Respondents Brief — Bristol-Myers Squibb Company, et al., Petitioners v. New Mexico, ex rel. Hector Balderas, Attorney General

No. 20-293

In the

Supreme Court of the United States

BRISTOL-MYERS SQUIBB COMPANY, SANOFI

AVENTIS U.S. LLC, SANOFI US SERVICES INC.,

FORMERLY KNOWN AS SANOFI-AVENTIS U.S.

INC., SANOFI SYNTHELABO INC., AND

DOE DEFENDANTS 1 TO 100,

Petitioners,

v.

STATE OF NEW MEXICO, ex rel. HECTOR

BALDERAS, ATTORNEY GENERAL,

Respondent.

On Petition for a Writ of Certiorari to the

Court of A ppeals of the State of New Mexico

BRIEF IN OPPOSITION

P. Cholla Khoury

A ssistant Attorney General

Office of the New Mexico

Attorney General

408 Galisteo Street

Santa Fe, NM 87501

(505) 827-6000

Catherine H. Dorsey

Counsel of Record

Baron & Budd, P.C.

600 New Hampshire Avenue, NW

Washington, DC 20037

(202) 333-4562

cdorsey@baronbudd.com

Russell Budd

Baron & Budd, P.C.

3102 Oak Lawn Avenue,

Suite 1100

Dallas, TX 75219

(214) 521-3605

Daniel A lberstone

Jonas P. Mann

Peter Klausner

Baron & Budd, P.C.

15910 Ventura Boulevard,

Suite 1600

Encino, CA 91436

(818) 839-2333

Counsel for Respondent

(For Continuation of Appearances See Inside Cover)

298440

Burton LeBlanc

Baron & Budd, P.C.

2600 CitiPlace Drive

Baton Rouge, LA 70808

(225) 927-5441

Marcus J. Rael, Jr.

Robles, Rael & A naya, P.C.

500 Marquette Avenue, NW,

Suite 700

Albuquerque, NM 87102

(505) 242-2228

Counsel for Respondent

i

QUESTION PRESENTED

Whether the New Mexico Court of Appeals properly

held that a federal court’s dismissal of a relator’s qui tam

action against petitioners for failure to state a claim is not

a judgment on the merits and therefore does not preclude

the State of New Mexico, a nonparty to the qui tam action,

from pursuing a state court consumer protection action,

arising out of different facts and asserting causes of action

that relator could not have brought in the first action,

against the same petitioners.

ii

TABLE OF CONTENTS

Page

QUESTION PRESENTED . . . . . . . . . . . . . . . . . . . . . . . . i

TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . ii

TABLE OF CITED AUTHORITIES . . . . . . . . . . . . . . . iv

STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

A. Statutory Background . . . . . . . . . . . . . . . . . . 1

B. Procedural Background . . . . . . . . . . . . . . . . 2

REASONS FOR DENYING THE PETITION . . . . . . 5

I.

THERE IS NO CIRCUIT SPLIT ON THE

QUESTION PRESENTED. . . . . . . . . . . . . . . . . 6

A. The Fifth And Eleventh Circuits Have

Not Decided the Applicability of Res

Judicata to Government Claims in FCA

Actions, but Their Decisions Support the

Outcome Here. . . . . . . . . . . . . . . . . . . . . . . . . 7

B. The Seventh and Ninth Circuits Have

Also Not Decided the Question Presented

but, in any Event, Their Decisions Do

Not Favor a Different Outcome. . . . . . . . . . . 9

II. THE COURT OF APPEALS CORRECTLY

R EF USED T O DI SM I S S T H E

STATE’S ACTION ON RES JUDICATA

GROUNDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

iii

Table of Contents

Page

A. The Court of Appeals Correctly Held

that Dickson Was Not Decided On the

Merits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

B. Because the State Was Not a Party to

Dickson, the State is Not Bound by

that Judgment. . . . . . . . . . . . . . . . . . . . . . . . 16

C. The Court of Appeals’ Judgment is

Correct for the Independent Reason

that the State’s Cause of Action is Not

the Same as in Dickson. . . . . . . . . . . . . . . . 22

III. THERE IS NO FEDER A L IS SUE

WA R R A N T I N G T H I S C O U R T ’ S

REVIEW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

A. There is No Federalism Problem . . . . . . . . 26

B. T he Cou r t of A pp e a l s D id not

Create a Public Policy Exception to

Res Judicata. . . . . . . . . . . . . . . . . . . . . . . . . 27

IV. IN ANY EVENT, THIS CASE PRESENTS

A POOR VEHICLE FOR REVIEW. . . . . . . . . 27

V.

THERE IS NO NEED FOR A REMAND. . . . 29

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

iv

TABLE OF CITED AUTHORITIES

Page

Cases

Adarand Constructors, Inc. v. Mineta,

534 U.S. 103 (2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Avondale Shipyards, Inc. v. Insured Lloyd’s,

786 F.2d 1265 (5th Cir. 1986) . . . . . . . . . . . . . . . . . . . 23

Benson and Ford, Inc. v. Wanda Petroleum Co.,

833 F.2d 1172 (5th Cir. 1987) . . . . . . . . . . . . . . . . . . . 20

United States ex rel. Berge v. Board of Trustees,

104 F.3d 1453 (4th Cir. 1997) . . . . . . . . . . . . . . . . . . . 24

Bittinger v. Tecumesh Prods. Co.,

123 F.3d 877 (6th Cir. 1997) . . . . . . . . . . . . . . . . . . . . 20

United States ex rel. Chovanec v.

Apria Healthcare Grp. Inc.,

606 F.3d 361 (7th Cir. 2010) . . . . . . . . . . . . . . . . . . 6, 10

Cox Broadcasting Corp. v. Cohn,

420 U.S. 469 (1975) . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Deflon v. Sawyers,

2006-NMSC-025, 139 N.M. 637 . . . . . . . . . . . . . . . . 12

United States ex rel. Dickson v.

Bristol-Myers Squibb Co.,

332 F. Supp. 3d 927 (D.N.J. 2017) . . . . . . . . . . . passim

v

Cited Authorities

Page

United States ex rel. Eisenstein v.

City of New York,

556 U.S. 928 (2009) . . . . . . . . . . . . . . . . . . 15, 16, 21, 22

Federated Dep’t Stores, Inc. v. Moitie,

452 U.S. 394 (1981) . . . . . . . . . . . . . . . . . . 12, 15, 22, 27

In re Schimmels,

127 F.3d 875 (9th Cir. 1997) . . . . . . . . . . . . . . . 6, 11, 21

Lawrence ex rel. Lawrence v. Chater,

516 U.S. 163 (1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Lomax v. Ortiz-Marquez,

140 S. Ct. 1721 (2020) . . . . . . . . . . . . . . . . . . . . . . 14, 30

Lucky Brand Dungarees, Inc. v.

Marcel Fashions Grp., Inc.,

140 S. Ct. 1589 (2020) . . . . . . . . . . . . . . . . . . . 22, 29, 30

United States ex rel. Lusby v. Rolls-Royce Corp.,

570 F.3d 849 (7th Cir. 2009) . . . . . . . . . . . . . . 5, 6, 9, 10

Montana v. United States,

440 U.S. 147 (1979) . . . . . . . . . . . . . . . . . . . . . 12, 17, 20

Murr v. Wisconsin,

137 S. Ct. 1933 (2017) . . . . . . . . . . . . . . . . . . . . . . . . . 30

New Mexico ex rel. National Educ. Ass’n of New

Mexico v. Austin Capital Mgmt. Ltd.,

671 F. Supp. 2d 1248 (D.N.M. 2009) . . . . . . . . . . 16, 20

vi

Cited Authorities

Page

United States ex rel. Pilon v.

Martin Marietta Corp.,

60 F.3d 995 (2d Cir. 1995) . . . . . . . . . . . . . . . . . . . . . . . 9

Potter v. Pierce,

2015-NMSC-002, 342 P. 3d 54 . . . . . . . . . . . . . . . . . . 22

Richards v. Jefferson Cty.,

517 U.S. 793 (1996) . . . . . . . . . . . . . . . . . . . . . . . . 16, 17

Semtek Int’l Inc. v. Lockheed Martin Corp.,

531 U.S. 497 (2001) . . . . . . . . . . . . . . . . . . . . . 11, 13, 14

Smith v. Bayer Corp.,

564 U.S. 299 (2011) . . . . . . . . . . . . . . . . . . . . . 16, 21, 26

State ex rel. Foy v. Austin Capital Mgmt., Ltd.,

2015-NMSC-025, 355 P.3d 1 . . . . . . . . . . . . . . . . . . . 24

Stoner v. Santa Clara Cty. Office of Educ.,

502 F.3d 1116 (9th Cir. 2007) . . . . . . . . . . . . . . 6, 11, 20

Taylor v. Sturgell,

553 U.S. 880 (2008) . . . . . . . . . . . . . . . . . . . . . . . passim

The Monrosa v. Carbon Black Exp., Inc.,

359 U.S. 180 (1959) . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

United States v. Quest Diagnostics, Inc.,

734 F.3d 154 (2d Cir. 2013) . . . . . . . . . . . . . . . . . . . . . . 9

vii

Cited Authorities

Page

United States v. Tohono O’Odham Nation,

563 U.S. 307 (2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Universal Health Servs., Inc. v.

United States ex rel. Escobar,

136 S. Ct. 1989 (2016) . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Urquilla-Diaz v. Kaplan Univ.,

780 F.3d 1039 (11th Cir. 2015) . . . . . . . . . . . . . . 6, 8, 14

United States ex rel. Vaughn v.

United Biologics, LLC,

907 F.3d 187 (5th Cir. 2018) . . . . . . . . . . . . . . . . . 26, 27

Vermont Agency of Nat. Res. v.

United States ex rel. Stevens,

529 U.S. 765 (2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Whole Women’s Health v. Hellerstedt,

136 S. Ct. 2292 (2016) . . . . . . . . . . . . . . . . . . . . . . . . . 22

United States ex rel. Williams v.

Bell Helicopter Textron Inc.,

417 F.3d 450 (5th Cir. 2005) . . . . . . . . . . . . . . . . passim

Yee v. City of Escondido,

503 U.S. 519 (1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

viii

Cited Authorities

Page

Statutes

28 U.S.C. 1257(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

31 U.S.C. 3729 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

31 U.S.C. 3730(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

31 U.S.C. 3730(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

31 U.S.C. 3730(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

31 U.S.C. 3730(b)(4)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

31 U.S.C. 3730(b)(4)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

31 U.S.C. 3730(b)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

31 U.S.C. 3730(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

NMSA §§ 27-14-1 to -15 . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

NMSA § 27-14-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

NMSA § 27-14-7(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 19

NMSA § 27-14-7(C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

NMSA § 27-14-7(E) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 19

NMSA § 27-14-7(E)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

ix

Cited Authorities

Page

NMSA § 27-14-8(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

NMSA § 27-14-8(C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

NMSA § 27-14-8(D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

NMSA § 27-14-9(A) . . . . . . . . . . . . . . . . . . . . . . . . . . 19, 23

NMSA § 27-14-9(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

NMSA § 30-44-3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

NMSA § 34-5-14(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

NMSA §§ 44-9-1 to -14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

NMSA § 44-9-3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

NMSA § 44-9-5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

NMSA § 44-9-5(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

NMSA § 44-9-5(C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

NMSA § 44-9-6(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

NMSA § 44-9-6(F) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

NMSA § 57-12-8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

x

Cited Authorities

Page

NMSA § 57-12-11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Rules

Fed. R. Civ. P. 9(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Fed. R. Civ. P. 12(b)(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Fed. R. Civ. P. 20(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Fed. R. Civ. P. 41(b) . . . . . . . . . . . . . . . . . . . . . . . 11, 13, 14

S. Ct. R. 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Other Authorities

Dickson Fourth Am. Compl., Dkt. No. 112,

filed in United States ex rel. Dickson v.

Bristol-Myers Squibb Co., No. 3:13-cv-01039FLW-LHG (Aug. 16, 2016) . . . . . . . . . . . . . . . . . . . 3, 25

Restatement (Second) of Judgments § 24 . . . . . 22, 23, 25

Restatement (Second) of Judgments § 54 . . . . . . . . . . . 18

Restatement (Second) of Judgments § 55 . . . . . . . . . . . 18

18 Charles A. Wright, Arthur R. Miller & Edward

H. Cooper, Federal Practice and Procedure

§§ 4407, 4415, 4452 (3d ed.) . . . . . . . . . . . . . . 18, 23, 24

1

Petitioners seek to preclude the State of New Mexico

from pursuing a consumer protection action against them

based solely on the dismissal of a private relator’s qui

tam action against petitioners for failure to state a claim.

Petitioners contend that the qui tam judgment was on the

merits such that res judicata required the New Mexico

Court of Appeals to dismiss the State’s action. Such a

result would be contrary to this Court’s precedent and

finds no support in circuit precedent. Nor do petitioners

identify any compelling reason for this Court to review

the New Mexico Court of Appeals’ run-of-the-mill

determination that the requirements for claim preclusion

were not satisfied. In any event, this case presents a poor

vehicle for review because, regardless of whether the qui

tam judgment was on the merits, res judicata does not

apply because the State was not a party to relator’s action,

relator’s suit involved a single claim under New Mexico’s

Medicaid False Claims Act, not at issue here, and relator

could not have brought the causes of action the State now

asserts.

STATEMENT

A.

Statutory Background

The False Claims Act (FCA), 31 U.S.C. 3729 et seq.,

authorizes the imposition of civil penalties and treble

damages against persons who commit specified acts of

fraud against the United States, including the submission

of false claims for payment. Suits to enforce the FCA may

be brought by the Attorney General, 31 U.S.C. 3730(a), or

by a private person (known as a “relator”), who may file

suit in the name of the United States “for the [relator] and

for the United States Government” (a “qui tam suit”). Id.

3730(b)(1).

2

When a relator commences a qui tam suit, the

complaint must be filed under seal and served on the

United States. Id. 3730(b)(2). The complaint shall remain

under seal for at least sixty days. Id. During the sealing

period, the United States may intervene and proceed with

the action, in which case “the action shall be conducted by

the Government.” Id. 3730(b)(2), (b)(4)(A). If the United

States declines to intervene, the relator “shall have the

right to conduct the action.” Id. 3730(b)(4)(B). If a qui tam

action results in damages or civil penalties, the award is

divided between the United States and the relator. Id.

3730(d).

Many states have their own versions of the FCA. See,

e.g., Pet. 6 n.1. New Mexico has two: the New Mexico Fraud

Against Taxpayers Act (FATA), NMSA 1978, §§ 44-9-1

to -14, and the New Mexico Medicaid False Claims Act

(MFCA), id. §§ 27-14-1 to -15. The FATA creates liability

for false claims made to the State, id. § 44-9-3, whereas

the MFCA establishes liability for false claims specific to

the State’s Medicaid program, id. § 27-14-4. As is relevant

to the question presented here, the statutes’ procedural

requirements are virtually identical to those of the FCA.1

B. Procedural Background

In 2011, relator Elisa Dickson filed a qui tam action

against petitioners in federal court alleging violations of

1. See NMSA 1978, §§ 27-14-7(B), 44-9-5 (private relator may

bring an action “on behalf of the person bringing suit and for the

state”); id. §§ 27-14-7(C), 44-9-5(C) (relator must serve the complaint

on the State); id. §§ 27-14-7(C), 44-9-5(B)-(C) (complaint remains

sealed for at least 60 days); id. §§ 27-14-7(E), 27-14-8(D), 44-9-5(C),

(D), 44-9-6(A), (F) (State may intervene and conduct the action,

or decline to intervene, in which case the relator has the right to

conduct the action).

3

the FCA and of twenty-four state analogues, including a

single claim under the MFCA. See generally United States

ex rel. Dickson v. Bristol-Myers Squibb Co., 332 F. Supp.

3d 927 (D.N.J. 2017) (Pet. App. 130a-183a); Pet. App. 135a

& n.2 (Count XVII). Relator’s fourth amended complaint

(the “Dickson complaint”) alleged that petitioners

caused false claims to be submitted to federal and state

governments by misrepresenting “Plavix as a superior

drug to aspirin for certain indicated usages, when Plavix

was no more effective than aspirin for those indicated

usages and cost one hundred times more.” Pet. App. 131a.

The Dickson complaint also alleged that cost-effectiveness

was a condition precedent for Medicaid reimbursement.

Pet. App. 132a. Relatedly, petitioners promoted Plavix as

comparably safe as aspirin, even though Plavix posed a

greater risk of bleeding. See, e.g., Dickson Compl. ¶¶ 5-7,

19, 174-77 (Dickson, No. 3:13-cv-01039-FLW-LHG, Dkt.

No. 112, filed Aug. 16, 2016). The State of New Mexico

never intervened or otherwise participated in Dickson,

which was conducted solely by relator. Pet. App. 5a,

133a-134a. Petitioners moved to dismiss the Dickson

complaint on several grounds, including failure to satisfy

Federal Rule of Civil Procedure 9(b), failure to plead the

element of materiality under Escobar, 2 and failure to state

a claim. Pet. App. 144a-145a.

In September 2016, while Dickson remained pending,

the State filed a consumer protection action against

petitioners in the First Judicial District Court of New

Mexico, alleging violations of the New Mexico Unfair

Practices Act, the New Mexico Medicaid Fraud Act, the

FATA, and various common law claims. Pet. App. 5a. The

2. Universal Health Servs., Inc. v. United States ex rel.

Escobar, 136 S. Ct. 1989 (2016).

4

State did not include a MFCA claim. Id. The State alleged,

inter alia, that petitioners knew, but failed to disclose,

that Plavix is ineffective for a significant percentage of

New Mexico patients who lack the necessary enzyme to

metabolize the drug properly; that petitioners knew, but

failed to disclose, that those patients could have been

easily identified through a simple genetic test; and that

petitioners’ marketing and sales of Plavix to those patients

constituted false, deceptive, unfair, and unlawful conduct.

Pet. App. 31a-32a, 38a-56a. Petitioners moved to dismiss

the State’s action for failure to state a claim, but the First

Judicial District Court stayed the case pending resolution

of the Dickson motion to dismiss. Pet. App. 5a-6a.

On June 27, 2017, the federal district court “dismissed”

the Dickson complaint, Pet. App. 183a, 185a, including the

MFCA claim, for failure to plead materiality. Pet. App.

151a, 162a, 164a-169a, 182a.

Petitioners subsequently moved to dismiss the State’s

action as barred by the doctrine of res judicata. Pet. App.

28a. The district court denied the motion, holding that res

judicata was inapplicable because Dickson was dismissed

based on relator’s defective pleading rather than “on the

merits of the claim.” Pet. App. 28a. In addition, the district

court held that “the causes of action are not the same in

the two suits.” Pet. App. 28a. The court explained that

“[t]he relator in Dickson did not assert any of the claims

the State asserts in this case, but rather only a single New

Mexico Medicaid False Claims Act claim.” Pet. App. 28a.

Moreover, the district court concluded that, other than the

FATA claim, “relator lacked the authority” “to assert[]

the claims the State asserts here.” Pet. App. 28a. The

district court certified its order for interlocutory appeal.

Pet. App. 29a.

5

The New Mexico Court of Appeals affirmed. Pet.

App. 1a-20a. The court of appeals observed that, when

an FCA case is fully litigated on the merits, the final

judgment binds both the relator and the government.

Pet. App. 10a (citing United States ex rel. Lusby v. RollsRoyce Corp., 570 F.3d 849, 853 (7th Cir. 2009)). But when

a relator’s action “is dismissed for reasons unrelated to

the merits of the claims,” such as a dismissal based on a

deficient complaint, “such a dismissal does not preclude

the government’s claims when the government has not

intervened.” Pet. App. 11a (citing United States ex rel.

Williams v. Bell Helicopter Textron, Inc., 417 F.3d

450, 455-56 (5th Cir. 2005)); see also Pet. App. 9a (“the

designation of [a dismissal for failure to state a claim]

as ‘on the merits’ is something of a misnomer”); id.

(“Such a dismissal obviously does not involve ‘a judicial

determination of’ the actual merits”). The court of appeals

concluded, therefore, that Dickson was “not a ‘final

judgment on the merits’” and did not bar the State’s action.

Pet. App. 20a. The court declined to reach the other two

elements for claim preclusion. Id.

REASONS FOR DENYING THE PETITION

The New Mexico Court of Appeals’ decision is a

straight-forward application of well-established claim

preclusion principles and does not conflict with any

decision of this Court or of any federal court of appeals.

The New Mexico Court of Appeals correctly declined

to apply res judicata to the State’s action based on a

federal judgment that was not decided on the merits.

Contrary to petitioners’ assertion, the decision below

does not raise any significant federal issue that warrants

this Court’s review. And, even if this Court were inclined

6

to grant review as to whether a dismissal for failure to

state a claim is a judgment on the merits, this case is an

unusually poor vehicle given that that issue is not outcome

determinative; the court of appeals’ decision is supported

by the independent grounds that the actions do not involve

the same parties or causes of action. The petition for a

writ of certiorari should be denied.

I.

T H ERE IS NO CIRCU IT SPLIT ON TH E

QUESTION PRESENTED.

Petitioners argue (Pet. 12-19) that there is a circuit

split as to whether dismissal of a relator’s qui tam action

for failure to state a claim precludes a State or the United

States from pursuing the same claim against the same

defendant. They contend (Pet. 13-15, 17-19) that the

Fifth and Eleventh Circuits have held that a dismissal

with prejudice of a relator’s non-intervened qui tam suit

does not bind the government for public policy reasons

(citing United States ex rel. Williams v. Bell Helicopter

Textron Inc., 417 F.3d 450 (5th Cir. 2005), and UrquillaDiaz v. Kaplan Univ., 780 F.3d 1039 (11th Cir. 2015)),

whereas the Seventh and Ninth Circuits have held that

a dismissal with prejudice of a relator’s qui tam action

does bind the government (citing United States ex rel.

Chovanec v. Apria Healthcare Grp. Inc., 606 F.3d 361

(7th Cir. 2010); United States ex rel. Lusby v. Rolls-Royce

Corp., 570 F.3d 849 (7th Cir. 2009); Stoner v. Santa Clara

Cty. Office of Educ., 502 F.3d 1116 (9th Cir. 2007); and In

re Schimmels, 127 F.3d 875 (9th Cir. 1997)). Petitioners

assert (Pet. 15-16) that the New Mexico Court of Appeals’

decision exacerbates this split by broadening Williams’

purported policy exception.

7

Petitioners fabricate a split where none exists.

Petitioners’ cited cases do not decide the res judicata

question ostensibly presented here: whether a dismissal

with prejudice of a relator’s non-intervened qui tam

action for failure to state a claim precludes the State

from bringing the same cause of action against the same

defendant. And, to the extent the cases include relevant

dicta, the New Mexico Court of Appeals’ decision that res

judicata does not apply here—where the prior dismissal

was not on the merits, the State was not a party to the

qui tam action, and the causes of action are not the

same—is not inconsistent with those cases. In any event,

petitioners mischaracterize the question presented by

incorrectly suggesting that the court of appeals agreed

that the parties and causes of actions are the same, such

that this Court’s resolution of whether a dismissal for

failure to state a claim is on the merits would control

the outcome here. See, e.g., Pet. 1-2, 7-8, 11, 17. As the

briefing and opinions below demonstrate, however, all

three res judicata elements are contested, and the New

Mexico Court of Appeals only resolved the first element.

Pet. App. 20a.

A.

The Fifth And Eleventh Circuits Have Not

Decided the Applicability of Res Judicata to

Government Claims in FCA Actions, but Their

Decisions Support the Outcome Here.

The Fifth and Eleventh Circuit cases on which

petitioners rely both involved direct appeals challenging

the scope of qui tam judgments. Neither determined

whether a prior qui tam judgment was entitled to

preclusive effect, much less adopted a public policy

exception to res judicata. Nevertheless, both cases

8

support the New Mexico Court of Appeals’ determination

that the State is not bound by the dismissal of a relator’s

qui tam complaint for failure to state a claim.

In United States ex rel. Williams v. Bell Helicopter

Textron Inc., 417 F.3d 450, 453 (5th Cir. 2005), the district

court dismissed a relator’s qui tam suit for failure to plead

fraud with particularity. The district court also dismissed

with prejudice the government’s claims because the

United States could have intervened in the action, even

though it did not. Id. at 452-53, 455. The United States

appealed, and the Fifth Circuit modified the judgment

to be without prejudice to the United States. Id. at 452,

455-56. The court of appeals explained that the FCA does

not require the United States to intervene, and there may

be “any number of reasons” why the United States does

not intervene. Id. at 455. The Fifth Circuit cautioned that,

by “essentially requiring the government to intervene in

order to avoid forfeiting any future claims against the

defendant, private parties would have the added incentive

to file FCA suits lacking in the required particularity,

knowing full well that the government would be obligated

to intervene.” Id. The court noted that modifying the

judgment to exempt the United States guarded against

the risk that the United States could be bound by the

relator’s deficient complaint “via res judicata.” Id.

Similarly, in Urquilla-Diaz v. Kaplan Univ., 780 F.3d

1039, 1057 (11th Cir. 2015), the Eleventh Circuit did “not

decide whether a Rule 12(b)(6) dismissal precludes the

government (or another relator) from bringing a False

Claims Act action against a defendant, especially where

the government did not intervene at any stage in the

proceedings.” Instead, on direct appeal, the Eleventh

Circuit affirmed the district court’s dismissal of relator’s

9

qui tam action with prejudice but, following Williams,

“modif[ied] the judgment of dismissal to be without

prejudice to the government.” Id.3

B. The Seventh and Ninth Circuits Have Also

Not Decided the Question Presented but, in

any Event, Their Decisions Do Not Favor a

Different Outcome.

Petitioners contend that the Seventh and Ninth

Circuits have broadly held that any dismissal of a relator’s

qui tam action binds the government. Not so. At most,

those circuits have suggested that, when a relator’s qui

tam action is resolved on its merits, the government is

precluded from filing its own suit for the same claims

against the same defendant. The New Mexico Court

of Appeals’ decision is entirely consistent with that

proposition. Thus, there is no conflict warranting this

Court’s review.

In United States ex rel. Lusby v. Rolls-Royce Corp.,

570 F.3d 849, 852 (7th Cir. 2009), the Seventh Circuit

addressed whether a stipulated dismissal of an employee’s

3. The Second Circuit also has not decided the res judicata

issue presented here, but has, in direct appeal cases, similarly

suggested that a non-merits dismissal of a relator’s qui tam

complaint should not preclude the United States (or other relators)

from bringing suit. See United States v. Quest Diagnostics,

Inc., 734 F.3d 154, 167 (2d Cir. 2013) (district court’s “decision

did not foreclose the government (or for that matter, a different

relator) from bringing suit”) (footnote omitted); United States

ex rel. Pilon v. Martin Marietta Corp., 60 F.3d 995, 1000 n.6 (2d

Cir. 1995) (despite dismissal of relator’s qui tam complaint, “the

government may independently proceed with these claims against

the Defendants”).

10

personal employment action precluded the employee

from bringing a qui tam action against his employer

and concluded that it did not. The court relied on two

rationales. First, because the United States is not a party

to a qui tam action unless it intervenes, the court held that

“[i]t would be inappropriate to snuff out” the government’s

financial interests in the action “just because a potential

relator thoughtlessly omitted a qui tam claim from a

personal suit.” Id. at 852. Second, the court noted that

“qui tam litigation is subject to requirements that make

combining it with a personal damages suit awkward”

and that are designed to protect the United States from

“bumbling relators.” Id. Lusby did not decide any claim

preclusion issue vis-à-vis the United States or a State. In

any event, the New Mexico Court of Appeals’ conclusion

that the Dickson relator’s unilateral actions should not bar

the State’s suit here is consistent with Lusby’s holding.

Petitioners instead rely on dicta that, “[i]f Lusby had

litigated a qui tam action to the gills and lost, neither

another relator nor the United States could start afresh.”

Id. at 853. At most, that language suggests that, when a

relator’s qui tam suit is resolved on its merits, it precludes

a subsequent action by the United States as to the same

cause of action. See United States ex rel. Chovanec v.

Apria Healthcare Grp. Inc., 606 F.3d 361, 362 (7th Cir.

2010) (citing Lusby for the proposition that a qui tam suit

resolved “on the merits or by settlement” precludes a later

suit by the United States).4 It does not suggest that the

Seventh Circuit would have concluded, contrary to the

New Mexico Court of Appeals’ decision, that Dickson,

4. Chovanec addressed whether a qui tam action should be

dismissed under the FCA’s first-to-file bar, 31 U.S.C. 3730(b)(5),

and did not decide any issue of claim preclusion. 606 F.3d at 365.

11

which was dismissed without reaching the merits, should

bar the State’s action here, particularly given that the

actions do not involve the same parties or causes of action.

Petitioners’ reliance on Stoner v. Santa Clara Cty.

Office of Educ., 502 F.3d 1116 (9th Cir. 2007), is similarly

misplaced. Stoner did not address claim preclusion, but

whether a pro se relator may bring a qui tam action. Id.

at 1119. In holding that relators may not act pro se, the

Ninth Circuit stated (without analysis) that “the United

States ‘is bound by the relator’s actions’ for purposes of

res judicata and collateral estoppel.” Id. at 1126 (quoting

In re Schimmels, 127 F.3d 875, 884 (9th Cir. 1997)). But

Schimmels addressed the distinct question of whether

dismissal of relators’ adversary bankruptcy proceeding—

not a qui tam action—had a preclusive effect on the United

States’ parallel bankruptcy proceeding against the same

defendants. 127 F.3d at 880. The Ninth Circuit’s decision

was grounded, in part, on its conclusion that the dismissal

was an adjudication on the merits. Id. at 884-85 (citing

Fed. R. Civ. P. 41(b)); see also Williams, 417 F.3d at 456

(explaining that Schimmels was decided on the merits).

Thus, even if Schimmels were directly applicable, which

it is not, it would not demand a different result here,

where the New Mexico Court of Appeals determined

that Dickson was not decided on the merits, but on the

complaint’s deficiencies. 5

5. In any event, the Ninth Circuit would be unlikely to reach

the same result today. As Schimmels recognized, the court granted

summary judgment because relators failed to file a timely opposition

to defendants’ motion. 127 F.3d at 879. As this Court has since

clarified, such a decision is not on the merits for purposes of claim

preclusion. Semtek Int’l Inc. v. Lockheed Martin Corp., 531 U.S.

497, 501-02 (2001) (judgment on the merits is “one that actually

‘passes directly on the substance of a particular claim’”); see also

infra pp. 13-14.

12

In sum, petitioners’ circuit split is illusory. Petitioners

have identified no circuit authority (or cases from this

Court) holding that dismissal of a relator’s non-intervened

qui tam action for failure to state a claim precludes the

United States or a State from bringing the same cause

of action against the same defendant. Even if there were

a circuit split on the question presented, it is not outcome

determinative here, where res judicata is also inapplicable

because the actions do not involve the same parties or

causes of action.

II. THE COU RT OF A PPEA LS CORRECT LY

REFUSED TO DISMISS THE STATE’S ACTION

ON RES JUDICATA GROUNDS.

As the New Mexico Court of Appeals properly

recognized, Pet. App. 8a, federal law governs whether

a federal court judgment should be accorded preclusive

effect. See, e.g., Taylor v. Sturgell, 553 U.S. 880, 891

(2008); Deflon v. Sawyers, 2006-NMSC-025, ¶ 2, 139

N.M. 637, 640. Res judicata bars a subsequent action only

when three elements are met: (1) a court renders a final

judgment on the merits; (2) the parties (or their privies)

are the same; and (3) the causes of action are the same.

Federated Dep’t Stores, Inc. v. Moitie, 452 U.S. 394, 398

(1981); Montana v. United States, 440 U.S. 147, 153 (1979).

Here, the New Mexico Court of Appeals correctly

decided that res judicata did not apply because the

Dickson dismissal for failure to state a claim was not a

judgment on the merits. That straightforward application

of federal law does not warrant this Court’s review. Indeed,

“a state court’s misapplication of federal law,” Pet. 19-20, is

ordinarily not grounds for granting certiorari. See S. Ct.

13

R. 10 (“A petition for writ of certiorari is rarely granted

when the asserted error consists of . . . the misapplication

of a properly stated rule of law.”). In addition, although

the court of appeals declined to decide whether petitioners

had satisfied the other two requisites for res judicata, the

record demonstrates that petitioners did not: the State

was not a party to Dickson (or in privity with the relator),

and the causes of action are not the same (nor could they

be). Those are independent grounds that support the New

Mexico Court of Appeals’ judgment.

A.

The Court of Appeals Correctly Held that

Dickson Was Not Decided On the Merits.

Not all judgments “denominated ‘on the merits’”

are, in fact, on the merits such that they “are entitled to

claim-preclusive effect.” Semtek Int’l Inc. v. Lockheed

Martin Corp., 531 U.S. 497, 501-02, 503-06 (2001). This

Court has explained that, in the context of res judicata,

the phrase “on the merits” refers to an adjudication that

“‘passes directly on the substance of [a particular] claim,’”

usually after a trial of the substantive issues. Id. Despite

this Court’s consistent construction of that term, however,

the phrase has been used loosely “over the years” to

encompass judgments that do not substantively adjudicate

the merits and which are not entitled to preclusive effect.

Id. at 502. As one example, this Court cited Federal Rule of

Civil Procedure 41(b), which specifies that an involuntary

dismissal presumptively “operates as an adjudication on

the merits,” even though not all such dismissals should be

given preclusive effect. Id. at 503-06.

The New Mexico Court of Appeals properly recognized

this distinction. See, e.g., Pet. App. 9a (“the designation of

14

[a dismissal for failure to state a claim] as ‘on the merits’ is

something of a misnomer”); Pet. App. 9a (“Such a dismissal

obviously does not involve ‘a judicial determination of’ the

actual merits”). Because Dickson was dismissed on the

basis of relator’s deficient complaint and without resolving

the merits of relator’s MFCA claim, the court of appeals

correctly concluded that the dismissal “is not a ‘final

judgment on the merits’ for claim preclusion purposes.”

Pet. App. 20a; see also Pet. App. 20a (construing Dickson

dismissal “as without prejudice to the State’s claims”). As

additional support for its conclusion that the State should

not be bound by Dickson, the court of appeals relied on

Williams and Urquilla-Diaz, which held that a dismissal

with prejudice of a relator’s complaint for failure to state

a claim should not extend to the United States’ claims.

Pet. App. 11a-14a.

Petitioners rely on Rule 41(b) to assert that Dickson

was adjudicated on the merits and is entitled to preclusive

effect. Pet. 20-21. But Semtek explicitly rejected the

argument that Rule 41(b) is determinative of the claim

preclusive effect of federal judgments. 531 U.S. at 503-06

(explaining that Rule 41(b)’s “on the merits” language is

simply shorthand for a dismissal with prejudice); see also

Lomax v. Ortiz-Marquez, 140 S. Ct. 1721, 1725 (2020)

(“When a court dismisses a case for failure to state a

claim, but neglects to specify whether the order is with or

without prejudice,” then “courts [must] treat the dismissal

‘as an adjudication on the merits’—meaning a dismissal

with prejudice.”) (emphasis added). Respondent does

not dispute that Dickson was dismissed with prejudice

such that relator is precluded from refiling her claim.

But a dismissal with prejudice, although “undoubtedly

a necessary condition” for claim preclusion, “is not a

sufficient one.” 531 U.S. at 506.

15

Petitioners cite (Pet. 20) Moitie as establishing that a

dismissal for failure to state a claim is a judgment on the

merits. But Moitie considered and rejected “the validity

of the Court of Appeals’ novel exception to the doctrine of

res judicata.” 452 U.S. at 398, 399-402. The Court did not

review the lower court’s determination “that the ‘technical

elements’ of res judicata had been satisfied,” including that

the dismissal for failure to state a claim was a judgment

on the merits. Id. at 399 (“the Court of Appeals conceded

that the ‘strict application of the doctrine of res judicata’

required” dismissal). Although a footnote in Moitie

stated that such a dismissal is on the merits, id. at 399

n.3, Semtek specifically cited that footnote as an example

of how the phrase “on the merits” has been misused to

include judgments “that do not pass upon the substantive

merits of a claim and hence do not (in many jurisdictions)

entail claim-preclusive effect.” 531 U.S. at 502.

Petitioners argue that the New Mexico Court of

Appeals’ decision conflicts with United States ex rel.

Eisenstein v. City of New York, 556 U.S. 928, 936 (2009),

which stated that “‘the United States is bound by the

judgment in all FCA actions regardless of its participation

in the case.’” Pet. 4. But as the court of appeals explained,

petitioners rely on “a statement of appellant’s argument,

not a statement of law by the Court.” Pet. App. 16a.

Eisenstein addressed only whether the United States,

if it declines to intervene, is a “party” in a FCA case

for purposes of the appellate filing deadline. Pet. App.

15a-16a; Eisenstein, 556 U.S. at 931. Eisenstein did not

decide any res judicata issue.

Even if petitioners were correct that Dickson was

decided on the merits, which they are not, petitioners have

16

not demonstrated that this Court’s review would alter the

outcome here. Petitioners raise no argument that they

have satisfied the other two requirements for res judicata.

B. Because the State Was Not a Party to Dickson,

the State is Not Bound by that Judgment.

It is black-letter law that a judgment does not bind

a nonparty, subject to a few limited exceptions. See,

e.g., Taylor v. Sturgell, 553 U.S. 880, 884 (2008) (“‘It is

a principle of general application in Anglo-American

jurisprudence that one is not bound by a judgment in

personam in a litigation in which he is not designated

as a party or to which he has not been made a party by

service of process.’”); Smith v. Bayer Corp., 564 U.S.

299, 312-13 (2011). “The importance of this rule and the

narrowness of its exceptions go hand in hand.” Bayer,

564 U.S. at 312-13. Nonparty preclusion is premised on

due process concerns that “‘everyone should have his own

day in court,’” Richards v. Jefferson Cty., 517 U.S. 793,

798 (1996), and that “[a] person who was not a party to a

suit generally has not had a ‘full and fair opportunity to

litigate’ the claims and issues settled in that suit.” Taylor,

553 U.S. at 892.

As Eisenstein made clear, unless the United States

intervenes, the United States is not a “party” to a qui tam

action. 556 U.S. at 933. Similarly, because the State did

not intervene, the State was not a party to Dickson. See

New Mexico ex rel. National Educ. Ass’n of New Mexico

v. Austin Capital Mgmt. Ltd., 671 F. Supp. 2d 1248, 125051 (D.N.M. 2009) (applying Eisenstein to conclude the

State was not a party to a qui tam suit in which it did not

intervene); Pet. App. 5a. Accordingly, unless one of the

17

limited exceptions to nonparty preclusion applies, Dickson

does not bind the State. Taylor, 553 U.S. at 884.

This Court has recognized six discrete categories

in which a nonparty may be precluded by an earlier

judgment: (1) a person agrees to be bound by a judgment;

(2) the nonparty to be bound and a party have a preexisting legal relationship; (3) a nonparty was “‘adequately

represented by someone with the same interests who was

a party’ to the suit”; (4) a nonparty assumed control of

the litigation in which the judgment was entered; (5) a

nonparty is a proxy or agent for a party; or (6) a statute

expressly forbids successive litigation by non-litigants,

such as in bankruptcy or probate proceedings. Taylor, 553

U.S. at 893-95. These exceptions to nonparty preclusion

have, in the past, been loosely characterized as applying

when “there is ‘privity’ between a party to the second

case and a party who is bound by an earlier judgment.”

Richards, 517 U.S. at 798.6

Petitioners have failed to demonstrate that any of

these limited exceptions apply such that the State is

bound by Dickson. See Taylor, 553 U.S. at 907 (claim

preclusion is an affirmative defense that defendant must

plead and prove). Categories one, five, and six are plainly

inapplicable here, and petitioners raise no argument to

the contrary. Charitably construed, petitioners’ assertions

potentially implicate the other three exceptions: a

preexisting legal relationship (category 2); adequate

representation (category 3); and nonparty control of the

6. More recently, this Court has avoided the term “privity”

as imprecise. See, e.g., Taylor, 553 U.S. at 894 n.8; Montana, 440

U.S. at 154 n.5.

18

litigation (category 4). As explained below, however, none

of these exceptions applies.

For category 2, the legal relationship is that the

Dickson relator is a partial assignee of the State’s MFCA

claim. Vermont Agency of Nat. Res. v. United States ex

rel. Stevens, 529 U.S. 765, 773 & n.4 (2000). It is wellestablished that a judgment against a partial assignee

cannot bind the assignor more broadly than the scope

of assignment. See Restatement (Second) of Judgments

§ 55 cmt. c (1982) (“A judgment for or against the partial

assignee does not preclude the assignor from bringing an

action on the unassigned portion of the obligation.”); 18

Charles A. Wright, Arthur R. Miller & Edward H. Cooper,

Federal Practice and Procedure § 4415 (3d ed.) (Wright

& Miller) (“an action by an assignor or assignee should

not foreclose a second action by the other on grounds of

claim preclusion”). This is because “[w]hen two or more

persons have concurrent ownership interests in property,

a judgment for or against one of them concerning his

interest does not have effects under the rules of res

judicata on another such owner.” Restatement (Second)

of Judgments § 54. Thus, a judgment on relator’s MFCA

claim does not preclude the State from pursuing its

interest in the unassigned portion, much less its separate

consumer protection claims, in which relator has no right

or legal relationship with the State.

As to category 3, the Dickson relator did not

adequately represent the State because relator and the

State do not have the “‘same interests.’” Taylor, 553

U.S. at 894 (“identity of interests” is necessary, but

not sufficient, for adequate representation). In Taylor,

this Court unanimously rejected an expansion of the

19

adequate representation exception (known as “virtual

representation”) that would have applied “whenever the

relationship between a party and a non-party is close

enough to bring the second litigant within the judgment.”

553 U.S. at 898 (internal quotation marks omitted).

The Court reasoned that, “[a] party’s representation of

a nonparty is ‘adequate’ for preclusion purposes only

if, at a minimum: (1) the interests of the nonparty and

her representative are aligned; and (2) either the party

understood herself to be acting in a representative

capacity or the original court took care to protect the

interests of the nonparty.” Id. at 900 (citations omitted).

The Dickson relator does not satisfy that test. Even as to

the MFCA claim, relator’s and the State’s interests are not

fully aligned. For example, such a claim is brought for both

the State and relator, NMSA § 27-14-7(B); relator has a

right to continue as a party even if the State intervenes, id.

§ 27-14-8(A); and each is entitled to a separate percentage

of any judgment, id. § 27-14-9(A), (B). Moreover, the

MFCA permits the State to intervene and assume control

of the action, NMSA § 27-14-7(E); to settle the claim, id.

§ 27-14-8(C); to approve any voluntary dismissal, id. § 2714-7(B); and to seek dismissal of the action over relator’s

objection, id. § 27-14-8(B). More significantly, the State

has a substantial interest in protecting its consumers, an

interest not shared by relator. As to the second prong,

the Dickson relator represented her own interests in the

MFCA claim and did not purport to represent the State

or its broader interests, including its consumer protection

claims, which relator could not have brought. See infra,

p. 23-24.

As to category 4, petitioners suggest (Pet. 17) that

the State “exercise[d] substantial control” over Dickson

20

because it had the right to intervene, dismiss, or settle the

action. But the State did not intervene, dismiss, or settle

Dickson. Relator exercised sole control. See NMSA § 2714-7(E)(2) (where State declines to intervene, relator “shall

have the right to conduct the action”); Stoner, 502 F.3d at

1128 (“Unless it intervenes or moves to dismiss, the United

States has little control over the conduct of [a relator’s qui

tam] action”). Thus, the State did not exercise any actual

control that could subject it to nonparty preclusion. Cf.

Montana, 440 U.S. at 155 (United States controlled a prior

unsuccessful action by, inter alia, requiring the suit to be

filed, reviewing and approving the complaint, and paying

the attorneys’ fees and costs); Benson and Ford, Inc. v.

Wanda Petroleum Co., 833 F.2d 1172, 1174 (5th Cir. 1987)

(“It is essential that the nonparty have actual control.”);

accord Bittinger v. Tecumesh Prods. Co., 123 F.3d 877,

887 (6th Cir. 1997).

Because none of the established exceptions for

nonparty preclusion applies, petitioners urge a novel

exception based on the State’s status in Dickson as the

“real party in interest.” See, e.g., Pet. 22. Petitioners

argue that otherwise the State will get a second bite at

the apple whenever a relator is unsuccessful. See, e.g.,

Pet. 26-27. But this Court has not recognized a “real

party in interest” exception to nonparty preclusion, and

Eisenstein refutes that status as a “real party in interest”

is sufficient to treat the government as a party. 556 U.S.

at 934 (“[T]he United States’ status as a ‘real party in

interest’ in a qui tam action does not automatically convert

it into a ‘party.’”); National Educ. Ass’n, 671 F. Supp. 2d

at 1250-51. Moreover, this Court recently rejected the

same, second-bite-at-the-apple argument as a justification

for expanding nonparty preclusion, acknowledging that

21

nonparty preclusion often “leads to relitigation of many

issues, as plaintiff after plaintiff after plaintiff (none

precluded by the last judgment because none a party to

the last suit) tries his hand at establishing some legal

principle or obtaining some grant of relief.” Bayer, 564

U.S. at 316. But the Court explained that “our legal system

generally applies principles of stare decisis and comity

among courts to mitigate the sometimes substantial costs

of similar litigation brought by different plaintiffs” rather

than “binding nonparties to a judgment.” Id. at 317.

Petitioners rely on dicta in Chovanec that “[t]he

plaintiff in a qui tam action is, after all, the United States

rather than relator.” 606 F.3d at 362. But Eisenstein holds

otherwise. 556 U.S. at 933 (United States is party to qui

tam action only when it intervenes). Petitioners also cite

Schimmels, 127 F.3d at 880, in which the Ninth Circuit held

that the United States’ bankruptcy proceeding was barred

by the final judgment in relators’ bankruptcy proceeding

against defendants, based in part on the court’s conclusion

that there was privity between relators and the United

States. Id. at 881-84. Schimmels’ privity determination,

however, relied on the United States’ participation in

relators’ action, id. at 882, a fact that is not present here.

In any event, Taylor’s rejection of a broad and amorphous

expansion of the adequate representation exception,

and its adherence to the discrete, limited exceptions for

nonparty preclusion, cast doubt on Schimmels’ continued

vitality.

Petitioners argue (Pet. 17-18, 22) that because the

government is “bound by the judgment in all FCA actions

regardless of its participation in the case,” Eisenstein, 556

U.S. at 936, the State must be in privity with relator. Not

22

only is that circular reasoning, Eisenstein did not purport

to decide that issue. Moreover, Eisenstein expressly

acknowledged that the United States could be bound by

a judgment “for a host of different reasons.” Id.

C.

The Court of Appeals’ Judgment is Correct for

the Independent Reason that the State’s Cause

of Action is Not the Same as in Dickson.

Res judicata does not apply unless both suits

involve the same cause of action. See, e.g., Lucky Brand

Dungarees, Inc. v. Marcel Fashions Grp., Inc., 140 S. Ct.

1589, 1594 (2020). Suits involve the same cause of action

for claim preclusion “when they arise from the same

transaction or involve a common nucleus of operative

facts.” Id. at 1595 (citations and internal quotation marks

omitted).

To determine whether causes of action are the same,

courts generally look to: (1) the relatedness of the facts

in time, space, origin, or motivation; (2) whether the

facts make a convenient trial unit; and (3) whether the

treatment of facts conforms to the parties’ expectations

or business understanding or usage. See, e.g., Potter v.

Pierce, 2015-NMSC-002, ¶ 11, 342 P. 3d 54, 57; Whole

Women’s Health v. Hellerstedt, 136 S. Ct. 2292, 2305

(2016); United States v. Tohono O’Odham Nation, 563

U.S. 307, 316 (2011) (“whether two suits involve the same

claim or cause of action depends on factual overlap”);

Restatement (Second) of Judgments § 24. Prior litigation

acts as a bar not only to those issues that were raised and

decided in the earlier litigation, but also as to those issues

that could have been raised. Moitie, 452 U.S. at 398; Potter,

2015-NMSC-002, ¶ 15, 342 P.3d at 59 (“res judicata does

23

not bar a subsequent action unless the plaintiff could and

should have brought the claim in the former proceeding”).

Significantly, “if more than one party has a right to

relief arising out of a single transaction, each such party

has a separate claim for purposes of merger and bar.”

Restatement (Second) of Judgments § 24 cmt. a; Wright

& Miller § 4407 (“it is assumed that each plaintiff has a

distinctive cause of action no matter how closely related

to the claims of the other plaintiffs”); accord Avondale

Shipyards, Inc. v. Insured Lloyd’s, 786 F.2d 1265, 1272

(5th Cir. 1986).7

Here, the causes of action are not the same for two

reasons. First, even if the suits arose out of the same

transaction, the State and relator are separate parties

and therefore have separate claims against petitioners.

See Restatement (Second) of Judgments § 24 cmt. a. For

example, relator and the State have separate claims under

the MFCA. See, e.g., NMSA § 27-14-9(A), (B) (action is

brought for both the State and relator, relator has right

to a share of the State’s recovery, and relator may remain

a party even if the State intervenes). Similarly, although

relator could have brought an action under FATA (but

did not), relator could not have brought the State’s other

consumer protection claims, which belong only to the

State. See NMSA §§ 57-12-8, 57-12-11 (only the State may

bring Unfair Practices Act claim for civil penalty); id.

§ 30-44-3 (only the State may enforce civil remedies under

7. For example, if A and B are injured in a car accident

caused by C, even though A’s and B’s causes of action arise out of

the same transaction, A and B, as separate parties, each have a

separate claim. If A sues C, B is not required to join that suit or

risk preclusion of his claim.

24

Medicaid Fraud Act). Thus, at least absent intervention,

relator’s action cannot bar the State’s separate claims.

Petitioners assert (Pet. 22-23) that because the State

could have intervened and brought its claims in Dickson,

the State’s action should be precluded. But there is no

requirement that a State intervene in a qui tam action

to assert any claims it might have against the defendant

or risk claim preclusion. See, e.g., Williams, 417 F.3d at

455; Wright & Miller § 4452 (“a nonparty is not obliged

to seize an available opportunity to intervene in pending

litigation that presents questions affecting the nonparty”).

Otherwise, a State would be required to identify all false

claims actions filed on its behalf in every jurisdiction, and

then move to intervene (or move to dismiss), regardless of

whether, at the time, the State was even aware of whether

it had other claims concerning the same transaction.

Williams, 417 F.3d at 455; Pet. App. 17a. That would run

counter to the statutes’ purpose, which is for qui tam

relators to assist the State in enforcement. See, e.g., State

ex rel. Foy v. Austin Capital Mgmt., Ltd., 2015-NMSC025, ¶ 25, 355 P.3d 1, 9 (FATA incentivizes “private

individuals to act on behalf of the public good by bringing

suit”); accord United States ex rel. Berge v. Board of

Trustees, 104 F.3d 1453, 1458 (4th Cir. 1997). Requiring

the State to intervene would also be contrary to principles

of permissive joinder. See Fed. R. Civ. P. 20(a) (persons

“may join” as plaintiffs in one action where the right to

relief “aris[es] out of the same transaction”).

Second, the causes of action are not the same because

they do not arise from a common nucleus of fact. The

relevant claim in Dickson was relator’s MFCA claim.

Pet. 4a. The State’s action here does not include a MFCA

25

claim, but instead seeks relief under different causes of

action. Pet. 5a. Although the fact that the State’s claims

involve different legal theories is not determinative, see,

e.g., Restatement (Second) of Judgments § 24 cmt. c, the

fact that the State’s claims are based on different facts

is. The State’s action is premised on petitioners’ efforts to

conceal that Plavix is ineffective for a substantial portion

of New Mexico’s patients who lack an enzyme necessary

to metabolize the drug, despite the fact that a simple

genetic test could have identified the affected patients.

Pet. App. 31a-32a, 38a-56a. In contrast, relator’s MFCA

claim focused on petitioners’ fraudulent marketing of

Plavix as superior to aspirin, despite allegations that

Plavix was not as safe as aspirin because it worked too

well for certain patients, resulting in an increased risk

of bleeding. Dickson Compl. ¶¶ 5-7, 19, 174-77. That the

two actions allege two different schemes to conceal two

different defects, which affected two different patient

populations, demonstrates that there is no factual overlap

and the causes of action are not the same. 8

Petitioners nevertheless suggest that both suits arise

out of the same operative facts—petitioners’ fraudulent

marketing of Plavix. Pet. 28-29. But petitioners view the

operative facts at too high a level of generality. As this

Court has made clear, the suits must involve the “‘very

same claim.’” Taylor, 553 U.S. at 892. Where the operative

facts concern separate defects of the drug, separate

marketing schemes, and different affected patient

8. Although Dickson’s first amended complaint included some

background allegations that Plavix was ineffective for certain

patients who could not metabolize the drug, those allegations

were omitted from relator’s subsequent complaints. See, e.g., Pet.

App. 110a-112a.

26

populations, the facts do not form a convenient trial unit

and the claims are not the same. See Restatement (Second)

of Judgments § 24.

III. THERE IS NO FEDERAL ISSUE WARRANTING

THIS COURT’S REVIEW.

A.

There is No Federalism Problem.

Petitioners assert (Pet. 23) that this Court’s review

is warranted because the New Mexico Court of Appeals

collaterally reviewed and rewrote the federal court’s

judgment in Dickson. That argument lacks merit.

As this Court stated in Bayer, “a court does not usually

get to dictate to other courts the preclusion consequences

of its own judgment.” 564 U.S. at 307 (internal quotation

marks omitted). Rather, “[d]eciding whether and how prior

litigation has preclusive effect is usually the bailiwick

of the second court.” Id.; accord United States ex rel.

Vaughn v. United Biologics, LLC, 907 F.3d 187, 192 (5th

Cir. 2018). That is precisely what the court of appeals did

here, applying well-established federal law.

Petitioners further contend (Pet. 23) that the New

Mexico Court of Appeals improperly revised the federal

judgment in Dickson by making it without prejudice to

the State, even though the judgment did not explicitly

“exempt[] the State from its res judicata effects.” But the

court of appeals did no such thing. Consistent with federal

law governing claim preclusion and the Dickson judgment,

the court of appeals correctly presumed, absent contrary

language, that the judgment did not apply to nonparties.

27

Petitioners argue (Pet. 24) that the State should

have sought to modify the Dickson judgment on direct

appeal to clarify that it was without prejudice to the

State. But the State would have had no reason to do so,

since the judgment applied only to the parties, not the

State. Nor is it clear that the State could have sought

such relief, at least absent intervention. See Vaughn, 907

F.3d at 192. Moreover, the fact that the United States has

sought modification of judgments in other cases, out of an

abundance of caution, does not mean that the State was

required to do so here or risk preclusion.

B. The Court of Appeals Did not Create a Public

Policy Exception to Res Judicata.

Petitioners contend (Pet. 21-23) that the New Mexico

Court of Appeals created a public policy exception to

res judicata for government litigants in qui tam cases,

contrary to this Court’s holding in Moitie. But the court of

appeals did not craft any res judicata exception. Instead, it

simply determined that, because Dickson was not decided

on the merits, res judicata did not apply. Pet. App. 20a.

That is in stark contrast to Moitie, where the federal

court of appeals determined that all three elements for res

judicata were satisfied, but nevertheless declined to apply

the doctrine on policy grounds. Moitie, 452 U.S. at 399.

IV. IN ANY EVENT, THIS CASE PRESENTS A POOR

VEHICLE FOR REVIEW.

Even if this Court were inclined to grant certiorari,

the State’s action presents a poor vehicle to decide whether

a dismissal of a relator’s qui tam action for failure to state

a claim precludes the State’s action.

28

First, the New Mexico Supreme Court dismissed

the writ of certiorari as improvidently granted, allowing

the court of appeals’ decision to stand. That the New

Mexico Supreme Court did not consider the case to raise

a sufficiently important issue for review counsels even

more strongly against this Court’s review. See, e.g., NMSA

§ 34-5-14(B) (New Mexico Supreme Court has authority

to review decisions, inter alia, that present an “issue of

substantial public interest”).

Second, there is a question as to whether this Court

has jurisdiction pursuant to 28 U.S.C. 1257(a) and Cox

Broadcasting Corp. v. Cohn, 420 U.S. 469, 481-83 (1975).

See Pet. 24 n.7. It is not clear that the New Mexico Court

of Appeals’ judgment on the federal issue is final such that

a decision by this Court on the merits would terminate

the litigation. 420 U.S. at 486. If this Court were to grant

certiorari and conclude that Dickson was decided on the

merits, the New Mexico Court of Appeals would still

need to determine whether petitioners satisfied the other

elements for res judicata.

Finally, because the New Mexico Court of Appeals

only addressed one of the three elements for res judicata,

this Court could not determine that the State’s action is

precluded (and that the court of appeals’ judgment should

be reversed) unless the Court determines that petitioners

met all three elements. That would require this Court, in

the first instance, to render a fact-bound decision as to

whether the parties and causes of action are the same.

See, e.g., Adarand Constructors, Inc. v. Mineta, 534

U.S. 103, 109, 110 (2001) (per curiam) (Court “is a court

of final review and not first review” and “ordinarily does

not decide in the first instance issues not decided below”)

29

(internal quotation marks omitted). That counsels against

granting certiorari here. See, e.g., Yee v. City of Escondido,

503 U.S. 519, 538 (1992) (“Prudence . . . dictates awaiting

a case in which the issue was fully litigated below, so that

we will have the benefit of developed arguments on both

sides and lower court opinions squarely addressing the

question.”). In addition, that those two factors provide an

independent legal basis for sustaining the lower court’s

judgment also weighs against certiorari. See The Monrosa

v. Carbon Black Exp., Inc., 359 U.S. 180, 184 (1959) (when

the challenged issue may not affect the ultimate judgment

because it may be affirmed on alternate grounds, that

issue “can await a day when it is posed less abstractly”).

V. THERE IS NO NEED FOR A REMAND.

This Court should decline to grant certiorari and

remand in light of this Court’s decisions in Lucky Brand

and Lomax. This Court has recognized that a GVR

order may be appropriate when there is a “reasonable

probability” that “a redetermination may determine

the ultimate outcome of the litigation.” Lawrence ex rel.

Lawrence v. Chater, 516 U.S. 163, 167 (1996) (per curiam).

Petitioners have failed to satisfy that standard here.

As explained above, the court of appeals’ decision is

supported by three independent grounds: (1) the Dickson

judgment was not on the merits; (2) the State was not a

party to Dickson; and (3) the State’s action does not involve

the same claims. Assuming arguendo that, on remand,

the New Mexico Court of Appeals might conclude that,

in light of Lucky Brand, relator’s and the State’s claims

arise out of the same transaction, there is no “reasonable

probability” that the court of appeals would conclude that

30

the State’s action is precluded. That is because the court

of appeals’ decision would still be compelled because of

petitioners’ failure to demonstrate that Dickson was

decided on the merits, that the State was a party to

Dickson, and that the State’s and relator’s claims are the

same (even though they are separate parties). See, e.g.,

Murr v. Wisconsin, 137 S. Ct. 1933, 1949 (2017) (courts

may affirm judgment below on any ground supported

by the record). In any event, there is nothing in Lucky

Brand that would support a conclusion that the two suits,

which depend on different fraudulent marketing schemes

to conceal entirely different drug defects that affected

entirely distinct sets of patients, arose out of the same

transaction.

Similarly, reconsideration in light of Lomax would

also be unlikely to change the court of appeals’ decision.

The court of appeals already determined, consistent with

Lomax, that Dickson was dismissed with prejudice as to

relator. See Lomax, 140 S. Ct. at 1725 (explaining that a

dismissal for failure to state a claim, pursuant to Rule

41(b), is presumed to be “a dismissal with prejudice”

absent language to the contrary); Pet. App. 19a-20a

(explaining that the Dickson “order did not provide for a

fifth amendment and disposed of all of Relator’s claims”).

And the court of appeals’ concomitant determination, that

Dickson was without prejudice to the State, Pet. App.

19a-20a, is in no way undermined by Lomax, which does

not address the effect of a dismissal on nonparties.

31

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

P. Cholla Khoury

A ssistant Attorney General

Office of the New Mexico

Attorney General

408 Galisteo Street

Santa Fe, NM 87501

(505) 827-6000

Catherine H. Dorsey

Counsel of Record

Baron & Budd, P.C.

600 New Hampshire Avenue, NW

Washington, DC 20037

(202) 333-4562

cdorsey@baronbudd.com

Russell Budd

Baron & Budd, P.C.

3102 Oak Lawn Avenue,

Suite 1100

Dallas, TX 75219

(214) 521-3605

Daniel A lberstone

Jonas P. Mann

Peter Klausner

Baron & Budd, P.C.

15910 Ventura Boulevard,

Suite 1600

Encino, CA 91436

(818) 839-2333

Burton LeBlanc

Baron & Budd, P.C.

2600 CitiPlace Drive

Baton Rouge, LA 70808

(225) 927-5441

Marcus J. Rael, Jr.

Robles, Rael & A naya, P.C.

500 Marquette Avenue, NW,

Suite 700

Albuquerque, NM 87102

(505) 242-2228

Counsel for Respondent