Saragosa v. Greene

NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
20-NOV-2024
08:23 AM
Dkt. 49 SO

CAAP-XX-XXXXXXX

IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAI#I

THAINE SARAGOSA, Plaintiff-Appellant, v.
JAMES GREENE, an individual; EAN HOLDINGS, LLC,
a foreign Limited Liability Company registered
to do business in Hawaii, Defendants-Appellees,
and JOHN DOES & JANE DOES 1-25; and RICHARD ROES &
MARY ROES 1-25; Defendants

APPEAL FROM THE CIRCUIT COURT OF THE THIRD CIRCUIT
(CASE NO. 3CCV-XX-XXXXXXX)

SUMMARY DISPOSITION ORDER
(By: Leonard, Acting Chief Judge, Nakasone and McCullen, JJ.)

Plaintiff-Appellant Thaine Saragosa (Saragosa) appeals

from the July 15, 2021 Judgment Pursuant to [Hawai#i Rules of

Civil Procedure (HRCP)] Rule 54[(b)] (Judgment) entered by the

Circuit Court of the Third Circuit (Circuit Court),1 in favor of

Defendant-Appellee EAN Holdings, LLC (EAN). Saragosa also

challenges the February 24, 2021 Order Granting Defendant EAN

1
The Honorable Peter K. Kubota presided.
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Holdings, LLC's Motion to Dismiss Complaint for Damages Filed

November 30, 2020 as to EAN Holdings, LLC (Order of Dismissal).

Saragosa raises two points of error on appeal,

contending that the Circuit Court erred in: (1) dismissing the

Complaint as to EAN, the employer of the other defendants, named

and unidentified, for failure to state a claim upon which relief

could be granted; and (2) holding that Hawaii Revised Statutes

(HRS) § 386-5 (2015)2 precluded recovery against EAN for injuries

to Saragosa's reputational interest caused by the acts or

inactions of co-employees.

Upon careful review of the record and the briefs

submitted by the parties, and having given due consideration to

the arguments advanced and the issues raised by the parties, we

resolve Saragosa's points of error as follows:

Saragosa filed a complaint on November 30, 2020

(Complaint). Named defendants were EAN's Hilo branch manager,

Defendant-Appellee James Green (Green),3 and EAN; unnamed

defendants were (1) persons who "heard and repeated" Green's

"damaging statements" (Doe Defendants), and (2) persons who were,

2
HRS § 386-5 provides:
§ 386-5 Exclusiveness of right to compensation;
exception. The rights and remedies herein granted to an
employee or the employee's dependents on account of a work
injury suffered by the employee shall exclude all other
liability of the employer to the employee, the employee's
legal representative, spouse, dependents, next of kin, or
anyone else entitled to recover damages from the employer,
at common law or otherwise, on account of the injury, except
for sexual harassment or sexual assault and infliction of
emotional distress or invasion of privacy related thereto,
in which case a civil action may also be brought.
3
Both "Green" and "Greene" appear throughout the record. However,
in his Answer to the Complaint, Green states that "Greene" is a spelling
error.

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inter alia, agents of EAN (Roe Defendants). The Complaint

alleges that Saragosa worked for EAN and that EAN had a personnel

policy in force regarding the confidential nature of company

information, including employees' personal information (Privacy

Policy). Saragosa alleges that Green told other employees and

other persons in the community that Saragosa was caught stealing

at work and was going to be fired, although Green knew that

Saragosa denied the theft. With respect to Green, Saragosa

alleged that, as a result of Green's wrongful statements and

their repetition, Saragosa suffered injury to his reputation,

shame, humiliation, and extreme emotional distress, which caused

him to suffer a severe mental breakdown, leading to attempted

suicide, prolonged mental disability, homelessness, and the loss

of family connections. With respect to the Roe Defendants,

Saragosa alleged they had a duty to train, supervise, and

discipline Green so that he did not violate the Privacy Policy,

and but for their negligent failure to train, supervise, and

discipline Green, Green would not have made the wrongful

statements, and Saragosa's losses were a direct and proximate

result of the Roe Defendants' negligence.

No similar factual allegation is made against EAN, but

in the Complaint's "Grounds for Relief," Saragosa states that the

failures of EAN and the Roe Defendants to train, supervise, and

discipline Green so that he did not violate the Privacy Policy

constitutes negligence and were a cause of Saragosa's losses.

The "Grounds for Relief" also includes two statements that the

actions of Green and the Doe Defendants (1) constituted

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defamation and were a cause of Saragosa's losses, and (2)

constituted false light and were a cause of Saragosa's losses.

No other grounds for relief were stated. The Complaint's "Prayer

for Relief" sought damages from the defendants, jointly and

severally, for damage to reputation, shame, mental and emotional

distress, cognitive impairment, post-traumatic stress, and loss

of enjoyment of life, as well as punitive damages for defamation,

false light, and infliction of emotional distress.

In [EAN's] Motion to Dismiss Complaint for Damages

Filed November 30, 2020 as to [EAN] (Motion to Dismiss), EAN

argued that Saragosa sought damages against it for negligent

supervision, training, and/or discipline of Green, and that,

pursuant to HRS § 386-5, workers' compensation is the exclusive

remedy for a negligence claim against an employer, including a

claim for negligent training, supervision, or infliction of

emotional distress premised on an employer's alleged failure to

properly train or supervise employees who failed to follow

personnel laws and policies, citing, inter alia, Andrade v. Cnty.

of Hawai#i, 145 Hawai#i 265, 451 P.3d 1 (App. 2019) (citations

omitted).

In opposition to the Motion to Dismiss, Saragosa argued

that EAN failed to address Nakamoto v. Kawauchi, 142 Hawai#i 259,

418 P.3d 600 (2018), which held that employees may bring

defamation and false light claims against their employers.

Saragosa further argued that Green's action causing injury to

Saragosa were taken outside of work hours, and were addressed to

third parties (people in the community), not co-employees.

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Saragosa concluded with argument that Saragosa adequately pleaded

causes of action against EAN for defamation, false light, and for

negligence.4

The Circuit Court granted the Motion to Dismiss.

In Nakamoto, the Hawai#i Supreme Court held that

employees may bring defamation and false light claims against

their employers because the Workers' Compensation Law is intended

to compensate for work-related personal injuries and the purpose

of defamation and false light actions is to "compensate

plaintiffs for harm to their reputation." Id. at 268, 418 P.3d

at 609. In light of these different purposes, and the lack of a

remedy for reputational harm in the Workers' Compensation Law,

allowing suit against employers for defamation and false light is

warranted. Id. at 268-69, 418 P.3d at 609-10.

In this case, Saragosa failed to allege facts that

could be construed as a claim against EAN for defamation and

false light. No such claim against EAN is stated in the

Complaint. Instead, Saragosa alleged a claim against EAN in the

nature of negligent supervision. To the extent that damages

sought by Saragosa are based on mental injuries allegedly arising

out of and in the course of his employment by EAN, Saragosa's

negligence claims against EAN were properly barred. See Andrade,

145 Hawai#i at 279, 451 P.3d at 15. However, viewing the

Complaint in a light most favorable to Saragosa in order to

4
Saragosa did not provide this court with a transcript of the
hearing on the Motion to Dismiss, and therefore, there is no basis for
concluding that further arguments were raised. Saragosa's opposition to the
Motion to Dismiss did not include any declarations or exhibits. Nor did it
seek leave to amend the Complaint.

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determine whether the allegations contained therein could warrant

relief under any alternate theory, as we must do on a motion to

dismiss under HRCP Rule 12(b)(6),5 we conclude that the Circuit

Court erred in granting EAN's motion to dismiss with prejudice.6

Particularly in light of the early stage of the proceedings here,

the Circuit Court erred in failing to dismiss Saragosa's

negligence claim without prejudice, to allow Saragosa an

opportunity to seek leave to file an amended complaint that

included allegations in the nature of the torts of defamation and

false light. See Nakamoto, 142 Hawai#i at 267, 418 P.3d at 608

(noting the claims against the employer were for respondeat

superior liability related to the employees' alleged conduct).

For these reasons, the Circuit Court's July 15, 2021

Judgment is vacated. The February 24, 2021 Order of Dismissal is

affirmed with respect to the dismissal of Saragosa's claim

against EAN in the nature of negligent supervision, but vacated

to the extent that the order operated as a dismissal with

5
See, e.g., Kahala Royal Corp. v. Goodsill Anderson Quinn & Stifel,
113 Hawai#i 251, 266, 151 P.3d 732, 747 (2007).
6
See HRCP Rule 41(b)(3) (unless otherwise specified in order,
dismissal generally operates as an adjudication on the merits). As explained
by Professors Wright and Miller:
[D]ismissal under Rule 12(b)(6) generally is not with
prejudice—meaning, not immediately final or on the
merits—because the district court normally will give the
plaintiff leave to file an amended complaint to see if the
shortcomings of the original document can be corrected. The
federal policy of deciding cases on the basis of the
substantive rights involved rather than on technicalities
requires that the plaintiff be given every opportunity to
cure a formal defect in the pleading. This is true even
when the district judge doubts that the plaintiff will be
able to overcome the shortcomings in the initial pleading[.]
5B CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1357 (4th ed.
2024).

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prejudice. This case is remanded to the Circuit Court for

further proceedings consistent with this Summary Disposition

Order.

DATED: Honolulu, Hawai#i, November 20, 2024.

On the briefs: /s/ Katherine G. Leonard
Acting Chief Judge
Peter L. Steinberg
for Plaintiff-Appellant /s/ Karen T. Nakasone
Associate Judge
Kendra K. Kawai
for Defendants-Appellees /s/ Sonja M.P. McCullen
Associate Judge

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