McIntyre v. Guild, Inc.

DAVIS, Judge. Appellant, David McIntyre, brought suit in the Circuit Court for Prince George’s County, alleging wrongful discharge (Count I) and breach of employment contract (Count II) against appellee Guild, Inc. (Guild), as well as intentional interference with contractual relations (Count III) against appellee Lt. Col. Everett Foster.

Guild filed a motion to dismiss for failure to state a claim, and Lt. Col. Foster filed a motion for summary judgment. The trial court (Martin, Jr., J.) granted both motions after a hearing.

Appellant presents three questions for our review: 1. Did the trial court err when it dismissed appellant’s wrongful discharge claim? 2. Did the court err when it dismissed appellant’s breach of contract claim? 3. Did the court err when it granted Lt.

Col. Foster’s motion for summary judgment? FACTS The following facts are gleaned from the pleadings and various exhibits. Appellee Guild, Inc. (Guild) is a corporation that provides its clients with “full service marketing design.” Appellant David McIntyre is an experienced communications ³⁴⁰ professional.

In the spring of 1993, Guild was competing for a contract with the United States National Guard for “Environmental Community Relations Support Services,” including the production of several films. In the process of putting together a bid for that contract, Guild began to solicit McIntyre’s assistance. By letter dated April 6, 1993, Guild informed McIntyre: The contract will require the special talents and expertise of people such as yourself, but, at the present time, the specific assignments have not yet been fully developed. This letter constitutes a formal request from Guild, Inc. for you to acknowledge, by signing below, your willingness to be hired as a_(insert labor category) by Guild, Inc.... in the event that your services, as determined by Guild, TEXCOM, the Federal Government, or any combination thereof, are needed in order for the contract to be performed properly.

The letter was signed by Eugene Orr, president of Guild. The blank specifying the “labor category” was not filled in. A second letter, also, dated April 6, 1993 and signed by Orr, stated: “At this time we would like to have a firm commitment for every available position. We will need to know your availability for the first year of the contract.” According to McIntyre, he sent Guild the following reply: This letter is to confirm that upon agreement of financial terms, I will accept the senior management position with Guild, Inc. I understand that this position is based upon the successful awarding of the National Guard contract to Guild Inc. The copy of this letter included in the record is unsigned.

In May 1993, the National Guard awarded the contract to Guild. A third letter from Guild purports to confirm Guild’s offer of a “full-time exempt position as Senior Management Specialist on the National Guard Bureau (NGB) contract at Guild, Inc.” The document provides for compensation of $47,000 per year, and a starting date of July 6, 1993. After ³⁴¹ describing the benefits and other terms of employment that are not pertinent here, the document states: Guild views the first three months of employment as a probationary period during which the employer and employee can establish a performance relationship which is mutually satisfactory and which will validate that the promises and potentials seen by each party during the application/interview process have or can be fulfilled. Hence, you may expect that during the first three months of employment, your designated supervisor will work closely with you, train you, counsel you, and comment on your performance in order to assist you in meeting the job requirements of your position to your full capacity.

Appellant signed the bottom of the document to indicate that he accepted the offer “as outline[d] above.” According to appellant’s amended complaint, a dispute arose in August 1993 between appellant and Lt. Col. Everett Foster of the National Guard. 1 Appellant had made arrangements for certain video production work to be subcontracted to a company of his choosing. Lt.

Col. Foster, however, requested that the work be performed by a company called Video Workshop, at a price of $10,000 to $20,000 more than the company that appellant had selected. Lt. Col.

Foster was a former employee of Video Workshop, and allegedly acknowledged that it would be a “conflict of interest” for him to insist that Guild retain Video Workshop. Nonetheless, he stated that Guild’s use of Video Workshop was “very important” to him. Appellant promptly spoke to his supervisor about the situation. He informed his supervisor that Lt.

Col. Foster “clearly had a conflict of interest with respect to Video Workshop, that there was no valid performance-related reason for hiring Video Workshop at such an inflated price,” and that if Guild ³⁴² agreed to hire Video Workshop, it might not be able to justify the extra expense. Lt. Col.

Foster thereafter let it be known that Video Workshop was the only video production company in which he had confidence. Lt. Col. Foster also indicated that he had previously terminated an entire project because of a “lack of confidence” in the production crew, and stated that he might have similar reservations about Guild unless it decided to use Video Workshop.

On August 27, 1993, Guild terminated McIntyre’s employment. 2 Guild allegedly explained that it was necessary to fire appellant in order to placate Lt. Col. Foster, who had no confidence in appellant’s ability to manage the project. When appellant attempted to defend his position regarding Guild’s use of Video Workshop, he was told that “[i]f the government wants to spend more, they can spend more.

This is a cost-plus contract.” Prior to his termination, appellant had not received any negative comments on his performance from anyone at Guild. As we noted above, appellant’s claims were dismissed on Guild’s motion to dismiss and Lt. Col. Foster’s motion for summary judgment.

This appeal followed. LEGAL ANALYSIS When reviewing a disposition by motion to dismiss for failure to state a claim, “we must assume the truth of all relevant and material facts that are well pleaded and all inferences which can be reasonably drawn from those pleadings.” Sharrow v. State Farm Mut. Ins. Co., 306.

Md. 754, 768, 511 A.2d 492 (1986); Baker, Watts, & Co. v. Miles & Stockbridge, 95 Md.App. 145, 186 , 620 A.2d 356 (1993). Moreover, we consider the “well-pleaded allegations” in the light ³⁴³ most favorable to the non-moving party. Berman v. Karvounis, 308 Md. 259, 264 , 518 A.2d 726 (1987). Our task is to determine whether the facts alleged in appellant’s complaint are legally sufficient to state a cause of action.

See Sharrow, 306 Md. at 768-69 , 511 A.2d 492 ; Briscoe v. Baltimore, 100 Md.App. 124, 128-29 , 640 A.2d 226 (1994). We limit our review, however, to specific allegations of fact and the inferences deducible from them, and not “merely conclusory charges.” Parker v. The Columbia Bank, 91 Md.App. 346 , 351 n. 1, 604 A.2d 521 , cert. denied, 327 Md. 524 , 610 A.2d 796 (1992) (quoting Berman, 308 Md. at 265 , 518 A.2d 726 ). I Appellant first contends that the trial court erred when it dismissed his claim for wrongful discharge. His amended complaint states, in part, that appellant was dismissed for acting in furtherance of the public policy underlying the federal False Claims Act, 31 U.S.C. § 3729 (1988 ed.).

Appellant further contends that his employment was terminated as retaliation for his exercise of “free speech,” and that his termination was contrary to the public policy embodied in the First Amendment and Article 40 of the Maryland Declaration of Rights. We shall address the False Claims Act and First Amendment issues separately. The False Claims Act The Court of Appeals first recognized a cause of action for wrongful discharge in Adler v. American Standard Corp., 291 Md. 31 , 432 A.2d 464 (1981). Prior to Adler , Maryland strictly adhered to the common law rule that, absent a statutory or contractual obligation to the contrary, an employer may terminate the employment relationship at any time for any reason, or for no reason at all.

See, e.g., State Comm’n on Human Rel. v. Amecom Div., 278 Md. 120, 126 , 360 A.2d 1 (1976). In Adler, 291 Md. at 46-47 , 432 A.2d 464 , the Court recognized a “narrow exception” to that rule, and held that an at-will employee who has been discharged in a manner that contravenes public policy may maintain a cause of action for abusive ³⁴⁴ or wrongful discharge against his or her former employer. See also Ewing v. Koppers Co., Inc., 312 Md. 45, 49 , 537 A.2d 1173 (1988) (holding that a claim for wrongful discharge may also be asserted by a contractual employee). Subsequent decisions have recognized a claim for abusive discharge only where the discharge violates a “mandate of public policy” that is clearly set forth in the constitution, a statute, or the common law.

See Leese v. Baltimore County, 64 Md.App. 442, 468 , 497 A.2d 159 , cert. denied, 305 Md. 106 , 501 A.2d 845 (1985) (“We can conceive of no clearer ‘mandate of public policy’ than the rights spelled out in the United States Constitution.”). See, e.g., Ewing, 312 Md. at 50 , 537 A.2d 1173 (employee discharged for exercising statutory rights under workers’ compensation statute); Kessler v. Equity Management, Inc., 82 Md.App. 577, 589-90 , 572 A.2d 1144 (1990) (employee discharged for refusal to invade a tenant’s right to privacy). See also Adler, 291 Md. at 45 , 432 A.2d 464 (suggesting that public policy may, on rare occasions, be derived from sources other than legislative enactments, administrative regulations, or prior judicial decisions). It is generally not sufficient to show that the employer violated the “spirit” or “intent” underlying a particular law or constitutional provision.

See Miller v. Fairchild Industries, 97 Md.App. 324, 336-37 , 629 A.2d 1293 , cert. denied, 333 Md. 172 , 634 A.2d 46 (1993). In order to state a claim for wrongful discharge, a plaintiff ordinarily must set forth clear, specific allegations of fact tending to show that the employer either (1) violated the legal rule at issue, or (2) punished the employee for exercising some legal right. See, e.g., Lee v. Denro, Inc., 91 Md.App. 822, 831-33 , 605 A.2d 1017 (1992); Ewing, 312 Md. at 50 , 537 A.2d 1173 . A claim for wrongful discharge may also be asserted in cases where the employee has been discharged for refusing to violate the law, or refusing to violate the legal rights of some third party.

See Kessler, 82 Md.App. at 590 , 572 A.2d 1144 . Our decision in Lee underscored the fact that a claim for wrongful discharge requires more than mere conclusory alie ³⁴⁵ gations. The plaintiff in that case was employed by a company that produced a communications system designed for use by air traffic controllers. Lee, 91 Md.App. at 825 , 605 A.2d 1017 .

While participating in tests of that equipment, Lee observed that mistakes were made and that testing procedures were not properly followed. Id. at 826-27 , 605 A.2d 1017 . She was fired after she called the problem to the attention of the director of manufacturing, and voiced her concerns in the presence of the customer (the Federal Aviation Administration). In her complaint, Lee alleged that her employer’s conduct violated two criminal statutes, including a statute prohibiting “false, fictitious or fraudulent statements or misrepresentations” regarding any matter “within the jurisdiction of any ... agency of the United States.” Id. at 831 , 605 A.2d 1017 (quoting 18 U.S.C. § 1001 ).

After reviewing the elements of the crime, we concluded: Lee does not allege that Denro made any false statement, let alone a material or willful one. Nor does she allege that Denro discharged her because she refused to make a false statement. In short, the complaint does not begin to set forth the allegations necessary to demonstrate that Denro’s “conduct violated § 1001.” Id. at 832, 605 A.2d 1017 (footnote omitted). Accepting the averments in Lee’s complaint as true, we nonetheless held at 831, quoting Adler, 291 Md. at 44 , 432 A.2d 464 , that they were “too general, too conclusory, too vague and lacking in specifics to mount up to a prima facie showing.” The same may be said for the complaint at issue in the present case.

In that complaint, appellant asserted that Guild acted with an intent to punish him “for acting in furtherance of the goals and interests of the False Claims Act” (the Act). The Act provides, in pertinent part, that any person who “knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent ³⁴⁶ claim for payment or approval” is liable to the United States Government. 31 U.S.C. § 3729 (a). In order to recover damages for violation of the Act, the government must establish that (1) the person presented or caused to be presented to an agent of the United States a claim for, payment; (2) the claim was false or fraudulent; (3) the person knew the claim was false or fraudulent; and (4) the United States suffered damages as a result of the false or fraudulent claim. Young-Montenay, Inc. v. United States, 15 F.3d 1040, 1043 (Fed.Cir.1994) (citing Miller v. United States, 213 Ct.Cl. 59 , 550 F.2d 17, 23 (1977)).

An action under the False Claims Act does not require an intent to deceive, but merely the knowing presentation of a claim that is “fraudulent” or simply “false.” United States ex rel. Hagood v. Sonoma County Water Agency, 929 F.2d 1416, 1421 (9th Cir.1991). 3 See also 31 U.S.C. § 3729 (b) (defining “knowingly” as possessing actual knowledge, or acting with “deliberate ignorance” or “reckless disregard” for the truth). In the present case, appellant’s amended complaint asserts (1) that Guild failed to accept the lowest bid, (2) that in appellant’s opinion, “there was no valid performance-related reason for hiring Video Workshop at such an inflated price,” and (3) that “the discharge of [appellant] enabled Guild to present to a member of the Armed Forces a false and fraudulent claim for payment or approval” (emphasis added). Appellant has not asserted that such a claim was actually submitted.

Assuming, arguendo, that Guild subsequently submitted a claim for the actual amount of Video Workshop’s bid, ³⁴⁷ we cannot agree that such a claim would violate the False Claims Act. Appellant simply does not explain what aspect of the claim would be “false” or “fraudulent,” nor does he contend that Guild was required by law or contract to accept the lowest bid. 4 We think it obvious that a claim may be “wasteful” without being either false or fraudulent. Whether a claim submitted by Guild was false or fraudulent could be tested only after a claim was actually submitted. To conclude that Guild might submit such a claim, based on the bid from Video Workshop, would be nothing more than sheer speculation.

As we explained in Lee, 91 Md.App. at 831 , 605 A.2d 1017 , such conclusory allegations cannot support a claim for wrongful discharge. The First Amendment In his amended complaint, appellant also asserts that Guild’s conduct was intended to prevent him from exercising his constitutional right to free speech, in contravention of the public policy “embodied within the First Amendment and the Maryland Declaration of Rights.” As a threshold matter, we must consider whether Guild’s discharge of appellant constituted government action. Under the “state action” doctrine, 5 “[c]onstitutional guarantees have been uniformly interpreted to restrain and restrict only the conduct of the government vis-a-vis private individuals; in the absence of state action there can be no violation of constitutional rights.” Miller v. Fairchild Industries, 97 Md.App. 324, 336 , 629 A.2d 1293 , cert. denied, 333 Md. 172 , 634 A.2d 46 (1993). See also Bleich v. ³⁴⁸ Florence Crittenton Serv., 98 Md.App. 123, 135 , 632 A.2d 463 (1993).

Where government action is not involved, an employee who has been discharged or disciplined may not assert a claim for violation of the right to speak freely. Miller, 97 Md.App. at 336-337 , 629 A.2d 1293 . In Burning Tree Club, Inc. v. Bainum, 305 Md. 53 , 501 A.2d 817 (1985), the Court of Appeals discussed the state action doctrine at length. Where the impetus for the action at issue is private, the Court explained, “the state must have significantly involved itself with the invidious discrimination before the doctrine may be invoked.” Id. at 74 , 501 A.2d 817 .

Thus, the state action doctrine may not be invoked where the private actor merely received a public benefit, or where the government has approved or acquiesced in the initiatives of a private party. Id. at 74-75 , 501 A.2d 817 (discussing Moose Lodge No. 107 v. Irvis, 407 U.S. 163 , 92 S.Ct. 1965 , 32 L.Ed.2d 627 (1972) and Blum v. Yaretsky, 457 U.S. 991 , 102 S.Ct. 2777 , 73 L.Ed.2d 534 (1982)). Where the conduct at issue involves a private actor, the state action doctrine may not be invoked unless the plaintiff can establish a “sufficiently close nexus” between the government and the challenged action, so that the action of the private party may fairly be treated as that of the government itself. Burning Tree Club, 305 Md. at 75 , 501 A.2d 817 (citing Blum, 457 U.S. at 1004 , 102 S.Ct. at 2785 ).

In other words, we must consider whether the alleged conduct is “fairly attributable” to the federal government. See Lugar v. Edmondson Oil Co., 457 U.S. 922, 937 , 102 S.Ct. 2744, 2753 , 73 L.Ed.2d 482 (1982). In Blum, 457 U.S. at 1004 , 102 S.Ct. at 2785, the Supreme Court explained: [Although the factual setting of each case will be significant, our precedents indicate that a State normally can be held responsible for a private decision only when it has exercised coercive power or has provided such significant encouragement, either overt or covert, that the choice must in law be deemed to be that of the State. ³⁴⁹ (emphasis added). See also Flagg Bros.

Inc. v. Brooks, 436 U.S. 149, 166 , 98 S.Ct. 1729, 1738 , 56 L.Ed.2d 185 (1978); Jackson v. Metropolitan Edison Co., 419 U.S. 345, 357 , 95 S.Ct. 449, 456 , 42 L.Ed.2d 477 (1974); Moose Lodge No. 107, 407 U.S. at 173 , 92 S.Ct. at 1971 . When the government has “commanded” or “compelled” a particular result, it has become involved with that result “to a significant extent,” and the state action requirement has been met. Adickes v. Kress & Co., 398 U.S. 144, 170 , 90 S.Ct. 1598, 1615 , 26 L.Ed.2d 142 (1970) (quoting Peterson v. City of Greenville, 373 U.S. 244, 248 , 83 S.Ct. 1119, 1121 , 10 L.Ed.2d 323 (1963)). In his amended complaint, appellant asserts that Guild terminated his employment because Lt.

Col. Foster wanted him discharged, and because Foster indirectly threatened to cancel the entire project. For the purpose of our review, we must accept the truth of those averments. Under appropriate circumstances, we think the threat of cancelling a government contract may be sufficiently coercive to satisfy the government action requirement.

Accordingly, we conclude that appellant’s claim for wrongful discharge in violation of his First Amendment rights could not be dismissed on the ground that government action was not involved. We stress that we have resolved this threshold question on Guild’s motion to dismiss. We do not conclude that Guild’s discharge of appellant constituted government action. Whether Lt.

Col. Foster’s conduct was sufficiently coercive to meet the government action requirement could only be determined after more extensive development of the facts. For the purpose of further analysis here, we shall assume, without deciding, that the government action requirement has been met, and that appellant may be considered to be the equivalent of a “public employee” for the purpose of his wrongful discharge claim. A public employee who claims to have been discharged or disciplined for the exercise of First Amendment rights must establish two elements to prevail on the claim: (1) that the conduct at issue was protected speech; and (2) that ³⁵⁰ the speech was a “substantial” or “motivating” factor in the employer’s adverse employment action.

See Mt. Healthy Bd. of Ed. v. Doyle, 429 U.S. 274, 287 , 97 S.Ct. 568, 576 , 50 L.Ed.2d 471 (1977); O’Leary v. Shipley, 313 Md. 189, 201 , 545 A.2d 17 (1988). If the plaintiff carries this burden, the employer must be accorded an opportunity to