Hogan v. Utah Telecommunications Open Infrastructure Agency et al
Filing
41
MEMORANDUM DECISION and Ordergranting in part and denying in part 19 Motion to Dismiss; denying 27 Motion to Strike. Signed by Judge Ted Stewart on 10/18/2011. (tls)
IN THE UNITED STATES COURT FOR THE DISTRICT OF UTAH
NORTHERN DIVISION
CHRIS HOGAN,
Plaintiff,
MEMORANDUM DECISION AND
ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANTS’
MOTION TO DISMISS AND
DENYING PLAINTIFF’S MOTION
TO STRIKE
vs.
UTAH TELECOMMUNICATION OPEN
INFRASTRUCTURE AGENCY, AKA
UTOPIA,
AND
TODD MARRIOT, EXECUTIVE
DIRECTOR OF UTAH
TELECOMMUNICATION OPEN
INFRASTRUCTURE AGENCY
Case No. 1:11-CV-64 TS
AND
DOES 1-5
Defendants.
This matter is before the Court on Defendants Utah Telecommunication Open
Infrastructure Agency (“UTOPIA”) and Todd Marriott’s (collectively “Defendants”) Motion to
1
Dismiss1 and Plaintiff Chris Hogan’s Motion to Strike.2 For the reasons discussed more fully
below, the Court will grant in part and deny in part Defendants’ Motion to Dismiss and will deny
Plaintiff’s Motion to Strike.
I. BACKGROUND
The following facts are taken from Plaintiff’s Amended Complaint. Plaintiff’s
Complaint centers around actions allegedly taken by UTOPIA, an inter-local cooperative entity
and political subdivision of the State of Utah, and Mr. Marriott—a Utah resident—who serves as
UTOPIA’s executive director. Plaintiff is a citizen of the State of Colorado.
Plaintiff alleges that, on or about May 9, 2009, he entered into an agreement with
UTOPIA (the “Agreement”) to provide his services as an independent contractor. According to
Plaintiff, he had already been working for UTOPIA for almost a year when he entered into the
Agreement. Under the terms of the Agreement, Plaintiff was to provide certain services
including “sales, marketing, business development, operations, IT, and engineering efforts
regarding the UTOPIA network.”3 In exchange, Plaintiff was to receive $11,500 per month. By
its terms, the Agreement was to expire in May of 2011. Plaintiff asserts that despite the
termination clause in the Agreement, Mr. Marriott and UTOPIA’s general counsel, David Shaw,
led Plaintiff to believe that the Agreement would be renewed.
1
Docket No. 19.
2
Docket No. 27.
3
Docket No. 24, Ex. A, at 1-2.
2
Though not included in the terms of the Agreement, UTOPIA also provided Plaintiff an
apartment to live in during the week, for which it paid both the utilities and internet. UTOPIA
also provided Plaintiff with an office, computer, and cell phone, none of which were provided for
under the Agreement.
Plaintiff alleges that his duties with UTOPIA included:
developing sales, marketing, developments functions for UTOPIA in the business
and consumer markets, branding, marketing strategy and plan, hiring, hiring of
employees, developing marketing, hiring partner agencies, conducting requests for
proposal processes to secure partners, liaising with all of UTOPIA’s partners and
stakeholders, meeting with city officials to attract new member cities to UTOPIA,
making presentation about UTOPIA, meeting with strategic partners both inside
and outside of UTOPIA, attracting and developing new service providers and
application providers to the UTOPIA network, helping to develop the business
model for the organization, and actively participating in board and executive
committee meetings.4
Plaintiff alleges that Utopia dictated the pace and sequence of how he performed his job
and also set the hours he worked. According to Plaintiff, as the head of multiple departments, he
was able to delegate his functions. In early 2011, Plaintiff was made the Director of Operations
for UTOPIA. This meant that Plaintiff also became responsible for such processes as customer
care, service provider support, trouble ticketing, installation and customer fulfillment, billing,
and other similar processes. Plaintiff acknowledges that throughout the term of his contract he
was a 1099 contractor and maintained separate business and tax records.
Plaintiff alleges that the negative employment actions taken against him were in
retaliation for statements Plaintiff made to Mr. Jared Pantier, an outside plant manager and
4
Id. at 4-5.
3
UTOPIA employee, who also reports directly to Mr. Marriott. Plaintiff had suspicions that
UTOPIA, through Mr. Marriott, may be engaging in anti-competitive bidding practices. Plaintiff
asserts that his suspicions were based on the involvement of Tetra Tech, a company for which
Mr. Marriott’s brother serves on the upper management for the region of Utah. According to
Plaintiff, Tetra Tech is a company with a disfavored status with UTOPIA. Plaintiff became
suspicious when Tetra Tech submitted bid amounts that were extremely close to the projected
cost amounts developed by UTOPIA. UTOPIA later terminated the bidding process in which
Tetra Tech had directly been involved. However, Plaintiff alleges that it was his understanding
that Tetra Tech had discussed working under another general contractor, Corning Incorporated.
Plaintiff asserts that he spoke with Mr. Pantier about his suspicions, instead of filing a
report with the authorities, because he acknowledged that he could be wrong and decided to be
cautious before accusing Mr. Marriott and Tetra Tech of engaging in anti-competitive bidding
practices. Plaintiff alleges:
In order to make sure the bidding process did not jeopardize the success of
UTOPIA and in hopes of making the process transparent, [Plaintiff] suggested to
[Mr.] Pantier that he ensure that the Executive Board knew about the relationship
between Tetra Tech and [Mr.] Marriott as well as the possibility that Corning,
Incorporated, may be having discussions with Tetra Tech about awarding the curb
to home subcontract to Tetra Tech.5
Plaintiff alleges that soon thereafter, Mr. Marriott requested that Plaintiff sign a
termination agreement. Plaintiff asserts that he would not sign the termination agreement and, as
a result, Mr. Marriott began sending texts to Plaintiff’s wife’s cell phone warning Plaintiff to
5
Docket No. 24, at 10.
4
keep quiet about UTOPIA’s dealings. Plaintiff further alleges that Defendants attempted to have
him evicted from the apartment he lived in during the week and locked him out of the UTOPIA
office he used. Plaintiff also believes that, after he refused to sign the termination agreement, a
member of UTOPIA’s executive staff told UTOPIA employees that Plaintiff had been
committing crimes.
Plaintiff also makes various allegations about being removed from a separate company in
which he was involved with Mr. Marriott and Mr. Shaw, a non-profit corporation entitled
“GigNation.”
Plaintiff subsequently sought legal advice and directed counsel to serve a draft complaint
on the executive—Plaintiff alleges managing—board of UTOPIA. Plaintiff asserts that the draft
complaint was accompanied by a letter notifying UTOPIA that Plaintiff intended to file a lawsuit
but was open to negotiating a mutually acceptable resolution instead of litigation. Plaintiff
alleges that, in response, he received a letter from Mr. Marriott, indicating that “your actions
specific to recent interactions with Mr. Jarrod (sic) Pantier are clearly outside the scope of that
certain Professional Services Agreement, together with applicable Statements of Work, dated as
of May 12, 2009.”6 Plaintiff subsequently sent a demand letter to UTOPIA’s executive board on
March 24, 2011. Mr. Shaw responded to Plaintiff’s demand letter on April 4, 2011, and,
according to Plaintiff, denied all of Plaintiff’s claims.
Plaintiff has attached as an exhibit to his Amended Complaint a redacted version of this
response to his demand letter and alleges that he has redacted the letter because the Utah Third
6
Docket No. 24, Ex. C, at 1.
5
District Court found the paragraphs to be redundant, immaterial, impertinent, or scandalous.
Defendants attached the same letter to their Answer to Plaintiff’s Amended Complaint and
Motion to Dismiss, without redactions.
II. STANDARD OF REVIEW
In considering a motion to dismiss under Rule 12(b)(6), all well-pleaded factual
allegations, as distinguished from conclusory allegations, are accepted as true and viewed in the
light most favorable to Plaintiff as the nonmoving party.7 Plaintiff must provide “enough facts to
state a claim to relief that is plausible on its face.”8 All well-pleaded factual allegations in the
complaint are accepted as true and viewed in the light most favorable to the nonmoving party.9
But, the court “need not accept . . . conclusory allegations without supporting factual
averments.”10 “The court’s function on a Rule 12(b)(6) motion is not to weigh potential evidence
that the parties might present at trial, but to assess whether the plaintiff’s complaint alone is
legally sufficient to state a claim for which relief may be granted.”11 The Supreme Court has
7
Ruiz v. McDonnell, 299 F.3d 1173, 1181 (10th Cir. 2002).
8
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 547 (2007).
9
GFF Corp. v. Associated Wholesale Grocers, Inc., 130 F.3d 1381, 1384 (10th Cir.
1997).
10
S. Disposal, Inc., v. Tex. Waste, 161 F.3d 1259, 1262 (10th Cir. 1998); Hall v. Bellmon,
935 F.2d 1106, 1110 (10th Cir. 1991).
11
Miller v. Glanz, 948 F.2d 1562, 1565 (10th Cir. 1991).
6
explained that a plaintiff must “nudge[ ][his] claims across the line from conceivable to
plausible” to survive a motion to dismiss.12
Thus, the mere metaphysical possibility that some plaintiff could prove some set
of facts in support of the pleaded claims is insufficient; the complaint must give
the court reason to believe that this plaintiff has a reasonable likelihood of
mustering factual support for these claims.13
The Supreme Court recently provided greater explanation of the standard set out in
Twombly in Ashcroft v. Iqbal.14 In Iqbal, the Court reiterated that while FED .R.CIV .P. 8 does not
require detailed factual allegations, it nonetheless requires “more than unadorned, the-defendantunlawfully-harmed-me accusation[s].”15 “A pleading that offers ‘labels and conclusions’ or ‘a
formulaic recitation of the elements of a cause of action will not do.’”16 “Nor does a complaint
suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’”17
The Court in Iqbal stated:
Two working principles underlie our decision in Twombly. First, the tenet
that a court must accept as true all of the allegations contained in a complaint is
inapplicable to legal conclusions. Threadbare recitals of the elements of a cause
of action, supported by mere conclusory statements, do not suffice. Rule 8 marks
a notable and generous departure from the hyper-technical, code-pleading regime
of a prior era, but it does not unlock the doors of discovery for a plaintiff armed
12
Twombly, 550 U.S. at 547.
13
The Ridge at Red Hawk, LLC v. Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007)
(emphasis in original).
14
556 U.S. 662 (2009).
15
Id. at 1949.
16
Id. (quoting Twombly, 550 U.S. at 555).
17
Id. (quoting Twombly, 550 U.S. at 557).
7
with nothing more than conclusions. Second, only a complaint that states a
plausible claim for relief survives a motion to dismiss. 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.
But where the well-pleaded facts do not permit the court to infer more than the
mere possibility of misconduct, the complaint has alleged—but it has not
show[n]—that the pleader is entitled to relief.
In keeping with these principles a court considering a motion to dismiss
can choose to begin by identifying pleadings that, because they are no more than
conclusions, are not entitled to the assumption of truth. While legal conclusions
can provide the framework of a complaint, they must be supported by factual
allegations. When 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.18
In considering the adequacy of a plaintiff’s allegations in a complaint subject to a motion
to dismiss, a district court not only considers the complaint, but also “documents incorporated
into the complaint by reference, and matters of which a court may take judicial notice.”19 Thus,
“notwithstanding the usual rule that a court should consider no evidence beyond the pleadings on
a Rule 12(b)(6) motion to dismiss, ‘[a] district court may consider documents referred to in the
complaint if the documents are central to the plaintiff’s claim and the parties do not dispute the
documents’ authenticity.’”20
18
Id. at 1949-50 (internal quotation marks and citations omitted).
19
Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007) (citing 5B
WRIGHT & MILLER § 1357 (3d ed. 2004 & Supp. 2007)).
20
Alvarado v. KOBTV, LLC, 493 F.3d 1210, 1215 (10th Cir. 2007) (quoting Jacobsen v.
Deseret Book Co., 287 F.3d 936, 941 (10th Cir. 2002)).
8
III. DISCUSSION
Defendant moves this Court to dismiss Plaintiff’s first, second, fourth, fifth and sixth
causes of action of Plaintiff’s Amended Complaint for failure to state a claim for which relief
may be granted. Plaintiff contends that, accepting the allegations in his Amended Complaint as
true, viewing them in the light most favorable to Plaintiff, and drawing all reasonable inferences
in his favor, Plaintiff has stated a claim upon which relief may be granted as to each of the claims
listed above. Plaintiff also moves the Court to strike four paragraphs from pleadings submitted
by Defendants. The Court will address each of the claims individually.
A.
FIRST AMENDMENT
Defendant alleges that Plaintiff’s first cause of action—for violation of his right of speech
under the First and Fourteenth Amendment of the United States Constitution, brought pursuant to
42 U.S.C. § 1983—fails because the speech for which Plaintiff allegedly suffered retaliation was
made in his official duties and did not pertain to a matter of public concern. Defendants also
assert that their interests in providing efficient public service outweighs Plaintiff’s interest in the
speech in question.
“[T]he First Amendment protects a public employee’s right, in certain circumstances, to
speak as a citizen addressing matters of public concern.”21 There is some dispute in this action
whether, in application, Plaintiff was an independent contractor or employee. However, for
purposes of the First Amendment analysis, the Supreme Court has previously found no
21
Garcetti v. Ceballos, 547 U.S. 410, 417 (2006).
9
“difference of constitutional magnitude between independent contractors and employees.”22 The
Supreme Court further held that, for First Amendment speech purposes, “[i]ndependent
government contractors are similar in most relevant respects to government employees” and “the
same form of balancing analysis should apply to each.”23
The balancing analysis the Court must weigh to determine whether Plaintiff was denied
his constitutional rights is referred to as the Pickering test, or the Garcetti/Pickering analysis.24
The test comprises five elements, called ‘prongs’: (1) whether the speech was
made pursuant to an employee's official duties; (2) whether the speech was on a
matter of public concern; (3) whether the government's interests, as employer, in
promoting the efficiency of the public service are sufficient to outweigh the
plaintiff's free speech interests; (4) whether the protected speech was a motivating
factor in the adverse employment action; and (5) whether the defendant would
have reached the same employment decision in the absence of the protected
conduct.25
“The first three steps of the Garcetti/Pickering analysis are issues of law ‘to be resolved by the
district court, while the last two are ordinarily for the trier of fact.’”26 Under the
Garcetti/Pickering analysis the Court must first analyze whether the speech occurred pursuant to
22
Bd. of Cnty. Comm’rs, Wabaunsee Cnty., Kan., v. Umbehr, 518 U.S. 668, 684 (1996).
23
Id. at 684-85.
24
See Brammer-Hoelter v. Twin Peaks Charter Acad., 492 F.3d 1192, 1202 (10th Cir.
2007).
25
Dixon v. Kirkpatrick, 553 F.3d 1294, 1302 (10th Cir. 2009) (citing Brammer-Hoelter,
492 F.3d at 1202-03).
26
Rohrbough v. Univ. of Colo. Hosp. Auth., 596 F.3d 741, 745 (10th Cir. 2010) (quoting
Brammer-Hoelter, 492 F.3d at 1203).
10
the public employee Plaintiff’s official duties and the inquiry ends after that initial step if the
court answers this legal question in the affirmative.27
In determining whether speech is made pursuant to an employee’s official duties “the
Tenth Circuit has taken a case-by-case approach, looking both to the content of the speech, as
well as the employee’s chosen audience.”28
[T]he court has focused on whether the speech activity stemmed from and was of
the type that the employee was paid to do and has highlighted that the ultimate
question in determining whether speech falls within an employee’s official duties
is whether the employee speaks as a citizen or instead as a governmental
employee. 29
“Consequently, if an employee engages in speech during the course of performing an official
duty and the speech reasonably contributes to or facilitates the employee's performance of the
official duty, the speech is made pursuant to the employee's official duties.”30
In the instant action, Plaintiff voiced his suspicions to a fellow employee that UTOPIA,
through Mr. Marriott, may be engaging in anti-competitive bidding practices with a
company—Tetra Tech—in which Mr. Marriott’s brother is involved in an upper management
position. The parties dispute whether the content of Plaintiff’ statements were within the scope
of his official duties.
27
See Hesse v. Town of Jackson, Wyo., 541 F.3d 1240, 1249 (10th Cir. 2008).
28
Rohrbough, 596 F.3d at 746.
29
Id. (internal quotations and citations omitted).
30
Brammer-Hoelter, 492 F.3d at 1203.
11
Plaintiff asserts that a letter sent to Plaintiff from Mr. Marriott after the statements in
question were made is dispositive on this issue. In the letter, Mr. Marriott indicates to Plaintiff
that his “actions specific to recent interactions with Mr. Jarrod [sic] Pantier are clearly outside
the scope of that certain Professional Services Agreement, together with applicable Statements of
Work, dated as of May 12, 2009.”31 Plaintiff argues that this comment by Mr. Marriott
establishes that his statements to Mr. Pantier were outside of the scope of his official duties as
such statements were not made pursuant his Agreement.32
The Tenth Circuit has indicated that its “precedents since Garcetti have taken a broad
view of the meaning of speech that is pursuant to an employee’s official duties.”33 Moreover,
“speech may be made pursuant to an employee's official duties even if it deals with activities that
the employee is not expressly required to perform.”34 Therefore, Mr. Marriott’s assertion that
Plaintiff’s actions with regard to Mr. Pantier were clearly outside the scope of the Agreement, is
not dispositive of whether Plaintiff was acting pursuant to his official duties in making his
statements to Mr. Pantier.35 Rather, if the speech “reasonably contributes to or facilitates the
31
Docket No. 24, Ex. C, at 1.
32
In oral argument, Defendants argued that the letter from Mr. Marriott was not focused
on the statements made by Plaintiff, rather, it was focused on the insubordinate action of Plaintiff
in taking his allegations to a fellow employee. On this argument alone, the Court is persuaded
that the letter from Mr. Marriott is not dispositive on this issue.
33
Thomas v. City of Blanchard, 548 F.3d 1317, 1324 (10th Cir. 2008) (internal quotations
omitted).
34
Brammer-Hoelter, 492 F.3d at 1192, 1203.
35
See Thomas, 548 F.3d 1323-24 (“In this case, Mr. Thomas’s supervisor, Monte
Ketchum, conceded that Mr. Thomas’s official duties did not include a duty to contact the OSBI
12
employee’s performance of the official duty, the speech is made pursuant to the employee’s
official duties.36
Plaintiff indicates in his Amended Complaint that he made the statement’s in question
“[i]n order to make sure the bidding process did not jeopardize the success of UTOPIA and in
hopes of making the process transparent, [Plaintiff] suggested to Pantier that he ensure that the
Executive Board knew about the relationship between Tetra Tech and Mr. Marriott.”37
Moreover, Plaintiff explains that his motive in making this suggestion to Mr. Pantier was “to
protect the public trust of the citizens of UTOPIA’s member cities and of taxpayers whose tax
dollars helped to fund UTOPIA, and to prevent UTOPIA from entering into a contract that could
be illegal and would endanger UTOPIA’s continual success and existence.”38
The Court finds that the facts of this case are similar to those confronted by the Tenth
Circuit in Casey v. West Las Vegas Independent School District.39 In that case, the court
analyzed the statements of the former superintendent of a school district. The court found that
statements made to the board (the superintendent’s supervisors) were precluded under Garcetti
because the superintendent was under an obligation to provide candid advice and counsel to her
for perceived criminal violations. But that is not the end of the matter. The inquiry is a practical
one . . . Therefore the fact that it was not expressly Mr. Thomas's duty to report to the OSBI is
not dispositive on whether he was acting pursuant to his duties.”) (internal quotations omitted).
36
Brammer-Hoelter, 492 F.3d at 1203.
37
Docket No. 24, at 10.
38
Id.
39
473 F.3d 1323 (10th Cir. 2007).
13
supervisors.40 The court went on to hold that statements by the superintendent to the New
Mexico Attorney General “however, are another kettle of fish” because the plaintiff “was not
seeking to fulfill her responsibility of advising the Board when she went to the Attorney
General’s office.”41
Admittedly, this case is distinguishable from Casey because Plaintiff’s statements were
not made directly to the executive board. Instead, Plaintiff made his statements to an
intermediary, Mr. Pantier, and suggested that he speak to the board with regard to his concerns.
Thus, Plaintiff acknowledges that the intended recipient of Plaintiff’s statements was the
executive board. In his Amended Complaint Plaintiff asserts that his duties with UTOPIA
included actively participating in board and executive committee meetings. Given the extensive
list of duties Plaintiff provides in his Amended Complaint,42 it is difficult for the Court to foresee
a situation where Plaintiff would not be under an obligation to report a concern regarding
UTOPIA to the board. Particularly a concern which Plaintiff felt could “endanger UTOPIA’s
continual success and existence.”43 Plaintiff has alleged that he had a duty to actively participate
in board and executive committee meetings and the statements he made to Mr. Pantier were
meant to influence the board. For these reasons, the Court finds that Plaintiff’s statements to Mr.
Pantier were within the scope of his official duties.
40
Id. at 1332.
41
Id.
42
See Docket No. 24, at 4.
43
Id. at 10.
14
Because the Court finds that Plaintiff’s statements to Mr. Pantier were within the scope of
his official duties, it will dismiss Plaintiff’s first cause of action for violation of his free speech
rights under the First and Fourteenth Amendment of the United States Constitution.
B.
UTAH CODE ANNOTATED § 67-21-3
Plaintiff’s second cause of action is for violation of Utah Code Annotated § 67-21-3 (“§
67-21-3”). Plaintiff alleges Defendants took an adverse action against him because he
communicated in good faith the violation or suspected violation of a law, rule, or regulation
adopted under the laws of Utah. Defendants contend that the Court should dismiss this claim on
a number of grounds. First, Defendants argue that the Court should dismiss the claim because
Plaintiff failed to strictly comply with the procedural requirements of the Utah Governmental
Immunity Act (“UGIA”). Next, Defendants argue that even if Plaintiff had complied with the
requirements of the UGIA, the Court should dismiss this claim because § 67-21-3 only applies to
government employees, not to independent contractors.
Without reaching Defendants’ other arguments, this Court will dismiss Plaintiff’s claim
because it is unable to conclude that § 67-21-3 applies to independent contractors.
Utah Code Annotated § 67-21-2(3) provides that “employees” are covered under this
Chapter of the Utah Code. It provides that “‘[e]mployee’ means a person who performs a
service for wages or other remuneration under a contract of hire, written or oral, express or
implied.” Plaintiff asserts that “[i]ndependent contractors fall squarely within this definition,”
however, he does not cite any case law to support this assertion.44
44
Docket No. 29, at 14.
15
Plaintiff argues that this Court should find “[Plaintiff], an independent contractor, is also
an employee under section 67-21-3 because he performed services for UTOPIA for wages or
other remuneration under a written contract for hire.”45 It is undisputed that Plaintiff was hired
under a contract to perform services. However, such contracts are not included within the
definition of “employee” for purposes of Utah Code, Title 67, Chapter 21. In effect, Plaintiff
requests that this Court find that a contract for hire, which creates an at-will employment
relationship, is synonymous to a contract for services, which results in a contractual relationship.
Employees and independent contractors are not synonymous and are not afforded the
same rights of recovery under the law. For this reason, various courts that have found that
statutory protections that apply to employees do not apply to independent contractors.46
Moreover, the Court notes that other Utah statutes that have used substantially the same language
to define employee—specifically the language “contract of hire”—have not included independent
contractors under that definition.47
45
Id.
46
See IOSTAR Corporation v. Stuart, 2009 WL 270037, at *18 (D. Utah Feb. 3, 2009)
(holding that the wrongful discharge doctrine grew out of a need to protect at-will employees and
does not protect independent contractors); Vesom v. Atchison Hosp. Ass’n, 2006 WL 2714265, at
*25 (D. Kan. Sep. 22, 2006) aff’d, 279 Fed. Appx. 624 (10th Cir. 2008) cert. denied, 129 S. Ct.
459 (2008) (finding independent contractor not protected by Kansas whistle blower statute,
because the tort is only an exception to the employment-at will doctrine and is based on the
wrongful conduct of an entity with the power to terminate the employee).
47
See Utah Code Annotated § 34A-2-104(1)(b)(i) & (5). Compare section (1) specifying
that an employee is a person in the service of any employer under any contract of hire, express or
implied with section (5) explaining that an employee does not include various positions including
independent contractors.
16
The Court agrees that “[t]he purpose of statutory construction is to ‘give effect to the
Legislature’s intent.’”48 Given the dearth of support for Plaintiff’s asserted position, the Court is
unwilling to find that the Legislature intended its definition of “employees” for purposes of this
act to include independent contractors. For this reason, the Court will dismiss Plaintiff’s claim
under § 67-21-3.
C.
GOOD FAITH AND FAIR DEALING
Plaintiff’s fourth cause of action is for violation of the covenant of good faith and fair
dealing. Plaintiff alleges in this claim that Defendants violated the covenant of good faith and
fair dealing when they (1) unilaterally terminated the Agreement; (2) immediately thereafter
hired one of Mr. Marriott’s neighbors, Gary Jones, to replace Plaintiff in the role of Marketing
Director; (3) locked Plaintiff out of his office computer and company cell phone; (4) announced
his termination to all UTOPIA employees; and (5) attempted to lock Plaintiff out of the
apartment rented for Plaintiff by Defendants. Defendants argue that this claim fails because,
through these allegations, Plaintiff is attempting to create rights that the Agreement does not
provide. Moreover, Defendants argue that none of these allegations support a finding of the
breach of covenant of good faith and fair dealing because they occurred after the alleged
termination of the Agreement.
48
Docket No. 29, at 13 (quoting Progressive Cas. Ins. Co., v. Ewart, 167 P.3d 1011, 1014
(Utah 2007).
17
Parties to a contract must exercise their contractual rights in good faith.49 Good faith and
fair dealing means the parties must be faithful to the “‘agreed common purpose’” and consistent
with “‘the justified expectations of the other party.’”50 The covenant cannot, however, “be read
to establish new, independent rights or duties to which the parties did not agree ex ante.”51
In the instant case, Plaintiff alleges numerous violations of the covenant of good faith and
fair dealing. The Court notes that Plaintiff may be unable to prove that each of these allegations
constitutes a violation of the covenant of good faith and fair dealing. However, to the extent the
Defendants took actions that would prevent Plaintiff from performing his obligations under the
Agreement, such is sufficient to maintain an action for breach of the covenant of good faith and
fair dealing.
Because Plaintiff had a justified expectation that he would be allowed to perform his
obligations under the Agreement, the Court will deny Defendants’ Motion to Dismiss Plaintiff’s
fourth cause of action for violation of the covenant of good faith and fair dealing.
D.
WRONGFUL DISCHARGE
Plaintiff’s fifth cause of action is for wrongful discharge in violation of public policy.
Plaintiff alleges that Defendants’ actions violated Utah’s strong public policy preventing
government employers from retaliating against their employees for communicating their concerns
49
See Brehany v. Nordstrom, Inc., 812 P.2d 49, 55 (Utah 1991).
50
Olympus Hills Shopping Ctr., Ltd. v. Smith’s Food & Drug Ctrs., Inc., 889 P.2d 445,
451 (Utah Ct. App. 1994) (quoting Restatement (Second) of Contracts § 205 cmt. a (1979)).
51
Oakwood Village LLC v. Albertsons, Inc., 104 P.3d 1226, 1240 (Utah 2004) (internal
citations omitted).
18
that the employer may be engaging in, or is about to engage in, illegal activities. Plaintiff also
alleges that he acquired a significant legal right when he contracted with UTOPIA to provide his
professional services as an independent contractor and that Defendants violated the public policy
requiring the parties to a contract to perform the terms of contract in good faith and with fair
dealing. Defendants argue that this claim should be dismissed because a claim under the tort of
wrongful discharge does not apply to independent contractors and because, even if such a claim
did apply to independent contractors, Plaintiff’s allegations still fail to state a claim for which
relief can be granted.
In his opposition, Plaintiff alleges for the first time that he is an employee of UTOPIA.
Plaintiff cites to various Utah cases that provide factors to be weighed in considering whether a
person is an employee or independent contractor.52 The Court is not persuaded that it should find
Plaintiff to be an employee for purposes of this claim.
First, the Court notes that Plaintiff attempts to obtain the benefits of the Agreement as an
independent contractor, while also availing himself of Utah statutory and common-law
protections meant for non-contracted, at-will employees. Plaintiff’s employment relationship
with Defendants was not at-will. In Touchard v. La-Z-Boy, Inc.,53 the Utah Supreme Court held
that “[w]hen employment is at-will, either the employer or the employee may terminate the
employment for any reason (or no reason) except where prohibited by law. Accordingly, an
52
See Utah Home Fire Ins. Co., v. Manning, 985 P.2d 243 (Utah 1999); Petro-Hunt, LLC
v. Dep’t of Workforce Servs., 197 P.3d 107 (Utah Ct. App. 2008).
53
148 P.3d 945 (Utah 2006).
19
employer's decision to terminate an employee is presumed to be valid.”54 In contrast, the method
for termination of Plaintiff’s employment with Defendants was provided for in the Agreement.
Pursuant to the terms of the Agreement, Plaintiff cannot be discharged at-will by UTOPIA—or
any of the Defendants—and any termination before the termination date set out in the Agreement
is presumptively invalid.
Moreover, the facts of this case do not lend themselves to the purposes for which the
Utah Supreme Court has indicated the tort of wrongful termination in violation of public policy
exception exists. In Peterson v. Browning,55 the Utah Supreme Court held that an action for
wrongful termination in violation of public policy “is imposed by law, and thus is properly
conceptualized as a tort.”56 In Peterson, the Court further explained:
[i]n the case of the public policy exception, potential punitive damages will exert
a valuable deterrent effect on employers who might otherwise subject their
employees to a choice between violating the law or losing their jobs. The
employment-at-will doctrine does not grant an employer the privilege of
subjecting its employees to the risks of criminal liability.57
Here, no such public policy exception is necessary nor, based on this Court’s review of
relevant Utah case law, is it merited. This reasoning is also in line with this Court’s holding in
IOSTAR Corporation v. Stuart.58 In that case, this Court held “[t]he wrongful discharge doctrine
54
Id. at 948.
55
832 P.2d 1280 (Utah 1992).
56
Id. at 1285.
57
Id.
58
2009 WL 270037.
20
grew out of a need to protect at-will employees, who are under the total control of the employer
and without separate or independent contractual rights that provide employment protections. As
such, it does not protect independent contractors.”59 Plaintiff’s rights are provided for under the
Agreement. Thus, the Court will proceed on the basis that Plaintiff is an independent contractor
and determine his rights per the Agreement.
For the foregoing reasons, the Court will dismiss Plaintiff’s fifth cause of action for
wrongful discharge in violation of public policy.
E.
PROMISSORY ESTOPPEL
Plaintiff’s sixth cause of action alleges that, based on Plaintiff’s discussions with Mr.
Shaw and Mr. Marriott, Plaintiff had an expectation of employment with UTOPIA through May
15, 2012. To support this claim, Plaintiff alleges that he forwent several job offers for the next
year based on his reliance on Defendants’ representations. Defendants argue that this claim
should be dismissed because UTOPIA never made a promise to renew the Agreement.
In Utah, the elements of promissory estoppel are: ‘(1) The [promisee]
acted with prudence and in reasonable reliance on a promise made by the
[promisor]; (2) the [promisor] knew that the [promisee] had relied on the promise
which the [promisor] should reasonably expect to induce action or forbearance on
the part of the [promisee] or a third person; (3) the [promisor] was aware of all
material facts; and (4) the [promisee] relied on the promise and the reliance
resulted in a loss to the [promisee].’
59
Id. at *18.
21
In addition, a promisee must support a promissory estoppel claim with
more than a subjective understanding of the promisor's statements. The claim
must show evidence of a reasonably certain and definite promise.60
Detrimental to Plaintiff’s claim for promissory estoppel is the requirement of a reasonably
certain and definite promise. In his Amended Complaint, Plaintiff has failed to point to a single
statement made by any of the Defendants that the Agreement would be renewed for a subsequent
year. Plaintiff has alleged that this was his subjective understanding based upon an alleged
conversation with Mr. Shaw and Mr. Marriott. However, such is insufficient to maintain a claim
for promissory estoppel. Plaintiff’s subjective understanding based on an alleged conversation is
not enough—without more specific facts as to an actual promise made by the Defendants—to
estop the Defendants from allowing the Agreement to expire on May 15, 2011. For this reason,
the Court will dismiss Plaintiff’s claim for promissory estoppel.
F.
MOTION TO STRIKE
Plaintiff asserts that two paragraphs in a letter attached to Defendants’ Motion to Dismiss
as Exhibit A and also attached to Defendants’ Answer to Amended Complaint as Exhibit A are
redundant, immaterial, impertinent, or scandalous. For this reason, Plaintiff requests that this
Court either: strike the offending letter attached to Defendants’ Motion, or, strike the allegedly
offensive paragraphs as redacted in Plaintiff’s exhibit. Defendants contend that the Court should
deny Plaintiff’s Motion to Strike because (1) the letter constitutes Defendants’ statutorily-
60
J.R. Simplot Co. v. Sales King Intern., Inc., 17 P.3d 1100, 1107 (Utah 2000) (quoting
Nunley v. Westates Casing Servs., Inc., 989 P.2d 1077, 1088 (Utah 1999)).
22
required response under the UGIA and (2) the Court should deny the Motion as moot because
Plaintiff expressly alleges the accusations in his original Complaint.
Federal Rule of Procedure 12(f) provides that “the court may strike from a pleading an
insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.”
The letter in question is not irrelevant or immaterial to the case, as is demonstrated by the
fact that both parties attached a version of the letter to their pleadings before this Court. Indeed,
Plaintiff relies upon this letter to demonstrate compliance with the UGIA. Nor is the letter
redundant merely because Defendants attached an unedited version of the letter to their
pleadings.
Plaintiff also argues that the paragraphs in question constitute scandalous matter. Black’s
Law Dictionary defines scandalous matter as “matter that is both grossly disgraceful (or
defamatory) and irrelevant to the action or defense.”61 Courts that have applied Rule 12(f) and
stricken scandalous matter have done so only where the material was of an extreme nature.62 The
contents of this letter are not so extreme so as to render it scandalous matter.
Because the paragraphs in question do not meet the requirements of Rule 12(f), the Court
will deny Plaintiff’s Motion to Strike.
61
BLACK’S LAW DICTIONARY 1345 (7th ed. 1999).
62
See Garrett v. Selby Connor Maddux & Janer, 425 F.3d 836 (10th Cir. 2005)
(dismissing an appeal where it contained abusive and offensive language).
23
IV. CONCLUSION
For the foregoing reasons, the Court will grant Defendants’ Motion to Dismiss as to
Plaintiff’s First, Second, Fifth, and Sixth claims and deny Defendants’ Motion to Dismiss as to
Plaintiff’s Fourth claim. Moreover, the Court will deny Plaintiff’s Motion to Strike. It is
therefore
ORDERED that Defendants’ Motion to Dismiss (Docket No. 19) is GRANTED IN
PART and DENIED IN PART. It is further
ORDERED that Plaintiff’s Motion to Strike (Docket No. 27) is DENIED. Moreover, the
parties are
ORDERED to submit the remaining claims of breach of contract and violation of the
covenant of good faith and fair dealing to a settlement conference.
DATED October 18, 2011.
BY THE COURT:
_______________________________
TED STEWART
United States District Judge
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