United States District Court, E.D. Wisconsin
UNITED STATES OF AMERICA and the STATE OF WISCONSIN, ex rel. ROSE PRESSER, Plaintiffs,
ACACIA MENTAL HEALTH CLINIC, LLC and ABE FREUND, Defendants.
Stadtmueller U.S. District Judge
Rose Presser (“Presser”) initiated this qui
tam action against Defendants on January 18, 2013,
alleging violations of the federal False Claims Act
(“FCA”), 31 U.S.C. § 3730, and its Wisconsin
counterpart. (Docket #1). After an appeal to the Seventh
Circuit, on remand she sought and was granted leave to file a
second amended complaint. (Docket #58). She filed her second
amended complaint on December 14, 2016, which Defendants
answered on December 28, 2016. (Docket #59 and #60).
December 28, 2016, the government filed its own civil action
under the FCA, raising largely the same claims as Presser
asserts here. (Docket #61 at 2). Because the government did
not identify this action as related, the government's
suit was assigned to District Judge Lynn Adelman and is
pending in Case No. 16-CV-1718. Currently before the Court is
Presser's motion for voluntary dismissal without
prejudice, which she filed on February 3, 2017. Id.
She seeks dismissal on the ground that the government's
FCA action prevents her from maintaining this one. See
Id. at 3. Additionally, she notes that under the FCA she
has the same rights to a share in the government's
recovery in its case as she does here. Id.;
see 31 U.S.C. § 3730(c)(5). Defendants oppose
the motion, arguing that while they agree the case should be
dismissed, any dismissal should be with prejudice. (Docket
#65). Presser filed a reply in support of her motion on
February 27, 2017. (Docket #69). The motion is fully briefed
and, for the reasons stated below, it will be
Rule of Civil Procedure 41 governs Presser's motion for
voluntary dismissal. Because Defendants have answered the
second amended complaint, and because Defendants would not
consent to the dismissal, Rule 41 provides that Presser can
only obtain voluntary dismissal by court order and “on
terms that the court considers proper.” Fed.R.Civ.P.
41(a)(2). In considering whether to grant a motion under Rule
41(a)(2), a court must examine whether the defendant will
suffer unfair prejudice from the dismissal. Marlow v.
Winston & Strawn, 19 F.3d 300, 304 (7th Cir. 1994).
Several factors guide this analysis, including
“‘the defendant's effort and expense of
preparation for trial, excessive delay and lack of diligence
on the part of the plaintiff in prosecuting the action,
insufficient explanation for the need to take a dismissal,
and the fact that a motion for summary judgment has been
filed by the defendant.'” Kunz v.
DeFelice, 538 F.3d 667, 677 (7th Cir. 2008) (quoting
Pace v. S. Express Co., 409 F.2d 331, 334 (7th Cir.
Rule 41(a)(2), a court can, in its discretion, impose
conditions on dismissal that are necessary to offset possible
prejudice to the defendant. Marlow, 19 F.3d at 303;
McCall-Bey v. Franzen, 777 F.2d 1178, 1184 (7th Cir.
1985). One common condition is requiring the plaintiff to pay
the defendant's reasonable attorney's fees and costs.
Marlow, 19 F.3d at 305. Another permissible
condition is dismissing the matter with prejudice, although
dismissals under Rule 41(a)(2) are normally made without
prejudice. See Fed. R. Civ. P. 41(a)(2);
Marlow, 19 F.3d at 305. The Seventh Circuit has
instructed that the plaintiff must be given a reasonable
opportunity to withdraw the motion for voluntary dismissal if
the court indicates that it will grant the requested
dismissal but only with conditions the plaintiff has not
previously agreed to. Marlow, 19 F.3d at 305.
raise several concerns about Presser's proposed
dismissal. At the outset, however, it should be noted that
the Defendants seem more focused on obtaining dismissal of
the government's related case. Defendants apparently
believe that if they can achieve a dismissal of Presser's
case with prejudice, they can take that dismissal to Judge
Adelman and obtain dismissal of the government's action
on res judicata grounds. Viewed from that
perspective, it is easier to understand the parties'
open with a description of what they view as a history of
delay and obfuscation by Presser and the government.
Defendants suggest that the government has waived its ability
to bring its own FCA suit by choosing not to intervene in
this case during its four-year life span. (Docket #65 at 1).
In Defendants' view, the government's newly filed
case comes as Presser finally realizes that she will have to
litigate this case in a meaningful way. Id. at 1-2.
Defendants state that Presser has not provided dates for her
own deposition and has not responded to Defendants'
discovery requests, which were served on December 28, 2016.
Id. at 2. Nor has she propounded her own discovery
requests although the case is fully entered into the
discovery phase. See Id. at 3. Indeed, according to
Defendants, even the government is dragging its feet. The
United States filed its separate action on December 28, 2016
and only obtained a waiver of service from Defendants'
counsel in early February 2017. Id. at 2.
tie this theory of dilatoriness into the Pace
factors and ask for dismissal with prejudice. First, they claim
that they have expended significant amounts of time and money
litigating two motions to dismiss, an appeal, and other trial
preparation in this case, including serving their recent
discovery requests. Id. at 2-3. Second, Defendants
contend that Presser has not been diligent in her prosecution
of this case, since she failed to plead actionable claims
twice and is now refusing to participate in discovery.
Id. at 3.
and most critical to Defendants, they believe that
Presser's explanation of her need for dismissal falls
short. Id. According to Defendants, Presser does not
adequately explain how the government can now bring its own
FCA suit despite failing to intervene in this action.
Id. at 4. Defendants say that this is not permitted,
arguing that the government must intervene in a relator's
FCA suit or be bound to the result reached in its absence.
Id. (citing U.S. ex rel. Lusby v. Rolls-Royce
Corp., 570 F.3d 849, 853 (7th Cir. 2009)). It cannot
simply file its own duplicative lawsuit. Id.
contrast, Presser believes that the FCA permits just what
occurred here. She points to language in the statute which
allows the government to pursue “any alternate
remedy” instead of intervening in Presser's
lawsuit, id. § 3730(c)(5), which has been
interpreted as allowing the government to bring its own FCA
action. (Docket #61 at 2) (citing U.S. ex rel. Bledsoe v.
Cmty. Health Sys., 342 F.3d 634, 647 (6th Cir. 2003));
(Docket #69 at 4). Additionally, Presser contends that
because there has been no determination on the merits in this
action, Defendants' reliance on principles of claim
preclusion is misplaced. (Docket #69 at 7).
disagree. They argue that since the government needs to show
“good cause” to intervene late in private
citizen's FCA action, 31 U.S.C. § 3730(b)(3), it
cannot be that instead of showing good cause the government
can decide to file its own case. (Docket #65 at 5). This
would, in Defendants' view, render the requirement
“toothless.” Id. Defendants emphasize
that allowing the government to bypass the “good
cause” requirement for intervening in Presser's
suit after four years of silence would work substantial
prejudice against them. Id. at 5-6.
reply, Presser seeks to justify the government's failure
to intervene in her case, claiming that the government
initially failed to intervene after the Court did not give it
enough extensions of time to complete its investigation.
(Docket #69 at 2). After the government completed its
investigation, it decided to pursue its own FCA action.
Id. Presser argues that this is not an end-run
around the “good cause” standard, but instead
represents the government's strategic choice among the
options available to it under the FCA. Id.
also challenges the notion that the government has not
participated in this case. Id. She states that when
the Seventh Circuit referred the case to mediation, the
government “took the lead, seeking a global settlement
of all potential claims involving defendants' conduct
offending the False Claims Act.” Id. Presser
further contends that Defendants have always known that the
government has been “aggressively pursuing its own
investigation of them, ” including acquiring documents
from Defendants and conducting witness interviews, suggesting
that the government's new case comes as no surprise to
them. Id. at 3.
next defends her own litigation conduct. She states that
because the government has filed an FCA action based on
similar facts, she is not permitted to pursue her claims
independently. Id. at 3-4 (citing U.S. ex rel.
LaCorte v. Wagner, 185 F.3d 188, 191 (4th Cir. 1999)).
Thus, when Defendants served discovery requests on her ...