Opinion
3:10-CV-452-ECR-VPC.
December 10, 2010
Order
Plaintiff in this case is Jowell Laguerre, the former Vice-President of Academic Affairs at Truckee Meadows Community College ("TMCC"). Defendants are Nevada System of Higher Education ("NSHE"), Plaintiff's former employer, and Maria Sheehan ("Sheehan"), an individual.
Now pending are Defendants' motion to dismiss (#6) and Defendants' motion to dismiss Plaintiff's first amended complaint (#8). Plaintiff has opposed (#11) the motion to dismiss Plaintiff's first amended complaint (#8), and Defendants replied (#13). The motions are ripe, and we now rule on them.
Defendants' motion to dismiss (#6) was never fully briefed because Plaintiff filed an amended complaint (#7), which rendered the motion to dismiss (#6) moot.
I. Factual and Procedural Background
Plaintiff was formerly employed by NSHE as Vice President of Academic Affairs at TMCC. In 2009, "all employees were offered a severance package of one year's worth of pay plus vacation." (Am. Compl. ¶ 2 (#7).) "Plaintiff was eligible and accepted." (Id.) Plaintiff alleges that, as a result, a contract between himself and TMCC was formed. The alleged contract "contained no prohibition against accepting future employment" and "Plaintiff obtained future employment." (Id. ¶ 3.) Because Plaintiff obtained future employment "Defendant failed and refused to comply with its obligation to fund the severance as agreed." (Id.) "In addressing this dispute regarding the breach of contract, Plaintiff and General Counsel for TMCC, representing that he had full authority of the president of TMCC, reached a compromise, a new contract or a novation, for the sum of $65,000. This formed a second contract." (Id. ¶ 4.) Subsequently, TMCC "required Plaintiff to leave early in order to receive the benefit of the contract. Plaintiff complained. Defendant then refused to perform under the second contract. . . ." (Id. ¶ 5.) Plaintiff "attempted to grieve these breaches to the Chancellor who deferred to the TMCC President." (Id. ¶ 7.)
Plaintiff also alleges that NSHE denied him emeritus status after nearly seven years of employment, and that others similarly situated who are not "African American, foreign born and black" did receive emeritus. (Id. ¶ 8.) In addition, Plaintiff alleges that "another similarly situated to Plaintiff who was not African-American, foreign-born and black received severance despite having future employment and others who obtained settlements were not required to leave early." (Id. ¶ 9.)
On June 23, 2010, Plaintiff filed a complaint in state court. On July 21, 2010, Defendants removed (#1) the action to federal court, invoking our federal question jurisdiction. On August 16, 2010, Defendants filed a motion to dismiss (#6). On August 17, 2010, Plaintiff filed an amended complaint (#7). On September 3, 2010, Defendants filed a motion to dismiss (#8) the amended complaint. Plaintiff opposed the motion and Defendants replied.
II. Motion to Dismiss Standard
A motion to dismiss under Fed.R.Civ.P. 12(b)(6) will only be granted if the complaint fails to "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). On a motion to dismiss, "we presum[e] that general allegations embrace those specific facts that are necessary to support the claim." Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992) (quoting Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 889 (1990)) (alteration in original). Moreover, "[a]ll allegations of material fact in the complaint are taken as true and construed in the light most favorable to the non-moving party." In re Stac Elecs. Sec. Litig., 89 F.3d 1399, 1403 (9th Cir. 1996) (citation omitted).
Although courts generally assume the facts alleged are true, courts do not "assume the truth of legal conclusions merely because they are cast in the form of factual allegations." W. Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981). Accordingly, "[c]onclusory allegations and unwarranted inferences are insufficient to defeat a motion to dismiss." In re Stac Elecs., 89 F.3d at 1403 (citation omitted).
Review on a motion pursuant to Fed.R.Civ.P. 12(b)(6) is normally limited to the complaint itself. See Lee v. City of L.A., 250 F.3d 668, 688 (9th Cir. 2001). If the district court relies on materials outside the pleadings in making its ruling, it must treat the motion to dismiss as one for summary judgment and give the non-moving party an opportunity to respond. FED. R. CIV. P. 12(d); see United States v. Ritchie, 342 F.3d 903, 907 (9th Cir. 2003). "A court may, however, consider certain materials — documents attached to the complaint, documents incorporated by reference in the complaint, or matters of judicial notice — without converting the motion to dismiss into a motion for summary judgment." Ritchie, 342 F.3d at 908.
If documents are physically attached to the complaint, then a court may consider them if their "authenticity is not contested" and "the plaintiff's complaint necessarily relies on them." Lee, 250 F.3d at 688 (citation, internal quotations, and ellipsis omitted). A court may also treat certain documents as incorporated by reference into the plaintiff's complaint if the complaint "refers extensively to the document or the document forms the basis of the plaintiff's claim." Ritchie, 342 F.3d at 908. Finally, if adjudicative facts or matters of public record meet the requirements of Fed.R.Evid. 201, a court may judicially notice them in deciding a motion to dismiss. Id. at 909; see Fed.R.Evid. 201(b) ("A judicially noticed fact must be one not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.").
III. Analysis
Plaintiff asserts five claims for relief. Defendants challenge each one. We will examine each claim in turn.
A. Breach of Contract: First Contract
Plaintiff's first claim alleges that NSHE breached a contract between himself and NSHE regarding severance. Defendants contend that Plaintiff has not pled facts in support of the first element of a breach of contract claim — the existence of a valid contract. Defendants argue that the offer at issue in this case, which Plaintiff alleges was extended to "all employees," (Am. Compl. ¶ 2(7)), is merely information distributed by NSHE regarding a so-called buyout program. Defendants attach the information — a memorandum sent via e-mail to all classified academic and administrative faculty regarding a buy out program ("the Memorandum") and a document entitled Buyout Questions and Answers ("Q A") distributed to the same list via e-mail (collectively, "the Information") — to their motion to dismiss and requests that we consider the documents in deciding the pending motion. Defendants contend that the Information does not constitute an "offer" within the meaning of the law and thus Plaintiff does not state a claim.
Plaintiff does not take issue with Defendants' characterization of the Information as the offer at issue nor does he object to our consideration of the Memorandum and Q A with respect to deciding this motion. He nonetheless contends that he states a claim for breach of contract.
Because the Memorandum and Q A apparently form the basis of Plaintiff's complaint, we will consider them. See Ritchie, 342 F.3d at 908. Defendants also request that we consider Plaintiff's employment contract in deciding this motion. We decline, however, to consider Plaintiff's employment contract and will not address Defendants' arguments based on its terms. The employment contract does not form the basis of Plaintiff's complaint. Defendants provide no authority that would militate in favor of its admissibility at this stage in the litigation.
To succeed on a breach of contract claim, a plaintiff must show four elements: (1) formation of a valid contract; (2) performance or excuse of performance by the plaintiff; (3) material breach by the defendant; and (4) damages. See Bernard v. Rockhill Dev. Co., 734 P.2d 1238, 1240 (Nev. 1987) ("A breach of contract may be said to be a material failure of performance of a duty arising under or imposed by agreement") (quoting Malone v. Univ. of Kan. Med. Ctr., 552 P.2d 885, 888 (Kan. 1976)).
"Basic contract principles require, for an enforceable contract, an offer and acceptance, meeting of the minds, and consideration." May v. Anderson, 119 P.3d 1254, 1256 (Nev. 2005). With respect to contract formation, "preliminary negotiations do not constitute a binding contract unless the parties have agreed to all material terms." Id. "[T]o enforce a contract at law, the offer must be sufficiently definite or must call for such definite terms in the acceptance, that the performance required is reasonably certain." Spellman v. Dixon, 63 Cal. Rptr. 668, 670 (Cal. App. 1967). In order to be sufficiently definite, the parties must have agreed to all material terms of a contract.Chung v. Atwell, 745 P.2d 370, 371 (Nev. 1987). "In determining whether a contract or its terms are definite, an important consideration is whether the court can determine [the putative contract's] exact meaning and fix the legal liability of the parties." Id. (internal quotation marks omitted) (alteration in original).
In this case, the offer at issue — the Memorandum and Q A — pertains to a voluntary program intended to reduce "the adverse impact of budget reductions." (The Memorandum at 1 (#8-1).) The Memorandum explains that in light of budget reductions, certain professional employees and classified staff are eligible to apply for participation in a so-called buyout program. (Id. at 2.) The Memorandum further indicates that those who apply and are chosen to participate in the buyout program will receive one year's salary, $7,500 and any annual leave accrual in exchange for their retirement and resignation. (Id.) The Memorandum explicitly states that "participation is subject to the approval of the appropriate Vice President or President, and the Cabinet on April 6, 2009 and that "funds may be approved for buy outs on a first come first served basis. . . ." (Id. at 1.) The Q A elaborates on the criteria for the buyout program and emphasizes that not all applicants to the program will be approved. Specifically, the Q A informs e-mail recipients that those employees who request buyouts will be informed if they've been approved by the end of April 2009. (Q A at 1 (#8-1).) Neither the Memorandum nor the Q A — considered separately or in conjunction — constitutes an "offer." Neither document is definite and neither call for definite terms in the acceptance. Spellman, 63 Cal. Rptr. at 670. The Memorandum and Q A merely furnish information to potential participants in the buyout program regarding the buyout program itself and the application procedures and criteria for participation. Plaintiff does not allege that he was approved for participation in the buyout program or that a definite offer was presented to him. Plaintiff may have interpreted the Information as an offer but contracts cannot be created by subjective expectations. See Vancheri v. GNLV Corp., 777 P.2d 366, 369 (Nev. 1989). Plaintiff's first claim thus fails and will be dismissed. B. Breach of Contract: Second Contract
Plaintiff's second claim alleges breach of the second contract or novation. Plaintiff's allegations with respect to the existence second contract are as follows: "In addressing this dispute regarding the breach of contract, Plaintiff and General Counsel for TMCC, representing that he had full authority of the president of TMCC, reached a compromise, a new contract or a novation, for the sum of $65,000. This formed a second contract." (Id. ¶ 4.) Plaintiff's allegations are insufficient to support the existence of a contract. Specifically, Plaintiff merely asserts the existence of a contract involving $65,000 without alleging facts that would permit an inference of contract formation. Plaintiff's second claim will therefore be dismissed.
C. Breach of the Covenant of Good Faith and Fair Dealing
Plaintiff's third claim requests tort damages for breach of the covenant of implied faith and fair dealing. An implied covenant of good faith and fair dealing is recognized in every contract under Nevada law. Consol. Generator-Nevada, Inc. v. Cummins Engine Co., Inc., 971 P.2d 1251, 1256 (Nev. 1998). To plead this tort, the plaintiff must allege: (1) plaintiff and defendant were parties to the agreement; (2) the defendant owed a duty of good faith to the plaintiff; (3) the defendant breached that duty by performing in a manner that was unfaithful to the purpose of the contract; and (4) the plaintiff's justified expectations were denied. Perry v. Jordan, 900 P.2d 335, 337 (Nev. 1995). Plaintiff alleges no facts indicating that NSHE performed any contract in a manner that was unfaithful to that contract's purpose; Plaintiff's third claim will be dismissed on that basis. D. 42 U.S.C. § 1981
Plaintiff's fourth claim alleges a violation of 42 U.S.C. § 1981. As the Supreme Court explains, 42 U.S.C. § 1981 "protects the equal right of `all persons within the jurisdiction of the United States' to `make and enforce contracts' without respect to race." Domino's Pizza, Inc. v. McDonald, 546 U.S. 470, 474-75 (2006). The phrase "make and enforce contracts" includes "the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship." 42 U.S.C. § 1981(b). To succeed on a section 1981 claim, a "contractual relationship need not already exist, because § 1981 protects the would-be contractor along with those who already have made contracts."Domino's Pizza, Inc., 546 U.S. 470 at 476.
Plaintiff's claim for discrimination appears to be based on two allegations: (1) "Defendant denied Plaintiff's emeritus status after nearly seven years of employment. Others similarly situated who were not African-American foreign-born and black did receive emeritus. This combined with the other adverse actions constitutes an adverse employment action." (Am. Compl. ¶ 8 (#7)) and (2) "Another similarly situated to Plaintiff who was not African-American, foreign-born and black received severance despite having future employment and others who obtained settlements were not required to leave early." (Id. ¶ 9 (#7).)
Plaintiff's allegations are sufficient to state a section 1981 claim. Although Plaintiff does not allege facts sufficient to permit the inference that a contract existed between himself and NSHE, the existence of a contract is not required to state a claim under section 1981. See Domino's Pizza, Inc., 546 U.S. at 476. Plaintiff identifies two potential contractual relationships and alleges that he was denied the benefits of these contracts because of his race. That is sufficient to state a claim under section 1981. Plaintiff's fourth claim thus survives this motion to dismiss.
The allegations do not specify whether emeritus status involves a contractual relationship. Nevertheless, for the purposes of a motion to dismiss, Plaintiff's claim passes muster.
E. First Amendment
Plaintiff's fifth claim alleges a violation of his First Amendment rights. This claim appears to only apply to Sheehan. Specifically, Plaintiff alleges that "Defendant Sheehan punished Plaintiff for complaining about official misconduct by ratifying the foregoing breaches." (Am. Compl.
Defendants urge us to conclude that Plaintiff does not state a claim under the Fifth Amendment for the conduct underlying his fifth claim for relief. Plaintiff, in his opposition, asserts that "there is no such claim in the first amended complaint." (P.'s Opp. at 3 (#11).)
The theory of ratification is available in section 1983 lawsuits to hold a municipality liable for a constitutional violation when an authorized policymaker approves a subordinate's decision and the basis for it. Lytle v. Carl, 382 F.3d 978, 987 (9th Cir. 2004). Plaintiff appears to graft the theory onto a First Amendment retaliation claim. This order is not intended to comment on the viability of such a theory in the First Amendment context. Defendants challenge Plaintiff's claim only on the basis that Plaintiff's speech is unprotected, not on the causal connection between the speech and the adverse employment actions at issue. Thus, we do not reach the issue of ratification.
The First Amendment prohibits state retaliation against a public employee for speech made as a citizen on a matter of public concern. Connick v. Myers, 461 U.S. 138, 147 (1983). Analysis of a First Amendment retaliation claim against a government employer involves a sequential five-step series of questions: (1) whether the plaintiff spoke on a matter of public concern; (2) whether the plaintiff spoke as a private citizen or public employee; (3) whether the plaintiff's protected speech was a substantial or motivating factor in the adverse employment action; (4) whether the state had an adequate justification for treating the employee differently from other members of the general public; and (5) whether the state would have taken the adverse employment action even absent the protected speech. Derochers v. City of San Bernardino, 572 F.3d 703, 708-709 (9th Cir. 2009).
Defendants challenge Plaintiff's fifth claim only on the basis that the speech at issue is not protected under the First Amendment. The speech at issue appears to be as follows: "Plaintiff attempted to grieve these breaches [of contract] to the Chancellor who deferred to he TMCC President." (Am. Compl. ¶ 7 (#7).) Plaintiff re-frames the speech in more general terms later in the complaint, suggesting Plaintiff may have grieved TMCC's actions with respect to other employees as well as himself: "Plaintiff pointed out the refusals of public officials in a public agency to follow through on their agreements with employees." (Id. ¶ 31.)
"Speech that deals with individual personnel disputes and grievances and that would be of no relevance to the public's evaluation of the performance of governmental agencies" Coszalter v. City of Salem, 320 F.3d 968, 973 (9th Cir. 2003) (internal quotation marks and citation omitted). Nevertheless, Plaintiff's allegations regarding the relevant speech are too vague for us to determine whether Plaintiff's speech falls with in Coszalter's proscription or was on a matter of public concern. Plaintiff does not allege precisely what he said nor does Plaintiff allege facts regarding the context of the alleged speech. It would be premature to conclude, as Defendants urge, that Plaintiff's speech was unprotected as a matter of law. See Henkle v. Gregory, 150 F. Supp. 2d 1067, 1075 (D. Nev. 2001) (declining to dismiss First Amendment claim at the motion to dismiss stage). Plaintiff's fifth claim thus survives the present motion to dismiss.
IV. Leave to Amend
Under Rule 15(a) leave to amend is to be "freely given when justice so requires." In general, amendment should be allowed with "extreme liberality." Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 712 (9th Cir. 2001) (quoting Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990)). If factors such as undue delay, bad faith, dilatory motive, undue prejudice or futility of amendment are present, leave to amend may properly be denied in the district court's discretion.Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051-52 (9th Cir. 2003).
In light of the liberal spirit of Rule 15(a), we will give Plaintiff leave to amend. If the amended complaint is similarly deficient however, further leave to amend may be denied. If Plaintiff chooses not to amend the complaint, this case will proceed with respect to Plaintiff's fourth and fifth claims.
V. Conclusion
Plaintiff's first and second claims for breach of contract do not survive the present motion to dismiss because Plaintiff does not allege facts sufficient to permit the inference that a contract existed. Plaintiff's third claim for the breach of the implied covenant of good faith and fair dealing fails because Plaintiff alleges no facts indicating that NSHE performed any contract in a manner that was unfaithful to that contract's purpose. Plaintiff's fourth claim alleging a violation of 42 U.S.C. § 1981 survives the present motion to dismiss because Plaintiff identifies two potential contractual relationships and alleges that he was denied the benefits of these contracts because of his race. Plaintiff's fifth claim alleging First Amendment retaliation likewise survives the present motion to dismiss because it would be premature to conclude at this stage that the speech at issue is not of public concern. Plaintiff will be given leave to amend his complaint.
IT IS, THEREFORE, HEREBY ORDERED THAT Defendants' motion to dismiss (#6) is DENIED as moot.
IT IS FURTHER HEREBY ORDERED THAT Defendants' motion to dismiss (#8) is GRANTED in part and DENIED in part on the following basis: Plaintiff's first, second and third claims are dismissed. Plaintiff's fourth and fifth claims survive this motion to dismiss. Plaintiff shall have twenty-one (21) days within which to file an amended complaint. If Plaintiff chooses not to file an amended complaint this case will proceed with respect to the claims not dismissed by this order.
DATED: December 9, 2010.