Woods v. The Boeing Company
Filing
12
ORDER granting 6 Motion to Dismiss for Failure to State a Claim Signed by Honorable Patrick Michael Duffy on January 3, 2012.(prei, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
CHARLESTON DIVISION
John Woods,
Plaintiff,
v.
The Boeing Company,
Defendant.
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Civil Action No.: 2:11-cv-02932-PMD
ORDER
This matter is before the Court upon Defendant The Boeing Company’s (“Defendant” or
“Boeing”) motion to dismiss Plaintiff John Woods’s (“Plaintiff” or “Woods”) complaint
pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons set forth herein, the Court
grants Defendant’s motion to dismiss.
BACKGROUND
Plaintiff is an engineer who was hired by Boeing in 2009 to create and design repair
templates for a commercial aircraft called the 787 Dreamliner. On or about July 13, 2010,
Plaintiff reported to Boeing that he was experiencing harassment and retaliation as a result of his
insistence on adhering to quality and safety standards imposed by several agencies.1 Plaintiff
alleges that despite his reporting efforts, the harassment and retaliation continued, and he
informed Boeing that the harassment and retaliation were causing production delays in his work.
On September 14, 2010, Plaintiff made a second report to Boeing Ethics about the
harassment, retaliation, and mismanagement he was experiencing, including other complaints of
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Agencies such as: the Federal Aviation Authority (“FAA”), Occupational Safety and Health
Administration (“OSHA”), the U.S. Department of Labor (“DOL”), and the State of South
Carolina.
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discrimination.2 Boeing fired Plaintiff on September 21, 2010, and subsequently dismissed
Plaintiff’s report.
According to Plaintiff, because his concerns were related to the health and safety of all
employees, he made a formal complaint to the FAA, OSHA, and the DOL. In a letter dated July
27, 2011, attached to the complaint as Exhibit A, the FAA informed Woods that “a violation of
an order, regulation, or standard relating to air carrier safety operations may have occurred and
the FAA was taking appropriate corrective action.” Compl. ¶ 12. Plaintiff states that he has
exhausted all administrative remedies, and Defendant has refused to reinstate him or allow him
to participate in ADR.
PROCEDURAL HISTORY
On September 20, 2011, Plaintiff filed this action against Boeing in the Court of
Common Pleas for Charleston County, South Carolina. The complaint alleges that Defendant
violated the South Carolina Whistleblower Act (“the Act”), S.C. CODE ANN. § 8-27-10 et seq.
On October 27, 2011, Defendant filed a notice of removal pursuant to diversity jurisdiction. On
November 17, 2011, Defendant filed a motion to dismiss and memorandum in support. Plaintiff
filed a response to Defendant’s motion on December 5, 2011, and Defendant filed a reply.
STANDARD OF REVIEW
“A motion to dismiss under Rule 12(b)(6) for failure to state a claim upon which relief
can be granted is a challenge to the legal sufficiency of a complaint.” F.T.C. v. Innovative Mktg.,
Inc., 654 F. Supp. 2d 378, 384 (D. Md. 2009). The Supreme Court recently held that “[t]o
survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true,
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Plaintiff’s report also included complaints related to his health under the ADA and other forms
of discrimination. These issues are raised in another lawsuit filed by Plaintiff against Defendant
on October 20, 2011, captioned John Woods v. The Boeing Company, C.A. No.: 2:11-cv-2855PMD-BHH.
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to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949
(2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “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.” Id. at 1940 (citing Twombly,
550 U.S. at 556). “Determining whether a complaint states a plausible claim for relief will . . .
be a context-specific task that requires the reviewing court to draw on its judicial experience and
common sense.” Id. at 1950; see also Harman v. Unisys Corp., No. 09-1298, 2009 WL 4506463,
at *2 (4th Cir. Dec. 4, 2009). The Court added that “the tenet that a court must accept as true all
of the allegations contained in the complaint is inapplicable to legal conclusions,” and that
“[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory
statements, do not suffice.” Iqbal, 129 S.Ct. at 1949. The Court further noted that “[w]hen there
are well-pleaded factual allegations, a court should assume their veracity and then determine
whether they plausibly give rise to an entitlement to relief.” Id. at 1950.
ANALYSIS
Plaintiff contends that Boeing is a “public body” within the definition of the Act and is
therefore subject to suit under the Act. The Court disagrees.
The Act provides that a “public body may not discharge . . . any employee of a public
body whenever the employee reports a violation of any state or federal law or regulation” or
“exposes governmental . . . waste, fraud, gross negligence, or mismanagement.” Spencer v.
Barnwell Cnty. Hosp., 444 S.E.2d 538, 540 (Ct. App. 1994) (citing S.C. CODE ANN § 8-27-20).
Section 8-27-50 states that the Act does not apply to “nonpublic, private corporations.” A
whistleblower’s claim may lie against a “public body,” which is expressly defined by the statute
to include:
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a department of the State; a state board, commission, committee,
agency, or authority; a public or governmental body or political
subdivision of the State, including counties, municipalities, school
districts, or special purpose or public service districts; an
organization, corporation, or agency supported in whole or in
part by public funds or expending public funds; or a quasigovernmental body of the State and its political subdivisions.
S.C. CODE ANN. § 8-27-10(1) (emphasis added).
It must be determined whether Boeing is a corporation “supported in whole or in part by
public funds,” and therefore a “public body.” Boeing argues that it is not a “public body”
because the State received benefits in return for the incentives offered to Boeing. In support of
its position that a private corporation receiving public funds pursuant to a quid pro quo
agreement does not convert it into a “public body,” Boeing points to Weston v. Carolina
Research & Dev. Found., 401 S.E.2d 161 (S.C. 1991), and Sutler v. Palmetto Electric Coop.,
Inc., 481 S.E.2d 179 (S.C. Ct. App. 1997). The case law in South Carolina pertaining to this
issue is limited to these two cases. As such, Plaintiff relies on the same cases in support of his
position that a massive capital investment of public money in Boeing makes an otherwise private
corporation subject to the Act.
In Weston, a private, non-profit corporation (“the Foundation”) argued that it was not
subject to the FOIA statute despite receiving the support of public funds. Weston, 401 S.E.2d at
164. The language used to define “public body” in the FOIA is identical to the language used in
the Act. The court held that the Foundation was a public body because it had accepted federal
grant money and grants from the City of Columbia and Richland County; undertook to
administer the expenditure of that money; and ultimately acted as an agent for a state university.
Id. at 162-64 (“The Foundation operates exclusively for the benefit of the University of South
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Carolina.”). The court made an important distinction3 when it interpreted “supported in whole or
in part.” It stated that when a business enterprise “receives payments from public bodies in return
for supplying specific goods or services on an arm’s length basis,” the FOIA may not necessarily
apply. Id. at 165. But, “when a block of public funds is diverted en masse from a public body to
a related organization, or when the related organization undertakes the management of the
expenditure of public funds,” the FOIA applies. Id. (emphasis in original).
In Sutler, the court directly applied this distinction to a case involving the State’s
Whistleblower Act. In that case, a private company (“the Cooperative”) received low-interest
loans from a federal agency, pursuant to the Rural Electrification Act, in exchange for the
Cooperative “furnishing and improving electric and telephone service in rural areas.” Sutler, 481
S.E.2d at 180. The court highlighted that unlike in Weston, the Cooperative did not receive any
federal or state grants; instead, it secured a favorable loan on the condition that it complies with
the requirements of the Electrification Act. Id. at 181. Therefore, the court held that “[j]ust as
the FOIA does not apply to enterprises that accept payments from public bodies in exchange for
services, the Whistleblower Act does not apply to [the Cooperative], who provides electricity . . .
in exchange for loans with beneficial interest rates.” Id.
Pursuant to the State General Obligation Economic Development Bond Act (“Bond
Act”), the South Carolina Legislature issued economic bonds worth millions of dollars to Boeing
to build a plant in North Charleston. For that reason, Plaintiff alleges that Boeing is a “public
body” because it is supported in part by public funds from the State of South Carolina and/or
expending public funds.
However, the purpose of the Bond Act is to foster economic
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Other courts have made this same distinction in interpreting the provision “supported in whole
or in part by public funds.” See Kneeland v. NCAA, 850 F. 2d 224 (5th Cir. 1998); Indianapolis
Convention & Vistors Ass’n v. Indianapolis Newspapers Inc., 577 N.E.2d 208 (Ind. 1991);
Adams Cnty. Record v. Greater North Dakota Ass’n, 529 N.W.2d 830 (N.D. 1995).
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development within the State, and the issuance of these bonds is conditioned on compliance with
the requirements set forth in the Bond Act. See S.C. CODE ANN. § 11-41-20(7) (stating that the
authorization of debt is necessary to foster economic development in the State); see also § 11-4130(2)(a), (c) (stating that in exchange for investing “at least four hundred new jobs are created,”
and the “job creation requirements must be attained”). Therefore, the situation between Boeing
and the State is more analogous to the situation in Sutler. See Sutler, 481 S.E.2d at 181 (“[T]he
Cooperative met the quid pro quo condition . . . [it] cannot obtain the loans unless it complies
with the requirements set out in the Rural Electrification Act.”). Boeing has provided, and
continues to provide, jobs to an area within the State that would otherwise not have jobs. In
exchange for this service, under a negotiated agreement governed by the Bond Act, Boeing has
received and will continue to receive payments from the State. The Court finds that this type of
situation satisfies the quid pro quo condition, and as a result, Boeing is not a “public body” under
the Act. See id. (holding that the Act does not apply to “a situation where a business enterprise
receives payment from public bodies in return for supplying specific goods or services on an
arm’s length basis”).
Plaintiff also contends that under the reasoning of Weston, the Act does apply to Boeing
because it received a “block of funds en masse and has put those funds into the production of a
facility it manages on behalf of its investors.” Pl.’s Opp. Memo at 7. Boeing did receive a
massive amount of public money; however, Boeing is not a “related organization” to the State.
See Weston, 401 S.E.2d at 165 (The Act applies “when a block of public funds is diverted en
masse from a public body to a related organization, or when the related organization undertakes
management of the expenditure of public funds.”) (emphasis added). Unlike the Foundation in
Weston, Boeing does not act as the State’s agent nor does it operate for the sole benefit of the
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State. Boeing manages and spends the money it receives on behalf of its investors, not the State,
and it uses the money to carry out its business of manufacturing planes, not the business of the
State. Additionally, Boeing provides a service to the State in return. See id. at 164 (there is no
evidence that the Foundation “actually performed any services” to earn the fee). The Court is
not persuaded by Plaintiff’s argument under Weston, and therefore dismisses Plaintiff’s
complaint.
Furthermore, the Court denies Plaintiff’s request for leave to amend the complaint to
include “alternative and other claims” because such an amendment would be futile. 4 See Foman
v. Davis, 371 U.S. 178, 182 (the “grant or denial of an opportunity to amend is within the
discretion of the District Court” (citing Fed. R. Civ. P. 15(a))). Pursuant to Federal Rule of Civil
Procedure 15(a)(2), “leave to amend a complaint should be freely given ‘when justice so
requires.’” Fields v. Walpole, No. 11-1000, 2011 WL 6217081, at *2 (D. Md. Dec. 13, 2011).
So, “‘leave to amend should be denied only when the amendment would be prejudicial to the
opposing party, there has been bad faith on the part of the moving party, or amendment would be
futile.’” Id. (citing Matrix Capital Mgmt. Fund., LP v. BearingPoint, Inc., 576 F.3d 172, 193 (4th
Cir. 2009)). If an amendment would fail to withstand a motion to dismiss, it is futile. Id.; see
also Perkins v. United States, 55 F.3d 910, 917 (4th Cir. 1995). Thus, “if the well-pleaded facts
in the proposed new complaint do not amount to a ‘showing’ that the plaintiff is entitled to
relief,” the court should deny a motion for leave to amend. Id.; see Ashcroft v. Iqbal, 129 S.Ct.
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The Court notes that Plaintiff does not have a right to amend under Fed. R. Civ. P. 15(a)
because Defendant has filed a responsive pleading—Defendant’s Reply Memorandum In
Support Of Motion To Dismiss. See Hall v. Burney, No. 11-6566, 2011 WL 5822176, at * 2 (4th
Cir. Nov. 18, 2011) (“[T]he doctrine of futility only applies when the plaintiff seeks leave of
court to amend and does not have a right to amend.” (citing Galustian v. Peter, 591 F.3d 724,
730 (4th Cir. 2010))).
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1937, 1950 (2009) (explaining that a “showing” is more than the “mere possibility of
misconduct”).
Plaintiff fails to state any specific claim(s) against Defendant in his request, thereby,
denying the Court the ability to make a determination and denying notice to Defendant. See
Shonk v. Fountain Power Boats, 338 Fed. Appx. 282, 285 (4th Cir. 2009) (asserting that
proposed amendment was futile because it failed to state a claim against defendants). Plaintiff
did not file a motion with the Court, but requested leave to amend in the last paragraph of his
response to Defendant’s motion to dismiss. Additionally, Plaintiff did not provide the Court with
a proposed amended complaint or provide any explanation as to why these unidentified,
“alternative claims” could not have been brought earlier. Plaintiff’s request failed to qualify as a
motion for leave to amend, see Fed. R. Civ. P. 7(b), 15(a), and the Court finds that such a request
would be futile. See Cozzarelli v. Inspire Pharms., Inc., 549 F.3d 618, 630-31 (4th Cir. 2008)
(“[W]e cannot say that the district court abused its discretion by declining to grant a motion that
was never properly made.”); see e.g., United States ex rel. Williams v. Martin-Baker Aircraft
Co., 389 F.3d 1251, 1259 (D.C. Cir. 2004) (“While Federal Rule 15(a) provides that leave to
amend shall be freely given when justice so requires, a bare request in an opposition to a motion
to dismiss—without any indication of the particular grounds on which amendment is sought—
does not constitute a motion with the contemplation of Rule 15(a).” (citing Kowal v. MCI
Commc’ns. Corp., 16 F.3d 1271, 1280 (D.C. Cir. 1994))). Therefore, Plaintiff’s request for leave
to amend is denied.
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CONCLUSION
For the foregoing reasons, it is hereby ORDERED that Defendant’s motion to dismiss
Plaintiff’s complaint is GRANTED and Plaintiff’s request for leave to amend is DENIED.
AND IT IS SO ORDERED.
January 3, 2012
Charleston, SC
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