854 F. Supp. 2d 577
N.D. Ind.2012Background
- Plaintiff Brad Mart sued Forest River and Peter Liegl seeking relief on breach of contract, SOX, retaliatory discharge, negligent misrepresentation, FMLA, and defamation claims; Berkshire Hathaway also faced dismissal on some claims.
- Berkshire acquired Forest River in 2005; Mart was hired as Forest River CEO under a written Employment Agreement dated October 31, 2007, with substantial compensation terms and relocation provisions.
- Mart moved to Granger, Indiana, and attempted to transition to CEO; discussions with Liegl about succession were contentious and did not resolve the leadership arrangement.
- Mart uncovered alleged unlawful transactions funded through Liegl’s shadow companies and reported these to Buffett, who promised to make Mart whole under Berkshire’s Code of Conduct.
- In fall 2008 Forest River announced Mart would become President, but in November 2008 he was terminated; emails from Forest River HR confirmed the termination and arranged logistics, including retrieving his chair.
- The court addresses motions to dismiss under Rule 12(b)(6) for state-law claims and Rule 12(b)(1)/(2)/(6) for federal SOX claim, applying liberal pleading standards and evaluating at-will versus definite-term employment theories.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the breach of contract claim viable given at-will status? | Mart asserts exceptions: adequate independent consideration and promissory estoppel rebutting at-will. | FR argues no definite term or adequate consideration; Code cannot create unilateral contract; at-will presumption stands. | Yes; breach survives as at-will with for-cause terms may apply under Indiana tests. |
| Did adequate independent consideration or unilateral contract theory defeat at-will status? | Reports of violations and Code protections constitute adequate independent consideration and create unilateral contract. | Courts require either definite term or valuable consideration; reporting wrongdoing is not adequate independent consideration; unilateral contract not supported. | Adequate independent consideration not found; unilateral contract theory not supported; at-will status remains applicable to limited terms. |
| Whether negligent misrepresentation lies against FR or Berkshire under Indiana law. | Employer’s misrepresentations induced relocation and reliance; Eby/Trytko/Abdulrahim support in employment context. | Eby limited; misrepresentation tied to future promises not sufficiently tied to employer-employee context; Code-based allegations not sufficiently similar. | Negligent misrepresentation may survive against FR but not against Berkshire; BT/Code-based claims narrowed. |
| Whether the SOX claim is subject to dismissal for failure to exhaust with OSHA within 90 days. | Plaintiff filed within 90-day window; termination date appropriate for deadline; reliance on 18 U.S.C. § 1514A. | OSHA exhaustion required; failure to exhaust deprives court of jurisdiction. | SOX claim is time-barred for lack of exhaustion; 90-day requirement applied. |
| Is Berkshire subject to SOX claims and is subject-matter jurisdiction proper given exhaustion issues? | Berkshire affiliated with Forest River; should be liable for retaliatory acts. | Lack of jurisdiction over SOX claims against Berkshire; same exhaustion issue applies. | SOX claims against Berkshire dismissed for lack of jurisdiction. |
Key Cases Cited
- Bartholet v. Reishauer A.G., 953 F.2d 1077 (7th Cir. 1992) (complaint may allege new facts/law in response to dismissal motion)
- Bonte v. U.S. Bank, N.A., 624 F.3d 462 (7th Cir. 2010) (failure to respond to arguments can constitute waiver of those issues)
- Orr v. Westminster Vill. N., Inc., 689 N.E.2d 712 (Ind. 1997) (identifies at-will and three exceptions: adequate independent consideration, public policy, promissory estoppel)
- Resistoflex Co. v. 854 F.2d 762, 854 F.2d 762 (5th Cir. 1988) (determines when termination notice is final for limitations purposes)
- Ricks v. Del. State College, 449 U.S. 250 (U.S. 1981) (limitations period begins when termination decision is communicated)
- Trytko v. Hubbell, Inc., 28 F.3d 715 (7th Cir. 1994) (negligent misrepresentation in employment context possible under Indiana law)
- Dvorak v. Mostardi Platt Associates, Inc., 289 F.3d 479 (7th Cir. 2002) (limits Eby-based negligent misrepresentation to specific facts)
- Westinghouse Electric Corp. v. EEOC, 725 F.2d 211 (3d Cir. 1983) (distinguishes termination notice and benefits/compliance timing)
- Monnig v. Kennecott Corp., 603 F. Supp. 1035 (D. Conn. 1985) (discusses need for specific termination date for notice)