OPINION AND ORDER
Defendants Forest River and Peter Liegl (“the FR defendants”) have moved to dismiss several of plaintiffs claims under Fed. R. Crv. P. 12(b)(6) (DE # 27) and Fed. R. Crv. P. 12(b)(1) (DE # 29). Defendant Berkshire Hathaway (“Berkshire”) has also moved to dismiss plaintiffs claims against it under Fed. R. Crv. P. 12(b)(1), Fed. R. Civ. P. 12(b)(2), and Fed. R. Civ. P. 12(b)(6). (DE #32.) In his amended complaint, plaintiff brought six claims in total. (DE # 5 at 15-21.) Count One is a breach of contract claim against Forest River. (Id. at 15-16.) Count Two is a Sarbanes-Oxley Act claim against each of the defendants. (Id. at 16-18.) Count Three is a retaliatory discharge claim against Forest River. (Id. at 18-19.)
FACTUAL BACKGROUND
Plaintiff Brad Mart sold real estate to defendant Peter Liegl in 2000, and the two later became friends. (DE # 5 at 5.) At that point Liegl was, and still is, the CEO of defendant Forest River. (Id. at 1.) In 2005, Mart analyzed defendant Forest River’s business to develop strategic alternatives for Liegl. (Id. at 5.) During this time, Mart came to believe that Forest River was the type of company that defendant Berkshire would find attractive. (Id.) With Liegl’s permission, Mart submitted a business overview of Forest River to Berkshire CEO Warren Buffet, and in August of 2005, Berkshire purchased Forest River, making Forest River a wholly owned subsidiary of Berkshire. (Id.)
After the acquisition, Liegl hired Mart to be the general manager of Forest River Financial Services, a new business unit at Forest River. (Id. at 6.) In the fall of 2007, Liegl told Mart that he (Liegl) was planning to retire, and asked Mart to take over as the CEO of Forest River. (Id. at 7) This move would have required Mart to move his family from Illinois to Indiana. (Id.) Although Mart was hesitant, Liegl eventually convinced Mart to take the position, and on October 31, 2007, Mart accepted the position of CEO of Forest River. (Id.) He entered into a written agreement
After accepting the position, Mart bought a house in Granger, Indiana. (Id.) From November 2007 to February 2008, Mart approached Liegl several times to discuss his transition to the CEO position, but Liegl refused to discuss the matter. (Id. at 8.) Mart eventually posed two questions directly to Liegl: (1) “Are you still planning to retire at the end of 2008?” and (2) “Are you still planning for me to be
During the Fall of 2008, Mart discovered that Forest River, acting through Liegl, and at least two other “shadow-companies” owned by Liegl, were engaging in unlawful transactions. (Id. at 9.) Mart realized that Liegl had been siphoning money from Forest River through a series of unlawful maneuvers. (Id.) Mart began to question this conduct, and got “pushback” from Liegl. (Id. at 10.) Mart believed some of this conduct violated federal law. (Id.) He also believed some of this conduct to be in violation of the Berkshire Hathaway Code of Business Conduct and Ethics (the “Code”) (DE # 93-1 at 12), and reported the conduct to Buffet. (DE # 5 at 11.)
In late 2008, Mart reported the violations to Buffet during a series of phone calls. (DE # 5 at 11.) During one of these phone calls, Buffet told Mart that only he (Buffet) had the authority to hire and fire the CEO of a Berkshire subsidiary. (DE # 94 at 3.) Buffet also told Mart that Mart would be made whole as a result of his reliance on the October 31, 2007, agreement. (Id.) Buffet made it clear to Mart that he should discuss these issues with Liegl, and that Mart and Liegl might have to resolve these issues by going to Omaha, with either Mart or Liegl likely not working at Forest River after that meeting. (Id.) During one of these conversations, Mart told Buffet he planned to meet with Liegl that same day, and Buffet wished him luck. (Id. at 3-4.)
After informing Buffet about the improprieties, Mart confronted Liegl directly. (DE # 5 at 11.) Liegl responded by verbally abusing Mart, including threatening Mart’s life. (Id.) After that encounter, Liegl began subjecting Mart to a hostile work environment. (Id.) Mart would not have approached Liegl if he had not received the assurance from Buffet that he would be made whole, and his belief that he would be protected by the Code. (DE # 94 at 4.) After Mart confronted Liegl, Buffet was no longer willing to discuss these matters with Mart. (DE # 5 at 15; DE # 94 at 4.) Despite these conversations, Buffet took no action after learning about this conduct. (DE # 5 at 11.)
In October 2008, Liegl made a company-wide announcement that Mart was taking over as “President” of Forest River. (Id. at 12.) This position did not previously exist, and Mart had been under the impression that he was sharing the role of CEO with Liegl until Liegl retired at the end of 2008. (Id.) Mart and Liegl sat down for a meeting on October 9, 2008, to discuss Mart’s transition into the CEO position. (Id.) However, the meeting became heated, and Liegl refused to discuss the matter further. (Id.) Finally, in a letter from Forest River dated November 19, 2008, Mart was informed he was being terminated. (Id.)
LEGAL STANDARD
Defendants have moved to dismiss plaintiffs claims under Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief may be granted. Rule 8 of the Federal Rules of Civil Procedure sets forth the pleading standard for complaints filed in
PLAINTIFF’S STATE LAW CLAIMS
I. The Forest River Defendants’ Motion to Dismiss
The FR defendants have moved to dismiss plaintiffs state law claims: breach of contract, retaliatory discharge, negligent misrepresentation, and defamation. (DE # 27.) In his response brief, plaintiff agrees to drop his retaliatory discharge and defamation claims. (DE # 93 at 2.) Therefore, only the breach of contract and negligent misrepresentation claims remain on this motion to dismiss.
A. Plaintiff’s Response Brief
As an initial matter, the FR defendants contend that Mart, in his response brief to the FR defendants’ motion to dismiss, improperly alleges new theories of contractual liability. (DE # 100 at 5-6.) The FR defendants allege that Mart has essentially amended his amended complaint through his response brief. (Id.)
“[I]t is axiomatic that the complaint may not be amended by the briefs in opposition to a motion to dismiss.” Car Carriers, Inc. v. Ford Motor Co.,
In Milazzo, the plaintiff brought an action claiming a violation of her procedural due process rights after she was terminated from her job working at a county circuit court. Milazzo,
In Milazzo, similar to the case at hand, the defendants argued the plaintiff should not be allowed to “assert new facts to bolster her complaint in her response” to the motion to dismiss. Id. The court allowed the plaintiff to assert these new facts, stating:
We find the words of Judge Easterbrook in Bartholet v. Reishauer A.G. (Zurich),953 F.2d 1073 , 1078 (7th Cir.1992), instructive here: “A complaint under Rule 8 limns the claim; details of both fact and law come later, in other documents.” We believe this approach harmonizesbest with the spirit of the Federal Rules of Civil Procedure. Milazzo’s complaint adequately describes her procedural due process claim, and she is not forbidden from alleging new facts, or even new legal theories about that claim, in her response brief.
Id. at 1340 (emphasis added).
In contrast, the FR defendants cite Cast Group of Companies, Inc. v. Electronic Theatre Controls, Inc., No. 08-cv-753-bbc,
The FR defendants argue that plaintiff introduces three entirely new theories of liability in his response brief: promissory estoppel, adequate independent consideration, and a claim based on Bochnowski v. Peoples Federal Savings & Loan Ass’n,
The Seventh Circuit has stated: “Rule 8(a) of the Federal Rules of Civil Procedure says that a complaint must identify the basis of jurisdiction and contain ‘a short and plain statement of the claim showing that the pleader is entitled to relief ” and that the “complaint need not identify a legal theory, and specifying an incorrect theory is not fatal.” Bartholet,
B. Plaintiffs Status As an At-Will Employee
In their motion to dismiss, the FR defendants first argue that plaintiffs claim
Plaintiff responds by claiming that he was not an at-will employee because of two exceptions to the at-will employment doctrine under Indiana law. (DE # 93 at 4-9.) He also contends that the anti-retaliation provision of the Code created a unilateral contract between Berkshire, Forest River, and plaintiff. (Id. at 5-6.) Finally, plaintiff argues that his contract was terminable, not terminated, in October 2008, thus making the at-will doctrine inapplicable to defendants’ breach. (Id. at 11-13.)
The court will begin its analysis of the breach of contract claim by analyzing whether plaintiff was an at-will employee. Under Indiana law, “[t]he determination of whether an employee is at-will is a legal determination.” Bee Window, Inc. v. Turman,
“When interpreting state law, a federal court’s task is to determine how the state’s highest court would rule.” Rodas v. Seidlin,
Under Indiana law, there are two basic types of employment: “(1) employment for a definite or ascertainable term; and (2) employment at-will.” Orr v. Westminster Vill. N., Inc.,
“[I]n order to convert employment at will to employment requiring good cause for termination, ‘independent consideration supplied by the employee, which results in detriment to him and a corresponding benefit to the employer, must be given in return for permanent employment.’ ” Orem v. Ivy Tech State Coll.,
[A]n employer cannot arbitrarily fire an employee when (1) the employer knows the employee had a former job with assured permanency (or assured non-arbitrary firing policies) and (2) was only accepting the new job upon receiving assurances the new employer could guarantee similar permanency. [GJood cause must be shown in order to terminate such an employee....
Romack v. Pub. Serv. Co. of Ind.,
Indiana Courts have identified fact scenarios in which the employee’s act or forbearance might provide adequate independent consideration sufficient to support an employment contract terminable only for good cause. See Romack v. Public Service Co.,511 N.E.2d 1024 (Ind.1987) (an employee surrendering his own permanent employment with the express understanding that he would not do so except for assurance from employer of receiving the same protections in the new job could provide adequate consideration); Ohio Table Pad Co. v. Hogan,424 N.E.2d 144 , 146 (Ind.Ct.App.1981) (an employee abandoning his own competing business could provide adequate consideration); Mt. Pleasant Coal Co. v. Watts,91 Ind.App. 501 ,151 N.E. 7 (Ind.Ct.App.1926) (conveying a valuable coal lease in exchange for employment could provide adequate consideration); Toni v. Kingan & Co.,214 Ind. 611 ,15 N.E.2d 80 (Ind.1938) (holding that releasing the employer from liability on a personal injury claim would constitute adequate independent consideration.)
No. 3:07cv017,
It is not entirely clear from plaintiffs response brief what adequate independent consideration he gave his employer. All plaintiff states is “[Mart’s reports of illegal or unethical conduct] not only placed Mart squarely under the protective umbrella of the Berkshire Code, they also brought into play [the adequate independent consideration exception to the at-will doctrine].” (DE # 93 at 4-5.) Plaintiff then proceeds to give a general description of the adequate independent consideration exception without explaining how it applies to his case. (Id. at 5.) Because plaintiff does not clearly put forth his argument as to why the adequate independent consideration exception applies, the court assumes from what little it has been given that plaintiffs argument is that the reports of alleged unethical and illegal behavior that Mart provided were enough of a detriment to him and a benefit to his employer that
The court finds that Mart did not provide adequate independent consideration by reporting the alleged violations so as to transform his employment status to for cause. The few Indiana cases that have found adequate independent consideration focused on the employee giving up a job with permanent job security or some other valuable asset. See Speekman v. City of Indianapolis,
The language of the Code itself lends plaintiff no support. The court may not usually consider matters outside of the pleadings on a motion to dismiss. Albany Bank & Trust Co. v. Exxon Mobil Corp.,
Although not stated expressly in his re
The Company’s directors, CEO, senior financial officers and chief legal officer shall promptly report any known or suspected violations of this Code to the Chairman of the Company’s Audit Committee. All other Covered Parties should talk to supervisors, managers or other appropriate personnel about known or suspected illegal or unethical behavior.
(DE # 93-1 at 15.) Mart did not provide adequate independent consideration to his employer by following the procedures described in the Code, thus changing his status from an at-will employee to a for cause employee. These actions are more in line with “continued services” than “adequate independent consideration.” As noted above, an employee simply continuing employment is not sufficient for the adequate independent consideration exception. McCalment,
There would be bizarre logical consequences if the court accepted plaintiffs position on this matter. If an employee could provide adequate independent consideration by reporting violations as set out in the Code, it seems that an employee could provide adequate independent consideration by reporting a potential conflict of interest or refraining from participating in insider trading. (DE # 93-1 at 12-14.) The court does not believe an Indiana appellate court would find any of these scenarios to constitute adequate independent consideration. The court cannot find, and plaintiff does not cite, an Indiana appellate decision that would support plaintiffs argument that an Indiana appellate court would recognize an exception to the at-will doctrine in this case. Additionally, the court is mindful of Indiana’s policy favoring at-will employment, and the reluctance of Indiana appellate courts to cut back the protections of the at-will doctrine. As the district court in Woodall v. AES Corp. aptly stated, “we must heed Indiana appellate courts’ frequent statements that any further exceptions to employment at will must come from Indiana’s General Assembly and not its appellate courts (and certainly not a federal court sitting in its district).” No. IP-02-575-C-B/S,
Plaintiffs next argument that he was not an at-will employee is based on a unilateral contract theory. Plaintiffs theory is that defendants Berkshire and Forest River made an offer via the Code by promising that no retaliatory action would be taken against anyone reporting illegal behavior, and plaintiff accepted that offer by reporting the alleged wrongdoing. (DE # 93 at 5-6.) Plaintiff alleges that this unilateral contract “limited Forest River’s rights as an at-will employer” and created a separate contract that both Forest River and Berkshire breached. (Id. at 5.)
Indiana courts have been extremely reluctant to allow employee handbooks
Although the Indiana Supreme Court has not expressly addressed whether a unilateral employment contract requires adequate independent consideration or whether an employee handbook can “ever constitute a unilateral contract serving to modify [an] otherwise at-will employment relationshipf,]” Orr,
The FR defendants direct the court to Campbell v. Eli Lilly & Co., in which the plaintiff argued that the provisions of an employee handbook constituted a covenant that became part of his conditions of employment.
Even assuming, arguendo, that the handbook relied upon by appellant constituted a part of the contract, in the absence of a promise on the part of the employer that the employment should continue for a period of time that is either definite or capable of determination, the employment relationship is terminable at the will of the employer.There being no binding promise on the part of the employee that he would continue in the employment, it must also be regarded as terminable at his discretion as well. For want of mutuality of obligation or consideration, such a contract would be unenforcible (sic) in respect of that which remains executory.
Id. at 1062 (quoting Shaw v. S.S. Kresge Co.,
Given the Indiana Supreme Court’s refusal in Orr to adopt a “broad new exception to the at-will doctrine,”
Plaintiff is asking the court to chip away at the protections provided by the at-will employment doctrine, but has provided no case law to support his argument that the Code created a unilateral contract limiting defendant Forest River’s rights as an at-will employer. The court’s own research was unable to unearth Indiana case law that would lead the court to believe that allowing plaintiffs claim to proceed would be anything other than a novel exception to Indiana’s at-will employment doctrine. Because the Indiana Supreme Court has not yet recognized that an employee handbook can constitute a unilateral contract, the court is unwilling to make any such exception.
Plaintiff also argues that the Code created a “separate contract that Forest River and Berkshire both breached.” (DE # 93 at 5.) Unfortunately for the plaintiff, he does not thoroughly develop this argument. Plaintiff essentially explains what a unilateral contract is and then proceeds to cite the “Carbolic Smoke Ball ”
One case from the Southern District of Indiana, Ward v. Independent Order of Foresters, which neither party cites, is on point. No. 1:04-CV-00676-SEBVSS,
Count 2 cannot be fairly read to assert that the Code of Ethics’ promise of whistleblower protection constituted an offer of a unilateral contract by [defendant] which [plaintiff] accepted by his performance of reporting Code violations. Even if it can be so read, the Indiana Supreme Court has expressly refused to recognize “a broad new exception to the at-will doctrine for employee handbooks.” Orr,689 N.E.2d at 719 .
Id. at *9 n. 8. The facts of Ward are extremely similar to the case at hand. Although only persuasive, the court agrees with the court in Ward, and does not believe that an Indiana appellate court would find a separate contract here.
Finally, plaintiff argues “[t]he lack of a stated term of employment in Mart’s employment contract did not mean that Mart and Forest River could not add a job security clause.... ” (DE # 93 at 4.) Plaintiff quotes the Indiana Supreme Court in Orr: “If the parties choose to include a clear job security provision in an employment contract, the presumption that the employment is at-will may be rebutted.” Orr,
Indiana case law does not support plaintiffs argument on this point. “[A]s a rule of contract construction, the employment at-will doctrine does not prevent job security provisions from becoming part of an at-will employment contract, so long as the parties intended them to be part of the employment contract and so long as the contract is otherwise enforceable.” Bentz Metal Prods. Co., Inc. v. Stephans,
Additionally, the facts of the case at hand are very different from the sole Indiana appellate decision the court could find enforcing a job security provision. Eck & Assocs., Inc. v. Alusuisse Flexible Packaging, Inc.,
C. Breach of Contract
In plaintiffs amended complaint, plaintiff alleges a breach of contract
The court agrees that plaintiff may no longer argue that the Agreement meets the four elements set out in Majd Pour. The Seventh Circuit’s decision in Bonte v. U.S. Bank, N.A., is instructive on this issue. In Bonte, the plaintiffs filed a claim against the defendant under the Truth in Lending Act seeking mortgage rescission. Bonte,
Under Indiana law, both employment for a definite term and employment at-will are considered contractual relationships. Whinery v. Roberson,
In Majd Pour, the plaintiff brought an action for breach of contract alleging that the defendant terminated him before the expiration of the contract. Majd Pour,
Similarly, in Firestone v. Standard Management Corp, a district court, sitting in the Southern District of Indiana, used the four-element test in analyzing whether the alleged contract created an at-will relationship or a relationship that was for a definite term requiring defendant to pay the plaintiff his salary beyond his discharge date, a bonus plaintiff was to receive at the end of his first year of employment, and a severance payment. No. 1:04-CV-1223-DFH-TAB,
In cases where a definite term was not part of the employment relationship, Indiana courts have used the traditional three-part test for determining the existence of an employment contract: “The elements of an employment contract are established by ‘[Employer’s] (1) offer to pay (2) consideration for the Employee’s services and (3) the Employee’s acceptance
In sum, the four-element Majd Pour test is used by Indiana courts to find a binding and enforceable employment contract for a definite term (creating a relationship where an employee can only be fired for cause), and the three factor test discussed in Williams is used to determine when the contractual relationship between employer and employee is at-will. See also Firestone,
These principles stand for the proposition that the fact that an employment contract is not for a definite term does not mean that all of its terms are unenforceable. Rather, the terms of an at-will employment relationship are enforceable as long as the at-will employment relationship continues. As a district court sitting in Massachusetts
A contract-at-will ... may contain binding terms that are effective during the life of the contract____Indeed, so long as an employment relationship exists, employer and employee may have strong reasons to define its terms.... While the agreement between them did not bind the defendant to employ plaintiff for any specified length of time, its terms defined the parties’ rights so long as plaintiff remained on the job.
Sargent v. Tenaska,
Because this is a motion to dismiss, the court must assume the truth of all allegations set out in plaintiffs amended complaint. See Hammond v. Kunard,
The court finds that an Indiana court would find that the parties entered into an at-will employment relationship, not an agreement for a definite term of employment, and therefore would enforce the agreement for as long as the relationship existed. See Williams,
D. Negligent Misrepresentation
The FR defendants contend that plaintiff has failed to state a cognizable claim for negligent misrepresentation. (DE # 30 at 8, DE # 100 at 3-5.) The tort of negligent misrepresentation is recognized in Indiana in the limited circumstance of the employer-employee relationship.
The primary elements of the tort of negligent misrepresentation are found in RESTATEMENT (SECOND) OF TORTS § 552 (1977), which limits responsibility to the following:
“(1) One who, in the course of his business, profession, or employment, or in any other transaction in which he has apecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.
(2) Except as stated in Subsection (3), the liability stated in Subsection (1) is limited to loss suffered
(a) by the person or one of a limited group of persons for whose benefit and guidance he intends to supply the information or knows that the recipient intends to supply it; and (b) through reliance upon it in a transaction that he intends the information to influence or knows that the recipient so intends or in a substantially similar transaction.
(3) The liability of one who is under a public duty to give the information extends to loss suffered by any of the class of persons for whose benefit the duty is created, in any of the transactions in which it is intended to protect them.”
Id. at 628-29 (emphasis in original).
In Eby, the plaintiffs brought a claim for negligent misrepresentation after the defendant’s employee told one of the plaintiffs there was a job waiting for him in another city. Id. at 625, 628-29. After moving to take the job, the plaintiff reported to work and found out that the employee who had offered him the job was no longer with the company, and the job was no longer available. Id. at 625. The court recognized the tort for the plaintiffs’ action and ruled that summary judgment should not have been entered for the defendant. Id. at 629-30.
Since the Eby decision, as the FR defendants point out, the Indiana Court of Appeals has limited the application of Eby to its own facts. For example, in Darst v. Illinois Farmers Insurance Co., the Indiana Court of Appeals stated: “[W]e decline to extend the tort’s application beyond the specific facts of Eby.” Darst,
Other courts have allowed plaintiffs in the employment context to bring claims for negligent misrepresentation. For example, in Trytko v. Hubbell, Inc., the plaintiff brought a claim for negligent misrepresentation against his former employer alleging negligent advice in regard to exercising certain stock options.
Similarly, in Abdulrahim v. Gene B. Glick Co., the plaintiff brought an action for negligent misrepresentation against his former employer.
Here, similar to the plaintiffs in Eby, Trytko, and Abdulrahim, plaintiff has alleged he relied on representations by his employer’s employee that plaintiff had a specific job with defendant Forest River (plaintiff believed he was made CEO on October 31, 2007, and was sharing the position with defendant Liegl until the end of 2008), and he moved his family to Indiana in reliance on this representation. (DE # 5 at 7, 12.) The court finds that an Indiana appellate court would allow a claim for negligent misrepresentation to survive a motion to dismiss under these circumstances. The facts of this case are similar enough to the facts of Eby, Trytko, and Abdulrahim, to warrant this conclusion.
Plaintiff also alleges that defendants’ violation of the Code by firing him and therefore retaliating against him for reporting violations of the Code constitutes negligent misrepresentation. {See id. at 19-20, DE # 93 at 16-17.) The court finds that this allegation is not factually similar enough to Eby to allow the claim to survive a motion to dismiss. Neither Eby nor any of the cases applying Eby lead the court to believe that an Indiana appellate court would find an actionable negligent misrepresentation claim based on alleged misrepresentations contained in a corporation’s code of ethics.
The FR defendants also contend that plaintiffs negligent misrepresentation claim must be dismissed because the alleged misrepresentations dealt with future conduct, and to be actionable, misrepresentations must deal with past or presently existing facts. (DE # 30 at 10-11.) The FR defendants point to the language of plaintiffs amended complaint in which plaintiff alleges that he was going to be named CEO in the future. {Id. at 11-12.) Even assuming the FR defendants’ legal argument here is correct, plaintiff, in the negligent misrepresentation portion of his amended complaint, incorporated all preceding paragraphs, including the paragraphs that alleged Mart was made CEO on October 31, 2007, effective immediately, and that Mart believed he was sharing the role of CEO with Liegl until the end of 2008. (DE # 5 at 7, 12, 19.) With these allegations, plaintiff sufficiently alleges a presently existing fact.
Finally, the FR defendants argue that plaintiff could not have justifiably relied on defendants’ representations because plaintiff was an at-will employee. (DE # 30 at 12-13.) However, in his response brief, plaintiff argues that he was not an at-will employee because of the promissory estoppel exception to the at-will doctrine set out in Orr. See Orr,
II. Defendant Berkshire’s Motion to Dismiss Plaintiffs Negligent Misrepresentation Claim
Defendant Berkshire argues that the tort of negligent misrepresentation does
One who, in the course of his business, profession, or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.
Eby, 455 N.E.2d at 628 (emphasis in original).
In his response brief, plaintiff does not address this argument, but instead directs the court to his response to the FR defendants’ motion to dismiss. (DE # 94 at 25.) That document does not make clear what false representations Berkshire made to plaintiff. (DE # 93 at 13-17.) Plaintiffs only argument that Berkshire committed negligent misrepresentation is that by adopting the code it promised not to take any retaliatory action against anyone submitting reports under the Code.
THE FR DEFENDANTS’ MOTION TO DISMISS PLAINTIFF’S SOX CLAIM
The FR defendants have moved under Fed. R. Civ. P. 12(b)(1) arguing that the court lacks subject matter jurisdiction over plaintiffs Sarbanes-Oxley Act (“SOX”) claim because plaintiff did not file a complaint with OSHA
Plaintiff correctly asserts that the date of an unlawful employment practice is a question of fact. (DE #91 at 7 (citing Flannery v. Recording Indus. Ass’n of Am.,
[I]f the complaint is formally sufficient but the contention is that there is in fact no subject matter jurisdiction, the movant may use affidavits and other material to support the motion. The burden of proof on a 12(b)(1) issue is on the party asserting jurisdiction. And the court is free to weigh the evidence to determine whether jurisdiction has been established. Factual findings rendered during this process are reviewed for clear error.
Id. (emphasis in original) (internal citations omitted); see also LaSalle Nat’l Trust, N.A. v. ECM Motor Co.,
The court may also look at whatever evidence has been submitted in making the jurisdictional determination. Apex Digital, Inc. v. Sears, Roebuck & Co.,
I. Facts
Plaintiff met with Jeff Rowe, Forest River’s director of human resources, on November 3, 2008. (DE # 31 at 5; DE # 91 at 6.) It isn’t clear what was said at that meeting. However, it is undisputed that plaintiff and Rowe started corresponding following the November 3, 2008, meeting. The post-meeting exchanges between plaintiff and Rowe began on November 4, 2008. On November 4, plaintiff emailed Rowe, stating in part:
As we discussed yesterday, I need to receive an email from you summarizing our conversation yesterday and clearly indicating that you are asking me not to report for work at Forest River.
(DE # 91-1 at 31.) Rowe responded with an email the same day. His email stated:
I haven’t had a chance to summarize our conversation yet, but this will confirm that there is no need to report for work at Forest River. As I stated yesterday, the decision had been made that you would no longer be employed by Forest River and it was my objective to discuss how we could, I believe the term I used was unravel the employment situation. I have also secured your personal chair, and will make arrangements to get that to you.
(Id. at 30.) Plaintiff responded that same day:
I realize that you have a big assignment here and I appreciate your efforts. Thanks for at least confirming in writing that you are asking me not to report to work at Forest River.
(Id.) The next email in this exchange was an email sent from plaintiff to Rowe on November 13, 2008. In that email, plaintiff wrote:
It has now been almost two weeks since we met at the hotel conference room onthe morning of November 3rd. In this meeting, we agreed that we would work toward a relatively quick resolution in your words to “unravel the employment situation[.]”
Can you please provide me with an update and/or Pete’s thoughts regarding potential next steps in timing[.]
(Id.) Rowe contacted plaintiff next on November 19, 2008, when Rowe sent plaintiff a letter.
This letter is to formally acknowledge that, as of January 1, 2009, you are no longer an employee of Forest River, Inc.
(DE # 91-1 at 33.)
II. Analysis
Plaintiff and the FR defendants agree that plaintiff met with Jeff Rowe, Forest River’s director of human resources, on November 3, 2008. (DE #31 at 5; DE # 91 at 6.) But the parties disagree on the significance of that meeting. Defendants contend Rowe told plaintiff his employment was terminated at that meeting. (DE # 31 at 5.) Defendants also argue that if the decision to terminate plaintiff was not clear to plaintiff on November 3, the email exchange on the between Rowe and plaintiff following day, November 4, 2008, informed plaintiff unequivocally that he had been terminated. (See DE # 99 at 4.) The FR defendants contend that the 90-day period began to run, at the latest, on November 4, 2008. (DE # 99 at 4.)
Plaintiff argues that he believed only Warren Buffet had the power to terminate him. (DE # 91 at 2.) He also argues that the November 4, 2008, email from Rowe was not clear about whether he had been terminated, but it instead indicated he was not welcome at the Forest River offices and that his employment situation would be “unraveled” at some future point. (Id.) Additionally, he argues that he did not believe that his exchanges with Rowe on November 3 and 4 were the official position of the company. (Id. at 10.) Mart therefore argues that the earliest trigger date for the 90-day period was November 19, 2008, the date that Rowe first sent Mart a letter. (Id. at 12-13.) Plaintiff filed his claim with OSHA on February 17, 2009. (DE # 5 at 17.) Therefore, if the court finds that the 90-day period to file a claim with OSHA started before November 19, 2008, plaintiff would not have filed his claim within the 90-day window, and the court would not have subject matter jurisdiction over his claim.
“Under federal discrimination statutes, the time for filing an administrative charge of employment discrimination begins running when a discrete unlawful practice takes place.” Rzepiennik v. Archstone-Smith, Inc.,
Under Seventh Circuit precedent, two elements must be shown in a discriminatory discharge case to establish the date of the “unlawful employment practice.” Flannery,
As to the first element of the Flannery test, although Rowe did not use the term “terminate,” the language he did use clearly indicated that a decision to terminate plaintiff had been made. Rowe wrote: “As I stated yesterday, the decision had been made that you would no longer be employed by Forest River.... ” (DE # 91-1 at 30.) This is undoubtedly evidence that a final decision had been made. As to the second element, the language Rowe used was sufficient to unequivocally notify plaintiff of the decision to terminate his employment. It may have been helpful for Rowe to use the word “terminate” or “terminated” at some point during this email, but the two-part test from Flannery does not require any particular language. All that test requires is a final, non-tentative decision to terminate is unequivocally conveyed to the employee. Flannery,
Plaintiff puts forth several arguments to try to avoid this result. Plaintiff first argues that a specific end date of employment must be given to constitute a notice of termination. (DE # 91 at 8.) Plaintiff cites to Monnig v. Kennecott Corp. in support of this argument.
Plaintiff also argues that in Mull v. ARCO Durethene Plastics, Inc., the Seventh Circuit recognized the holding from Monnig.
Plaintiff cites E.E.O.C. v. Westinghouse Electric Corp. in support of his position that a specific end date is required to constitute notice of termination.
[I]n Ricks, there was precise specificity as to the date of termination unlike the instant matter which is intertwined with uncertainty as to whether the employees were even informed as to when the layoff would actually take place. In contrast to Ricks, there is no evidence ... indicating that the ... employees received any notice-oral or written-of the actual date when the ... plant would be closed. Nor can we expect these employees to have had some mystical powers of omniscience whereby they knew the precise date management was to close the plant. It is conceivable that in February 1977, those employees who were not privy to management’s secrets might have been under the impression that the ... plant would not be closed for months or even years.
Id. at 220.
Westinghouse is distinguishable from the case at hand. Here, unlike in Westinghouse, plaintiff was told that his employment would be coming to an end. In Westinghouse, all that the employees were told during the counseling session was that they would not be eligible for these benefits when the plant eventually did close. See id. They were not laid off or put on administrative leave. Here, by contrast, plaintiff was told a decision had been made that he would no longer be employed, he was told not to report to work anymore, and he was told that arrangements would be made for him to retrieve his personal chair. (DE # 91-1 at 30.) This is a stark contract from Westinghouse, where the employees could have been under the impression that the plant would not “be closed for months or even years.” Westinghouse,
Plaintiffs next argument is that any notice of termination must indicate that it is the “official position” of the employer, and Rowe’s November 4 email to plaintiff failed to indicate that. (DE # 91 at 10-11.) In support of this proposition, plaintiff again cites to Monnig,
Plaintiff argues the November 4 email was not the company’s “official position” because it was not blessed by Buffet or Liegl, and because the Berkshire Code of Conduct protected him from retaliation. (DE # 91 at 10-11.) Although not clearly articulated in this portion of his brief (Id. at 10-11), plaintiff also appears to argue that he believed Buffet was the only one who could terminate him, thus preventing the November 4 email from constituting the company’s “official position” (See id. at 5). In order to determine whether plaintiffs “official position” arguments have any merit, the court must determine whether plaintiffs subjective beliefs about the November 4 email have any impact on this analysis.
In Ricks, the Supreme Court stated “the pendency of a grievance, or some other method of collateral review of an employment decision, does not toll the running of the limitations periods.” Ricks,
These two cases prompted one Seventh Circuit district court to come to the conclusion that “any subjective belief that the layoff decision was not final is simply not relevant.” Libri v. Quinn, No. 06-3167,
Plaintiff also argues that neither the November 3 meeting nor the November 4 email constituted a final, definitive, or unequivocal notice of plaintiffs termination, (DE # 91 at 11.) As noted above, “[djetermination of when notice has been communicated to an employee is based upon an objective standard, focusing upon when the employee knew, or reasonably should have known, that the adverse employment decision had been made.” Resistoflex Co.,
Several other courts have analyzed when final notice has been given to an employee. For example, in Economu v. Borg-Warner Corp., the district court dismissed the plaintiffs ADEA claim because it was untimely.
In contrast, in Clark v. Resistoflex Co., the Fifth Circuit reversed a district court that had held the plaintiffs ADEA claim was untimely. Resistoflex Co.,
Similarly, in Trumbull v. Health Care and Retirement Corp. of America, the defendant argued that a memorandum one of its regional directors issued recounting a visit to the plaintiffs job site and informing the plaintiff that his “continued employment ... [would] be based upon the findings during [job site visits]” triggered the ADEA limitations period.
The case at hand is significantly different from the Trumbull and Resistoflex cases, where notice was found to be lacking. Here, in contrast with Resistoflex, plaintiff was not told he was fired by his immediate supervisor. Resistoflex Co.,
Although there may be an argument that the “unravel the employment situation” language from Rowe’s November 4 email to plaintiff is similar to the “clarify his status” language the plaintiff in Resistoflex got from the personnel department, the fact remains that the plaintiff in Resistoflex had received mixed signals, and here, plaintiff did not. Resistoflex Co.,
Additionally, the language in Rowe’s November 4 email is not vague like the language in the memo in Trumbull. Trumbull,
Plaintiff argues that the policy behind requiring unequivocal notice to trigger the statute of limitations supports his argument. Plaintiff points to the Flannery court’s statement that: “Requiring employees like [plaintiff] to file EEOC charges on the basis of ambiguous conversations regarding termination would cause a flood of false charges; litigants would be
Plaintiffs next arguments come from the November 19, 2008, letter. (DE # 91 at 11.) Plaintiff argues that because a terminated employee has no leave rights, and because Rowe’s November 19 letter addressed plaintiffs eligibility for leave, plaintiff was not terminated on November 3. (DE # 91 at 11.) Plaintiff also argues that the November 19 letter did not address COBRA rights, “which would be indicative of a termination of employment.” (DE #91 at 11.) These arguments have no merit. The Seventh Circuit has stated: “[T]he significant date for purposes of Ricks and the limitations period is that date upon which the employee receives notice of termination and not the date upon which the termination becomes effective.” Mull,
Plaintiffs next argument is that if the November 3 meeting or the November 4 email had been sufficiently clear, there would be no need for the November 19, 2008, or January 9, 2009, letters. (DE # 91-1 at 11.) Additionally, plaintiff argues there would be no need to discuss plaintiffs eligibility for leave or COBRA rights if the meeting or email had been clear. (Id.) However, neither the January 9 letter nor anything plaintiff has alleged about the November 19 letter cast any doubt on the clarity of the November 4 email. (DE # 91-1 at 30) (“[T]he decision had been made that you would no longer be employed by Forest River.”).
Plaintiff further argues that his November 13, 2008, email to Rowe indicates that the notice of termination he received was not unequivocal.
Plaintiffs final argument is that the Tenth Circuit’s analysis in Rzepiennik v. Archstone-Smith, Inc. makes November 19, 2008, the earliest trigger date for the limitations period. Rzepiennik,
In their motion to dismiss, the FR defendants argue that plaintiff cannot invoke the doctrine of equitable estoppel to toll the 90-day filing deadline. (DE # 31-1 at 21-24.) The court need not address that argument, as plaintiff did not respond to it in his response brief. (DE # 91.) The FR defendants argue (DE # 99 at 11-12), and the court agrees, that because plaintiff has failed to respond to this argument, plaintiff concedes the doctrine of equitable estoppel does not apply in this case. Bonte,
In sum, because plaintiff had final, unequivocal notice of the termination decision on November 4, 2008, the claim he filed with OSHA on February 17, 2009, was not timely, and the court lacks jurisdiction to hear his claim. Because the court lacks jurisdiction over plaintiffs SOX claim on account of the 90-day filing period, it will not address the FR defendants’ argument that Forest River is not covered by SOX § 806. (DE # 31 at 7.)
BERKSHIRE’S MOTION TO DISMISS PLAINTIFF’S SOX CLAIM
Defendant Berkshire has moved to dismiss plaintiffs SOX claims against it. (DE # 32.) The same analysis from the section above applies here with regard to Berkshire’s motion. The court lacks subject matter jurisdiction over plaintiffs SOX claim against Berkshire. Therefore, plaintiffs SOX claim is dismissed under Fed. R. Civ. P. 12(b)(1). Because the court must dismiss this claim for lack of jurisdiction, and because the court is dismissing plaintiffs negligent misrepresentation claim against Berkshire, it need not address the remaining arguments in Berkshire’s brief in support of its motion to dismiss, including Berkshire’s argument that the court lacks personal jurisdiction over it. (DE # 32-1.)
CONCLUSION
For the foregoing reasons:
1. Forest River and Peter Liegl’s motion to dismiss plaintiffs state law claims (DE # 27) as the motion relates to plaintiffs breach of contract and negligent misrepresentation claims is DENIED.
2. The portion of Berkshire Hathaway’s motion to dismiss (DE # 32) that relates to plaintiffs negligent misrepresentation claim is GRANTED.
3. Forest River and Peter Liegl’s motion to dismiss plaintiffs Sarbanes-Oxley Act claim (DE # 29) is GRANTED.
4. The portion Berkshire Hathaway’s motion to dismiss (DE # 32) that relates to plaintiffs Sarbanes-Oxley Act claim is GRANTED. Because no claims remain against Berkshire Hathaway, it is dismissed from the case.
SO ORDERED.
Notes
. For purposes of deciding defendants’ RULE 12(b)(6) motions, the court accepts plaintiff's factual allegations as true. Erickson v. Pardus,
. The text of that written agreement is as follows:
Mart Employment Agreement
CEO, Forest River
October 31, 2007
Timing: Effective October 31, 2007
Annual Salary: $175,000 per year
Bonus: Forest River CEO annual bonus equal to 10% of the amount of Forest River's Profits in excess of $90 million.pFNl] For 2008, bonus guaranteed to be no less than the bonus Mart would have earned that year as General Manager of Forest River Financial Services. [FN1]: The profit calculation will exclude federal and state income taxes and Berkshire management fees and other Berkshire allocations or similar charges, if any, as well as amortization and/or depreciation of any purchase accounting adjustments recorded in connection with Berkshire's acquisition of Forest River, and such calculation shall be made using accounting principles consistent with past practices.
Relocation: Forest River to pay real estate agent fees and closing costs associated with selling the Mart family house in Elmhurst, IL. Forest River to pay moving expenses associated with moving the Mart family from Elmhurst, IL to the Elkhart area.
(DE # 5-1 at 1); see also Reger Devel., LLC v. Nat’l City Bank,592 F.3d 759 , 764 (7th Cir.2010) ("We consider documents attached to the complaint as part of the complaint itself.").
. This standard applies to the FR defendants and Berkshire's motions to dismiss under Rule 12(b)(6).
. Although Bochnowski is not mentioned anywhere in plaintiff's amended complaint, the Bochnowski argument is a breach of contract claim based on the Employment Agreement ("the Agreement”). (DE # 93 at 11-13.)
. As discussed later in this opinion, the FR defendants also argue that plaintiff’s negligent misrepresentation claim cannot survive because he was an at-will employee. (DE #30 at 12-13.)
. The FR defendants concede that plaintiff can survive the motion to dismiss on a claim for promissory estoppel. (DE # 100 at 5 n. 2.)
. As mentioned earlier, this part of Mart's response brief is not entirely clear as to his theory of adequate independent consideration. The court assumes his theory is that by reporting these alleged violations, Mart gave adequate independent consideration to his employer, thus changing his employment status to for cause.
. Although the Code is not labeled an employee handbook, plaintiff is arguing, similar to the employees in the employee handbook cases, that this document, a non-employment agreement document that sets out general guidelines for the employment relationship, has an impact on the employer-employee relationship. Accordingly, the court finds that the Code is legally analogous to an employee handbook for the purposes of this opinion.
. The Seventh Circuit has cast doubt on these broad statements by the Indiana Court of Appeals, noting a "line of Indiana cases that has enforced the terms of employee handbooks running in favor of employers on the issue of employees' entitlement to vacation pay upon termination.” Peters v. Gilead Scis., Inc.,
. The Indiana Supreme Court also stated: "[I]n Indiana, the presumption of at-will employment is strong, and this Court is disinclined to adopt broad and ill-defined exceptions to the employment-at-will doctrine.” Orr,
. In the "Carbolic Smoke Ball" case, a staple in first year law school classes, the defendant produced a carbolic smoke ball to fight influenza, and in an advertisement, promised £100 to anyone who contracted influenza or a cold after taking the carbolic smoke balls three times a day for two weeks. Carhill v. Carbolic Smoke Ball Co., (1893) 1 Q.B. 256, 256-257. The plaintiff, after seeing the advertisement, took the smoke balls as directed for well over two weeks, but still contracted influenza. Id. The court found the advertisement constituted an offer that the plaintiff accepted by following the directions set out in the advertisement. Id. at 261-65.
. Plaintiff also quotes Ryan v. J.C. Penney Co., Inc., where the Seventh Circuit stated: "Indiana indeed recognizes that an employment contract may be enforced as a valid unilateral contract although there is no mutuality of obligation.”
. Plaintiff's breach of contract claim asserts that even assuming he was an at-will employee, because the contract was terminable but not yet terminated, the provisions of the agreement were breached when defendants failed to make plaintiff CEO and failed to pay him his full compensation. (DE #5 at 15; DE #93 at 11-13.) This argument is based on the Indiana Supreme Court case Bochnowski v. Peoples Federal Savings & Loan Ass'n.
. In their motion to dismiss, the FR defendants also argued that the Indiana Statute of Frauds prevented plaintiff from using parol evidence to establish the period of employment element of Majd Pour. (DE # 30 at 5-7.) Plaintiff did not respond to this argument in his response brief. In their reply brief, defendants argue that because plaintiff makes no response to this argument, he has conceded its validity. (DE # 100 at 3.) The court agrees that the plaintiff cannot now try to supply the period of employment through the use of parol evidence. Bonte,
. When there is an absence of authority, relevant cases from other jurisdictions may be consulted. Amerisure, Inc. v. Wurster Const. Co., Inc.,
. To the extent that plaintiff’s contentions in his amended complaint that plaintiff "was to be named the CEO of Forest River, would act as CEO of Forest River” conflict with the employment agreement that indicated Mart was hired as CEO effective October 31, 2007, the employment agreement would trump the amended complaint. See N. Ind. Gun & Outdoor Shows, Inc. v. City of South Bend,
. There is still the possibility that plaintiff can rebut the at-will presumption with the promissory estoppel exception to the at-will doctrine. (DE # 100 at 5 n. 2.)
. In its motion to dismiss, Berkshire notes that negligent misrepresentation has also been recognized in the context of professionals giving opinions. (DE # 32-1 at 23.) The Indiana Supreme Court has weighed in on negligent misrepresentation in the professional context: "A professional may owe a duty to a third party with whom the professional has no contractual relationship, but the professional must have actual knowledge that such third person will rely on his professional opinion.” U.S. Bank, N.A. v. Integrity Land Title Corp.,
. Berkshire moved to dismiss plaintiff's negligent misrepresentation and SOX claims in
. For this part of Berkshire’s motion, the court accepts plaintiff's factual allegations as true. Erickson,
. Although plaintiff does not clearly make this argument in his state law response brief (DE # 93), to the extent that plaintiff is also attempting to argue that statements made by Buffet to plaintiff form the basis for a negligent misrepresentation claim (DE # 94 at 3-4), the court finds that an Indiana appellate court would not allow this claim to proceed, as it is too dissimilar to Eby and the cases following Eby. See Eby,
. Under § 1514A(b), someone alleging retaliatory discharge under SOX must first file a claim with the Secretary of labor. The Secretary of Labor has delegated the authority to handle these complaints to OSHA. Johnson v. Stein Mart, Inc.,
. The 90-day limit was in place when plaintiff filed his claim with OSHA. As of July 22, 2010, the statute allows 180 days for the filing of a complaint. 18 U.S.C. § 1514A(b)(2)(D) (2010).
. There seems to be discord in Seventh Circuit precedent as to whether the court is
Although these cases may seem to contradict each other, as long as the disputed facts concern whether the court actually has subject matter jurisdiction to hear the case, the court does not need to accept the factual allegations as true. Int'l Harvester Co. v. Deere & Co.,
. The facts relevant to defendants’ motions to dismiss under Fed. R. Civ. P. 12(b)(1) are significantly different from the facts relevant to defendants' Fed. R. Civ. P. 12(b)(6) motions. Thus, this section of the opinion has its own set of facts.
. This letter (DE # 92) was filed under seal because it is a privileged and confidential settlement communication. (DE #99 at 11 n. 4.) Any references to this letter and its contents have been taken from the parties’ briefs, which have not been sealed.
. In Ricks, the plaintiff, a professor at a state college, was denied tenure and filed a grievance with his employer’s grievance committee.
. Plaintiff believed Buffet was the only person that could terminate his employment. (DE #91 at 5.) Plaintiff asserts that Warren Buffet told plaintiff that he (Buffet) was the only person that could hire or fire a CEO of a Berkshire subsidiary. (DE # 94 at 3.) However, Buffet never appointed plaintiff to the position of CEO at Forest River. Plaintiff negotiated with Liegl over the CEO position (DE # 5 at 7), and plaintiff has not argued that Buffet had anything to do with plaintiff being hired as CEO. Additionally, plaintiff does not allege that Buffet told him that Liegl lacked authority to terminate plaintiff (DE #91 at 3); plaintiff only asserts that Buffet told him that Buffet had the sole power to hire or fire the CEO of a Berkshire subsidiary. (DE # 94 at 3.)
. Liegl had in fact made the decision to terminate plaintiff, and he directed Rowe to inform plaintiff of the decision. (DE # 31-1 at 2.) Additionally, plaintiff never questioned Rowe’s authority to terminate his employment in any of the emails Rowe and plaintiff exchanged. (DE # 91-1 at 30-31.)
. The Seventh Circuit has stated: "[A]n employer who communicates a willingness to later change a final decision of termination, as through an appeals process, does not render a decision ‘tentative’ and not final for the purposes of beginning the limitations period.” Flannery,
. The plaintiff actually sued his former employer and his former employer’s parent company. Economu,
. The text of that email stated:
It has now been almost two weeks since we met at the hotel conference room on the morning of November 3rd. In this meeting, we agreed that we would work toward a relatively quick resolution in your words to “unravel the employment situation!)] ” Can you please provide me with an update and/or Pete’s thoughts regarding potential next steps in timingf]
(DE # 91-1 at 30.)