United States v. Association of Behavior Consultants

          ORDER GRANTING DEFENDANTS' MOTION FOR VOLUNTARY DISMISSAL OF COUNTERCLAIM AND DENYING RELATOR'S MOTION FOR ATTORNEYS' FEES AND COSTS RE: DKT. NOS. 157, 164

          JOSEPH C. SPERO UNITED STATES MAGISTRATE JUDGE.

         Before the Court is Defendants Association of Behavior Consultants' (“ABC”) and William J. Palyo's (“Palyo” and together, “Defendants”) motion for voluntary dismissal of their counterclaim in this action pursuant to Rule 41(a)(2) of the Federal Rules of Civil Procedure and Relator Deborah Cullen's (“Relator”) amended motion for attorneys' fees. Having reviewed the parties' submissions, the Court concludes that these matters are suitable for decision without a hearing. The Court GRANTS Defendants' motion for voluntary dismissal and DENIES Relator's amended motion for attorneys' fees.

         I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

         Relator filed her complaint in this False Claims Act case on March 12, 2015 (the “Federal Complaint”). Several days later, Relator filed a separate complaint against Defendants in the Superior Court of California, County of Sonoma, No. SCV-256863 alleging: (1) wrongful termination in violation of public policy; (2) whistleblower retaliation in violation of Cal. Lab. Code § 1102.5; (3) whistleblower retaliation in violation of Cal. Gov't Code § 12653; and (4) failure to pay wages owed in violation of California Lab. Code §§ 201 and 203 (the “State Complaint”). On February 5, 2016, the United States of America declined to intervene, and on August 5, 2016, the State of California also declined to intervene in this action.

         On or about March 4, 2016, the parties entered into a settlement agreement that partially resolved Relator's State Complaint (the “First Settlement Agreement”). On September 14, 2016, the parties entered into another settlement that fully settled the remaining disputes that gave rise to the State Complaint (the “Second Settlement Agreement”). Dkt. No. 99-1, Declaration of Bryan L. Malone in support of Defendants' Motion for Summary Judgment, Ex. C. The Second Settlement Agreement contained a full release of claims Relator had or would have in the future against Defendants that “in any way gr[ew] out of events . . . identified in [the State Complaint].” Id., § 1.1. Relator “expressly waive[d] all rights she has, or may have, under Section 1542 of the Civil Code of California . . . ” Id., § 1.5. The Second Settlement Agreement expressly applied to “any individual and/or representative claims of whistleblower retaliation pursuant to the Federal False Claims Act (31 U.S.C. §§ [sic] 3730(h) and the California False Claims Act (Cal. Gov. Code § 12653).” Id., § 1.6. The release did “not extend to any claim or action, known or unknown, by the United States or the State of California, or to any reward paid by the United States or the State of California, pursuant to the Federal False Claims Act (31 U.S.C. §§ 3729 et seq.), the California False Claims Act (Cal. Gov. Code §§ [sic] 12650), or any other federal or state statute or regulation whereby a government entity claims entitlement to recover funds and pays to anyone a reward for such recovery.” Id. The Second Settlement Agreement contained an indemnification provision whereby

[P]laintiff agrees to defend, indemnify, protect and hold the released parties harmless from any and all liens, rights of subrogation, indemnification claims, contribution claims, defense claims, losses, liability, actions, damages, causes of action, judgments, costs and expenses, including attorney's fees, whatsoever made by or sustained by or arising from any person, corporation, partnership, state or federal government, governmental agency, hospital, or any other medical provider, health care provider, disability or insurance benefits provider, workers compensation carrier, Medicare, Medicaid, Medi-Cal or any other entity arising in whole or in part out of the incident(s), or in any way connected to the allegations in this action.

Id., § 4.3. After the parties entered into the Second Settlement Agreement, Relator requested dismissal with prejudice of the state court case, which the clerk of court entered on November 7, 2016.

         The Court lifted the seal on December 7, 2016 and ordered Relator to serve the Federal Complaint on Defendants. On March 3, 2017, Defendants answered the Federal Complaint and asserted the following counterclaims against Relator: (1) breach of contract; (2) express indemnity; (3) implied indemnity; (4) contribution; and (5) a request for declaratory relief. Defendants' counterclaim is based upon the previously-executed settlement agreement. Defendants argued that the release provision contained in the Second Settlement Agreement applies to individual and/or representative claims of whistleblower retaliation pursuant to the Federal False Claims Act (31 U.S.C.§§3730(h)) and the California False Claims Act (California Government Code § 12653). In addition, Defendants argued that Relator agreed to indemnify and hold harmless Defendants from any and all losses, liability, damages, causes of action, costs and expenses, including attorney's fees, asserted from any person, government or agency arising out of the incidents set forth in the allegations of the Federal Complaint.

         On March 23, 2017, Relator moved to strike Defendants' counterclaim under California's anti-SLAPP statute. On May 18, 2017, the Court denied Relator's motion to strike Defendants' counterclaim. On June 13, 2017 and June 16, 2017, respectively, Relator filed a motion for relief from the order denying Relator's motion to strike Defendants' counterclaim and a motion to dismiss Defendants' counterclaim. The Court denied both motions in an order dated September 1, 2017. Relator also filed a motion for summary judgment on Defendants' counterclaim on August 1, 2017 but Relator later withdrew her motion for summary judgment on August 29, 2017. Dkt. No. 83. Relator moved for Rule 11 sanctions against Defendants on the grounds that their counterclaims were frivolous. The Court denied that motion on September 11, 2017.

         On May 9, 2019, the Court granted Defendants' motion for summary judgment on the Federal Complaint but denied Defendants' motion for summary judgment on the counterclaim. The Court recognized that the parties dispute the meaning of the release and indemnification provisions of the Second Settlement Agreement. Dkt. No. 133 at 25-30. The Court denied summary judgment on the interpretation of the provisions, finding that Relator had raised, at a minimum, a real dispute over how to properly interpret these provisions of the Second Settlement Agreement, if not made the stronger argument. Dkt. No. 133 at 30. However, because Relator did not move for summary judgment on the counterclaim, the Court could only deny Defendants' motion.

         On June 6, 2019, Relator filed a motion for partial new trial or in the alternative, to alter or amend the judgment set forth in the Court's May 9, 2019 Order. On July 18, 2019, the Court denied Relator's motion for partial new trial or in the alternative, to alter or amend the judgment set forth in the Court's May 9, 2019 Order. As a result of the Court's order, Defendants' counterclaim is the only remaining claim in this action.

         On November 19, 2019, Defendants filed a motion for voluntary dismissal of their counterclaim without prejudice. On December 9, 2019, Relator filed an amended motion for attorneys' fees incident to the dismissal of the counterclaim.

         II. LEGAL STANDARD

         A. ...