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City of Los Angeles ex rel. Knudsen v. New Cingular Wireless National Accounts, LLC

United States District Court, E.D. California

October 28, 2019




         This matter is before the Court pursuant to Defendant New Cingular Wireless National Accounts, LLC dba Cingular Wireless, now known as AT&T Mobility National Accounts LLC's (“Defendant”) Motion to Dismiss Plaintiff's Complaint in Intervention. (ECF No. 55.) Plaintiff City of Los Angeles (“Plaintiff”) filed an opposition. (ECF No. 56.) For the reasons set forth below, the Court hereby GRANTS in part and DENIES in part Defendant's Motion to Dismiss. (ECF No. 55.)

         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 two wireless and related services contracts between Plaintiff and Defendant. The first agreement (“City Contract I”) went into effect March 1, 2007. (ECF No. 1-2 ¶ 93.) The parties renewed their agreement on May 1, 2013 (“City Contract II”). (ECF No. 1-2 ¶ 94.) The parties entered into these two wireless service contracts under two group purchasing contracts. The first group purchasing contract was the Western States Contracting Alliance RFP/Contract Number 1523 (“WSCA I”). (ECF No. 1-2 ¶ 48.) The second group purchasing contract was the Western States Contracting Alliance Acting by and Through the State of Nevada and AT&T Mobility RFP/Contract Number 1907 (“WSCA II”). (ECF No. 1-2 ¶ 48.) WSCA I was in effect from 2006 to 2012, and WSCA II took effect in 2012. (ECF No. 1-2 ¶ 48.)

         On September 13, 2013, Relator Richard Knudsen filed this CFCA suit 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 Cellco Partnership dba Verizon Wireless (collectively, “Carrier Defendants”). (ECF No. 55 at 11.) The three cases were consolidated in the Los Angeles County Superior Court. 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.) On April 17, 2017, the three cases were transferred to this Court. (ECF No. 39.) Defendant filed the instant motion to dismiss on June 30, 2017. (ECF No. 55.)

         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, 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).

         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 55-1.) In its opposition, Plaintiff also submits extrinsic documents.[2] (ECF No. 56-1). 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) the contractual language at issue precludes Plaintiff's claims; (2) Plaintiff fails to adequately plead the elements of a CFCA claim; and (3) Plaintiff fails to allege fraud with particularity under Rule 9(b). (ECF No. 55 at 7-16.) The Court will address each argument in turn.

         A. Contract Interpretation

         Under California law, contracts must be interpreted “to give effect to the mutual intention of the parties as it existed at the time of contracting.” Cal. Civ. Code § 1636; see also ASARCO, LLC v. Celanese Chem. Co., 792 F.3d 1203, 1212 (9th Cir. 2015). “It is not the parties' subjective intent that matters, but rather their ‘objective intent, as evidenced by the words of the contract.'” Block v. eBay, Inc., 747 F.3d 1135, 1138 (9th Cir. 2014) (quoting Founding Members of the Newport Beach Country Club v. Newport Beach Country Club, Inc., 109 Cal.App.4th 944, 956 (2003)). The words of a contract are interpreted in their ordinary and popular sense unless used by the parties in a technical sense or given special meaning. Cal. Civ. Code § 1644; Hartford Cas. Ins. Co. v. Swift Distribution, Inc., 59 Cal.4th 277, 288 (2014) (citing AIU Ins. Co. v. Superior Court, 51 Cal.3d 807, 822 (1990)). Additionally, contractual language is interpreted in context of the whole contract. Dep't of Alcoholic Beverage Control v. Alcoholic Beverage Control Appeals Bd., 29 Cal.App. 5th 410, 418 (2018) (citing Cal. Civ. Code § 1641).

         In a dispute over the meaning of contractual language, a court must determine “whether the disputed language is reasonably susceptible to the interpretation urged by the party.” Halicki Films, LLC v. Sanderson Sales & Mktg., 547 F.3d 1213, 1223 (9th Cir. 2008) (quoting People ex rel. Lockyer v. R.J. Reynolds Tobacco Co., 107 Cal.App.4th 516, 524 (2003)) (internal quotation marks omitted). “Under California law, interpretation of a contract is a two-step process: [f]irst the court provisionally receives . . . all credible evidence concerning the parties' intentions to determine ambiguity . . .. If in light of the extrinsic evidence the court decides the language is reasonably susceptible to the interpretation urged, the extrinsic evidence is then admitted to aid in the second step-interpreting the contract.” In re Facebook PPC Advert. Litig., 709 F.Supp.2d 762, 768 (N.D. Cal. 2010) (internal quotation marks omitted) (quoting Wolf v. Superior Court, 114 Cal.App.4th 1343, 1351 (2004)). “Even if a contract appears unambiguous on its face, a latent ambiguity may be exposed by ...

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