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Dahlstrom v. Sauk-Suiattle Indian Tribe

United States District Court, W.D. Washington, Seattle

March 21, 2017

RAJU DAHLSTROM, et al., Plaintiffs,
v.
SAUK-SUIATTLE INDIAN TRIBE, et al., Defendants.

          ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS

          JAMES L. ROBART United States District Judge

         I. INTRODUCTION

         Before the court is Defendants Sauk-Suiattle Indian Tribe of Washington (“the Sauk-Suiattle” or “the Tribe”), Community Natural Medicine, PLLC (“CNM”), Christine Morlock, Robert Morlock, and Ronda Metcalf's (collectively “Defendants”) motion to dismiss Plaintiff Raju Dahlstrom's claims against them. (MTD (Dkt. # 13).) Mr. Dahlstrom opposes Defendants' motion. (Resp. (Dkt. # 19).) The court has reviewed the motion, all of the parties' submissions related to the motion, [1] the relevant portions of the record, and the applicable law. Being fully advised, the court GRANTS the motion with respect to Mr. Dahlstrom's claims against the Sauk-Suiattle, but DENIES the motion with respect to Mr. Dahlstrom's claims against CNM, Dr. Morlock, Mr. Morlock, and Ms. Metcalf. The court declines to grant Mr. Dahlstrom leave to amend his claims against the Sauk-Suiattle because these claims fail as a matter of law. Finally, the court DENIES Defendants' request for Federal Rule of Civil Procedure 11 sanctions and attorney's fees.

         II. BACKGROUND

         On January 12, 2016, Mr. Dahlstrom filed a complaint under seal pursuant to the qui tam provisions of the False Claims Act (“FCA”), 32 U.S.C. §§ 3729-33, and the Washington State Medical Fraud and False Claims Act (“MFFCA”), RCW 74.66.005 et seq. (Compl. (Dkt. # 1).) The Sauk-Suiattle is a federally recognized Native American tribe in Darrington, Washington. (Id. ¶ 31; Gov't Mot. (Dkt. # 4) at 2.) CNM is a health clinic in Arlington, Washington, owned by Dr. Morlock and Mr. Morlock. (See Gov't Mot. at 2.) The complaint also lists Dr. Morlock, Mr. Morlock, and Ms. Metcalf (collectively, “Individual Defendants”), who is the Director of the Indian Health Service (“IHS”) and the Health Clinic of the Sauk-Suiattle, as defendants. (See Compl. at 2; Gov't Mot. at 2.)

         The Sauk-Suiattle employed Mr. Dahlstrom from 2010 through his termination on December 8, 2015. (Compl. ¶ 30.) The Tribe initially hired Mr. Dahlstrom as a Case Manager, but in April 2015, the Tribe promoted him to Director. (Id.; Gov't Mot. at 3.) Mr. Dahlstrom alleges that Defendants knowingly presented or caused to be presented false or fraudulent claims to the United States-and by extension, the State of Washington-by: (1) approving payments of cosmetic dentistry for two individuals; (2) allowing an individual to use vaccines specifically donated to the Sauk-Suiattle for that individual's own private business; (3) fraudulently certifying compliance with the IHS Loan Repayment Program; (4) using government funds to secretly purchase land originally meant for residential care for children, and after acquiring that land, dropping the programs for children; and (5) fraudulently using government resources designated for healthcare facility costs. (Id.; see generally Compl.)

         On September 26, 2016, the United States of America and Washington State notified the court of their decision not to intervene in the action. (Notice (Dkt. # 8) at 2 (citing 31 U.S.C. § 3703(b)(4)(B) and RCW 74.66.050).) Accordingly, on September 28, 2016, the court unsealed the case and ordered Mr. Dahlstrom to serve Defendants. (9/8/16 Order (Dkt. # 9).)

         On January 12, 2017, Defendants filed the instant motion to dismiss Mr. Dahlstrom's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). (MTD.) On the same day, Defendants filed a supplement to their motion to dismiss to move for sanctions and attorney's fees. (Supp. Mot. (Dkt. # 14).) The court now considers Defendants' motions.

         III. ANALYSIS

         A. Standard for a Motion to Dismiss

         When considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the court construes the complaint in the light most favorable to the nonmoving party. Livid Holdings, Ltd. v. Salomon Smith Barney, Inc., 416 F.3d 940, 946 (9th Cir. 2005). The court must accept all well-pled facts as true and draw all reasonable inferences in favor of the plaintiff. Wyler Summit P'ship v. Turner Broad. Sys., Inc., 135 F.3d 658, 661 (9th Cir. 1998). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see Telesaurus VPC, LLC v. Power, 623 F.3d 998, 1003 (9th Cir. 2010). A court may dismiss a complaint if it lacks a cognizable legal theory or states insufficient facts under a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990); Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984).

         The court need not accept as true a legal conclusion presented as a factual allegation. Iqbal, 556 U.S. at 678. Although the pleading standard of Federal Rule of Civil Procedure 8 does not require “detailed factual allegations, ” it demands more than “an unadorned, the-defendant-unlawfully-harmed-me accusation.” Id. (citing Twombly, 550 U.S. at 555). A pleading that offers only “labels and conclusions or a formulaic recitation of the elements of a cause of action” will not survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). Id.

         B. Sovereign Immunity

         Defendants argue that they are immune from Mr. Dahlstrom's claims due to the Tribe's sovereign immunity. (MTD at 2.) Defendants further claim that the Sauk-Suiattle's sovereign immunity extends to all Defendants. (MTD at 5, n.1.) Mr. Dahlstrom responds that sovereign immunity does not exist “where, as here, the suit is brought by or on behalf of the United States, ” and he contends ...


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