Peace v. Panorama Orthopedics and Spine Center, Inc.

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Chief Judge Philip A. Brimmer
Civil Action No. 23-cv-01027-PAB-JPO
WILLIAM J. PEACE, M.D., an individual,
Plaintiff and Counter Defendant,
v.
PANORAMA ORTHOPEDICS AND SPINE CENTER, INC., d/b/a PANORAMA
ORTHOPEDICS & SPINE CENTER, P.C.,1
Defendant and Counter Claimant.
____________________________________________________________________
ORDER
_____________________________________________________________________
This matter is before the Court on Plaintiff/Counterclaim Defendant’s Fed. R. Civ.
P. 12(B)(6) Motion to Dismiss and Fed. R. Civ. P. 12(F) Motion to Strike [Docket No. 35]
filed by Dr. William J. Peace. Defendant and counter claimant Panorama Orthopedics
and Spine Center, Inc., d/b/a Panorama Orthopedics & Spine Center, P.C.
(“Panorama”) filed a response. Docket No. 37. Dr. Peace filed a reply. Docket No. 41.
The Court has jurisdiction pursuant to 28 U.S.C. § 1331.
1 On June 7, 2023, the Court granted the parties’ motion to amend the case
caption to reflect the correct entity name for defendant Panorama Orthopedics and
Spine Center, Inc. Docket No. 17.
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I. 	BACKGROUND
A. Factual Background2
Dr. Peace is a board-certified orthopedic surgeon and a Lieutenant Colonel in the
Colorado Air National Guard. Docket No. 1 at 1, ¶ 1; Docket No. 34 at 1, ¶ 1.
Panorama is a Colorado corporation that provides orthopedic, sports medicine, spine
care, joint replacement, imaging, physical therapy, and performance training services at
various facilities in Colorado. Docket No. 1 at 2, ¶¶ 7, 9; Docket No. 34 at 2, ¶¶ 7, 9.
Panorama is plaintiff’s employer. Docket No. 34 at 1, ¶ 1.
Panorama’s predecessor company, Panorama Orthopedics & Spine Center, P.C.
(the “predecessor company”), hired Dr. Peace on October 1, 2012 for a full-time
physician position with a base salary of $300,000 per year. Docket No. 1 at 4, ¶¶ 18,
21; Docket No. 34 at 3, ¶¶ 18, 21. On January 1, 2016, Dr. Peace became an
employee shareholder in the practice. Docket No. 1 at 4, ¶ 23; Docket No. 34 at 3,
¶ 23. As an employee shareholder, Dr. Peace is required to contribute to overhead
costs, proportionate to his ownership interest, and his current overhead contribution
amounts to approximately $850,000 per year. Docket No. 1 at 5, ¶ 24; Docket No. 34 at
3, ¶ 24.
In early 2022, the predecessor company merged with another company to
become Panorama. Docket No. 1 at 4, 6, ¶¶ 18, 33; Docket No. 34 at 3-4, ¶¶ 18, 33. In
June 2022, Panorama re-negotiated Dr. Peace’s employment agreement, which
2 The facts below are taken from the amended answer, Docket No. 34, and are
presumed to be true for purposes of ruling on Dr. Peace’s motion to dismiss. See
Brown v. Montoya, 662 F.3d 1152, 1162 (10th Cir. 2011). This section also includes
facts from plaintiff’s complaint that Panorama admitted in its answer.
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superseded his prior agreement from 2012. Docket No. 1 at 6, ¶ 34; Docket No. 34 at
4, ¶ 34.
On June 27, 2022, Dr. Peace signed a Letter of Transmittal for Equity Interests
(“Letter of Transmittal”) as part of the Agreement and Plan of Merger (“Merger
Agreement”) that Panorama entered into. Docket No. 34 at 8, ¶ 1.3 The Letter of
Transmittal states
By executing and delivering this Letter of Transmittal, the undersigned hereby
acknowledges that he or she hereby approves of the Merger Agreement and the
transactions contemplated thereby and is becoming a party to the Merger
Agreement as a ‘Seller’ for all purposes thereunder. Further, the undersigned
hereby acknowledges and agrees to the terms and conditions set forth in the
Merger Agreement[.]
Id., ¶ 2; see also Docket No. 35-2 at 6. Dr. Peace appointed Mark J. Conklin, M.D., as
“Sellers’ Representative to act on the undersigned’s behalf pursuant to and in
accordance with the Merger Agreement.” Docket No. 35-2 at 7.
3 Dr. Peace requests that the Court consider several documents outside the
pleadings, including the Letter of Transmittal and the Merger Agreement. Docket No.
35 at 4-6 (citing Docket Nos. 35-1, 35-2). Generally, a court should not consider
evidence beyond the pleadings when ruling on a 12(b)(6) motion, Waller v. City & Cnty.
of Denver, 932 F.3d 1277, 1282 (10th Cir. 2019), and if the court considers matters
outside the complaint, “the motion must be treated as one for summary judgment under
Rule 56.” Fed. R. Civ. P. 12(d). However, the Tenth Circuit has recognized a “limited
exception” to this rule: the “district court may consider documents referred to in the
complaint if the documents are central to the plaintiff’s claim and the parties do not
dispute the documents’ authenticity.” Waller, 932 F.3d at 1282; see also GFF Corp. v.
Associated Wholesale Grocers, Inc., 130 F.3d 1381, 1384 (10th Cir. 1997) (recognizing
that “if a plaintiff does not incorporate by reference or attach a document to its
complaint, but the document is referred to in the complaint and is central to the plaintiff’s
claim, a defendant may submit an indisputably authentic copy to the court to be
considered on a motion to dismiss”). Panorama does not contest the authenticity of the
documents. See Docket No. 37 at 5, 7. The Court will consider the Letter of
Transmittal and the Merger Agreement because the documents are referenced in
Panorama’s pleading, are central to the breach of contract counterclaim, and the parties
do not dispute the documents’ authenticity. See Docket No. 34 at 8-9, ¶¶ 1-16.
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On June 29, 2022, Panorama executed the Merger Agreement. Docket No. 34
at 8, ¶ 3. The closing of the Merger Agreement occurred on July 19, 2022. Id., ¶ 4. Dr.
Peace is a “Seller” under the Merger Agreement. Id., ¶ 5. Under Section 7.9 of the
Merger Agreement, Dr. Peace agreed to release and discharge all potential claims he
may have had against Panorama prior to the closing date. Id., ¶ 6. Specifically, Section
7.9(a) states that
Effective as of the Closing, each Seller on such Seller’s own behalf and on behalf
of such Seller’s past, present and future Affiliates, agents, attorneys,
administrators, heirs, executors, Related Parties, trustees, beneficiaries,
representatives, successors and assigns claiming by or through such Seller
(collectively, the “Related Persons”), hereby absolutely, unconditionally and
irrevocably RELEASES and FOREVER DISCHARGES each Target Company
and their respective past, present and future directors, managers, members,
equity holders, officers, employees, agents, Subsidiaries, Affiliates, attorneys,
representatives, successors and assigns (each, a “Released Party” and
collectively, the “Released Parties”) from the following (collectively, the
“Releasing Party Claims”): all claims (including any derivative claim on behalf of
any Person), actions, causes of action, suits, arbitrations, proceedings, debts,
liabilities, obligations, sums of money, accounts, covenants, contracts,
controversies, agreements, promises, damages, fees, expenses, judgments,
executions, indemnification rights, claims and demands arising out, relating to,
against or in any way connected with a Released Party, including any and all
actions, activities, assets, liabilities and the ownership of any securities, whether
known or unknown, suspected or unsuspected, absolute or contingent, direct or
indirect or nominally or beneficially possessed or claimed by such Seller, whether
the same be in administrative proceedings, in arbitration, at law, in equity or
mixed, which such Seller ever had, now has or hereafter may have against any
or all of the Released Parties, in each case, in respect of any and all agreements,
liabilities or obligations entered into or incurred on or prior to the Closing, or in
respect of any event occurring or circumstances existing on or prior to the
Closing, whether or not relating to claims pending on, or asserted after, the
Closing; provided, however, the foregoing release does not extend to, include or
restrict or limit in any way, and such Seller hereby reserves such Seller’s rights, if
any, to pursue any and all Releasing Party Claims that such Seller may now or in
the future have solely on account of (i) rights of such Seller under this Agreement
and (ii) any rights or claims for benefits (other than any severance or deferred
compensation) under benefit plans of any Target Company.
Docket No. 35-1 at 1-2. Section 7.9(b) further provides that
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Effective as of the Closing, each Seller hereby expressly waives any rights such
Seller may have under applicable Laws to preserve Releasing Party Claims
which such Seller does not know or suspect to exist in such Seller’s favor at the
time of executing the release provided in Section 7.9(a). Each Seller
understands and acknowledges that such Seller may discover facts different
from, or in addition to, those which such Seller knows or believes to be true with
respect to the claims released herein, and agrees that the release provided in
Section 7.9(a) shall be and remain effective in all respects notwithstanding any
subsequent discovery of different or additional facts.
Id. at 2. Under Section 7.9(c), Dr. Peace agreed to refrain from commencing any suit
against Panorama based on the released claims. Docket No. 34 at 8, ¶ 7; see also
Docket No. 35-1 at 2.
Dr. Peace received substantial monetary compensation in consideration for
signing the Letter of Transmittal and agreeing to the terms of the Merger Agreement.
Docket No. 34 at 8, ¶ 8. The consideration that Dr. Peace received in return for signing
the Letter of Transmittal exceeds the damages he seeks in this case and exceeds the
value of any claims he released in the Merger Agreement. Id. at 9, ¶ 9. Panorama has
performed its obligations under the Merger Agreement. Id., ¶ 13. Panorama has
incurred damages. Id., ¶ 16.
B. Procedural Background
On April 24, 2023, Dr. Peace filed this case. Docket No. 1. Dr. Peace asserts
two claims against Panorama: (1) a claim for discrimination under the Uniform Services
Employment and Reemployment Rights Act (“USERRA”), 38 U.S.C. § 4311 et seq.; and
(2) a claim for a permanent injunction. Id. at 7-9, ¶¶ 39-56.4 Specifically, Dr. Peace
4 Dr. Peace’s complaint also included claims against another defendant, United
Musculoskeletal Partners, LLC. Docket No. 1. However, on June 16, 2023, the parties
agreed to dismiss all claims against United Musculoskeletal Partners, LLC without
prejudice pursuant to Fed. R. Civ. P. 41(a)(1)(A)(ii). See Docket Nos. 19-20.
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alleges that Panorama violated USERRA by (i) charging Dr. Peace for overhead
contributions while he was on military leave; and (ii) informing Dr. Peace that he would
be limited to eight weeks of military leave per year. Id. at 5-7, ¶¶ 28-29, 31-32, 36-37,
42-43. On July 28, 2023, Dr. Peace filed a notice of computation of damages, stating
that he is seeking economic damages for overhead contributions from 2016 to the
present. Docket No. 29 at 2.
On September 6, 2023, Panorama filed an amended answer, asserting the
affirmative defense of laches, Docket No. 34 at 7, ¶ 1, as well as a counterclaim against
Dr. Peace for breach of contract. Id. at 8-9, ¶¶ 1-16. Panorama alleges that Dr. Peace
breached his contractual obligations under the Letter of Transmittal and Merger
Agreement when he filed this lawsuit because Dr. Peace released any claims against
Panorama that arose prior to the closing date, July 19, 2022. Id. at 9, ¶¶ 10, 12, 15. On
September 27, 2023, Dr. Peace filed a motion requesting that the Court dismiss
Panorama’s counterclaim under Fed. R. Civ. P. 12(b)(6) and strike Panorama’s
affirmative defense of laches under Fed. R. Civ. P. 12(f). Docket No. 35.
II. 	LEGAL STANDARD
A. Fed. R. Civ. P. 12(b)(6)
To survive a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil
Procedure, a complaint must allege enough factual matter that, taken as true, makes
the plaintiff’s “claim to relief . . . plausible on its face.” Khalik v. United Air Lines, 671
F.3d 1188, 1190 (10th Cir. 2012) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). “The ‘plausibility’ standard requires that relief must plausibly follow from the
facts alleged, not that the facts themselves be plausible.” RE/MAX, LLC v. Quicken
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Loans Inc., 295 F. Supp. 3d 1163, 1168 (D. Colo. 2018) (citing Bryson v. Gonzales, 534
F.3d 1282, 1286 (10th Cir. 2008)). Generally, “[s]pecific facts are not necessary; the
statement need only ‘give the defendant fair notice of what the claim is and the grounds
upon which it rests.’” Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam) (quoting
Twombly, 550 U.S. at 555) (alterations omitted). A court, however, does not need to
accept conclusory allegations. See, e.g., Hackford v. Babbit, 14 F.3d 1457, 1465 (10th
Cir. 1994) (“we are not bound by conclusory allegations, unwarranted inferences, or
legal conclusions.”).
“[W]here the well-pleaded facts do not permit the court to infer more than the
mere possibility of misconduct, the complaint has alleged – but it has not shown – that
the pleader is entitled to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (quotations
and alterations omitted); see also Khalik, 671 F.3d at 1190 (“A plaintiff must nudge [his]
claims across the line from conceivable to plausible in order to survive a motion to
dismiss.” (quoting Twombly, 550 U.S. at 570)). If a complaint’s allegations are “so
general that they encompass a wide swath of conduct, much of it innocent,” then
plaintiff has not stated a plausible claim. Khalik, 671 F.3d at 1191 (quotations omitted).
Thus, even though modern rules of pleading are somewhat forgiving, “a complaint still
must contain either direct or inferential allegations respecting all the material elements
necessary to sustain a recovery under some viable legal theory.” Bryson, 534 F.3d at
1286 (alterations omitted).
B. Fed. R. Civ. P. 12(f)
Federal Rule of Civil Procedure 12(f) permits the Court to “strike from a pleading
an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.”
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However, motions under Rule 12(f) are viewed with disfavor, both because striking a
portion of a pleading is a drastic remedy and because such motions are often used as a
dilatory or harassing tactic. A1 Garage Door Serv., L.L.C. v. West, No. 21-cv-01821-
PAB-NRN, 2022 WL 952874, at *1 (D. Colo. Mar. 30, 2022) (collecting cases); see also
5C Arthur R. Miller et al., Fed. Prac. & Proc. § 1380 (3d ed. June 2024). Thus, motions
to strike are typically granted only when the allegations have no bearing on the
controversy and the movant can show prejudice. Sierra Club v. Young Life Campaign,
Inc., 176 F. Supp. 2d 1070, 1086 (D. Colo. 2001). “An affirmative defense is insufficient
if, as a matter of law, the defense cannot succeed under any circumstance.” Chavez v.
Bd. of Cnty. Comm’rs of Lake Cnty., 423 F. Supp. 3d 1106, 1108 (D. Colo. 2019)
(quoting FDIC v. Isham, 782 F. Supp. 524, 530 (D. Colo. 1992)). An affirmative
defense, however, “should not be stricken if there is any real doubt about its validity,
and the benefit of any doubt should be given to the pleader.” Sender v. Mann, 423 F.
Supp. 2d 1155, 1163 (D. Colo. 2006) (citation, alterations, and internal quotations
omitted). Whether to strike a portion of a pleading is within the trial court’s discretion.
Scherer v. Dep’t of Educ., 78 F. App’x 687, 689 (10th Cir. 2003) (unpublished)
(reviewing a district court’s ruling on a motion to strike for abuse of discretion); Purzel
Video GmbH v. Smoak, 11 F. Supp. 3d 1020, 1030-31 (D. Colo. 2014); see also Fed. R.
Civ. P. 12(f) (denoting only that allegations that are subject to Rule 12(f) “may” be
stricken).
Courts in this district have held that the requirement that a complaint set forth
sufficient factual matter allowing for a reasonable inference that the pleader is entitled to
relief, as set forth in Twombly and Iqbal, does not apply to affirmative defenses. See,
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e.g., Crocs, Inc. v. Joybees, Inc., No. 21-cv-02859-PAB-MEH, 2022 WL 4603583, at *8
(D. Colo. Sept. 30, 2022); Alarid v. Biomet, Inc., No. 14-cv-02667-REB-NYW, 2015 WL
6376171, at *2 (D. Colo. Sept. 22, 2015); Malibu Media, LLC v. Benson, No. 13-cv-
02394-WYD-MEH, 2014 WL 2859618, at *2 (D. Colo. June 20, 2014) (holding that “an
affirmative defense is sufficient if stated ‘in short and plain terms’ pursuant to Rule
8(b)(1)(A), and if the movant fails to demonstrate that the defense cannot succeed
under any circumstance”); Holdbrook v. SAIA Motor Freight Line, LLC, No. 09-cv-
02870-LTB-BNB, 2010 WL 865380, at *2 (D. Colo. Mar. 8, 2010) (finding it “reasonable
to impose stricter pleading requirements on a plaintiff who has significantly more time to
develop factual support for his claims than a defendant who is only given 20 days to
respond to a complaint and assert its affirmative defenses” and concluding that an
affirmative defense should not be held to the Iqbal/Twombly standard “particularly in
light of the disfavored status of motions to strike”).
III. 	ANALYSIS
Dr. Peace moves to dismiss Panorama’s breach of contract counterclaim
pursuant to Fed. R. Civ. P. 12(b)(6) for failure to state a claim. Docket No. 35 at 1.
Additionally, Dr. Peace requests that the Court strike Panorama’s affirmative defense of
laches pursuant to Fed. R. Civ. P. 12(f). Id.
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A. Breach of Contract Counterclaim5
To state a counterclaim for breach of contract under Colorado law, Panorama
must allege (1) the existence of a contract; (2) performance by Panorama or some
justification for nonperformance; (3) failure to perform the contract by Dr. Peace; and (4)
damages to Panorama. See Warming Trends, LLC v. Stone, No. 19-cv-03027-PAB-
STV, 2023 WL 2716652, at *10 (D. Colo. Mar. 30, 2023); W. Distrib. Co. v. Diodosio,
841 P.2d 1053, 1058 (Colo. 1992) (collecting cases).
First, Dr. Peace argues that the Court should dismiss Panorama’s breach of
contract counterclaim because USERRA “supersedes” the release of liability found in
Section 7.9 of the Merger Agreement. Docket No. 35 at 7-10. Second, Dr. Peace
argues that, even if the release in Section 7.9 is valid, Dr. Peace’s USERRA claim “is for
a benefit that is excepted from the release” under Section 7.9(a). Id. at 10-11.
As a preliminary matter, Dr. Peace failed to comply with this Court’s Practice
Standards for Rule 12(b)(6) motions because Dr. Peace did not clearly identify which
elements of the counterclaim he challenges. See Practice Standards (Civil Cases),
Chief Judge Philip A. Brimmer, § III.F.2.a.i (“For each claim for relief that the movant
seeks to dismiss pursuant to Rule 12(b)(6), clearly enumerate each element that
movant contends must be alleged, but was not.” (emphasis added)). Nevertheless, the
5 Dr. Peace does not address which state’s law would apply to the breach of
contract counterclaim. Panorama appears to assert that Colorado law would apply to
this counterclaim. See Docket No. 37 at 6 (citing Colorado case law to show that a
“contract may consist of two or more writings”). At the motion to dismiss stage, the
Court presumes that Colorado law applies to the breach of contract counterclaim. See
Grynberg v. Total S.A., 538 F.3d 1336, 1346 (10th Cir. 2008) (“Because the parties’
arguments assume that Colorado law applies, we will proceed under the same
assumption.”).
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Court construes Dr. Peace’s first argument as raising an affirmative defense and
construes his second argument as challenging the third element of the breach of
contract claim.
1) Whether USERRA Supersedes the Release
Dr. Peace’s first argument is that the Court should dismiss Panorama’s breach
of contract claim because 38 U.S.C. § 4302(b) “supersedes” the release in Section 7.9.
Docket No. 35 at 7-10. The Court construes this argument as raising an affirmative
defense. See Fryer v. A.S.A.P. Fire & Safety Corp., 658 F.3d 85, 90 (1st Cir. 2011)
(noting that section 4302 is a “defense of preemption”); Gardner v. United States, 316 F.
Supp. 3d 1308, 1315 (D. Utah 2018) (holding that “preemption is an affirmative
defense”) (citing PLIVA, Inc. v. Mensing, 564 U.S. 604, 634 (2011); Cook v. Rockwell
Int’l Corp., 790 F.3d 1088, 1092 (10th Cir. 2015))). The counter defendant has the
burden of pleading an affirmative defense. See Fernandez v. Clean House, LLC, 883
F.3d 1296, 1299 (10th Cir. 2018) (noting that a plaintiff “need not anticipate” an
affirmative defense in its pleading). As a result, a court may consider an affirmative
defense at the motion to dismiss stage “only when the complaint itself admits all the
elements of the affirmative defense by alleging the factual basis for those elements.” Id.
One of the purposes of USERRA is “to prohibit discrimination against persons
because of their service in the uniformed services.” Lewis v. Rite of Passage, Inc., 217
F. App’x 785, 786 (10th Cir. 2007) (unpublished) (quoting 38 U.S.C. § 4301(a)(3)).
Section 4302(b) provides that USERRA
supersedes any State law (including any local law or ordinance), contract,
agreement, policy, plan, practice, or other matter that reduces, limits, or
eliminates in any manner any right or benefit provided by this chapter, including
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the establishment of additional prerequisites to the exercise of any such right or
the receipt of any such benefit.
38 U.S.C. § 4302(b). However, the application of section 4302(b) is limited by section
4302(a), which provides that
[n]othing in this chapter shall supersede, nullify or diminish any Federal or State
law (including any local law or ordinance), contract, agreement, policy, plan,
practice, or other matter that establishes a right or benefit that is more beneficial
to, or is in addition to, a right or benefit provided for such person in this chapter.
38 U.S.C. § 4302(a); see also Wysocki v. Int’l Bus. Mach. Corp., 607 F.3d 1102, 1107
(6th Cir. 2010). Courts have “recognized that the text and legislative history of
USERRA indicate that a veteran may waive his rights under the statute.” Tolle v.
PocketSonics, Inc., 342 F. Supp. 3d 695, 701 (W.D. Va. 2018) (citing Wysocki, 607 F.3d
at 1108). The “critical inquiry” is whether the rights or benefits that the waiver provides
are “more beneficial” than the rights or benefits the service member agreed to give up.
Id. at 702; see also Wysocki, 607 F.3d at 1107; Ziegler v. Dep’t of the Interior, 2022 WL
1435385, at *4 (Fed. Cir. May 6, 2022); Ward v. Shelby Cnty., Tenn., 98 F.4th 688, 692
(6th Cir. 2024). Furthermore, to be enforceable, a waiver must also be “clear and
unambiguous.” Wysocki, 607 F.3d at 1108; Tolle, 342 F. Supp. 3d at 701; Ziegler, 2022
WL 1435385, at *4.
Dr. Peace argues that the Court should find that USERRA supersedes Section
7.9’s release in the Merger Agreement for two reasons. Docket No. 35 at 8-10. First,
Dr. Peace contends that the release in Section 7.9 is invalid because Dr. Peace did not
sign the Merger Agreement. Id. at 8-9. Although he signed the Letter of Transmittal,
Dr. Peace states that his signature on that document “did not grant the Sellers’
representative the authority to sign away Dr. Peace’s USERRA rights.” Id. at 9. Dr.
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Peace argues that Panorama “points to no document where Dr. Peace himself
release[d] any claims.” Id. Panorama responds that Dr. Peace’s signature on the Letter
of Transmittal was sufficient to bind him to the release provision in the Merger
Agreement. Docket No. 37 at 5-6. Panorama argues that, under Colorado law, a “party
need not sign every page of a contract for the whole of the document to be effective,”
and that a “contract may consist of two or more writings when so intended and relating
to the same subject matter.” Id. at 6 (quoting Master Palletizer Sys., Inc. v. T.S.
Ragsdale Co., 725 F. Supp. 1525, 1531 (D. Colo. 1989)).
The Court rejects Dr. Peace’s first argument. Under Colorado law, a “party need
not sign every page of a contract for the whole of the document to be effective.”
Clowdis v. Colo. Hi-Tec Moving & Storage, Inc., No. 11-cv-00036-CMA-KMT, 2011 WL
5882191, at *6 (D. Colo. Nov. 3, 2011), recommendation adopted, 2012 WL 895701 (D.
Colo. Mar. 15, 2012) (quoting Master Palletizer Sys., Inc., 725 F. Supp. at 1531).
Additionally, a “contract may consist of two or more writings when so intended and
relating to the same subject matter.” Master Palletizer Sys., Inc., 725 F. Supp. at 1531
(citing Grizzly Bar, Inc. v. Hartman, 454 P.2d 788 (1969)). For “an incorporation by
reference to be effective, ‘it must be clear that the parties to the agreement had
knowledge of and assented to the incorporated terms.’” Liquid Magnetix Corp. v.
Therma-Stor LLC, No. 13-cv-03151-WJM-KMT, 2014 WL 1389984, at *2 (D. Colo. Apr.
9, 2014) (quoting Taubman Cherry Creek Shopping Ctr., LLC v. Neiman–Marcus Grp.,
Inc., 251 P.3d 1091, 1095 (Colo. App. 2010)). “So long as it is clear what document is
being referred to and that the parties intended for it to be a part of the agreement, it is
as effectively a part thereof as if recited therein.” Id. (quoting In re Seymour’s Marriage,
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536 P.2d 1172, 1175 (Colo. App. 1975)) (internal alterations omitted). Here, Dr. Peace
signed the Letter of Transmittal on June 27, 2022. Docket No. 34 at 8, ¶ 1. The Letter
of Transmittal states
By executing and delivering this Letter of Transmittal, the undersigned hereby
acknowledges that he or she hereby approves of the Merger Agreement and the
transactions contemplated thereby and is becoming a party to the Merger
Agreement as a ‘Seller’ for all purposes thereunder. Further, the undersigned
hereby acknowledges and agrees to the terms and conditions set forth in the
Merger Agreement[.]
Id., ¶ 2 (emphasis added); see also Docket No. 35-2 at 6. The Court finds that the
Merger Agreement was incorporated by reference into the Letter of Transmittal because
Dr. Peace explicitly agreed to be bound by “the terms and conditions set forth in the
Merger Agreement.” See Docket No. 34 at 8, ¶ 2; see also Liquid Magnetix Corp., 2014
WL 1389984, at *2. Dr. Peace’s argument that he did not sign the Merger Agreement is
irrelevant because Dr. Peace signed the Letter of Transmittal. As a result, the Court
rejects Dr. Peace’s first argument.
Second, Dr. Peace contends that the release in Section 7.9 is invalid because
the release is not “an unambiguous and clear waiver of Dr. Peace’s rights under
USERRA.” Docket No. 35 at 9-10. Dr. Peace asserts that, in order to be valid, a
USERRA waiver must explicitly “waive the service-member’s USERRA rights.” Id. at 9
(citing Wysocki, 607 F.3d at 1108). Dr. Peace argues that Section 7.9 is a “catch-all”
disclaimer that does not reference USERRA, veteran status, or military service
obligations. Id. at 9-10. Panorama responds that the Court should reject plaintiff’s
argument because “USERRA only requires that the release be clear and unambiguous,
not that it explicitly reference USERRA or any related status.” Docket No. 37 at 6.
Panorama argues that many courts have enforced contractual releases that do not
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explicitly mention USERRA. Id. at 6-7 (citing Ziegler, 2022 WL 1435385, at *4; Tolle v.
PocketSonics, Inc., 2018 WL 1161142, at *3 (W.D. Va. Mar. 5, 2018); Cornelius v.
United Parcel Serv., Inc., 2012 WL 975053, at *1 (S.D.N.Y. Mar. 21, 2012)).6
Panorama asserts that, in Section 7.9(a) of the Merger Agreement, Dr. Peace clearly
and unambiguously waived “all claims” that arose prior to the closing. Id. at 7.
The Court finds that the language in Section 7.9 of the Merger Agreement is
sufficiently clear and unambiguous to waive Dr. Peace’s USERRA rights. Dr. Peace
agreed to “absolutely, unconditionally and irrevocably RELEASE[] and FOREVER
DISCHARGE[]” Panorama from “all claims . . ., actions, causes of action, suits . . .
arising out, relating to, against or in any way connected with” Panorama prior to the
closing date. Docket No. 35-1 at 1-2. Dr. Peace also agreed to waive his rights to any
claims “which such Seller does not know or suspect to exist in such Seller’s favor at the
time of executing the release.” Id. at 2. Many courts have upheld similar broad
releases that do not specifically reference USERRA or military status. See, e.g.,
Ziegler, 2022 WL 1435385, at *4 (finding that the waiver language was “clear and
unambiguous” where service member agreed to release the agency from “any and all
appeals, complaints, claims . . . up to and including the effective date of this Settlement
Agreement”); Tolle, 2018 WL 1161142, at *3 (holding that the severance agreement
“used clear and unambiguous language to waive the plaintiff’s USERRA rights” because
it expressly stated that plaintiff waives “any and all” claims in connection with his
6 In his reply, Dr. Peace contends that defendant’s cited cases are
distinguishable because those plaintiffs did not waive their USERRA rights “by means of
an intermediate agreement or third-party.” Docket No. 41 at 2-3. Because the Court
previously found that the Merger Agreement was incorporated by reference into the
Letter of Transmittal, the Court rejects this argument in Dr. Peace’s reply.
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employment); Cornelius, 2012 WL 975053, at *1 (finding that the release clearly waived
plaintiff’s USERRA claims because plaintiff agreed to “unconditionally release
[defendant] from all known or unknown claims”); Ward, 98 F.4th at 691-92 (holding that
the release provision “patently encompassed” plaintiff’s USERRA claim because the
provision stated that plaintiff agreed to release “any and all claims whatsoever”).
The Court rejects Dr. Peace’s argument that a release waiver is only valid if it
explicitly mentions USERRA. Dr. Peace cites Wysocki in support of that argument.
Docket No. 35 at 9 (citing Wysocki, 607 F.3d at 1108). In Wysocki, the Sixth Circuit
found that a release provision clearly and unambiguously waived the plaintiff’s USERRA
rights because the provision stated that it covered claims based on “veteran status.”
Wysocki, 607 F.3d at 1108. However, recently, the Sixth Circuit rejected the argument
that a valid release under § 4302 must contain a reference to “veteran status” or
USERRA claims. Ward, 98 F.4th at 692 (“That in Wysocki the court chose to highlight
the term ‘veteran status’—among all the belts and suspenders the release employed
there—did not make that term magic words necessary for release of a USERRA claim
. . . . Nor did the absence of that term create any ambiguity here.”). Accordingly, the
Court finds that the language in Section 7.9 is sufficiently clear and unambiguous to
waive Dr. Peace’s USERRA rights. The Court therefore rejects Dr. Peace’s second
argument.
Dr. Peace does not address the “critical inquiry” under § 4302, namely, whether
the waiver provides “more beneficial” rights or benefits than Dr. Peace agreed to give
up. See Tolle, 342 F. Supp. 3d at 702; Wysocki, 607 F.3d at 1107. Panorama’s
counterclaim alleges that the consideration that Dr. Peace received in return for signing
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the Letter of Transmittal exceeds the damages he seeks in this case and exceeds the
value of any claims he released in the Merger Agreement. Docket No. 34 at 9, ¶ 9. At
the motion to dismiss stage, this allegation is sufficient to establish that the waiver
provides more beneficial rights.7
Because Dr. Peace has failed to establish that 38 U.S.C. § 4302(b) supersedes
the release in Section 7.9, the Court denies this portion of Dr. Peace’s motion.
2) Third Element of the Breach of Contract Counterclaim
Alternatively, Dr. Peace argues that, even if the release in Section 7.9 is valid,
Dr. Peace’s USERRA claim “is for a benefit that is excepted from the release” under
Section 7.9(a). Docket No. 35 at 10-11. The Court presumes that Dr. Peace’s second
argument contests the third element of a breach of contract claim, namely, Dr. Peace’s
alleged failure to perform the contract. Dr. Peace states that, pursuant to Section
7.9(a), he reserved the right to pursue any “claims for benefits . . . under benefit plans”
of Panorama. Id. at 10. Dr. Peace argues that his USERRA claim for the “overhead
contribution amount” is an employment benefit. Id. at 11. Because his claim is
excepted from the release, Dr. Peace appears to argue that he did not breach the
contract. See id.
Panorama responds that the “overhead obligations” are not a benefit plan under
the Merger Agreement. Docket No. 37 at 8. Panorama contends that plaintiff’s
7 Courts have noted that evidence of “mistake, incapacity, fraud,
misrepresentation, unconscionability, or duress” could invalidate a contractual release
under section 4302. Wysocki, 607 F.3d at 1108; see also Ziegler, 2022 WL 1435385, at
*4; Ward, 98 F.4th at 693. However, Dr. Peace does not argue that he signed the Letter
of Transmittal due to mistake, incapacity, fraud, misrepresentation, unconscionability, or
duress.
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responsibility to pay overhead expenses as a partner in the business is different from an
employee benefit plan. Id. at 9. Panorama contends that there are no allegations in its
pleading suggesting that Panorama implemented a benefit plan to reduce partners’
overhead obligations. Id.
At the motion to dismiss stage, the Court agrees with Panorama. Section 7.9(a)
provides that
the foregoing release does not extend to, include or restrict or limit in any way,
and such Seller hereby reserves such Seller’s rights, if any, to pursue any and all
Releasing Party Claims that such Seller may now or in the future have solely on
account of (i) rights of such Seller under this Agreement and (ii) any rights or
claims for benefits (other than any severance or deferred compensation) under
benefit plans of any Target Company.
Docket No. 35-1 at 2 (emphasis added). However, there are no allegations in
Panorama’s pleading suggesting that Panorama’s benefit plan encompassed overhead
contributions by shareholders. As a result, Dr. Peace’s USERRA claim, alleging that
Panorama charged him for overhead contributions while on military leave, does not
clearly fall within the exception in Section 7.9(a).
Panorama’s counterclaim alleges that, under Section 7.9(c) of the Merger
Agreement, Dr. Peace agreed to refrain from commencing any suit against Panorama
based on the released claims. Docket No. 34 at 8, ¶ 7. On April 24, 2023, Dr. Peace
filed this case, alleging that Panorama violated USERRA by (i) charging Dr. Peace for
overhead contributions while he was on military leave; and (ii) informing Dr. Peace that
he would be limited to eight weeks of military leave per year. Docket No. 1 at 5-7,
¶¶ 28-29, 31-32, 36-37, 42-43; see also Docket No. 34 at 9, ¶ 10. The Court finds that
these allegations are sufficient at the motion to dismiss stage to establish that plaintiff
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breached his contractual obligations under the Letter of Transmittal and the Merger
Agreement. Accordingly, the Court denies this portion of Dr. Peace’s motion.
B. Latches Defense
Dr. Peace argues that the Court should strike Panorama’s affirmative defense of
laches in its answer because there is no statute of limitations for USERRA claims.
Docket No. 35 at 12. Dr. Peace asserts that section 4327(b) provides that there “shall
be no limit on the period for filing” a claim under USERRA. Id. Alternatively, Dr. Peace
argues that the Court should strike the laches defense because Panorama “has not
alleged any facts plausibly supporting Dr. Peace’s delay in bringing suit.” Id. at 13.
Panorama responds that the Court should deny Dr. Peace’s motion to strike
because Dr. Peace has failed to show that the laches defense cannot succeed under
any circumstances. Docket No. 37 at 9. Panorama argues that many courts have
applied laches in USERRA cases. Id. (citing Mahone v. Amazon.com, Inc., 2023 WL
2837164, at *4-5 (W.D. Wash. Apr. 7, 2023)). Moreover, Panorama asserts that the
Iqbal/Twombly pleading standard does not apply to affirmative defenses. Id. at 4.
Panorama contends that whether Dr. Peace’s “delay was undue and the extent of the
prejudice to Panorama are questions of fact that cannot be decided on the pleadings.”
Id. at 10.
The Court finds that Dr. Peace has failed to show that the laches defense
“cannot succeed under any circumstance.” See Chavez, 423 F. Supp. 3d at 1108.
Many courts have found that, even though USERRA has no statute of limitations, the
equitable defense of laches can apply to USERRA claims. See, e.g., Mahone, 2023 WL
2837164, at *4-5 (finding that “laches remains a valid defense” for USERRA claims,
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“though it should be used sparingly”); Garner v. Yellow Freight Sys., Inc., 19 F. App’x
834, 836 (10th Cir. 2001) (unpublished) (affirming dismissal of USERRA claim based on
the affirmative defense of laches); Durr v. Merit Sys. Prot. Bd., 2022 WL 16943007, at
*1 (Fed. Cir. Nov. 15, 2022) (same); Travers v. FedEx Corp., 567 F. Supp. 3d 542, 547
(E.D. Pa. 2021) (“Congress did not bar laches defenses to [USERRA] claims through
the Act’s 2008 amendment in subsection 4327(b)”); Clarkson v. Alaska Airlines, Inc.,
2020 WL 5899398, at *4 (E.D. Wash. Oct. 5, 2020) (collecting cases holding that laches
continues to be a valid defense after the 2008 USERRA amendments). Moreover,
USERRA regulations recognize that, “if an individual unreasonably delays asserting his
or her rights, and that unreasonable delay causes prejudice to the employer, the courts
have recognized the availability of the equitable doctrine of laches to bar a claim under
USERRA.” Mahone, 2023 WL 2837164, at *5 (quoting 20 C.F.R. § 1002.311). Dr.
Peace has identified no statute or case law suggesting that laches is not a valid defense
for a USERRA claim.8
Furthermore, the Court declines to strike the laches defense based on plaintiff’s
argument that Panorama has not plausibly alleged any facts supporting this affirmative
defense. See Crocs, Inc., 2022 WL 4603583, at *8 (holding that the plausibility
standard of Iqbal and Twombly does not apply to affirmative defenses). The Court finds
that the affirmative defense is sufficiently pled “in short and plain terms” pursuant to
8 Dr. Peace cites Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829, 835
(9th Cir. 2002), in support of his argument that laches should not apply to USERRA
suits. Docket No. 35 at 12. However, Jarrow Formulas did not involve a claim under
USERRA; rather, the court analyzed whether laches would apply to a claim for false
advertising under the Lanham Act. Jarrow Formulas, Inc., 304 F.3d at 835-38.
Accordingly, the Court finds that Jarrow Formulas is not on point.
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Rule 8(b)(1)(A). See id. at *9. Accordingly, the Court denies the portion of Dr. Peace’s
motion requesting that the Court strike the laches defense under Rule 12(f).
IV. 	CONCLUSION
It is therefore
ORDERED that Plaintiff/Counterclaim Defendant’s Fed. R. Civ. P. 12(B)(6)
Motion to Dismiss and Fed. R. Civ. P. 12(F) Motion to Strike [Docket No. 35] is
DENIED.
DATED September 9, 2024.
BY THE COURT:
___________________________
PHILIP A. BRIMMER
Chief United States District Judge
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