Egge v. County of Santa Clara et al

Filing 67

ORDER GRANTING 55 , 59 MOTIONS TO DISMISS FIRST AMENDED COMPLAINT WITHOUT LEAVE TO AMEND; AND DISMISSING ACTION. Signed by Judge Beth Labson Freeman on 5/7/2018. (blflc1S, COURT STAFF) (Filed on 5/7/2018)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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MELISSA EGGE,
Plaintiff,

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United States District Court
Northern District of California

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v.
COUNTY OF SANTA CLARA, et al.,
Defendants.

Case No. 17-cv-02842-BLF
ORDER GRANTING MOTIONS TO
DISMISS FIRST AMENDED
COMPLAINT WITHOUT LEAVE TO
AMEND; AND DISMISSING ACTION
[Re: ECF 55, 59]

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Plaintiff Melissa Egge, M.D., a Suspected Child Abuse and Neglect (“SCAN”) physician,

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filed this lawsuit after her termination from Santa Clara Valley Medical Center (“VMC”) in the

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aftermath of a child’s death. Dr. Egge claims that her supervisor, Dr. John Stirling, failed to

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contact Child Protective Services (“CPS”) about a two-year-old boy who came in with multiple

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bone fractures despite his obligation (and express promise) to do so, and that Dr. Egge was made a

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scapegoat when the boy died of abuse several months later. She sues Santa Clara County, VMC,

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and senior County and VMC officers (collectively, “County Defendants”) for federal

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constitutional violations under 42 U.S.C. § 1983 and for violations of California state law. She

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also sues Dr. Stirling for violations of state law.

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Both the County Defendants and Dr. Stirling move to dismiss the first amended complaint

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(“FAC”) under Federal Rule of Civil Procedure 12(b)(6). For the reasons discussed below, the

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Court GRANTS the County Defendants’ motion to dismiss Dr. Egge’s federal constitutional

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claims without leave to amend and declines to exercise supplemental jurisdiction over Dr. Egge’s

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state law claims, which are DISMISSED without leave to amend and without prejudice.

I.

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BACKGROUND1

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Dr. Egge began working for VMC as a Child Abuse Pediatrician in July 2011. FAC ¶ 17,

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ECF 54. She reported to Dr. Stirling, the Director of the Center for Child Protection at VMC. Id.

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¶ 20. Dr. Egge and Dr. Stirling were the only SCAN physicians at VMC and they were alternately

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on call for child abuse issues. Id. ¶ 21. Both Dr. Egge and Dr. Stirling reported to Dr. Stephen

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Harris, the Chair of the Department of Pediatrics. Id. ¶ 20.
In the early morning hours of July 4, 2015, Dr. Egge was called by a VMC intern about a

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two-year-old child who had come in with “bilateral supracondylar fractures,” that is, fractures just

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above the elbow joint on both arms.2 FAC ¶ 23. The child had been transported from another

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local hospital, O’Connor Hospital, due to concerns about non-accidental trauma and orthopedic

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management. Id. The child’s mother said that he was injured when he slipped and fell backward

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on both his outstretched hands, which – as Dr. Egge informed the intern – was not a pattern of

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injury typical for non-accidental trauma. Id. Dr. Egge told the intern that if the O’Connor doctors

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suspected abuse, they should make a report. Id. Dr. Egge was not asked to see the child or

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perform an inpatient consultation, and she went off call later that morning. Id. ¶ 24.

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Other VMC doctors discovered that the child actually had more bone fractures than

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originally thought, and orthopedic surgery was performed over the July 4th weekend. FAC ¶ 25.

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Dr. Stirling consulted on the case while the child was inpatient at VMC, but he did not report

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suspected abuse and the child was discharged to go home with his mother. Id.
During a review of the case months later, the Orthopedic Review Committee became

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concerned that a report to CPS was warranted. FAC ¶ 26. Dr. Egge was asked to do a

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supplemental review of the case, as Dr. Stirling was the assigned SCAN consulting doctor. Id. ¶

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26. Upon review of the child’s records, Dr. Egge discovered that he had suffered four fractures,

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not the two of which she had been informed during the telephone consultation. Id. ¶ 27. Given

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Plaintiff’s well-pled factual allegations are accepted as true for purposes of the motion to
dismiss. See Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681, 690 (9th Cir. 2011).
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“A supracondylar humerus fracture is a fracture of the distal humerus just above the elbow
joint.” https://en.wikipedia.org/wiki/Supracondylar_humerus_fracture (last visited May 1, 2018).
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that information, Dr. Egge reported to Dr. Harris that a CPS report should have been made. Id.

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Dr. Harris asked Dr. Egge to speak to Dr. Stirling, which she did on November 17, 2015, and at

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that time Dr. Stirling agreed to file a CPS report. Id.

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On December 22, 2015, before leaving on a week-long vacation, Dr. Egge checked in with

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Dr. Stirling to make sure he had made the CPS report. FAC ¶ 29. Dr. Stirling stated that he had

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forgotten to make the report but he promised to do so that evening. Id. In fact, Dr. Stirling did not

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make a report, and the child died in January 2016, apparently from physical and sexual abuse. Id.

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When Dr. Egge learned of the death in February 2016, she checked the hospital’s records and

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found that Dr. Stirling had placed a note in the child’s chart on December 24, 2015 indicating that
a CPS report was not warranted. Id. ¶ 30. Dr. Egge contacted Dr. Harris to inform him of the

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child’s death and Dr. Stirling’s failure to make a CPS report. Id. ¶ 32. During that conversation,

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Dr. Egge voiced her concerns about the failure to report in that specific child’s case and also about

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VMC’s policies and procedures in general. Id. ¶¶ 32-34.

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On March 11, 2016, Dr. Egge was put on administrative leave. FAC ¶ 35. On April 21,

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2016, the Medical Executive Committee of VMC recommended a 6-month summary suspension

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of Dr. Egge’s clinical privileges and medical staff memberships. Id. The next day, April 22,

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2016, Dr. Egge was fired by Dr. Jeffrey Smith, the County Executive. Id. Dr. Phuong Nguyen,

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VMC’s Chief of Staff, reported Dr. Egge to the Medical Board of California. Id. ¶ 37. Although

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state law requires reporting of suspensions only if they total at least 15 days, Dr. Nguyen reported

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Dr. Egge for what was effectively a 1-day suspension. Id. Dr. Egge believes that Dr. Nguyen

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reported her as punishment for voicing her concerns about VMC’s policies and practices. Id. ¶ 39.

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The County also disseminated false information to the press in an effort to deflect criticism from

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VMC’s deficient procedures. Id. ¶ 43. Subsequent articles published in the San Jose Mercury

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News contained inaccurate statements that Dr. Egge was fired for failing to report abuse of a

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toddler and for failing to act as required by law. Id. ¶¶ 41-42.

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Dr. Egge appealed her summary suspension and received a Judicial Review Committee

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(“JRC”) hearing. FAC ¶ 50. She claims that the hearing was a staged proceeding which was

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conducted so that Defendants could avoid liability. Id. Dr. Egge nonetheless prevailed, and the
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JRC found that her summary suspension was unreasonable. Id. ¶ 51. Despite that finding, Dr.

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Egge has not regained her good name in the medical profession. Id. She has applied for at least 3

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positions in the Bay Area, without success. FAC ¶ 45. She now has a part-time position as a

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SCAN doctor in Southern California. Id. ¶ 46. She is separated from her husband and children for

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several days each week when she flies to Southern California for work. Id.
Dr. Egge filed this action on May 17, 2017 against the County, VMC, Dr. Smith, Dr.

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Nguyen, and Dr. Stirling. The Court granted Defendants’ Rule 12(b)(6) motions to dismiss the

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original complaint with leave to amend. Dr. Egge subsequently filed the operative FAC, asserting

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the following claims: (1) a § 1983 claim for “Stigma-Plus” against the County Defendants; (2) a §

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1983 claim for deprivation of Substantive Due Process against the County Defendants: (3) breach

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of written contract against the County and VMC; (4) breach of oral contract against the County,

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VMC, and Dr. Stirling; (5) promissory estoppel against the County, VMC, and Dr. Stirling; and

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(7) violation of California Labor Code § 1102.5 against the County and VMC.3 The FAC alleges

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that the Court has federal question jurisdiction with respect to the § 1983 claims and supplemental

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jurisdiction with respect to the state law claims. FAC ¶ 1.
II.

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LEGAL STANDARD
“A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a

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claim upon which relief can be granted ‘tests the legal sufficiency of a claim.’” Conservation

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Force v. Salazar, 646 F.3d 1240, 1241-42 (9th Cir. 2011) (quoting Navarro v. Block, 250 F.3d

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729, 732 (9th Cir. 2001)). While a complaint need not contain detailed factual allegations, it

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“must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible

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on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly,

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550 U.S. 544, 570 (2007)). A claim is facially plausible when it “allows the court to draw the

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reasonable inference that the defendant is liable for the misconduct alleged.” Id.
When evaluating a Rule 12(b)(6) motion, the district court must consider the allegations of

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the complaint, documents incorporated into the complaint by reference, and matters which are

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Although actually the sixth claim in the FAC, the § 1102.5 claim is mislabeled as the “Seventh
Cause of Action.” There is no claim labeled as the “Sixth Cause of Action.”
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subject to judicial notice. Louisiana Mun. Police Employees’ Ret. Sys. v. Wynn, 829 F.3d 1048,

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1063 (9th Cir. 2016) (citing Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322

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(2007)).

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III.

DISCUSSION
Before turning to the parties’ arguments as to the adequacy of Dr. Egge’s claims, the Court

addresses the County Defendants’ request for judicial notice of the following documents:

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(a) excerpts of the County of Santa Clara’s Charter; (b) excerpts of the County of Santa Clara’s

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Ordinance Code; (c) the transcript of this Court’s hearing regarding Defendants’ motion to dismiss

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the original complaint in this matter; (d) a copy of a Mercury News article dated April 29, 2016

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which is referenced at paragraph 41 of the FAC; and (e) a copy of a Mercury News article dated

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May 3, 2016 which is referenced at paragraph 42 of the FAC. County Defs.’ RJN, ECF 56-2.

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Judicial notice is appropriate with respect to items (a), (b), and (c). See Reyn’s Pasta Bella, LLC

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v. Visa USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir. 2006) (“We may take judicial notice of court

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filings and other matters of public record.”). The Court may consider the Mercury News articles

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submitted as items (d) and (e) under the incorporation by reference doctrine. See Knievel v. ESPN,

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393 F.3d 1068, 1076 (9th Cir. 2005) (incorporation by reference doctrine permits a court to

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consider documents referenced in but not physically attached to the complaint). Accordingly, the

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County Defendants’ request for consideration of all of the identified documents is GRANTED.

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A.

§ 1983 Claims

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As noted above, subject matter jurisdiction is based on federal question, specifically, on

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two § 1983 claims asserted against the County Defendants. The Court addresses those claims

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first, because absent a viable federal claim the Court declines to exercise supplemental jurisdiction

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over Dr. Egge’s state law claims.

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Both of the § 1983 claims allege deprivations of Dr. Egge’s rights guaranteed under the

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Due Process Clause of the Fourteenth Amendment. Claim 1 is a “stigma-plus” claim based on the

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County Defendants’ statements to the Medical Board and the press. Dr. Egge asserts that those

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statements harmed her reputation to such a degree as to effect a deprivation of both a protected

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property interest in her employment and a protected liberty interest in the right to work in her
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chosen profession. FAC ¶ 65. Claim 2 alleges that the County Defendants’ acts, including

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publicly humiliating Dr. Egge but not subjecting others at VMC to such demeaning treatment,

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“were so arbitrary and capricious that they shock the conscience.” Id. ¶ 73. Dr. Egge asserts that

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“Defendants’ wrongful acts alleged above” in the General Allegations section effected a

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deprivation of both a protected property interest in her employment and a protected liberty interest

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in the right to work in her chosen profession. Id. ¶¶ 72-74.

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The County Defendants seek dismissal of these claims on a number of grounds. First, they
argue that Dr. Egge has not alleged facts sufficient to show a deprivation of either a property

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interest or a liberty interest – a threshold requirement for a Due Process Claim. Second, they

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contend that the alleged statements to the Medical Board and the press were not stigmatizing.

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Third, they argue that Dr. Egge’s claims lack merit because she concededly received a name

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clearing hearing and she has not shown that the hearing was constitutionally deficient. Fourth, the

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County Defendants argue that Dr. Egge has not alleged facts showing that one actor was

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responsible for both the allegedly stigmatizing publications and her termination. And finally, they

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argue that Dr. Egge has not alleged facts giving rise to liability against the County. Because the

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first argument is dispositive, the Court need not reach the others.

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The Fourteenth Amendment provides that no state shall “deprive any person of life, liberty,

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or property, without due process of law.” U.S. Const. amend. XIV, § 1. “A threshold requirement

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to a substantive or procedural due process claim is the plaintiff’s showing of a liberty or property

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interest protected by the Constitution.” Wedges/Ledges of California, Inc. v. City of Phoenix, 24

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F.3d 56, 62 (9th Cir. 1994).

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1.

Property Interest

With respect to Dr. Egge’s claim that she was deprived of a property interest in her

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employment, “government employees can have a protected property interest in their continued

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employment if they have a legitimate claim to tenure or if the terms of the employment make it

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clear that the employee can be fired only for cause.” Blantz v. California Dep’t of Corr. &

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Rehab., 727 F.3d 917, 922 (9th Cir. 2013). Dr. Egge has not alleged facts showing that she had

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tenure at VMC or that VMC could fire her only for cause. The FAC contains only bare allegations
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that she had “a property right in her employment.” FAC ¶ 72. However, “[t]here must be some

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source, recognized under state law” for Dr. Egge’s “claimed entitlement to her position, not

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merely her unilateral expectation that it would continue.” Blantz, 727 F.3d at 924.

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In her opposition to the County Defendants’ motion, Dr. Egge suggests two sources for her
asserted entitlement to her position, the County Ordinance Code and VMC’s Medical Staff

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Bylaws. While Article 11 of the County Ordinance Code provides that “classified employees” are

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entitled to discipline for cause, no such entitlement is granted to “unclassified employees.”

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County Ordinance Code Art. 1 Sec. A25-35, Art. 11 Sec. A25-301, Exh. B to Defs.’ RJN, ECF

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56-2. It is undisputed that Dr. Egge was an “unclassified employee.” See County Charter Art.

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VII Sec. 701(a)(7), Exh. A to Defs.’ RJN, ECF 56-1. With respect to the Bylaws, Dr. Egge has

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made only a bare allegation that they were “a component of her contractual employment

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agreement with the County of Santa Clara.” FAC ¶ 18, ECF 54. She does not point to any

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contractual language or other facts showing how the Bylaws were incorporated into her

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employment contract. The Bylaws themselves provide that “Medical Staff membership will

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automatically terminate, without the right to a review, hearing, or other appeal procedures . . .

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when the provider is no longer employed by the County.” Bylaws ¶ 2.6, Exh. A to FAC, ECF 54-

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1. That provision certainly does not suggest any continuing right to employment. Given the plain

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language of the County Ordinance and the Bylaws, the Court finds that Dr. Egge’s conclusory

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allegations are insufficient to plausibly allege a property interest in employment under the

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standards set forth in Iqbal and Twombly.

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The County Defendants’ motion to dismiss is GRANTED as to Dr. Egge’s § 1983 claims
based on alleged deprivation of a property interest in her employment.
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Liberty Interest

With respect to Dr. Egge’s claim that she was deprived of a liberty interest in the right to

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work in her chosen profession, the Ninth Circuit has “recognized the liberty interest in pursuing an

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occupation of one’s choice.” Engquist v. Oregon Dep’t of Agric., 478 F.3d 985, 997 (9th Cir.

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2007). Thus “[a] public employer can violate an employee’s rights by terminating the employee if

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in so doing, the employer makes a charge that might seriously damage the terminated employee’s
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standing and associations in his community or imposes on a terminated employee a stigma or

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other disability that forecloses his freedom to take advantage of other opportunities.” Blantz, 727

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F.3d at 925 (internal quotation marks, citations, and alterations omitted). However, “the liberty

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interests protected by the Fourteenth Amendment are implicated only when the government’s

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stigmatizing statements effectively exclude the employee completely from her chosen profession.”

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Id. “Stigmatizing statements that merely cause reduced economic returns and diminished prestige,

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but not permanent exclusion from, or protracted interruption of, gainful employment within the

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trade or profession do not constitute a deprivation of liberty.” Id. (internal quotation marks

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omitted).
Dr. Egge has alleged that she is working in her profession, and in fact in her area of

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specialty, as a SCAN physician in Southern California. FAC ¶ 46. That allegation is fatal to her

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liberty interest claims. Dr. Egge does allege that she has been unable to obtain employment in the

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Bay Area as a result of the County Defendants’ conduct and that her current employment is only

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part-time. Id. ¶¶ 45-46. She also explains that her inability to obtain local employment has

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required to her travel to Southern California on a weekly basis, obtain part-time housing and

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transportation there, and endure separation from her husband and children for several days out of

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the week. Id. ¶ 46. While Dr. Egge understandably would prefer to work in the Bay Area, and

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clearly is suffering hardship as a result of her inability to do so, “people do not have liberty

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interests in a specific employer.” Blantz, 727 F.3d at 925 (internal quotation marks, citation and

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alteration omitted). “Thus, stigmatizing statements do not deprive a worker of liberty unless they

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effectively bar her from all employment in her field.” Id. Dr. Egge has not alleged that she is

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effectively barred from all employment in her field, only employment in her preferred geographic

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locale.

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The County Defendants’ motion to dismiss is GRANTED as to Dr. Egge’s § 1983 claims
based on alleged deprivation of a liberty interest in her chosen profession.
3.

Leave to Amend

Having determined that Dr. Egge’s § 1983 claims are subject to dismissal, the Court must
decide whether leave to amend is warranted. Leave ordinarily must be granted unless one or more
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of the following factors is present: (1) undue delay, (2) bad faith or dilatory motive, (3) repeated

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failure to cure deficiencies by amendment, (4) undue prejudice to the opposing party, and (5)

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futility of amendment. Foman v. Davis, 371 U.S. 178, 182 (1962); see also Eminence Capital,

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LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (discussing Foman factors). The Court

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finds no undue delay (factor 1) or bad faith (factor 2). However, despite the Court’s prior order

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dismissing the original complaint with guidance regarding amendment, Dr. Egge still has not

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alleged a viable § 1983 claim (factor 3). At the hearing, Dr. Egge’s counsel stated that Dr. Egge

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had put her “best foot forward” with respect to factual allegations supporting the § 1983 claims,

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indicating that no additional facts could be added to those claims even if amendment were
permitted. Thus while granting further leave to amend might not prejudice the County Defendants

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“unduly” (factor 4), it would be futile (factor 5).
After weighing the relevant factors, the Court finds it appropriate to dismiss the § 1983

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claims – Claims 1 and 2 – WITHOUT LEAVE TO AMEND.

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B.

State Law Claims

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Absent a viable federal claim, the Court declines to exercise supplemental jurisdiction over

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Dr. Egge’s state law claims. “A district court ‘may decline to exercise supplemental jurisdiction’

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if it ‘has dismissed all claims over which it has original jurisdiction.’” Sanford v. MemberWorks,

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Inc., 625 F.3d 550, 561 (9th Cir. 2010) (quoting 28 U.S.C. § 1367(c)(3)). “‘[I]n the usual case in

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which all federal-law claims are eliminated before trial, the balance of factors to be considered

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under the pendent jurisdiction doctrine – judicial economy, convenience, fairness, and comity –

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will point toward declining to exercise jurisdiction over the remaining state-law claims.’” Id.

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(quoting Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 n.7 (1988)). Here, the case is still at

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the pleading stage. Under these circumstances, the Court perceives no reason to exercise

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supplemental jurisdiction over Dr. Egge’s state law claims here.
Accordingly, Dr. Egge’s state law claims – Claims 3, 4, 5, and 7 – are DISMISSED

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WITHOUT LEAVE TO AMEND AND WITHOUT PREJUDICE.

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IV.

ORDER

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For the foregoing reasons,

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(1)

TO AMEND;

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Claims 1 and 2, arising under federal law, are DISMISSED WITHOUT LEAVE

(2)

The Court DECLINES to exercise supplemental jurisdiction over Claims 3, 4, 5,

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and 7, arising under state law. The state law claims are DISMISSED WITHOUT

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LEAVE TO AMEND AND WITHOUT PREJUDICE; and

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(3)

The action is DISMISSED.

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United States District Court
Northern District of California

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Dated: May 7, 2018
______________________________________
BETH LABSON FREEMAN
United States District Judge

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