WELLS v. ONE2ONE LEARNING FOUNDATION PART - IV 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. )
_ )
Continue from Part III ………
Peter W. also identified other public policy considerations, “even more important in practical terms,” that counsel against an “actionable ‘duty of care’ in persons and agencies who administer the academic phases of the public educational process.” (Peter W., supra, 60 Cal.App.3d 814, 825.) The opinion noted that the public schools are “already beset by social and financial problems” including widespread dissatisfaction with their academic performance, and are subject to “the limitations imposed upon them by their publicly supported budgets.” (Ibid.) Subjecting such institutions to an academic duty of care under these circumstances, the opinion concluded, “would expose them to the tort claims—real or imagined—of disaffected students and parents in countless numbers. . . . The ultimate consequences, in terms of public time and money, would burden them—and society—beyond calculation.” (Ibid.)
As the instant Court of Appeal made clear, however, the considerations identified in Peter W. that preclude an action for personal educational injury based on inherently subjective standards of duty and causation do not apply to a claim that school operators fraudulently sought and obtained public education funds for doing nothing more than collecting attendance forms. Resolution of such a claim does not require judgments about pedagogical methods or the quality of the school’s classes, instructors, curriculum, textbooks, or learning aids. Nor does it require evaluation of individual students’ educational progress or achievement, or the reasons for their success or failure. It simply obliges the court to determine whether the operator offered any significant teaching, testing, curriculum oversight, and educational resources to ostensible students.
Similarly, nothing in the rationale of Peter W. precludes a claim that a school operator’s claim on state funds was “false” insofar as the school committed objectively identifiable breaches of its charter, applicable state law, or promises it made to induce enrollment. For example, Peter W. does not bar assertions that a school operator failed to provide promised equipment and supplies, used teachers who lacked necessary credentials, violated specific rules governing “independent study” programs, or caused students, parents, or guardians to incur improper fees or charges,[1] so long as such claims do not challenge the educational quality or results of the school’s programs.[2]
For the most part, plaintiffs’ CFCA allegations, detailed above, conform to these principles, and thus avoid preclusion under Peter W. As the Court of Appeal held, the trial court thus erred in concluding that the CFCA cause of action was wholly barred as a claim for “educational malfeasance.” We note, however, a single passage of the complaint which alleges that One2One “fails to provide the education it promises but falsely collects State educational funds as if the education were provided.” Insofar as this particular allegation seeks to raise issues of the quality of education offered by the charter school defendants, or of the academic results produced, we believe it falls within the rule that courts will not entertain claims of “educational malfeasance.” To that extent, therefore, the allegation is not actionable.
9. Did the CFCA cause of action against the charter school operators require prior presentment of a claim under the TCA?
The TCA states that, with specified exceptions, all “claims for money or damages” against the state or “local public entities” must be “presented” in accordance with that law. (Gov. Code, §§ 905, 905.2.) Except as otherwise provided, no suit for money or damages may be brought against a public entity until such a claim has been presented to the entity and acted upon or deemed rejected. (Id., § 945.4.) The claim must be presented within six months of accrual of the cause of action (id., § 911.4), but the claimant may apply to the public entity for leave to present a late claim (id., § 911.6). If such an application is denied, or deemed denied, the claimant may petition the court for relief from the claim presentment requirement. (Id., § 946.6.)
Plaintiffs’ complaint pleads that they “have presented claims for money or damages to the public entity defendants pursuant to the requirements of Government Code [section] 945.4, which have been denied, and/or have sought relief from the claims presentment requirements.” (Italics added.) Plaintiffs concede that this pleading does not allege actual compliance with the TCA claim presentment requirements, and that they have not so complied. They urge no such compliance is necessary for purposes of the CFCA. The Court of Appeal concurred. We agree with the Court of Appeal.
At the outset, we need not decide whether the TCA’s claim presentment requirements apply to plaintiffs’ CFCA claims against the district defendants, because we have concluded that those defendants are not “persons” subject to suit under the CFCA. (See discussion, ante.) On the other hand, the question arises whether the claim presentment provisions of the TCA could ever apply to the charter school defendants.
Under that law, claims must be presented to “the state” (Gov. Code, § 905.2) or “local public entities” (id., § 905). For purposes of the TCA, “ ‘[l]ocal public entity’ includes a county, city, district, public authority, public agency, and any other political subdivision or public corporation in the [s]tate, but does not include the [s]tate.” (Gov. Code, § 900.4.) Under the CSA, charter schools are part of the public school system and, for specified purposes, are deemed to be school districts. (See discussion, ante.) However, those purposes do not expressly include coverage by the TCA, and the nongovernmental operators of charter schools do not fit comfortably within any of the categories defined, for purposes of the TCA, as “local public entities.”
In any event, as the Court of Appeal concluded, application of the TCA’s claim presentment requirement to CFCA actions would frustrate the purposes of both statutes. The TCA itself expressly excludes from the claim presentment requirement “[c]laims by the [s]tate or by a state department or agency or by another local public entity.” (Gov. Code, § 905, subd. (i).) Hence, CFCA actions brought, in their official capacities, by the Attorney General (id., § 12652, subd. (a)) or local prosecuting authorities (id., subd. (b)) clearly are exempt.
The same rule appears applicable to qui tam actions by “persons” under the CFCA. Such a suit is brought, not only for the qui tam plaintiff, but “for the State of California in the name of the state, if any state funds are involved, or for a political subdivision in the name of the political subdivision, if political subdivision funds are exclusively involved.” (Gov. Code, § 12652, subd (c)(1), italics added.) If the Attorney General or local prosecuting authority elects not to intervene and proceed with the action, “the qui tam plaintiff shall have the same right to conduct the action as the Attorney General or prosecuting authority would have had if it had chosen to proceed . . . .” (Id., subd. (f)(1).) Hence, at the time a qui tam action is brought, the qui tam plaintiff stands in the shoes of the state or political subdivision, and within the TCA exemption for claims by the state or a local public entity.
Moreover, as the Court of Appeal explained, the qui tam provisions of the CFCA are at odds with the policy behind the TCA’s claim presentment requirement. The general proviso that a public entity may not be sued for money or damages until it has received, and had the chance to act upon, a written claim is intended to allow the entity to investigate while the facts are fresh, to settle short of litigation where appropriate, and to engage in fiscal planning for potential liability. (E.g., City of San Jose v. Superior Court (1974) 12 Cal.3d 447, 455; Gatto v. County of Sonoma (2002) 98 Cal.App.4th 744, 763; Barkley v. City of Blue Lake (1996) 47 Cal.App.4th 309, 316.)
On the other hand, a qui tam complaint under the CFCA must be filed under seal, and immediately must be served, along with a written disclosure of all material evidence and information the qui tam plaintiff possesses, on the Attorney General. (Gov. Code, § 12652, subd. (c)(2), (3).) If political subdivision funds are involved, the Attorney General must forward these materials to the local prosecuting authority within 15 days. (Id., subd. (c)(7)(A).) The complaint must remain sealed for up to 60 days after filing, with additional extensions available upon timely application, while the Attorney General or local prosecuting authority investigates and decides whether to intervene. (Id., subd. (c)(2), (4), (6), (7).) During this period, the complaint must not be served on the defendant. (Ibid.) Moreover, once a qui tam action is filed, it cannot be settled without the consent of the court, “taking into account the best interests of the parties involved and the public purposes behind [the CFCA].” (Id., subd. (c)(1).)
No California decision has discussed the purpose of the CFCA’s seal requirement. However, several federal cases, addressing the FFCA’s similar provision, have indicated that the interests served include making sure the qui tam action does not alert wrongdoers, prior to intervention by the government, that they are under investigation. (E.g., U.S. ex rel. Lujan v. Hughes Aircraft Co. (9th Cir. 1995) 67 F.3d 242, 245-246; United States ex rel. Pilon v. Martin Marietta Corp. (2d Cir. 1995) 60 F.3d 995, 1000; Erickson ex rel. United States v. American Institute of Bio. Sciences (E.D.Va. 1989) 716 F.Supp. 908, 912.)
The CFCA does not explicitly preclude a potential qui tam plaintiff, prior to filing a CFCA complaint, from disclosing to the potential defendant the basis of the claim, or even from attempting to settle it. But the CFCA’s purposes would obviously be undermined if CFCA qui tam plaintiffs were required, under the TCA, to present “local public entity” defendants, as defined in that statute, with written claims before proceeding with suit.
The charter school defendants urge that this construction of the two statutes improperly “elevates” the CFCA over the TCA. Not so. As we have noted, the TCA includes an explicit exemption from the claim presentment requirement for claims by the state and local public entities. Qui tam actions under the CFCA are, in essence, claims of that kind. In any event, in view of the secrecy provisions of the CFCA, a later and more narrowly focused statute, it must prevail over contrary provisions of the earlier and more general TCA.[3]
We therefore conclude that even if the charter school defendants are “local public entities” for purposes of the TCA, plaintiffs were not required under that statute to present written claims before filing their qui tam complaint pursuant to the CFCA.[4]
CONCLUSION
The judgment of the Court of Appeal is reversed insofar as it concludes that (1) the public school defendants are “persons” subject to suit under the CFCA, (2) the charter school defendants are not “persons” subject to suit under the UCL, and (3) the “independent study” restrictions set forth in Education Code section 51747.3, in the form adopted in 1993, did not apply to charter schools until that section was amended in 1999. In all other respects, the judgment of the Court of Appeal is affirmed. LeVine v. Weis, supra, 68 Cal.App.4th 758, and LeVine v. Weis, supra, 90 Cal.App.4th 201, are disapproved to the extent they hold that public school districts are “persons” who may be sued under the CFCA. The cause is remanded to the Court of Appeal for further proceedings consistent with the views expressed in this opinion.
BAXTER, J.
WE CONCUR:
GEORGE, C.J.
CHIN, J.
MORENO,
CORRIGAN, J.
IRION, J. *
* Associate Justice of the Court of Appeal, Fourth Appellate District, Division One, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
CONCURRING AND DISSENTING OPINION BY KENNARD, J.
I concur in the majority’s holdings that: (1) public school districts are not subject to lawsuits under the California False Claims Act; (2) charter schools and their operators are subject to lawsuits under the California False Claims Act and the unfair competition law; (3) plaintiffs’ claims, except for the allegation that defendant One2One Learning Foundation failed to provide the education it promised, are not barred as claims for “educational malfeasance”; and (4) plaintiffs are not required to present written claims under the Tort Claims Act before filing a qui tam action under the California False Claims Act.
I dissent, however, from the majority’s holding that Education Code section 51747.3[5] applied to charter schools before its amendment in 1999, which became effective on January 1, 2000. That holding violates the rule that courts are to harmonize and maintain the integrity of statutes whenever possible, and it is contradicted by the legislative history of the 1999 amendment to section 51747.3.
Section 51747.3 was originally enacted in 1993. As here pertinent it (1) prohibited a local education agency from claiming state funding for students in independent study programs if the agency provided funds or other things of value beyond what it provided to students who attend regular classes; (2) prohibited school districts and county superintendents of schools, notwithstanding any other provision of law applicable to them, from claiming average daily attendance (for purposes of apportionment of funds) for students who were not residents of their county or a county immediately adjacent to their county; and (3) provided that its provisions could not be waived by the State Board of Education, by the State Superintendent of Public Instruction, or “under any provision of Part 26.8 (commencing with Section 47600).” (Stats. 1993, ch. 66, § 32, p. 923, italics added.) Section 47600 is the first statute appearing in the Charter School Act. In 1999, the Legislature amended section 51747.3 to apply its provisions to charter schools. (Stats. 1999, ch. 162, § 1.)
Seizing on the language in the 1993 enactment of section 51747.3 prohibiting waiver of that statute’s provisions under the Charter School Act, the majority reasons that the waiver reference serves no purpose if section 51747.3 did not apply to charter schools. Perhaps so. But the majority’s construction cannot be reconciled with the plain language of other statutory provisions, as I explain.
Section 51747.3, when enacted in 1993, provided that school districts and county superintendents of schools could not claim students from outside the county or adjacent counties in average daily attendance. Charter schools, however, were prohibited by subdivision (d) of former section 47605 (as added by Stats. 1992, ch. 781, § 1, p. 3758) from excluding students on the basis of their residence even if they lived beyond those boundaries. And at that time the Charter School Act then also provided, in former section 47610 (as added by Stats. 1992, ch. 781, § 1, p. 3760), that a charter school was exempt from all laws governing school districts except as specified in section 47611. Because section 51747.3, a law that governs school districts, was not then specified in section 47611, it had no applicability to charter schools. Thus, the majority’s construction of section 51747.3, as originally enacted in 1993, as applying to charter schools is flatly inconsistent with the language of former sections 47605, subdivision (d), 47610, and 47611. In my view, the relevant statutory provisions are best harmonized and given effect by construing section 51747.3, as originally enacted in 1993, as being inapplicable to charter schools. Such applicability occurred only on January 1, 2000, the date on which the Legislature’s 1999 amendment of section 51747.3 became effective.
The legislative history of section 51747.3 further underscores the error of the majority in construing the language of that statute’s 1993 amendment as applying to charter schools. The Legislative Counsel’s Digest of Senate Bill No. 434 (1999-2000 Reg. Sess.), which in 1999 proposed amending section 51747.3, specifically noted that the bill was adding charter schools to the statute: “(2) Existing law prohibits a local education agency from claiming state funding for the independent study of a pupil, whether characterized as home study or otherwise, if the agency has provided any funds or other thing of value to the pupil or his or her parent or guardian that the agency does not provide to pupils who attend regular classes or to their parents or guardians. [¶] This bill would make this prohibition applicable to charter schools . . . . [¶] (3) Existing law requires community school and independent study average daily attendance to be claimed by school districts and county superintendents of schools only for pupils who are residents of the county in which the apportionment claim is reported or pupils who are residents of the county in which the apportionment claim is reported or pupils who are residents of the county immediately adjacent to the county in which the apportionment claim is reported. [¶] This bill would apply this provision also to charter schools.” (Leg. Counsel’s Dig., Sen. Bill No. 434 (1999-2000 Reg. Sess.), italics added; accord, Sen. Com. on Education, Analysis of Senate Bill No. 434 (1999-2000 Reg. Sess.) June 28, 1999 [“Distance learning most closely resembles independent study in other public schools, but charter schools are not specifically required to abide by the independent study requirements that apply to other public schools”].) Thus, as the Court of Appeal here concluded, the legislative history indicates that it was only in 1999 that the Legislature intended to add charter schools to section 51747.3.
Accordingly, I would affirm the judgment of the Court of Appeal, which in turn affirmed the trial court, insofar as it concluded that section 51747.3, as originally enacted in 1999, did not apply to charter schools, and that it was only when the statute’s 1999 amendment became effective on January 1, 2000, that charter schools came within the statute’s reach.
KENNARD, J.
See last page for addresses and telephone numbers for counsel who argued in Supreme Court.
Name of Opinion Wells v. One2One Learning Foundation
Unpublished Opinion
Original Appeal
Original Proceeding
Review Granted XXX 116 Cal.App.4h 515
Rehearing Granted
Opinion No. S123951
Date Filed: August 31, 2006
Court: Superior
County: Sierra
Judge: William Wooldridge Pangman
Attorneys for Appellant:
Law Offices of Michael S. Sorgen, Michael S. Sorgen, Andrea Adam Brott, Joshua N. Sondheimer, Robert S. Rivkin, Claudia A. Baldwin; Haley and Bilheimer, Allan Haley and John Bilheimer for Plaintiffs and Appellants.
James Moorman, Amy Wilken, Joseph E. B. White; Law Offices of Paul D. Scott and Paul D. Scott for Taxpayers Against Fraud as Amicus Curiae on behalf of Plaintiffs and Appellants.
Attorneys for Respondent:
Gordon & Rees, Dion N. Cominos, Fletcher C. Alford, Heather A. McKee and Mark C. Russell for Defendant and Respondent One2One Learning Foundation.
Seyfarth Shaw, James M. Nelson, Kurt A. Kappes, Jason T. Cooksey and William S. Jue for Defendant and Respondent Charter School Resource Alliance.
California Education Legal Services, Thomas M. Griffin; Girard & Vinson, Christian M. Keiner and David E. Robinett for Defendant and Respondent Camptonville Union Elementary School District.
Parks, Dingwall & Associates, Linda Rhoads Parks; Law Offices of Jon Webster and Jon Webster for Defendants and Respondents Camptonville Academy, Inc., and Janice Jablecki.
Needham, Davis, Kirwan & Young, Marc E. Davis, Marc J. Cardinal and Matt Demel for Defendant and Respondent Mattole Unified School District.
Duncan, Ball & Evans, Evans, Wieckowski & Ward, Matthew D. Evans and James B. Carr for Defendants and Respondents Sierra Summit Academy, Inc., and Sierra Plumas Joint Unified School District.
Page 2 – S123951 – counsel continued
Attorneys for Respondent:
Farmer, Murphy, Smith & Alliston, Craig E. Farmer and Jojra E. Jackson for Statewide Association of Community Colleges, Southern California Regional Liability Excess Fund, Northern California Regional Liability Excess Fund and Schools Excess Liability Fund as Amici Curiae on behalf of Defendants and Respondents.
Sharon L. Browne for Pacific Legal Foundation as Amicus Curiae on behalf of Defendants and Respondents.
Declues & Burkett, J. Michael Declues and Gregory A. Wille for Coast Community College District as Amicus Curiae on behalf of Defendants and Respondents.
Gibson, Dunn & Crutcher, Joel S. Sanders, Mark A. Perry, Ethan D. Dettmer and Rebecca Justice Lazarus for PricewaterhouseCoopers LLP as Amicus Curiae on behalf of Defendants and Respondents.
Ann Miller Ravel, County Counsel (Santa Clara) and Kathryn J. Zoglin, Deputy County Counsel, for California State Association of Counties as Amicus Curiae on behalf of Defendants and Respondents.
Thomas Law Firm, R. Todd Bergin and Allen L. Thomas for Fullerton Joint Union High School District, Brea-Olinda Unified School District, Claremont Unified School District, Huntington Beach Union High School District, Long Beach Unified School District, Newport-Mesa Unified School District, Placentia-Yorba Linda Unified School District, Pomona Unified School District Santa Monica-Malibu Unified School District, Tustin Unified School District and Whittier Union School High School District as Amici Curiae on behalf of Defendants and Respondents.
Bill Lockyer, Attorney General, Manuel M. Medeiros, State Solicitor General, James Humes, Chief Assistant Attorney General, Christopher Ames, Assistant Attorney General, Larry G. Raskin and Mark R. Soble, Deputy Attorneys General, for Real Party in Interest and Respondent.
Counsel who argued in Supreme Court (not intended for publication with opinion):
Michael S. Sorgen
Law Offices of Michael S. Sorgen
240 Stockton Street, 9th Floor
San Francisco, CA 94108
(415) 956-1360
Kurt A. Kappes
Seyfarth Shaw
400 Capitol Mall, Suite 2350
Sacramento, CA 95814
(916) 448-0159
James B. Carr
Evans, Wieckowski & Ward
745 University Avenue
Sacramento, Ca 95825
(916) 923-1600
Mark R. Soble
Deputy Attorney General
1300 “I” Street
Sacramento, CA 94244-2550
(916) 322-5247
Publication Courtesy of California attorney directory.
Analysis and review provided by Oceanside Property line attorney.
[1] Indeed, we have routinely addressed claims that public schools wrongly charged students, parents, or guardians for school-related activities or services, without any suggestion that such issues implicated the “educational malfeasance” doctrine. (E.g., Salazar v. Eastin (1995) 9 Cal.4th 836 [taxpayer suit challenging charges for transportation of students to and from school]; Hartzell v. Connell (1985) 35 Cal.3d 899 [parent/taxpayer suit challenging school fees for extracurricular activities].)
[2] We emphasize that our discussion here is limited to whether such theories are barred under Peter W. as claims for “educational malfeasance.” We express no view on whether such allegations can form the basis for a cause of action under the CFCA. In other words, we do not address whether a charter school’s breaches of promises to students, parents, or guardians, or its violations of its charter or applicable law, may cause any related funding claims the school makes upon the state to be “false” within the meaning of that statute. Nor, of course, do we concern ourselves with the possibility that plaintiffs have pled factually inconsistent CFCA theories by alleging, on the one hand, that the charter school defendants failed to deliver educational equipment and supplies and, on the other, that they violated the “independent study” rules by providing things of value not offered to classroom students. Such issues were not addressed on demurrer and are beyond the scope of this appeal.
[3] Defendant Sierra Summit Academy urges that the claim presentment requirement of the TCA is made applicable to the CFCA by Government Code section 12651, subdivision (e), which provides, in effect, that the CFCA is not violated by claims made pursuant to the TCA. We fail to follow the logic of this argument. That claims made pursuant to the TCA do not violate the CFCA does not mean a CFCA action against a public entity must be preceded by presentment of such a claim. Insofar as this defendant seeks to argue that section 12651, subdivision (e) exempts it from the CFCA, the claim lacks merit on this record. There is no indication that Sierra Summit Academy’s claims for state education funding—the basis of plaintiffs’ CFCA cause of action—were presented pursuant to the TCA.
[4] The charter school defendants suggest alternatively that, as “public entities” for purposes of the TCA, they enjoy, pursuant to that statute, immunity from CFCA liability. These defendants note the TCA’s rule that a public entity is not liable for an “injury” where the public employee causing the injury is immune from liability. (Gov. Code, § 815.2, subd. (b).) They claim that submission of a false claim is a “discretionary act” and a “misrepresentation” for which a public employee, and thus the public entity, would be immune. (See id., §§ 820.2, 822.2; see also § 818.8.) However, while the TCA was meant to supplant contrary common law, it was not intended to prevail over other statutes that impose liability in specific circumstances. (See Nestle, supra, 6 Cal.3d 920, 932; Cal. Law Revision Com. com., 32 West’s Ann. Gov. Code (1995 ed.) foll. § 815, pp. 167-168.) As we have seen, the CFCA makes “persons,” including “natural person[s], corporation[s], [and] organization[s]” (Gov. Code, § 12650, subd.(b)(5)), liable for the submission of false claims (id., §§ 12651, 12652). Insofar as “persons,” as defined in the CFCA, include the nongovernmental corporations and entities that operate charter schools, they are not entitled to immunity under the TCA. The charter school defendants note that immunities specified in the TCA prevail over liabilities set forth in that statute. (Cal. Law Revision Com., com., 32 West’s Ann. Gov. Code, supra, foll. § 185, p. 168.) But this principle applies only within the TCA itself (ibid.); it does not preclude the Legislature from adopting other statutes that impose liability in specific circumstances, despite immunities stated in the TCA.
[5] All further statutory references are to the Education Code unless otherwise indicated.
|
