Magee v. American Institute of Certified Public Accountants
245 F. Supp. 3d 106
D.D.C.2017Background
- Plaintiff Peter J. Magee, a CPA and long‑time member of the AICPA, was subject to a decade‑long Ethics Committee investigation based in the Institute’s North Carolina office arising from his work for a tribal client.
- Magee alleges the Ethics Committee subjected him to repeated document requests, denied him a hearing, threatened him with coercive "take it or leave it" resolutions, caused business and emotional harm, and imposed ongoing oversight.
- He sued the American Institute of Certified Public Accountants and several Ethics Division employees asserting negligence (two counts), negligent and intentional infliction of emotional distress, breach of fiduciary duty, and breach of the implied covenant of good faith and fair dealing.
- Defendants moved to dismiss under Fed. R. Civ. P. 12(b)(6). The parties and court applied District of Columbia law except that North Carolina law governed the negligent‑infliction claim.
- The court dismissed all claims except the breach of the implied covenant of good faith and fair dealing claim against the Institute, which was allowed to proceed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Negligence (two counts) | Magee claims Institute breached duties in investigating and disciplining him beyond bylaws, causing damages. | Institute: relationship is contractual via bylaws; no independent legal duty exists, so negligence fails. | Dismissed — plaintiff failed to plead a legally cognizable duty independent of the contractual bylaws. |
| Negligent infliction of emotional distress | Magee alleges prolonged oversight and harassment caused severe emotional harm. | Institute: no independent duty; in any event plaintiff fails to plead requisite severe emotional distress under applicable law. | Dismissed — North Carolina law applies and plaintiff failed to plead a legal duty and specific severe emotional/physical symptoms. |
| Breach of fiduciary duty | Magee alleges he reposed trust and confidence in the Institute, creating fiduciary obligations. | Institute: membership/bylaws do not create fiduciary duties; any fiduciary claim would be derivative against officers if at all. | Dismissed — allegations are conclusory; no authority that a professional membership organization owes fiduciary duties to members. |
| Intentional infliction of emotional distress | Magee contends Ethics Committee conduct was outrageous and caused severe distress. | Institute: conduct is not extreme/outrageous as a matter of law; comparable employer‑investigation cases were insufficient. | Dismissed — alleged conduct (prolonged investigation, burdensome requests) not extreme/outrageous under D.C. standards. |
| Breach of implied covenant of good faith and fair dealing | Magee contends Institute failed to follow its procedures, denying him contractual procedural protections and the fruits of membership. | Institute: procedures were properly applied; allegations do not show bad faith or arbitrary action. | Survived dismissal — plausible factual allegations that Institute failed to follow its own procedures, supporting a claim for breach of the implied covenant. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard: factual matter required to state a plausible claim)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (plausibility pleading standard)
- Meshel v. Ohev Sholom Talmud Torah, 869 A.2d 343 (D.C. 2005) (bylaws of an organization construed as contract between organization and members)
- Kerrigan v. Britches of Georgetown, Inc., 705 A.2d 624 (D.C. 1997) (employer investigation/fabricated evidence insufficient for IIED)
- Grimes v. District of Columbia, 89 A.3d 107 (D.C. 2014) (false reporting/publication insufficient for IIED)
- Paul v. Howard Univ., 754 A.2d 297 (D.C. 2000) (implied covenant of good faith and fair dealing and standards for bad faith)
- Allworth v. Howard Univ., 890 A.2d 194 (D.C. 2006) (interpretation of good faith and fair dealing)