California Court of Appeal Clarifies Qui Tam Sealing Rules in Albarghouti v. LA Gateway Partners

A recently published decision from the California Court of Appeal, Second Appellate District (Jamal Albarghouti v. LA Gateway Partners, LLC, et al., Case No. B333058, filed March 24, 2026, certified for publication April 2, 2026) carries meaningful implications for qui tam plaintiffs under the California False Claims Act (CFCA). The Court reversed a trial court dismissal and held that a CFCA qui tam complaint's seal lifts automatically after 60 days, opening the door for private whistleblowers to pursue alleged false claims even when government authorities fall short of their own statutory obligations.

Background: The Alleged False Claims

The dispute arose from a qui tam complaint filed by Relator Jamal Albarghouti on behalf of Los Angeles World Airports (LAWA) and the LA Department of Water and Power (LADWP). The defendants (LA Gateway Partners, LLC (LAGP) and PCL Construction Services, Inc. (PCL)) performed work under a not-to-exceed $2,028,302,301 Design-Build-Finance-Operate-Maintain contract for the LAX Consolidated Rent-A-Car Facility (ConRAC).

The First Alleged False Claim: LAGP and PCL allegedly represented to LAWA that a mandated change to a more expensive shoring method would require an additional $2,120,284.32. LAWA and LADWP paid that amount in full - but the relator alleges that LAGP and PCL never intended to use the costlier method and instead proceeded with the original, less expensive approach, retaining the difference.

The Second Alleged False Claim: In August 2020, LAGP and PCL submitted two voluminous relief event claims seeking tens of millions of dollars from LAWA, premised on alleged utility pole removal delays. The relator alleges the underlying representations were knowingly false, including allegedly inflated hauling distances, overstated labor and equipment needs, and falsified overtime hours. LAWA settled both claims for $7.4 million and paid an additional $42 million in change orders that the relator alleges were improper.

The Procedural Battle: Trial Court Dismissal

Relator filed his complaint on May 27, 2022, under seal, and served the California Attorney General by certified mail the same day. After 60 days passed without the Attorney General seeking an extension or notifying the court of its intervention decision, Relator served the defendants. It was subsequently confirmed that the California Attorney General's Office had in fact received the complaint, but due to an internal administrative error, had allegedly failed to forward it to the relevant public entities. Defendants seized on this sequence of events, arguing that Relator had improperly unsealed the complaint before the Attorney General acted, thereby depriving the court of jurisdiction. The trial court agreed, sustaining a demurrer to the Second Amended Complaint without leave to amend and dismissing with prejudice. Relator appealed.

The Appellate Ruling: Seal Lifts Automatically After 60 Days

The Court of Appeal reversed. It determined that compliance with the CFCA's sealing and service requirements is not a prerequisite to stating a cause of action and cannot, on its own, support a demurrer. Drawing on the U.S. Supreme Court's analysis in State Farm Fire and Cas. Co. v. U.S. ex rel. Rigsby, 580 U.S. 26 (2016), the Court reasoned that where the Legislature intended dismissal as a remedy, it said so expressly, and the CFCA's sealing provisions carry no such mandate.

The Court also held that the CFCA creates a 60-day default sealing period, after which the seal lifts automatically if the government neither requests an extension nor notifies the court of its intervention decision. The statutory language, that a complaint "may remain under seal for up to 60 days" (Gov. Code § 12652, subd. (c)(2)), establishes a ceiling, not an indefinite hold. The Court rejected defendants' interpretation as one that would allow the seal to persist indefinitely through governmental inaction, rendering the good-cause requirement for extensions superfluous. The Court also noted that California deliberately differs from the federal FCA, which requires the seal to remain in place for "at least" 60 days and mandates a court order before service, reflecting California's policy preference for private enforcement.

Moreover, the Court rejected defendants' argument that Relator lacked standing because the government had never "assigned" its rights to him by formally declining to intervene. The Court found that Government Code section 12652 expressly authorizes a qui tam plaintiff to bring an action without prior governmental approval and that the relator holds a personal stake in the action independent of the government's representative role. Standing to bring and to pursue the action did not depend on the government giving notice of non-intervention.

The Court of Appeal reversed the judgment in full, including the cost award to defendants, and remanded with directions to the trial court to overrule the demurrer. Relator was awarded his costs on appeal.

Key Takeaways for Whistleblowers and Practitioners

This decision has several practical implications for CFCA qui tam practice. First, the 60-day seal is a ceiling, not a floor: under Government Code section 12652, subdivision (c)(2), the seal lifts automatically if the government neither moves to extend it nor notifies the court of its intervention decision. A relator who files under seal, serves the Attorney General by certified mail with return receipt requested, and waits the full 60 days before serving defendants has complied, regardless of whether the government acts. Second, government inaction does not defeat private enforcement. A relator cannot be penalized for the government's failure to meet its own statutory obligations, including its duty to forward the complaint to local prosecuting authorities. Note, however, that governmental inaction is not a formal declination: the government retains the right to move to intervene later under section 12652, subdivision (f)(2)(A), upon a showing of inadequate representation. Third, procedural noncompliance does not mandate automatic dismissal, but it is not consequence-free. Trial courts retain inherent authority to impose sanctions, and the Court left open whether California applies the federal three-factor balancing test (weighing the actual harm from the seal violation, the severity of the violation, and the evidence of bad faith).