Although it took several months to see if and how DOJ would start implementing the January 2018 Granston Memo, DOJ has since then filed a torrent of "Granston" motions to dismiss in courts throughout the United States. Many of these motions have yet to be decided. In this update, we discuss briefly Michael Granston's recent remarks about DOJ's policy as well as one of the motions that has been decided since the policy was issued.
One of the potential grounds for dismissal outlined in the Granston Memo is to "preserv[e] government interests . . . when the government's expected costs are likely to exceed any expected gain." Per the Memo, examples of potential costs include, "the need to monitor or participate in ongoing litigation, including responding to discovery requests." To date, DOJ has successfully argued preserving government resources as a basis for dismissal in several suits: United States ex rel. Toomer v. Terrapower, LLC, No. 16-226, 2018 WL 4934070 (D. Idaho Oct. 10, 2018); United States ex rel. Stovall v. Webster University, No. 15-3530, 2018 WL 3756888 (D.S.C. Aug. 8, 2018); and United States ex rel. Schneider v. J.P. Morgan Chase Bank, N.A., No. 14-1047, 2019 WL 1060876 (D.D.C. Mar. 6, 2019). The government also argued "burdensome discovery" as a basis for dismissal in Gilead Sciences, Inc. v. United States ex rel. Campie, No. 17-936, while the case was on appeal to the U.S. Supreme Court.
No doubt buoyed by this factor, FCA defendants, according to Mr. Granston, have been serving discovery on the government to prompt or otherwise support a government dismissal motion on this ground. But Mr. Granston recently made clear that this factor alone would not prompt DOJ to file motions to dismiss. In remarks at the Federal Bar Association's FCA Conference earlier this month, Mr. Granston explained that DOJ would not be persuaded to dismiss "just because a case may impose substantial discovery obligations on the government." The decision to seek dismissal will instead be evaluated on a case-by-case basis, with the cost-benefit analysis focusing on the likelihood that the relator can prove the allegations brought on behalf of the government. Mr. Granston further cautioned: "Defendants should be on notice that pursuing undue or excessive discovery will not constitute a successful strategy for getting the government to exercise its dismissal authority," and that "[t]he government has, and will use, other mechanisms for responding to such discovery tactics." It remains to be seen whether Mr. Granston's recent remarks will impact defense discovery strategy, as he surely hopes, as well as future DOJ motions to dismiss under his policy, given the prominence that the government burden factor has taken as a basis for dismissal.
In another important post-Granston Memo development, one district court recently made clear that the Granston Memo does not curb the government's "unfettered right to dismiss" under Swift v. United States, 318 F.3d 250 (D.C. Cir. 2003). (As previously reported, the longstanding circuit split regarding the standard that applies when the government seeks dismissal of a relator's suit under Section 3730(c)(2)(A)—i.e., how much deference is given to the government—still remains today.) In United States ex rel. Schneider v. J.P. Morgan Chase Bank, N.A., DOJ moved to dismiss on the ground that relator's claims lacked substantial merit and litigation would require unnecessary expenditures of government resources. Relator argued that DOJ established a new standard for dismissal with the Granston Memo, and neither of DOJ's reasons for dismissal "withstand any level of reasonable scrutiny" under this new standard. The district court, unpersuaded by relator's argument, upheld the "unfettered right" standard of review under Swift and dismissed the suit. The Schneider decision is important because it demonstrates that the Granston Memo in no way alters or abrogates the applicable standard of review—under Swift, the "unfettered right to dismiss"—applied to government motions to dismiss FCA suits.
Although the purpose of the Granston Memo was to define a framework to guide DOJ's authority to dismiss qui tam suits, it is clear that there are lingering questions regarding its application in practice. As these updates demonstrate, practitioners' understanding of the Memo is still evolving. We will continue to monitor developments in this area of increasing importance in the FCA space.
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