On July 25, 2025, the Eleventh Circuit Court of Appeals issued an important opinion in a False Claims Act (FCA) qui tam case styled United States ex rel. Sedona Partners LLC v. Able Moving & Storage Inc., et al. (No. 22-13340). Eleventh Circuit Judge Jill Pryor, who wrote the opinion and was joined by Judges Newsom and Lagoa, summarized the issue as follows:
This case is about whether, at the motion-to-dismiss stage, a court may ignore a qui tam relator’s allegations in an amended complaint solely because the relator derived those allegations from material obtained in discovery.
The answer to that question, according to the Eleventh Circuit, is “no.”
The underlying case was an FCA qui tam (whistleblower) lawsuit filed in the Southern District of Florida. The Relator – a Transportation Service Provider (TSP) – alleged that various other TSPs carried out a scheme wherein they obtained fraudulent waivers to the policy that requires TSPs to use American shipping carriers for contract shipments.
After the DOJ declined to intervene in the case, the Relator filed an amended complaint and the defendants filed motions to dismiss. After the District Court denied the defendants’ motion to stay discovery while the motions to dismiss were pending, discovery commenced. A few months later, however, the district court granted the defendants’ motion to dismiss without prejudice, concluding that the amended complaint was inadequate because it made “general allegations against defendants as a group, without pointing to any specific conduct on the part of any of them” and that if failed to allege fraud with particularity as required by Federal Rule of Civil Procedure 9(b).
The Relator then filed a second amended complaint, which included allegations derived from materials that were produced in discovery. The defendants again moved to dismiss, and argued that the allegations based upon information obtained in discovery should be struck under Federal Rule 12(f) and that, without these allegations, the second amended complaint again failed to meet the particularity requirements of Rule 9(b).
Citing the Eleventh Circuit’s 2019 unpublished decision in Bingham v. HCA, Inc. (783 F. App’x 868 (11th Cir. 2019)), the district court agreed with the defendants and struck the allegations that were based on information obtained in discovery. The district court went on to hold that, without those allegations, the Relator’s second amended complaint failed to meet Rule 9(b)’s specificity requirement, and therefore dismissed the second amended complaint. The district court also denied the Relator’s request to file a third amended complaint.
On appeal, the Eleventh Circuit reversed, finding that the district court erred in concluding that, for purposes of a motion to dismiss and Rule 9(b), it could ignore allegations solely because they were based on information obtained in discovery. In doing so, the Eleventh Circuit noted that, because it was unpublished, Bingham was not binding on the court and the court did “not find it persuasive because . . . Rule 9(b) does not prohibit pleaders from using, or courts from considering, allegations based on information obtained during discovery.”
The court based its holding on the text of Rule 9(b), which it noted contained no restriction on the source of the information that may be used to satisfy the rule. “To the contrary,” the court held, “the Federal Rules of Civil Procedure permit a party to amend its pleading to reflect information gained from any source, so long as amendment is otherwise proper under Rule 15.” The court rejected the defendants’ argument that FCA qui tam Relators should be treated differently from any other plaintiff in this regard. The court also rejected the defendants’ policy arguments, noting that “policy arguments cannot supersede the clear text of the rule.”
The Eleventh Circuit then went on to hold that the district court abused its discretion when it struck, under Rule 12(f), the Relator’s discovery-based allegations. The court agreed with Relator’s argument that “Rule 12(f) does not authorize the striking of a complaint’s allegations solely because they were based on information obtained in discovery.”
Given our holding that Rule 9(b) does not bar district courts from considering a relator’s allegations based on information obtained in discovery when the court is deciding a motion to dismiss after discovery has begun, the district court had no basis under Rule 12(f) to conclude the allegations were “redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). Thus, the district court abused its discretion by incorrectly applying Rule 12(f) when it struck allegations from Sedona’s second amended complaint without a basis under the rule to do so.
The Eleventh Circuit’s decision in Sedona Partners is significant in that it allows Relators to file factually-deficient qui tam complaints, conduct discovery while the court is considering the defendant’s motion to dismiss (which often takes months), and then amend the complaint with information obtained in discovery to avoid dismissal. This has the potential to substantially increase the number of frivolous qui tam lawsuits that make their way through discovery and beyond.
FCA defense counsel should consider utilizing other tools to avoid this result, including advocating that the DOJ utilize its dismissal power to dismiss – as opposed to simply decline to intervene in – frivolous qui tams, and to file motions to stay discovery pending the district court’s consideration of a motion to dismiss.
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The attorneys at Chilivis Grubman represent businesses and individuals in connection with False Claims Act investigations and litigation. If you need assistance with such a matter, contact us today.