George v. Atos It Sols. & Servs.

GEORGE DIX, Plaintiff, v. ATOS IT SOLUTIONS AND SERVICES, INC., Defendant.

Case No. 1:18-cv-275

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION

March 25, 2021

JUDGE DOUGLAS R. COLE

OPINION AND ORDER

This cause is before the Court on three pending motions, including: (i) Plaintiff George Dix's ("Dix") Motion to Sever Counts II and III (Doc. 33); (ii) Defendant Atos IT Solutions and Services, Inc.'s ("Atos") Motion for Summary Judgment (Doc. 26); and (iii) Atos's Motion for Sanctions (Doc. 27).

For the reasons below, the Court GRANTS Dix's Motion to Sever (Doc. 33), DENIES Atos's Motion for Summary Judgment (Doc. 26), and DENIES Atos's Motion for Sanctions (Doc. 27).

BACKGROUND

This breach of contract dispute arose after Atos, an IT consulting company, fired one of its employees, George Dix, allegedly for using his work computer in violation of company policy. Dix does not dispute that he used his computer inappropriately, nor does he argue against Atos's decision to terminate his employment. Rather, Dix argues only that, under a retention contract, he is still entitled to a $100,000 "retention bonus" that Atos never paid.

A. Dix Began His Short-Lived Employment At Atos.

Before Dix worked for Atos, he worked for another IT services company, Anthelio Healthcare Solutions ("Anthelio"). His employment contract with Anthelio provided that Dix would receive three months of his salary in severance pay if Anthelio "terminated [his] employment without cause due to position elimination." (Anthelio Emp. Cont., Doc. 24-1, #91). In 2016, Atos acquired Anthelio and offered to keep Dix on staff. Dix agreed, and signed a Retention Agreement on September 20, 2016. (Retention Agreement, Doc. 1-1). In the Retention Agreement, Atos promised to pay Dix a $100,000 "retention bonus" on June 30, 2017, which was nine months after he started with Atos. (Id. at #8). This retention bonus, however, was contingent on Dix's continued employment with the company. Specifically, Dix would forfeit the retention bonus if he "voluntarily resigned," or if Atos fired him "for cause." (Id.).

"For cause" is a defined term in the Retention Agreement. Atos provides three situations which might give rise to for-cause termination:

(i) neglect or refusal of Employee to perform the duties and projects assigned to Employee to the extent such duties and projects are commensurate with Employee's skills, experience and position with the Company; (ii) failure to adhere to the policies and procedures of the Company and failure of Employee to correct such failure within five (5) days following notice of such failure from the Company; or (iii) conviction of a crime of moral turpitude, theft, fraud, embezzlement or violence.

(Id. at #8-9).

Dix's employment with Atos went smoothly for about three months. But in November 2016, an Atos IT employee performing routine maintenance on Dix's computer saw an explicit Skype message pop up on Dix's laptop screen. (Pl.'s Resp. to Def.'s Statement of Undisputed Facts, ("SOUF"), Doc. 31-1, ¶ 3, #3546). Theemployee discovered more explicit content as she continued to work on Dix's computer. (Id.). At that point, the employee reported the explicit content to her superiors in the IT department who, in turn, got human resources involved. (Id.).

On January 11, 2017, Atos's human resources called Dix to a meeting where they accused him of viewing, downloading, and soliciting sexually explicit material on his work computer. (Compl., Doc. 1, ¶¶ 13-14, #3; Amy Brown Decl., Doc. 24, ¶ 9, #86). Dix claims that Atos refused to tell him the details of the inappropriate material, but instead simply demanded his immediate resignation.¹ (Compl., Doc. 1, ¶ 15, #3; Amy Brown Decl., Doc. 24, ¶ 10, #86). As demanded, Dix submitted a hand-written resignation that was effective immediately. (Compl., Doc. 1, ¶ 16, #3). Atos then hired a consulting company, FTI Consulting, to extract any explicit material from Dix's laptop. (SOUF, Doc. 31-1, ¶ 5, #3547-48). FTI confirmed that Dix has accessed voluminous amounts of sexually explicit material during his employment with Atos.² (Id.).

B. Dix Sued Atos For Breach of Contract And Conversion.

On April 20, 2018, Dix sued Atos alleging two breach of contract claims and one conversion claim. The first breach of contract claim (Claim I) argues that Atos breached the Retention Agreement when it fired Dix without allowing him to firstcure his misconduct. (Compl., Doc. 1, ¶ 23, #4). Based on the breach, Dix claims that he is entitled to the $100,000 retention bonus. (Id.). The second breach of contract claim (Claim III), in contrast, stems from Dix's employment contract with Anthelio. Specifically, Dix claims that, when Atos acquired Anthelio, it assumed Anthelio's contractual promise to pay Dix three months of severance in the event that it should fire him "without cause." (Id. at ¶ 28, #5). Dix says that his termination here was "without cause," meaning that Atos has a contractual obligation to pay his severance. (Id.). Finally, Dix also brings a common law conversion claim (Claim II), alleging that Atos refused to give Dix the opportunity to retrieve certain documents in his laptop's "personal documents" folder. (Id. at ¶ 26, #5; Dix Decl. Ex. 2 Doc. 31-2, #3566).

Atos asserts that all of Dix's claims are frivolous. In fact, on December 10, 2019, Atos sent a "safe harbor" letter to Dix indicating that it intended to seek Rule 11 sanctions on account of Dix's "frivolous" claims. (Mot. to Sever, Doc. 33, #3620; Mot. to Sever Resp., Doc. 37, #3636). Dix and Atos went back and forth for several months until, on February 14, 2020, Atos notified Dix that it intended to file both a motion for summary judgment and motion for Rule 11 sanctions on March 6, 2020. (Mot. to Sever Resp., Doc. 37, #3637). On March 3, 2020, Dix and Atos discussed whether Atos would still seek sanctions for Counts II and III if and when Dix agreed to dismiss those claims.³ Atos indicated that it would not commit to limiting its sanctions motion until Dix actually dismissed the claims. (Mot. to Sever Resp. Ex. 1, Doc. 37-1, #3642).

On March 6, 2020, the same day as Atos had intended to file its motions, Dix filed a "Notice of Voluntary Dismissal" seeking to dismiss Count II, his conversion claim, and Count III, his breach of contract claim for severance pay. (Doc. 22). This "Notice," however, was ineffective. As the Court explained in its March 17, 2020 order, "Dix should have filed a Rule 21 motion to sever claims instead of purporting to unilaterally dismiss by notice." (Op. on Dix's Notice, Doc. 29, #3518). The Court accordingly denied Dix's "Notice" without prejudice and instructed him to refile using a motion under Rule 21, not a notice under Rule 41. (Id. at #3251).

But, before Dix could file the proper Rule 21 motion, Atos filed a motion for summary judgment, (Doc. 26), and a motion for Rule 11 sanctions, (Doc. 27). Although Dix had not yet properly moved to dismiss Claims II and III, Atos preemptively directed both of its motions towards Dix's remaining claim—i.e., that Atos breached the Retention Agreement when it fired him without first offering him the "contractually required" opportunity to cure his misconduct. In its motion for summary judgment, Atos argues that it had no obligation to allow Dix to "cure" his misconduct because "[s]uch conduct was, by its nature, simply incapable of being cured." (Mot. for Summ. J., Doc. 26, #3375). Therefore, Atos argues that it did not breach the contract by failing to offer a cure period. And absent any breach, Atos reasons, Dix's breach of contract claim fails as a matter of law.

Beyond arguing that Dix's breach of contract claim fails on the merits, Atos also asserts that Dix's claim is so factually and legally groundless that the Courtshould assess Rule 11 sanctions both on Dix and his counsel. (Mot. for Sanctions, Doc. 27). Atos's motion for sanctions largely reiterates the same argument as its motion for summary judgment: because "Dix's misfeasance was, by its very nature, incurable," Atos did not breach the contract when it failed to permit Dix to "cure" his misconduct. (Id. at #3396). Atos explains that without a breach, Dix's breach of contract claim is factually and legally untenable. The Court should sanction Dix, Atos argues, for continuing to pursue this "groundless" claim. (Id.).

A few weeks after Atos filed its two motions, Dix filed a Rule 21 motion to sever Counts II and III of his Complaint, and then to dismiss them with prejudice. (Mot. to Sever, Doc. 33). There, Dix explains that he "believes that the decision to sever and dismiss Counts II and III will result in minimal, if any, prejudice to" Atos because "[i]t appears that little time has been devoted to those claims." (Id. at #3620). Atos responded on April 21, 2020, indicating that, although it does not oppose the dismissal of Counts II and III, Atos is seeking the fees and costs it incurred defending against those claims. (Mot. to Sever Resp., Doc. 37).

All three motions have been fully briefed and are now ripe for review.

LAW AND ANALYSIS

The Court first addresses Dix's Motion to Sever Counts II and III, then Atos's Motion for Summary Judgment, and finally turns to Atos's Motion for Sanctions.

A. The Court Severs, And Dismisses Claims II And III, But Denies Atos's Request For Attorneys' Fees As A Condition Of Dismissal.

Federal Rule of Civil Procedure 21 allows the Court, either by motion or on its own, to "at any time, on just terms, add or drop a party ... [or] sever any claim againsta party." District courts have "broad discretion in determining whether or not actions should be severed." Parchman v. SLM Corp., 896 F.3d 728, 733 (6th Cir. 2018) (quoting Johnson v. Advanced Bionics, LLC, No. 2:08-CV-02376-JPM, 2011 WL 1323883, at *6 (W.D. Tenn. Apr. 4, 2011)). In exercising that discretion, however, courts should consider a variety of factors, including "whether settlement of the claims or judicial...