Maxwell v. Advanced Sterilization Products Inc. et al

1:22-cv-00894CodOct 19, 2023

Full text

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Magistrate Judge S. Kato Crews
Civil Action No. 1:22-cv-00894-SKC
ERIN MAXWELL,
Plaintiff,
v.
ADVANCED STERILIZATION PRODUCTS, INC.,
Defendant.
ORDER RE: MOTION FOR PARTIAL JUDGMENT ON THE PLEADINGS
This matter is before the Court on Defendant Advanced Sterilization Products,
Inc.’s1 Motion for Partial Judgment on the Pleadings (“Motion”) under Fed. R. Civ. P.
12(c). Dkt. 29.2 Defendant moves for judgment on the pleadings as it pertains to
Plaintiff Erin Maxwell’s first and second claim in the Complaint. Defendant argues
that (1) Plaintiff’s claim for breach of an implied contract is facially void because
Defendant’s written policies contain no more than aspirational language with clear
1 Defendant, in its Answer to the Complaint, states that Plaintiff incorrectly named
the company. Defendant’s correct name is “Advanced Sterilization Products Services
Inc.”
2 The Court uses “Dkt. __” to refer to specific docket entries in CM/ECF.
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disclaimers, and (2) Plaintiff’s wrongful termination claim based on public policy fails
because Plaintiff does not identify an actionable public policy. Id. at p. 1-2.
Following the parties’ consent, the case was referred to this Court for all
purposes pursuant to 28 U.S.C. § 636(c). Dkt. 16. The Court has carefully considered
the Complaint (Dkt. 5), Defendant’s Motion for Partial Judgment on the Pleadings
(Dkt. 29), Plaintiff’s Response (Dkt. 33), Defendant’s Reply (Dkt. 37), and applicable
law. A hearing is unnecessary.
Because the Court finds the only implied-contract theories that are plausibly
alleged in the Complaint are implied contracts based on Defendant’s Standards of
Conduct and Code of Ethics, the Motion is PARTIALLY GRANTED and PARTIALLY
DENIED as to this claim. And because the Complaint fails to plausibly allege an
appropriate source of public policy, the Motion is GRANTED as to the wrongful
discharge claim.
A. BACKGROUND3
Defendant, a subsidiary of Fortive Corporation (“Fortive”), is a medical-device
company that provides infection prevention services. Dkt. 5 at ¶ 5. Defendant and its
predecessor, Johnson and Johnson, hired Plaintiff in 2012. Id. at ¶ 7. Prior to her
discharge from Defendant, Plaintiff worked as a Regional Sales Director. Id. at ¶ 6.
3 For purposes of the Background, the Court accepts the well-pleaded facts in the
Complaint as true and views the allegations in the light most favorable to the non-
movant. Casanova v. Ulibarri, 595 F.3d 1120, 1124-25 (10th Cir. 2010).
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During her employment, Defendant gave Plaintiff an Employee Handbook
(“Handbook”), Fortive Standards of Conduct (“Standards of Conduct”), and a U.S.
Government Contracting Code of Business Ethics and Conduct (“Code of Ethics”). Id.
at ¶ 11. Plaintiff alleges these policies prevent retaliation in the workplace by
establishing an employee reporting process known as “Speak Up.” Id. at ¶ 10-13.
In 	about 	February 	2021, 	Plaintiff 	raised 	compliance 	concerns 	with 	her
superior, Doug Brooks (“Brooks”), relating to pricing offered to a customer that she
believed violated certain agreements with the customer. Id. at ¶ 21. According to
Plaintiff, a Corporate Accounts Director instructed her to offer lower pricing to a
customer without proper internal or external approvals. Id. Plaintiff expressed
concerns to Brooks that doing so violated anti-kickback regulations. Id. She alleges
that Brooks dismissed her concerns and told her to follow the direction of the
Corporate Accounts Director. Id. at ¶ 22. Plaintiff also reported additional concerns
to Brooks that she was being harassed by other employees for having reported her
compliance concerns. Id. at ¶ 23. Brooks stated he would investigate these issues. Id.
at ¶ 24.
In June 2021, Brooks and a representative from the Human Resources
Department (“HR”), Elle Wilson (“Wilson”), told Plaintiff they received complaints
regarding her behavior. Id. at ¶ 25. In response, Plaintiff argued she was being
retaliated against for reporting her compliance concerns. Id. In August 2021, she was
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then told the concerns others raised about her behavior had been resolved. Id. at ¶
26.
In September 2021, Plaintiff continued to have compliance concerns. Id. at ¶
28. On November 9, 2021, she reported her concerns to Brooks, who called Plaintiff
on November 12 and told her that Brooks reported her concerns to the Compliance
Department and HR. Id. at ¶ 29. On November 15, Plaintiff wrote to the Regional
Compliance Leader, Ximena Cajas Gonzalez (“Cajas Gonzalez”), who then scheduled
a confidential call with Plaintiff on November 16. Id. at ¶ 30. Then, on November 17,
2021, Wilson scheduled a call with Plaintiff in which she asked Plaintiff if she was
interested in an “exit plan” to leave the company. Id. at ¶ 31.
Following these events, on November 20, 2021, Plaintiff submitted a Speak Up
Complaint because she believed she was the subject of retaliation. Id. at ¶ 32. When
Plaintiff met with Cajas Gonzalez on November 22, 2021, he told her an investigation
would occur and that he would report back to her. Id. at ¶ 34. But Plaintiff never
heard back. Id. Instead, on December 17, 2021, Brooks and HR representative Estelle
Pellegrino (“Pellegrino”) terminated Plaintiff’s employment during a telephone call,
citing elimination of her job as the reason. Id. at ¶¶ 35, 36. Her termination was
effective December 31, 2021. Id.
Plaintiff subsequently sued Defendant asserting claims for breach of implied
contract, wrongful termination in violation of public policy, and a violation of the
Colorado Wage Claim Act. Id. at ¶¶ 52, 65, 72. Defendant moves for judgment on the
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pleadings as it pertains to the claim for breach of an implied contract and the
wrongful termination claim. Id. at p. 1-2.
B. LEGAL PRINCIPLES
“After the pleadings are closed – but early enough not to delay trial – a party
may move for judgment on the pleadings.” Fed. R. Civ. P. 12(c). A motion for judgment
on the pleadings contends that the moving party is entitled to judgment based on the
pleadings alone; the court, therefore, is typically limited to an examination of the
sufficiency of the pleadings. Id. But a court may also consider written documents
attached to the complaint or answer, and any matter of which the court can take
judicial notice for the factual background of the case. Tuttle v. Nationwide Affinity
Ins. Co. of Am., No. 19-cv-00526-NYW, 2019 WL 2208513, at *2 (D. Colo. May 22,
2019).
A judgment on the pleadings should not be granted “unless the moving party
has clearly established that no material issue of fact remains to be resolved and the
party is entitled to judgment as a matter of law.” Park Univ. Enters., Inc. v. Am. Cas.
Co. of Reading, Pa., 442 F.3d 1239, 1244 (10th Cir. 2006) (internal quotations
omitted), abgrogated on other grounds by Magnus, Inc. v. Diamond State Ins. Co., 545
F. App’x 750, 753 (10th Cir. 2013). A motion for a judgment on the pleadings “only
has utility when all material allegations of fact are admitted or not controverted in
the pleadings and only questions of law remain to be decided by the district court.”
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5C Charles Alan Wright et al., Federal Practice & Procedure § 1367 (3d ed., Apr. 2019
update).
“A motion for judgment on the pleadings under Rule 12(c) is treated as a motion
to dismiss under Rule 12(b)(6).” Atl. Richfield Co. v. Farm Credit Bank of Wichita,
226 F.3d 1138, 1160 (10th Cir. 2000). As such, a court may dismiss a complaint for
failure to state a plausible claim upon which relief can be granted. See Fed. R. Civ. P.
12(b)(6); Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009); Bell Atl. Corp. v. Twombly,
550 U.S. 544, 554 (2007).
C. DISCUSSION
1. 	Breach of Implied Contract Claim
In support of her claim for breach of implied contract, Plaintiff relies on
Defendant’s “U.S. Employee Handbook, which incorporates Fortive Standards of
Conduct and the Fortive ‘Speak Up’ Roadmap[, and] the US Government Contracting
Code of Business Ethics and Conduct[.]” Dkt. 5 at ¶46. She alleges that these “policies
and procedures” “imposed a duty on Plaintiff to notify ASP of any violations of such
policies and procedures, and further created an implicit contract or promise that ASP
will not retaliate against the individual who has notified management of such
violations.” Id. at ¶50. She then alleges Defendant “breached its implied contract and
promise of protection against retaliation by terminating Plaintiff for complying with
the requirement to report violations of such policies and procedures.” Id. at ¶52.
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Defendant argues it cannot be contractually bound because its policies and
procedures contain multiple contractual disclaimers. Dkt. 29, p. 5. It further argues
its policies and procedures contain mere aspirational language lacking any explicit
promise or commitment. Id. at p. 8. Defendant contends, as a matter of law, no
contract exists implied or otherwise.
An implied contract may arise out of an employment manual, handbook or any
other document reflecting company policy. Vasey v. Martin Marietta Corp., 29 F.3d
1460, 1464 (10th Cir. 1994). To succeed on an implied contract theory, an employee
must show: (1) “the employer’s actions manifested an intent to be bound by the
provisions of that document [;]” and (2) “that the offer was accepted and consideration
provided by simply indicating that their continued employment with the company
could at least reasonably have been motivated by the terms of the offer.” Frymier v.
Ampex Corp., 61 F.3d 757, 769-70 (10th Cir. 1995). To establish an employer’s binding
intent (factor 1), the terms of the offer must be “communicated to all employees,”
“sufficiently definite and detailed,” and “the offer must not include a disclaimer
provision.” Id.
Plaintiff 	asserts 	Defendant 	made 	offers 	of 	no-retaliation 	in 	multiple
documents, including: (1) in the Employee Handbook; (2) in the Standards of Conduct;
and (3) in the Code of Ethics. The Court has reviewed and considered these policy
documents, and may do so without converting the Motion to a motion for summary
judgment because these policies are alleged in the Complaint and are central to
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Plaintiff’s claims. U.S. Olympic Comm. v. Am. Media, Inc., 156 F. Supp. 2d 1200, 1204
(D. Colo. 2001).
a. 	The Handbook
If an employer includes a clear and conspicuous disclaimer in an employee
handbook indicating the employer did not intend to create a contract, the disclaimer
can void indications that an employer is bound to comply with certain policies.
Anderson v. Regis Corp., 185 F. App’x 768, 771 (10th Cir. 2006). Courts in the Tenth
Circuit have repeatedly held such disclaimers to be effective in precluding a claim
based on an implied contract. See, e.g., Jones v. Denver Pub. Sch., 427 F.3d 1315, 1324
(10th Cir. 2005); Vance v. TOLMAR, Inc., 2018 WL 1456275, at *8 (D. Colo. Mar. 23,
2018).
Plaintiff’s Complaint fails to plead a claim for breach of implied contract that
relies on the Handbook. The Handbook contains guidelines to help employees
understand their workplace and work expectations. Dkt. 33-7 at ¶ 3. As a matter of
law, the Handbook does not constitute an implied contract between the parties
because it contains an explicit disclaimer that it is neither a contract of employment
nor a legal document. Dkt. 29-1, p. 5. Such a disclaimer by Defendant is effective in
precluding a claim based on an implied contract theory. Jones, 427 F.3d at 1324;
Vance, 2018 WL 1456275, at *8. Therefore, as a matter of law, the Handbook cannot
be used to plausibly allege this claim.
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b. 	The Standards of Conduct4
The Standards of Conduct is a resource to help employees operate with
integrity. Dkt. 33-2 at ¶ 3. In considering this document, the Court finds the
Complaint plausibly alleges this policy supports a breach of implied contract, at least
at this stage of the Court’s consideration.
To establish Defendant’s binding intent, Plaintiff cites the Standards of
Conduct’s specific language regarding Defendant’s no-retaliation policy. Dkt. 5 at ¶
12, 14 (e.g., “ASP prohibits retaliation”).5 And the Court notes the Standards of
Conduct expressly provide: “Remind them of our zero tolerance policy on retaliation.”
(Dkt. 33-2 at p.14); “We are Courageous. As employees, we face problems head on and
promptly report any behavior that we believe violates our Core Values or our Code,
knowing 	that 	Fortive 	will 	not 	tolerate 	retaliation.” 	(Id. 	at 	p.17); 	“Don’t 	Fear
Retaliation. . .. Fortive absolutely prohibits retaliation against anyone who makes a
report or participates in an investigation.” (Id. at p.18). This language in the
4 While Plaintiff alleges the Handbook “incorporates” the Standards of Conduct and
Code of Ethics, Dkt. 5 at ¶ 46, the Handbook instead indicates the Standards of
Conduct are “in addition to” the Handbook. Dkt. 33-7 at p.3. The Court, therefore,
construes the Standards of Conduct as a policy document separate and apart from
the Handbook. And because the Code of Ethics is referred to as a “supplement” to the
Standards of Conduct, Dkt. 29-3 p. 2, it too stands alone (or possibly together with
the 	Standards 	of 	Conduct). 	Lastly, 	the 	“Speak 	Up” 	Roadmap 	alleged 	in 	the
Complaint, is part-and-parcel of the Standards of Conduct. See generally Dkt. 33-2.
5 The Complaint primarily cites to the Handbook, which the Court has found
insufficient. However, the Complaint alleges that similar assurances exist in the
Standards of Conduct (Dkt. 5 at ¶ 11).
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Standards of Conduct is definite and detailed, rather than vague and aspirational.
See Frymier, 61 F.3d at 770 (“The manual included a specific schedule of benefits and
employed 	language 	that 	strongly 	indicated 	Ampex’s 	intention 	to 	be 	bound.”).
Furthermore, the Complaint plausibly alleges that the terms in the Standards of
Conduct are communicated to all employees. Dkt. 5 at ¶ 47.
The parties dispute which of two versions of the Standards of Conduct (2016
or 2020) is applicable to this case. In Defendant’s Motion, it refers to the 2016 version
(Dkt. 29-2), while Plaintiff’s Response refers to the 2020 version. Dkt. 33-2. The 2016
version apparently contains a disclaimer, while the 2020 version does not. Viewing
the facts in the light most favorable to the non-movant, the Complaint plausibly
alleges that the Standards of Conduct contain no disclaimer, which is supported by
the 2020 version of the document. Dkt. 5 at ¶ 49; cf. Peru v. T-Mobile USA, Inc., 897
F. Supp. 2d 1078, 1087 (“this language clearly and unambiguously advises employees
that T-Mobile’s statements of policies may be ‘modified or disregarded’ at any point,
purely at T-Mobile’s discretion. Accordingly, such policies cannot amount to a promise
enforceable.”). Finally, the Complaint plausibly asserts that Plaintiff’s continued
employment could at least reasonably have been motivated by the terms of the
implied contract. Id. at ¶ 51. For these reasons, Plaintiff has plausibly alleged a
breach of implied contract claim based on the 2020 Standards of Conduct.
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c. 	The Code of Ethics
The Code of Ethics outlines compliance requirements. Id. at ¶ 16. Because it is
intended to supplement the Standards of Conduct, the Court views it in the same
manner as the 2020 Standards of Conduct. Dkt. 29-3 p. 2.
The Complaint points to language from the Code of Ethics that plausibly
alleges a breach of implied contract claim. Id. at p. 3; Dkt. 5 at ¶ 20 (“A violation of
ASP’s non-retaliation policy will lead to discipline, including termination.” “If [an
employee] suspects someone is retaliating against [them], [the employee] should
contact one of the resources[.]”). Even further, the Code of Ethics contains this express
language: “ASP employees who report violations and potential violations will be
treated with respect. . .. ASP employees will never be penalized for reporting in good
faith.” Dkt. 29-3 at p.3. This language is not vague and aspirational, as Defendant
contends. Further, like the Standards of Conduct, there is no disclaimer in the Code
of Ethics. As such, Plaintiff’s allegations are sufficient, at the pleading stage, to
support a claim for breach of an implied contract not to retaliate against Plaintiff for
complying with the Standards of Conduct and the Code of Ethics.
2. 	Wrongful Termination Claim
Plaintiff argues her termination “violates established public policy of the State
of Colorado that an employer may not retaliate against an employee who attempts to
prevent an employer’s participation in an act that violates a law or rule and
regulations of the United States.” Dkt. 5 at ¶ 61. Defendant argues Plaintiff fails to
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mention what specific public policy Defendant violated, and only makes passing
reference to anti-kickback statutes. Id. at ¶ 57; Dkt. 29 at p. 2. Defendant asserts
further that private policies cannot be used to establish a public policy claim, and
Plaintiff has failed to sufficiently identify a specific public policy. Dkt. 29, p. 11. The
Court agrees with Defendant, and therefore, grants the motion with regard to the
wrongful termination claim.
“Colorado recognizes both state and federal mandates as ‘public policy’ that
properly supports a wrongful discharge claim.” Cejka v. Vectrus Sys. Corp., 291 F.
Supp. 3d 1231, 1245 (D. Colo. 2018). A claim for wrongful discharge is “a limited
exception to at-will employment insofar as an employee who is discharged in violation
of a clearly-established public policy may challenge her termination.” Peru, 897 F.
Supp. 	2d 	at 	1087. 	The 	underlying 	rationale 	of 	the 	public-policy 	exception 	to
termination of an at-will employee “is to prohibit an employer from placing an
employee in the position of keeping a job only by performing an illegal act, forsaking
a public duty, or foregoing a job-related right or privilege.” Martin Marietta Corp. v.
Lorenz, 823 P.2d 100, 109 (Colo. 1992).
Both parties assume and discuss the prima facie case for wrongful termination
in violation of public policy based on the theory of a plaintiff’s refusal to comply with
her employer’s unlawful directive. See Lawson v. Heartland Payment Sys., LLC, 548
F. Supp. 3d 1085, 1090 (D. Colo. 2020); Rocky Mountain Hospital & Medical Services
v. Mariani, 916 P.2d 519 (Colo. 1996). Namely, the allegation that Plaintiff objected
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to the Corporate Accounts Director’s request for a pricing discount to a customer that
Plaintiff believed violated the law. Dkt. 5 at ¶ 21-22, 56, 61 (e.g., “Plaintiff internally
objected to illegal practices in which she believed ASP was engaging.”). But the
Complaint instead pleads the claim based on the theory that Plaintiff was discharged
for having exercised a right or having performed a public duty. See id. at ¶ 60 (“ASP
terminated Plaintiff as a direct and proximate result of her reporting her concerns
and filing her complaint regarding the government compliance concerns as set forth
above.”). She even argues this theory in her Response while citing the wrong prima
facie case. Dkt. 33 at p. 15 (e.g., “Maxwell was terminated as a result of exercising
her right to report potential ethical violations without any retaliation.”). This matters
generally because claims for wrongful discharge in violation of public policy that are
premised on the exercise of a right or public duty have a different prima facie case.
See Lathrop v. Entenmann’s, Inc., 770 P.2d 1367, 1373 (Colo. App. 1989); Kearl v.
Portage Envtl., Inc., 205 P.3d 496, 499 (Colo. App. 2008). But the distinction is of no
matter here because, under either prima facie case, the Complaint fails to plausibly
allege an appropriate source of public policy.
a. 	Anti-Kickback Statute
The Complaint only generally and loosely references Defendant’s alleged
noncompliance with “anti-kickback statutes” or “anti-kickback regulations.” Dkt. 5 at
¶¶21, 57. While the Complaint does identify the Anti-Kickback Act of 1986, 41 U.S.C.
§ 8701 et seq., Plaintiff fails to plead what aspects of the Act she complained about to
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determine whether she plausibly alleged a requisite public policy.6 For example, with
only general mentions of anti-kickback regulations or statutes in the Complaint, the
Plaintiff then defines the term “kickback” using a definition contained in Defendant’s
internal policies. Dkt. 5 at ¶ 17. And while she cites 41 U.S.C. §§ 1303(a)(1) and
1121(b) in her Response, Plaintiff cannot amend her Complaint with her Response.
Sudduth v. Citimortgage, Inc., 79 F. Supp. 3d 1193, 1198 (D. Colo. 2015) (“Plaintiffs
cannot amend their complaint by adding factual allegations in response to [a] motion
to dismiss.”).
As a result, Plaintiff’s statements regarding the wrongful termination claim
are conclusory at best and cannot be afforded weight by the Court. See, e.g., id. at ¶
65 (“ASP’s termination of Plaintiff violates public policy.”). Under the Twombly-Iqbal
standard, the Court will disregard conclusory statements and only look to the
remaining, well-pleaded factual allegations. When doing so, the Court struggles to
find sufficient factual allegations to support Plaintiff’s wrongful termination claim.
Since “[n]ot all potential sources of public policy are of sufficient gravity to outweigh
the precepts of at-will employment,” Crawford Rehab. Servs., Inc. v. Weissman, 938
6 The Complaint, in ¶ 16, generally cites the Anti-Kickback Act of 1986, 41 U.S.C.
§ 8701 et seq. For some reason, in its Motion, Defendant instead cites and discusses
the 	Anti-Kickback 	Statute, 	42 	U.S.C. 	§ 	1320a-7b, 	which 	is 	different 	and 	not
mentioned in the Complaint, nor in Plaintiff’s Response. See United States ex rel.
Haight v. RRSA (Com. Div.), LLC, No. 3:16-CV-1975-S, 2020 WL 6163139, at *5, n.
12 (N.D. Tex. Oct. 20, 2020) (“The Anti-Kickback Act, 41 U.S.C. § 8702 et seq., must
be distinguished from the Anti-Kickback Statute (‘AKS’), 42 U.S.C. § 1320a et seq.,
which can form the basis of an [False Claims Act] claim in the healthcare context.”).
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P.2d 540, 553 (Colo. 1997), Plaintiff must allege more than general references to anti-
kickback regulations or statutes. Indeed, she must allege sufficient facts to plausibly
establish a clearly expressed public policy relating to her basic rights or duties as an
employee. Id. (“[W]e discern no clearly expressed public policy relating to an
employee’s basic rights or duties.”).
For these reasons, Plaintiff has failed to plausibly allege a clearly expressed
public policy based on anti-kickback regulations or statutes to sustain this claim.
b. 	Internal Policy
Colorado courts have held that private employment codes are not considered
public policy. See Jaynes v. Centura Health Corp., 148 P.3d 241, 245 (Colo. App. 2006)
(“But we need not resolve that dispute because the ANA Code and the AACN Policy
are purely private pronouncements, violation of which subjects a nurse to no adverse
consequences. Recognizing such pronouncements as embodiments of public policy
sufficient to sustain a wrongful discharge claim would extend Mariani, which we
decline to do.”). This is because “[t]he General Assembly is the branch of government
charged with creating public policies, and the courts may only recognize and enforce
such policies.” Crawford Rehab. Servs., Inc. v. Weissman, 938 P.2d 540, 553 (Colo.
1997) (“Weissman”).
Plaintiff’s allegations that attempt to make public policy out of Defendant’s
private policies fail to state a claim as a matter of law. Public policy “must concern
behavior that truly impacts the public in order to justify interference into an
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employer’s business decisions.” Weissman, 938 P.2d at 552 (internal citation omitted).
Thus, Plaintiff’s citation to internal policies fails to sufficiently allege a wrongful
termination claim as a matter of law.
* 	* 	*
For the reasons share above, the Court ORDERS the Motion GRANTED IN
PART, and DENIED IN PART, as follows:
1. 	the claim for breach of implied contract is DISMISSED, with prejudice,
as based on the employee handbook—the claim may proceed as based on the 2020
Standards of Conduct and Code of Ethics;
2. 	the wrongful termination claim is DISMISSED, with prejudice, as based
on Defendant’s internal policies; and
3. 	the wrongful termination claim is DISMISSED, without prejudice, as
based on anti-kickback sources or theories of public policy.
As a result, this matter shall proceed on Plaintiff’s claim for breach of implied
contract (as limited above), and her Colorado Wage Act claim.
DATED: October 19, 2023
BY THE COURT:
S. Kato Crews
United States Magistrate Judge
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