Case 2:12-cv-10400-PA-AGR Document 61 Filed 07/19/13 Page 1 of 4 Page ID #:4699

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL Case No. Title CV 12-10400 PA (AGRx) Date July 19, 2013

AIDS Healthcare Foundation, et al. v. Los Angeles County, et al.

Present: The Honorable Paul Songco Deputy Clerk

PERCY ANDERSON, UNITED STATES DISTRICT JUDGE Not Reported Court Reporter N/A Tape No.

Attorneys Present for Plaintiffs: None Proceedings:

Attorneys Present for Defendants: None

IN CHAMBERS COURT ORDER

Before the Court is an Ex Parte Application for Temporary Restraining Order and OSC re Preliminary Injunction (Application for TRO) filed by plaintiffs AIDS Healthcare Foundation (AHF) and Michael Weinstein (collectively Plaintiffs) (Docket No. 59). Pursuant to Rule 78 of the Federal Rules of Civil Procedure and Local Rule 7-15, the Court finds that this matter is appropriate for decision without oral argument. I. Factual Background and Procedural History

Plaintiffs commenced this action against defendants Los Angeles County (the County), Jonathan Fielding, Mario Perez, Zev Yaroslovsky, and Gloria Molina on December 5, 2012. On March 18, 2013, the Court granted defendants Motion to Dismiss the original Complaint and Plaintiffs filed a First Amended Complaint (FAC). The FAC alleges, among other things, that defendants have, over the past ten years, engaged in repeated audits of Plaintiffs facilities and contracts with the County, each time shortly after Plaintiffs have criticized Defendants. (FAC 112.) Specifically, AHF alleges that in 2010, the Countys Division of HIV and STD Programs (DHSP) asked the Auditor Controller to conduct an audit of AHF and incorrectly told the Auditor Controller that AFH had not filed a cost allocation plan. (FAC 114-15.) A draft of this audit (the 2010 Audit) was released in September 2010 and concluded that AHF had overbilled the County in excess of $1.7 million. AHF disputed the 2010 Audits findings in a November 24, 2010 response. According to the FAC: On May 31, 2012, (around the time AHF sued the County Defendants over the Ramsell contract, and when Measure B showed strong public support), the Auditor Controller issued another identical audit report labeled May xx 2012. This report again claimed that AHF owed the County over $1.7 million (the 2012 Audit). (FAC 125.) The FAC alleges that the County again demanded payment of the $1.7 million in September 2012, October 2012, and on election day, November 6, 2012, when Measure B was on the ballot. (FAC 128, 132, 133.) On one occasion in 2012, according to the FAC, Mario Perez, the Director of DHSP, allegedly brought representatives from the Auditor Controllers office to a Health and
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Case 2:12-cv-10400-PA-AGR Document 61 Filed 07/19/13 Page 2 of 4 Page ID #:4700

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL Case No. Title CV 12-10400 PA (AGRx) Date July 19, 2013

AIDS Healthcare Foundation, et al. v. Los Angeles County, et al.

Mental Health Services Cluster meeting for the sole purpose of intimidating Plaintiffs. (FAC 136.) According to the FAC, after the filing of the original Complaint, Plaintiffs announced a campaign to create an independent health department within the City of Los Angeles that would replace the Countys Department of Public Health (DPH). (FAC 142.) The FAC alleges that defendants have responded to this new campaign by announcing a new audit of AHFs programs. (FAC 145.) Plaintiffs allege that this new audit is not within regular audit patterns and not sought against other providers. (FAC 147.) The FAC alleges claims for: (1) violation of the First Amendment pursuant to 42 U.S.C. 1983; (2) conspiracy to violate federal constitutional rights; (3) retaliation under the False Claims Act, 31 U.S.C. 3730(h); and (4) declaratory relief pursuant to California Civil Code 1060. Defendants filed a Motion to Dismiss the FAC. On June 3, 2013, the Court granted in part, and denied in part, the Motion to Dismiss the FAC. Specifically, the Court dismissed Plaintiffs claims except with respect to AHFs claim for declaratory relief against the County, Plaintiffs First Amendment claim brought pursuant to 42 U.S.C. 1983 against Perez, and the Monell and Canton claims against the County. The Court dismissed the remaining claims and defendants without leave to amend. In their Application for TRO, Plaintiffs seek to delay the County from beginning its latest audit of AFH from July 22, 2013, to no earlier than September 1, 2013. According to Plaintiffs, the new audit comes shortly after AHFs staff to devoted significant resources to previous audits. Plaintiffs assert that they are still playing catch up to compensate for time lost in performing their normal day-to-day functions as a result of the prior audits and that the patient care provided by AHF will suffer if the Countys new audit begins on July 22, 2013. According to the County, it has been attempting to schedule the new fiscal audit, which is required by the federal agency overseeing the Countys dispersal of federal health care funds, since March 2013, and already delayed the audit from May to July 22, 2013, when AHF refused to agree to the proposed May dates. The County asserts that in the past, AHF and other providers have never indicated that fiscal audits have had any impact on the delivery of patient care at their clinics. (Perez Decl. 6.) According to the County, the July 22 fiscal audit would only require the involvement of AHFs financial and administrative staff; no involvement from AHFs clinical and program staff would be required. (Id.) II. Analysis

The standard for issuing a temporary restraining order is identical to the standard for issuing a preliminary injunction. See Lockheed Missile & Space Co., Inc. v. Hughes Aircraft Co., 887 F. Supp. 1320, 1323 (N.D. Cal. 1995). A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest. Winter v. Natural Resources Defense Council, 555 U.S. 7, 20, 129 S. Ct. 365, 374, 172 L. Ed. 2d 249
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Case 2:12-cv-10400-PA-AGR Document 61 Filed 07/19/13 Page 3 of 4 Page ID #:4701

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL Case No. Title CV 12-10400 PA (AGRx) Date July 19, 2013

AIDS Healthcare Foundation, et al. v. Los Angeles County, et al.

(2008). A preliminary injunction is an extraordinary remedy never awarded as of right. Id. The Ninth Circuit employs a sliding scale approach to preliminary injunctions as part of this four-element test. Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir. 2011). Under this sliding scale, a preliminary injunction may issue when a plaintiff demonstrates . . . that serious questions going to the merits were raised and the balance of hardships tips sharply in the plaintiffs favor, as long as the other two Winter factors have also been met. Id. (internal citations omitted). [A] preliminary injunction is an extraordinary and drastic remedy, one that should not be granted unless the movant, by a clear showing, carries the burden of persuasion. Mazurek v. Armstrong, 520 U.S. 968, 972, 117 S. Ct. 1865, 1867, 138 L. Ed. 2d 162 (1997). The Application for TRO contends that Plaintiffs have a substantial likelihood of success on the merits of their First Amendment claim. The First Amendment forbids government officials from retaliating against individuals for speaking out. Blair v. Bethel School Dist., 608 F.3d 540, 543 (9th Cir. 2010). To prevail on a 1983 First Amendment retaliation claim, a plaintiff must prove: (1) he engaged in constitutionally protected activity; (2) as a result, he was subjected to adverse action by the defendant that would chill a person of ordinary firmness from continuing to engage in the protected activity; and (3) there was a substantial causal relationship between the constitutionally protected activity and the adverse action. Id. The only evidence submitted in support of Plaintiffs allegations of retaliation in violation of the First Amendment is contained in a single paragraph of Michael Weinsteins Declaration. That paragraph states: Plaintiffs in this action allege that Defendants have initiated a retaliatory campaign against Plaintiffs using, among other tools, unwarranted and unduly burdensome audits and incorrect audit findings, including those discussed above, to punish Plaintiffs for exercising their rights and for taking positions critical of the County. Defendants have continued that campaign during the pendency of this action, most recently by insisting that an audit of unprecedented scope commence on July 22, 2013 directly on the heels of the conclusion of the information-gathering portions of prior audits that have been pending for the last several months. Defendants have stated no basis for insisting that the contemplated audit commence on the heels of the conclusion of the prior audits and, more importantly, have ignored AHFs pleas that Defendants continued insistence on conducting the contemplated audit would put the health of AHFs patients at risk.

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Case 2:12-cv-10400-PA-AGR Document 61 Filed 07/19/13 Page 4 of 4 Page ID #:4702

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL Case No. Title CV 12-10400 PA (AGRx) Date July 19, 2013

AIDS Healthcare Foundation, et al. v. Los Angeles County, et al.

(Weinstein Decl. 15.) This paragraph does nothing more than repeat the allegations contained in the FAC. Unlike the limited success Plaintiffs have achieved in opposing defendants Motions to Dismiss, in which the Court confined its consideration to the allegations contained in the pleadings, Plaintiffs must support their request for injunctive relief with evidence. In the absence of sufficient evidence, as opposed to allegations, Plaintiffs have not met their burden to make a clear showing of a likelihood of success on the merits. See Mazurek, 520 U.S. at 972, 117 S. Ct. at 1867, 138 L. Ed. 2d 162. Nor can the Court conclude that Plaintiffs have succeeded in raising serious questions going to the merits. See Alliance for the Wild Rockies, 632 F.3d at 1135. As a result of Plaintiffs failure to meet their burden to show a likelihood of success or raising serious questions going to the merits, the Court concludes that Plaintiffs are not entitled to the injunctive relief they seek despite their showing of irreparable harm. Even Plaintiffs evidence of irreparable harm is relatively weak in light of the Countys evidence that the type of fiscal audit it plans ordinarily does not interfere with the delivery of patient care. Additionally, the Court cannot conclude that the balance of hardships and public interest favor Plaintiffs. Instead, those factors, which arguably pose only a minimal conflict between Plaintiffs effective provision of important medical services to a vulnerable population against the Countys equally important interests in making sure public funds are spent wisely and in accordance with contractual and statutory requirements, do not tip sharply in favor of Plaintiffs. CONCLUSION For all of the foregoing reasons, the Court concludes that Plaintiffs have not met their burden to justify the injunctive relief they seek. The Court therefore denies Plaintiffs Application for TRO. IT IS SO ORDERED.

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