WELLS v. ONE2ONE LEARNING FOUNDATION PART - I WELLS v. ONE2ONE LEARNING FOUNDATION
Filed 8/31/06 (this opn. should precede companion case, S131807, also filed 8/31/06)
IN THE SUPREME COURT OF CALIFORNIA
JOEY WELLS, a Minor, etc., et al., )
)
Plaintiffs and Appellants, )
) S123951
v. )
) Ct.App. 3 C042504
ONE2ONE LEARNING FOUNDATION )
et al., )
) Sierra County
Defendants and Respondents; ) Super. Ct. No. S46-CV-5844
)
STATE OF CALIFORNIA, )
)
Real Party in Interest and Respondent. )
)
The Charter Schools Act (CSA; Ed. Code, § 47600 et seq.), as adopted by the Legislature in 1992 and since amended, represents a revolutionary change in the concept of public education. Under this statute, interested persons may obtain charters to operate schools that function within public school districts, accept all eligible students, charge no tuition, and are financed by state and local tax dollars, but nonetheless retain considerable academic independence from the mainstream public education system. Such schools may elect to operate as, or be operated by, corporations organized under the Nonprofit Public Benefit Corporation Law. (Id., § 47604, subd. (a).)
Here certain charter schools, their corporate operators, and the chartering school districts were sued on multiple grounds by some of the schools’ students and their parents or guardians. The gravamen of all the claims is that the schools—designed to provide and facilitate home instruction through use of the Internet (so-called distance learning)—failed to deliver instructional services, equipment, and supplies as promised, and as required by law. In effect, the plaintiffs assert, the schools functioned only to collect “average daily attendance” (ADA) forms, on the basis of which the schools, and the districts, fraudulently claimed and received public education funds from the state. Plaintiffs also claim violations of specific statutory rules governing “independent study” programs offered by the public schools.
This case concerns whether, and in what circumstances, public school districts, charter schools, and/or the operators of such schools may be exposed to civil liability based on allegations of this kind. Among other things, we must determine whether such entities, or any of them, are “persons” who may be sued (1) under the unfair competition law (UCL; Bus. & Prof. Code, § 17200 et seq.) and (2) in a qui tam action, brought by individuals on behalf of the state, under the California False Claims Act (CFCA; Gov. Code, § 12650 et seq.).[1]
We reach the following conclusions: (1) Public school districts are not “persons” who may be sued under the CFCA. (2) On the other hand, charter schools, and the individuals, corporations, entities, or organizations that operate them, are “persons” subject to suit under both the CFCA and the UCL, and are not exempt from either law merely because such schools are deemed part of the public school system. (3) The CFCA cause of action is not a barred claim for “educational malfeasance” (see Peter W. v. San Francisco Unified Sch. Dist. (1976) 60 Cal.App.3d 814 (Peter W.)) insofar as it asserts, not simply that One2One’s charter schools provided a substandard education, but that they submitted false claims for school funds while failing to furnish any significant educational services, materials, and supplies. (4) The CFCA cause of action is not barred insofar as it alleges that, before 2000, the charter schools violated “independent study” rules set forth in a 1993 statute, Education Code section 51747.3, because section 51747.3 applied to charter schools even before its amendment in 1999. (5) Finally, a qui tam action under the CFCA against a charter school operator is not subject to the Tort Claims Act (TCA; Gov. Code, § 815 et seq.) requirement of prior presentment of a claim for payment (see id., §§ 905, 910 et seq.). These conclusions require that we affirm in part, and reverse in part, the judgment of the Court of Appeal.
FACTS AND PROCEDURAL BACKGROUND
On December 30, 1999, plaintiffs filed a complaint, which included a claim for qui tam relief on behalf of the state, under the CFCA. (Gov. Code, § 12652, subd. (c)(1).) As provided by the CFCA in such cases, the complaint was filed under seal. (Id., subd. (c)(2).) In July 2000, after the seal was lifted, the Attorney General noticed his election to intervene in, and proceed with, the CFCA action on behalf of the state. (Id., subd. (c)(6).)
On August 11, 2000, plaintiffs filed their first amended complaint (the complaint). As pertinent to the issues before us, the complaint alleged the following:
At various times during 1997, 1998, and 1999, defendant One2One Learning Foundation (One2One), a Texas corporation, operated three charter schools in California through its California corporate alter ego, defendant Charter School Resource Alliance (CSRA). These schools included (1) defendant Sierra Summit Academy, Inc. (Sierra Summit Academy), operating as a California nonprofit corporation, and chartered by the Sierra Plumas Joint Unified School District (Sierra District) in Sierra County, (2) defendant Mattole Valley Charter School (Mattole Valley School), chartered by the Mattole Unified School District (Mattole District) in Humboldt County, and (3) defendant Camptonville Academy, Inc. (Camptonville Academy), operating as a California nonprofit corporation, and chartered by defendant Camptonville Union Elementary School District (Camptonville District) in Yuba County.
Defendant Robert Carroll is One2One’s president and chief executive officer. Defendant Jeff Bauer is Superintendent of the Sierra District. Defendant Carol Kennedy is the Director of Sierra Summit Academy. Defendant Richard Graey is Superintendent of the Mattole District and the Director of Mattole Valley School. Defendant Allen Wright is Superintendent and Principal of the Camptonville District. Defendant Janis Jablecky is the Director of Camptonville Academy.[2]
Each plaintiff was a minor student enrolled in one of the defendant charter schools at some time during 1998 and/or 1999, or the parent and/or guardian of such a student. All the plaintiffs were direct victims of One2One’s failure to provide promised instruction, testing, equipment, materials, and supplies.
Like traditional public schools, charter schools are funded by the state based on ADA records. While charter schools have considerable freedom in their academic approach, they must meet statewide educational standards and use appropriately credentialed teachers. The chartering entity, usually a school district, has oversight responsibilities, and must revoke a school’s charter for fiscal mismanagement, material violation of the charter, failure to meet or pursue any of the educational outcomes set by the charter, failure to meet generally accepted accounting principles, or violation of law.
Sierra Summit Academy, Mattole Valley School, and Camptonville Academy were operated as distance learning schools, in which students study at home, complete lessons on their computers, and transmit them via the Internet to the school. Students are also tested through the Internet.
The charters and promotional literature for One2One-operated schools promised to provide “ways and means” for students to achieve an education through distance learning, including the furnishing of computers, necessary software, and textbooks, and reimbursement of up to $100 per month for out-of-pocket educational expenses incurred by students or their parents or guardians. Each student was also to be assigned an “educational facilitator,” who was to devise a learning contract for the student, provide parents with a copy of the student’s curriculum goals, order necessary educational materials, and come to the student’s home a few hours per week for personal instruction, testing, and evaluation.
Despite its promises, One2One has failed to provide the enumerated equipment, supplies, and services, either to plaintiff students or to any of its enrollees. Its educational facilitators—who, on information and belief, are teaching outside their credentialed areas or are not credentialed at all—do not provide assessment, instruction, review, or curriculum, either online or in person. One2One also fails to reimburse students, parents, and guardians for educational expenses. In some cases, parents actually pay One2One for equipment and for educational materials and supplies, either because One2One has failed to provide these items for free as promised, or because parents have exhausted their $100 per month expense allowance. Moreover, One2One overbills for the educational materials and software it does provide. In particular, the educational software programs One2One uses are available online for free, or for much less than One2One charges.[3]
One2One aggressively recruits poor, rural districts to approve their charter schools, then enrolls students throughout the state for distance learning. In return for chartering its schools and allowing their operation, One2One pays the districts administration fees in excess of those allowed by statute. Despite their oversight responsibilities, the districts enable One2One to misuse public funds by turning a blind eye to the charter schools’ activities, and, for the most part, failing to take steps to monitor them.
On the basis of allegations such as these, the complaint asserted causes of action against the charter school defendants for breach of contract (seventh cause of action) and intentional and negligent misrepresentation (fourth and fifth causes of action, respectively). Against the charter school and district defendants, it contained claims for mandamus and declaratory relief (third and 10th causes of action, respectively), and for violation of the free school, equal protection, and due process guarantees of the California Constitution (eighth and ninth causes of action, respectively). As to all defendants, it sought injunctive relief against misuse of taxpayer funds (second cause of action).
Finally, the complaint included, (1) against the charter school and district defendants, a CFCA cause of action for qui tam relief, on behalf of the state, for the alleged submission of false and fraudulent claims for payment of state educational funds (first cause of action) and, (2) against the charter school defendants, an individual and representative claim under the UCL, alleging unfair and deceptive business practices in the operation of the schools (sixth cause of action).
The CFCA cause of action asserted that the charter school defendants submitted false claims, within the meaning of this statute, by requesting funding from the districts and/or the state, “knowing that their ADA records did not accurately reflect the students enrolled in and receiving instruction, educational materials, or services from their schools.” (At another point, the complaint alleged more generally that One2One “fails to provide the education it promises but falsely collects State educational funds as if the education were provided.”)
The CFCA count also alleged that the charter school defendants falsely claimed ADA funds (1) for what was effectively independent study, though the schools were in violation of Education Code section 51747.3, subdivision (a), in that they provided money or other things of value to independent study pupils that were not provided to students attending regular classes, and (2) for independent study pupils who, in violation of subdivision (b) of the same section, resided outside the counties in which the respective schools were located, or adjacent counties.[4]
In the CFCA cause of action, the complaint alleged that the district defendants had submitted false claims on behalf of the charter schools, even though they “knew or deliberately or recklessly disregarded whether the public funds were being used for wrongful purposes.” Further, the complaint asserted, the district defendants wrongfully claimed funds for supervisory services beyond the limits set forth in the CSA.
Aside from the injunctive and declaratory relief noted above, the complaint sought, among other things, (1) compensatory and punitive damages against the charter school defendants, and, (2) against the charter school and district defendants, restitution of funds falsely claimed and received, with treble damages and civil penalties as provided in the CFCA.
Several defendants demurred.[5] In November 2001, the trial court sustained, without leave to amend, the demurrers as to the first (CFCA), second (taxpayer injunctive relief), fourth (intentional misrepresentation), fifth (negligent misrepresentation), sixth (UCL), and seventh (breach of contract) causes of action.[6] The court reasoned as follows: (1) All these counts are noncognizable private claims for “educational malfeasance.” (2) Because the charter school and district defendants are “public entities,” the CFCA, intentional misrepresentation, and negligent misrepresentation causes of action are subject to the TCA requirement of prior presentment of a claim for payment. (3) As “public entities,” the charter school defendants are not “persons” subject to suit under the UCL. (4) The taxpayer claim for injunctive relief is subject to the requirement of a prior claim for refund. (5) The CFCA claim for violation of the statutory restrictions on “independent study” programs fails, because those restrictions applied to charter schools only in and after 2000, and all the facts alleged in the complaint precede that date.[7]
All parties stipulated that (1) the trial court’s ruling on the demurrers was binding, as law of the case, on those defendants who had not demurred, (2) the remaining causes of action would be dismissed in order to facilitate appellate review, and (3) plaintiffs would dismiss the individual defendants. Judgment was entered accordingly.
Plaintiffs appealed, urging that the CFCA, UCL, contract, and misrepresentation claims should not have been dismissed.[8] The Court of Appeal reversed the judgment of dismissal. The Court of Appeal agreed with the trial court that the causes of action for breach of contract and misrepresentation are barred by the rule that private parties cannot sue public schools for “educational malfeasance.” The Court of Appeal also concurred that the charter school defendants, as part of the public school system, are “public entities,” and thus are not “persons” who may be sued under the UCL.
On the other hand, the Court of Appeal held that the CFCA, unlike the UCL, does include public entities among the “persons” who may be sued. Hence, the Court of Appeal determined, charter schools and public school districts may be subject to private qui tam actions under the CFCA. Moreover, the Court of Appeal reasoned, plaintiffs’ CFCA allegations—i.e., that the charter school and district defendants made or facilitated fraudulent claims to obtain state ADA funds for educational services that were not provided—are not a prohibited cause of action for “educational malfeasance.”
Nor, the Court of Appeal concluded, must a qui tam action under the CFCA be preceded by presentment of a claim for payment pursuant to the TCA. In this regard, the Court of Appeal noted that (1) the state is expressly exempt from the TCA’s “prior presentment” requirement (Gov. Code, § 905, subd. (i)), (2) a qui tam plaintiff under the CFCA stands in the shoes of the state, and (3) application of a “prior presentment” requirement in this context would undermine the CFCA’s provision that qui tam actions must initially be filed under seal, thus allowing the state to investigate, without prior warning to the alleged false claimant, before deciding whether to intervene in the action.
Finally, however, the Court of Appeal concurred with the trial court that plaintiffs’ CFCA claim must fail insofar as it is based on allegations that the charter schools violated the “independent study” statute (Ed. Code, § 51747.3). Like the trial court, the Court of Appeal concluded that, while the complaint covered only acts done by the charter school defendants in the years 1998 and 1999, the “independent study” statute did not apply to charter schools until the year 2000.
The Court of Appeal remanded for further proceedings consistent with its opinion. We understand the effect of the Court of Appeal’s judgment to be that plaintiffs may proceed against both the district and charter school defendants on the CFCA cause of action—minus the allegations concerning violation of the statutory rules governing “independent study” programs—but may not proceed on the UCL, contract, or misrepresentation causes of action.
Petitions for review were filed by defendants (1) One2One, (2) CSRA, (3) the Mattole District and Graey, (4) Camptonville Academy and Jablecki, and (5) the Sierra District and Sierra Summit Academy. All challenged the Court of Appeal’s reinstatement of plaintiffs’ CFCA cause of action. The petitions variously argued that (1) the charter school and district defendants are “public entities,” and as such, are not “persons” subject to suit under the CFCA, (2) a qui tam action under the CFCA is subject to the “claim presentment” provisions of the TCA, and (3) the CFCA allegations are a disguised claim for “educational malfeasance.”
Plaintiffs answered the petitions, urging, as additional issues, that (1) the restrictions on “independent study” programs imposed by Education Code section 51747.3 have applied to charter schools since that statute’s adoption in 1993 and (2) private nonprofit corporations operating charter schools are “persons” covered by the UCL. We granted review. As will appear, we agree with certain of the Court of Appeal’s holdings and disagree with others. We will therefore reverse in part the Court of Appeal’s judgment.[9]
DISCUSSION
1. The CSA.
The CSA, as adopted in 1992 and since substantially amended, is intended to allow “teachers, parents, pupils, and community members to establish . . . schools that operate independently from the existing school district structure.” (Ed. Code, § 47601.) By this means, the CSA seeks to expand learning opportunities, encourage innovative teaching methods, provide expanded public educational choice, and promote educational competition and accountability within the public school system. (Id., subds. (a)-(g).)
If statutory requirements are met, public school authorities must grant the petition of interested persons for a charter to operate such a school within a public school district. (Ed. Code, § 47605.) For certain purposes, the school is “deemed to be a ‘school district’ ” (id., § 47612, subd. (c)), is “part of the Public School system” (id., § 47615, subd. (a)), falls under the “jurisdiction” of that system, and is subject to the “exclusive control” of public school officers (id., § 47615, subd. (a)(2); § 47612, subd. (a)). (See Wilson v. State Bd. of Education (1999) 75 Cal.App.4th 1125, 1136-1142 (Wilson).)
A charter school must operate under the terms of its charter, and must comply with the CSA and other specified laws, but is otherwise exempt from the laws governing school districts. (Ed. Code, § 47610.) A charter school may elect to operate as, or be operated by, a nonprofit corporation organized under the Nonprofit Public Benefit Corporation Law. (Id., § 47604, subd. (a), as added by Stats. 1998, ch. 34, § 3.)
A charter school is eligible for its share of state and local public education funds, which share is calculated primarily, as with all public schools, on the basis of its ADA. (Ed. Code, § 47612; see also id., § 47630 et seq.)[10] Provisions added to the CSA since its original adoption enumerate certain oversight responsibilities of the chartering authority (id., § 47604.32), and authorize that agency to charge the school supervisorial fees, within specified limits, for such services (id., § 47613).
2. The CFCA.
The CFCA, which is patterned after a similar federal law, was adopted in 1987. (Stats. 1987, ch. 1420, § 1, p. 5237.) It provides that “[a]ny person” who, among other things, “ [k]nowingly presents or causes to be presented to . . . the state or . . . any political subdivision thereof, a false claim for payment or approval,” or “[k]nowingly makes, uses, or causes to be made or used a false record or statement to get a false claim paid or approved by the state or by any political subdivision,” or “[c]onspires to defraud the state or any political subdivision by getting a false claim allowed or paid by the state or any political subdivision,” or “[i]s a beneficiary of an inadvertent submission of a false claim to the state or a political subdivision, subsequently discovers the falsity of the claim, and fails to disclose the false claim to the state or the political subdivision within a reasonable time after discovery [thereof],” “shall be liable to the state or to the political subdivision for three times the amount of damages” the state or political subdivision thereby sustained, as well as for the state’s or political subdivision’s costs of suit, and may also liable for a civil penalty of up to $10,000 for each false claim. (Gov. Code, § 12651, subd. (a)(1)-(3), (8).)[11]
The CFCA defines a “person” to “include any natural person, corporation, firm, association, organization, partnership, limited liability company, business, or trust.” (Gov. Code, § 12650, subd. (b)(5).)
Where a “person” has submitted a false claim upon state funds, or upon both state and political subdivision funds, in violation of the CFCA, the Attorney General may sue that person to recover the damages and penalties provided by the statute. (Gov. Code, § 12652, subd. (a)(1).) Where the false claim was upon “political subdivision funds,” or upon both state and political subdivision funds, the “prosecuting authority” of the affected political subdivision may bring such an action. (Id., subd. (b)(1).)[12]
When either the Attorney General or the local prosecuting authority unilaterally initiates an action involving both state and political subdivision funds, the other affected official or officials must be notified. If the Attorney General initiates such an action, the local prosecuting authority may, upon receiving notice, intervene. If the local prosecuting attorney is the initiator, the Attorney General may, upon notice, elect to assume responsibility for the action, though the local prosecuting authority may continue as a party. (Gov. Code, § 12652, subds. (a)(2), (3), (b)(2), (3).)
A CFCA action may also be initiated by a “person,” as a “qui tam” plaintiff, for and in the name of the state or the political subdivision whose funds are involved. (Gov. Code, § 12652, subd. (c)(1), (3).) The complaint in such an action shall be filed in camera, and may remain under seal for up to 60 days. While the complaint remains sealed, “[n]o service shall be made on the defendant.” (Id., subd. (c)(2).)
The qui tam plaintiff must immediately notify the Attorney General of the suit and disclose to him all material evidence and information the plaintiff possesses. If the qui tam complaint involves only state funds, the Attorney General may, within the 60-day period or extensions thereof, elect to intervene and proceed with the action. If political subdivision funds alone are involved, the Attorney General must forward the qui tam complaint to the local prosecuting authority, who may elect to intervene and proceed with the action. If both state and political subdivision funds are involved, the Attorney General and the local prosecuting authority are to coordinate their investigation and review. Either official, or both of them, may then elect to intervene and proceed with the action. If these officials decline to proceed, the qui tam plaintiff shall have the right to conduct the action. (Gov. Code, § 12652, subd. (c)(4)-(8).) If state or local officials intervene, they may assume control of the action, but the qui tam plaintiff may remain as a party. (Id., subd. (e)(1).)
A substantial portion of the proceeds of any settlement or court award in a CFCA action—as much as 66 percent—does not revert to the general coffers of the state or the political subdivision against which the false claim was submitted. Instead, a significant “cut” of these proceeds goes to those who pursued the action on behalf of the defrauded entity.
Thus, if the Attorney General or a local prosecuting authority initiated an CFCA action, that officer is entitled to a fixed 33 percent of the proceeds of the action, or settlement thereof. Where a local prosecuting authority intervened in an action initiated by the Attorney General, the court may award the local prosecuting authority a portion of the Attorney General’s 33 percent, as appropriate to the local authority’s role in conducting the action. If, in an action brought by a qui tam plaintiff, the Attorney General or the local prosecuting authority proceeds with the action, that official receives a fixed 33 percent of the proceeds, and the qui tam plaintiff receives from 15 to 33 percent, depending on his or her litigation role. Where both the Attorney General and a local prosecuting authority are involved in a qui tam action, the court may award the latter officer a portion of the Attorney General’s 33 percent, depending on the role played by the local prosecutor.[13] If neither the Attorney General nor the local prosecuting authority elects to proceed with the action, the qui tam plaintiff may receive between 25 and 50 percent of the proceeds. (Gov. Code, § 12652, subd. (g).)
The CFCA’s remedies are cumulative to any others provided by statute or common law. (Gov. Code, § 12655, subd. (a).) Further, its provisions “shall be liberally construed and applied to promote the public interest.” (Id., subd. (c).)
3. The UCL.
As pertinent here, the UCL provides for relief by civil lawsuit against “[a]ny person who engages, has engaged, or proposes to engage in unfair competition.” (Bus. & Prof. Code, § 17203.) “Unfair competition” is defined to include “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising . . . .” (Id., § 17200.) An action for injunctive relief, which relief may include orders necessary “to restore to any person in interest any money or property. . . . acquired by means of such unfair competition” (id., § 17203), may be brought (1) by the Attorney General or a specified local prosecuting officer “upon their own complaint or upon the complaint of any board, officer, corporation, or association,” or (2) “by any person who has suffered injury in fact and has lost money or property as a result of such unfair competition” (id., § 17204). For purposes of the UCL, “the term person shall mean and include natural persons, corporations, firms, partnerships, joint stock companies, associations and other organizations of persons.” (Id., § 17201.) Except as otherwise specifically provided, the UCL’s remedies are “cumulative to each other and to the remedies or penalties available under all other laws of this state.” (Id., § 17205.)
4. May a public school district be sued under the CFCA?
The Court of Appeal held that both the district and charter school defendants are “persons” subject to suit under the CFCA. The district defendants insist that they are not “persons” for purposes of this statute. For reasons that will appear, we agree with the district defendants.
We apply well-settled principles of statutory construction. Our task is to discern the Legislature’s intent. The statutory language itself is the most reliable indicator, so we start with the statute’s words, assigning them their usual and ordinary meanings, and construing them in context. If the words themselves are not ambiguous, we presume the Legislature meant what it said, and the statute’s plain meaning governs. On the other hand, if the language allows more than one reasonable construction, we may look to such aids as the legislative history of the measure and maxims of statutory construction. In cases of uncertain meaning, we may also consider the consequences of a particular interpretation, including its impact on public policy. (E.g., MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co., Inc. (2005) 36 Cal.4th 412, 426; People v. Smith (2004) 32 Cal.4th 792, 797-798.)
To be continue as Part II ..
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[1] The CFCA provides a single definition of “person” for all purposes of that statute. “Persons” who knowingly submit false claims to state or local governments may be sued under the CFCA (Gov. Code, § 12651), and, under certain circumstances, “persons” may also bring “qui tam” actions, on behalf of defrauded governmental entities, against alleged false claimants (id., § 12652, subd. (c)). Here, as noted above, we consider, among other things, whether public entities are “persons” who may be sued as false claimants under the CFCA. In a companion case, State of California ex rel. Harris v. PricewaterhouseCoopers, LLP (Aug. 31, 2006, S131807) _Cal.4th _ (Harris), we address the question whether a governmental entity is a person who, as a qui tam plaintiff under the CFCA, may sue for alleged false claims that were submitted only to other public agencies.
[2] One2One, CSRA, Sierra Summit Academy, Mattole Valley School, and Camptonville Academy, as identified and described in the complaint, are hereafter collectively referred to as the charter school defendants. The Sierra District, the Mattole District, and the Camptonville District are hereafter collectively referred to as the district defendants. The charter school defendants, the district defendants, and the individual defendants are hereafter collectively referred to as all defendants.
[3] Included in the complaint were detailed allegations concerning the charter schools’ treatment of the named plaintiffs, including the schools’ broken promises to supply computers and educational materials, and the failure of their “educational facilitators” to provide home visits, or any other significant contact, except for “religious” visits to collect signed ADA forms. The complaint also contained class action allegations.
[4] According to the complaint, for each of the 5,200 students enrolled statewide in its distance learning charter schools, One2One collects ADA funds of about $120 per day, or $4,350 per school term. The complaint thus asserted generally that, on the basis of One2One’s failure to provide educational services and materials as promised in its charters and required by law, “One2One engages in a practice of defrauding parents, school districts, and the State by collecting more than $20 million annually in educational funds.”
[5] Separate demurrers were filed by (1) CSRA and Carroll, (2) Sierra Summit Academy, Sierra District, Bauer, and Kennedy, and (3) One2One. One2One later filed a joinder in the demurrer of CSRA and Carroll.
[6] Previously, in September 2001, the trial court had denied the State of California’s motion to dismiss plaintiffs’ CFCA claim for lack of jurisdiction. The motion was made under Government Code section 12652, subdivision (d)(3)(A), which deprives the court of jurisdiction over a private qui tam CFCA action that is based on the prior “public disclosure” of the facts supporting the claim, where the disclosure was made “in a criminal, civil, or administrative hearing, in an investigation, report, hearing, or audit conducted by or at the request of the Senate, Assembly, auditor, or governing body of a political subdivision, or by the news media,” unless the qui tam plaintiff “is an original source of the information.” The ruling on this motion is not involved in the appeal before us.
[7] After an initial hearing on the demurrers, the trial court issued a final ruling as to the second (taxpayer injunctive relief), third (mandamus), fourth (intentional misrepresentation), fifth (negligent misrepresentation), seventh (breach of contract), eighth (free school guarantee), ninth (equal protection and due process), and tenth (declaratory relief) causes of action. However, as to the first (CFCA) and sixth (UCL) causes of action, the court obtained additional briefing on whether, in light of a then-recent Court of Appeal decision, LeVine v. Weis (2001) 90 Cal.App.4th 201 (LeVine II) (see also LeVine v. Weis (1998) 68 Cal.App.4th 758 (LeVine I)), the charter school and district defendants, as “public entities within the public school system,” could be sued under the CFCA and the UCL. In its final ruling, as noted, the court determined that the charter school defendants were not subject to suit under the UCL, but the court did not decide whether a similar rule applied to either the charter school or district defendants under the CFCA.
[8] No defendant cross-appealed from the trial court’s order overruling demurrers to the third (mandate), eighth (free school guarantee), ninth (equal protection/due process), and tenth (declaratory relief) causes of action. Nor did any of defendants’ Court of Appeal briefs argue that those counts should have been dismissed. By the same token, after stipulating in the trial court to dismissal of individual defendants Carroll, Bauer, Kennedy, Graey, Wright, and Jablecki, plaintiffs did not contend in the Court of Appeal that the second cause of action (taxpayer relief)—the only one naming those defendants—should be reinstated. The State of California, as real party and respondent, filed a brief asserting only that the “prior claim” requirement of the TCA should not apply to qui tam actions under the CFCA.
[9] Amicus curiae briefs in support of defendants have been filed by (1) the Statewide Association of Community Colleges et al., (2) Fullerton Joint Union High School District et al., (3) the Pacific Legal Foundation, (4) the California State Association of Counties, (5) Coast Community College District, and (6) PricewaterhouseCoopers, LLP. An amicus curiae brief in support of plaintiffs has been filed by Taxpayers Against Fraud. We appreciate the assistance provided by these briefs.
[10] California school finance is enormously complex, but the basic system is that “funds raised by local property taxes are augmented by state equalizing payments. Each school district has a base revenue limit that depends on average daily attendance, . . . and varies by size and type of district. [¶] The revenue limit for a district includes the amount of property tax revenues a district can raise, with other specific local revenues, coupled with an equalization payment by the state, thus bringing each district into a rough equivalency of revenues.” (56 Cal.Jur.3d (2003) Schools, § 7, p. 198.)
[11] In certain circumstances, where the person submitting the false claim reported it promptly and cooperated in any investigation, the court may assess less than three times the damages (though no less than two times the damages), and no civil penalty. (Gov. Code, § 12651, subd. (b).)
[12] “ ‘Prosecuting authority’ refers to the county counsel, city attorney, or other local government official charged with investigating, filing, and conducting civil legal proceedings on behalf of, or in the name of, a particular political subdivision.” (Gov. Code, § 12650, subd. (b)(4).)
[13] Any proceeds recovered by the Attorney General as his “cut” of the award or settlement is deposited into a special False Claims Fund in the State Treasury. The Attorney General is to use the money in this fund, upon its appropriation by the Legislature, for the ongoing investigation and prosecution of false claims. (Gov. Code, § 12652, subd. (j).)
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