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Meyer v. State

Court of Appeals of Oregon

July 5, 2018

Sarah MEYER and Gail Wooldridge, Personal Representative of the Estate of Martin Wooldridge, Plaintiffs-Appellants,
v.
STATE OF OREGON, by and through the Oregon Lottery, public bodies, Defendant-Respondent, and Jill GOLDSMITH, Larry Niswender, Tessa Sugahara, John Kroger, and Craig Durbin, Defendants.

          Argued and submitted September 27, 2016

          Marion County Circuit Court 12C23875 Courtland Geyer, Judge.

         William D. Stark argued the cause and fled the briefs for appellants.

          Jona J. Maukonen, Assistant Attorney General, argued the cause for respondent. Also on the brief were Ellen F. Rosenblum, Attorney General, and Benjamin Gutman, Solicitor General.

          Before DeVore, Presiding Judge, and Shorr, Judge, and A oyag i, Judge. [*]

          [292 Or.App. 648] Case Summary: Plaintiffs appeal from a general judgment dismissing their action against their employer, the Oregon State Lottery, and various other defendants, raising multiple assignments of error. First, plaintiffs assign error to the trial court's dismissal of their 42 USC section 1983 claims for failure to state a claim. Second, plaintiffs assign error to the trial court's dismissal of their claims for intentional interference with an economic relationship for failure to state a claim. Third, they assign error to the trial court's denial of their motions to compel production of certain documents created by an outside investigator during two workplace investigations. Fourth, they assign error to the trial court's grant of defendants' summary judgment motion as to plaintiffs' federal and state statutory retaliation claims. Held: First, the trial court did not err in dismissing the majority of plaintiffs' section 1983 claims because plaintiffs failed to plead ultimate facts that constituted those claims. However, the trial court erred by dismissing plaintiffs' section 1983 freedom of association claims. Plaintiffs adequately pleaded a violation of their right to be free of interference with their intimate relationship, and defendants were not entitled to qualified immunity on those claims. Second, the trial court did not err in dismissing plaintiffs' intentional interference with an economic relationship claims. Plaintiffs failed to plead ultimate facts to support those claims. Third, the trial court did not err in denying plaintiffs' motions to compel. The documents sought by plaintiffs were subject to work-product protection, and plaintiffs failed to demonstrate that those documents fell within an exception to that protection. Finally, the trial court erred by granting summary judgment to defendants on plaintiffs' retaliation claims. Plaintiffs established a genuine issue of material fact as to all elements of those claims insofar as those claims reached defendants' release to the media of an investigation report regarding plaintiffs' alleged misconduct and the issuance of disciplinary letters to plaintiffs.

          [292 Or.App. 649] SHORR, J.

         Plaintiffs, Sarah Meyer and Martin Wooldridge, appeal from a general judgment dismissing their action against defendants Oregon State Lottery (the Lottery), Jill Goldsmith, Larry Niswender, Tessa Sugahara, John Kroger, and Craig Durbin.[1] Plaintiffs assert five assignments of error. We reject plaintiffs' fourth assignment of error without written discussion and write only to address their remaining assignments. First, plaintiffs assign error to the trial court's dismissal of their 42 USC section 1983 claims for failure to state a claim. Second, plaintiffs assign error to the trial court's dismissal of their claim for intentional interference with an economic relationship for failure to state a claim. Third, they assign error to the trial court's denial of their motions to compel production of certain documents created by Goldsmith during the two investigations that she conducted. Finally, in their fifth assignment of error, plaintiffs assert that the trial court erred in granting defendants' summary judgment motion as to plaintiffs' federal and state retaliation claims.[2] As explained below, we reject plaintiffs' second and third assignments. However, with respect to their first assignment of error, we conclude that the trial court erred in dismissing plaintiffs' section 1983 claim alleging that Niswender and Sugahara violated their right to intimate association. Further, with respect to the fifth assignment of error, we conclude that the trial court erred in granting defendants' motion for summary judgment on certain aspects of plaintiffs' retaliation claims. As a result, we reverse and remand as to those claims and otherwise affirm.

         I. FACTUAL AND PROCEDURAL HISTORY

         We begin with a summary of the facts and procedural history. The relevant acts in this case occurred [292 Or.App. 650] between 2008 and 2011. Plaintiffs, who were involved in an extramarital romantic relationship, were both managers for the Lottery. Because of anonymous complaints received from various employees regarding their relationship and how it affected their work, the Lottery opened an investigation into plaintiffs' department and, specifically, into plaintiffs themselves. Goldsmith, an outside investigator hired by the Oregon Department of Justice (DOJ), performed the investigation. Sugahara, as an attorney for DOJ, oversaw the investigation. Kroger was the Attorney General at the time of the investigation.

         During the pendency of that investigation, Niswender, the Lottery's then director, placed plaintiffs on administrative leave with pay. After being placed on leave, Meyer filed a complaint with the Lottery's human resources department alleging that Niswender had previously sexually harassed her and other women and that the investigation and her placement on administrative leave were in retaliation for her resistance to his sexual advances. A concurrent investigation into Meyer's allegations was also held. Goldsmith also conducted that investigation.

         At the conclusion of both investigations, Durbin, the Lottery's Assistant Director for Security, issued plaintiffs disciplinary letters and allowed plaintiffs to return to work subject to increased supervision. Plaintiffs obtained Goldsmith's report regarding plaintiffs' department, but were never given a copy of Goldsmith's report regarding the investigation of Meyer's allegations against Niswender. Plaintiffs were given the opportunity to have a "name-clearing" hearing before the Lottery board in a public meeting; however, plaintiffs never took advantage of that opportunity. Sometime later, a copy of Goldsmith's report regarding plaintiffs' department was released to the media in response to a public records request.

         Plaintiffs subsequently filed the current action against defendants, asserting seven claims for relief. Three of those claims are relevant on appeal. They are (1) a claim that the Lottery unlawfully retaliated against plaintiffs because they engaged in protected conduct; (2) claims under section 1983 alleging that (a) Niswender and Sugahara [292 Or.App. 651] violated plaintiffs' right to equal protection, (b) Kroger failed to adequately train Sugahara, (c) Niswender, Sugahara, and Kroger violated plaintiffs' right to substantive and procedural due process, and (d) Niswender and Sugahara violated plaintiffs' right to freedom of association; and (3) a claim that Niswender intentionally interfered with plaintiffs' economic relationship with the Lottery.

         Defendants responded with a motion to dismiss the section 1983 claims and the intentional interference with an economic relationship claim for failure to state a claim. Defendants also moved to dismiss Niswender, Sugahara, Kroger, and Durbin from the complaint. The trial court agreed and dismissed those claims and those defendants. Discovery proceeded on plaintiffs' remaining claims, during which plaintiffs sought Goldsmith's report regarding her investigation of Meyer's complaint against Niswender, as well as the notes and documents that Goldsmith collected during both investigations. The remaining defendants refused to turn over those documents, and the trial court denied plaintiffs' multiple motions to compel production of those documents.

         At the conclusion of discovery, the remaining defendants sought summary judgment on plaintiffs' remaining sexual discrimination and retaliation claims. After a hearing, the trial court granted summary judgment to defendants.

         II. ANALYSIS

         As noted, we discuss four of the plaintiffs' assignments of error. Because those assignments involve different facts and law and are also subject to varying standards of review, we address each of them in turn below.

         A. 42 USC section 1983 Claims

         In their first assignment, plaintiffs argue that the trial court erred when it dismissed, under ORCP 21 A(8), the section 1983 claims for failure to state ultimate facts that constitute a claim.

         Plaintiffs explicitly alleged three claims for relief against defendants under section 1983: equal protection, [292 Or.App. 652] substantive due process, and failure to train. Plaintiffs also argued before the trial court and us that they intended to plead (and their complaint contains at least some text alleging) claims for violations of their right to procedural due process and their right to freedom of association. Before the trial court, defendants also treated plaintiffs' complaint as containing claims for violations of their right to procedural due process and freedom of association.

         Defendants filed a motion to dismiss the section 1983 claims under ORCP 21 A(8), arguing that none of the claims alleged by plaintiffs assert a federal constitutional or statutory right that was violated and that, even if they did, defendants were entitled to qualified immunity on those claims, because none of those rights were clearly established. In response, plaintiffs argued that they did allege violations of clearly established constitutional rights. The trial court agreed with defendants and dismissed all of plaintiffs' section 1983 claims.[3]

         When reviewing a trial court's decision to dismiss a claim under ORCP 21 A(8), we must determine if the "complaint *** contain[s] factual allegations that, if proved, establish the right to the relief sought." Moser v. Mark, 223 Or.App. 52, 57, 195 P.3d 424 (2008). When undertaking that task, we assume "all well-pleaded facts" in the complaint "are true and give plaintiff[s] the benefit of all favorable inferences that reasonably may be drawn from those factual allegations." Skille v. Martinez, 288 Or.App. 207, 209-10, 406 P.3d 126, adh'd to as modified on recons, 289 Or.App. 637, 407 P.3d 998 (2017) (internal quotation marks omitted).

         As noted, the claims at issue were brought under section 1983, which provides:

[292 Or.App. 653] "Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory or the District of Columbia, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress."

         "To state a claim for relief in an action brought under [section] 1983, [plaintiffs] must establish that they were deprived of a right secured by the Constitution or laws of the United States, and that the alleged deprivation was committed under color of state law." American Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40, 49-50, 119 S.Ct. 977, 143 L.Ed.2d 130 (1999).

         In this case, the trial court concluded that plaintiffs did not allege any constitutional or statutory violations and, thus, they failed to allege ultimate facts that, if proved, established a claim for relief. For the reasons stated below, we conclude that the trial court only erred in dismissing plaintiffs' freedom of association claim. Accordingly, we reverse and remand as to that claim and otherwise affirm.

         1. Equal protection

         In their section 1983 claim against Niswender and Sugahara, plaintiffs alleged that their right to equal protection under the Fourteenth Amendment to the United States Constitution had been violated.

         The Fourteenth Amendment provides, in part, that "[n] o State shall * * * deny to any person within its jurisdiction the equal protection of the laws." In some situations, courts have allowed plaintiffs to proceed when they allege an equal protection violation based on a "class of one"- i.e., "where the plaintiff alleges that she has been intentionally treated differently from others similarly situated and that there is no rational basis for the difference in treatment." Village of Willowbrook v. Olech, 528 U.S. 562, 564, 120 S.Ct. 1073, 145 L.Ed.2d 1060 (2000). However, "the class-of-one theory of equal protection has no application in the public employment context." Engquist v. Oregon Dept. of Agriculture, 553 U.S. 591, 607, 128 S.Ct. 2146, 170 L.Ed.2d [292 Or.App. 654] 975 (2008). As a result, to assert a claim that their right to equal protection was violated, plaintiffs cannot merely allege that they were "arbitrarily treated differently from other similarly situated employees, with no assertion that the different treatment was based on [their] membership in any particular class." Id. at 594.

         In this case, plaintiffs alleged only a "class-of-one" (or, in this case, arguably a class-of-two) equal protection violation. They did not allege that they were treated differently because of their membership in any particular class. Instead, they merely asserted that they were treated differently from "similarly situated persons" because of their association with one another without a basis in "legitimate public policy." Without an allegation that plaintiffs were members of a "distinct group [ ] of individuals," under Engquist, plaintiffs failed to state a claim for a violation of their constitutional right to equal protection. 553 U.S. at 605. Consequently, the trial court did not err in dismissing plaintiffs' section 1983 equal protection claim.

         2. Failure to train

         With respect to plaintiffs' section 1983 claim for "failure to train" against Kroger, failure to train a subordinate may serve as the basis for a section 1983 claim only where the failure to train amounts "to deliberate indifference to the rights of persons with whom" the subordinate came into contact. Connick v. Thompson, 563 U.S. 51, 61, 131 S.Ct. 1350, 179 L.Ed.2d 417 (2011) (internal quotation marks omitted; emphasis added).

         In support of their claim for "failure to train," plaintiffs alleged that

"Kroger failed to train and/or supervise Assistant Attorney General Tessa Sugahara to cause and facilitate an objective investigation by an objective investigator and negligently retained a contracted investigator, who was not qualified to investigate management practices."

         Those allegations are insufficient to state a claim under section 1983 because they contain no ultimate facts that, if proved, would indicate that Kroger's failure to train [292 Or.App. 655] Sugahara was the result of "deliberate indifference to the rights" of persons with whom Sugahara came into contact. Connick, 563 U.S. at 61 (internal quotation marks omitted). Consequently, the trial court did not err in dismissing plaintiffs' "failure to train" claim.

         3. Procedural and substantive due process

         In their section 1983 procedural and substantive due process claims against Niswender, Sugahara, and Kroger, plaintiffs alleged that they were wrongly subjected to an unwarranted investigation into their employment and forced to take paid administrative leave during that investigation. Further, they alleged that they were wrongly given disciplinary letters indicating that they could return to work but would be subjected to more intense supervision. Plaintiffs also alleged that, during this process, Sugahara "denied * * * plaintiffs an opportunity to learn of any allegations against them, in violation of Oregon law and Lottery policy that required notice of allegations within 7 days of any suspension and an opportunity to clear their name before publicizing the report." Finally, plaintiffs alleged that Sugahara conspired with defendants Goldsmith and Niswender "to produce a deliberately fabricated, misleading and false investigation report and engaged in actions to coerce * * * plaintiffs into returning the investigation reports (their own personnel records) by threatening to make the records public and then disclosing the reports in violation of Official Misconduct statutes."

         To establish either a substantive or procedural due process violation, plaintiffs must first show that they were deprived of a constitutionally protected liberty or property interest. See Board of Regents v. Roth, 408 U.S. 564, 569, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972) (noting that "[t]he requirements of procedural due process apply only to the deprivation of interests encompassed by the Fourteenth Amendment's protection of liberty and property"). Thus, to state a claim under section 1983 on a due process theory, a plaintiff "must begin by establishing that [he or she] had either a property or a liberty interest meriting constitutional protection." Wheaton v. Webb-Petett, 931 F.2d 613, 615 (9th Cir 1991). Plaintiffs failed to plead that they had either.

          [292 Or.App. 656] First, as federal appellate courts have explained, being placed on paid administrative leave during an investigation and being given a disciplinary letter does not implicate a constitutionally protected property interest absent a showing that plaintiffs suffered "loss of employment," "demotion," "loss of salary," or "loss of benefits." See Piscottano v. Murphy, 511 F.3d 247, 288 (2d Cir 2007) (holding that no property interest was harmed when a plaintiff was placed on fully paid leave during an investigation, was issued a formal disciplinary letter advising him that he would be subject to increased discipline if he violated the terms of his employment again, and did not suffer "loss of employment," "demotion," "loss of salary," or "loss of benefits"); see also Pitts v. Board of Educ. of U.S.D. 305, Salina, Kansas, 869 F.2d 555, 556 (10th Cir 1989) ("While suspension of a public employee without pay may infringe upon a property right, the two-day suspension with pay did not deprive Pitts of any measurable property interest." (Emphasis in original; internal citation omitted.)). Here, plaintiffs did not allege that they had suffered any loss of employment, demotion, loss of salary, or loss of benefits.

         Similarly, plaintiffs did not plead that defendants violated a constitutionally protected liberty interest. On appeal, plaintiffs argue, as they did to the trial court, that they had a liberty interest in not having their reputation damaged by the release of the report detailing their allegedly fabricated employee misconduct. However, "so long as *** damage flows [only] from injury caused by the defendant to a plaintiffs reputation," rather than from some other more tangible harm, that damage "may be recoverable under state tort law but is not recoverable" as a protected liberty interest. Siegert v. Gilley, 500 U.S. 226, 234, 111 S.Ct. 1789, 114 L.Ed.2d 277 (1990), reh'g den, 501 U.S. 1265 (1991), overruled in part on other grounds by Pearson v. Callahan, 555 U.S. 223, 129 S.Ct. 808, 172 L.Ed.2d 565 (2009); see also Lincoln Loan Co. v. City of Portland, 158 Or.App. 574, 583 n 11, 976 P.2d 60 (1999), rev den, 330 Or. 138, cert den, 531 U.S. 1013 (2000) (noting that, "by themselves, reputational interests are not 'liberty' interests within the meaning of the Due Process Clause and do not merit due process protections" (internal quotation marks omitted)); Krainski v. Nevada ex rel. Bd. of [292 Or.App. 657] Regents of Nevada System of Higher Educ., 616 F.3d 963, 971 (9th Cir 2010), cert den, 562 U.S. 1286 (2011) (same). Plaintiffs did not allege some more tangible interest attached to their reputational harm. Consequently, they failed to allege a liberty interest meriting constitutional protection.

         Accordingly, plaintiffs failed to assert ultimate facts constituting a claim for violation of their right to either substantive or procedural due process. Consequently, the trial court did not err in dismissing those section 1983 claims.

         4. Freedom of association

         Finally, with respect to plaintiffs' claim that Niswender and Sugahara violated plaintiffs' right to freedom of association under the First Amendment to the United States Constitution, we conclude that the trial court erred when it determined that plaintiffs did not plead a constitutional violation against those defendants. Because we also conclude that those defendants were not entitled to qualified immunity, the trial court erred in dismissing plaintiffs' freedom of association claim. As discussed below, we therefore reverse the trial court's dismissal of that claim against Niswender and Sugahara, but affirm its dismissal of that claim ...


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