In United States ex rel. Weiner v. Siemens AG, No. 22-2656_(2d Cir. Nov. 28, 2023), the panel vacates dismissal of a False Claims Act (FCA) for failure of service of process, holding that the time for service under Fed. R. Civ. P. 4(m) never triggered because the court never ordered service under 31 U.S.C. § 3730(b)(2).
The FCA, 31 U.S.C. §§ 3729–32, also known as the federal qui tam statute, imposes civil liability on any person or entity that knowingly submits “a false or fraudulent claim for payment or approval” to the federal government. Id. § 3729(a)(1)(A). In this case, the relator “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.”
The FCA provides, with respect to procedure, that when a private person (the Relator) files an action 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).
Here, the complaint remained sealed six years after its filing in 2012. On December 11, 2015, the district court ordered 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.” On June 26, 2018, the complaint was unsealed, yet “over a year passed . . . 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.” The court never once ordered service of the complaint and summons.
“Defendants then moved to dismiss Relator’s complaint for insufficient service of process and failure to prosecute, citing the age of the proceedings.” While declining to dismiss for want of prosecution under Fed. R. Civ. P. 41, the district court dismissed for untimely service under Rule 4(m), observing that “because Relator had not served Defendants in the preceding nine years,” there was “no way for this Court to determine that service was not untimely.”
The Second Circuit vacates and remands. “This appeal presents a narrow question: Under Section 3730, when does the service-of-process clock begin to tick? Relator . . . argues that the service-of-process period does not begin until the district court explicitly orders service. Defendants-Appellees . . . contend that the service period begins automatically when the district court unseals a complaint.”
The panel holds that the unambiguous language of the FCA provides that service of process may only be effected upon court order. “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 . . . . Thus, it is only when a district court expressly ‘orders’ a relator to serve a defendant that the Rule 4 period begins.” (The Relator had tried arguing that Rule 4(m) did not apply to the FCA at all, but “[b]ecause the FCA repeatedly refers to the service period set by the Federal Rules of Civil Procedure,” the panel rejected that suggestion.)
The panel also “observe[s] 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’ . . . . 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 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.”
The panel notes, though, that the Relator bears responsibility to keep the district court informed of the case and to take action. “[R]elators 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.” In this case, though, despite the seemingly alarming delay, the panel affirms the district court’s decision not to dismiss for failure to prosecute under Rule 41, holding that it was not an abuse of discretion. “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.”
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