Judge Daniel M. Crowley, Case Number: 24STCV13547, Date: 2025-04-24 Tentative Ruling

Defendants Allstate Insurance Company and Knox Ricksen LLP’s special motions to strike all or part of Plaintiff’s complaint are granted in their entireties.

Defendant Allstate Insurance Company (“Allstate”) specially moves to strike all five causes of action from the complaint of Plaintiffs Doe 1, Doe 2, and Doe 3 (collectively, “Plaintiffs”) on the grounds that Plaintiffs’ causes of action arise from constitutionally protected petitioning activity in connection with a public issue and Plaintiffs cannot establish a probability that they will prevail on the above causes of action (and all claims within them) at trial.

Allstate also specially moves to strike Paragraphs 11-24, 26-27, 33-36, 38-39, 41-50, 51-55, 56-64, and 65-68 of the Complaint, on the same grounds as to each individually challenged allegation.

Defendant Knox Ricksen LLP (“Knox”) concurrently moves specially to strike Plaintiffs’ fourth cause of action for fraudulent inducement, the only one levied against it. As with Allstate, Knox also specially moves to strike numerous portions of the complaint in the alternative.

Plaintiffs Does 1-3 filed this action against defendants Allstate Insurance Company and Knox Ricksen LLP on May 30, 2024, asserting claims for (1) breach of contract, (2) promissory estoppel, (3) quasi-contract, (4) fraudulent inducement, and (5) declaratory relief.

Although Plaintiffs initially pursued their suit via fictitious names, they have since disclosed in public filings that they are Ari Resnik (“Resnik”) and two companies he owns and operates: 11 Funding, LLC (“11 Funding”) and R.O.A.R. Management Company, Inc. (“R.O.A.R.”). (See Opp., 6:25-26 [not filed under seal]; Resnik Decl., ¶¶ 1-2 [same].)

Plaintiffs allege, in brief, that Resnik approached defendant Allstate in March 2023 and offered to report on “a large-scale healthcare fraud scheme involving a medical provider named Healthpointe”. (Opp., 7:3-4; Resnik Decl., ¶ 4.) In exchange for his information, Resnik demanded that Allstate agree that it “would not sue them in any lawsuit concerning any matter” for ten years, or for five years after any litigation specifically involving Healthpointe resolved, whichever was later. (Opp., 7:12-16; Resnik Decl., ¶ 10.)

When proposing the Release, Plaintiffs specifically contemplated the possibility that Allstate might bring a qui tam action against Healthpointe or others under California’s Insurance Frauds Prevention Act (“IFPA”), Insurance Code section 1871 et seq.:

“To assist in the fight against insurance fraud, the IFPA contains a qui tam provision empowering interested persons to file lawsuits on behalf of the government against perpetrators of insurance fraud. ‘Under subdivision (b) of Insurance Code section 1871.7, “[e]very person” who engages in insurance fraud . . . is subject to penalties and assessments. . . . Section 1871.7, subdivision (e)(1) expressly authorizes any “interested person[ ]” to bring a qui tam action to recover damages and penalties for fraudulent insurance claims both for that person and for the State of California. . . . The person who brings the qui tam action, called the “relator,” stands in the shoes of the People of the State of California, who are deemed to be the real party in interest. . . . The relator in a qui tam action under section 1871.7 does not personally recover damages but, if successful, receives a substantial percentage of the recovery as a bounty.’ . . . . Penalties are assessed for each fraudulent claim presented by a defendant to a victim-insurer. . . . .”

People ex rel. State Farm Mutual Automobile Ins. Co. v. Rubin (2021) 72 Cal.App.5th 753, 762-763, internal citations omitted).

According to Plaintiffs, Allstate accepted their offer on April 4, 2023, agreeing that if Resnik would provide Allstate with confidential information regarding the Healthpointe fraud scheme, Allstate would agree not sue Resnik on any basis for at least ten years (“the Release”). (Opp., 7:19-25; Resnik Decl., ¶¶ 5-6.)

Allstate did eventually file an IFPA lawsuit against Healthpointe as qui tam relator.

Subsequently, Allstate filed a separate IFPA relator lawsuit, arising from a different alleged fraud scheme, captioned People ex rel. Allstate Insurance Company v. Perez (LA Sup. Ct. 21STCV45088) (“Perez” or “the Perez case”). That case remains pending in this department and has been formally related to the instant lawsuit.

On January 26, 2024, Allstate amended its complaint in Perez to identify Plaintiffs as fictitiously-named defendants.

Plaintiffs now allege Allstate breached the Release by naming Plaintiffs as defendants in Perez, and/or that Allstate fraudulently induced Plaintiffs to enter the Release in order to obtain confidential whistleblower information from Resnik, while always harboring an intent to sue notwithstanding the terms of the Release. Plaintiffs also levy their claim for fraudulent inducement against Knox, who represented Allstate as its attorney at relevant times.

Allstate and Knox now specially move to strike Plaintiff’s complaint in its entirety (or, for Knox, as to the only cause of action against it, the fourth), on the grounds stated above.

“Litigation of an anti-SLAPP motion involves a two-step process. First, ‘the moving defendant bears the burden of establishing that the challenged allegations or claims ‘aris[e] from’ protected activity in which the defendant has engaged.’ [Citation.] Second, for each claim that does arise from protected activity, the plaintiff must show the claim has “at least ‘minimal merit.’ [Citation.]” (Bonni v. St. Joseph Health System (2021) 11 Cal.5th 995, 1009, citations omitted.) As to the second step inquiry, a plaintiff seeking to demonstrate the merit of the claim “may not rely solely on its complaint, even if verified; instead, its proof must be made upon competent admissible evidence.” (Sweetwater Union High School District v. Gilbane Building Co. (2019) 6 Cal.5th 931, 940, citations omitted.)

A plaintiff opposing a special motion to strike has the burden to “state [] and substantiate [] a legally sufficient claim.” (Navellier v. Sletten (2002) 29 Cal.4th 82, 88 & 93.) “‘Put another way, the plaintiff “must demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited.”’ [Citations.]” (Id. at pgs. 88-89.) To that end, the plaintiff must present competent evidence, “that would be admissible at trial.” (HMS Capital, Inc. v. Lawyers Title Co. (2004) 118 Cal.App.4th 204, 212.) “[D]eclarations may not be based upon ‘information and belief’ [citation]” and documents submitted without the proper foundation will not be considered. (Id.) The complaint, even if verified, is insufficient to carry the plaintiff’s shifted burden. (Roberts v. Los Angeles County Bar Association (2003) 105 Cal.App.4th 604, 614; Karnazes v. Ares (2016) 244 Cal.App.4th 344, 354 [“pleadings do not constitute evidence”]; see also Burke, Anti-SLAPP Litigation (The Rutter Group, Civil Litigation Series 2018 § 5:13) [“To satisfy prong two, the plaintiff must submit admissible evidence that if credited is sufficient to sustain a favorable judgment against the legal theories asserted by the defendant.”].)

“A cause of action is subject to a special motion to strike if the defendant shows that the cause of action arises from an act in furtherance of the defendant’s constitutional right of petition or free speech in connection with a public issue and the plaintiff fails to demonstrate a probability of prevailing on the claim. [Citations.]” (Digerati Holdings, LLC v. Young Money Entertainment, LLC (2011) 194 Cal.App.4th 873, 883.)

“An ‘act in furtherance of a person’s right of petition or free speech under the United States or California Constitution in connection with a public issue’ is defined by statute to include ‘(1) any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law, (2) any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law, (3) any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest, or (4) any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest.’ [Citation.] If the defendant shows that the cause of action arises from a statement described in clause (1) or (2) of section 425.16, subdivision (e), the defendant is not required to separately demonstrate that the statement was made in connection with a ‘public issue.’ [Citation.]” (Id.)

On the first prong of the anti-SLAPP analysis, Allstate contends all of Plaintiffs’ claims arise from conduct in furtherance of its right to petition. By Allstate’s account, “Plaintiffs are suing Allstate for supposedly (1) agreeing not to sue them, and then (2) breaching that agreement by suing them[.]” (Mot., 8:14-15.)

The Court agrees. All of Allstate and Knox’s alleged misconduct arises from their activity related to the qui tam claims they asserted against Plaintiffs in Perez. Where an anti-SLAPP movant asserts that the claims brought against it arise out of its protected petitioning activity (rather than free speech), there is no requirement that the petitioning activity must be related to a “public issue.” (Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1116.)

Plaintiffs concede the same in their opposition by declining to argue the point. (See Opp., 9:14 [argument begins and proceeds from “Plaintiffs’ Claims Possess the Requisite Minimal Merit”].)

“If the court determines that relief is sought based on allegations arising from activity protected by the statute, the second step is reached. There, the burden shifts to the plaintiff to demonstrate that each challenged claim based on protected activity is legally sufficient and factually substantiated. The court, without resolving evidentiary conflicts, must determine whether the plaintiff’s showing, if accepted by the trier of fact, would be sufficient to sustain a favorable judgment. If not, the claim is stricken. Allegations of protected activity supporting the stricken claim are eliminated from the complaint, unless they also support a distinct claim on which the plaintiff has shown a probability of prevailing.” (Baral v. Schnitt (2016) 1 Cal.5th 376, 396.) The burden is on the plaintiff to produce evidence that would be admissible at trial—i.e., to proffer a prima facie showing of facts supporting a judgment in plaintiff’s favor. (Chavez v. Mendoza (2001) 94 Cal.App.4th 1083, 1087.)

Allstate argues Plaintiffs cannot show a probability of prevailing on their claims because (1) the claims ought to be brought as compulsory cross-claims in the Perez case; (2) the Release, if it existed, would be an unenforceable pre-filing waiver of qui tam claims; (3) the litigation privilege and Noerr-Pennington doctrine bar all of Plaintiffs’ claims; and (4) as to the merits of Plaintiffs’ claims: Plaintiffs cannot show (a) Allstate agreed to the Release, (b) Allstate breached any Release in the manner Plaintiffs allege, or (c) Plaintiffs performed under the Release.

Assuming, for the sake of argument, that the parties executed the Release, the Release is unenforceable as matter of public policy.

Allstate invokes U.S. v. Northrop Corp. (9th Cir. 1995) 59 F.3d 953 (Northrop) for its holding that, in the context of the federal False Claims Act (“FCA”), individual plaintiffs’ waiver of their right to bring qui tam lawsuits are void as a matter of public policy. (Northrop, supra, at p. 963.) Recognizing that federal courts’ interpretations of federal law are not binding in California, Allstate cites recent California case law confirming that our courts may look to federal courts’ interpretations of the FCA to inform our interpretation of the IFPA. (See People ex rel. State Farm Mutual Automobile Ins. Co. v. Rubin (2021) 72 Cal.App.5th 753, 769 (Rubin) [IFPA and FCA “share a similar design and purpose”].)

Plaintiffs suggest Northrop distinguished expressly distinguished federal from California law and implied that California law, unlike federal law, favors “ ‘ironclad and enforceable general releases’ ”. (Northrop, supra, 59 F.3d, at p. 961.) Not so. The Northrop court expressed general concerns about the “possibility” and “substantial risk” that state law might require the opposite result. (Ibid.) In reversing the district court, although the district court had relied on state law for his decision enforcing a waiver of FCA claims, Northrop expressly did not decide whether the federal trial judge’s interpretation or application of California law was correct. (See ibid.)

Plaintiffs also cite People ex rel. Allstate Ins. Co. v. Weitzman (2003) 107 Cal.App.4th 534, 563 (Weitzman) for its statement that “there are material differences between the purposes and operation of the federal False Claims Act and section 1871.7.” But Weitzman is distinguishable: it interpreted the application of the “original source rule” in Insurance Code 1871.7. (See id., at pp. 563-564 [“no evidence of a legislative intent to adopt a particular circuit’s perspective on the original source rule” (italics omitted)].) And the Weitzman court did not reject federal law entirely – it simply “decline[d] to entirely rely on circuit court decisional authority”. (Id., at p. 564, italics in original.)

Weitzman is also unhelpful when weighed against Rubin, a more recent opinion, but one that is similarly confined to a particular provision in the IFPA: the first-to-file rule. In that context, Rubin remarked as strongly and clearly as Weitzman that “the IFPA and FCA share a similar design and purpose. They are qui tam statutes designed to supplement government enforcement to uncover and prosecute fraudulent claims.” (Rubin, supra, 72 Cal.App.5th 753, 770.)

Rubin does not suggest the FCA and IFPA should be interpreted identically. Rubin distinguishes the two based on their mechanics and intended beneficiaries:

““The goal of the [FCA] is to recoup government funds lost through the fraud of federal contractors. In other words, when a federal contractor fraudulently overcharges the government, public monies are lost. The federal government is the [only] direct victim . . . . [¶] The IFPA seeks to prevent insurance fraud. Insurers, not the federal government, are the direct victims of the fraud. Unlike an FCA claim, the same fraudulent insurance scheme can have numerous direct victims. . . . And, generally, many of those victims will be unknown to the party filing the initial IFPA action since the scope of the defendant's fraudulent scheme will likely be unclear when the action is filed.”

But after comparing the laws’ mechanisms against their similar design and purpose, Rubin decided that the federal first-to-file rule was too restrictive to impose on the IFPA. The IFPA’s purpose would be better served with more plaintiffs, not fewer. Applied here: public policy militates against a plaintiff waiving its IFPA claims away.

Rubin also commented on the importance of an insurer’s qui tam power under the IFPA to “bring a broad IFPA action covering all the false claims a defendant has billed to any insurer” (id., at p. 773) – another count against Plaintiffs’ contention that the law, after creating a broad right of recovery for Allstate, then allows it to waive that right for private consideration.

In this context, the Court finds that an individual insurer’s release of qui tam IFPA claims is unenforceable because it violates public policy, just as similar releases violate federal public policy when they release qui tam claims under the FCA.[1]

Plaintiff claims Allstate agreed “not [to] sue them in any lawsuit concerning any matter” for some period of time. (Opp., 7:13-14.) Because this waiver purports to cover all claims, including claims brought on behalf of others in a qui tam capacity, the waiver is unenforceable, pursuant to Rubin and Weitzman, as informed by Northrop.[2]

Plaintiffs cannot show a probability of prevailing because the alleged Release, even if it were executed, is void.

b. Plaintiffs cannot show a probability that a contract was formed, or that Allstate made any enforceable promise or fraudulently induced Plaintiff to behave in any particular manner.

A claim for breach of contract requires a plaintiff to prove (1) a contract, (2) plaintiff’s performance, (3) defendant’s breach, and (4) damages. (See Reichert v. General Insurance Co. (1968) 68 Cal.2d 822, 830.) For promissory estoppel, a plaintiff must show “ ‘ “(1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom the promise is made; (3) [the] reliance must be both reasonable and foreseeable; and (4) the party asserting the estoppel must be injured by his reliance.” [Citation.]’ [Citation.]” (Jones v. Wachovia Bank (2014) 230 Cal.App.4th 935, 945.) Fraud requires a knowingly false statement intended to induce a plaintiff’s reliance; justifiable reliance; and resulting damage. (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216.)

As an evidentiary matter, Plaintiffs have not shown a probability of prevailing on any of these claims.

Plaintiffs have not shown a reasonable probability that they can demonstrate the formation of a contract, a clear unambiguous promise, or justifiable reliance on any false statement.

When it comes to the formation of the parties’ alleged oral agreement, the only evidence Plaintiffs point to is Ashwin Ram’s testimony that he formalized the Release via oral agreement with Allstate’s then-counsel. (See Opp., 9:24-10.)

Plaintiffs insist that the Court should not weigh credibility and should assume Plaintiffs’ evidence is true. (Id., 10:3-8, citing Oasis W. Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 820.) But Plaintiffs also acknowledge that the Court must evaluate Defendant’s evidence to see if it defeats Plaintiffs’ – even if Plaintiffs’ is given special credence during anti-SLAPP proceedings. (See ibid.)

Allstate’s evidence defeats Plaintiffs’. Against only Ram’s declaration, Allstate offers the declaration of its own counsel, who confirms she never agreed to the Release. (Sokolove Decl., ¶¶ 12-21.) But Allstate also offers considerable documentary evidence, in the form of email communications, showing that discussions about the terms of the Release went on for months after the purported date of Ram and Sokolove’s alleged oral agreement. (Id., Exhs. A-D.) Allstate’s written exhibits decisively show the parties did not reach an agreement at the time or on the terms Plaintiffs allege. Plaintiffs offer no alternate narrative to explain when the parties allegedly reached agreement.

Plaintiffs fail to show a probability that a contract was formed in the first instance, or that Allstate promised them – fraudulently or otherwise – that one would be formed. Thus, they fail to show a probability that they can prevail on any of their first, second, or fourth causes of action.

c. Plaintiffs have not shown a probability they performed, for purposes of their contract claim, or delivered something of value, for purposes of quasi-contract.

A contract claim requires performance. (See Reichert v. General Insurance Co., supra, 68 Cal.2d, at p. 830.) Its equitable counterpart, quasi-contract, requires delivery of something of value. (See Hedging Concepts, Inc. v. First Alliance Mortgage Co. (1996) 41 Cal.App.4th 1410, 1419.)

Plaintiffs present no corroborating evidence of anything they provided to Allstate in exchange for the Release. Plaintiffs have advanced a declaration from Plaintiff Resnik, who purportedly disclosed the information promised. But he does not directly attest he disclosed anything of value. (See Resnik Decl., ¶¶ 7-8 [Resnik “authorized” his counsel to disclose; Resnik “reaffirmed . . . authorization”; Resnik “would not have disclosed” unless Allstate executed release].) Resnik enumerates, in relatively general terms, some categories of information he allegedly provided, quoted in full as follows:

“I authorized Mr. Ram to disclose to Allstate information in my possession concerning the Healthpointe fraud scheme. This included extensive details about the key players and entities involved, as well as the modus operandi of the fraud. Much of the information was highly sensitive and non-public, including specific evidence establishing the fraud scheme, such as voice dictation files, a roadmap for the collection of key evidence, information about an imminent spoliation threat, and actions taken by key players in the fraud scheme.

And Resnik’s declaration is supported only by Ram’s – again, Plaintiffs have adduced no documentary evidence supporting their position here.

Allstate’s counsel explains that no agreement was reached because, although Resnik made partial disclosures, Allstate determined he did not possess information of enough value to reach an agreement on a Release. (See Sokolove Decl., ¶¶ 17-21.) Again, this account is supported by emails between counsel. (Id., Exhs. A-D.)

Plaintiffs have not demonstrated a probability that they performed according to the terms of the Release, or that they delivered Allstate something of value for which they are owed a release of liability in exchange.

“ ‘To qualify for declaratory relief, [a party] [has] to demonstrate its action present[s] two essential elements: “(1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to [the party's] rights or obligations.” ’ ” (Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909.)

For the same reasons discussed above, there is no proper subject for declaratory relief. There is no ongoing contractual relationship between the parties. The only ongoing controversy is another lawsuit, Perez, which will be disposed of in its own course.

The Court declines to take up Allstate’s remaining arguments, as the foregoing findings are dispositive.

If one assumes Allstate formed an enforceable contract and Plaintiffs performed it, then Plaintiffs may have raised a probability that Allstate breached it by filing suit; the matter is irrelevant.

The Court declines to unnecessarily and prematurely rule on the propriety of cross-claims in Perez.

As for the litigation privilege: Allstate appears to concede that it applies only to Plaintiffs’ tort claims, because, as Plaintiffs argue, the litigation privilege does not protect defendants from contract claims arising from liability releases. But there is no reason to parse the separate causes of action where other matters dispose of the whole complaint.

The reasoning above applies equally to Allstate’s co-defendant, Knox, the other moving party. Knox has been accused of all the same misconduct, simply conducted on behalf of Allstate. Knox’s conduct is even more clearly protected by the anti-SLAPP statute, given that Knox was an attorney acting on behalf of a client at all relevant times. (See Wittenberg v. Bornstein (2020) 50 Cal.App.5th 303, 314-315.) And Plaintiff has shown no better probability of prevailing against Knox than against Allstate.

Code of Civil Procedure § 425.16(g) stays all discovery upon the filing of the notice of an anti-SLAPP motion. “The stay of discovery shall remain in effect until notice of entry of the order ruling on the motion.” (Code Civ. Proc., § 425.16(g).) But “[t]he court, on noticed motion and for good cause shown, may order that specified discovery be conducted notwithstanding [subdivision (g)].” (Ibid.; see also Britts v. Superior Court (2006) 145 Cal.App.4th 1112, 1129.)

Subdivision (g) serves the policy purpose of the anti-SLAPP scheme by protecting a defendant in a SLAPP suit from incurring unnecessary costs of litigation before the Court has the opportunity to strike violative claims. (Mattel, Inc. v. Luce, Forward, Hamilton & Scripps (2002) 99 CA4th 1179, 1190.)

“ ‘Good cause’ is required for discovery while an anti-SLAPP motion is pending. . . . To satisfy this requirement, plaintiff must make a prima facie showing at least as to the elements of the claim for which no discovery should be needed.” (Paterno v. Superior Court (2008) 163 Cal.App.4th 1342, 1349.)

Plaintiffs’ claims fail as a matter of law because their purported oral agreement is void a matter of policy (and violates the statute of frauds). Also, Plaintiffs have failed to show good cause because they have failed to adduce even minimal evidence in support of their claims. The Court cannot, consistent with the purpose of the anti-SLAPP law, permit Plaintiffs to propound discovery based solely on the self-serving declarations of Resnik and Plaintiffs’ counsel.

Defendant Allstate and Knox’s special motions to strike are granted in their entireties.

[1] This result comports with analogous in the much-litigated PAGA space, finding an individual plaintiff’s capacity to waive its right to qui tam action is limited. (See Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, 1117-1118, citing Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 383, abrogated in different part by Viking River Cruises Inc. v. Moriana (2022) 596 U.S. 639.)

[2] Plaintiffs could (dubiously) argue that this broad waiver of all litigation rights whatsoever should somehow be severed and applied only to qui tam claims brought by Allstate on its own behalf. The Court doubts whether such an argument would be successful, but notes that it was not raised.

The Court also notes that, although it was not argued in the moving papers, the release may be void for violation of policy without implicating qui tam procedures. Plaintiffs construe the agreement as an agreement to refrain from filing “any lawsuit concerning any matter” for at least ten years. (Opp., 7:14.) The Court fails to see how a total waiver of all of a party’s rights to seek relief in court, no matter the subject matter, no matter whether a dispute arose before or after the Release, and possibly for an indefinite period of time (five years after a hypothetical proceeding against Healthpointe) could comport with policy.Health

Similarly, although the matter is not raised in the papers, the Court fails to see how Plaintiffs expect to enforce an oral agreement, to be performed over the course of at least ten years, consistent with the statute of frauds. (See Civ. Code, § 1624(a)(1); Plumlee v. Poag (1984) 150 Cal.App.3d 541, 548-549 [discussing rule].)