Daniels v. YRC et al

Filing 18

ORDER granting 6 Defendant's Partial Motion to Dismiss Count II Defamation and Count III Negligence. Signed by Judge Richard F. Cebull on 2/5/2013. (EMA)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
BILLINGS DIVISION

PAUL W. DANIELS, JR.,

Case No. CV-12-129-BLG-RFC

Plaintiff,
vs.
YRC, INC., a Delaware Corporation;
YRC LOGISTICS GLOBAL, LLC,
aka MIQ GLOBAL, LLC, a Delaware
Limited Liability Company; YRC
FREIGHT; and John Does 1-5,

ORDER GRANTING
DEFENDANTS’ PARTIAL
MOTION TO DISMISS

Defendants.
I.

INTRODUCTION
Plaintiff Paul Daniels, Jr. brings causes of action for negligence,

defamation, and wrongful discharge under Montana’s Wrongful Discharge From
Employment Act (“WDEA”) against his former employer. Defendants have
moved to dismiss the negligence and defamation claims on the grounds that they
arise out of the discharge and are therefore preempted by the WDEA. Doc. 6.
Defendants also argue that two of the allegedly defamatory statements are
privileged and therefore do not give rise to a legally cognizable cause of action.
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II.

ANALYSIS
A claim is subject to dismissal under Rule 12(b)(6) Fed.R.Civ.P. if it lacks a

cognizable legal theory. Johnson v. Riverside Healthcare System, LP, 534 F.3d
1116, 1121-22 (9th Cir. 2008). Except with regard to other statutes that prohibit
discharge and discrimination on other grounds, a WDEA claim is the “exclusive
remedy for a wrongful discharge from employment” under Montana law. Kulm v.
Montana State University-Bozeman, 948 P.2d 243, 245 (Mont. 1997); Mont Code
Ann. §§ 39-2-902, 39-2-912. The WDEA explicitly preempts all common law
remedies for wrongful discharge, providing that “no claim for discharge may arise
from tort or express or implied contract.” Id., citing Mont. Code Ann. § 39-2-913.
Moreover, under the WDEA, “[t]here is no right under any legal theory to
damages for wrongful discharge under this part for pain and suffering, emotional
distress, compensatory damages, punitive damages, or any other form of damages,
except as provided for in [the WDEA].” Id., citing Mont. Code Ann. § 39-2-905.
The WDEA does not bar all tort or contract claims arising in the
employment context, however, just those that are inextricably intertwined with the
discharge and whose claims for damages are caused by an asserted wrongful
discharge. Kulm, 948 P.3d at 246. Stated otherwise, other causes of action are
precluded if the claims were contingent upon termination and unless the plaintiff
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could bring the claim regardless of whether she was still employed. Id.
The Complaint alleges that the reason Defendants gave for terminating
Daniels were pretextual. Specifically, the Complaint alleges Daniels was a
longtime, award-winning employee of Roadway Express trucking who by 2009
had worked his way up to Terminal Manager in Billings. In 2009, Roadway
formally merged with Yellow Corporation. As a result of this merger, Dale
Elsberry, a Yellow employee, became Daniels’ supervisor. Daniels alleges
Elsberry was upset that Daniels was paid more and was allotted more leave time.
On August 24, 2011, Daniels drove an ATV a distance of 200 yards and
back to give another employee a work assignment. After Daniels left for the day,
two other employees were observed recklessly riding the ATV. An anonymous
complaint was lodged. A subsequent investigation revealed that Daniels was not
driving the ATV in a dangerous manner, but Daniels was nonetheless placed on
administrative leave pending the outcome of the investigation. Although neither
of the other two employees nor their supervisor were discharged or disciplined,
Daniels was discharged on September 2, 2011. The stated justification was
violating the Company Code of Conduct by placing the Company and public at
risk on August 24, 2011 due to egregious errors in judgment.

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Daniels tried to appeal the termination through the internal grievance
process, but Defendants did not respond to the appeal. During the Unemployment
Insurance Compensation proceedings, Defendants contested Daniels’ claim and
told the UI Investigator that Daniels had no right to file a grievance and that he
needed a subpoena for his personnel file. The UI Investigator found that Daniels
did not violate the Code of Conduct or any other policy and did not intentionally
disregard any obligation to Defendants. Defendants requested reconsideration, but
the initial determination was affirmed. Defendants then appealed the UI decision,
but it was affirmed after a hearing. Daniels filed suit in state court in August
2012. Defendants removed to this Court one month later.
At issue here are Daniels’ claims for defamation and negligence. They
alleges as follows:

COUNT II
DEFAMATION
36. Plaintiff Daniels realleges paragraphs 1 through 35 of this Complaint as
if fully set forth verbatim.
37. On information and belief, Elsberry during his investigation of the
anonymous complaint informed other employees that Daniels was operating
the ATV at high rate of speed, in a dangerous manner, and/or performing
stunts.
38. During the UI Compensation proceedings, Defendants communicated to
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the UI investigator/claims adjuster and hearings officer that Daniels violated
its Code of Conduct.
39. During the Unemployment Compensation proceedings, Defendants
submitted a document entitled “Notice of Termination”. Under “Comments
(resignation/termination reasons)” this Notice reads “Terminated for
integrity. Not eligible for rehire.”
40. The foregoing statements, documents, and communications of
Defendants and Elsberry are untrue and false.
41. Defendants knew the statements, documents, and communications were
false, acted in reckless disregard of whether the statements, documents, and
communications were false, or acted negligently in failing to ascertain their
truth or falsity.
42. The foregoing statements, documents, and communications were not
privileged.
43. As a direct and proximate result of the Defendants’ actions, Plaintiff has
been damaged in an amount to be proven at trial.

COUNT III
NEGLIGENCE
44. Plaintiff Daniels realleges paragraphs 1 through 43 of this Complaint as
if fully set forth verbatim.
45. The employees of the Defendants have a duty to exercise a reasonable
degree of skill in performing their duties or services for the Defendants.
46. The employees of the Defendants breached their duty during the
investigation of the anonymous complaint, in the documentation of the
investigation and any disciplinary action, and in the communication with
third parties.

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47. As a direct and proximate result of the Defendants' and their employees’
actions, Plaintiff has been damaged in an amount to be proven at trial.
48. Defendants are responsible and liable for the acts of their employees
committed in the course of their employment with the Defendants.

The defamation claim alleges three defamatory statements made by
Defendants: (1) Elsberry told other employees during the investigation that
Daniels recklessly drove the ATV; (2) Defendants told the UI investigator and
hearings officer that Daniels violated the Code of Conduct; and (3) Defendants
submitted a document during the UI Compensation proceedings stating that
Daniels was terminated and ineligible for rehire due to lack of integrity. As these
claims are contingent upon the discharge and could not have been brought if
Daniels was still employed, they must be dismissed for failure to state a legally
cognizable claim.
Daniels cites Ruzicka v. First Healthcare Corp. in support of his claim that
the defamation was not inextricably intertwined with the discharge. 45 F.Supp.2d
809 (D.Mont. 1997). In Ruzicka, the plaintiff was discharged from her position as
a nurse for allegedly ordering nursing home staff to withhold food from a patient.
45 F.Supp.2d at 811. After the discharge, the employer took the extra step of
reporting the plaintiff to the Montana Board of Nursing. Id. This Court refused

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defendant’s invitation to dismiss the “malicious damage to professional
reputation” claim as preempted, holding that her defamation claim was separate
and independent from the discharge claim. 45 F.Supp.2d at 812.
Daniels also cites Beasley v. Semitool, Inc., for the proposition that his
negligence and defamation claims are not “completely and inextricably
intertwined” with the allegedly wrongful discharge. 853 P.2d 84, 87 (Mont.
1993). In that case, Beasley resigned after his employer Semitool failed to follow
through with the compensation package it had promised. Beasley sued for breach
of the employment contract, bad faith, and wrongful constructive discharge. The
breach of contract and bad faith claims were dismissed by the district court as
preempted by the WDEA, but the Montana Supreme Court reversed, holding that
the issue of whether Beasley was compensated properly during his employment
was independent from whether he was wrongfully discharged. 853 P.2d at 86-87.
Although it would have been awkward, Beasley could have continued to work for
Semitool while suing to recover the compensation he was promised.
This case is unlike Beasley or Ruzicka because neither of Daniels’ claims
could be brought were he not discharged. Two of the allegedly defamatory

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statements were made to the Unemployment Insurance Compensation Division.1
Such claims could obviously not be brought if Daniels were still employed. With
respect to Elsberry telling other employees that Daniels recklessly drove the ATV,
the Complaint alleges Elsberry did so during the investigation that led to Daniels’
discharge. As such these allegedly defamatory statements are inextricably
intertwined with the discharge and not cognizable under Montana law.
Daniels’ negligence claim alleges Defendants breached their duty during the
investigation of the anonymous complaint, in the documentation of the
investigation and any disciplinary action, and in the communication with third
parties. Again, these allegedly negligent acts are completely and inextricably
intertwined with the discharge. If Daniels were still employed, he would not have
been damaged and would therefore not have a valid negligence cause of action
challenging Defendants’ mishandling of the investigation, discharge, and
Unemployment Insurance proceedings
Finally, although courts should ordinarily grant leave to amend when
dismissing claims for implausibility, leave to amend is not required where

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In addition, statements made in official proceedings authorized by law are privileged and
do not give rise to a defamation claims. See Mont. Code Ann. §§ 27-1-801-803, 804(2).
Accordingly, the defamation claim must fail as to the statements made during Unemployment
Insurance Division proceedings.
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amendment would be futile because these causes of action could not be cured by
the allegation of additional facts. Nunes v. Ashcroft, 375 F.3d 805, 808 (9th Cir.
2003). Here, it is obvious that Daniels’s claims are inextricably intertwined with
the discharge and that his claims for damages are caused by an allegedly wrongful
discharge.
IV.

ORDER
For those reasons, IT IS ORDERED that Defendants’ Rule 12(b)(6) Partial

Motion to Dismiss (doc. 6) is GRANTED: Count II, alleging Defamation, and
Count III, alleging Negligence, are DISMISSED WITH PREJUDICE.
Dated this 5th day of February, 2013.
/s/ Richard F. Cebull_____
Richard F. Cebull
United States District Judge

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