Stoner v. Santa Clara County Office of Educ.

• Decision Date: 07 September 2007
• Docket Number: No. 04-15984.,04-15984.
• Citation: 502 F.3d 1116
• Parties: John David STONER, individually; United States of America, ex rel. John David Stoner, Plaintiffs-Appellants, and The State of California; County of Santa Clara, Plaintiffs, v. SANTA CLARA COUNTY OFFICE OF EDUCATION; East Side Union High School District; Colleen B. Wilcox; Joe Fimiani; David Wong, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

502 F.3d 1116

John David STONER, individually; United States of America, ex rel. John David Stoner, Plaintiffs-Appellants, and The State of California; County of Santa Clara, Plaintiffs, v. SANTA CLARA COUNTY OFFICE OF EDUCATION; East Side Union High School District; Colleen B. Wilcox; Joe Fimiani; David Wong, Defendants-Appellees.

No. 04-15984.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 17, 2007.

Filed September 7, 2007.

John David Stoner, Sunnyvale, CA, for himself.

Peter D. Keisler, Assistant Attorney General; Kevin V. Ryan, United States Attorney; Douglas N. Letter, Appellate Litigation Counsel, Civil Division, U.S. Department of Justice, Washington, D.C., as amicus curiae, by special leave of court.

Mark E. Davis and Marc J. Cardinal, Needham, Davis, Kirwan & Young LLP, San Jose, CA, for the appellees.

Appeal from the United States District Court for the Northern District of California; James Ware, District Judge, Presiding. D.C. No. CV-03-04622-JW.

Before: DIARMUID F. O'SCANNLAIN and SANDRA S. IKUTA, Circuit Judges, and LEONARD B. SAND,^* Senior District Judge.

IKUTA, Circuit Judge:

Under the False Claims Act ("FCA"), "[a]ny person" who, among other things, "knowingly presents, or causes to be presented, to an officer or employee of the United States Government ... a false or fraudulent claim for payment or approval" is liable to the Government for a civil penalty, treble damages, and costs. 31 U.S.C. § 3729(a)(1). The FCA authorizes a private person, known as a relator, to bring a qui tam civil action "for a violation of section 3729 for the person and for the United States Government .... in the name of the Government." 31 U.S.C. § 3730(b)(1). This case requires us to decide whether a pro se relator may bring a qui tam action in federal court on behalf of the government against various actors in the California school system.

We have jurisdiction under 28 U.S.C. § 1291, and we affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.

FACTUAL AND PROCEDURAL BACKGROUND

Appellant John David Stoner brought this qui tam action in the United States District Court for the Northern District of California against the Santa Clara County Office of Education ("SCCOE"), his former employer, the East Side Union High School District ("ESUHSD"), and three SCCOE employees, Colleen Wilcox, Joe Fimiani, and David Wong. In the proceedings before the district court, Stoner appeared pro se. Although Stoner is a licensed attorney, and has been admitted to practice before this court, see Fed. R.App. Proc. 46(a), he is not a member of the State Bar of California, and consequently could not be admitted to membership before the district court for the Northern District of California, see Northern District of California, Civil Local Rule 11-1. Stoner's complaint alleged that defendants presented various fraudulent claims for payment or approval to the United States in violation of the False Claims Act ("FCA"). Specifically, he claimed that defendants falsely certified compliance with the Individuals with Disabilities Education Act to induce the government to disburse more money for certain educational programs. Stoner's complaint also raised a number of state law claims, including alleged violations of the California False Claims Act.

As required by the FCA, Stoner filed his complaint under seal and served it on the United States. See 31 U.S.C. § 3730(b)(2). After the United States declined to intervene, the complaint was unsealed and served on the SCCOE. The SCCOE immediately moved to dismiss the claims against it, arguing, among other things, that it was not a "person" subject to liability under the FCA. The remaining defendants joined in that motion.

The district court granted the motion to dismiss after determining that the complaint failed to state a claim under the FCA. See Fed.R.Civ.P. 12(b)(6). The court held that the FCA did not provide a cause of action against the SCCOE and the ESUHSD because each entity is a state agency, and thus not a "person" subject to liability under the FCA. See Vt. Agency of Natural Res. v. United States ex rel. Stevens, 529 U.S. 765, 787-88, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000) (holding that the FCA does not subject a state or state agency to liability in a qui tam action brought by a private relator). Relying on United States ex rel. McVey v. Board of Regents of the University of California, 165 F.Supp.2d 1052, 1058-59 (N.D.Cal. 2001), the court also held that Stoner could not sue the individual SCCOE employees in their personal capacities under the FCA for actions committed in the course of their official responsibilities. In addition, the court sua sponte raised the issue of Stoner's authority to prosecute a qui tam action on behalf of the United States in propria persona and held that Stoner could not proceed pro se¹ on the FCA claims. The court then declined to exercise supplemental jurisdiction over Stoner's remaining state law claims and dismissed Stoner's complaint in its entirety. Stoner filed this timely appeal. See Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 923 (9th Cir.2001) (noting that a motion to dismiss becomes a final appealable order within the meaning of 28 U.S.C. § 1291 when the district court order disposes of all claims against all parties).²

STANDARDS OF REVIEW

"A dismissal for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6) is reviewed de novo." Marder, 450 F.3d at 448. "All allegations of material fact in the complaint are taken as true and construed in the light most favorable to the plaintiff. Dismissal of the complaint is appropriate only if it appears beyond doubt that the plaintiff can prove no set of facts in support of the claim which would entitle him to relief." McGary v. City of Portland, 386 F.3d 1259, 1261 (9th Cir.2004) (internal citation omitted).

Questions of statutory interpretation and the existence of sovereign immunity are also reviewed de novo. United States ex rel. Hyatt v. Northrop Corp., 91 F.3d 1211, 1213 (9th Cir.1996); United States ex rel. Ali v. Daniel, Mann, Johnson & Mendenhall, 355 F.3d 1140, 1144 (9th Cir.2004).

DISCUSSION

I.

We first address the question whether school districts in California, including county offices of education, are subject to qui tam liability under the FCA. We begin our analysis with the language of the statute itself. The FCA subjects to liability any "person" who, among other things, "knowingly presents, or causes to be presented, to an officer or employee of the United States Government . . . a false or fraudulent claim for payment or approval." 31 U.S.C. § 3729(a). Section 3729 does not define the term "person." However, Stevens held that a state or state agency is not a "person" for purposes of § 3729 and, therefore, not subject to liability in qui tam suits brought by private parties. 529 U.S. at 787-88, 120 S.Ct. 1858.

In light of Stevens' holding, we must determine whether the SCCOE, a California county office of education, and the ESUHSD, a California school district, are state agencies. Although we have not yet considered this issue in the context of the FCA, we previously determined that a California school district and county office of education were state agencies for purposes of Eleventh Amendment sovereign immunity. Belanger v. Madera Unified Sch. Dist., 963 F.2d 248, 254 (9th Cir.1992); Eaglesmith v. Ward, 73 F.3d 857, 860 (9th Cir.1996). The district court looked to these cases in ruling that neither the SCCOE nor the ESUHSD was a "person" within the meaning of 31 U.S.C. § 3729.

We agree with the district court's approach. As explained below, Stevens teaches that our Eleventh Amendment case law should guide our determination of whether an entity is a state agency and thus not a "person" for purposes of § 3729. Stevens' analysis of the word "person" in § 3729 was driven by canons of statutory construction relating to protection of the state's sovereign immunity. See Stevens, 529 U.S. at 781-87, 120 S.Ct. 1858. Specifically, Stevens based its holding that neither a state nor a state agency were "persons" within the meaning of § 3729 on the following canons of statutory construction related to state sovereignty: (1) the presumption that the term "person" does not include the sovereign, id. at 780, 120 S.Ct. 1858; (2) the rule that Congress must clearly state its intention to subject states to liability, id. at 781-82, 787, 120 S.Ct. 1858; (3) the presumption against imposition of punitive damages on governmental entities, id. at 784-85, 120 S.Ct. 1858; and (4) "the ordinary rule of statutory construction that if Congress intends to alter the usual constitutional balance between States and the Federal Government, it must make its intention to do so unmistakably clear in the language of the statute," id. at 787, 120 S.Ct. 1858. Applying these canons, the Court observed that "far from providing the requisite affirmative indications that the term `person' included States for purposes of qui tam liability," Congress expressed a contrary intent. Id. This conclusion was buttressed by "the doctrine that statutes should be construed so as to avoid difficult constitutional questions." Id. With respect to this last point, the Supreme Court explained that there was "`a serious doubt'" on the question whether an action in federal court by a qui tam relator against a state or a state agency would be consistent with the Eleventh Amendment, id. (quoting Ashwander v. TVA, 297 U.S. 288, 348, 56 S.Ct. 466, 80 L.Ed. 688 (1936) (Brandeis, J., concurring)), although the Court was careful to "express no view" on this issue. Id. In effect, the Court presumed that in enacting the FCA, Congress intended not to infringe on a state's sovereign immunity and therefore did not make states subject to suit under the FCA.

To effectuate Congress's presumed intent, we must interpret the term "person" ...