October 6, 2000
Craig A. Crispin, Shelley D. Russell, Portland, Oregon, Attorneys for Plaintiffs.
Paul C. Buchanan, Sharon A. Hill, Portland, Oregon, Attorneys for Defendant.
Plaintiffs Suzanne Travis, Candace Duncan, Lisa Maddocks, and Katherine Clark bring this employment action against defendant Allan Knappenberger. In their Third Amended Complaint, plaintiffs bring fifteen claims, including claims for fraud, gross negligence, negligence, intentional infliction of emotional distress (IIED), wrongful discharge, and several wage and retaliation claims. Defendant moves to dismiss the fraud claim, the gross negligence claim, the negligence claim, the intentional infliction of emotional distress claim, the wrongful discharge claim, and a claim under Oregon's Employer Liability Act. I recommend that the motion be granted in part and denied in part.
Plaintiffs are either employees or former employees of defendant. Each worked as a legal secretary or as a legal assistant. Plaintiffs allege that although defendant represented to each plaintiff that she was engaged as an independent contractor, defendant created an employment relationship with each plaintiff by retaining the right to direct and control all work performed by plaintiffs, by furnishing all equipment and supplies necessary for plaintiffs to perform their duties, by compensating plaintiffs on the basis of an hourly wage, and otherwise treating them as employees. As a result, plaintiffs contend, defendant should have paid plaintiffs overtime wages, withheld taxes from their gross pay, and paid pension, profit sharing, and 401(k) contributions on plaintiffs' behalf. Defendant's failure to perform these acts provides the basis for many of plaintiffs' claims. Additionally, plaintiffs contend that defendant engaged in several retaliatory acts in response to plaintiffs' allegations and in response to the filing of this lawsuit. Other pertinent allegations are discussed below in the context of specific claims.
Defendant's motions are brought pursuant to Federal Rules of Civil Procedure 8, 9(b), and 12, depending on the claim.
I. Rule 8
Rule 8(a) states that "[a] pleading which sets forth a claim for relief . . . shall contain . . . a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a). To comply with Rule 8, a plaintiff must "plead a short and plain statement of the elements of his or her claim, identifying the transaction or occurrence giving rise to the claim and the elements of the prima facie case[.]" Bautista v. Los Angeles County, 216 F.3d 837, 840 (9th Cir. 2000). Rule 8 requires "sufficient allegations to put defendants fairly on notice of the claims against them." McKeever v. Block, 932 F.2d 795, 798 (9th Cir. 1991).
II. Rule 9(b)
Rule 9(b) states that "[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity. Malice, intent, knowledge, and other condition of mind of a person may be averred generally." Fed.R.Civ. p. 9(b). To satisfy Rule 9 (b),
"a plaintiff must set forth more than the neutral facts necessary to identify the transaction. The plaintiff must set forth what is false or misleading about a statement, and why it is false. In other words, the plaintiff must set forth an explanation as to why the statement or omission complained of was false or misleading."Coooer v. Pickett, 137 F.3d 616, 625 (9th Cir. 1997) (quoting In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541, 1548 (9th Cir. 1994) en banc)) (emphasis in GlenFed).
III. Rule 12
On a motion to dismiss under Rule 12(b)(6), the court must review the sufficiency of the complaint. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). The court should construe the complaint most favorably to the pleader:
In evaluating the sufficiency of the complaint, we follow, of course, the accepted rule that the complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.Conley v. Gibson, 355 U.S. 41, 45-46 (1957). The allegations of material fact must be taken as true. Moyo v. Gomez, 40 F.3d 982, 984 (9th Cir. 1994).
Defendant moves to dismiss the fraud claim under Rule 9(b) and Rule 12. Defendant notes that the allegations do not identify when the alleged misrepresentation took place, to whom defendant allegedly made the misrepresentation, where the alleged misrepresentation took place, and through what medium it allegedly was conveyed. For example, it is unknown whether the alleged misrepresentation was made at one time to all plaintiffs, or separately to each one, whether it was made in writing or orally, or what it was that defendant allegedly said that purportedly induced plaintiff to rely on the representation or representations. Plaintiffs note that the allegations identify the fraud, the parties to the fraud, and why defendant's representations were false. Plaintiffs argue that these allegations provide adequate notice to defendant to prepare a defense.
I agree with defendant. In addition to the standards cited above, a plaintiff is generally required to plead the "time, place, and content" of the false representation. See In re Stac Electronics Sec. Litig., 89 F.3d 1399, 1410 (9th Cir. 1996) (affirming district court's Rule 9(b) dismissal of certain allegations that stated the time, place, and content in the "broadest of terms").
Here, while plaintiffs have identified the parties to the alleged misrepresentation, they have not identified when the alleged misrepresentation took place, whether it was delivered individually to each plaintiff or to plaintiffs as a group, and whether it was oral or written. Without these details, plaintiffs have not met the requirements of Rule 9(b). I recommend granting the motion without prejudice to plaintiffs repleading the fraud claim with the required particularity.
II. Gross Negligence
Plaintiffs allege that, as plaintiffs' employer, defendant had a duty to properly classify plaintiffs as employees and not as independent contractors. Third Am. Comp. at ¶ 47. Plaintiffs contend that pursuant to state and federal law, defendant had a duty to withhold and pay income and employment taxes. Id. at ¶ 48. Plaintiffs further allege that defendant failed to treat plaintiffs as employees and failed to withhold and pay income and employment taxes when defendant knew or should have known that plaintiffs were not independent contractors. Id. at ¶ 49. Plaintiffs contend that defendant's conduct unreasonably created a foreseeable risk of the harm suffered by plaintiffs. Id. at ¶ 50.
Defendant moves for dismissal under Rule 12 because plaintiffs' alleged damages consist solely of lost income and excess employment taxes with no recovery sought for any personal injury or property damage.
In Oregon, purely economic loss incurred as a result of alleged negligence is not recoverable unless there is "[s]ome source of a duty outside the common law of negligence. . . ." Onita Pacific Coro. v. Bronson, 315 Or. 149, 159, 843 P.2d 890, 896 (1992). As noted in Onita Pacific, "[o]ur precedents establish that a negligence claim for the recovery of economic losses caused by another must be predicated on some duty of the negligent actor to the injured party beyond the common law duty to exercise reasonable care to prevent foreseeable harm." Id. (footnote omitted).
In a 1998 case, the Oregon Court of Appeals stated that such a duty is found in special relationships in which the defendant has an obligation to pursue the economic interests of the plaintiff. Oregon Life Health Ins. Guar. Ass'n v. Inter-Regional Financial Group, Inc., 156 Or. App. 485, 496-97, 967 P.2d 880, 886 (1998); see also Conway v. Pacific Univ., 324 Or. 231, 159, 924 P.2d 818, 820 (1996) (heightened duty arises when one party acts, at least in part, to further economic interests of the other party). The court held that "[u]nless otherwise established by law, that duty must be decided on a "case-by-case basis," an analysis that naturally requires the consideration of facts unique to the case at hand." Oregon Life, 156 Or. App. at 497, 967 P.2d at 886 (citation omitted). Adversarial and arm's length relationships do not meet the standard. Onita Pacific, 315 Or. at 165, 843 P.2d at 899. Additionally, "[w]hether such a relationship existed is a question of law." Oregon Life, 156 Or. App. at 497, 967 P.2d at 886.
Defendant argues that in this case, there is no special relationship that would give rise to a source of duty outside the common law of negligence. Defendant contends that as alleged employees of defendant, plaintiffs were in an arm's length relationship with defendant and consequently, defendant had no duty to protect plaintiffs' economic interests.
There is some support for defendant's position that an employer-employee relationship is typically viewed as an adversarial one. See, e.g., Conway, 24 Or. at 244, 924 P.2d at 826 (parties who had negotiated employment contract were each pursuing their own interests and no special relationship created); Patton v. J.C. Penney Co., 301 Or. 117, 123, 719 P.2d 854, 858 (1986) ("in most respects employment remains an arms length, `take it or leave it' relationship."); Vanderselt v. Pope, 155 Or. App. 334, 340 n. 2, 963 P.2d 130, 133 n. 2 (1998) ("employment, in and of itself, does not create a `special relationship.'").
Plaintiffs argue, however, that the "federal and state laws on which plaintiffs base their claims create a special relationship between defendant and plaintiffs imposing a duty on defendant to properly classify his employees and compensate them accordingly." Plfs' Response at p. 3. To the extent this argument is premised on plaintiff's wage claims, I find it unpersuasive. While particular statutes at issue in this case mandate certain wages for hours worked, they do not alter the arm's length relationship between an employee and an employer. Rather, such laws serve certain societal interests unrelated to any fiduciary-like responsibility of the employer. At oral argument, plaintiffs suggested that as an employer, defendant stands, in part, in the place of the government by holding part of the employee's compensation intended for taxes and social security and medicare benefits. Plaintiffs argue that defendant has a fiduciary responsibility to properly handle such funds and that this duty creates a special relationship sufficient to sustain a negligence claim asserting solely economic loss.
Plaintiffs are unable to cite a single case in support of their theory that various tax and benefit statutes create the special relationship necessary to support an economic loss negligence claim. Given this lack of precedent, and for the reasons discussed below, I conclude that plaintiffs' argument is without merit.
First, there is an important distinction between an employment relationship and the other types of special relationships found by Oregon courts to support this type of claim. Here, assuming there is a fiduciary relationship at all, it is one imposed by government regulation, not a consensual relationship where the role of fiduciary has been voluntarily assumed. See Conway, 324 Or. at 239-40, 924 P.2d at 823-24 (listing the types of special relationships found by Oregon courts: professional relationships such as lawyer/client and physician/patient; contractual relationships requiring a standard of skill of the professional, independent of the contract, such as those commonly associated with engineers and architects and their clients; agent/principal; real estate broker/seller; pledgee/pledgor; and the duty to defend imposed on a liability insurer).
Second, the statutes alluded to by plaintiffs do not create a relationship where defendant is pursuing or furthering plaintiffs' economic interests. Employers are required to withhold both income taxes and the "employee portion" of social security and medicare taxes from an employee's wages. 26 U.S.C. § 3101 (a), 3101(b) (imposing social security and medicare taxes on employees); 26 U.S.C. § 3102 (a) (requiring employers to withhold the tax created by section 3101 from employees' wages); 26 U.S.C. § 3402 (a) (requiring employers to withhold certain amount of employees' wages for employees' income tax liability). The employer withholds the taxes as "a special fund in trust for the United States." 26 U.S.C. § 7501 (a). Thus, the special relationship created by these statutes, if any, is between the government and the employer, not the employer and the employee. When the employer stands in place of the government as tax collector, it is not acting to further the employee's economic interests.
Furthermore, if the employer fails to pay over the withheld taxes, the employee is still credited with having paid the taxes and is not liable for any additional payment. Purdy Co. of Ill. v. United States, 814 F.2d 1183, 1186 (7th Cir. 1987); Morales v. United States, 805 F. Supp. 1062, 1067 n. 5 (D.P.R. 1992) The government then has a variety of methods to seek payment from the employer. See 26 U.S.C. § 3102 (b), 3403 (creating liability for unpaid wage withholdings); 26 U.S.C. § 6321, 6331-6344, 7501 (to recover past-due withholdings, government can, with procedures of assessment, notice, and demand, obtain a lien upon the employer's property and take the proceeds of a forced sale); 26 U.S.C. § 6656, 7202, 7215 (government can seek penalties assessable against the employer for tax delinquencies); 26 U.S.C. § 6672 (if the official or employee who is required to collect, account for, and pay over employment taxes for the employer willfully fails to do so, he or she is personally liable for a penalty equal to the amount of the unpaid taxes).
The availability of these various remedies underscores the conclusion that the laws requiring an employer to withhold income and social security taxes from employee wages do not, standing alone, make the employer a fiduciary vis-a-vis the employee. The remedies demonstrate that withheld wages, or wages that should have been withheld, belong to the government and are not a protectable interest belonging to the employee. Accordingly, the relevant statutes create no special relationship between the employee and the employer.
Similarly, no pursuit of an employee's economic interest is created by other laws requiring the employer to pay additional employment-related taxes. In addition to the laws requiring withholding of certain taxes from an employee's wages, employers are required to pay an additional "employer portion" of social security and medicare taxes, 26 U.S.C. § 3111, as well as a federal unemployment tax, 26 U.S.C. § 3301. The fact that a tax imposed on an employer may eventually inure to an employee's benefit does not, by itself, place the employer in a fiduciary relationship with its employee. In fact, the burden of the tax may result in lower wages to the employee if the employer considers its tax liability as part of its total labor costs. Thus, the tax may act to further accentuate the adversarial relationship of the employee and employer. Additionally, if the employer fails to pay the taxes, the government is armed with the same remedies as noted above, suggesting that the key relationship created by the statutes is between the government and the employer, not the employer and the employee.
Because no special relationship or duty beyond the common law duty to exercise reasonable care to prevent foreseeable harm exists in this case, I recommend that defendant's motion to dismiss the gross negligence claim be granted and that the claim be dismissed with prejudice.
Plaintiffs allege that as their employer, defendant had a duty to provide a safe working environment, that defendant negligently failed in this duty, and that as a result, Travis injured her wrists and arms, Clark injured her arms and shoulders, and they both suffered emotional distress. Third Am. Comp. at ¶¶ 58, 59, 60.
Pursuant to Rules 8 and 12, defendant moves to dismiss this claim. Defendant argues that the allegations set forth no facts that provide notice of the events or conditions on which plaintiffs base this claim. Defendant contends that even under the liberal notice pleading rules, a vague allegation of unsafe conditions, without more, is insufficient to state a claim for relief.
Plaintiffs note that they allege that defendant had a duty to provide a safe working environment, that defendant negligently failed to provide a safe working environment, and that as a direct and proximate result, Travis and Clark suffered injuries. Plaintiffs argue that further details regarding defendant's actions and any harm resulting from his conduct is appropriately obtained through discovery.
Plaintiffs have alleged negligence and injury. They have indicated the injuries are to their arms, wrists, and shoulders. The allegations of the entire Third Amended Complaint suggest that the injuries complained of were caused by overuse of certain computer equipment. The negligence allegations are sufficient under a notice pleading standard. I recommend that defendant's motion to dismiss the negligence claim be denied.
IV. Employer Liability Act
Travis and Clark allege that defendant violated Oregon's Employer Liability Act, Oregon Revised Statute (O.R.S.) 654.305-654.335 (ELA). They contend that their employment with defendant involved a risk or danger of injury, including overuse injuries. Third Am. Comp. at ¶ 62. They also allege that defendant had a duty to use every device, care, and precaution practicable for the protection and safety of his employees, but failed to do so, resulting in damage and injury to Travis's arms and wrists, and to Clark's arms and shoulders. Id. at ¶ 63.
Based on Rule 12, defendant moves to dismiss this claim on the basis that the ELA is inapplicable to plaintiffs' employment.
In pertinent part, the ELA provides that
Generally, all owners, contractors or subcontractors and other persons having charge of, or responsibility for, any work involving a risk or danger to the employees or the public shall use every device, care and precaution that is practicable to use for the protection and safety of life and limb, limited only by the necessity for preserving the efficiency of the structure, machine or other apparatus or device, and without regard to the additional cost of suitable material or safety appliance and devices.
O.R.S. 654.305. As stated in the statute, the work at issue must involve a "risk or danger to the employees." To come under the ELA, the work must be so "inherently dangerous or present dangers so uncommon that the employment would be classed as work involving `risk or danger[.]'" Kruse v. Coos Head Timber Co., 248 Or. 294, 304, 432 P.2d 1009, 1014 (1967);see also Richardson v. Harris, 238 Or. 474, 476-77, 395 P.2d 435, 436 (1964) (noting that "[w]ork involving `risk or danger' has been interpreted as work which is `inherently dangerous' or employment which presents `dangers which are uncommon.'") Oregon's ELA "comprehends hazardous occupations in general, specifically enumerated or otherwise."Union Oil Co. of Ca. v. Hunt, 111 F.2d 269, 274 (9th Cir. 1940). Additionally, "[w]here reasonable minds can differ, it is a jury question whether or not any particular work involves `risk or danger.'" Richard, 238 Or. at 476-77, 395 P.2d at 436.
The Ninth Circuit and Oregon courts have found a variety of employment activities to be outside the scope of the ELA as a matter of law. See,e.g., Hunt, 111 F.2d at 274 (operating a gas station); Short v. Federated Livestock Corp., 235 Or. 81, 87-88, 383 P.2d 1016, 1019 (1963) (hog feeding); Hoffman v. Broadway Hazelwood, 139 Or. 519, 525, 10 P.2d 349, 351 (1947) (restaurant and confectionary business); O'Neill v. Odd Fellows Home of Or., 89 Or. 382, 393, 174 P. 148, 151 (1918) (laundress using a step ladder two or three feet high not equipped with a hand rail).
Defendant argues that the duties of office employees in a law firm plainly involve less danger than those set forth in the cases above. Plaintiffs argue that reasonable minds could differ as to whether working in an office environment is an inherently dangerous activity. Plaintiffs suggest that with the common knowledge of repetitive motion injuries, back problems, and vision impairment resulting from the very type of office work in which plaintiffs were engaged, defendant's argument that working in an office is not an inherently dangerous activity, is ludicrous. Additionally, at oral argument plaintiffs suggested that office-related activities such as moving large, heavy boxes or flipping electrical switches would constitute inherently dangerous activities.
I disagree. The statute and the cases make clear that the occupations subject to the ELA involve a significant risk of catastrophic injury. While repetitive motion injuries and other types of injuries noted by plaintiffs might indeed be serious in some cases, they are qualitatively different than the types of injuries commonly risked by occupations such as those in the construction or electrical fields which clearly fall under the ELA's provisions.
Plaintiffs argue that it is inappropriate to determine the viability of this claim on a motion to dismiss because to do so constitutes a conclusion that as a matter of law, no office worker could ever be covered by the ELA. Plaintiffs note that under Oregon law, the applicability of the ELA is determined by reference to what activity the employee was actually engaged in at the time of the injury, not simply by the general type of work the employee was hired to do. Bartley v. Doherty, 225 Or. 15, 22-23, 357 P.2d 521, 523-23 (1960) (citing Barker v. Portland Traction Co., 524 180 Or. 586, 173 P.2d 288 (1946)).
While I agree with plaintiffs' statement of Oregon law, I see no facts in the Third Amended Complaint, or suggested at oral argument, capable of supporting an ELA claim. I conclude that allegations stating only that plaintiffs' employment at defendant's office involved a risk or danger of injury, are insufficient to sustain an ELA claim. Absent some specific allegations indicating that an injury occurred outside of the ordinary, everyday risks seen in an office environment, plaintiffs' claim cannot survive. I note that even the hypothetical facts raised by plaintiffs during oral argument, including moving heavy boxes, overuse of a computer, or flipping electrical switches to turn on lights and office power, are not inherently dangerous within the meaning of the ELA. I recommend that plaintiffs' ELA claim be dismissed without prejudice, with leave to replead, if possible, an inherently or uncommonly dangerous activity occurring in the office environment.
Plaintiffs allege that from approximately the beginning of their employment through the present time, or through the date of their separation from employment for those plaintiffs no longer employed by defendant, defendant engaged in a continuous course of conduct with the intent to cause plaintiffs to suffer severe emotional harm and distress, or under circumstances by which defendant knew such distress was certain, or substantially certain, to result from his conduct. Third Am. Comp. at ¶ 82.
Plaintiffs further allege that defendant's conduct exceeded any reasonable limit of social tolerance, was outrageous in the extreme, and included the following particular acts: (1) throwing documents and files at and toward plaintiffs; (2) engaging in repeated use of abusive language; (3) imposing extremely burdensome volumes of work; (4) kicking office furniture at and near plaintiffs; (5) causing plaintiffs to assist in the billing of clients for work not done; (6) causing plaintiffs to engage in the preparation of court documents and correspondence in violation of common rules of decency in litigation; (7) repeated and severe unfounded accusations of impropriety, incompetence, or misconduct directed toward plaintiffs; (8) leaving hostile messages relating to the lawsuit on Travis's voice mail; (9) making hostile references and comments relating to the lawsuit to plaintiffs; (10) engaging in the increased use of abusive language; (11) imposing a heightened level of inspection and supervision over plaintiffs' work performance and work product; (12) setting unreasonable and impossible deadlines for the production of work; (13) dictating correspondence and court documents in insufficient detail, and otherwise providing insufficient information and guidance, to permit plaintiffs to perform their duties; (14) increasing the volume of work imposed on plaintiffs; (15) knowingly assigning tasks outside the experience and skills of Clark and thereafter subjecting Clark to an abusive oral reprimand; (16) knowingly directing plaintiffs to perform tasks which aggravated plaintiffs' injured wrists, arms and shoulders, often without a business need for such tasks; (17) interrogating plaintiffs about the lawsuit; (18) terminating Travis's and Clark's employment. Third Am. Comp. at ¶¶ 66, 83.
To sustain an IIED claim, plaintiff must show that (1) the defendant intended to inflict severe emotional distress on plaintiff; (2) the defendant's acts were the cause of plaintiff's severe emotional distress; and (3) the defendants' acts constituted an extraordinary transgression of the bounds of socially tolerable conduct. McGanty v. Staudenraus, 321 Or. 532, S43, 901 P.2d 841, 849 (1995).
Defendant argues that the facts alleged by plaintiffs, even if true, do not establish that his alleged behavior constituted an extraordinary transgression of the bounds of socially tolerable conduct. Plaintiffs state that the conduct described in their pleading constitutes an extraordinary transgression beyond the bounds of socially tolerable conduct, especially given that defendant threw objects at them, used hostile and I abusive language, knowingly directed plaintiffs to perform tasks that aggravated injuries, kicked furniture near plaintiffs, and engaged in abusive activity in retaliation for bringing their claims.
The court determines as a matter of law whether a complaint is subject to dismissal for failure to allege conduct sufficient to constitute an extraordinary transgression of the bounds of socially tolerable conduct.Robinson v. U.S. Bancorp, No. CV-99-1723-ST, 2000 WL 435468, at *6, Findings and Recommendation CD. Or. Mar. 17, 2000) (citing Babick v. Oregon Arena Corp., 160 Or. App. 140, 150, 980 P.2d 1147, 1153 (1999)) adopted by Judge Jones, April 20, 2000.
In Robinson, Judge Stewart recently noted that "[w]hile IIED claims are common in the context of employment disputes, Oregon appellate courts have been very hesitant to impose liability for IIED claims in employment settings, even in the face of serious employer misconduct." Id. at *8. Judge Stewart cited several Oregon IIED cases and noted that the following acts have not met the requisite standard: overworking employees, making unreasonable demands on employees, terminating an employee for refusing to pull down his pants, throwing a tantrum, screaming and yelling, accusing employees of being liars, inconsistent and excessive supervision, unjustified reprimands, threats of termination, requiring employee to perform menial tasks, and termination. Id. (citations omitted). Based on the cases cited inRobinson, most of plaintiffs' allegations are insufficient, as a matter of law, to support an IIED claim. I conclude, however, that there are two allegations capable of sustaining the claim: that defendant caused plaintiffs to assist in the billing of clients for work not done, and that he knowingly directed plaintiffs to perform tasks which aggravated their injured wrists, arms, and shoulders. While one Oregon case has rejected the argument that an IIED defendant's illegal act is per se tortious,Shay v. Paulson, 131 Or. App. 270, 273-74, 884 P.2d 870, 872 (1994), at least one court in the country has found facts sufficient to state an IIED claim when an employer defendant required the plaintiff to falsify work reports and retaliated against the employee for his refusal to do so. Milton v. Illinois Bell Tel. Co., 101 Ill. App.3d 75, 80, 427 N.E.2d 829, 833, 56 Ill. Dec. 497, 501 (1981).
Additionally, as noted by Judge Stewart, at least one Oregon case has suggested that an IIED claim is appropriate where the defendant's actions include conduct that subjects the plaintiff to the threat of imminent physical injury. Robinson, 2000 WL 435468, at *9 (citing Babick, 160 Or. App. at 150, 980 P.2d at 1152-53). Because at this point it may be possible for plaintiffs to come forward with facts regarding their assistance in billing clients for work not done, and defendant's knowingly forcing them to perform tasks which aggravated their injuries, it would be improper to dismiss those allegations.
I recommend that plaintiff's IIED claim be allowed to proceed, but only on the two allegations cited above. It is likely that the issue will be revisited at summary judgment.
VI. Wrongful Discharge
Plaintiffs allege that their acts of seeking legal representation and filing a complaint against defendant constituted resistance and opposition to defendant's violation of wage and hour laws, defendant's unlawful employment practices, and defendant's violations of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001-1461. Third Am. Comp. at ¶ 87. They further allege that following plaintiffs' commencement of this action, they continued to resist and oppose defendant's actions. Id. at ¶ 88. Plaintiffs contend that on April 11, 2000, defendant terminated Clark's and Travis's employment in substantial part in retaliation for their resistance and opposition to the violation of important statutory employment rights. Id. at ¶ 89.
Defendant argues that the wrongful discharge claim should be dismissed as a matter of law because there is an adequate statutory remedy for the allegedly wrongful conduct asserted in support of the claim. Additionally, defendant argues that plaintiffs' wrongful discharge claim should be dismissed because the claim as pleaded fails to identify any protected public policy interest that plaintiffs contend was violated by the alleged termination of their employment.
Under Oregon law, "[e]ven if a particular case fits into the narrow exception to the employment-at-will situation, the availability of a common law remedy is conditioned on the absence of adequate statutory remedies [and thus,] the availability of an adequate statutory remedy precludes a common law wrongful discharge claim." Washington v. Fort James Operating Co., No. CV-99-1300-JO, 2000 WL 1257267, at *7 (D. Or. Aug. 7, 2000).
Plaintiffs concede that the remedies available under O.R.S. 659.410 preclude a wrongful discharge claim based on retaliation for asserting workers' compensation rights. See Farrimond v. Louisiana Pacific Corp., 103 Or. App. 563, 567, 798 P.2d 697, 699 (1990) (O.R.S. 659.410 precludes a common law wrongful discharge claim because the statutory remedy is adequate and thus exclusive). Plaintiffs acknowledge that if they recover on their O.R.S. 659.410 claim, they cannot recover on a wrongful discharge claim based on a workers' compensation retaliation theory. Plaintiffs argue, however, that if they do not recover on that claim, they will not have adequate remedies available to them. Plaintiffs state that they will make an election of remedies at some point, perhaps in the pretrial order or at the time of verdict, to disclaim the wrongful discharge claim to the extent it is based on O.R.S. 659.410.
Neither party discussed Judge Ashmanskas's 1999 ruling in which he held that once the court concludes that one statutory claim precludes the common law wrongful discharge claim, there is no need to address whether any other statutory remedies also preclude the wrongful discharge claim.Underhill v. Willamina Lumber Co., No. CV-98-630-AS, 1999 WL 421596, at *4 (D. Or. May 20, 1999). There, the plaintiff brought a claim under the Americans with Disabilities Act (ADA), a claim under the Family Medical Leave Act (FMLA), a claim under Oregon's disability discrimination statute, and a common law wrongful discharge claim. Judge Ashmanskas concluded that the Oregon statutory disability discrimination claim precluded the wrongful discharge claim. Id. He then declined to address whether the presence of the ADA or FMLA claims also precluded the wrongful discharge claim because even if the remedies afforded by those statutes were inadequate, the "existence of one statutory remedy is sufficient to preclude a wrongful discharge claim[,]. regardless of whether the remedies under the FMLA or the ADA are similarly sufficient."Id. (citing Delaney v. Taco Time Int'l. Inc., 297 Or. 10, 16, 681 P.2d 114, 118 (1984)).
If I were to follow Judge Ashmanskas's reasoning, there would be no need to examine the remedies of the other three statutes at issue.Underhill, plaintiffs' concession that her wrongful discharge claim is precluded by her O.R.S. 459.410 claim would be enough to dismiss the wrongful discharge claim. I conclude, however, that either Underhill is distinguishable or, if not, that I must respectfully disagree with Judge Ashmanskas.
As noted, the plaintiff in Underhill brought, as statutory claims, a FMLA, an ADA, and an Oregon disability discrimination claim. Certainly, the same factual allegations formed the basis of the ADA and the Oregon disability discrimination claims. Although it is unclear from reading the case, it is possible that the same, or very similar, factual allegations formed the basis of the FMLA claim as well. If all the statutory claims were predicated on the same allegations, and the wrongful discharge claim was predicated on them as well, I agree that if the remedy for one of the statutory claims is adequate, there is no need to analyze the remedies of the other statutory claims because the same allegations are involved.
In the instant case, the allegations in support of the statutory claims are distinct, as are the theories and facts advanced in support of the wrongful discharge claim. Thus, if I read Underhill to hold that (1) when the same allegations and theories are advanced in multiple statutory claims and a wrongful discharge claim, and (2) one of the statutory claims provides an adequate remedy so as to preclude the wrongful discharge claim, then (3) there is no need to examine the remedies provided by the other statutory claims, Underhill is distinguishable from this case.
If however, the allegations in support of the claims in Underhill are distinct and the plaintiff there had independent theories with separate non-overlapping facts supporting the wrongful discharge claim, thenUnderhill is not distinguishable and I decline to follow it.
First, I fail to find support for the argument in Delaney. There, the plaintiff brought a wrongful discharge claim on the basis that he had been discharged for refusing to sign a false and possibly tortious statement casting aspersions on the habits and behavior of a former employee.Delaney, 297 Or. at 12-14, 681 P.2d at 115-17. There were no relevant statutory remedies available to plaintiff and the issue of the adequacy of one statutory remedy, much less the issue of whether examination of other relevant statutory remedies was warranted, was not discussed. Id. at 15-19, 681 P.2d at 117-19. The court, in its discussion of whether the facts alleged were sufficient to state a wrongful discharge claim, delineated three types of wrongful discharge claims, including what it called the "third category" where an "adequate existing remedy protects the interests of society so that an additional remedy of wrongful discharge will not be accorded." Id. at 16, 681 P.2d at 118. Delaney does not address the issue of whether one adequate statutory remedy precludes a wrongful discharge claim in the presence of other inadequate statutory remedies, where the basis of the wrongful discharge claim includes allegations related to all the relevant, but unrelated, statutory claims.
Second, I discern no sound basis for dismissing the wrongful discharge claim when there is a chance that plaintiffs will not prevail on the O.R.S. 659.410 claim (either before trial or upon a verdict). If they fail on that claim, and if the wrongful discharge claim is dismissed now, they may be left with statutory claims carrying inadequate remedies for the factual allegations supporting them, and no wrongful discharge claim to fill the gap. Because a common law wrongful discharge claim is recognized as an interstitial tort to provide a remedy when the conduct in question was unacceptable and no other [adequate] remedy was available, Draper v. Astoria Sch. Dist. No. 1C, 995 F. Supp. 1122, 1127 (D. Or. 1998), it should remain in the case if any of the other statutory claims are inadequate.
Therefore, having rejected the holding of Underhill, to complete the analysis of defendant's argument, I must examine the relief provided by the other three statutory retaliation claims. First, plaintiff asserts a claim under O.R.S. 653.060 which prohibits discrimination by an employer against an employee who has made certain wage complaints, has instituted proceedings regarding certain statutory wage provisions, or has testified in any such proceeding. Under O.R.S. 653.256, the Commissioner of Oregon's Bureau of Labor and Industries is given authority to assess a civil penalty not to exceed $1,000, for violations of O.R.S. 653.060.
Other than generally arguing that the statutory remedies are adequate or inadequate, the parties have not briefed the issue of the adequacy of the remedies for a violation of O.R.S. 653.060. Assuming arguendo that plaintiff has a private right of action to bring an O.R.S. 653.060 claim, I conclude that the statutory remedies which appear to provide no jury trial, no damages, and no equitable relief to plaintiff, are inadequate.
Plaintiff's next statutory claim is a whistleblower claim under O.R.S. 659.550. Plaintiff acknowledges that all of the common law remedies available in a common law wrongful discharge claim are available for violations of O.R.S. 659.550. See O.R.S. 659.121(2) (providing a jury trial, compensatory and punitive damages, and equitable relief for O.R.S. 659.550 claims). Nonetheless, plaintiff notes that O.R.S. 659.550 expressly provides that "[t]he remedies provided by this section are in addition to any common law remedy or other remedy that may be available to an employee for the conduct constituting a violation of this section." O.R.S. 659.550(4).
The parties have cited no cases interpreting this provision and I have found none. A review of the legislative history shows that Representative Hedy Rijkin, sponsor of House Bill 3435 which became O.R.S. 659.550, represented to the members of the House Labor Committee that the "-1 Amendment" to the bill made it clear that the provisions of the bill did not preclude any other remedies that may be available to an employee.Public Hearing on H.B. 3435 Before the House Labor Comm., 1991 Or. Legis (May 3, 1991). Previously, Oregon State Bar member (now Oregon Supreme Court Justice) Robert Durham explained to the committee that the "-1 Amendments" were intended to make it clear that there was no intention to have exclusive remedies or to take away any existing employee rights.Id. 1991 Or. Legis. Apr. 15, 1991). After hearing this testimony, the House Labor Committee adopted the "-1 Amendment" on May 15, 1991. Id., 1991 Or. Legis. (May 15, 1991). In testimony before the Senate Labor Committee, Representative Rijkin described that House Bill 3435 did not preclude other common law remedies available to the employee. Public Hearing on H.B. 3435 Before the Senate Labor Comm., 1991 Or. Legis (June 5, 1991). The bill, with the "-1 Amendment," was then passed by the Senate and signed into law by the Governor.
It is important to note that while subsection (1) of House Bill 3435 became O.R.S. 659.550, subsection (2) of the bill amended O.R.S. 659.121 (2) to insert O.R.S. 659.550 as one of the statutes for which O.R.S. 659.121(2) provided a remedy. Thus, the bill simultaneously gave an aggrieved employee filing suit under O.R.S. 659.550 the full panoply of remedies under O.R.S. 659.121(2) and expressly provided that no other common law or other remedies were precluded. In light of this history, I conclude that while O.R.S. 659.550 provides an adequate remedy as that concept is understood in the preclusion analysis, because of the Oregon Legislature's express intention that all other remedies remain available, O.R.S. 659.550 is not exclusive and plaintiffs may maintain their wrongful discharge claim along with the O.R.S. 659.550 claim.
Finally, the last statutory claim capable of precluding the wrongful discharge claim is plaintiffs' Fair Labor Standards Act (FLSA) retaliation claim brought under 29 U.S.C. § 215 (a)(3). An employer who violates section 215(a)(3) is liable for legal and equitable relief, "including without limitation employment, reinstatement, promotion, and the payment of wages lost and an additional equal amount as liquidated damages." 29 U.S.C. § 216 (b). Front pay may be awarded in lieu of reinstatement, even in the presence of a double damage award.Avitia v. Metropolitan Club of Chicago, Inc., 49 F.3d 1219, 1232 (7th Cir. 1995) Because the statute provides that the legal and equitable relief available is "without limitation," it may include compensatory and punitive damages. Travis v. Gary Community Mental Health Center, Inc., 921 F.2d 108, 111-12 (7th Cir. 1990); but see Snapp v. Unlimited Concepts, Inc., 208 F.3d 928, 934-35 (11th Cir. 2000) (rejectingTravis's holding on punitive damages); Lambert v. Ackerley, 180 F.3d 997, 1011 (9th Cir. 1999) (declining to address the issue of whether punitive damages are available under section 216(b)), cert. denied, 120 S.Ct. 936 (2000).
Given the array of remedies available for a section 215(a)(3) violation, I conclude that plaintiffs' statutory FLSA retaliation claim precludes a common law wrongful discharge claim based on the FLSA retaliation allegations.
In summary, plaintiffs' wrongful discharge claim is precluded to the extent it relies on allegations in support of an O.R.S. 659.410 claim and a 29 U.S.C. § 215 (a)(3) claim. To the extent plaintiffs' wrongful discharge claim is premised on allegations of whistleblowing under O.R.S. 659.550 and on retaliation for asserting certain wage-related rights under O.R.S. 653.060, the claim may continue alongside the statutory claims.
Finally, defendant properly notes that plaintiffs fail to allege that they were discharged for fulfilling a societal obligation or in retaliation for pursuing a job-related right which is an important public interest. See Draper, 995 F. Supp. at 1127 (explaining two circumstances in which wrongful discharge tort is implicated). Because such an allegation is required to state a wrongful discharge claim, plaintiffs' wrongful discharge claim should be dismissed for failure to plead the proper basis for the claim. The dismissal should be without prejudice to properly repleading the claim consistent with this Findings Recommendation.
I recommend that defendant's motion to dismiss (#27) be granted in part and denied in part as follows: that the motion be granted without prejudice as to the fraud claim, the Employer Liability Act claim, and the wrongful discharge claim; that the motion be granted with prejudice as to the gross negligence claim; and that the motion be denied as to the IIED and negligence claims as discussed above.
The above Findings and Recommendation will be referred to a United States District Judge for review. Objections, if any, are due October 24, 2000. If no objections are filed, review of the Findings and Recommendation will go under advisement on that date.
If objections are filed, a response to the objections is due November 7, 2000, and the review of the Findings and Recommendation will go under advisement on that date.