United States District Court, E.D. California
CITY OF LOS ANGELES ex rel. RICHARD KNUDSEN, Plaintiff,
SPRINT SOLUTIONS, INC.; NEXTEL OF CALIFORNIA, INC. dba NEXTEL COMMUNICATIONS AND SPRINT NEXTEL; and DOES 1-10, Defendants.
L. NUNLEY UNITED STATES DISTRICT JUDGE.
matter is before the Court pursuant to Defendants Sprint
Solutions, Inc. and Nextel of California, Inc.'s
(collectively, “Defendants”) Motion to Dismiss
Plaintiff's Consolidated Complaint in Intervention. (ECF
No. 82.) Plaintiff City of Los Angeles
(“Plaintiff”) filed an opposition. (ECF No. 89.)
For the reasons set forth below, the Court hereby GRANTS in
part and DENIES in part Defendants' Motion to Dismiss.
(ECF No. 82.)
Factual and Procedural Background
contracted with Defendants for wireless airtime, wireless
data, and equipment. (ECF No. 1-2 ¶ 1.) Plaintiff
alleges Defendants agreed to provide Plaintiff with rate plan
optimization on a quarterly or routine basis. (ECF No. 1-2
¶¶ 2, 4.) Moreover, Plaintiff alleges Defendants
were 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 Defendants were 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 Defendants did not provide rate plan optimization
reports to Plaintiff, resulting in millions of dollars of
overcharges. (ECF No. 1-2 ¶¶ 5, 7.)
claims arise from three wireless and related services
contracts between Plaintiff and Defendants: (1) Contract
Number 58644 (“City Contract I”), effective
October 27, 2006, (ECF No. 1-2 ¶ 44; ECF No. 82-3); (2)
Contract 59288 (“City Contract II”), effective
July 1, 2011, (ECF No. 1-2 ¶ 95; ECF No. 82-7); and (3)
Contract 59510 (“City Contract III”), effective
February 1, 2013, (ECF No. 1-2 ¶ 95; ECF No. 82-8.)
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 Defendants 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 Sprint Solutions, Inc.
RFP/Contract Number 1907 (“WSCA II”). (ECF No.
1-2 ¶ 48.)
Contract I took effect October 27, 2006, and adopted the
prices, terms, and conditions of the CWC. (ECF No. 82-3 at
2.) City Contract I contained an optimization provision which
states, “Optimization: After the initial plan
assignment, Nextel/Sprint 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. 82-3 at 3.) The CWC
incorporated the State of California's electronic Request
for Proposals 5014 (“eRFP 5014”) and
Defendants' Final Proposal in response. (ECF No. 1-2
¶¶ 27, 40.) Although eRFP 5014 contained a
provision on wireless services optimization reports, (ECF No.
82-4 at 84- 85), this provision expressly did not apply to
Plaintiff as a local agency, (ECF No. 1-2 ¶ 29; ECF No.
82-4 at 84.) On October 29, 2010, Plaintiff and Defendants
amended City Contract I to extend until April 2, 2011, in
accordance with the WSCA I. (ECF No. 82-5 at 2.)
Contract II took effect July 1, 2011, and adopted the prices,
terms, and conditions of the WSCA I. (ECF No. 82-7 at 2.)
City Contract II did not specifically mention optimization.
(See ECF No. 82-7.) The WSCA I request for proposal
(“RFP”) and resulting contract required
Defendants to produce a “[q]uarterly optimization
report for each wireless service subscriber.” (ECF No
82-6 at 19.) Further, the WSCA I RFP defined a subscriber as
“[a] using entity who contracts to receive and pay for
wireless or walkie-talkie services.” (ECF No. 82-6 at
Contract III took effect February 1, 2013, and adopted the
terms and conditions of the WSCA II. (ECF No. 82-8 at 2.)
Similar to the WSCA I RFP, the WSCA II RFP defined a
subscriber as “[a] using entity who contracts to
receive and pay for wireless services.” (ECF No. 82-9
at 20.) Additionally, the WSCA II RFP and resulting contract
required Defendants to produce a “[q]uarterly
optimization report for each wireless/broadband service
subscriber.” (ECF No. 82-9 at 23.) City Contract
III's optimization provision states, “After the
initial plan assignment, Sprint Solutions will, upon written
request of the City (but in no event more than once per
quarter), 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. 82-8 at 4.)
September 13, 2013, Relator Richard Knudsen filed three
separate CFCA actions on behalf of Plaintiff in the Los
Angeles County Superior Court against Defendants, Cellco
Partnership dba Verizon Wireless, and New Cingular Wireless
National Accounts, LLC dba Cingular Wireless, now known as
AT&T Mobility National Accounts LLC (collectively,
“Carrier Defendants”). (ECF No. 82-1 at 9; ECF
No. 89 at 9.) The cases were consolidated in the Los Angeles
County Superior Court. (ECF No. 89 at 9.) Thereafter,
Plaintiff filed a Consolidated Complaint in Intervention
against Carrier Defendants on September 9, 2016. (ECF No.
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.)
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. 82-1 at 9.) On April 17,
2017, the three cases were transferred to this Court. (ECF
No. 53.) Defendants filed the instant motion to dismiss on
June 30, 2017. (ECF No. 82.)
Standard of Law
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, 677-78 (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).
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 (2007).
“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).
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).
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.
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)).
preliminary matter, Defendants submit several extrinsic
documents in support of their motion. (ECF No. 82-2.) In its
opposition, Plaintiff also submits several extrinsic
documents. (ECF No. 89-1.) 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.
move to dismiss all Plaintiff's causes of action.
Specifically, Defendants argue: (1) each cause of action
should be dismissed because Defendants had no contractual
obligation to provide Plaintiff with optimization reports;
(2) the first and second causes of actions should be
dismissed because they do not satisfy the CFCA's
objectivity requirements; (3) the first and second causes of
actions should be dismissed because they are not pleaded with
sufficient particularity under Federal Rule of Civil
Procedure 9(b); and (4) Plaintiff's fifth cause of action
should be dismissed because it is not independently
sustainable. (ECF No. 82-1 at 6.) The Court will address each
argument in turn.
Contractual Obligation to Provide Quarterly ...