Wagda et al v. AT&T Corp. et al

Filing 56

ORDER signed by District Judge John A. Mendez on 6/30/2022 GRANTING 36 Motion to Dismiss with prejudice. CASE CLOSED. (Mena-Sanchez, L)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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UNITED STATES OF AMERICA, ex
rel. DONALD CLOYCE WAGDA,
Plaintiffs,

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2:19-cv-01057-JAM-AC

ORDER GRANTING DEFENDANTS’
MOTION TO DISMISS

v.

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No.

AT&T CORP., a corporation, et
al.

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Defendants.

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I.

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FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND

Donald Wagda (“Relator”) brought this action on behalf of

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the United States against AT&T Inc. and its subsidiaries

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(“Defendants”), after review of California’s Unclaimed Property

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Database indicated Defendants escheated federal property to the

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State under California’s Unclaimed Property Law (“UPL”).

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¶¶ 11, 25-28, ECF No. 1.

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items of federal property with a total value of over

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$133,429.00, which they then escheated to the State.

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27.

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escheating the property to the State, Defendants should have

Compl.

Relator alleges Defendants held 182

Id. ¶¶ 26,

Relator contends this was improper, and that rather than

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returned the property to the United States.

Id. ¶ 26.

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Relator brings two claims under the False Claims Act

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(“FCA”): (1) failure to return federal property in violation of

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31 U.S.C. § 3729(a)(1)(D) and (2) conspiracy to violate the act

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in violation of 31 U.S.C. § 3729(a)(1)(C).

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Accordingly, Relator filed this action on behalf of the United

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States as “[t]he FCA allows private individuals, referred to as

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‘relators,’ to bring suit on the Government’s behalf against

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entities that have violated the Act’s prohibitions.”

See generally id.

U.S. ex

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rel. Mateski v. Raytheon Co., 816 F.3d 565, 569 (9th Cir. 2016)

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(citing 31 U.S.C. § 3730(b)(1)).

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called qui tam suits.”

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asserts the FCA claim “on behalf of the government, which may

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choose to intervene in the action” and “[i]f the relator is

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successful, [they are] entitled to a share of the recovery,

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whether or not the government intervenes.”

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255 F.3d 1154, 1158 (9th Cir. 2001) (citing 31 U.S.C.

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§§ 3730(d)(1),(2)).

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Id.

“Such suits are commonly

In a qui tam suit, the relator

Seal 1 v. Seal A,

The United States declined to intervene.

United States’

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Notice of Election to Decline Intervention, ECF No. 19.

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thereafter, the complaint was unsealed and served on Defendants.

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Order, ECF No. 20.

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under 12(b)(6) and 12(b)(7).

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36.

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replied.

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Shortly

Defendants then filed this motion to dismiss
Mot. to Dismiss (“Mot.”), ECF No.

Relator opposed the motion.
Reply, ECF No. 51.

Opp’n, ECF No. 45.

Defendants

Additionally, the United States

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This motion was determined to be suitable for decision without
oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled
for May 3, 2022.
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filed a statement of interest.

United States’ Statement of

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Interest, ECF No. 41.

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grants Defendants’ 12(b)(7) motion to dismiss.

For the reasons set forth below, the Court

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II.

OPINION

A party may move under Federal Rule of Civil Procedure

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12(b)(7) to dismiss a claim for “failure to join a party under

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Rule 19.”

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Rule 19(a) provides that:

A person who is subject to service of process and
whose joinder will not deprive the court of
jurisdiction over the subject matter of the action
must be joined as a party if (A) in that person’s
absence, the court cannot accord complete relief among
existing parties; or (B) that person claims an
interest relating to the subject of the action and is
so situated that the disposition of the action in the
person’s absence may: (i) as a practical matter impair
or impede the person’s ability to protect that
interest; or (ii) leave an existing party subject to a
substantial risk of incurring double, multiple, or
otherwise inconsistent obligations because of the
interest.
If it is not feasible for the court to join a person

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meeting the requirements of Rule 19(a), then under 19(b) the

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court “shall determine whether in equity and good conscience the

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action should proceed among the parties before it, or should be

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dismissed.”

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considered by the court in determining whether a party is

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indispensable include: (1) “to what extent a judgment rendered

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in the person’s absence might be prejudicial to the person or

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those already parties”; (2) “the extent to which any prejudice

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could be lessened or avoided”; (3) “whether a judgment rendered

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in the person’s absence would be adequate”; and (4) “whether the

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plaintiff would have an adequate remedy if the action were

Fed. R. Civ. P. 19(b).

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The factors to be

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dismissed for nonjoinder.”

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step process for determining whether the court should dismiss an

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action for failure to join a purportedly indispensable party.”

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United States v. Bowen, 172 F.3d 682, 688 (9th Cir. 1999).

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Id.

Rule 19 thus “provides a three-

The Court first “determine[s] whether a nonparty should be

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joined under Rule 19(a).”

E.E.O.C. v. Peabody W. Coal Co., 400

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F.3d 774, 779 (9th Cir. 2005).

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California “is a necessary party by virtue of the fact that it

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is holding the federal assets in question for the benefit of the

Defendants contend that

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federal government and as such is effectively the trustee over

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the 182 assets enumerated in Exhibit A.”

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disputes that California has an interest in the property arguing

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it “is not a lawful trustee with respect to the federal property

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at issue (due to intergovernmental immunity and the UPL being

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pre-empted [by] the FCA).”

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has rejected such circular arguments in determining whether a

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party is necessary.

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F.3d 1015, 1024 (9th Cir. 2002).

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protectible interest that makes its presence necessary.”

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As the transferee of the assets at issue, California has an

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interest in this case.

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446, 450 (D. Conn. 2003).

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Court to find it was improper for Defendants to escheat this

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property to the State under the UPL rather than return it to the

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federal government, Compl. ¶ 26, which would necessarily impact

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the State’s interest in the property.

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at 450.

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a necessary party under Rule 19(a).

Opp’n at 14.

Mot. at 20.

Relator

But the Ninth Circuit

Am. Greyhound Racing, Inc. v. Hull, 305
“It is the party’s claim of
Id.

See Nastro v. D’Onofrio, 263 F.Supp.2d
Relator in this action, asks the

See Nastro, 263 F.Supp.2d

Accordingly, the Court finds the State of California is

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Id.

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“If an absentee is a necessary party under Rule 19(a), the

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second stage is for the court to determine whether it is

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feasible to order that the absentee be joined.”

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Co., 400 F.3d at 779.

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join the State because of sovereign immunity.

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15; see also Dawavendewa v. Salt River Project Agric.

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Improvement and Power Dist., 276 F.3d 1150, 1159 (9th Cir. 2002)

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(not feasible to join party entitled sovereign immunity); Bly-

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Magee v. California, 236 F.3d 1014, 1017 (9th Cir. 2001) (states

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and state agencies enjoy sovereign immunity from liability under

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the FCA).

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Peabody W. Coal

Relator concedes it is not feasible to
See Opp’n at 14-

Thus, the Court must decide whether in “equity and good

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conscience” the action can continue without the State.

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Civ. P. 19(b).

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requires consideration of four factors: (1) prejudice to the

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absent or existing parties; (2) possibility to lessen or avoid

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said prejudice; (3) adequacy of the remedy in the party’s

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absence; and (4) the existence of an adequate remedy in the

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event of a dismissal.

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cannot be joined in light of sovereign immunity, there may be

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very little need for balancing because immunity itself may be

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viewed as the compelling factor.”

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Table Grape Comm’n, 623 F.Supp.2d 1144, 1168 (E.D. Cal. 2009),

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aff’d, 655 F.3d 1337 (Fed. Cir. 2011) (quoting Kescoli v.

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Babbit, 101 F.3d 1304, 1311 (9th Cir. 1996)).

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It finds it cannot.

Id.

Fed. R.

The analysis generally

“However, where the absent party

Delano Farms Co. v. Cal.

Here, since California is a necessary party with an

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interest in the land, it would be prejudiced by a judgment

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rendered in its absence.

See Williams v. Arizona, No. CV-175

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03390-PHX-DJH, 2018 WL 6605845, at *5 (D. Ariz. Dec. 17, 2018),

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aff’d, No. 19-15330, 2019 WL 8064707 (9th Cir. Oct. 21, 2019).

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And while Relator does not request specific relief against the

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State, a finding in his favor would require a determination that

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escheating certain property under California’s UPL statute

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violates the FCA.

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avoid prejudice to the State.

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have an alternative remedy, the United States, the real party in

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interest, does, as it may request any of its property under the

See Opp’n at 3-8.

Thus, there is no way to

Finally, while Relator may not

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UPL.

See Harris v. Westly, 116 Cal.App.4th 214, 346 (2004)

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(“The UPL is not a permanent or ‘true’ escheat statute.

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Instead, it gives the state custody and use of unclaimed

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property until such time as the owner claims it.”)

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the Court finds the case cannot proceed without the State and

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therefore GRANTS Defendants’ 12(b)(7) motion to dismiss for

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failure to join an indispensable party, with prejudice.

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the Court finds dismissal is warranted under 12(b)(7) it need

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not reach the parties’ additional 12(b)(6) arguments.

Accordingly,

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III.

ORDER

For the reasons set forth above, the Court GRANTS
Defendants’ motion to dismiss with prejudice.
IT IS SO ORDERED.
Dated: June 30, 2022

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Because