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Gros v. Walker County Hospital, Corp.

United States District Court, S.D. Texas, Houston Division

August 5, 2019

GUY GROS and ELIDA CERVANTES-GROS, Plaintiffs,
v.
WALKER COUNTY HOSPITAL, CORPORATION D/B/A HUNTSVILLE MEMORIAL HOSPITAL, Defendant.

          MEMORANDUM, RECOMMENDATION, AND ORDER

          NANCY K. JOHNSTON, UNITED STATES MAGISTRATE JUDGE

         Pending before the court[1] is Defendant Walker County Hospital Corporation d/b/a Huntsville Memorial Hospital's (“Defendant” or the “Hospital”) Motion to Dismiss (Doc. 21) and Motion to Strike Plaintiffs' Surreply to Defendant's Motion to Dismiss (Doc. 26). The court has considered the motion, the response, the reply, all other relevant filings, and the applicable law. For the reasons set forth below, the court RECOMMENDS that Defendant's motion be GRANTED in part and DENIED in part.

         I. Case Background

         Plaintiffs Guy Gros (“Mr. Gros”) and Elida Cervantes-Gros (“Mrs. Cervantes-Gros”) (collectively the “Plaintiffs”) filed this lawsuit against Defendant, alleging violations of 42 U.S.C. 1983 (“Section 1983”), defamation per se, and breach of contract.

         A. Factual Background

         On February 18, 2013, Defendant hired Mr. Gros as its Chief Financial Officer (“CFO”).[2] On May 1, 2013, Defendant and Mr. Gros entered into an employment agreement for a twenty-five-month period.[3] On February 1, 2014, Mrs. Cervantes-Gros was hired by Defendant as a wound care physician.[4] Defendant and Mrs. Cervantes-Gros entered into a three-year employment agreement.[5]

         On July 1, 2015, Defendant provided Mr. Gros a three-year contract (the “Contract”) to continue his employment as the Hospital's CFO.[6] Under the Contract, Defendant could terminate Mr. Gros's employment “for cause.”[7] The Contract defined “cause” to include “gross negligence in the performance of the Executive's Duties” and “willful violation of the Hospital's Code of Conduct.”[8]

         According to Plaintiffs, at some point during the course of his employment, Mr. Gros “began to raise financial concerns about [the Hospital].”[9] He reported to Defendant that it had been operating at a deficit and criticized its spending and use of funds.[10]Specifically, Mr. Gros alleges that he told Defendant that due to its budget constraints, its financial decisions were “not appropriate, ” “wasteful, ” and “reckless.”[11] He warned Defendant that it “was soon going to be in large debt, ” and that “management would not listen to his suggestions.”[12]

         In November 2016, Mr. Gros was asked to “present a speech on behalf of [the Hospital] at a Veteran's Day program on November, 11, 2016.”[13] Plaintiffs allege that after Mr. Gros had prepared his speech, he was later informed that the Hospital's Chief Operating Officer (“COO”), Dawn Thompson (“Ms. Thompson”), would give the speech instead.[14] Mrs. Cervantes-Gros subsequently sent a text to an employee at the Hospital inquiring about “why the [speaker] change would occur when it did.”[15] Plaintiffs contend that Defendant retaliated against them in response.[16] Specifically, Plaintiffs allege that Ms. Thompson “berated [Mrs. Cervantes-Gros] about her inquiry on her husband's speech being taken away.”[17] On November 16, 2016, Mrs. Cervantes-Gros complained to Human Resources about the incident with Ms. Thompson.[18] Plaintiffs alleged that the Human Resources department “made assertions that Mrs. [Cervantes-] Gros had been the instigator of the dispute and problems, ” and closed the investigation shortly thereafter.[19]

         On December 2, 2016, [20] Mr. Gros was terminated.[21] Defendant presented Mr. Gros with a notice of termination (the “Notice”) informing him that his employment was being terminated “for cause.”[22] The Notice defined cause as, “lack of recognition and respect for the duties and obligation of an officer of the Hospital, ” “engaging in conduct inconsistent with [the Hospital's] core values, ” and “serious violations of [h]ospital policies.”[23]According to Mr. Gros, he had “no outstanding issues” with the Hospital until he began to raise concerns about Defendant's financial decisions.[24] Mr. Gros contends that he was fired, not “for cause, ” but in retaliation for his remarks about the company's financial status.[25] On January 31, 2017, Mrs. Cervantes-Gros's contract ended as per the contract's original terms.[26] Her contract was not renewed.[27]

         Plaintiffs allege that after Mr. Gros's termination and the non-renewal of Mrs. Cervantes-Gros's contract, employees of the Hospital defamed Plaintiffs. Specifically, Mr. Gros alleges that (1) the Hospital's Chief Executive Officer (“CEO”), Shannon Brown (“Mr. Brown”), defamed him by stating to a member of an unidentified board, that “[h]e did something illegal, something he should not have”; (2) the Hospital solicited negative information about him from the hospital staff thus damaging his reputation; and (3) Ms. Thompson falsely accused him of sexual harassment.[28]

         B. Procedural Background

         On April 13, 2017, Plaintiffs filed this action against Defendant, alleging retaliation based on Mr. Gros's protected speech, defamation per se, and breach of Mr. Gros's employment contract. On June 6, 2017, Defendant “asserted that it was entitled to arbitration of Plaintiffs' claims.”[29] Plaintiffs agreed to arbitration and to pay the initiation fee contingent upon Defendant's payment of the remainder of the arbitration costs.[30]On June 15, 2017, the court dismissed the case in favor of arbitration.[31] Defendant subsequently failed to pay the arbitration expenses. On November 2, 2018, the court reopened the case. On December 13, 2018, Defendant filed a motion to dismiss Plaintiffs' claims.[32] On February 28, 2018, Plaintiffs filed a response to Defendant's motion to dismiss.[33] On March 5, 2019, Defendant filed a reply to Plaintiffs' response.[34] On March 12, 2019, Plaintiffs filed a surreply to Defendant's motion to dismiss. On March 15, 2019, Defendant filed a motion to strike Plaintiffs' surreply.[35]

         II. Legal Standard

         Pursuant to Rule 12(b)(6), dismissal of an action is appropriate whenever the complaint, on its face, fails to state a claim upon which relief can be granted. When considering a motion to dismiss, the court should construe the allegations in the complaint favorably to the pleader and accept as true all well-pled facts. Sullivan v. Leor Energy, LLC, 600 F.3d 542, 546 (5th Cir. 2010).

         A complaint need not contain “detailed factual allegations” but must include sufficient facts to indicate the plausibility of the claims asserted, raising the “right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Plausibility means that the factual content “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. A plaintiff must provide “more than labels and conclusions” or “a formulaic recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555. In other words, the factual allegations must allow for an inference of “more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678.

         III. Analysis

         Defendant argues that Plaintiffs have failed to state a valid Section 1983 First Amendment retaliation claim.[36] Defendant also moves to dismiss Plaintiffs' defamation per se claims on the grounds that Plaintiffs have failed to plead the claims with the requisite level of specificity and that Mr. Gros's claim is barred by the Texas Citizens Participation Act (“TCPA”).[37] Lastly, Defendant argues that Mr. Gros “fails to plead facts showing that [the] Hospital breached any obligation toward him.”[38]

         A. Section 1983 First Amendment Retaliation Claim

         To establish a Section 1983 First Amendment retaliation claim, a plaintiff must prove that “(1) an adverse employment action was taken; (2) speech involving a matter of public concern was uttered; (3) the employee's interest in speaking outweighs the employer's interest in efficiency; and (4) the protected speech precipitated the adverse employment action.” Angel v. La Joya Indep. Sch. Dist., 717 Fed.Appx. 372, 376 (5th Cir. 2017) (unpublished) (citing McCoy v. City of Shreveport, 492 F.3d 551, 562 (5th Cir. 2007)). The court focuses on the second element, whether Mr. Gros alleged that he spoke on a matter of public concern.

         The First Amendment protects speech made by public employees in circumstances only where they are speaking as citizens on matters of public concern. Garcetti v. Ceballos, 547 U.S. 410, 422 (2006) (holding that a a deputy district attorney's disposition memorandum was written pursuant to his employment duties and therefore lacked First Amendment protection). The Fifth Circuit has adopted the Seventh Circuit's analysis of Garcetti, noting that “before asking whether the subject-matter of particular speech is a topic of public concern, the court must decide whether the plaintiff was speaking ‘as a citizen' or as part of her public job.” Davis v. McKinney, 518 F.3d 304, 312 (5th Cir. 2008) (citing Mills v. City of Evansville, 452 F.3d 646, 647 (7th Cir. 2006)). “Only when government penalizes speech that a plaintiff utters ‘as a citizen' must the court consider the balance of public and private interests, along with other questions posed by Pickering.” See id. Therefore, the first inquiry is whether Mr. Gros's speech about the Hospital's financial issues was made in his capacity as a citizen or as the Hospital's CFO.

         To determine the capacity in which a public employee's speech was made, courts consider the employee's job duties, to whom the speech was made, whether the speech was required by the employer, and the employee's knowledge on the subject. See Garcetti, 547 U.S. at 422; Pickering v. Bd. of Educ. Of Township High Sch., 391 U.S. 563, 570 (1968); Davis, 518 F.3d at 313; Williams v. Dallas Indep. Sch. Dist., 480 F.3d 689, 694 (5th Cir. 2007). However, a public employee's “formal job description” and whether he “speak[s] on the subject matter of [his] employment” are not dispositive. See Garcetti 547 U.S. at 424; Williams, 480 F.3d at 692.

         The court agrees with Defendant that Mr. Gros's speech was made in the course of performing his job as the Hospital's CFO because making statements about the Hospital's finances is inherently part of a CFO's job. In support of their contrary position, Plaintiffs rely on the holding in Lane v. Franks 573 U.S. 228, 238 (2014). There, the plaintiff alleged that his employer, a community college, retaliated against him after he testified in a criminal prosecution of a state legislator who had been charged with mail fraud and theft of federal funds related to the legislator's employment at the college. See id. at 232-33. The employee was subpeonaed to testify about his reasons for terminating the legislator's employment. See id. at 233. In holding that the employee's testimony was made in his capacity as a citizen and was thus protected, the court noted the “nature of sworn judicial statements” and explained that “[a]nyone who testifies in court bears an obligation, to the court and society at large, to tell the truth.” See id. at 238; see also Anderson v. Valdez, 845 F.3d 580, 597 (5th Cir. 2016) (finding that a public employee's speech made in an effort to report judicial misconduct was made as a citizen because “[a]ll lawyers, not just lawyers who are public employees, have a duty to report malfeasance”).

         Unlike in Lane, Mr. Gros's speech did not have any relation to allegedly illegal activity and was not compelled by a subpoena.[39]Indeed, Mr. Gros did not allege any type of illegal actions taken by the Hospital.[40] Mr. Gros admitted that his speech constituted mere “suggestions” to the Hospital.[41] Using knowledge that he gained from his position as the Hospital's CFO, and in furtherance of that position, Mr. Gros determined that the Hospital's actions were “wasteful, ” “not appropriate, ” and “reckless.”[42] He warned the Hospital that it would soon be operating at a deficit.[43]

         In Williams, an athletic director of a public high school sent a letter to his principal and the school's office manager requesting information about the use of funds collected at athletic events. Williams, 480 F.3d at 690. His letter included criticism about how the school allocated their funds. Id. at 694. The court reasoned that, while the speech was not required by his employer, the speech was made in the course of his employment because he needed financial information and the funds to run the athletic department. Id. at 694; see also Rayborn v. Bossier Parish Sch. Bd., 881 F.3d 409, 418 (5th Cir. 2018) (determining that while a school nurse's job did not require the speech at issue, her speech was made pursuant to her official responsibilities and was within the scope of her duties).

         The Williams court found that the athletic director's memo reflected his “special knowledge” and “authority” about the public entity's financial situation. Id. at 694. Like the athletic director in Williams, Mr. Gros's concerns about the Hospital's spending, use of funds, and budget constraints, reflected his special knowledge of the Hospital's financial status by virtue of his position as CFO.[44] The complaint clearly alleges that Mr. Gros's complaints related to his position as CFO.

         Lastly, the court must consider whether the speech at issue was made to individuals within the company or to the public. See Davis v. McKinney 518 F.3d 304, 314 (5th Cir. 2008); Williams, 480 F.3d at 694. If the speech was made internally, it weighs against a finding of protected speech. See Williams, 480 F.3d at 693.

         In Davis v. McKinney, the plaintiff was an audit manager at the University of Texas Health Science Center. Davis, 518 F.3d at 307. The court found that her complaints to her supervisor and to the university's president concerning her perception of the university's “inadequate response” to her audit findings of wrongdoing within the university was “clearly made as an employee.” Davis, 518 F.3d at 315; but see Pickering, 391 U.S. at 569-70 (finding that a teacher's letter to a newspaper editor were not directed toward any person with whom the teacher would normally be in contact in the course of his daily work as a teacher). The Fifth Circuit elaborated, “the letter related to her work within the internal audit department and to her core job description.” Id. Specifically, the unprotected speech was made “up the chain of command seeking redress for what [the employee] felt was an inadequate response to the findings of her investigation.” Id.

         Here, by alleging that the Hospital “got tired” of hearing of his financial warnings, Mr. Gros has admitted that he directed his comments internally.[45]

         Because the plain language of the complaint defeats the second element of Mr. Gros's First Amendment retaliation claim, the court proceeds no further. Mr. Gros has failed to allege a Section 1983 First Amendment retaliation claim.

         Mrs. Cervantes-Gros did not engage in protected speech and only makes a First Amendment retaliation claim based on Mr. Gros's speech.[46] For the reasons stated above, Mr. Gros's speech is not protected. Therefore, Mrs. Cervantes-Gros does not have a derivative First Amendment retaliation claim.

         For these reasons, Defendant's motion to dismiss Plaintiffs' Section 1983 First Amendment retaliation claims should be GRANTED.

         B. Plaintiffs' Defamation Per Se Claims

         Defendant argues that dismissal of Plaintiffs' defamation per se claims is proper because Plaintiffs failed to allege facts sufficient to state claims for defamation. To state a defamation claim under Texas law, a plaintiff must plead facts showing that the defendant “(1) published a statement; (2) that was defamatory concerning the plaintiff; (3) while acting with . . . negligence if the plaintiff was a private individual, regarding the truth of the statement.” Copeland v. State Farm Ins., 657 Fed.Appx. 237, 240 (5th Cir. 2016) (unpublished) (citing WFAA-TV, Inc. v. McLemore, 978 S.W.2d 568, 571 (Tex. 1998)); see also D Magazine Partners, L.P. v. Rosenthal, 529 S.W.3d 429, 434 (Tex. 2017). Under the first element, the publication of defamatory statements may be communicated “orally, in writing, or in print to some third person who is ‘capable of understanding their defamatory import and in such a way that the third person did so understand.'” Exxon Mobil Corp. v. Rincones, 520 S.W.3d 573, 579 (Tex. 2017) (citing Austin v. Inet Techs., Inc., 118 S.W.3d 491, 496 (Tex. App.-Dallas 2003, no pet.). A defendant is negligent if it “knew or should have known a defamatory statement was false, ” unless the statement would not “warn a reasonabl[y] prudent [person] of its defamatory potential.” D Magazine Partners, L.P., 529 S.W.3d at 440 (citing Foster v. Laredo Newspapers, Inc., 541 S.W.2d 809, 820 (Tex. 1976)).

         Additionally, for a defamation claim to rise to the level of defamation per se, the allegedly defamatory statements at issue must be “so obviously hurtful that they require no proof that they caused injury in order for them to be actionable.” Fiber Sys. Int'l v. Roehers, 470 F.3d 1150, 1161 (5th Cir. 2006) (citing Columbia ...


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