Lopez v. Booz Allen Hamilton, Inc.

Opinion

JOSEPH LOPEZ, JOSHUA SARRIS, No. 2:20-cv-01310-JAM-JDP CODY DANTE, and SHANE PECK, ORDER GRANTING DEFENDANT’S Plaintiffs, MOTION TO DISMISS v.

and DOES 1 through 20, inclusive,

Defendants. This matter is before the Court on Booz Allen Hamilton’s (“Defendant”) Motion to Dismiss for failure to plead allegations of fraud with specificity and for failure to state a claim upon which relief can be granted. Mot., ECF No. 6. Joseph Lopez, Joshua Sarris, Cody Dante, and Shane Peck (“Plaintiffs”) filed an opposition to Defendant’s motion. Opp’n, ECF No. 8. Defendant replied. Def.’s Reply, ECF No. 9. After consideration of the parties’ briefing on the motion and relevant legal authority, the Court GRANTS Defendant’s Motion to Dismiss.1

1 This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled for October 27, 2020. In 2018, Defendant Booz Allen Hamilton (“BAH”) entered into a contract with the U.S. Department of the Air Force (“DAF”) to provide IT services at the Beale Air Force base in Yuba County, California. See Compl. ¶¶ 6-8, ECF No. 1. The contract (“Mission Planning Cell”) required Defendant to recruit IT professionals to assist the DAF with processing and analysis of reconnaissance information from the DAF’s 99th Squadron. Compl. ¶ 7. The IT work was to be performed on-site at the Beale Air Force base. Id. Plaintiffs are four IT professionals who were recruited to work on Mission Planning Cell by either Defendant or one of the IT employment agencies Defendant used for the contract. Compl. ¶¶ 8,11. Plaintiffs all resigned from their prior jobs and relocated for the job at Beale. Compl. ¶¶ 14, 20. Specifically, in November 2018, Joshua Sarris relocated from Santa Clara, California, where he was doing IT work for a medical provider. Compl. ¶ 21. Joseph Lopez left a job in Sacramento, California with another defense contractor. Compl. ¶ 22. Cody Dante relocated from Hawaii and took a large pay cut from his prior job. Compl. ¶ 23. Finally, Shane Peck relocated in September 2018 from Colorado Springs, Colorado, where he was doing IT work in cybersecurity. Compl. ¶ 24. Based on Defendant’s representations, Plaintiffs expected they would be doing “very technical IT work with other senior IT engineers.” Compl. ¶¶ 14-16. However, “as soon as the plaintiffs reported to Beale and began work, they learned the positions were not as advertised.” Compl. ¶ 17. The complaint paints a vivid picture of what the job was actually like day-to- day, ranging from coworkers’ pranks like hiding Mr. Saris’s golf clubs around the building to a “Cybersecurity Lead” who freely admitted to knowing nothing about computers. See Compl. ¶ 17(a)-(ii). Each of the Plaintiffs complained to their BAH supervisors. Compl. ¶ 27. Mr. Saris, Mr. Lopez, and Mr. Dante were constructively terminated in April 2019. Compl. ¶¶ 21-23. Mr. Peck was fired in June 2019. Compl. ¶ 24. On June 30, 2020, Plaintiffs filed this lawsuit against Defendant seeking monetary relief. See Compl. Plaintiffs bring the following claims against Defendant: (1) pre-employment fraud, (2) violation of California Labor Code Section 970, and (3) termination in violation of public policy. Compl. ¶¶ 28-43. Mr. Sarris brings an additional claim for rescission of contract. Id. at ¶¶ 44-49. Defendant has moved to dismiss the first claim for pre-employment fraud, the second claim for violation of Labor Code Section 970 and exemplary damages for that claim, and the fourth claim for rescission. See Mot. at 1. A. Judicial Notice Rule 201 of the Federal Rules of Evidence allows a court to take judicial notice of an adjudicative fact that is “not subject to reasonable dispute,” because it (1) “is generally known within the trial court’s territorial jurisdiction”; or (2) “can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(a)–(b). A court may take judicial notice of matters of public record. United States ex rel. Lee v. Corinthian Colleges, 655 F.3d 984, 999 (9th Cir. 2011). Matters of public record include “government documents available from reliable sources on the internet.” Cal. River Watch v. City of Vacaville, No. 2:17-cv-00524-KJM-KJN, 2017 WL 3840265, at *2 n.1 (E.D. Cal. Sept. 1, 2017). Defendant requests the Court take judicial notice of two exhibits. See Def.’s Req. for Jud. Notice (“RJN”) ECF No. 6-3. The two exhibits are: (1) the California Judicial Council’s April 6, 2020, Emergency Rules Related to COVID-19, and (2) the California Judicial Council’s May 29, 2020, Order. Id. Plaintiffs do not oppose Defendant’s request. The Court finds the two exhibits to be matters of public record, and, therefore, proper subjects of judicial notice. Accordingly, the Court GRANTS Defendant’s Request for Judicial Notice. In doing so, the Court judicially notices “the contents of the documents, not the truth of those contents.” Gish v. Newsom, No. EDCV 20-755-JGB(KKx), at *2 (C.D. Cal. April 23, 2020). B. Legal Standard A Rule 12(b)(6) motion attacks the complaint as not alleging sufficient facts to state a claim for relief. Fed. R. Civ. Proc. 12(b)(6). “To survive a motion to dismiss [under 12(b)(6)], a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) /// /// (internal quotation marks and citation omitted).2 While “detailed factual allegations” are unnecessary, the complaint must allege more than “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements.” Id. Moreover, fraud-based claims are subject to the heightened pleading standard of Rule 9(b). Fed. R. Civ. Proc. 9(b). Rule 9(b) requires a party to “state with particularity the circumstances constituting fraud or mistake.” Id. The “who, what, when, where and how of the misconduct charged” must be stated with particularity. Ebeid ex rel. U.S. v. Lungwitz, 616 F.3d 993, 998 (9th Cir. 2010) (internal quotation marks and citation omitted).3 When a party averring fraud fails to meet the heightened pleading standard of Rule 9(b), dismissal of the claim is proper. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1107 (9th Cir. 2003) (“A motion to dismiss a complaint or claim ‘grounded in fraud’ under Rule 9(b) for failure to plead with particularity is the functional equivalent of a motion to dismiss under Rule 12(b)(6) for failure to state a claim.”). ///

2 Plaintiffs cite to Conley v. Gibson, 335 U.S. 41 (1957) as providing the relevant legal standard for a 12(b)(6) motion. Opp’n at 5. However, Conley was overruled and replaced by the plausibility standard set forth in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). See also Ashcroft, 556 U.S. at 679(2009). 3 Plaintiffs again cite to inapposite authority. See Opp’n at 8- 11 (citing Stansfield v. Starkey, 220 Cal. App. 3rd 59 (1990), Lazar v. Superior Court, 12 Cal. App. 4th 631 (1996), and Lenk v. Total Western Inc., 89 Cal. App. 4th 959 (2001)). The cases cited by Plaintiff are not federal Rule 9(b) pleading cases and do not provide the relevant standard. C. Analysis 1. Rule 9(b) The parties agree that Plaintiffs’ first, second, and fourth claims are based on predicate allegations of fraud and therefore must satisfy the heightened pleading standard of Rule 9(b). See Opp’n at 8; Def.’s Reply at 1. However, the parties disagree about whether the complaint provides the requisite “who, what, when, where, and how.” Ebeid, 616 F.3d at 998. Plaintiffs insist their complaint provides the specifics of the fraud. See Opp’n at 8-11. Defendant contends Plaintiffs have not set out facts sufficient to satisfy the 9(b) standard, and asks the Court to dismiss Plaintiffs’ fraud-based claims. See Def.’s Reply at 2-5. As explained below, the Court agrees with Defendant that the complaint fails to satisfy Rule 9(b). While the complaint provides significant detail about Plaintiffs’ employment at Beale, it does not clearly set forth the pre-employment representations Defendant made to Plaintiffs. To be sure, the complaint is not completely devoid of allegations regarding Defendant’s pre-employment representations; Plaintiffs have set forth general allegations about “misrepresentations made in late 2018 by BAH in its job advertisements and the BAH recruiters for the job.” Opp’n at 11. However, these general allegations are incomplete in that they fail to provide all the necessary “who, what, when, where, and how” details. For example, the complaint states: “Joseph Lopez specifically asked before taking this job on the BAH contract if night or weekend work would be required. He was assured it would not be, but on his first day at work this proved to be untrue. The set hours of 9-5 were a reason he took this position.” Compl. ¶ 17(gg). Who assured Mr. Lopez the hours would be 9-5? When and where was this assurance made? How was the assurance knowingly false when made? Without providing the “who,” “when,” “where,” and “how,” Plaintiffs do not satisfy Rule 9(b). The examples Plaintiffs highlight in their opposition brief are likewise incomplete. For instance, Plaintiffs point to eight pre-employment misrepresentations arising from a job advertisement set forth in Paragraph 12 of the complaint. Opp’n at 8-9. Yet, the complaint does not indicate which of the four Plaintiffs received this job advertisement, or when, where, or by what means each received the advertisement. Id. Lacking these specific allegations, the complaint fails to provide Defendant with sufficient detail to be put on notice “of the particular misconduct which is alleged to constitute the fraud charge so that [he] can defend against the charge and not just deny that [he has] done anything wrong.” United States ex rel. Swoben v. United Healthcare Ins. Co., 848 F.3d 1161, 1180 (9th Cir. 2016) (internal quotation marks and citation omitted). Because Plaintiffs have not clearly and specifically set forth what representations Defendant made to them as required under Rule 9(b), their first, second, and fourth causes of action based on fraud are DISMISSED. 2. Section 970 Claim Defendant additionally requests the Court dismiss Plaintiffs’ Section 970 claim with prejudice because Plaintiffs failed to file suit within the applicable one-year statute of limitations. Mot. at 9. The parties dispute the applicable statute of limitations period for a Section 970 claim: Defendant contends the limitations period is one-year and begins to run when the plaintiff discovers or has reason to discover the fraud, see Mot. at 9-14, while Plaintiffs argue the one-year clock begins to run upon plaintiff’s termination, see Opp’n at 12-13. On November 4, 2020, the Ninth Circuit issued a memorandum in Keenan v. Cox Communications California, LLC, 2020 WL 6482390 (9th Cir. 2020), resolving the dispute in favor of Defendant’s position. This memorandum clarified: 1) a section 970 claim is subject to a one-year statute of limitations period, and 2) the claim “accrues when the plaintiff discovers, or has reason to discover, the cause of action.” Id. at *1. The panel reasoned that because a Section 970 claim is subject to mandatory double damages, the California Supreme Court would likely find it imposes a penalty, and thus apply California’s one-year limitations period for actions involving a penalty under Cal. Code Civ. Pro. Section 340(a). Id. The panel further explained: “when a plaintiff reasonably should have discovered facts for purposes of the accrual of a cause of action or application of the delayed discovery rule is generally a question of fact, properly decided as a matter of law only if the evidence . . . can support only one reasonable conclusion.” Id. (omitting internal quotes). Thus, Keenan supports Defendant’s position that the discovery of the fraud sets the anchor date for when the one-year limitations period begins to run. Pointing out Keenan is unpublished and therefore not binding on this Court, Plaintiffs ask the Court to find the one-year clock begins to run at termination not discovery of the fraud. See Pls.’ Supplemental Br., ECF No. 14. In support of their position, Plaintiffs rely on Aguilera v. Pirelli Armstrong Tire Corp, 223 F.3d 1010 (9th Cir. 2000). In Aguilera, plaintiff- employees alleged the defendant-employer fraudulently promised them permanent employment. 223 F.3d at 1013. Significantly, because the Aguilera plaintiffs could not have discovered that defendant’s representations about the permanency of their employment were fraudulent until they were actually terminated, the date of discovery of the fraud and the date of termination were the same in that case. Thus, Aguilera itself can be read as a discovery rule case, consistent with Keenan. Def.’s Supplemental Br., ECF No. 15 at 2. Finding Keenan persuasive, this Court adopts its conclusion that the applicable limitations period for a Section 970 claim is one-year and begins to accrue when the plaintiff discovers or has reason to discover the fraud. 2020 WL 6482390 at *1. Applying Keenan here, the Court finds Plaintiffs’ Section 970 claim is time-barred. The complaint alleges “as soon as the plaintiffs reported to Beale and began work, they learned the positions were not as advertised.” Compl. ¶ 17. Thus, Plaintiffs admit to discovering the fraud, or at least reason to suspect the fraud, as soon as they started working. The complaint further states each Plaintiff “resigned their prior positions and went to work at Beale… in late 2018.” Compl. ¶ 31. Taking these allegations as true and drawing inferences in Plaintiffs’ favor, the Court finds that “late 2018” could mean Plaintiffs’ work at Beale began as late as December 31, 2018. Given Plaintiffs discovered the “positions were not as advertised” “as soon as they reported to Beale,” it follows the one-year clock began to run by December 31, 2018. In fact, for Mr. Sarris and Mr. Peck’s claims, the clock started running before then: Mr. Sarris started working in November 2018 and Mr. Peck started in October 2018. Compl. ¶¶ 21, 24. The face of the complaint therefore supports only one conclusion: the one-year limitations period for all Plaintiffs ran by the end of 2019. Yet, Plaintiffs did not file this lawsuit until June 30, 2020. See Compl. Thus, Plaintiffs’ Section 970 claim is time-barred. The California Judicial Council’s emergency COVID-19 tolling orders do not change this analysis. See California Judicial Council’s April 6, 2020, Order and May 29, 2020, Order, Ex. A and Ex. B to Def.’s RJN. These orders provide only for tolling “from April 6, 2020” forward, and do not revive claims that had already expired prior to April 6, 2020, as Plaintiffs’ Section 970 claim had here. See Mot. at 13; Ex. A and B. to Def.’s RJN. In sum, the Court finds Plaintiffs’ Section 970 claim time- barred on the face of the complaint. Further, in opposition, Plaintiffs made purely legal arguments and did not proffer any facts that might lead the Court to believe Plaintiffs could add allegations to avoid dismissal on statute of limitation grounds. Accordingly, the Court finds amendment would be futile and DISMISSES this claim with prejudice. /// /// em REE ROSIN OS I III EEE II RO RIED OIE USI IED eee

D. Leave to Amend Plaintiffs have requested leave to amend. Opp’n at 14. Because Plaintiffs have not had the opportunity to amend their complaint and the Court finds that amendment would not be futile with respect to the first and fourth causes of action, the Court grants leave for those claims. See Deveraturda v. Globe Aviation Sec. Servs., 454 F.3d 1043, 1049 (9th Cir. 2006). However, leave to amend is denied as to Plaintiffs’ Section 970 claim, because as explained above, the Court finds amendment would be futile. IIl. ORDER For the reasons set forth above, the Court GRANTS Defendant’s Motion to Dismiss. Plaintiffs’ Section 970 claim is DISMISSED WITH PREJUDICE. Plaintiffs shall file their Amended Complaint within twenty days of the date of this Order. Defendant’s responsive pleading is due within twenty days thereafter. Dated: December 14, 2020 kA teiren staves odermacr 7008 11