Opinion
Civil Action No. SA-03-CA-742 OG (NN).
June 21, 2004
MEMORANDUM AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
I. Introduction
The matter before the court is the motion to dismiss brought by defendant NCO Financial Systems, Inc. The motion was filed on January 16, 2004, and seeks dismissal of all the claims contained in plaintiff's complaint. Plaintiff's Original Petition (hereafter complaint), initially filed in state court and then removed to this court, alleged that defendant defamed plaintiff and wrongfully terminated him in violation of his federal due process and state due course rights.
Docket Entry 28. See also Docket Entry 29, Defendant's memorandum in support of its motion to dismiss.
Defendant seeks to dismiss the complaint on the basis that: (1) plaintiff's defamation claims are barred by the applicable statutes of limitations, or, alternatively, are non-actionable statements of opinion and/or are privileged; (2) plaintiff's wrongful termination claims are untenable because plaintiff was an at-will employee; and (3) plaintiff's due process claims cannot be a basis for relief because such claims are only viable against governmental entities and defendant is not a governmental entity.
Docket Entry 29.
Having reviewed the entire record in the case, including the arguments raised by defendant in support of dismissal, the evidence submitted by plaintiff through his reply and surreply to defendant's motion, and the applicable case and statutory authority, it is my recommendation that defendant's motion to dismiss be GRANTED pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiff has failed to state a claim for which relief could be granted.
Docket Entries 28, 29, 35.
Docket Entries 32, 43.
I have jurisdiction to enter this Memorandum and Recommendation under 28 U.S.C. § 636(b) and the District Court's Order referring all pretrial matters in this proceeding to me for disposition by order, or to aid in their disposition by recommendation where my authority as a Magistrate Judge is statutorily constrained.
Docket Entry 12.
II. Statement of the Case
Plaintiff worked for defendant NCO Financial Systems, Inc. (hereafter defendant) from May 1999 until October 2001. Plaintiff alleges, inter alia, that defendant wrongfully terminated him on October 22, 2001. Specifically, plaintiff's complaint avers that plaintiff was required to respond to false sexual harassment charges on June 25, 2001, in a meeting with Carol Giovino, an employee in NCO's corporate human resources department, and Reggie Dumas, NCO's Operations Manager. The complaint alleges that during the June 2001 meeting, plaintiff was confronted about the fact that he requested rides from his subordinates and, in other ways unspecified in the complaint, committed acts of sexual harassment. In order to keep his job, plaintiff was required to sign a document in which he acknowledged the warning about his unprofessional conduct, agreed to abide by the employee handbook, and promised not to request car rides from his subordinates in the future. The complaint further avers: that plaintiff was singled out for mistreatment, despite his high performance appraisals; that his actions neither violated company policy nor created a hostile work environment; and that other NCO employees, including Mr. Dumas, acted in worse ways than plaintiff but were never reprimanded. On October 22, 2001, NCO terminated plaintiff after he requested a ride from a subordinate.During his employ with NCO, plaintiff requested a ride from one of his subordinates, defendant David Lopez. While defendant Lopez was driving plaintiff to a location not specified in the complaint, they were involved in an automobile accident. As a result of the accident, plaintiff sued defendant Lopez. Plaintiff's attorney deposed defendant Lopez on June 11, 2002. In answer to some of the questions posed by plaintiff's attorney, defendant Lopez testified that he had heard that plaintiff had been: accused of sexual harassment; required to sign a document agreeing not to request rides from other NCO employees; and, eventually, terminated for asking for a ride. The complaint alleges that plaintiff learned of the aforementioned facts at his own deposition on July 3, 2002.
See, generally Petition; Petition, Exhibit 12.
Id.
See Petition, Exhibit 12.
Petition, at 25-26.
Based on the foregoing, plaintiff initiated a civil action in the 288th Judicial District of Bexar County, Texas, on June 27, 2003. Plaintiff's Original Petition sought relief for the following causes of action: (1) defamation; (2) violations of plaintiff's federal due process and state due course rights; and (3) wrongful termination. Defendant removed the action to this court on August 5, 2003.
Docket Entry 1.
Petition.
Docket Entry 1.
On May 21, 2004, I entered a Memorandum and Recommendation to Honorable Judge Orlando Garcia regarding plaintiff's motion to remand and defendant Lopez' motion to dismiss, recommending that this court exercise jurisdiction over the instant action (as both federal question and diversity jurisdiction exist) and dismiss plaintiff's complaint as to all claims brought against individual defendant David Lopez.
See Docket Entry 54.
III. Federal Court Jurisdiction
This court has jurisdiction pursuant to 28 U.S.C. § 1331, 1332.IV. Issues Presented
Whether plaintiff has stated a claim against defendant NCO Financial Systems, Inc. upon which relief might be granted?
V. Applicable Legal Standards
Defendant moves to dismiss plaintiff's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). Under Rule 12(b)(6), a plaintiffs claim may be dismissed for failure to state a claim upon which relief may be granted when, viewing the allegations in the plaintiff's complaint in the light most favorable to him and drawing all reasonable inferences in his favor, it appears certain that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Rule 12(b)(6) allows a court to eliminate actions that are fatally flawed in their legal premises and destined to fail, thus sparing the litigants the burdens of unnecessary pretrial and trial activity. Conclusory allegations or legal conclusions masquerading as factual allegations will not suffice to prevent a motion to dismiss under Rule 12(b)(6). In ruling on a motion to dismiss, a court should consider only those facts stated on the face of the complaint or incorporated into the complaint by reference, and matters of which judicial notice may be taken. If a complaint omits facts concerning pivotal elements of a plaintiff's claim, a court is justified in assuming the non-existence of those facts.
See Kaiser v. Aluminum Chem Sales, Inc. v. Avondale Shipyard, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982), cert. denied, 459 U.S. 1105 (1983); and Adolph v. Federal Emergency Management Agency, 854 F.2d 732, 735 (5th Cir. 1988).
See Spivey, Jr., v. Robertson, 197 F.3d 772, 774 (5th Cir. 1999).
See Fernandez-Montes v. Allied Pilots Assoc., 987 F.2d 278 (5th Cir. 1993).
See Lovelace v. Software Spectrum, Inc., 78 F.3d 1015, 1017 (5th Cir. 1996) and McNamara v. Bre-X Minerals Ltd., 57 F. Supp.2d 396, 417 n. 12 (E.D. Tex. 1999).
See Ledesma v. Dillard Dept. Stores, Inc., 818 F. Supp. 983 (N.D. Tex. 1993).
VI. Analysis
In the instant case, defendant moves for dismissal on the following grounds: (1) that plaintiff's defamation claims are barred by the applicable statutes of limitation and/or are not actionable because they are either privileged or statements of opinion; (2) that plaintiff's wrongful termination claim is not viable because plaintiff has failed to defeat the presumption of at-will employment and has failed to allege any facts negating the basis for his termination (i.e. that he requested a ride after being warned that continuing to do so would result in his termination); and (3) that plaintiff's due process claims cannot be maintained because neither defendant NCO, nor any of the individuals alleged to have violated plaintiff's due process rights, are governmental entities or actors. For these reasons, defendant argues that plaintiff's complaint should be dismissed in its entirety.1. Plaintiff has failed to state a defamation claim upon which relief might be granted.
The first issue before the court is whether plaintiff stated a defamation claim upon which relief might be granted. Defendant asserts that plaintiff's defamation claims cannot be maintained because they are either barred by the applicable statutes of limitation or are otherwise not actionable.
a. Certain of plaintiff's defamation claims are barred by the applicable statute of limitations.
Defendant's first challenge to plaintiff's defamation causes of action is that said claims are barred by the applicable statutes of limitation. Specifically, defendant argues
Any claims made based upon statements attributed to Giovino and Dumas in the meetings with Plaintiff on June 25, 2001 and October 22, 2001 are barred by the statute of limitations. Plaintiff was present at those meetings and knew about any statements at that time. Suit was not filed until June 27, 2003, two years after the first meeting and twenty months after the second meeting. Any statements made at those meetings fall outside the one-year limitations period and are barred.
Docket Entry 29, ¶ 33, at 8.
In Texas, the statute of limitations for libel and slander is one year. In general, "a defamation claim accrues when the matter is published or circulated." When the purported defamatory statement is not a matter of public knowledge, however, the discovery rule applies to toll the statute of limitations. Under the discovery rule, a defamation cause of action does not accrue (i.e. the statute of limitations does not begin running) until the injured party learns, or reasonably should have learned, of the alleged defamation. In other words,
Newsom v. Brod, 89 S.W.3d 732, 736 (Tex.App.-Houston [1st Dist.] 2002).
Id.
the discovery rule operates to defer accrual of a cause of action until a plaintiff discovers or, through the exercise of reasonable care and diligence, should discover the `nature of his injury'. . . . Thus, when the discovery rule applies, accrual is tolled until a claimant discovers or in the exercise of reasonable diligence should have discovered the injury and that it was likely caused by the wrongful acts of another. But once these requirements are satisfied, limitations commences, even if the plaintiff does not know the exact identity of the wrongdoer.
Childs v. Haussecker, 974 S.W.2d 31, 40 (Tex. 1998) (internal citations omitted).
Clearly, any alleged defamatory statements made in plaintiff's presence before June 26, 2002 (one year before plaintiff filed his Original Petition) cannot form the basis for a defamation cause of action because they are barred by the applicable statutes of limitation. The discovery rule would not apply to those statements because plaintiff would have reasonably discovered the injury at the time the alleged defamatory statements were made in his presence.
See Docket Entry 1.
However, the allegedly defamatory statements made by NCO personnel to defendant Lopez are not barred by the applicable statutes of limitations. Those statements are not time-barred because plaintiff's complaint has sufficiently alleged the requisite facts to invoke the discovery rule. Although defendant Lopez testified to the alleged defamation in his deposition on June 11, 2002 — a deposition taken by plaintiff's counsel — plaintiff did not discover the defamation until his own deposition on July 3, 2002. Plaintiff alleges
Further, even though Plaintiff has been represented by Counsel at the Deposition of June 11, 2002 ( sic), he, Plaintiff, on or about that same day, June 11, 2002, fired his Attorney, without finding out about the Defamatory Comments Defendant, DAVID REGINO LOPEZ, JR., had made at his Deposition, and when Plaintiff picked up his file from his then Attorney, David Regino Lopez, jr.'s ( sic) Deposition was not in the file provided. Thus, Plaintiff, ALBERT J. LEVARIO, First ( sic) learned of these Defamatory Statements about him on July 3, 2002.
See Petition, at 25.
Although the aforementioned allegations might be insufficient were the matter before the court a motion for summary judgment, they are sufficient for plaintiff to survive dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6) solely based on the statute of limitations. Plaintiff has alleged a reasonable basis for his delay in discovering the defamation injury for the purported acts of defamation which occurred outside his presence.
b. The statements for which plaintiff's defamation claims seek relief are not actionable.
Even if certain of the allegedly defamatory statements are not barred by the applicable statutes of limitation, they are, nevertheless, not actionable. In order to successfully plead and prove a defamation claim, a plaintiff must allege and establish that an individual published a defamatory statement which he knew, or reasonably should have known, was false. Because knowledge of the falsity of the statement is what gives rise to liability, truth is
See WFAA-TV, Inc. v. McLemore, 978 S.W.2d 568, 571 (Tex. 1998).
an absolute defense to a cause of action for defamation which, if proved, entirely defeats the plaintiff's claim.
See Van v. Anderson, 199 F. Supp. 550, 570 (N.D.Tex. 2002) (internal citations omitted).
In this case, plaintiff's complaint fails to allege facts which establish that the purported defamatory statements were untrue. In asserting the precise content of the defamatory statements, plaintiff's complaint avers that defendant Lopez stated he was told that
Plaintiff, ALBERT J. LEVARIO, was fired for violating NCO Company Policy, and states it was for sexual harassment, and that Plaintiff had signed a `CONTRACT' with Defendant NCO not to take rides with or from Defendant NCO CO-WORKERS.
Petition, at 22.
Plaintiff's complaint concludes that someone in upper management must have told defendant Lopez about the document regarding plaintiff's rides and the reasons for plaintiff's termination and that, in so doing, plaintiff was defamed. Plaintiff's complaint further asserts that plaintiff's termination — in and of itself — constituted a defamation, as it negatively impacted plaintiff's reputation in the collection industry.
See Petition, at 23.
Petition, at 24.
Although plaintiff alleged throughout the complaint that the defendants acted with reckless disregard for the truth and/or with knowledge of the falsity of their statements, those allegations are contradicted in other parts of the complaint and in plaintiff's other pleadings before this court. Plaintiff has admitted that: (1) he was required to, and did in fact, sign a document agreeing not to accept rides from his NCO co-workers because he had been accused of harassment and violations of NCO company policy; and (2) when plaintiff was terminated, the formal documentation stated that plaintiff continued to ask for rides from his subordinates and that said behavior, in light of the company's previous warnings regarding the same, constituted harassment and unprofessional conduct in violation of NCO company policy. Thus, according to plaintiff's own pleadings, the statements at issue were true. Since truth is an absolute defense to a defamation claim, plaintiff has failed to plead a claim upon which relief might be granted. For these reasons, I recommend that the court GRANT defendant's motion and DISMISS plaintiff's defamation claims.
Petition, at 12. See also Docket Entry 29, Exhibit B.
See Petition, Exhibit 1.
See Van v. Anderson, 199 F. Supp. 550, 570 (N.D.Tex. 2002) (internal citations omitted).
Notably, plaintiff has referred the court to the Turner v. KTRK Television decision for the proposition that, even if each of the individual statements comprising an overall impression are true, a party can still be liable for defamation if the impression conveyed by those statements — taken together — is false. See Docket Entry 32, at 4, citing Turner v. KTRK Television, Inc., 38 S.W.3d 103, 113-117 (Tex. 2000). When pieced together and read in an extraordinarily generous manner, the allegations in the complaint convey plaintiff's belief that: the sexual harassment allegations against him were false; he was terminated merely because one of his supervisors had a vendetta against him; and that, when unnamed NCO employees discussed the circumstances surrounding plaintiff's termination to unnamed third parties, they were "publishing" true statements that conveyed a false impression. However, in light of plaintiff's concessions (and contradictory allegations) throughout the pleadings — that plaintiff was warned that asking for rides from subordinates placed his job in jeopardy and constituted a violation of company policy regarding professional conduct, that plaintiff continued to ask for rides from his subordinates, and that plaintiff was fired for the same — the Turner rule is inapplicable to the instant case. See Turner, 38 S.W.3d, at 113-117; Petition. See also Docket Entry 35, at 4.
2. Plaintiff has failed to state a wrongful termination claim upon which relief might be granted.
Defendant's motion to dismiss also asserts that plaintiff's wrongful termination claim is not a claim upon which relief might be granted. Specifically, defendant argues
Plaintiff's claim for wrongful discharge should be dismissed because Plaintiff fails to rebut the presumption of employment-at-will. He does not show that NCO expressly, unequivocally, and directly limited its right to terminate Plaintiff without cause. The only `contact' that Plaintiff refers to, is his written commitment not to request rides from his subordinates and the NCO Employee Handbook provisions on Harassment and Unprofessional Conduct . . . In no way do these documents change the nature of Plaintiff's employment or limit NCO's right to terminate Plaintiff without cause. In addition, Plaintiff does not deny that he requested a ride from his subordinate Lopez after he received final warning. Under these circumstances, Plaintiff does not have a claim for wrongful discharge.
Docket Entry 29, ¶ 38, at 9.
In opposition to the motion to dismiss, plaintiff asserts that the letter of warning and agreement he signed, in which he agreed not to solicit rides from other employees, constituted a new employment agreement. Plaintiff contends
It is true that prior to Plaintiff signing a Contract not to accept rides, NCO could have terminated Plaintiff at-will without giving any explanation, however, once NCO decided to put wrong doing violations on paper, as part of Plaintiff's Personnel Record, that completely changed the situation, and permitted the filing, in Good Faith, of this Lawsuit . . .
Docket Entry 32, at 3. See also Petition, at 12.
Plaintiff also argues that the reasons given for his termination — his alleged sexual harassment and unprofessional conduct — were untrue and that none of his actions violated NCO company policy. Plaintiff asserts that he was terminated solely because individuals in NCO management did not like him.
Docket Entry 32, at 3. See also Petition, at 12.
Id.
Texas is an employment-at-will jurisdiction, meaning that there is a rebuttable presumption that any given employment relationship falls under the employment-at-will doctrine. The employment-at-will doctrine "mandates that a worker may be terminated without cause and at the will of either party." Unless the employment relationship or the circumstances surrounding termination of the employment relationship fall into one of several narrow exceptions, "an employer . . . may discharge an employee for any reason or for no reason at all."
See Duffy v. Leading Edge Products, Inc., 44 F.3d 308, 311 n. 2 (5th Cir. 1995); Pease v. Pakhoed Corp., 980 F.2d 995, 1000 (5th Cir. 1993).
Pease, 980 F.2d, at 1000.
Duffy, 44 F.3d, at 311, n. 2.
In order to rebut the employment-at-will presumption,
"an employment contract must directly limit in a `meaningful and special way' the employer's right to terminate the employee without cause." Rios v. Texas Commerce Bancshares, Inc., 930 S.W.2d 809, 815 (Tex.App.-Corpus Christi 1996, writ denied) ( quoting Massey v. Houston Baptist Univ., 902 S.W.2d 81, 83 (Tex.App.-Houston [1st Dist.] 1995, writ denied)). Stated another way,
`the employer must unequivocally indicate a definite intent to be bound not to terminate the employee except under clearly specified circumstances . . .' [This] Montgomery holding reflects the general understanding that at-will employment can only be altered by express provisions.
Hamilton v. Segue Software, Inc., 232 F.3d 473, 478 (5th Cir. 2000).
Id., at 479, quoting Montgomery County Hosp. Dist. v. Brown, 965 S.W.2d 501, 502 (Tex. 1998).
In the instant case, plaintiff has failed to sufficiently plead allegations which establish that defendant NCO unequivocally indicated a definite intent to be bound only to terminate plaintiff for cause. The new employment "contract" to which plaintiff refers in his complaint and his responsive pleadings is a "Job Discussion Summary" form. The form indicates that the "nature of the discussion" summarized therein is a final warning regarding plaintiff's conduct. The Summary explains the accusations made against plaintiff, why the behaviors of which plaintiff was accused constituted a violation of NCO company policy, and the remedial actions plaintiff was required to take in order to keep his job (namely, reviewing and understanding the EEO and Harassment and Unprofessional Conduct policy). Finally, the form warned plaintiff that he would be subject to termination if
See Docket Entry 29, Exhibit B.
Id.
Id.
the company at any time in the future has any occasion to question your conduct in relation to the above or if the company receives any information that you have retaliated in any way against any employee you believe may have made accusations about your conduct . . .
Id.
The form does not explicitly or impliedly alter plaintiff's previous employment agreement. Therefore, plaintiff has failed to rebut the presumption of at-will employment and has failed to state a legal claim for wrongful termination. NCO was free to terminate plaintiff at any time, for any legal reason or no reason at all.
See Hamilton, 232 F.3d, at 478.
Duffy, 44 F.3d, at 311, n. 2.
Moreover, plaintiff's allegations and arguments that he was treated differently (and worse) than other employees and that NCO's managers acted with actual malice in terminating him does not resuscitate the wrongful termination claim. Plaintiff has failed to plead any allegations establishing that defendant's purported favoritism or malice was illegally motivated. Absent such allegations, plaintiff has failed to state a legally cognizable claim for wrongful termination.
See Petition, at 11-12, 14; Docket Entry 32, at 3, 4.
Importantly, not every wrong has a legal remedy. An employer's arbitrary preference for one employee over another, unless illegally motivated, does not create a basis for legal liability.
Finally, plaintiff admits, at least in part, that he committed the act for which he was terminated. He requested a ride from a co-worker despite the warning that so doing placed his job in immediate jeopardy. In his response to the motion to dismiss, he stated
Plaintiff accepted a ride from a co-worker on October 16, 2001, because he felt that he was being singled out, with a Contract that was not justifiable, either standing alone, or as an extension of the COMPANY POLICY HANDBOOK of 2001 . . .
Docket Entry 32, at 4.
For all the foregoing reasons, I hereby recommend that defendant's motion to dismiss be GRANTED and plaintiff's wrongful termination claim DISMISSED pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiff has failed to state a claim for which relief might be granted.
3. Plaintiff has failed to state claims for violations of his due process and due course rights upon which relief might be granted.
Defendant also challenges plaintiff's claims for violations of his due process and due course rights and requests dismissal of the same. In particular, defendant argues
Plaintiff fails to state a claim for alleged denial of due process. Plaintiff alleges that Giovino's and Dumas' refusal to tell him who made complaints of sexual harassment against him violates his due process rights under the United States Constitution. The due process clauses in the Federal Constitution, however, only apply to governmental entities or actors. The due process clauses do not limit the actions of private persons or entities. Neither NCO, Giovino, nor Dumas are a governmental entity or actor. Accordingly, plaintiff's claims for alleged denial of due process should be dismissed.
Docket Entry 29, ¶ 39, at 10.
In response and opposition to the aforementioned argument, plaintiff appears to contend that the harm done to his reputation by defendant's purported defamation constituted an unlawful taking (e.g. a "taking" of his reputation) which is actionable under the Fifth and Fourteenth Amendments to the United States Constitution. Specifically, plaintiff argues
Despite Counsel for Defendant, NCO, and his position with regard to the DUE PROCESS CLAUSE, a taking of one's Reputation, (See Exhibits 3, 4 and 5, all speaking of Plaintiff's Good Reputation in the Collection Industry, as opposed to negative comments made by the Operations Manager, which truly demonstrate unprofessional conduct and sexual harassment, Exhibits 6, 7 and 8) the DUE PROCESS CLAUSE protects unlawful takings, such as one's Reputation, or causing Plaintiff to suffer financial injury, by the loss of his employment with Defendant, NCO, because the DUE PROCESS CLAUSE of the FIFTH AMENDMENT, makes the DUE PROCESS CLAUSE of the FOURTEENTH AMENDMENT AVAILABLE to the STATES, and the Individuals that reside therein.
Docket Entry 32, at 4. See also Petition, at 12.
Plaintiff's pleadings muddle the purpose and scope of the due process and takings clauses contained in the Fifth and Fourteenth Amendments. The purpose of the takings and due process clauses is to prevent the government from taking private property without either due process of law or just compensation. In order for plaintiff to state a claim upon which relief might be granted under those constitutional provisions, plaintiff must allege that defendant NCO was a governmental entity or that NCO's agents (Giovino and Dumas) were governmental actors at the time the purported wrongdoing occurred. Plaintiff has failed to allege the same and has failed to assert any viable theory or refer to any competent evidence that would make such an assertion plausible. For these reasons, it is my finding that plaintiff's claims for violations of his due process and due course rights are not claims upon which relief might be granted. As such, I recommend that said claims be DISMISSED.
See Garneau v. City of Seattle, 147 F.3d 802, 817-818 (9th Cir. 1998).
See Rendell-Baker v. Kohn, 457 U.S. 830, 837-838 (1982), "Similarly, the Fourteenth Amendment, which prohibits the states from denying federal constitutional rights and which guarantees due process, applies to acts of the states, not to acts of private persons or entities." Importantly, plaintiff's complaint alleged violations of both plaintiff's federal and state constitutional due process/due course rights. Plaintiff's responses to the motion to dismiss do not address his claims for violation of his due course rights under the Texas Constitution. However, plaintiff's state constitutional claims cannot be maintained for the same reasons his federal claims are irreparably defective. Claims for violations of an individual's due course rights are only viable against a state entity or actor. See Republican Party of Texas v. Dietz, 940 S.W.2d 86, 91 (Tex. 1997); Robison v. Earthgrains Baking Companies, Inc., 2001 WL 305846 (N.D. Tex. 2001).