Ambrose v. Coffey

Filing 196

ORDER signed by Judge Lawrence K. Karlton on 11/1/2012 ORDERING that Plaintiffs may not amend their complaint to allege a substantive due process claim. Plaintiffs are not barred by collateral estoppel from bringing their state law claim for malicious prosecution. A status conference is set for 12/3/2012 at 2:00 p.m. in Courtroom 4. The parties shall file their status reports fourteen (14) days prior to the status conference. (Zignago, K.)

1
2
3
4
5
6
7

UNITED STATES DISTRICT COURT

8

FOR THE EASTERN DISTRICT OF CALIFORNIA

9
JOSEPH AMBROSE, D.C.,
NO. CIV. S-08-1664 LKK/GGH

10
Plaintiff,
11
v.

O R D E R

12
GARY COFFEY, et al.,
13
Defendants.
/

14
15

Plaintiffs Ambrose, Yates, Sausedo, Vaezi, and Origel–-all

16

licensed chiropractors--bring suits arising out of an investigation

17

of them, their arrests, and their criminal prosecutions.

18

Now before the court are the following two questions that

19

arose from Defendants’ motion for summary judgment and the oral

20

argument thereon: (1) whether Plaintiffs can allege a Section 1983

21

substantive due process claim that survives Defendants’ motions for

22

summary judgment; and (2) whether Plaintiffs’ malicious prosecution

23

claims are barred by collateral estoppel.

24

////

25

////

26

////
1

I. BACKGROUND1

1
2

Plaintiffs

in

this

assert

Manipulation

they

performed

Under

a

chiropractic

4

(“MUA”), believing that MUAs were within the scope of their

5

chiropractic practice.

6

federal due process rights and their rights against malicious

7

prosecution under state law, Defendants (Travelers, an insurance

8

provider,

9

participated in criminal actions against Plaintiffs in order to

10

prevent future claims, and to avoid paying outstanding claims, for

11

the performance of MUAs.

12

A. Undisputed Facts

its

called

that

3

and

procedure

case

Anesthesia

They allege that, in violation of their

employee,

William

Reynolds)

requested

and

13

According to the statements of undisputed facts submitted by

14

Defendants in support of their motions, Plaintiffs’ responses to

15

those statements, and Defendants’ replies, the parties agree that

16

the following facts are undisputed.

17

Prior to filing criminal charges against Plaintiffs Ambrose,

18

Yates, Sausedo, and Vaezi, relating to the performance of MUAs on

19

August 23, 2005, DDA James C. Weydert (“Weydert”) was aware of

20

California

Board

of

Chiropractic

Examiners

(“BCE”)

documents

21
22
23
24
25
26

1

For a detailed summary of the procedural history in this
case and the factual allegations contained in Plaintiffs' Second
Amended Complaints, see this court's July 23, 2010 order, ruling
on Defendants' motions to dismiss. Order, ECF No. 126, 1-13.
Since the issuance of that order, following a stipulation by the
parties, the court ordered that Defendants Weydert, Coffey, and the
County of San Joaquin be dismissed with prejudice. Stipulation &
Order, ECF No. 132 (Aug. 27, 2010). The only remaining defendants
in this action are therefore Reynolds and Travelers.
2

1

adopting statements that "a proper chiropractic adjustment, if

2

within the scope of practice of Section 302, is not made illegal

3

simply because the patient is under anesthesia."

4

Origel, ECF No. 181 ("DRO"), ¶ 60; Defs' Reply re: Ambrose et al.

5

("DRA"),

6

information in those documents prior to filing criminal charges

7

against Origel relating to the performance of MUAs in March 2006.

8

DRO ¶ 64.

¶¶

63,

67.

Similarly,

Weydert

was

Defs' Reply re:

aware

of

the

9

Prior to filing criminal charges against Plaintiffs Ambrose,

10

Yates, Sausedo, and Vaezi, and prior to filing criminal charges

11

against Origel relating to the performance of MUAs, the DA's Office

12

(including Defendant Gary Coffey, a criminal investigator with the

13

DA’s office) knew that the BCE had signed a "Final Statement of

14

Reasons" recognizing MUAs on October 21, 2004, and that the BCE had

15

approved continuing education classes on MUAs.

16

¶¶ 68, 69.

DRO ¶¶ 65, 66; DRA

17

On or about August 23, 2005, DDA Weydert filed a criminal

18

complaint against Plaintiffs Yates and Ambrose charging them with

19

six counts of criminal conduct, including the uncertified practice

20

of medicine for performing MUAs, insurance fraud, conspiracy, and

21

grand theft.

22

filed a criminal complaint against Plaintiffs Sausedo and Vaezi

23

charging them with three counts of criminal conduct, including the

DRA ¶ 73.2

On or about August 23, 2005, DDA Weydert

24
25
26

2

According to Plaintiffs' Second Amended Complaint, the
criminal charges against Ambrose were dismissed after a hearing on
his motion to dismiss on August 15, 2006.
3

1

uncertified practice of medicine for performing MUAs and insurance

2

fraud.

DRA ¶ 79.3

3

In March 2006, an amended complaint was filed by the DA's

4

Office against Origel which included, for the first time, a charge

5

against Origel for a violation of Business & Professions Code §

6

2052--uncertified practice of medicine--relating to the performance

7

of MUAs.

DRO ¶ 73.

8

In May/June 2006, the criminal case against Origel proceeded

9

to a preliminary hearing in front of Judge Garrigan of the San

10

Joaquin County Superior Court.

DRO ¶ 77; DRA ¶ 88.

At the

11

preliminary hearing, which was conducted by DDAs Green and Weydert,

12

Defendant William Reynolds (“Reynolds”)--an employee of Travelers

13

who was involved in investigating alleged workers compensation

14

fraud--was called as a witness by the prosecution.

15

not provide any testimony on the issue of MUAs, including the

16

legality of that procedure.

Reynolds did

DRO ¶ 79.

17

In June 2006, Plaintiff Origel submitted a brief in the

18

criminal case arguing that he did not have fair warning that the

19

performance of MUAs was illegal.

20

argument at the conclusion of the preliminary hearing, Origel's

21

attorney argued the fair warning issue.

22

Despite those arguments regarding the alleged lack of fair warning,

23

in June 2006, at the conclusion of the preliminary hearing, Judge

DRO ¶ 80; DRA ¶ 89.

During oral

DRO ¶ 81; DRA ¶ 90.

24
3

25
26

According to Plaintiffs' Second Amended Complaint, the
criminal charges against Sausedo and Vaezi were dismissed on March
11, 2008, on the grounds of insufficient evidence and in the
interests of justice.
4

1

Garrigan found the evidence sufficient to hold Origel to answer on

2

fifteen counts, including the charge relating to the performance

3

of MUAs.

DRO ¶ 82; DRA ¶ 91.

4

In March 2007, Origel filed a motion pursuant to California

5

Penal Code § 995 to set aside the order holding him to answer

6

following the preliminary hearing, and arguing that his federal due

7

process rights were being violated because he was being prosecuted

8

for performing MUAs when "no statute, case law or regulation []

9

states that MUAs are outside the scope of practice." DRO ¶ 83; DRA

10

¶ 92.

The DA's Office filed an opposition to the motion, and

11

Origel filed a reply.

12

and denied in June 2007 by a different judge from the one who held

13

Origel to answer at the preliminary hearing.

DRO ¶ 84; DRA ¶ 93.

The motion was heard

DRO ¶ 85; DRA ¶ 94.

14

In June 2007, the criminal case against Yates proceeded to a

15

preliminary hearing in front of Judge Garrigan of the San Joaquin

16

County Superior Court.

17

witness for the prosecution at the preliminary hearing, which was

18

conducted by DDA Sudha Rajender.

19

the preliminary hearing, Yate's defense attorney argued that the

20

court should not hold Yates to answer as to the uncertified

21

practice of medicine charge because the laws were too vague for the

22

Court to find that MUAs were outside the scope of practice for a

23

chiropractor.

24

including on the MUA charge.

DRA ¶ 84.

DRA ¶ 86.

Reynolds did not testify as a

DRA ¶ 85.

At the conclusion of

The state court held Yates to answer,
DRA ¶ 87.4

25
4

26

According to Plaintiffs' Second Amended Complaint, the
criminal charges against Yates were dismissed in the interests of
5

1

The criminal case against Origel proceeded to trial in 2008.

2

After the prosecution presented its case-in-chief, Origel made a

3

motion to dismiss the case pursuant to California Penal Code §

4

1118.1.

5

B. Plaintiffs’ Remaining Causes of Action

6

The state court denied the motion.

Following

the

court's

July

23,

DRO ¶ 87.5

2010

order

ruling

on

7

Defendants' motions to dismiss and the stipulation and order

8

dismissing Defendants Weydert, Coffey, and the County of San

9

Joaquin, Plaintiffs' only remaining causes of action were against

10

Reynolds and Travelers for "malicious prosecution resulting in

11

violation of due process for lack of fair warning," Ambrose Second

12

Amended Complaint (“ASAC”), ECF No. 110, ¶¶ 34-39 (First Cause of

13

Action); Origel Second Amended Complaint, ECF No. 111 (“OSAC”), ¶¶

14

60-66, and "common law malicious prosecution," ASAC ¶¶ 61-67

15

(Fourth Cause of Action); OSAC ¶¶ 90-96.

16

In the court's July 23, 2010 order, in regards to Plaintiffs'

17

first cause of action against Reynolds and Travelers for "malicious

18

prosecution resulting in violation of due process for lack of fair

19

warning," this court provided as follows:

20

[P]laintiffs nowhere alleged facts that directly
support a conclusion that the prosecutions were

21
22
23
24
25
26

justice.
5

According to Plaintiff Origel's Second Amended Complaint,
all charges against Origel were dismissed in the interests of
justice on November 20, 2008. OSAC, ECF No. 111, ¶ 44. In this
court's December 24, 2009 order ruling on Defendants' motions to
dismiss, however, the court noted that "At oral argument,
defendants informed the court that Origel was tried and that the
trial resulted in a hung jury." Order, ECF No. 64, 7 fn. 1.
6

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18

initiated for the purpose of depriving plaintiffs
of their right to a fair warning, but rather have
alleged their purpose to be to prevent plaintiffs
from billing Travelers for the performance of MUAs.
Plaintiffs did not write this cause of action as
the court instructed in its prior order.
Specifically, the court instructed plaintiffs to
plead a claim under Section 1983 for violation of
their due process rights because defendants
initiated a prosecution against them knowing that
they lacked fair warning that their conduct was
unlawful.
This theory of liability was not
directly premised upon malicious prosecution. The
malicious prosecution theory they alleged is flawed
because there are no allegations that the
prosecutions were brought for the purpose of
depriving them of a constitutional right, as
required to state a claim for malicious prosecution
under Section 1983. Awabdy [v. City of Adelanto],
368 F.3d [1062,] 1066 [(9th Cir. 2004)]. The court
considered dismissal with leave to amend so as to
premise plaintiff's fair warning claim as a
violation of due process, and not a malicious
prosecution claim.
This case, however, has
languished at the pleading stage, despite the fact
that the parties all know what the case [is] about.
Under the circumstances, dismissal and repleading
appears to be no more than honoring form over
substance, and the court declines to require future
pleadings.
That determination is especially
appropriate in light of the fact that, if there is
a pretrial conference in the case, the order
emerging therefrom will supersede the pleadings.
Order, ECF No. 126, 26-27.

19

By order issued December 13, 2011, this court reiterated that

20

it construed Plaintiff’s first cause of action as a claim under

21

Section 1983 for violation of Plaintiffs’ due process rights

22

because Defendants initiated a prosecution against them knowing

23

that they lacked fair warning that their conduct was unlawful.

24

Order, ECF No. 186.

25

D. Defendants’ Motion for Summary Judgment

26

Defendants’

filed

motions
7

for

summary

judgment

as

to

1

Plaintiffs’ remaining claims. Defs’ Mots., ECF Nos. 155, 157. The

2

court found that: (1) Plaintiffs are not barred by collateral

3

estoppel from bringing a claim under Section 1983 for violation of

4

their due process rights because Defendants initiated a prosecution

5

against them knowing that Plaintiffs lacked fair warning that their

6

conduct was unlawful; and (2) Defendants’ motions for summary

7

judgment are granted as to Plaintiffs’ Section 1983 procedural due

8

process claims.

Order, ECF No. 186, at 9-15.

9

At oral argument on Defendants’ motions for summary judgment,

10

Plaintiffs’ counsel indicated that they had felt constrained by

11

this court’s prior order suggesting that Plaintiffs’ § 1983 due

12

process claims were most appropriately pled under a theory of

13

procedural due process, as opposed to a theory of substantive due

14

process.

15

Plaintiffs, to designate specific facts demonstrating the existence

16

of genuine issues for trial as to their substantive due process

17

claim.

18

This court therefore ordered additional briefing from

Additionally,

because

Defendants,

in

their

reply

to

19

Plaintiffs’ opposition to summary judgment, raised the argument

20

that Plaintiffs’ malicious prosecution claims were barred by

21

collateral estoppel, the court granted the parties an opportunity

22

to submit further briefs regarding Defendants’ collateral estoppel

23

as to malicious prosecution argument.

24

Plaintiffs

filed

briefs,

presently

before

the

court,

25

addressing the substantive due process and collateral estoppel

26

issues, and Defendants replied.

See Pls’ Supplemental Brs., ECF
8

1

Nos. 187, 188; Defs’ Supplemental Br., ECF No. 189.

2
3

II. ANALYSIS
A. Plaintiffs’ Substantive Due Process Claim

4

As

a

5

supplemental

6

entertain a substantive due process claim by Plaintiffs because,

7

inter alia: (1) consideration of such a claim would first require

8

Plaintiffs to amend their complaint to add a substantive due

9

process claim and no leave to amend should be granted because “a

10

motion [for leave to amend] would be untimely, no good cause has

11

been

12

plaintiffs should be judicially estopped from trying to assert a

13

substantive due process claim”;6 and (2) any substantive due

14

process claim by Plaintiffs would be barred by the applicable

15

statute of limitations.7

shown

preliminary
briefs,

to

matter,

Defendants

justify

the

in

response

argue

untimely

that

to

the

proposed

Plaintiffs’
court

cannot

amendment,

and

Defs’ Supplemental Br., ECF No. 189, at

16
6

17
18
19
20
21
22
23
24
25
26

Defendants’ argument that amendment is required before the
court may construe Plaintiffs’ claim as being brought under a
substantive due process theory is consistent with the transcript
of the motions hearing, at which Plaintiff’s counsel asked, “Does
the court wish me to submit an amended pleading or just briefing
on that issue?”, and the court replied, “Why don’t you start with
briefing and we’ll see whether the amendment will lie?”. Tr., ECF
No. 185, at 9.
7

Additionally, Defendants twice suggest that the court’s
consideration of Plaintiffs’ claims under a substantive due process
theory, at this stage in the litigation, would violate Defendants’
due process rights. See Defs’ Supplement Br., ECF No. 189, at 5
(“Ironically, defendants’ due process rights are now in danger of
being violated.”), 9 (“Allowing plaintiffs to defeat the motions
for summary judgment based on new legal claims asserted for the
first time at the hearing on the motions would be inappropriate and
a violation of defendants’ due process rights.”). Defendants do
not make clear which due process theory would protect their right
to preclude another party from explicating their basis for a
9

1

6-14.8

2

i. Leave to Amend

3

Federal Rule of Civil Procedure 15(a) provides that leave to

4

amend shall be "freely give[n] when justice so requires.”

“In the

5

absence of any apparent or declared reason–such as undue delay, bad

6

faith or dilatory motive on the part of the movant, repeated

7

failure to cure deficiencies by amendments previously allowed,

8

undue prejudice to the opposing party by virtue of allowance of the

9

amendment, futility of amendment, etc.-the leave sought should, as
Foman v. Davis, 371 U.S.

10

the rules require, be ‘freely given.’”

11

178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962).

12

pleading is to facilitate a proper decision on the merits.’”

13

at 181-82, 83 S.Ct. 227 (quoting Conley v. Gibson, 355 U.S. 41, 48,

14

78 S.Ct. 99, 2 L.Ed.2d 80 (1957)).

15

amendment is to be applied with “extreme liberality.”

16

Capital, L.L.C. v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir.

17

2003) (citation omitted).

18

usual “[l]iberality in granting a plaintiff leave to amend” include

19

bad faith and futility.

20

Cir. 1999).

21

“‘[T]he purpose of
Id.

The strong policy permitting
Eminence

Factors which merit departure from the

Bowles v. Reade, 198 F.3d 752, 757 (9th

The court first addresses whether amendment would be futile,

22
23
24
25
26

constitutional claim. In the absence of any legal support for
Defendants’ due process argument, the court declines to further
address their due process contention.
8

The court’s citations to page numbers in the parties’
supplemental briefs refer to the court’s electronic pagination
system.
10

1

due to the applicable statute of limitations and the merits of

2

Plaintiffs’ substantive due process argument, before turning to the

3

remaining considerations for granting leave to amend.

4

a. Statute of Limitations

5

Defendants argue that “the statute of limitations on any

6

substantive due process claim ran at least a year before the civil

7

complaints

8

Plaintiffs’ cause of action accrued upon the filing of the criminal

9

charges

10
11

were

against

filed,”

based

Plaintiffs

on

Defendants’

relating

to

the

reasoning

MUAs.

that

Defs’

Supplemental Br., ECF No. 189, at 12.
Actions brought pursuant to 42 U.S.C. § 1983 are governed by

12

state statutes of limitations for personal injury actions.

13

v. Davis, 260 F.3d 1009, 1012 (9th Cir. 2001); Karim-Panahi v. Los

14

Angeles Police Dep’t, 839 F.2d 621, 627 (9th Cir. 1988) (citing

15

Wilson v. Garcia, 471 U.S. 261, 105 S.Ct. 1938, 85 L.Ed.2d 254

16

(1985), superceded by statute on other grounds as stated in Jones

17

v. R.R. Donnelley & Sons Co., 541 U.S. 369, 377-78 (2004)).

18

California, the statute of limitations for personal injury actions

19

is two years.

20

Plaintiffs had two years after their substantive due process claim

21

accrued to bring an action for violation of their substantive due

22

process rights.

23

Cal. Civ. Proc. Code § 335.1 (West 2003).

Knox

In

Thus,

“While state law determines the period of limitations, federal

24

law determines when a cause of action accrues.”

25

661 F.2d 108, 110 (9th Cir. 1981) (internal citations omitted).

26

Under federal law, the statute of limitations begins to run when
11

Cline v. Brusett,

1

a potential plaintiff knows or has reason to know of the asserted

2

injury.

3

509 F.3d 1020, 1026-27 (9th Cir. 2007).

Action Apartment Ass’n v. Santa Monica Rent Control Bd.,

4

While a cause of action for malicious prosecution does not

5

accrue until the case has been terminated in favor of the accused,

6

see Venegas v. Wagner, 704 F.2d 1144, 1146 (9th Cir.1983), a

7

“substantive due process violation is complete as soon as the

8

government action occurs.”

9

1027 (citing Macri v. King Country, 126 F.3d 1125, 1129 (9th Cir.

10

Action Apartment Ass’n, 509 F.3d at

1997)).

11

Here, Plaintiffs knew or had reason to know that they were

12

being prosecuted for the performance of MUAs, without fair warning

13

as to any illegality of the procedure, at the time the criminal

14

charges were filed against them for performance of MUAs.

15

substantive

16

prosecution of Plaintiffs Yates, Ambrose, Sausedo, and Vaezi, for

17

their perfomance of MUAs, accrued on August 23, 2005.

Any

18

substantive

the

19

prosecution of Plaintiff Origel, for his performance of MUAs,

20

accrued in March 2006.

due

due

process

process

causes

cause

of

of

action

action

arising

arising

Thus,

from

from

the

21

The statute of limitations on the substantive due process

22

claims brought by Plaintiffs Yates, Ambrose, Sausedo, and Vaezi,

23

therefore expired on August 23, 2007.

24

on the substantive due process claim brought by Plaintiff Origel

25

expired in March 2008.

26

was filed by Plaintiff Ambrose, in July 2008.

The statute of limitations

The earliest filed complaint in this case

12

Thus, all of

1

Plaintiffs’ substantive due process claims are barred by the

2

applicable statute of limitations.

3

Plaintiffs cannot successfully argue that the continuing

4

violation theory, which is applicable to § 1983 actions and allows

5

plaintiffs to seek relief for events outside of the limitations

6

period, see Knox v. Davis, 260 F.3d 1009, 1013 (9th Cir. 2001),

7

applies in their case.

8

or practice of discrimination, the only way they can show a

9

continuing violation is to “state facts sufficient . . . [to]

10

support[] a determination that the alleged discriminatory acts are

11

related closely enough to constitute a continuing violation, and

12

that one or more of the acts falls within the limitations period.”

13

Id. (citing DeGrassi v. City of Glendora, 207 F.3d 636, 645 (9th

14

Cir. 2000)).

Because Plaintiffs do not allege a system

15

The Ninth Circuit has held, however, that a “mere ‘continuing

16

impact from past violations is not actionable.’” Id. (internal

17

citations omitted).

18

criminal prosecutions against Plaintiffs continued throughout the

19

pendency of their criminal cases, the continued prosecutions were

20

impacts of the initial filing of the criminal charges against them.

21

Thus, the continuing violation doctrine is inapplicable to this

22

case.

Here, even though the negative effects of the

23

Because Plaintiffs are time-barred from bringing a claim for

24

violation of their substantive due process rights, amendment to

25

allow such a claim would be futile.

26

////
13

1

b. Merits of Plaintiffs’ Substantive Due Process Claim

2

Although the court has concluded that Plaintiffs’ substantive

3

due process claims arising from the criminal prosecutions against

4

them are time-barred, the court feels it necessary to address the

5

merits of such a claim, should its first conclusion be found to be

6

in error.

7

Plaintiffs’ substantive due process claim has not been clearly

8

articulated.

9

Plaintiffs without fair warning that the performance of MUAs was

10

It

appears

to

be

based

on

the

prosecution

of

illegal, and on Defendants’ abuse of the criminal process.

11

The substantive due process prong of the Fourteenth Amendment

12

protects against egregious official conduct, which is “arbitrary

13

in the constitutional sense”; that is, the conduct must amount to

14

an “exercise of power without any reasonable justification in the

15

service

16

Sacramento v. Lewis, 523 U.S. 833, 846, 118 S.Ct. 1708, 140 L.Ed.2d

17

1043 (1998); Shanks v. Dressel, 540 F.3d 1082, 1088 (9th Cir.

18

2008).

19

which “shocks the conscience.”

20

Health Services, 627 F.3d 1101, 1111 (9th Cir. 2010) (citing

21

Brittain v. Hansen, 451 F.3d 982, 991 (9th Cir. 2006)).

of

a

legitimate

governmental

objective.”

County

of

The cognizable level of executive abuse of power is that
Costanich v. Dep’t of Social and

22

Put another way, an abuse of process constitutes a substantive

23

due process violation if it “‘offend[s] those canons of decency and

24

fairness which express the notions of justice of English-speaking

25

peoples even toward those charged with the most heinous offenses.”

26

Johnson v. Barker, 799 F.2d 1396, 1400 (9th Cir. 1986) (citing
14

1
2

Rochin v. California, 342 U.S. 165, 169 (1952)).9
The

protection

from

governmental

action

provided

by

3

substantive due process has most often been reserved for the

4

vindication of fundamental rights. Halverson v. Skagit County, 42

5

F.3d 1257, 1261 (9th Cir. 1994) (citing Albright v. Oliver, 510

6

U.S. 266, 114 S.Ct. 807, 812, 127 L.Ed.2d 114 (1994) (“The

7

protections of substantive due process have for the most part been

8

accorded to matters relating to marriage, family, procreation, and

9

the right to bodily integrity.”)).

The Supreme Court has always

10

been reluctant to expand the concept of substantive due process

11

because it asserts that guideposts for responsible decisionmaking

12

in this unchartered area are scarce and open-ended.

13

(citing Collins v. City of Harker Heights, 503 U.S. 115, 112 S.Ct.

14

1061, 1068, 117 L.Ed.2d 261 (1992)).10

15

rely on substantive due process to challenge governmental action

16

that does not impinge on fundamental rights, the court does “not

17

require that the government’s actions actually advance its stated

18

purposes, but merely look[s] to see whether the government could

19

have had a legitimate reason for acting as it did.”

20

Wedges/Ledges of California, Inc. v. City of Phoenix, 24 F.3d 56,

21

66 (9th Cir. 1994)).

Id. at 1262

Where, as here, Plaintiffs

Id. (citing

Official decisions that rest on an erroneous

22
23
24
25

9

While the decency and fairness inherent in our notions of
justice have never been the exclusive province of “the Englishspeaking peoples,” the court observes the meaning and import of the
Ninth Circuit’s statement of law.
10

26

How this differs from all the cases explicating
constitutional rights has not been addressed.
15

1

legal

2

arbitrary.

3

Harker Heights, 503 U.S. 115, 128-30, 112 S.Ct. 1061, 117 L.Ed.2d

4

261 (1992); Brittain v. Hansen, 451 F.3d 982, 996 (9th Cir. 2006)).

5

interpretation

As

to

are

not

necessarily

constitutionally

Shanks, 540 F.3d at 1089 (citing Collins v. City of

the

initiation

of

criminal

prosecution

against

6

Plaintiffs, the court previously concluded that “a reasonable

7

prosecutor or investigator could have relied on the language in

8

[People v. Fowler, 32 Cal.App.2d Supp. 737, 745, 84 P.2d 326

9

(1938)] that the practice of chiropracty is drugless to conclude

10

that any use of drugs, regardless of who administers them, violates

11

the Chiropractic Act.” Ambrose v. Coffey, 696 F.Supp.2d 1109, 1116

12

(E.D. Cal. 2009).

13

court

14

legitimate reason for initiating criminal prosecutions against

15

Plaintiffs based on their performance of MUAs and, thus, the

16

government’s actions did not rise to the level of a substantive due

17

process violation.

here

Consistent with this court’s prior opinion, the

determines

that

the

government

could

have

had

a

18

In sum, because Plaintiffs’ substantive due process claims are

19

time-barred, and because such claims would not succeed on the

20

merits, amendment to allow such claims would be futile. The court,

21

thus, need not discuss the remaining considerations for granting

22

leave to amend under Federal Rule of Civil Procedure 15(a).

23

Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222

24

(1962).

25

////

26

////
16

See

1

B. Collateral Estoppel as to Plaintiffs’ Malicious Prosecution

2

Claim

3

Defendants

argue

that

Plaintiffs’

state

law

malicious

4

prosecution claims are barred by collateral estoppel because the

5

state

6

prosecutions of Plaintiffs Origel and Yates, following preliminary

7

hearings, “bars relitigation of the probable cause element” of a

8

malicious prosecution cause of action and “entitles defendants to

9

summary

court’s

finding

judgment

as

to

of

the

probable

state

10

claim[s]” brought by all Plaintiffs.11

11

cause

law

in

the

malicious

criminal

prosecution

21.

Defs’ Mot., ECF No. 189, at

12

In the malicious prosecution context, probable cause is a

13

suspicion founded on circumstances sufficiently strong to warrant

14

a reasonable man to believe that the charge is true.

15

Dollar Markets, 99 Cal.App.2d 534, 540, 222 P.2d 136, 141 (1950).

16

To succeed on a malicious prosecution claim, amongst other factors,

17

the plaintiff must prove that the defendant did not have reasonable

18

grounds for believing that the facts alleged in the criminal

19

complaint were true.

Centers v.

Id. at 540, 222 P.2d at 141.

20

Under California law, an issue is precluded if (1) the issue

21

sought to be precluded from relitigation was identical to that

22

decided in a former proceeding; (2) that issue must have been

23
24
25
26

11

In order for Plaintiffs to recover on a malicious
prosecution claim, they would have to prove: (1) termination of the
criminal proceedings in their favor; (2) want of probable cause;
and (3) malice on the part of Defendants. Sheldon Appel Co. v.
Albert & Oliker, 47 Cal.3d 863, 871, 765 P.2d 498, 501 (Cal. 1989).
17

1

actually litigated in the former proceeding; (3) that issue must

2

have been necessarily decided in the former proceeding; (4) the

3

decision in the former proceeding must be final and on the merits;

4

and (5) the party against whom preclusion is sought must be the

5

same as, or in privity with, the party to the former proceeding.

6

Hernandez v. City of Pomona, 46 Cal. 4th 501, 511, 207 P.3d 506

7

(Cal. 2009).

8

finality of the decision in the former proceeding, and the privity

9

of the parties involved.

Of these five factors, the parties contest only the

10

i. Finality

11

A long-standing principle of California common law is that “a

12

decision by a judge or magistrate to hold a defendant to answer

13

after a preliminary hearing constitutes prima facie–-but not

14

conclusive–-evidence

15

Adelanto, 368 F.3d 1062, 1067 (9th Cir. 2004); cf. Haupt v.

16

Dillard, 17 F.3d 285, 288 (9th Cir. 1994) (“The probable cause

17

determination

18

interlocutory in any meaningful sense; it was, rather, a final,

19

conclusive

20

determination was immediately appealable”).

21

effect of a probable cause determination, the California Court of

22

Appeal has explained that:

23
24
25
26

at

of

probable

[Plaintiff’s]

determination

of

the

cause.”

Awabdy

preliminary

issue.

.

v.

hearing

.

.

City

was

[because

not

the]

As to the preclusive

A finding of probable cause to hold the defendant
over for trial is a final judgment on the merits
for the purposes of collateral estoppel under the
California law because the accused can (1)
immediately appeal the determination by filing a
motion to set aside the preliminary hearing ([Cal.]
Pen. Code § 995) and (2) obtain review of the
18

of

1

3

decision on the motion to set aside the preliminary
hearing by filing a writ of prohibition ([Cal.]
Pen. Code § 999a).
Also, the issue of probable
cause cannot be litigated further because it cannot
be used as a defense at trial.

4

McCutchen v. City of Montclair, 73 Cal.App.4th 1138, 1145-46, 87

5

Cal.Rptr.2d 95, 100 (Cal. Ct. App. 1999).

2

6

In June 2006, following a preliminary hearing in the San

7

Joaquin County Superior Court, Plaintiff Origel was held to answer

8

on criminal charges, one of which related to the performance of

9

MUAs. In June 2007, Origel’s motion to set aside the order holding

10

him to answer for the charge relating to the performance of MUAs

11

was heard and denied. Plaintiff Yates was similarly held to answer

12

on a criminal charge related to the practice of MUAs, following a

13

preliminary hearing.

14

The undisputed fact that Plaintiffs Origel and Yates were held

15

to answer on criminal charges related to the performance of MUAs,

16

after a preliminary hearing, therefore constitutes prima facie

17

evidence that probable cause existed to proceed in their criminal

18

prosecutions.

19

However, “[a]mong the ways that a plaintiff can rebut a prima

20

facie finding of probable cause is by showing that the criminal

21

prosecution was induced by fraud, corruption, perjury, fabricated

22

evidence, or other wrongful conduct undertaken in bad faith.”

23

Awabdy, 368 F.3d at 1067; see also McCutchen, 73 Cal.App.4th at

24

1147 (“When the officer misrepresents the nature of the evidence

25

supporting probable cause and that issue is not raised at the

26

preliminary hearing, a finding of probable cause at the preliminary
19

1

hearing would not preclude relitigation of the issue of integrity

2

of the evidence.”).

3

As to the probable cause hearing in the criminal case against

4

Plaintiff Origel, Plaintiffs submitted numerous email exchanges

5

indicating that William Reynolds (“Reynolds”) was both interested

6

in the monetary benefits to his company of declaring MUAs illegal

7

and saw his influence as a motivating force in the criminal

8

prosecutions.

9

(August 25, 2005 email from Reynolds) (“Dr. Stahl: You have to love

See, e.g., Pls’ Evid. Opp’n, ECF No. 162, Ex. 7

10

it.

DOI proclaims MUA's illegal!

Wow!”); Pls’ Evid. Opp’n, ECF

11

No. 162, Ex. 9 (August 25, 2005 email from Reynolds to Steven Piper

12

from “St. Paul Travelers”) (“I just spoke with the DOI Investigator

13

and he states that his office wants to ‘prosecute’ all the DC's in

14

the state for billing this service (MUA's).

15

affect the insurance commissioner's budget and political standing

16

to have a major arrest investigation of this magnitude.

17

financial impact would be huge! There are 18,000 DC's in the state

18

and I bet 25% are involved in this procedure.

19

interesting to see if we can franchise this investigation on a

20

National Investigation.

21

Evid. Opp’n, ECF No. 162, Ex. 8 (October 17, 2005 email from

22

Reynolds to a consultant for Travelers) (“Lori, This is what Frank

23

& I have been pushing on!

24

DC's for doing this procedure.”).

It would dramatically

The

It will be very

Would you like to discuss this?”); Pls’

The San Joaquin Co. DA arrested the 4

25

Plaintiffs submitted evidence that, in a March 29, 2011

26

deposition of Lon Malcolm (“Malcolm”), a criminal investigator for
20

1

the California Department of Insurance Fraud Division, Malcolm

2

testified that portions of the affidavit that he had submitted to

3

DDA Weydert to establish the existence of probable cause to support

4

of the search warrant were “totally based on what Mr. Reynolds

5

[had] conveyed to [him].”

6

104:3, 105:6-9; see also Pls’ Evid. Opp’n, ECF No. 162, Ex. 24, 4-

7

15 (Affidavit).

8

that the extent of Reynolds’ influence of Malcolm was raised at the

9

preliminary hearing.

Pls’ Evid. Opp’n, ECF No. 162, Ex. 22,

The evidence before the court does not indicate

10

Defendants Reynolds and Travelers submitted evidence showing

11

that Malcolm also testified that he had independently reviewed the

12

citations to corporate law referred to in his affidavit, which

13

“either directly or ultimately, support[ed] the Department of

14

Workers' Compensation position on the irregularity of the MUA

15

referral

16

affidavit].”

17

11; Pls’ Evid. Opp’n, ECF No. 162, Ex. 23, 17:6-9.

system

and

[the]

MUA

procedures

described

[in

the

See Decl. Richard Garcia, ECF No. 183, Ex. C, 107:5-

18

Given Plaintiff’s evidence indicating that the prosecutions

19

of Origel and Yates were based on Malcolm’s affidavit, which was

20

in turn based on the evidently self-interested and potentially bad

21

faith influence of Reynolds, and the fact that the testimony

22

regarding Malcolm’s reliance upon Reynolds was not available at the

23

time of the preliminary hearing, the court finds that Plaintiffs

24

have presented sufficient evidence to overcome the presumption that

25

Plaintiffs “had a full and fair opportunity to litigate the issue

26

of

probable

cause

during

the
21

course

of

[their]

criminal

1

prosecution.”

2

1994).

3

Origel and Yates were held to answer on their criminal charges is

4

not final for collateral estoppel purposes as to Plaintiffs’ state

5

law malicious prosecution claim.

6

See Haupt v. Dillard, 17 F.3d 285, 290 (9th Cir.

Thus, the court concludes that the fact that Plaintiffs

ii. Privity

7

Because the court determines that the state court’s decision

8

to hold Plaintiffs Origel and Yates to answer after a preliminary

9

hearing does not, in this case, constitute a finding of probable

10

cause for collateral estoppel purposes, Defendants cannot assert

11

collateral

12

remaining Plaintiffs.

13
14

estoppel

on

probable

cause

issue

against

the

Thus, Plaintiffs are not barred by collateral estoppel from
bringing their state law claim for malicious prosecution.

15
16

the

IV. CONCLUSION
For the reasons provided above, Plaintiffs may not amend their

17

complaint to allege a substantive due process claim.

18

are not barred by collateral estoppel from bringing their state law

19

claim for malicious prosecution.

20

Plaintiffs

A status conference is set for December 3, 2012 at 2:00 p.m.

21

The parties shall file their status reports fourteen (14) days

22

prior to the status conference.

23

IT IS SO ORDERED.

24

DATED:

November 1, 2012.

25
26
22