Lopez v. Booz Allen Hamilton, Inc. ( 2021 )

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 EASTERN DISTRICT OF CALIFORNIA 9 10 JOSEPH LOPEZ, JOSHUA SARRIS, No. 2:20-cv-01310-JAM-JDP CODY DANTE, and SHANE PECK, 11 Plaintiffs, 12 ORDER DENYING DEFENDANT’S MOTION v. TO DISMISS 13 BOOZ ALLEN HAMILTON, INC., 14 and DOES 1 through 20, inclusive, 15 Defendant. 16 17 Joseph Lopez, Joshua Sarris, Cody Dante, and Shane Peck 18 (“Plaintiffs”) bring this action against Booz Allen Hamilton 19 (“Defendant” or “BAH”) for pre-employment fraud, termination in 20 violation of public policy, and rescission of contract. First 21 Amended Complaint (“FAC”), ECF No. 17. Defendant moves to 22 dismiss Plaintiffs’ first claim for pre-employment fraud and 23 Plaintiff Sarris’s third claim for rescission. Mot., ECF No. 24 18. For the reasons set forth below, the Court DENIES 25 Defendant’s Motion to Dismiss.1 26 27 1 This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled 28 for March 9, 2021. 1 I. BACKGROUND 2 A recitation of the primary factual allegations in this 3 case can be found in a prior order issued by this Court and will 4 not be repeated here. MTD Order, ECF No. 16, at 2-3; Lopez et 5 al. v. Booz Allen Hamilton, Inc., No. 2:20-CV-01310-JAM-JDP, 6 2020 WL 7342396, at *1 (E.D. Cal. Dec. 14, 2020) (granting 7 Defendant’s motion to dismiss). In that order, and as relevant 8 to this motion, this Court dismissed Plaintiff’s claims for pre- 9 employment fraud and rescission of contract with leave to amend. 10 MTD Order at 11. 11 On December 31, 2020, Plaintiffs filed an amended 12 complaint. See FAC. Defendants once again move to dismiss the 13 first and third claims, arguing that Plaintiffs have failed to 14 plead allegations of fraud with the specificity required under 15 Rule 9(b). Mot. at 1. Plaintiffs filed an opposition, Opp’n, 16 ECF No. 19, to which Defendant replied, Reply, ECF No. 20. 17 II. OPINION 18 A. Legal Standard 19 Fraud-based claims are subject to the heightened pleading 20 standard of Rule 9(b). Fed. R. Civ. Proc. 9(b). Rule 9(b) 21 requires a party to “state with particularity the circumstances 22 constituting fraud or mistake.” Id. The “who, what, when, 23 where and how of the misconduct charged” must be stated with 24 particularity. Ebeid ex rel. U.S. v. Lungwitz, 616 F.3d 993, 25 998 (9th Cir. 2010) (internal quotation marks and citation 26 omitted). In addition, the pleading must identify “what is 27 false or misleading about the purportedly fraudulent statement, 28 and why it is false.” California ex rel. Heryford v. Alliance 1 Data Systems Corporation, No. 2:15-cv-02343-TLN, 2018 WL 3197856 2 at *4 (E.D. Cal. June 26, 2018) (internal quotation marks and 3 citation omitted); see also Yourish v. California Amplifier, 191 4 F.3d 983, 993 (9th Cir. 1999). When a party averring fraud 5 fails to meet the heightened pleading standard of Rule 9(b), 6 dismissal of the claim is proper. Vess v. Ciba-Geigy Corp. USA, 7 317 F.3d 1097, 1107 (9th Cir. 2003). 8 B. Analysis 9 As the Court discussed in its prior Order, Plaintiffs’ pre- 10 employment fraud and rescission claims are based on predicate 11 allegations of fraud – namely that BAH fraudulently 12 misrepresented the nature of the positions to which Plaintiffs 13 applied - and therefore must satisfy the heightened pleading 14 standard of Rule 9(b). See MTD Order at 6. Defendant argues 15 that the amended complaint still fails to provide the requisite 16 “who, what, when, where, and how” of the alleged fraud and how 17 the statements were knowingly false when made. Mot. at 10-13; 18 Reply at 2-3. In particular, Defendants highlight a core 19 failing of the amended complaint as follows: “Plaintiffs have 20 not identified any facts to show that the speakers knew the 21 statements to be false when made. The absence of this critical 22 allegation of knowledge of falsity alone warrants dismissal of 23 their fraud based claims.” Mot. at 12. That is, Plaintiffs 24 still have not, according to BAH, set forth an explanation as to 25 how BAH’s representations were knowingly false when made. The 26 Court disagrees. 27 As Defendant acknowledges in its Motion, one way plaintiffs 28 can demonstrate the false or misleading character of a statement 1 is “by identifying inconsistent contemporaneous information that 2 was available to the defendants.” Mot. at 9 (citing to Yourish, 3 191 F.3d at 994). Here, Plaintiffs added an allegation to their 4 amended complaint that “BAH managers were on site prior to July 5 2018.” FAC ¶ 7. Taking this fact as true and drawing 6 inferences in Plaintiffs’ favor as it must, the Court properly 7 infers that because BAH had managers on site, BAH knew the 8 conditions at Beale were not as they were being represented to 9 Plaintiffs. Because this allegation sufficiently identifies 10 inconsistent contemporaneous information available to BAH at the 11 time they were recruiting Plaintiffs for the Beale project, the 12 “knowingly false when made” requirement has been met. 13 The Court finds that at least one theory of fraud survives 14 the present Motion: that BAH misrepresented to Plaintiffs, four 15 IT professionals who resigned from prior jobs and relocated for 16 the Beale project, that there would be networks to manage, Linux 17 systems, and advanced technical work for them. FAC ¶¶ 16(e), 18 16(i), 16(ii). As to this theory, Defendant argues that 19 Plaintiffs have failed to plead any false promise, 20 representation, or omission about the nature of the work with 21 particularity. Reply at 4-5. Not so. Each Plaintiff has added 22 specific allegations regarding the representations made to them 23 about the nature of the work, particularly the existing networks 24 and advanced technical work. See FAC. Lopez alleges that 25 during his interview, “the need for a senior person due to the 26 technical work” was “stressed.” FAC at 6. Saris alleges Mr. 27 Yurasek, one of BAH’s principal recruiters, told him “it was 28 high level work,” “that he would be administering networks,” and nee een meee ne nn nn nnn ne IIE OE EE 1 “that he would be working on high speed projects.” FAC at 7. 2 Dante alleges Danielle Blum, another recruiter, “emphasized how 3 advanced and senior the position was” and that “the networks he 4 | would administer would be advanced and secure.” FAC at 8. 5 Finally, Peck alleges that Mr. Yurasek told him he would be 6 doing “network administration, network building, network 7 management, and support to keep multiple systems operating.” 8 | Id. Accordingly, the Court finds this theory of fraud 9 sufficiently complies with the pleading standard of Rule 9(b)and 10 Plaintiffs’ first and third claims survive. 11 IIl. ORDER 12 For the reasons set forth above, the Court DENIES 13 Defendant’s Motion to Dismiss. 14 IT IS SO ORDERED. 15 Dated: April 6, 2021 16 ke Me 17 teiren staves odermacr 7008 18 19 20 21 22 23 24 25 26 27 28