Evans v. Southern California Intergovernmental Training and Development Center

Filing 35

MEMORANDUM AND ORDER signed by District Judge Morrison C. England, Jr on 4/25/17 ORDERING that Defendant's MOTION to DISMISS 27 is GRANTED. Claims four through six are DISMISSED for failure to state a claim. Because PlaintiffRelator's claims under the CFCA are barred as a matter of law, the dismissal is without leave to amend. CASE CLOSED.(Mena-Sanchez, L)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 12 UNITED STATES OF AMERICA and STATE OF CALIFORNIA ex rel. TAMARA EVANS, 13 14 15 16 17 Plaintiff–Relator, MEMORANDUM AND ORDER v. SOUTHERN CALIFORNIA INTERGOVERNMENTAL TRAINING AND DEVELOPMENT CENTER, and DOES 1–10, Defendant. 18 19 No. 2:15-cv-00619-MCE-CKD Plaintiff–Relator Tamara Evans brings this action against Defendant Southern 20 California Intergovernmental Training and Development Center—which does business 21 as the San Diego Regional Training Center (“SDRTC”)—under the False Claims Act 22 (“FCA”), 31 U.S.C §§ 3729–3733, and its California counterpart, the California False 23 Claims Act (“CFCA”), Cal. Gov’t Code §§ 12650–12656. Defendant now moves to 24 dismiss Plaintiff–Relator’s CFCA claims under Federal Rule of Civil Procedure 12(b)(6) 25 for failure to state a claim. ECF No. 27. For the reasons that follow, that motion is 26 GRANTED.1 27 28 1 Because oral argument would not have been of material assistance, the Court ordered this matter submitted on the briefs in accordance with Local Rule 230(g). 1 BACKGROUND2 1 2 3 From June 2004 to March 2013, Plaintiff–Relator worked for the California 4 Commission on Peace Officer Standards and Training (“POST”), which receives millions 5 of dollars in funding from the United States Department of Justice Office on Violence 6 Against Women and the California Emergency Management Agency. POST, in turn, 7 provided Defendant with some of these funds for services rendered in furtherance of 8 those organizations’ respective goals. As part of her work for POST, Plaintiff–Relator 9 managed grant-funded contracts, reviewed and approved invoices submitted for 10 payment by contractors of POST, and participated in audits of POST’s expenditures. 11 Plaintiff-Relator claims that while performing these activities, she discovered that 12 Defendant collected almost $22 million in state and federal funds based on the 13 submission of false and/or fraudulently inflated invoices. 14 On March 19, 2015, Plaintiff–Relator filed the instant qui tam action, bringing six 15 claims for relief. Claims one through three are made under the FCA, while claims four 16 through six are made under the CFCA. Defendant moves to dismiss claims four through 17 six on the basis that it is not a proper defendant under the CFCA. 18 19 STANDARD 20 21 On a motion to dismiss for failure to state a claim under Federal Rule of Civil 22 Procedure 12(b)(6), all allegations of material fact must be accepted as true and 23 construed in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. 24 Co., 80 F.3d 336, 337–38 (9th Cir. 1996). Rule 8(a)(2) “requires only ‘a short and plain 25 statement of the claim showing that the pleader is entitled to relief’ in order to ‘give the 26 defendant fair notice of what the . . . claim is and the grounds upon which it rests.’” Bell 27 28 2 Unless otherwise noted, the allegations in this section are drawn directly, and in some cases verbatim, from the allegations of Plaintiff–Relator’s Complaint. 2 1 Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 2 47 (1957)). A complaint attacked by a Rule 12(b)(6) motion to dismiss does not require 3 detailed factual allegations. However, “a plaintiff's obligation to provide the grounds of 4 his entitlement to relief requires more than labels and conclusions, and a formulaic 5 recitation of the elements of a cause of action will not do.” Id. (citation omitted). A court 6 is not required to accept as true a “legal conclusion couched as a factual allegation.” 7 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). 8 “Factual allegations must be enough to raise a right to relief above the speculative level.” 9 Twombly, 550 U.S. at 555 (citing 5 Charles Alan Wright & Arthur R. Miller, Federal 10 Practice and Procedure § 1216 (3d ed. 2004) (stating that the pleading must contain 11 something more than “a statement of facts that merely creates a suspicion [of] a legally 12 cognizable right of action”)). 13 Furthermore, “Rule 8(a)(2) . . . requires a showing, rather than a blanket 14 assertion, of entitlement to relief.” Id. at 555 n.3 (citation omitted). Thus, “[w]ithout some 15 factual allegation in the complaint, it is hard to see how a claimant could satisfy the 16 requirements of providing not only ‘fair notice’ of the nature of the claim, but also 17 ‘grounds’ on which the claim rests.” Id. (citing Wright & Miller, supra, at 94–95). A 18 pleading must contain “only enough facts to state a claim to relief that is plausible on its 19 face.” Id. at 570. If the “plaintiffs . . . have not nudged their claims across the line from 20 conceivable to plausible, their complaint must be dismissed.” Id. However, “[a] well- 21 pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those 22 facts is improbable, and ‘that a recovery is very remote and unlikely.’” Id. at 556 (quoting 23 Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). 24 A court granting a motion to dismiss a complaint must then decide whether to 25 grant leave to amend. Leave to amend should be “freely given” where there is no 26 “undue delay, bad faith or dilatory motive on the part of the movant, . . . undue prejudice 27 to the opposing party by virtue of allowance of the amendment, [or] futility of the 28 amendment . . . .” Foman v. Davis, 371 U.S. 178, 182 (1962); Eminence Capital, LLC v. 3 1 Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (listing the Foman factors as those to 2 be considered when deciding whether to grant leave to amend). Not all of these factors 3 merit equal weight. Rather, “the consideration of prejudice to the opposing party . . . 4 carries the greatest weight.” Id. (citing DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 5 185 (9th Cir. 1987)). Dismissal without leave to amend is proper only if it is clear that 6 “the complaint could not be saved by any amendment.” Intri-Plex Techs. v. Crest Grp., 7 Inc., 499 F.3d 1048, 1056 (9th Cir. 2007) (citing In re Daou Sys., Inc., 411 F.3d 1006, 8 1013 (9th Cir. 2005); Ascon Props., Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 9 1989) (“Leave need not be granted where the amendment of the complaint . . . 10 constitutes an exercise in futility . . . .”)). 11 12 ANALYSIS 13 14 Under the CFCA, an individual may bring suit on behalf of the government against 15 “any person” who commits certain acts related to the submission of false claims to the 16 government. Cal. Gov’t Code § 12651(a). Defendant contends that Plaintiff–Relator has 17 failed to state a claim under the CFCA because the SDRTC, as a governmental entity, is 18 not a “person” under that act. See Def.’s Mem. of P & A in Supp. of Mot. to Dismiss 19 (“MTD”), ECF No. 27-1, at 4–5 (quoting Wells v. One2One Learning Found., 39 Cal. 4th 20 1164, 1193 (2006)). In response, Plaintiff–Relator argues that “California courts look to 21 the law developed under the federal False Claims [A]ct to construe the CFCA” and that 22 because the SDRTC is subject to suit under the FCA, it must also be subject to suit 23 under the CFCA. Pl.–Relator’s Opp’n, ECF No. 28, at 3–4. 24 Regardless of California courts’ general reliance on federal authority in construing 25 the CFCA, the California Supreme Court has departed from federal authority in 26 determining whether California governmental entities are subject to suit under the CFCA. 27 In Wells, the California Supreme Court explicitly stated, regarding its application to local 28 governmental entities, that the FCA “is distinct from its California counterpart.” 4 1 29 Cal. 4th at 1197. Applying California principles of statutory interpretation, the 2 California Supreme Court held that regardless of the application of FCA to local 3 governmental entities, such entities are not “persons” under the CFCA. Id. at 1199 (“We 4 conclude that neither [public school] districts, nor any other agencies of state and local 5 government, are ‘persons’ subject to suit under the CFCA.”). Regardless of Defendant’s 6 exhortation that this Court “find liability under the CFCA as a matter of public policy 7 and . . . as a matter of common sense,” Pl. Relator’s Opp’n, at 4, this Court will not 8 override California’s policy choices embodied by its statutes and legal precedent. 9 Because California governmental agencies are not subject to suit under the 10 CFCA, the only remaining question is whether the SDRTC is a governmental entity. The 11 SDRTC is a joint powers authority, created pursuant to the Joint Exercise of Powers Act, 12 Cal. Gov’t Code §§ 6500–6599.3, which allows two or more public agencies to create a 13 separate governmental agency for the purpose of jointly exercising common powers, id. 14 §§ 6502, 6503.5, 6507; see also San Diegans for Open Gov’t v. City of San Diego, 15 242 Cal. App. 4th 416, 444 (2015) (“Two or more public agencies by agreement may 16 jointly exercise any power common to the contracting parties, and they may join in the 17 creation of a separate entity to exercise those powers on their behalf.” (brackets and 18 citation omitted)). “Such agencies are governmental agencies.” People v. Parmar, 19 86 Cal. App. 4th 781, 799 (2001). Accordingly, Defendant is not subject to suit under the 20 CFCA. 21 /// 22 /// 23 /// 24 /// 25 /// 26 /// 27 /// 28 /// 5 1 CONCLUSION 2 3 Because governmental agencies are not subject to suit under the CFCA and 4 because Defendant is a governmental agency, its Motion to Dismiss, ECF No. 27, is 5 GRANTED. Claims four through six are dismissed for failure to state a claim. Because 6 Plaintiff–Relator’s claims under the CFCA are barred as a matter of law, the dismissal is 7 without leave to amend. 8 9 IT IS SO ORDERED. Dated: April 25, 2017 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6

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