Bay v. Wild Oats Mkt. Inc.

244 Or.App. 443

260 P.3d 700

94 Empl. Prac. Dec. P 44,246

161 Lab.Cas. P 61,169

33 IER Cases 78

Gary DE BAY, Plaintiff–Appellant,

v.WILD OATS MARKET, INC.; Whole Foods Market, Inc.; and Whole Foods Market Pacific Northwest, Inc., dba Whole Foods Market, Defendants–Respondents,andPerry Odak, Bruce Bowman, and Peter Williams, Defendants.

080406238; A142629.

Court of Appeals of Oregon.

Argued and Submitted Oct. 7, 2010.Decided July 20, 2011.

Daniel Le Roux, Portland, argued the cause for appellant. With him on the opening brief was Mitra Law Group. On the reply brief were Mitra Shahri and Mitra Law Group.P. Andrew McStay, Jr., Portland, argued the cause for respondents. With him on the brief was Davis Wright Tremaine LLP.Before HASELTON, Presiding Judge, and ARMSTRONG, Judge, and LIPSCOMB, Senior Judge.^*LIPSCOMB, S.J.

Plaintiff appeals a judgment of dismissal, predicated on various ORCP 21 motions to dismiss, of his common-law wrongful discharge claim against his former employer, Wild Oats Market, Inc. (Wild Oats), and two related corporate entities, Whole Foods Market, Inc., and Whole Foods Market Pacific Northwest, Inc. (the Whole Foods defendants). In his complaint, plaintiff contended, inter alia, that he was discharged in retaliation for exercising an important societal duty— viz., making complaints to his supervisors about wrongful corporate conduct and threatening to take his complaints to the board of directors—and for exercising his right to complain that his bonus was cut. The trial court dismissed all of plaintiff's claims against the Whole Foods defendants contained in his first amended complaint for lack of personal jurisdiction. Plaintiff's third, and final, amended complaint was dismissed by the trial court for failure to state a claim against Wild Oats.

On appeal, plaintiff raises two assignments of error: first, that the trial court erred in dismissing the related corporate Whole Foods defendants, and, second, that the trial court erred in dismissing his claim against his actual employer, defendant Wild Oats. For the reasons that follow, we reject plaintiff's first assignment of error, but agree with the second assignment. Accordingly, we affirm the judgment of dismissal as to the Whole Foods defendants, but reverse and remand the dismissal of plaintiff's common-law wrongful discharge claim against Wild Oats.

With respect to his first assignment of error, plaintiff claims that the Whole Foods defendants are “alter egos” of each other, that defendant Whole Foods Market, Inc., is the successor corporation to defendant Wild Oats following a “merger,” and that the Whole Foods defendants are thereby jointly liable for the acts of defendant Wild Oats. Further, because the court had personal jurisdiction over defendant Whole Foods Pacific Market Northwest, Inc., due to its own business activities in Oregon, plaintiff contends that, by extension, the court had jurisdiction over defendant Whole Foods Market, Inc., as well. Finally, plaintiff argues that, at a minimum, the trial court abused its discretion in ordering dismissal of the Whole Foods defendants on the basis of the jurisdictional allegations in his first amended complaint without allowing further discovery and further amendments to his complaint. None of those arguments raised in support of plaintiff's first assignment of error has sufficient merit to warrant any further discussion here, and we reject them.

With respect to plaintiff's second assignment of error, he asserts that the trial court erred in dismissing his third amended complaint under ORCP 21 because the complaint states a common-law wrongful discharge claim arising out of plaintiff's termination from his employment in retaliation for having exercised important societal rights and obligations protected both under Oregon law, ORS 659A.230; ORS 652.355, and under a provision of federal law, section 806 of the Sarbanes–Oxley Act of 2002, 18 U.S.C. § 1514A.

Plaintiff's third amended complaint is not a model pleading by any measure. Nevertheless, when it is construed in the light most favorable to plaintiff, as we must in the present procedural posture of this case, see Stringer v. Car Data Systems, Inc., 314 Or. 576, 584, 841 P.2d 1183 (1992), that complaint does make the following factual allegations with sufficient clarity:

• Plaintiff alleges that he was employed by Wild Oats from November 1, 2004, until he was terminated on May 2, 2006. As part of his duties at Wild Oats, he had “in substantial part” developed a “1–3–5 year Strategic Growth Plan” that sought to transform Wild Oats from $1 billion in sales per year to $5 billion in sales per year. The plan had been approved by the board of directors in March 2005 for development, funding, and execution.

• Plaintiff also alleges that Wild Oats was a publicly traded company during his employment there, and that its stock had “beg[u]n to soar” after the completion of the first year of the 1–3–5 year Strategic Growth Plan. However, the executive management team (which included plaintiff's supervisors) had willfully shut off all capital funding and staffing resources necessary to implement the second phase of the 1–3–5 year Strategic Growth Plan. Plaintiff further alleges that the management team did so intentionally and wrongfully in order to artificially reduce the company's short-term capital expenses, so that the members of the executive management team could meet their own internal financial performance targets, which enabled them to receive 100 percent individual cash bonuses. Plaintiff also alleges that the members of the executive management team had intentionally operated the company so as to maximize their own individual severance packages, contrary to the best interests of the company. As a result, plaintiff alleges, the growth prospects, market competitiveness, and the overall financial well-being of the company had suffered.

• Plaintiff further alleges that the executive management team had periodically released false and misleading public relations messages and press releases by mail and internet publications intended to assure stockholders and other investors that the 1–3–5 year Strategic Growth Plan was still on track. This was done in order to increase the value of Wild Oats stock artificially, while the executive management team wrongfully held down the actual book value of the company to make it more amenable to a quick sale. Plaintiff further alleges that those actions were intentional and that the responsible executives were fully cognizant that their actions were detrimental to the interests of the company and its stockholders.

• Plaintiff further alleges that, in February 2006, he gave a detailed written report to his supervisors directly questioning the executive management team's actions, as well as its motives for withholding the funds needed to fully implement the second phase of the 1–3–5 year Strategic Growth Plan. Plaintiff also alleges that his report noted that those executives were acting contrary to the best interests of Wild Oats, that their actions were contrary to their representations to the stockholders, and that their actions were designed to financially benefit themselves personally.

• Plaintiff then alleges that his bonus was cut in half because of the February 2006 report and that, when he then threatened to bring his concerns to the board of directors, the executive management team terminated his employment, effective the day before the next board meeting, in order to prevent him from informing the board of his concerns.

• Finally, plaintiff alleges that he was wrongfully terminated from his employment because he reported and resisted what he in good faith believed to be criminal, illegal, and fraudulent business practices; because he, in good faith, threatened to inform the board of directors of the wrongdoings of the executive management team; and because he complained about the retaliatory reduction of his bonus. All of which, he further alleges, entitles him to damages under several provisions of both state and federal law.

Although defendants dispute the accuracy of many of plaintiff's allegations, those disagreements are immaterial in the context of our review of a dismissal pursuant to ORCP 21 A(8).

On appeal, plaintiff argues that the allegations of his complaint are sufficient to state a claim for common-law wrongful discharge because they allege facts from which it can be shown that he was terminated for exercising important societal obligations and rights recognized in ORS 659A.230, ORS 652.355, and under the Sarbanes–Oxley Act, at least when “liberally construed,” ORCP 12 A, and when he is given “the benefit of all favorable inferences that may be drawn from the facts alleged,” see Stringer, 314 Or. at 584, 841 P.2d 1183.

ORS 659A.230 provides that it is an unlawful employment practice “to discharge * * * an employee * * * for the reason that the employee has in good faith reported criminal activity by any person.” That statute is cited by plaintiff as the source of an important societal obligation to report criminal activity. However, as the trial court suggested in dismissing plaintiff's claim, under Oregon law, a common-law wrongful discharge claim based on retaliation for “whistleblowing” under ORS 659A.230 requires that the complaint be made to a recognized outside authority legally vested with the power to take action on such complaints. Internal complaints, without more, are normally insufficient under Oregon law. See Lamson v. Crater Lake Motors, Inc., 346 Or. 628, 639–40, 216 P.3d 852 (2009). Compare Roberts v. Oregon Mutual Ins. Co., 242 Or.App. 474, 481, 255 P.3d 628 (2011) (holding that, under Lamson, the trial court did not err in granting the defendant summary judgment on the plaintiff's common-law wrongful discharge claim because “[the] plaintiff did not pursue a right related to her role as an employee such as making a report of an...