Regie Salgado v. Truconnect
22-55721
9th Cir.Dec 22, 2023Background
- Plaintiffs, Regie Salgado and Melinda Zambrano, are former employees of TruConnect Communications, Inc., a participant in the FCC's Lifeline Program for subsidizing phone service to low-income Americans.
- The plaintiffs allege that TruConnect engaged in fraudulent schemes to defraud the government via the Lifeline program and retaliated against them after they reported this alleged fraud.
- Specific allegations include manipulating subscriber eligibility and submitting fraudulent usage data (such as robo-calls or fake texts) to maximize government reimbursement.
- District court dismissed the FCA fraud and related state law claims for inadequate Rule 9(b) particularity, and granted summary judgment on FCA retaliation and related state law claims.
- Plaintiffs appealed both dismissals, arguing that their allegations and evidence were sufficient to survive both a motion to dismiss and summary judgment.
- The Ninth Circuit, reviewing de novo, affirmed the district court. Judge Clifton dissented, arguing that the complaint was sufficiently specific and that factual issues remained on retaliation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| FCA Fraud – Pleading Specificity (Rule 9(b)) | Sufficient details and strong inference of fraud from insider knowledge | Complaint lacked particularized examples of false claims | Dismissed; plaintiffs failed to plead fraud with particularity |
| Subscriber Eligibility (Street Teams) | TruConnect knowingly signed ineligible users via vendors | Company not responsible for initial eligibility; no specific subs. | Dismissed; TruConnect not liable, no specifics pled |
| Fraudulent Usage Data (Robo-calls, Low Usage) | Alleged company manipulated usage to qualify for funds | No specifics on who, how, or concrete links to claims submitted | Dismissed; allegations too vague and unsupported |
| FCA Retaliation | Retaliation influenced by knowledge of whistleblowing | No evidence decision-makers were influenced by subordinates | Summary judgment; insufficient non-speculative evidence |
Key Cases Cited
- Bly–Magee v. California, 236 F.3d 1014 (9th Cir. 2001) (explaining FCA claims must meet Rule 9(b)'s heightened pleading standard)
- United States ex rel. Campie v. Gilead Scis., Inc., 862 F.3d 890 (9th Cir. 2017) (standards for reviewing FCA claims and summary judgment)
- Cafasso, U.S. ex rel. v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047 (9th Cir. 2011) (outlines requirements for FCA pleading and retaliation claims)
- Ebeid ex rel. U.S. v. Lungwitz, 616 F.3d 993 (9th Cir. 2010) (establishes test for Rule 9(b) FCA pleadings)