Supplemental Brief — Ortho Biotech Products, L.P. v. United States ex rel. Duxbury

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No. 09-654 | OFFICE OF THE CLK

IN THE

Supreme Court of the United States

ORTHO BIOTECH PRODUCTS, L.P.,

Petitioner,

Vv.

UNITED STATES EX REL.

CHINYELU DUXBURY,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI

To THE UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

SUPPLEMENTAL BRIEF FOR PETITIONER

Ethan M. Posner

Counsel of Record

Patrick S. Davies

Jonathan L. Marcus

Andrew W. Lamb

Covington & Burling LLP

1201 Pennsylvania Ave., NW

Washington, DC 20004

(202) 662-6000

June 1, 2010 Counsel for Petitioner

QUESTIONS PRESENTED

1. Whether a federal court lacks subject-matter

jurisdiction over a qui tam suit under the False

Claims Act (“FCA”), 31 U.S.C. §§ 3729 et seq., that

repeats publicly disclosed allegations from prior

litigation, where the FCA relator did not provide the

government with information on _ the _ suit’s

allegations before the public disclosure.

2. Whether an FCA relator, alleging that the

defendant induced a third party to submit false or

fraudulent claims, can satisfy Rule 9(b) of the

Federal Rules of Civil Procedure without identifying

a single false or fraudulent claim, but merely by

alleging facts sufficient “to strengthen the inference

of fraud beyond possibility.”

RULE 29.6 DISCLOSURE STATEMENT

The Petitioner, Ortho Biotech Products, L.P.

(“OBP”), is a New Jersey corporation and subsidiary

of parent corporation Johnson & Johnson, also a New

Jersey corporation. No publicly held corporation

other than Johnson & Johnson owns 10% or more of

OBP’s stock.

TABLE OF CONTENTS

QUESTIONS PRESENTED ......................ccccceeceeeeeeeeeee I

RULE 29.6 DISCLOSURE STATEMENT ..................1

TABLE OF CONTENTS ...................- RR ener OIE Lii

TABLE OF AUTHORITIES

SUPPLEMENTAL BRIEF FOR PETITIONER..........

[. The Court Should Review The First,

“Original Source” Question Because It

Is Of Continuing Significance To

Hundreds of Pending And Future

5 et EOI A Fs Oo I any eo en ee 3

The Court Should Review the Second,

Rule 9(b) Question Because It Is

Unsettled And Significant

A. The Court Should Reach The

Rule 9(b) Question After Taking

The “Original Source” Question. ............ &

The Court Can Also Review The

Rule 9(b) Question On Its Own. ........

The Hopper Case Is Not A Better

Vehicle For Resolving The Rule 9(b)

Nee sas actuucbadivesiiuees

[f The Court Does Not Review The Rule

9(b) Question, It Shouvid Hold This Case

Until It Disposes Of The Question In

ae in caduubennsenees LO

( ii)

CONCLUSION ...

TABLE OF AUTHORITIES

CASES

Ashcroft v. Iqbal,

129 S. Ct. 1937 (2009).............

Chalabi v. Hashemite Kingdom of Jordan,

543 F.3d 725 (D.C. Cir. 2008)

Conyers v. Rossides,

558 F.3d 137 (2d Cir. 2009) .................0..

Graham County Soil & Water Conservation

Dist. v. United States ex rel. Wilson,

ABD BH. Cb. TOD CR ico cccescnsccncssssescens

Guaylupo-Moya v. Gonzales,

423 F.3d 121 (2d Cir. 2005) ........

Hopper v. Solvay Pharms., Inc.,

588 F.3d 1318 (11th Cir. 2009)............

Hughes Aircraft Co. v. United States ex rel.

Schumer, 520 U.S. 939, 946 (1997)

Steel Co. v. Citizens for a Better Envt,

523 U.S. 83 (1998)

United States v. Centennial Sav. Bank FSB,

499 U.S. 573 (1991)

United States ex rel. Wood v. Applied Research

Assocs., Inc., 328 Fed. Appx. 744, 746 (2d

Cir. 2009), cert. denied, 130 S. Ct. 1285

EEN << sucsdsucdnustacsounuedaonseseouemerent =

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STATUTES

31 U.S.C. §§ 3729(a)(1)-(2).

Fraud Enforcement And Recovery Act Of

2009, Pub. L. No. 111-21, 123 Stat. 1617

(May, 20, 2009).................

Patient Protection And Affordable Care Act,

Pub. L. No. 111-148, 124 Stat. 119 (Mar

23, 2010)

RULES

Fed. R. Civ. P. 8

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

Fed. R. Civ. P. 12(c) 6

SUPPLEMENTAL BRIEF FOR PETITIONER

As its amicus brief makes clear, the United

States supports the petition in significant respects.

The United States agrees that each of the two

questions presented concerns a ruling that “deepens

an existing conflict” among federal circuits. Br. for

the United States as Amicus Curiae, No. 09-654, at 9

(May 2010) (“U.S. Amicus Br.”). It also agrees that

the first question has “some continuing practical

significance” and could have warranted review in an

appropriate case, id. at 13, and that this Court’s

review of the second question “likely would be

warranted in an appropriate case,” id. at 9.

The United States ultimately recommends that

the petition should be denied only because of the new

healthcare law (the “PPACA”).! The PPACA, among

other things, amended the “original source” provision

of the False Claims Act (“FCA”), In the United

States’ view, that amendment makes the frst,

“original source” question “not of sufficient

continuing importance to warrant review.” U.S

Amicus Br. at 9. The United States further contends

that the change to the “original source” provision

renders this case an “[un]suitable vehicle” for

resolving the “unsettled and significant” Rule 9(b)

question because “the Court could not address the

Rule 9(b) issue in this case unless it first

determined” the jurisdictional question. /d. at 9, 17.

' Patient Protection And Affordable Care Act, Pub. L. No. 111

148, 124 Stat. 119 (Mar. 23, 2010)

The United States seriously underestimates the

ongoing significance of the first question on “original

source.” Even after the PPACA, that question

potentially affects hundreds of FCA cases—including

cases pending when the PPACA was enacted and

post-PPACA cases that implicate pre-PPACA

conduct. The Court should review the “original

source” question as potentially relevant to all of

these cases—just as the Court has _ reviewed

questions of similar ongoing significance in the past.

See, e.g., United States v. Centennial Sav. Bank FSB,

499 U.S. 573, 578 n.3 (1991) (granting certiorari on

question about law as it existed before 1986

amendment “in light of the significant number of

pending cases concerning the ... [law] prior to

1986”).

The ongoing significance of the “original source”

question removes the only U.S. objection to

reviewing the Rule 9(b) question. As shown below

and contrary to what the United States suggests,

because the jurisdictional issue here arises from the

FCA statute and not Article III of the Constitution,

the Court could also review the Rule 9(b) question

even if it decided not to take the “original source”

question. The Rule 9(b) question merits review now

because, as the United States observes, it is “both

unsettled and significant.” U.S. Amicus Br. at 17.

Moreover, notwithstanding the United States’

suggestion, another case pending before the Court,

United States ex rel. Hopper v. Solvay Pharms., Inc.,

No. 09-1065 (filed Mar. 4, 2010) (“Hopper Pet.”), does

not present a superior vehicle for addressing the

Rule 9(b) question. See U.S. Amicus Br. at 18 n.6.

The Court Should Review The =. irst,

“Original Source” Question Because It Is Of

Continuing Significance To Hundreds of

Pending And Future Cases.

Although the PPACA amended the “original

source” provision, the “original source” question still

has “continuing practical significance,” as the United

States acknowledges. U.S. Amicus Br. at 13. That is

because the “original-source” provision at issue here

still applies to hundreds of FCA cases—including (1)

those pending when the PPACA was enacted, and (2)

those filed post-PPACA that concern pre-PPACA

conduct.

First, the “original source” question remains

significant to hundreds of FCA cases pending when

the PPACA was enacted. According to the Justice

Department, 577 FCA cases were “active” as of

September 30, 2009. See U.S. Dept. of Justice, Civil

Div., Fraud Staiistics;s Qui Tam _ Intervention

Decisions & Case Status as of Sept. 30, 2009, final

page of Fraud Statistics — Overview: Oct. 1, 1987

Sept. 30, 2009, available at

http://www.justice.gov/civil/frauds/fcastats. pdf.?

Clearly, hundreds of FCA cases were pending when

the PPACA was enacted in March 2010. Because the

PPACA does not apply retroactively, see Graham

County Sotl & Water Conservation Dist. v. United

States ex rel. Wilson, 130 S. Ct. 1396, 1400 n.1

(2010); U.S. Amicus Br. at 4, 13 & n.4, the Act’s

* This report is available through a link on the Justice

Department's False Ciaims Act Statistics webpage, available at

http://www justice.gov/civi/frauds/fcastats htm!)

amendment to the “original source” provision affects

none of these cases, which remain subject to the

“original source” provision at issue here.

Second, the “original source” question remains

relevant also to cases filed after the PPACA’s

enactment. As this Court made clear in Hughes

Aircraft Co. uv. United States ex rel. Schumer, an

amendment to the “original source” provision that

Congress did not make expressly retroactive and

that removes aé_ defense—like the PPACA

amendment—does not apply retroactively. 520 U.S.

939, 946-48 (1997). And a provision that is not

retroactive does “not apply to the conduct ... which

occurred prior to [the amendment’s] effective date.”

Id. at 946. Because the pre-PPACA “original source”

provision will apply to future suits that challenge

conduct occurring before the PPACA’s enactment,

the first question remains relevant to all of these

suits as well.

The Court should thus review the first question

presented because it is of continuing importance to

hundreds of FCA cases. See Centennial Sav. Bank

FSB, 499 U.S. at 578 n.3 (granting certiorari on

question about law as it existed before 1986

amendment “in light of the significant number of

pending cases concerning the ... [law] prior to

1986”).

II. The Court Should Review the Second, Rule

9(b) Question Because It Is Unsettled And

Significant.

A. The Court Should Reach The Rule 9(b)

Question After Deciding The “Original

Source” Question.

The Court should also review the second, Rule

9(b) question. The United States agrees that the

question implicates a “deep[]” circuit conflict on an

“unsettled and significant” issue and thus “likely”

warrants this Court’s review in an “appropriate”

case.2 U.S. Amicus Br. at 9, 17. And the continuing

significance of the “original source” question, as

shown above, renders unpersuasive the United

States’ only objection to reviewing the Rule 9(b)

question in this case. Id. at 9, 17-18.

Moreover, this Court often addresses threshold

jurisdictional questions before reaching a question on

the merits. Just last term, in Ashcroft v. Iqbal, 129

S. Ct. 1937 (2009), this Court granted certiorari to

3 On the merits, the United States argues (U.S. Amicus Br. at

17) that a Rule 9(b) standard that would require the relator to

identify false claims should be rejected because it would deter

relators with helpful information about alleged fraud from

filing suit. The United States’ policy argument is untethered to

either the text of Rule 9(b) or the purposes it is designed to

serve. See Pet. for a Writ of Cert., Ortho Biotech Prods., L.P. v.

United States ex rel. Duxbury, No. 09-654, at 31 (Dec. 3, 2009)

(“OBP Pet.”); Reply Brief for Petitioner, Ortho Biotech Prods.,

L.P. v. United States ex rel. Duxbury, No. 09-654, at 11-12 (Jan.

20, 2010) (““OBP Reply Br.”).

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address a federal pleading standard question in the

face of an argument that the case was an unsuitable

vehicle because a question existed about the Court’s

jurisdiction. The Court went on to decide the

jurisdictional question, which enabled it to reach the

pleading standard issue. Id. at 1945.

B. The Court Could Also Review The Rule

9(b) Question On Its Own.

Furthermore, contrary to the United States’

contention (U.S. Amicus Br. at 9, 17-18), the Court

need not decide the “original source” question in

order to review the question on Rule 9(b). Although

the “original source” question is jurisdictional, it

concerns statutory, not Article III, jurisdiction.

Courts may defer statutory jurisdiction questions to

reach other questions—including merits questions—

that enable them to dispose of the issue at hand.

See, e.g., Steel Co. v. Citizens for a Better Env’t, 523

U.S. 83, 97 n.2 (1998) (acknowledging that courts can

prioritize merits questions over statutory standing

questions); Conyers v. Rossides, 558 F.3d 137, 150

(2d Cir. 2009) (declining to decide whether statute

divests the court of jurisdiction and “proceed{[ing] to

address the alternative argument for dismissal”

under Fed. R. Civ. P. 12(c) Gudgment on the

pleadings), where “the question is one of statutory

rather than constitutional jurisdiction”); Chalabi v.

Hashemite Kingdom of Jordan, 543 F.3d 725, 728

(D.C. Cir. 2008) (“Steel Co. requires that we

prioritize the jurisdictional issue only when the

existence of Article II jurisdiction is in doubt; that

decision explicitly recognized the propriety of

addressing the merits where doing so made it

possible to avoid a doubtful issue of statutory

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jurisdiction.”) (internal quotation marks and citation

omitted); Guaylupo-Moya v. Gonzales, 423 F.3d 121,

132 n.10 (2d Cir. 2005) (declining to resolve question

of statutory jurisdiction before disposing of ex post

facto argument on the merits); United States ex rel.

Wood v. Applied Research Assocs., Inc., 328 Fed.

Appx. 744, 746 (2d Cir. 2009) (unpublished)

(“Because we agree that [the FCA relator’s] claims

fall short of the pleading standard required by Fed.

R. Civ. P. 9(b), ... we decline to reach the question

of whether the district court had subject matter

jurisdiction under 31 U.S.C. § 3730(e)(4)(A).”), cert.

denied, 130 S. Ct. 1285 (2010).

Here, if this Court were to bypass the statutory

jurisdiction question to reach the Rule 9(b) question,

it would alter the posture of the case only if it ruled

that dismissal for failure to satisfy 9(b) was

warranted, but dismissal is precisely the result that

would obtain from a finding of no jurisdiction.

Bypassing the statutory jurisdiction question thus

would not “take the [C]ourt into vast, uncharted

realms of judicial opinion giving.” Steel Co., 523 U.S.

at 97 n.2.

For all of these reasons, and contrary to the

argument of the United States, this case is not a poor

vehicle for resolving the Rule 9(b) question.

Ill. The Hopper Case Is Not A Better Vehicle

For Resolving The Rule 9(b) Question.

The United States suggests that another case

pending before the Court, Hopper, may be a better

vehicle for addressing the Rule 9(b) question

presented by Petitioner. See U.S. Amicus Br. at 18

n.6. Here too, the United States is mistaken.

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First, the questions presented in the two

petitions are not the same. This petition’s Rule 9(b)

question (and the court of appeals’ decision) covers

both core FCA liability provisions—31 U.S.C.

§§ 3729(a)(1) and (a)(2).4. The Hopper question

expressly concerns only Section 3729(a)(2). See

Hopper Pet. at i (question presented referencing only

31 U.S.C. § 3729(a)(2)).

Second, this petition’s Rule 9(b) question

concerns “[w]hether an FCA relator, alleging that the

defendant induced a third party to submit false or

fraudulent claims, can satisfy Rule 9(b) ... without

identifying a single false or fraudulent claim, but

merely by alleging facts sufficient to strengthen the

inference of fraud beyond possibility.” OBP Pet. ati

(internal quotation marks omitted). It thus concerns

not only whether Rule 9(b) requires FCA relators to

identify false or fraudulent claims but also, more

basically, what Rule 9(b) measures—i.e., whether it

measures plausibility and perhaps requires only

allegations that make fraud more than possible, or

whether it measures particularity in a way that adds

something to the Rule 8 plausibility standard. See,

e.g., OBP Pet. at 24-26, 32-33; OBP Reply Br. at 8

(Jan. 20, 2010).5 By contrast, the Hopper question

4 These provisions were renumbered and amended by the Fraud

Enforcement And Recovery Act Of 2009, Pub. L. No. 111-21,

123 Stat. 1617, 1621-23 (May, 20, 2009) (““FERA”). As

previously noted, and as neither respondent nor the United

States disputes, the changes do not affect the Rule 9(b) question

presented. See OBP Pet. at 3 n.1; OBP Reply Br. at 9 n.2.

5 The United States appears to agree with the First Circuit that

the Rule 9(b) standard requires nothing more than Rule 8 in

(continued...)

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concerns only “[w]hether Rule 9(b) ... requires the

identification of a specific false claim.” Hopper Pet.

at 1.

Third, the Hopper case is not a good vehicle to

decide whether a relator needs to identify a specific

false claim even under Section 3729({a)(2), because

the Eleventh Circuit expressly stated that it was

unnecessary to decide that question because the

complaint failed to allege adequately the element of

intent. See Hopper v. Solvay Pharms., Inc., 588 F.3d

1318, 1330-31 (11th Cir. 2009); Br. in Opp’n to Pet.

for Writ of Cert., Hopper, No. 09-1065, 2010 WL

1900659, at *7-8 (May 10, 2010) (arguing that the

Eleventh Circuit’s decision addressed only Rule 9(b)’s

application to allegations of intent).

Finally, while the United States notes that

Hopper “does not appear to contain any potential

jurisdictional obstacle,” U.S. Amicus Br. at 18 n.6, we

have explained above why the statutory jurisdiction

question should not be viewed as an “obstacle” to

further review.

For all of these reasons, this petition is a better

vehicle than Hopper for addressing Rule 9(b)’s

application to the core liability provisions of the FCA.

the FCA context. See U.S. Amicus Br. at 14-15 (stating that the

First Circuit’s holding that a relator can satisfy Rule 9(b) by

providing “factual or statistical evidence to strengthen the

inference of fraud beyond possibility” is “correct”) (internal

quotation marks and citations omitted).

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IV. If The Court Does Not Review The Rule 9(b)

Question, It Should Hold This Case Until It

Disposes Of The Question In Hopper.

While this case is a better vehicle than Hopper to

address the Rule 9(b) question presented here, the

Hopper question—as to whether or not “Rule 9(b)...

requires the identification of a specific false claim,”

Hopper Pet. at i—is undeniably relevant to the court

of appeals’ holding at issue here. Petitioner thus

requests, if the Court decides to review the Rule 9(b)

question presented in Hopper rather than in this

case, that the Court defer its disposition of this

petition until it resolves the related question

presented in Hopper.

CONCLUSION

The petition for a writ of certiorari should be

granted. In the alternative, if the Hopper petition is

granted, this petition should be held and disposed of

in accordance with the resolution in Hopper.

Respectfully submitted,

Ethan M. Posner

Counsel of Record

Patrick S. Davies

Jonathan L. Marcus

Andrew W. Lamb

Covington & Burling LLP

1201 Pennsylvania Ave., NW

Washington, DC 20004

(202) 662-6000

June 1, 2010 Counsel for Petitioner

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