-JCG United States of America et al v. Calibre Systems Inc et al, No. 2:2010cv04466 - Document 48 (C.D. Cal. 2012)

Court Description: ORDER GRANTING PLAINTIFF'S MOTION FOR LEAVE TO FILE THIRD AMENDED COMPLAINT 14 by Judge Otis D Wright, II. See order for details. (cch)

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-JCG United States of America et al v. Calibre Systems Inc et al Doc. 48 O 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 UNITED STATES OF AMERICA ex rel. KATHERINE KNAPP, 12 13 14 15 v. Plaintiff, CALIBRE SYSTEMS, INC. Case No. 2:10-cv-4466-ODW(JCGx) ORDER GRANTING PLANTIFF’S MOTION FOR LEAVE TO FILE THIRD AMENDED COMPLAINT [41] Defendants. 16 I. 17 INTRODUCTION 18 Pending before the Court is Plaintiff Knapp’s March 26, 2012 Motion for Leave 19 to File Third Amended Complaint. (Dkt. No. 41.) Defendant Calibre Systems, Inc. 20 filed an Opposition on April 2, 2012, to which Plaintiff filed the Reply on April 9, 21 2012. (Dkt. Nos. 43, 44.) Having considered the papers filed in support of and in 22 opposition to this motion, the Court deems the matter appropriate for decision without 23 oral argument. Fed. R. Civ. P. 78; L.R. 7-15. For the following reasons, the Court 24 GRANTS Plaintiff’s Motion. 25 II. FACTUAL BACKGROUND 26 Defendant contracted with the United States government to provide 27 environmental and archaeological services for the Ft. Irwin National Training Center 28 in California. (SAC ¶ 11.) Defendant’s contract required its compliance with sections Dockets.Justia.com 1 106 and 110 of the National Historic Preservation Act of 1996 (“NHPA”), as well as 2 other related regulations. (SAC ¶ 11.) 3 Plaintiff worked for Defendant at the Ft. Irwin site as an Analyst member of the 4 Environment Program Management Directorate. (SAC ¶¶ 14–16.) During the course 5 of her employment, Plaintiff learned that Defendant regularly ignored the NHPA and 6 related regulations and chose to proceed with projects on sites that should have been 7 preserved for historic values, in an attempt to secure future contracts with the 8 government. (SAC ¶¶ 16–18.) In March 2009, Plaintiff expressed her concerns 9 regarding Defendant’s NHPA violations to two government agencies. (SAC ¶¶ 20– 10 21.) Plaintiff alleges Defendant ultimately terminated her employment as a result. 11 (SAC ¶¶ 29–35.) 12 Thereafter, Plaintiff instituted this action under the False Claims Act on 13 June 17, 2010. (Dkt. No. 1.) The United States declined to intervene in the action, 14 and the case continued with Plaintiff as a Relator. (Dkt. No. 10.) On July 25, 2011, 15 the Court granted Defendant’s motion to dismiss the sixth claim of the Complaint with 16 leave to amend. (Dkt. No. 20.) Plaintiff filed a First Amended Complaint on August 17 8, 2011. (Dkt. No. 21.) On October 17, 2011, the Court granted in part and denied in 18 part Defendant’s motion to dismiss Plaintiff’s FAC. (Dkt. No. 27.) Plaintiff filed her 19 Second Amended Complaint (“SAC”) on October 31, 2011, alleging (1) violation of 20 the False Claims Act (“FCA”), 31 U.S.C. § 3729; (2) violation of the anti-retaliation 21 provision of the False Claims Act, 31 U.S.C. § 3730(h); (3) wrongful termination in 22 violation of public policy; (4) violation of California Labor Code sections 1102.5 and 23 98.6; and (5) intentional infliction of emotional distress. (Dkt. No. 28.) Following 24 Defendant’s refusal to stipulate to Plaintiff’s request to for leave to file a Third 25 Amended Complaint (“TAC”), Plaintiff now moves the Court for leave to amend her 26 SAC, seeking to add information learned through discovery to clarify her claims. 27 28 2 III. 1 LEGAL STANDARD 2 Rule 15(a)(2) provides that leave to amend a complaint should be “freely given 3 when justice so requires.” Fed. R. Civ. P. 15(a)(2); Moss v. U.S. Secret Serv., 572 4 F.3d 962, 972 (9th Cir. 2009). Rule 15 is “to be applied with extreme liberality.” 5 Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003). The 6 decision whether to permit leave to amend rests in the sound discretion of the trial 7 court. Swanson v. U.S. Forest Serv., 87 F.3d 339, 343 (9th Cir. 1996); California v. 8 Neville Chem. Co., 358 F.3d 661, 673 (9th Cir. 2004). 9 The party opposing the amendment carries the burden of showing why leave to 10 amend should not be granted. DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 186– 11 187 (9th Cir. 1987). Leave to amend should be freely granted unless the opposing 12 party can show reason for denial, considering four common factors: undue delay, 13 prejudice to the opposing party, bad faith or dilatory motive, and futility of 14 amendment. Foman v. Davis, 371 U.S. 178, 182 (1962); Ditto v. McCurdy, 510 F.3d 15 1070, 1079 (9th Cir. 2007). IV. 16 DISCUSSION 17 Plaintiff’s proposed amendments include three categories of new allegations 18 regarding Defendant’s fraudulent scheme: (1) explicit allegations that Defendant 19 defrauded the United States government by expressly or impliedly representing to the 20 government that the work Defendant performed complied with the NHPA and the 21 National Environmental Protection Act (“NEPA”); (2) allegations concerning 22 Defendant’s fraudulent inducement of its contracts with the United States government; 23 and (3) allegations that Defendant presented an inflated bid price for a bridge contract. 24 (Mot. 3–5.) 25 26 Defendant opposes Plaintiff’s amendment on the grounds of undue delay and substantial prejudice. The Court addresses ach in turn. 27 28 3 1 A. UNDUE DELAY 2 Defendant argues that Plaintiff seeks by its TAC to allege new theories of 3 recovery two years after she filed her initial complaint. (Opp’n 4–5.) However, 4 Plaintiff’s proposed TAC does not add any new claims; rather, all of Plaintiff’s 5 proposed amendments pertain to the SAC’s first claim for violation of the FCA, 31 6 U.S.C. § 3729. 7 Defendant engaged in fraud. Plaintiff simply seeks to clarify that this fraud was 8 consummated through Defendant’s express and implied flase certifications to the 9 government, which resulted in fraudulent inducement.” (Mot. 3.) Plaintiff’s proposed 10 allegation that Defendant failed to comply with the NEPA is a further example, in 11 addition to Defendant’s disregard for the NHPA, of Defendant’s fraudulent 12 certification of compliance as pleaded in the SAC. 13 contract price is a classic basis for liability under the FCA. 1 All of Plaintiff’s 14 proposed amendments add only new or clarifying facts that arise out of the same 15 nucleus of operative facts alleged in Plaintiff’s SAC. The Court is not persuaded that 16 Plaintiff’s proposed amendments could be construed to form any new theory of 17 recovery. As Plaintiff correctly argues, “Plaintiff has always alleged that Defendant’s inflated bridge 18 Defendant further contends that Plaintiff’s amendments arise out of facts and 19 theories that she knew or should have known at the time of filing the original 20 complaint or the SAC. (Opp’n 5–6.) Plaintiff maintains that the amendments are 21 based on new facts revealed in documents Defendant produced during discovery. 22 (Mot. 3, 5; Reply 5.) Because Defendant fails to explain how Plaintiff should have 23 known of the new allegations at the time she filed her SAC, the Court is unwilling to 24 25 26 27 28 1 The FCA provides for liability for any person who, among other things, “knowingly presents . . . a false or fraudulent claim for payment” to the United States government; “knowingly makes [or] uses . . . a false record or statement” to obtain payment of a false or fraudulent claim by the government . . . .” 31 U.S.C. § 3729(a). “The archetypal qui tam FCA action is filed by an insider at a private company who discovers his employer has overcharged under a government contract.” United States ex rel. Hopper v. Anton, 91 F.3d 1261, 1266 (9th Cir. 1996) (footnote omitted). 4 1 reject Plaintiff’s assertion that her proposed amendments could only have been 2 gleaned through the discovery process. Overall, the Court finds no undue delay in Plaintiff’s request for leave to 3 4 amend. On the surface, some delay is apparent considering this action was 5 commenced in June 2010. Defendant analogizes this case to Lockheed Martin Corp. 6 v. Network Solutions, Inc., 194 F.3d 980 (9th Cir. 1999). But there, the Ninth Circuit 7 found undue delay where plaintiff’s motion to amend came several months after the 8 deadline for amending or supplementing the complaint, none of the amendments 9 relied on facts that were unavailable before the deadline, the movant had been 10 considering those amendments three months before the deadline, and the movant did 11 not explain the delay. Id. at 986. None of these circumstances are present in this case. 12 Here, the motion to amend was filed on March 26, 2012, prior to the April 23, 2012 13 deadline for amending pleadings set by this Court. While this case was filed two 14 years ago, prosecution of this action only began in earnest in early 2011 following the 15 United States’ option not to intervene. In short, Plaintiff was diligent in prosecuting 16 her case and sought to amend as soon as having obtained the new information through 17 discovery. The Court therefore concludes that there was no undue delay in Plaintiff’s 18 request to amend complaint. 19 B. PREJUDICE 20 Defendant contends it will suffer prejudice if Plaintiff is granted leave to 21 amend. “Prejudice is the touchstone of the inquiry under Rule 15(a).” Eminence 22 Capital, 316 F.3d at 1052. Defendant argues that it would be substantially prejudiced 23 by being forced to conduct additional discovery and defend against the new legal 24 theory of recovery. (Opp’n 6–8.) 25 Defendant disingenuously cites Lockheed Martin for the proposition that “[t]he 26 need for a party to conduct supplemental discovery or to consider a new line of legal 27 argument are classic examples of prejudice,” sufficient for denying leave to amend. 28 (Opp’n 7 (citing Lockheed Martin Corp., 194 F.3d at 986).) However, the court in in 5 1 Lockheed Martin found prejudice to the defendant based on the need to reopen 2 discovery: “A need to reopen discovery and therefore delay the proceedings supports a 3 district court’s finding of prejudice from a delayed motion to amend the complaint.” 4 Lockheed Martin Corp., 194 F.3d at 986. In contrast, Plaintiff brought the instant 5 Motion on March 26, 2012, well before the April 23, 2012 deadline for amending 6 pleadings, the December 10, 2012 discovery cutoff date, and the January 21, 2013 7 deadline for pretrial motions. 8 Further, any new discovery would still be within the same manageable scope, as 9 Plaintiff has not asserted any new theory of recovery. Moreover, there is ample time 10 to continue discovery. As Defendant concedes, Plaintiff commenced discovery on 11 January 6, 2012, and discovery had been ongoing for less than three months when 12 Plaintiff brought this motion to amend. 13 December 10, 2012 discovery cutoff date, Defendant has ample opportunity to 14 respond to the new allegations. 15 perspective, Defendant should have stipulated to Plaintiff’s request to amend, rather 16 than wasting time and money with disingenuous complaints of prejudice and lag in 17 these proceedings. (Vogel Decl. ¶¶ 7–8.) Given the Indeed, the Court notes that from a practical 18 Considering the circumstances in this case and the policy favoring amendment 19 in accordance to the notice pleading system, the Court finds no reason to deny leave to 20 amend, nor has Defendant raised any to meet its burden of persuasion. 21 /// 22 /// 23 /// 24 /// 25 /// 26 /// 27 /// 28 /// 6 V. 1 2 3 CONCLUSION For the reasons discussed above, Plaintiff’s Motion for Leave to Amend Complaint is GRANTED. 4 5 IT IS SO ORDERED. 6 7 May 4, 2012 8 9 10 ____________________________________ HON. OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7

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