Hetu v. Charter Communications et al
FINDINGS AND RECOMMENDATIONS re 15 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM filed by Charter Communications. IT IS RECOMMENDED that Defendant Charters Motion for Partial Dismissal (ECF 15 ) be GRANTED and that Counts 1, 2, 3, an d 5, against Charter be dismissed. IT IS FURTHER RECOMMENDED that Defendant Lane's Motion to Dismiss (ECF 15 , 27 ) be GRANTED as to Counts 1, 2, 3, and 5, but DENIED as to Count 4.Thus, if the recommendation is accepted, only Count 4 will remain against Defendants Charter and Lane. Signed by Magistrate Judge Carolyn S Ostby on 4/6/2015. (JDH, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
LLC, and AMY LANE, and John
Plaintiff Laura Hetu’s (“Hetu”) Amended Complaint asserts the
following claims against the Defendants, Charter Communications
(“Charter”), Amy Lane (“Lane”), and John Does 1-10:
Count One—Breach of Express and Implied Contract & Breach of
the Covenant of Good Faith and Fair Dealing
Count Four— Wrongful Denial of Family and Medical Leave Act
Count Five— Negligence
See ECF 14.1 Count Four is based on federal law; the remaining
counts are based on state law.
“ECF” refers to the document as numbered in the Court’s Electronic Case
Files. See The Bluebook, A Uniform System of Citation, § 10.8.3.
Now pending is Charter’s Renewed Motion for Partial Dismissal
(ECF 15). Lane joins in the motion (ECF 27). Having reviewed the
parties’ arguments and the applicable law, the Court recommends as
Hetu first brought this action in state court, alleging defamation
and wrongful termination in addition to claims identified above. See
Complaint, ECF 1-1. After the action was removed to this Court, Hetu
was allowed to file an Amended Complaint. See ECF 13, 14. The
Amended Complaint dropped the defamation and wrongful discharge
claims. The following facts are alleged in Hetu’s Amended Complaint
and are, for purposes of considering the pending motion to dismiss,
assumed to be true.
Hetu was employed in Charter’s sales department and had
completed the company’s probationary employment period. Toward the
end of June 2013, she suffered severe and debilitating anxiety and
panic attacks. The attacks arose after Hetu had been scolded, belittled,
unfairly singled out, verbally abused, and humiliated at work. ECF 14
at ¶ 9. As a result, Hetu became physically ill and informed Defendants
she “would be off work because of her anxiety related illness.” Id. at ¶¶
Hetu contacted Charter’s employee assistance program for help
with her ongoing anxiety and panic attacks. Charter informed her that
she was eligible for FMLA leave, and provided her with an application
for such leave. Id. at ¶¶ 12–13. Hetu remained in regular contact with
Lane, her human resource department contact, during the end of June
and beginning of July while she was absent from work. She submitted
her FMLA leave application on July 17, 2013.
On July 18, Lane informed Hetu that her application for FMLA
leave was denied, and Hetu later learned it was denied because her
paperwork did not indicate a serious health condition under FMLA
requirements. Id. at ¶¶ 24–27. Lane explained that she did not qualify
for FMLA leave because Hetu’s counselor “indicated she had never
treated [Hetu] prior to 7/17, that she wouldn’t be treating [Hetu] again,
she did not prescribe medication and she stated [Hetu] could perform
[her] job duties.” Id. at ¶ 27.
On July 26, Hetu filed an amended FMLA leave, along with an
updated medical diagnosis from her mental health professional.
Charter denied the amended application on July 31, because it
erroneously determined that “Ms. Hetu’s therapist was not qualified as
a ‘health care provider’ according to the provisions of the FMLA and/or
Charter’s employee health network.” Id. at ¶ 36. The same day, July
31, 2013, Charter terminated Hetu’s employment, informing her that
she had “abandoned” her job. Id. at ¶¶ 38–39. Hetu tried to appeal the
denial of her FMLA leave application, but Lane informed her, on
August 8, 2013, that there was no grievance policy available to her.
After her termination, Hetu sought unemployment benefits from
the Montana Department of Labor (“MDOL”). Id. at 45. Lane and
Charter “engaged in a deliberate and deceitful exchange of untrue
assertions, half-truths and misinformation with the [MDOL] relative to
Ms. Hetu’s claim for unemployment benefits” and withheld information
from MDOL officials. Id. at ¶¶ 44–45. Specifically, Lane did not inform
MDOL officials that Hetu “had been diagnosed with panic and anxiety
attacks, and was ordered by her therapist to remain off work,” or that
she was in the process of applying for FMLA leave when she had been
terminated. Id. at ¶ 45. Hetu was also denied access to short term
disability benefits due to the denial of her FMLA leave.
III. PARTIES’ ARGUMENTS
Charter moves to dismiss all claims except Count Four (wrongful
denial of FMLA leave) and Lane moves to dismiss all claims against
Defendants’ motions to dismiss contend: (1) the WDEA is the sole
and exclusive remedy for a wrongful discharge, regardless of whether a
WDEA claim is pled, ECF 16 at 4–5; (2) Charter’s statements to MDOL
regarding Hetu’s unemployment compensation cannot be the basis for a
fraud claim because they are privileged, id. at 9; and (3) all claims
against Lane should be dismissed because the WDEA and FMLA do not
provide for individual liability, nor has Hetu sufficiently pled facts
indicating that Lane is an employer. Id. at 12–13.
In response, Hetu argues that the motion should be denied
because the facts she relies upon do not “relate to or intertwine with the
fact that Plaintiff was illegally terminated” from her employment. ECF
22 at 6. Hetu argues that almost all of the facts specifically relate to
the period before Charter’s decision to terminate Hetu’s employment.
Id. at 6. Next, Hetu argues that the post-termination dealings with the
MDOL and Hetu’s attempts to obtain temporary disability benefits
arise outside of the employer/employee relationship and should not be
excluded by the Montana WDEA. Id. at 15–16. Finally, Hetu argues
that the “Code of Federal Regulations strongly implies that Lane has
individual culpability under the FMLA,” and that Lane “fits the bill of
an employer.” Id. at 17–18.
Dismissal under Rule 12(b)(6) is proper only when the complaint
either (1) lacks a cognizable legal theory or (2) fails to allege sufficient
facts to support a cognizable legal theory. Zixiang Li v. Kerry, 710 F.3d
995, 999 (9th Cir. 2013). The Court’s standard of review under Rule
12(b)(6) is informed by Rule 8(a)(2), which requires that a pleading
contain a “short and plain statement of the claim showing that the
pleader is entitled to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 677–678
(2009) (quoting Fed. R. Civ. P 8(a)).
To survive a motion to dismiss under Rule 12(b)(6), a complaint
must contain sufficient factual matter, accepted as true, to state a claim
for relief that is plausible on its face. A claim has facial plausibility
when the plaintiff pleads factual content that allows the court to draw
the reasonable inference that the defendant is liable for the misconduct
alleged. A plausibility determination is context specific, and courts
must draw on judicial experience and common sense in evaluating a
complaint. Levitt v. Yelp! Inc., 765 F.3d 1123, 1135 (9th Cir. 2014).
Claim Preemption under Montana’s WDEA
Montana’s WDEA is “the exclusive remedy for a wrongful
discharge from employment.” MCA § 39–2–902. Except as provided in
the Act, “no claim for discharge may arise from tort or express or
implied contract.” MCA § 39–2–913. But the WDEA does not bar all
tort or contract claims arising in the employment context. It bars only
those claims that “are inextricably intertwined with and based upon”
termination from employment. Kulm v. MT State University-Bozeman,
948 P.2d 243, 255–256 (Mont. 1997) (citing Beasley v. Semitool, Inc.,
853 P.2d 84, 86 (Mont. 1993)); see also Kneeland v. Luzenac Am., Inc.,
961 P.2d 725, 729 (Mont. 1998) (MCA § 39–2–913 “bars only those tort
and contract claims which are ‘for discharge’ ”). Thus, the first issue the
Court must address is whether Hetu’s state tort claims are inextricably
intertwined with and based upon her termination from employment.
For the following reasons, the Court concludes that they are and that
they must be dismissed.
Count One—Breach of Express and Implied
Contract & Breach of the Covenant of Good
Faith and Fair Dealing
Count One alleges that under an express and implied contract,
“Charter owed Ms. Hetu the duty of good faith and fair dealing in
abiding by and performing its promise of continued employment and
also in assisting Ms. Hetu in applying for FMLA leave.” ECF 14 at ¶ 55.
It further alleges that Defendants violated Hetu’s expectation that she
could apply for FMLA leave and “still continue her employment with
the Charter sales department.” Id. at ¶ 57. Hetu argues the
Defendants “have caused Ms. Hetu to suffer past and future lost wages
and benefits, past and future lost commissions, and future earning
capacity, from receiving unemployment benefits, and from receiving
benefits under Plaintiff’s short term disability policy.” Id. at ¶ 53.
As is plain from the allegations quoted above, Count One is not
independent of Hetu’s termination from employment. The claim is
based on expectations of continued employment and the damages Hetu
alleges are primarily a result of her termination. Id. at ¶¶ 60–61. The
claim is inextricably intertwined with and based upon Hetu’s
termination from employment. See Kulm, 948 P.2d at 256.
Hetu relies on Beasley v. Semitool, Inc., in her assertion that the
claim is separate from the discharge. But as the Beasley Court
explained, when a claim for breach of the implied covenant of good faith
and fair dealing includes a violation of a promise of continued
employment, the claim is inextricably intertwined with a discharge
from employment. Beasley, 853 P.2d at 86–87; see also Solle v. W.
States Ins. Agency, Inc., 999 P.2d 328, 331 (Mont. 2000). Here, the
claim rests on a promise of continued employment, ECF 14 at ¶¶ 55, 57,
and thus is preempted by the WDEA. The Court recommends
that Count One be dismissed.
Count Two and Three—Deceit and Fraud
Hetu’s deceit and fraud claims are based on two sets of
representations: (1) those made to Hetu regarding the FMLA
application process and the status of her applications; and (2) those
made to third parties regarding unemployment and disability benefits
after Hetu’s termination. ECF 14 at ¶¶ 65–70, 80.
The first set of statements cannot form the basis for Hetu’s fraud
and deceit claims because the handling of the FMLA applications are
connected with her termination. Hetu made her first FMLA application
on July 17, 2013, and her second July 26, 2013. ECF 14 at ¶¶ 20, 33.
Her discharge came within two weeks of her first application and as a
result of Charter’s allegedly wrongful denial of FMLA leave requests.
Id. at ¶¶ 38-41. Hetu alleges: “Instead of granting Ms. Hetu’s request
for FMLA leave or requesting additional information from Ms. Hetu’s
therapist, Defendants sent Plaintiff a letter informing her that she had
abandoned her job.” Id. at ¶ 39.
Hetu argues that Defendants deceived her with “the intent of
having her alter her position with respect to future injury and/or the
risk of future injury,” ECF 14 at ¶ 65, but that future injury was her
discharge. Without the discharge she would have no injury. Thus, the
claim is inextricably intertwined with Hetu’s discharge.
The statements made in connection with claims for
unemployment benefits are also intertwined with the underlying
employment termination. Daniels, 2013 WL at *3. Hetu would not
have been seeking unemployment benefits had she not been discharged
from her job.2
Regarding the remaining representations alleged in Hetu’s fraud
claim, she has not claimed any damages independent of her
termination. The Amended Complaint simply states there are “general
and special damages to be proven at the time of trial.” ECF 14 at ¶ 88.
But fraud requires that the Plaintiff plead enough facts to indicate “the
hearer’s consequent and proximate injury or damages caused by their
reliance on the representation.” In re Estate of Kindsfather, 108 P.3d at
490. Hetu has failed to plead any damages caused by Defendants’
representations that demonstrate the claim is independent from Hetu’s
discharge. The WDEA preempts those claims for damages caused by a
Additionally, the statements to MDOL were made in official
proceedings authorized by law and are privileged. MCA § 27–1–804(2);
Daniels v. YRC, Inc., 2013 WL 449300, *3 n.3.
discharge. Kulm, 948 P.2d at 245. Thus, it is recommended that Count
Two and Three be dismissed.
The Plaintiffs’ negligence claim must properly allege four
elements: “(1) duty; (2) breach of duty; (3) causation; and (4) damages.”
Hatch v. State Dept. of Highways, 887 P.2d 729, 732 (Mont. 1994).
Hetu’s claimed damages include “past and future lost wages,
commissions, bonuses, fringe benefits, and future lost earning capacity.”
ECF 14 at ¶¶ 114–116. She also alleges the Defendants’ conduct
prevented her “from receiving unemployment benefits from the state of
Montana and short term disability benefits,” and “damages in the form
of past and future mental and emotional distress, humiliation, loss of
course of established life, the loss of the ability to enjoy life, and other
harms.” Id. at ¶¶ 115–116.
Hetu’s claim is inextricably intertwined with her discharge
because the damages alleged in the Amended Complaint are a result of
her discharge. ECF 14 at ¶¶ 114–116. The WDEA preempts those
claims for damages caused by a discharge. Kulm, 948 P.2d at 245; see
also Bentley v. ConocoPhillips Pipeline Co., 2010 WL 1981324, *3 (D.
Mont. May 14, 2010). The Court recommends that Count Five be
Claim Preemption under FMLA
The FMLA provides a detailed remedial scheme for damages
available to an eligible employee for violations under the act.
Recoverable damages include: compensatory damages, interest,
liquidated damages, attorney’s fees and costs, and other equitable relief
such as employment, reinstatement, and promotion. 28 U.S.C. § 2617.
Most courts that have considered the question have concluded that
FMLA’s remedial scheme sets forth the exclusive remedies for an FMLA
violation. See, e.g., Kastor v. Cash Exp. of Tennessee, LLC, 2015 WL
128051, *9 (W.D. Ky. Jan. 8, 2015); McAllister v. Quality Mobile X-Ray
Services, Inc., 2012 WL 3042972, *7 (M.D. Tenn. July 25, 2012); Alvarez
v. Hi-Temp Inc., 2004 WL 603489, *3 (N.D. Ill. Mar. 24, 2004); Cavin v.
Honda of Am. Mfg., Inc., 138 F. Supp. 2d 987, 994–998 (S.D. Ohio 2001).
In finding conflict preemption, these courts have reasoned that while
the FMLA does contain a savings clause that expressly allows states to
provide greater rights for family and medical leave, it does not allow
states to provide additional remedies for FMLA violations. Kastor, 2015
WL at *9; McAllister, 2012 WL at *7.
The Court heard oral argument from parties on the issue whether
the state law tort claims are preempted by the FMLA. The Defendants
argued that the claims are barred by conflict preclusion because the
FMLA, mirroring the Fair Labor Standards Act, only allows certain
damages to be recovered for a violation of the act. Defendants argued
that if state law remedies exceeded those provided by the FMLA then
that conflict preempted state law tort claims. Defendants argue that
Hetu is using the state law claims to augment damages, which is
improper and in conflict with congressional intent.
Hetu responded that the claims should go forward. She argued
that the deceit claim falls outside of the FMLA, entitling her to
emotional distress damages. She also argued that the negligence claim
should be allowed to go forward because if the deceit was not
intentional then the conduct would constitute negligence.
The Court joins the majority of courts in holding that it would
circumvent the remedial scheme Congress devised to accomplish the
FMLA’s objectives if a claimant could bring a state tort claim to rectify
an FMLA violation and thereby recover damages not recoverable under
the FMLA. Here, each of Hetu’s state tort claims are premised on
violations of the FMLA. Count One, breach of express and implied
contract and breach of the covenant of good faith and fair dealing, is
based on “an express and implied contract of continued employment and
also that the Company would assist [Hetu] with the process of applying
for leave under the FMLA.” ECF 14 at ¶ 53. Count Two and Three,
deceit and fraud, are based on statements and representations made
regarding Hetu’s FMLA leave application. Id. at ¶¶ 64–70, 74–87.
Finally, Count Five, negligence, is based on a duty imposed under the
FMLA. Id. at ¶¶ 106–115.
Counts One, Two, Three, and Five seek either punitive damages
or damages for emotional distress—remedies not permitted under the
FMLA. Hetu conceded in oral argument that the damages sought
under the state tort claims are damages not available under the FMLA.
Thus, the Court finds that Counts One, Two, Three, and Five are also
preempted by the FMLA.
Motion to Dismiss of Lane from Count Four
The FMLA prohibits an employer from interfering with “the
exercise of the employee’s right to take leave.” Xin Liu v. Amway Corp.,
347 F.3d 1125, 1132 (9th Cir. 2003) (citing 29 U.S.C. § 2615(a)). An
employer under the FMLA includes “any person who acts, directly or
indirectly, in the interest of an employer to any of the employees of such
employer[.]” 29 U.S.C. § 2611(4)(A)(ii)(I).
Defendants’ motion seeks to dismiss Lane from Count Four,
alleging that Hetu has not properly plead that “Lane is an ‘employer’ or
that she actually violated the FMLA.” ECF 16 at 13. Defendants also
argue that individual liability is not possible under the FMLA. ECF 16
at 12–13. But to survive a Rule 12(b)(6) motion, the Plaintiff only needs
to plead enough “factual content that allows the court to draw a
reasonable inference that the defendant is liable for the misconduct
alleged.” Ashcroft, 556 U.S. at 678. Hetu alleges that Lane was her only
contact regarding her applications for FMLA leave, and Lane was the
only person who reviewed the applications. ECF 14 at ¶¶ 15, 24–27.
The Amended Complaint provides enough factual content to suggest
Lane may have been a person who acted, “directly or indirectly, in the
interest of an employer” towards Hetu—especially because the
Amended Complaint alleges Lane is the only one who reviewed or read
Hetu’s FMLA applications. See Haybarger v. Lawrence County Adult
Probation and Parole, 667 F.3d 408, 414–415 (3d Cir. 2012); Saavedra
v. Lowe's Home Centers, Inc., 748 F. Supp. 2d 1273, 1284 (D.N.M. 2010).
Thus, the Court recommends the motion to dismiss Lane from Count
Four be denied.
Leave to Amend
When a Rule 12(b)(6) motion is granted, leave to amend should be
granted unless “the pleadings could not possibly be cured by the
allegation of other facts.” See, e.g., Lopez v. Smith, 203 F.3d 1122, 1127
(9th Cir. 2000). There are five factors to be considered in deciding
whether to grant leave to amend: bad faith, undue delay, prejudice to
the opposing party, futility of amendment, and whether the plaintiff has
previously amended the complaint. United Broth. of Carpenters and
Joiners of Am. v. Bldg. and Const. Trades Dept., AFL-CIO, 770 F.3d
834, 845 (9th Cir. 2014) (quoting United States v. Corinthian Colleges,
655 F.3d 984, 995 (9th Cir. 2011)) (internal quotations omitted).
The factors weigh against Hetu in deciding whether to grant leave
to amend. While there is no bad faith, there would be some prejudice to
the other party and it would cause undue delay. When Charter initially
filed a Motion for Partial Dismissal (ECF 2), Hetu moved to amend the
complaint “in an effort to address Defendant’s pending Motion seeking
partial dismissal of the Plaintiff’s claims.” ECF 8 at 1–2. The Court
granted leave to amend. ECF 13. Charter renewed its Motion for
Partial Dismissal after Hetu filed her Amended Complaint. ECF 15.
Consequently, Hetu has already amended her complaint once to address
the issues presented in the motions and was additionally heard through
oral argument. Hetu has suggested no facts that could be further
alleged that would cure the identified defects in Counts 1, 2, 3, and 5 of
the Amended Complaint. Thus, further amendment would be futile.
For the reasons stated, IT IS RECOMMENDED that Defendant
Charter’s Motion for Partial Dismissal (ECF 15) be GRANTED and that
Counts 1, 2, 3, and 5, against Charter be dismissed.
IT IS FURTHER RECOMMENDED that Defendant Lane’s
Motion to Dismiss (ECF 15, 27) be GRANTED as to Counts 1, 2, 3, and
5, but DENIED as to Count 4.
Thus, if the recommendation is accepted, only Count 4 will remain
against Defendants Charter and Lane.
NOW, THEREFORE, IT IS ORDERED that the Clerk shall serve
a copy of the Findings and Recommendations of United States
Magistrate Judge upon the parties. The parties are advised that
pursuant to 28 U.S.C. § 636, any objections to the findings and
recommendations must be filed with the Clerk of Court and copies
served on opposing counsel within fourteen (14) days after entry hereof,
or objection is waived.
DATED this 6th day of April, 2015.
/s/ Carolyn S. Ostby
United States Magistrate Judge
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