Key Points

  • The Tennessee Court of Appeals held that the October 2023 federal order in the Northern District of New York was a voluntary dismissal of all of the relator's claims, including his Tennessee False Claims Act claim, and not a decision declining supplemental jurisdiction.
  • The court held that the federal False Claims Act's requirement of court and Attorney General consent does not convert a relator's voluntary dismissal into a judicial dismissal.
  • The court held that 'dismissal' of a supplemental claim under 28 U.S.C. § 1367(d) means a dismissal imposed by the court, so § 1367(d) does not toll the limitations period for a claim the plaintiff voluntarily dismissed.
  • The panel followed the Ninth Circuit's decision in Holt v. County of Orange, declined to follow the Idaho Supreme Court's decision in Bray and a Sacramento County Superior Court ruling in the relator's parallel California case, and reversed and remanded.
  • The court did not reach the relator's argument under the Tennessee act's ten-year limitations period, which was not designated for review.

A Tennessee appeals court ruled Oct. 22 that a whistleblower who voluntarily dropped his federal fraud lawsuit over highway guardrails cannot use a federal tolling law to rescue his refiled state claim against Lindsay Corp. and three related companies. The ruling reverses a Davidson County judge who had refused to dismiss the case as untimely.

The Tennessee Court of Appeals held that Stephen Eimers voluntarily dismissed every claim in his multistate suit in federal court in New York in October 2023, including his claim under the Tennessee False Claims Act. The court then held that 28 U.S.C. § 1367(d), a federal provision that pauses state statutes of limitations while state-law claims are pending in federal court, does not apply when the plaintiff dismisses those claims himself. Judge J. Steven Stafford wrote the opinion, joined by Judges Valerie L. Smith and Steven W. Maroney.

The decision aligns Tennessee with the Ninth Circuit's 2024 ruling in Holt v. County of Orange and against the Idaho Supreme Court and a Florida appellate court, which have applied the tolling to claims a plaintiff voluntarily dismissed. The panel also declined to follow a California Superior Court in Sacramento County, which read the same federal dismissal order in Eimers' favor in a parallel suit, writing that the California court's reading "is not reflective of what actually transpired in the federal action." The trial court had found that the Tennessee law's three-year limitations period started March 1, 2019, so absent tolling it ran out on March 1, 2022, more than a year before Eimers refiled.

Eimers filed the original case on March 1, 2019, in the U.S. District Court for the Northern District of New York as a qui tam action, a suit in which a private person, called a relator, sues on the government's behalf and shares in any recovery. He asserted claims under the federal False Claims Act and the false claims acts of Tennessee and 11 other states. His later Tennessee complaint alleged that after a 2010 crash test and a Federal Highway Administration eligibility letter, the companies "secretly and substantially redesigned" the guardrail and made it unsafe.

In September 2023, the U.S. Attorney General's office first appeared in the case and said it planned to move to dismiss. Its letter said the states had no objection to the court declining supplemental jurisdiction, the federal court's power to hear related state-law claims alongside federal ones. Eimers replied that he would "voluntarily dismiss the federal claims" and would not object to the court declining jurisdiction over the state claims.

On Oct. 10, 2023, however, Eimers filed a notice of voluntary dismissal under Federal Rule of Civil Procedure 41 that did not limit itself to particular claims. The federal False Claims Act allows a relator's case to be dismissed only with the written consent of the court and the Attorney General. The government consented two days later, and on Oct. 26 the court dismissed the action without prejudice as to Eimers, the United States and all 12 states. Eimers refiled the Tennessee claim in Davidson County Circuit Court on Nov. 27, 2023.

Judge Thomas W. Brothers held that § 1367(d) "should be read broadly to include the peculiar circumstances of this case," because Eimers could not dismiss without the government's consent. The trial court then permitted Lindsay to seek an interlocutory appeal.

The appeals court read the order on its face. Judge Stafford wrote that it "neither states nor implies in any way the dismissal is based on a lack of supplemental jurisdiction," and he held that "the FCA's consent requirements do not, ipso facto, transform a clear and unambiguous order of voluntary dismissal into a judicial dismissal." Even on the full record, the court said, Eimers' unqualified notice turned the case into one in which every claim was voluntarily dismissed. "Thus, whatever Relator may have meant to do, what he did was seek to voluntarily dismiss his entire lawsuit," Judge Stafford wrote.

On tolling, Lindsay argued that federal courts had nearly unanimously refused tolling after a voluntary dismissal, while Eimers pointed to state courts that had allowed it. Section 1367(d) tolls limitations for supplemental claims and for "any other claim in the same action that is voluntarily dismissed at the same time as or after the dismissal of the claim under subsection (a)." Because Congress wrote "voluntarily dismissed" in one clause and an unqualified "dismissal" in another, the court presumed the words mean different things.

The panel rejected the Idaho Supreme Court's contrary reading in Bray v. Idaho Department of Juvenile Corrections. The Idaho court's "decision to omit the bulk of the subsection, particularly the clause that refers to 'other' claims, alters the material language of the statute," Judge Stafford wrote.

The court also relied on the long-standing federal rule that a voluntary dismissal does not stop the limitations clock. Following Holt, the panel concluded that Congress meant "dismissal" in § 1367(d) "to refer to dismissals imposed by the court rather than dismissals initiated by the plaintiff." When a plaintiff drops his own state claims, the panel wrote, "it is his own action that frustrates his ability to obtain relief in the federal court rather than any decision by the court declining to exercise jurisdiction over the claim or otherwise."

The panel left two questions open. It did not decide whether § 1367(d) covers judicial dismissals beyond those listed in § 1367(c), the provision that lets federal courts decline supplemental jurisdiction. It also did not reach Eimers' argument that his claim was timely under what he called the Tennessee act's ten-year limitations period, because that issue was not designated for review.

Lawyers for Lindsay and its affiliates included Brigid M. Carpenter of Nashville. Eimers was represented by Wayne A. Ritchie of Knoxville.

The appeals court reversed the trial court's judgment and remanded the case to Davidson County Circuit Court for further proceedings consistent with the opinion. It taxed the costs of the appeal to Eimers.