State Ex Rel. Grayson v. Pacific Bell Telephone Co.

Qui tarn relator Alan Grayson seeks a bounty under the False Claims Act (FCA; Gov. Code, § 12650 et seq.) for compelling telecommunication companies to escheat to the state balances on prepaid telephone cards by sidestepping the procedures provided by the Unclaimed Property Law (UPL; Code Civ. Proc., § 1500 et seq.) and circumventing the State Controller, the notice provisions, and the absence of any determination of liability under the law. Although in his third amended complaint he does not plead he had any specific inside knowledge of undisclosed fraud, he does allege that defendants’ duty to escheat was public knowledge. We must decide whether the qui tarn complaint has helped the government ferret out fraud it otherwise might not have uncovered or whether the allegations or transactions are substantially similar to information already in the public domain.

In sustaining defendant telecommunication companies’ demurrer to the third amended complaint without leave to amend, the trial court skipped the threshold issue of subject matter jurisdiction and decided that balances on prepaid telephone cards did not constitute property under the UPL. We affirm the dismissal of…