Amphastar Pharmaceuticals Inc. v. Aventis Pharma SA

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

AMPHASTAR Nos. 14-56382

PHARMACEUTICALS INC., 15-56209

Relator,

Plaintiff-Appellee, D.C. No.

5:09-cv-00023-MJG-OP

v.

AVENTIS PHARMA SA;

AVENTIS PHARMACEUTICALS

INC.; SANOFI-AVENTIS SA,

Defendants-Appellants.

AMPHASTAR No. 15-56122

PHARMACEUTICALS INC.,

Relator, D.C. No.

Plaintiff-Appellant, 5:09-cv-00023-MJG-OP

v.

OPINION

AVENTIS PHARMA SA;

AVENTIS PHARMACEUTICALS

INC.; SANOFI-AVENTIS SA,

Defendants-Appellees.

2 AMPHASTAR PHARM. V. AVENTIS PHARMA

Appeal from the United States District Court

for the Central District of California

Marvin J. Garbis, District Judge, Presiding by Designation

Argued and Submitted November 10, 2016

Pasadena, California

Filed May 11, 2017

Before: Diarmuid F. O’Scannlain and Johnnie B.

Rawlinson, Circuit Judges, and Rosemary Marquez,*

District Judge.

Opinion by Judge O’Scannlain

SUMMARY**

False Claims Act

In a qui tam suit under the False Claims Act, the panel

affirmed the district court’s dismissal of the action for lack of

subject matter jurisdiction; dismissed as moot the defendant’s

appeal from the district court’s denial of its motion for

summary judgment; reversed the district court’s denial of the

defendant’s motion for attorneys’ fees; and remanded the case

to the district court.

*

The Honorable Rosemary Marquez, United States District Judge for

the District of Arizona, sitting by designation.

**

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

AMPHASTAR PHARM. V. AVENTIS PHARMA 3

The plaintiff alleged that by committing fraud against the

United States Patent and Trademark Office in a patent

application, the defendant obtained an illegal monopoly over

a drug and then knowingly overcharged the United States.

The panel held that the district court lacked subject matter

jurisdiction because the complaint was based on public

disclosures in the form of allegations of fraud, as well as

allegations of the underlying facts, in a prior patent

infringement suit. In addition, the plaintiff did not show that

it was the original source of the information on which its

allegations were based. The panel held that the plaintiff did

not show both that it had direct, firsthand knowledge of the

alleged fraud and that it obtained this knowledge

independently.

Reversing the denial of attorneys’ fees under the fee-

shifting provision of the False Claims Act, the panel held that

the district court had authority to award attorneys’ fees after

the dismissal of the action for lack of subject matter

jurisdiction. Agreeing with the Tenth Circuit, the panel held

that the fee-shifting provision provides an independent grant

of jurisdiction. In addition, the defendant was a prevailing

party. The panel concluded that the Supreme Court’s opinion

in CRST Van Expedited, Inc. v. E.E.O.C., 136 S. Ct. 1642

(2016), effectively overruled the holding of Branson v. Nott,

62 F.3d 287 (9th Cir. 1995), that a defendant that wins

because the action is dismissed for lack of subject matter

jurisdiction is never a prevailing party. The panel remanded

for resolution of the attorneys’ fees issue.

4 AMPHASTAR PHARM. V. AVENTIS PHARMA

COUNSEL

Wayne R. Gross (argued), Evan C. Borges, Michael E. Lopez,

and Bret D. Hembd, Greenberg Gross LLP, Costa Mesa,

California, for Relator-Appellant/Appellee.

Mark A. Perry (argued) and Stephen C. Payne, Gibson Dunn

& Crutcher LLP, Washington, D.C.; M. Sean Royall, Tracey

B. Davies, and Olivia A. Adendoroff, Gibson Dunn &

Crutcher LLP, Dallas, Texas; for Defendants-

Appellants/Appellees.

OPINION

O’SCANNLAIN, Circuit Judge:

We must decide whether we have subject matter

jurisdiction over a corporate qui tam action1 under the False

Claims Act that accuses a competing company of committing

fraud against the United States.

I

This saga began in the early 1990s, when Aventis Pharma

S.A., (“Aventis”) a French pharmaceutical enterprise,2

1

A qui tam action is one in which a private party (the relator) brings

a lawsuit on behalf of the United States government alleging fraud in

return for a portion of any damages awarded. See 31 U.S.C. § 3730(b).

2

Aventis Pharma S.A. and Aventis Pharmaceuticals, Inc. (the

American subsidiary) merged with and into Sanofi-Aventis S.A. during

this litigation. The defendants-appellants are collectively referred to as

Aventis.

AMPHASTAR PHARM. V. AVENTIS PHARMA 5

developed a plan to sell the drug enoxaparin in the United

States under the brand name Lovenox. Enoxaparin is a

heparin-based blood thinner that was patented in Europe in

the 1980s as European Patent 40,144 (“EP144”). Eventually,

European authorities invalidated EP144 as lacking novelty.

A

In June 1991, Aventis applied to the U.S. Patent and

Trademark Office (“USPTO”) for a patent to cover a

supposedly new version of enoxaparin (“618 Product”).3

Aventis filed a New Drug Application (“NDA”) with the

Food and Drug Administration (“FDA”) a month later.

The initial versions of the NDA were rejected in part as

being “obvious in view of the prior art,” including EP144.

Aventis acknowledged that EP144 was prior art, but claimed

that the 618 Product was a different drug from the drug

produced by following EP144 (“EP144 Product”). After

several subsequent rejections, Aventis submitted a revised

NDA in 1993 supported by the expert declaration of Dr.

Andre Uzan, a French scientist. Dr. Uzan claimed that data in

Example 64 of the patent application, included in the revised

NDA, “clearly demonstrate[d]” that the 618 Product has a

longer half-life relative to the EP144 Product, and thus was

novel.

3

Referred to as the “618 Product” by previous courts because it was

eventually covered by Patent Number 5,389,618.

4

Example 6 of the patent application describes data from studies that

purport to show that the 618 Product has a significantly longer half-life

than the EP144 Product, enabling the same effect to be achieved with

lower dosages.

6 AMPHASTAR PHARM. V. AVENTIS PHARMA

The USPTO then approved the revised application and

issued Patent Number 5,389,618 (“618 Patent”)5 for the

618 Product in 1995, in large part because of Dr. Uzan’s

statements regarding Example 6. However, it turned out that

Dr. Uzan’s sworn declarations were incorrect. Dr. Uzan had

based his claim of a difference by comparing a 40mg dose of

the 618 Product with a 60mg dose of the EP144 Product, but

had not disclosed that different dosages were used in the

USPTO submissions. A dose-for-dose comparison would

have shown that the difference between the products was “not

statistically significant.” This error went undetected for years.

Meanwhile, after the 618 Patent was issued, Aventis listed it

in the FDA’s Orange Book, which invokes the protections of

the Hatch-Waxman Act. 21 U.S.C. § 355(j)(5)(B)(iii)

(requiring a generic drug competitor to certify that the patent

is either not infringed or invalid).

1

Amphastar Pharmaceuticals, Inc., (“Amphastar”) a U.S.-

based generic pharmaceutical firm founded in 1999 by Yong

Feng Zhang, decided that enoxaparin would be a good

prospect for a generic product, believing it might be possible

to develop a generic version by utilizing information from

EP144. Development work began in 2000 and included

experiments performed from 2000 to 2003 (“Pre-Litigation

Experiments”). The exact nature of the Pre-Litigation

Experiments is disputed, but they led to Amphastar’s being

able to manufacture a generic enoxaparin. Amphastar then

submitted an Abbreviated New Drug Application (“ANDA”)

to the FDA on March 4, 2003.

5

This patent was reissued as U.S. Reissue Patent No. 38,743 in 2005.

Both patents are collectively referred to herein as the “618 Patent.”

AMPHASTAR PHARM. V. AVENTIS PHARMA 7

Aventis responded to Amphastar’s ANDA by bringing

suit five months later, alleging that Amphastar and Teva

Pharmaceuticals were infringing on the 618 Patent.

Amphastar filed its Amended Answer and Counterclaim and

made no mention of the Example 6 error or the Pre-Litigation

Experiments.

After discovery was underway, Amphastar filed a motion

to amend its Answer and Counterclaim, stating, “based on

facts recently developed in this litigation, Amphastar has

added new affirmative defenses and several antitrust claims

to its answer and counterclaims.” Amphastar’s additions

included an affirmative defense alleging inequitable conduct

by Aventis in obtaining the 618 Patent. After Aventis filed a

motion to strike the amendments, Amphastar responded by

asserting: “As to the unenforceability of the ‘618 patent based

on inequitable conduct, all of the facts and evidence upon

which this affirmative defense is based are in the possession

and control of Aventis.” Amphastar did not mention the Pre-

Litigation Experiments when it listed the evidence on which

it based its inequitable conduct defense. Amphastar also

alleged antitrust violations.

2

Amphastar eventually prevailed in its patent infringement

litigation battle with Aventis.6 By the end of the litigation the

6

The initial 2003 patent infringement suit by Aventis led to the

finding, on summary judgment, that Amphastar’s affirmative defense on

inequitable conduct grounds succeeded because (1) Aventis’s false

representations and nondisclosures to the USPTO were material, and (2) it

had intent to deceive the USPTO. Aventis Pharma S.A. v. Amphastar

Pharm., Inc., 390 F. Supp. 2d 952 (C.D. Cal. 2005) (“Aventis I”). The

Federal Circuit affirmed in part but reversed in part. 176 Fed. App’x 117

8 AMPHASTAR PHARM. V. AVENTIS PHARMA

Federal Circuit had affirmed the district court’s conclusions

that: (1) Aventis made material nondisclosures and false

representations to the USPTO regarding the 618 Patent

application and (2) Aventis intended to deceive the USPTO.

Amphastar was thus able to produce generic enoxaparin

without fear of infringement—the 618 Patent was “found to

be unenforceable on the ground of inequitable conduct.”

However, Amphastar’s antitrust counterclaim was dismissed.

B

Amphastar then brought this qui tam action against

Aventis.7 Amphastar duly sent the statutorily required letter

to the United States Department of Justice, notifying it of its

intent to bring this action. Amphastar then filed its sealed

complaint on January 7, 2009, alleging that by committing

fraud against the USPTO, Aventis obtained an illegal

monopoly over enoxaparin and then knowingly overcharged

the United States. By committing such fraud, Amphastar

(Fed. Cir. 2006) (“Aventis II”) (affirming the material false representations

and nondisclosures finding, but vacating the intent to deceive conclusion

and remanding the case to the district court for a trial on the intent to

deceive issue).

On remand, the district court again found that Aventis did intend to

deceive the USPTO; this time the decision was affirmed on appeal.

Aventis Pharma S.A. v. Amphastar Pharm., Inc., 475 F. Supp. 2d 970, 994

(C.D. Cal. 2007) (“Aventis III”), aff’d, 525 F.3d 1334 (Fed. Cir. 2008)

(“Aventis IV”).

7

Said action was filed pursuant to 31 U.S.C. § 3730, which was

amended on March 23, 2010, but the amendments are not retroactive.

Graham Cnty. Soil & Water Conservation Dist. v. United States ex rel.

Wilson, 559 U.S. 280, 283 n.1 (2010). We analyze the statute as it existed

when Amphastar first filed its complaint in 2009.

AMPHASTAR PHARM. V. AVENTIS PHARMA 9

further alleged, Aventis knew the patent was invalid and thus

knowingly defrauded the United States. The complaint was

unsealed and the case proceeded in October 2011, after the

government declined to join the litigation.

1

On November 14, 2012, the district court ruled that

Amphastar’s complaint was based on public disclosures, and

therefore Amphastar had to show it was the “original source

. . . of the information on which the allegations are based.”

§ 3730(e)(4). Thereafter, Aventis filed a motion for summary

judgment contending Amphastar had failed to meet the

original source exception to the jurisdictional bar. To be an

original source of information underlying the complaint,

Amphastar needed to meet the pre-suit disclosure and “direct

and independent knowledge” requirements.

Aventis first argued that Amphastar had failed to disclose

enough information in its pre-suit disclosure letter. The

district court denied Aventis’s summary judgment motion on

this issue in a May 2014 ruling, but certified its ruling for

interlocutory appeal, which Aventis brought in No. 14-56382.

2

The district court then proceeded to the “direct and

independent knowledge” issue.8 It held a four-day evidentiary

8

Direct knowledge is firsthand knowledge of the alleged fraud

obtained by the relator’s own labor. United States v. Alcan Elec. & Eng’g,

Inc., 197 F.3d 1014, 1020 (9th Cir. 1999). Independent knowledge is

knowledge obtained by the relator before the evidence of the fraud was

10 AMPHASTAR PHARM. V. AVENTIS PHARMA

hearing to determine if Amphastar had direct and independent

knowledge of any of the information underlying its

allegations. The district court made various factual findings:

Amphastar had no knowledge of Example 6 being false

before the Aventis I litigation began; Zhang (Amphastar’s

CEO) was not a credible witness; Amphastar had engaged in

inconsistent actions regarding whether it had known of the

Example 6 error before the Aventis I litigation, and such

inconsistent actions undermined its argument. The district

court also concluded that Amphastar did not produce

enoxaparin by following EP144 in its Pre-Litigation

Experiments, but copied key information from Patent 618.

For all these reasons the district court held that Amphastar

had neither direct nor independent knowledge of any of the

elements of fraud supposedly committed by Aventis. The

district court then dismissed the case for lack of jurisdiction.

Aventis moved for attorneys’ fees, which motion was denied.

Amphastar timely appealed the dismissal of its qui tam

suit. Aventis timely cross-appealed the denial of attorneys’

fees.

II

On appeal, Amphastar contends that the district court

erred in dismissing its qui tam suit for lack of jurisdiction.9 It

disclosed to the public. United States ex rel. Devlin v. California, 84 F.3d

358, 361 n.5 (9th Cir. 1996).

9

Whether subject matter jurisdiction exists “is a question of law

reviewed de novo.” United States ex rel. Biddle v. Bd. of Trs. of Leland

Stanford, Jr. Univ., 161 F.3d 533, 535 (9th Cir. 1998). “The district

court’s findings of fact relevant to its determination of subject matter

jurisdiction are reviewed for clear error.” Id. District court evidentiary

AMPHASTAR PHARM. V. AVENTIS PHARMA 11

argues specifically that the district court erred in concluding

that the allegations of fraud had been publicly disclosed and

further erred in concluding that Amphastar was not “an

original source” of Aventis’s allegedly fraudulent actions.

31 U.S.C. § 3730(e)(4).

The relevant portions of Section 3730(e)(4) of the False

Claims Act state:

(e)(4)(A): No court shall have jurisdiction

over an action under this section based upon

the public disclosure of allegations or

transactions in a criminal, civil, or

administrative hearing . . . unless . . . the

person bringing the action is an original

source of the information.

(e)(4)(B): For purposes of this paragraph,

“original source” means an individual who

has direct and independent knowledge of the

information on which the allegations are

based and has voluntarily provided the

information to the Government before filing

an action under this section which is based on

the information.

If Amphastar’s allegations are based on publicly disclosed

information, the jurisdictional bar applies unless Amphastar

is an “original source.” To be an original source, Amphastar

rulings are reviewed for abuse of discretion. Gribben v. United Parcel

Serv., Inc., 528 F.3d 1166, 1171 (9th Cir. 2008). Other legal issues, such

as the attorneys’ fees issue, are reviewed de novo. See Salve Regina Coll.

v. Russell, 499 U.S. 225, 231 (1991).

12 AMPHASTAR PHARM. V. AVENTIS PHARMA

must demonstrate that: (1) it had direct and independent

knowledge of the information on which it based its

allegations, and (2) it satisfied the pre-suit disclosure

requirements by providing the necessary information to the

government before filing an action. Amphastar “bears the

burden of establishing subject matter jurisdiction by a

preponderance of the evidence.” Alcan, 197 F.3d at 1018.

A

Was the public disclosure bar triggered?

1

Transactions or allegations are disclosed if they can be

found in pleadings or other public filings. Hagood v. Sonoma

Cnty. Water Agency, 81 F.3d 1465, 1474 n.13 (9th Cir. 1996).

Our circuit interprets “allegations” to refer to direct claims of

fraud, and, we interpret “transaction to refer to facts from

which fraud can be inferred.” United States ex rel. Mateski v.

Raytheon Co., 816 F.3d 565, 571 (9th Cir. 2016). We have

adopted the reasoning of United States ex rel. Springfield

Terminal Railway Co. v. Quinn, which states that when a

critical mass of the underlying facts or of the allegations in

the qui tam complaint have been disclosed prior to the qui

tam complaint being filed, the public disclosure bar applies.

Mateski, 816 F.3d at 571 (citing 14 F.3d 645, 653–54 (D.C.

Cir. 1994)).

The Mateski court explained that if “X + Y = Z, Z

represents the allegation of fraud and X and Y represent its

essential elements.” Id. (quoting United States ex rel. Found.

Aiding the Elderly v. Horizon W., Inc., 265 F.3d 1011, 1015

(9th Cir. 2001), amended on denial of reh’g, 275 F.3d 1189

AMPHASTAR PHARM. V. AVENTIS PHARMA 13

(9th Cir. 2001)). If the fraud allegations [Z] are disclosed, the

bar applies. Id. If enough of the underlying facts making up

the elements of fraud are disclosed, the bar applies. Id. “[I]n

a fraud case, X and Y inevitably stand for but two elements:”

the misrepresented facts [X] and the true facts [Y]. Id.

(quoting Found. Aiding, 265 F.3d at 1015).

2

Amphastar argues that the allegations of fraud were never

publicly disclosed before it filed this qui tam action. It

concedes that general allegations of fraud were made in its

Aventis I Amended Answer and Counterclaim, but says these

past allegations never mentioned any false claims submitted

to or paid by the federal government and state governments.

Instead, its current allegations concern the fact that false

claims were submitted to one or another government,

allegations which were never made in any prior publicly

disclosed document.

However, “[a]n allegation need not include an express

reference to the [False Claims Act]” for the public disclosure

bar to apply. Alcan, 197 F.3d at 1019. Nor does a disclosed

allegation need to contain every specific detail to constitute

a disclosure. Id. (rejecting an argument the relator’s new

allegations are meaningfully different because the old

allegations “did not mention the [False Claims Act] and did

not include details of the violations”). Alcan involved a

situation where the publicly disclosed allegations “did not

mention any overcharging, false-invoicing . . . or any other

specific fraud on the government.” Id. Like Alcan, this is not

a case where the prior allegations concerned “a very different

problem” than the qui tam allegations. See Mateski, 816 F.3d

14 AMPHASTAR PHARM. V. AVENTIS PHARMA

at 574 (discussing the “substantially similar” spectrum)

(quoting Found. Aiding, 265 F.3d at 1016).

Amphastar’s Amended Answer and Counterclaim in the

2003 Patent Infringement case made nearly identical

allegations to those made here. It accused Aventis of

obtaining an invalid patent due to misrepresentations. It also

claimed that, despite knowing about these misrepresentations,

“Aventis has attempted to maintain or obtain a monopoly

over others” by doing things such as improperly listing the

Patent in the Orange Book. Finally, it alleged that “Aventis

has wrongfully derived, and will continue to wrongfully

derive, income and profits from this conduct.” The only new

allegation Amphastar makes in the instant case is that the

government also bought the drug while Aventis held its

illegal monopoly, but this is an obvious inference based on

the publicly disclosed allegations. The allegations in this case

are so “substantially similar” to the prior allegations that we

are satisfied the public disclosure bar applies. See Mateski,

816 F.3d at 573–74.

3

While the fraud allegations being disclosed are enough to

trigger the bar, Amphastar also failed to demonstrate that

both the misrepresented facts and the true facts were not

disclosed. This is also enough to trigger the bar on its own.

The misrepresented facts presented to the government (via the

USPTO) are that the 618 Product differed from the EP144

Product because the half-life of the products was different,

and thus Aventis held a valid patent—and, the true facts

(actual state of the world) are that Example 6 was false and

thus Aventis held an invalid patent, and this invalid patent

allowed Aventis unlawfully to charge monopoly prices to

AMPHASTAR PHARM. V. AVENTIS PHARMA 15

customers. In this case “the information publicly disclosed

. . . contained the material facts underlying [the relator’s]

allegation of fraud.” A-1 Ambulance Serv., Inc. v. California,

202 F.3d 1238, 1245 (9th Cir. 2000); see also Found. Aiding,

265 F.3d at 1015–17 (asking if the true state of the world was

disclosed (i.e. the defendant’s substandard care) and if the

misrepresented facts were disclosed (i.e. the false statements

to the government)).

The evidence that the misrepresented facts and the true

facts were actually disclosed is overwhelming. The qui tam

complaint alleges that: (1) Aventis intentionally made

material misrepresentations to the USPTO regarding whether

the 618 Product was novel relative to prior art, (2) such

misrepresentations allowed it fraudulently to obtain the

618 Patent, (3) Aventis then improperly listed the 618 Patent

in the FDA Orange Book, and (4) such listing allowed

Aventis to overcharge the government. The 2004 allegations10

that were publicly disclosed included all of these facts,

except, instead of mentioning overcharging the government,

they mentioned overcharging in general. While the Amended

Answer and Counterclaim did not specifically mention

Example 6, it did allege material misrepresentations

regarding “studies of the pharmacological properties of prior

art compounds, including half life.”

10

These include the Amended Answer and Counterclaim filed by

Amphastar and the Motion for Leave (After the Fact) to File its Amended

Answer and Counterclaim (Amend Motion) in Aventis I, which added new

affirmative defenses and several antitrust claims “based on facts recently

developed in this litigation.”

16 AMPHASTAR PHARM. V. AVENTIS PHARMA

4

Amphastar also argues that the district court erred because

it recited: “The ‘public disclosure’ standard is not intended to

be difficult to meet. Hagood, 81 F.3d at 1476 n.18 (noting

that courts often treat the ‘based upon public disclosure’ step

as a ‘quick trigger’ to arrive at the more exacting ‘original

source’ inquiry).” Amphastar Pharm., Inc. v. Aventis Pharma

S.A., No. EDCV-09-0023, 2012 WL 5512466, at *7 (C.D.

Cal. Nov. 14, 2012) (“Aventis V”). Mateski specifically

rejected a defendant’s argument that the “quick trigger”

language of Hagood means the courts should avoid

substantively analyzing a public disclosure issue. 816 F.3d at

577–78 (stressing the need to analyze the issue “with some

specificity”).

Even assuming the district court committed legal error by

failing to analyze this issue in enough detail, any error would

be harmless. We are satisfied that enough of the fraud

allegations, or alternatively, enough of the underlying facts,

were publicly disclosed such that the public disclosure bar

should have been triggered.

B

Since the public disclosure bar was triggered, did

Amphastar qualify as an original source?

1

The first prong of the original source analysis asks

whether Amphastar can show it had “knowledge that is both

direct and independent.” Devlin, 84 F.3d at 361 n.5. To prove

“direct” knowledge, Amphastar “must show that [it] had

AMPHASTAR PHARM. V. AVENTIS PHARMA 17

firsthand knowledge of the alleged fraud, and that [it]

obtained this knowledge through [its] own labor unmediated

by anything else.” Alcan, 197 F.3d at 1020. To prove

“independent” knowledge, relators have to show they had

relevant “evidence of fraud prior to the public disclosure of

the allegations.” Devlin, 84 F.3d at 361 n.5.

Amphastar claimed it learned that Example 6 was false

through its Pre-Litigation Experiments (direct) and knew this

information before the Aventis I disclosures (independent).11

Amphastar Pharm., Inc. v. Aventis Pharma S.A., No. EDCV-

09-0023, 2015 WL 4511573, at *6 (C.D. Cal. July 20, 2015)

(“Aventis VI”). Specifically, Amphastar argued that its Pre-

Litigation Experiments showed that it could create “a

bioequivalent enoxaparin with the same molecular weight and

half-life properties as” the 618 Product by just following

EP144. Id. Thus, Example 6, which showed a difference in

11

Amphastar also argues that it gained direct and independent

knowledge that Aventis committed fraud during the Aventis I discovery

process. However, this argument is not relevant to the original source

analysis. Even if Amphastar did gain knowledge of the fraud because of

the Aventis I discovery process, a relator’s involvement in prior litigation

that constituted a public disclosure does not make it an original source

when it learned of the alleged fraud solely through discovery of materials

that could potentially be accessed by the public. See, e.g., United States

ex rel. Kreindler & Kreindler v. United Techs. Corp., 985 F.2d 1148,

1158–59 (2d Cir. 1993); United States ex rel. Stinson, Lyons, Gerlin &

Bustamante, P.A. v. Prudential Ins. Co., 944 F.2d 1149, 1160–61 (3d Cir.

1991). To qualify as an original source Amphastar must show it gained

some direct and independent knowledge from its Pre-Litigation

Experiments, since this is the only non-Aventis I discovery source of

information from which it claims it gained direct and independent

knowledge. This is presumably why Amphastar devoted almost all of its

efforts at the July 2014 evidentiary hearing to proving that it learned

Example 6 was false because of its Pre-Litigation Experiments.

18 AMPHASTAR PHARM. V. AVENTIS PHARMA

half-life between the two products, must be false, it argued.

Id.

2

So the crucial question is whether the district court’s

factual findings derived from the July 2014 evidentiary

hearing are clearly erroneous. The district court did a

thorough job developing the record—eight witnesses

(including four experts) testified, 300 exhibits were

submitted, and the transcript for the hearing exceeds 1,100

pages. The district court found that Amphastar had no

knowledge Example 6 was false before this fact was publicly

disclosed in the Aventis I litigation. Aventis VI, 2015 WL

4511573, at *6. The court concluded that Zhang’s testimony,

that he knew Example 6 of the 618 Patent application was

false before the Aventis I litigation began, was not credible.

Id. It also concluded that Amphastar had no direct or

independent knowledge that Aventis had made false reports

to the FDA about its manufacturing process. Id. at *14

(“Indeed, in argument, Amphastar acknowledged that its only

witness regarding its supposed ‘direct and independent

knowledge,’ Zhang, did not offer such evidence.”).

The district court rejected Zhang’s testimony that he

believed Example 6 was false before Aventis I for several

reasons. For example, there was no written documentation of

this seemingly important discovery. The only proof Zhang

offered was a single statement in his deposition that he

allegedly told two other people in passing, yet neither of these

people testified to confirm these alleged conversations. Id. at

*6. The court also concluded that the Pre-Litigation

Experiments did not actually produce enoxaparin by

following EP144, and thus did not demonstrate that Example

AMPHASTAR PHARM. V. AVENTIS PHARMA 19

6 was false—despite Zhang claiming this is how he first came

to believe it. Id. at *8.

Additional evidence supporting the district court’s

conclusion was the notebooks documenting the Pre-Litigation

Experiments; they provided critical evidence that Amphastar

ended up relying on the 618 Patent to create a generic

enoxaparin. Id. at *9–14.12 This greatly undermined

Amphastar’s argument that it was able to duplicate the

618 Product using just EP144 disclosures and thus proved to

itself that something was wrong with the 618 Patent.

Amphastar even conceded that it is “not challenging the

court’s factual findings regarding its pre-litigation

experiments.”

The district court was also deeply troubled (for good

reason) by Amphastar’s inconsistent prior statements about

when it discovered the Example 6 error. Amphastar did not

raise the Example 6 issue as a defense until a year after the

Aventis I litigation began. Aventis VI, 2015 WL 4511573, at

*7. When it did raise the defense, in its June 7, 2004 motion,

it recited, “based on facts recently developed in this litigation,

Amphastar has added new affirmative defenses [and several

counterclaims].” Id. (emphasis added by district court).

Amphastar did not list the supposedly important Pre-

Litigation Experiments among the evidence in support of its

June 2004 contentions. Id. Also, the pre-suit disclosure letter

written by Amphastar in 2008 and sent to the government

12

Amphastar originally produced copies of the notebooks

documenting the Pre-Litigation Experiments that were missing certain

pages. Id. at 9. However, Amphastar actually knew that the original

notebooks contained some of those pages and did not inform the court of

this discrepancy until it was caught. Id. at 9–11.

20 AMPHASTAR PHARM. V. AVENTIS PHARMA

before Aventis VI stated that “[d]uring Amphastar’s litigation

against Aventis, Amphastar discovered that Aventis has

committed frauds against [the United States], which have

resulted in false claims.” Id. at *8 (emphasis added by district

court).

All of Amphastar’s legal arguments regarding direct and

independent knowledge fail if the factual findings of the

evidentiary hearing stand. Amphastar argues the district court

incorrectly required Amphastar to show it had knowledge of

Example 6’s falsity and of Aventis’s intent to deceive.

Furthermore, the district court does use the phrases “false

statement” and “knowledge of the alleged fraud”

interchangeably, which is problematic. See, e.g., id. at *6.

Amphastar only needed to prove it had direct and

independent knowledge that Example 6 was false to be an

original source—the district court should have spoken with

more precision. Nevertheless, the factual conclusion that

Amphastar had no knowledge of the Example 6 issue before

it was disclosed makes this argument moot. Any error is

harmless if Amphastar fails to overturn the factual findings.

Amphastar was required to offer compelling proof the

district court erred to overcome the deferential clear error

standard that governs factual findings. Anderson v. City of

Bessemer, 470 U.S. 564, 573 (1985) (describing the “clearly

erroneous” standard). Yet, Amphastar does not even directly

challenge the district court’s factual findings, instead arguing

that the district court did not adequately consider its March

17, 2003, experiment in considering whether Amphastar

knew about the Example 6 issue through its own labor pre-

Aventis I. However, the district court clearly concluded that

no Pre-Litigation Experiment provided Amphastar this

information. It discussed all of the issues with the Pre-

AMPHASTAR PHARM. V. AVENTIS PHARMA 21

Litigation Experiments in general and then provided specific

examples. The district court is not required to list all one

hundred plus experiments and explain why each one did not

provide this information, but instead it is presumed to have

considered all the evidence unless something indicates

otherwise. See W. Pac. Fisheries, Inc. v. SS President Grant,

730 F.2d 1280, 1285 (9th Cir. 1984). Here, the district court

considered “the evidence” and reached the not clearly

erroneous conclusion that none of the Pre-Litigation

Experiments produced enoxaparin utilizing just EP144

disclosures. Aventis VI, 2015 WL 4511573, at *1, 8.

3

Amphastar further argues that the district court abused its

discretion by allowing Aventis to present an argument at the

evidentiary hearing that it copied 618 Patent processes in its

Pre-Litigation Experiments. Amphastar served interrogatories

to Aventis before the evidentiary hearing to disclose facts,

witnesses, and other items supporting its arguments. Aventis

did not disclose that it would make an argument that

Amphastar copied the 618 Patent in response to the

interrogatories or in its pre-evidentiary hearing brief.

Amphastar believes this theory, and any related contentions,

should have been excluded under Federal Rule of Civil

Procedure 37(c)(1), which states: “If a party fails to provide

information or identify a witness as required by Rule 26(a) or

(e), the party is not allowed to use that information . . . unless

the failure was substantially justified or is harmless.”

However, Amphastar waived this argument by failing to

raise it adequately below. Nowhere before the district court

did Amphastar make a Rule 37(c)(1) objection or ask that

evidence relating to the copying theory be excluded. At the

22 AMPHASTAR PHARM. V. AVENTIS PHARMA

evidentiary hearing’s closing arguments Amphastar did

mention being caught off-guard by the “copying” theory, but

got several facts wrong and never attempted to exclude the

theory or raise a Rule 37 objection. Amphastar did make a

cursory Rule 37(b)(2)(A)(ii) request for sanctions and an

objection in its post-hearing brief, alleging that “Aventis . . .

failed to provide a full and complete disclosure of its

contentions.” But no citation to Rule 37(c)(1) was made.

Assuming arguendo that this issue was not waived and

the district court did err, any error was harmless. Even if the

“copying” theory were excluded, the record would still

contain all of the other factual findings that indicate

Amphastar lacked direct and independent knowledge. The

inconsistencies, the notebooks, Zhang’s lack of

credibility—all would remain. Amphastar would still bear the

burden of prevailing on the jurisdictional bar issue. Alcan,

197 F.3d at 1018. It has not come close to doing so.13

III

In its cross-appeal, Aventis contends that the district court

erred in concluding it had no power to award attorneys’ fees

to Aventis, and we agree. The relevant fee-shifting provision

states:

13

Because we conclude that Amphastar is not an original source since

it lacks direct and independent knowledge of some of the information

upon which the qui tam allegations are based, we need not address, and

choose not to consider, Aventis’s interlocutory appeal (No. 14-56382).

That appeal raised the issue of whether the district court erred by

concluding that Amphastar’s pre-suit disclosure letter satisfied the pre-suit

disclosure requirement of § 3730(e)(4)(B). In light of our conclusions

above, the interlocutory appeal will be dismissed as moot. See Earth

Island Inst. v. U.S. Forest Serv., 442 F.3d 1147, 1157 (9th Cir. 2006).

AMPHASTAR PHARM. V. AVENTIS PHARMA 23

If the Government does not proceed with the

action and the person bringing the action

conducts the action, the court may award to

the defendant its reasonable attorneys’ fees

and expenses if the defendant prevails in the

action and the court finds that the claim of the

person bringing the action was clearly

frivolous, clearly vexatious, or brought

primarily for purposes of harassment.

31 U.S.C. § 3730(d)(4) (emphasis added).

A

The district court relied on Branson v. Nott, 62 F.3d 287,

293 (9th Cir. 1995), to conclude that as a matter of law

attorneys’ fees cannot be awarded under a fee-shifting statute

if the underlying claim was dismissed for lack of subject

matter jurisdiction. Aventis VI, 2015 WL 4511573, at *16.

Branson and its progeny set out a two-part test for

analyzing whether a district court can award attorneys’ fees

when the underlying action is dismissed for lack of subject

matter jurisdiction in a case such as this: (1) Does the fee-

shifting provision contain an independent grant of subject

matter jurisdiction? (2) If so, did the winning party “prevail?”

62 F.3d at 293.

First, we look to see if the fee-shifting provision

“provide[s] the district court with jurisdiction to grant an

attorney fee award where subject matter jurisdiction to hear

the underlying . . . claim is lacking.” Id. Sometimes the

answer is no. See, e.g., Zambrano v. I.N.S., 282 F.3d 1145,

1150 (9th Cir. 2002) (concluding that the fee-shifting statute

24 AMPHASTAR PHARM. V. AVENTIS PHARMA

“does not provide an independent grant of jurisdiction” and

therefore the district court lacks the jurisdiction to award

attorneys’ fees). Sometimes the answer is yes. See, e.g.,

Alaska Right to Life Political Action Comm. v. Feldman,

504 F.3d 840, 852 (9th Cir. 2007) (holding that we “may

award attorneys’ fees and costs even after dismissing for lack

of jurisdiction”). And sometimes the answer is yes, but only

with regard to the jurisdictional issues. Latch v. United States,

842 F.2d 1031, 1033 n.4 (9th Cir. 1988) (per curiam)

(explaining that 26 U.S.C. § 7430 allows fees to be awarded

to a defendant that “prevailed on the only issue over which

the district court properly had jurisdiction, i.e., the

determination that it had no jurisdiction”).

Second, “even if the district court had the jurisdiction to

impose . . . attorney’s fees [under the fee-shifting provision],

attorney’s fees are only available under that provision to a

party who has ‘prevailed’ on the merits.” Branson, 62 F.3d at

293. The district court skipped to the second-prong and

reasonably concluded that Branson controlled, Aventis did

not “prevail,” and it could not award attorneys’ fees. Aventis

VI, 2015 WL 4511573, at *16; see also Branson, 62 F.3d at

293 (“Where, as here, dismissal is mandated by a lack of

subject matter jurisdiction, a defendant is not a ‘prevailing’

party within the meaning of § 1988.”).

B

But, Branson’s analysis of the second-prong has been

called into question. In CRST Van Expedited Inc. v. E.E.O.C.

the Supreme Court explained that “a favorable ruling on the

merits is not a necessary predicate to find that a defendant has

prevailed.” 136 S. Ct. 1642, 1646 (2016). It reversed an

Eighth Circuit decision that declined to award attorneys’ fees

AMPHASTAR PHARM. V. AVENTIS PHARMA 25

because the defendant did not win “on the merits.” Id. at

1650, 1654. The court elaborated at length about why

defendants who prevail for various non-meritorious reasons

should still be deemed “prevailing part[ies].” Id. at

1651–54.14 In doing so it included an example where

defendants prevailed for jurisdictional reasons, id. at 1653,

and never indicated that jurisdictional and non-jurisdictional

victories should be treated differently. Finally, it made clear

that its reasoning applied to other fee-shifting statutes, stating

that “Congress has included the term ‘prevailing party’ in

various fee-shifting statutes, and it has been the Court’s

approach to interpret the term in a consistent manner.” Id. at

1646. For these reasons, we conclude that the Supreme Court

has effectively overruled Branson’s holding that when a

defendant wins because the action is dismissed for lack of

subject matter jurisdiction he is never a prevailing party. See

Miller v. Gammie, 335 F.3d 889, 899–900 (9th Cir. 2003) (en

banc) (explaining that a three-judge panel may no longer be

bound by prior circuit precedent if it is “effectively overruled

by subsequent Supreme Court decisions”).

With Branson out of the way, the question of whether

Aventis is a prevailing party is an easy one: Yes. Aventis has

14

The Supreme Court tells us that we should look to whether there

was a “material alteration of the legal relationship of the parties.” Id. at

1646. We should also look to whether deeming a party “prevailing” and

awarding fees for frivolous litigation furthers the purpose of the statutory

scheme. Id. at 1652. Given that the purpose of fee-shifting statutes is to

deter frivolous litigation, and since fees can only be awarded if the

plaintiff’s action is deemed frivolous, the answer is almost always yes. See

id. (“Imposing an on-the-merits requirement for a defendant to obtain

prevailing party status would undermine that congressional policy by

blocking a whole category of defendants for whom Congress wished to

make fee awards available.”).

26 AMPHASTAR PHARM. V. AVENTIS PHARMA

spent eight years, quite a bit of money, and quite a bit of

energy, fighting this lawsuit. This lawsuit has probably lasted

longer than the vast majority of lawsuits that are resolved on

the “merits.” If Amphastar brought a frivolous action, the

statutory scheme strongly indicates that this is the kind of

case for which fee awards should be available to deter future

frivolous plaintiffs. See CRST, 136 S. Ct. at 1652. Common

sense says that Aventis has won a significant victory and

permanently changed the “legal relationship of the parties.”

Id. at 1646.

C

Amphastar challenges whether § 3730(d)(4) contains an

independent grant of subject matter jurisdiction to award

attorneys’ fees. We have located independent grants in some

cases but not in others, as discussed above, but whether

§ 3730(d)(4) contains an independent grant of jurisdiction is

a matter of first impression for this circuit. When deciding

this question we have looked at the text and structure of the

statute. See Latch, 842 F.2d at 1033. We have also been more

willing to allow a district court to award attorneys’ fees when

the underlying issues concerned whether the district court had

jurisdiction—since a court always has jurisdiction to

determine its own jurisdiction. Id. at 1033 n.4.

Two courts in other circuits have addressed this question.

Both conclude that § 3730(d)(4) provides an independent

grant of jurisdiction to award attorneys’ fees even if the

underlying action is dismissed for lack of jurisdiction. See

United States ex rel. Grynberg v. Praxair, Inc., 389 F.3d

1038, 1055–58 (10th Cir. 2004); United States ex rel.

Atkinson v. Pa. Shipbuilding Co., 528 F. Supp. 2d 533, 540

(E.D. Pa. 2007). Both relied on the text and structure of the

AMPHASTAR PHARM. V. AVENTIS PHARMA 27

statute. Id. Atkinson observed that “[e]liminating jurisdiction

to award attorney fees and expenses in such cases would have

the illogical consequence of disallowing fees in cases

specifically identified by Congress as undesirable.” 528 F.

Supp. 2d at 539–40.

The False Claims Act jurisdictional bar covers a huge

number of cases. To rule that a district court cannot award

attorneys’ fees even when it determines that a Relator brought

a frivolous suit just because the jurisdictional bar applies

would undermine one of the key purposes of the 1986

amendments to the False Claims Act—“to discourage

‘parasitic’ suits brought by individuals with no information of

their own to contribute to the suit.”15 United States v. Johnson

Controls, Inc., 457 F.3d 1009, 1017 (9th Cir. 2006) (quoting

Seal 1 v. Seal A, 255 F.3d 1154, 1158 (9th Cir. 2001)). It is

consistent with the statutory scheme that Aventis can receive

attorneys’ fees from Amphastar if its claim was frivolous,

given the immense amount of resources and time this action

has cost everyone. Cf. CRST, 136 S. Ct. at 1652–53

(discussing how in the context of Title VII of the Civil Rights

Act, “significant attorney time and expenditure may have

gone into contesting the claim [in cases like these]” and

“Congress could not have intended to bar defendants from

obtaining attorney’s fees in these cases”).

Given Latch, the text and structure of the statute, and

Grynberg and Atkinson, we conclude that § 3730(d)(4)

contains an independent grant of subject matter jurisdiction

at least to the extent that a court is able to award attorneys’

15

Congress enacted two related provisions to further that goal in

1986: the public disclosure bar (§ 3730(e)(4)) and the attorneys’ fees

provision for prevailing defendants (§ 3730(d)(4)).

28 AMPHASTAR PHARM. V. AVENTIS PHARMA

fees even where the issue is whether the court had subject

matter jurisdiction at all.

D

We are persuaded that the district court had subject matter

jurisdiction over the attorneys’ fees issue and that Aventis is

the prevailing party. As such, the district court may award

attorneys’ fees to Aventis if it determines that Amphastar’s

claim “was clearly frivolous, clearly vexatious, or brought

primarily for purposes of harassment.” § 3730(d)(4).

IV

Amphastar’s allegations in this action were based on

publicly disclosed information, and it lacked the direct and

independent knowledge needed to be an original source. We

uphold the judgment of the district court in favor of Aventis

on the merits. However, because the False Claims Act’s fee-

shifting provision contains an independent grant of subject

matter jurisdiction and because a party who wins a lawsuit on

a non-merits issue is a “prevailing party,” the conclusion of

the district court that it could not award attorneys’ fees is

erroneous, and the case is remanded for resolution of the

attorneys’ fees issue.

Therefore, the judgment of the district court in No. 15-

56122 is AFFIRMED, the appeal in No. 14-56382 is

DISMISSED, the judgment in No. 15-56209 is

REVERSED, and the case is REMANDED for further

proceedings consistent with this opinion.