US Ex Rel. Hrayr Shahinian, Md v. Kimberly-Clark Corp. ( 2020 )

FILED
NOT FOR PUBLICATION
JUN 4 2020
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES ex rel. HRAYR No. 18-56532
SHAHINIAN, M.D., F.A.C.S., an
individual; on behalf of the United States D.C. No.
of America, the District of Columbia, the 2:14-cv-08313-JAK-JPR
City of Chicago, and the states of
California, Colorado, Connecticut,
Delaware, Florida, Georgia, Hawaii, MEMORANDUM*
Illinois, Indiana, Iowa, Louisiana,
Massachusetts, Michigan, Minnesota,
Montana, Nevada, New Jersey, New
Mexico, New York, North Carolina,
Oklahoma, Rhode Island, Tennessee,
Texas, Virginia, Washington, and
Wisconsin (collectively, Plaintiff),
Plaintiff-Appellant,
v.
KIMBERLY-CLARK CORPORATION, a
Delaware Corporation,
Defendant-Appellee.
Appeal from the United States District Court
for the Central District of California
John A. Kronstadt, District Judge, Presiding
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Submitted April 15, 2020**
Pasadena, California
Before: THOMAS, Chief Judge, and FERNANDEZ and W. FLETCHER, Circuit
Judges.
Hrayr Shahinian appeals the district court’s judgment in his False Claims
Act1 qui tam action against Kimberly-Clark Corporation (KC) for alleged
misrepresentations about its MICROCOOL* Breathable High Performance
Surgical Gowns. The district court dismissed the action on the ground that
substantially the same allegations and transactions had already been publicly
disclosed from the news media in counterclaims filed in earlier litigation between
KC and Cardinal Health (the Cardinal Counterclaims). See 31 U.S.C.
§ 3730(e)(4)(A)(iii); United States ex rel. Mateski v. Raytheon Co., 816 F.3d 565,
569–70 (9th Cir. 2016). The district court erred. We vacate and remand.
Construed in the light most favorable to Shahinian,2 his complaint made
allegations about a new fraud, one based on subsequent statements made by KC
about a new and different surgical gown. See United States ex rel. Aflatooni v.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
1
31 U.S.C. §§ 3729–33.
2
See Williams v. Gerber Prods. Co., 552 F.3d 934, 937 (9th Cir. 2008).
2
Kitsap Physicians Servs., 163 F.3d 516, 522–23 (9th Cir. 1999); Wang v. FMC
Corp., 975 F.2d 1412, 1415–16 (9th Cir. 1992), overruled on other grounds by
United States ex rel. Hartpence v. Kinetic Concepts, Inc., 792 F.3d 1121, 1123 (9th
Cir. 2015) (en banc). Documents judicially noticed by the district court indicate
that these new gowns were made from a different fabric, contained a different film
layer, and were constructed in a manner different from the predecessor gowns.
That Shahinian’s complaint and the Cardinal Counterclaims both generally alleged
that KC made misrepresentations about the permeability of surgical gowns is not
sufficient to bar this qui tam action. See Mateski, 816 F.3d at 577. The Cardinal
Counterclaims “could not have alerted the Government to the specific areas of
fraud alleged” here: a fraud purportedly occurring during a later period and
concerning a different product. Id. at 579; see also United States ex rel. Found.
Aiding The Elderly v. Horizon W., Inc., 265 F.3d 1011, 1016–17 (9th Cir.),
amended by 275 F.3d 1189, 1189–90 (9th Cir. 2001). In light of our conclusion,
we do not reach Shahinian’s alternative argument that the district court erred in
determining that the Cardinal Counterclaims were disclosed “from the news
media.” 31 U.S.C. § 3730(e)(4)(A)(iii); see Found. Aiding The Elderly, 265 F.3d
at 1015. Thus, we vacate and remand the district court’s dismissal of this action.
3
We disagree with KC’s argument that we should affirm the judgment on the
alternative ground that this qui tam action was barred by res judicata. We agree
with the district court that, regardless of Shahinian’s dismissal of his personal,
individual claim in a prior class action case, the government was not a party to that
case. Therefore, res judicata cannot act as a bar to the claim brought on the
government’s behalf in this qui tam case. See Stoner v. Santa Clara Cty. Office of
Educ., 502 F.3d 1116, 1126–27 (9th Cir. 2007); see also Whole Woman’s Health v.
Hellerstedt, __ U.S. __, __, 136 S. Ct. 2292, 2304–05, 195 L. Ed. 2d 665 (2016).
VACATED and REMANDED.
4