Channon v. Tavanger
820 F. App’x 733
10th Cir.2020Background
- Channon, a software developer, contracted with Armada to provide iPhone app development services to TP-Link Research America (TPRA); TPRA and Armada had a separate agreement covering the work.
- A background check disclosed pending federal conspiracy and wire-fraud charges against Channon; he worked at TPRA for nearly two weeks after disclosure.
- TPRA terminated its agreement with Armada after learning of the charges; Armada then terminated its contract with Channon.
- Channon was later convicted of five counts of wire fraud.
- He sued the California defendants in federal court in New Mexico asserting (inter alia) a claim under Cal. Labor Code § 432.7(a), tortious interference, breach of contract, unfair business practices, and civil conspiracy; the district court dismissed all claims with prejudice under Rule 12(b)(6).
- The Tenth Circuit AFFIRMED the dismissal, granting Channon in forma pauperis status on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1. Whether Channon stated a claim under Cal. Lab. Code § 432.7(a) | §432.7(a) was misread; his arrest/detention was unlawfully considered in employment decision | §432.7(a) protects only arrests/detentions that did not result in conviction; Channon was convicted | Dismissed—§432.7(a) requires allegation that arrest did not result in conviction; Channon could not plead that given his later conviction |
| 2. Choice of law for tort and contract claims (counts 2, 4, 7) | District court should have applied New Mexico law to counts 2, 4, and 7 | New Mexico choice-of-law rules point to California law because alleged wrongs and contracting occurred in California | Affirmed—California law governs count 2 (tort), count 4 (contract), and count 7 (conspiracy) under New Mexico choice rules |
| 3. Alleged inconsistency between rulings on interference (count 2) and breach (count 4) | Court’s findings are mutually exclusive: TPRA could have economic interest yet not be in implied employment contract | TPRA can have an economic interest in the Armada contract while no express or implied employment contract existed with Channon | No conflict—express contractual term disclaimed TPRA employment, so implied-employment claim fails even if TPRA had economic interest |
| 4. Sufficiency of service of TPRA’s motion to dismiss | Motion was not properly served; failure to respond should excuse dismissal | TPRA served via the court’s e-filing system; Channon consented to service and did not revoke consent; court decided motion on merits | No reversible error—service was proper and court ruled on merits; any service defect did not affect substantial rights |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading must state a plausible claim to survive Rule 12(b)(6))
- Slater v. A.G. Edwards & Sons, Inc., 719 F.3d 1190 (10th Cir. 2013) (applying Iqbal plausibility standard)
- Smallen v. W. Union Co., 950 F.3d 1297 (10th Cir. 2020) (de novo review of Rule 12(b)(6) dismissal)
- Coll v. First Am. Title Ins. Co., 642 F.3d 876 (10th Cir. 2011) (federal courts must predict state law when no controlling decision exists)
- Pitman v. City of Oakland, 243 Cal. Rptr. 306 (Cal. Ct. App. 1988) (to state a §432.7 claim complaint must allege arrest did not result in conviction)
- Faigin v. Signature Grp. Holdings, Inc., 150 Cal. Rptr. 3d 123 (Cal. Ct. App. 2012) (express contract terms can preclude implied-contract claims on same subject)
- Pepsi-Cola Bottling Co. of Pittsburg, Inc. v. PepsiCo, Inc., 431 F.3d 1241 (10th Cir. 2005) (federal courts apply forum-state choice-of-law rules in diversity cases)
- Ettenson v. Burke, 17 P.3d 440 (N.M. Ct. App. 2000) (New Mexico law on tortious interference and requirement that conspiracy is not actionable alone)