Hutchinson Consultants PC et al v. Federal Occupational Health et al
Filing
47
OPINION AND ORDER that Defendants' 33 Motion to Dismiss the Second Amended Complaint is GRANTED. IT IS FURTHER ORDERED that the remaining motions pending in this matter are DENIED AS MOOT. Signed by Judge William S. Duffey, Jr on 3/25/2015. (anc)
I.
BACKGROUND
A.
Facts
Federal Occupational Health (“FOH”) is a non-appropriated agency within
the United States Department of Health and Human Services (“HHS”) that
provides occupational health services to federal employees. FOH entered into a
contract with InGenesis, Inc. (“InGenesis”) that required InGenesis to provide
annual medical qualifications and return to work clearances (“Clearance Services”)
to employees of federal law enforcement agencies. InGenesis, in turn, entered into
a contract with STG International (“STG”) that required STG to provide the
Clearance Services. STG, in turn, entered into a contract with HC that required
HC to provide Clearance Services for employees of federal law enforcement
agencies (“the HC Agreement”). Defendants Titus and Miller, and an unidentified
“John or Jane Doe” Defendant, are employed by FOH (sometimes collectively
referred to as “Defendants”). Defendants Titus and Miller are first-level
supervisors at FOH. The Second Amended Complaint does not describe Defendant
Doe’s role at FOH.
HC is a private corporation, based in Auburn, Georgia. The HC Agreement
required HC to assist in providing Clearance Services for Court Security Officers
(“CSO”) and Special Security Officers (“SSO”) employed by the United States
2
Marshals Service (“USMS”). It also required HC to recommend to the Judicial
Services Division of the USMS whether to approve or withhold medical clearances
for CSOs and SSOs. Hutchinson is a board certified specialist in Occupational
Medicine and Preventive Medicine, and a primary owner of HC. Hutchinson
alleges that he has a non-verbal learning disability associated with Asperger’s
syndrome or high-functioning autism.
In September 2010, Hutchinson began to provide Clearance Services for
CSOs and SSOs pursuant to the HC Agreement. Hutchinson received medical
examination reports of CSOs and SSOs that contained health information (“PHI”)
protected from disclosure by the Health Insurance Portability and Accountability
Act of 1996 (“HIPPA”). Sarah Ohlsson, the Administrative Coordinator for the
USMS’s Judicial Services Division, provided Hutchinson with medical
examination reports and entered medical information on an online system known
as MERITS. Plaintiff performed a substantial amount of the work at his home
because he claims that due to his disability he is most productive at night. Ohlsson
allegedly sent the medical examination reports to Plaintiff’s home office through
encrypted emails and unencrypted facsimiles. Plaintiff alleges that “FOH
supervisors were aware of and had authorized Ohlsson’s practices of sending and
receiving medical information via fax” to his home. Second Am. Compl. at ¶ 62.
3
On May 16, 2013, Hutchinson received a group email from Defendant
Miller. In it, Defendant Miller requested each FOH reviewing physician to bring
all federal medical records to Defendant Titus’s office on May 17, 2013, the day
after the email was sent.
On May 17, 2013, Hutchinson met with Defendants Titus and Miller in
Defendant Miller’s office, and produced the medical records in his possession. An
Atlanta police officer and a building security guard were present outside Defendant
Miller’s office when Hutchinson arrived for the meeting. Once inside Defendant
Miller’s office, Hutchinson participated in a conference call. Defendants Miller
and Titus, along with Marcia Euwema (“Euwema”), STG’s Human Resources
Director, participated in the call. Euwema told Hutchinson that STG was
terminating the contract with HC because of a “security breach.” Id. at ¶ 72.
Hutchinson alleges that he was not aware of a “security breach,” and asked
Euwema to explain the circumstances of the breach. Id. at ¶ 73. “Euwema, []
Miller and [] Titus [] stated that they were not allowed to tell [] Hutchinson about
the problem.” Id. Hutchinson “inquired if the problem related to the faxing of
material to and from Ohlsson. Hutchinson alleges that an unidentified male voice
came over the speaker phone and said that ‘there had actually been a confidential
leak.’” Id. at ¶ 74. Euwema told Hutchinson that a HIPPA breach had occurred.
4
Id. at ¶ 74. Hutchinson contends that “all of the other participants in the
conference call” refused to provide specific details regarding the alleged breach.
Id. at ¶ 76.
Plaintiffs allege that Defendants Miller and Titus and the John Doe
Defendant communicated to unidentified third parties that (1) the contract with
STG was terminated because of a “data breach” and a “confidential leak,” (2)
Plaintiffs caused the “data breach” and “confidential leak,” and (3) as a
consequence of the communications, Hutchinson lost “other contracts and
consulting opportunities that he is qualified to perform.” Id. at ¶ 81-85.
B.
Procedural History
On October 28, 2013, Plaintiffs filed a ten count (10) Complaint against
FOH and a Doe Defendant, in his or her official and individual capacities. In the
original Complaint, Plaintiffs alleged that Defendants (1) violated the substantive
and procedural components of the Due Process Clause by terminating Plaintiffs’
contract with STG, (2) violated the Equal Protection Clause by treating Hutchinson
differently from similarly-situated contractors because of his disability, and (3)
tortiously interfered with Plaintiffs’ business relations by inducing third parties not
to enter into or continue a business relationship with HC.
On January 6, 2014, FOH moved to dismiss the original Complaint on the
5
grounds that the Court lacked subject-matter jurisdiction because Plaintiffs filed
this action against FOH without providing notice of their claim to HHS, as
required by the Federal Tort Claims Act. FOH further claimed that the United
States Court of Federal Claims has jurisdiction over FOH with respect to Plaintiffs’
claims based on HC’s contract with STG.
On February 26, 2014, the Court granted Plaintiffs’ Motion to file an
Amended Complaint. That day, Plaintiffs filed their Amended Complaint to
include claims against a Doe Defendant based on the deprivation of a property and
liberty interest, under the Due Process Clause, and the denial of equal protection,
under the Equal Protection Clause. In the Amended Complaint, Plaintiffs did not
name FOH as a defendant in the action.
On March 14, 2014, Plaintiffs moved to file a Second Amended Complaint,
which, on March 18, 2014, the Court granted. In the Second Amended Complaint,
Plaintiffs assert claims against Defendants Titus, Miller, and a Doe Defendant, in
their individual capacities, pursuant to Bivens v. Six Unknown Named Agents of
the Federal Bureau of Narcotics, 403 U.S. 388 (1971).1 Count I of the Second
1
“Claims brought under Bivens are similar to § 1983 claims, because Bivens
essentially created a remedy against federal officers, acting under color of federal
law . . . Courts generally apply § 1983 law in Bivens actions.”
Topping v. U.S. Dept. of Educ., 510 F. App’x 816, 818 (11th Cir. 2013).
6
Amended Complaint alleges that Defendants violated Plaintiffs’ substantive Due
Process rights in violation of the Due Process Clause by “interfering with
Plaintiffs’ interests in working on current and future contracts and other [federal]
projects.” Second Am. Compl. at ¶ 89. Plaintiffs contend that “Defendants’
unlawful action of accusing [] Hutchinson of a HIPPA violation and a data security
breach, which resulted in terminating [] HC’s contract, was done with the
premeditated intent of preventing Plaintiffs from working [as consultants to FOH]
and was done maliciously and in bad faith. Such bad faith actions violate Plaintiffs
substantive due process rights.” Id. at ¶ 91.
In Count II of the Second Amended Complaint, Plaintiffs allege that
Defendants violated Plaintiffs’ equal protection rights under the Equal Protection
Clause by “treat[ing] [Plaintiffs] differently from other similarly-situated
contractors in that Defendants are maliciously prosecuting them due to
[Hutchinson’s] disabilities.” Id. at ¶ 95.
In Count III of the Second Amended Complaint, Plaintiffs allege that
Defendants violated Plaintiffs’ procedural Due Process right to bid and work on
contracts for FOH and other federal agencies by “wrongfully accusing []
Hutchinson of a HIPPA violation and a data security breach, which resulted in
7
FOH’s termination of [] HC’s contract . . . .” Id. at ¶¶ 100-101.2
On July 13, 2014, Defendants Titus and Miller moved, under Rule 12(b)(6)
of the Federal Rules of Civil Procedure, to dismiss the Second Amended
Complaint on two grounds. First, that the Plaintiffs fail to state a claim against
Defendant Titus and Miller upon which relief can be granted. Second, that
Defendants Titus and Miller are otherwise entitled to qualified immunity.
Alternatively, and for the same reasons, Defendants Titus and Miller move for
summary judgment on Plaintiffs’ claims.
On August 1, 2014, Plaintiffs replied to the Defendants’ Motion to Dismiss
the Second Amended Complaint, and moved to stay the time to respond to
Defendants’ Motion for Summary Judgment. On August 6, 2014, the Court agreed
first to consider the Motion to Dismiss and stayed the time for Plaintiffs to respond
to Defendants’ Motion for Summary Judgment. The Court ordered that if the
pending Motion to Dismiss is denied, Plaintiffs are required to respond to the
Motion for Summary Judgment eighteen (18) days after the Court denies the
Motion to Dismiss.
2
It is not clear from the allegations in Count III if Plaintiffs intend to limit this
claim to the Doe Defendant. Because paragraph 98 of the Second Amended
Complaint incorporates paragraphs 1-86 of the Second Amended Complaint, the
Court, for the purposes of this Motion, considers the procedural Due Process Claim
to be raised against all of the Defendants.
8
II.
DISCUSSION
A.
Legal Standard
1.
Motion to Dismiss
Dismissal of a complaint, pursuant to Rule 12(b)(6), is appropriate “when,
on the basis of a dispositive issue of law, no construction of the factual allegations
will support the cause of action.” Marshall Cnty. Bd. of Educ. v. Marshall Cnty.
Gas Dist., 992 F.2d 1171, 1174 (11th Cir. 1993). In considering a motion to
dismiss, the Court accepts the plaintiff’s allegations as true and considers the
allegations in the complaint in the light most favorable to the plaintiff. See
Hishon v. King & Spalding, 467 U.S. 69, 73 (1984); Watts v. Fla. Int’l Univ.,
495 F.3d 1289, 1295 (11th Cir. 2007); see also Bryant v. Avado Brands, Inc.,
187 F.3d 1271, 1273 n.1 (11th Cir. 1999). The Court is not required to accept a
plaintiff’s legal conclusions as true. See Sinaltrainal v. Coca-Cola Co., 578 F.3d
1252, 1260 (11th Cir. 2009) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)),
abrogated on other grounds by Mohamad v. Palestinian Auth., — U.S. —,
132 S. Ct. 1702 (2012). The Court also will not “accept as true a legal conclusion
couched as a factual allegation.” See Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555 (2007). The complaint, ultimately, is required to contain
“enough facts to state a claim to relief that is plausible on its face.” Twombly,
9
550 U.S. at 570.
To state a plausible claim for relief, the plaintiff must plead factual content
that “allows the Court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Iqbal, 556 U.S. at 678. “Plausibility” requires more
than a “sheer possibility that a defendant has acted unlawfully,” and a complaint
that alleges facts that are “merely consistent with” liability “stops short of the line
between possibility and plausibility of ‘entitlement to relief.’” Id. (citing
Twombly, 550 U.S. at 557); see also Arthur v. JP Morgan Chase Bank, NA,
569 F. App’x 669, 680 (11th Cir. 2014) (noting that Conley’s “no set of facts”
standard has been overruled by Twombly, and a complaint must contain “sufficient
factual matter, accepted as true, to state a claim for relief that is plausible on its
face.”). “A complaint is insufficient if it ‘tenders naked assertions devoid of
further factual enhancement.’” Tropic Ocean Airways, Inc. v. Floyd,
— F. App’x —, No. 14-12424, 2014 WL 7373625, at *1 (11th Cir. Dec. 30, 2014)
(quoting Iqbal, 556 U.S. at 678).
“To survive a motion to dismiss, plaintiffs must do more than merely state
legal conclusions; they are required to allege some specific factual bases for those
conclusions or face dismissal of their claims.” Jackson v. BellSouth Telecomms.,
372 F.3d 1250, 1263 (11th Cir. 2004); see also White v. Bank of America, NA,
10
— F. App’x —, No. 14-10318, 2014 WL 7356447, at *2 (11th Cir. Dec. 29, 2014)
(“[C]onclusory allegations, unwarranted deductions of facts or legal conclusions
masquerading as facts will not prevent dismissal.”) (quoting Oxford Asset Mgmt.,
Ltd. v. Jaharis, 297 F.3d 1182, 1188 (11th Cir. 2002)).3
B.
Analysis
1.
Substantive Due Process
i.
Property Interest
Under the Due Process Clause of the Fifth Amendment, the federal
Government cannot deprive any person of “life, liberty or property without due
process of law.” U.S. CONST. amend. V. A property interest must be based on “a
legitimate claim of entitlement.” Board of Regents v. Roth, 408 U.S. 564, 570-571
(1972). Property interests are “created and their dimensions are defined by
existing rules or understandings that stem from an independent source such as
state-law-rules or understandings that secure certain benefits and that support
claims of entitlement to those benefits.” Id. at 577. “To have a property interest in
3
Federal Rule of Civil Procedure 8(a)(2) requires the plaintiff to state “a short and
plain statement of the claim showing that the pleader is entitled to relief.” Fed. R.
Civ. P. 8(a)(2). In Twombly, the Supreme Court recognized the liberal minimal
standards imposed by Federal Rule 8(a)(2) but also acknowledged that “[f]actual
allegations must be enough to raise a right to relief above the speculative
level . . . .” Twombly, 550 U.S. at 555.
11
a benefit, a person clearly must have more than an abstract need or desire for it.
[He] must have more than a unilateral expectation of it. [He] must, instead, have a
legitimate claim of entitlement to it.” Id. Property interests are based on existing
rules or understandings under state law. See Perry v. Sindermann, 408 U.S. 593,
601 (1972). Property interests are not created by the Constitution. See Roth, 408
U.S. at 577.
An individual who serves as a public employee may have a protected
interest in his or her job if he or she cannot be removed “except for cause.” See
Logan v. Zimmerman Brush Co., 455 U.S. 422, 430 (1982); Barry v. Barchi,
443 U.S. 55, 65 (1979); see also Stein v. Bd. of Educ., 792 F.2d 13, 14 (2d Cir.
1986) (finding that plaintiff had a legitimate claim to a property interest because
“Stein could not be discharged from his employment except for just cause.”). The
Eleventh Circuit also recognizes that an “only ‘for cause’” provision can create a
property right. See Barnes v. Zaccari, 669 F.3d 1295, 1304-05 (11th Cir. 2012).
In Barnes, the Eleventh Circuit held that a student expelled by Valdosta State
University (“VSU”) had a property interest in his continued enrollment at VSU
because VSU’s Policy Manual and Student Code allowed disciplinary sanctions to
be imposed on a student “only ‘for cause.’” Id. The Eleventh Circuit explained
that “until a student violates [the “only ‘for cause’” provision], that student has a
12
legitimate claim of entitlement to continued enrollment at VSU under Georgia
law.” Id. at 1305. The mere presence of a “just cause” provision in a contractual
agreement, however, does not create a property interest.
In Ross v. Clayton County, Georgia, the Eleventh Circuit considered
whether a probationary employee had an entitlement to continued employment
with Clayton County. 173 F.3d 1305, 1308 (11th Cir. 1999). The Eleventh Circuit
noted that Rule 8.301 of the Clayton County Service Rules (“CCSR”) provided
that an employee may be demoted only “for cause.” Id. at n.5. The CCSR defined
“cause” to include “unfitness to perform assigned duties, negligence or inefficiency
in performing duties, misconduct, insubordination or for other justifiable cause.”
Id. The Eleventh Circuit noted that Rule 8.303 of the CCSR provided that
probationary employees did not have a right to appeal their demotion. Id. at 1308.
Reading the Rule 8.301 and 8.303 demotion provisions together, the Eleventh
Circuit held that “the determination of whether [there was] [] grounds [] [to
demote] were exclusively for the [employer], whose authority was unchecked
because there was no appeal right for probationary employees . . . [and the]
regulations created something tantamount to an ability to demote at will, rather
than a just cause standard.” Id. at 1309. Because the authority to determine
whether there were grounds to demote were vested in the employer, the Eleventh
13
Circuit concluded that the plaintiff lacked a property interest in his continued
employment. Id. at 1309-10.
Other federal courts similarly have concluded that the mere presence of a
“just cause” provision alone does not create a property interest, especially where
there are other terms of employment to provide grounds or authority to terminate.
See Dasey v. Anderson, 304 F.3d 148, 157-160 (1st Cir. 2002) (holding that “just
cause” provision in a probationary employee’s contract did not provide employee
with a property interest in continued employment because the statutory and
regulatory scheme only protected veteran troopers and evidence indicated that the
phrase was not meant to establish a “just cause only” standard); Int’l Union, United
Auto., Aerospace & Agricultural Implement Workers of America, Local 737 v.
Auto Glass Employees Fed. Credit Union, 72 F.3d 1243, 1251 (6th Cir. 1996)
(holding that plaintiffs did not have a property interest in their collective
bargaining agreement despite the right to be discharged for “just cause” because
“no provision explicitly promised that the Credit Union would not discharge its
employees without cause” and the employer had discretion to terminate for other
reasons).
Federal courts analyze substantive Due Process claims under contracts for
public services under the same framework that applies in cases involving contracts
14
for personal employment with the government. See Toxco, Inc. v. Chu,
801 F. Supp. 2d 1, 9 (D. D.C. 2011) (applying the framework developed in public
employment cases to a sub-contractor’s Due Process claim). The same analysis
applies also when the alleged property interest is based on a subcontract instead of
a direct contract with the federal government because “the question of whether an
individual has a property interest in a government benefit depends upon whether
the person is entitled to that benefit.” See Baja Contractors, Inc. v. City of
Chicago, 830 F.2d 667, 676 (7th Cir. 1987). For example, in Toxco, Inc., the
District Court found that the subcontractor did not have a property interest
protected by the Constitution because the Government did not promise to retain the
subcontractor and there were no limitations on the Government’s authority to
withdraw its consent to the subcontract. See Toxco, Inc., 801 F. Supp. 2d at 9.
To establish a legitimate claim of entitlement, Plaintiffs must show that they
had, under State law, the right to provide services to FOH, and the right to work on
contracts with other federal agencies. See Ross, 173 F.3d at 1307; LaFleur v.
Hugine, 587 F. App’x 536, 541 (11th Cir. 2014); Amador v. Town of Palm Beach,
517 F. App’x 834, 837 (11th Cir. 2013) (“In order to have a constitutionally
protected property interest in one’s public employment, the employee must have a
legitimate and objective entitlement to continued employment based on
15
ordinances, rules, regulations, or other mutual understandings promulgated by the
government.”).
Against this legal backdrop and Plaintiffs having admitted that they do not
have a property interest in providing Clearance Services to FOH, Plaintiffs suggest
that Wilson v. MVM, Inc., 475 F.3d 166 (3d Cir. 2007) supports that they have a
protected property interest in the contract with STG because the contract contains a
“for cause” provision that allows STG to terminate the contract only “as may be
necessary.” Plaintiffs appear to contend that this “for cause” provision in a
subcontract three times removed from the FOH is enough to support that a property
interest exists and was violated when FOH provided STG with a reason—the
alleged HIPPA violation—to terminate the contract. Wilson stands for the
unremarkable proposition that where a contract for employment services contains a
“just cause” termination provision, an employee has an expectation of continued
employment, and where the Government provides the grounds to require a “just
cause termination,” an employee’s property right may be adversely effected.
The Third Circuit, in Wilson, considered the termination of employment of
employees who worked for MVM, Inc. (“MVM”), a company that contracted with
the USMS to provide CSOs to assist the USMS to provide security services.
475 F.3d at 170. MVM had a clause in its collective bargaining agreement that
16
stated that the CSOs could be terminated for “just cause only.” Id. During the
course of the CSOs’ employment, the USMS added several medical conditions that
precluded individuals from qualifying to be CSOs at facilities at which the USMS
provided protective services. Id. at 171. Several MVM employees who suffered
from these medical conditions were thus disqualified from serving as CSOs, and
because MVM did not have other positions for them, they terminated the
employment of these employees claiming the USMS medical requirements
constituted “just cause” for their termination. Id.
The employees sued MVM, the USMS, the Judicial Conference of the
United States and the Department of Justice (“the federal defendants”). Id. at 170.
Among the claims alleged was that their Due Process rights were violated.
Id. at 175. They alleged specifically that the determination by the USMS that
made them medically disqualified for a job they held for many years was the basis
for their termination and that, as a result, their Due Process rights were violated by
the federal defendants. Id. The Third Circuit held that the “just cause only”
termination provision in the collective bargaining agreement created a property
interest in the CSOs’ employment with MVM. Id. at 177.
The Third Circuit, in Wilson, held that a CSO could assert a claim against
the federal defendants where the USMS’s decision on medical qualifications
17
directly impacted an employer’s decision to terminate.4 Id. at 178. The Third
Circuit held that the plaintiffs thus had a property interest in their contract that
entitled them to the guarantees of procedural fairness under the Due Process
Clause because “‘[t]he just cause for the discharge was supplied by the state, which
by disqualifying the employee[s] foreclosed them from doing [their jobs].’” Id.
(quoting Stein v. Bd. of Educ., 792 F.2d 13, 16 (2d Cir. 1986)). Wilson does not
apply here.
The “Termination” provision here is different from the one in Wilson. The
HC Agreement contained a three subpart “Termination” provision:
5.1 This Agreement may be terminated as may be necessary by any of
the following means (emphasis added):
5.1.1 By direction of Client(s) or its designated agent.
Termination will be effective immediately or upon the date set
by Client(s).
5.1.2 By STGi, for cause, upon such prior notice and after such
opportunity to cure, if any, as STGi shall deem advisable under
the circumstances. STGi also may terminate this Agreement or
the Services, upon written notice in the event of a material
breach by Contractor of this Agreement.
5.1.3 By Contractor, for cause, after giving due notice, STGi
4
The Third Circuit found that the employees had been afforded sufficient notice
and opportunity to be heard on their disqualification and affirmed the district
court’s dismissal of the Due Process claim against the federal defendants.
Id. at 178.
18
fails to correct conditions that impede the Contractor’s
performance such that its professional reputation is at risk.
Contract for Services Between STG and HC, at p. 3, attached as Ex. 1 to
Defs.’ Mot. to Dismiss.
Three different bases for contract termination discredits Plaintiffs’ argument
that they had a legitimate claim of entitlement to perform under the contract with
STG.5 The “Termination” provision allows the Client (in this case FOH or
InGenesis), in its discretion, to terminate the HC Agreement immediately or on a
date certain. “Cause” is not required and in its absence in this subparagraph alone
supports that Plaintiffs did not have a legitimate expectation of continuation of
services. Even under the second subparagraph where the termination is for cause,
Plaintiffs were allowed an opportunity to cure only if STG determined the
opportunity advisable. Again, discretion given to STG does not support a
legitimate entitlement to continuation of the HC Agreement. STG had the right to
terminate the contract without cause at the direction of either InGenesis or FOH or
for a material breach of the agreement.
5
The HC Agreement had a more developed “Termination” provision than the one
in Wilson because it allowed STG to terminate the agreement under three different
circumstances: (1) by direction of a client or its designated agent, (2) by written
notice in the event of a material breach by HC, and (3) for cause, upon such prior
notice and after such opportunity to cure, if any, as STG deemed advisable under
the circumstances.
19
The allegations here do not support that Plaintiffs had a “legitimate claim of
entitlement” to the continuation of their agreement with STG. The cases support
this conclusion. In Int’l Union, United Auto., Aerospace & Agricultural
Implement Workers of America, Local 737 v. Auto Glass Employees Fed. Credit
Union, the conservator of a Federal Credit Union (“FCU”) repudiated a collective
bargaining agreement, implemented new wage rates and employee benefits, and
terminated the existing employee pension plan and distributed vested pension
benefits to at least some of the plan beneficiaries. 72 F.3d 1243, 1246
(6th Cir. 1996). Employees of the FCU and their union filed a complaint against
the FCU, in which they alleged that the conservator’s actions caused termination,
constructive discharge or permanent layoff in violation of their constitutional right
not to be deprived of a property interest without Due Process of law. Id. The Sixth
Circuit held that although the employees’ collective bargaining agreement created
a “non-exhaustive list of management rights” that included “the right to discharge
employees for ‘just cause,’ no provision explicitly promised that the [FCU] would
not discharge its employees without cause.” Id. at 1251.
The Sixth Circuit, therefore, held that the employees failed to state a claim
under the Due Process Clause because they did not have a property interest in their
continued employment based on the collective bargaining agreement. Id. The
20
Sixth Circuit’s requirement that an agreement must explicitly promise that it will
not be terminated unless there is just cause is consistent with other federal
decisions. See Strolberg v. U.S. Marshals Service, 350 F. App’x 113, 114 (9th Cir.
2009) (holding that a contract containing a just cause provision that allows the
government to terminate the agreement creates a “hybrid contract” with no
constitutionally protected property interest); Letich v. MVM, Inc., No. Civ.A. 034344, 2005 WL 331707, at *3 (E.D. Pa. Feb. 10, 2005) (finding that plaintiffs had
no property interest despite a “just cause” provision in their agreement because the
agreement did not contain unqualified language that termination would be for “just
cause only.”); see also Int’l Union, Sec., Police, and Fire Prof'l of Am. (SPFPA) v.
United States Marshal’s Serv., 350 F. Supp. 2d 522 (S.D.N.Y. 2004).
The HC Agreement allows FOH to terminate the HC Agreement in its
discretion. The “just cause” provision in the HC Agreement allows STG to
terminate the agreement “upon such prior notice and after such opportunity to cure,
if any, as STG[] deemed advisable under the circumstances.” (emphasis added).
The HC Agreement does not contain a mechanism for how an opportunity to cure
will be given or what factors STG may utilize in determining whether Plaintiffs are
entitled to an opportunity to cure before the agreement may be terminated. The
agreement simply provides STG with the discretion to determine the process that
21
applies if it decides to terminate the agreement for “just cause.” This discretion
coupled with the absence of a provision in the HC Agreement that describes the
process allegedly due to Plaintiffs means that the “just cause” provision also does
not create a property right to the continuation of the contract. See Ross, 173 F.3d
at 1309-10 (holding that plaintiff had no property interest despite “just cause”
provision in the agreement because employer determined whether just cause
existed to terminate, and employer’s authority was unchecked because there was
“no appeal right for probationary employees.”); Edwards v. Brown, 699 F.2d 1073,
1077 (11th Cir. 1983) (ordinance providing that police officer “shall serve during
good behavior and efficient service, to be judged by the Commissioner or a
designee” did not create a property interest because the Commissioner determined
whether officer served during “good behavior and efficient service.”).
The HC Agreement does not constitute the kind of single “for cause” only
termination provision that can support a legitimate claim of entitlement to
continuation of the Agreement. The Court concludes that Plaintiffs do not have a
“legitimate claim of entitlement” to do business with FOH or to the continuation of
their private contract with STG, and thus do not have a property interest upon
22
which a Due Process claim may be based.6 Defendants Titus’s and Miller’s
Motion to Dismiss Plaintiffs’ substantive Due Process claim based on a property
interest is granted.
ii.
Liberty Interest
Under the Due Process Clause of the Fifth Amendment, a liberty interest
includes an individual’s right “in his or her reputation coupled with the more
tangible benefits or entitlements which rest upon a person’s good name.”
Bank of Jackson County, 980 F.2d at 1367. To prevail on a claim that government
6
Defendants Titus and Miller rely on a letter from STG to the American
Arbitration Association and Plaintiffs’ counsel to support that their Motion to
Dismiss should be granted. The letter states that STG terminated the contract at
the direction of InGenesis. Defendants argue that the “for cause” provision does
not apply here because Plaintiffs’ contract was terminated at InGenesis’s direction.
These facts were not included in the Second Amended Complaint. The Second
Amended Complaint alleges that Euwema, at the direction of STG, told
Hutchinson that STG was terminating the contract with HC because of a “security
breach.” Id. at ¶ 72. Accepting these facts as true at this stage of the proceedings,
the Court finds that Section 5.1.2 of the HC Agreement allows STG to terminate
the contract for cause or for a material breach of the provisions of the Agreement.
Even if the Court limited its discussion to this provision of the contract, the result
would be the same because this provision does not limit STG’s discretion to
terminate the contract “for cause only.” STG may also terminate the contract for a
material breach of the agreement. Whether STG did or could terminate the
agreement for a material breach is not before the Court, and it is not germane to the
Court’s analysis of whether Plaintiffs have a property interest at stake that triggers
the substantive and procedural components of the Due Process Clause. The
Court’s analysis is confirmed by section 5.1.3 of the agreement, which allows HC
to terminate the Agreement only for cause after giving due notice to STG.
23
action deprived the plaintiff of a liberty interest in reputation, the plaintiff must
show: (1) a stigmatizing allegation []; (2) dissemination or publication of that
allegation [], and (3) loss of some tangible interest due to publication of the
stigmatizing allegation [].” Id. The plaintiff must show that the government
published a charge that damaged plaintiff’s “standing and associations in the
community.” Roth, 408 U.S. at 573-575. The “stigma” caused by the
Government’s action must prevent the plaintiff from access to a “range of
employment opportunities.” Id.; Paul, 424 U.S. at 701. To prevail on a claim that
the Government’s alleged defamatory statements deprived Plaintiffs of their liberty
interest, Plaintiffs must show “an additional constitutional injury, tied to a
previously recognized constitutional property or liberty interest, flowing from the
defamation.” See Rehberg v. Paulk, 611 F.3d 828, 852 (11th Cir. 2010) (noting
that generalized allegations of defamation are insufficient to state a liberty interest
claim under the Due Process Clause).
Plaintiffs claim that Defendants communicated to third parties that
(1) the contract with STG was terminated because of a “data breach” and a
“confidential leak,” (2) Plaintiffs caused the “data breach” and “confidential leak,”
and (3) as a consequence of the communications, Hutchinson lost “other contracts
and consulting opportunities that he is qualified to perform.” Second Am. Compl.
24
at ¶ 81-85. These conclusory allegations are insufficient to state a claim for the
deprivation of a liberty interest under the Due Process Clause.
The Second Amended Complaint here alleges facts that third parties were
told that the contract with STG was terminated because of a “data breach” and a
“confidential leak” and, as a result, unspecified contracts and consulting
agreements were lost. While this alone is not enough to state a claim, the Second
Amended Complaint fails completely to allege the “additional constitutional
injury” required to allege adequately a liberty interest supporting a Due Process
violation. See Rehberg, 611 F.3d at 852. Plaintiffs do not allege that HC or
Hutchinson had an existing property interest in the contracts and consulting
opportunities that were lost because of the Defendants’ actions. Id. Plaintiffs only
allege that they “lost” unspecified contracts and “opportunities” to seek contracts.
The allegations also are insufficient to state a claim because Plaintiffs fail to
allege that they are excluded from a “range of employment opportunities,” or that
Hutchinson is precluded from pursuing his chosen career. See Roth, 408 U.S. at
573-575; Paul, 424 U.S. at 701.
In Buxton v. City of Plant City, Fla, the Eleventh Circuit noted that a liberty
interest is implicated under the Due Process Clause if the plaintiff is foreclosed
from several employment opportunities because the defendant’s defamatory
25
statements stigmatize plaintiff in the eyes of other employers and the community at
large. 871 F.2d 1037, 1046 (11th Cir. 1989); see also Bank of Jackson County,
980 F.2d at 1369 (holding that “[t]he loss of one particular kind of government
loan guarantee in a limited geographical area, constituting a limited portion of
BJC’s business, did not impose so severe a constraint on the bank’s freedom that it
may be called a deprivation of liberty.”) Shirvinski v. U.S. Coast Guard, 673 F.3d
308, 315 (4th Cir. 2012) (affirming the grant of summary judgment on
subcontractor’s liberty interest claim because subcontractor failed to show that he
was “‘foreclosed from reentering the field,’” or “‘effectively barred from pursuing
his chosen trade.’”) Kartseva v. Dept. of State, 37 F.3d 1524, 1525 (D.C. Cir.
1994) (holding that a subcontractor failed to allege that the termination of her
contract with the prime contractor was a deprivation of liberty because
subcontractor was not excluded from a category of government jobs or precluded
from pursuing her chosen career).
Plaintiffs, at most, suggest that there is a relationship between the alleged
statements made and the claimed consequences. They do not allege that HC and
Hutchinson are foreclosed from a range of government contracts or that
Hutchinson is foreclosed from pursuing his chosen career. The Court concludes
that the Second Amended Complaint fails to allege that the Defendants’ allegedly
26
defamatory statements deprived Plaintiffs of a liberty interest under the Due
Process Clause. Defendants Titus’s and Miller’s Motion to Dismiss Plaintiffs’ Due
Process claim based on a liberty interest is thus granted.
2.
Procedural Due Process
To prevail on a procedural Due Process claim, a plaintiff must establish:
(1) a constitutionally protected interest in life, liberty or property; (2) state action
that deprives the constitutionally protected interest in life, liberty or property; and
(3) the constitutional inadequacy of procedures used to deprive the protected
interest in life, liberty or property. Bank of Jackson County, 980 F.2d at 1366.
“The requirements of procedural due process apply only to the deprivation of
interests encompassed by the [Fifth] Amendment’s protection of liberty and
property.” Smith v. Siegelman, 322 F.3d 1290, 1296 (11th Cir. 2003).
The Second Amended Complaint fails to allege a constitutionally protected
interest in liberty or property. Plaintiffs have, therefore, failed to satisfy the
requisite elements of a procedural Due Process violation. Without a protectable
interest in liberty or property, Plaintiffs are not entitled to process and there is not a
denial of “due process.” See Manley v. City of Tallahassee, 525 F. App’x 908,
909 (11th Cir. 2013); Tefel v. Reno, 180 F.3d 1286, 1299 (11th Cir. 1999);
Economic Development Corp. of Dade County, Inc. v. Stierheim, 782 F.2d 952,
27
954 (11th Cir. 1986) (holding that in the absence of a deprivation of an interest in
liberty or property, there can be no denial of due process). Plaintiffs’ procedural
Due Process claim is thus required to be dismissed.
3.
Equal Protection
Under the Equal Protection Clause of the Fourteenth Amendment,7 the
federal government, and individuals acting on its behalf, cannot deny a person the
equal protection of the laws. U.S. CONST. amend. XIV. “The central mandate of
the equal protection guarantee is that “[t]he sovereign may not draw distinctions
between individuals solely on differences that are irrelevant to a legitimate
governmental objective.” Lofton v. Secretary of Dep. of Children and Family
Servs., 358 F.3d 804, 817 (11th Cir. 2004). “To properly plead an equal protection
claim, a plaintiff must allege that, through state action, similarly-situated persons
are treated disparately.” Austin v. City of Montgomery, 353 F. App’x 188, 191
(11th Cir. 2009) (citing Thigpen v. Bibb County, 223 F.3d 1231, 1237 (11th Cir.
7
“The Equal Protection Clause of the Fourteenth Amendment does not apply
directly to the federal government; however, the principles of equal protection are
applied to the federal government through the Due Process Clause of the Fifth
Amendment.” Swisher Int’l, Inc. v. Schafer, 550 F.3d 1046, 1060 (11th Cir.
2008).
28
2000), abrogated on other grounds by Nat’l R.R. Passenger Corp. v. Morgan, 536
U.S. 101, 122 S. Ct. 2061 (2002)).
“Proof of discriminatory intent or purpose is a necessary prerequisite to any
Equal Protection Clause claim.” Parks v. City of Warner Robins, 43 F.3d 609, 616
(11th Cir. 1995). Intent or purpose means that “the decisionmaker . . . selected or
reaffirmed a particular course of action at least in part ‘because of,’ not merely ‘in
spite of,’ its adverse effects upon an identifiable group.”
Corey Airport Servs. Inc. v. Clear Channel Outdoor, Inc., 682 F.3d 1293, 1297
(11th Cir. 2012) (internal quotation marks and citations omitted).
Plaintiffs allege that Defendants violated the Equal Protection Clause by
“treat[ing] [Plaintiffs] differently from other similarly-situated contractors in that
Defendants are maliciously prosecuting them due to [Hutchinson’s] disabilities.”
Second Am. Compl. at ¶ 95. The Second Amended Complaint fails to identify a
similarly-situated contractor that was treated differently. “Bare allegations that
‘other’ [contractors], even ‘all other’ [contractors], were treated differently do not
state an equal protection claim; a complaint must attempt to show in some fashion
that these ‘other’ [contractors] were situated similarly to the plaintiff.”
GJR Invs., Inc. v. County of Escambia, 132 F.3d 1359, 1367 (11th Cir. 1998); see
also Douglas Asphalt Co. v. Qore, Inc., 541 F.3d 1269, 1275 (11th Cir. 2008)
29
(affirming the dismissal of an Equal Protection claim because plaintiff did not
“identify an instance in which a similarly situated contractor completed its project
without being subject to the same testing procedures.”).
The Second Amended Complaint also fails to allege facts that impute a
discriminatory intent or purpose on Defendants. Plaintiffs allege that “[s]hortly
after beginning work with FOH, [] Hutchinson disclosed his disability to Drs. Scott
and Sahakian. They both indicated that he appeared fine and that he must be
exaggerating his condition.” Second Am. Compl. at ¶ 28. Drs. Sahakian and Scott
were supervisors at FOH that left their position at the end of 2012. Id. at ¶¶ 43-49.
At some point in 2013, Defendant Titus assumed Dr. Sahakian’s role, and
Defendant Miller assumed Dr. Scott’s role. Id. at ¶ 43-49. The Second Amended
Complaint fails to allege that Defendants knew of Hutchinson’s disability. It does
not contain plausible facts to indicate that Hutchinson’s services with FOH and
HC’s contract with STG were terminated because of Hutchinson’s disability or that
Defendants “selected or reaffirmed a particular course of action at least in part
‘because of,’ not merely ‘in spite of,’” Hutchinson’s disability.
See Corey Airport Servs. Inc., 682 F.3d at 1297.
The Court concludes that even after Plaintiffs amended their Complaint, the
Second Amended Complaint fails to allege that the services of a similarly-situated
30
subcontractor were not terminated or that Defendants induced STG to terminate
HC’s contract because of Hutchinson’s disability. In fact, they do not allege that
any person involved in the contract termination decision even knew of
Hutchinson’s disability. Defendants’ Motion to Dismiss Plaintiffs’ Equal
Protection claim is granted.8
III.
CONCLUSION
Accordingly, for the foregoing reasons,
IT IS HEREBY ORDERED that Defendants’ Motion to Dismiss the
Second Amended Complaint is GRANTED [33].
IT IS FURTHER ORDERED that the remaining motions pending in this
matter are DENIED AS MOOT.9
8
The unidentified Doe Defendant is dismissed. Plaintiffs do not describe the Doe
Defendant in their Second Amended Complaint. “Fictitious party practice is not
permitted in federal court.” New v. Sports & Rec. Inc., 114 F.3d 1092, 1094 n.1
(11th Cir. 1997). While courts have sometimes made exceptions when the plaintiff
may be able to describe an individual without stating his or her name precisely or
correctly, Plaintiffs have not provided any description of the Doe Defendant
alleged in this case. See Dean v. Barber, 951 F.2d 1210, 1215-16 (11th Cir. 1992)
(finding plaintiff’s description of “Chief Deputy of the Jefferson County Jail John
Doe” sufficient because the proposed defendant existed and plaintiff adequately
described the person to be sued so that the person could be identified for service).
Thus, this exception does not apply and Defendant Doe is required to be dismissed.
9
On May 27, 2014, Plaintiffs moved to join STG as a necessary party to this action
pursuant to Rule 19(a) of the Federal Rules of Civil Procedure. Plaintiffs contend
that it is necessary to join STG in this action because STG made the decision to
31
SO ORDERED this 25th day of March, 2015.
_______________________________
WILLIAM S. DUFFEY, JR.
UNITED STATES DISTRICT JUDGE
terminate the HC Agreement. On January 12, 2015, Plaintiffs moved for leave to
file a Third Amended Complaint. In the proposed Third Amended Complaint,
Plaintiffs seek to add Gene Migliaccio (“Migliaccio”), the Director of FOH, as a
Defendant in this action. Plaintiffs allege that Migliaccio directed that Plaintiffs’
services with FOH be terminated. Plaintiffs’ Motions to Join STG as a necessary
party and leave to file a Third Amended Complaint are required to be denied as
moot because Plaintiffs have failed to allege a constitutional violation, and the
addition of these parties is futile. Even if these parties were added to this action,
Plaintiffs’ Complaint still fails to state a claim upon which relief can be granted.
32
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?