Nevins v. Upward Foundation

Filing 17

ORDER that Upward Foundation's Motion to Dismiss Complaint (Doc. 6) is GRANTED. IT IS FURTHER ORDERED that Nevinss Motion for Leave to Amend Complaint (Doc. 8) is DENIED as moot. Signed by Judge Neil V Wake on 6/30/2011.(KMG)

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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Jack Nevins, No. CV-11-00563-PHX-NVW Plaintiff, 10 11 vs. 12 ORDER Upward Foundation, an Arizona non-profit corporation, 13 Defendant. 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Before the Court is Defendant’s Motion to Dismiss Complaint (Doc. 6) and Plaintiff’s Motion for Leave to Amend Complaint (Doc. 8). The Court will grant Defendant’s motion and deny Plaintiff’s motion as moot in light of the pending motion for leave to file a second amended complaint. I. MOTION TO DISMISS LEGAL STANDARD To state a claim for relief under Fed. R. Civ. P. 8(a), a plaintiff must make “‘a short and plain statement of the claim showing that the pleader is entitled to relief,’ in order to ‘give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.’” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted). This “short and plain statement” must also be “plausible on its face.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). A claim is plausible if it contains sufficient factual matter to permit a reasonable inference that the defendant is liable for the conduct alleged. Id. “Determining whether a complaint states a plausible claim for relief . . . [is] 1 a context-specific task that requires the reviewing court to draw on its judicial experience 2 and common sense.” Id. at 1950. 3 A proper complaint needs no “formulaic recitation of the elements of a cause of 4 action,” see Twombly, 550 U.S. at 555, but the plaintiff must at least “allege sufficient 5 facts to state the elements of [the relevant] claim,” Johnson v. Riverside Healthcare Sys., 6 LP, 534 F.3d 1116, 1122 (9th Cir. 2008). 7 allegations are accepted as true and the pleadings are construed in a light most favorable 8 to the plaintiff. Knievel, 393 F.3d at 1072. 9 II. 10 11 All of the plaintiff’s plausible factual BACKGROUND The following facts are accepted as true for purposes of Upward Foundation’s motion to dismiss. 12 Defendant Upward Foundation is an Arizona nonprofit corporation that receives 13 federal financial assistance. On August 14, 2001, Defendant Upward Foundation hired 14 Plaintiff Jack Nevins to be Upward Foundation’s executive director. 15 someone at Upward Foundation told Nevins that he would receive deferred 16 compensation, just as previous executive directors had received deferred compensation. 17 Upward Foundation’s Board of Directors approved such deferred compensation for 18 Nevins before hiring him, amounting to $225,000 after five years of employment, and 19 $337,500 after 10 years of employment. Nevins, however, never received a copy of that 20 Board resolution, nor did he receive any other document memorializing the terms of 21 deferred compensation, but he knew that such deferred compensation would be funded 22 through a life insurance policy on his own life. Such a policy was indeed issued on 23 December 13, 2002. At that time, 24 In 2009, Nevins began discussing the deferred compensation plan with Upward 25 Foundation representatives. The plan had not been fully funded, and Nevins wanted to 26 reduce the deferred compensation arrangement to writing. Upward Foundation agreed to 27 negotiate with Nevins on this issue. 28 -2  1 Around the same time, Nevins began to experience problems with one of his eyes, 2 requiring multiple surgeries and eventually resulting in legal blindness. These medical 3 issues lasted through February 2010, during which time very little progress was made on 4 Nevins’s deferred compensation agreement. 5 Despite these medical challenges, Nevins missed little time at work. In fact, 6 throughout Nevins’s time at Upward Foundation, he had never received a negative 7 performance review, written warning, or disciplinary action of any type. However, 8 according to minutes from Upward Foundation’s board meeting on January 18, 2010, the 9 president of Upward Foundation’s board of directors, Alan Havir, moved to terminate 10 Nevins as soon as possible. The board approved the motion and directed Havir to inform 11 Nevins of the termination as soon as possible. 12 Nevins was not aware of the board’s resolution at the time the board made it, and 13 Havir did immediately say anything to Nevins. In mid-February 2010, Havir visited 14 Nevins at the office and asked about Nevins’s health but did not mention the board 15 resolution. About a week later, Havir terminated Nevins without explanation. Nevins 16 was offered a severance package, but that package was withdrawn when Nevins 17 informally asserted legal claims against Upward Foundation. To this date, Nevins has 18 not received any severance or deferred compensation, although the life insurance policy 19 that was supposed to fund his deferred compensation is currently worth about $200,000. 20 III. PROCEDURAL HISTORY 21 Nevins believes that Upward Foundation fired him either because of his medical 22 conditions, his insistence on reducing the deferred compensation agreement to writing 23 and making sure it was funded, or both. To that end, he alludes to a discrimination 24 charge filed with the EEOC (Doc. 1-1 ¶ 49), and he eventually filed suit in Maricopa 25 County Superior Court, alleging three causes of action: (1) violation of the Rehabilitation 26 Act, 29 U.S.C. § 794; (2) violation of the Arizona Wage Act, A.R.S. § 23-350 to -362; 27 and violation of the Arizona Employment Protection Act, A.R.S. § 23-1501. Upward 28 -3  1 Foundation removed to this Court based on federal question jurisdiction and has now 2 moved to dismiss. 3 IV. ANALYSIS 4 A. Rehabilitation Act Claim 5 The Rehabilitation Act provides: “No otherwise qualified individual with a 6 disability in the United States . . . shall, solely by reason of her or his disability, be 7 excluded from the participation in, be denied the benefits of, or be subjected to 8 discrimination under any program or activity receiving Federal financial assistance . . . .” 9 29 U.S.C. § 794(a). Nevins claims that his blindness makes him an “individual with a 10 disability,” and that Upward Foundation terminated him “[m]otivated in part by 11 Plaintiff’s disability, and Defendant’s perception of Plaintiff being disabled.” (Doc. 1-1 12 ¶ 37.) 13 As alleged, Nevins cannot sustain a Rehabilitation Act claim because he claims 14 that Upward Foundation was “[m]otivated in part by [his] disability,” rather than 15 motivated “solely” by his disability, as the Rehabilitation Act requires. As pleaded, then, 16 the claim must be dismissed. 17 18 B. Wage Act Claim 1. Deferred Compensation as “Wages” 19 Under the Wage Act, “if an employer . . . fails to pay wages due any employee, the 20 employee may recover in a civil action against an employer or former employer an 21 amount that is treble the amount of the unpaid wages.” A.R.S. § 23-355(A). The Wage 22 Act defines “wages” as 23 24 25 26 27 nondiscretionary compensation due an employee in return for labor or services rendered by an employee for which the employee has a reasonable expectation to be paid whether determined by a time, task, piece, commission or other method of calculation. Wages include sick pay, vacation pay, severance pay, commissions, bonuses and other amounts promised when the employer has a policy or a practice of making such payments. A.R.S. § 23-350(5). 28 -4  1 Upward Foundation argues that deferred compensation is not “wages” for 2 purposes of the Wage Act. 3 deferred compensation qualifies as “wages,” but the Wage Act as a whole demonstrates 4 that “wages” refers primarily to regularly received compensation. See A.R.S. § 23- 5 351(C). Nevins’s alleged deferred compensation does not fall under this definition. 6 Accordingly, the Wage Act claim will be dismissed for failure to state a claim. 2. 7 No located authority answers the question of whether ERISA Preemption 8 Upward Foundation also argues that the Employment Retirement Income Security 9 Act (ERISA) preempts Nevins’s Wage Act claim. Specifically, Upward Foundation 10 claims that the deferred compensation arrangement Nevins described in his complaint 11 qualifies as a “plan . . . established or maintained by an employer . . . [that] results in a 12 deferral of income by employees for periods extending to the termination of covered 13 employment or beyond.” 14 compensation arrangement falls within this definition. Accordingly, Nevins’s Wage Act 15 claim fails both because his deferred compensation is not “wages” under the Wage Act, 16 and because ERISA preempts the claim. 17 18 C. 29 U.S.C. § 1002(2)(A)(ii). Nevins’s alleged deferred Employment Protection Act Claim 1. The Employment Protection Act’s Applicability 19 The Arizona Employment Protection Act allows employees to bring wrongful 20 termination claims against employers under various circumstances, but none of those 21 circumstances apply to Nevins’s allegation that Upward Foundation terminated him 22 because he had complained about the absence of a written deferred compensation 23 agreement. Nevins’s claim that he was fired because of his legal blindness does fit within 24 the Employment Protection Act’s deference to bringing wrongful termination claims 25 when “[t]he employer has terminated the employment relationship of an employee in 26 violation of a statute of this state . . . including . . . the civil rights act prescribed in title 27 41, chapter 9.” A.R.S. § 23-1501(3)(b)(i). However, because the Civil Rights Act 28 “provides a remedy to an employee,” that Act’s statutory remedies “are the exclusive -5  1 remedies” available to Nevins. A.R.S. § 23-1501(3)(b). He cannot sure under the 2 Employment Protection Act. Hence, Nevins’s third cause of action does not state a claim 3 for relief. 2. 4 5 ERISA Preemption Upward Foundation claims that, like Nevins’s Wage Act claim, ERISA preempts 6 Nevins’s Employment Protection Act claim. Upward Foundation is correct, and 7 therefore Nevins’s Employment Protection Act claim also founders on ERISA. 8 D. 9 At the same time Nevins filed his response to Upward Foundation’s motion to 10 dismiss, he filed a motion to amend his complaint. Nevins has since filed a motion for 11 leave to file a second amended complaint. The first motion for leave is therefore moot, 12 and the Court will await full briefing on the second motion. 13 14 15 Leave to Amend IT IS THEREFORE ORDERED that Upward Foundation’s Motion to Dismiss Complaint (Doc. 6) is GRANTED. IT IS FURTHER ORDERED that Nevins’s Motion for Leave to Amend 16 Complaint (Doc. 8) is DENIED as moot. 17 Dated this 30th day of June, 2011. 18 19 20 21 22 23 24 25 26 27 28 -6 

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