City of Los Angeles ex rel. Knudsen v. Cellco Partnership

          ORDER

          Troy L. Nunley, United States District Judge.

         This matter is before the Court pursuant to Defendant Cellco Partnership dba Verizon Wireless's (“Defendant”) Motion to Dismiss Plaintiff's Consolidated Complaint in Intervention. (ECF No. 67.) Plaintiff City of Los Angeles (“Plaintiff”) filed an opposition. (ECF No. 70.) For the reasons set forth below, the Court hereby GRANTS in part and DENIES in part Defendant's Motion to Dismiss. (ECF No. 67.)

         I. Factual and Procedural Background

         Plaintiff contracted with Defendant for wireless airtime, wireless data, and equipment. (ECF No. 1-2 ¶ 1.) Plaintiff alleges Defendant agreed to provide Plaintiff with rate plan optimization on a quarterly or routine basis. (ECF No. 1-2 ¶¶ 2, 4.) Moreover, Plaintiff alleges Defendant was to identify the one rate plan among those offered for each wireless customer that would result in the lowest cost to Plaintiff. (ECF No. 1-2 ¶ 4.) Plaintiff further alleges Defendant was contractually obligated to provide Plaintiff with rate plan optimization reports that would permit Plaintiff to purchase wireless services at the lowest cost available. (ECF No. 1-2 ¶ 4.) However, Plaintiff alleges Defendant did not provide rate plan optimization reports to Plaintiff, resulting in millions of dollars of overcharges. (ECF No. 1-2 ¶¶ 5, 7.)

         Plaintiff's claims arise from three wireless and related services contracts between Plaintiff and Defendant: (1) Contract Number 58608 (“City Contract I”), effective July 1, 2006, (ECF No. 1-2 ¶ 46; ECF No. 68-1); (2) Contract 59277 (“City Contract II”), effective September 1, 2011, (ECF No. 1-2 ¶ 96; ECF No. 68-6); and (3) Contract 59464 (“City Contract III”), effective March 1, 2013, (ECF No. 1-2 ¶ 96; ECF No. 68-7.)

         The parties entered into the three City Contracts under three group purchasing contracts. The first group purchasing contract was the California Wireless Contract (“CWC”), a cooperative purchasing agreement between Defendant and the State of California. (ECF No. 1-2 ¶ 3.) The second group purchasing contract was the State of Nevada RFP/Contract Number 1523 (“WSCA I”). (ECF No. 1-2 ¶ 48.) The third group purchasing contract is the Western States Contracting Alliance Acting by and Through the State of Nevada and Cellco Partnership dba Verizon Wireless RFP/Contract Number 1907 (“WSCA II”). (ECF No. 1-2 ¶ 48.)

         City Contract I took effect July 1, 2006, and adopted the prices, terms, and conditions of the CWC. (ECF No. 68-1 at 4.) City Contract I contained an optimization provision which states, “Optimization: After the initial plan assignment, Verizon Wireless will routinely identify those users that are not in the most optimized plan and work with the City Department Telephone Coordinators to place users in the most optimized plan.” (ECF No. 68-1 at 5.) The CWC incorporated the State of California's electronic Request for Proposals 5014 (“eRFP 5014”) and Defendant's Final Proposal in response. (ECF No. 1-2 ¶¶ 27, 40.) Although eRFP 5014 contained a provision on wireless services optimization reports, (ECF No. 68-2 at 84-85), this provision expressly did not apply to Plaintiff as a local agency, (ECF No. 1-2 ¶ 29; ECF No. 68-2 at 84.) On October 29, 2010, Plaintiff and Defendant amended City Contract I to extend until April 2, 2011, in accordance with the WSCA I. (ECF No. 68-3 at 2.)

         City Contract II took effect September 1, 2011, and expressly adopted the terms of the WSCA I. (ECF No. 68-6 at 4.) City Contract II's optimization provision did not specifically reference optimization reports as it stated, “Verizon Wireless shall work with the City Departments optimizing the rate plans by providing bill analysis and pricing update on a regular basis. Verizon shall keep the City Departments updated with promotions and pricing updates.” (ECF No. 68-6 at 8.) The WSCA I request for proposal (“RFP”) and resulting contract required Defendant to produce a “[q]uarterly optimization report for each wireless service subscriber.” (ECF No 68-4 at 9.) Further, the WSCA I defined a subscriber as “[a] using entity who contracts to receive and pay for wireless or walkie-talkie services.” (ECF No. 68-4 at 7.)

         City Contract III took effect March 1, 2013, and adopted the terms and conditions of the WSCA II. (ECF No. 68-7 at 2.) The WSCA II RFP and resulting contract required Defendant to produce a “[q]uarterly optimization report for each wireless/broadband service subscriber.” (ECF No. 68-8 at 12.) City Contract III stated, “Verizon Wireless shall not be required to provide rate optimization reports except upon specific written request by an Authorized Contact on the account/profile for which a report is requested.” (ECF No. 68-7 at 4.)

         On September 13, 2013, Relator Richard Knudsen filed three separate CFCA actions on behalf of Plaintiff in the Los Angeles County Superior Court against Defendant, Sprint Solutions, Inc. and Nextel of California, Inc. dba Nextel Communications and Sprint Nextel, and New Cingular Wireless National Accounts, LLC dba Cingular Wireless, now known as AT&T Mobility National Accounts LLC (collectively, “Carrier Defendants”). (ECF No. 67 at 11; ECF No. 70 at 9.) The three cases were consolidated in the Los Angeles County Superior Court. (ECF No. 70 at 9.) Thereafter, Plaintiff filed a Consolidated Complaint in Intervention (“Complaint”) against Carrier Defendants on September 9, 2016. (ECF No. 1-2.)

         Plaintiff's Complaint alleges five causes of action against Carrier Defendants: (1) violation of the California False Claims Act (“CFCA”) section 12651(a)(1); (2) making false records and statements in violation of the CFCA section 12651(a)(2); (3) unfair business practices in violation of California Business and Professions Code sections 17200 et seq.; (4) breach of written contract; and (5) unjust enrichment. (ECF No. 1-2 ¶¶ 142-166.)

         On October 7, 2016, Carrier Defendants removed the three cases to the United States District Court for the Central District of California. (ECF No. 1; ECF No. 67 at 12.) On April 17, 2017, the three cases were transferred to this Court. (ECF No. 53.) Defendant filed the instant motion to dismiss on July 6, 2017. (ECF No. 67.)

         II. Standard of Law

         A motion to dismiss for failure to state a claim under Rule 12(b)(6) tests the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Federal Rule of Civil Procedure 8(a) requires that a pleading contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” See Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). Under notice pleading in federal court, the complaint must “give the defendant fair notice of what the claim . . . is and the grounds upon which it rests.” Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations omitted). “This simplified notice pleading standard relies on liberal discovery rules and summary judgment motions to define disputed facts and issues and to dispose of unmeritorious claims.” Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512 (2002).

         On a motion to dismiss, the factual allegations of the complaint must be accepted as true. Cruz v. Beto, 405 U.S. 319, 322 (1972). A court is bound to give plaintiff the benefit of every reasonable inference to be drawn from the “well-pleaded” allegations of the complaint. Retail Clerks Int'l Ass'n v. Schermerhorn, 373 U.S. 746, 753 n.6 (1963). A plaintiff need not allege “‘specific facts' beyond those necessary to state his claim and the grounds showing entitlement to relief.” Twombly, 550 U.S. at 570. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556).

         Nevertheless, a court “need not assume the truth of legal conclusions cast in the form of factual allegations.” United States ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2 (9th Cir. 1986). While Rule 8(a) does not require detailed factual allegations, “it demands more than an unadorned, the defendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678. A pleading is insufficient if it offers mere “labels and conclusions” or “a formulaic recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555; see also Iqbal, 556 U.S. at 678 (“Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.”). Moreover, it is inappropriate to assume the plaintiff “can prove facts that it has not alleged or that the defendants have violated the . . . laws in ways that have not been alleged.” Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983).

         Ultimately, a court may not dismiss a complaint in which the plaintiff has alleged “enough facts to state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 697 (quoting Twombly, 550 U.S. at 570). Only where a plaintiff has failed to “nudge[] [his or her] claims . . . across the line from conceivable to plausible, ” is the complaint properly dismissed. Id. at 680. While the plausibility requirement is not akin to a probability requirement, it demands more than “a sheer possibility that a defendant has acted unlawfully.” Id. at 678. This plausibility inquiry is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. at 679.

         If a complaint fails to state a plausible claim, “[a] district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) (en banc) (quoting Doe v. United States, 58 F.3d 484, 497 (9th Cir. 1995)); see also Gardner v. Marino, 563 F.3d 981, 990 (9th Cir. 2009) (finding no abuse of discretion in denying leave to amend when amendment would be futile). Although a district court should freely give leave to amend when justice so requires under Rule 15(a)(2), “the court's discretion to deny such leave is ‘particularly broad' where the plaintiff has previously amended its complaint.” Ecological Rights Found. v. Pac. Gas & Elec. Co., 713 F.3d 502, 520 (9th Cir. 2013) (quoting Miller v. Yokohama Tire Corp., 358 F.3d 616, 622 (9th Cir. 2004)).

         III. Analysis

         As a preliminary matter, Defendant submits several extrinsic documents in support of its motion.^[1] (ECF No. 68.) In its opposition, Plaintiff also submits extrinsic documents.^[2] (ECF No. 70-1.) Generally, “a district court may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion.” Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001) (quoting Branch v. Tunnell, 14 F.3d 449, 453 (9th Cir. 1994)). However, a court may consider extrinsic documents on a Rule 12(b)(6) motion when the parties do not contest the authenticity of the documents and the complaint necessarily relies on their contents. Id. Here, the contracts at issue and documents involved in formation of those contracts are central to Plaintiff's claims. Moreover, the Court notes that there is no apparent dispute as to the authenticity of the documents provided. Therefore, the Court will consider the relevant extrinsic evidence provided by the parties.

         Defendant moves to dismiss all Plaintiff's causes of action with prejudice. Specifically, Defendant argues: (1) each cause of action should be dismissed because Defendant had no contractual obligation to provide Plaintiff with optimization reports; (2) the first and second causes of action should be dismissed because they do not satisfy the CFCA's objectivity requirements; (3) the first and second causes of action should be dismissed because they are not pleaded with sufficient particularity under Federal Rule of Civil Procedure 9(b); and (4) the Plaintiff's fifth cause of action should be dismissed because it is duplicative. (ECF No. 67 at 2.) The Court will address each argument in turn.

         A. Contractual Obligation to Provide Quarterly ...