Peralta v. California Franchise Tax Board

NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
LESLIE ANN PERALTA, DBA AMETHYST
INNOVATIONS,
Plaintiff-Appellant
v.
CALIFORNIA FRANCHISE TAX BOARD, A STATE
AGENCY, SELVI STANISLAUS, DIRECTOR,
NANCY PAKER, TAX COUNSEL, IN INDIVIDUAL
AND OFFICIAL CAPACITIES, JOHN CHIANG,
CALIFORNIA STATE TREASURER, IN
INDIVIDUAL AND OFFICIAL CAPACITIES, FKA
CALIFORNIA STATE CONTROLLER, KAMALA
HARRIS, CALIFORNIA STATE ATTORNEY
GENERAL, KRISTA DUNZWEILER, DEPUTY
ATTORNEY GENERAL, IN INDIVIDUAL AND
OFFICIAL CAPACITIES,
Defendants-Appellees
______________________
2016-1820
______________________
Appeal from the United States District Court for the
Northern District of California in No. 3:15-cv-01595-
WHO, Judge William H. Orrick III.
______________________
Decided: December 9, 2016
______________________
2 PERALTA v. CAL. FRANCHISE TAX BD.
LESLIE ANN PERALTA, Clearlake, CA, pro se.
KENNY KHOA VU NGUYEN, California Office of the At-
torney General, Sacramento, CA, for defendants-
appellees. Also represented by KAMALA D. HARRIS.
______________________
Before MOORE, WALLACH, and CHEN, Circuit Judges.
WALLACH, Circuit Judge.
Appellant Leslie Ann Peralta appeals the decision of
the U.S. District Court for the Northern District of Cali-
fornia (“District Court”) dismissing various federal and
state law claims for failure to state a claim under Rule
12(b)(6) of the Federal Rules of Civil Procedure. See
Peralta v. Cal. Franchise Tax Bd., 124 F. Supp. 3d 993,
995 (N.D. Cal. 2015). We affirm.
BACKGROUND
Ms. Peralta is the inventor of U.S. Patent No.
7,584,129 (“the ’129 patent”). The ’129 patent discloses a
“new method for recovery of tax revenues in lien status”
by “utiliz[ing] a new, non-title related and previously
unperformed tax lien search to be performed during the
real property escrow process on any lienholder.” ’129
patent, Abstract. After unsuccessfully attempting to
license her patented invention to the California Franchise
Tax Board (“FTB”), Ms. Peralta sued the FTB, as well as
its officers and their attorneys in both their official and
individual capacities for patent infringement and related
state law claims. See Peralta, 124 F. Supp. 3d at 996−98.
The District Court dismissed the majority of Ms. Per-
alta’s claims with prejudice, finding that the FTB and its
officers and attorneys had not waived their sovereign
immunity under the Eleventh Amendment. Id. at 999,
1001–02. The District Court allowed Ms. Peralta thirty
PERALTA v. CAL. FRANCHISE TAX BD. 3
days to amend her Complaint to plead valid patent in-
fringement claims against the FTB officials in their
individual capacities and to plead valid state law contract
claims. Id. at 998, 1000–01, 1003–04. The District Court
noted that Ms. Peralta’s “only basis for federal jurisdic-
tion” was her patent infringement claim, and that
“[w]ithout a viable patent claim, there is no federal juris-
diction for [Ms.] Peralta’s state-law claims.” Id. at 998.
Instead of amending her Complaint, Ms. Peralta appealed
to the U.S. Court of Appeals for the Ninth Circuit before
the District Court entered final judgment. Appellant’s
App. 6 (Docket No. 36). The District Court later entered
final judgment. Id. (Docket No. 39). After it received the
appeal, the Ninth Circuit transferred the case to the U.S.
Court of Appeals for the Federal Circuit “because
the . . . Federal Circuit has exclusive jurisdiction over
appeals in cases arising under federal patent law.” Appel-
lees’ Suppl. App. 97.
We have jurisdiction pursuant to 28 U.S.C.
§ 1295(a)(1) (2012).
DISCUSSION
I. The Federal Circuit Has Jurisdiction to Hear This
Appeal
“[A] federal court [must] satisfy itself of its jurisdic-
tion over the subject matter before it considers the merits
of a case.” Ruhrgas AG v. Marathon Oil Co., 526 U.S.
574, 583 (1999). We thus address Appellees’ argument
that this court lacks jurisdiction over Ms. Peralta’s claim
for an injunction barring the FTB and its employees from
infringing the ’129 patent. See Appellees’ Br. 21. Ms.
Peralta appealed to the Ninth Circuit following the Dis-
trict Court’s grant of leave to amend her Complaint to
plead certain claims with greater specificity. At that
time, the District Court had not entered a final judgment.
Compare Appellant’s App. 6 (Docket No. 35 entered Aug.
24, 2015, stating an “amended complaint shall be filed
4 PERALTA v. CAL. FRANCHISE TAX BD.
within 30 days of this Order”), with id. (Docket No. 36
entered Sept. 2, 2015, entering a notice of appeal filed
with the Ninth Circuit). Appellees allege that “[Ms.]
Peralta’s refusal to amend before filing her Notice of
Appeal deprives this [c]ourt of jurisdiction over her claim
for injunctive relief.” Appellees’ Br. 21. 1
Rule 4(a)(2) of the Federal Rules of Appellate Proce-
dure states that “[a] notice of appeal filed after the court
announces a decision or order―but before the entry of the
judgment or order―is treated as filed on the date of and
after the entry.” The Supreme Court has interpreted that
this rule “permits a notice of appeal filed from certain
nonfinal decisions to serve as an effective notice from a
subsequently entered final judgment,” FirsTier Mortg. Co.
v. Inv’rs Mortg. Ins. Co., 498 U.S. 269, 274 (1991) (foot-
note omitted), which establishes the requisite finality
needed for general appellate review per 28 U.S.C. § 1291,
id. at 275. We have jurisdiction to hear this appeal be-
cause the District Court’s entry of final judgment on
October 5, 2015, following Ms. Peralta’s appeal, satisfies
our circuit’s identical jurisdictional requirement to review
appeals from “final decision[s] of a district court.” 28
U.S.C. § 1295(a)(1); see Pandrol USA, LP v. Airboss Ry.
Prods., Inc., 320 F.3d 1354, 1362−63 (Fed. Cir. 2003)
(observing for purposes of final judgment that “[w]hat
essentially is required is some clear and unequivocal
manifestation by the trial court of its belief that the
1 Ms. Peralta was only granted leave to amend with
respect to her infringement claims for injunctive relief
and against the FTB officials in their individual capaci-
ties, and her contract claim against the FTB defendants
in their individual capacities. See Peralta, 124 F. Supp.
3d at 1004. Appellees only raise an argument on lack of
jurisdiction with respect to the claims for injunctive relief.
PERALTA v. CAL. FRANCHISE TAX BD. 5
decision made . . . is the end of the case” (internal quota-
tion marks and citation omitted)).
II. The District Court Did Not Err in Dismissing the Case
for Lack of Jurisdiction
We review grants of motions to dismiss for failure to
state a claim upon which relief can be granted under the
law of the regional circuit in which the district court sits.
K-Tech Telecomms., Inc. v. Time Warner Cable, Inc., 714
F.3d 1277, 1282 (Fed. Cir. 2013). The Ninth Circuit
“review[s] de novo a district court’s grant of a motion to
dismiss for failure to state a claim under Federal Rule of
Civil Procedure 12(b)(6).” WPP Lux. Gamma Three Sarl
v. Spot Runner, Inc., 655 F.3d 1039, 1047 (9th Cir. 2011).
“The court accept[s] the plaintiffs’ allegations as true and
construe[s] them in the light most favorable to plaintiffs.”
K-Tech Telecomms., 714 F.3d at 1282 (internal quotations
and citation omitted). “The court will hold a dismissal
inappropriate unless the complaint fails to ‘state a claim
to relief that is plausible on its face.’” Id. (quoting Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). To
plead with sufficient plausibility, a plaintiff must show
“factual content that allows the court to draw the reason-
able inference that the defendant is liable for the miscon-
duct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(citing Twombly, 550 U.S. at 556).
A. The District Court Properly Dismissed Ms. Peralta’s
Claims
Ms. Peralta argues that the District Court erred in
dismissing her case for failure to state a claim. Appel-
lant’s Br. 20–21. We address each of her arguments in
turn.
1. Patent Infringement Claims Against the FTB and Its
Employees in Their Official Capacities for Damages
The District Court dismissed Ms. Peralta’s claims
against the FTB and its employees in their official capaci-
6 PERALTA v. CAL. FRANCHISE TAX BD.
ties because Ms. Peralta failed to present evidence that
the FTB and its employees waived sovereign immunity.
Peralta, 124 F. Supp. 3d at 999.
Ms. Peralta claims that the California Attorney Gen-
eral’s acceptance of a federal grant of $200,000 to prose-
cute intellectual property crimes, “one of many” such
grants, Appellant’s Br. 4, waived the state of California’s,
and hence the FTB’s, immunity because the grant stated
that the Attorney General would protect inventors and
“bring those involved in intellectual property crimes to
justice,” Appellant’s App. 28 (internal quotation marks
and citation omitted). She further argues that the FTB
waived immunity by (1) “provid[ing] no remedy, or an
insufficient remedy” to an injured patent owner, Appel-
lant’s Br. 12, and (2) generally “agreeing to comply with
all federal statutes,” including patent statutes under Title
35, the agency has waived immunity, id. at 21.
The “test for determining whether a [s]tate has
waived its immunity from federal-court jurisdiction is a
stringent one.” College Sav. Bank v. Fla. Postsecondary
Ed. Expense Bd., 527 U.S. 666, 675 (1999) (internal quota-
tion marks and citation omitted). “A waiver of sovereign
immunity ‘must be unequivocally expressed,’ . . . .” Mara-
thon Oil Co. v. United States, 374 F.3d 1123, 1127 (Fed.
Cir. 2004) (quoting United States v. Mitchell, 445 U.S.
535, 538 (1980)) (additional citations omitted). A state
does not “consent to suit in federal court merely by stating
its intention to sue and be sued . . . or even by authorizing
suits against it in any court of competent jurisdiction.”
College Sav. Bank, 527 U.S. at 676 (internal quotation
marks and citations omitted). Additionally, the “mere
receipt of federal funds cannot establish that a [s]tate has
consented to suit in federal court.” Atascadero State
Hosp. v. Scanlon, 473 U.S. 234, 246−47 (1985) (citation
omitted), abrogated on other grounds in Lane v. Pena, 518
U.S. 187 (1996).
PERALTA v. CAL. FRANCHISE TAX BD. 7
On review, we find no evidence that when accepting
the grant, the State Attorney General, or the FTB and its
employees in their official capacities, waived California’s
sovereign immunity. The word waiver is not mentioned
in the grant and there is no language in the grant that
could otherwise be construed as a waiver. See generally
Appellant’s App. 84 (Press Announcement of Grant Re-
ceipt). Furthermore, agreeing to follow federal law is not,
as Ms. Peralta alleges, the test for waiver. We affirm the
District Court’s determination that Appellees have not
waived their sovereign immunity.
2. Patent Infringement Claims Against FTB Employees in
Their Official Capacities for Injunctive Relief
Under Ex parte Young, claims against state officials
for injunctive relief are not barred by the Eleventh
Amendment. 209 U.S. 123, 157 (1908). Ms. Peralta pled
claims against the FTB employees in their official capaci-
ties for injunctive relief, and the District Court dismissed
these infringement claims. The District Court found that
Ms. Peralta had failed to plead sufficient facts and to put
defendants on proper notice. Peralta, 124 F. Supp. 3d at
1000−01.
In her Complaint, Ms. Peralta did not allege claims
against FTB employees with adequate sufficiency. On her
infringement claims for injunctive relief, Ms. Peralta
stated that defendants have continued to infringe the ’129
patent through “practicing the method embodied in the
’129 patent, directly and through third parties . . . via the
internet, 24 hours per day, 7 days per week.” Appellant’s
App. 32. She further claimed that she “discover[ed] clear
evidence of unauthorized use” of the ’129 patent, id. at 26,
and that certain named individuals were “in . . .position[s]
to terminate and remedy the harm caused [to] Plaintiff by
theft of her intellectual property, but failed and refused
ever to do so,” id. at 18; see id. (referring to the third
8 PERALTA v. CAL. FRANCHISE TAX BD.
named FTB employee and stating that “all harm caused
as described herein commenced with this Defendant”).
The facts asserted in the infringement claim do not al-
lege with requisite specificity the actual infringement
claimed. See Pennington Seed, Inc. v. Produce Exch. No.
299, 457 F.3d 1334, 1343 (Fed. Cir. 2006) (“A nexus
between the violation of federal law and the individual
accused of violating that law requires more than simply a
broad general obligation to prevent a violation.”). A
complaint in federal court must contain “a short and plain
statement of the grounds for the court’s jurisdiction” and
“a short and plain statement of the claim showing that
the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(1)–
(2). “All that is required are sufficient allegations to put
defendants fairly on notice of the claims against them.”
McKeever v. Block, 932 F.2d 795, 798 (9th Cir. 1991).
Because Ms. Peralta has not presented her Complaint
against the named individuals with adequate specificity,
she has not put the named individuals on notice of the
alleged infringement. Ms. Peralta offers no reasonably
cognizable arguments to contest the District Court’s
finding on the sufficiency of her pleading. See Appellant’s
Br. 12−13.
Finally, Ms. Peralta argues that the District Court’s
Patent Local Rules do not mandate that she provide
evidence of infringing material until “[n]ot later than 14
days after the Initial Case Management Conference.”
Appellant’s Br. 11 (internal quotation marks and citation
omitted). She further argues that her pleadings would
have been sufficient had she opted to file a Form 18,
which in patent infringement cases filed before December
1, 2015, only required a form complaint whose “‘proper
use . . . effectively immunizes a claimant from attack
regarding the sufficiency of the pleading.’” Id. at 20
PERALTA v. CAL. FRANCHISE TAX BD. 9
(quoting K-Tech Telecomms., 714 F.3d at 1277). 2 As for
Ms. Peralta’s contention relating to Form 18, we stated in
K-Tech Telecommunications, “Form 18 in no way relaxes
the clear principle of Rule 8, that a potential infringer be
placed on notice of what activity or device is being accused
of infringement.” 714 F.3d at 1284. 3 The boilerplate
allegation that defendants infringe by practicing “the
method embodied in the ’129 patent, directly and through
third parties . . . via the internet, 24 hours per day, 7 days
per week,” Appellant’s App. 32, is not enough to comply
with Form 18, which still requires “some allegation of
specific services or products of the defendants which are
being accused,” Addiction & Detoxification Inst. L.L.C. v.
Carpenter, 620 F. App’x 934, 937 (Fed. Cir. 2015).
2 The revised Federal Rules of Civil Procedure en-
tered into effect on December 1, 2015. The revised Rules
eliminate Rule 84, which had allowed for patent in-
fringement claims to be plead at a lower standard in form
pleadings than that espoused in Twombly. See generally
Fed. R. Civ. P. and advisory committee’s note to 2015
amendment.
3 Nor are the Patent Local Rules’ requirements for
disclosure of asserted claims and infringement in conflict
with the underlying rules for sufficiency of pleading in
federal court. See, e.g., Atlas IP LLC v. Pac. Gas & Elec.
Co., No. 15-cv-05469-EDL, 2016 WL 1719545, at *5 (N.D.
Cal. Mar. 9, 2016) (examining a 12(b)(6) motion in a
patent infringement case under the Twombly and Iqbal
standards, and affirming defendant’s claim that the
Patent Local Rules “cannot trump the pleading require-
ments of Iqbal and Twombly”).
10 PERALTA v. CAL. FRANCHISE TAX BD.
3. Patent Infringement Claims Against FTB Employees in
Their Individual Capacities for Damages
The District Court also dismissed Ms. Peralta’s claims
against the FTB employees in their individual capacities
for failure to show that the actions were taken as individ-
uals, effectively finding that the claims were de facto
against the employees in their official capacities and
again barred by sovereign immunity. Peralta, 124 F.
Supp. 3d at 1001−02.
We agree that Ms. Peralta has presented no allegation
that the accused individuals acted in their individual
capacities as required to assert claims for damages
against state officials. See Edelman v. Jordan, 415 U.S.
651, 663 (1974). Ms. Peralta’s Complaint, liberally con-
strued, does not set forth any basis for a claim that the
officials were acting in their individual capacities. See
Appellant’s App. 10−92. The District Court judge even
suggested that Ms. Peralta amend the Complaint in order
to properly allege such claims, but she declined to do so.
Peralta, 124 F. Supp. 3d at 1001.
4. State Law Claims
Because Ms. Peralta has not pled a plausible factual
basis to assert a patent infringement claim under federal
law, we do not have jurisdiction over the supplemental
state law claims. See United Mine Workers of Am. v.
Gibbs, 383 U.S. 715, 725 (1966) (for pendent or supple-
mental jurisdiction to exist, “[t]he federal claim must have
substance sufficient to confer subject matter jurisdiction
on the court” (citation omitted)). Therefore, we decline to
review the pleadings on Ms. Peralta’s state law claims.
III. There Is No Evidence to Support a Finding of Judicial
Bias
Ms. Peralta argues that there was a “disqualifying
conflict of interest,” Appellant’s Br. 2, in her case because
the District Court judge’s “family[] firm [Orrick, Herring-
PERALTA v. CAL. FRANCHISE TAX BD. 11
ton and Sutcliffe] has represented . . . [the] defendants
. . . .” 4 Id. at 2−3. We disagree.
Ms. Peralta’s claims of judicial bias by the District
Court and request for reassignment on remand “invoke[] a
matter not within the exclusive jurisdiction of this court,”
and will be assessed under the law of the Ninth Circuit.
See Micro Chem., Inc. v. Lextron, Inc., 318 F.3d 1119,
1122 (Fed. Cir. 2003). The Ninth Circuit reviews claims
of judicial bias not raised at the district court for “plain
error,” United States v. Bosch, 951 F.2d 1546, 1548 (9th
Cir. 1991), and will only reverse or vacate a district court
opinion under this standard “when it appears necessary
to prevent a miscarriage of justice or to preserve the
integrity and reputation of the judicial process,” id. (in-
ternal quotation marks and citation omitted). To succeed
on a judicial bias claim, an appellant must “overcome a
presumption of honesty and integrity in those serving as
adjudicators.” Withrow v. Larkin, 421 U.S. 35, 47 (1975).
The Ninth Circuit will reassign a different judge on
remand only under “rare and extraordinary circumstanc-
es.” Krechman v. Cty. of Riverside, 723 F.3d 1104, 1112
(9th Cir. 2013) (internal quotation marks and citation
omitted).
4 Ms. Peralta also argues that the case “should have
been transferred back to the San Jose Division” to grant
her “a fair and impartial hearing.” Appellant’s Br. 3, see
id. at 24−25 (making further arguments as to why the
case should be transferred back to the San Jose Division).
However, 28 U.S.C. § 1404(a) states that “[a] district court
may transfer any civil action to any other district or
division where it might have been brought.” San Jose and
San Francisco are both in the Northern District of Cali-
fornia; the decision to change venue within the district
was entirely proper.
12 PERALTA v. CAL. FRANCHISE TAX BD.
Ms. Peralta has presented no evidence of judicial bias
(in her words, “judicial conflict of interest,” Appellant’s
Br. 9). There is no evidence that Judge Orrick has prac-
ticed at or is affiliated with Orrick, Herrington, and
Sutcliffe. Nor is there any evidence presented that the
firm has any affiliation with the case at bar. Ms. Peralta
has not only failed to overcome the “presumption of hon-
esty” accorded to adjudicators, see Withrow, 421 U.S. at
47, she has presented nothing but rank, baseless, and
scandalous speculation to support her argument.
CONCLUSION
We have considered Ms. Peralta’s remaining argu-
ments and find them unpersuasive. Accordingly, we find
that the decision of the U.S. District Court for the North-
ern District of California is
AFFIRMED
COSTS
Each party shall bear its own costs.