Peralta v. California Franchise Tax Board

124 F. Supp. 3d 993, 2015 U.S. Dist. LEXIS 111920, 2015 WL 5021665
CourtDistrict Court, N.D. California
DecidedAugust 24, 2015
DocketCase No. 15-cv-01595-WHO
StatusPublished
Cited by5 cases

This text of 124 F. Supp. 3d 993 (Peralta v. California Franchise Tax Board) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Peralta v. California Franchise Tax Board, 124 F. Supp. 3d 993, 2015 U.S. Dist. LEXIS 111920, 2015 WL 5021665 (N.D. Cal. 2015).

Opinion

ORDER GRANTING MOTION TO DISMISS; DENYING MOTION FOR SANCTIONS

WILLIAM H. ORRICK, District Judge

INTRODUCTION

Pro se plaintiff Leslie Peralta accuses officials of the California Franchise Tax Board (“FTB”) of misappropriating her patented method for locating and collecting governmental tax revenues in lien status for federal, state and local governments. She brings causes of action for patent infringement and related state-law claims- against the FTB and John Chiang, California State Controller and Chair of the FTB, Selvi Stanislaus, Executive Director of the FTB, and Nancy Parker, in-house counsel for the FTB. Peralta also accuses California Attorney General Kamala Harris and Deputy Attorney General Krista Dunzweiler of improperly- defending the FTB - against these charges and of fraudulently concealing a conflict which bars the representation. •

The Eleventh Amendment bars claims in federal court against state agencies and state officials acting in their official capacities. Peralta’s patent claim for damages against the FTB and FTB officials in their official capacities is therefore DISMISSED WITH PREJUDICE. However, the Eleventh Amendment does not bar claims against státe officials acting in their individual capacities or for injunctive relief. Peralta’s infringement claims for injunctive relief and against the FTB officials in their individual capacities are "therefore DISMISSED WITH , LEAVE TO AMEND. Her state-law., claims, aside [996]*996from her contract claim, are time-barred and are DISMISSED WITH PREJUDICE. Her contract claim against the FTB defendant is DISMISSED WITH LEAVE TO AMEND because, as pleaded, it does not state claims against the defendants in their individual capacities and is barred by the Eleventh Amendment and for failure to exhaust administrative remedies. . Her contract claims against the Attorney General defendants are DISMISSED WITH PREJUDICE because Peralta cannot plausibly plead that those defendants acted in their individual capacities in their representation of the FTB defendants.1

BACKGROUND

In 2005, Peralta applied for a patent on her invention of a method for locating and collecting governmental tax revenues in lien status for federal, state and local governments. Compl. ¶ 35 [Dkt. No. 1]. In May 2006, while her patent application was pending, Peralta began marketing her invention to the FTB. Id. ¶ 37. In December 2006, the FTB executed a Non-Disclosure and Non-Use Agreement (“NDA”) with Peralta in order to review her invention. Id. ¶ 38. The NDA was prepared by defendant Parker, in-house counsel for the FTB and signed by non-party Carol Williams on behalf of the FTB. Id.) Dkt. No. 1-1.

In March 2007, the FTB advised Peralta that it was unable to use her invention. Id. ¶ 39. Peralta’s “contact” at the FTB informed her that the confidential information she had submitted for review would be turned over to the legal department and that the FTB would be back in touch with her. Id. Over the next year, Peralta continued marketing her invention to the FTB while repeatedly asking the FTB to return her intellectual property. Id. ¶¶ 40-44. The FTB returned the intellectual property to her in April 2008, along with a written statement that it could not use her invention. Id. ¶ 44.

The Patent and Trademark Office issued a patent on Peralta’s invention on September 1, 2009. Id. ¶ 45. The patent, entitled “Escrow Method for Settlement of Tax Liens (EMSTL’tm) (Federal, State, Local) of Lienholders Against Real Property (Residential, Commercial, Other),” was assigned U.S. Patent Number 7,584,129. Id.) Compl. Ex. 4.

In 2011, Peralta prepared to market her invention to the California Department of Finance. Id. ¶ 47. To prepare, she reviewed the FTB website for potentially useful information regarding revenue and taxation codes. Id. On September 5, 2011, in the course of her review, Peralta “was stunned to discover clear evidence of unauthorized use” of her now-patented invention on the FTB website. Id. ¶ 48. She wrote a cease and desist letter to defendant Stanislaus, the director of the FTB. Id. ¶ 49. In response, the FTB “admitted to such use but falsely claimed that such use was not infringing.” Id. Additional correspondence between Peralta and the FTB followed, with the same result. Id. Despite her warnings, the FTB continues to infringe the patent.

In September 2012, Peralta submitted a claim to the California Government Claims Board for the alleged misappropriation of her invention. Id. ¶ 51. In response, the board informed her that she needed to pay [997]*997a $25 fee to pursue her claim. Id. She decided not to pursue the claim process, choosing to pursue a legal action instead.2 Id.

In August 2014, Peralta filed a civil action against the FTB defendants in California state court, alleging trade secret misappropriation and related state-law claims. Id. ¶ 53. She was “astounded” to learn that the California Attorney General, represented by Deputy Attorney General Dunzweiler, was defending the FTB defendants in that action and “researched the inappropriateness of the situation.” She discovered that the California Attorney General had received a $200,000 federal grant to prosecute intellectual property theft in California. Id. ¶ 55. In December 2014, she requested a copy of the grant from California Attorney General Harris under the California Public Records Act, but she was never provided a copy of the grant. Id.

In February 2015, Peralta obtained information about the grant “from a cooperative federal source.” Id. ¶58. After reviewing the terms of the grant, she determined that by accepting federal funds and participating in a program to prosecute intellectual .property crimes, Attorney General Harris had exercised her authority to waive California’s Eleventh Amendment immunity from suit in federal court. Id. ¶ 58. She contends that Attorney General Harris and Deputy Attorney General Dunzweiler fraudulently concealed the federal grant from her in order to subject her to “years of oppressive litigation in state court.” Id. ¶60. She also alleges that the Attorney General’s representation of the FTB defendants in the state litigation against claims of intellectual property theft violates the Attorney- General’s agreement with .the federal government to investigate and prosecute intellectual property theft, for which it accepted the federal grant. After resolving that California had waived its immunity from suit in federal court, Peralta dismissed her state action and filed suit in federal court, arguing that the federal court has original jurisdiction over this matter based on her patent infringement claim. Id. ¶ 58.

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Bluebook (online)
124 F. Supp. 3d 993, 2015 U.S. Dist. LEXIS 111920, 2015 WL 5021665, Counsel Stack Legal Research, https://law.counselstack.com/opinion/peralta-v-california-franchise-tax-board-cand-2015.