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Wichansky v. Zowine

United States District Court, D. Arizona

November 4, 2014

Marc A. Wichansky, Plaintiff,
David T. Zowine, et al., Defendants.


DAVID G. CAMPBELL, District Judge.

Defendants David Zowine, Karen Zowine, Zoel Holding Company, Inc., and MGA Home Healthcare LLC, along with Martha Leon, Charles Johnson, Patricia Gonzalez, Pat Shanahan, Sarah Shanahan, Mike Ilardo, Alisa Ilardo, Rio Mayo, Michael Narducci, Brett Costello, Andrea Costello, Justin Grant, Kai Knowlton, and Don Maniccia ("Employee Defendants"), have filed a motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). Doc. 61. The motions are fully briefed. For the reasons that follow, the Court will grant Defendants' motion in part.

I. Background.

Plaintiff Marc Wichansky began this action on June 14, 2013, alleging violations of the anti-retaliation provisions of the False Claims Act ("FCA"), 31 U.S.C. § 3729, violations of the Computer Fraud and Abuse Act ("CFAA"), 18 U.S.C. §§ 1030(a)(2)(C), 1030(a)(4), 1030(a)(5)(C), 1030(b), and violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. Doc. 1 at 2. Plaintiff also alleged many claims arising under state law, including breach of fiduciary duty, constructive fraud, defamation, defamation per se, assault, battery, intentional infliction of emotional distress, intentional interference with existing business relations, intentional interference with prospective business relations, unjust enrichment, intrusion upon seclusion, prima facie tort, and aiding and abetting tortious conduct. Id. at 38-48. This Court granted Defendants' motion to dismiss the Plaintiff's original complaint with leave to amend on January 24, 2014. Doc. 49. Plaintiff then filed a 93-page First Amended Complaint, alleging the previous claims and adding a claim for violation of the obstruction of justice provision of 42 U.S.C. § 1985(2). Doc. 54.

This case is only the latest in a longstanding and bitter dispute between the parties. Plaintiff alleges that in 2006 he and Defendant David Zowine ("Zowine") founded Defendant Zoel Holding Company, Inc. ("Zoel"), a company specializing in employee placement services. Id., ¶¶ 45-46. Plaintiff owned a 50% interest and served as Zoel's chairman and president. Id., ¶¶ 41, 48. Plaintiff's employment duties and responsibilities included administrative operations and the management or supervision of day-to-day business affairs. Doc. 54, ¶¶ 49-50. Zowine also owned 50% and was Zoel's secretary and vice president. Id., ¶¶ 41, 51. Zowine ran sales operations. By 2011, Zoel generated in excess of $40 million in revenues, maintained offices in five states, and employed hundreds of people. Id., ¶ 54.

Between December 2010 and January 2011, Plaintiff alleges that Zowine's behavior toward Plaintiff changed dramatically. Id., ¶ 80. Zowine began to intimidate, harass, and disparage Plaintiff, members of Plaintiff's family, and any Zoel employees whom Zowine believed remained loyal to Plaintiff. Id., ¶ 81. Plaintiff alleges that Zowine would scream obscenities at Plaintiff and other Zoel employees while holding or swinging a baseball bat and that Zowine would knowingly express falsehoods about Plaintiff. Id., ¶¶ 83, 86. Zowine's belligerent behavior continued for some time and caused the staff at Zoel to fracture into two camps: those who respected the chain of command and remained loyal to Plaintiff and those loyal to Zowine and under his immediate influence and command. Id., ¶ 88. Zowine's camp, the Employee Defendants, began to be unruly and uncooperative and to engage in obstructive, demeaning, and intimidating conduct. Id., ¶ 89. On January 19, 2011, Zowine allegedly attacked and beat Plaintiff on Zoel's premises. Id., ¶ 95. In his capacity as Zoel's president and chairman, Plaintiff caused Zoel to place Zowine on paid administrative leave on January 25, 2011. Id., ¶ 101.

Plaintiff alleges that Zowine and the Employee Defendants conspired to operate a secret office at the Regus business center. Id., ¶ 115. While Plaintiff and Zowine were attending a court hearing, six of the Employee Defendants forced their way into Zoel's server room and attempted to make a duplicate copy of Zoel's email server and main server. Id., ¶ 126. Unable to rapidly copy the server's data, they allegedly ripped servers from the wall and absconded with the servers and over 30 computers. Id., ¶¶ 127-28. Zowine and the Employee Defendants refused to return the servers or computers. In addition, Zowine subsequently dispatched an expert to Zoel's headquarters who accessed and copied Plaintiff's personal office computer. Id., ¶ 145. In order to retrieve information that was vital for the continued operation of Zoel, Plaintiff personally hired a firm specializing in computer forensics to image the stolen devices and paid them $165, 934.66. Id., ¶¶ 147, 151. After this incident, Zowine and the Employee Defendants would routinely leave their secret office and arrive at Zoel unannounced, where they would aggressively threaten, disparage, humiliate, and victimize Plaintiff and other Zoel employees. Id., ¶¶ 155-58.

On January 26, 2011, Plaintiff caused Zoel to terminate Zowine's employment. Id., ¶ 112. Zowine disputed Plaintiff's authority to terminate his employment in state court. Zowine prevailed in state court. Id, ¶ 160. Given the immense tension that existed between the parties, Plaintiff concluded that he had no alternative but to seek judicial dissolution of Zoel. Id., ¶ 163. Under Arizona law, Zowine elected to buy Plaintiff out in lieu of permitting Zoel to be wound down. Id., ¶ 173.

In preparation for the Zoel valuation hearing, Plaintiff retained experts who allegedly discovered facts that exposed a fraudulent billing scheme taking place at MGA Home Healthcare LLC ("HHL"), one of Zoel's subsidiaries overseen by Zowine. Id., ¶ 174. The sprawling scope of the fraudulent scheme suggested to Plaintiff that Zowine had been intimately involved with it. Id., ¶¶ 178-81. Plaintiff claims that upon discovery of the billing fraud he realized that Zowine's violent and abrasive conduct had been designed from the start to drive Plaintiff from Zoel and dupe him into petitioning for dissolution, thereby enabling Zowine to buy Plaintiff out and prevent anyone from discovering the fraudulent scheme. Id., ¶¶ 175-76, 194-95. Plaintiff moved to withdraw his dissolution petition and set aside Zowine's election to purchase Plaintiff's shares, but the state court denied his motions. Id., ¶¶ 195-96.

A five-day valuation proceeding took place in February 2012. In December 2012, the state court ordered that Zowine be permitted to purchase Plaintiff's shares of Zoel at a price Plaintiff believed to be materially below fair value. Id., ¶ 203. Plaintiff claims that Zowine and certain Employee Defendants have conspired since June 2013 to deter Plaintiff from seeking redress from the state and federal courts through a systematic campaign of escalating intimidation, harassment, physical violence, and disparagement. Id., ¶ 451.

II. Legal Standard.

When analyzing a complaint for failure to state a claim to relief under Rule 12(b)(6), the well-pled factual allegations are taken as true and construed in the light most favorable to the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). Legal conclusions couched as factual allegations are not entitled to the assumption of truth, Ashcroft v. Iqbal, 556 U.S. 662, 680 (2009), and therefore are insufficient to defeat a motion to dismiss for failure to state a claim, In re Cutera Sec. Litig., 610 F.3d 1103, 1108 (9th Cir. 2010). To avoid a Rule 12(b)(6) dismissal, the complaint must plead enough facts to state a claim to relief that is plausible on its face. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This plausibility standard "is not akin to a probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 556).

III. Analysis.

A. Retaliation in Violation of the False Claims Act.

Plaintiff asserts a claim for retaliation under the FCA. The Ninth Circuit has explained this ...

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