May employee sue for whistleblower retaliation under the federal False Claims Act in state court, and have that right decided in a petition for extraordinary relief?

Posted in: Appellate Practice, Trial Practice by Steven Vartabedian on

In Driscoll v. Superior Court (filed 1/30/14) 2014 DJDAR 11270, the Court of Appeal, Fifth Appellate District, answered yes on both counts, issuing a writ of mandate instructing the state trial court to overrule the demurrer it had previously sustained without leave to amend.

Driscoll had been employed as a medical doctor with real party Spencer’s medical group. Spencer initiated the state action by suing Driscoll, alleging various causes of actions including breach of contract, disparagement, fraud and defamation. Driscoll proceeded to file a federal court action alleging retaliation under the FCA; he additionally cross-complained in the state action claiming whistleblower retaliation under the federal FCA and wrongful termination. The gist of his claims was that Spencer refused to pay him for excess hours worked and he was terminated in retaliation for requesting such pay and for complaining about Spencer’s billing practices which he believed were fraudulent concerning Medicare and Medi-Cal patients.

In the state court action, Spencer demurred to the federal FCA causes of action alleging the trial court lacked subject matter jurisdiction. The trial court agreed, finding that the federal FCA statute’s reference to the filing of such action in an “appropriate [federal] district court” implies that the state courts would not have concurrent jurisdiction. Driscoll then petitioned the state appellate court for a writ of mandate to reinstate the federal FCA causes of action.

Because Driscoll still had other causes of action he could pursue in his state action cross-complaint and still had to defend against Spencer’s complaint, Driscoll did not have an order from which he could appeal; his resort for relief here thus was for extraordinary writ relief, which is a method of review dependent on the appellate court’s exercise of discretion. Here, the court exercised that discretion because: (1) it appeared the trial court deprived Driscoll of the opportunity to plead his cause of action and immediate review may prevent a needless trial and reversal (Taylor v. Superior Court (1979) 24 Cal.3d 890, 894); and (2) the demurrer raised an important question of subject matter jurisdiction (San Diego Gas & Electric v. Superior Court (1996) 13 Cal.3d4th 893, 913).

In getting to the merits of the petition, the Court of Appeal began with the presumption that state courts have concurrent jurisdiction over federal claims. (Cianci v. Superior Court (1985) 40 Cal.3d 903, 910.) The court then reviews the three circumstances that each rebut that presumption: (1) Congress’s affirmatively ousting the state courts of jurisdiction, (2) unmistakable implication from legislative history of federal court exclusivity, or (3) clear incompatibility between state-court jurisdiction and federal interests.

First, the court found that the statute’s mere grant of jurisdiction to the federal court did not operate to oust a state court from concurrent jurisdiction. The express language states an action “may be brought” in the appropriate federal district court. Legislative silence will not rebut the presumption of concurrency.

Second, the court rejected Spencer’s claim that, because the FCA involves claims where the federal government has rights and is an actual party to the matter, it must be heard in federal court based on legislative history. While there may be a history of instances where the legislature has stated that when the federal government is sued the federal courts have exclusive jurisdiction, this case is of a personal nature, a private sector employee’s claim of whistleblower retaliation, rather than one of primary governmental concern.

Third, there is no federal versus state incompatibility. Spencer never claimed that in the trial court. Additionally, the appellate court pointed to California’s False Claims Act which is modeled after the federal statute.

I see this opinion as having some valuable points in addition to its determination that the state courts have concurrent jurisdiction in federal FCA statutory cases. One is that counsel should make an informed choice of whether they wish a case in federal or state court. It is true here that Driscoll would still have been able to maintain his FCA claims in his federal action if he had not petitioned for relief, but his counsel saw a real benefit to having these issues raised in a single action in state court. Spencer certainly had strategic reasons to limit this cause of action to being heard in federal court.

Finally, this opinion provides a concise review of the showing that may be sufficient to get a party immediate writ review of issues that may otherwise languish for years before gaining appellate review of a final judgment. Writ petitions may commonly be denied discretionarily, but in the infrequent case where granted, they provide a powerful, expeditious tool.

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