United States District Court, D. Montana, Missoula Division
FAWN CAIN, TANYA ARCHER, and SANDI OVITT, Relators and Plaintiffs,
SALISH KOOTENAI COLLEGE, INC., et al., Defendants,
MORRIS UNITED STATES DISTRICT COURT FUDGE
Court addresses two motions. Defendants Robert Fouty, Jim
Durglo, Renee Pierre, Ellen Swaney, Linden Plant, Tom
Acevedo, Zane Kelly, Ernest Moran, Luana Ross, Carmen Taylor,
Elaine Frank, Lisa Harmon, Rebekkah Hulen, and Dawn Benson
(collectively “Individual Defendants”), move the
Court to Certify its May 17, 2018, Order as a final judgement
for purposes of appeal. (Doc. 109). The Individual Defendants
further move the Court to dismiss this matter for failure to
state a claim under the False Claims Act (“FCA”)
and for lack of subject matter jurisdiction pursuant to
Federal Rules of Civil Procedure 12(b)(1) and (6). (Doc.
Court entered an order in 2014 dismissing Salish Kootenai
College (“the College”) from this action based on
its status as a sovereign tribal entity and therefore not
being a “person” subject to suit under the False
Claims Act. (Doc. 39). The Court also dismissed
Plaintiffs' original complaint against Defendants Salish
Kootenai College Board of Directors-the Individual
Defendants. The Court allowed Plaintiffs to file an amended
complaint in which Plaintiffs were directed to state with
particularity the circumstances that constitute fraud or
mistake, pursuant to Rule 9(b). (Doc. 39).
appealed the ruling. The Ninth Circuit remanded the dismissal
of the College so that this Court could analyze different
factors to determine whether the College qualified as an
arm-of-the-tribe. (Doc. 78 at 13). The Ninth Circuit further
ordered this Court to allow Plaintiffs to conduct additional
jurisdictional discovery. (Doc. 78). This Court again
dismissed the College based on its renewed determination that
the College qualified as an arm-of-the-tribe and thus stood
as a sovereign entity not subject to suit under the False
Claims Act 31 U.S.C. § 3729 (“FCA”). (Doc.
as relators in this qui tam action, currently seek to hold
the Individual Defendants personally liable, pursuant to the
FCA, for their alleged individual fraudulent conduct.
Plaintiffs further claim that the Individual Defendants stand
personally liable, pursuant to 31 U.S.C. § 3730(h), for
their alleged retaliatory actions against Plaintiffs.
Motion to Dismiss
motion to dismiss tests the legal sufficiency of the claims
asserted in the complaint. Fed.R.Civ.P. 12(b)(6). The
standard for dismissal under Rule 12(b) remains well
established. “All allegations of material fact are
taken as true and construed in the light most favorable to
the non-moving party.” Hicks v. Small, 69 F.3d
967, 969 (9th Cir. 1995). The complaint will not be dismissed
unless it appears beyond doubt that the plaintiff can prove
no facts sufficient to support a claim that entitles the
plaintiff to relief. Id.
must plead adequately claims under § 3729 of the FCA to
satisfy the standards of both Rule 8 and Rule 9 of the
Federal Rules of Civil Procedure. Universal Health Servs.,
Inc. v. U.S. ex rel. Escobar, 136 S.Ct. 1989, 2003-04 n.
6 (2016). Rule 8(a)(2) requires that a plaintiff's
complaint make a short and plain statement. Bell Atlantic
Corp. v. Twombly, 550 U.S. 544, 555 (2007). Rule 8
similarly requires that the complaint contain
“sufficient factual matter” that, taken as true,
“state a claim to relief that is plausible on its
face.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009). A claim appears plausible when the pleading raises
factual content sufficient to allow the court to draw a
“reasonable inference that the defendant is liable for
the misconduct alleged.” Id.
assertion of fraud or mistake requires a plaintiff to state
“with particularity the circumstances constituting
fraud.” Fed.R.Civ.P. 9(b). Courts recognize, however,
that “knowledge, and other conditions of a person's
mind may be alleged generally.” Id. Plaintiffs
may not “lump multiple defendants together.”
United States v. Corinthian Colleges, 655 F.3d 984,
997-98 (9th Cir. 2011). Plaintiffs instead must
“differentiate their allegations . . . and inform each
defendant separately of the allegations surrounding his
alleged participation in the fraud.” Id.
Plaintiffs must also “identify the role of each
defendant in the alleged fraudulent scheme, ”
Swartz v. KPMG LLP, 476 F.3d 756, 764-65 (9th Cir.
2007). This identification requirement forces Plaintiffs to
set out the “who, what, when, where, and how” as
to each defendant. Ebeid ex rel. U.S. v. Lungwitz,
616 F.3d 993, 998 (9th Cir. 2010).
Defendants argue that Plaintiffs' Amended Complaint fails
to match the pleading requirements contemplated by Rule 9(b).
The Individual Defendants first argue that the Amended
Complaint continues to sue the Board Members “because
of” their official capacities. (Doc. 112 at 10). The
Individual Defendants contend that Plaintiffs cannot subject
the Board Members to the “FCA's punitive liability
regime merely because they served on the College's
Board.” Id. Individual Defendants insist
further that Plaintiffs have failed to state allegations
sufficient to notify each Individual Defendant of the
specific conduct with which he or she may be held liable.
Id. at 2-3. Individual Defendants allege that this
lack of specificity effectively lumps all the Individual
Defendants together and fails to identify the role that each
Individual Defendant played in the alleged scheme.
Plaintiffs May Sue the Individual Defendants Despite their
Defendants rely on the Ninth Circuit's decision in
Maxwell v. Cnty of San Diego, 708 F.3d 1075, 1088
(9th Cir. 2013), to support their argument that the Board
Members may not be sued “because of” their
official capacities. Maxwell provides this Court with the
appropriate “remedy-focused analysis” similar to
the analysis developed in Stoner v. Santa Clara Cnty
Office of Educ., 502 F.3d 1116, 1123-24 (9th Cir. 2007).
Namely, an individual capacity suit against a government
official presents the ultimate question of who stands as the
real party in interest? Id.
pursuant to the FCA subjects to liability “any
person” who, among other things, knowingly submits a
false claim or causes a claim to be submitted to the United
States. 31 U.S.C. § 3729. The Ninth Circuit reviewed a
district court's dismissal of FCA claims against three
state government employees in Stoner. The district court
wrongly had determined that state sovereign immunity had
shielded the government employees from suit. The Ninth
Circuit determined that “state employees sued in their
personal capacities are ‘persons' who may be
subject to liability for submitting false claims to the
United States.” Stoner, 502 F.3d at 1123-24. The Ninth
Circuit reasoned that to hold otherwise effectively would
grant state officials absolute immunity for any actions taken
in the course of their governmental responsibilities.
Id. at 1125; see Hafer v. Melo, 502 U.S.
21, 27-29 (1991).
Ninth Circuit explained that an “individual capacity
suit for damages against state officials alleged to have
personally violated § 3729 does not implicate the
principles of sovereignty . . . because such action seeks
damages from the individual defendants rather than the state
treasury.” Stoner, 502 F.3d at 1125 (emphasis in
original). “Nor does the fact that a state may choose
to indemnify the employees for any judgement rendered against
them” bring sovereignty into the issue. Id.
When a plaintiff holds an individual government employee
personally liable for their “knowing participation in
the submission of false or fraudulent claims to the United
States government, the state is not the real party in
interest . . . and [sovereignty] poses no barrier to such a
suit.” Id. (emphasis added) (citing Hafer, 502
Supreme Court similarly determined that “[a] government
official in the role of personal-capacity defendant . . .
fits comfortably within the statutory term
‘person.'” Hafer, 502 U.S. at 27. The
plaintiffs in Hafer brought a personal capacity suit against
Hafer in which they alleged that Hafer had terminated their
employment due to the plaintiffs' contrary political
affiliations. Id. at 23. Hafer raised sovereign
immunity as a defense based on the fact that “she acted
in her official capacity.” Id. at 26. The
Supreme Court found no reason to extend absolute immunity to
a government official's action simply because of
one's status as a government official. As a result,
damage awards against individual defendants who serve as
government officials in federal courts “are a
permissible remedy in some circumstances notwithstanding the
fact that they hold public office.” Id. at 30
(citing Ex parte Young, 209 U.S. 123 (1908)).
Ninth Circuit's decision in Pistor v. Garcia,
791 F.3d 1104 (9th Cir. 2015), likewise aids the Court's
analysis. The Plaintiffs in Pistor filed an individual
capacity suit against tribal officers and tribal casino
employees. The tribal defendants argued that sovereign
immunity shielded their unlawful actions as they accomplished
their actions in furtherance of their official duties and
within the scope of official authority. Id. at 1109.
The Ninth Circuit determined that a tribal officer sued in
his individual capacity cannot hide behind sovereign immunity
from suit so long as the plaintiff seeks relief from the
officer personally and not from the government treasury.
Ninth Circuit explained that the general rule against
official capacity claims “does not mean that tribal
officials are immunized from individual capacity suits
arising out of actions they took in their official
capacities. Rather, it means that tribal officials are
immunized from suits brought against them because of their
official capacities-that is, because the powers they possess
in those capacities enable them to grant the plaintiffs
relief on behalf of the tribe.” Id. at
1112-13. (emphasis in original). Tribal sovereign immunity
derives from the same common law immunity principles that
shape state and federal sovereign immunity. Id. at
1113; Maxwell 708 F.3d at 1087-88. An individual capacity
suit proves proper, therefore, when a plaintiff seeks to hold
a government official or employee personally liable for their
own unlawful choice or action.
Court acknowledges that the claims against the Individual
Defendants differ from a state-official claim as the claims
here implicate the irrefutable importance of protecting
tribal sovereignty. The respect and care that a court must
afford to tribal sovereignty remains emphatically respected.
A court accordingly must be sensitive to whether the
plaintiff seeks a judgment against the tribe or the
individual person. Maxwell, 708 F.3d at 1088. This Court
understands, however, that the reasoning presented in Stoner,
Garcia, and Hafer guides this Court to determine that the
Tribe does not stand as the real party in interest here.
Plaintiffs seek to hold the Individual Defendants, who serve
as tribal employees, personally liable for their alleged
fraudulent conduct “arising out of actions they took in
their official capacities.” Garcia, 791 F.3d at 1112.
Supreme Court similarly determined in Lewis v. Clarke,
U.S., 137 S.Ct. 1285, 1291 (2017), that when a party
brings a suit against a tribal employee in their individual
capacity, the employee, not the tribe, stands as the real
party in interest and the tribe's sovereign immunity is
not implicated. This conclusion parallels the Ninth
Circuit's reasoning in both Stoner and in Garcia. If the
Court were to adopt the Individual Defendants' argument
and prevent an action against a tribal official in his
personal capacity, the Court effectively would grant absolute
immunity to tribal officials under the FCA for any actions
taken in the course of, or because of, their governmental
responsibilities. The allegations presented by Plaintiffs
prove serious, however, and this Court cannot ignore the fact
that fraud equals fraud, regardless of one's position and
duties in any governmental capacity.
tribal government employee sued in his or her personal
capacity stands, therefore, as a person who may be subject to
liability for knowingly submitting false information to the
United States for purposes of FCA liability. Stoner, 502 F.3d
at 1125. This Court agrees that when a plaintiff seeks to
hold a tribal government employee personally liable for their
“knowing participation in the submission of false or
fraudulent claims to the United States government, the
[tribe] is not the real party in interest . . . and
[sovereign immunity] poses no barrier to such a suit.”
Id. (emphasis added). It is of no consideration that
the Individual Defendants made the alleged fraudulent
decision ‘because of' their official tribal duties.
See Hafer, 502 U.S. 21.
Amended Complaint Proves Sufficient for Rule 9(b)'s
Particularized Standards The Court considers next whether the
facts presented in the Amended Complaint sufficiently allege
fraudulent conduct to satisfy Rule 9(b)'s particularized
pleading standards. The FCA makes liable any person who
knowingly presents or causes to be presented, who uses or
causes to be made or used, a false record or statement
material to a false or fraudulent claim. 31 U.S.C. §
3729(a)(1). A claim pursuant to the FCA may be based on the
allegation that ...