UNITED STATES OF AMERICA ex rel. JUAN N. WALTERSPIEL, M.D., F.A.A.P. v. Bayer Ag; Quintiles Transnational Corporation; John Doe; Joe Doe; Jane Doe

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 15-1459
UNITED STATES OF AMERICA ex rel. JUAN N. WALTERSPIEL, M.D.,
F.A.A.P.,
Plaintiff - Appellant,
v.
BAYER AG; QUINTILES TRANSNATIONAL CORPORATION; JOHN DOE; JOE
DOE; JANE DOE,
Defendants - Appellees.
Appeal from the United States District Court for the Middle
District of North Carolina, at Greensboro. Loretta C. Biggs,
District Judge. (1:12-cv-00773-LCB-JEP)
Submitted: October 30, 2015 Decided: January 20, 2016
Before KEENAN and HARRIS, Circuit Judges, and HAMILTON, Senior
Circuit Judge.
Affirmed by unpublished per curiam opinion.
Mick G. Harrison, Bloomington, Indiana, for Appellant. Kathleen
McDermott, Holly Barker, MORGAN LEWIS & BOCKIUS LLP, Washington,
D.C., for Appellees.
Unpublished opinions are not binding precedent in this circuit.

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PER CURIAM:
Juan N. Walterspiel, M.D., filed a five count complaint
under the False Claims Act (FCA), 31 U.S.C. §§ 3729-33 (2009)
(current version at 31 U.S.C. §§ 3729-33 (2012)), against Bayer
AG, Quintiles Transnational Corporation, and three Doe
defendants. Walterspiel alleged that Bayer AG and Quintiles
conspired to falsify study data and that Bayer AG submitted the
falsified data to the Food and Drug Administration (FDA) as part
of an application for a six-month extension of its patent for
Ciprofloxacin (Cipro). Walterspiel further alleged that the
extension of Bayer AG’s patent for Cipro enabled Bayer AG to
sell Cipro at a higher price to the government because the
patent delayed the production and sale of less expensive generic
equivalents to Cipro.
A magistrate judge issued a recommendation concluding that
(1) Walterspiel’s complaint with respect to Quintiles failed to
satisfy Fed. R. Civ. P. 9(b)’s heightened pleading standard;
(2) Walterspiel’s “request” for leave to amend his complaint did
not comply with Fed. R. Civ. P. 7(b)(1) and M.D.N.C. Local R.
15.1 because he did not file a motion for leave to amend or a
proposed amended complaint; and (3) Walterspiel failed to
complete service of process on Bayer AG and the Doe defendants.
Over Walterspiel’s objections, the district court adopted the
magistrate judge’s memorandum recommendation in full and

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dismissed Walterspiel’s action. On appeal, Walterspiel argues
that (1) his complaint contained particularized facts to sustain
his claims against Quintiles under the FCA; (2) the district
court erred in not permitting him leave to amend his complaint
to cure any deficiency in his pleading; (3) the district court
erred in dismissing his claims against Bayer AG for failure to
complete service of process; and (4) the district court erred in
adopting the magistrate judge’s report and recommendation
without addressing his objections. We affirm.
I
We turn first to the question whether Walterspiel properly
completed service of process on Bayer AG. “In reviewing an
order to dismiss for insufficient service of process, we review
de novo the determination that service of process was
insufficient and we review for abuse of discretion the decision
to dismiss the complaint.” Marshall v. Warwick, 155 F.3d 1027,
1030 (4th Cir. 1998). Service of process on a foreign
corporation can be accomplished by serving either (1) an agent
of the corporation in the United States in accordance with forum
state service of process rules, in this case Indiana’s service
of process rules, and the Due Process Clause of the United
States Constitution; or (2) the corporation overseas in
accordance with the Hague Service Convention. See

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Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694, 705-
08 (1988); see also Fed. R. Civ. P. 4(e)(1), (f), (h).
Walterspiel contends that he completed service of process by
both means. We disagree.
Under Indiana Rule of Trial Procedure 4.6(A)(1), service of
process on a foreign organization may be completed “upon an
executive officer thereof, or if there is an agent appointed or
deemed by law to have been appointed to receive service, then
upon such agent.” Under Indiana law, the mere existence of a
parent-subsidiary relationship between two entities, even if the
subsidiary is wholly owned by the parent, is not sufficient to
render the subsidiary the parent’s agent for purposes of service
of process. Gen. Fin. Corp. v. Skinner, 426 N.E.2d 77, 84 (Ind.
Ct. App. 1981). Instead, an unappointed subsidiary is an agent
of the parent for purposes of service of process when the
subsidiary lacks a will of its own and operates at the direction
of the parent company such that the subsidiary is a “mere
instrumentality of the foreign corporation.” Id. at 85-86
(internal quotation marks omitted).
Based on the record, including the materials in the joint
appendix on appeal, we find no basis to conclude that Bayer AG
appointed Bayer Corporation as its actual agent for service of
process or that Bayer Corporation’s operations are sufficiently
controlled by Bayer AG to render Bayer Corporation Bayer AG’s

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agent as a matter of Indiana law. In the absence of any
evidence regarding Bayer AG’s actual control over Bayer
Corporation, as opposed to evidence merely showing that Bayer
Corporation is wholly owned by Bayer AG, we conclude that
Walterspiel’s attempt to serve process on Bayer AG by way of
service on Bayer Corporation was ineffective.
Turning to Walterspiel’s attempt to serve Bayer AG in
Germany via FedEx, the Hague Service Convention governs the
service of foreign corporations abroad. Volkswagenwerk
Aktiengesellschaft, 486 U.S. at 698. Although Article 10(a) of
the Hague Service Convention states that the “Convention shall
not interfere with . . . the freedom to send judicial documents,
by postal channels, directly to persons abroad,” the Article
permits a “State of destination” to object to the delivery of
judicial documents by postal channels. Hague Service Convention
art. 10, Nov. 15, 1965, 20 U.S.T. 361, 363. Germany has
objected to Article 10(a), and has established Central
Authorities to execute requests for international service of
process. See Davies v. Jobs & Adverts Online, GMBH, 94
F.Supp.2d 719, 722 n.6 (E.D. Va. 2000). Accordingly,
Walterspiel’s use of FedEx to complete service of process on
Bayer AG was ineffective under the Hague Service Convention.
Walterspiel argues that even if he failed to complete
service of process properly, the district court abused its

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discretion in dismissing his complaint. We again disagree. At
the time of the district court’s dismissal, Walterspiel’s
litigation had been pending for over five years. Furthermore,
the district court had inquired four times about Walterspiel’s
completion of service of process on Bayer AG, and Walterspiel
twice represented that he intended to hire a German process
service to complete service of process in accordance with German
law. Nothing in the record suggests Walterspiel undertook any
steps to act on his representation to the court. Accordingly,
the district court did not abuse its discretion by dismissing
Walterspiel’s claims against Bayer AG and the Doe defendants for
failure to complete service of process.*
II
Having concluded that Walterspiel did not properly complete
service of process on Bayer AG, we turn to the district court’s
dismissal of Quintiles under Fed. R. Civ. P. 12(b)(6). We
review de novo a district court’s dismissal of an action under
Fed. R. Civ. P. 12(b)(6), accepting factual allegations in the
complaint as true and drawing all reasonable inferences in favor
* We note that, contrary to Walterspiel’s contention on
appeal, the magistrate judge’s recommendation clearly states
that Fed. R. Civ. P. 4(m)’s 120-day time limitation for
completing service of process did not apply because Bayer AG was
a foreign corporation.

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of the nonmoving party. Kensington Volunteer Fire Dep’t,
Inc. v. Montgomery Cty., 684 F.3d 462, 467 (4th Cir. 2012). To
sustain an action under the FCA, “a plaintiff must allege four
elements: (1) a false statement or fraudulent course of conduct;
(2) made with the requisite scienter; (3) that is material; and
(4) that results in a claim to the Government.” United
States v. Triple Canopy, Inc., 775 F.3d 628, 634 (4th Cir. 2015)
(brackets omitted), pet. for cert. filed, No. 14-1440 (June 8,
2015).
Claims brought under the FCA are subject to Fed. R. Civ. P.
9(b)’s “more stringent particularity requirement.” Id. “Rule
9(b) requires that an FCA plaintiff must, at a minimum, describe
the time, place, and contents of the false representations, as
well as the identity of the person making the misrepresentation
and what he obtained thereby.” Id. (internal quotation marks
omitted).
Having reviewed Walterspiel’s complaint, we conclude that
it lacks particularized allegations regarding the claims Bayer
AG made to the Government. Specifically, Walterspiel’s
complaint fails to identify, with particularity, what claims
Bayer AG made to the Government, the amount of the claims, or
the extent to which Bayer AG benefited from the alleged fraud it
perpetrated on the Government. In an effort to overcome this
omission from his complaint, Walterspiel argues that we should

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adopt a “relaxed” pleading standard for claims involving fraud
when the defendants are in exclusive possession of the
insufficiently alleged facts. This argument is not persuasive
because Quintiles, the only properly served defendant, was one
step removed from Bayer AG’s filing of claims on the Government,
and Walterspiel’s complaint lacks sufficient factual allegations
supporting the existence of a conspiracy between Bayer AG and
Quintiles that would place the relevant evidence regarding Bayer
AG’s requests for payment to the Government in Quintiles’
possession. Therefore, we affirm the district court’s dismissal
of Walterspiel’s claims against Quintiles.
III
The district court denied Walterspiel’s request for leave
to amend his complaint because the request did not comply with
Fed. R. Civ. P. 7(b)(1) or M.D.N.C. Local R. 15.1 when
Walterspiel filed neither a motion for leave to amend nor a
proposed amended complaint. On appeal, Walterspiel fails to
present any challenge to the district court’s basis for denying
leave to amend. Walterspiel instead argues that the district
court abused its discretion by denying him leave to amend
because an amendment would not have been futile. Pursuant to
Fed. R. App. P. 28, we conclude that Walterspiel has waived
appellate review of this issue. See United States v. Bartko,

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728 F.3d 327, 335 (4th Cir. 2013) (holding that issue not raised
in opening brief, as required by Fed. R. App. P. 28(a)([8])(A),
is waived).
IV
Finally, Walterspiel argues that the district court erred
by adopting the magistrate judge’s recommendation without
specifically addressing his objections. Walterspiel cites no
case law in support of his argument; 28 U.S.C. § 636(b)(1)(C)
(2012) merely requires the district court to make a “de novo
determination of those portions of the report or specified
proposed findings or recommendation to which objection is made.”
The district court complied with this requirement. Accordingly,
we find no procedural error in the district court’s decision not
to address specifically Walterspiel’s objections.
Therefore, we affirm the district court’s judgment and
order. We dispense with oral argument because the facts and
legal contentions are adequately presented in the materials
before this court and argument would not aid the decisional
process.
AFFIRMED

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