We always thought that the decade-old Nargol v. DePuy False Claims Act litigation was a particularly abusive misapplication of the FCA for legal reasons. As discussed here, the primary allegations asserted the same sort of “fraud on the FDA” claim that, when brought as a common-law tort claim, were held preempted in Buckman Co. v. Plaintiffs Legal Committee, 531 U.S. 341 (2001) – that the defendant purportedly misled the FDA to clear a §510(k) medical device, and that, as a result, every use of the device was ipso facto a false claim. No other causation needed. As the earlier post discussed, the First Circuit rightly put an end to that attack on FDA authority in United States ex rel. Nargol v. DePuy Orthopaedics, Inc., 865 F.3d 29 (1st Cir. 2017).
Then it turned out that a lot more was wrong with Nargol than just a bogus legal theory. The relators were p-side “experts,” Antoni Nargol and David Langton, who had access to documents from a couple of MDLs that targeted the defendant’s hip implant products. Critically:
Protective orders regarding confidential [defendant’s] product design information were issued in both of the multidistrict litigation cases (individually, the “ASR protective order” and the “Pinnacle protective order”; collectively, the “Protective Orders”).
United States ex rel. Nargol v. DePuy Orthopaedics, Inc., ___ F.4th ___, 2023 WL 3746534, at *1 (1st Cir. May 18, 2023).
As we’ve already described, these two “experts” in hip implant design decided to go into business for themselves – by using information gleaned from confidential MDL documents to support FCA claims that they personally brought against the defendant as “relators.” However, their use of this information in in this fashion repeatedly violated the aforementioned confidentiality orders, which eventually resulted (after nine years of litigation) in the district court dismissing the entire action as a sanction for these violations. See United States v. Depuy Orthopaedics, Inc., 2021 WL 5831626, at *10 (D. Mass. Dec. 8, 2021) (listing violated court orders). Equally seriously, “[i]t was also contrary to relators’ sworn affidavits that the second amended complaint did not contain confidential information in violation of any relevant court order,” resulting in an adverse inference. Id.
Anyway, we’re pleased to learn that the First Circuit has now affirmed the dismissal in the published decision quoted above. As did the district court, this opinion details the sordid facts of FCA complaints grounded in confidential MDL discovery information taken without approval, directly contrary to an MDL order, followed by untrue affidavits “sworn to under the pains of perjury” attempting to cover-up the earlier violations – all by p-side experts seeking to parlay that information into their own recovery. Id. at *2-5.
On appeal, the would-be relators’ issues were primarily procedural – anything to avoid taking responsibility for their repeated confidentiality violations. They argued first that the burden of proof should have been on the party wronged by their misconduct rather than on them. They lost.
Relators give no reasoning as to why, after receiving multiple warnings over the course of this decade-long litigation, the district court should not do exactly as it promised and place the burden on Relators to show that information contained in the SAC was public at the time of its filing.
Nargol, 2023 WL 3746534, at *6. Relators offered no basis for their contrary argument, “fail[ing] to realize” that after all their years of misconduct, “the district court need not identify newly discovered evidence if it has identified an error of law.” Id.
On appeal from a sanction-based dismissal under Fed. R. Civ. P. 41(b), the “standard of review is not appellant-friendly − and a sanctioned litigant bears a weighty burden in attempting to show that an abuse occurred.” Id. (citations and quotation marks omitted). That is because after “a court has dismissed a case for failure by a party to adhere to court orders,” such sanctioned “parties have not received a sympathetic ear from us.” Id. (citations and quotation marks omitted).
These phony plaintiffs claimed that their violations should be excused because – unbeknownst to them at the time they violated the orders − some of the information was actually in the public domain. That didn’t matter, because they still sought to profit from improperly obtained confidential material. The orders themselves were unambiguous, “Relators were not to use any of the information they learned through their work as experts in the MDLs in this litigation.” Nargol, 2023 WL 3746534, at *7. Indeed, as mentioned above in one instance the ASR MDL judge had flatly denied these same relators’ motion for permission to disclose MDL information.
That some of the information was actually public made no difference, since the relators did not actually rely on “publicly available sources backing their allegations” (which would have defeated their FCA claims). Id. Instead, they engaged in illegal shortcuts.
Relators once again fail to distinguish between confidential documents and the facts underlying those documents. It is true that once any of the information Relators learned as experts subsequently became public knowledge, then Relators would have been free to use that information in their qui tam suit. . . . However, the district court found that Relators did not know that the [device’s] dimensions were public until . . . years after Relators signed the affidavits stating that the SAC did not contain any confidential information.
Nargol, 2023 WL 3746534, at *7 (emphasis added). Not only was there “no error in the district court’s conclusion”; what the relators offered “the alternative would be nonsensical and directly contrary to the purpose of the Protective Orders.” Id. In addition, their factual justifications “lacked credibility.” Id.
Further, these relator/plaintiffs’ conduct fully justified the ultimate sanction of dismissal with prejudice. All circuits, including this one (the First) have their “non-exclusive list of substantive factors to consider when reviewing sanctions orders.” Id. at *8. Nargol looked at: “the severity of the violation,” “the deliberateness . . . of the misconduct,” any “mitigating excuses, the “prejudice to the other side and to the operations of the court,” and the “adequacy of lesser sanctions.” Id.
As for severity:
[D]isregard of court orders qualifies as extreme behavior, and we do not take such insolence lightly. This is particularly true when a plaintiff displays a pattern of repeatedly flouting court orders.
Nargol, 2023 WL 3746534, at *8 (citations and quotation marks omitted). The district court’s findings were that relators’ confidentiality order violations were “repeated” and “evidenc[ed] a pattern of disregarding orders from this and other courts.” Id. Thus, relators’ “recurrent conduct of disregarding the orders of several courts emphasizes the severity of [their] behavior.” Id.
Nargol mentioned no mitigating circumstances.
As for prejudice,
Relators had many opportunities to identify the sources of the information contained in the SAC [second amended complaint]. Relators also certified to the district court, through their affidavits, that the SAC did not contain confidential information. Had Relators not acted in this manner, [defendant] could have potentially identified the [improperly used confidential information] as utilized in the SAC years earlier. Instead, [defendant] had to repeatedly file motions with the district court in an attempt to gather this information from Relators − expending an enormous amount of time and energy.
Nargol, 2023 WL 3746534, at *8.
As for lesser sanctions than dismissal, “where a noncompliant litigant has manifested a disregard for orders of the court and been suitably forewarned of the consequences of continued intransigence, a trial judge need not first exhaust milder sanctions before resorting to dismissal.” Id. Years of litigation had demonstrated the “futil[ity]” of “hold[ing r]elators to their obligations.” Id.
Relators had been on alert for years that the district court was concerned with the use of confidential information. The district court clearly believed, and reasonably so, that given the pattern of disregarding court orders in the face of these warnings, a lesser sanction would have had no deterrent effect on Relators. Therefore, the district court need not resort to a lesser, and likely inadequate, sanction.
Nargol, 2023 WL 3746534, at *8.
Procedurally, “Relators had notice of the possible dismissal, as well as an opportunity to respond.” Id. at *9.
In sum, all the Nargol legal chickens came home to roost.
Except one. As mentioned above, these would-be relators got their start as MDL plaintiffs’ experts. Given how they misused the confidential information they received in the two MDLs, why should they ever receive that kind of opportunity again? Remember them. Should they ever darken the door of medical device (or any other) litigation again, defendants should seriously consider moving to exclude them, or at the very seek a protective order denying them access to any confidential information, for all of the reasons discussed in Nargol. They have no more business being employed in product liability litigation than arsonists do in a fire department.