Sample v. City of Sheridan et al

Filing 49

ORDER Defendants Motions to Dismiss and in the Alternative Motions for SummaryJudgment ECF Nos. 22 , 23 , are GRANTED IN PART and DENIED IN PART, by Judge William J. Martinez on 4/13/2012.(ervsl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Civil Action No. 10-cv-01452-WJM-KLM
RAY E. SAMPLE,
Plaintiff,
v.
CITY OF SHERIDAN, a municipality,
ARTHUR J. KRIEGER, City Manager, individually and in his official capacity,
Defendants.
_____________________________________________________________________
ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTIONS TO DISMISS AND IN THE
ALTERNATIVE MOTIONS FOR SUMMARY JUDGMENT
_____________________________________________________________________
Plaintiff Ray E. Sample brings this action against Defendants the City of
Sheridan, Colorado and Sheridan City Manager Arthur J. Krieger for employment
discrimination and wrongful termination. Before the Court are Defendants’ Motions to
Dismiss and in the Alternative Motions for Summary Judgment (the “Motions”). (ECF
Nos. 22, 23.)
For the reasons set forth below, Defendants’ Motions are GRANTED in part and
DENIED in part.
I. BACKGROUND
A.

Factual Background
The following facts are taken from the record and are undisputed:
Plaintiff was the City of Sheridan’s (the “City”) Chief of Police from 1996 until he

retired from law enforcement in April of 2008 and became the City’s Economic
Development Director.1 (Transcript of Appeals Hearing, Vol. I, at 201-03, attached to
Sheridan Motion, Ex. A.) In 2008, Plaintiff also became the Executive Director for the
Sheridan Urban Renewal Authority (“SRA”). (Id.) The City is a home rule municipality
established and existing under the Constitution and laws of the State of Colorado.
(Sheridan Municipal Code, § 1.4.) Defendant Arthur J. Kieger became the interim City
Manager in July of 2008 and was named the permanent City Manager in December of
that year. (Transcript of Appeals Hearing, Vol. I, at 6.)
On February 18, 2009, Defendant Krieger became aware of what he believed
were issues regarding the City’s Fire and Police pension fund. (Dep. of A. Krieger,
179:5-25, 180:1-16.) In response, he scheduled interviews with Plaintiff and Fire Chief
Ron Carter, a pension board Trustee. (Transcript of Appeals Hearing, Vol. I, at 29,
42-43.) On March 4, 2009, Defendant Krieger and Sheridan Chief of Police Marco
Vasquez had an interview with Plaintiff regarding the Fire and Police pension fund. (Id.
at 30-31.)
On March 6, 2009, Plaintiff authored a letter to Sheridan Mayor Mary Carter,
Chairperson of the SRA, alleging that the City’s request for reimbursement from the
SRA of administrative costs of 25% of salary and benefits for administrative staff was
fraudulent, bordered on official misconduct, and unethical. (Administrative Hearing
Order, at 5, attached to Sheridan Motion, Ex. B.) Plaintiff hand delivered a copy of the

1

Plaintiff was 47 years of age when his employment with the City was terminated
in 2009. (Plaintiff’s Charge of Discrimination, attached to Response to Sheridan Motion, Ex.
22.)

2

letter to Mayor Carter, and believes he gave a copy to the City Attorney William
Hayashi. (Transcript of Appeals Hearing, Vol. I, at 274-75.)
On March 10, 2009, Defendant Krieger and Chief Vasquez had a follow-up
meeting with Plaintiff regarding the pension fund. (Dep. of Krieger, 207:22-25,
208:1-3.) At this meeting, Defendant Krieger informed Plaintiff that he was going to hire
an outside investigator to look into the history of the fund. (Transcript of Appeals
Hearing, Vol. I, at 141; Dep. of Krieger, 210:11-14.)
On March 11, 2009, Plaintiff’s attorney submitted a second letter to Mayor Carter
and Mr. Hayashi, alleging that Defendant Krieger had engaged in a variety of improper
actions including but not limited to interfering with fiduciary obligations, age
discrimination, and retaliation for whistle blowing. (Administrative Hearing Order, at 6.)
Defendant Krieger subsequently retained the accounting firm of Clifton
Gunderson, LLP to investigate the allegations in Plaintiff’s March 6, 2009 letter. (Id. at
106.) Clifton Gunderson found no merit to Plaintiff’s allegations. (Transcript of Appeals
Hearing, Vol. II, at 120-121, 124.) Defendant Krieger also retained attorney Peter
Doherty to investigate the allegations in the March 6, 2009 letter, as well as the
allegations in the March 11, 2009 letter. (Transcript of Appeals Hearing, Vol. I, at 110,
137-38.) Mr. Doherty found no support for Plaintiff’s allegations. (Id., at 140-143;
Administrative Hearing Order, at 28.) On March 19, 2009, Defendant Krieger placed
Plaintiff on paid administrative leave. (Transcript of Appeals Hearing, Vol. I, at 307.)
On March 24, 2009, members of the City Council and Defendant Krieger
received an e-mail from a “Timothy Smith,” whose identity remains unknown.
(Administrative Hearing Order, at 7.) The e-mail alleged that Plaintiff had been the
3

subject of an investigation by the Colorado Bureau of Investigation (“CBI”) as a result of
allegations that he had an improper sexual relationship with a former Police Explorer.
(Id.) Chief Vasquez subsequently verified that the CBI had investigated Plaintiff
regarding the allegations contained in the anonymous e-mail. (Transcript of Appeals
Hearing, Vol. I, at 164-165.) However, the CBI did not file criminal charges against
Plaintiff. (Id.; Dep. of M. Vasquez, 151:13-15.)
Defendant Krieger prepared a Pre-Disciplinary Conference Notice dated May 19,
2009, and instituted a pre-disciplinary conference against Plaintiff. (Transcript of
Appeals Hearing, Vol. I, at 307.) On June 4, 2009, Plaintiff attended the pre-disciplinary
conference with his counsel, after which Defendant Krieger issued his Disciplinary
Findings and Decision. (Disciplinary Findings and Decision, at 2-3, attached to
Sheridan Motion, Ex. E.) Defendant Krieger found that Plaintiff violated various ethical
and other rules relating to: (1) Police and Fire Pension matters; (2) the March 6, 2009
letter to Mayor Carter regarding the SRA; (3) the March 11, 2009 letter to Mayor Carter
and City Attorney William Hayashi; and (4) the CBI investigation. (Affidavit of A.
Krieger; Personnel Manual, § 8.4; Disciplinary Findings and Decision, at 2-3.)
Defendant Krieger then terminated Plaintiff’s employment with the City. (Affidavit of
Krieger; Disciplinary Findings and Decision, at 4; Administrative Hearing Order, at 2.)
Plaintiff subsequently appealed Defendant Krieger’s termination decision.
(Affidavit of Krieger; Transcript of Appeals Hearing, Vol. I, at 308.) Defendant Krieger
scheduled the appeals hearing with Administrative Hearing Officer Kristin Brown, Esq.,
and a hearing was held on September 28 and 29, 2009. (Administrative Hearing Order,
at 1.) On October 13, 2009, Hearing Officer Brown affirmed Defendant Krieger’s
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decision to terminate Plaintiff’s employment, finding that there was competent evidence
to support such a decision. (Administrative Hearing Order, at 31.)
B.

Procedural History

Plaintiff filed this action on June 21, 2010. (ECF No. 1.) Plaintiff brings
employment discrimination and wrongful termination claims against Defendants. (Id.)
Specifically, Plaintiff brings claims for: (1) violation of the Age Discrimination in
Employment Act (“ADEA”) 29 U.S.C.A. § 621, et seq.; (2) violation of Title VII of the
Civil Rights Act of 1964, 42 U.S.C. §2000 et seq.; (3) wrongful termination in violation of
public policy; (4) intentional interference with financial advantage; (5) unlawful denial of
Consolidated Omnibus Budget Reconciliation Act (“COBRA”) benefits; and (6) implied
breach of contract/promissory estoppel. (Id.) Plaintiff alleges that Defendants
terminated his employment with the City due to age discrimination and in retaliation for
reporting improprieties. (Id.)
On April 8, 2011, Defendants filed two separate Motions to Dismiss and in the
Alternative Motions for Summary Judgment. (Sheridan Motion (ECF No. 22); Krieger
Motion ( ECF No. 23.)) Defendants seek summary judgment pursuant to Federal Rule
of Civil Procedure 56 on all of Plaintiff’s claims, and seek to dismiss certain of Plaintiff’s
claims pursuant to Federal Rule of Civil Procedure 12(b)(1). (Id.)
On March 20, 2012, Plaintiff filed his Responses to Defendants’ Motions.
(Response to Sheridan Motion (ECF No. 43); Response to Krieger Motion (ECF No.
44.)) On April 3, 2012, Defendants filed their Reply Briefs in Support of their Motions.
(Sheridan Reply (ECF No. 45); Krieger Reply (ECF No. 46.))

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These Motions are now ripe for resolution.2
II. LEGAL STANDARD ON A MOTION FOR SUMMARY JUDGMENT
Summary judgment is appropriate only if there is no genuine issue of material
fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P.
56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Henderson v. Inter-Chem
Coal Co., Inc., 41 F.3d 567, 569 (10th Cir. 1994). Whether there is a genuine dispute
as to a material fact depends upon whether the evidence presents a sufficient
disagreement to require submission to a jury or, conversely, is so one-sided that one
party must prevail as a matter of law. Anderson v. Liberty Lobby Inc., 477 U.S. 242,
248-49 (1986); Stone v. Autoliv ASP, Inc., 210 F.3d 1132 (10th Cir. 2000); Carey v.
U.S. Postal Serv., 812 F.2d 621, 623 (10th Cir. 1987).
A fact is “material” if it pertains to an element of a claim or defense; a factual
dispute is “genuine” if the evidence is so contradictory that if the matter went to trial, a
reasonable juror could return a verdict for either party. Anderson, 477 U.S. at 248. The
Court must resolve factual ambiguities against the moving party, thus favoring the right
to a trial. Quaker State Mini-Lube, Inc. v. Fireman’s Fund Ins. Co., 52 F.3d 1522, 1527
(10th Cir. 1995); Houston v. Nat’l Gen. Ins. Co., 817 F.2d 83, 85 (10th Cir. 1987).
The moving party bears the initial burden of showing an absence of evidence to
support the nonmoving party’s case. Celotex, 477 U.S. at 325. Where the non-movant

2

While the Motion to Dismiss portions of Defendants' Motions are before the
Court, Defendants' Motions to Dismiss are subsumed by their Motions for Summary Judgment,
and the Court's ruling on Defendants' Motions for Summary Judgment effectively moot
Defendants' Motions to Dismiss. See Brown v. Bd. of Educ. of Pueblo Sch. Dist. No. 1, No.
05-cv-02079, 2007 WL 389947, at *2 (D. Colo. Feb. 1, 2007). Accordingly, this Order
constitutes the Court's findings on the entirety of Defendants' Motions.

6

bears the burden of proof at trial, the non-movant must then point to specific evidence
establishing a genuine issue of material fact with regard to each challenged element.
See Reed v. Bennett, 312 F.3d 1190, 1194 (10th Cir. 2002); In re Ribozyme Pharms.,
Inc. Sec. Litig., 209 F. Supp. 2d 1106, 1111 (D. Colo. 2002).
III. ANALYSIS
A.

Violations of the ADEA (First Claim)
Defendants argue that they had lawful cause to terminate Plaintiff’s employment

with the City, and that Plaintiff cannot establish a prima facie case of age discrimination.
(Sheridan Motion at 11-23.) Plaintiff refutes Defendants’ arguments. (Response to
Sheridan Motion at 16-27.)
The ADEA prohibits an employer from discriminating “against any individual with
respect to his compensation, terms, conditions, or privileges of employment, because of
such individual’s age.” 29 U.S.C. § 623(a)(1). The ADEA protects workers “who are at
least 40 years of age,” 29 U.S.C. § 631(a), and was passed “‘to promote employment of
older persons based on their ability rather than age’ and ‘to prohibit arbitrary age
discrimination in employment.’” MacKenzie v. City and County of Denver, 414 F.3d
1266, 1276 (10th Cir. 2005) (quoting 29 U.S.C. § 621(b)).
In order to establish a prima facie job termination claim based on age
discrimination under the ADEA, a plaintiff must show that: (1) he is within the protected
age group; (2) he was doing satisfactory work; (3) he was discharged; and (4) his
position was either not filled or filled by a younger person. See Rivera v. City and Cnty.
of Denver, 365 F.3d 912, 920-21 (10th Cir. 2004) (citing McKnight v. Kimberly Clark

7

Corp., 149 F.3d 1125, 1128 (10th Cir. 1998)).
After a plaintiff has established a prima facie case, the burden shifts to the
employer to articulate a legitimate, non-discriminatory reason for the employee’s
discharge. See McDonnell-Douglas Corp. v. Green, 411 U.S. 792, 802 (1973). Once
the employer comes forward with a facially non-discriminatory reason for the adverse
employment decision, the plaintiff is afforded a fair opportunity to demonstrate that the
assigned reason for the allegedly discriminatory act was a pretext or discriminatory in its
application. Id. at 804; Morgan v. Hilti, Inc., 108 F.3d 1319, 1321 (10th Cir. 1997). “A
plaintiff produces sufficient evidence of pretext when she shows ‘such weaknesses,
implausibilities, inconsistencies, incoherenceies, or contradictions in the employer’s
proffered legitimate reasons for its action that a reasonable fact finder could rationally
find them unworthy of credence and hence infer that the employer did not act for the
asserted non-discriminatory reasons.’” Jones v. Okla. City Pub. Sch., 617 F.3d 1273,
1280 (10th Cir. 2010) (quoting Jaramilo v. Colo. Judicial Dep’t, 427 F.3d 1303, 1308
(10th Cir. 2005)).
Defendants appear to only challenge the third prong of Plaintiff’s prima facie
case–namely, Defendants dispute that Plaintiff was doing satisfactory work because
they argue his employment with the City was terminated “due to his violation of several
provisions of the Personnel Manual, including insubordination, refusal to cooperate and
inadequate job performance.”3 (Sheridan Motion at 22.) Defendants further argue that

3

Defendants’ argument that Plaintiff has not demonstrated that he was treated
less favorably than similarly situated younger employees is not an element of a prima facie
case for a job termination claim based on age discrimination.

8

these violations were legitimate, non-discriminatory reasons for Plaintiff’s discharge.
See McDonnell-Douglas Co., 411 U.S. at 802. Plaintiff counters that he has
established a prima facie case under the ADEA, and that his alleged violations were
pretext because Plaintiff was actually discharged due to age discrimination, and in
retaliation for reporting financial improprieties. (Response to Sheridan Motion at
16-27.)
The Court finds that Plaintiff has established a prima facie case of age
discrimination, and has put forth sufficient evidence to create a genuine dispute of fact
whether Defendants’ proffered basis for termination was a pretext for age
discrimination. Plaintiff has submitted evidence that: (1) Fire Chief Ron Carter gave
similar responses to Defendant Krieger regarding the pension fund issues, but was not
disciplined (Appeals Hearing Transcript, Vol. I, Krieger Testimony, 32:2-7; Appeals
Hearing Transcript, Vol. II, 14:5-9, 15:2-6; Dep. of A. Krieger, 212:18-21); (2) Plaintiff
acted appropriately and in good faith when he authored his March 6, 2009 and March
11, 2009 letters reported alleged financial improprieties (Appeals Hearing Transcript,
Vol. II, 49:16-17, 51:1-3, 65:15-22; C.R.S. §31-25-112); and (3) Plaintiff did not
intentionally conceal the CBI investigation, and did not violate provisions of the City’s
Personnel Manuel (Dep. of A. Krieger, 240:2-25; Appeals Hearing Transcript, Vol. I,
155:13-25; 156:1-2; Appeals Hearing Transcript, Vol. II, 39:9-12; Dep. of R. Sample,
248:5-11; 249:19-25).
Construing this evidence in the light most favorable to Plaintiff, a jury could
reasonably find that Defendants’ proffered basis for Plaintiff’s job termination was but a
pretext for unlawful age discrimination. See Miller v. Eby Realty Group LLC, 396 F.3d
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1105, 1111 (10th Cir. 2005) (question of fact for jury when employer’s proffered reason
for termination is called into question). Accordingly, Defendant’s Motion for Summary
Judgment on Plaintiff’s ADEA claim (First Claim) is denied.
B.

Age Retaliation Claim (Second Claim)
Defendants assert that Plaintiff has not made out a prima facie case for age-

based retaliation. (Sheridan Motion at 23-24.) Plaintiff counters that he has
established all the elements of a prima facie age retaliation claim.
In order to make out a prima facie case of retaliation, a plaintiff must present
evidence that: “(1) he engaged in protected opposition to discrimination; (2) he suffered
an adverse action that a reasonable employee would have found material; and (3) there
is a causal nexus between his opposition and the employer’s adverse action.” Johnson
v. Weld Cnty., Colo., 594 F.3d 1202, 1215 (10th Cir. 2010) (quoting Williams v. W.D.
Sports, N.M., Inc., 497 F.3d 1079, 1086 (10th Cir. 2007)). “The requisite causal
connection may be shown by producing ‘evidence of circumstances that justify an
inference of retaliatory motive, such as protected conduct closely followed by adverse
action.’” McGarry v. Board of County Com’rs of Cnty. of Pitkin, 175 F.3d 1193, 1201
(10th Cir. 1999) (quoting Burrus v. United Telephone Co. of Kansas, Inc., 683 F.2d 339,
343 (10th Cir. 1982)).
The only element that Defendants challenge is the existence of a causal nexus
between Plaintiff’s actions and his employment termination. (Sheridan Motion at 2324.) In response, Plaintiff argues that he has established a prima facie case because
the temporal proximity of his firing to his written complaints of discrimination create an

10

inference of retaliation. (Response to Sheridan Motion at 27-30.)
Temporal proximity between protected activity and the alleged resulting adverse
action may combine with additional circumstantial evidence to create a fact issue as to
pretext. See City of Prairie Village v. Butler, 172 F.3d 736, 752 (10th Cir. 1999).
Moreover, temporal proximity can contribute to an inference of retaliation. See Trujillo
v. Pacificorp, 524 F.3d 1149, 1157 (10th Cir. 2008); City of Prairie Village v. Butler, 172
F.3d 736, 749 (10th Cir. 1999) (temporal proximity between request for accommodation
under the ADEA and decline in employer’s satisfaction with work performance
contributed to inference of discrimination).
Here, Plaintiff was placed on administrative leave on March 19, 2009, within 8
days after his complaint of possible age discrimination in his March 11, 2009 letter.
(Transcript of Appeals Hearing, Vol. I, at 307.) As such, the tight temporal proximity
between Plaintiff’s discrimination complaint and his adverse employment action,
combined with the dispute of fact as to the reasons for Plaintiff’s job termination, in the
Court’s view can create an inference of retaliation in this case. See Trujillo, 524 F.3d at
1157. Therefore, Plaintiff has shown a genuine dispute of fact as to whether
Defendants’ proffered basis for termination was pretext for retaliation, and Defendants’
Motion for Summary Judgment on Plaintiff’s retaliation claim (Second Claim) is denied.
C.

Wrongful Termination in Violation of Public Policy Claim (Third Claim)
Defendants argue that Plaintiff’s state tort claim for wrongful termination fails

because: (1) it is barred under the Colorado Governmental Immunity Act (“CGIA”), and
(2) it fails as a matter of law. (Krieger Motion at 3-8.) Plaintiff refutes both of these

11

arguments. (Response to Krieger Motion at 3-10.)
The Court first turns to the question of immunity under the CGIA. The purpose
of the CGIA is to protect public employees, public entities, and, by extension, taxpayers
from unlimited liability. C.R.S. § 24-10- 102. The CGIA provides that a public entity or
a public employee performing duties within the scope of his employment “shall be
immune from liability in all claims for injury which lie in tort or could lie in tort …” C.R.S.
§ 24-10-106(a); accord § 24-10-105(1). However, pursuant to C.R.S. §24-10-105, “[no]
public entity shall be liable for such actions except as provided in this article, and no
public employee shall be liable for injuries arising out of an act or omission occurring
during the performance of his or her duties and within the scope of his or her
employment, unless such act or omission was willful and wanton.” Willful and wanton
conduct has been defined as conduct that was purposefully committed and was done
heedlessly without regard to the rights of the plaintiff or an intention or desire to harm
the plaintiff seriously through doing something unjustified or revengeful or with an intent
to cause damage or oppression. See Bonidy v. Vail Valley Center for Aesthetic
Dentistry, P.C., 232 P.3d 277, 286 (Colo. App. 2010).
The Court finds that there is a genuine dispute of fact as to whether Defendants
terminated Plaintiff’s employment in a willful and wanton manner. Plaintiff introduced
evidence that Defendant Krieger’s conduct could be viewed as in violation of state and
federal law, exceeded his authority, and was not within the City’s customary practices
and policies. (Affidavit of Mayor Carter; Hayashi E-Mail and Job Description, Chain of
Command, attached to Response to Sheridan Motion, Ex. 2; Dep. of R. Sample,
170:13-22; 240:6-11.) The City can also be held liable for an unlawful decision by one
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of its officials so long as that official possessed final authority with respect to the action.
See Sauers v. Salt Lake County, 1 F.3d 1122, 1129 (10th Cir. 1993) (“a municipality is
liable for the acts of its final policymaking authority”) (internal quotes and citations
omitted). There is evidence that Defendant Krieger was acting as the City Manager for
the City while engaging in this conduct, and that he possessed final authority to
terminate Plaintiff’s employment. (Transcript of Appeals Hearing, Vol. I, at 6.) As such,
Plaintiff’s claim for wrongful termination in violation of public policy is not barred by the
CGIA.
The Court thus turns to Defendants’ argument that they are entitled to judgment
as a matter of law on Plaintiff’s wrongful termination claim. Colorado recognizes a
claim for relief for wrongful discharge in violation of public policy. See Wisehart v.
Meganck, 66 P.3d 124, 127 (Colo. App. 2002). Under the public policy exception, an
employee may recover damages for wrongful discharge if the discharge was based on
a refusal to engage in conduct that would violate public policy, or participation in
conduct that is protected or encouraged by public policy. See Coors Brewing Co. v.
Floyd, 978 P.2d 663, 666-67 (Colo. 1999) (en banc); see also Martin Marietta Corp. v.
Lorenz, 823 P.2d 100, 109 (Colo. 1992).
As described above, Plaintiff has put forth sufficient evidence to create a genuine
issue of material fact as to the reason for his job termination. Plaintiff’s evidence
creates a dispute of fact as to whether he was fired for complaining of age
discrimination and alleged financial improprieties, both of which are encouraged by
public policy. See Coors Brewing Co., 978 P.2d at 666-67; see also 29 U.S.C. §

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623(a)(1). Accordingly, Defendants’ Motion for judgment as a matter of law on
Plaintiff’s claim for wrongful termination in violation of public policy (Third Claim) is
denied.
D.

Intentional Interference with Financial Advantage Claim (Fourth Claim)
Defendants argue that Plaintiff’s intentional interference with financial advantage

claim is barred under the CGIA, and that they are entitled to summary judgment
because Plaintiff did not have an actual employment contract with the City. (Krieger
Motion at 8-9.) Defendants also argue that there is no evidence that Defendant Krieger
interfered with Plaintiff’s job performance. (Id.) In response, Plaintiff asserts that he
had an actual employment contract with Defendants, and that Defendant Krieger
intentionally induced the City to breach that contract. (Response to Krieger Motion at
10-12.)
For the same reasons stated above, the Court finds that Plaintiff’s intentional
interference with financial advantage claim is not barred by the CGIA. Therefore, the
Court turns to the merits of Plaintiff’s intentional interference claim. A claim for
intentional interference with financial advantage is analyzed as a claim for intentional
interference with contractual relations. See Transamerica Premier Ins. Co. v. K & S
Const., 850 F. Supp. 930, 934 (D. Colo. 1994). The tort of intentional interference with
contractual relations is committed when one intentionally and improperly interferes with
the performance of a contract between another person and a third person by inducing
or otherwise causing the third person not to perform the contract. See Westfield Dev.
Co. v. Rifle Inv. Assoc., 786 P.2d 1112 (Colo. 1990). To establish tortious interference

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with a contract, a plaintiff must prove that: (1) plaintiff had a contract with another party;
(2) the defendant knew or should have known of such contract’s existence; (3) the
defendant intentionally induced the other party to the contract not to perform the
contract with the plaintiff; and (4) the defendant’s actions caused the plaintiff to incur
damages. See Telluride Real Estate Co. v. Penthouse Affiliates, LLC, 996 P.2d 151
(Colo. App. 1999).
The Court agrees with Defendants that Plaintiff’s intentional interference claim
fails because Plaintiff did not have an actual contract with the City.4 Plaintiff contends
that the City had a contract known as the “Agreement Between the City of Sheridan and
the Sheridan Redevelopment Agency Regarding Personnel Services” (the “SRA
Agreement”) that constitutes Plaintiff’s employment contract with the City. (Response
to Krieger Motion at 10-11.) However, the SRA Agreement is solely a contract between
the City and the SRA, and states that the City’s Director of Economic Development
shall serve as the SRA’s Executive Director. (Affidavit of W. Hayashi, at ¶ 1.) Further,
the SRA Agreement specifically states that at all times the Director of Economic
Development, even when performing the job duties of the SRA Executive Director, is a
City employee. (Id.) Plaintiff’s name does not appear anywhere in the SRA
Agreement, nor does it nor make any promises of employment to Plaintiff. (Id.)
Therefore, the SRA Agreement is an agreement between the SRA and the City, and is
not an express employment contract between Plaintiff and the City.

4

Plaintiff does not argue that he satisfies the elements of his intentional
interference with contractual relations claim based on an implied contract theory.

15

Because Plaintiff did not have an actual contract with Defendants, his intentional
interference with contractual relations claim fails as a matter of law. See William v.
Burns, 540 F. Supp. 1243, 1251 (D. Colo. 1982) (motion for summary judgment was
granted because plaintiff failed to present evidence of an existing contract). Therefore,
Defendants’ Motion for Summary Judgment on Plaintiff’s intentional interference with
contractual relations claim (Fourth Claim) is granted.
E.

Unlawful Denial of COBRA Benefits Claim (Fifth Claim)
Defendants argue that Plaintiff is precluded from bringing his claim for COBRA

benefits because he did not first exhaust his administrative remedies. (Sheridan Motion
at 25-27.) Plaintiff does not dispute that he has not exhausted his administrative
remedies, but asserts that the administrative exhaustion doctrine does not apply here.
(Response to Sheridan Motion at 30-32.)
COBRA mandates that employers give former employees the opportunity to
continue coverage under the employer's group health plan if a qualifying event occurs.
See 29 U.S.C. § 1161. Petitioners seeking COBRA benefits may do so under the terms
of the Employee Retirement Income Security Program (“ERISA”). Although ERISA
does not expressly require claimants to exhaust administrative remedies before
bringing suit in federal court, ERISA Section 503 provides that every benefit plan shall
establish an administrative review procedure for “any participant whose claim for
benefits has been denied ...” 29 U.S.C. § 1133. Thus, courts have applied this
requirement as a matter of “judicial discretion.” McGraw v. Prudential Ins. Co. of
America, 137 F.3d 1253, 1263 (10th Cir. 1998) (internal quotation and citation omitted).

16

Plaintiff has submitted evidence that he was denied the full extent of his COBRA
benefits. In Morales-Cotte v. Cooperativa de Ahorro y Credito Yabucoena, 73 F. Supp.
2d 153, 159-60 (D.P.R. 1999), the United States District Court for the District of Puerto
Rico examined a similar denial of COBRA benefits and found that the exhaustion
requirement applies only where the matter in contention concerns an interpretation of
the terms of the plan (“plan-based” claims), and not the terms of the statute itself
(“statute-based” claims). The Morales-Cotte Court so reasoned because “the only
statutory mandate for requiring claimants to exhaust administrative remedies, Section
503 of ERISA, speaks solely of establishing a procedure for the review of a denial of a
claim for benefits under a group health plan (plan-based claims).”5 Id. “[T]here is
simply no statutory basis for an administrative exhaustion requirement in the context of
statute-based claims. Further, although requiring administrative exhaustion of both
plan-based and statute-based claims may have the salutary effect of reducing the
number of cases to reach the federal courts, that is simply not sufficient justification for
the federal courts to abdicate their duty to adjudicate questions involving the
interpretation of federal law in the absence of some statutory directive.” Id.
The Court agrees with the reasoning in Morales-Cotte and finds that an
exhaustion of administrative remedies is not required when a plaintiff’s claim for denial
of COBRA benefits is based on a statutory violation of ERISA. Here, neither party has

5

In accordance with the applicable regulations, every employee benefit plan shall:
(1) provide adequate notice in writing to any participant or beneficiary whose claim for benefits
under the plan has been denied, setting forth the specific reasons for such denial, written in
matter calculated to be understood by the participant, and (2) afford a reasonable opportunity to
any participant whose claim for benefits has been denied for a full and fair review by the
appropriate named fiduciary of the decision denying the claim. 29 U.S.C. § 1133.

17

referred to or proffered any argument regarding a plan-based denial of COBRA
benefits. The Court therefore concludes that the parties at least implicitly acknowledge
that the allegedly unlawful denial of COBRA benefits claim in this case is statutorily
based. As a consequence, following the reasoning and analysis in Morales-Cotte, the
Court holds that Plaintiff did not need to exhaust his administrative remedies before
bringing a claim in this court for denial of COBRA benefits.
Defendant also argues that Plaintiff is not entitled to COBRA benefits because
he was fired for “gross misconduct.” (Sheridan Motion at 27-28.) However, as
described above, a genuine dispute of fact exists as to the cause of Plaintiff’s job
termination. As such, Defendants’ Motion for Summary Judgment on Plaintiff’s COBRA
benefits claim (Fifth Claim) is denied.
F.

Implied Breach of Contract/Promissory Estoppel Claim (Sixth Claim)
Defendants argue that Plaintiff’s implied breach of contract/promissory estoppel

claim fails as a matter of law because: (1) Plaintiff did not have an actual or implied
contract with the City, and (2) Defendants followed the disciplinary procedures outlined
in the City’s Personnel Manual and, therefore, there is no basis for Plaintiff’s promissory
estoppel claim. (Krieger Motion at 10-14.)
The elements for breach of contract under Colorado law are: (1) the existence of
a contract; (2) performance by the plaintiff or some justification for nonperformance; (3)
failure to perform the contract by the defendant; and (4) resulting damages to the
plaintiff. See PayoutOne v. Coral Mortg. Bankers, 602 F. Supp. 2d 1219, 1224 (D.
Colo. 2009) (citing W. Distrib. Co. v. Diodosio, 841 P.2d 1053, 1058 (Colo. 1992)).

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“Under Colorado law, an individual hired for an indefinite period of time is an at-will
employee whose employment can be terminated by either party without cause and
without notice. Generally, an at-will employee’s termination will not give rise to a cause
of action.” Orback v. Hewlett-Packard Co., 909 F. Supp. 804, 808 (D. Colo. 1995)
(citing Continental Air Lines, Inc. v. Keenan, 731 P.2d 708, 711 (Colo. 1987)). “An
employer may be held liable for the discharge of an otherwise at-will employee,
however, where an implied contract arises out of company policy or employment
manuals, or where an employee relies on the policies and manuals to his detriment.”
Id. (internal citation omitted); see also Vasey v. Martin Marietta Corp., 29 F.3d 1460,
1464 (10th Cir. 1994).
Under an breach of an implied contract claim, evidence must demonstrate that
the employer intended to make an offer to the employee: “[T]hat is, the employer
manifested his willingness to enter into a bargain in such a way as to justify the
employee in understanding that his assent to the bargain was invited by the employer
and that the employee’s assent would conclude the bargain.” Vasey, 29 F.3d at 1464
(internal quotations omitted). “An offer in the form of an employment manual must be
communicated to the employee to be effective, and must be sufficiently definite to
enable the court to determine whether the contract has been performed.” Orback, 909
F. Supp. at 808 (internal quotations and citations omitted). “Once the employee
establishes the employer’s intent to be bound by its procedures, he must go on to show
his continued employment constituted acceptance of and consideration for those
procedures.” Id. (internal citations omitted).

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While the existence of an implied contract is normally a question of fact for a
jury, the issue may be decided as a matter of law if: (1) there is a valid disclaimer
stating the policies are not intended to create a contract, see Therrien v. United Air
Lines, Inc., 670 F. Supp. 1517, 1522 (D. Colo.1987); (2) the alleged promises are
nothing more than “vague assurances,” see Vasey, 29 F.3d at 1464–65; or (3) if the
undisputed facts otherwise “indicate[ ] that the employer did not intend the manual to
operate as a contractual offer to the employee.” Id.
As the Court has already found that Plaintiff did not have an actual employment
contract with the City, the only question left for this Court to consider in this regard is
whether Plaintiff had an implied contract of employment. Plaintiff argues that the City’s
Personnel Manual was an implied contract between himself and the City. (Response to
Krieger Motion at 12-15.) Plaintiff further asserts that the Personnel Manual’s “policies
are very specific in the areas of the Disciplinary Process, Disciplinary Action and
Disciplinary Policies”, and thus created an implied contract. (Id.)
The City’s Personnel Manual specifically states that the handbook does not
create an implied contract.6 (Personnel Manual, § 1.3.) This disclaimer is found in the
Introduction of the Personnel Manual. (Id.) Moreover, the disclaimer is in bold
capitalized language, which highlights it from the rest of the language on the page.
(Id.). Plaintiff has submitted no evidence that Defendants considered the Personnel

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The Personnel Manual reads: THIS HANDBOOK DOES NOT CONSTITUTE A
CONTRACTUAL ARRANGEMENT OR AGREEMENT BETWEEN THE CITY OF SHERIDAN
AND ITS EMPLOYEES OF ANY KIND, INCLUDING, BUT NOT LIMITED TO, DURATION OF
THE EMPLOYMENT RELATIONSHIP OR TERMS AND CONDITIONS OF EMPLOYMENT.
(Personnel Manual, § 1.3.)

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Manual to be an implied contract. Therefore, contrary to Plaintiff’s assertion, the City’s
Personnel Manual did not create an implied contract, and Plaintiff’s claim for breach of
an implied contract fails as a matter of law. See Baldwin v. Key Equipment Finance,
Inc., 05-cv-00502, 2006 WL 2016843, at *6 (D. Colo. July 17, 2006) (citing Jaynes v.
Centura Health Corp., 148 P.3d 241, 248 (Colo. App. 2006)); Therrien, 670 F. Supp. at
1521-23 (D. Colo. 1987) (denying claims based on implied contract in handbook where
the employer clearly and conspicuously disclaimed intent to enter into a contract limiting
the right to discharge employees).
Finally, the Court turns to Plaintiff’s promissory estoppel claim. An “employee [is]
entitled to enforce [] termination procedures under a theory of promissory estoppel if he
can demonstrate that the employer should reasonably have expected the employee to
consider the employee manual as a commitment from the employer to follow the
termination procedures, that the employee reasonably relied on the termination
procedures to his detriment, and that injustice can be avoided only by enforcement of
the termination procedures.” Continental Air Lines, Inc. v. Keenan, 731 P.2d 708, 712
(Colo. 1987).
Plaintiff argues that he has a valid promissory estoppel claim because
Defendants did not provide Plaintiff with progressive discipline and failed to follow
proper disciplinary procedures. (Response to Krieger Motion at 17.) Defendants
counter that they followed all the disciplinary procedures outlined in the Personnel
Manual.
Section 8 of the Personnel Manual outlines the disciplinary procedures that must
be taken when disciplining a City employee. Under § 8.4 of the Manual, an employee
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must be provided with written notice of the proposed disciplinary action and must be
provided with an opportunity to respond to the charge(s) at a pre-disciplinary
conference. (Personnel Manual, § 8.4.) The employee may then appeal to the City
Manager. (Id., § 8.5.) If the appeal concerns the decision of the City Manager, than an
independent hearing officer will be chosen to hear the appeal. (Id.) The hearing officer
shall affirm, modify or reverse, in whole or in part the decision of the Department Head
within ten business days of the hearing. (Id.) The Manual further states that “[t]he
actual discipline imposed is up to the discretion of the supervisory personnel.” (Id., §
8.2.)
Defendants followed these procedures in bringing disciplinary action against
Plaintiff. Plaintiff was provided a Pre-Disciplinary Conference Notice, and was afforded
the opportunity to dispute any information at a pre-disciplinary conference. (Transcript
of Appeals Hearing, Vol. I, at 307.) Defendant Krieger subsequently issued his
Disciplinary Findings and Decision, and Plaintiff appealed his dismissal. (Affidavit of A.
Krieger; Personnel Manual, § 8.4; Disciplinary Findings and Decision, at 2-3.) A
hearing was conducted were Plaintiff had an opportunity to present evidence and to
cross-examine witnesses, and an Administrative Hearing Officer affirmed Defendant
Krieger’s decision to terminate Plaintiff’s employment. (Affidavit of Krieger; Transcript
of Appeals Hearing, Vol. I, at 308; Administrative Hearing Order.)
Accordingly, the Court finds that there is no genuine dispute that all procedural
requirements were met during the disciplinary process against Plaintiff. Plaintiff himself
testified during the administrative hearing that all processes and procedures had been
followed and that he just disagreed with the final decision. (Transcript of Appeals
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Hearing, Vol. I, at 308.) As such, Plaintiff’s promissory estoppel claims fails as a matter
of law.
IV. CONCLUSION
For the reasons set forth above, the Court ORDERS as follows:
1.

Defendants’ Motions to Dismiss and in the Alternative Motions for Summary
Judgment (ECF Nos. 22, 23) are GRANTED IN PART and DENIED IN PART;

2.

Defendants’ Motion for Summary Judgment on Plaintiff’s Age Discrimination in
Employment Act (“ADEA”) violation claim (First Claim) is DENIED;

3.

Defendants’ Motion for Summary Judgment on Plaintiff’s retaliation claim
(Second Claim) is DENIED;

4.

Defendants’ Motion for Summary Judgment on Plaintiff’s wrongful termination in
violation of public policy claim (Third Claim) is DENIED;

5.

Defendants’ Motion for Summary Judgment on Plaintiff’s intentional interference
with financial advantage claim (Fourth Claim) is GRANTED;

6.

Defendants’ Motion for Summary Judgment on Plaintiff’s unlawful denial of
COBRA benefits claim (Fifth Claim) is DENIED; and

7.

Defendants’ Motion for Summary Judgment on Plaintiff’s implied breach of
contract/promissory estoppel claim (Sixth Claim) is GRANTED.
Dated this 13th day of April, 2012.
BY THE COURT:

_______________________
William J. Martínez
United States District Judge
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