1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 CITY OF LOS ANGELES ex rel. No. 2:17-cv-00810-TLN-AC RICHARD KNUDSEN, 12 Plaintiff, 13 ORDER v. 14 CELLCO PARTNERSHIP dba VERIZON 15 WIRELESS; and DOES 11-20, 16 Defendants. 17 18 19 This matter is before the Court pursuant to Defendant Cellco Partnership dba Verizon 20 Wireless’s (“Defendant”) Motion to Dismiss Plaintiff’s Consolidated Complaint in Intervention. 21 (ECF No. 67.) Plaintiff City of Los Angeles (“Plaintiff”) filed an opposition. (ECF No. 70.) For 22 the reasons set forth below, the Court hereby GRANTS in part and DENIES in part Defendant’s 23 Motion to Dismiss. (ECF No. 67.) 24 /// 25 /// 26 /// 27 /// 28 /// 1 I. FACTUAL AND PROCEDURAL BACKGROUND 2 Plaintiff contracted with Defendant for wireless airtime, wireless data, and equipment. 3 (ECF No. 1-2 ¶ 1.) Plaintiff alleges Defendant agreed to provide Plaintiff with rate plan 4 optimization on a quarterly or routine basis. (ECF No. 1-2 ¶¶ 2, 4.) Moreover, Plaintiff alleges 5 Defendant was to identify the one rate plan among those offered for each wireless customer that 6 would result in the lowest cost to Plaintiff. (ECF No. 1-2 ¶ 4.) Plaintiff further alleges Defendant 7 was contractually obligated to provide Plaintiff with rate plan optimization reports that would 8 permit Plaintiff to purchase wireless services at the lowest cost available. (ECF No. 1-2 ¶ 4.) 9 However, Plaintiff alleges Defendant did not provide rate plan optimization reports to Plaintiff, 10 resulting in millions of dollars of overcharges. (ECF No. 1-2 ¶¶ 5, 7.) 11 Plaintiff’s claims arise from three wireless and related services contracts between Plaintiff 12 and Defendant: (1) Contract Number 58608 (“City Contract I”), effective July 1, 2006, (ECF No. 13 1-2 ¶ 46; ECF No. 68-1); (2) Contract 59277 (“City Contract II”), effective September 1, 2011, 14 (ECF No. 1-2 ¶ 96; ECF No. 68-6); and (3) Contract 59464 (“City Contract III”), effective March 15 1, 2013, (ECF No. 1-2 ¶ 96; ECF No. 68-7.) 16 The parties entered into the three City Contracts under three group purchasing contracts. 17 The first group purchasing contract was the California Wireless Contract (“CWC”), a cooperative 18 purchasing agreement between Defendant and the State of California. (ECF No. 1-2 ¶ 3.) The 19 second group purchasing contract was the State of Nevada RFP/Contract Number 1523 (“WSCA 20 I”). (ECF No. 1-2 ¶ 48.) The third group purchasing contract is the Western States Contracting 21 Alliance Acting by and Through the State of Nevada and Cellco Partnership dba Verizon 22 Wireless RFP/Contract Number 1907 (“WSCA II”). (ECF No. 1-2 ¶ 48.) 23 City Contract I took effect July 1, 2006, and adopted the prices, terms, and conditions of 24 the CWC. (ECF No. 68-1 at 4.) City Contract I contained an optimization provision which 25 states, “Optimization: After the initial plan assignment, Verizon Wireless will routinely identify 26 those users that are not in the most optimized plan and work with the City Department Telephone 27 Coordinators to place users in the most optimized plan.” (ECF No. 68-1 at 5.) The CWC 28 incorporated the State of California’s electronic Request for Proposals 5014 (“eRFP 5014”) and 1 Defendant’s Final Proposal in response. (ECF No. 1-2 ¶¶ 27, 40.) Although eRFP 5014 2 contained a provision on wireless services optimization reports, (ECF No. 68-2 at 84–85), this 3 provision expressly did not apply to Plaintiff as a local agency, (ECF No. 1-2 ¶ 29; ECF No. 68-2 4 at 84.) On October 29, 2010, Plaintiff and Defendant amended City Contract I to extend until 5 April 2, 2011, in accordance with the WSCA I. (ECF No. 68-3 at 2.) 6 City Contract II took effect September 1, 2011, and expressly adopted the terms of the 7 WSCA I. (ECF No. 68-6 at 4.) City Contract II’s optimization provision did not specifically 8 reference optimization reports as it stated, “Verizon Wireless shall work with the City 9 Departments optimizing the rate plans by providing bill analysis and pricing update on a regular 10 basis. Verizon shall keep the City Departments updated with promotions and pricing updates.” 11 (ECF No. 68-6 at 8.) The WSCA I request for proposal (“RFP”) and resulting contract required 12 Defendant to produce a “[q]uarterly optimization report for each wireless service subscriber.” 13 (ECF No 68-4 at 9.) Further, the WSCA I defined a subscriber as “[a] using entity who contracts 14 to receive and pay for wireless or walkie-talkie services.” (ECF No. 68-4 at 7.) 15 City Contract III took effect March 1, 2013, and adopted the terms and conditions of the 16 WSCA II. (ECF No. 68-7 at 2.) The WSCA II RFP and resulting contract required Defendant to 17 produce a “[q]uarterly optimization report for each wireless/broadband service subscriber.” (ECF 18 No. 68-8 at 12.) City Contract III stated, “Verizon Wireless shall not be required to provide rate 19 optimization reports except upon specific written request by an Authorized Contact on the 20 account/profile for which a report is requested.” (ECF No. 68-7 at 4.) 21 On September 13, 2013, Relator Richard Knudsen filed three separate CFCA actions on 22 behalf of Plaintiff in the Los Angeles County Superior Court against Defendant, Sprint Solutions, 23 Inc. and Nextel of California, Inc. dba Nextel Communications and Sprint Nextel, and New 24 Cingular Wireless National Accounts, LLC dba Cingular Wireless, now known as AT&T 25 Mobility National Accounts LLC (collectively, “Carrier Defendants”). (ECF No. 67 at 11; ECF 26 No. 70 at 9.) The three cases were consolidated in the Los Angeles County Superior Court. (ECF 27 No. 70 at 9.) Thereafter, Plaintiff filed a Consolidated Complaint in Intervention (“Complaint”) 28 against Carrier Defendants on September 9, 2016. (ECF No. 1-2.) 1 Plaintiff’s Complaint alleges five causes of action against Carrier Defendants: (1) 2 violation of the California False Claims Act (“CFCA”) section 12651(a)(1); (2) making false 3 records and statements in violation of the CFCA section 12651(a)(2); (3) unfair business practices 4 in violation of California Business and Professions Code sections 17200 et seq.; (4) breach of 5 written contract; and (5) unjust enrichment. (ECF No. 1-2 ¶¶ 142–166.) 6 On October 7, 2016, Carrier Defendants removed the three cases to the United States 7 District Court for the Central District of California. (ECF No. 1; ECF No. 67 at 12.) On April 8 17, 2017, the three cases were transferred to this Court. (ECF No. 53.) Defendant filed the 9 instant motion to dismiss on July 6, 2017. (ECF No. 67.) 10 II. STANDARD OF LAW 11 A motion to dismiss for failure to state a claim under Rule 12(b)(6) tests the legal 12 sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Federal Rule of 13 Civil Procedure 8(a) requires that a pleading contain “a short and plain statement of the claim 14 showing that the pleader is entitled to relief.” See Ashcroft v. Iqbal, 556 U.S. 662, 678–79 15 (2009). Under notice pleading in federal court, the complaint must “give the defendant fair notice 16 of what the claim . . . is and the grounds upon which it rests.” Bell Atlantic v. Twombly, 550 U.S. 17 544, 555 (2007) (internal quotations omitted). “This simplified notice pleading standard relies on 18 liberal discovery rules and summary judgment motions to define disputed facts and issues and to 19 dispose of unmeritorious claims.” Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512 (2002). 20 On a motion to dismiss, the factual allegations of the complaint must be accepted as true. 21 Cruz v. Beto, 405 U.S. 319, 322 (1972). A court is bound to give plaintiff the benefit of every 22 reasonable inference to be drawn from the “well-pleaded” allegations of the complaint. Retail 23 Clerks Int’l Ass’n v. Schermerhorn, 373 U.S. 746, 753 n.6 (1963). A plaintiff need not allege 24 “‘specific facts’ beyond those necessary to state his claim and the grounds showing entitlement to 25 relief.” Twombly, 550 U.S. at 570. “A claim has facial plausibility when the plaintiff pleads 26 factual content that allows the court to draw the reasonable inference that the defendant is liable 27 for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). 28 Nevertheless, a court “need not assume the truth of legal conclusions cast in the form of 1 factual allegations.” United States ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2 (9th Cir. 2 1986). While Rule 8(a) does not require detailed factual allegations, “it demands more than an 3 unadorned, the defendant–unlawfully–harmed–me accusation.” Iqbal, 556 U.S. at 678. A 4 pleading is insufficient if it offers mere “labels and conclusions” or “a formulaic recitation of the 5 elements of a cause of action.” Twombly, 550 U.S. at 555; see also Iqbal, 556 U.S. at 678 6 (“Threadbare recitals of the elements of a cause of action, supported by mere conclusory 7 statements, do not suffice.”). Moreover, it is inappropriate to assume the plaintiff “can prove 8 facts that it has not alleged or that the defendants have violated the . . . laws in ways that have not 9 been alleged.” Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 10 U.S. 519, 526 (1983). 11 Ultimately, a court may not dismiss a complaint in which the plaintiff has alleged “enough 12 facts to state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 697 (quoting 13 Twombly, 550 U.S. at 570). Only where a plaintiff has failed to “nudge[] [his or her] claims . . . 14 across the line from conceivable to plausible,” is the complaint properly dismissed. Id. at 680. 15 While the plausibility requirement is not akin to a probability requirement, it demands more than 16 “a sheer possibility that a defendant has acted unlawfully.” Id. at 678. This plausibility inquiry is 17 “a context-specific task that requires the reviewing court to draw on its judicial experience and 18 common sense.” Id. at 679. 19 If a complaint fails to state a plausible claim, “[a] district court should grant leave to 20 amend even if no request to amend the pleading was made, unless it determines that the pleading 21 could not possibly be cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1130 22 (9th Cir. 2000) (en banc) (quoting Doe v. United States, 58 F.3d 484, 497 (9th Cir. 1995)); see 23 also Gardner v. Marino, 563 F.3d 981, 990 (9th Cir. 2009) (finding no abuse of discretion in 24 denying leave to amend when amendment would be futile). Although a district court should 25 freely give leave to amend when justice so requires under Rule 15(a)(2), “the court’s discretion to 26 deny such leave is ‘particularly broad’ where the plaintiff has previously amended its complaint.” 27 Ecological Rights Found. v. Pac. Gas & Elec. Co., 713 F.3d 502, 520 (9th Cir. 2013) (quoting 28 Miller v. Yokohama Tire Corp., 358 F.3d 616, 622 (9th Cir. 2004)). 1 III. ANALYSIS 2 As a preliminary matter, Defendant submits several extrinsic documents in support of its 3 motion.1 (ECF No. 68.) In its opposition, Plaintiff also submits extrinsic documents.2 (ECF No. 4 70-1.) Generally, “a district court may not consider any material beyond the pleadings in ruling 5 on a Rule 12(b)(6) motion.” Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001) 6 (quoting Branch v. Tunnell, 14 F.3d 449, 453 (9th Cir. 1994)). However, a court may consider 7 extrinsic documents on a Rule 12(b)(6) motion when the parties do not contest the authenticity of 8 the documents and the complaint necessarily relies on their contents. Id. Here, the contracts at 9 issue and documents involved in formation of those contracts are central to Plaintiff’s claims. 10 Moreover, the Court notes that there is no apparent dispute as to the authenticity of the documents 11 provided. Therefore, the Court will consider the relevant extrinsic evidence provided by the 12 parties. 13 Defendant moves to dismiss all Plaintiff’s causes of action with prejudice. Specifically, 14 Defendant argues: (1) each cause of action should be dismissed because Defendant had no 15 contractual obligation to provide Plaintiff with optimization reports; (2) the first and second 16 causes of action should be dismissed because they do not satisfy the CFCA’s objectivity 17 1 Defendant requests the Court take judicial notice of: (1) City of Los Angeles Supply Contract No. 58608 18 and attachments, effective date July 1, 2006; (2) California Department of General Services Wireless Equipment and Services eRFP # DGS 5014; (3) City of Los Angeles Supply Contract No. 58608 – Amendment 04 Wireless 19 Telephones, Accessories, and Airtime Services, dated October 29, 2010; (4) State of Nevada Division of Purchasing on Behalf of the Western States Contracting Alliance, Request for Proposal No. 1523, dated February 8, 2006 20 (“Request for Proposal No. 1523”); (5) Amendment No. 1 to Request for Proposal No. 1523, dated March 1, 2006; (6) City of Los Angeles Supply Contract No. 59277 and attachments, effective date September 1, 2011; (7) City of 21 Los Angeles Supply Contract No. 59464, effective date March 1, 2013; (8) State of Nevada Division of Purchasing on Behalf of the Western States Contracting Alliance, Request for Proposal No. 1907, dated February 3, 2011 22 (“Request for Proposal No. 1907”). Under Federal Rule of Evidence 201, a court can take judicial notice of a document when the subject “can be accurately and readily determined from sources whose accuracy cannot 23 reasonably be questioned.” For the reasons stated in Defendant’s request and noting no opposition by Plaintiff, the Court GRANTS Defendant’s request and takes judicial notice of the attached exhibits pursuant to Federal Rule of 24 Evidence 201, (ECF Nos. 68, 68-1, 68-2, 68-3, 68-4, 68-5, 68-6, 68-7, and 68-8.) 2 Plaintiff requests the Court take judicial notice of: (1) DGS Request for Offer #DGS-1070 issued by the 25 State of California Department of General Services on November 12, 2010; (2) the Second Amended Complaint filed in State of California ex rel. OnTheGo Wireless, LLC v. Cellco Partnership, et al., Sacramento Superior Court, Case No. 34-2012-00127517 (“OnTheGo”) on May 6, 2016; (3) September 13, 2016 Order on Defendants’ demurrer to the 26 Second Amended Complaint in OnTheGo; and (4) Attachment F to WSCA RFP No. 1523, dated March 1, 2006. Under Federal Rule of Evidence 201, a court can take judicial notice of a document when the subject “can be 27 accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” For the reasons stated in Plaintiff’s request and noting no opposition by Defendant, the Court GRANTS Plaintiff’s request and takes 28 judicial notice of the attached exhibits pursuant to Federal Rule of Evidence 201, (ECF No. 70-1.) 1 requirements; (3) the first and second causes of action should be dismissed because they are not 2 pleaded with sufficient particularity under Federal Rule of Civil Procedure 9(b); and (4) the 3 Plaintiff’s fifth cause of action should be dismissed because it is duplicative. (ECF No. 67 at 2.) 4 The Court will address each argument in turn. 5 A. Contractual Obligation to Provide Quarterly Optimization Reports 6 Defendant argues Plaintiff’s causes of action should be dismissed because Defendant had 7 no contractual obligation to provide quarterly optimization reports to Plaintiff. (ECF No. 67 at 8 13.) In response, Plaintiff contends it was entitled to quarterly optimization reports under the 9 plain meaning of the contractual language. (ECF No. 70 at 12.) 10 Under California law, courts must interpret contracts “to give effect to the mutual 11 intention of the parties as it existed at the time of contracting.” Cal. Civ. Code § 1636; see also 12 ASARCO, LLC v. Celanese Chem. Co., 792 F.3d 1203, 1212 (9th Cir. 2015). “It is not the 13 parties’ subjective intent that matters, but rather their ‘objective intent, as evidenced by the words 14 of the contract.’” Block v. eBay, Inc., 747 F.3d 1135, 1138 (9th Cir. 2014) (quoting Founding 15 Members of the Newport Beach Country Club v. Newport Beach Country Club, Inc., 109 Cal. 16 App. 4th 944, 956 (2003)). A court interprets words in a contract in their ordinary and popular 17 sense unless used by the parties in a technical sense or given special meaning. Cal. Civ. Code § 18 1644; Hartford Cas. Ins. Co. v. Swift Distribution, Inc., 59 Cal. 4th 277, 288 (2014) (citing AIU 19 Ins. Co. v. Superior Court, 51 Cal. 3d 807, 822 (1990)). Additionally, a court interprets contract 20 language in context of the whole contract. Dep’t of Alcoholic Beverage Control v. Alcoholic 21 Beverage Control Appeals Bd., 29 Cal. App. 5th 410, 418 (2018) (citing Cal. Civ. Code § 1641). 22 In a dispute over the meaning of contractual language, a court must determine “whether 23 the disputed language is reasonably susceptible to the interpretation urged by the party.” Halicki 24 Films, LLC v. Sanderson Sales & Mktg., 547 F.3d 1213, 1223 (9th Cir. 2008) (quoting People ex 25 rel. Lockyer v. R.J. Reynolds Tobacco Co., 107 Cal. App. 4th 516, 524 (2003)) (internal quotation 26 marks omitted). “Under California law, interpretation of a contract is a two-step process: [f]irst 27 the court provisionally receives . . . all credible evidence concerning the parties’ intentions to 28 determine ambiguity . . .. If in light of the extrinsic evidence the court decides the language is 1 reasonably susceptible to the interpretation urged, the extrinsic evidence is then admitted to aid in 2 the second step—interpreting the contract.” In re Facebook PPC Advert. Litig., 709 F. Supp. 2d 3 762, 768 (N.D. Cal. 2010) (internal quotation marks omitted) (quoting Wolf v. Superior Court, 4 114 Cal. App. 4th 1343, 1351 (2004)). “Even if a contract appears unambiguous on its face, a 5 latent ambiguity may be exposed by extrinsic evidence which reveals more than one possible 6 meaning to which the language of the contract is yet reasonably susceptible.” Copart, Inc. v. 7 Sparta Consulting, Inc., 339 F. Supp. 3d 959, 976 (E.D. Cal. 2018) (quoting Morey v. Vannucci, 8 64 Cal. App. 4th 904, 912 (1998)). 9 Here, Plaintiff’s causes of action stem primarily from three separate contracts. The Court 10 will discuss the relevant language of each contract in turn. 11 i. City Contract I 12 Defendant argues City Contract I did not contain an optimization report requirement and 13 that any optimization report requirements under the CWC or the WSCA I expressly exempted 14 local agencies like Plaintiff or only applied to Nevada, respectively. (ECF No. 67 at 14–15.) In 15 response, Plaintiff contends that City Contract I’s optimization provision required Defendant to 16 provide Plaintiff with optimization reports. (ECF No. 70 at 7, 13–14.) Plaintiff further states 17 Defendant was expressly required to provide optimization reports to Plaintiff when City Contract 18 I was amended to incorporate the terms of the WSCA I. (ECF No. 70 at 14.) 19 At the outset, Plaintiff concedes the CWC does not expressly require Defendant to provide 20 optimization reports because the optimization requirement only applied to state departments. 21 (ECF No. 70 at 13.) Under the CWC, local agencies like Plaintiff were specifically exempted 22 from the optimization report requirement. (ECF No. 68-2 at 84.) Because City Contract I 23 incorporated the language of the CWC, (ECF No. 68-1 at 1–2), City Contract I specifically 24 exempted Plaintiff from the CWC optimization report requirements. 25 The Court now turns to the optimization provision within City Contract I, which states, 26 “Optimization: After the initial plan assignment, [Defendant] will routinely identify those users 27 that are not in the most optimized plan and work with City Department Telephone Coordinators 28 to place users in the most optimized plan.” (ECF No. 68-1 at 5.) Defendant argues the 1 optimization provision does not require Defendant to provide optimization reports explicitly. 2 (ECF No. 67 at 14.) However, the Complaint also repeatedly alleges that rate plan optimization 3 has a specific meaning in the wireless industry and that Defendant knew of this meaning. (ECF 4 No. 1-2 ¶¶ 6, 21, 25, 134.) More specifically, the Complaint alleges Defendant fulfilled its rate 5 plan optimization requirements with private customers by providing optimization reports. (ECF 6 No. 1-2 ¶ 134.) 7 Plaintiff is not required to prove its claims at this stage. Rather, in ruling on a 12(b)(6) 8 motion, a court determines only whether the operative complaint contains “enough facts to state a 9 claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 697 (quoting Twombly, 550 U.S. at 10 570). Plaintiff’s allegations must be taken as true and given the benefit of “every reasonable 11 inference.” Retail Clerks Int’l Ass’n, 373 U.S at 753 n.6. Although City Contract I’s 12 optimization provision did not require optimization reports on its face, Plaintiff’s factual 13 allegations support a reasonable inference that the optimization provision contained a latent 14 ambiguity. Indeed, Plaintiff sufficiently nudged its claim “across the line from conceivable to 15 plausible” by alleging Defendant (1) knew that such a provision held special meaning in the 16 industry and (2) fulfilled its rate plan optimization with other customers by providing 17 optimization reports. Id. at 680. Thus, the Court finds that City Contract I is at least reasonably 18 susceptible to Plaintiff’s interpretation that the optimization provision required optimization 19 reports. Halicki Films, 547 F.3d at 1223. 20 Moreover, any ambiguity regarding Defendant’s obligation to provide optimization 21 reports dissipated once City Contract I incorporated the terms of the WSCA I. The WSCA I RFP 22 provides a subscriber is “[a] using entity who contracts to receive and pay for wireless or walkie- 23 talkie services.” (ECF No. 68-4 at 7.) Further, the WSCA I RFP states a quarterly optimization 24 report for each wireless service subscriber shall be submitted. (ECF No. 68-4 at 9.) Plaintiff is an 25 entity who contracted with Defendant for wireless services, (ECF No. 1-2 ¶ 1), and thus Plaintiff 26 is considered a subscriber. As a subscriber, a reasonable interpretation of the WSCA I requires a 27 quarterly optimization report be submitted regarding Plaintiff. 28 In sum, the Court finds that based on the factual allegations in the Complaint, City 1 Contract I is reasonably susceptible to the interpretation that Defendant was required to provide 2 Plaintiff with quarterly optimization reports. Therefore, the Court declines to grant Defendant’s 3 motion to dismiss based on City Contract I. 4 ii. City Contract II 5 Defendant argues City Contract II, which adopted the terms of the WSCA I, did not 6 reference optimization or optimization reports in the “Quarterly Reports” provision. (ECF No. 67 7 at 10–11.) Plaintiff contends the plain language and structure of the WSCA I confirms that 8 Defendant was required to provide quarterly optimization reports to Plaintiff. (ECF No. 70 at 9 14.) 10 As stated above, City Contract I is reasonably susceptible to the interpretation that 11 Defendant was required to provide Plaintiff with quarterly optimization reports, even more so 12 once City Contract I incorporated the terms of the WSCA I. Because City Contract II similarly 13 incorporated the terms of the WSCA I, City Contract II is also reasonably susceptible to the same 14 interpretation. The Court thus declines to grant Defendant’s motion to dismiss based on City 15 Contract II. 16 iii. City Contract III 17 Defendant argues City Contract III did not require Defendant to provide quarterly 18 optimization reports to Plaintiff. (ECF No. 67 at 16.) Plaintiff asserts City Contract III required 19 Defendant to provide Plaintiff with optimization reports upon request, but reports provided by 20 Defendant lacked the required optimization content. (ECF No. 70 at 18–19.) Defendant responds 21 that Plaintiff has not specifically alleged an occasion where a report was requested and not 22 provided. (ECF No. 71 at 7.) 23 Defendant’s argument is unavailing. City Contract III explicitly provided for rate 24 optimization reports upon request. (ECF No. 68-7 at 4.) Plaintiff alleges that although Defendant 25 provided reports, the reports Defendant provided were insufficient because they did not analyze 26 the cost of service under all available rate plans and identify the lowest cost alternative plan. 27 (ECF No. 1-2 ¶ 119.) Plaintiff need not allege a specific occasion when a requested report was 28 not provided because the thrust of Plaintiff’s claim is that the reports—though provided—were 1 deficient. See Twombly, 550 U.S. at 570 (holding the plaintiff is not required to allege “‘specific 2 facts’ beyond those necessary to state his claim”). Accordingly, Defendant’s contention City 3 Contract III did not require optimization reports is not grounds to dismiss Plaintiff’s claims. 4 In sum, Plaintiff’s allegations regarding Defendant’s obligation to provide optimization 5 reports under City Contracts I, II, and III are sufficient to survive Defendant’s motion to dismiss. 6 B. CFCA Requires Objective Falsity 7 Defendant asserts Plaintiff’s first and second causes of action should be dismissed for 8 lacking objective falsity, as required by the CFCA. (ECF No. 67 at 17.) Plaintiff responds its 9 allegations demonstrate objective falsity because the violated contractual terms are not vague, 10 imprecise, or subjective. (ECF No. 70 at 19.) 11 “The CFCA is intended ‘to supplement governmental efforts to identify and prosecute 12 fraudulent claims made against state and governmental entities.’” State ex rel. McCann v. Bank 13 of Am., N.A., 191 Cal. App. 4th 897, 903 (2011) (quoting Rothschild v. Tyco Int’l. (US), Inc., 83 14 Cal. App. 4th 488, 494 (2000)). Thus, “the CFCA must be construed broadly so as to give the 15 widest possible coverage and effect to the prohibitions and remedies it provides.” San Francisco 16 Unified Sch. Dist. ex rel. Contreras v. First Student, Inc., 224 Cal. App. 4th 627, 638 (2014) 17 (quoting San Francisco Unified Sch. Dist. ex rel. Contreras v. Laidlaw Transit, Inc., 182 Cal. 18 App. 4th 438, 446 (2010)). 19 Under the CFCA, any person who knowingly submits a false claim to the state or a 20 political subdivision may be sued for damages and civil penalties. In re Bank of New York 21 Mellon Corp. False Claims Act Foreign Exch. Litig., 851 F. Supp. 2d 1190, 1195 (N.D. Cal. 22 2012); State ex rel. Harris v. PricewaterhouseCoopers, LLP, 39 Cal. 4th 1220, 1223 (2006) 23 (citing Cal Gov’t Code § 12650 et seq.). “The statement or conduct alleged must represent an 24 objective falsehood.” United States ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 25 376 (4th Cir. 2008); see also United States ex rel. Yannacopoulos v. Gen. Dynamics, 652 F.3d 26 818, 836 (7th Cir. 2011).3
27 3 “The CFCA was modeled on the FCA, and state courts turn to federal FCA case law for guidance in interpreting the CFCA.” United States v. Somnia, Inc., 339 F. Supp. 3d 947, 954 (E.D. Cal. 2018) (citing Mao’s 28 Kitchen v. Mundy, 209 Cal. App. 4th 132, 146 (2012)); see also Fassberg Constr. Co. v. Hous. Auth. of City of Los 1 Here, the Complaint repeatedly references how rate plan optimization has a specific 2 meaning in the wireless industry and that Defendant knew of this meaning. (ECF No. 1-2 ¶¶ 6, 3 21, 25, 134.) More specifically, the Complaint alleges Defendant fulfilled its rate plan 4 optimization requirements with private customers by providing optimization reports. (ECF No. 5 1-2 ¶ 134.) Taking Plaintiff’s factual allegations as true and drawing reasonable inferences in its 6 favor, it is plausible to conclude that Defendant’s failure to fulfill its contractual obligations 7 would constitute objective falsity. See United States ex rel. Lindenthal v. Gen. Dynamics Corp., 8 61 F.3d 1402, 1412 (9th Cir. 1995) (holding the defendant satisfied its contractual obligations and 9 therefore the defendant did not submit any “false or fraudulent” claims). 10 Thus, the Court declines to dismiss the first and second causes of action based on 11 Defendant’s argument that Plaintiff’s claims fail to plead objective falsity. 12 C. Sufficient Particularity 13 Defendant argues Plaintiff’s first and second causes of action should be dismissed because 14 the Complaint lacks particularity as required by Rule 9(b). (ECF No. 67 at 19.) Plaintiff 15 responds that its allegations meet Rule 9(b)’s particularity requirements. (ECF No. 70 at 17.) 16 Defendant challenges the particularity of Plaintiff’s Complaint on three grounds: (1) Plaintiff’s 17 claim relies on a nonexistent contractual obligation; (2) Plaintiff improperly groups Carrier 18 Defendants together without articulating each Defendant’s individual liability; and (3) Plaintiff’s 19 allegations lack plausibility because they are contradictory. (ECF No. 67 at 19–21.) The Court 20 will address each of Defendant’s arguments in turn. 21 i. Particularity of Optimization Reports Allegations 22 Defendant first argues Plaintiff cannot plead fraud with particularity because Plaintiff 23 points to a contractual obligation that did not exist: the obligation to provide quarterly 24 optimization reports. (ECF No. 67 at 19–20; ECF No. 71 at 9.) In response, Plaintiff claims this 25 obligation did exist and thus Defendant’s argument has no bearing on particularity requirement. 26 (ECF No. 70 at 22.) 27 “Claims under the False Claims Act are . . . subject to Rule 9(b). United States ex rel.
28 Angeles, 152 Cal. App. 4th 720, 735 (2007). 1 Swoben v. United Healthcare Ins. Co., 848 F.3d 1161, 1180 (9th Cir. 2016). A False Claims Act 2 claim “must state with particularity the circumstances constituting fraud.” Fed. R. Civ. P. 9(b). 3 “To satisfy this requirement, a pleading must identify ‘the who, what, when, where, and how of 4 the misconduct charged,’ as well as ‘what is false or misleading about [the purportedly 5 fraudulent] statement, and why it is false.’” United States ex rel. Silingo v. WellPoint, Inc., 904 6 F.3d 667, 677 (9th Cir. 2018) (alteration in original) (quoting United States ex rel. Cafasso v. 7 Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1055 (9th Cir. 2011)). 8 Defendant fails to demonstrate Plaintiff’s CFCA claims should be dismissed for lack of 9 sufficient particularity. As stated, the Court has determined City Contracts I, II, and III are 10 reasonably susceptible to the interpretation that Defendant was required to provide Plaintiff with 11 quarterly optimization reports. As such, Defendant’s argument that the Complaint lacks 12 particularity because it involves a nonexistent contractual obligation is not grounds to dismiss the 13 first and second causes of action. 14 ii. Collective Allegations 15 Defendant next contends Plaintiff impermissibly groups Carrier Defendants together and 16 fails to articulate how Defendant failed to comply with the contractual provisions. (ECF No. 67 17 at 20; ECF No. 71 at 10.) In response, Plaintiff argues separating out the collective and identical 18 allegations against Carrier Defendants would serve no practical purpose. (ECF No. 70 at 22–23.) 19 “Rule 9(b) does not allow a complaint to merely lump multiple defendants together but 20 requires plaintiffs to differentiate their allegations when suing more than one defendant . . ..” 21 Swoben, 848 F.3d at 1184 (internal quotation marks omitted) (quoting United States ex rel. Lee v. 22 Corinthian Colls., 655 F.3d 984, 997 (9th Cir. 2011)). However, “[t]here is no flaw in a pleading 23 . . . where collective allegations are used to describe the actions of multiple defendants who are 24 alleged to have engaged in precisely the same conduct.” Silingo, 904 F.3d at 677 (internal 25 quotation marks omitted) (quoting Swoben, 848 F.3d at 1184). 26 Plaintiff’s Complaint alleges each of Carrier Defendants perpetrated its own independent 27 fraud. (ECF No. 1-2 ¶¶ 1, 4–6.) Thus, Plaintiff’s use of collective allegations is permissible 28 under Rule 9(b) because each Carrier Defendant is alleged to have engaged in precisely the same 1 conduct. Accordingly, the Complaint’s collective allegations are not grounds to dismiss 2 Plaintiff’s first and second causes of action. 3 iii. Contradictory Allegations 4 Defendant argues that Plaintiff’s allegations lack plausibility because they are 5 contradictory. (ECF No. 67 at 21.) Specifically, Defendant contends Plaintiff’s allegation that 6 Carrier Defendants sporadically prepared reports related to rate plan selections directly 7 contradicts Plaintiff’s allegation that Defendant did not “work with” Plaintiff. (ECF No. 67 at 8 21.) Plaintiff argues that its allegations are not contradictory. (ECF No. 70 at 23–24.) 9 The allegations identified by Defendant are not contradictory because they are made 10 compatible through explanation in the Complaint. Plaintiff alleges Carrier Defendants promised 11 to prepare quarterly optimization reports, but Carrier Defendants failed to produce these reports 12 and Plaintiff did not receive them. (ECF No. 1-2 ¶ 98.) Thereafter, Plaintiff admits Carrier 13 Defendants sporadically prepared reports related to rate plan selections. (ECF No. 1-2 ¶ 98.) 14 However, the Complaint explains the sporadically prepared reports lacked the substance and 15 frequency to be considered optimization reports. (ECF No. 1-2 ¶ 98.) Because the reports 16 Defendant provided did not allegedly satisfy the contractual requirements, it is not contradictory 17 for Plaintiff to allege Defendant failed to “work with” Plaintiff as required by City Contracts I, II, 18 and III. Therefore, Defendant’s argument that the Complaint contains contradictory allegations is 19 not grounds to dismiss the first and second causes of action. 20 D. Unjust Enrichment 21 Defendant asserts Plaintiff’s unjust enrichment cause of action must be dismissed because 22 it is based on Defendant’s alleged breach of contract and therefore duplicative. (ECF No. 67 at 23 22.) Plaintiff argues it pleaded unjust enrichment in the alternative if the Court determines there 24 is not an enforceable agreement in the present matter. (ECF No. 70 at 24.) In reply, Defendant 25 argues Plaintiff cannot plead unjust enrichment because it did not plead the absence of an 26 enforceable agreement. (ECF No. 71 at 10.) 27 A court may construe an unjust enrichment claim for relief as a quasi-contract claim 28 seeking restitution. Astiana v. Hain Celestial Grp., Inc., 783 F.3d 753, 762 (9th Cir. 2015) (citing 1 Rutherford Holdings, LLC v. Plaza Del Rey, 223 Cal. App. 4th 221, 231 (2014)). “But a plaintiff 2 may not ‘pursue or recover on a quasi-contract claim if the parties have an enforceable agreement 3 [on] a particular subject matter.’” Copart, Inc., 339 F. Supp. 3d at 983 (alteration in original) 4 (quoting Klein v. Chevron U.S.A., Inc., 202 Cal. App. 4th 1342, 1388 (2012)). Further, to allege a 5 quasi-contract claim, a party “must plausibly allege the absence of any applicable and enforceable 6 contract provisions, even if in the alternative.” Copart, Inc., 339 F. Supp. 3d at 984; see also 7 Damian v. A-Mark Precious Metals, Inc., No. CV 16-7198 FMO (SSx), 2017 WL 6940515, at *7 8 (C.D. Cal. Aug. 28, 2017) (dismissing unjust enrichment claim with leave to amend because the 9 plaintiff did not allege his contracts with the defendant were void). 10 Plaintiff expressly alleged the existence of enforceable wireless services contracts with 11 Defendant. (ECF No. 1-2 ¶¶ 157–162.) Plaintiff did not allege in the alternative that the 12 contracts were unenforceable or invalid. (See ECF No. 1-2 ¶¶ 163–166.) Therefore, Plaintiff is 13 precluded from asserting its unjust enrichment claim concerning the wireless services. See 14 Copart, 339 F. Supp. 3d at 984. Accordingly, Plaintiff’s unjust enrichment cause of action is 15 dismissed with leave to amend. 16 IV. CONCLUSION 17 For the foregoing reasons, the Court hereby GRANTS in part and DENIES in part 18 Defendant’s Motion to Dismiss Plaintiff’s Consolidated Complaint. (ECF No. 67.) The Court 19 orders as follows: 20 1. Defendant’s Motion to Dismiss as to Plaintiff’s first through fourth causes of action is 21 DENIED; and 22 2. Defendant’s Motion to Dismiss Plaintiff’s fifth cause of action for unjust enrichment 23 is GRANTED with leave to amend. 24 IT IS SO ORDERED. 25 Dated: October 28, 2019 26 27 28