Fla. AG Can Toss 'Frivolous' State FCA Case, Court Told

By Kelly Knaub

Law360, New York (June 11, 2014, 4:05 PM ET) -- The state of Florida argued Wednesday to a state appellate court that it has the authority to dismiss a False Claims Act suit brought against  Motorola Inc. it deemed frivolous, saying it does not need approval from the relator who filed suit.   

Russell S. Kent, of the Office of the Attorney General’s Special Counsel For Litigation, urged a panel of three judges at Florida’s First District Court of Appeal to prohibit a trial court from hearing a motion to strike a July 2013 voluntary dismissal notice by Attorney General Pam Bondi, whose previous attempts to block the hearing were denied by the Leon County Circuit Court.

“The filing of that dismissal notice terminated the litigation, instantly divested the trial court of its jurisdiction and precluded revival of the original action,” Kent told the panel in the closely watched case, which is being monitored by attorneys for its potential impact on qui tam cases throughout Florida.

The hearing was scheduled after relator Zoltan Barati — who filed the qui tam suit against Motorola in 2009 over representations made about a new fingerprinting system — moved to strike the dismissal notice, claiming the attorney general only has the power to dismiss whistleblower suits where she has intervened.

Bondi, however — who was a real party in interest in the case — contends the attorney general has the unconditional right to dismiss a qui tam action under the Florida False Claims Act.

“The dismissal power is there as part of the executive branch’s duty to faithfully execute the law,” Kent said. “It’s really a matter of prosecutorial discretion, which cases — asserting the rights of the state — should go forward.”

Kent said there were many reasons why dismissal may be appropriate, including a drain of agency resources, disruption of the regulatory environment, disclosure of confidential information, the possible creation of bad precedent or even discouraging private businesses from entering into contracts with the state. While Bondi dismissed the Barati case on the grounds that it was frivolous, Kent said it was important to note that the state has full discretion to dismiss even a meritorious qui tam case.

Gary Farmer Jr., who argued on behalf of Barati and amicus Florida Justice Association, told the panel that the Florida FCA gives relators greater rights than the federal statute. He also said that just because the state has declined the action does not mean it was meritless, noting that the state had not interviewed Barati during discovery.

“In September of 2009, the case is filed. The state gets three extensions of time to conduct its investigation under the statute,” Farmer said. “During that time, by the way, it never interviews Barati. So I don’t know how it determined it to be meritless or with merit because it never even sat down with the relator during that time frame.”

Farmer said the state declined the case in March 2010 and, “40 months later, after thousands of documents are produced, depositions are taken, the case is litigated, its notice for trial is set on the trial docket, the state — at the eleventh hour — files its purported notice of voluntary dismissal.”

David W. Moye, an attorney representing Barati, told the panel that the Florida FCA statute limits the power of the attorney general and shot down the contention that she would have no power to address cases deemed to be frivolous.

“These aren’t fishing expeditions” Moye said. “The idea that we’re going to file frivolous suits and the attorney general will have her hands cuffed and not be able to address these problems is without merit.”

The hearing ended with closing arguments from Kent, who said he was troubled by the fact that Farmer was representing both Barati and an amicus party simultaneously.

Kent said the argument that the Florida FCA gives greater rights to the relator “could not be more wrong,” noting that there has never been a successful challenge to a dismissal in a state FCA case, and rejected the argument that the attorney general can only dismiss intervened cases.

When asked by the court what he thought about devoting resources to the case for three and a half years and then having the “rug pulled out from under you,” Kent replied that there were no injuries to the relator and said the case belonged to the state at all times.

“There’s no interest that would prevent dismissal just because you worked up a case on the hope that you may get a profit from it down the road,” Kent said.

Barati, a former Motorola software engineer, alleged the company submitted false certifications to the Florida Department of Law Enforcement that it had complied with the terms of a $7.4 million contract to install a new automated fingerprinting system.

According to court documents, the attorney general said an FDLE employee provided an affidavit stating that the fingerprinting system in question is successful and fully complies with the contract. 

Moye told Law360 on Wednesday that the affidavit was partially retracted by the agency, but said the issue is not about whether or not the system is successful.

“It’s not about whether it works or doesn’t work,” Moye said. “At this time, it’s about whether or not they filed false statements during the time they worked on the contract to obtain milestone installment payments.”

Judges Robert T. Benton II, William Van Nortwick and Bradford L. Thomas sat on the panel.

The state of Florida is represented by Attorney General Pamela Jo Bondi, William W. Large of the Florida Justice Reform Institute, Russell S. Kent of the Office of the Attorney Genera’s Special Counsel For Litigation, William E. Foster of the Office of the Attorney General, and John T. Boese and Kayla Stachniak Kaplan of  Fried Frank Harris  Shriver & Jacobson LLP.

Barati is represented by Mark S. Fistos, Gary M. Farmer Jr. and Gary M. Farmer Sr. of Farmer Jaffe Weissing Edwards Fistos & Lehrman PL; Brian A. Newman and Brandice D. Dickinson of  Pennington PA; David W. Moye and Tracy P. Moye of The Moye Law Firm; and Brian F. LaBovick of LaBovick & LaBovick PA.

The case is Florida v. Barati et al., case number 1D13-4937, in the District Court of Appeal for the First District of Florida.

--Editing by Emily Kokoll.

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