File First, Facts Later? Eleventh Circuit Says That Discovery Can Inform False Claims Act Allegations in Amended Complaints

On July 25, 2025, the Eleventh Circuit Court of Appeals issued its decision in United States ex. rel. Sedona Partners LLC v. Able Moving & Storage Inc. et al., holding that a district court cannot ignore new factual allegations included in an amended complaint filed by a False Claims Act qui tam relator based on the fact that those additional facts were learned in discovery, even while a motion to dismiss for failure to comply with the heightened pleading standard under Federal Rule of Civil Procedure 9(b) is pending.  Under Rule 9(b), allegations of fraud typically must include factual support showing the who, what, where, why, and how of the fraud to survive a defendant’s motion to dismiss.  And while that standard has not changed, Sedona gives room for a relator to file first and seek out discovery in order to amend an otherwise deficient complaint and survive a motion to dismiss, at least in the Eleventh Circuit.  Importantly, however, the Eleventh Circuit clarified that a district court retains the discretion to dismiss a relator’s complaint before or after discovery has begun, meaning that district courts are not required to permit discovery at the pleading stage.  Nevertheless, the Sedona decision is an about-face from precedent in the Eleventh Circuit, and many other circuits, where, historically, facts learned during discovery could not be used to circumvent Rule 9(b) by bolstering a relator’s factual allegations while a motion to dismiss was pending.  While the long-term effects of the decision remain to be seen, in the short term the decision may encourage relators to engage in early discovery in hopes of learning facts that they can use to survive otherwise meritorious motions to dismiss.

In Sedona, the original complaint alleged that the defendants, transportation service providers, defrauded the government when bidding on contracts by submitting: (1) low-ball bids in order to secure contracts for specific shipping lanes; and (2) false certifications that “no U.S. flag vessels were available to carry out shipments.”  The defendants moved to dismiss, alleging that the complaint failed to state a claim under Rule 12(b)(6) or plead fraud with particularity under Rule 9(b).  At the same time, the defendants moved to stay discovery, arguing that they should not be required to respond to discovery until the court ruled whether the complaint would survive the motion to dismiss.  The U.S. District Court for the Southern District of Florida denied the motion to stay and required the defendants to produce documents pursuant to discovery requests.  The District Court later granted defendants’ motion to dismiss, albeit without prejudice.

Following dismissal, the relator amended its complaint to include more specific factual allegations of purported fraud related to 96 individual shipments, relying on documents and facts that the defendants had produced in response to discovery requests.  The defendants again moved to dismiss and also moved to strike the allegations in the amended complaint stemming from documents the relator had received during discovery pursuant to Rule 12(f), citing to Bingham v. HCA, Inc., 783 F. App’x 868, (11th Cir. 2019).  In Bingham, the Eleventh Circuit concluded that “permitting a [r]elator to use the discovery process to cure a defective pleading constitutes an impermissible end-run around the gatekeeping functions of Rule 9(b).”  The defendants argued that Bingham precluded the relator from using facts learned during discovery to bolster its deficient complaint.  The District Court agreed, struck the allegations based on facts learned during discovery, and dismissed the amended complaint with prejudice.  In its decision, the District Court noted that if the court “were to allow [Sedona] to use information it obtained in discovery, it would effectively be permitting relators to make baseless allegations, conduct discovery in hopes of discovering information that will substantiate their allegations, and amend pleadings to state a viable claim if they discover corroborating evidence.”

The relator appealed, and the Eleventh Circuit considered: (1) whether the District Court erred by ignoring allegations only because the relator learned the facts underlying them via discovery; and (2) whether the District Court abused its discretion by striking allegations including facts learned in discovery.  The Eleventh Circuit held that Bingham was not binding as it is unpublished and found Bingham unpersuasive.  Distinguishing its own precedent, the Eleventh Circuit held that “a district court has the discretion to dismiss a relator’s complaint before or once discovery has begun, but it may not disregard a relator’s allegations solely because those allegations were obtained in discovery.”  The Court further reasoned that “Rule 9(b) does not prohibit pleaders from using, or courts from considering, allegations based on information obtained during discovery,” and relied on Rule 15 for the assertion that the Federal Rules permit a party to “reflect information gained from any source[.]”  The Court also concluded that the District Court did not properly consider or apply Rule 12(f) in light of its description of what material may be struck.  The Eleventh Circuit accordingly reversed the District Court’s order and remanded for further proceedings.

This decision is unwelcome news for companies that regularly have to contend with relators filing half-baked or bare-bones qui tam complaints in hopes that discovery will uncover information needed to adequately plead a violation of the False Claims Act.  And, while the Eleventh Circuit seems to have limited this ruling to cases where a motion to dismiss is filed after the initiation of discovery, Sedona still represents a significant development in the treatment and use of information learned during discovery to survive a motion to dismiss in a False Claims Act lawsuit.  It remains to be seen whether other circuits will follow similar reasoning when confronted with allegations based on facts learned in discovery.  Either way, relators may try to use this decision to argue that facts learned during discovery are fair game when amending a deficiently pleaded complaint.  In this respect, a district court’s decision to open or stay discovery at the pleading stage may take on new importance.