Bye v. Augmenix, Inc., No. 2:2018cv01279 - Document 17 (W.D. Wash. 2018)
Court Description: ORDER granting in part and denying in part Defendant's 13 Motion for Judgment on the Pleadings. If Plaintiff chooses to file an amended complaint, she must do so within 30 days of the issuance of this order. Signed by U.S. District Judge John C Coughenour. (TH)
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Bye v. Augmenix, Inc. Doc. 17 THE HONORABLE JOHN C. COUGHENOUR 1 2 3 4 5 6 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 7 8 9 STEPHANIE BYE, 10 Plaintiff, CASE NO. C18-1279-JCC ORDER v. 11 AUGMENIX, INC., 12 13 Defendant. 14 15 This matter comes before the Court on Defendant’s motion for judgment on the pleadings 16 (Dkt. No. 13). Having thoroughly considered the parties’ briefing and the relevant record, the 17 Court finds oral argument unnecessary and hereby GRANTS the motion in part and DENIES the 18 motion in part for the reasons explained herein. 19 I. 20 BACKGROUND In June 2017, Plaintiff Stephanie Bye began working as a regional sales manager for 21 Defendant Augmenix, Inc. (Dkt. No. 1-1 at 2.) Defendant manufactures a medical device called 22 the SpaceOAR, which it sells to oncology practices across the United States. (Id. at 3.) Plaintiff 23 worked in the Pacific Northwest region under the direct supervision of Tony Viselli. (Id. at 2.) 24 A few months after beginning work, Plaintiff learned that a colleague was stealing money 25 from Defendant by submitting fraudulent travel reimbursements. (Id.) After conferring with a 26 senior executive from another region, Plaintiff confronted her co-worker and informed Mr. ORDER C18-1279-JCC PAGE - 1 Dockets.Justia.com 1 Viselli of the suspected theft. (Id.) Mr. Viselli was irritated that Plaintiff had contacted someone 2 outside the region, and told Plaintiff that he did not want to report the incident to human 3 resources. (Id. at 3.) 4 Around the same time, Plaintiff became aware of a scheme involving Mr. Viselli and 5 other co-workers that she believed violated state and federal law. (Id. at 3–4.) It was challenging 6 to sell the SpaceOAR to medical practices that did not have the compatible ultrasound 7 equipment—known as “Sonoscape”—needed to use the device. (Id. at 3.) In order to generate 8 more sales, Mr. Viselli and other sales representatives devised a plan where they would provide 9 prospective purchasers with the Sonoscape free of charge in order to induce them to purchase the 10 SpaceOAR. (Id. at 3.) Plaintiff believed that the employees involved in the scheme were 11 obtaining the Sonoscape from a co-worker’s side business and that some of these items were 12 being entered on expense reports as “demo” equipment. (Id. at 4.) 13 Although Defendant generally prohibited this type of conduct, Mr. Viselli and others took 14 steps to modify and expand their scheme. (Id.) When it became clear that Plaintiff was not going 15 to cooperate in the scheme, the employees involved sought to conceal their conduct. (Id.) They 16 created a fake email account to communicate about the scheme and avoided making any 17 references to the Sonoscape. (Id.) In January 2018, Plaintiff raised concerns about the Sonoscape 18 scheme to several of Defendant’s senior executives. (Id. at 5.) Plaintiff separately complained to 19 Mr. Viselli about multiple issues, including the unlawful, off-label use of products by certain 20 providers as well as possible Medicare fraud by another physician with whom Mr. Viselli 21 worked closely. (Id. at 5.) 22 In April 2017, 1 both Plaintiff and Mr. Viselli were temporarily restricted from accessing 23 Providence medical facilities due to an order requisition issue. (Id.) On May 4, 2018, Defendant 24 terminated Plaintiff for her purported “inability to follow directives and lack of professionalism 25 1 26 Based on the other allegations in the complaint, it appears this date should be April 2018. Plaintiff did not work for Defendant in April 2017. (Dkt. No. 1-1 at 2.) ORDER C18-1279-JCC PAGE - 2 1 with team and accounts.” (Id.) The month before being terminated, Plaintiff was ranked as one of 2 Defendant’s top three sales representatives. (Id. at 2.) Prior to being terminated, Plaintiff had 3 never received any write-ups, counseling, or warnings of any kind. (Id. at 5.) 4 Plaintiff believes that Defendant had grown tired of her voicing concerns about the 5 unethical and unlawful conduct of her co-workers, and therefore terminated her employment for 6 the pretextual reason that her access to Providence had been restricted. (Id.) Plaintiff further 7 alleges that Defendant’s reason was pretextual because another employee directly supervised by 8 Mr. Viselli was neither disciplined nor terminated for having his access privileges revoked at a 9 medical facility in California. (Id. at 6.) That employee was male and significantly younger than 10 Plaintiff. (Id.) 11 Plaintiff filed this lawsuit alleging the common law claim of unlawful termination in 12 violation of public policy, as well as disparate treatment discrimination on the basis of gender 13 and age pursuant to the Washington Law Against Discrimination (“WLAD”), Revised Code of 14 Washington section 49.60.030. (Dkt. No. 1-1 at 6–8.) Defendant moves for judgment on the 15 pleadings, arguing that Plaintiff has failed to plead sufficient factual allegations to make her 16 claims plausible. (See generally Dkt. No. 13.) 17 II. DISCUSSION 18 A. Judgment on the Pleadings 19 “After the pleadings are closed—but early enough not to delay trial—a party may move 20 for judgment on the pleadings.” Fed. R. Civ. P. 12(c). A motion for judgment on the pleadings is 21 “functionally identical” to a motion to dismiss for failure to state a claim pursuant to Federal 22 Rule of Civil Procedure 12(b)(6). Dworkin v. Hustler Magazine Inc., 867 F.2d 1188, 1192 (9th 23 Cir. 1989). As such, the Court must determine whether the complaint contains “sufficient factual 24 matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 25 556 U.S. 662, 678 (2009); see also Hansen v. Boeing Co., 903 F. Supp. 2d 1215, 1217 (W.D. 26 Wash. 2012) (applying Rule 12(b)(6) plausibility standard to resolve a Rule 12(c) motion). A ORDER C18-1279-JCC PAGE - 3 1 claim is plausible where the plaintiff “pleads factual content that allows the court to draw the 2 reasonable inference that the defendant is liable for the misconduct alleged.” Id. In conducting 3 this analysis, the Court must accept the complaint’s factual allegations as true and credit all 4 reasonable inferences arising from those allegations. Sanders v. Brown, 504 F.3d 903, 910 (9th 5 Cir. 2007). 6 B. Unlawful Termination in Violation of Public Policy 7 As a general rule, employees in Washington work at-will, meaning they can quit or be 8 fired for any reason. Gardner v. Loomis Armored Inc., 913 P.2d 377, 379 (Wash. 1996). The tort 9 of wrongful termination in violation of public policy is a narrow exception to the at-will doctrine. 10 White v. State, 929 P.2d 396, 408 (Wash. 1997). “To state a cause of action, the plaintiff must 11 plead and prove that his or her termination was motivated by reasons that contravene an 12 important mandate of public policy.” Becker v. Cmty. Health Sys., Inc., 359 P.3d 746, 749 13 (Wash. 2015) (emphasis added). The Washington State Supreme Court has outlined four factual 14 scenarios that implicate the wrongful termination tort. Id. The four scenarios are: 15 16 17 18 19 20 21 (1) when employees are fired for refusing to commit an illegal act, (2) when employees are fired for performing a public duty or obligation, such as serving jury duty, (3) when employees are fired for exercising a legal right or privilege, such as filing workers’ compensation claims, and (4) when employees are fired in retaliation for reporting employer misconduct, i.e., whistle-blowing.[2] Rose v. Anderson Hay & Grain Co. 358 P.3d 1139, 1142 (2015) (citing Gardner, 913 P.2d 377, 379). “Under each scenario, the plaintiff is required to identify the recognized public policy and demonstrate that the employer contravened that policy by terminating the employee.” Id. Plaintiff alleges that she was terminated in retaliation for reporting employer 22 23 24 25 26 2 Defendant incorrectly analyzes Plaintiff’s claim using the analytical framework first adopted by the Washington Supreme Court in Gardner. 913 P.2d at 382 (adopting the so-called “Perritt factors” to analyze “all public policy wrongful discharge torts.”). The Washington Supreme Court has since held that the Perritt factors do not apply when, as here, a case alleges one of the four recognized categories of wrongful termination in violation of public policy. See Martin v. Gonzaga Univ., 425 P.3d 837, 843 (Wash. 2018) (citing Becker, 359 P.3d at 746). ORDER C18-1279-JCC PAGE - 4 1 misconduct. 3 (Dkt. No. 1-1 at 6.) Plaintiff also alleges that she engaged in activities that further 2 Washington public policy, including “reporting corporate embezzlement, exposing an unlawful 3 sales scheme, and raising safety concerns about implantable medical products involved in that 4 scheme.” (Id.) Plaintiff additionally alleges that she “believed in good faith” that the conduct she 5 reported “was improper, unlawful, and unethical.” (Id.) Plaintiff asserts that Defendant 6 terminated her employment as a result of reporting this alleged misconduct to Mr. Viselli and 7 other corporate executives. (Id. at 5–7.) 8 To state a claim for wrongful termination based on whistle-blowing, courts “generally 9 examine the degree of alleged employer wrongdoing, together with the reasonableness of the 10 manner in which the employee reported, or attempted to remedy, the alleged misconduct.” 11 Dicomes v. State, 782 P.2d 1002, 1006 (Wash. 1989). An employer’s reported misconduct can 12 involve “either a violation of the letter or policy of [a] law, so long as the employee sought to 13 further the public good, and not merely private or proprietary interests, in reporting the alleged 14 wrongdoing.” Id. at 1008. 15 16 In reviewing the complaint, the Court identifies the following factual allegations that conceivably support Plaintiff’s whistle-blowing theory: 17 • 18 Defendant by submitting fraudulent travel reimbursements. Plaintiff told Mr. Viselli that her co-worker was stealing money from 19 • 20 Defendant’s senior executives. Plaintiff told these executives that “members of her 21 team were using Mr. Chamber’s ultrasound equipment as part an enticement for 22 would-be customers to purchase SpaceOAR.” Plaintiff also talked to these 23 3 24 25 26 Plaintiff voiced concerns about the Sonoscape scheme to several of In her response brief, Plaintiff also states that her claim is supported by “her refusal to commit an illegal act . . . because Viselli was upset she would not support and participate in his fraudulent scheme.” (Dkt. No. 14 at 8.) The complaint does not plausibly allege that Plaintiff was terminated for refusing to commit an illegal act. First, the complaint does not allege that Plaintiff refused to participate in the alleged scheme. Second, there are no factual allegations that Plaintiff was terminated because she refused to participate in the alleged scheme. ORDER C18-1279-JCC PAGE - 5 1 executives about “the conflict of interest inherent in an employee of Augmenix 2 supplying complimentary disposable and implantable equipment.” 3 • 4 unlawful, off-label use of products by certain providers as well as possible 5 Medicare fraud by another physician with whom Mr. Viselli worked closely and 6 separately.” 7 8 Plaintiff “complained to Mr. Viselli about multiple issues including the (Dkt. No. 1-1 at 2–5.) These allegations, even accepted as true, do not enable the Court to draw a reasonable 9 inference that Defendant retaliated against Plaintiff for reporting the alleged misconduct. First, 10 the complaint does not contain any allegations explaining how the misconduct Plaintiff reported 11 violated the letter or policy of a specific law or regulation. See Dicomes, 782 P.2d at 1008; see 12 also Martin, 425 P.3d at 844 (affirming summary judgment of wrongful termination tort 13 premised on a whistle-blowing theory where plaintiff failed to demonstrate how employer’s 14 failure to install wall-padding on basketball courts violated a clear mandate of public policy 15 articulated in a “court decision, statute, or regulation.”). It is not sufficient for Plaintiff to merely 16 allege that she “believed in good faith” that the conduct was “improper, unlawful, and 17 unethical.” (Dkt. No. 1-1 at 6); see Martin, 425 P.3d at 844 (“Even if [plaintiff] truly believed the 18 unpadded walls posed a danger to students, this does not change the analysis, as the focus for 19 whistle-blowing matters is on the employer’s level of wrongdoing, not [plaintiff’s] actions to 20 address what he perceived as wrongdoing.”). 21 Second, the complaint does not contain sufficient factual allegations to demonstrate that 22 Plaintiff was reporting misconduct of Defendant, as opposed to Defendant’s employees. 23 Plaintiff’s misconduct allegations pertain to her co-workers and Mr. Viselli. (See generally Dkt. 24 No. 1-1.) It is not clear from the complaint how the alleged misconduct of Plaintiff’s co-workers 25 represented misconduct on the part of Defendant, such that Plaintiff can maintain her claim that 26 she reported employer misconduct. See Martin, 425 P.3d at 843 (wrongful termination in ORDER C18-1279-JCC PAGE - 6 1 violation of public policy is implicated “where employees are fired in retaliation for reporting 2 employer misconduct.”). 3 In her response to Defendant’s motion to dismiss, Plaintiff addressed some of the 4 complaint’s deficiencies. (See generally Dkt. No. 14.) For example, Plaintiff lists various statutes 5 and policies that she believes were being violated by Defendant and its employees. (See Dkt. No. 6 14 at 9–12.) However, the Court cannot consider these allegations because they are not contained 7 in the complaint. See Cervantes v. City of San Diego, 5 F.3d 1273, 1274 (9th Cir. 1993) (noting 8 that a district court’s review of Rule 12(b)(6) motion is limited to the facts alleged in the 9 complaint). In its current form, the complaint does not contain sufficient allegations to plausibly 10 11 allege that Defendant retaliated against Plaintiff for reporting employer misconduct. For those reasons, Defendant’s motion for judgment on the pleadings regarding 12 Plaintiff’s wrongful termination in violation of public policy claim is GRANTED. Plaintiff’s 13 claim is DISMISSED without prejudice and with leave to amend. If Plaintiff chooses to file an 14 amended complaint, she must plead additional allegations that demonstrate Defendant violated 15 the letter or policy of a statute, regulation, or court decision, and that Defendant is responsible 16 for the reported misconduct. 17 C. 18 The WLAD prohibits employers from discriminating against any employee in either the 19 terms or conditions of employment on the basis of a protected characteristic, including age and 20 gender. RCW 49.60.180(3). To state a prima facie claim for disparate treatment discrimination 21 based on gender or age, a plaintiff must show that he or she: (1) belongs to a protected class, (2) 22 was treated less favorably in the terms or conditions of employment, (3) than a similarly situated, 23 non-protected employee, and (4) did substantially the same work as the nonprotected 24 comparator. See Washington v. Boeing Co., 19 P.3d 1041, 1048 (Wash. Ct. App. 2000) (citing 25 Johnson v. Dep’t of Social & Health Servs., 907 P.2d 1223, 1232 (Wash. Ct. App. 1996)). 26 Plaintiff alleges disparate treatment discrimination based on her gender and age by ORDER C18-1279-JCC PAGE - 7 WLAD Gender and Age Discrimination 1 Defendant. (Dkt. No.1-1 at 7–8.) Plaintiff alleges that Defendant’s stated reason for terminating 2 her—that her access to Providence medical facilities had been temporarily revoked—amounted 3 to discrimination because: 4 5 6 On information and belief, another Augmenix employee directly supervised by Mr. Viselli had his access privileges revoked at a medical facility in California. Unlike Ms. Bye, his employment was not terminated. In fact, he received no discipline at all. In addition to being male, he was significantly younger than Ms. Bye. 7 (Id. at 6.) In addition, the complaint alleges that Mr. Viselli had also been temporarily restricted 8 from accessing Providence medical facilities. (Id.) 9 The complaint plausibly alleges claims of disparate treatment discrimination on the basis 10 of gender and age. For the purpose of establishing her claims, Plaintiff was a member of a 11 protected class based on her gender and age, and the alleged comparator was both male and 12 “significantly younger” than Plaintiff. (Id.) The complaint plausibly alleges that Plaintiff was 13 treated less favorably than the alleged comparator when she was terminated for having her access 14 to Providence’s medical facilities restricted, as the comparator was neither terminated nor 15 disciplined for having his access restricted to a medical facility in California. (Id.) The Court can 16 draw a reasonable inference that Plaintiff and the alleged comparator were similarly situated and 17 did substantially the same work based on the allegation that they were both directly supervised 18 by Mr. Viselli and were both restricted from a medical facility. 19 Defendant argues that the complaint “lacks factual detail sufficient to support a plausible 20 inference that the unnamed comparator was ‘similarly situated’ to Bye or that Bye’s age or 21 gender motivated her termination.” (Dkt. No. 13 at 14.) Defendant goes on to list various reasons 22 to question whether Plaintiff and the alleged comparator were similarly situated, including that 23 Plaintiff was restricted from multiple medical facilities while the alleged comparator, according 24 to the complaint, was only restricted from one hospital. (Id.) 25 26 Defendant’s argument would require the Court to make factual distinctions that are not proper at this stage of the proceeding. See Edwards v. Marin Park, Inc., 356 F.3d 1058, 1062 ORDER C18-1279-JCC PAGE - 8 1 (9th Cir. 2004) (noting that for federal discrimination claims “[t]he prima facie case is ‘an 2 evidentiary standard, not a pleading requirement.’ . . . Failure to adduce it may result in a later 3 loss at summary judgment, but failure to plead it does not support dismissal at the outset.”) 4 (citation omitted). Plaintiff alleges that she was terminated because of something that also 5 happened to a younger, male colleague under the supervision of the same manager, yet he was 6 neither disciplined nor terminated. Such allegations are sufficient for the Court “to draw a 7 reasonable inference that Defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. 8 That is especially true when considering that Plaintiff alleges that she was one of Defendant’s 9 top sales representatives the month before she was terminated and had never been written up, 10 counseled, or warned prior to being fired. Whatever its merits, Defendant’s argument is better 11 suited for summary judgment. 12 For those reasons, Defendant’s motion for judgment on the pleadings regarding 13 Plaintiff’s WLAD claims is DENIED. 14 III. 15 CONCLUSION For the foregoing reasons, Defendant’s motion for judgment on the pleadings (Dkt. No. 16 13) is GRANTED in part and DENIED in part. If Plaintiff chooses to file an amended complaint, 17 she must do so within 30 days of the issuance of this order. If filed, the amended complaint shall 18 only include additional allegations regarding her claim for wrongful termination in violation of 19 public policy as explained in this order. 20 DATED this 30th day of October 2018. 23 A 24 John C. Coughenour UNITED STATES DISTRICT JUDGE 21 22 25 26 ORDER C18-1279-JCC PAGE - 9
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