other parties to the action."              6A Wright et al., Federal

Practice and Procedure § 1504, at 258-59.

              PharMerica acknowledges these principles but insists

that they are trumped in this instance by the venerable rule that

"[j]urisdiction is determined based on whether it existed at the

time the plaintiff filed the original complaint."                United States

ex rel. Estate of Cunningham v. Millennium Labs. of Cal., Inc.,

713 F.3d 662, 664 (1st Cir. 2013).           Noting that we have described

the first-to-file bar as jurisdictional, see, e.g., United States

ex rel. Wilson v. Bristol-Myers Squibb, Inc., 750 F.3d 111, 117

(1st Cir. 2014), PharMerica suggests that the fact that the

relator's claim was barred when brought prevents him from using

Rule 15(d) to cure the jurisdictional defect.           This suggestion is

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bolstered, PharMerica says, by the FCA itself, which provides that

no one can "bring" an action based on the same facts as those

undergirding a pending action.           31 U.S.C. § 3730(b)(5).

            After    careful     consideration,           we    find     PharMerica's

position untenable.         We explain briefly.

            Rule    15(d)     prescribes     that    "[t]he      court     may   permit

supplementation even though the original pleading is defective in

stating a claim or defense."          This sentence was added to the rule

in 1963.       It was designed to combat "the rigid and formalistic

view that where the original complaint fails to state a claim upon

which   relief     can   be   granted,      leave    to   serve      a   supplemental

complaint   must    be   denied."        Fed.   R.    Civ.      P.   15(d)   advisory

committee's note to 1963 amendment.             The new language was designed

to ensure that the amended rule would "give the court broad

discretion in allowing a supplemental pleading" so that plaintiffs

would not be "needlessly remitted to the difficulties of commencing

a new action even though events occurring after the commencement

of the original action have made clear the right to relief."                         Id.

            In    keeping     with   this   spirit    of       flexibility,      courts

generally have read Rule 15(d) to include defects in subject matter

jurisdiction among the deficiencies that may be corrected through

a supplemental pleading.             The Supreme Court has signaled its

approval of this praxis.         See Mathews v. Diaz, 426 U.S. 67, 75 &

n.8   (1976)     (recognizing    that    plaintiff        had    not     satisfied    "a

                                      - 8 -
nonwaivable condition of jurisdiction" before filing suit, but

noting that plaintiff had subsequently satisfied the condition so

"[a] supplemental complaint in the District Court would have

eliminated this jurisdictional issue").         The decision in Mathews

plainly implies that subject matter jurisdiction falls within the

cluster of defects that may be cured by a supplemental pleading

under Rule 15(d).

             Our sister circuits have not hesitated to make this

implication explicit.       See, e.g., Prasco, LLC v. Medicis Pharm.

Corp., 537 F.3d 1329, 1337 (Fed. Cir. 2008); Franks v. Ross, 313

F.3d 184, 198 (4th Cir. 2002); see also Hertz Corp. v. Enterprise

Rent-a-Car Co., 557 F. Supp. 2d 185, 191-92 (D. Mass. 2008).          A

few illustrations suffice to make the point.           For example, the

expiration of a jurisdictional waiting period can be shown through

a supplemental pleading in order to salvage an otherwise premature

complaint.    See Feldman v. Law Enforcement Assocs. Corp., 752 F.3d

339, 345, 347-48 (4th Cir. 2014); Wilson v. Westinghouse Elec.

Corp., 838 F.2d 286, 290 (8th Cir. 1988).       So, too, Rule 15(d) has

been viewed as an appropriate mechanism for pleading newly arising

facts necessary to demonstrate standing.             See Northstar Fin.

Advisors, Inc. v. Schwab Invs., 779 F.3d 1036, 1044-45 (9th Cir.),

cert. denied, 136 S. Ct. 240 (2015).

             The   weight   and   consistency   of   these   authorities

undermines PharMerica's attempt to elongate the reach of the

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familiar rule that jurisdiction is determined by the facts existing

at the time of filing an original complaint.       As we previously

have explained, "[t]he letter and spirit of the [time-of-filing]

rule apply most obviously in diversity cases, where the rule

originated, and where heightened concerns about forum-shopping and

strategic behavior offer special justifications for it."   ConnectU

LLC v. Zuckerberg, 522 F.3d 82, 92 (1st Cir. 2008) (citation

omitted).     In federal question cases, however, "courts have been

careful not to import the time-of-filing rule indiscriminately."

Id. Where, as here, there are no allegations of manipulative abuse

of the rule, the time-of-filing rule is inapposite to the federal

question context.1    See id. at 92 & n.8.

            Viewed against this backdrop, we think it manifest that

the relator's case is well suited to a motion for leave to

supplement.    Developments occurring after the filing of the second

amended complaint — the Carter decision and the dismissal of the

Wisconsin action — have dissolved the jurisdictional bar that the

court below found dispositive.     Although the order of dismissal

may have been proper at the time it was entered, the relator timely

     1 Though we have at times referenced the time-of-filing rule
in federal question cases, see, e.g., Sallen v. Corinthians
Licenciamentos LTDA, 273 F.3d 14, 23 (1st Cir. 2001), those
references have invariably been in dictum. They are, therefore,
without any binding effect.      See Dedham Water Co., Inc. v.
Cumberland Farms Dairy, Inc., 972 F.2d 453, 459 (1st Cir. 1992).

                                - 10 -
appealed   and   the       critical   developments     occurred   during    the

pendency of that appeal.        Consequently, this case is analogous to

the cases in which a jurisdictional prerequisite (such as an

exhaustion requirement) is satisfied only after suit is commenced.

Under the circumstances, it would be a pointless formality to let

the dismissal of the second amended complaint stand — and doing so

would needlessly expose the relator to the vagaries of filing a

new action.   We hold, therefore, that the relator's second amended

complaint is eligible for the proposed supplementation.2

           This holding does not end our odyssey.              Even though the

relator's second amended complaint is eligible for the proposed

supplementation,       a     question    remains     as   to    whether    such

supplementation should be allowed.             This question comes before us

in a curious posture.          Typically, a motion for supplementation

will be proffered in the district court, and an appellate court's

role will be limited to examining whether the district court abused

its discretion in granting or denying the motion.                  See, e.g.,

Schwarz v. City of Treasure Island, 544 F.3d 1201, 1211 (11th Cir.

2008); Twin Disc, Inc. v. Big Bud Tractor, Inc., 772 F.2d 1329,

    2 Because we conclude that a supplemental pleading can be used
to cure a jurisdictional defect, we have no need to consider the
relator's back-up argument that the first-to-file bar is not
jurisdictional in light of Carter and the recent decision in United
States ex rel. Heath v. AT&T, Inc., 791 F.3d 112, 119-21, 121 n.4
(D.C. Cir. 2015), petition for cert. filed, 84 U.S.L.W. 3179 (U.S.
Sept. 21, 2015) (No. 15-363).

                                      - 11 -
1338 (7th Cir. 1985).         Here, however, the timing of the new

developments was such that the district court did not have an

opportunity to pass upon a motion to supplement.

            The relator requests supplementation for the first time

on appeal, and he phrases his request in the alternative: he asks

that we either deem his second amended complaint supplemented

instanter     or   remand   the   case   to   the   district   court   with

instructions to permit supplementation.

            We reject the relator's first alternative out of hand.

Under Rule 15(d), the filing of a supplemental pleading is not

available to the pleader as a matter of right but, rather, is

subject to the court's discretion.          See ConnectU, 522 F.3d at 90.

            That discretion should normally be exercised in the

first instance by the district court, not by the court of appeals.

For this reason, we reject the relator's alternative request as

framed. It would completely frustrate the district court's ability

to exercise its discretion were we to remand with instructions to

permit supplementation.      A remand makes sense here only if it is

for the purpose of allowing the district court to exercise its

discretion.

            In the closely analogous circumstances of discretionary

amendments under Rule 15(a), we have emphasized the desirability

of allowing the district court to exercise discretion in the first

instance.     See United States ex rel. Rost v. Pfizer, Inc., 507

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F.3d 720, 733-34 (1st Cir. 2007).             Requests for supplementation

under Rule 15(d) are no different.          Where, as here, the pleader is

not entitled to supplementation as a matter of right and we have

no firm indication as to how the district court would exercise its

discretion with respect to a Rule 15(d) motion, allowing the

district court to make the initial determination is the proper

course.

             This conclusion is reinforced by the breadth of the

discretion inherent in Rule 15(d). As written, Rule 15(d) contains

no standards at all to guide the district court's analysis; it

merely authorizes the district court to permit service of a

supplemental pleading "on just terms."            In an effort to fill this

vacuum and in keeping with the overarching flexibility of Rule 15,

courts customarily have treated requests to supplement under Rule

15(d) liberally.      See, e.g., Walker v. United Parcel Serv., Inc.,

240   F.3d   1268,   1278   (10th    Cir.     2001).     This   liberality   is

reminiscent of the way in which courts have treated requests to

amend under Rule 15(a)'s leave "freely give[n]" standard.                  See,

e.g., Glatt v. Chi. Park Dist., 87 F.3d 190, 194 (7th Cir. 1996);

Quaratino v. Tiffany & Co., 71 F.3d 58, 66 (2d Cir. 1995); Mueller

Co. v. U.S. Pipe & Foundry Co., 351 F. Supp. 2d 1, 2 (D.N.H. 2005).

             This    does   not     mean,     however,   that    motions     for

supplementation should be granted automatically.                For one thing,

it is implicit in the logic of Rule 15(d) that a motion to

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supplement may be denied where the referenced events occurred

before the filing of the original complaint.3         See Eid v. Alaska

Airlines, Inc., 621 F.3d 858, 874-75 (9th Cir. 2010).           For another

thing, leave to supplement may be withheld when the request would

"unduly delay resolution of the case."       Hall v. CIA, 437 F.3d 94,

101 (D.C. Cir. 2006); accord Schwarz, 544 F.3d at 1229; Weeks v.

N.Y. State (Div. of Parole), 273 F.3d 76, 88 (2d Cir. 2001); Twin

Disc, 772 F.2d at 1338.      In the last analysis, a district court

faced with a Rule 15(d) motion must weigh the totality of the

circumstances, just as it would under Rule 15(a).           See Palmer v.

Champion Mortg., 465 F.3d 24, 30-31 (1st Cir. 2006). Idiosyncratic

factors — say, the futility of supplementation, see Haggard v.

Bank of the Ozarks, Inc., 668 F.3d 196, 202 (5th Cir. 2012) (per

curiam); Motorola Credit Corp. v. Uzan, 388 F.3d 39, 65 (2d Cir.

2004), prejudice to the opposing party, see Walker, 240 F.3d at

1278-79, and unreasonable delay in attempting to supplement, see

Glatt, 87 F.3d at 194 — may suffice to ground a denial of a Rule

15(d) motion.    Everything depends on context.

          We    recognize   that   a   district   court   has   a   hands-on

familiarity with a case — a familiarity that an appellate court

     3  For the sake of completeness, we note that a motion to
supplement that is in fact a motion to amend will ordinarily be
recharacterized and addressed under the correct rubric.     See
McDonald v. Hall, 579 F.2d 120, 120 n.1, 121-22 (1st Cir. 1978)
(per curiam).

                                   - 14 -
cannot hope to replicate.   Given this special coign of vantage, it

will almost always be advisable for the district court, not the

court of appeals, to pass judgment in the first instance on a

request for supplementation.   See United States ex rel. D'Agostino

v. ev3, Inc., 802 F.3d 188, 195 (1st Cir. 2015) (expressing a

similar view with respect to Rule 15(a) motions).      Rule 15(d)'s

unique mandate that supplementation of pleadings shall only be

allowed "on just terms" points us in the same direction.

           Of course, vacating the judgment and remanding to the

district court to allow consideration of a motion to supplement

leaves the merits issues unresolved.    But under the circumstances,

it would be imprudent to attempt to resolve them here.   After all,

the case will change materially if the district court permits

supplementation of the second amended complaint.      Consequently,

any disposition of the substantive issues raised in this appeal

would run the risk of being wholly advisory — and federal courts

are prohibited from rendering advisory opinions.      See Hayburn's

Case, 2 U.S. (2 Dall.) 409 (1792); Osediacz v. City of Cranston,

414 F.3d 136, 139 (1st Cir. 2005).

III.   CONCLUSION

           We need go no further. For the reasons elucidated above,

we vacate the judgment of the district court and remand the case

so that the relator may file, within such time parameters as the

district court may set, a motion to supplement his second amended

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complaint.   The district court shall pass upon that motion in due

season and, in the event that the court denies the motion, it may

reenter a judgment of dismissal.4   If, however, the court grants

the motion for supplementation, the case will proceed in the

ordinary course.

Vacated and remanded.   No costs.

    4 Although there may no longer be a barrier to the relator's
suit under the first-to-file bar, PharMerica may assert any number
of other defenses to the relator's proposed supplementation. For
example, PharMerica may argue that such supplementation would be
futile in light of the settlement in the Wisconsin action. See
United States ex rel. Chovanec v. Apria Healthcare Grp. Inc., 606
F.3d 361, 362, 365 (7th Cir. 2010) (noting that the circumstances
surrounding a lifting of the first-to-file bar may sometimes give
rise to other defenses to the action).

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