Kerri L. Colby v. Umbrella, Inc., et al.

1. In this suit for wrongful termination, plaintiff Kerri Colby appeals the superior court order denying her motion to amend the complaint and dismissing her claims against defendant State of Vermont. We reverse and remand.

2. Defendant Umbrella, Inc. is a Vermont corporation that provides support services to domestic violence victims and operates a state-sponsored childcare resource center. Plaintiff was employed by Umbrella's child-care-resource center from February 2000 to October 2002. In October 2002, her employment with the center was terminated. Plaintiff alleges that she was wrongfully terminated as a result of: (1) expressing concerns about what she considered to be a discriminatory new mission statement, and (2) her qualifiying disability under the Vermont Fair Employment Practices Act (FEPA).

3. On May 6, 2005, plaintiff filed a complaint in Essex Superior Court naming the following as defendants: Umbrella, Inc.; Umbrella's executive director, Michelle Fay; plaintiff's direct supervisor, Jennifer Townsend; and the Department for Children and Families (DCF) Child Development Division. Plaintiff claimed that she was wrongfully terminated in violation of 42 U.S.C. § 1983, FEPA, and public policy. On May 9, 2005, the State moved to dismiss the claims against it pursuant to Vermont Rule of Civil Procedure 12(b)(6). In response, plaintiff filed a memorandum in opposition and a motion to amend the complaint. The amended complaint: (1) added Kimberly Keiser, Director of DCF's Child Development Division as a defendant, (2) alleged Keiser's personal involvement in plaintiff's termination, (3) alleged the State was plaintiff's employer for purposes of FEPA, and (4) added an intentional infliction of emotional distress (IIED) claim against all defendants. On January 19, 2006, the superior court denied plaintiff's motion to amend and granted the 12(b)(6) motion dismissing all claims against the State. Plaintiff now appeals, claiming that the court abused its discretion in denying her motion to amend and in prematurely dismissing her § 1983, FEPA, and IIED claims against the State.

4. We begin with plaintiff's argument that the court's denial of her motion to amend the complaint was an abuse of discretion. Under the rules of civil procedure, leave to amend the complaint "shall be freely given when justice so requires." V.R.C.P. 15(a); Lillicrap v. Martin, 156 Vt. 165, 170, 591 A.2d 41, 43-44 (1989). In considering motions under Rule 15(a), trial courts must be mindful of the Vermont tradition of liberally allowing amendments to pleadings where there is no prejudice to the other party. Tracy v. Vinton Motors, Inc., 130 Vt. 512, 513, 269 A.2d 269, 271 (1971). "The principal reasons underlying the liberal amendment policy are (1) to provide maximum opportunity for each claim to be decided on its merits rather than on a procedural technicality, (2) to give notice of the nature of the claim or defense, and (3) to enable a party to assert matters that were overlooked or unknown to him at an earlier stage in the proceedings." Bevins v. King, 143 Vt. 252, 255, 465 A.2d 282, 283 (1983). In rare cases, however, denial of a motion under Rule 15(a) may be justified based upon a consideration of the following factors: "(1) undue delay; (2) bad faith; (3) futility of amendment; and (4) prejudice to the opposing party." Perkins v. Windsor Hosp., 142 Vt. 305, 313, 455 A.2d 810, 815 (1982). On appeal, we review the trial court's decision on a motion to amend for an abuse of discretion. Id.

5. The trial court denied plaintiff's motion to amend the complaint, reasoning that despite plaintiff's amendments, the complaint failed to state any claim against the State for which relief could be granted and was therefore futile. See V.R.C.P. 12(b)(6). In determining whether a complaint can survive a motion to dismiss under Rule 12(b)(6), courts must take the factual allegations in the complaint as true, and consider whether "it appears beyond doubt that there exist no facts or circumstances that would entitle the plaintiff to relief." Alger v. Dep't of Labor & Indus., 2006 VT 115, 12, ___ Vt. ___, 917 A.2d 508 (quotations omitted).[1] Motions to dismiss for failure to state a claim are disfavored and are rarely granted. Gilman v. Me. Mut. Fire Ins. Co., 2003 VT 55, 14, 175 Vt. 554, 830 A.2d 71 (mem.).

6. Keeping in mind the generous standard governing Rule 15(a) motions to amend, we first consider plaintiff's addition of Keiser, director of the Child Care Services Division, as a defendant in her proposed amended complaint. As the trial court noted, under Vermont law, claims based on the actions of a state employee must generally lie against the state, not the individual employee who allegedly committed the harm. 12 V.S.A. § 5602(a); Amy's Enters. v. Sorrell, 174 Vt. 623, 624, 817 A.2d 612, 616 (mem.). Plaintiff alleged, in the proposed complaint, that Keiser "maliciously and wrongfully terminated" her in violation of 42 U.S.C. § 1983. In order to sustain a § 1983 claim, "a litigant . . . must first establish that the challenged conduct constitutes ‘state action.' " United States v. Int'l Bhd. of Teamsters, 941 F.2d 1292, 1295-96 (2d Cir. 1991). State action, in turn, requires both: (1) "an alleged constitutional deprivation ‘caused by the exercise of some right or privilege created by the State or by a rule of conduct imposed by the State or by a person for whom the State is responsible,' " and (2) "that ‘the party charged with the deprivation . . . be a person who may fairly be said to be a state actor.' " Am. Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40, 50 (1999) (quoting Lugar v. Edmondson Oil Co., 457 U.S. 922, 937 (1982)). The trial court determined that plaintiff's amendments were futile because, in its estimation, she failed to make factual allegations demonstrating that her termination involved state action.

7. We cannot agree with the court that plaintiff failed to allege sufficient facts establishing state action to sustain a § 1983 claim. To fulfill the state-actor requirement under § 1983, the claimant must demonstrate "personal involvement" of the defendant in the alleged constitutional violations. Moffitt v. Town of Brookfield, 950 F.2d 880, 886 (2d Cir. 1991). Although plaintiff's amended complaint specifically asserted that Keiser had "personal involvement in the decision to wrongfully terminate Plaintiff," the court apparently ignored this allegation and focused instead on statements in her affidavit attached to a memorandum in response to the State's opposition to the amendment to the effect that Keiser's subordinate was directly involved in her termination. The court, however, was required to "restrict its inquiry to the facts alleged in the [proposed] complaint" when deciding whether the amendment was futile under Rule 12(b)(6), and simply should have taken plaintiff's factual allegation of Keiser's personal involvement as true rather than determining that allegations of personal involvement by subordinates are insufficient to fulfill the state actor requirement. See Wentworth v. Crawford, 174 Vt. 118, 121, 807 A.2d 351, 352 (2002). The "complaint need only set out a short and plain generalized statement of the claim from which the defendant will be able to frame a responsive pleading," 5B C. Wright & A. Miller, Federal Practice and Procedure § 1357, at 564 (3d ed. 2004), and thus, despite the lack of detailed allegations regarding Keiser's role in the termination, adding her as a defendant was not a futile amendment. See, e.g., Boyce v. Nationwide Mut. Ins. Co., 842 F. Supp. 822, 824 (E.D. Pa. 1994).

8. In its order denying the motion to amend, the trial court failed to address plaintiff's proposed amendments to her FEPA claim. Plaintiff argues that the amended complaint stated a legally cognizable claim under FEPA and thereby met notice-pleading requirements under Rule 8(a). Plaintiff alleged in her amended complaint that she had a "qualified disability" under FEPA at all times relevant to her claims, that the defendants failed to reasonably accomodate that disability, and that plaintiff's termination was a "direct and proximate result of [her] disability." Furthermore, she asserted that the State "is an employer under the definition of employer under 21 V.S.A. § 495," and that it was therefore "liable for the wrongful actions of Defendants . . . in the termination of Plaintiff." Again, in considering whether the court erred in denying plaintiff's motion to amend for futility, we are mindful of the low threshold for withstanding a 12(b)(6) motion to dismiss. See Levinsky v. Diamond, 140 Vt. 595, 600-01, 442 A.2d 1277, 1280-81 (1982) (explaining that 12(b)(6) dismissal is inappropriate "unless it appears beyond doubt that there exist no circumstances or facts which the plaintiff could prove about the claim made in [her] complaint which would entitle [her] to relief").

9. Under FEPA, it is unlawful for "any employer . . . to discriminate . . . against a qualified disabled individual." 21 V.S.A. § 495(a)(1). While plaintiff did not prove her "qualified disability," in her amended complaint, she was not required to at the pleading stage. Instead, she set out a plain, generalized statement that she had a disability, requested accommodation from her employer, and was fired as a result of the disability. Taking these allegations and all reasonable inferences therefrom as true, plaintiff adequately pleaded a FEPA claim. Although the court ultimately dismissed plaintiff's FEPA claim against the State, concluding that the State was not plaintiff's employer as defined by 21 V.S.A.§ 495, it did so prematurely and with disregard for the amendments in plaintiff's proposed complaint. The standards for establishing a prima facie case under FEPA are the same as those required by Title VII of the Civil Right Act of 1964. Robertson v. Mylan Labs., Inc., 2004 VT 15, 16, 176 Vt. 356, 848 A.2d 310. To establish that a defendant is an "employer" under Title VII, a plaintiff must, as a threshold matter, show that she was hired by the defendant. United States v. City of New York, 359 F.3d 83, 90-91 (2d Cir. 2004). To prove that she was hired, she must establish that she received direct or indirect remuneration from the employer. York v. Ass'n of the Bar of N.Y., 286 F.3d 122, 125-26 (2d Cir. 2002). Despite the trial court's determination to the contrary, plaintiff's allegations that she was a childcare referral specialist at Umbrella's childcare resource center, and that Umbrella regarded her as its at-will employee, do not conflict with her contention that the State was her employer for purposes of FEPA. In the amended complaint, plaintiff stated that the DCF Child Development Division had supervisory and managerial control over Umbrella's childcare resource center and alleged that as an employer under 21 V.S.A. § 495, the State was liable for DCF's actions in wrongfully terminating her. Furthermore, plaintiff alleged that the Child Development Division was "significantly entwined with the management of Defendant Umbrella's child care resource center including being involved in the hiring and termination of Defendant Umbrella's staff." To conclude that plaintiff's amendments to the FEPA claim were futile, the court must necessarily have dismissed her factual allegations that the Child Development Division acted as an employer with respect to childcare resource center staff by participating in hiring and termination decisions and asserting managerial control over the center. While plaintiff did not provide evidence that the State remunerated her, at the pleading stage, plaintiff was merely required to give notice to defendants of the claims against them. As such, we find that plaintiff's amendments with respect to her FEPA claim could survive a 12(b)(6) motion to dismiss and were not, therefore, futile. The trial court abused its discretion in denying the motion to amend this claim.

10. Finally, the trial court rejected plaintiff's amendment adding an intentional infliction of emotional distress claim, reasoning that plaintiff had failed to allege any facts that could support such a claim against the State. An IIED claim can be sustained only where the plaintiff demonstrates "outrageous conduct, done intentionally or with reckless disregard of the probability of causing emotional distress, resulting in the suffering of extreme emotional distress, actually or proximately caused by the outrageous conduct." Boulton v. CLD Consulting Eng'rs, Inc., 175 Vt. 413, 427, 834 A.2d 37, 49 (2003) (citing Crump v. P & C Food Mkts., Inc., 154 Vt. 284, 296, 576 A.2d 441, 448 (1990)). Termination of employment alone cannot form the basis for an IIED claim. Crump, 154 Vt. at 296, 576 A.2d at 448. The manner in which the termination is executed must evince "circumstances of oppressive conduct and abuse of a position of authority vis-à-vis plaintiff" to support such a claim. Id. As the trial court noted, plaintiff failed to allege any outrageous or oppressive conduct in the manner of termination - an element of IIED. Rather, plaintiff continuously asserted in the amended complaint only that she was "maliciously and wrongfully terminated," and the conclusory allegation that she "suffered intentional infliction of emotional distress" as a result. Smith v. Local 819 I.B.T. Pension Plan, 291 F.3d 236, 240 (2d Cir. 2002) (courts not required to accept as true "[c]onclusory allegations or legal conclusions masquerading as factual conclusions" in 12(b)(6) analysis); see also Aranoff v. Bryan, 153 Vt. 59, 62-64, 569 A.2d 466, 468-69 (1989) (declining to accept as true conclusory statements in complaint with no factual basis). While the standard for amending a complaint under Rule 15(a) is liberal, it is not entirely without teeth. As plaintiff's amended complaint lacked any facts supporting the elements of IIED, the trial court did not abuse its discretion in finding the addition of the IIED claim to be futile on the basis that it could not withstand a motion to dismiss under Rule 12(b)(6).

11. Because we have analyzed the claims in plaintiff's amended complaint under the 12(b)(6) standard for dismissal for failure to state a claim, we need not repeat that analysis with regard to the trial court's decision to dismiss all claims against the State. The amended complaint adequately stated § 1983 and FEPA claims against the State, and therefore, we reverse the court's decision with respect to those claims. As to any IIED claim against the State, it did not survive plaintiff's motion to amend the complaint.

12. As a final matter, we respond to the dissent's concerns. The dissent reasons that plaintiff's statement regarding Keiser's "personal involvement" in her termination is a legal conclusion, rather than a factual allegation, and is thereby insufficient to make out the elements of a § 1983 claim. This reasoning, however, is in direct conflict with Vermont Rule of Civil Procedure 84, which incorporates appended forms as "sufficient under the rules" and "intended to indicate the simplicity and brevity of statement which the rules contemplate." Among the forms is a complaint for negligence which provides the following illustration:

1. On June 1, 1970, in a public highway called Church Street in Burlington, Vermont, defendant negligently drove a motor vehicle against plaintiff who was then crossing said highway.

2. As a result plaintiff was thrown down and had plaintiff's leg broken and was otherwise injured, was prevented from transacting plaintiff's business, suffered great pain of body and mind, and incurred expenses for medical attention and hospitalization in the sum of one thousand dollars.

Where plaintiff demands judgment against defendant in the sum of ten thousand dollars and costs.

V.R.C.P. Form 9. By the dissent's reasoning, this complaint, incorporated into our rules of civil procedure, would be insufficient under our notice pleading rules because the term "negligently" is a legal conclusion, and the complaint includes no further factual allegations regarding the specific actions by the defendant that the plaintiff alleges amounted to negligence. Again, the rules expressly indicate that such complaints are sufficient and thus, the dissent's reasoning is flawed.

13. Furthermore, the beauty of our rules of civil procedure is that they strike a fair balance, at the early stages of litigation, between encouraging valid, but as yet underdeveloped, causes of action and discouraging baseless or legally insufficient ones. The complaint is a bare bones statement that merely provides the defendant with notice of the claims against it. See Lane v. Town of Grafton, 166 Vt. 148, 150-52, 689 A.2d 455, 456-57 (1997). Its purpose is to initiate the cause of action, not prove the merits of the plaintiff's case. As such, the rules allow a plaintiff to plead over if she has omitted essential elements and require the court to take the plaintiff's allegations as true on a motion to dismiss, so as not to unfairly prejudice the plaintiff before she has any opportunity to develop the case. See V.R.C.P. 15(a); Amiot v. Ames, 166 Vt. 288, 291, 693 A.2d 675, 677 (1997) (on a motion to dismiss, court takes all factual allegations in complaint as true).

14. Here, the State attempted to force a merits determination in the early stages of litigation. It used the wrong procedural vehicle for doing so. A motion to dismiss serves to identify an insufficient cause of action, like the IIED claim here, where essential elements are not alleged. There were other procedural tools at the State's disposal, however, that it chose not to employ. In a motion for summary judgment, the defendant can present facts establishing that the plaintiff cannot prevail on its claims, so that the court may dismiss the case with confidence if the plaintiff fails to show that those facts are either disputed or have no force with respect to the legal claims. See V.R.C.P. 56. If, as the State alleges, plaintiffs' claims are not supported by the facts, the State easily could have moved for summary judgment at little expense after conducting limited discovery - namely, taking plaintiff's deposition. See V.R.C.P. 26(f) (authorizing court on its own motion or on motion by either party to set limitations on discovery); Iqbal, 490 F.3d at 158 (stating that court may in its discretion permit "some limited and tightly controlled reciprocal discovery so that a defendant may probe for amplification of a plaintiff's claims and a plaintiff may probe such matters as a defendant's knowledge of relevant facts and personal involvement in challenged conduct"). Alternatively, a motion for more definite statement under Rule 12(e) would have served the goal of providing the information that the State claims it needed to respond to plaintiff's allegations. The dissent, like the State and court below, would decide the merits of the case at this early stage, rather than allow the civil pleading rules to serve their intended function.

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http://www.libraries.vermont.gov/supct/current/op2006-088.html

Reversed and remanded.

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