Res Judicata and the Pursuit of Scientific Misconduct Investigations
Benjamin S. Gifford IV,
Esq. and Robert P. Bauchwitz M.D., Ph.D.
Amerandus Research
BNY Mellon Center
1735 Market Street, Suite 3750
Philadelphia, PA 17033
correspondence to: director-legres@amerares.com
Purpose
There are an increasing number of qui tam actions being brought in U.S. federal courts involving
research misconduct. [1]
Evidence obtained in such cases can
be relevant to correction of the scientific literature.[2] However, because of the complexity of
legal terminology regarding the principle of res judicata, plaintiff-relators, scientific publishers, and other non-attorneys
may be misled into believing that the evidence they obtain regarding scientific
misconduct from a legal case cannot be used after a settlement[3]. In this memo, we attempt
to clarify under what conditions evidence obtained from a legal case can be
used after dismissal with prejudice, a common outcome of a lawsuit settlement.
QUESTIONS PRESENTED
1. Whether
dismissal with prejudice implies adjudication of the merits on any basis other
than precluding re-filing of the action?
2. Whether
a defendant can agree to dismiss an action with prejudice as to one co-plaintiff
and without prejudice as to another?
3. Whether
it is common for a plaintiff to agree to a voluntary dismissal with prejudice?
4. Whether
a plaintiffÕs agreement to dismiss a suit with prejudice is an admission that
the suitÕs allegations were frivolous or that the evidence did not substantiate
the claim in question?
5. Whether
DefendantÕs implied claims – that the court did consider the evidence
obtained during discovery or that the plaintiff conceded the allegations were
frivolous – are misrepresentations in the general usage of the term?
6.
Whether, after the court has dismissed a case with prejudice, plaintiffs can
use evidence obtained during discovery in any forum or proceeding other than the
original cause of action?
Brief Answer
1. A
dismissal with prejudice generally precludes the same parties or their privies
from bringing a new legal case under the same cause of action. A
dismissal with prejudice does not necessarily mean a court made findings of
fact in a case, nor does it preclude other parties from litigating the same
cause of action.
2. A
defendant may agree to dismiss one action with prejudice as to some plaintiffs
and without prejudice as to others, but the court must strictly adopt that
provision in its order.
3. It
is common for plaintiffs to agree to a voluntary dismissal with prejudice.
4. A
dismissal with prejudice does not automatically establish that the action was
unreasonable or without foundation, or that the defendants were the prevailing
party.
5. DefendantÕs
implicit claims that the court did consider the evidence obtained during
discovery or that the plaintiff conceded the allegations were frivolous are
misrepresentations in the general use of the term.
6. Absent
a protective order imposed by the court, plaintiffs would be free to use
evidence obtained during discovery in a non-trial forum. Specific
examples relevant to evidence reuse after settlement in scientific fraud cases
are provided:
a.
A plaintiff may, after his suit has been dismissed with prejudice, turn over
evidence obtained during discovery to the university employing the former
defendant, or to a journal or its publisher, for the purpose of initiating a
scientific misconduct investigation.
b. A
defendant cannot threaten to bring a suit against a university or a journal or
publisher conducting an investigation based on evidence received from a
plaintiff whose claim was dismissed with prejudice on the grounds of res
judicata.
c. A plaintiff may, after his suit has been dismissed with
prejudice, turn over evidence obtained during discovery to a United States
agency or official for investigation, though the government's ability to
litigate the same cause of action may depend on whether it was party to the original
dismissal with prejudice.
d. A
party unrelated to the original plaintiffs can bring a suit against the
original defendants for the same factual and legal cause of action after an
earlier suit had settled.
FACTS
Pursuant to
Local Rule 41.1(b) of the Pennsylvania Eastern District, plaintiffs and
defendants agreed to settle a civil suit after discovery had commenced, but
prior to any hearing regarding evidence collected during the process. One of
the two plaintiffs agreed to a voluntary withdrawal with prejudice (hereafter
ÒPlaintiffÓ), while the other agreed only to a voluntary withdrawal without
prejudice. The court approved the
written stipulation of voluntary dismissal and ordered the action dismissed
with prejudice.
After the suit
was dismissed, defendants asserted to others that, because the suit was
dismissed with prejudice, the plaintiffs had conceded that their allegations
had been without merit or that the evidence obtained during discovery had been
considered by the Court in ordering the dismissal.
Plaintiff contends that the motivation
for the settlement was that the district judge had reduced the period for
discovery to less than the time that had been agreed to by the parties[4], and on the day of
settlement he had rejected motions requesting an extension of discovery. There
is no record that Plaintiff conceded that there was ever any evidence found to
undermine the merits of the case.
DISCUSSION
I.
A dismissal with prejudice does not necessarily mean that
there were any findings of fact in a legal case.
A
settlement between the plaintiffs and defendants in a lawsuit can generally be
made on a voluntary basis at any time prior to a final judgment. Under such
circumstances, as part of the settlement, the parties may agree to forgo
further litigation of certain claims[5], and the judge may order
the case dismissed "with prejudice." The latter term has
implications as to what further lawsuits may be brought between the parties.
The preclusive effects of a settlement followed by case dismissal with
prejudice can be generally described by the term "res judicata".[6]
"The preclusive effect of a judgment
is defined by claim preclusion and issue preclusion, which are collectively
referred to as 'res judicata.'"[7] The Supreme Court in Taylor made note of the "confusing
lexicon" of terms related to res judicata.[8] Consistent with that concern, the term
"res judicata" is often used to mean only Òclaim preclusion.Ó[9]
As it
is a "cause of action" that is being precluded, it is important to
note that this term can also have different meanings, which can cause further
confusion as to what is being precluded. More specifically, Òcause of actionÓ
can refer to "facts which give a
plaintiff the right to bring a legal action against another"[10], or it can refer to
"the legal theory forming the
basis of a lawsuit."[11] The term "claim" is synonymous
with cause of action.[12]
The
cause of action that is being precluded by "res judicata" (claim
preclusion) is based on a "common nucleus of facts," regardless of
the number of legal theories under which those facts could be litigated:
In the days when civil procedure still bore the
imprint of the forms of action and the division between law and equity, the
courts were prone to associate claim
with a single theory of recovery, so
that, with respect to one transaction, a plaintiff might have as many claims as
there were theories of the substantive law upon which he could seek relief
against the defendant ... The present trend is to see claim in factual terms
and to make it coterminous with the transaction
regardless of the number of substantive theories, or variant forms of relief
flowing from those theories, that may be available to the plaintiff; regardless
of the number of primary rights that may have been invaded; and regardless of
the variations in the evidence needed to support the theories or rights. The transaction is the basis of the
litigative unit or entity which may not be split. . . . The expression Òtransaction, or series of connected
transactions,Ó is not capable of a mathematically precise definition ... In
general, the expression connotes a natural grouping or common nucleus of operative facts.[13]
Claim
preclusion, sometimes used synonymously with "res judicata" (as noted
above, and henceforth in quotes), does not necessarily address whether there
were actually any findings of fact.[14] Though a dismissal with prejudice is
considered an adjudication on the merits for the purposes of res judicata, such
an adjudication does not necessarily mean that a court considered the facts of
the case when deciding to dismiss.[15]
While
a settlement agreement that includes a voluntary dismissal with prejudice may
operate as if it had been "on the
merits"[16],
many such settlements are in fact made prior to trial or any findings of fact
and without any stipulation by the parties as to facts or concessions. For this
reason, the Restatement (Second) of Judgments, 1982, does not use the term
"on the merits" because of
its potential to mislead:
It is frequently said that a valid and final
personal judgment for the defendant will bar another action on the same claim only if the judgment is rendered Òon the
merits.Ó The prototype case continues to be one in which the merits of the
claim are in fact adjudicated against the plaintiff after trial of the substantive issues. Increasingly, however, by
statute, rule, or court decision, judgments
not passing directly on the substance of the claim have come to operate as a bar. Although such judgments are often
described as Òon the meritsÓ or as Òoperating as an adjudication on the merits,Ó
that terminology is not used here in the statement of the
general rule because of its possibly
misleading connotations.[17]
The
distinction as to whether there has been a weighing of facts is important, as
it determines whether there will be any collateral
estoppel of further actions between the parties. Collateral estoppel, which
is synonymous with "issue preclusion," refers to "the binding
effect of a judgment as to matters actually litigated and determined in one
action on later controversies between the parties involving a different claim
from that on which the original judgment was based."[18] "Under the
doctrine of res judicata, a judgment Ôon the meritsÕ in a prior suit involving
the same parties or their privies bars a second suit based on the same cause of
action. Under the doctrine of collateral estoppel, on the other hand, such a
judgment precludes relitigation of issues actually litigated and determined in
the prior suit, regardless of whether it was based on the same cause of action
as the second suit."[19] [20]
Therefore, while "res
judicata" (claim preclusion) acts in a technical sense as if there had
been a judgment "on the merits", it can be distinguished from
collateral estoppel (issue preclusion), as further illustrated in Lawlor:
Pursuant to
the settlement, the suit was dismissed Òwith prejudiceÓ by court order. No findings of fact or law were made . .
. . [T]he 1943 judgment dismissing the previous suit Òwith prejudiceÓ bars a
later suit on the same cause of action.
It is likewise true that the judgment was unaccompanied by findings and
hence did not bind the parties on any
issue—such as the legality of the exclusive license agreements or
their effect on petitionersÕ business—which might arise in connection
with another cause of action.[21]
Consequently, "a fact
or point must have been litigated (by the parties), determined (by the
tribunal), and necessarily so determined before the parties will be bound
collaterally upon it"; and, "a
consent judgment should not be given any effect as collateral estoppel except
in the rare case where it may fairly be said that the parties intended this
effect."[22]
In summary, the party seeking to invoke claim preclusion must show
that there has been Ò(1) a final judgment on the merits in a prior suit involving
(2) the same parties or their privies[23] and (3)
a subsequent suit based on the same cause of action.Ó[24] Absent
the same cause of action, the same parties or their privies could sue one
another, except that facts actually litigated in the first case could not be
relitigated in the second.
What constitutes a Òcause of actionÓ
in a research misconduct qui tam
suit, e.g. one brought under the federal False Claims Act (31 U.S.C. ¤¤ 3729
– 3733), has been further specified in recent case law as the transactional nucleus of facts associated
with a specific grant:
The false claims asserted in both
the Government's Complaint-In-Intervention and the current complaint arise from the same nucleus of operative
fact. . . . [T]o the extent that the false claims against Cornell Medical
are based on [those facts], they are foreclosed by res judicata.
Plaintiff does, however, set forth allegations with respect to a
different federal grant . . . [and] [t]o the extent that plaintiffs false
claims relate to this grant, they are not barred by res judicata because
false statements and claims made in connection with a different grant would not
be part of the same transactional nucleus of fact.[25]
It is also of note that "res judicata" (claim
preclusion) may also apply to any cause of action that could have been brought
in the original suit:
The federal
courts have traditionally adhered to the related doctrines of res judicata and
collateral estoppel. Under res
judicata, a final judgment on the merits of an action precludes the parties or
their privies from relitigating issues that were or could have been raised in that action. Under collateral estoppel, once a court
has decided an issue of fact or law necessary to its judgment, that decision
may preclude relitigation of the issue[26]
in a suit on a different cause of action involving a party to the first case.[27]
The United States Supreme
Court has also said:
But where the
second action between the same parties is upon a different claim or demand, the
judgment in the prior action operates as an estoppel only as to those matters in issue or points controverted, upon the determination of which the finding
or verdict was rendered. In all cases, therefore, where it is sought to
apply the estoppel of a judgment rendered upon one cause of action to matters arising in a suit upon a different
cause of action, the inquiry must always be as to the point or question actually litigated and determined in the original action, not what might have been thus litigated and determined. Only upon
such matters is the judgment conclusive in another action.[28]
Furthermore,
while a particular party or its privies (see following) may be precluded from
refiling a suit after a settlement and dismissal with prejudice, the same is
not the case for a different party:
A
person who was not a party to a suit generally has not had a Òfull and fair
opportunity to litigateÓ the claims and issues settled in that suit. The
application of claim and issue preclusion to nonparties thus runs up against
the deep-rooted historic tradition that everyone should have his own day in
court. Indicating the strength of
that tradition, we have often repeated the general rule that Òone 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.[29]
Thus, Òif 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.Ó[30]
In addition, res judicata may not apply to
claims or parties not specified in a settlement agreement, even though those
claims and parties were part of the original case. In Sarafoglou v. Weill Medical College, the
New York Southern District Court held that where there was no specific
litigation of claims and a settlement agreement that only specified some
original claims and parties but not others[31], res
judicata precluded only those claims and parties specified in the settlement
agreement.[32] The Court went on to note that Òpartial
interventions are allowed where the Government intervenes as to certain claims,
or as to certain defendants.Ó[33]
Thus,
a settlement by the government can bind the plaintiff-relator, even if the latter
does not agree to the terms, and conversely, a settlement in a non-intervened
case can bind the government and preclude it from a subsequent action. However,
if there is an explicit settlement agreement in which different terms were
agreed with respect to the relator and the U.S., then those terms will likely
prevail.
Finally,
the terms of a settlement agreement are only one of many bases by which qualifications
or exceptions to res judicata may occur. ÒThe res judicata doctrine may be
qualified or even rejected when its application "would contravene an
overriding public policy or result in manifest injustice."[34] Consistent with this concern, the
Restatement (Second) of Judgments states that:
[It is] inappropriate that all judgments
be treated as absolutely inviolable. Particularly
is this true when a judgment has been procured by the fraud of the successful
party. To immunize such a judgment from attack is to compound the injustice
of its result on the merits with the injustice of the means by which it was
reached. Equally important, if judgments
were wholly immune it would give powerful incentive to use of fraudulent
tactics in obtaining a judgment. A litigant would know that if he could sustain duress or deception through the moment of finality, the
benefit of the judgment would be his forever.[35]
In
addition to fraud occurring during the legal case, there are a number of other
bases by which res judicata may be found not to apply. Such circumstances are often codified in
statutory law, such as Rule 60(b) of the Federal Rules of Civil Procedure[36]
and comparable state statutes.
II.
A defendant may agree to
dismiss an action with and without prejudice as to two separate parties, but
the judgeÕs order should reflect that agreement exactly.
A
defendant can agree to dismiss one plaintiffÕs claims with prejudice and
another without. The Second Circuit
has held that a settlement agreement is a contract that, once entered into, is
binding and conclusive.[37] Courts have the inherent authority to
enforce a settlement agreement.[38] However, a court does not have the power
prior to trial to Òmodify a proposed consent decree and order its acceptance
over either partyÕs objection.Ó[39] A court has three options when presented
with a settlement agreement: (1) accept the proposed agreement; (2) reject the
proposed agreement and delay the trial to allow time for a new agreement to be
reached; or (3) decide to move to trial.[40] Thus, while a defendant can dismiss a
case with multiple plaintiffs with prejudice as to some and without prejudice
as to others, the settlement agreement reflecting that decision must be
strictly enforced by the court and cannot be altered. Any alteration will likely lead to a meritorious
appeal to vacate the order.
III.
It is common for plaintiffs to agree to a voluntary
dismissal with prejudice
The
available information about settlement agreements is mainly anecdotal, as accurate
empirical data about rates and frequency of settlement may not exist.[41] Roughly forty-four percent of all cases
settle pursuant to a Stipulation of Dismissal. Id.
In order to obtain an estimate of
the percentage of cases that invoked a voluntary dismissal with prejudice to
those that invoked a voluntary dismissal without prejudice, a comparison of
case law searches for the phrases Òvoluntary dismissal with prejudiceÓ vs.
Òvoluntary dismissal without prejudiceÓ was made[42].
The results supported a near
equivalence of the frequency of published cases invoking dismissal with
prejudice as without: for the Eastern District of Pennsylvania, fifteen cases
mentioned Òvoluntary dismissal with prejudice,Ó while twenty-two mentioned
Òvoluntary dismissal without prejudiceÓ (forty-one percent with prejudice); for
all U.S. jurisdictions, thirty-seven percent of cases discussed the term
Òvoluntary dismissal with prejudice.Ó Of the total of 3,985 cases from all
jurisdictions since 1950, only 104 mentioned both phrases.
One
possible reason for the relatively high percentage of settlement agreements
made with prejudice is that defendants may insist upon such a stipulation so as
to ensure at least some res judicata effect.[43] Cases found in searches for the term
Òvoluntary dismissal with prejudiceÓ also suggest that another reason
plaintiffs choose to dismiss with prejudice is to allow an appeal, as "appellate
courts treat a voluntary dismissal with prejudice as an appealable order if it was entered after an adverse ruling by
the trial court in order to expedite an appeal of the ruling."[44]
IV. A dismissal with prejudice does not
automatically establish that the action was unreasonable or without foundation,
or that the defendants were the prevailing party.
Case
law supports the proposition that Òthe mere dismissal of the plaintiffÕs suit
will not establish that the underlying claim was frivolous, unreasonable, or
groundless.Ó[45] The United States Supreme Court has held
that a plaintiff is only considered a Òprevailing partyÓ when Òactual relief on
the merits of his claim materially alters the legal relationship between the
parties by modifying the defendantÕs behavior in a way that directly benefits
the plaintiff.Ó[46]
In the
case at hand, there is no evidence in the record[47] of any hearing or other
consideration of new evidence obtained during discovery. The Plaintiff stated his ultimate motivation
for the settlement was the reduction of the period for discovery by the Court
to less than adequate time to prosecute the claim[48], and on the day of settlement
the Court had rejected motions requesting an extension of discovery. At no time
did the Plaintiff concede that there was ever any evidence found to undermine
the merit of the case, nor did the Court make any determination to that effect.
It is also
unlikely that Plaintiff had conceded that his initial suit was frivolous in
agreeing to dismiss with prejudice because having been represented by counsel
in filing his suit, his attorney had an ethical responsibility not to bring an
action without a basis in law and fact.
Attorneys have a duty not to pursue baseless claims or frivolous issues.[49] This requirement has been
codified as well, providing:
A
lawyer shall not bring or defend a proceeding, or assert or controvert in issue
therein, unless there is a basis in law and fact for doing so that is not
frivolous, which includes a good faith argument for an extension, modification
or reversal of existing law.[50]
Violation of this rule
can result in disciplinary sanctions imposed on the attorney.[51]
Additionally,
it is a violation of the Federal Rules of Civil Procedure for a party to file a
claim that is not warranted by existing law or that is frivolous in nature.[52] The Rules also require that all factual
contentions have evidentiary support at the time of filing or that such
contentions are likely to have support after a reasonable opportunity for
further investigation and discovery.[53] Violations of these rules can result in
sanctions imposed by the court.[54]
Finally,
with respect to new evidence obtained during discovery, not only were there no
hearings or rulings on such evidence, nor concessions or stipulations regarding
such, but also at the time of settlement, the U.S. AttorneyÕs Office did not
agree to dismissal with prejudice, consistent with the possibility that it did not
believe the case lacked merit sufficient for consideration of filing the cause
of action again.
V. DefendantÕs claims that the
court considered the evidence obtained during discovery or that the plaintiff
conceded the allegations were frivolous are misleading.
In
entering its order of dismissal, there is no record that the court in the case considered
any evidence obtained during discovery.
No hearing regarding such evidence had taken place by the time the suit
was dismissed. Any claim made by
the defendant to the contrary would therefore be inaccurate. Because the plaintiffs did not concede
their claim was without merit and the court did not consider any evidence
obtained during discovery, defendant has misrepresented events if they told
third parties the opposite.[55]
Although
one plaintiff agreed to a dismissal with prejudice, the facts support a
conclusion that he did so because of restrictions placed on discovery. Further,
in the case for which a second plaintiff, the United States, only agreed to
dismiss without prejudice, any claim that the government agreed to dismiss with
prejudice would be false. As such,
defendantÕs assertion that either Plaintiff conceded his claim was without
merit is inaccurate.
VI. Absent a protective order
imposed by the court, plaintiffs would be free to use evidence obtained during
discovery in a non-trial forum.
Assuming
that Plaintiffs simply wish to use the evidence they obtained through discovery
in an alternative forum, what the defendant says regarding the merits of
plaintiffsÕ original case or actions taken by the court is irrelevant.[56]
The
evidence from the settled case could even be used in another trial. For
example, if plaintiffs[57]
wanted to file a different cause of action against the defendant that included
the evidence obtained during the discovery process from the first suit, they
would be free to do so, as a court would consider the evidence used by
plaintiffs in the second suit regardless of whether plaintiffsÕ prior claim had
merit or the court in that suit considered said evidence.[58]
In particular, Ò[m]aterial
operative facts occurring after the
decision of an action with respect to the same subject matter may in
themselves, or taken in conjunction with
the antecedent facts, comprise a transaction which may be made the basis of
a second action not precluded by the
first.Ó[59] Thus, facts involved in the original
case could be used in a new action based on new facts that occurred after the
end of the original case.[60]
A dismissal with prejudice reveals nothing about whether there had
been findings of fact or any concessions by the parties.[61] Although such facts or concessions can be
stipulated in the settlement agreement, no such stipulations exist in the
present case.[62]
Finally,
it should be noted that even if a civil case, such as an action brought under
the False Claims Act[63], were res judicata as to
subsequent civil actions, the government would not be precluded from bringing a
criminal action subsequently, nor would a civil action be precluded by a prior
criminal action on the same facts.
Specific
examples relevant to evidence reuse after settlement in scientific fraud cases:
1a. Whether
a plaintiff may, after his suit has been dismissed with prejudice, turn over
evidence obtained during discovery to the university employing the former
defendant for the purpose of initiating a scientific misconduct investigation?
1b. Whether
a plaintiff may, after his suit has been dismissed with prejudice, turn over
evidence obtained during discovery to a journal or its publisher for
investigation?
The
Federal Rules of Civil Procedure allow a party in a civil suit to request
evidence through the discovery process.[64] There is generally no confidentiality
associated with the evidence obtained through discovery.[65] However, any Òparty or person from whom
discovery is sought[66] may move for a protective
order in the court where the action is pending.Ó[67]
The
Rules do not contain any explicit time limit for filing a motion for a
protective order.[68] Such a motion for protection, however,
must be timely filed.[69] This requirement for timeliness usually
means a party must file the motion at least during the period set for
discovery.[70]
Although
the Rules provide eight ways in which a protective order can be fashioned if
Ògood causeÓ[71]
exists[72], courts are not limited
merely to the methods as pronounced in the Rules.[73] ÒThe rules . . . permit the broadest
scope of the district court to decide what restrictions may be necessary in a
particular case.Ó[74] This discretion allows courts to issue
protective orders to Òlimiting [the] use of the materials [obtained through
discovery] to the present lawsuit.Ó[75]
The
absence of such a protective order, however, would allow a plaintiff to
disclose evidence obtained through discovery in any manner he so chooses.[76] Thus, absent a protective order
prohibiting such conduct, it would be within a plaintiffÕs rights to turn over
evidence collected during the discovery process to a defendantÕs employer for
the purpose of initiating a scientific misconduct investigation, regardless of
whether the suit was dismissed with prejudice.
Furthermore,
claim preclusion (res judicata) only bars
new litigation; it does not bar appeals of concluded litigation[77] or, potentially, agency
action. [78] Therefore, the university, publisher, or
other investigatory body or government agency would not be precluded from using
the evidence obtained during a civil case, regardless of how the case was
settled. This would be true even if an investigation, such as under the Public Health Service Policies on Research
Misconduct (42 CFR Parts 50 and
93) were to lead to former defendants, now respondents, to appeal an
adverse decision to a governmental
appeals board.
2a. Whether
a defendant can threaten to bring a suit against a university conducting a
scientific misconduct investigation on the grounds of res judicata or
collateral estoppel?
2b. Whether
a defendant can threaten to bring a suit against a journal or publisher conducting
an investigation based on evidence received from a plaintiff whose claim was
dismissed with prejudice on the grounds of res judicata or collateral estoppel?
A
defendant would not be able to bring a suit against a university, a journal, or
a publisher conducting a scientific conduct investigation alleging res judicata
or collateral estoppel. Res
judicata and collateral estoppel are affirmative defenses as enumerated by the
Federal Rules of Civil Procedure.[79] Affirmative defenses must be timely raised,
or else a party waives it.[80] Res judicata and collateral estoppel
cannot be used as the basis of a lawsuit to prohibit an individual from using
evidence obtained through a settled lawsuit.[81] Because res judicata and collateral
estoppel are affirmative defenses and not claims a party can assert in an
initial action against another, a defendant cannot threaten such an action
against a university, journal, or publisher conducting a scientific misconduct
investigation.
3. Whether a plaintiff may, after his suit has been dismissed
with prejudice, turn over evidence obtained during discovery to a United States
agency or official for investigation where the government was previously
involved in investigating the prior cause of action but was not party to the
dismissal with prejudice?
Though plaintiff would be able to turn over
evidence to the government after his qui tam suit was dismissed with prejudice,
the doctrine of res judicata might preclude the government from bringing its
own suit against defendant for the same claim.[82] The Supreme Court has stated that Òone
who prosecutes or defends a suit in the name of another to establish and
protect his own right, or who assists in the prosecution or defense of an
action in aid of some interest of his own . . . is as much bound . . . as he
would be if he had been a party to the record.Ó[83] Because the government has an interest
in any qui tam suit brought by a relator, claim preclusion and possibly
collateral estoppel would apply to any claims settled by a relator on behalf of
the government such that Òdisposing of the action would as a practical matter
impair or impede the governmentÕs ability to protect its interest.Ó[84] Therefore, while a relator can turn over
any evidence obtained during the discovery process to the government, the
government might be precluded from initiating another civil suit against the
defendant based solely on that evidence.
In addition, the plaintiff would generally
be barred by res judicata from attempting to bring an action in an administrative
tribunal "engaged in deciding specific legal claims or issues through a
procedure substantially similar to those employed by courts", i.e. one
engaged in adjudication."[85] However, not only must the elements of
adjudicatory procedure[86] be present, but there
must be a claim of entitlement under substantive law. Similarly, if the case
had first been brought in an administrative tribunal of the government acting
under adjudicatory procedure upon a specific legal claim, then res judicata
could apply to a subsequent attempt to bring the same claim in a judicial
tribunal by the same parties or their privies (e.g. the government).
4. Whether a party unrelated to the original
plaintiffs could bring a suit against the original defendants for the same
factual and legal cause of action after an earlier suit had settled
without judgment regarding facts or
law?
Yes.
Claim preclusion (res judicata) only bars claims brought by the same party or
its privies. A new party,
completely unrelated to the initial plaintiff, could sue the defendant for the
exact same thing. In theory, both
the underlying facts and the legal theory could be part of a completely
identical cause of action. However, in a False Claims Act case, there might be
impediments such as the need for the new plaintiff to show that he/she, too,
was an original source (31 U.S.C. ¤¤ 3729 –
3733), the statute of limitations specified by the law, and perhaps most
significantly, that the United States again would be a real party in interest,
and thereby for this reason alone the new action might be blocked by res
judicata.
SUMMARY
Many
legal actions brought in the United States settle prior to trial. In such
cases, there may have been no actual consideration of facts or new evidence. In
cases settled and then dismissed "with prejudice", the action is
treated as if its merits had been considered, even when the factual or evidence-related
merits had not in reality been adjudicated. A dismissal with prejudice, absent
any findings of fact or specific concessions by the parties, does not determine
whether the original allegations were valid or not. The purpose of "res
judicata", or claim preclusion, is to facilitate judicial economy and
bring an end to litigation between specific parties. Therefore, an original
plaintiff or her associates ("privies") could not bring another civil
suit based upon the same cause of action, i.e. the same facts or legal theory.
This most likely would include not only facts and legal theories that were brought
in the original case, but also those that could have been brought in that case.
The original plaintiff, however, could bring a new suit against the original
defendants for a new cause of action that involved a different set of facts
than that of the first suit, and they could then include facts from the
original case in support of the latter. Unrelated plaintiffs could bring a new
suit against the original defendants based on the original cause of action and
exactly the same facts, i.e. they would be allowed their own day in court
regardless of a suit by others on the same points.
With
respect to evidence obtained during the original case, it could be used in a
new trial; however, if the defendants could show that there had been some
judicial finding or jury verdict on such evidence, the import of such evidence
could not again be litigated with respect to the original parties, even though
it could be introduced. Outside of
a new legal case, there would be no restrictions, absent a prior protective
order in the original case, that would impede the use of evidence from the
original case in any subsequent investigation of the defendants on exactly the
same facts alleged originally.
ENDNOTES
EN1
- Cause of Action - definitions and
further explications
Abbreviations:
1) from Black's Law Dictionary, Ninth
Ed., 2009 (Bl.)
2) from Restatement (Second) of Judgments
1982 (Rest.Sec.Judg.)
A) Black's Law Dictionary,
Ninth Ed., 2009:
cause of action Ò1.
A group of operative facts
giving rise to one or more bases for suing; a factual situation that entitles
one person to obtain a remedy in court from another person; CLAIM. 2.
A legal theory of a lawsuit."
(Bl.; emphasis added.)
claim, n. "1. The aggregate of operative
facts giving rise to a right enforceable by a court <the plaintiff's short,
plain statement about the crash established the claim>." (Bl.)
operative fact. See FACT. (Bl.)
fact "1. Something that actually exists;
an aspect of reality <it is a fact that all people are mortal>. Facts
include not just tangible things, actual occurrences, and relationships, but
also states of mind such as intentions and opinions." (Bl.)
B) Additional case law:
The Third
Circuit has stated Òthat the term Ôcause
of actionÕ cannot be precisely defined, nor can a simple test be cited for
use in determining what constitutes a cause of action for res judicata
purposes.Ó[87] There are various factors, however, the
court may consider when determining whether multiple suits involve the same
cause of action.[88] ÒThese factors are the components of Ôan essential similarity of the underlying
events,Õ and thus provide sufficient guidance for assessing when there is not a single cause of action.Ó[89] The court may consider:
(1) Whether the
acts complained of and the demand for relief are the same (that is, whether the
wrong for which redress is sought is the same in both actions); (2) whether the
theory of recovery is the same; (3) whether the witnesses and documents
necessary at trial are the same (that is, whether the same evidence necessary
to maintain the second action would have been sufficient to support the first);
and (4) whether the material facts
alleged are the same.[90]
Thus, a common nexus of facts
cannot be the subject of multiple suits; they must all be consolidated in one
action.
C) The Restatement (Second) of Judgments states:
When a valid and final
judgment rendered in an action extinguishes the plaintiff's claim . . . the claim extinguished includes all rights
of the plaintiff to remedies against the defendant with respect to all or any
part of the transaction, or series of
connected transactions, out of which the action arose. When a defendant is
accused of successive but nearly
simultaneous acts, or acts which though
occurring over a period of time were substantially of the same sort and
similarly motivated, fairness to the defendant as well as the public
convenience may require that they be dealt with in the same action. The events
constitute but one transaction or a connected series. ... [For example:] When a
person trespasses daily upon the land of another for a week, although the owner
of the land might have maintained an action each day, such a series of
trespasses is considered a unit up to the
time when action is brought.[91]
Note that if the same plaintiff were to bring a second case
against the same defendants, a court looking at res judicata retrospectively
might try to establish whether the claim could have been brought in the
original action, e.g. by amendment of the original claim. Therefore, it may be
safer to conclude that such trespasses, or often in the case of research
misconduct qui tam cases, successive grant progress reports, might be
considered a unit for res judicata purposes through the time of settlement or
judgment.
There is an exception to the above, which has to do with financial
considerations:
On the other hand, when there is an undertaking,
for which the whole consideration has been previously given, to make a series of payments of money—perhaps
represented by a series of promissory notes, whether or not
negotiable—the obligation to make each payment is considered separate
from the others and judgment can be obtained on any one or a number of them
without affecting the right to maintain an action on the others. The same
applies to the obligations represented by coupons attached to bonds or other
evidences of indebtedness which are similarly considered separate.[92]
This is important for
scientific misconduct pursued through the False Claims Act, since it means that
each submission for an annual payment from a grant is a separate claim, and
that any other submissions of false claims, even for contemporaneous grants,
would not necessarily be precluded by res judicata.
EN2 - Res
judicata and related definitions
From
Black's Law Dictionary, Ninth Ed., 2009 (Bl.):
res judicata "1. An issue that has been
definitively settled by judicial decision. 2. An affirmative defense barring
the same parties from litigating a second lawsuit on the same claim, or any
other claim arising from the same transaction or series of transactions and
that could have – but was not – raised in the first suit."
affirmative defense "A defendant's assertion of facts
and arguments that, if true, will defeat the plaintiff's or prosecution's
claim, even if all the allegations in the complaint are true. The defendant
bears the burden of proving an affirmative defense. Examples of affirmative
defenses are É insanity and self-defense. Also termed plea in avoidance; plea in
justification." [An affirmative defense relevant to qui tam cases
could be based on the statute of limitations.]
negative defense "A defendant's outright denial of
the plaintiff's allegation without additional facts pleaded by way of
avoidance."
EN3
– Issue and Issue Preclusion
A) Definitions of Issue
"A legal point of dispute between
two or more parties to the litigation which, if it is a matter of law, should
be resolved by the court, or if it is a matter of fact, should be resolved by
the jury." (Gilbert Law Dictionary, 1997).
"A point
in dispute between two or more parties. ... 'when a fact is alleged in the
complaint and denied in the answer, the matter is then put in issue between the
parties'" (quoting 35A C.J.S. Federal
Court Procedure ¤ 357, at 541 (1960). (Bl.)
B) Restatement (Second) of Judgments ¤ 24:
"Issue preclusion
(Subsection (3)). A valid and final
personal judgment, whether in favor of the plaintiff or of the defendant, has a
further effect—that of issue preclusion. In a subsequent action between
the parties, the judgment generally is conclusive as to the issues raised in the
subsequent action if those issues were
actually litigated and determined in the prior action and if their
determination was essential to the judgment. When the subsequent action is on a different claim, this effect of the
judgment is sometimes designated a collateral estoppel. When an issue is actually litigated and
determined in an action, the determination is also generally conclusive in
any subsequent action between the parties
on the same claim. This effect of the judgment is sometimes designated a direct estoppel. Ordinarily, after a
judgment is rendered in an action, the
claim is extinguished by the judgment's bar or merger effect, and therefore it
is impossible to maintain a subsequent action on the claim. But there are
exceptions. For example, when a
judgment for the defendant is based on lack of jurisdiction, improper venue, or
nonjoinder or misjoinder of parties, the plaintiff is not precluded from
maintaining another action on the claim (see ¤ 20(1)). Also, when the defendant
interposes a counterclaim on which an affirmative judgment in his favor is not
permitted to be rendered, and he obtains judgment on the counterclaim, he is
not precluded from subsequently maintaining an action on his claim to secure
further relief (see ¤ 21(2))." (Restatement (Second) Judgments ¤ 17).
EN4 - Settlement agreement and
complaint-in-intervention in:
UNITED STATES of America ex rel. Kyriakie SARAFOGLOU, Plaintiff, v. WEILL
MEDICAL COLLEGE OF CORNELL UNIVERSITY, New York-Presbyterian Hospital, Antonio
M. Gotto, Jr., M.D., Barbara Pifel, Maria I. New, M.D., Lauren Beamud, Susanna
Cunningham-Rundles, Noel Maclaren, M.D., Gregory Siskind, M.D., Michael
Wajnrajch, M.D., Madeleine Harbison, M.D., Patricia Giardina, M.D., and James
Bussel, M.D., Defendants. No. 03 Civ. 6761(DC). United States District Court,
S.D. New York. September 12, 2006.
"Plaintiff filed a sealed complaint
against Cornell Medical, the individual defendants, and NYPH under the qui
tam provisions of the FCA in September 2003 (the "Original
Complaint"). (Tiska Decl. Ex. D). The Original Complaint alleged that the
defendants made false statements to the United States to obtain federal
research funds (id. ¦¦ 31-103), and further, that these defendants
retaliated against Dr. Sarafoglou when she told her supervisors that she was
concerned about the misrepresentations (id. ¦¦ 104-26).
In
June 2005, approximately two years after the Original Complaint was filed, the
Government filed a Notice of Election to Intervene, in which it notified the
Court that it was electing "to partially intervene and proceed with this
action" against Cornell Medical. (Tiska Decl. Ex. F). In its Complaint-In-Intervention,
the United States asserted claims against Cornell Medical alone, for violations
of the FGA, common law fraud, unjust enrichment, and payment made under mistake
of fact. (Tiska Decl. Ex. G. ¦¦ 134-56).
At
the same time that the United States filed its Notice of Election to Intervene,
it also submitted a Stipulation and Order of Settlement and Dismissal (the
"Settlement Agreement") that it entered into with Cornell Medical.
(Tiska Decl. Ex. H). According to the Settlement Agreement, "the United
States and [Cornell Medical] mutually agree to reach a full and final
settlement and compromise of the claims that the United States asserts against
[Cornell Medical] based on the Covered Conduct." (Tiska Decl. Ex. H ¤
II.F).
The
Settlement Agreement defined "Covered Conduct" as the conduct
occurring during the period between December 1995 through November
2003—when Cornell Medical applied to the NIH for Grant 5M0 and allegedly
submitted false statements and claims in connection with that grant. (Id.
at ¤ II.C). The Settlement Agreement also referenced the
Complaint-In-Intervention for a more descriptive account of the "Covered
Conduct." (Id.).
Neither
the Settlement Agreement nor the Complaint-In-Intervention addressed Cornell Medical's
conduct with respect to retaliation. They also did not address any false claims
in connection with Grant HDO for research projects on androgen metabolism."
U.S. ex rel. Sarafoglou v. Weill Med. Coll., 451 F.Supp.2d 613, 618
(S.D.N.Y. 2006).