SCOTT M. DRISCOLL, Petitioner, v. THE SUPERIOR COURT OF MADERA COUNTY, Respondent; TODD SPENCER et al., Real Parties in Interest.
No. F066550
Fifth Dist.
Jan. 30, 2014
223 Cal.App.4th 630
Bartley Law Offices and Daniel R. Bartley for Petitioner.
No appearance for Respondent.
McCormick, Barstow, Sheppard, Wayte & Carruth, Jerry D. Casheros, Todd W. Baxter and Scott M. Reddie for Real Parties in Interest.
HOFF, J.*—Petitioner Scott M. Driscoll, M.D., is the defendant and cross-complainant in a civil lawsuit filed in state court. Driscoll filed an amended cross-complaint against plaintiffs Todd Spencer, M.D. Medical Group, Inc., and Todd Spencer, M.D. (hereafter referred to collectively as Spencer or real parties in interest). Driscoll alleged a claim of retaliation in violation of
Driscoll petitioned this court for a writ of mandate directing the trial court to vacate its order sustaining the demurrer to his FCA claim. We asked for an informal response from real parties in interest and then issued an order to show cause why the relief prayed for in the petition should not be granted. We now conclude that state courts have concurrent jurisdiction over FCA retaliation claims such as Driscoll‘s and, consequently, we grant the requested relief.
FACTUAL AND PROCEDURAL HISTORIES
Spencer initiated this state court action by filing a complaint against Driscoll in Madera County Superior Court. (Spencer v. Driscoll (Super. Ct. Madera County, 2011, No. MCV057183).) Spencer alleged claims of defamation, corporate disparagement, interference with contract, interference with prospective economic advantage, fraud, slander, breach of contract, and breach of the implied covenant of good faith and fair dealing.
Subsequently, Driscoll filed a complaint, under seal, in the United States District Court for the Eastern District of California. Driscoll named Spencer and two hospitals as defendants and asserted, among other claims, a cause of action for retaliation under the FCA.
At the time an answer was due in the state court action, Driscoll filed a cross-complaint alleging whistleblower retaliation and wrongful termination. His first cause of action was for retaliation under the FCA. Spencer filed a demurrer to certain causes of action. The trial court overruled the demurrer in part and sustained the demurrer in part with leave to amend.
On September 29, 2012, Driscoll filed a first amended cross-complaint. Driscoll alleged he had worked for the M.D. Medical Group, Inc., as a
On November 2, 2012, Spencer filed a second demurrer. With respect to the first cause of action, they alleged the trial court lacked subject matter jurisdiction. Spencer argued: “It does not appear that a claim under the Federal False Claims Act for retaliation in violation of
The trial court heard argument on Spencer‘s demurrer on December 3, 2012. Driscoll‘s attorney argued there must be an explicit statement of exclusive federal jurisdiction in the statute in order to find that state courts lack subject matter jurisdiction over claims brought under that statute. As an example of an explicit statement, he cited the Employee Retirement Income Security Act of 1974 (ERISA) (
The trial court indicated that it was inclined to sustain the demurrer to the first cause of action. The court explained: “I think you stated that it has to be an express statement of sole jurisdiction in the statute which may be an example of ERISA, but I think the ... standard is really different. It needs to be either express or implied. And to me this would have been really superfluous language to be included in there specifically with respect to directing that it be filed in the district court. And as counsel pointed out in her points and authorities there really are no cases. This has been around for a while and there are no cases which directly deal with it. There are some general proposition[s], of course, that the [state] courts have concurrent jurisdiction and there is some dicta. I think the case ... cited on that was [U.S. ex rel. Hindo v. University of Health Sciences/Chicago Medical
Later in the hearing, the court stated, “[T]he Court still, I think, has to look at the standard, ... [and] the best I can make of the language in this particular statute is that it‘s to be filed in the district court and there‘s at least an implied statement in that, that it not be filed in the state court.” The court asked Spencer‘s attorney to prepare an order on the demurrer.
On December 26, 2012, the trial court‘s order on Spencer‘s demurrer, which overruled the demurrer with respect to six claims and sustained the demurrer with respect to two claims, was signed and filed. As relevant to this petition, the trial court sustained the demurrer to the first cause of action, FCA retaliation, without leave to amend.
On January 30, 2013, Driscoll petitioned this court for a writ of mandate and/or prohibition or other appropriate relief and requested a stay of the court‘s order. On February 6, 2013, we granted real parties in interest leave to file an informal response to address Soni v. Boston Medical Center Corp. (D.Mass. 2009) 683 F.Supp.2d 74, 94–95 (Soni). In Soni, the district court concluded that state courts have concurrent jurisdiction over FCA claims. The court observed, “The only courts that appear to have addressed the issue have concluded that state courts have concurrent jurisdiction over civil actions brought under the FCA.” (Soni, supra, at p. 94.)
An informal response was filed February 26, 2013. On March 1, 2013, we issued an order staying the trial pending further order of this court and directing real parties in interest to show cause why the relief prayed for should not be granted. On April 17, 2013, real parties in interest filed a return. Driscoll did not file a reply.
I. Grounds for writ relief
When a demurrer is sustained without leave to amend to fewer than all of the causes of action, review through a petition for extraordinary relief may be appropriate. (Campbell v. Superior Court (1996) 44 Cal.App.4th 1308, 1314–1315 [52 Cal.Rptr.2d 385].) “[M]andamus will lie when it appears that the trial court has deprived a party of an opportunity to plead his cause of action or defense, and when extraordinary relief may prevent a needless and expensive trial and reversal.” (Taylor v. Superior Court (1979) 24 Cal.3d 890, 894 [157 Cal.Rptr. 693, 598 P.2d 854].) In Campbell, supra, at page 1315, for example, the trial court sustained the insurer‘s demurrer to the insured‘s claim for breach of the implied covenant of good faith and fair dealing. The appellate court granted writ relief to consider “the novel and important question” whether an allegation of an insurer‘s unjustified refusal to defend an insured is sufficient to state a cause of action for breach of the covenant of good faith and fair dealing. (Id. at pp. 1314–1315.)4
Further, courts have recognized that review by means of extraordinary writ is warranted “when the demurrer raises an important question of subject-matter jurisdiction . . . .” (San Diego Gas & Electric Co. v. Superior Court (1996) 13 Cal.4th 893, 913 [55 Cal.Rptr.2d 724, 920 P.2d 669] [listing cases].)
Here, the trial court‘s ruling has deprived Driscoll of an opportunity to plead one of his claims, and the petition raises a novel issue, which is also a question of subject matter jurisdiction. For these reasons, we conclude writ relief is appropriate to resolve this question: Do state courts have concurrent jurisdiction over retaliation claims brought under the FCA?
II. Standard of review for demurrer
In reviewing the trial court‘s order in this case, we apply the same standard of review we use in reviewing an order sustaining a demurrer on appeal. (E.g., Campbell v. Superior Court, supra, 44 Cal.App.4th at pp. 1310–1311.) We accept as true all material facts properly pleaded. (Ibid.) We review de novo rulings on subject matter jurisdiction where the question is purely one of law. (Singletary v. International Brotherhood of Electrical Workers, Local 18 (2012) 212 Cal.App.4th 34, 41 [151 Cal.Rptr.3d 107].) We also review de
III. Trial court has concurrent jurisdiction over FCA retaliation claim
We begin with the presumption that state courts have concurrent jurisdiction over federal law claims. (Cianci v. Superior Court (1985) 40 Cal.3d 903, 910 [221 Cal.Rptr. 575, 710 P.2d 375] (Cianci).)5 The United States Supreme Court has explained it is axiomatic that, “under our federal system, the States possess sovereignty concurrent with that of the Federal Government, subject only to limitations imposed by the Supremacy Clause.” (Tafflin v. Levitt (1990) 493 U.S. 455, 458 [107 L.Ed.2d 887, 110 S.Ct. 792] (Tafflin).) Thus, the Supreme Court has “consistently held that state courts have inherent authority, and are thus presumptively competent, to adjudicate claims arising under the laws of the United States.” (Ibid.)
“This deeply rooted presumption in favor of concurrent state court jurisdiction is, of course, rebutted if Congress affirmatively ousts the state courts of jurisdiction over a particular federal claim.” (Tafflin, supra, 493 U.S. at p. 459.) Congress may limit jurisdiction to the federal courts either explicitly or implicitly. (Gulf Offshore Co. v. Mobile Oil Corp. (1981) 453 U.S. 473, 478 [69 L.Ed.2d 784, 101 S.Ct. 2870] (Gulf Offshore).) “[T]he presumption of concurrent jurisdiction can be rebutted [(1)] by an explicit statutory directive, [(2)] by unmistakable implication from legislative history, or [(3)] by a clear incompatibility between state-court jurisdiction and federal interests.” (Ibid.)
We now turn to the federal law at issue to determine whether Congress affirmatively ousted the state courts of jurisdiction over FCA retaliation claims. We consider the three methods of rebutting the presumption of concurrent jurisdiction recognized in Gulf Offshore.
Generally, the FCA “prohibits false or fraudulent claims for payment to the United States, [citation], and authorizes civil actions to remedy such fraud to be brought by the Attorney General, [citation], or by private individuals in the Government‘s name, [citation].” (Rockwell Int‘l Corp. v. United States (2007) 549 U.S. 457, 463 [167 L.Ed.2d 190, 127 S.Ct. 1397].) A claim brought by an individual on the government‘s behalf is called a qui tam claim. (Ibid.)
In addition, the FCA “protects ‘whistle blowers’ from retaliation by their employers.” (Moore v. California Institute of Technology (9th Cir. 2002)
The statute further provides, “An action under this subsection may be brought in the appropriate district court of the United States for the relief provided in this subsection.” (
The FCA does not contain “an explicit statutory directive” ousting state court jurisdiction. (Gulf Offshore, supra, 453 U.S. at p. 478.) The FCA does confer jurisdiction to the federal district courts, but “[i]t is black letter law . . . that the mere grant of jurisdiction to a federal court does not operate to oust a state court from concurrent jurisdiction over the cause of action.” (Gulf Offshore, supra, at p. 479.)
Real parties in interest argue that the fact that
In addition, after reviewing various federal statutes and United States Supreme Court case law, the California Supreme Court concluded that the presumption of state court concurrent jurisdiction arises “when the jurisdictional provision in question is silent as to the jurisdiction of state courts.” (Kingston Constructors, Inc. v. Washington Metropolitan Area Transit Authority (1997) 14 Cal.4th 939, 948 [59 Cal.Rptr.2d 866, 928 P.2d 581], italics omitted.) For example, state courts have concurrent jurisdiction over civil actions brought under title VII of the Civil Rights Act of 1964 (Title VII) (
Similarly, in this case the FCA‘s jurisdiction provision does not mention state courts or their jurisdiction, and, as a result, we presume state courts share concurrent jurisdiction over FCA claims. We note that at least one court has concluded that the language of the statute alone establishes that state courts share concurrent jurisdiction with federal courts over FCA claims. In U.S. ex rel. Paul v. PBQ&D (S.D.Tex. 1994) 860 F.Supp. 370, 375 (Paul), the court held: “The False Claims Act states that an action arising under it ‘may’ be brought in federal court.
We next consider whether an “unmistakable implication from legislative history” establishes that federal courts have exclusive jurisdiction over FCA claims. (Gulf Offshore, supra, 453 U.S. at p. 478.) Real parties in interest offer no argument related to the legislative history of the FCA. Courts that have considered this issue have uniformly found no implication that Congress intended to grant federal courts exclusive jurisdiction over FCA claims. In U.S. ex rel. Hartigan v. Palumbo Bros., Inc. (N.D.Ill. 1992) 797 F.Supp. 624, 632 (Hartigan), the district court reviewed the legislative history of the FCA and found “no evidence that Congress addressed or even considered the question of concurrent state court jurisdiction over FCA claims.” Further, the court found “no suggestion that Congress, in its deliberations, affirmatively intended to confer exclusive jurisdiction over such claims on the federal courts.” (Hartigan, supra, at p. 632.) Likewise, in Nguyen v. City of Cleveland (N.D.Ohio 2000) 121 F.Supp.2d 643, 646 (Nguyen), the district court determined there was no ” ‘unmistakable implication from legislative history’ ” that “federal jurisdiction of [FCA] whistleblower retaliation claims is exclusive of the states ....” (Italics omitted.)
We find Spencer‘s assertion that the Legislature implicitly intended to divest state courts of jurisdiction over FCA claims unpersuasive. They point out that the FCA governs certain claims in which the federal government “has rights and is an actual party to the action.” From this observation, they assert, “Certainly, when enacting a statute where the Federal Government is the true party in interest and has the absolute right to control the litigation, Congress, at a minimum, implicitly intended that the District Courts would have exclusive jurisdiction over the case.” We do not see the logic of this
Finally, we consider whether there is a “clear incompatibility between state-court jurisdiction and federal interests.” (Gulf Offshore, supra, 453 U.S. at p. 478.) “[F]actors indicating clear incompatibility ‘include the desirability of uniform interpretation, the expertise of federal judges in federal law, and the assumed greater hospitality of federal courts to peculiarly federal claims.’ ” (Tafflin, supra, 493 U.S. at p. 464.)
In Tafflin, the Supreme Court held that state courts have concurrent jurisdiction over civil RICO claims, finding no “clear incompatibility” between state court jurisdiction over civil RICO actions and federal interests. (Tafflin, supra, 493 U.S. at pp. 464, 467.) The court explained: “[S]tate court adjudication of civil RICO actions will, in practice, have at most a negligible effect on the uniform interpretation and application of federal criminal law, [citation], and will not, in any event, result in any more inconsistency than that which a multimembered, multitiered federal judicial system already creates, [citation]. [][] Moreover, . . . we have full faith in the ability of state courts to handle the complexities of civil RICO actions, particularly since many RICO cases involve asserted violations of state law, such as state fraud claims, over which state courts presumably have greater expertise. [Citations.] To hold otherwise would not only denigrate the respect accorded coequal sovereigns, but would also ignore our ‘consistent history of hospitable acceptance of concurrent jurisdiction,’ [citation].” (Tafflin, supra, 493 U.S. at pp. 465–466.)
Previously, the California Supreme Court reached the same conclusion about state court jurisdiction over civil RICO claims. In Cianci, supra, 40 Cal.3d at page 916, the court noted that state and federal courts share an
Here, real parties in interest do not claim that state court jurisdiction over FCA retaliation claims would be incompatible with federal interests. In Hartigan, supra, 797 F.Supp. at page 632, the court considered the issue and found no clear incompatibility. Echoing Tafflin, the court reasoned, “. . . FCA claims involve allegations of fraud and misrepresentations. These types of claims, which were originally based on common law, are the type of claims over which state courts presumably have great expertise.” (Hartigan, supra, at p. 632.) In Nguyen, the district court also found no clear incompatibility in state courts having jurisdiction over FCA retaliation claims. (Nguyen, supra, 121 F.Supp.2d at p. 646.)
Further, our Legislature has enacted California‘s False Claims Act (
In sum, we have found no explicit statutory directive, unmistakable implication from legislative history, or clear incompatibility between state court jurisdiction and federal interests to overcome the presumption that state courts have concurrent jurisdiction over Driscoll‘s FCA retaliation claim. Real parties in interest contend, however, that “a plethora of cases” have determined that federal district courts have exclusive jurisdiction over FCA claims. These cases are not authority for the issue presented in the case.
The cases cited by Spencer involve individuals attempting to bring FCA claims in the United States Court of Federal Claims. The issue whether state courts have concurrent jurisdiction with federal district courts over FCA claims was not presented or considered in any of the cases. For example, in Giles v. U.S. (Fed.Cl. 2006) 72 Fed.Cl. 335, 335–336 (Giles), the plaintiff Diane Giles, an auditor for the City of Los Angeles (city), filed an FCA qui tam action in district court. She alleged that debris removal contractors submitted false claims for payment and she complained to the city, but her concerns were ignored. She further alleged the federal government reimbursed the city for debris removal costs, but the city later repaid some of the
Giles then filed a complaint in the claims court seeking a portion of the payment the city had refunded to the federal government. (Giles, supra, 72 Fed.Cl. at p. 336.) The claims court held it did not have subject matter jurisdiction over her FCA qui tam claim. (Giles, supra, at p. 337.) In doing so, the court wrote, “The Federal Circuit has construed
In LeBlanc, Roland LeBlanc, a federal government employee, filed a complaint in the Court of Federal Claims alleging he was terminated from his employment and blacklisted as a result of his whistleblowing activities. (LeBlanc, supra, 50 F.3d at pp. 1027–102828 U.S.C. § 1491(a) (Supp.V 1993). This statute confers jurisdiction on the Court of Federal Claims, and a corresponding waiver of the government‘s sovereign immunity from suit, when the constitutional provision, statute, or regulation in question expressly creates a substantive right enforceable against the federal government for money damages.” (LeBlanc, supra, 50 F.3d at p. 1028.)
The question for the LeBlanc court was “whether Congress intended to create in section 3730(h) a right of action for employees like LeBlanc in the Court of Federal Claims.” (LeBlanc, supra, 50 F.3d at p. 1030 United States for the relief provided in this subsection.’ ” (Ibid.) The court declined to create a right of action in the Court of Federal Claims by implication. (Ibid.) In determining whether Congress intended to grant the Court of Federal Claims—a court of limited jurisdiction—jurisdiction over FCA claims, the LeBlanc court had no reason to consider the different question of whether Congress intended to oust state courts—courts of general jurisdiction—of their presumed concurrent jurisdiction over such claims. Once again, this case is not authority for a proposition not considered. (Vasquez v. State of California, supra, 45 Cal.4th at p. 254.) Similarly, the other cases cited by Spencer, Schweitzer v. U.S. (Fed.Cl. 2008) 82 Fed.Cl. 592 and Capelouto v. U.S. (Fed.Cl. 2011) 99 Fed.Cl. 682, do not address the issue of state court jurisdiction. There are, however, courts that have considered the issue. In Soni, supra, 683 F.Supp.2d at page 81, the plaintiff Dr. Deepa Soni filed a complaint in the United States District Court for the District of Massachusetts against various defendants alleging retaliation under the FCA, among other claims. Three of the defendants filed a separate state court action for declaratory relief seeking a judgment that Soni was not entitled to continued employment. (Soni, supra, at p. 86Id. at p. 92Soni, supra, at p. 94Soni, supra, at p. 94, citing Paul, supra, 860 F.Supp. 370 and Hartigan, supra, 797 F.Supp. 624.) In addition to Soni and the cases cited therein, the United States District Court for the Northern District of Ohio reached the same conclusion in Nguyen, supra, 121 F.Supp.2d 643, and the Fifth Circuit Court of Appeals affirmed Paul, holding, “[S]tate courts have concurrent jurisdiction over FCA claims.” (Paul v. Parsons, Brinkerhoff, Quade & Douglas, Inc. (5th Cir. 1995) 53 F.3d 1282, citing Hartigan, supra, 797 F.Supp. 624.) In our own research, we have not found any cases that reach a contrary conclusion. Based on the deeply rooted presumption in favor of concurrent state court jurisdiction, our analysis of the FCA under Gulf Offshore, and the relevant case law, we conclude that state courts have concurrent jurisdiction over FCA retaliation claims. DISPOSITION Let a writ of mandate issue directing the superior court to modify its order on Spencer‘s demurrer to Driscoll‘s first amended cross-complaint. As modified, the order will overrule the demurrer as to the first cause of action for retaliation in violation of title 31 United States Code section 3730(h). Costs are awarded to the petitioner. Cornell, Acting P. J., and Gomes, J., concurred.