Monday, October 7, 2013

Bringing Title VII and False Claims Act Retaliation Claims in Different Cases: the Perils of Duplicative Litigation

It is increasingly common to see plaintiffs bring a traditional employment-law discrimination claim (e.g., Title VII claim) together with a claim, based on the same facts, alleging that their employer retaliated against them for complaining about conduct that violated the False Claims Act. Indeed, I have seen an employment lawyer file a Title VII case on behalf of his client alleging discrimination on the basis of sex in one case, and that same plaintiff with a different lawyer file a False Claims Act ("FCA") retaliation claim based on the same conduct in a separate case while the first case was pending.

In a recent case, the Second Circuit Court of Appeal addressed just this scenario, and in an interesting summary opinion, they affirmed the District Court's dismissal of the second "duplicative" FCA retaliation case. Davis v. Norwalk Economic Opportunity Now, Inc., -- Fed. Appx.--, 2013 WL 4558833 (2nd Cir., August 29, 2013). In Davis, a discharged employee sued her former employer alleging retaliatory harassment and discharge in violation of the FCA's provision prohibiting retaliation, 31 U.S.C. 3730(h), for her reporting food stamp misappropriation by fellow employees. Davis had previously filed a Title VII case that was still pending against the same employer when she filed her second suit alleging FCA retaliation. The District Court dismissed her FCA retaliation claim on the grounds that it was "duplicative" of an already existing case.

The Second Circuit affirmed the dismissal of "duplicative litigation," and explained that a district court had the power to "administer its docket" and could "stay or dismiss a suit that is duplicative of another federal court suit." Though different from claim preclusion, the Court "borrowed" the test for determining claim preclusion and applied it to "assess whether the second suit raises issues that should have been brought in the first." Applying that analysis, the Court found that Davis based her Title VII and FCA claims on nearly "identical" facts. In addition, the Court observed that both actions essentially asked the same question: whether Davis's employer "had a legitimate and lawful reason for taking the adverse employment actions" that plaintiff complained about. The Court found that these two causes of action should have been brought in the same case, even though Davis alleged claims with "different retaliatory motives."

Finally, Davis complained that her FCA claim should not have been dismissed because she was not permitted to amend her Title VII claim in the other case since the deadline for adding claims had passed and she did not discover her employer's FCA violation until after that deadline. The Court rebuffed that argument as well, finding that plaintiff had "ample time" to bring her FCA retaliation claim.

According to the Second Circuit's rules, this case has no precedential effect. Nevertheless, the decision demonstrates that not all claims are fungible and that a relator splits his or her claims at their peril.

A. Brian Albritton
October 7, 2013