Petition for Writ of Certiorari — United States, ex rel. Regie Salgado, et al., Petitioners v. TruConnect, et al.

No. 23In the

Supreme Court of the United States

REGIE SALGADO, EX REL. UNITED STATES OF

AMERICA; AND MELINDA ZAMBRANO, EX REL.

UNITED STATES OF AMERICA,

Petitioners,

v.

TRUCONNECT, NATHAN JOHNSON,

AND MATTHEW JOHNSON,

Respondents.

On Petition for a Writ of Certiorari to the United

States Court of A ppeals for the Ninth Circuit

PETITION FOR A WRIT OF CERTIORARI

Brian P. Sanford

Counsel of Record

The Sanford Firm

1910 Pacific Avenue, Suite 15400

Dallas, Texas 75201

(214) 717-6653

bsanford@sanfordfirm.com

Counsel for Petitioners

115195

A

(800) 274-3321 • (800) 359-6859

i

QUESTIONS PRESENTED

Whether a party’s own testimony can create a fact

issue to defeat summary judgment when the testimony

is uncorroborated and self-serving.

ii

PARTIES

The parties to this proceeding are set out in the

caption.

iii

STATEMENT OF RELATED CASES

Salgado, et al. v. TruConnect, et al., No. CV16-03767,

U.S. District Court for the Central District of California.

Judgment entered June 21, 2022.

Salgado, et al. v. TruConnect, et al., No. CV16-03767,

U.S. Court of Appeals for the Ninth Circuit. Judgment

entered December 22, 2023.

iv

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED . . . . . . . . . . . . . . . . . . . . . . . i

PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii

STATEMENT OF RELATED CASES . . . . . . . . . . . . iii

TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . iv

TABLE OF APPENDICES . . . . . . . . . . . . . . . . . . . . . . . v

TABLE OF CITED AUTHORITIES . . . . . . . . . . . . . . . vi

PETITION FOR WRIT OF CERTIORARI . . . . . . . . . 1

OPINIONS BELOW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

STATUTORY PROVISIONS AND RULES

INVOLVED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

STATEMENT OF THE CASE . . . . . . . . . . . . . . . . . . . . 4

REASONS FOR GRANTING THE PETITION . . . . . 4

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

v

TABLE OF APPENDICES

Page

United States Court of Appeals for the Ninth

C i r c u it , Me mor a ndu m , D e c e mb e r 2 2 ,

2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . App. 1

United States District Court for the Central

Dist r ict of Ca l i for n ia , Civ i l M i nut es —

General, Order, June 21, 2022 . . . . . . . . . . . . . . App. 11

United States District Court for the Central

Dist r ict of Ca l i for n ia , Civ i l M i nut es —

General, Order, March 30, 2021 . . . . . . . . . . . . App. 36

Un it ed St at e s Cou r t of App ea ls for t he

Ninth Circuit, Order (denying rehearing),

January 30, 2024 . . . . . . . . . . . . . . . . . . . . . . . . App. 60

vi

TABLE OF CITED AUTHORITIES

Page

CASES

Chapman v. AI Transp.,

229 F.3d 1012 (11th Cir. 2000) . . . . . . . . . . . . . . . . . . . 6

Lester v. Wells Fargo Bank, N.A.,

805 Fed. Appx. 288 (5th Cir. 2020) . . . . . . . . . . . . . . . 5

Nnadozie v. Genesis HealthCare Corp.,

730 Fed. Appx. 151 (4th Cir. 2018) . . . . . . . . . . . . . . . . 5

Payne v. Pauley,

337 F.3d 767 (7th Cir. 2003) . . . . . . . . . . . . . . . . . . . . . 5

United States v. Stein,

881 F.3d 853 (11th Cir. 2018) . . . . . . . . . . . . . . . . . . . . 5

Villiarimo v. Aloha Island Air, Inc.,

281 F.3d 1054 (9th Cir. 2002) . . . . . . . . . . . . . . . . . . . . 5

Ward v. D.C.,

950 F. Supp. 2d 9 (D.D.C. 2013) . . . . . . . . . . . . . . . . . . 5

STATUTES

28 U.S.C. § 1254(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

31 U.S.C. § 3730(h)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Cal. Gov’t Code § 12653(a) . . . . . . . . . . . . . . . . . . . . . . . . . 2

vii

Cited Authorities

Page

Cal. Lab. Code § 1102.5(b) . . . . . . . . . . . . . . . . . . . . . . . . . 3

RULES

Federal Rule of Civil Procedure 56 . . . . . . . . . . . . . . . . . 3

Federal Rule of Evidence 602 . . . . . . . . . . . . . . . . . . . . 3, 4

1

PETITION FOR WRIT OF CERTIORARI

Regie Salgado and Melinda Zambrano petition this

Court for a writ of certiorari to review the judgment of

the United States Court of Appeals for the Ninth Circuit.

OPINIONS BELOW

The opinion of the Court of Appeals is unofficially

reported at 2023 WL 8866563 (9th Cir. December 22,

2023). App. 1. The order denying rehearing en banc

is available at 821 Fed. Appx. 311. App. 60. The order

granting a motion for summary judgment by the District

Court for the Central District of California is unofficially

reported at 2022 WL 3009130 (C.D.Cal. June 21, 22). App.

11.

JURISDICTION

The decision of the Court of Appeals was entered on

December 22, 2023. App. 1. A timely petition for rehearing

en banc was denied on January 30, 2024. App. 60. The

Court has jurisdiction under 28 U.S.C. § 1254(1).

STATUTORY PROVISIONS

AND RULES INVOLVED

The relevant statutes are the federal and California

False Claims Act and the California Labor Code that

prohibit retaliation for reporting concerns of government

fraud. The federal False Claims Act provides in relevant

part:

2

Any employee, contractor, or agent shall be

entitled to all relief necessary to make that

employee, contractor, or agent whole, if that

employee, contractor, or agent is discharged,

demoted, suspended, threatened, harassed, or

in any other manner discriminated against in

the terms and conditions of employment because

of lawful acts done by the employee, contractor,

agent or associated others in furtherance of an

action under this section or other efforts to stop

1 or more violations of this subchapter.

31 U.S.C. § 3730(h)(1).

The California False Claims Act provides:

Any employee, contractor, or agent shall be

entitled to all relief necessary to make that

employee, contractor, or agent whole, if that

employee, contractor, or agent is discharged,

demoted, suspended, threatened, harassed, or

in any other manner discriminated against in

the terms and conditions of that employee’s,

contractor’s, or agent’s employment because of

lawful acts done by the employee, contractor,

agent, or associated others in furtherance of an

action under this section or other efforts to stop

one or more violations of this article.

Cal. Gov’t Code § 12653(a).

3

The California Labor Code provides:

An employer, or any person acting on behalf

of the employer, shall not retaliate against an

employee for disclosing information, or because

the employer believes that the employee

disclosed or may disclose information, to a

government or law enforcement agency, to a

person with authority over the employee or

another employee who has the authority to

investigate, discover, or correct the violation

or noncompliance, or for providing information

to, or testifying before, any public body

conducting an investigation, hearing, or inquiry,

if the employee has reasonable cause to believe

that the information discloses a violation of

state or federal statute, or a violation of or

noncompliance with a local, state, or federal rule

or regulation, regardless of whether disclosing

the information is part of the employee’s job

duties.

Cal. Lab. Code § 1102.5(b).

The relevant rules are Rule 56 of the Federal Rules

of Civil Procedure and Rule 602 of the Federal Rules of

Evidence:

Fed. R. Civ. P. 56(c)(4)

Affidavits or Declarations. An affidavit or

declaration used to support or oppose a motion

must be made on personal knowledge, set out

facts that would be admissible in evidence, and

4

show that the affiant or declarant is competent

to testify on the matters stated.

Fed. R. Evid. 602

A witness can only testify to a matter if there

is evidence that the witness has personal

knowledge of the matter. This rule does not

apply to expert testimony.

STATEMENT OF THE CASE

Nathan and Matthew Johnson are co-chief executive

officers of TruConnect. App. 13. The company terminated

the employment of Salgado and Zambrano two days after

they reported concerns of TruConnect defrauding the

United States and California governments. 2-ER-88.

Salgado and Zambrano reported the fraud concerns to

several persons, including Todd Wallace. 3-ER-344, 349.

Nathan Johnson says that department heads could make

the decision to recommend persons to be eliminated from

the company. App. 29. Nathan Johnson asserts that Eric

Milhizer was Salgado and Zambrano’s department head.

App. 28. Salgado and Zambrano testify that Todd Wallace,

not Eric Milhizer, was their department head at the time

of the termination. 3-ER-343, 349.

REASONS FOR GRANTING THE PETITION

The majority affirmed the District Court’s decision to

grant the summary judgment, disallowing “uncorroborated

and self-serving declarations” that a manager alleged to

have made the decision to terminate plaintiffs was not

their manager at the time. App. 6, 9. A dispute over the

5

actual manager at the time is material. An employee will

have direct knowledge of the identity of the employee’s

manager. Denying that evidence is improper.

The Ninth Circuit has established a rule, particularly

applied in employment cases, that “uncorroborated and

self-serving declarations” by the plaintiff are insufficient

to create a genuine dispute of material fact. See Villiarimo

v. Aloha Island Air, Inc., 281 F.3d 1054, 1061 (9th Cir.

2002). A similar stance is suggested by a case from the

District of Columbia, where it was indicated that selfserving testimony does not create genuine issues of

material fact, especially where corroborating evidence

should be readily available. Ward v. D.C., 950 F. Supp. 2d

9, 17 (D.D.C. 2013).

Other circuits have held that a non-conclusory

affidavit can create genuine issues of material fact that

preclude summary judgment, even if the affidavit is

self-serving and uncorroborated. Lester v. Wells Fargo

Bank, N.A., 805 Fed. Appx. 288, 291 (5th Cir. 2020).

“[T]he self-serving and/or uncorroborated nature of

an affidavit cannot prevent it from creating an issue of

material fact.” United States v. Stein, 881 F.3d 853, 859

(11th Cir. 2018) (en banc). See also Nnadozie v. Genesis

HealthCare Corp., 730 Fed. Appx. 151, 160 (4th Cir. 2018)

(that “allegations lack extensive corroborating evidence

is of little import”); Payne v. Pauley, 337 F.3d 767, 772–73

(7th Cir. 2003); United States v. Stein, 881 F.3d 853, 859

(11th Cir. 2018) (en banc) (J. Pryor, concurring) (explaining

that finding “self-serving” evidence insufficient to create

a material dispute not only “ha[s] no basis in law ... [b]

ut ... also flout[s] the history of the right to a jury trial in

civil cases.”).

6

Summary judgments, denying a plaintiff a trial, are

no longer rare in employment cases. See Chapman v. AI

Transp., 229 F.3d 1012, 1025 (11th Cir. 2000). The overuse

of summary judgment in employment cases needs to be

addressed.

CONCLUSION

The Court should grant the petition for a writ of

certiorari.

Respectfully submitted,

Brian P. Sanford

Counsel of Record

The Sanford Firm

1910 Pacific Avenue, Suite 15400

Dallas, Texas 75201

(214) 717-6653

bsanford@sanfordfirm.com

Counsel for Petitioners

APPENDIX

i

TABLE OF APPENDICES

Page

United States Court of Appeals for the Ninth

C i r c u it , Me mor a ndu m , D e c e mb e r 2 2 ,

2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . App. 1

United States District Court for the Central

Dist r ict of Ca l i for n ia , Civ i l M i nut es —

General, Order, June 21, 2022 . . . . . . . . . . . . . . App. 11

United States District Court for the Central

Dist r ict of Ca l i for n ia , Civ i l M i nut es —

General, Order, March 30, 2021 . . . . . . . . . . . . App. 36

Un it ed St at e s Cou r t of App ea ls for t he

Ninth Circuit, Order (denying rehearing),

January 30, 2024 . . . . . . . . . . . . . . . . . . . . . . . . App. 60

App. 1

NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

REGIE SALGADO, ex rel.

United States of America;

MELINDA ZAMBRANO, ex

rel. United States of America,

Plaintiffs-Appellants,

No. 22-55721

D.C. No.

2:16-cv-03767-PSG-SK

MEMORANDUM*

(Filed Dec. 22, 2023)

and

STATE OF CALIFORNIA;

UNITED STATES

OF AMERICA,

Plaintiffs,

v.

TRUCONNECT,

Defendant-Appellee,

and

NATHAN JOHNSON;

MATTHEW JOHNSON,

Defendants.

Appeal from the United States District Court

for the Central District of California

Philip S. Gutierrez, Chief District Judge, Presiding

* This disposition is not appropriate for publication and is

not precedent except as provided by Ninth Circuit Rule 36-3.

App. 2

Argued and Submitted October 19, 2023

Pasadena, California

Before: CLIFTON and SANCHEZ, Circuit Judges, and

KORMAN,** District Judge.

Dissent by Judge CLIFTON.

This is a qui tam False Claims Act (“FCA”) and

whistleblower retaliation case. Plaintiffs-Appellants

Regie Salgado and Melinda Zambrano are former employees of Defendant-Appellee TruConnect Communications, Inc. (“TruConnect”). TruConnect is a cellphone

network operator that participates in the Lifeline Program, a program by which the Federal Communications Commission (“FCC”) and state governments

subsidize phone service for low-income Americans. See

47 U.S.C. § 254(b)(1), (b)(3); 47 C.F.R. § 54.401(a). Salgado and Zambrano allege that TruConnect engaged

in two central schemes to defraud the government. After Salgado and Zambrano discovered and protested

TruConnect’s fraudulent conduct, they allege, TruConnect retaliated by terminating them.

The District Court granted TruConnect’s motion

to dismiss relators’ FCA fraud and related state law

claims. The District Court later granted summary

judgment as to the remaining FCA retaliation and related state law claims. This appeal followed. We have

jurisdiction pursuant to 28 U.S.C. § 1291. Reviewing

both rulings de novo, we affirm. See United States ex

** The Honorable Edward R. Korman, United States District

Judge for the Eastern District of New York, sitting by designation.

App. 3

rel. Campie v. Gilead Scis., Inc., 862 F.3d 890, 898 (9th

Cir. 2017); Cafasso, U.S. ex rel. v. Gen. Dynamics C4

Sys., Inc., 637 F.3d 1047, 1060 (9th Cir. 2011).

1. Relators’ qui tam fraud claims do not meet the

heightened pleading standard of Rule 9(b). Bly–Magee

v. California, 236 F.3d 1014, 1018 (9th Cir. 2001). To

survive this heightened standard, Relators must identify either “representative examples of false claims” or

allege “particular details of a scheme to submit false

claims paired with reliable indicia that lead to a strong

inference that claims were actually submitted.” Ebeid

ex rel. U.S. v. Lungwitz, 616 F.3d 993, 998–99 (9th Cir.

2010). The Complaint fails to do either.

2. Relators’ allegation that TruConnect uses

third-party vendors called “street teams” to sign up

subscribers without confirming their eligibility fails for

two reasons. First, as a matter of law, TruConnect is

not responsible for determining initial subscriber eligibility. See Resol. T-17366 – Modifications to the Cal.

Lifeline Program Rules – Gen. Ord. 153 – in Compliance

with the Fed. Commc’ns Comm’n’s Lifeline/Link-Up

Reform Ord. (FCC 12-11), 2012 WL 2945692 (Cal. Pub.

Util. Comm’n July 12, 2012). Second, the Complaint

lacks any well-pled allegation that TruConnect failed

to receive proper documentation for any subscriber

for which TruConnect actually submitted a claim for

reimbursement. See 47 C.F.R. §§ 54.410(b)(2)(i)-(ii),

(c)(2)(i)-(ii).1 We do not relax Rule 9(b)’s particularity

1

We reference the 2015 version of the regulations, which

were in force at the time of TruConnect’s alleged misconduct.

App. 4

requirement simply because Relators allege that the

fraudulent billing is within the defendant’s exclusive

possession. See Ebeid, 616 F.3d at 999. At bottom, Relators cannot, as they repeatedly purport to do here,

describe a fraudulent scheme but then “allege simply

and without any stated reason that claims requesting

illegal payments must have been submitted.” Cafasso,

637 F.3d at 1058 (citations omitted and cleaned up).

3. Relators’ allegation that TruConnect knowingly submitted fraudulent usage minutes from robocalls and wrong-number calls to circumvent the FCC’s

usage requirements does not meet the requirements of

Rule 9(b). Although Relators allege that Regie Salgado

analyzed TruConnect’s subscriber data and found a

low amount of subscriber usage, they do not explain

how billing the government for low usage violates

FCC regulations or otherwise constitutes fraud. Relators’ further allegations that TruConnect essentially

manipulates robo-calls and then submits fraudulent

usage data are vague and fatally unsupported. The

Complaint does not explain with particularity who

at TruConnect was behind “pushing” the robo-calls, or

how or when they went about doing so. “This type of

allegation, which identifies a general sort of fraudulent

conduct but specifies no particular circumstances of

any discrete fraudulent statement, is precisely what

Rule 9(b) aims to preclude.” Cafasso, 637 F.3d at 1057.

4. Relators have also failed to adduce sufficient

evidence to support their claims for retaliation. Relators do not dispute that co-CEOs Nathan and Matthew

Johnson made the ultimate decision to eliminate

App. 5

Relators’ positions. Relators have not presented any

evidence that the Johnson brothers acted with a discriminatory or retaliatory motive. Relators are thus

left to survive summary judgment with a “cat’s paw

theory” of liability, which requires establishing that

one of the Johnsons’ subordinates, in response to Relators’ whistleblowing, “set in motion” the Johnsons’ decision to eliminate Relators’ jobs. Cafasso, 637 F.3d at

1060–61 (alterations adopted and citations omitted).

Relators identify three TruConnect employees potentially involved in their firing: Todd Wallace, Earl

Peck, and Rick Burgar. But Relators fail to present

non-speculative evidence from which a reasonable jury

could conclude that any of those three individuals were

aware of Relators’ whistleblowing and were involved in

the decision to eliminate their jobs.

While the parties dispute whether Todd Wallace

was the head of Relators’ department, there is no evidence in the record that Wallace was aware of Relators’

whistleblowing activity. Relators identify a single July

13, 2015 email from Salgado to Wallace in which Salgado analyzed usage data from a third-party vendor

and “found evidence to examine the sales techniques of

[the vendor].” Relators present no evidence that Wallace ever responded to Salgado’s email, ever communicated with the Johnson brothers or anyone else about

Salgado’s work, or was aware from this email that Relators believed TruConnect was defrauding the government. Only by way of speculation could a

reasonable jury conclude that Wallace, or any other

subordinate, set in motion the Johnsons’ decision to

App. 6

eliminate Relators’ jobs specifically in response to Salgado’s investigation of a third-party vendor. We have

found summary judgment appropriate in these circumstances. See Cafasso, 637 F.3d at 1060–61 (affirming

grant of summary judgment on an FCA retaliation

claim where relator merely speculated that other officials who knew about her conduct may have influenced

the decision-maker).

5. We decline TruConnect’s request for fees under 31 U.S.C. § 3730(d)(4) because Relators’ claims are

not frivolous, and there is no evidence that they acted

with an improper motive. See id. at 1062 (noting a concern about granting fee awards under § 3730(d)(4) because “awarding fees against a qui tam claimant may

chill prospective relators from exposing frauds on the

government”).

AFFIRMED.

No. 22-55721, Salgado v. TruConnect

CLIFTON, Circuit Judge, dissenting:

I respectfully dissent. This case primarily presents

claims under the False Claims Act of fraud upon the

government. In my view, the allegations in the complaint are not so insufficiently specific or implausible

as to support dismissal at the pleading stage, even under the heightened pleading standard of Fed. R. Civ. P.

9(b). As employees at TruConnect, Plaintiffs were personally acquainted with TruConnect’s actions and well

App. 7

positioned to identify potential fraud. Their complaint

alleges more than enough to survive a motion to dismiss.

TruConnect’s counsel acknowledged at oral argument that billing the government through the Lifeline

program or other similar program was “the only business of Tru Connect.” It is not an insubstantial business. The complaint alleges that TruConnect was paid

over $5 million each month by the federal government

and the state of California.

Plaintiffs observed and alleged details of a scheme

to maximize payments to the company under the Lifeline program. Under the program, TruConnect would

only be reimbursed for phones that had at least some

call or text activity, presumably by the low-income person to whom the phone had been given. Plaintiffs’ complaint alleged that in two months of 2015, the federal

government paid TruConnect $651,597 for phones with

zero to one minute of usage. It alleged that TruConnect

sought to maximize reimbursements by treating as

“active” phones that were broken and in the possession

of the company and phones that had not yet been

placed in the hands of program beneficiaries. It also alleged that TruConnect sought to generate usage artificially in order to qualify for reimbursements under

Lifeline regulations. For example, it was asserted that

“TruConnect circumvents the Lifeline requirements by

pushing robo-calls to Lifeline accounts.” It contended

that “70,433 phones between June and July 2015 had

less than one minute of usage” and no texts. It also asserted that “4,800 phones received text messages, but

App. 8

no calls, for over a year,” and that “many of the incoming text messages on these phones were random pictures of office interiors or car engines, appearing to be

illegitimate.” That pattern of usage was alleged to be

inconsistent with actual usage by customers in the experience of a Plaintiff who had worked in the industry

for many years. The complaint also contended that

TruConnect officers discussed developing an AutoDialer App that would be preloaded onto each phone to

allow the company itself to generate usage in order to

manufacture qualification for reimbursement even if

the customer never used the phone.

TruConnect argues that Plaintiffs did not identify

any specific examples of false claims submitted by

TruConnect under the Lifeline program. That appears

to be true but is not surprising because that was not

information to which Plaintiffs had access. It cannot be

the case that a fraudster can escape accountability by

hiding certain specific details about the actual execution of the fraud. The complaint does include an allegation that a TruConnect vice president confirmed

that the company did bill the Lifeline program for users with one minute of usage. More broadly, the allegations in the complaint “lead to a strong inference that

[false] claims were actually submitted.” Ebeid ex rel.

U.S. v. Lungwitz, 616 F.3d 993, 998-99 (9th Cir. 2010).

The district court’s dismissal of the FCA claim rested

on a finding by the court that Plaintiffs “failed to allege

TruConnect fraudulently billed the government.” We

cannot reasonably assume that a company that went

to elaborate efforts to generate one minute of usage for

App. 9

phones never actually sought reimbursement for any

of those phones, especially if an officer confirmed that

the program was billed for phones with one minute of

usage. That reimbursement was not actually sought by

TruConnect is not a reasonable inference, let alone a

compelling one.

Plaintiffs’ claims may not be true, or they might be

exaggerated, but they have not been disproven. They

should not be assumed to be false. The allegations are

not so unspecific or implausible to terminate this action at the pleading stage.

Similarly, in my view, Plaintiffs have raised genuine issues of material fact regarding their whistleblower retaliation claim, which the district court

discarded by granting TruConnect’s motion for summary judgment. The error in awarding summary judgment may be best illustrated by the court’s explanation

of why it accepted TruConnect’s contention that a

TruConnect officer named Todd Wallace was not involved in the decision to terminate Plaintiffs. Beneath

that conclusion was a dispute over Wallace’s relationship with Plaintiffs, in particular whether Wallace was

the head of Plaintiffs’ department. The district court

explained its conclusion as follows:

For support, Relators point to their declarations, in which they each declare that Wallace

was their department head at the time of

their termination. Zambrano Decl. ¶¶ 21–22;

Salgado Decl. ¶ 22. However, “uncorroborated

and self-serving declarations” are insufficient

to create a genuine dispute of material fact.

App. 10

King v. United Parcel Serv., 152 Cal. App. 4th

426, 433 (2007); see also Villiarimo v. Aloha

Island Air, Inc., 281 F.3d 1054, 1061 (9th Cir.

2002). Relators’ uncorroborated and selfserving statements do not create a genuine

dispute as to whether Wallace, rather than

Milhizer, was Relators’ department head.

That reasoning is wrong. The individual Plaintiffs

were competent to testify as to who was the head of

their department. Those declarations did not need further corroboration to create a genuine issue of material

fact under Fed. R. Civ. P. 56(a). That testimony by a

witness, even a party, might serve that person’s interest is not reason by itself to disregard it. Parties regularly testify, and that testimony, if competent, must be

considered. Indeed, most testimony is intended to

serve a party’s interest; otherwise it would be irrelevant.

The orders granting the motion to dismiss and the

motion for summary judgment should be vacated and

the case remanded for further proceedings.

App. 11

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

JS-6

CIVIL MINUTES—GENERAL

(Filed Jun. 21, 2022)

Case No. CV 16-3767 PSG (SKx) Date June 21, 2022

United States of America et al. v.

Title

TruConnect, et al.

===========================================================================================

Present:

The Honorable

Philip S. Gutierrez, United States

District Judge

Wendy Hernandez

Deputy Clerk

Not Reported

Court Reporter

Attorneys Present for

Plaintiff(s):

Attorneys Present for

Defendant(s):

Not Present

Not Present

Proceedings

(In Chambers): The Court GRANTS Defendant’s

motion for summary judgment.

Before the Court is a motion for summary judgment filed by Defendant TruConnect Communications,

Inc. (“Defendant”). See generally Dkt. # 130-1 (“Mot.”).1

Relators Melinda Zambrano (“Zambrano”) and Regie

Salgado (“Salgado”) (collectively with Zambrano, “Relators”) opposed. See generally Dkt. # 142 (“Opp.”).

1

The Court cites Defendant’s memorandum in support of its

motion because it contains Defendant’s substantive arguments.

Defendant’s motion itself is Docket Entry # 130.

App. 12

Defendant replied. See generally Dkt. # 148 (“Reply”).

The Court finds the matter appropriate for decision

without oral argument. See Fed. R. Civ. P. 78; L.R. 7-15.

After considering the moving, opposing, and reply papers, the Court GRANTS Defendant’s motion.

I.

Background

This is a qui tam whistleblower retaliation case.

Defendant is a mobile virtual network operator and

provider of wireless services via Lifeline Programs,

through which the federal and state governments subsidize cellular services for low-income families. Defendant’s Statement of Uncontroverted Facts, Dkt. # 130-2

(“DSUF”), ¶¶ 1–2.2

In March 2015, Zambrano was hired as Vice President—Products. See DSUF ¶ 12; Relators’ Statement

of Genuine Disputes, Dkt. # 142-1 (“RSGD”), ¶ 12; Dkt.

# 142-3, Ex. 1. The next month, Salgado was hired as

Director of Inventory Operations. See DSUF ¶ 14;

RSGD ¶ 14; Dkt. # 142-4, Ex. 4. Although the parties

dispute whether Relators were employed by Defendant

or by third party Sage Telecom, Inc. (“Sage”), both of

whom do business under the name “TruConnect,” this

dispute does not affect the outcome of the instant motion, as described below. See DSUF ¶¶ 10–12, 14, 16–

18, 24–30; RSGD ¶¶ 11–12, 14, 16–18, 24–30. Brothers

Nathan Johnson (“Nathan”) and Matthew Johnson

2

As discussed further below, the Court treats as undisputed

the facts proffered by Defendant to which Relators supply no

response.

App. 13

(“Matthew”) are co-chief executive officers of both Defendant and Sage. See DSUF ¶ 5; see also Declaration

of Nathan Johnson, Dkt. # 130-6 (“N. Johnson Decl.”),

¶¶ 8,14.

In June 2015, Salgado noticed that some broken

phones he was fixing continued to receive phone calls

and text messages, which he found “odd” and led him

to investigate further. See DSUF ¶¶ 44–47; Excerpts

of the Deposition of Regie Salgado, Dkt. # 130-4, Ex. 1

(“Salgado Depo. Excerpts”), 153:10–158:24. On July 6,

Salgado e-mailed Sage’s Vice President of Revenue

Rick Burgar (“Burgar”) to request data on minutes of

usage for June 2015 and stating that he “would love

to do analytics on TOP as I think they are doing something odd.” See DSUF ¶ 46; Dkt. # 130-4, Ex. 5 at 4.

TOP was a third-party vendor that distributed cell

phones to Lifeline subscribers in California. DSUF

¶ 47. In response, Burgar sent Salgado a spreadsheet

with subscriber call data for June and early July. Id.

¶ 50. Salgado testified that the call data “didn’t look

right” because he saw a high number of subscribers

whose only usage was a single short duration call. See

id. ¶ 52; Salgado Depo. Excerpts 46:25–47:20, 109:15–

111:4.

On July 11, Salgado e-mailed Burgar, copying

Zambrano and Jennifer Carter (“Carter”), describing

his review of the subscriber call data and “encourag[ing] investigation into TOP.” See DSUF ¶ 51;

Dkt. # 130-4, Ex. 5 at 2. On July 13, Salgado e-mailed

Sage’s Chief Operating Officer Todd Wallace (“Wallace”), copying Zambrano, describing his concerns and

App. 14

recommending further investigation. See DSUF ¶ 56;

Dkt. # 130-4, Ex. 5 at 1–2. The same day, Salgado sent

several e-mails to Earl Peck (“Peck”) regarding his concerns. See DSUF ¶¶ 57, 60–61; Dkt. # 130-4, Ex. 5 at 1.

On July 22, Zambrano and Salgado met with

Burgar to discuss their concerns about the call usage

data. See DSUF ¶¶ 67–68. Relators both testified that

they asked Burgar about the “one-second calls” and

Zambrano says she asked Burgar if they were “ripping

off the Government.” Id. ¶¶ 69–70; Salgado Depo. Excerpts 193:18-194:5; Excerpts from the Deposition of

Melinda Zambrano, Dkt. # 130-5, Ex. 2 (“Zambrano

Depo. Excerpts”), 96:23–97:3. Salgado testified that

Burgar responded, “Melinda, what are you talking

about? We work hard for those one-second calls” and

that such calls “happen all the time” because “people

want to save minutes.” Salgado Depo. Excerpts 194:5–

10, 215:17–216:9. Salgado told Burgar he was “just

trying to make sure the government is being billed

correctly,” id. 201:7–22, and Zambrano said she did

not want to have anything to do with ripping off the

government, Zambrano Depo. Excerpts 96:2–3. According to Zambrano, Burgar responded, “[k]eep your

mouth shut, quit asking questions, I need this job.” Id.

17:23–24.

Also in June 2015, Sage experienced significant

market contractions and decided to implement reductions in force “in order to stay afloat.” DSUF ¶¶ 34–37.

On July 24, Relators were informed that their positions would be eliminated. Id. ¶ 109. Matthew and

Nathan declare that (1) they made the decision to

App. 15

eliminate Relators’ positions, (2) Sage’s Chief Marketing Officer Eric Milhizer (“Milhizer”) identified Relators as potential candidates for the reduction in force,

and (3) they did not discuss their decision to eliminate

Relators’ positions with anyone except Milhizer, including Burgar, Wallace, or Peck. N. Johnson Decl.

¶¶ 20, 47, 51; Declaration of Matthew Johnson, Dkt.

# 130-5 (“M. Johnson Decl.”), ¶ 7. They also declare

that, prior to making the decision, they were not

aware of any of Relators’ complaints, reports, or concerns. M. Johnson Decl. ¶¶ 9–11, 16; N. Johnson Decl.

¶¶ 54–55, 59. Salgado also testified that he did not

speak to Matthew, Nathan, or Milhizer regarding his

concerns and was not aware that anyone he spoke

about his concerns with relayed those concerns to

Matthew, Nathan, or Milhizer. See DSUF ¶¶ 85, 87–88;

Salgado Depo. Excerpts 191:4–8, 233:18–24, 234:6–13.

Zambrano did not raise her or Salgado’s concerns to

any C-level executives of Sage or Defendant’s. See

DSUF ¶¶ 89, 91.

In 2016, Relators filed suit in this Court against

Matthew, Nathan, and “TruConnect.” See generally

Dkt. # 1. After the United States and the People of the

State of California declined to intervene in Relators’

case, see generally Dkts. # 54, 58, the case was unsealed, see generally Dkt. # 59. In February 2021, Matthew, Nathan, and Defendant moved to dismiss the

operative third amended complaint. See generally Dkt.

# 82. The Court granted in part and denied in part

the motion, dismissing several of Relators’ claims for

violations of the False Claims Act (“FCA”) and the

App. 16

California False Claims Act (“CFCA”). See generally

Dkt. # 87. Three causes of action remain:

Fifth Cause of Action: Retaliation under the

FCA in violation of 31 U.S.C. § 3730(h). Third

Amended Complaint, Dkt. # 79 (“TAC”),

¶¶ 218–24.

Sixth Cause of Action: Retaliation [under the

CFCA] in violation of Cal. Gov’t Code § 12653.

TAC ¶¶ 225–31.

Seventh Cause of Action: Wrongful termination, consistent with Cal. Labor Code § 1102.5

and Tameny v. Atlantic Richfield Co., 27 Cal.

3d 167 (1980). TAC ¶¶ 232–43.

In March 2022, the parties stipulated to dismiss Matthew and Nathan. See generally Dkt. # 123. Defendant

now moves for summary judgment on each claim. See

generally Mot.

II.

Legal Standard

“A party may move for summary judgment, identifying each claim or defense—or the part of each claim

or defense—on which summary judgment is sought.

The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any

material fact and the movant is entitled to judgment

as a matter of law.” Fed. R. Civ. P. 56(a).

A party seeking summary judgment bears the initial burden of informing the court of the basis for its

motion and identifying those portions of the pleadings

App. 17

and discovery responses that demonstrate the absence

of a genuine issue of material fact. See Celotex Corp. v.

Catrett, 477 U.S. 317, 323 (1986). If the nonmoving

party will have the burden of proof at trial, the movant

can prevail by pointing out that there is an absence of

evidence to support the nonmoving party’s case. See id.

If the moving party meets its initial burden, the nonmoving party must set forth, by affidavit or as otherwise provided in Rule 56, “specific facts showing that

there is a genuine issue for trial.” Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 248 (1986).

In judging evidence at the summary judgment

stage, the court does not make credibility determinations or weigh conflicting evidence. Rather, it draws all

reasonable inferences in the light most favorable to the

nonmoving party. See T. W. Elec. Serv., Inc. v. Pac. Elec.

Contractors Ass ‘n, 809 F.2d 626, 630–31 (9th Cir.

1987). The evidence presented by the parties must be

capable of being presented at trial in a form that would

be admissible in evidence. See Fed. R. Civ. P. 56(c)(2).

Conclusory, speculative testimony in affidavits and

moving papers is insufficient to raise genuine issues of

fact and defeat summary judgment. See Thornhill

Publ’g Co. v. Gen. Tel. & Elecs. Corp., 594 F.2d 730, 738

(9th Cir. 1979).

III.

Evidentiary Objections

Defendant asserts several evidentiary objections

along with its reply brief. See generally Dkts. # 148-1–

148-3. Among other objections, Defendant objects to

App. 18

Relators’ Exhibits 2 and 16 as improperly authenticated. See Dkt. # 148-1 at 1-5, 11–13.

Authentication is a “condition precedent to admissibility,” and this condition is satisfied by “evidence

sufficient to support a finding that the matter in question is what its proponent claims.” Fed. R. Evid. 901(a).

The Ninth Circuit has repeatedly held that courts cannot consider unauthenticated documents in a motion

for summary judgment. See, e.g., Orr v. Bank of Am.,

285 F.3d 764, 773 (9th Cir. 2002). A document may be

authenticated through personal knowledge “by a witness who wrote it, signed it, used it, or saw others do

so.” Id. at 773-74 & n.8 (citing 31 Wright & Gold, Fed.

Prac. & Proc.: Evid. § 7106, 43 (2000)).

Relators’ counsel declares that “Exhibit 2 is an organizational chart prepared as a demonstrative aid

from prior counsel created from the testimony of the

parties and document production” and that “Exhibit 16

is an organizational chart of companies owned by Matthew and Nathan Johnson obtained by prior counsel

from a website.” See Declaration of Brian Sanford, Dkt.

# 146-1, ¶ 2. Although he purports to have “personal

knowledge of the matters set forth herein,” id. ¶ 1,

Plaintiffs’ counsel does not declare that he created Exhibit 2 or retrieved Exhibit 16, witnessed their creation

or retrieval, or otherwise show a basis for personal

knowledge as to the origin or contents of either “organizational chart.” Instead, he declares that unspecified

“prior counsel” created the chart in Exhibit 2 based on

united testimony and document production and that

Exhibit 16 was retrieved by unspecified “prior counsel”

App. 19

from an unspecified website on an unspecified date. See

id. ¶ 2. Because Relators have not laid sufficient foundation for their counsel’s personal knowledge of the

creation or contents of these documents, or proffered

another method to authenticate them, the Court SUSTAINS Defendant’s objections to Exhibits 2 and 16

and excludes these documents. See Orr, 285 F.3d at

773–74; United States v. Real Property Located at 475

Martin Lane, Beverly Hills Cal., 298 F. App’x 545, 551

(9th Cir. 2008) (affirming exclusion of exhibits where

declarant “did not state that he created or even reviewed the summary exhibits” and thus an insufficient

foundation was laid as to his personal knowledge of the

exhibits’ creation).3

Otherwise, to the extent that the Court relies on

objected-to evidence, it relies on only admissible evidence and, therefore, OVERRULES the objections.

See Godinez v. Alta-Dena Certified Dairy LLC, No. CV

15-01652 RSWL (SSx), 2016 WL 6915509, at *3 (C.D.

Cal. Jan. 29, 2016).

IV.

Requests for Judicial Notice

Defendant requests that the Court take judicial

notice of copies of (1) the answer filed by Relators in a

3

The Court also notes that Exhibit 16 is barely legible and

contains none of the indicia of authenticity that courts typically

rely on to find screenshots of websites properly authenticated.

Cf. Ciampi v. City of Palo Alto, 790 F. Supp. 2d 1077, 1091–92

(N.D. Cal. 2011); Premier Nutrition, Inc. v. Organic Food Bar,

Inc., No. SACV 06-0827 AG (RNBx), 2008 WL 1913163, at *6

(C.D. Cal. Mar. 27, 2008).

App. 20

suit in Texas state court and (2) three documents from

the California Secretary of State website. See generally

Dkt. # 130-3. Similarly, Relators ask that the Court

take judicial notice of copies of several documents and

business organizations inquiry results from the Texas

Secretary of State website. See generally Dkt. # 142-2.

The parties do not oppose each other’s requests. Although many of these items are likely proper subjects

for judicial notice, the Court does not find them necessary for deciding the instant motion and therefore need

not take judicial notice of them.

V.

Discussion

The Court begins by addressing (A) Relators’ violations of the Court’s Standing Order, before turning

to (B) the merits of Relators’ claims.

A. Violations of the Standing Order

The Court begins by addressing some of Defendant’s challenges to the format and content of the materials supporting Relators’ opposition. See Reply 2:7–4:8.

The Court’s Standing Order states that the separate statement of undisputed facts supporting a motion for summary judgment should be submitted in the

following format:

The separate statement of undisputed facts

shall be prepared in a two-column format.

The left hand column sets forth the allegedly

undisputed fact. The right hand column sets

App. 21

forth the evidence that supports the factual

statement. The factual statements should be

set forth in sequentially numbered paragraphs. Each paragraph should contain a

narrowly focused statement of fact. Each

numbered paragraph should address a single

subject as concisely as possible.

See Standing Order Regarding Newly Assigned Cases,

Dkt. # 6 (“Standing Order”), § 6.c. 1. In opposing a summary judgment motion:

[t]he opposing party’s statement of genuine issues must be in two columns and track the movant’s separate statement exactly as prepared.

The left hand column must restate the allegedly undisputed fact, and the right hand column must state either that it is undisputed or

disputed. . . . The court will not wade through

a document to determine whether a fact really

is in dispute. To demonstrate that a fact is disputed, the opposing party must briefly state

why it disputes the moving party’s asserted

fact, cite to the relevant exhibit or other piece

of evidence, and describe what it is in that exhibit or evidence that refutes the asserted

fact.

The opposing party may submit additional

material facts that bear on or relate to the issues raised by the movant, which shall follow

the format described above for the moving

party ‘s separate statement. These additional

facts shall continue in sequentially numbered

paragraphs and shall set forth in the right

App. 22

hand column the evidence that supports that

statement.

Id. (emphases added). Additionally,

No party shall submit evidence other than the

specific items of evidence or testimony necessary to support or controvert a proposed statement of undisputed fact. For example, entire

deposition transcripts, entire sets of interrogatory responses, and documents that do not specifically support or controvert material in the

separate statement shall not be submitted in

support of opposition to a motion for summary

judgment.

Id. § 6.c.2 (emphases added).

Relators’ separate statement of genuine disputes

and the evidence submitted in opposition to Defendant’s motion contain numerous violations of the

Court’s Standing Order. First, Relators’ statement of

genuine disputes includes just a fraction of Defendant’s uncontroverted facts, failing to respond to 72 of

120 facts. See generally RSGD; DSUF. The Court may

treat the facts to which Relators supply no response as

undisputed. See Fed. R. Civ. P. 56(e) (“If a party . . . fails

to properly address another party’s assertion of fact as

required by Rule 56(c), the court may . . . (2) consider

the fact undisputed for purposes of the motion.”); L.R.

56-3 (in deciding a motion for summary judgment, “the

Court may assume that the material facts as claimed

and adequately supported by the moving party are admitted to exist without controversy except to the extent that such material facts are (a) included in the

App. 23

‘Statement of Genuine Disputes’ and (b) controverted

by declaration or other written evidence filed in opposition to the motion”); Castlepoint Nat’l Ins. Co. v.

Weather Masters Waterproofing, Inc., No. CV 13-06137

MMM (FFMx), 2014 WL 12567166, at *2 n.8 (C.D. Cal.

June 2, 2014) (deeming proposed uncontroverted facts

to which opposing party did not respond undisputed).

Moreover, by prefacing their partial list of disputed

facts with the statement “Defendant lists several ‘uncontroverted material facts’ that are indeed controverted,” RSGD 4:6, Relators seem to suggest that they

do not dispute the remaining facts proffered by Defendant. Accordingly, the Court treats the remaining

72 facts as undisputed.

Second, before responding to Defendant’s uncontroverted facts, Relators’ separate statement includes

a two-page preamble titled “Statements of Genuine

Disputes.” See RSGD 2:5–4:4. To the extent this is an

attempt to submit additional material facts in support

of Relators’ opposition, it fails to comply with the

Court’s Standing Order. The Standing Order requires

an opposing party’s additional material facts to follow

the format described for the moving party’s separate

statement of uncontroverted facts—i.e., “in a two-column format” listing the allegedly undisputed fact in

the left-hand column and the evidence in support of

the proffered fact in the right-hand column. Standing

Order § 6.c.1. Each proffered fact “should be set forth

in sequentially numbered paragraphs,” and the Standing Order reiterates that any additional material facts

submitted by the opposing party “shall continue in

App. 24

sequentially numbered paragraphs” in the two-column

format. See id. Relators’ “Statement of Genuine Disputes” does not list proffered facts and their supporting

evidence in a two-column format nor set forth the facts

in sequentially numbered paragraphs. See RSGD 2:5–

4:4. Not only does this violate the Standing Order, but

it leaves no practical manner for Defendant to respond

to each proffered fact or for the Court or Defendant to

cite to such facts. As a result, the Court declines to consider the information listed in Relators’ “Statement of

Genuine Disputes,” RSGD 2:5–4:4, as additional material facts.

Third, much of Relators’ supporting evidence fails

to comply with the Standing Order. In violation of the

specific examples in the Standing Order, Relators

submit “entire deposition transcripts” and “entire sets

of interrogatory responses.” See Standing Order § 6.c.2;

see generally Deposition of Melinda Zambrano, Dkt.

# 142-3, Ex. 3 (“Zambrano Depo.”); Deposition of Regie

Salgado, Dkt. # 142-4, Ex. 5 (“Salgado Depo. I”); Deposition of Regie Salgado [continued], 142-5, Ex. 5 (“Salgado Depo. II”); Deposition of Nathan Johnson, Dkt.

# 142-6, Ex. 6 (“Johnson Depo.”); Defendants’ Responses to Plaintiff ’s Interrogatories, Set One, Dkt.

# 142-6, Ex. 14. As stated in the Standing Order, “[t]he

court will not wade through a document to determine

whether a fact really is in dispute.” Standing Order

§ 6.c. 1. However, to the extent Relators cite to specific

portions of this evidence, such as page and line numbers of deposition testimony, the Court will consider it.

See id. § 6.c.2 (directing parties to submit only “the

App. 25

specific items of evidence or testimony necessary to

support or controvert a proposed statement of undisputed fact”); cf. Orr, 285 F.3d at 775 (“[W]hen a party

relies on deposition testimony in a summary judgment

motion without citing to page and line numbers, the

trial court may in its discretion exclude the evidence.”).

Fourth, Relators’ statement of genuine disputes

repeatedly cites to their entire declarations as evidence to controvert Defendant’s proposed uncontroverted facts, rather than specific paragraphs of each

declaration. See generally RSGD (citing Declaration of

Melinda Zambrano, Dkt. # 142-6, Ex. 7 (“Zambrano

Decl.”); Declaration of Regie Salgado, Dkt. # 1426,

Ex. 8 (“Saldago Decl.”)). Although the Court has discretion not to consider declarations a party relies on

“without citing to paragraph numbers,” see Orr, 258

F.3d at 775 n.14, the Court will consider Relators’ declarations to the extent it is able to discern which portion of the declarations purportedly support Relators’

positions.

B. Merits of Relators’ Claims

Relators’ remaining claims assert retaliation in violation of (1) the FCA and (2) the CFCA and (3) wrongful termination “consistent with California Labor Code

§ 1102.5 and Tameny.” TAC ¶¶ 218–43. As an initial

matter, the parties extensively dispute whether Relators were in an employment or agency relationship

with Defendant rather than Sage. See Mot. 15:2–17:7;

App. 26

Opp. 12:1–13:27; Reply 7:24–10:7.4 However, the Court

need not reach this issue because, even assuming that

Relators were Defendant’s employees, contractors, or

agents, their claims nonetheless fail on the merits. The

Court addresses in turn Relators’ (i) FCA and CFCA

retaliation claims and (ii) wrongful termination claim.

i. Retaliation Claims

To establish an FCA retaliation claim under 31

U.S.C. § 3730(h), a plaintiff must prove that (1) he or

she was “engaging in conduct protected under the Act,”

(2) the defendant “employer kn[ew] that the [plaintiff ]

was engaging in such conduct,” and (3) the defendant

discriminated against the plaintiff because of his or

her protected conduct. United States ex rel. Cafasso

v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1060

(9th Cir. 2011) (quoting United States ex rel. Hopper v.

Anton, 91 F.3d 1261, 1269 (9th Cir. 1996)). A CFCA

4

The FCA and CFCA both prohibit retaliation against an

“employee, contractor, or agent” for whistleblowing activity. See

31 U.S.C. § 3730(h)(1); Cal. Gov’t Code § 12653(a). California Labor Code § 1102.5 similarly prohibits retaliation “against an employee for disclosing information . . . to a government or law

enforcement agency,’ among other protected activities. See United

States ex rel. Kelly v. Serco, Inc., 846 F.3d 325, 336 (9th Cir. 2017)

(quoting Cal. Lab. Code § 1102.5(b)). A claim for wrongful termination in violation of public policy under Tameny requires proof

of “an employer-employee relationship.” See Yau v. Santa Margarita Ford, Inc., 229 Cal. App. 4th 144, 154–55 (2014) (listing elements of a wrongful discharge in violation of public policy claim);

Kelly, 846 F.3d at 336 n.6 (“A claim for wrongful termination in

violation of public policy is a California common-law claim created

by Tameny [ ].”).

App. 27

retaliation claim under Cal. Gov’t Code § 12653 requires proof of the same elements. See Mendiondo v.

Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir.

2008).

The parties dispute whether Relators can prove all

three elements of their FCA and CFCA retaliation

claims. See Mot. 18:14-24:17; Opp. 5:4–11:8. Because

the Court agrees with Defendant that Relators cannot

raise a genuine dispute as to the second element of

their claims—knowledge of any protected conduct—

the Court does not reach the parties’ arguments as to

the remaining elements.

Relators contend that they engaged in protected

activity by investigating potentially fraudulent activity and reporting their concerns to Burgar and others

at “TruConnect.” Opp. 5:24–6:18. They point to the following evidence to support their reporting of suspicious activity. First, Salgado sent e-mails to someone

named Luke Duval (“Duval”) on June 25 and 26, 2015.

See generally Dkt. # 142-6, Ex. 12. Second, Relators

point to e-mails that Salgado sent to Burgar and

Carter on July 11 and e-mails Salgado sent to Wallace

and Peck on July 13, in which Salgado reported results

from his investigation, identified some concerns, and

recommended investigation into third-party vendor

TOP. See generally Dkt. # 142-6, Ex. 10. Third, Relators

testified that they met with Burgar on July 22 and reported concerns about one-second calls and potentially

“ripping off the Government” but that Burgar dismissed their concerns. See Zambrano Depo. 16:12–15,

App. 28

17:17–19:18; see also Salgado Depo. II 193:5–194:23,

199:2–25.

Defendant argues that, even if Relators engaged

in protected conduct and reported such conduct to

Burgar and others, the individuals involved in the decision to terminate Relators were not aware of any

such protected activity. Mot. 23:6–27. Nathan declares

that Relators worked in Sage’s marketing department

under Milhizer, and Nathan and Matthew both declare

that Milhizer identified Relators as potential candidates for the reduction in force. N. Johnson Decl. ¶¶ 26,

51; M. Johnson Decl. ¶ 7. Matthew and Nathan also declare that (1) they were the only decision-makers involved in the decision to eliminate Relators’ positions

and (2) they did not discuss this decision with anyone

other than Milhizer, including Burgar, Wallace, Peck,

or anyone else to whom Relators raised complaints. M.

Johnson Decl. ¶¶ 5, 7; N. Johnson Decl. ¶¶ 46–47, 51.

Matthew and Nathan also each declare that, prior to

Relators’ termination, they were not aware of any alleged complaints, concerns, or reports of fraud or other

unlawful activity from Salgado or Zambrano. M. Johnson Decl. ¶¶ 9–12, 14, 16; N. Johnson Decl. ¶¶ 54–57,

59. Salgado also testified that he did not speak to

Matthew, Nathan, or Milhizer about his concerns and

was not aware whether anyone he spoke to about his

concerns relayed those concerns to Matthew, Nathan,

or Milhizer. See DSUF ¶¶ 85, 87–88; Salgado Depo.

Excerpts 191:4–8, 233:18–24, 234:6–13. Similarly,

Zambrano did not raise her or Salgado’s concerns to

App. 29

any C-level executives of Sage or Defendant’s. DSUF

¶¶ 89, 91.

Nonetheless, Relators contend that Wallace was

involved in the decision to terminate them. Opp. 7:6–

8:19. Relators point to Nathan’s deposition testimony

that he asked each department to recommend employees for the reduction in force, but they dispute Nathan’s testimony that Milhizer was the person who

recommended Relators’ termination. See Johnson

Depo. 63:1–64:9. For support, Relators point to their

declarations, in which they each declare that Wallace

was their department head at the time of their termination. Zambrano Decl. ¶¶ 21–22; Salgado Decl. ¶ 22.

However, “uncorroborated and self-serving declarations” are insufficient to create a genuine dispute of

material fact. King v. United Parcel Serv., 152 Cal. App.

4th 426, 433 (2007); see also Villiarimo v. Aloha Island

Air, Inc., 281 F.3d 1054, 1061 (9th Cir. 2002). Relators’

uncorroborated and self-serving statements do not

create a genuine dispute as to whether Wallace, rather

than Milhizer, was Relators’ department head. See

FTC v. Publ’g Clearing House, Inc., 104 F.3d 1168, 1171

(9th Cir. 1997) (“A conclusory, self-serving affidavit,

lacking detailed facts and any supporting evidence, is

insufficient to create a genuine issue of material fact”);

Khera v. United States, No. EDCV 17-1827 JGB (KKx),

2019 WL 2610966, at *5–6 (C.D. Cal. May 10, 2019)

(finding general statements in declaration, without detailed facts or supporting evidence, insufficient to raise

a genuine dispute). And even if Relators’ uncorroborated declarations were enough to raise a genuine

App. 30

dispute, Relators provide no evidence that Wallace

made the recommendation to terminate them, was involved in the decision, or disclosed any of Relators’ protected conduct to any of the decision-makers. And

although Relators also provide an e-mail thread between Wallace, Matthew, and others discussing the reduction in force, the e-mail provides no indication that

Wallace was involved in the decision to terminate Relators specifically. See generally Dkt. # 154-2, Ex. 13.

Relators also contend that “[a] reasonable jury

could also determine that Peck . . . and Burgar . . . were

also involved as decisionmakers.” Opp. 8:19–22. They

each declare that “[i]t is reasonable to infer that

Burgar was one of the decisionmakers in my termination and that he spoke to the Johnsons about my concerns of fraud.” Zambrano Decl. ¶ 27; Salgado Decl.

¶ 20. Similarly, Zambrano declares that “Burgar constantly communicated with TruConnect leadership

and the Johnsons who had the power to terminate me

and it was likely that [Burgar] did” communicate to

others at TruConnect that Relators should be terminated. Zambrano Decl. ¶ 25. But “[t]o survive summary judgment, a plaintiff must set forth nonspeculative evidence of specific facts, not sweeping conclusory allegations” and must do more than establish

that a “set of events could conceivably have occurred.”

Cafasso, 637 F.3d at 1061. Relators’ speculation is insufficient to create a genuine dispute that Burgar was

involved in the decision to terminate them or communicated their concerns to Matthew, Nathan, or Milhizer. See id. at 1060–61 (affirming grant of summary

App. 31

judgment in defendant’s favor on FCA retaliation

claim where the official who eliminated relator’s position testified that he did not know about her allegedly

protected conduct at the time of the decision and relator merely speculated that other officials who knew

about her conduct may have influenced the decisionmaker); Brazill v. Cal. Northstate Coll. of Pharmacy,

LLC, 949 F. Supp. 2d 1011, 1024–25 (E.D. Cal. June 5,

2013) (granting summary judgment for defendant on

FCA retaliation claim where plaintiff failed to provide

any non-speculative evidence that the decision-maker

knew about his protected activity and thus did not rebut the showing that the decision-maker did not know

about the activity when he terminated plaintiff ).

Finally, Relators provide evidence that they emailed some of their concerns to Peck, Duval, and

Carter. See generally Dkt. # 142-6, Exs. 10, 12. But Relators do not provide any evidence that Peck, Duval, or

Carter were involved in the decision to terminate them

or shared any of Relators’ concerns with any of the

decision-makers.

In sum, even assuming that Relators were employees or agents of Defendant’s and that they engaged in

protected conduct within the meaning of the FCA and

CFCA, Relators have not raised a genuine dispute that

the decision-makers involved in their termination

knew of any such protected conduct. As a result, they

cannot establish the second element of their FCA and

CFCA retaliation claims. See Cafasso, 637 F.3d at 1060;

Mendiondo, 521 F.3d at 1104. Accordingly, the Court

GRANTS Defendant’s motion for summary judgment

App. 32

as to Relators’ fifth cause of action for retaliation under

the FCA and Relators’ sixth cause of action for retaliation under the CFCA.

ii. Wrongful Termination Claim

“A California wrongful termination in violation of

public policy claim ‘requires a showing that there has

been a violation of a fundamental public policy embodied in statute.” Moreno v. UtiliQuest, LLC, 29 F.4th 567,

575 (9th Cir. 2022) (quoting Merrick v. Hilton Worldwide, Inc., 867 F.3d 1139, 1150 (9th Cir. 2017)). Here,

Relators’ third amended complaint appears to base

their wrongful termination claim on the public policies

embodied by California Labor Code § 1102.5, California Penal Code § 484(a), or California Civil Code

§ 1572. See TAG ¶¶ 232–236. As described above, Labor Code § 1102.5 prohibits retaliation against employees “for disclosing information . . . to a government

or law enforcement agency,’ ” among other protected

activities. See Kelly, 846 F.3d at 336 (quoting Cal. Lab.

Code § 1102.5(b)). Under Penal Code § 484(a), “[e]very

person who . . . shall knowingly and designedly, by any

false or fraudulent representation or pretense, defraud

any other person of money, labor or real or personal

property . . . is guilty of theft.” Civil Code § 1572 “pertains [to] fraud in connection with a contract.” See

Montano v. Wash. Mut. Bank, F.A., No. SACV 09–1242

DOC(ANx), 2010 WL 11520162, at *3 (C.D. Cal. Jan.

21, 2010) (citing Cal. Civ. Code § 1572).

App. 33

Defendant argues that Relators’ wrongful termination claim fails because they cannot demonstrate a

protected act under Penal Code § 484 and because a

violation of Civil Code § 1572 cannot support a wrongful termination in violation of public policy claim. Mot.

24:18–25:5 (citing Hunter v. Up-Right, Inc., 6 Cal. 4th

1174, 1186 (1993) (holding wrongful termination in violation of public policy claim could not be predicated

on a violation of Civil Code § 1572 as such a fraud

claim did not violate a “substantial policy that concerns society at large” but was rather “essentially a private dispute”)). Relators fail to respond to Defendant’s

arguments and accordingly concede that their wrongful termination claim cannot rest on an alleged violation of Penal Code § 484 or Civil Code § 1572. See Tapia

v. Wells Fargo Bank, N.A., No. CV 15-03922 DDP

(AJWX), 2015 WL 4650066, at *2 (C.D. Cal. Aug. 4,

2015) (arguments to which no response is supplied are

deemed conceded); Silva v. US. Bancorp, No. 5:10-cv01854-JHN-PJWx, 2011 WL 7096576, at *3 (C.D. Cal.

Oct. 6, 2011) (same).

The only argument Relators provide as to their

wrongful termination claim is that “[s]upporting

claims under the [FCA] should be sufficient to support

claims under California’s parallel state laws: the

[CFCA] and wrongful termination in violation of public

polic[y].” Opp. 11:20–25. But, as described above, Relators’ FCA and CFCA claims do not survive summary

judgment. As such, to the extent Relators’ wrongful

termination claim is based on violations of the FCA or

CFCA, it also fails. See Kelly, 846 F.3d at 336 (finding

App. 34

determination that defendant did not violate Labor

Code § 1102.5 foreclosed Tameny claim based on a violation of § 1102.5 as a matter of law).

Finally, although Relators’ third amended complaint appeared to base their wrongful termination

claim in part on a violation of Labor Code § 1102.5,

Relators’ opposition does not indicate as much. See

Opp. 11:20-22 (merely arguing that proving their FCA

claims should suffice to prove their wrongful termination claim). Moreover, under the burden-shifting

framework that applies to § 1102.5 whistleblower retaliation claims, a plaintiff must first “demonstrate by

a preponderance of the evidence ‘that retaliation for

[his or her] protected activities was a contributing factor in a contested employment action.’ ” Wiele v. Del. N.

Cos., Inc., No.: 2:21-cv-07271-SB-AS, 2022 WL 714392,

at *6 (C.D. Cal. Mar. 4, 2022) (quoting Lawson v. PPG

Architectural Finishes, Inc., 12 Cal. 5th 703, 718

(2022)). To establish a prima facie case under § 1102.5,

the plaintiff must show that (1) he or she engaged in a

protected activity, (2) he or she was subjected to an adverse employment action, and (3) “a causal link between the two.” Moreno, 29 F.3d at 575. “Essential to a

causal link is evidence that the employer was aware

that the plaintiff had engaged in protected activity.”

Wittenbrock v. Sunovion Pharms. Inc., No. EDCV 19342 JVS (SHKx), 2019 WL 4453719, at *5 (C.D. Cal.

May 20, 2019) (quoting Morgan v. Regents of Univ. of

Cal., 88 Cal. App. 4th 52, 69–70 (2000)). Here, as described above, Relators provide no evidence that the

individuals involved in decision to terminate them

App. 35

were aware of any of their protected conduct. As such,

Relators cannot show that retaliation was a contributing factor for their termination for purposes of a

§ 1102.5 claim or a wrongful termination claim premised on § 1102.5.

In sum, because Relators have failed to raise a

genuine dispute that they were terminated in violation

of a public policy based on any statutory or constitutional provision, their wrongful termination claim cannot survive summary judgment. See Kelly, 846 F.3d at

336. The Court therefore GRANTS Defendant’s motion for summary judgment as to Plaintiff ’s seventh

cause of action for wrongful termination.5

VI.

Conclusion

For the foregoing reasons, the Court GRANTS Defendant’s motion for summary judgment in its entirety.

This order closes the case.

IT IS SO ORDERED.

5

Defendant also argues that Relators’ CFCA and wrongful

termination claims fail because California law does not apply extraterritorially to Relators, who did not live or work in California

or allege that any misconduct took place in California. Mot. 17:8–

18:13. Although Relators fail to respond to this argument, see generally Opp., the Court need not reach this issue because Relators’

claims otherwise do not survive summary judgment for the reasons described above.

App. 36

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES—GENERAL

(Filed Mar. 30, 2021)

Case No. CV 16-3767 PSG (FFMx) Date March 30, 2021

Title

United States of America et al. v.

TruConnect, et al.

===========================================================================================

Present:

The Honorable

Philip S. Gutierrez, United States

District Judge

Wendy Hernandez

Deputy Clerk

Not Reported

Court Reporter

Attorneys Present for

Plaintiff(s):

Attorneys Present for

Defendant(s):

Not Present

Not Present

Proceedings

(In Chambers): The Court GRANTS IN PART and

DENIES IN PART the motion to

dismiss

Before the Court is a motion to dismiss filed by

Defendants TruConnect Communications, Inc. (“TruConnect”), Matthew Johnson, and Nathan Johnson, (collectively, “Defendants”). See generally Dkt. # 82 (“Mot”).

Relators Regie Salgado (“Salgado”) and Melinda Zambrano (“Zambrano”) (collectively, “Relators”) opposed.

See generally Dkt. # 85 (“Opp.”). Defendants replied.

See generally Dkt. # 86 (“Reply”). The Court finds the

App. 37

matter appropriate for decision without oral argument. See Fed. R. Civ. P. 78; L.R. 7-15. Having considered the moving, opposing, and reply papers, the Court

GRANTS IN PART and DENIES IN PART the motion to dismiss.

I.

Background

This is a qui tam action based on Defendants’ alleged violations of the False Claims Act (“FCA”), FCA

retaliation, and related California state law claims.

See generally Third Amended Complaint, Dkt. # 79

(“TAC”).

Relators are former employees of TruConnect, a

mobile virtual network operator and a provider of

wireless voice, messaging, and data services. Id. ¶¶ 20–

22. Before joining TruConnect, Salgado had 15 years

of experience “in the prepaid, low income part of the

cellphone industry.” Id. ¶¶ 74, 115. Zambrano worked

at PrimeCoPersonal Communications and Metro PCS

from 1998–2006. Id. ¶ 70. Zambrano recruited Salgado

to work at TruConnect in April 2015. Id. ¶ 72.

TruConnect is a “Lifeline Provider” through the

Lifeline Program (“Lifeline”), a program by which the

federal and state governments subsidize cellular service for low income families. Id. ¶ 26. Matthew and Nathan Johnson are brothers and joint CEOs of

TruConnect, and they exercise comprehensive control

over the company, including its billing practices. Id.

¶ 28. Relators allege that Defendants falsely bill the

government for phones not in use and falsely represent

App. 38

that TruConnect complies with the Lifeline regulations set out by the Federal Communications Commission (“FCC”). Id. ¶ 30.

A. The Lifeline Program

Lifeline provides pre-paid wireless services to

qualified low-income families. Id. ¶ 32. Carriers like

TruConnect receive reimbursement from the federal

and state governments for providing these services. Id.

Under 47 C.F.R. § 54.410, carriers must receive (1) notice of low income and (2) a copy of the subscriber’s certificate of eligibility before the carrier can seek

reimbursement.

In order for a carrier to claim reimbursement,

the phone must be “used” by a subscriber within the

last sixty days.1 TAG ¶¶ 42–43. Under 47 C.F.R.

§ 54.407(c)(2), the following constitutes “using” the service: (1) completion of an outbound call, (2) purchasing

minutes from the eligible communication carrier to

add to the subscriber’s service plan, (3) answering an

incoming call from a party other than the eligible telecommunications carrier or the carrier’s agent or representative, or (4) responding to direct contact from the

eligible communications carrier and confirming that

1

Although current Lifeline regulations require that subscribers use the phone within the preceding 30 days, see 47 C.F.R.

§ 54.407, the regulations in place during 2015 required usage during the previous 60 days, see Lifeline and Link Up Reform and

Modernization, Telecommunications Carriers Eligible for Universal Service Support, Connect America Fund, 81 FR 33026-01 (noting the change from 60 to 30 days).

App. 39

he or she wants to continue receiving the Lifeline service. Id. ¶ 43.

Carriers must file FCC Form 497 each month to

receive reimbursement for each Lifeline subscriber

they claim. Id. ¶ 46. Form 497 states: “I certify that my

company is in compliance with all the Lifeline program

rules, and, to the extent required, have obtained valid

certifications for each subscriber for whom my company seeks reimbursement.” Id. ¶ 47.

B. The Alleged Wrongdoing

Relators’ FCA claims are based on Defendants’ alleged violations of Lifeline regulations. See generally

id. Specifically, Relators claim (1) Defendants hire

“street teams” to hand out “live” mobile phones to acquire customers without obtaining information to determine eligibility, id. ¶¶ 63–68; and (2) Defendants

allow “robo-calls” and illegitimate text messages to be

pushed to thousands of phones that would otherwise

be inactive so that the phones are “used” in the sixty

days before billing the government, id. ¶¶ 75–97.

i.

User Acquisition Through Street Teams

In order to acquire customers, TruConnect hired

street teams to distribute mobile phones outside of Unemployment Insurance and Social Security offices.2 Id.

¶ 63. The street teams handed out “live” phones, with

2

The FCC has since prohibited this practice for Lifeline subscribers because of fraud. Id. ¶ 100.

App. 40

SIM cards already activated in the phone. Id. ¶¶ 64,

98. TruConnect did not have a system to confirm that

the phones were delivered to eligible customers. Id.

¶ 101. While street teams required proof of low income

to receive a phone, proof of food stamps was sufficient,

and street teams did not require a name, birth date,

address, number of people in the household, or social

security number. Id. ¶¶ 65–66.

TruConnect did not follow up with subscribers after phones were distributed by street teams. Id. ¶ 69.

Monthly statements were not sent to subscribers. Id.

TruConnect billed the government for any phone

it considered “active,” id. ¶ 111, even if (1) the phone

was not yet in the hands of a customer, id. ¶ 102, (2)

TruConnect had not confirmed the customer’s eligibility, id. ¶ 101, or (3) the phone was returned for repair

and replacement, id. ¶¶ 106–09.

ii. Fraudulent Usage

Around July 2015, Salgado was examining six

“broken phones” that did not belong to any subscribers.

Id. ¶ 75. During his examination, unique robo-call

numbers continued to call the phones. Id. Salgado confirmed with Luke Duval from Ingram Micro, a phone

vender from which TruConnect purchased phones, that

these phones were activated even though they did not

belong to any subscribers. Id. ¶¶ 76–78.

Plintron, the wholesale provider to TruConnect,

asked Salgado to help it build a system to properly bill

App. 41

call usage to its customers including TruConnect. Id.

¶ 117. To help Plintron, Salgado requested and received usage data from Rick Burgar (“Burgar”), the

Vice President of Revenue Assurance at TruConnect.

Id. ¶ 79, 118–20. Salgado analyzed the data and “became concerned there was fraud because he noticed

red flags in the data based on his previous experience

in fraud/revenue assurance positions with a former

employer.” Id. ¶ 121.

Specifically, Salgado analyzed subscriber data of

369,081 customers over a thirty-eight-day period. Id.

¶¶ 80–83. Salgado discovered that 45 percent of these

users were near the sixty-day non-usage cut off. Id. He

also noticed that there was not a substantial amount

of usage within the first several weeks of service, and

that the usage that did exist was generally of calls lasting less than one minute. Id. ¶ 122. This did not comport with Salgado’s experience with “this kind of

customer” or with real usage data by subscribers. Id.

¶¶ 115, 123.

Additionally, 13.67 percent of all subscribers in the

data set showed zero to one minute of usage and no

texting. Id. ¶ 83. An additional 4,800 phones received

text messages, but no calls, for over a year. Id. ¶ 85.

Many of the incoming text messages on these phones

were random pictures of office interiors or car engines,

appearing to be illegitimate. Id. ¶ 86.

Relators also allege that TruConnect discussed

developing and installing an “Auto-Dialer App” feature

that would automatically make the necessary

App. 42

outbound calls required by the FCC’s eligibility rules.

Id. ¶ 124–25. Both Nathan and Matthew Johnson advocated for this feature. Id. ¶ 127–29.

Finally, Relators allege that “TruConnect knew

that telephone numbers for the Lifeline program were

recycled quicker than industry standards, tending to

result in usage for the new customer resulting from

calls intended for the former owner of that telephone

number.” Id. ¶ 132. Rather than try to stop the practice

of recycling numbers too quickly, TruConnect continued to bill for the usage without determining the legitimacy of the usage data. Id. ¶ 133.

iii. Reporting and Retaliation

Burgar told Zambrano on several occasions that

Salgado should mind his own business and focus on inventory and not billing issues. Id. ¶ 157.

On July 22, Relators told Burgar they had concerns about fraudulent billing to the government. Id.

¶ 159. Specifically, Salgado questioned the practice of

billing for calls that lasted only one second and “the

unusual usage.” Id. Burgar responded, “We work hard

for those one second calls. What are you trying to allege, Regie?” Id. Zambrano told Burgar that “she did

not want to be a part of ripping off the government.”

Id. ¶ 161. Burgar told Zambrano to “back off ” and that

he “need[ed] this job.” Id. ¶ 161.

Relators allege that “Burgar’s attitude and demeanor changed dramatically” after these comments,

App. 43

and the meeting ended. Id. ¶ 162. Two days later,

TruConnect terminated Relators’ employment, allegedly due to a reduction in the workforce. Id. ¶ 156.

However, Relators claim that “TruConnect posted a position matching Zambrano’s responsibilities within

about a week of Zambrano’s termination” and that the

company “replaced Salgado, as well.” Id. ¶ 165.

C. Procedural History

i.

The 2015 FCC Subpoena

On December 17, 2015, the Office of the Inspector

General of the FCC (“OIG”) issued a subpoena to

TruConnect (the “2016 Subpoena”), requesting information about TruConnect’s involvement in Lifeline,

among other information. Request for Judicial Notice,

Dkt. # 82-2 (“RJJV”), Ex. 1.3 TruConnect made five

productions to the OIG in response to each of the requests in the 2015 Subpoena. Id. Exs. 2–6.

3

Defendants request that the Court take judicial notice of

(1) the 2015 Subpoena (2) TruConnect’s five responses to the 2015

Subpoena, (3) a subpoena issued to TruConnect by the OIG on

September 19, 2016 (“2016 Subpoena”), and (4) TruConnect’s six

responses to the 2016 Subpoena. See RJN at 2–3. Relators do

not oppose the request. Courts may take judicial notice of the fact

of service and response to subpoenas, but not the truth of their

contents. Klein v. Mony Life Ins. Co. of Am., No. CV 17-07003RSWL-AS, 2018 WL 2472916, at *3 (C.D. Cal. May 30, 2018)

(“[T]he Court takes judicial notice of the fact of service of and response to the subpoena, but not the truth of the facts recited

therein”). Accordingly, the Court GRANTS Defendants’ request

for judicial notice.

App. 44

ii. This Action

Relators filed their original complaint on May 31,

2016. See Dkt. # 1. On September 19, 2016, the OIG

issued a second subpoena to TruConnect (the “2016

Subpoena”). RJN Ex. 7. TruConnect made six document productions in response to the requests in the

2016 Subpoena. Id. Exs. 8–13.

On October 8, 2019, the United States declined to

intervene in Relators’ case. Dkt. # 54. On May 19, 2020,

the People of the State of California also declined to

intervene in Relators’ case, see Dkt. # 58, and the case

was unsealed, see Dkt. # 59.

On June 25, Relators filed a Second Amended

Complaint (“SAC”). See generally Second Amended

Complaint, Dkt. # 60 (“SAC”). The Court granted Defendants’ motion to dismiss the SAC in its entirety,

with leave to amend. See generally November 23, 2020

Order Granting Defendants’ Motion to Dismiss, Dkt.

# 78 (“November 2020 Order”).

Relators filed the operative Third Amended Complaint (“TAC”) on January 4, 2021, alleging the following causes of action:

First Cause of Action: Knowingly submitting false

claims for payment in violation of the FCA, 31

U.S.C. § 3729(a)(1)(A). TAC ¶¶ 175–86.

Second Cause of Action: Knowingly making false

records material to a false claim in violation of the

FCA, 31 U.S.C. § 3729(a)(1)(B). TAC ¶¶ 187–96.

App. 45

Third Cause of Action: Knowingly submitting false

claims for payment in violation of the California

FCA (“CFCA”), Cal. Gov’t Code § 12651(a)(1). TAC

¶¶ 197–208.

Fourth Cause of Action: Knowingly making false

records material to a false claim in violation of the

CFCA, Cal. Gov’t Code § 12651(a)(2). TAC ¶¶ 209–

17.

Fifth Cause of Action: Retaliation under the FCA

in violation of 31 U.S.C. § 3730(h). TAC ¶¶ 218–24.

Sixth Cause of Action: Retaliation in violation of

Cal. Gov’t Code § 12653. TAC ¶¶ 225–31.

Seventh Cause of Action: Wrongful termination,

consistent with Cal. Labor Code § 1102.5 and

Tameny v. Atl. Richfield Co., 27 Cal. 3d 167 (1980).

TAC ¶¶ 232–43.

Defendants now move to dismiss the TAC. See generally Mot.

II.

Legal Standard

A. Rule 12(b)(6)

To survive a motion to dismiss under Rule

12(b)(6), a complaint must “contain sufficient factual

matter, accepted as true, to ‘state a claim to relief that

is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662,

678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S.

544, 570 (2007)). In assessing the adequacy of the complaint, the court must accept all pleaded facts as true

and construe them in the light most favorable to the

App. 46

plaintiff. See Turner v. City & Cty. of San Francisco, 788

F.3d 1206, 1210 (9th Cir. 2015); Cousins v. Lockyer, 568

F.3d 1063, 1067 (9th Cir. 2009). The court then determines whether the complaint “allows the court to draw

the reasonable inference that the defendant is liable

for the misconduct alleged.” Iqbal, 556 U.S. at 678.

However, “[t]hreadbare recitals of the elements of a

cause of action, supported by mere conclusory statements, do not suffice.” Id. Accordingly, “for a complaint

to survive a motion to dismiss, the non-conclusory factual content, and reasonable inferences from that content, must be plausibly suggestive of a claim entitling

the plaintiff to relief.” Moss v. US. Secret Serv., 572 F.3d

962, 969 (9th Cir. 2009) (internal quotation marks

omitted).

B. Rule 9(b)

Rule 9(b) requires a party alleging fraud to “state

with particularity the circumstances constituting

fraud.” Fed. R. Civ. P. 9(b). To plead fraud with particularity, the pleader must state the time, place, and specific content of the false representations. See Odom v.

Microsoft Corp., 486 F.3d 541, 553 (9th Cir. 2007). The

allegations “must set forth more than neutral facts

necessary to identify the transaction. The plaintiff

must set forth what is false or misleading about the

statement, and why it is false.” Less v. Ciba-Geigy Corp.

USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (internal quotation marks omitted). In essence, the defendant must

be able to prepare an adequate answer to the allegations of fraud. Where multiple defendants allegedly

App. 47

engaged in fraudulent activity, “Rule 9(b) does not allow a complaint to merely lump multiple defendants

together.” Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th

Cir. 2007). Rather, a plaintiff must identify each defendant’s role in the alleged scheme. See id. at 765.

III. Discussion

Defendants argue that (1) Relator’s first and second causes of action under the FCA should be dismissed pursuant to Rule 12(b)(6) and for failure to

meet Rule 9(b)’s heightened pleading standards, Mot.

at 17–30, (2) nothing in the TAC cures the defects in

the retaliation claim, id. at 30–32, and (3) the state law

claims should be dismissed, id. at 32–33. The Court addresses each argument in turn.

A. First and Second Causes of Action Under the

FCA

Defendants argue (1) Relators fail to allege with

particularity (a) that TruConnect violated any Lifeline

regulations and (b) that TruConnect submitted false

statements in connection with any claim for payment,

(2) Relators still do not allege that TruConnect knowingly presented false claims for payment, and (3) Relators have not pled that any false statement was

material to the submission of a claim for payment. Id.

at 17–30. Because the Court finds that Relators failed

to allege TruConnect fraudulently billed the government, the Court does not address the arguments regarding knowledge and materiality.

App. 48

i.

TruConnect’s Lifeline Violations and False

Statements

To satisfy Rule 9(b), Relators’ allegations must

show the “who, what, when, where, and how of the misconduct charged.” Cafasso, U.S. ex rel. v. Gen. Dynamics

C4 Sys., Inc., 637 F.3d 1047, 1055 (9th Cir. 2011). A relator can “identify representative examples of false

claims” or “particular details of a scheme to submit

false claims paired with reliable indicia that lead to a

strong inference that claims were actually submitted,”

so long as the allegations give “notice of the particular

misconduct which is alleged to constitute the fraud

charged so that [they] can defend against the charge.”

See Ebeid ex rel. U.S. v. Lungwitz, 616 F.3d 993, 998–

99 (9th Cir. 2010). Here, rather than identify representative examples of false claims, Relators allege two

schemes to submit false claims—(1) the use of street

teams to fraudulently acquire customers and (2) usage

fraud.

a. Street Teams

In the November 2020 Order, the Court found the

allegations in the SAC regarding street teams insufficient to satisfy Rule 9(b) because Relators failed to connect the street teams’ behavior to any false claims.

November 2020 Order at 10–11. Relators added allegations explaining that (1) street teams were incentivized to deliver phones regardless of subscriber

eligibility, (2) TruConnect did not have a system to confirm a subscriber’s eligibility, (3) street teams handed

out phones that were already deemed active, and (4)

App. 49

all active phones were billed to the government regardless of whether they were in the hands of eligible customers. TAC 98–113. Again, these allegations are

insufficient to connect the street teams’ actions to false

claims for reimbursement.

Defendants contend that Relators mischaracterize

47 C.F.R. § 54.410, which addresses subscriber eligibility determination and certification. Mot. 14:23–15:6.

Section 54.410 requires certified states, not carriers, to

determine a subscriber’s initial eligibility. Id. Carriers

are then required to confirm a subscriber’s eligibility

before seeking reimbursement. See 47 C.F.R.

§§ 54.410(b)(2)(i)–(ii), (c)(2)(i)–(ii)) (carriers “must not

seek reimbursement . . . unless the carrier has received from the . . . state agency: (i) Notice that the prospective subscriber meets the income-eligibility

criteria” and “(ii) a copy of the subscriber’s certification”).

Relators allege that “TruConnect did not have a

system to confirm that the phones were delivered to

eligible customers.” TAC ¶ 101. But TruConnect is not

required to have such a system because TruConnect’s

obligations arise when seeking reimbursement, not

when delivering phones to customers.

Relators also claim that “TruConnect’s billing system was unable to determine whether a phone shown

as active was in a qualifying customer’s hands.” TAC

¶ 113. Again, this allegation is insufficient to connect

the street teams’ actions to false claims. The Lifeline

regulations do not require that TruConnect’s billing

App. 50

system operate in any specific way—they only require

that TruConnect refrain from requesting reimbursement for a subscriber if the company has not received

documentation from California. Relators fail to allege

that TruConnect did not receive (1) notice and (2) certification for the customers acquired by the street

teams. Without such allegations, the Court cannot infer that the use of street teams led to fraudulent billing.

Relators also include various allegations that do

not meet Rule 9(b)’s particularity requirements. For

example, Relators allege that “TruConnect billed for

subscribers before a subscriber had possession of a

phone,” id. ¶ 102, but they provide no examples or descriptions of how TruConnect conducted this practice.

Relators further claim that “when TruConnect tried to

send replacement phones, many were returned because of invalid addresses or addressee not at address.”

Id. ¶ 110. Relators do not assert when this allegedly

occurred, who sent the phones out, and critically,

whether the phones were deemed active and subsequently billed to the government. Rule 9(b) requires

more specificity when alleging fraud. Cafasso, 637 F.3d

at 1055.

Relators further claim that Lifeline phones remain active when they were “in for repair.” Id. ¶¶ 106–

09. However, Relators do not explain how keeping a

phone “active” during repair violates Lifeline regulations.

App. 51

Finally, Relators include quotes from Burgar and

Nathan Johnson regarding the timing of “orders” and

when such “orders” are complete. Id. ¶¶ 103–04. These

allegations are insufficient because Relators do not explain what Burgar and Johnson meant when discussing “orders,” and they fail to provide any context

surrounding the statements or to allege when they

were made.

As such, the Court cannot infer that the street

teams’ behavior led to fraudulent billing, and the Court

GRANTS the motion to dismiss on this ground.

b. Usage Fraud

In the November 2020 Order, the Court found the

allegations in the SAC regarding usage fraud insufficient to satisfy Rule 9(b) because (1) Relators failed to

allege that TruConnect was behind robo-calls and text

messages that led to fraudulent usage, (2) the data set

Relators relied on to allege that TruConnect fraudulently bills the government only spans 38 days, and

fraudulent billing could only occur if a phone was unused for 60 days, and (3) the phones from the data set

were “used” as required by the Lifeline regulations.4

November 2020 Order at 10–11.

4

In the SAC, Relators alleged Salgado analyzed two data

sets: (1) current and historical data of 60,000 Lifeline subscribers

and (2) the 38-day time span data set of 369,081 subscribers. SAC

¶¶ 81–89. Relators claimed that 8,800 of the subscribers from the

first data set showed no calls or text messages for over a year. The

Court found Relators’ allegations lacking because Relators failed

to allege with specificity that TruConnect billed the government

App. 52

To cure the allegations regarding the robo-calls,

Relators allege TruConnect employees discussed developing an Auto-Dialer App that could be pre-loaded

onto phones. TAC ¶ 124. This app “would allow

TruConnect to meet the FCC’s Lifeline outbound call

requirement.” Id. ¶ 127. However, Relators fail to allege that this app was ever developed and installed on

any device. As such, these allegations are insufficient

to support an inference that TruConnect submitted

false claims for reimbursement based on fraudulent

usage through this app.

Relators also allege that “TruConnect knew that

telephone numbers for the Lifeline program were recycled quicker than industry standards, tending to result

in usage for the new customer resulting from calls intended for the former owner of that telephone number.”

Id. ¶ 132. Rather than stop the practice of billing for

these phones, TruConnect continued to submit claims

for reimbursement “without determining if the usage

was due to wrong number calls.” Id. ¶ 133. But Relators fail to explain how receiving calls from wrong

numbers violates the Lifeline regulations, or that

TruConnect was somehow behind the recycling of

these phone numbers and the wrong number calls. Accordingly, these allegations also fail to support an inference that TruConnect submitted false claims for

reimbursement.

for those phones. November 2020 Order at 10–11. Relators appear

to have abandoned the claims regarding the first data set, as they

do not appear in the TAC.

App. 53

To cure the defects regarding the data set, Relators add allegations providing context as to why Salgado acquired the data and Salgado’s experience in

analyzing it. Specifically, Relators contend that Salgado obtained the data from Burgar in order to “help

[Plintron, TruConnect’s wholesale provider] build a

system to properly bill its customers.” Id. ¶¶ 117–21.

Although the data set only spanned 38-days, “[i]n Salgado’s experience and based on assurances from Rick

Burgar, the data [Salgado] received was an adequate

sample to extrapolate typical usage for these phones

over a 60-day period.” TAC ¶ 130. Salgado was qualified to notice alleged “red flags” due to his “previous

experience in fraud/revenue assurance positions.” Id.

¶¶ 121–22.

Even if these allegations were sufficient to cure

the Court’s concern that the data set only spans 38

days, they do not address the fact that the phones in

the data set were “used” as required under 47 C.F.R.

§ 54.47(c)(2). Relators claim “[f ]orty-five percent of

subscribers were near the sixty day non-usage cut off,”

“[n]ineteen percent of all subscribers had zero to one

minute[ ] of usage,” and “4,800 phones received text

messages, but no calls, for over a year.” TAC ¶¶ 82–85.

But none of these allegations lead to the conclusion

that phones were not “used” under the regulations.

Finally, Relators point to Salgado’s experience to

support their allegation that “short calls do not represent normal usage but are more likely to represent

wrong number calls or no conversations.” Id. ¶ 131.

These allegations are also insufficient because billing

App. 54

for “wrong number calls” or “no conversations” does not

violate Lifeline regulations. Further, Relators claim

that “[in]substantial amount of usage within the first

several weeks” amounts to a “red flag” does not suffice

because Relators fail to allege that the data set included any phones that had been given to customers in

recent weeks. Id. ¶ 122.

Accordingly, Relators have failed to allege that Defendants submitted claims for reimbursement based

on fraudulent usage data, and the Court GRANTS the

motion to dismiss on this ground as well.

ii. Leave to Amend

Whether to grant leave to amend rests in the

sound discretion of the trial court. See Bonin v. Calderon, 59 F.3d 815, 845 (9th Cir. 1995). Courts consider

whether leave to amend would cause undue delay or

prejudice to the opposing party, and whether granting

leave to amend would be futile. See Sisseton-Wahpeton

Sioux Tribe v. United States, 90 F.3d 351, 355 (9th Cir.

1996). Generally, dismissal without leave to amend is

improper “unless it is clear that the complaint could

not be saved by any amendment.” Jackson v. Carey, 353

F.3d 750, 758 (9th Cir. 2003).

Here, Relators have had the opportunity to amend

their claims and they were unable to cure the defects

found. Given these shortcomings, the Court believes

that further attempts to amend would be futile. See

Sisseton Wahpeton Sioux Tribe, 90 F.3d at 355. As such

the Court DENIES leave to amend.

App. 55

B. The FCA Retaliation Claim

To plead retaliation under the FCA, Relators must

allege (1) they were engaged in conduct protected by

the FCA, (2) Defendants knew they were engaged in

protected conduct, and (3) Defendants discriminated

against them because of their protected conduct.

Cafasso, 637 F.3d at 1060.

In the November 2020 Order, the Court dismissed

the retaliation claim because (1) Relators did not claim

to have reported fraudulent conduct to Burgar, and

(2) Relators did not establish the requisite employer

notice. November 2020 Order at 13–14.

To address these issues, Relators added allegations further detailing the conversation they had with

Burgar that purportedly led to their termination. During this conversation, Relators claim they (1) questioned TruConnect’s practice of billing for one second

calls and “the unusual usage” and (2) told Burgar that

they “did not want to be a part of ripping off the government.” TAC ¶¶ 159–61. In response, Burgar stated

“We work hard for those one-second calls. What are you

trying to allege, Regie?” Id. He also told Zambrano to

“back off.” Id. These allegations are sufficient to cure

the defects in the SAC, as they show that (1) Relators

reported what they thought was fraudulent conduct

and that (2) Defendants were aware of Relators’ protected activity.

Defendants argue Relators’ conduct is not protected because Relators did not plead “an objectively

App. 56

reasonable FCA violation.” Mot. 31:9–10. The Court

disagrees.

“[A]n employee engages in protected activity

where (1) the employee in good faith believes, and (2)

a reasonable employee in the same or similar circumstances might believe, that the employer is possibly

committing fraud against the government.” Moore v.

California Inst. of Tech. Jet Propulsion Lab y, 275 F.3d

838, 845 (9th Cir. 2002). Here, the TAC alleges both

prongs. First, Relators had a good faith belief because,

based on their experience in the industry, they noticed

unusual usage patterns that raised red flags. Second,

Defendants fail to put forth any argument that a reasonable employee would have believed differently.

Their cited cases, all decided at summary judgment or

later, do not necessitate a different result at this early

stage. See, e.g., U.S. ex rel. Zemplenyi v. Grp. Health Coop., No. C09-603-RSM, 2012 WL 1642213, at *3 (W.D.

Wash. May 10, 2012) (finding a jury could not find that

a reasonable employee suspect fraud and granting

summary judgment to defendants where the relator

had no “basic idea of what evidence would be necessary

to support a suspicion of fraud.”).5

Defendants also contend that the new allegations

do not assert employer notice because “Relators do not

5

Importantly, Defendants do not cite a case, and the Court

found none, stating that Relators must successfully plead an FCA

claim in order to succeed on their retaliation claim. This makes

sense, because the standard under Rule 9(b) for pleading fraud

under the FCA is higher that the standard under Rule 12(b)(6) for

pleading that a reasonable employee would have suspected fraud.

App. 57

allege that [billing for one-second calls and the unusual usage] violates any Lifeline regulations.” Mot.

31:27–28. But Defendants cite no authority for the

proposition that Relators had to specify which regulations were allegedly violated. See U.S. ex rel. Hopper v.

Anton, 91 F.3d 1261, 1269 (9th Cir. 1996) (“Specific

awareness of the FCA is not required”). Further,

Burgar’s alleged responses to Relators’ comments—i.e.

“what are you trying to allege?” and “back off ”—lead

to the reasonable inference that Burgar, and therefore

TruConnect, knew and understood Relators’ allegations.

Finally, Defendants insist Burgar’s responses

“[m]ore plausibly . . . relate to his annoyance and frustration that Relators were diverting time and energy

away from their job functions.” Mot. 32:5–8. This, according to Defendants, “likely would have been

grounds to terminate Relators for cause had they not

been terminated due to a company-wide reduction in

force.” Id. 32:14–15. But this is not the standard on a

motion to dismiss. Relators’ inferences need not be the

most plausible or possible explanation for the alleged

facts, rather, they must “allow[ ] the court to draw the

reasonable inference that the defendant is liable for

the misconduct alleged.” See Iqbal, 556 U.S. at 678. Relators claim that Burgar responded to their accusations of fraud defensively and then promptly

terminated them two days later. Opp. 20:14–25. They

also allege that shortly thereafter, Defendants began

searching for Relators’ replacements, which rebuts

TruConnect’s purported reason for Relators’ dismissal.

App. 58

Id. 20:10–14. Defendants have failed to establish why

Relators’ version of events is implausible. Accordingly,

the TAC successfully states a claim for FCA retaliation, and the Court DENIES the motion to dismiss on

this ground.

C. The State Law Claims

Defendants argue that the CFCA and CFCA retaliation claims—the third, fourth, and sixth causes of

action—should be dismissed for the same reasons as

the related federal law claims. Mot. 32:18–33:2. The

Court agrees that the state law claims should bear

the same fate as their federal counterparts.6 As such,

for the same reasons as described above, the Court

GRANTS the motion to dismiss the third and fourth

causes of action for CFCA violations and DENIES

leave to amend. Similarly, the Court DENIES the

motion to dismiss the sixth cause of action for CFCA

retaliation.

Defendants further argue that the because the

Court should dismiss all of the federal law claims, the

Court should decline to exercise supplemental

6

Since the CFCA is patterned on the federal statutory

scheme, the requirements for state liability are the same as for

federal liability. See State ex rel. Grayson v. Pac. Bell Tel. Co., 142

Cal.App.4th 741, 747 n. 3 (2006); see also United States v. Shasta

Servs., Inc., 440 F.Supp.2d 1108, 1111 (E.D.Cal. 2006). Furthermore, the same pleading specificity requirements applicable to

fraud causes of action under Rule 9(b) also apply to a complaint

alleging CFCA violations. United States v. Sequel Contractors,

Inc., 402 F. Supp. 2d 1142, 1152 (C.D. Cal. 2005); see also Less

v.Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103 (9th Cir. 2003).

App. 59

jurisdiction over the pendant California claims and

dismiss them. Mot. 33:3–13. The state law claims currently before the Court are (1) the sixth cause of action

for CFCA retaliation and (2) the seventh cause of action for wrongful termination in violation of the California Labor Code. Because the Court finds that

Relators state a federal law claim for FCA retaliation,

and their CFCA retaliation and wrongful termination

claims substantially reflect their allegations under the

FCA retaliation claim, the Court retains supplemental

jurisdiction over the remaining state law claims and

DENIES the motion to dismiss them.

IV.

Conclusion

For the foregoing reasons, the Court rules as follows:

•

The Court GRANTS the motion to dismiss

the first, second, third, and fourth causes of

action for violations of the FCA and CFCA

without leave to amend.

•

The Court DENIES the motion to dismiss

the fifth, sixth, and seventh causes of action

for FCA retaliation, CFCA retaliation, and

wrongful termination.

IT IS SO ORDERED.

App. 60

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

REGIE SALGADO, ex rel.

United States of America;

MELINDA ZAMBRANO,

ex rel. United States of

America,

No. 22-55721

D.C. No. 2: 16-cv03767-PSG-SK Central

District of California,

Los Angeles

Plaintiffs-Appellants, ORDER

and

(Filed Jan. 30, 2024)

STATE OF CALIFORNIA;

UNITED STATES OF

AMERICA,

Plaintiffs,

v.

TRUCONNECT,

Defendant-Appellee,

and

NATHAN JOHNSON;

MATTHEW JOHNSON,

Defendants.

Before: CLIFTON and SANCHEZ, Circuit Judges, and

KORMAN,* District Judge.

* The Honorable Edward R. Korman, United States District

Judge for the Eastern District of New York, sitting by designation.

App. 61

Judge Sanchez voted to deny the petition for rehearing en Banc, and Judges Clifton and Korman recommended denying the same. The full court has been

advised of the petition, and no judge has requested to

vote on whether to rehear the matter en banc. Fed. R.

App. 35. Accordingly, Appellants’ petition for rehearing

en banc, filed January 5, 2024, (Dkt. No. 59) is DENIED. No further petitions will be entertained.