PHILADELPHIA — The U.S. Court of
Appeals for the 3rd Circuit has ruled that a shared agreement between
two claimants who brought qui tam suits against Quest Diagnostics
International should not have been placed under a seal.
In the Fair
Laboratory Practices Associates v. Riedel, the appeals court said
that it failed to find any personal harm that would result if the
settlement agreement was made available for public view. It also
discounted the public interest in learning about the settlement
According to law.cornell.edu,
a qui tam suit is defined as one in which a private party starts an
action on behalf of the government, with the party sharing in the
award if the action is successful.
The case originated from a qui tam suit
brought against QDI in a California state court by Chris Riedel and
Hunter Laboratories, according to a report
on National Law Journal's website. A second was brought against QDI
in the Southern District of New York by Fair Laboratory Practices
Associates and NPT Associates. According to the suit finding, both
parties have filed numerous qui tam suits against QDI and other
In May 2010, according to court
the suit detailed that FLPA and Hunter entered a qui tam sharing
agreement where they agreed to share the proceeds of their respective
qui tam suits against QDI and other clinical laboratories.
In 2011, FLPA filed a lawsuit against
QDI and Unilab, a subsidiary of QDI, in the Southern District of New
York. However, the district court dismissed the lawsuit because FLPA
and its principals, including Unilab’s former general counsel, Mark
Bibi, had improperly used and disclosed Unilab’s privileged
information as part of the lawsuit, in violation of the New York
Rules of Professional Conduct. As the suit details, also in 2011, QDI
settled a separate qui tam lawsuit filed by Hunter in California
state court asserting claims under California law.
Because of the qui tam sharing
agreement between Hunter and FLPA made in 2010, FLPA asserted that
Hunter owed FLPA 15 percent of its proceeds of the settlement between
Hunter and QDI, according to the National Law Journal report.
Yet, Hunter is reported to have declined to remit payment, citing the
Southern District’s dismissal of the FLPA suit.
Also according to the National
Law Journal report, FLPA then sued Hunter in the District of New
Jersey, seeking the percentage it previously asked for from the
California settlement. District Judge William Martini granted FLPA
summary judgment, holding that the Southern District of New York
dismissal did not breach the profit-sharing agreement.
Several months later, a joint
stipulation was filed by FLPA and Hunter announcing an agreement had
been reached granting Hunter the amount already awarded by Martini.
However, before the condition could be approved, Martini asked the
two parties to file their settlement agreement in court, which they
did under seal.
As the National Law Journal report
said, QDI opposed the sealing and attempted to intervene; however,
Martini failed to let the company join the case and proceeded with
allowing the item to be sealed.
Appellate Judges Thomas Ambro, Patty
Shwartz and Julio Fuentes ruled for a seal reversal, stating
that the district court “too quickly discounted the public’s
interest,” and that in future the district court should consider
redacting confidential information, which would help protect the
parties’ privacy instead of sealing a case.