Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_15-cv-00689/USCOURTS-caed-1_15-cv-00689-4/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Petition for Removal

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UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

SIERRA VIEW LOCAL HEALTH CARE 

DISTRICT,

Plaintiff,

v.

INFLUENCE HEALTH, INC., and DOES 

1 through 100,

Defendants.

No. 1:15-cv-00689-DAD-SAB

ORDER GRANTING DEFENDANT’S

MOTION FOR JUDGMENT ON THE 

PLEADINGS

(Doc. No. 58)

This matter came before the court on June 21, 2016, for hearing of defendant’s motion for 

judgment on the pleadings brought pursuant to Rule 12(c) of the Federal Rules of Civil Procedure

with respect to plaintiff’s California False Claims Act claims. Attorney Robert Krase appeared at 

the hearing on behalf of plaintiff Sierra View Local Health Care District (“Sierra View”). 

Attorney Daniel L. Baxter appeared on behalf of defendant Influence Health, Inc. (“Influence”).

Following oral argument, defendant’s motion was taken under submission. For the reasons stated 

below, the court will grant defendant’s motion for judgment on the pleadings.

BACKGROUND

On April 9, 2015, plaintiff Sierra View commenced this action in the Superior Court of 

California for the County of Tulare-South County Justice Center, Case No. PCU260332. (Doc.

No. 1.) On April 8, 2015, defendant Influence removed this action from state court pursuant to 28 

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U.S.C. § 1441(b). (Id.)

The case now proceeds before this court on plaintiff‘s first amended complaint (“FAC”), 

filed October 27, 2015. (Doc. No. 26.) In the FAC, plaintiff brings eight claims against 

defendant: (1) four breach of contract claims, (2) one unjust enrichment claim, (3) and three

claims under the California False Claims Act (“CFCA”), California Government Code § 12650. 

(Id. at 1.) With respect to the CFCA claims, plaintiff brings these claims in its capacity as “a 

political subdivision of the State of California.” (Id. at 18, 21, 25, ¶¶ 68, 80, 94.)

The FAC alleges in relevant part as follows. On February 26, 2010, plaintiff Sierra View 

entered into a Software License Agreement (“License Agreement”) to purchase software modules 

from the defendant Influence. (Id. at 3, ¶ 5.) Plaintiff also entered into a Software Maintenance 

Agreement (“Maintenance Agreement”) with defendant. (Id.) Defendant submitted notices of 

completion for software modules that were not finished, and in May 2011, defendant began 

wrongfully billing plaintiff maintenance fees for incomplete modules. (Id. at 5, ¶ 11.) Three 

years after beginning paying those maintenance fees, plaintiff discovered that only four of the 

twelve modules purchased from defendant were functioning. (Id. at 7, ¶ 17.) When defendant 

refused plaintiff‘s verbal and written requests for a reduction in the maintenance fees, plaintiff 

stopped payments. (Id. at 7, ¶ 18.) In January 2015, plaintiff’s counsel demanded a refund of the 

paid maintenance fees and notified defendant of plaintiff‘s CFCA claims. (Id. at 8, ¶ 19.)

On May 20, 2016, defendant filed a motion for judgment on the pleadings, arguing that 

plaintiff lacked standing to pursue CFCA claims. (Doc. No. 58.) On June 7, 2016, plaintiff filed 

their opposition to defendant’s motion for judgment on the pleadings. (Doc. No. 59.) On June 

14, 2016, defendant filed their reply to plaintiff’s opposition. (Doc. No. 60.) 

LEGAL STANDARDS 

Rule 12(c) of the Federal Rules of Civil Procedure provides that: “After the pleadings are 

closed—but early enough not to delay trial—a party may move for judgment on the pleadings.”

In reviewing a motion brought under Rule 12(c), the court “must accept all factual allegations in 

the complaint as true and construe them in the light most favorable to the nonmoving party.”

Fleming v. Pickard, 581 F.3d 922, 925 (9th Cir. 2009).

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The same legal standard applicable to a Rule 12(b)(6) motion applies to a Rule 12(c) 

motion. Dworkin v. Hustler Magazine, Inc., 867 F.2d 1188, 1192 (9th Cir. 1989). Accordingly, 

“judgment on the pleadings is properly granted when, taking all the allegations in the non-moving 

party’s pleadings as true, the moving party is entitled to judgment as a matter of law.” Marshall 

Naify Revocable Trust v. U.S., 672 F.3d 620, 623 (9th Cir.2012) (quoting Fajardo v. Cnty. of 

L.A., 179 F.3d 698, 699 (9th Cir.1999)). See also Fleming v. Pickard, 581 F.3d 922, 925 (9th Cir.

2009) (stating that “judgment on the pleadings is properly granted when there is no issue of 

material fact in dispute, and the moving party is entitled to judgment as a matter of law”). The 

allegations of the nonmoving party must be accepted as true, while any allegations made by the 

moving party that have been denied or contradicted are assumed to be false. MacDonald v. 

Grace Church Seattle, 457 F.3d 1079, 1081 (9th Cir. 2006). The facts are viewed in the light 

most favorable to the non-moving party and all reasonable inferences are drawn in favor of that 

party. Living Designs, Inc. v. E.I. DuPont de Nemours & Co., 431 F.3d 353, 360 (9th Cir. 2005).

Courts have discretion both to grant a motion for judgment on the pleadings with leave to 

amend or to simply grant dismissal of causes of action rather than grant judgment as to them. 

Lonberg v. City of Riverside, 300 F. Supp. 2d 942, 945 (C.D. Cal. 2004) (citations omitted); see 

also Pacific West Group, Inc. v. Real Time Solutions, Inc., 321 Fed. Appx. 566, 569 (9th Cir. 

2008)1; Woodson v. State of California, No. 2:15-cv-01206-MCE-CKD, 2016 WL 524870, at *2 

(E.D. Cal. Feb. 10, 2016). Generally, dismissal without leave to amend is proper only if it is clear 

that “the complaint could not be saved by any amendment.” Intri-Plex Techs. v. Crest Group, 

Inc., 499 F.3d 1048, 1056 (9th Cir. 2007) (citing In re Daou Sys., Inc., 411 F.3d 1006, 1013 (9th 

Cir. 2005)); Ascon Props., Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 1989) (noting that 

“[l]eave need not be granted where the amendment of the complaint . . . constitutes an exercise in 

futility”).

/////

/////

 

1 Citation to this unpublished Ninth Circuit opinion is appropriate pursuant to Ninth Circuit Rule 

36-3(b).

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ANALYSIS

In their motion for judgment on the pleadings, defendant argues that plaintiff, Sierra View 

Local Health District, lacks standing to pursue their CFCA claims. (Doc. No. 58.) 

Under the CFCA, any person who submits a false claim to the state or a political 

subdivision may be sued for damages and civil penalties. Cal. Gov. Code, § 12651(a); State Ex 

Rel. Harris v. PricewaterhouseCoopers, LLP, 39 Cal. 4th 1220, 1227 (2006). A political 

subdivision includes “any city, city and county, county, tax or assessment district, or other legally 

authorized local government entity with jurisdictional boundaries.” Cal. Gov. Code 

§ 12650(b)(3).

Under California Government Code § 12652, CFCA claims can only be brought by the 

Attorney General, the prosecuting authority of a political subdivision, or a private party in a qui 

tam action. Cal. Govt. Code § 12652; Los Angeles Memorial Coliseum Commission v. 

Insomniac, Inc., 233 Cal. App. 4th 803, 819 (2015). When a person has submitted a false claim 

upon political subdivision funds, or upon state and political subdivision funds, the “prosecuting 

authority of the affected political subdivision may bring an action.” Cal. Gov. Code 

§ 12652(b)(1). See also State ex rel. Harris v. PricewaterhouseCoopers, LLP, 39 Cal. 4th 1220, 

1227 (2006); State ex rel. Dockstader v. Hambyi, 162 Cal. App. 4th 480, 490 (2008) (stating that 

“CFCA authorizes the prosecuting authority of a local agency to pursue recovery only where its 

own political subdivision funds are at issue, or where both its own and state funds are at issue”). 

Under the statute, the “prosecuting authority” may be “the county counsel, city attorney, or other 

local government official charged with investigating, filing, and conducting civil legal 

proceedings on behalf of, or in the name of, a particular political subdivision.” Cal. Gov. Code 

§ 12650(b)(4); see, e.g., Debro v. Los Angeles Raiders, 92 Cal. App. 4th 940, 949 (2001) (stating 

that “it is clear from the plain language of the statue that the ‘official of the . . . political 

subdivision charged with responsibility to act’ pertains to the responsible persons with the City of 

Oakland and Alameda County”). 

California law provides for the creation and operation of hospital districts in the state. 

California Health & Safety Code § 32121. Hospital districts created under § 32121 constitute 

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“special districts,” agencies of government performing governmental or proprietary functions 

within limited boundaries. See American River Fire Protection Dist. v. Board of Supervisors, 211 

Cal. App. 3d 1076, 1077 (1989); see also Eden Tp. Healthcare Dist. v. Sutter Health, 202 Cal. 

App. 4th 208, 230 (2011) (citing Talley v. Northern San Diego County Hospital Dist., 41 Cal. 2d 

33, 40 (1953)). They have the power “[t]o sue and be sued in all courts and places and in all 

actions and proceedings whatever,” and may “employ legal counsel . . . to perform the functions 

in respect to the legal affairs of the district.” Cal. Health & Safety Code § 32121(b), (f). 

Defendant, in their motion for judgment on the pleadings, argues that plaintiff Sierra View 

lacks standing to bring its three CFCA claims because plaintiff is not a qui tam plaintiff or a 

“prosecuting authority” that may bring suit for political subdivision funds. (Doc. No. 58-1 at 4.) 

According to defendant, Sierra View “is not represented, nor is it alleged to be represented, by the 

Tulare City Counsel, a city attorney, or a government official authorized to bring suits under the 

[CFCA],” defendant contends. (Id. at 5.) Defendant argues that plaintiff therefore lacks standing 

to bring the CFCA claims and should not be granted leave to amend because amendment would 

be futile. (Id.) 

Plaintiff, opposing defendant’s motion, argues that Sierra View does have standing to 

bring CFCA claims. Plaintiff agrees that Sierra View is not a qui tam plaintiff, but contends that 

Sierra View may properly bring CFCA claims in its capacity as a “prosecuting authority” of a 

political subdivision, the Sierra View Local Health Care District. (Doc. No. 59 at 3.) Plaintiff 

makes four points in support of this contention. First, plaintiff asserts that Sierra View, as a local 

district hospital, is a political subdivision of the state of California under California Government 

Code § 12650(b)(6). (Id.) Second, plaintiff observes that the funds at issue are political 

subdivision funds under California Government Code § 12650(b)(7). (Doc. No. 59 at 3.) Third, 

plaintiff argues that Sierra View is a proper “prosecuting authority” because it has authority to 

bring suits on its own behalf under California Health & Safety Code § 32121(b). (Id. at 4–5.) 

Though acknowledging that it is being represented by private counsel, plaintiff notes that 

California’s Health & Safety Code § 32121(f) specifically authorizes hiring of private counsel for 

legal advice and assistance. (Doc. No. 59 at 4–5.) Finally, plaintiff argues that its FAC provides 

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defendant sufficient notice that plaintiff brings its CFCA claims in its capacity as prosecuting 

authority for the Sierra View district. (Id. at 5–6.) In this latter regard, plaintiff points to the 

language of the FAC, which alleges that “Plaintiff is a political subdivision of the State of 

California,” (Doc. No. 26 at 18, 21, 25, ¶¶ 68, 80, 94). Plaintiff argues that “[t]his allegation is 

sufficient to provide notice to Influence that Sierra View has all the powers and authority vested 

to Local District Hospitals by statute.” (Doc. No. 59 at 5.) Finally, plaintiff requests that in the 

event the court grants defendant’s pending motion, it be granted leave to amend the FAC with 

respect to its CFCA claims. (Id. at 6.)

In their reply, defendant argues that Health & Safety Code § 12650 does not confer 

“prosecuting authority” powers upon Sierra View. (Doc. No. 60 at 2–4.) Defendant contends 

that, while § 12650 authorizes Sierra View to stand as a party to litigation and to retain private 

counsel, the statute does not grant Sierra View the power to act as its own “prosecuting authority” 

within the meaning of the CFCA. (Id.). 

Defendant’s arguments are persuasive. The parties do not dispute that the funds at issue 

are political subdivision funds, or that Sierra View is a political subdivision of the State of 

California. The only disputed issue is thus whether Sierra View is a “prosecuting authority” that 

may properly bring CFCA claims to recover the relevant funds. The court concludes plaintiff 

Sierra View has not pled sufficient facts that, if proven, would demonstrate it acts as a 

“prosecuting authority” under the CFCA. In the FAC, plaintiff alleges that Sierra View bring its

claims as “a political subdivision of the State of California,” (Doc. No. 26 at 18, 21, 25, ¶¶ 68, 80, 

94), but does not allege or specify how Sierra View was charged with investigating, filing, or 

conducting CFCA civil legal proceedings.

2

 In opposition to defendant’s motion to dismiss, 

plaintiff notes that California law allows hospital districts such as Sierra View to “sue and be sued 

 

2

In their opposition, plaintiff also indicates that a witness, John Chivers, Chief Financial officer 

for Sierra View, could “testify under oath that he is a local government official hired by the 

elected board of directors for Sierra View, and that his job duties include, in part, investigating 

false claims made to and paid by the hospital, and when necessary hiring legal counsel to file and 

conduct civil legal proceedings on behalf of and in the name of Sierra View.” (Doc. No. 59 at 6.) 

However, plaintiff does not make any such allegations in their FAC, or otherwise allege that 

Sierra View officers are the “prosecuting authority” for the relevant political subdivision.

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in all courts,” and to obtain legal services through private counsel. Cal. Health and Safety Code § 

32121. But, as defendant indicates, the ability to stand as a party to litigation and to retain private 

counsel does not itself demonstrate Sierra View is a “prosecuting authority” within the meaning 

of Cal. Gov. Code § 12650. See Los Angeles Memorial Coliseum Commission, 233 Cal. App. 4th 

at 900 (finding that plaintiffs lacked standing to bring a CFCA claim because “allegations of the 

operative first amended complaint [did not] suggest or imply that either the Coliseum or the 

Association [plaintiffs] were otherwise ‘charged with the investigating, filing, and conducting 

civil legal proceedings in behalf of, or in the name of, a particular political subdivision’”); see 

also State ex. Rel. Hindin v. Hewlett-Packard Co., 153 Cal. App. 4th 307, 314, 320 (2007) 

(finding that an individual employee of a political subdivision did not have standing to bring a 

CFCA claim as a “prosecuting authority” because the CFCA defines prosecuting authority as “a 

public official such as the Attorney General, not a private individual such as [the plaintiff]”). 

Accordingly, even taking all the allegations in plaintiff’s FAC as true, plaintiff would lack

standing to pursue its claims under the CFCA. Accordingly, defendant’s motion will be granted. 

Whether or not plaintiff should be granted leave to amend depends on whether plaintiff 

could amend their complaint to allege facts supporting standing under Cal. Gov. Code § 12650. 

See Mueller v. Auker, 700 F.3d 1180, 1191 (9th Cir. 2012) (indicating that leave to amend should 

be granted unless it is clear the complaint could not be saved by amendment). The CFCA does 

not expressly limit the types of officials who may be “charged with investigating, filing, and 

conducting civil legal proceedings on behalf of, or in the name of” political subdivisions. Cal. 

Gov. Code § 12650. No California court has directly addressed the question of whether political 

subdivisions may bring claims on their own behalf, or retain private counsel to do so. Cf. Los 

Angeles Memorial Coliseum Commission v. Insomniac, Inc., 233 Cal. App. 4th 803, 822 (2015)

(stating that, because it was undisputed that an action was not brought by a prosecuting authority, 

“[w]e do not have to deal with whether attorneys working in a government agency or subdivision 

are or can be” prosecuting authorities). In the absence of authority suggesting that Sierra View or 

Sierra View employees are foreclosed from acting as “prosecuting authorities” under the CFCA, 

it is therefore not “clear that amendment would be futile” here. Thinket Ink Information 

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Resources, In. v. Sun Microsystems, Inc., 368 F.3d 1053, 1061 (9th Cir. 2004) (finding that leave 

to amend is properly denied if amendment would be futile). Here, it is conceivable that plaintiff 

could in good faith allege facts supporting the notion that the CFCA claims are being pursued by 

a local government official charged with investigating, filing, and conducting civil legal 

proceedings on behalf of, or in the name of, a particular political subdivision as authorized by 

California Government Code § 12650(b)(4). Accordingly, the court will exercise its discretion to 

dismiss plaintiff’s CFCA claims with leave to amend.

CONCLUSION

For the reasons stated above:

1. Defendant’s motion for judgment on the pleadings, (Doc. No. 58), is granted; 

2. Plaintiff’s CFCA causes of action are dismissed with leave to amend; and

3. If plaintiff wishes to pursue the CFCA claims, it shall file a second amended 

complaint within twenty one (21) days of the date of this order.

IT IS SO ORDERED.

Dated: August 5, 2016 

UNITED STATES DISTRICT JUDGE

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