Hurst v. IHC Health Services, Inc. et al

Filing 34

MEMORANDUM DECISION AND ORDER granting in part and denying in part 15 Motion for Summary Judgment. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by cjm)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
CINDY HURST,
Plaintiff,

Case No. 4:10-cv-00387-BLW

v.
IHC HEALTH SERVICES, INC., a Utah
General Non-Profit Corporation d/b/a
CASSIA REGIONAL MEDICAL
CENTER; INTERMOUNTAIN
HEALTHCARE, INC., a Utah General
Non-Profit Corporation,

MEMORANDUM DECISION
AND ORDER

Defendants.

Before the Court is a Motion for Summary Judgment (Dkt. 15) by Defendants IHC
Health Services, Inc. and Intermountain Healthcare, Inc. (collectively, the Hospital). The
Court heard oral argument on September 13, 2011. Having considered the parties’
arguments, and being familiar with the record, the Court will deny the motion in part, and
grant the motion in part, as more fully expressed below.
BACKGROUND
Plaintiff Cindy Hurst was first employed with the Hospital in August 1988 as the
Emergency Room Unit Secretary. Perrigot Aff. (Ex. B) at ¶ 3, Dkt. 16-2. Since that
time, Hurst’s assignments have changed a number of times. In March 2008, when

MEMORANDUM DECISION AND ORDER - 1

Hurst’s primary assignment was in the Hospital recovery room, she began part-time work
for the Harris Laser Care Clinic. Hurst Dep. (Ex. A) at 27:11-19, Dkt. 16-1. The Clinic
was established, owned and operated by surgeon Eric Harris, MD. Dr. Harris staffed the
Clinic with Hospital employees such as Hurst, through an agreement with the Hospital.
Perrigot Aff. at ¶¶ 5-6. Hurst resigned her primary assignment in the recovery room in
January 2009, and received a new primary assignment working “full-time” in the Clinic.
Hurst Dep., at 27:23-25. Hurst still maintained on-call shifts in the recovery room,
roughly three times per month. Id. at 44:23 - 46:1.
All employees of the Hospital, including Hurst, are employed at-will, as provided
in the Hospital’s employee handbook. Hurst Dep. at 161:9-22; Perrigot Aff. at ¶ 17,
Attachment 12 at 2, Dkt. 16-3 at 26.
In early January of 201, Hurst and Dr. Harris became involved in a disagreement
about the propriety of having the Clinic’s office manager perform patient IV-line
maintenance. On January 8, 2010, Dr. Harris told the Hospital’s Human Resources
Director, Keri Perrigot, he no longer wanted Hurst working for him in the Clinic. Harris
Aff. (Ex. C) at ¶¶ 7-8, Dkt. 16-4. On January 12, 2010, the day before a scheduled
meeting with Perrigot, Hurst delivered a letter to Dr. Harris and to the Hospital’s human
resources office, resigning her position with the Clinic. Hurst Dep. at 136:11 – 138:25.
Hurst contends that she was afraid she would be terminated because of the dispute over
allowing employees to perform medical procedures which were outside their permissible
scope of practice. See Pl. St. of Facts, Dkt. 23 at ¶¶ 7-17.

MEMORANDUM DECISION AND ORDER - 2

Effective January 13, 2010, the Hospital ended Hurst’s work assignment at the
Clinic. Since Hurst was not given another assignment to replace her work at the Clinic,
this left her with only a part-time assignment consisting of three on-call shifts per month
in the recovery room. Although she has requested additional shifts, Hurst has not been
offered any extra shifts since January 13, 2010. Hurst Dec. ¶ 11, Dkt. 24. If called in to
work, Hurst is paid $30.48 per hour; if she is not called into work during the on-call shift,
she is paid $3.81 per hour. Id. ¶ 10. Hurst has maintained this minimal assignment so as
to maintain her licensure as a nurse. Even if Hurst were to work all three shifts for
which she is on-call, her hours – and thus her income – would be roughly one tenth of
what she maintained prior to January 13, 2010, when she was employed at the Clinic fulltime.
At Hurst’s request, the Hospital removed references from her employee file which
suggested that she had been “terminated” from her position with the Clinic; the Hospital
informed Hurst it would consider her assignment change from the Clinic as a resignation.
Hurst Dep. at 152:17 – 153:19; Perrigot Aff. ¶ 15.
LEGAL STANDARD
One of the principal purposes of the summary judgment “is to isolate and dispose
of factually unsupported claims . . . .” Celotex Corp. v. Catrett, 477 U.S. 317, 323-24
(1986). It is “not a disfavored procedural shortcut,” but is instead the “principal tool[ ] by
which factually insufficient claims or defenses [can] be isolated and prevented from
going to trial with the attendant unwarranted consumption of public and private

MEMORANDUM DECISION AND ORDER - 3

resources.” Id. at 327. “[T]he mere existence of some alleged factual dispute between
the parties will not defeat an otherwise properly supported motion for summary
judgment; the requirement is that there be no genuine issue of material fact.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986).
The evidence must be viewed in the light most favorable to the non-moving party,
and the Court must not make credibility findings. Id. at 255. Direct testimony of the
non-movant must be believed, however implausible. Leslie v. Grupo ICA, 198 F.3d
1152, 1159 (9th Cir. 1999). On the other hand, the Court is not required to adopt
unreasonable inferences from circumstantial evidence. McLaughlin v. Liu, 849 F.2d
1205, 1208 (9th Cir. 1988).
The moving party bears the initial burden of demonstrating the absence of a
genuine issue of material fact. Devereaux v. Abbey, 263 F.3d 1070, 1076 (9th Cir. 2001)
(en banc). To carry this burden, the moving party need not introduce any affirmative
evidence (such as affidavits or deposition excerpts) but may simply point out the absence
of evidence to support the nonmoving party’s case. Fairbank v. Wunderman Cato
Johnson, 212 F.3d 528, 532 (9th Cir. 2000).
This shifts the burden to the non-moving party to produce evidence sufficient to
support a jury verdict in her favor. Id. at 256-57. The non-moving party must go beyond
the pleadings and show “by her affidavits, or by the depositions, answers to
interrogatories, or admissions on file” that a genuine issue of material fact exists.
Celotex, 477 U.S. at 324.

MEMORANDUM DECISION AND ORDER - 4

However, the Court is “not required to comb through the record to find some
reason to deny a motion for summary judgment.” Carmen v. San Francisco Unified Sch.
Dist., 237 F.3d 1026, 1029 (9th Cir. 2001) (quoting Forsberg v. Pac. Northwest Bell Tel.
Co., 840 F.2d 1409, 1418 (9th Cir. 1988)). Instead, the “party opposing summary
judgment must direct [the Court’s] attention to specific triable facts.” Southern
California Gas Co. v. City of Santa Ana, 336 F.3d 885, 889 (9th Cir. 2003).
ANALYSIS
1.

Retaliation In Violation of Public Policy
The courts in Idaho have not addressed a claim for retaliation in violation of public

policy where the adverse employment action falls short of full termination. Absent direct
case authority on the issue before it, a federal court sitting in diversity must “apply the
rule . . . it believes would be applied by the highest court of the state.” Owens v. White,
380 F.2d 310, 313 (9th Cir. 1967). In cases concerning wrongful discharge in violation
of public policy, the Idaho Supreme Court has explained that the action is an exception to
the at-will employment doctrine, intended to protect employees whose discharge is
motivated by their “[refusal] to commit unlawful acts, [performance of] important public
obligations, or . . . exercise [of] certain legal rights or privileges.” Edmondson v. Shearer
Lumber Prod., 75 P.3d 733, 737 (Idaho 2003); see also Jackson v. Minidoka Irrigation
Dist., 563 P.2d 54, 57 (Idaho 1977).
The first question here is whether Hurst was terminated. “[D]etermination of an
employee’s employment status is a factual finding.” Hummer v. Evans, 923 P.2d 981,

MEMORANDUM DECISION AND ORDER - 5

986 (Idaho 1996). Here, it is undisputed that Hurst submitted a letter of resignation (to
both the Clinic and the Hospital) from her primary assignment in the Clinic. Hurst Dep.
at 136:11 – 138:25. However, it is also undisputed that Dr. Harris had asked the Hospital
to terminate Hurst’s position with the Clinic, before receiving the resignation letter.
Harris Aff. at ¶¶ 7-8. When the Hospital’s personnel director contacted her, Hurst
believed she was going to be terminated, so she resigned from the Clinic position to
preempt termination. Hurst Dep. at 152:5 – 153:19.
Viewing the facts in a light most favorable to Hurst, the Court finds that Hurst’s
resignation from her primary assignment in the Clinic could be construed as a
constructive discharge. See Patterson v. State Dept. of Health & Welfare, 256 P.3d 718,
725 (Idaho 2011) (citing Draper v. Coeur Rochester, Inc., 147 F.3d 1104, 1110 (9th Cir.
1998)). In its summary judgment motion, the Hospital does not challenge whether
Hurst’s departure from the Clinic was a constructive discharge. Instead, the Hospital
asserts that a public policy wrongful discharge analysis is inapplicable here, because
Hurst has maintained partial employment with the hospital.
The parties do not dispute that Hurst is, at least as of her filing of this action, still
employed by the Hospital on a part-time “as-needed” basis, with recovery room nursing
shifts. Thus the question is, would the Idaho Supreme Court apply a public policy
wrongful discharge analysis to Hurst’s situation, where she was constructively discharged
from her primary assignment in the Clinic, but maintains a limited part-time assignment?

MEMORANDUM DECISION AND ORDER - 6

The courts of other states are split on this issue. The California Court of Appeals
has held that an adverse employment action taken in violation of public policy is
actionable even if it falls short of a full discharge. See Garcia v. Rockwell Int’l Corp.,
232 Cal.Rptr. 490 (Cal. Ct. App. 1986) (abrogated by Gantt v. Sentry Insur., 824 P.2d
680 (Cal. 1992) as to the holding that the policy violated need not be rooted in statute or
constitution). In so finding, the court in Garcia reasoned that the pertinent inquiry is
whether the public policy against retaliation was violated, “even though the ultimate
sanction of discharge has not been imposed.” Id. at 493. Courts in Ohio and Kansas
have reached similar conclusions. Powers v. Springfield City Schools, 1998 WL 336782
(Ohio Ct. App. 1998); Brigham v. Dillon Companies, Inc., 935 P.2d 1054 (Kan. 1997).
However, other states have rejected the expansion of the public policy exception
recognized in Kansas, Ohio, and California. For example, the Seventh Circuit Court of
Appeals – sitting in diversity – disallowed an action for wrongful demotion, noting the
Illinois state courts’ reluctance to extend the tort of wrongful discharge. Ludwig v. C&A
Wallcoverings, Inc., 960 F.2d 40 (7th Cir. 1992). Two years after Ludwig, the Illinois
Supreme Court confirmed that an employee’s action for retaliatory conduct based on
demotion was not justified, in Zimmerman v. Buchheit of Sparta, Inc., 645 N.E.2d 877,
882 (Ill. 1994). In its decision, the Zimmerman plurality expressed concern that increased
judicial involvement in resolving workplace disputes would otherwise result. Id. In
addition, the court noted the “guarded development and narrow construction of the tort of
retaliatory discharge.” Id. at 884.

MEMORANDUM DECISION AND ORDER - 7

The Washington State Supreme Court also refused to recognize a tort of wrongful
transfer in White v. State, 929 P.2d 396 (Wash. 1997). Highlighting the need to balance
an employer’s right to operate its business with the importance of prohibiting wrongful
action against an employee, id. at 407 (citation omitted), the court in White concluded
that the proper balance would not be achieved by “[s]ubjecting each disciplinary decision
of an employer to the scrutiny of the judiciary.” Id. at 408. The Utah Supreme Court
also declined to create a cause of action for harassment or discrimination short of
discharge, in Touchard v. La-Z-Boy Inc., 148 P.3d 945, 955 (Utah 2006). While
characterizing retaliatory harassment or discrimination as “deplorable,” the court in
Touchard held that “it does not implicate a clear and substantial public policy to the same
extent as a discharge.” Id. 1
Thus, the courts of other states are split. A majority of courts are reluctant to
recognize a claim for disciplinary action in violation of public policy because it would
result in excessive judicial interference in the workplace. However, even those courts
which refuse to recognize such a claim express concerns that such a rule may lead to
employers recognizing that they may retaliate against their employees with impunity, so
long as their discipline stops just short of actual discharge. See Zimmerman, 645 N.E.2d
at 885 (Bilandic, C.J. concurring). It is this very concern that has led a minority of courts
to recognize a claim for wrongful disciplinary action in violation of public policy.

1
 The Hospital cites case law from Arizona, Colorado, Connecticut, Iowa, Maryland, Montana, and
Oklahoma, in addition to the cases from Illinois, Utah, and Washington, in which courts have opted not to
extend the wrongful discharge doctrine to include claims for retaliatory employment action short of
termination. Def. Reply, Dkt. 27 at 3.

MEMORANDUM DECISION AND ORDER - 8

The Court concludes that the facts of this case make it unnecessary to decide
whether the Idaho Supreme Court would accept or reject the majority view that there is
no public policy wrongful discipline claim for routine disciplinary actions, such as
demotion, transfer and even a reduction in hours. Rather, the Court concludes that the
Idaho Supreme Court would regard the actions taken against Hurst because of her
complaints about the Clinic’s practices as amounting to far more than routine discipline;
they would regard them as being tantamount to a complete discharge. As noted above,
Hurst’s real employment with the Hospital was with the Clinic. While she also retained
an as-needed, on-call position in the recovery room, it amounted to no more than three
shifts per month and was accepted by her as a means of keeping her nursing license
current. Her constructive termination from the Clinic position deprived her of full-time
income, resulted in a loss of any meaningful employee benefits, and left her with a
drastically reduced income.2 This, in effect, amounts to a termination of employment.
Counsel for the Hospital suggests that if an employee maintains any form of
employment with her employer, she is not terminated and therefore cannot argue that a
wrongful discharge occurred. However, the Court concludes that this focuses on the
wrong event. The question is not whether she continues to maintain some form of
employment with the Hospital – no matter how trivial. Rather, the relevant question is,

2
Counsel for Defendant acknowledged that Hurst earned roughly $1,570 between January and July of
2011, which amounted to roughly 30 hours of work in total for that period – or about 5 hours of work per
month..

MEMORANDUM DECISION AND ORDER - 9

“Was she discharged?” With regard to Hurst’s employment with the Clinic, the answer
to that question is clearly “yes.”
Such a holding is necessary to avoid the specter suggested by both the minority
view and the dissenting opinions offered by state court justices in states which have
adopted the majority view. Holding otherwise would permit an unscrupulous employer,
who wishes to punish an employee for engaging in some form of protected activity, to act
without legal consequence so long as the employee is offered some form of continued
employment – no matter how insignificant. On the other hand, the Court’s decision also
avoids the concern expressed by the majority view that recognizing a claim of wrongful
discipline in violation of public policy will inappropriately inject the court system into
the workplace. The Court does not envision that its holding will have application outside
of the rare circumstances presented here. It certainly would not extend to routine
disciplinary action allegedly taken to punish an employee. That is another question for
another day.
For the reasons stated, the Court will deny the Hospital’s motion for summary
judgment as to Hurst’s claim for public policy wrongful discharge.
2.

Implied Covenant of Good Faith and Fair Dealing
In Idaho, the covenant of good faith and fair dealing is implied in all contracts,

including those for employment-at-will. Cantwell v. City of Boise, 191 P.3d 205, 213
(Idaho 2008). The covenant does not provide rights beyond those available under a
negotiated contract. Id. at 214. Rather, it requires parties to perform in good faith, the

MEMORANDUM DECISION AND ORDER - 10

obligations existing under the contract. Id. at 213. Breach of the covenant occurs where
a party “violates, qualifies[,] or significantly impairs any benefit or right of the other
party under an employment contract.” Id. at 213-14. The paradigmatic example of a
breach of the covenant is where an employer terminates an at-will employee weeks
before the employee’s retirement vests in order to avoid paying the employee’s
retirement benefits; although the employment contract permits termination without cause,
termination to avoid paying benefits due the employee would amount to a breach. The
test for breach of the covenant is objective, and considers the reasonableness of the
parties in carrying out the contract. Independence Lead Mines v. Hecla Mining Co., 137
P.3d 409, 414 (Idaho 2006); Jenkins v. Boise Cascade Corp., 108 P.3d 380, 390 (Idaho
2005).
The contractual term at issue need not be express, but may be implied. Cantwell,
191 P.3d at 213-14. Hurst contends that her at-will employment contract had a limitation
implied by the Clinic’s annual requirement that she complete compliance questionnaires
regarding her duty to be accountable for all laws and rules governing her Clinic position.
Hurst Dec. at ¶ 3, Dkt. 24. According to Hurst, this requirement created an implied
contractual term that she would not face adverse employment consequences for
advocating adherence to laws and regulations governing her work.
To determine the validity of an implied contractual term, the court considers
whether, “from all the circumstances surrounding the relationship, a reasonable person
could conclude that both parties intended [the limitation].” Metcalf v. Intermountain Gas

MEMORANDUM DECISION AND ORDER - 11

Co., 778 P.2d 744, 746 (Idaho 1989). It is correct that promises made in employee
manuals can support valid and enforceable terms of an employment contract. Harkness
v. City of Burley, 715 P.2d 1283, 1287-88 (1986). However, the Idaho Supreme Court
has held that an implied-in-fact contract will not be found, based on language in an
employee manual, where the manual explicitly denies the employer’s intent that it be part
of the employment contract. Jenkins v. Boise Cascade Corp., 108 P.3d 380, 388 (Idaho
2005). Here, language in the Hospital’s employee handbook provides that the “policies
and procedures expressed in these handbooks or any other Intermountain Healthcare
materials, which may be used from time to time, do not create a binding employment
contract or any other agreement between [the employee] and Intermountain Healthcare.”
Perrigot Aff. at ¶ 17, Attachment 12.
Also, Hurst’s argument presumes that the Clinic and the Hospital are one and the
same. Even without the Hospital’s express disclaimer in its handbook, the Clinic’s
requirement for Hurst to complete compliance questionnaires fails to demonstrate that the
Hospital intended to limit Hurst’s at-will employment. Without this contractual
limitation, Hurst’s breach of covenant claim is simply an allegation that her termination
was in bad faith. This allegation alone is duplicative of Hurst’s public policy wrongful
discharge claim. Accordingly, the Court will grant the Hospital’s motion for summary
judgment on this issue, and dismiss Hurst’s claim for breach of the covenant.
3.

Idaho Wage Claim Act

MEMORANDUM DECISION AND ORDER - 12

Under Idaho’s Wage Claim Act, an employer must “pay or make available at the
usual place of payment all wages then due the employee” within 10 days from the dates
of termination of the employment or the next regularly scheduled payday, whichever is
earlier. I.C. § 45-606(1). Wages under the Wage Claim Act are defined as
“compensation for labor or services rendered by an employee, whether the amount is
determined on a time, task, piece or commission basis.” I.C. § 45-601(7). According to
Hurst, she is entitled to her earned “paid time off,” under the Act, in light of her
termination from her assignment with the Clinic. Compl., Count I, Dkt. 1-2.
The purpose of Idaho’s Wage Claim Act “is to insure that employees receive
compensation due and owing to them upon termination of their employment.” Hales v.
King, 762 P.2d 829, 832 (Idaho Ct. App. 1988). It is undisputed that Hurst has been paid
for every hour worked. Hurst’s claim under the Wage Claim Act concerns paid time off.
The Hospital’s paid time off policy provides that “[e]mployees who terminate or retire
from employment with [the Hospital], or become permanently disabled from work, will
be paid for accrued but unused Paid Time Off Hours.” Paid Time Off Policy at ¶ 10.1,
Attachment 8 to Perrigot Aff. (at ¶ 12). The implication is that an employee’s wages are
due and owing to them when they are no longer working for the Hospital on any basis.
The Court here finds that Hurst’s interpretation of the Act, and of the Hospital’s policy
regarding payment of paid time off implausible, or at best unreasonable.
No triable issue of fact remains whether Hurst’s departure from the Clinic
triggered her entitlement to paid time off under the Hospital’s policy or Idaho’s Wage

MEMORANDUM DECISION AND ORDER - 13

Claim Act. The Court finds Hurst was not so entitled. Accordingly, the Court will grant
the Hospital’s motion for summary judgment on this issue, and dismiss the claim.
ORDER
IT IS ORDERED:
1.

Defendant’s Motion for Summary Judgment (Dkt. 15) is GRANTED in
part, DENIED in part.

2.

Plaintiff shall be allowed to proceed as to her claim of public policy
wrongful discharge; as to this claim, Defendant’s Motion is DENIED.

3.

As to Plaintiff’s claims for breach of the implied covenant of good faith and
fair dealing, and for violation of Idaho’s Wage Claim Act, Defendant’s
Motion is GRANTED, and these two claims are DISMISSED with
prejudice.

DATED: September 15, 2011

_________________________
B. Lynn Winmill
Chief Judge
United States District Court

MEMORANDUM DECISION AND ORDER - 14