Under California Penal Code Section 496(a) a person who buys or receives any property that has been stolen or that has been obtained in any manner constituting theft or extortion, knowing the property to be so stolen or obtained, is subject to imprisonment. Subdivision (c) of the same statute provides that any person injured by such a violation may bring an action for three times the amount of actual damages, if any, sustained by the plaintiff, costs of suit, and reasonable attorney’s fees.
In Mandeep Dhoat v. Walia, 2024 WL 4804980 (N.D. Cal. Nov. 15, 2024), the plaintiff brought a derivative claim based on Section 496. The plaintiff alleged that the defendants had engaged in a scheme to route business through billing intermediaries, thereby reducing the corporation's profits. The derivative claim was based on the profits that could have gone to the corporation had the corporation had contracted directly, rather than through the billing intermediary entities. Judge Jacqueline Scott Corley, however, ruled that the plaintiff had failed to allege civil theft because the corporation had neither title to, nor possession of, the money allegedly stolen as it did not actually receive the hypothetical profits. The claim was dismissed without prejudice, so the plaintiff may try to replead his claim.
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