Anderson v. Reeds Jewelers, Inc.

Filing 11

MEMORANDUM ORDER & OPINION entered and filed 5/11/17: Before this Court is Reeds Jewelers, Inc.'s ("Defendant") Motion to Dismiss. Defendant filed a Memorandum in Support of its motion, and Plaintiff filed a Response. Defendant also filed a Reply Brief, and moved for a hearing. The Court held a hearing on May 10, 2017. At the hearing Defendant moved, with Plaintiffs consent, for the dismissal of Count Two, which the Court granted. For the reasons set forth in th is Memorandum Order & Opinion, Defendant's 4 Motion to Dismiss Count 1 and III are DENIED. Count II was dismissed for the reasons stated on the record. (See Memorandum Order & Opinion and Foot Notes for Specifics) (Signed by District Judge Raymond A. Jackson on 5/11/17). Copies provided as directed 5/12/17.(ecav, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Norfolk Division

CHRISTINE ANDERSON,
Plaintiff,
CIVIL ACTION NO. 2:16cv739
V.

REEDS JEWELERS, INC.,
Defendant.
Memorandum Order & Opinion

Before this Court is Reeds Jewelers, Inc.'s ("Defendant") Motion to Dismiss. Defendant

filed a Memorandum in Support of its motion, and Plaintiff filed a Response. Defendant also
filed a Reply Brief, and moved for a hearing. The Court held a hearing on May 10, 2017, At the

hearing Defendant moved, with Plaintiffs consent, for the dismissal of Count Two, which the
Court granted. For the reasons discussed below, Defendant's Motion to Dismiss on Counts One
and Three is DENIED.
I. FACTUAL i& PROCEDURAL HISTORY

On December 2, 2016, Plaintiff filed a three count Complaint against Defendant in the
Circuit Court of the City of Virginia Beach, Virginia. Count One alleged that Defendant
wrongfully discharged Plaintiff for her refusal to engage in a criminal act in violation of public

policy. Compl. ^ 21. Count Two' alleged Defendant tortiously interfered with Plaintiffs
prospective business relations by "negligently, recklessly and/or intentionally defam[ing] and

malign[ing] Plaintiffs reputation within the community." Id. at 30. Count Three alleges
Defendant insisted that Plaintiff engage in a common law conspiracy with "handlers," which
violates, inter alia, the public policy mandate of the Va. Code Section 18.2-178. Id. at 36.
Plaintiff voluntarily dismissed this charge.
1

Defendant removed this action to this Court on diversity jurisdiction grounds on
December 27, 2016. ECF No. 1 at 1-2. That same day, Defendant moved to Dismiss Counts

One, Two, and Three of Plaintiffs Complaint pursuant to 12(b)(6) of the Federal Rules of Civil
Procedure. ECF No. 4. Plaintiff filed a response, and voluntarily dismissed Count Two of the

Complaint, on January 11, 2017. ECF No. 7. Defendant filed a reply on January 17,2017, ECF
No. 8, and moved for a hearing on its Motion to Dismiss on February 24,2017. ECF No. 9.

As a matter of background, Defendant employed Plaintiff as a sales associate on or about
October 9, 2006. Compi. T[ 5. Throughout the eight years that Plaintiff was employed with
Defendant, Plaintiff received high marks, pay increases, was promoted to Assistant Store
Manager, and was offered a Store Manager position. Id. at ^ 5-6. Six months after Defendant

offered Plaintiffthe store manager position at Defendant's Patrick Henry Mall location. Plaintiff
was terminated for using multiple lenders and for failure to follow "company policy." IdM TI 6.
Plaintiff asserts that no other employee had been terminated for this reason and that the company
did not have such a policy at the time that Plaintiff was fired. Id.

Plaintiff specifically argues that Defendant was engaged in a "scheme" that brought
young military personnel ("buyer") into Defendant's Virginia Beach store to request credit from
Defendant's lending partners to purchase jewelry—mainly Rolex watches. Id. at ^ 8. After the
buyer received lender financing with the assistance of Defendant's employees, and subsequently
purchased the jewelry, the buyer typically sold the jewelry to "handlers" for a fraction of the
amount actually financed. Id. at ^ 9.

Upon learning of the "scheme," Plaintiff discouraged new buyers from using lender
financing to purchase jewelry—telling them that failure to make regular payments could lead to
military discipline.

Id. at H 10.

Plaintiff also informed Justin Ward, Defendant's Loss

Prevention Manager, on October 17, 2014, about the scheme and its potential harm on buyers.
Id. at ^ 11. Defendant did nothing to investigate this scheme, and Plaintiff continued to see
inflated sales of high end jewelry as the result of this scheme. Id.
Plaintiff told Peaches Bosley, Defendant's Head of Inventory Control, "I don't feel
comfortable continuing to assist with the financing of these particular buyers [,]" in January of
2015. Id. at ^ 12. Plaintiff also informed Bosley that she was concerned about "transshipping"

issues—especially regarding Defendant's Rolex license.^ Id. Defendant continued to ignore
Plaintiffs allegations. Id.

Plaintiff further learned that "handlers" were "coaching" buyers to lie about their military

pay rank on their jewelry financing documents to increase their amount of potential financing. Id.
at H 13.

Pioneer, a financial lender that primarily serves military service members began

investigating the increases in loan defaults at Defendant's Hampton Road stores in or about

February 2015. Id. at f 14. Ward, Defendant's Loss Prevention Manager, visited Plaintiff at
Defendant's Lynnhaven store location and denied that Plaintiff informed him of the scheme. Id.
Shortly thereafter, Defendant fired Plaintiff, and continuously "disparaged" [Plaintiffs]
character and "alleged that [Plaintiff] is being or will be investigated by law enforcement

agencies... and [the] Federal Bureau of Investigation..." Id. at^ 15.
II. LEGAL STANDARD

Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of actions that fail to

state a claim upon which relief can be granted. For purposes of a Rule 12(b)(6) motion, courts
may only rely upon the complaint's allegations and those documents attached as exhibits or
incorporated by reference. See Simons v. Montgomery Cty. Police Officers, 762 F.2d 30, 31 (4th

^Defendant is one oftlie few businesses licensed to sell Rolex watches inthe Hampton Roads area. CompI.
1112.

Cir. 1985). Courts will favorably construe the allegations of thecomplainant and assume that the
facts alleged in the complaint are true. See Erickson v. Pardus, 551 U.S. 89, 93-94 (2007);
Mylan Lab., Inc. v. Matkari, 7 F.3d 1130,1134 (4th Cir. 1993). A court will only granta motion
to dismiss if "it appears to a certainty that the plaintiff would be entitled to no relief under any
state of facts which could be proved in support of his claim." Johnson v. Mueller, 415 F.2d 354,
355 (4th Cir. 1969).

Although a complaint need not contain detailed factual allegations, "[f]actual allegations
must be enough to raise a right to relief above the speculative level on the assumption that all the

allegations in the complaint are true." BellAtl. Corp. v. Twombly, 550 U.S. 544, 545 (2007). If
the factual allegations do not nudge the Plaintiff's claims "across the line from conceivable to
plausible, their complaint must be dismissed." Id. at 570.
III. DISCUSSION

A. COUNT ONE: WRONGFUL DISCHARGE IN VIOLATION OF PUBLIC POLICY

Plaintiff charges, inter alia, that Defendant wrongfully discharged her in violation of the
public policy of the Commonwealth of Virginia due to her refusal to continue to engage in a
series of criminal acts. Compl. | 24. Defendant asserts that Count I should be dismissed
because Plaintiff failed to plead that Defendant asked Plaintiff to engage in the alleged unlawful
acts under the threat of discharge, or that she was discharged because of her alleged refusal to
engage in a criminal act. Id.

The Commonwealth of Virginia is an employment-at-will state. See Miller v. SEVAMP,
Inc., 234 Va. 462, 465 (Va. 1987) (affirming state circuit court decision that no cause of action
for retaliatory discharge exists in employment-at-will situation where appellant employee was
discharged because she was a witness for co-worker at a grievance hearing). As such, when an

employment contract in Virginia does not provide for the duration of the employment

relationship expressly or by fair inference, either party ordinarily is free to terminate the
relationship for any reason or for no reason at all, provided that it gives the other party
reasonable notice. See id. (citing Bowman v. State Bank of Keysville, 229 Va. 534, 535 (Va.

1985)). That rule, however, "is not absolute." Bowman v. State Bank ofKeysville, 229 Va. 534,
539 (Va. 1985). Courts in at least 20 states, including Virginia, have granted exceptions to the
strict application of this doctrine in favor of at-will employees who claim to have been
discharged in violation of an established public policy. Id. at 539.

Because all Virginia statutes generally express some degree of public policy, the
Supreme Court of Virginia further restricted the Bowman exception. See Virginia Beach v.
Harris, 259 Va. 220 (Va. 2000).

The Supreme Court of Virginia clarified that two types of

statutes may give rise to a viable wrongful discharge claim on public policy grounds: (1) statutes

involving laws containing explicit statements of public policy (e.g. "It is the public policy of the
Commonwealth of Virginia [that]...") Harris, 259 Va. at 232 (citing Lockhart v. Commonwealth

Educ. Sys. Corp., 247 Va. 98, 105 (Va. 1994)); and (2) statutes that implicitly express an
established state public policy, "designed to protect the property rights, personal freedoms,

health, safety, or welfare of the people in general[,]" that the discharge violates. Anderson, 92 F.
Supp. 2d at 521 (citing Harris, 259 Va. at 232; Lockhart v. Commonwealth Educ. Sys. Corp., I'M
Va. at 98, 104 (Va. 1994)). Additionally, an employee must also be "a member of the class of

individuals the public policy is intended to benefit." Anderson, 92 F. Supp.2d at 522 (citing
Harris, 259 Va. at 233).

Here, Plaintiff asserts that Defendant's scheme violated eight Virginia Codes: Va, Code
Ann. § 18.2-178 (1981)—obtaining money or signature, etc., by false pretenses; Va. Code Ann.

§ 18.2-186 (2007) —false statements to obtain property or credit; Va. Code Ann. § 18.2-195
(1991)—Credit card fraud, conspiracy, and penalties; Va. Code Ann. § 18.2-195.2 (2007)—

Fraudulent application for credit card; Va. Code Ann. § 18.2-197 (1981)—criminally receiving
goods and services fraudulently obtained; Va. Code Ann. § 18.2-216 (2014)—^Untrue,
deceptive, or misleading advertising, inducements, writings or documents; Va. Code Ann. §
18.2-217 (1975)—^advertising merchandise, etc., for sale vdth intent not to sell at price or terms
advertised; and Va. Code Ann. § 18.2-246.3 (1999)—money laundering.
As a matter of common law, none of the aforementioned statutes may serve as the basis

of a Bowman claim under the first category because they each fail to explicitly state that they are

expressing a public policy of the Commonwealth of Virginia. See Harris, 259 Va. at 232.
Alternatively, they each may serve as the basis of a Bowman claim under the second category

because they are all designed to protect a person from being discharged for engaging in a
criminal act.

See Robinson v. Salvation Army, 292 Va. 666, 670 (Va. 2016) ("One such

exception specifically recognized in Bowman is that an at-will employee who is discharged
based on a refusal to engage in a criminal act may have a valid cause of action for wrongful
discharge.").

But, as expressed above, the analysis does not end here. The Court must also determine
whether Plaintiff falls within the class of individuals the eight statutes are designed to benefit or
protect. See Anderson, 92 F. Supp. 2d at 521. While it is obvious that protected classes would
fall under the at-will termination exception, "a statute's protective reach may extend beyond the
class of persons who are victims of its violation." Id.
Plaintiff in this case claims to have been wrongfiilly discharged, in violation of the public

policy of the Commonwealth for her refusal to continue to engage in criminal acts. Compl. Tf 24.

"[A] statute's protective reach may extend beyond the class of persons who are victims of its
violation." Anderson, 92 F. Supp. at 521. "Indeed, a statute's protective reach may extend to
those who have a legal duty under that statute." Id. (citing Dray v. New Market Poultry Prod.,
Inc., 258 Va. 187 (Va. 2000). Stated differently, "an employee does not have to be the victim of
the crime he or she is asked to commit to fall within the statute's protective reach." Anderson, 92

F. Supp. at 523 (citing Mitchem v. Counts, 259 Va. 179 (Va. 2000) (abrogated by Robinson v.
Salvation Army, 292 Va. 666 (Va. 2016) and Dray v. New Market Poultry Prod., Inc., 258 Va.
187 (Va. 2000)). In such instances, "it is sufficient that the statute imposes upon the employee a
duty not to engage in the conduct ordered by the employer." Id.

Here, all eight statutes Plaintiff cited plainly prohibited Plaintiff from committing the
aforementioned crimes. As a result. Plaintiff falls within the protective reach of each of those
statutes, and has stated a valid Bowman wrongful discharge claim where Plaintiff alleges that her
employer fired her for refusing to engage in statutorily prohibited conduct. See Anderson, 92 F.
Supp. at 523; See also Robinson, 292 Va. at 670.
For these reasons. Count I states a valid Bowman claim for wrongful discharge in

violation of Virginia public policy, and Defendant's Motion to Dismiss on Count I is DENIED.
B. COUNT THREE: COMMON LAW CONSPIRACY

Plaintiff charges that Defendant engaged in a tacit agreement with a group of "handlers"
to: "(i) tortuously [sic] defraud Defendant's business partners . . . ; (ii) breach contractual and

fiduciary duties owed to Defendant's supplier, Rolex . . .; and (iii) firing [Plaintiff], and . . .
violating {inter alia) the public policy mandate of Va. Code Section 18.2-178 by insisting that
Plaintiff participate in the above-referenced scheme." Compl. H 36.

Defendant asserts that

Plaintiff failed to plead sufficient facts to support a claim for civil conspiracy because Plaintiff

failed to state claims for termination in violation of public policy. ECF No. 5 at 10. Defendant
further asserts that Plaintiff fails to meet the particularity requirement under Federal Rule of
Civil Procedure 9(b) because the Complaint refers to Defendant and some unidentified
"handlers." ECF No. 5 at 11. Defendant also notes that Plaintiff has failed to plead sufficient
facts that show how this allegedly unlawful scheme resulted in Plaintiffs injury. ECF No. 8 at 5.

To state a claim for common law conspiracy under Virginia law, a plaintiff must show

"1) an agreement between two or more persons; 2) to participate in an unlawful act, or a lawful
act in an unlawful manner; 3) an injury caused by an unlawful overt act performed by one of the
parties to the agreement; and 4) that the overt act was done pursuant to and in furtherance of the
common scheme," Skillstorm, Inc. v. Elec. Data Sys., LLC, 666 F. Supp. 2d 610, 618 (E.D. Va.

Oct. 9, 2009) (citing Hechler Chevrolet, Inc. v. Gen. Motors Corp., 230 Va. 396, 337 (Va.

1985)). "[A]n allegation of conspiracy, whether criminal or civil, must at least allege an

unlawful act or an unlawful purpose." Skillstorm, Inc., 666 F. Supp. 2d at 618 (quoting Hechler
Chevrolet, 230 Va. at 402). Thus, "to survive a motion to dismiss, an allegation of conspiracy

must include either an unlawful act or an unlawful purpose." Skillstorm, Inc., 666 F. Supp. 2d at
618 (quoting Bay Tobacco, LLC v. Bell Quality Tobacco Prod., LLC, 261 F. Supp. 2d 483, 499
(E.D. Va. 2003)).

Here, Plaintiff alleges that Defendants conspired with Plaintiff and an unidentified group
of "handlers" to execute the alleged conspiracy. While Federal Rule of Civil Procedure 9(b)
requires parties alleging fraud or mistake to state the circumstances pertaining to the fraud or

mistake with particularity, the standard for common law conspiracy under Virginia law is quite
different. As noted above, to survive a motion to dismiss for common law conspiracy, a Plaintiff
must simply allege that Defendant was engaged in a conspiracy that included either an unlawful

8

act or an unlawful purpose. Here, Plaintiff alleges that there was an agreement between two or

more people to commit an unlawful act—namely the eight alleged statutory violations expressed
in Count I. See Compl. ^ 35-38. Additionally, Plaintiff cites a number of injuries that were
caused by the conspiracy, Id. at 39-40, and further alleges that the overt acts were done pursuant
to and in furtherance of a common scheme. Id. at 8-15, and 35-38.

It is important to note, however, that the vast majority of Plaintiffs Complaint also
alleges that Defendant was engaged in fraudulent behavior. To the extent that Plaintiff alleges
fraud, Plaintiff must plead such facts with specificity, including the "the time, place and contents
of the false representations, as well as the identity of the person making the misrepresentation
and what he obtained thereby." Feely v. Tolal Realty Mgmi, 660 F. Supp. 2d 700, 712 (E.D. Va,
Aug. 28, 2009) (quoting Harrison v, Weslinghouse Savannah River Co., 176 F.3d 776, 784 (4th
Cir.1999); Fed. R. Civ. P. 9(b)); see also Iron Workers Local 16 Pension Fund v, Hilb Rogal &

Hobbs Co., 432 F.Supp.2d 571, 579 (E.D.Va.2006) (" 'Rule 9(b) requires; that allegations of
fraud be pled with specificity [and] [gjrouping defendants together in a pleading fails to satisfy
the requirement that the who, what, when, where, why and how, be pled with specificity.' ").
For the foregoing reason, Defendant's Motion to Dismiss on Count III is DENIED.
CONCLUSION

For the reasons set forth above. Defendant's Motion to Dismiss on Counts 1 and III are
DENIED. Count II was dismissed for the reasons stated on the record.

The Court DIRECTS the Clerk to send a copy of this Order to the Parties.
IT IS SO ORDERED.

Norfolk, Virginia

May /I ,2017

'Rnyin.-ind A'lackson
Unilcd Slates District Judge