Rhoades v. Oklahoma ex rel. Stitt

BILLY D. "RUSTY' RHOADES III, an individual;MEGAN L. SIMPSON, an individual;and MICHAEL S. HARRELL, an individual, Plaintiffs, v. THE STATE OF OKLAHOMA, ex rel. GOVERNOR KEVIN STITT;THE STATE OF OKLAHOMA,ex rel. THE DEPARTMENT OF PUBLIC SAFETY;KEVIN STITT, an individual;CHIP KEATING, an individual;JASON NELSON, an individual;and JOE CLARO, an individual, Defendants.

No. CIV-20-761-R

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF OKLAHOMA

March 8, 2021

ORDER

Before the Court is Defendants' Second Partial Motion to Dismiss, Doc. No. 21. Plaintiffs responded in opposition to the Motion, Doc. No. 22, and Defendants then filed a Reply, Doc. No. 23. The Court finds as follows.

According to the Complaint, Oklahoma Governor Mary Fallin appointed Plaintiff Billy D. Rusty Rhoades III ("Rhoades") as the Commissioner of the Department of Public Safety ("the Department") on November 10, 2017. Doc. No. 16, ¶ 26. Soon thereafter, Rhoades selected Plaintiff Michael S. Harrell ("Harrell") as the Chief of Patrol of the Oklahoma Highway Patrol in December of 2017 and Plaintiff Megan Simpson ("Simpson") as the General Counsel for the Department in July of 2018. Id. ¶¶ 27-28.

In August of 2018, Simpson met with various other members of the Department's legal team. First, she met with Defendant Joe Claro ("Claro"), Senior Attorney and Acting Deputy General Counsel, and Doug Young, Acting General Counsel. Id. ¶ 34. Next, Simpson met with Myriah Downs ("Downs"), Assistant General Counsel, to inquire about "Downs' interest in the position of [the Department's] Legal asset forfeiture attorney." Id. ¶ 35. Downs then informed Simpson that the asset forfeiture program suffered from legal and ethical issues—including "serious legal deficiencies that violated ... constitutional rights"—which Downs had documented in a memorandum and produced to Young and Claro. Id. ¶¶ 36-38.

Allegedly, Downs further informed Simpson that "both Young and [ ] Claro explicitly told [her] [...] to continue litigating civil asset forfeiture cases despite" the serious deficiencies, and both Young and Claro "blocked efforts to advance concerns" about the issues in the asset forfeiture division Downs had documented. Id. ¶¶ 38-39. Simpson discovered that the asset forfeiture division "fail[ed] to effectuate proper service in the majority of asset forfeiture cases filed by DPS." Id. ¶ 45. In October of 2018, Simpson submitted the issues to Rhoades, who in turn instructed "Troop Z"—the investigative arm of the Department—to investigate the asset forfeiture division. Id. ¶ 52.

The Complaint states that the investigation revealed wrongdoing by Young, Claro, and asset forfeiture coordinator Stephanie Ware, who was eventually charged and convicted for embezzlement based on conduct within the asset forfeiture division. Id. ¶ 53.

Meanwhile, in August and September of 2018, Rhoades alleges that Oklahoma Highway Patrol Captain Troy German ("German") "attempted to blackmail Rhoades in an attempt to be promoted." Doc. No. 16, ¶ 56. The blackmail demands sought promotion of German, "two new majors," and at "least one other associate or colleague of German." Id. ¶¶ 56, 61. The alleged compromising material German threatened to reveal included "reveal[ing] falsified assertions of tampering with the OHP promotional process." Id. ¶ 57. Subsequently, Rhoades reported the blackmail attempt to Simpson, who in turn provided electronic information to "Troop Z, for purposes of opening an investigation." Id. ¶ 63. Troop Z then began an internal investigation into the blackmail on November 20, 2018. Id. ¶ 64. Next, Defendant Kevin Stitt ("Stitt")—who was inaugurated as the Governor of Oklahoma on January 14, 2019—ordered an independent investigation of the Troop Z investigation on January 18, 2019. Id. ¶ 76.

On February 15, 2019, "as a result of the Troop Z investigation," German was charged by a grand jury with one count of blackmail. Id. ¶ 78. The Complaint describes the Plaintiff's efforts to investigate the asset forfeiture division and the attempted blackmail as the "Exposure of Corruption within [the Department and the Oklahoma Highway Patrol]." Id. ¶¶ 82-102.

After his inauguration in January, on February 22, 2019, Stitt announced "the re-appointment of [ ] Rhoades" as Commissioner of the Department. Id. ¶ 86. Not long after, in June of 2019, Defendant Chip Keating ("Keating")—Secretary of Public Safety—"demanded to meet with [ ] Simpson and go through the ongoing investigative file, which he had no authority to do." Id. ¶ 90. Just one week later, on June 28, 2019, the criminalcharges against German were dismissed "at the request of the state" and because the Oklahoma Highway Patrol "determined that [dismissal] was in the best interests of the agency." Id. ¶¶ 91, 93.

Nonetheless, Simpson instructed the Troop Z investigations, beginning with the report of German's blackmail, to continue. Id. ¶ 95. Then, on August 17, 2019, Keating demanded that the Plaintiffs cease investigations and "take no further actions in support of their statutory duties under Oklahoma law...". Id. ¶ 96.

On August 28, 2019, Simpson terminated Claro from his post as Deputy General Counsel partially due to his "involvement in mismanagement and/or covering up mismanagement of the [ ] asset forfeiture program...". Id. ¶ 98. The following day, during a meeting with the Department's Human Resources Division, Claro stated "I'll be back," "What goes around comes around," and "There are other unapproved terminations the governor doesn't know about." Id. ¶ 99. The Plaintiffs allege that immediately after his termination, Claro "advanced false reports to Defendant Keating and/or Defendant Stitt, whether directly or through intermediaries...". Id. ¶ 102.

"The next day, August 30, 2019, for the first time, [ ] Keating accused Plaintiffs and [the Department] of not meeting benchmarks for REAL ID"—a program enacted in 2005 which "established new security standards for state-issued IDs for limited federal purposes." Id. ¶¶ 23, 100. On September 2, 2019, the Plaintiffs were terminated from their positions in the Department. Id. ¶¶ 103-07. The Plaintiffs allege the terminations were the product of "Claro's false reports to Defendants Nelson[,] Keating, and/or Stitt" and weremade alongside pretextual statements that the Plaintiffs had not complied with the REAL ID Act. Id. ¶¶ 109, 112.

On September 3, 2019 and September 8, 2019, "The Daily Oklahoman reported and published" the terminations of the Plaintiffs and the statements of Defendant Stitt, "accusing Plaintiffs of failure to meet requirements of the REAL ID act, which were knowingly false...". Id. ¶¶ 116-17.

In response, on July 2, 2020, Plaintiffs filed an action in state court in Oklahoma County, alleging due process violations under the federal and state constitutions, wrongful termination, and tortious interference with employment. Doc. No. 1-2. Defendants then removed the action to this Court on August 4, 2020. Doc. No. 1. At the Court's direction, Plaintiffs amended their complaint. Doc. No. 16. Plaintiffs' Amended Complaint included an additional claim for a violation of due process against Stitt for alleged statements to the press. Id. Defendants now move to dismiss i) Rhoades's due process claim arising from his termination, ii) Rhoades and Harrell's due process claims under the Oklahoma Constitution, iii) Plaintiffs' wrongful termination claims, iv) Plaintiffs' tortious interference claim, and v) Rhoades's due process claims against Stitt for his statements to the media. Doc. No. 21.

In considering a Motion to Dismiss under Rule 12(b)(6), the Court must determine whether a plaintiff has stated a claim upon which relief may be granted. The motion is properly granted when the Complaint provides no "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The Complaint must contain enough "facts to state a claim torelief that is plausible on its face," id. at 570, and the factual allegations "must be enough to raise a right to relief above the speculative level." Id. at 555 (citations omitted). The Court must accept all the well-pleaded allegations of the Complaint as true and must construe the allegations in the light most favorable to Plaintiff. Id.; Alvarado v. KOB-TV, L.L.C., 493 F.3d 1210, 1215 (10th Cir. 2007). But the Court need not accept as true those allegations that are conclusory in nature. Erikson v. Pawnee Cnty. Bd. of Cnty. Comm'rs, 263 F.3d 1151, 1154-55 (10th Cir. 2001). "[C]onclusory allegations without supporting factual averments are insufficient to state a claim upon which relief can be based." Hall v. Bellmon, 935 F.2d 1106, 1109-10 (10th Cir. 1991).

I. § 1983 Due Process Claim (Count 1)

"[T]o prevail on either a procedural or substantive due process claim [under § 1983], a plaintiff must first establish that a defendant's actions deprived plaintiff of a protectible property interest." Hyde Park Co. v. Santa Fe City Council, 226 F.3d 1207, 1210 (10th Cir. 2000). The Constitution does not establish a property interest itself, rather, one is "created by independent sources such as a state or federal statute, a municipal charter or ordinance, or an implied or express contract." Teigen v. Renfrow, 511 F.3d 1072, 1079 (10th Cir. 2007) (internal citations and quotation marks omitted). The question for public employees is whether state law provides "'a legitimate claim of entitlement' in continued employment, as opposed to a 'unilateral expectation' or 'an abstract need or desire' for it." Farthing v. City of Shawnee, Kan., 39 F.3d 1131, 1135 (10th Cir. 1994) (citing Bd. of Regents of State Colls. v. Roth, 408 U.S. 564, 577 (1972)). A legitimate claim of entitlement could be grounded in "state statutes, local ordinances, established rules, or mutually explicitunderstandings." Id. (citing Dickeson v. Quarberg, 844 F.2d 1435, 1437 (10th Cir. 198...