Appellate Court Reinstates Whistleblower’s Claims Where the District Court Dismissed an Amended Complaint Because the Allegations Were Based on Information Learned in Discovery

On July 25, 2025, in United States ex rel. Sedona Partners LLC v. Able Moving & Storage, Inc., — F.4th —, 2025 WL 2087871 (11th Cir. 2025), the Eleventh Circuit Court of Appeals issued an opinion in a False Claims Act case reversing the dismissal of a whistleblower’s second amended complaint on the basis that the whistleblower relied on information learned during discovery to bolster its allegations and, without relying on such information, the operative complaint could not state a claim. The district court adopted the magistrate judge’s report and recommendation to dismiss the operative complaint under Federal Rule of Civil Procedure 9(b)—which requires fraud to be pled with particularity—and to strike the allegations learned through discovery.

The alleged fraudulent scheme arose in connection with the Centralized Household Goods Traffic Management Program (“CHAMP”) administered by the General Services Administration (“GSA”) the program responsible for shipping household belongings of federal employees who are relocated overseas. The alleged scheme worked in two parts: First, shipping companies submitted fraudulent low-ball bids to capture competitive, international shipping lanes; and second, those shipping companies submitted false certifications to obtain “foreign flag waivers” that would allow foreign vessels to be used in lieu of U.S. vessels in violation of the applicable “America-First” policy.  

In the opinion, the Court rejected the proposition that information learned during discovery cannot be used to bolster allegations in a complaint and also held that district courts are not permitted to expand or rewrite the Federal Rules of Civil Procedure by heightening a pleading standard. The Court reversed the district court’s dismissal of the case and its striking of the allegations based on discovery and remanded the case back to the district court, where the case will now proceed with discovery on the merits.

The holding in this case is expected to impact False Claims Act cases nationwide but will also likely impact non-FCA cases.

Rabin Kammerer Johnson attorneys Adam Rabin and Havan Clark are co-counsel for the whistleblower with Sarvenaz Fahimi and Kevin Boutin from Cotchett Pitre & McCarthy in California, and Paul Pelletier in Washington, D.C.