McCormack v. Medcor, Inc.

CINDI MCCORMACK, Plaintiff, v. MEDCOR, INC., Defendant.

No. 14 CV 3551

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

November 3, 2014

Hon. Marvin E. Aspen

MEMORANDUM OPINION AND ORDER

MARVIN E. ASPEN, District Judge:

Presently before us is Defendant's motion to dismiss Counts II, IV, and V of Plaintiff's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons stated below, we grant Defendant's motion in its entirety.

BACKGROUND

Plaintiff Cindi McCormack ("McCormack") filed a complaint against Defendant Medcor, Inc. ("Medcor"), alleging that her former employer retaliated against her for taking protected medical leave pursuant to the Family Medical Leave Act ("FMLA") (Count 1); discriminated against her on the basis of her disability and wrongfully terminated her in violation of public policy (Count 2); breached its duties under the employment contract (Count 3); breached an implied covenant of good faith and fair dealing in the employment contract (Count 4); and violated the California Labor Code (Count 5).

Medcor, a corporation headquartered in Illinois, maintains offices and does business in multiple states. (Compl. ¶ 2.) It provides services to clients on-site at large client locations and through telephone calls at smaller locations. (Id.) When Medcor first hired McCormack inApril 2003, she resided in Washington state. (Id. ¶ 7; Mem. at 2.) She moved to California in May 2011 for personal reasons. (Resp. at 2.) McCormack worked from home and also traveled to Medcor's clinics in Washington, Colorado, Wyoming, New Mexico, and Texas. (Id.) While Medcor maintains offices in California, McCormack's work was not related to its business in that state. (Compl. ¶ 2; Mem. at 2.)

In December 2011, McCormack suffered a "nervous breakdown" and went on medical leave at her doctor's recommendation. (Compl. ¶ 10.) Medcor granted McCormack's request for leave pursuant to the FMLA, with a return date of January 31, 2012. (Id.) When McCormack requested a leave extension until February 19, 2012, based on her doctor's recommendation, Medcor informed her that if she did not return to work by February 1, 2012, the company would begin looking for her replacement. (Id. ¶¶ 11-12.) McCormack communicated with her supervisors and the human resources department located in Illinois regarding her separation. (Id. ¶¶ 12-20.) She was in California at the time her employment ended. (Resp. at 2.)

McCormack originally filed this action in the Superior Court of California, County of San Joaquin, on August 20, 2013. (See Compl.) Medcor removed the case to the United States District Court for the Eastern District of California on September 26, 2013. (Resp. at 2.) Medcor then moved to transfer venue to this court pursuant to 28 U.S.C. § 1404(a), which the California district court granted on May 14, 2014. (Id.)

STANDARD OF REVIEW

A motion to dismiss under Rule 12(b)(6) is meant to test the sufficiency of the complaint, not to decide the merits of the case. Gibson v. City of Chi., 910 F.2d 1510, 1520 (7th Cir. 1990). To survive a motion to dismiss, the complaint must contain a "short and plain statement of theclaim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Specifically, "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 1949 (2009) (citing Bell Atl. Corp. v. Twombly, 540 U.S. 544, 555, 127 S. Ct. 1955, 1964-65 (2007)). The plausibility standard "is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. Thus, while a complaint need not give "detailed factual allegations," it must provide more than "labels and conclusions, and a formulaic recitation of the elements of a cause of action." Twombly, 540 U.S. at 545, 127 S. Ct. at 1964-65; Killingsworth v. HSBC Bank Nevada, N.A., 507 F.3d 614, 618-19 (7th Cir. 2007). The statement must be sufficient to provide the defendant with "fair notice" of the claim and its basis. Twombly, 540 U.S. at 545, 127 S. Ct. at 1964 (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S. Ct. 99, 102 (1957)); Tamayo v. Blagojevich, 526 F.3d 1074, 1083 (7th Cir. 2008). In evaluating a motion to dismiss, we must accept all well-pleaded allegations in the complaint as true and draw all reasonable inferences in the plaintiff's favor. Thompson v. Ill. Dep't of Prof'l Reg., 300 F.3d 750, 753 (7th Cir. 2002).

DISCUSSION

McCormack, a California resident, brings this action against Medcor, the Illinois-headquartered employer that discharged her. (Compl. ¶ 1; Mem. at 2.) McCormack argues that California law applies to the merits of this case, while Medcor argues that Illinois law applies. Relying on Illinois law, Medcor also asserts that Counts II, IV, and V should be dismissed for failure to state a claim. We will first resolve which state law applies, and then evaluate the sufficiency of McCormack's complaint.

I. CHOICE-OF-LAW

Before we evaluate whether McCormack adequately pleads a cause of action, we must first determine whether Illinois or California law governs the claims at issue. When a defendant transfers venue under 28 U.S.C. § 1404(a), the transferee court must generally apply the law of the state where the action originated to the plaintiff's claims. Van Dusen v. Barrack, 376 U.S. 612, 639, 84 S. Ct. 805, 821 (1964); Anderson v. Aon Corp., 614 F.3d 361, 365 (7th Cir. 2010). This principle also requires use of the originating state's choice-of-law rules. Downing v. Abercrombie & Fitch, 265 F.3d 994, 1005 (9th Cir. 2001); Smidt v. Drobny, 96 C 8360, 1997 WL 797669, at *3 (N.D. Ill. Dec. 24, 1997) (citing Piper Aircraft Co. v. Reyno, 454 U.S. 235, 244, 102 S. Ct. 252, 260 (1981)). This action was transferred from California, thus we will look to the choice-of-law rules applied in that state.

California uses a three-part governmental interest test to resolve choice-of-law issues. Sullivan v. Oracle Corp., 51 Cal. 4th 1191, 1202, 254 P.3d 237, 245 (Cal. 2011); Kearney v. Salomon Smith Barney, Inc., 39 Cal. 4th 95, 107-08, 137 P.3d 914, 922 (Cal. 2006). Using the governmental interest approach, the court must determine: (1) whether the foreign law materially differs from California law; (2) the nature and extent of each state's interest in the application of its own law; and (3) which state's interest would be more impaired if its laws were not applied. Sullivan, 51 Cal. 4th at 1202, 254 P.3d at 245; Kearney, 39 Cal. 4th at 107-08, 137 P.3d at 922. Absent a governing contractual choice-of-law stipulation, California courts examine the relative contacts with each state to determine each jurisdiction's interest. Edwards v. U.S. Fid. & Guar. Co., 848 F. Supp. 1460, 1465 (N.D. Cal. 1994); Expansion Pointe Props. Ltd. P'ship v. Procopio, Cory, Hargreaves & Savitch, LLP, 152 Cal. App. 4th 42, 59, 61 Cal. Rptr. 3d 166, 179 (Cal. Ct. App. 2007). This inquiry includes where the contract was negotiated, executed, andperformed, the location of the subject matter of the contract, and the parties' residence and place of business. Edwards, 848 F. Supp. at 1465 (quoting Restatement (Second) of Conflict of Laws § 188(2)); Expansion Pointe, 152 Cal. App. 4th at 59, 61 Cal. Rptr. 3d at 179.

A. California and Illinois law Materially Differ

We will first assess whether Illinois and California law materially differ with regard to Counts II, IV, and V. For the reasons stated below, we find that they do.

i. Count II: Wrongful Termination

Count II of McCormack's complaint alleges that Medcor discriminated against her on the basis of her disability, and wrongfully terminated her in violation of public policy. McCormick brings this count as a common law claim under the disability discrimination provisions of the California Fair Employment and Housing Act ("FEHA"). See Cal. Gov. Code § 12940. California and Illinois both recognize a common law cause of action for wrongful termination in violation of public policy, but Illinois's law is far narrower, as discussed below.

The FMLA and the Americans with Disabilities Act ("ADA") both provide statutory remedies for wrongful termination. 29 U.S.C. § 2615; 42 U.S.C. § 12112. Medcor concedes that in addition to those remedies, California law permits distinct common law claims for wrongful termination. (Mem. at 6.) Hernandez v. MidPen Hous. Corp., 13 C 5983, 2014 WL 2040144, at *5 (N.D. Cal. May 16, 2014); Violan v. On Lok Senior Health Serv., 12 C 5739, 2013 WL 6907153, at *5 (N.D. Cal. Dec. 31, 2013); see Stevenson v. Superior Court, 16 Cal. 4th 880, 889, 941 P.2d 1157, 1161 (Cal. 1997); Tameny v. Atl. Richfield Co., 27 Cal. 3d 167, 170, 610 P.2d 1330, 1331 (Cal. 1980). Illinois courts, however, do not usually allow common law claims where a statutory anti-retaliation provision provides an alternative remedy. O'Connell v. Cont'l Elec. Constr. Co., 11 C 2291, 2011 WL 4916464, at *10 (N.D. Ill. Oct. 17, 2011); Stebbings v.Univ. of Chi., 312 Ill. App. 3d 360, 366, 726 N.E.2d 1136, 1141 (1st Dist. 2000). Indeed, McCormack concedes that she could not file her common law tort claim for discriminatory discharge in Illinois. (Resp. at 4.) Therefore, California and Illinois law conflict with regard to Count II.

ii. Count IV: Breach of Implied Covenant of Good Faith and Fair Dealing

In Count IV, McCormack alleges that Medcor breached an implied covenant of good faith and fair dealing in the employment contract. Specifically, she claims that Medcor breached the implied covenant by terminating her in interference with the performance of the contract and by refusing to pay her bonus. (Compl. ¶¶ 21, 45-46.)

California law implies a covenant of good faith and fair dealing in every contract. Kelly v. Skytel Commc'ns, Inc., 32 F. App'x 283, 285 (9th Cir. 2002); Carma Developers (Cal.), Inc. v. Marathon Dev. Cal., Inc., 2 Cal. 4th 342,...