Defendants’ MSJ Reply Brief to Relator’s Contentions re Public Disclosure — United States ex rel. GNGH2 Inc. v. XLD Century LLC (Dkt. 67, C.D. Cal.)

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Defendants' MSJ Reply Brief to Relator's Contentions re Public Disclosure in United States ex rel. GNGH2 Inc. v. XLD Century LLC and XLD Group LLC, in the U.S. District Court for the Central District of California, dated April 1, 2024. The defendants respond to the relator's claim that public disclosures have become stale and that information more than 5 years old should not count as public disclosure. They argue that the relator relies erroneously on a New York district court ruling in U.S. ex rel. Kester v. Novartis. The brief concludes that the relator's complaint is subject to dismissal under the public disclosure bar, and it is signed by Dana Moon of Moon & Dorsett, PC.

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Case 2:22-cv-05514-SB-PVC Document 67 Filed 04/01/24 Page 1 of 5 Page ID #:651




1     Dana Moon, Esq. (Bar No. 185154)
      wk@moondorsett.com
2     MOON & DORSETT, PC
3     445 S. Figueroa Street, Suite 2900
      Los Angeles, CA 90071
4     Telephone: (213) 380-1526
5     Attorneys for Defendants
      XLD CENTURY LLC; XLD GROUP LLC
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                            UNITED STATES DISTRICT COURT
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10                   FOR THE CENTRAL DISTRICT OF CALIFORNIA
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      United States ex rel. GNGH2 Inc., )      Case No.: 2-22-CV-05514-5B-PVC
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                                        )
14                  Plaintiff,          )      DEFENDANTS’ MSJ REPLY
                                        )      BRIEF TO RELATOR’S
15                                             CONTENTIONS RE PUBLIC
            vs.                         )
16                                             DISCLOSURE
                                        )
17    XLD CENTURY LLC and XLD           )
                                        )      Date: May 3, 2024
18    GROUP LLC,                               Time: 8:30 a.m.
                                        )      Dept: “6C”
19                Defendants.           )
                                        )     Hon. Stanley Blumenfeld, Jr.
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22          Defendants XLD CENTURY LLC and XLD GROUP LLC (collectively
23    “Defendants”) hereby submit their reply brief to Plaintiff United States ex rel.
24    GNGH2, Inc. (“Relator”)’s contentions regarding public disclosure bar,
25    specifically its claim that public disclosure has become “stale” and that any
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      information more than 5 years old should disqualify as “public disclosure.”
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            Defendants’ Reply Brief to Relator’s Contention Re Public Disclosure Bar

     Case 2:22-cv-05514-SB-PVC Document 67 Filed 04/01/24 Page 2 of 5 Page ID #:652




1           Relator contends in the Joint Brief that “[e]ssentially all of Defendants’
2     public disclosure have become ‘stale’ for the purposes of the False Claims Act
3     (“FCA”),” erroneously relying on a New York district court ruling on U.S. ex rel.
4     Kester v. Novartis Pharmaceuticals Corporation (S.D.N.Y. 2014) 43 F.Supp.3d
5     332, 353 (Relator miscited this case as 43 F.Supp.2d 332, 353).
6           Not only is Relator’s purported reliance on Kester misplaced, but it is also,
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      within this case’s context, wholly misleading. Kester’s ruling has little to do with
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      public disclosure becoming “stale” due to the passage of time. Rather, the ruling
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      addressed the state court filings becoming “stale” due to the amendment of FCA to
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      exclude state court filings as sources of public disclosure. Here, there are no state
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      court filings that are at issue in this case. Public disclosures do not become stale
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      solely from any passage of time, as Relator contends.1
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            As Kester court noted:
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15          Thus, after the 2010 amendment, a court may consider federal court
            filings—but not state court filings—when it decides whether
16          “substantially similar” facts were disclosed prior to the bringing of a
17          qui tam relator's lawsuit.
18          (Kester, supra, 43 F.Supp.3d at 347.)
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            [T]here is a fairly convenient “sell by” date for the information that
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            was disclosed in 2008. On March 23, 2010 (the effective date of the
21          PPACA), the FCA was amended so that state court filings ceased to
22          qualify as sources of “public disclosures.” 31 U.S.C. § 3730(e)(4)(A)
            (2010). It thus makes sense to conclude that, at least by the date of the
23          amendment, the fact of the state court lawsuits had become
24          sufficiently stale so that Caremark secured a “clean slate,” as it were,
25     1
         According to counsel to and CEO of Relator David Abrams (“Counsel”),
26    Counsel scoured the entire US case law for any case mentioning the term “stale” in
27    connection with public disclosure, and Kester was the only case that mentions the
      word. Despite a meet and confer involving the discussion of why Kester is not
28    dispositive, Kester is nevertheless mentioned and relied upon by Relator.
                                           Page 2 of 5
            Defendants’ Reply Brief to Relator’s Contention Re Public Disclosure Bar

     Case 2:22-cv-05514-SB-PVC Document 67 Filed 04/01/24 Page 3 of 5 Page ID #:653




1           for purposes of the public disclosure bar; the old accusations against
2           Caremark could no longer be deemed “substantially similar” to any
            allegations of current misconduct, even if the allegations were similar
3           in every other way.
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            I thus conclude that Relator's allegations concerning Caremark's
5           conduct between January 2007 and March 2010 are “substantially
6           similar” to the allegations contained in the 2008 public disclosures;
            his allegations relating to Caremark's conduct after March 2010 are
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            not “substantially similar” to those prior disclosures.
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9           (Id. at 353.)
10          Moreover, Relator has conceded that it relied solely on publicly disclosed
11    information in drafting its complaint, belying its claim that public disclosures have
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      become “stale.” Where all information, by Relator’s own admission, utilized in
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      drafting its complaint stemmed not from any inside information, but from publicly
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      disclosed and available information, Relator cannot reasonably claim that such
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      information he obtained from publicly available sources on the internet became
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      “stale.” It is nonsensical to claim that those materials on which Relator has actually
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      relied for the factual allegations in his complaint have become “stale.”
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            In Relator’s 11/21/23 response and 12/28/23 amended response (collectively
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      “Response”) to Interrogatory (“Rog”) number 8, Relator states that it discovered
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21    that “[a]t all time relevant to this matter, the Defendants were wholly owned

22    subsidiaries of Sichuan Xinglida Group Enterprises, which is a PRC real estate
23    investment company based in Sichuan, People’s Republic of China,” as stated in
24    its complaint (¶ 16, page 4, lines 9-11), “from a review of the website of said
25    Sichuan Xinglida Group Enterprises.” Relator further states that “Plaintiff is not
26    contending that its discovery was based on inside information.”
27          In its Response to Rog 9, Relator states that the discovery of Defendants
28    receiving $4 million in “disaster relief as a result of the certifications set forth
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            Defendants’ Reply Brief to Relator’s Contention Re Public Disclosure Bar

     Case 2:22-cv-05514-SB-PVC Document 67 Filed 04/01/24 Page 4 of 5 Page ID #:654




1     above,” as stated in its complaint (¶ 24, page 5, lines 6-8), was “based on PPP
2     information provided by the SBA” and that it was not “based on inside
3     information.”
4            In Relator’s Response to Rog 10, Relator states it discovered that
5     “Defendant XLD CENTURY LLC is a California limited liability with primary
6     place of business in Los Angeles, California,” as stated in its complaint (¶ 2, page
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      2, lines 2-3) “from a review of the Defendant’s filings with the California
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      Secretary of State.”
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             In Relator’s Response to Rog 11, Relator states that it “does not recall” how
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      it discovered that “Defendant XLD CENTURY LLC operates the LAX Marriott
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      hotel,” as its complaint states. (¶ 2, page 2, lines 3-4.) Relator further states that
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      “Plaintiff is not contending that its discovery was based on inside information.”
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             In Relator’s Response to Rog 12, Relator states that Relator states it
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15    discovered that “Defendant XLD GROUP LLC is a California limited liability with

16    primary place of business in Los Angeles, California,” as stated in its complaint (¶
17    3, page 2, lines 5-6) “from a review of the Defendant’s filings with the California
18    Secretary of State.”
19           In Relator’s Response to Rog 13, Relator states that it “does not recall” how
20    it discovered that “Defendant XLD GROUP operates the LAX Marriott hotel,” as
21    its complaint states. (¶ 3, page 2, lines 6-7.) Relator further states that “Plaintiff is
22    not contending that its discovery was based on inside information.
23           Accordingly, all factual allegations in the complaint against Defendants
24    stem, by Relator’s own admission, not from any inside information, but solely
25    from publicly disclosed and available information.
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             Generally, information published on the internet has been held to be a
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      public disclosure so long as the websites are readily accessible. See U.S. ex rel.
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            Defendants’ Reply Brief to Relator’s Contention Re Public Disclosure Bar

     Case 2:22-cv-05514-SB-PVC Document 67 Filed 04/01/24 Page 5 of 5 Page ID #:655




1     Green v. Serv. Contract Educ. & Training Trust Fund, 843 F. Supp. 2d 20, 32-33
2     (D.D.C. 2012) ((“there is no evidence or contention that access to the website was
3     limited to SCETTF or LIUNA members of that the website was in any other way
4     restricted”); United States ex rel. Repko v. Guthrie Clinic, P.C., 2011 WL
5     3875987, aff’d 2012 WL 3104883(3rd Cir 2012) (material in question disclosed
6     on several different websites including Guidestar, Bloomberg Professional and
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      Standard & Poor’s); United States ex rel. Doe v. Staples, Inc. CIV. 08-846 RJL,
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      2013 WL 1192982 (D.D.C. Mar. 22, 2013); United States ex rel. Unite Here v.
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      Cintas Corp., No. C 06-2413 PJH, 2007 WL 4557788, at *14 (N.D.Cal. Dec. 21,
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      2007.).)
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            Accordingly, Relator’s complaint is subject to dismissal based on public
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      disclosure bar.
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15    Dated: April 1, 2024                  MOON & DORSETT, PC

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17                                          By: _______/s/_____________________
                                                  Dana Moon Esq.
18                                          Attorneys for Defendants
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                                           Page 5 of 5
            Defendants’ Reply Brief to Relator’s Contention Re Public Disclosure Bar

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