Unanimous SCOTUS Issues Favorable First-to-File Decision

Today the Supreme Court of the United States issued an opinion in Kellogg Brown & Root Services, Inc. v. United States ex rel. Carter, No. 12–1497, that resolved what it means for an action to be "pending" so as to trigger the False Claims Act's "First-to-File Bar." And the resulting decision is good news for Relators.

According to the federal statute, "When a person brings an action under [the False Claims Act], 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). The clause has been nicknamed the "First-to-File Bar," because, in a nutshell, it says that only the first pending action is allowed.

At issue here was the meaning of the term "pending." According to the Defendant, KBR, "first-to-file" should be construed literally: once an action has been filed, it argued, no other person may bring a related action ever, period, full stop. According to KBR, the entire universe of relators gets one bite at the apple, and if the first-filed complaint fails, that claim may never be raised again and the defendant is immune from it.

Fortunately, the Supreme Court recognized the absurdity of KBR's argument, noting "This interpretation does not comport with any known usage of the term “pending.” Under this interpretation, Marbury v. Madison, 1 Cranch 137 (1803), is still “pending.” So is the trial of Socrates." The Court pointed out that odd results and practical problems could arise if KBR's interpretation were adopted. For example, it made little sense to the justices that a case abandoned by an uninterested relator should bar all future willing relators from pursuing their claims.

So the Court held that the "ordinary" definition of "pending" should apply: "[r]emaining undecided; awaiting decision." This means that if the first-filed claim has been dismissed or otherwise resolved and closed before the second action is filed, the First-to-File Bar would not be triggered.

The full opinion, including a separate discussion of the applicability of the Wartime Suspension of Limitations Act to the FCA, can be read on the SupremeCourt.gov website.