A unanimous panel of the United States Court of Appeals for the First Circuit recently vacated and remanded a district court ruling that a relator’s suit against PharMerica Corp. was barred by the first-to-file rule.  See United States ex rel. Gadbois v. PharMerica Corp., No. 14-2164 (1st Cir. Dec. 16, 2015). The appellate court’s decision to permit leave to supplement the complaint addresses a key question left unanswered by the Supreme Court’s decision in Carter – whether the dismissal of a first-filed complaint cures the jurisdictional defect resulting when a second complaint is filed while the first complaint is pending.

In PharMerica, the relator had filed his initial qui tam action in November 2010 in the District of Rhode Island, then filed an amended complaint in May 2011.  More than two years later, the United States elected not to intervene.  In February 2014, the relator filed a second amended complaint, which PharMerica moved to dismiss, arguing, in part, that the first-to-file bar applied due to a pending, earlier-filed action in the Eastern District of Wisconsin.  The district court granted the motion to dismiss on that ground.  While the appeal was pending, the Supreme Court issued Carter and the Wisconsin action settled.

The First Circuit determined “that the relator’s case is well suited to a motion for leave to supplement,” and held:   “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.”  The Court made explicit its conclusion “that a supplemental pleading can be used to cure a jurisdictional defect.”  In remanding to allow the relator to file a motion for leave to supplement, the First Circuit emphasized that supplementation should not be granted automatically and noted the appropriateness of denying supplementation when supplementation would unduly delay resolution of the case or when it would be unjust under the totality of the circumstances.  The First Circuit specifically observed that “PharMerica may argue that supplementation would be futile in light of the settlement in the Wisconsin action.”

This approach is in tension with that of the United States District Court for the Eastern District of Virginia, which had held that amending a complaint after the dismissal of an earlier-filed case would not solve the jurisdictional issue if the initial complaint had been filed while the first-filed action was still pending.  By deciding as it did, the First Circuit obviated a need to consider whether a re-filed second complaint would nevertheless be barred by the statute of limitations – a question that the Eastern District of Virginia left open.

A copy of the First Circuit’s opinion can be found here.