June 08, 2009

Supreme Court Decides United States ex rel. Eisenstein v. City of New York

On June 8, the Supreme Court decided United States ex rel. Eisenstein v. City of New York, No. 08-660.

Irwin Eisenstein and four other New York City employees filed a lawsuit under the False Claims Act (FCA) against the city. The FCA allowed the United States 60 days to review the lawsuit and decide whether to intervene and proceed with the action. The United States declined to intervene, and the defendants subsequently filed a motion to dismiss the complaint. The district court granted that motion and entered final judgment in favor of the defendants. A party ordinarily has 30 days to file a notice of appeal to the Court of Appeals, but the deadline is extended to 60 days if the United States or one of its officers or agencies is a party to the case. Eisenstein filed his notice of appeal 54 days later. The U.S. Court of Appeals for the Second Circuit therefore concluded that the appeal was not timely and dismissed it.

The Supreme Court affirmed, holding that the normal 30-day time limit applied: "Although the United States is aware of and minimally involved in every FCA action, we hold that it is not a ‘party' to an FCA action for purposes of the appellate filing deadline unless it has exercised its right to intervene in the case." In reaching this conclusion, the Court dismissed several arguments made by the petitioners. First, citing Black's Law Dictionary, the Court stated that a party to litigation is one by or against whom a lawsuit is brought. One may also become a party to litigation by intervening in the action. The United States does not become a party to a privately-initiated qui tam action unless it intervenes in the action.

Nor does it matter, the Court concluded, that the United States is a real party in interest to all FCA actions. A "real party in interest" is a term of art, and has no bearing on whether an entity is a party. Similarly, the Court rejected Eisenstein's argument that the United States is a party to an FCA action because the action must be brought in the name of the government. A person or entity may be named in the caption without being a party to an action.

Eisenstein further argued that the United States should be deemed a party to all FCA actions because it has a right to receive pleadings and deposition transcripts in cases where it declines to intervene. The Court dismissed that argument as well, noting that if the United States were a party to every FCA suit, there would be no need for a separate statutory provision preserving this basic legal right. The fact that the United States is bound by the judgment in all FCA actions, regardless of its participation, also was not determinative. Finally, the Court declined to consider Eisenstein's characterization of the purpose behind Federal Rule of Appellate Procedure, and instead interpreted the text of the rule as it is written.

Justice Thomas delivered the opinion for a unanimous Court.

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