*1 Aug. S123951. [No. 2006.] WELLS, Minor, etc., al., et Plaintiffs and v.
JOEY Appellants, al., ONE2ONE LEARNING FOUNDATION et Defendants Respondents; CALIFORNIA,
STATE OF Real in Interest Party Respondent.
Counsel *12 Brott, Andrea Michael S. Adam Sorgen, Law Offices Michael S. Sorgen, Rivkin, Baldwin; Sondheimer, and A. Haley N. Robert S. Claudia Joshua Bilheimer, Bilheimer for and and Plaintiffs Appellants. Allan John Haley Wilken, White; D. Moorman, B. Law Offices of Paul E. James Amy Joseph Curiae on for Fraud as Amicus Against and Paul D. Scott Taxpayers Scott and Appellants. behalf Plaintiffs Alford, Cominos, Heather McKee and Rees, Fletcher C. A. & Dion N.
Gordon Learning One20ne for Defendant and Respondent Mark C. Russell Foundation. Shaw, Nelson, M. A. T.
Seyfarth James Kurt Jason and Kappes, Cooksey William S. School Jue for Defendant and Charter Resource Respondent Alliance. Vinson, Services, Griffin;
California Education Thomas M. Girard & Legal Christian M. and and Keiner David E. Robinett for Defendant Respondent Camptonville Union School District. Elementary Parks, Associates, Parks; & Linda Rhoads Offices Dingwall Law of Jon Webster and Jon Webster for Defendants and Respondents Camptonville Inc., and Janice Jablecki. Academy,
Needham, Davis, Davis, Kirwan & E. J. Cardinal Marc Marc and Matt Young, Demel for Defendant and Mattole Unified School District. Respondent Duncan, Evans, Evans, Ward, Ball & & Wieckowski Matthew D. Evans and Inc., James B. Carr for Defendants and Sierra Summit Respondents Academy, and Sierra Plumas Joint Unified School District.
Farmer, Alliston, & Smith E. Farmer E. Murphy, Craig Jojra and Jackson for Statewide Association California Colleges, Southern Community Regional Fund, Liability Excess Northern California Regional Liability Excess Fund and Schools Fund Amici Liability Excess Curiae on behalf of Defendants and Respondents.
Sharon L. Browne for Pacific Foundation as Curiae on behalf of Legal Amicus Defendants and Respondents. Burkett,
Declues & J. Michael A. Declues Wille for Coast Gregory Amicus Community District as Curiae College on behalf Defendants and Respondents.
Gibson, Crutcher, Sanders, Dunn & Joel S. Mark A. Ethan D. Perry, Dettmer and Rebecca Justice Lazarus for LLP as Amicus PricewaterhouseCoopers Curiae on behalf of Defendants and Respondents. Ravel,
Ann (Santa Clara) Miller County Counsel J. Kathryn Zoglin, Counsel, Deputy for State County California Association Counties as Amicus Curiae on behalf of Defendants and Respondents. Firm,
Thomas Law R. Todd Allen L. Thomas Fullerton Joint Bergin District, District, Union High School Brea-Olinda Unified School Claremont District, District, Unified School Beach Union School Huntington High *13 District, District, Long Beach Unified School School Unified Newport-Mesa District, Unified School Unified School Pomona Placentia-Yorba Linda District, District, Tustin Unified School Unified School Santa Monica-Malibu on as Amici Curiae and Union School School District High District Whittier of Defendants and Respondents. behalf General, General, Medeiros, M. State Solicitor
Bill Manuel Lockyer, Attorney General, Ames, Humes, Assistant Assistant Attorney Christopher James Chief Soble, General, Attorneys G. and Mark R. Deputy Raskin Attorney Larry General, for and Party Respondent. Real Interest Opinion Code, et
BAXTER, J. (CSA; Act Ed. seq.), Charter Schools The amended, and since as in 1992 Legislature represents adopted by statute, Under this in the education. revolutionary public change concept that function within obtain charters to schools may operate interested persons tuition, students, districts, no and are charge school all accept eligible public dollars, but retain considerable and local tax nonetheless by financed state education Such system. from the mainstream public academic independence as, organized or be may operated by, corporations schools elect to operate (Id., (a).) subd. Public Benefit Law. Corporation under Nonprofit schools, and the chartering Here certain charter their corporate operators, of the schools’ sued on some grounds by school districts were multiple all the claims is that guardians. gravamen students and their parents use through and facilitate home instruction the schools—designed provide deliver (so-called instructional learning)—failed of the Internet distance In services, law. and as required supplies promised, equipment, assert, effect, collect “average daily functioned only schools plaintiffs districts, schools, forms, and the (ADA) on basis of which the attendance” state. funds from the education fraudulently public claimed received governing “indepen- rules statutory Plaintiffs also claim violations of specific schools. dent offered study” programs public circumstances, whether, and in what This case concerns schools, be districts, may of such schools the operators charter and/or kind. Among of this allegations to civil based on liability exposed them, entities, or any such we must determine whether things, (UCL; law sued under the unfair competition who be “persons” action, Code, tam brought et a qui Bus. & Prof. seq.)
1179 state, the Act individuals on behalf of under the California False Claims Code, (CFCA; Gov. et 12650 seq.).1 § reach (1)
We the conclusions: school not following Public districts are hand, (2) who under the On the the be sued CFCA. other “persons” may case, charter schools in and their suit this operators, “persons” subject UCL, both the under CFCA and and are not law either exempt merely because such schools are deemed part public system. (3) The CFCA cause of action is not a claim for barred “educational v. Peter W. San Francisco Sch. Dist. (see malfeasance” (1976) 60 Unified (Peter asserts, 814 as it Cal.App.3d VK))insofar not Cal.Rptr. simply [31 854] education, substandard that One2One’s charter a schools but provided any submitted false for they claims school funds while failing furnish services, materials, educational significant (4) The CFCA cause supplies. that, 2000, of action is not barred insofar as it before the charter alleges statute, schools violated forth in a study” rules set 1993 “independent 51747.3, Education Code section because section 51747.3 to charter applied even schools before its amendment a tarn Finally, 1999. action qui under the CFCA a charter against school or its is not operator subject Code, Tort Claims Act (TCA; Gov. 815 et seq.) requirement prior § id., 905, of a (see claim for presentment payment 910 et These seq.). §§ conclusions that we affirm in require and reverse part, part, judgment of the Court of Appeal.
FACTS AND PROCEDURAL BACKGROUND 30, 1999, On December plaintiffs filed a which included a claim complaint, Code, state, for tarn relief qui (Gov. on behalf of the under CFCA. 12652, cases, subd. (c)(1).) As CFCA in such provided § complaint Code, filed (Gov. was under seal. (c)(2).) In after subd. July § lifted, in, the seal was the Attorney General noticed his election to intervene with, Code, proceed (Gov. CFCA action on behalf the state. 12652, subd. (c)(6).) provides single The CFCA definition “person” purposes for all of that statute. knowingly governments “Persons” who false may submit claims to state or local be sued under (Gov. Code, and, circumstances, bring 12651), the CFCA under “persons” may certain also actions, entities, against on “qui governmental tarn” alleged defrauded false claimants behalf of (id., Here, above, consider, (c)). among subd. as noted we things, other whether may be entities are sued as false claimants under public “persons” who In a CFCA. case, PricewaterhouseCoopers, State ex rel. Harris v. LLP companion of California (Harris), Cal.4th 1220 P3d Cal.Rptr.3d, question we address the [48 256] whether who, CFCA, governmental entity sue person qui plaintiff is a as a tarn under the alleged false to only agencies. claims that were submitted (the their
On filed first amended August plaintiffs complaint *15 us, As to the the alleged issues before the complaint complaint). pertinent following:
At various times and defendant One20ne during charter (0ne20ne), a Texas three Learning corporation, Foundation operated schools in California California alter defendant through ego, its corporate (CSRA). Charter School Resource Alliance These schools included (Sierra Academy), defendant Sierra Summit Inc. Summit Academy, as a and chartered the Sierra by California operating nonprofit corporation, District) (Sierra Joint School in County, Plumas Unified District Sierra School), char- (Mattole defendant Charter School Valley Valley Mattole (Mattole District) the District in Humboldt tered Mattole Unified School and Inc. (3) defendant County, Academy, (Camptonville Camptonville as a California and chartered Academy), operating nonprofit corporation, Union School District Elementary (Camptonville defendant Camptonville District) in Yuba County. and
Defendant Carroll is One20ne’s chief executive president Robert Bauer is Defend- officer. Defendant Jeff of Sierra District. Superintendent Sierra Defendant ant Carol is the Director of Summit Academy. Kennedy and Richard is of the Mattole District the Director Graey Superintendent Princi- Mattole School. Defendant Allen is and Valley Wright Superintendent Defendant is Director of Jablecky District. Janis pal Camptonville Camptonville Academy.2 charter
Each a minor enrolled in one of defendant was student plaintiff at some during guardian schools time 1998 and/or or and/or parent to a student. All were direct victims of One2Gne’s failure such plaintiffs instruction, materials, and provide testing, equipment, supplies. promised schools, are the state Like traditional charter schools funded by ADA While schools have considerable freedom based on records. charter meet and they their academic must statewide educational standards approach, credentialed teachers. The chartering entity, usually use appropriately district, a school’s has and must revoke oversight responsibilities, charter, material failure mismanagement, charter for fiscal violation charter, failure meet or educational outcomes set any pursue violation of law. meet or generally accepted accounting principles, School, One2One, CSRA, Academy, Valley Camptonville and Sierra Summit Mattole collectively referred to as Academy, complaint, and described in the are hereafter as identified District, District, Camptonville and the school defendants. The Sierra Mattole the charter collectively as the defendants. The charter school are hereafter referred to district District defendants, defendants, collectively individual defendants hereafter the district and the all referred to as defendants. School,
Sierra Summit Mattole Academy, and Valley Acad- Camptonville schools, were emy distance operated learning which students at study home, lessons on their complete and transmit them computers, via the Internet to the school. Students are also tested through Internet.
The charters and literature for promotional schools One20ne-operated promised provide “ways means” for students to achieve an education distance through learning, including furnishing computers, necessary software, textbooks, $100 reimbursement of month for up per educational out-of-pocket incurred expenses by students or their parents *16 guardians. Each student facilitator,” was also to be an “educational assigned student, who was to devise contract learning for the with a provide parents copy materials, student’s curriculum goals, order educational necessary and come to the student’s home a few hours week for per instruc- personal tion, and testing, evaluation. its
Despite One20ne promises, has failed to the enumerated provide services, equipment, and supplies, either to students or plaintiff to of its any facilitators—who, enrollees. Its educational belief, on information and outside teaching their credentialed areas or are not credentialed at all—do not assessment, instruction, review, provide curriculum, or either online or in One20ne person. students, also fails to reimburse and for parents, guardians cases, educational In some expenses. parents actually One20ne for pay and equipment for educational materials and either because supplies, One20ne has failed to these items provide for free as or because promised, have parents $100 exhausted their Moreover, month per expense allowance. One20ne overbills for the educational materials and software it does provide. In particular, educational software One20ne programs uses are available free, online for or for much less than One20ne charges.3 One2One recruits aggressively rural districts poor, their approve charter schools, then enrolls students throughout state for distance In learning. return for its chartering schools and their allowing operation, One20ne pays the districts administration fees in excess of those allowed statute. Despite their oversight responsibilities, the districts enable One20ne to misuse public funds by activities, a blind turning eye and, the charter schools’ for the most part, to take failing to monitor steps them. 3 Included in the complaint were detailed allegations concerning the charter schools’ treatment of the plaintiffs, including named the schools’ promises supply broken computers materials, and educational and the failure of their “educational facilitators” provide home visits, contact, any significant except “religious” for signed visits to collect ADA
forms. The complaint also contained allegations. class action these, causes of the basis of such asserted complaint On allegations (seventh school for breach of contract action charter defendants against action) (fourth cause of and intentional negligent misrepresentation action, the charter and district fifth causes of school Against respectively). defendants, (third it for relief contained claims mandamus declaratory school, action, causes of and for violation of the free and 10th respectively), and due of the California Constitution guarantees equal protection, process action, defendants, and ninth As to it causes of all (eighth respectively). funds (second relief misuse of cause injunctive against sought taxpayer action). included, the charter and district
Finally, complaint against state, defendants, relief, action for tam on behalf of the CFCA cause of qui of false and fraudulent claims for of state alleged submission payment and, (first action) funds cause of the charter school against educational defendants, UCL, an under alleging individual and claim representative (sixth unfair and business in the the schools deceptive practices operation action). cause of
The CFCA cause of action asserted that the charter school defendants *17 claims, statute, the submitted false within of this meaning by requesting state, the the that ADA records “knowing from districts and/or their funding instruction, students in and accurately did not reflect the enrolled receiving materials, (At schools.” the educational or services their another point, that “fails to the educa- alleged provide more 0ne20ne generally complaint funds education tion it but collects State educational as if the falsely promises were provided”) count that the school defendants falsely
The CFCA also charter alleged (1) though ADA funds for what was effectively independent study, claimed 51747.3, the were in violation of Education Code section subdivi- schools (a), sion in that or other value to they money things independent provided classes, and attending were not students study provided regular pupils who, (b) (2) for in violation subdivision independent study pupils section, the which the schools resided outside counties in respective same located, or counties.4 adjacent were 5,200 in its According for each of the students enrolled statewide complaint, schools, day, $120 or learning per ADA funds of about charter One20ne collects distance that, $4,350 generally thus on the basis of One20ne’s complaint school term. The asserted per required in its and promised and charters provide
failure to educational services materials as districts, law, engages defrauding and the State practice parents, in a “One20ne annually $20 collecting than in educational funds.” more million action,
In the CFCA cause of the district alleged complaint schools, defendants had submitted false claims on behalf of the charter even though “knew or they whether deliberately recklessly disregarded Further, funds were used for being wrongful purposes.” complaint asserted, the district defendants claimed wrongfully funds supervisory services beyond limits set forth in the CSA.
Aside from the above, and injunctive relief noted declaratory the complaint sought, among (1) other things, compensatory punitive damages against defendants, and, the charter school (2) against charter school and district defendants, received, restitution of funds claimed and falsely with treble damages civil in the CFCA. penalties provided Several defendants sustained, In demurred.5 November the trial court amend, without leave to (CFCA), demurrers as to the first second relief), (taxpayer injunctive (intentional fourth fifth misrepresentation), (negli- gent (UCL), sixth misrepresentation), (breach contract) seventh causes of action.6 The court reasoned (1) as follows: All these counts are noncog- nizable private claims for (2) “educational malfeasance.” Because the charter school and entities,” district CFCA, defendants are “public intentional misrepresentation, and negligent causes of action are misrepresentation sub- ject TCA requirement prior of a claim presentment for payment. (3) entities,” As “public the charter school defendants are not “persons” to suit subject under the UCL. claim for taxpayer relief is injunctive to the subject of a requirement claim prior for refund. The CFCA claim for violation of the statutory restrictions on “independent study” programs fails, because those restrictions to charter schools applied and after only 2000, and all the facts in the alleged that date.7 complaint precede *18 5 Separate (1) Carroll, demurrers were (2) filed CSRA and Academy, Sierra Summit District, Bauer, Sierra (3) Kennedy, and and One20ne. joinder One20ne later filed a in the demurrer of CSRA and Carroll. 6 Previously, September the trial court had denied the State of California’s motion plaintiffs’ dismiss CFCA claim jurisdiction. for lack of The motion was made under Government (d)(3)(A), Code section subdivision deprives jurisdic which the court of tion a private qui over tam CFCA action that prior “public is based on the disclosure” of the claim, supporting criminal, civil, facts the where the disclosure was made a “in or administra hearing, tive investigation, in an report, hearing, or audit conducted or at request the of the Senate, auditor, Assembly, subdivision, governing media,” body of a political byor the news qui unless the tam plaintiff original “is an source of the ruling information.” The on this motion is not involved in appeal the before us. 7 demurrers, After hearing an initial on the the trial court issued a ruling final as to the relief), second (taxpayer injunctive (mandamus), (intentional third fourth misrepresentation), (negligent (breach fifth misrepresentation), contract), (free eighth seventh of guarantee), school (equal ninth protection relief) and process), due and (declaratory 10th causes of action. However, (CFCA) action, as to the (UCL) first and sixth causes of the court obtained whether, briefing decision, additional light on of a then recent Appeal Court of LeVine v. Weis 1184 (1)
All that the trial court’s on the demurrers was ruling parties stipulated case, demurred, as law of the on those defendants who had not binding, (2) of be in order to facilitate the causes action would dismissed remaining review, (3) and would dismiss individual defendants. the appellate plaintiffs entered Judgment was accordingly. CFCA, UCL, contract, the and urging misrepresen Plaintiffs that appealed, d.8
tation not dismisse The of claims should have been Court reversed Appeal the Court of with the trial court dismissal. The judgment Appeal agreed that the causes of action for breach of contract and are misrepresentation barred that sue for “educa the rule cannot schools private parties public the tional also concurred that charter malfeasance.” Court of Appeal defendants, entities,” system, school as school part “public public be thus are not who sued under the UCL. “persons” may hand, CFCA, unlike On the held that the the the other Court of Appeal UCL, the be sued. may does include entities who public among “persons” determined, Hence, the Court of charter schools and school Appeal public the CFCA. districts be tarn actions under More- subject qui private over, reasoned, allegations—i.e., the Court CFCA Appeal plaintiffs’ made school and district defendants or facilitated fraudulent charter claims for that were not to obtain state ADA funds educational services for not a cause of action “educational malfeasance.” provided—are prohibited concluded, Nor, under must a tarn action the Court Appeal qui of a claim by presentment pursuant CFCA be preceded payment is (1) TCA. the Court of noted that the state regard, expressly In this Appeal Code, 905, (Gov. from TCA’s exempt “prior requirement presentment” CFCA in the (z)), (2) subd. tarn under the stands shoes plaintiff qui state, in this context (3) presentment” application “prior requirement initially would tarn actions must be qui undermine CFCA’s provision (LeVine II) (see LeVine v. Weis Cal.App.4th Cal.Rptr.2d also [108 562] defendants, (LeVine I)), the charter and district as Cal.App.4th Cal.Rptr.2d school 758 [80 439] system,” be the CFCA and the “public within the school could sued under UCL. entities noted, defendants were not ruling, In its the court determined that charter school final UCL, applied rule subject under the but court did not decide whether a similar to suit either or district under the CFCA. the charter school defendants overruling order demurrers to third cross-appealed No the trial court’s defendant (mandate), (free guarantee), (equal protection/due process), ninth 10th eighth *19 relief) argue briefs any Appeal did Court of (declaratory causes action. Nor defendants’ token, in the By stipulating the same after trial that counts should have been dismissed. those Bauer, Carroll, Wright, Kennedy, Graey, and individual court to dismissal of defendants Jablecki, the second cause of action Appeal did not the Court of that plaintiffs contend in relief)—the one be reinstated. State of (taxpayer only naming those defendants—should California, only “prior that the respondent, asserting filed a brief claim” party as real and qui tarn actions under the CFCA. requirement the TCA should not apply seal, warning under the state to without investigate, prior filed thus allowing claimant, to intervene in the to the false before whether alleged deciding action. however, with the trial court that the Court of concurred
Finally, Appeal that the CFCA claim fail as it is based on allegations must insofar plaintiffs’ Code, (Ed. charter schools violated statute study” “independent that, court, 51747.3). Like the trial the Court of concluded while Appeal defendants in the covered acts done the charter school complaint only by did not to charter and statute years study” apply “independent schools until the 2000. year
The Court with its remanded for further consistent Appeal proceedings to be We understand effect of the Court of opinion. Appeal’s judgment that both the and charter school district plaintiffs may proceed against defendants on the CFCA cause of the allegations concerning action—minus violation of the rules statutory governing study” “independent programs—but UCL, contract, not on the of action. causes proceed misrepresentation One20ne, CSRA, (1) (2)
Petitions for review were filed defendants by Jablecki, (3) (4) the Mattole District and and Graey, Academy Camptonville (5) and the Sierra District and Sierra Summit All Academy. challenged Court of reinstatement of CFCA cause of action. The Appeal’s plaintiffs’ (1) the charter school and district defendants petitions variously argued entities,” such, and as are not under the “public subject suit “persons” tam action under CFCA, qui “claim (2) a the CFCA is subject TCA, (3) the CFCA are a presentment” provisions allegations claim for “educational malfeasance.” disguised issues, (1) Plaintiffs answered the as additional urging, petitions, restrictions on Education Code study” by “independent programs imposed section 51747.3 have to charter schools that statute’s since applied adoption (2) in 1993 and charter schools are private nonprofit corporations operating covered the UCL. We As “persons” granted agree review. will we appear, with certain of the Court of with others. We Appeal’s holdings disagree will therefore reverse in the Court of judgment.9 part Appeal’s (1) curiae support Amicus briefs in of defendants have been filed the Statewide al., (2) Community Colleges High Association of et Fullerton Joint Union School District al., Foundation, Counties, (3) (4) Legal et the Pacific the California State Association of District, Community College LLP. An amicus PricewaterhouseCoopers, Coast Against appreciate curiae brief in has been Fraud. We support plaintiffs Taxpayers filed provided by the assistance these briefs. *20 1186
DISCUSSION
1. The CSA. amended, CSA, is substantially since adopted “teachers, intended to allow members community parents, pupils, . . from the school existing establish . schools that operate independently Code, means, (Ed. 47601.) district structure.” this CSA seeks By § methods, innovative expand learning encourage teaching pro opportunities, choice, and educational vide educational expanded public promote competi Code, 47601, (Ed. tion and within the school accountability public system. § subds. (a)-(g).) met,
If are school authorities must grant statutory requirements public a within a of interested for a charter such school persons operate petition Code, 47605.) For the school is (Ed. school district. certain purposes, public § ” 47612, (id., (c)), “deemed to be a subd. is of the ‘school district’ “part § 47615, (id., (a)), Public School subd. falls under the system” “jurisdiction” § of that to the “exclusive control” of school is system, subject public 47612, (id., v. State 47615, Wilson (a)(2); (a)). (See subd. officers subd. see § § 1125, Bd. Education 1136-1142 Cal.Rptr.2d Cal.App.4th [89 (Wilson).) 745] charter, and must A charter school must under terms of its operate laws, the CSA and other but is otherwise exempt with comply specified Code, 47610.) (Ed. the laws school districts. A charter school governing § as, organized elect to or be by, nonprofit corporation operate operated (Id., (a), Benefit subd. under the Public Law. Nonprofit Corporation § 3.) as added Stats. ch. §
A is for its share of state and local education charter school eligible schools, funds, on the calculated as with all public which share is primarily, id., Code, 47612; also 47630 et (Ed. basis of its ADA. see seq.)10 § enumerate certain Provisions added to the CSA since its original adoption Code, (Ed. oversight chartering authority §§ responsibilities fees, the school 47604.32), and authorize that agency charge supervisorial limits, (id., 47613). for such services within specified enormously complex, system but the basic is that “funds finance is California Each school district augmented by equalizing payments. state property raised local taxes attendance, average daily . . . and varies size and depends limit that on has base revenue property tax for a district includes the amount of type of district. The revenue limit [][] revenues, raise, coupled equalization with an specific with other local revenues a district can (56 state, rough of revenues.” bringing equivalency each district into a payment by the thus Schools, 198.) p. Cal.Jur.3d
2. The CFCA. law, CFCA, a federal was is after similar which patterned 1987, 1420, 1, 5237.) It (Stats. “[a]ny ch. p. provides 1987. adopted § who, to be or causes “[k]nowingly among things, presents person” thereof, a false . . subdivision to . . . the state or . any political presented makes, uses, be or causes to or “[kjnowingly claim for or payment approval,” claim or or statement to a false get paid approved made or used a false record subdivision,” to defraud the state or or by by any “[cjonspires political allowed or subdivision a false claim by getting paid state or any political subdivision,” a of an inadvertent the state or or any beneficiary political “[i]s subdivision, subse of a claim to the state or a political submission false claim, fails to disclose the false claim discovers the and falsity quently to the subdivision within a reasonable time after state or political [thereof],” be liable the state or to the subdivi “shall discovery political three the state or subdivi sion for times the amount of damages” political sustained, sion well as for the state’s or subdivision’s thereby political suit, $10,000 each costs of and also liable for a civil may up penalty Code, 12651, (Gov. (a)(l)-(3), (8).)11 false claim. subd. § The CFCA defines a natural any person, corporation, “person” “include[] firm, association, busi- limited organization, partnership, liability company, ness, Code, (Gov. (b)(5).) or trust.” subd. § funds,
Where a has submitted a false claim state or “person” upon upon CFCA, funds, both state and in violation of the subdivision political General sue that to recover the and Attorney may damages penalties person Code, (Gov. (a)(1).) the statute. subd. Where the false provided § funds,” claim was and subdivision both state upon “political upon political funds, subdivision affected subdi- “prosecuting authority” political (Id., (b)(1).)12 vision such an action. may bring subd.
When either the General or the local Attorney prosecuting authority initiates an action both state subdivi unilaterally involving political funds, affected must be notified. If the sion the other official or officials action, initiates an the local authority may, General such Attorney prosecuting circumstances, submitting reported promptly the false claim it person In certain where the damages cooperated any investigation, may the court assess less than three times Code, (Gov. (though damages), penalty. and no civil no less than two times the (b).) subd. “12 counsel, attorney, authority’ county city or other local ‘Prosecuting refers conducting legal proceedings government charged investigating, filing, official with civil of, Code, of, (Gov. subdivision.” particular political on behalf or in the name (b)(4).) subd. notice, If the local is the attorney intervene. upon receiving prosecuting initiator, notice, elect General to assume Attorney may, upon responsibil- action, for the the local continue as a ity though authority may prosecuting Code, (Gov. (a)(2), (3), (b)(2), (3).) subds. party. initiated
A action be as a tam” CFCA also “person,” “qui for and in the name the state or the subdivision whose plaintiff, political *22 Code, (Gov. (c)(1), (3).) funds are involved. subd. The complaint § camera, such an action shall be filed in and remain under seal for to may up sealed, the shall be made on While remains service days. complaint “[n]o (Id., (c)(2).) the defendant.” subd. tam must the General of the Attorney qui plaintiff immediately notify suit and disclose to him all material evidence and information the plaintiff funds, the Attorney If the tam involves state possesses. qui complaint only thereof, General within the or extensions elect to may, 60-day period and If alone are intervene with the action. subdivision funds proceed political involved, the the General must forward the tam Attorney qui complaint elect intervene and with local who prosecuting authority, may proceed involved, the action. If both subdivision funds are the state political General and the local are to coordinate their Attorney prosecuting authority official, them, and review. Either or both of then elect to investigation may intervene and with the action. If these officials decline to the proceed proceed, Code, (Gov. tam shall have the to conduct the action. right qui plaintiff intervene, (c)(4)-(8).) subd. If state or local officials they may § action, a assume control of the but the tam remain as plaintiff may party. qui (Id., (e)(1).) subd.
A the settlement or court award substantial portion proceeds any in a CFCA much as 66 not revert to the general action—as percent—does the the which the false claim coffers of state or subdivision political against Instead, was submitted. a “cut” of these to those significant goes proceeds who the action on behalf of the defrauded entity. pursued
Thus, or a initiated a authority if the General local Attorney prosecuting action, a fixed 33 of the CFCA that officer is entitled to percent proceeds action, Where a local inter- authority or settlement thereof. prosecuting General, in an action initiated the court award the Attorney may vened by a of the General’s 33 authority Attorney local prosecuting portion percent, If, in an to the local role in the action. authority’s conducting appropriate or the local action tam General brought by Attorney qui plaintiff, action, that official receives a fixed with the authority prosecuting proceeds tam receives from 15 to 33 qui plaintiff percent proceeds, her role. Where both the Attorney on his or litigation percent, depending action, the tam in a qui are involved authority a local General and prosecuting General’s Attorney the latter officer portion court award may neither the If the local prosecutor.13 on the role played depending percent, with elects to proceed authority nor the local prosecuting General Attorney action, between 25 and 50 percent receive tam plaintiff qui Code, 12652, subd. (Gov. (g).) proceeds. statute others any provided are cumulative to
The CFCA’s remedies Further, Code, (a).) its provisions subd. (Gov. or common law. interest.” be construed liberally applied promote “shall (Id., (c).) subd.
3. The UCL. here, lawsuit against for relief civil
As the UCL provides pertinent in unfair has engaged, engage who “[a]ny engages, proposes person Code, 17203.) is defined (Bus. & Prof. “Unfair competition” competition.” *23 unlawful, act or to include unfair or fraudulent business practice “any (Id., unfair, 17200.) An . . . .” advertising untrue or misleading § deceptive, relief, “to necessary relief include orders may action for which injunctive . . . by restore to in interest or any any money property acquired person (id., (1) the 17203), brought of unfair be may means such competition” § officer their own General or a local Attorney “upon specified prosecuting board, officer, or or the of any person, corporation, complaint upon complaint association,” in fact and has (2) injury or who has suffered “by any person (id., 17204). or as a result of such unfair competition” § lost money property UCL, and include natural For “the term shall mean purposes person firms, associations stock joint companies, persons, corporations, partnerships, (Id., 17201.) as otherwise and other organizations persons.” Except § each other and remedies are “cumulative to the UCL’s provided, specifically (Id., of this state.” the available under all other laws remedies or penalties 17205.) under the CFCA? a school district be sued May public 4. the district and charter school
The Court held that both of Appeal The district under the CFCA. defendants are to suit subject “persons” statute. For are not this defendants insist that they “persons” purposes the district defendants. reasons that will we with agree appear, or settlement Attorney General as his “cut” of award Any proceeds recovered Treasury. Attorney General False Claims Act Fund in the State deposited special into fund, ongoing Legislature, for the money upon appropriation in this its is to use Code, 12652, (Gov. (j).) subd. investigation and of false claims. prosecution We well-settled construction. Our task is apply principles statutory to discern the intent. The Legislature’s itself is the most statutory language indicator, words, reliable so we start with statute’s them their assigning usual and them in context. If the ordinary meanings, construing words themselves are not we meant it ambiguous, Legislature what presume said, hand, and the statute’s On the other if the plain meaning governs. construction, allows more than one reasonable we language look to such may aids as the of the measure and legislative history maxims statutory construction. In cases of uncertain consider meaning, we also of a its on consequences particular interpretation, including impact public Erectors, MW Inc. v. Niederhauser Ornamental & Metal Works policy. (E.g., Co., Inc. 41]; 36 Cal.4th 115 P.3d Cal.Rptr.3d [30 People v. Smith 32 Cal.4th P.3d 797-798 Cal.Rptr.3d [11 348].) noted,
As the CFCA defines covered “persons” any “include[] firm, association, natural lim person, corporation, organization, partnership, business, Code, (Gov. (b)(5).) ited liability trust.” subd. company, We observe at the outset that while this list is not necessarily comprehensive, words and only it uses are those most associated phrases commonly with While, sense, individuals and entities. in the broadest private school district be considered an “association” or an might list “organization,” statutory contains no words or most used to “persons” commonly signify phrases districts, or, matter, for that entities or public any governmental agencies.
Yet the statute makes reference to entities very specific governmental Thus, other contexts. it who a false claim provides any “person” presents to the “state or subdivision” is liable to such for two or political entity [a] Code, 12651, three (Gov. (a), times the sustained. subds. damage thereby § (b).) A subdivision” is defined to include and “political “any city, county, city district, tax or county, assessment or other authorized local legally govern (Id., 12650, ment with entity (b)(3).) boundaries.” subd. jurisdictional § context, enumeration of state and local in one specific governmental entities other, but not in the a conclusion that the weighs heavily against Legislature intended to include school districts as to CFCA public “persons” exposed liability. contexts,
In has demonstrated that similar defini- Legislature entities, tions of do not include and that know legislators “persons” public how to include such entities when intend to do so. For directly they example, Code, (FEHA; under the Fair and Act Gov. Housing Employment § individuals, et one or is defined to more seq.), “person” “include[] associations, limited liability legal partnerships, corporations, companies, other fidu- trastees, and receivers or trastees in bankruptcy, representatives, “ (Id., 12925, that an (d).) ‘[ejmployer’ FEHA provides subd. ciaries.” § or any person five or more persons, person regularly employing includes any any or the state indirectly, directly of an employer, as an acting agent state, cities,” and as otherwise or civil subdivision except political 12926, This Code, added.) (d), conceptual subd. italics (Gov. § specified. FEHA is an additional entities in from governmental separation “persons” not include public does the CFCA’s definition of “person” indication that entities.14 discussion of contains no explicit of the CFCA history
The legislative Nonetheless, the limited evidence available of the word scope “person.” and and other districts public there no intent to include school was suggests 4, 1987, March Assembly introduced on As agencies. originally governmental 1441), which Sess.) Bill No. (1987-1988 (Assembly Reg. Bill No. 1441 included, CFCA, “any as covered “persons,” became the explicitly final form trust, firm, association, business corpora organization, partnership, person, state, district, and city, any and tion, county, city county, company, added.) A these entities.” (Italics and subdivisions agencies political to the bill excised substantial amendment subsequent references entities, to the form was changed and the definition of “person” governmental 29, 1441, in Assem. (Apr. Bill as amended (Assem. No. finally adopted. 5238.)15 1; Our 1987) past ch. pp. see Stats. § defines Labor Code section 18 examples. other similar Perusal of the codes discloses association, code, organization, “any person, purposes all of that to mean “person,” for trust, 4 of the corporation.” In division liability company, or partnership, business limited insurance, Code, defined to “employer” a covered is concerning compensation workers’ Labor any person natural including any which has “[ejvery person public corporation, service include and, Code, 3300, (Lab. (c), added) additionally separately, and “[t]he in service” subd. italics district, public all (id., (a)) county, city, every agency” subd. and “[e]ach State and State (id., (b)). Section 19 of the agencies therein” subd. public corporations quasi firm, code, “any person, to mean purposes for all of that “[p]erson,” Water Code defines trust, association, liability company, or limited organization, corporation, business partnership, code, However, concerning quality, water of that company.” “ purposes of division 7 ” district, state, (Wat. any city, county, and the United States....” ‘[p]erson’ also “includes Code, (c).) subd. hand, expressio the maxim Taxpayers Against curiae Fraud invokes the other amicus On *25 12652, section that Government Code est exclusio alterius. Amicus curiae notes unius circumstances, against (d)(1), qui tam actions under certain explicitly prohibits, subdivision elected judiciary, . . . Assembly, . . . of the state of the State Senate or member[s] “Member[s] state, body governing of [a] . . . of the the executive branch of the or member[s] oificial[s] defendants, amicus curiae “public” By exempting particular these political subdivision.” designated persuaded. not all others. We are argues, the CFCA must mean to include officials, “persons,” and definition of covered clearly fall within the statute’s persons, as natural exemption. the statute intends in situations where expressly exempted thus must be 15 added statutory definition was liability company” in the reference to “limited The current 6087, 1010, 141, 6088.) 1994, (Stats. pp. ch. amendment. to the CFCA a 1994 1192
decisions note deletions from their bills to as indicia prior passage significant Sierra Club v. Coastal of legislative Com. (2005) intent. (E.g., 35 California 839, 316, 294]; Cal.4th 852 v. Birkett (1999) 111 P.3d People Cal.Rptr.3d [28 226, 205, 912]; 21 Cal.4th but cf. American 240-242 P.2d 980 Cal.Rptr.2d [87 Financial Services Assn. v. Oakland 1239, City (2005) 34 Cal.4th of 453, 813].) 1261-1262 104 P.3d Cal.Rptr.3d [23 that, A traditional rule of construction statutory is absent express words to the contrary, governmental are not included within the agencies Estate Miller 588, general (1936) words of a statute. (E.g., 5 Cal.2d 597 Balthasar 491]; 302, Ry. Elec. Co. P.2d (1921) v. 187 Cal. 305 [55 Pacific However, 37].) P. and their amici curiae invoke a more recent plaintiffs [202 i.e., to this excluded exception principle, government agencies are operation general statutory if their inclusion would provisions “only result in an infringement sovereign . . . Pursuant upon governmental powers. to this have been principle, governmental agencies held subject legislation which, terms, Los its (City applies simply any ‘person.’ [Citations.]” 199, Angeles City San Fernando v. (1975) 14 Cal.3d 276-277 [123 1, 1250]; also, Nestle v. Santa Monica 537 P.2d see City of Cal.Rptr. e.g., 920, 568, (Nestle); (1972) 6 Cal.3d 933 P.2d Cal.Rptr. [101 480] 497, Flournoy v. State (1962) 57 Cal.2d 498-499 Cal.Rptr. [20 of California 331]; Hoyt Board Civil Service Commrs. 370 P.2d v. 21 Cal.2d instance, 804].) P.2d In at least one this was premise applied [132 definition of statutory covered somewhat like that used in the “persons” (State v. Marin Mun. W.Dist. CECA. 17 Cal.2d of California P.2d held [county statute of Public subject allowing Department [111 651] Works to order to move his for “any person” pipeline necessary “ or statute defined safety highway to include improvement; “person” ‘any firm, association, or person, business partnership, corporation, organization, ” trust,’ entities].) and did not name expressly governmental I, In LeVine supra, the Court of held that the Cal.App.4th Appeal CECA, defendant school district was a within the “person” scope was thus to CECA retaliation an subject against provisions prohibiting (Gov. claim false a false claims action employee reporting furthering Code, (b)). subd. the “rule that Invoking governmental agencies excluded from the of a statute if their inclusion would general only provisions result in an sovereign Court of infringement upon powers,” Appeal I, (LeVine declined to find that the CECA would cause such infringement. supra, 765.) at The Court of reasoned that “no p. Appeal governmental
1193 otherwise, to a false knowingly present or sovereign has the agency power, us, the instant Court of (Ibid..)16 Appeal employed claim.” In the case before similar analysis. first the ultimate I. In the place, with the conclusion LeVine
We disagree their sovereign unless that entities are statutory “persons” premise public a maxim of construction. infringed statutory would be is simply powers unclear can an legisla- While the resolve “sovereign powers” help principle intent, intent. legislative tive it cannot indicia a contrary override positive structure, of the particular As the language, history we have explained, entities, including statute us—the that CFCA—strongly suggest before public districts, suit under law’s subject school are not public “persons” alone, basis governmental agencies, On that we are that provisions. persuaded case, this not be sued under the district defendants in including may California’s false claims statute.17
Moreover, not 7’s of the we do with LeVine agree analysis “sovereign “sovereign” Of school districts have no power” power course question. Nonetheless, claims right to submit false we against public treasury. 7’s of the CFCA to cannot LeVine determination accept application public would school districts no infringe sovereign powers. revenue, in
As we will explain, stringent appropriations, light under entities governmental restraints which all California budget operate, them to the liabilities of would draconian the CFCA exposing significantly their fiscal out their missions. In the impede ability to core carry public districts, such particular case would interfere with public exposure the state’s exercised at the local level power duty, plenary districts, free mandated individual education provide public Constitution. 16 II, affirmed, case, supra, In LeVine as law of Cal.App.4th Appeal 90 the Court I in LeVine ruling public “persons” subject
its to suit under CFCA. school districts II court declined light intervening LeVine prior holding reconsider its in of several decisions, Agency States ex rel. Vermont Natural Resources v. United including federal (Stevens). Stevens held that Stevens U.S. 765 120 S.Ct. L.Ed.2d [146 1858] subject liability under false claims statute. We “persons” qui states are not tam the federal discuss Stevens greater detail below. (ante, 1) single definition of provides “person,” have indicated that the CFCA We fn. Harris, may qui plaintiff. supra, be and who sue as a tam In sued governing both who purpose. we public “persons” we consider entities are for the latter As Cal.4th whether Harris, explain ample Legislature contemplate public entities there is evidence did not Harris, supra, 1229-1232.) (See qui plaintiffs pp. under the Cal.4th at Given tam CFCA. Harris’s analysis informs our conclusion “person,” statute’s uniform definition of further subject to the CFCA. “person[s]” here that entities also are not suit under *27 1194 initiative, have People, by all of put agencies government, districts,
including on a strict fiscal diet by adding to the provisions California A, Constitution that limit their to tax and Article power XIII spend. 1, section a on “places general the ad valorem ceiling taxes which property be levied on behalf of local governments school districts. [Cita (Butt 668, 691, v. State (1992) 4 tion].” Cal.4th fn. 17 [15 of California 480, (Butt).) 842 P.2d XIII Cal.Rptr.2d Article A also bans other new 1240] of, local taxes levied or by, for the benefit school and other specific special districts as except a two-thirds of approved by (Cal. the voters. majority Const., A, 4; art. XIII 1, see Rider County (1991) v. San 1 Diego § Cal.4th of 490, Flowers, 1000]; 13-15 820 P.2d Cal.Rptr.2d Hoogasian Inc. [2 v. State (1994) Bd. Equalization 23 1282-1284 Cal.App.4th Cal.Rptr.2d [28 686].) level, At the state article XIII A forbids the enactment of new ad any tax, valorem real property all increases in state prohibits taxes except Const., A, two-thirds vote of each house of (Cal. the Legislature. art. XIII §3.)
Article Xin B limits the annual generally of state and appropriations local governments to the years’ prior appropriations for the cost of adjusted Const., (Cal. B, living. 1.) art. XIII Under this constitutional provision, § these limits bemay vote changed only by (Id., of the affected electorate. 4.)18 §
Public school districts face an additional restriction on their to tax ability for their educational spend mission. Because in school disparities funding levels based on the wealth of local comparative districts violate the equal clause of the protection (see California Constitution Serrano v. Priest 18 Cal.3d 929]; 728 557 P.2d Serrano v. Cal.Rptr. Priest [135 Cal.3d 584 1241]), 487 P.2d Cal.Rptr. has Legislature [96 adopted Code, strict system (Ed. which, equalized funding 42238 et under seq.), above, as noted “the raise, amount of tax revenues a district property can with revenues, local specific with an coupled equalization payment by [is] state, thus each district into a bringing rough [per equivalency student] Cal.Jur.3d, Schools, (56 revenues.” supra, omitted.) fns. “In p. obedience to Serrano the current principles, system of school finance districts, eliminates the largely of local rich or ability to increase local poor, ad valorem taxes to fund current at property a level operations exceeding their (Butt, revenue attendance. [s]tate-equalized per average daily [Citation.]” 668, 691, supra, 17.) Cal.4th fn. reserve, governmental Article Xm B allows entities contingency, emergency, to establish trust, sinking, pay extraordinary and other like funds to unexpected expenses. Payments limitation, such funds do not to such appropriations subject constitute but contributions Const., B, against (Cal. 5.) do count entity’s appropriations funds an limit. art. XlH carry at their disposal the limited funds must use
School districts a system public duty mandated constitutionally provide out the state’s the Legislature responsible and makes The Constitution requires, education. shall be a free school which common schools “a system for providing, *28 IX, Const., The 5.) art. (Cal. . . . .” in each district kept up supported through guarantee this “fundamental” to has chosen implement Legislature but it is autonomy, of local degree with a considerable local school districts (Butt, education. over public power that the state retains plenary well settled 668, 680-681.) 4 Cal.4th supra,
Hence, among education is doubt that can be no public there educational that divert limited Laws most basic sovereign powers. state’s with the effective interference are an obvious this core function funds from districts, it school the CFCA public Were applied exercise of power. districts, CFCA, school under the a law. If found hable would constitute such their defendants, could face judgments—payable like other CFCA three, two, caused damage times at least and usually limited funds—of $10,000 false submission, for each civil plus penalties up each false claim, to the harm caused costs of suit. Such exposure, disproportionate plus It for to come. financially years a district to the could treasury, jeopardize it benefit far more than would the districts’ blameless students would injure fisc, finance who public or even the hard-pressed taxpayers the public education.19 revenue, budget, appropria- of the stringent is aware Legislature public all affecting agencies government—and
tions limitations conditions, an we cannot lightly presume these districts Given particular. they the fellow agencies not to make whole only intent to force such entities amounts, defrauded, often into pockets additional huge but also to pay other, may by which the state detailed means Legislature provided that the has We note Thus, districts. educational funds to local recoup overpayments of state discover and out, undergo independent must point local districts defendants and several amici curiae district Code, 41020), may also audit local school (Ed. Controller State annual audits id., 14506, 14507, 41344, (e)). received an (see an audit shows the district subd. If districts §§ ADA, to, than, the state one unit of greater the sum due for even equal overapportionment for a otherwise due to the district apportionment ADA accordingly reduce the total must (Id., hardship create for 41344.) single-year recoupment would year. If a succeeding §§ district, eight years. period up repayment for over plan implemented local be (Id., remedy funds state a strict for (a)(2).) provisions accord the subd. While these district, Legislature’s realistic solicitude they display the a local also improperly apportioned to districts, like all California school under which modem financial constraints several evidence that the They are additional carry their vital mission. agencies, must out government remedies in this context. the CFCA’s draconian Legislature apply did not intend to outside Such a parties. diversion of limited funds would interfere taxpayer with significantly government agencies’ fiscal ability out their carry public missions.20 “ We note that ultimate is to puipose ‘[t]he protect [CFCA] ” (State fisc.’
public v. Altus Finance 36 Cal.4th of California 1175].) 116 P.3d Given that Cal.Rptr.3d [32 school district finances on and largely dependent intertwined with state (see financial aid Belanger (9th v. Madera 1992) School Dist. Cir. 963 F.2d Unified 251-252 (Belanger)), assessment of double and treble as well damages, as other to school penalties, districts would not advance that purpose. course, exists,
Of where liability otherwise entities must legal pay *29 from their judgments limited revenues and even if appropriations, cannot they exceed their tax or to do so and appropriations ceilings must therefore cut Code, (See in other spending areas. Gov. 970 et Ventura seq.; Group § Ventures, 1089, Inc. v. (2001) Ventura Port Dist. 24 Cal.4th 1098-1100 [104 53, 717].) itself, 16 P.3d Cal.Rptr.2d This obligation, and of does not infringe their But we “sovereign powers.” consider the effect on intended, when we are sovereign powers whether the determining Legislature mere to implication, to a expose public entity particular statutory liability. detailed,
For the reasons we have
we conclude the
did
Legislature
not intend to
constrained
subject financially
school districts—or any agency
of state or local
government—to
treble-damages-plus-penalties
provisions
20
statute,
law,
By
“[notwithstanding any
provision
public entity
other
is not liable for
damages awarded under
[governing punitive damages]
[s]ection 3294
Civil Code
or
damages
imposed primarily for the
example
by way
sake of
punishing
Code,
(Gov.
818.)
defendant.”
might argue
One
treble-damage
the CFCA’s
provisions
strictly,
are not
or
primarily, “punitive,”
they
(1)
even
necessary
are
to ensure both
full
recovery by
political
the state
against
subdivision
which the false claim was made and
(2) due compensation
party
to the
who undertook the false claim action on behalf of the
(Cf.,
entity.
e.g., People
defrauded
Younger Superior
ex rel.
v.
Court
of the CFCA. We Weis, LeVine v. supra, 68 Cal.App.4th We suit under that statute. disapprove Weis, hold supra, and LeVine v. to the extent they Cal.App.4th otherwise. decisions Court two United States Supreme
Our
is not affected
analysis
(FFCA; 31 U.S.C.
claims
statute
the federal
false
construing
Stevens,
supra,
U.S.
In
for California's law.
et
model
seq.)—the
that the several states
of state
(including agencies
court
held
high
majority
the FFCA.
tam actions under
subject
are not
governments)
“persons”
qui
v.
County
in Cook
hand,
later concluded
On the other
a different majority
States ex rel. Chandler
United
L.Ed.2d
(2003)
In tam a federal false claims action qui plaintiff brought against county that the owner-operator hospital, alleging hospital submitted falsified documents to obtain federal research funds. compliance dismiss, moved to it not a county asserting was covered “person” Stevens, FFCA. On authority the district court and dismissed the agreed reversed, concluding that Stevens did not action. The court of appeals apply to the The United States Court affirmed the court of county. Supreme appeals. Stevens, the Chandler
In as had the court of distinguishing appeals, a different of federal majority applied construction— presumption statutory one also in effect since the Civil War of the FFCA. This inception presump- tion, that, defined, is where not majority word explained, specifically (Chandler, “artificial “person” encompasses such persons” “corporations” supra, 119, 125-126), U.S. both including “full-fledged municipal corpo- rations,” cities, such and as towns were at the incorporated request inhabitants, counties, their and such as that were cre- “quasi-corporations,” (id., 7). ated the state at fn. unilaterally by p.
The Chandler majority acknowledged 1986 amendments had statute, added treble-damage Civil War-era penalty provisions also conceded the entities to presumption against subjecting government the Chandler However, observed, “punitive” damages. there were majority remedial, to the 1986 In nonpunitive aspects damages penalty provisions. event, concluded, any majority given strong presumption against the modem addition of repeal by implication, arguably “punitive” damages the FFCA could not be considered a silent reversal of the historical assump- (Chandler, supra, tion that this statute includes 538 U.S. municipalities. 129-134.) above,
As noted when the issue is whether entities are government *31 scheme, covered a California courts “persons” statutory particular apply somewhat different from those detailed in Stevens interpretive principles Chandler. Under California law, intent, absent indicia of contrary legislative entities, are deemed to include statutory both state “persons” governmental local, such unless inclusion would entities’ exercise of their infringe statute, and duties. sovereign California’s false claims unlike the powers version, federal defines covered and does so in a “persons,” way suggests an intent not to include entities. Other indicia of government legislative detailed, also this And conclusion. for reasons we have purpose support of the CFCA’s to application treble-damages-plus-penalties requirement pub- lic school districts would severe and financial con- place disproportionate their straints on free education mandated ability provide
1199 in Nothing have intended. cannot Legislature Constitution—a result Stevens or Chandler changes regard. our conclusions in this decisions holding are federal and California beside the
Equally point state,” and thus the state’s are “arms of the enjoy California school districts Amendment, from suits in federal the Eleventh under sovereign immunity, supra, action (E.g., Belanger, rights F.2d 250-251 court. [civil Dist. Elsinore School Kirchmann v. Lake 1983]; under 42 U.S.C.A. Unified 1098, 1100-1102, Cal.Rptr.2d 1105-1115 289] Cal.App.4th [100 Amend, court from state with 11th also [entity immunity enjoys immunity Daniel, Mann, ex rel. Ali v. U.S. 1983]; cf. suits under 42 U.S.C. also Johnson the state” (9th 2004) “arm of Cir. 355 F.3d [five-pronged immu- government entity enjoys test is for whether appropriate determining Stevens].) we decide from federal false claims under When liability nity intended a California statute to include whether California Legislature entities, are not concerned with issues of exclude California we government federalism, constitutional or statutory. in decisions such issues us from
Nothing addressing holding, precludes intent the reasons we that there was no legislative apply have explained, districts, that neither such CFCA to school districts. We conclude public nor of state and local any agencies government, “persons” subject under suit the CFCA.21 sued under the CFCA? May charter schools and their be operators
5. about whether we have with the Court of Though disagreed Appeal actions, to CFCA we have little district defendants are “persons” subject “person” be deemed a argues public The State of California that a school district should CFCA, education against claims state under the and thus liable under that statute for false funds, essentially paid state any judgment against unless the district would be CFCA funds, exempt. of the state” and thus in which case the district should be considered an “arm case-by-case judgment against paid be from state funds is Whether a CFCA district would determination, we urges, the state and the instant record lacks information from which Hence, asserts, court is in the state a remand to the trial make such a determination this case. system of California school required. persuaded. equalization We are not Under the revenue finance, against funds will any judgment finding liable for a false claim state the district Indeed, the necessarily originally derived from the state. paid, part, be at least in from funds holding liability to CFCA in this urged purpose district have that there is no them defendants would, effect, “the regard, judgment of a CFCA constitute because the district’s satisfaction have in this thicket. For the reasons we paying state itself.” We need not immerse ourselves financial Legislature impair did not intend to districts’ explained, we are satisfied that carry by exposing behalf the state them to ability out their educational mission on monetary of the CFCA. the harsh sanctions *32 defendants’ Finally, analysis adopted unnecessary makes it to reach the district we have Code, (Gov. of the TCA. they liability provisions that are immune under various claims seq.) 815 et § 1200 the Court of that the charter
difficulty determination upholding Appeal’s school defendants are who be liable under the CFCA.22 “persons”
The CFCA defines to include and expressly “persons” “corporations” as, “limited as well other liability companies,” among things, “organizations” Code, 12650, (Gov. and (b)(5).) “associations.” subd. The statute includes § elsewhere, no either in the definitional section or for exemption, “corpora- tions” under the organized Public Benefit Law Nonprofit Corporation (Corp. Code, 5110), or for “limited “corporations,” liability “organi- companies,” § zations,” or “associations” charter schools under the CSA. operate
The instant and there no alleges, is complaint apparently dispute, One2Gne, CSRA, defendants Sierra Summit and Academy, Camptonville Moreover, School, are Mattole Academy corporations. Valley though appar- not ently itself is to be and is corporation, alleged operated corporations, an within the certainly “organization” of definition. meaning statutory Nonetheless, that, the charter school insist defendants virtue of CSA, are entitled to they their any “public entity” immunity enjoyed by districts. The charter school defendants declara- chartering various point in the tions CSA that charter schools are of the Public School “part System, [ajrticle Code, 47615, as in (Ed. defined IX of the California Constitution” (a)(1)),23 subd. “under the are of the Public School jurisdiction System (id., (a)(2)), the exclusive control of the officers of the schools” subd. public and, for of are “deemed to be . . . funding, ‘school specified purposes ” id., (id., (c); 47650).24 subd. see also district[s]’
We are not charter schools are deemed Though persuaded. part system schools for of academics and state public purposes fiinding 22 above, defendants, As indicated the charter school so labeled purposes as for of this themselves, opinion, legal they include the schools operated, whatever form as well as form, defendants, having legal all other entities than district which entities are named for, of, complaint having responsibility in the direct or indirect operation control such schools. 23 IX, public system Article section 6 of the California Constitution defines the schools, schools, schools, schools, kindergarten elementary secondary “include all technical and, addition, colleges, and State established in accordance with law the school districts and agencies the other authorized to maintain them.” 24 (c), Education Code section subdivision states that charter schools are deemed to through be school districts purposes for Education Code sections 14000 disbursements, (concerning appropriations, apportionment from the state school fund to ADA), ADA), (concerning apportionment local districts based on formulas based on XVI, 8.5, (defining proposes 41302.5 “school districts” for of art. 8 & California §§ Constitution, schools), funding through earmark state which sections levels of (concerning apportionment transporta from the state school fund for home-to-school tion), ADA), eligibility lottery (concerning and 47638 charter schools’ for state funds based on XVI, article and 8.5 of the California Constitution. sections 8 *33 (see officials and are to some school
eligibility, subject oversight by public Wilson, supra, are 1136-1142), the charter schools here Cal.App.4th operated, the but distinct outside entities— system, by not school public the are given which characterize parties nonprofit corporations—that the freedom achieve academic results free of interference by substantial to The between the charter educational sole bureaucracy. relationship public is the school and the districts in this case chartering through operators char- charters the schools’ governing respects, operation. Except specified ter schools their from the laws school operators governing “exempt Code, (Ed. 47610.) districts.” §
The autonomy, of charter school independent responsibility, operators extend, Thus, in considerable to financial matters. where a charter degree, school is benefit the operated by chartering nonprofit public corporation, Code, not authority (Ed. is liable for the school’s debts and obligations. (c).) subd. A 2003 amendment to the CSA makes clear that chartering from financial for a charter school authority’s immunity liability acts, errors, extends to “claims or omissions arising performance school, the . . . if the has with all authority oversight complied responsi- Code, (Ed. bilities law.” (c).) subd. required by The CECA was designed to recover help government public funds which it was defrauded entities with which it outside deals. There can be little doubt the CECA to entities applies generally nongovernmental that contract with state and local to their governments services on provide behalf. The is statutory served the CECA to the purpose equally by applying independent that receive under the corporations monies CSA public operate the schools at issue here on behalf of the education public system. hand, conclude,
On we over educa- sovereign power public CECA, tion is not infringed by its treble- application including to the charter damages-plus-penalties provisions, school in this operators school districts are the seen, case. As we have public entities fundamentally of free responsible operating system education public required by Constitution. The districts’ financial out this continuing ability carry mission at basic levels is thus critical adequacy state’s satisfying Butt, 4 Cal.4th supra, (See free 678-692.) obligation. we have concluded that did intend Accordingly, Legislature not school districts to the undermine this sovereign obligation by exposing public harsh sanctions of the CECA. monetary
But the CSA no similar to charter assigns sovereign significance statute, schools their Under that the term of a charter cannot operators. Code, (Ed. (a)(1).) subd. exceed five to renewal. years, subject *34 satisfaction of statutory and renewal of charters are dependent upon grant (Id., (b), educational subds. goals. attainment of including specific requirements, id., (c); 47605.) A charter be revoked for material violations see also § charter, failure to meet achievement or fiscal misman- goals, the law or pupil (Id., exist, (d).) If a charter school ceases to its subd. agement. § schools, and the are into the district’s mainstream reabsorbed pupils public for those revert ADA revenues allotted to the charter school pupils previously to the district. of educational choices available
The CSA was to widen the range adopted school That is a Yet salutary within public system. policy. application remedies, harsh, to the charter school defend- the CFCA’s however monetary maintenance, within the affected no fundamental threat ants presents Thus, districts, services. free educational basically public applica- adequate the charter in this case cannot be said to tion of the CFCA to school operators the exercise of the over education. sovereign public infringe power so, that the charter school This there is no reason conclude being the definition set forth in the defendants are not within “persons” expressly view, and be held liable they may CFCA. In our are such they “persons,” false for state or district under the terms of that statute if submit claims they educational funds.25 Academy application and Jablecki insist that CFCA Camptonville Defendants statutory mandates that operators charter and their would violate constitutional schools Const., XVI, 8, (Citing art. separately apportioned and maintained. Cal. § state school funds be (a) moneys by the apart applied there first be set to be subd. all state revenues shall [“From id., system”]; [referring separate see also 8.5 to this support § state for Code, Fund]; keep separate Controller shall fund the State School Ed. [State assert, Fund].) money falsely defendants require, account of State School This would these alone when recovered from School Fund must revert to that account received from State Yet, observe, (j) of Government they provides, the CFCA in subdivision the false claimant. by claim the from the action or settlement of “[proceeds [a CFCA] Code section fund, Act Fund created Attorney into a the False Claims deposited General” shall be different General, subdivision, by by Attorney upon appropriation and shall be used the same persuaded by We not ongoing investigation prosecution of false claims. Legislature, for defendants is argument. assuming premise that the advanced these hypertechnical Even this fund), only (i.e., Fund must revert to that falsely received from the State School correct funds noted, read, specifies As the CFCA (j), reasonably provide does not otherwise. subdivision Code, 12651, (a), (b).) (Gov. falsely subds.
recovery triple the amount received. of double or amount, General, authority, qui and/or tam Attorney prosecuting local From this total (id., (g)(l)-(5)), with the remainder “revert receive “cuts” subd. plaintiff, percentage (id., (g)(6)). than in subdivision subd. Elsewhere [ing] political to the state subdivision” [or] General, authority, Attorney prosecuting or a local is to makes clear that the (j), section 12652 investigation of false ongoing prosecution proceeds “cut” of the use that officer’s context, (B), (2).) (j), referring to (Id., In this subdivision when (g)(1)(A), subd. claims. General,” only Attorney means of the claim from the action or settlement “[proceeds charter schools and their be sued under the UCL? May operators
6. determined that the charter school defendants are not The Court of Appeal to suit under the UCL. But reasons similar to those “persons” subject under the CFCA the Court of erred in this applicable us persuade Appeal respect. CFCA’s,
In similar to the the UCL language defines “persons” subject firms, that law to “mean and include natural persons, corporations, partner- stock joint associations and other ships, companies, organizations persons.” *35 Code, are, (Bus. 17201.) & Prof. The charter school defendants either or are operated by, also constitute “associations” or corporations, they “organi- zations.” are within the They of the statute. plain meaning that several cases have held
Noting entities are not government “persons” who be sued under the UCL (e.g., Community Memorial v. Hospital Ventura 199, County (1996) 50 209 Cal.App.4th Cal.Rptr.2d [56 732] of Animals, Memorial)', (Community see also People Ethical Treatment for of Inc. v. Milk Producers Bd. 871, Advisory (2005) 125 Cal.App.4th California Medical Assn. 900]; 877-883 v. Regents Cal.Rptr.3d [22 California University (2000) 542, 551 79 Cal.App.4th Cal.Rptr.2d [94 of California 194]; Trinkle v. State Lottery (1999) 71 Cal.App.4th California 496]; 1203-1204 Janis v. State Lottery Com. Cal.Rptr.2d [84 California (1998) 68 Santa Monica Rent 549]; 831 Cal.App.4th Cal.Rptr.2d [80 Control Bd. v. Bluvshtein 230 318 Cal.App.3d Cal.Rptr. [281 298]; but see Notrica v. State Ins. Fund Comp. Cal.App.4th 89]), 939-945 the charter school Cal.Rptr.2d [83 defendants insist are they entitled, as of the part public system, to this “public entity” exemp- tion.26 The Court of We do not. Appeal agreed. indicated,
As we have the charter here are schools operated, pursu CSA, that, CFCA, ant to the for the do not corporations purposes mandate, as entities. qualify public Though, by statutory these institutions are funds, an alternative form of schools financed public education by public they and their are free and operators largely independent management Indeed, the oversight by education the public bureaucracy. charter schools settlement, Attorney General’s “cut” of the total leaving amount recovered in the action or fund, public the remainder for to the treasury, account—general specific—from reversion or or falsely which it was providing recovery, obtained. In for double or treble the CFCA seeks to ensure that public private “cuts” awarded to the parties prosecute who false claims prevent treasury obtaining actions will not the defrauded recovery itself from full funds actually lost to the false We claim. see in this scheme no violation of the constitutional statutory provisions by Camptonville Academy cited and Jablecki. Hence, Plaintiffs against made no UCL claim the school district defendants. whether entities, such, governmental are “persons” appeal. covered the UCL is not at issue in this students, receive funding for and they schools with traditional public compete recruit and retain at expense number of students they based on the use business practices Insofar as their operators deceptive traditional system. efforts, by subjecting of the UCL are served these to further purposes of that statute. them to the provisions undermined. Even function thereby educational sovereign
Nor is the state’s functions, entities, are their sovereign in the exercise of if governmental (see their restrictions on competitive practices from the UCL’s exempt Memorial, was not supra, [county 209-211 Community Cal.App.4th UCL, treatment of that county hospital’s such “person” purposes would be subject with hospitals private paying patients competition the charter school statute]), no reason to apply principle appears defendants, and which terms of statute which are covered by plain We funding. for students and the traditional schools with compete covered charter school defendants “persons” conclude that UCL.27 study programs apply on independent Did restrictions statutory
7. Code section 51747.3 was Education charter schools before *36 amended in 1999? that not may with the trial court plaintiffs of agreed
The Court Appeal action, that the charter of allegations of their CECA cause as part pursue, in violation of the “independent claimed ADA funding school defendants court Code section 51747.3. appellate of Education study” requirements after a charter schools 1999 only 51747.3 applied reasoned that section 2000, amendment, allegations in and that all pertinent effective conclude, the Court of contrary this effective date. We complaint preceded 2000, in 51747.3, did include charter as section that Appeal, effect before against following backdrop. analysis schools. Our proceeds 1989, study with (§ dealing independent 5.5 51745 et seq.), In article 4, 28, 2, 5 of the Education division chapter was added to title part programs, 51745, 1089, 5, (a), 1989, 3775.)28 subdivision Section (Stats. ch. p. Code. § school that, school local year, with the 1990-1991 beginning provides the educational “to meet study programs districts offer independent of this article.” with the in accordance requirements needs of pupils of later, 1992, CSA. One section enacted the the Legislature Three years 47610, must that a charter school law, Code section provided that Education however, complaint not, allegations plaintiffs’ of particular decide whether We do beyond scope appeal. of this That issue is action under the UCL. state a cause of 5.5, study, simultaneously repealed. was dealing independent with article also A former 1089, 4, 1989, 3775.) (Stats. p. ch. § charter, with its but was “otherwise from the laws
comply exempt governing districts, school with except specified [dealing participa- [s]ection 1992, 781, 1, tion in the State (Stats. Teacher’s Retirement ch. System].” § 3756, that, 3760.) Since its pp. the CSA has further stated with inception, to a charter specified exceptions, school shall not be determined “[a]dmission to the according of residence of the or of his or her place or pupil, parent Code, 47605, (Ed. within guardian, (d)(1).) this state.” subd. § 1993, In Education Code section 51747.3 was added to the independent 1993, 66, (Stats. enacted, study provisions. 923.) ch. As then section p. § 51747.3 local educational provided claim state agency may funding “[n]o for the of a if the has provided any funds independent study pupil... agency or other value thing to the or his or her or that the pupil parent guardian of does not agency to students provide who attend classes or to their regular (Stats. Code, parents guardians.” ch. Ed. p. adding § 51747.3, (a), Further, added.) subd. italics the new statute specified law, “Notwithstanding any other provision . . . independent study average of daily attendance shall be claimed districts and county superinten dents of schools who are residents county in only which pupils of apportionment claim is reported, or ... county immediately adjacent (Ibid., 51747.3, . . . .” county (b), adding added.) [such] subd. italics Finally, statute stated that provisions of this section are not subject “[t]he Education, to waiver the State Board State Superintendent Instruction, or under any Public Part provision 26.8 the Education [of with (commencing [i.e., (Ibid., 47600) Code] [s]ection adding CSA].” 51747.3, (d), added.) subd. italics A 1995 General’s Attorney concluded that opinion Education Code section 51747.3’s restrictions on the provision “funds or other special thing[s] of value” to independent study pupils to charter schools. applied The opinion *37 47610, observed that in although, section the CSA to charter purported exempt laws, schools from all but a few school district specified (d) subdivision of section 51747.3 of that statute that the expressly provided provisions could not be waived under the CSA. indicated,
As the opinion the may ‘laws comprise governing “[w]hatever school districts’ from which charter schools are it is clear that for exempt, of the state of purposes funding a charter school independent study programs, must with the comply particular requirements section [Education Code] 51747.3. The (d) last sentence of subdivision of section 51747.3 would otherwise be devoid of to the meaning, contrary rule of construction statutory sentence, word, be accorded of a statute must and part that every phrase, 253, (78 reasonably Ops.Cal.Atty.Gen. if significance possible. [Citations.]” (1995).)29 257-258 47610, 1996, part Education Code section
In the amended Legislature CSA, of laws from which statutes to the list the to add certain additional rule, were not exempt. schools, (Stats. the derogation general charter 786, 5, 1996, was not included. 4148.) Section 51747.3 ch. p. § 51747.3 in Education Code section amended Legislature In this setting, 1999, 162, (a) of 2.) subdivision (Stats. ch. As amended 1999. law,” any that “[notwithstanding provision section 51747.3 specifies barred from agencies” the “local educational “charter are among schools” thing received “funds or other for who have funding [s] state claiming pupils ch. (Stats. classroom students. regular of value” not to provided that charter (a) further declares 2.) sentence in subdivision “[a] A new if of a study for the funding independent pupil... not claim state may of value to the funds or other thing pupil the charter school has any provided could not legally that a school district provide or his or her or guardian parent district, or her or or to his parent of the school to a situated similarly pupil schools” to added “charter (b), In the amendment subdivision guardian.” entities ineli- of schools” as and “county superintendents “school districts” who for study pupils claim funds independent state gible apportionment claim is reported, which the outside the from county apportionment reside 2.)30 (Stats. ch. an county. adjacent concluded, however, in Education Code “things of value” referred to opinion materials, 51747.3, (a), laptop such as educational special did not include section subdivision aids, study in facilitating independent learning computers purpose and other for inherently study are different necessary independent Noting that the resources particular. “[sjection 51747.3 setting, opinion concluded appropriate to the classroom from those study independent program an limiting educational resources of construed as not be (78 opportunities. choices and Legislature” expand educational intended expressly asserted, result, 259-260.) would be opinion supra, pp. at Such a Ops.Cal.Atty.Gen., observed, 260.) history, opinion revealed (Id., legislative p. at The statute’s “absurd.” students in an are to be withheld from suggest that educational resources “[n]othing [to] Rather, language of section presented. circumstances study program under the independent 51747.3, offering ‘sign up bonuses’ to the (a), from adopted prevent schools subdivision was funding for the to obtain state for the schools study home children in order parents of prohibition was intended study programs. The independent in their attendance of the children education, preclude not to schools offering unrelated to from incentives prevent schools study students.” independent educational aids and materials for special funds on spending *38 260.) (78 supra, p.at Ops.Cal.Atty.Gen., 30 read, 1999, part, as follows pertinent 51747.3 in Education Code section As amended in “(a) any italics, brackets): Notwithstanding other (added by noted language [No] in omissions school, to, law, may a charter agency, including, but not limited education provision a local of any agency provided has study pupil... a if the of funding independent for the not claim state agency guardian that the does parent her or thing pupil to the or his or other of value funds or
1207 (1999-2000 Counsel’s for Bill 434 Legislative Senate No. Digest Reg. Sess.) (Senate 434), Bill No. which amendment 1999 incorporated 51747.3, (1) Education Code section stated that the amendment “would . . . make to charter schools” the applicable restriction preexisting statutory on ADA for students who have received or funding independent study money students, of value things (2) not to traditional classroom “would provided . . . also to charter schools” the ban on ADA for apply preexisting funding students who live independent study outside the in which is county funding or an sought, (3) and would charter adjacent county, additionally prevent schools from ADA for receiving funding to whom independent study pupils or they provided of value which a school district money things could not legally provide situated students. similarly
In that the concluding 1999 amendment extended Education Code section time, 51747.3 to charter schools for the first (1) the Court of cited Appeal CSA’s express of charter schools all but exemption a few specified districts, provisions (2) school governing CSA express provision residence, charter school enrollment cannot be (3) limited by amendment’s addition of charter express schools to the entities subject 51747.3, section (4) the Legislative Counsel’s above. The Digest quoted concurring and dissenting a opinion similar But that applies analysis. ap- proach overlooks section language 51747.3 has contained since its adoption 1993—i.e., are that its not to waiver under the subject CSA. provisions
As the General Attorney observed in his 1995 the only opinion, possible that, of meaning this language is from and after the effective date of the 1993 enactment, were, remain, charter schools to the subject restric statutory tions on independent study then set forth in that programs law. other Any conclusion would this of deprive phrase significance, to the contrary principle of statutory construction that which render interpretations of statute any part In re (2004) 900, to be avoided. Young superfluous (E.g., 32 Cal.4th Hunt v. 797]; 87 P.3d Superior Court Cal.Rptr.3d [12 Cal.4th provide not to pupils A charter regular who attend parents guardians. classes or to their or school funding independent study not claim state pupil ... the charter for of if provided any thing school has pupil parent or other value or his or her or funds of guardian legally that a school district provide similarly pupil could not to a situated district, parent guardian, school or to his or her Notwithstanding paragraph or (b) [f] (d) subdivision law, Section 47605 or any provision community school districts, independent study average daily county attendance shall be claimed [and] schools, and charter superintendents schools only pupils county who are residents of the apportionment in which the reported, claim is county immediately or who are residents of a adjacent county (d) to the apportionment reported, which the claim is . . . . . . The [f] [][] Education, provisions subject of this section are not to waiver the State Board of Instruction, Superintendent State of Public any provision (commencing under of Part 26.8 47600).” (Stats. 2.) with Section ch. A amendment substituted “educational” (Stats. 4.) for “education” “agency.” between “local” and ch. *39 1208 236, 705]; (1997) 16
984, v. People Aguilar 987 P.2d 1002 Cal.Rptr.2d [90 655, 1023, 1204].) 945 P.2d Cal.4th 1030 Cal.Rptr.2d [68 does not Code section 51747.3 This construction of Education CSA, and by noted the Court Appeal, overlook certain provisions 1993, in effect in already which were dissenting opinion, concurring charter for enrollment in particular 47605 (eligibility sections including (charter residence) and 47610 school exempt not to be determined by school In provided). districts except expressly from laws governing discordant, statutory provisions, and sometimes harmonizing disparate, irreconcilable, that, where statutes are otherwise we are the maxim guided by tanto, earlier and more over later and more enactments prevail, pro specific Resources Control Lumber Co. v. State Water (See, ones. general e.g., Pacific 921, 220, 126 P.3d (2006) 37 Cal.4th 942-943 Cal.Rptr.3d 1040] Bd. [38 Stores, Addiction, (1998) 17 Inc. v. Inc. Lumber); Lucky Youth Stop (Pacific 1086]; P.2d Department 950 Cal.Rptr.2d Cal.4th 568 [71 Bd. Control Beverage Appeals Alcoholic Control v.Alcoholic Beverage 621].) 71 Cal.App.4th Cal.Rptr.2d [84 version of we conclude that those principles, Applying 51747.3, nonwaiver under its for including Education Code section provision CSA, it addresses enactment on the subjects is a more recent and specific statutes, latter 47605 and 47610. The of sections than the pertinent provisions from charter schools were exempt generally enacted provided But section nonresident students. laws and must accept most school district restrictions, restrictions, on the residence including later 51747.3 placed schools, schools, could like other which charter circumstances under study pupils particular. obtain ADA funding independent programs Indeed, extent, section the earlier statutes. To that section 51747.3 superseded restrictions residency apply that its 51747.3 has always expressly provided (Id., (b).)31 of law. subd. notwithstanding any provision Code to Education the 1996 amendment We are not otherwise persuaded which the list of laws from certain statutes to section which added Section section 51747.3. but did not include charter schools are not exempt, terms, There was 51747.3, to charter schools. already applied its express in section 47610. no need to so say again history Senate Bill No. 399 legislative nothing contemporaneous We found in the have adopted, was first (1993-1994 Sess.), 51747.3 Reg. through which Education Code section intended, apply inception, its was the conclusion that the section
adds or detracts from to charter schools.
Nor are we dissuaded the the Digest, Counsel’s language, Legislative the of the Education section amendment to Code legislative history32 1999 51747.3, insofar as the charter they might 1999 believed suggest Legislature schools were to the for the A later of added statute first time. being expression legislative is not as to what meant when it purpose binding legislation prior Cummins, Lumber, 921, 940; was adopted. (E.g., 37 Cal.4th supra, Pacific 478, 823, Inc. v. Court Superior 36 Cal.4th 492 Cal.Rptr.3d [30 98].) 115 P.3d We therefore conclude that the restrictions on independent in study set forth version of Education section programs 1993 Code 51747.3 to charter schools applied even to the 1999 amendment.33 prior
Plaintiffs’ CFCA cause of action to the tailored appears properly version of the statute. The pre-1999 that the charter school complaint alleges defendants submitted false ADA claims for who study independent pupils (1) received “funds or other of value” not thing[s] provided to classroom students, and (2) resided outside the counties The statute. designated by trial court and the of Court thus erred in that Appeal holding plaintiffs’ claims “independent study” were barred because Education Code section 51747.3 did not to charter schools until it was amended in apply 1999.34 32See, e.g., the analysis Senate Education Committee’s of Senate Bill No. 434 as amended 28, 1999, pages June 1-2. 33 1993, originally adopted As in Education Code section 51747.3 referred “local districts,” schools,” agencies],” education “school “county superintendents but of not schools, specifically to charter as entities precluded claiming independent- from state for funds 1993, 66, study 904, under pupils (Stats. the circumstances pp. described in the statute. ch. However, 923.) nothing in the 1993 version of section indicated that these as in provisions, 2000, effect prior apply did equally independent-study pupils not to the of charter schools operating districts,” under jurisdiction of agencies,” the “local education “school “county superintendents responsible of schools” claiming for funds state on behalf such 1999, amended, schools. In among things, section 51747.3 was expressly to include section, among agencies” charter schools the “local education covered place and to charter schools within the statute’s on claiming limitations state funds for independent-study 1999, 162, (Stats. pupils. 2.)§ ch. But it appears express this statement of limitations on ability charter schools’ funding to claim state simply part contemporaneous was overhaul measure, way charter general. schools were funded Assembly in Another 1999 Bill (1999-2000 Sess.) Reg. 1115)—a No. 1115 (Assembly Bill Budget No. trailer to the 1999 47651, Bill—added section providing that a charter elect school to receive its share of funding directly, state than through agency” rather “local educational under which it (Stats. 32.8.) operates. legislative history ch. The of Senate Bill No. which amended, section specific change 51747.3 was made funding methodology reference to the in Education, adopted Assembly (See Bill 1115. analysis No. Sen. Com. on Sen. Bill 28, 1999, circumstances, 4.) No. as amended p. logical June Under these it became for sum, directly section 51747.3 to mention charter state schools as claimants In we are funds. 51747.3, persuaded pre-1999 not that either the version of section or the 1999 amendments to section, schools, Legislature’s evidence the prior intent exclude charter funding this statute’s independent-study programs. restrictions on simply We realize amendment to Education Code 51747.3 did insert section not subject “charter schools” as entities to the version of the statute. The amendment also CFCA claim barred as one “educational Is plaintiffs’
8. malfeasance”? submitted false charter defendants alleges complaint who “were not students [actually]
claims to obtain ADA funds for pupils materials, instruction, educational or services from receiving enrolled in and that, above, this is schools.” As noted claim gravamen [defendants’] *41 schools, little more the of their distance defendants did operation learning to than attendance forms from their ostensible while failing collect pupils, services, and in the the educational supplies promised provide equipment, materials, Among charters and and law. by schools’ promotional required for the asserts that defendants educa- things, overcharged complaint sources, never furnished tional software available from other readily prom- home, and at and failed to testing provide ised for online computers learning who, student, the of facilitators” for each were sup- services “educational order and an individualized necessary develop to posed equipment supplies, instruction, make home for weekly curriculum visits plan, personal and evaluation. testing, for
The trial court concluded that these were all claims impermissible W., Peter (see 814), but the supra, “educational malfeasance” Cal.App.3d of reasoned that the com- Court of The Court Appeal disagreed. Appeal or no about the allegations judgments methodology quality plaint’s required of educational services—a matter which reasonable upon persons defendants’ observed, Rather, the presented could the court disagree. complaint appellate claim that defendants de- “straightforward the only comprehensible” to frauded the state education funds for whom collecting pupils public no service of attendance forms. collection they provided beyond timely in Insofar as the We with the Court agree Appeal. complaint principle education, substandard a but instead that not that defendants alleges, provided services, did, do, (1) offered no or failed to educational they significant law, in their charters or or acts violation of applicable specific, quantifiable study of may funding independent pupil, added that school not claim state for charter “[a] otherwise, provided any funds study home or if the charter school has whether characterized as guardian that a district could thing pupil parent his or her or or other of value to or district, similarly parent to her or legally provide pupil to the school or his or not situated (Stats. added.) guardian.” may apply This sentence restrictions ch. italics new study original those version programs beyond imposed independent charter school issue, however, plaintiffs’ complaint because is not the statute. We need not address that Moreover, language. special we need not whether the terms this amended consider framed in study though not classroom provided independent pupils, materials be educational original students, thingfs] proscription of value” violating the “funds or other without statute, Attorney opinion. question That is suggested by the 1995 General’s version of the as beyond presented appeal. issues this scope students, caused improperly or to incur parents, guardians monetary or charges overcharges educational particular materials and equipment defendants, supplied by through it does not state a barred claim for educational malfeasance. We our in detail. explain reasoning W,
In Peter supra, an former Cal.App.3d 18-year-old district, school student sued his school causes of asserting action for negli- breach gence, of mandatory and fraud. The duty, complaint alleged follows: The district “negligently and failed carelessly” perceive disabilities, plaintiff’s learning assigned him to classes beyond his reading abilities with needs, instructors to meet his unqualified him special passed from grade to grade with knowledge he had not achieved necessary skills, him, law, permitted violation of state to graduate even though he could not time, read above the eighth grade level. this During the district made mother, to the representations plaintiff’s which representations district knew true, were false or had no basis to believe were that he was at performing result, or near his grade level. As a he graduated with fifth *42 skills, grade and reading thus writing permanently his limiting employment and opportunities earning capacity.
The sustained, defendant’s demurrer dismissed, was the suit was and the plaintiff appealed. Court of affirmed. The Appeal court concluded that the failed complaint to allege the district’s breach of a the law duty would noted, recognize. As the court “classroom affords methodology no readily care, cause, acceptable standards of or science, or injury.” Pedagogical observed, court is with different “fraught and theories” about conflicting how moreover, children should be taught; educational success or failure “are factors,” influenced a host of external, both and personal “which affect the pupil and W, subjectively” often are (Peter the control beyond of educators. supra, 824.) situation,” “We Cal.App.3d court, find in this said the “no conceivable of a rule of ‘workability care’ which against defendants’ conduct alleged [citation], be measured no reasonable of cer ‘degree . . tainty . plaintiff suffered within the of the injury’ law of meaning [citation], negligence and no such ‘connection between the perceptible de suffered,’ fendant’s conduct and the injury alleged, which would establish a causal link between them within (Id., the same at meaning [citation].” 825.) p.
Peter W. also considerations, identified other public policy “even more terms,” in important practical that counsel an against “actionable of ‘duty care’ in persons and agencies who administer the academic phases W, (Peter educational public supra, process.” 825.) The Cal.App.3d noted that opinion schools are public beset “already social and financial problems,” including dissatisfaction with their widespread academic them their and are “the limitations subject imposed upon performance, (Ibid.) institutions to an aca- such supported budgets.” Subjecting publicly circumstances, concluded, “would of under these duty demic care opinion and imagined—of them the tort claims—real or disaffected students expose terms of numbers. . . . The ultimate in consequences, countless parents calcula- time would money, society—beyond burden them—and public (Ibid.) tion.” however, clear,
As the instant Court made considerations Appeal in Peter an action for educational injury identified W. preclude personal and causation do not apply based on standards inherently subjective duty fraudulently a claim that school obtained operators sought than forms. education more attendance doing collecting funds nothing a claim does not about require pedagogical Resolution such judgments curriculum, classes, instructors, methods or the the school’s quality textbooks, it individual or aids. Nor does evaluation of learning require achievement, their educational or or reasons for students’ progress determine success or failure. It court to whether simply obliges offered curriculum any significant teaching, testing, oversight, operator educational resources to ostensible students. Peter that a rationale of a claim
Similarly, W. nothing precludes claim on state funds was “false” insofar as the school school operator’s law, charter, state committed identifiable breaches its objectively applicable it For Peter W.does not bar made to induce enrollment. example, promises *43 that failed to provide assertions a school operator promised equipment credentials, violated necessary specific used teachers who lacked supplies, students, or rules or caused governing study” programs, parents, “independent such do not or as claims charges,35 long incur fees so guardians improper of or results the school’s quality programs.36 educational challenge 35 students, Indeed, wrongly routinely charged that we have addressed claims schools services, any that such guardians suggestion or without parents, or for school-related activities v. Eastin (E.g., doctrine. 9 Salazar implicated issues the “educational malfeasance” charges challenging transporta Cal.Rptr.2d [taxpayer 890 P.2d suit for Cal.4th [39 43] school]; v. Connell Cal.Rptr. 35 Cal.3d of students to and from 899 [201 Hartzell tion activities].) challenging for extracurricular [parent/taxpayer P.2d suit school fees 35] such are barred emphasize our here is limited to whether theories We that discussion view such under Peter W. express malfeasance.” We no on whether claims for “educational words, under not the CFCA. a In other we do allegations can form the basis for cause of action students, parents, guardians, or promises a school’s breaches of or address whether charter law, funding the school applicable may any cause related claims violations of its charter or its Nor, course, we meaning that statute. do upon the state to be “false” within the makes factually inconsistent CFCA possibility plaintiffs pled ourselves with the that have concern hand, deliver one charter defendants failed to by alleging, theories on the that school other, and, they “independent supplies on the that violated the equipment educational above,
For the most CFCA part, plaintiffs’ allegations, detailed conform to these and thus avoid under Peter principles, preclusion W.As the Court of held, the trial court thus Appeal erred in that the concluding CFCA cause of action was wholly note, barred as a claim for “educational malfeasance.” We however, single passage which complaint alleges 0ne20ne “fails provide education it but promises collects State falsely educational funds as if the education were Insofar provided.” as this allegation particular seeks to raise issues of the of education quality offered the charter school defendants, or of the academic results we believe it falls within the produced, rule that courts will not entertain claims of “educational malfeasance.” To that extent, therefore, the is not allegation actionable.
9. Did the CFCA cause action the charter against require prior presentment a claim under the TCA? defendants that,
The TCA states with all specified exceptions, “claims for or money damages” the state against or “local public entities” must be in accordance “presented” (Gov. Code, with that law. 905.2.) Except §§ as otherwise no provided, suit for or be money damages may brought against a public entity until such a claim has been to the presented and acted entity (Id., or deemed upon 945.4.) rejected. The claim must be § within presented six (id., months of accrual of the cause of action 911.4), but the claimant to the apply for public entity leave to late (id., 911.6). claim present denied, If such an denied, application is or deemed the claimant may petition the court for relief from the (Id., claim presentment 946.6.) requirement.
Plaintiffs’ complaint “have pleads they claims for presented money damages to the public entity defendants to pursuant requirements 945.4, Government Code denied, which have been [section] and/or have sought relief from the claims presentment (Italics requirements.” added.) Plaintiffs concede that this does not pleading actual allege with compliance the TCA claim presentment and that requirements, have not they so complied. They no such urge is compliance necessary of the CFCA. purposes Court of Appeal concurred. We agree with the Court of Appeal. *44 outset,
At the we need not decide whether the TCA’s claim presentment requirements to apply plaintiffs’ CFCA claims the district against defendants, because we have concluded that those defendants are not to “persons” subject discussion, suit under (See the CFCA. ante.) hand, On the other the question arises whether the claim presentment of the TCA provisions could ever apply to the charter school defendants. study” by rules providing things of value not offered to classroom students. Such were issues
not addressed on beyond demurrer and are the scope appeal. of this Code, law, (Gov. “the state” Under claims must be to presented TCA, 905.2) (id., 905). or For of the “local entities” public purposes § § “ district, county, authority, includes a public entity’ city, public ‘[l]ocal in the subdivision or agency, any political public corporation public Code, [s]tate, (Gov. 900.4.) the but not include the Under does § [s]tate.” and, CSA, charter are of the for system schools part public specified discussion, However, ante.) (See are deemed to be school districts. purposes, and, the for those do not include TCA coverage by purposes expressly CFCA, with the reasons discussed in connection the charter school previously defined, for defendants do not fit of the ¡within any categories comfortably TCA, entities.” of the as “local purposes public concluded, event, the of the In as Court of Appeal application any to would the TCA’s claim CFCA actions frustrate requirement presentment of The excludes from the claim both statutes. TCA itself expressly purposes the a state or by or by department presentment requirement “[c]laims [s]tate Code, 905, (Gov. (i).) or local subd. public entity.” another agency Hence, Attorney CFCA actions in their official the brought, capacities, 12652, (id., (Gov. or (a)) General Code subd. local authorities prosecuting (b)) subd. are clearly exempt. tarn under the
The same rule actions applicable qui by “persons” appears for the tarn CFCA. Such a suit is not but brought, only qui plaintiff, “for state, involved, name State of California in the if funds are or state any of subdivision, in the name political a if political subdivision political for Code, (Gov. are involved.” exclusively subdivision funds added.) or local (c)(1), subd. italics If the General Attorney prosecuting action, “the tarn elects not to intervene and with authority proceed qui Attorney shall the same to conduct the action have plaintiff right have if it had to pro- General or would had chosen prosecuting authority (Id., Hence, (f)(1).) . .” at the time a tarn action is brought, ceed . . subd. qui subdivision, tarn or stands the shoes state plaintiff political qui a local entity. within the for claims state or TCA exemption Moreover, as the Court of tarn explained, qui provisions Appeal claim with the behind the TCA’s of the CFCA are at odds policy presentment not be sued for general proviso public entity requirement. received, and chance to act until it has had the upon, money damages while claim the facts entity investigate written is intended allow fresh, and to in fiscal where litigation appropriate, engage settle short San v. Court City Superior Jose liability. potential (E.g., planning Gatto 701]; County v. 525 P.2d 12 Cal.3d Cal.Rptr. [115 550]; Barkley v. Sonoma Cal.Rptr.2d 98 Cal.App.4th [120 679].) Blue Lake (1996) 47 City Cal.Rptt.2d Cal.App.4th [54 *45 hand, On the other a tam the CFCA be filed under must qui complaint seal, served, under must be with a immediately along written dis- closure of all material evidence and information the tam qui plaintiff Code, 12652, (Gov. (c)(2), (3).) on the General. possesses, Attorney subd. involved, If subdivision funds are for- political General must Attorney ward these materials to the local within 15 prosecuting authority days. (Id., (c)(7)(A).) subd. must remain sealed for to 60 complaint days up after with additional filing, extensions available upon timely application, while the General or Attorney local authority investigates prosecuting decides whether (Id., (4), to intervene. subd. (c)(2), (6), (7).) this During Moreover, period, (Ibid.) must not be served on the defendant. complaint filed, once a tam action is it qui cannot be settled without the consent of court, into account the “taking best interests of the involved and the parties behind public purposes (Id., (c)(1).) subd. [the CFCA].” No California decision has discussed the of the CFCA’s seal purpose However, cases, requirement. several federal the FFCA’s similar addressing have indicated that provision, the interests include served sure the making qui tam action does not alert wrongdoers, to intervention prior by govern ment, that are under they investigation. U.S. ex rel. v. (E.g., Lujan Hughes (9th Co. 1995) 245-246; Cir. 67 F.3d United States ex rel. Aircraft Pilon v. (2d 995, 1000; Martin Marietta 1995) Cir. Corp. 60 F.3d Erickson v. American (E.D.Va. Institute Bio. 1989) Sciences 912.) 716 F.Supp.
The CFCA does not explicitly preclude tam potential qui plaintiff, prior a CFCA filing to the complaint, disclosing defendant potential claim, the basis of the or even from to settle it. But the attempting CFCA’s would purposes be obviously undermined if CFCA tam were qui plaintiffs TCA, under required, defendants, “local present public entity” statute, defined in that with written claims before with suit. proceeding The charter school defendants urge this construction of the two statutes improperly noted, “elevates” the CFCA over the TCA. Not so. As we have the TCA includes an from the explicit exemption claim presentment require- ment for claims by state and local Qui entities. tam actions under are, essence, event, CFCA claims of that kind. In in view of the any CFCA, statute, secrecy a later and provisions more focused narrowly it must over prevail contrary provisions earlier more TCA.37 general 37 Defendant Sierra Academy urges Summit presentment requirement the claim TCA is made applicable (e), to the CFCA Government Code section subdivision effect, provides, which that the CFCA is not violated made pursuant claims to the TCA. fail logic argument. We to follow the of this That pursuant claims made to the TCA do not violate the CFCA against does not mean a CFCA public entity action be preceded must presentment of such a claim. Insofar argue as this defendant seeks to that section *46 1216 defendants are “local if the charter school conclude that even
We therefore TCA, under were not required of the plaintiffs entities” for purposes public tam their complaint written claims before filing qui that statute to present the CFCA.38 pursuant
CONCLUSION insofar as it concludes is reversed of the Court of Appeal judgment to suit under are subject school defendants (1) “persons” that public to suit CFCA, are not subject charter school defendants (2) “persons” in UCL, set forth restrictions study” and the “independent under the 1993, 51747.3, did not in apply in the form adopted Education Code section In all other amended in until that section was 1999. to charter schools Weis, LeVine v. is affirmed. of the Court Appeal respects, judgment Weis, v. 90 supra, Cal.App.4th and LeVine supra, Cal.App.4th are districts hold that school they public to the extent disapproved to the cause is remanded under the CFCA. The who be sued “persons” consistent with the views expressed further Court of Appeal proceedings in this opinion. Mon, J.,* Moreno, J., J., J., Chin, J., concurred. Corrigan, C.
George, CFCA, no on this record. There is (e) the claim lacks merit exempts it from the subdivision funding—the basis of Academy’s claims for state education Summit indication that Sierra pursuant to the TCA. presented of action—were plaintiffs’ CFCA cause that, purposes entities” for suggest alternatively “public defendants The charter school statute, TCA, immunity liability. These from CFCA they enjoy, pursuant to that “injury” for an where the entity a is not liable public note the TCA’s rule that defendants 815.2, Code, (b).) (Gov. subd. liability. causing injury is immune from public employee “discretionary “misrepresentation” act” and a claim is a They claim that submission of false 820.2, id., (See entity, immune. public §§ thus the would be employee, public for which However, contrary 822.2; 818.8.) supplant common while the TCA was meant also § see law, liability specific impose prevail over other statutes it was not intended com., 920, 932; Nestle, Com. (See Cal. Law Revision supra, 6 Cal.3d circumstances. seen, 167-168.) the CFCA (1995 ed.) As we have pp. Gov. Code foil. § West’s Ann. (Gov. organization[s]” corporation[s], including person[s], [and] “natural “persons,” makes 12651, 12652). (id., Code, 12650, (b)(5)), false claims §§ liable for the submission subd. CFCA, the charter operate corporations include the as defined in “persons,” Insofar as case, the TCA. The charter school immunity under they are not entitled to schools in this forth in that prevail over liabilities set specified in the TCA note that immunities defendants Code, 168.) com., Com., p. supra, foil. (Cal. 32 West’s Ann. Gov. Law Revision statute. com., Com., (Cal. 32 West’s Law Revision only the TCA applies within principle But this itself Code, 168); Legislature adopting preclude Ann. not p. it does supra, foil. § Gov. circumstances, in the despite immunities stated liability specific impose other statutes that TCA. One, District, assigned Division Appellate Fourth Appeal, of the Court of *Associate Justice VI, the California Constitution. section 6 of pursuant Justice to article by the Chief J., I concur in the
KENNARD, majority’s Concurring Dissenting. lawsuits under districts are not subject that: holdings Act; their in this case and (2) the charter schools California False Claims *47 Act and under the California False Claims to lawsuits subject operators law; claims, for the (3) allegation except the unfair competition plaintiffs’ the education Foundation failed Learning provide defendant 0ne20ne malfeasance”; and “educational it are not barred as claims for promised, claims under the Tort Claims (4) are not written present plaintiffs required False Claims Act. Act before tarn action under the California filing qui dissent, however, the that Education Code section holding I from majority’s 1999, which before its amendment in 51747.31 to charter schools applied 1, That violates the rule holding became effective on 2000. January are to and maintain the of statutes whenever integrity courts harmonize the amend- and it is contradicted the 1999 by legislative history possible, ment to section 51747.3. in As here it
Section 51747.3 was enacted 1993. originally pertinent a local education from state for agency claiming handing prohibited funds or other students in if the study agency provided independent programs of value what it to students who attend things beyond regular provided schools, classes; (2) school districts and prohibited county superintendents them, of law from notwithstanding any claiming provision applicable funds) (for attendance average daily purposes apportionment immediately students who were not residents of their or a county county not be could their that its adjacent county; provisions provided waived Education, the by State Board of State Superintendent Instruction, or “under Part 26.8 with any (commencing Public provision of 1993, 66, 32, 923, 47600).” Section (Stats. added.) ch. italics Section p. § 1999, Act. In 47600 is first statute in Charter School appearing amended section 51747.3 to its to charter Legislature provisions apply 1999, 162, (Stats. 1.) schools. ch. on the in the enactment of section 51747.3
Seizing language prohib- Act, waiver of that statute’s under the Charter School iting provisions reasons that the waiver reference serves no if section majority purpose But the majority’s 51747.3 did not to charter schools. so. apply Perhaps cannot of other statutory construction be reconciled with plain language as I provisions, explain. 1993, 51747.3, when enacted in that school districts
Section provided of schools could not claim students from outside county superintendents indicated. statutory All further references are to the Education Code unless otherwise schools, counties attendance. Charter county adjacent average daily however, (d) (as were subdivision of former section 47605 prohibited by 1992, 781, 1, 3756, 3758) added Stats. ch. students pp. excluding on the of their lived basis residence even if those boundaries. they beyond And at that time the Charter School Act then also in former section provided, 781, 1, 3756, (as 3760), added ch. that a charter Stats. pp. was from all school laws school districts as exempt governing except 51747.3, section 47611. Because section law that specified governs districts, was not then in section it had no specified applicabil- Thus, 51747.3, to charter schools. ity construction of section as majority’s enacted in to charter schools is inconsistent originally applying flatly (d), with of former sections subdivision language view, 47611. In the relevant are best harmonized and my statutory provisions *48 51747.3, effect as enacted in given section as construing originally to charter schools. Such occurred on being inapplicable applicability only 1, 2000, the date on which the amendment of January Legislature’s 1999 section 51747.3 became effective.
The legislative of section 51747.3 further underscores the error of history in of that statute’s amendment as majority construing language to charter schools. The Counsel’s of Senate Bill applying Legislative Digest (1999-2000 Sess.), No. 434 which in 1999 section Reg. proposed amending 51747.3, noted that the bill was charter schools to the specifically adding “(2) statute: law a local education Existing prohibits agency claiming state for the of a whether characterized funding as independent study pupil, otherwise, home or if the has funds or other study agency any thing provided of value to the or his or her or that the does not guardian agency pupil parent who attend classes or to their or provide pupils regular parents guardians, This bill would make this to charter schools .... prohibition applicable [f] law school and Existing community study requires independent [][] attendance to be claimed school districts and average daily county in of schools who are residents of superintendents only pupils county which claim is or who residents of apportionment reported pupils in which the claim who are is county apportionment reported pupils of a in which the immediately residents county adjacent county claim is This bill would this also apportionment reported. apply provision [][] (1999-2000 to charter schools.” Counsel’s Sen. Bill No. 434 Reg. (Leg. Dig., added; accord, Education, Sess.), Senate Bill italics Sen. Com. on Analysis (1999-2000 Sess.) No. 434 June most Reg. learning 1999 [“Distance schools, in but charter resembles closely independent study public are not to abide study schools specifically required independent Thus, schools”].) the Court of to other requirements apply concluded, the indicates that it was in history only here Appeal legislative that the intended to add charter schools to section 51747.3. Legislature which of the Court Appeal, I affirm the judgment would Accordingly, 51747.3, as court, it concluded section insofar as turn affirmed the trial schools, that it was not to charter did apply enacted originally January became effective on amendment when the statute’s 1999 only reach. came within the statute’s that charter schools denied for a was rehearing defendants and respondents petition above. 25, 2006, to read as printed and the was modified October opinion J., therein. did not Werdegar, participate