Mitchell II et al v. Cooper et al

Filing 23

MEMORANDUM OPINION re motion to dismiss. Signed by Judge Leonard P. Stark on 9/29/15. (ntl)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
BENJAMIN R. MITCHELL, II,
SCOTT A. O'BIER, and
VICTOR T. LETONOFF,
Plaintiffs,
v.

.C.A. No. 14-1421-LPS

SAMUEL R. COOPER, KEITH W.
BANKS, each in their individual and
official capacities, and CITY OF
REHOBOTH BEACH, a municipal
corporation,
Defendants.

John M. LaRosa, Law Office of John M. LaRosa, Wilmington, Delaware.
Attorney for Plaintiffs.

David H. Williams, James H. McMackin, III, and Allyson Britton DiRocco, Morris James LLP,
Wilmington, Delaware.
Attorneys for Defendants.

MEMORANDUM OPINION

September 29, 2015
Wilmington, Delaware

I.

INTRODUCTION
Plaintiffs Benjamin R. Mitchell, II, Scott A. O'Bier, and Victor T. Letonoff ("Plaintiffs")

filed this action pursuant to 42 U.S.C. § 1983, the Fourteenth Amendment, and Delaware state
law alleging violations of the Equal Protection Clause of the U.S. Constitution, procedural and
substantive due process, and the implied covenant of good faith and fair dealing. (D .I. 1)
Plaintiffs filed their complaint on November 20, 2014.
The defendants here are Samuel R. Cooper, the mayor of the City of Rehoboth Beach,
Delaware ("City"); Keith W. Banks, the Chief of Police of the Rehoboth Beach Police
Department ("the Department"); and the City of Rehoboth Beach, a municipal corporation
("Defendants"). On January 20, 2015, Defendants filed their answer. (D.I. 7) On the same date,'I
Defendants also filed a partial motion to dismiss Plaintiffs' complaint for failure to state a claim.
(D.I. 8) In particular, Defendants sought to dismiss counts II (Equal Protection) and IV (implied
covenant of good faith and fair dealing), as well as the claims for punitive damages against the
City. (D.I. 9) 1
For the reasons that follow, the Court will grant Defendants' motion.
II.

BACKGROUND
All three Plaintiffs are Sergeants with the Department who sought but were denied

promotion to Lieutenant. (See D.l. 10 at 1) They bring claims that arise from the Department's
creation of two new "Lieutenant vacancies." (D.I. 1 ~ 45) Plaintiffs allege that the Department

1

In their memorandum in opposition to Defendants' motion to dismiss, Plaintiffs agreed
to drop their claim under the Equal Protection Clause and clarified that they are not seeking
punitive damages against Rehoboth Beach. (See D.l. 10 at 7)
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did not adhere to its employment policies when filling the vacancies. (Id.

'if'if 61, 63) According

to Plaintiffs, the Department violated its employment policies by failing to notify Plaintiffs about

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the vacancies and by failing· to consider Plaintiffs for the positions - instead filling at least one
them with an unqualified officer. (Id.

'if'if 45-61, 63)

Additionally, the complaint alleges that, under the Department's Departmental Directives
("Directives"), an officer may not be promoted to Lieutenant unless the officer holds the rank of
Sergeant, with two years time-in-grade (D.I. 1 'if'if 29-34) .. It further alleges that each of the three
Plaintiffs has a stellar performance record and that each Plaintiff meets the qualifications set out
in the Directives for promotion to Lieutentant. (Id.

'if'if 10-28, 43) Plaintiffs allege that at least

one of the individuals promoted to Lieutenant was not qualified as he had never held the rank of
Sergeant. (Id. ~'if 58-59, 61)
Plaintiffs further allege that the violations of the City and Department policies were
deliberate and involved acts of deceit and bad faith. (Id.

'if'if 87-92, 124-27) For example,
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Plaintiffs allege that Defendant Banks, the chief of police, told the City's commissioners that "he I
.
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had two qualified candidates for promotion to Lieutenant," although in fact the candidates he wa~

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recommending were not qualified. (Id.

III.

'if 49)

LEGAL STANDARDS
Evaluating a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) requires

the Court to accept as true all material allegations of the complaint. See Spruill v. Gillis, 372
F.3d 218, 223 (3d Cir. 2004). "The issue is not whether a plaintiff will ultimately prevail but
whether the claimant is entitled to offer evidence to support the claims." In re Burlington Coat
Factory Sec. Litig., 114 F.3d 1410, 1420 (3d Cir. 1997) (internal quotation marks omitted).

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Thus, the Court may grant such a motion to dismiss only if, after "accepting all well-pleaded
allegations in the complaint as true, and viewing them in the light most favorable to plaintiff,
plaintiff is not entitled to relief." Maio v. Aetna, Inc., 221 F3d 472, 481-82 (3d Cir. 2000)
(internal quotation marks omitted).
However, "[t]o survive a motion to dismiss, a civil plaintiff must allege facts that 'raise a;
right to relief above the speculative level on the assumption that the allegations in the complaint
are true (even if doubtful in fact).'" Victaulic Co. v. Tieman, 499 F .3d 227, 234 (3d Cir. 2007)
(quoting Bell At!. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). A claim is facially plausible
"when the plaintiff pleads factual content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009). "The complaint must state enough facts to raise a reasonable expectation that discovery
will reveal evidence of [each] necessary element" of a plaintiffs claim. Wilkerson v. New Media,
Tech. Charter Sch. Inc., 522 F.3d 315, 321 (3d Cir. 2008) (internal quotation marks omitted).
The Court is not obligated to accept as true "bald assertions," Morse v. Lower Merion
Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997) (internal quotation marks omitted), "unsupported
conclusions and unwarranted inferences," Schuylkill Energy Res., Inc. v. Pennsylvania Power &
Light Co., 113 F.3d 405, 417 (3d Cir. 1997), or allegations that are "self-evidently false," Nami v.
Fauver, 82 F.3d 63, 69 (3d Cir. 1996).

IV.

DISCUSSION
The only issue the Court must resolve is whether to grant Defendants' motion to dismiss

Plaintiffs' claim for breach of the implied covenant of good faith and fair dealing. Defendants
argue that Plaintiffs have failed to state a claim on which relief may be granted. See Fed. R. Civ ..

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Proc. 12(b)(6). Under Delaware law, the implied covenant of good faith and fair dealing applies .
to all employment contracts, prohibiting employers from perpetrating fraud, acting in a deceitful
manner, or engaging in misrepresentations with respect to personnel decisions. See Merrill v.

Crothall Am., Inc., 606 A.2d 96, 101 (Del. 1992) ("[T]o constitute a breach of the implied
covenant of good faith, the conduct of the employer must constitute an aspect of fraud, deceit or
misrepresentation.") (internal quotation marks omitted).
Defendants contend thatthe covenant is actionable only when an employee "has been
fired or constructively discharged." (D.I. 9 at 4) (citing Meltzer v. City of Wilmington, 2008 WL
4899230 at *2 (Del. Super. Ct. Aug. 6, 2008)). In Defendants' view, then, Plaintiffs have failed
to state a claim because they do not allege they have been fired or constructively discharged, but ·
instead remain employed by the City. Plaintiffs counter that the covenant applies whenever "the
conduct of the employer constitutes an aspect of fraud, deceit or misrepresentation." (D.I. 10 at
8) (citing Hudson v. Wesley College Inc., 1998 WL 939712, at *13 (Del. Ch. Dec. 23, 1998))
Having reviewed the relevant authorities, the Court finds that it can resolve the pending
motion without deciding whether termination (or constructive discharge) is an essential element
of a claim for breach of the implied covenant of fair dealing. Even assuming, arguendo, that

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Plaintiffs are correct and that relief may be granted on such a claim, 2 the Court concludes that
Defendants' motion must be granted.

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Defendants correctly emphasize that in Meltzer the Delaware Superior Court considered
this precise issue and ruled exactly as Defendants would have this Court decide here. Meltzer
unambiguously states: "Delaware case law demonstrates that breach of the covenant of good faith
and fair dealing can be claimed only when an employee has been fired or constructively
discharged. Withholding or denying future promotions is insufficient as a matter of law to
support a claim for constructive discharge." 2008 WL 4899230, at *2 (internal quotation marks
omitted); see also Rizzitiello v. McDonald's Corp., 2004 WL 396411, at *1 (Del. Super. Ct. Oct.
6, 2003) ("The court agrees with the analysis in cases in other jurisdictions holding that denials
of ... future promotions is insufficient as a matter of law to support a claim for constructive
discharge.").
Notwithstanding this clear holding, the Delaware Supreme Court, in Lord v. Souder,
expressly recognized a claim for breach of the implied covenant of good faith and fair dealing by
an at-will employee "where the employer misrepresented an important fact and the employee
relied thereon either to accept a new position or remain in a present one." 748 A.2d 3 93, 400
(Del. 2000) (emphasis added) (internal quotation marks omitted); see also E.I duPont de
Nemours & Co. v. Pressman, 679 A.2d 436, 443 (Del. 1996) (same). It would seem that in this
narrow context an employee could "remain in a present" position - and not be terminated or
constructively discharged - and still state a claim for breach of the covenant. Consistent with
this view is the Delaware Court of Chancery's decision in Hudson, which broadly states that
"Delaware law has established that the [implied] covenant [of good faith and fair dealing] is
breached when [i.e., whenever] the conduct of the employer constitutes an aspect of fraud, deceit
or misrepresentation," Hudson, 1998 WL 939712, at *13 (internal quotation marks omitted), and
which specifically considered a non-tenured college professor's claim that the covenant was
breached when he was denied a promotion based on purported misrepresentations by the
college's president to its Board, id. at *6. As Plaintiffs observe, Hudson's claim was not .
dismissed or resolved as a matter of law but, instead, was denied due to a lack of proof of the
·required fraud, deceit, or misrepresentation. (See D.I. 10 at 9-10) Defendants (like the Superior
Court in Meltzer) distinguish Hudson based on the applicable tenure/promotion framework
having been set up in such a way as to have made the denial of tenure tantamount to termination.
(See D.I. 11 at 2-3) Even if this is true, however, it would seem to be further confirmation that
the implied covenant is not per se limited to a termination context, emphasizing again that
specific facts and circumstances must be considered.
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In Lord v. Souder, the Delaware Supreme Court explained that an at-will employee's3
action for breach of the covenant is limited to four narrow categories:
(i) where the termination violated public policy; (ii) where the
employer misrepresented an important fact and the employee relied
thereon either to accept a new position or remain in a present one;
(iii) where the employer used its superior bargaining power to
deprive an employee of clearly identifiable compensation related to
the employee's past service; and (iv) where the employer falsified
or manipulated employment records to create fictitious grounds for
termination.

Lord v. Souder, 748 A.2d 393, 400 (Del. 2000) (internal quotation marks omitted). Although the.
Complaint uses the words of each of these four categories (see D.I. 1 ifif 124-27),-it fails to go
beyond conclusory labels and fails to plead facts that, if proven, would bring Plaintiffs' claims
within any of these narrow categories.
The first and fourth categories are not adequately pled here as Plaintiffs have failed to
allege they were terminated. Additionally, there are no well-pleaded factual allegations as to
what public policy was allegedly violated, see Pressman, 679 A.2d at 441-42 (requiring
identification of "an explicit and recognizable public policy"), or as to any of Plaintiffs'
employment records being falsified. Similarly, the third category is not adequately pled here as
Plaintiffs do not allege how Defendants used their superior bargaining position or how they
deprived Plaintiffs of "clearly identifiable compensation" for past services.

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As Plaintiffs have not pleaded the existence of a written employment contract, the Court i
presumes that their employment is at-will. See generally Carlson v. Hallinan, 925 A.2d 506, 527
(Del. Ch. 2006) (explaining, "[i]n employment law, there is a strong presumption against
permanent positions," and an employee is presumed to be at-will unless "a clear and definite
intention to overcome the presumption [of at will employment is] is expressed in the contract"
(internal quotation marks omitted)).
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Plaintiffs come closest to stating a claim under the second category, but even here they
fail as well. While Plaintiffs claim that the Department misrepresented an important fact - by
failing to post or communicate the Lieutenant vacancies - they do not allege any facts
demonstrating that Plaintiffs somehow relied on this misrepresentation by remaining in their
positions. (See D.I. 1 if 125) Drawing all reasonable inferences in favor of Plaintiffs, they are
essentially pleading that Defendants misrepresented that there were no Lieutenant vacancies at a
time when, in fact, there were (new) Lieutenant vacancies for which Plaintiffs were qualified to
apply. But Plaintiffs do not further allege that they would have left their positions as Sergeants
had they known 'the truth, nor do they make any allegations as to how their continued
employment with the Department was in reliance on Defendants' misrepresentations.
Because Plaintiffs' claim does not fall into one of the four categories specified by the
Delaware Supreme Court, and because the claim does not otherwise indicate the presence of
fraud, bad faith, or other inequitable conduct, the Court finds that Plaintiffs have failed to state a
claim with respect to Count IV of their complaint. See generally Lord, 748 A.2d at 402 (holding
that four categories articulated above are "exclusive" and explaining that "[r]equiring at-will
employee-plaintiffs to fit within one of the four established Pressman categories will prevent
further erosion of an employment at-will doctrine already riddled with exceptions").

V.

CONCLUSION
For the reasons provided above, the Court will grant Defendants' partial motion to

dismiss for failure to state a claim. An appropriate Order will be entered.

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