Hanna v. Wci Communities, Inc.

• Decision Date: 18 November 2004
• Docket Number: No. 04-80595-CIV-HURLEY, 04-80595-CIV-LYNCH.,04-80595-CIV-HURLEY, 04-80595-CIV-LYNCH.
• Citation: 348 F.Supp.2d 1322
• Parties: Robert HANNA, Plaintiff, v. WCI COMMUNITIES, INC., et al. Defendants.
• Court: U.S. District Court — Southern District of Florida

348 F.Supp.2d 1322

Robert HANNA, Plaintiff, v. WCI COMMUNITIES, INC., et al. Defendants.

No. 04-80595-CIV-HURLEY, 04-80595-CIV-LYNCH.

United States District Court, S.D. Florida.

November 18, 2004.

Patricia Anne Leonard, James Wallace Beasley, Jr., Robyn Sue Hankins, Beasley & Hauser, West Palm Beach, FL, for Plaintiff.

Joseph Ianno, Jr., Carlton Fields Ward Emmanuel Smith & Cutler, West Palm Beach, FL, for Defendants.

ORDER DENYING MOTION TO DISMISS OF DEFENDANTS WCI COMMUNITIES, INC., ALFRED HOFFMAN, JR., JERRY STARKEY, MICHAEL GREENBERG, AND KERRY RUDOLPH

HURLEY, District Judge.

THIS CAUSE comes before the court upon a motion by the above named defendants to dismiss this case for failure to state a claim upon which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Defendants argue that plaintiff Robert Hanna's Sarbanes-Oxley Act whistle-blower protection claim is barred for failure to follow the procedures set forth in 18 U.S.C. § 1514A(b)(2)(A) and 49 U.S.C. § 42121(b)(4)(B). Because the plain language of 18 U.S.C. § 1514A(b)(1)(B) states that a plaintiff may obtain de novo review of any Sarbanes-Oxley administrative complaint that has not been resolved by a Department of Labor final decision within 180 days of filing an administrative complaint, the court denies defendants' motion to dismiss.

BACKGROUND

The facts relied upon in this order are taken from the complaint [DE # 1]. As required on a motion to dismiss, the court has construed the pleadings broadly, accepted all facts pled therein as true, and viewed all inferences in a light most favorable to the plaintiffs. Jackson v. Birmingham Bd. of Educ., 309 F.3d 1333, 1334 (11th Cir.2002).

Mr. Hanna was employed by defendant WCI Communities, Inc. ("WCI") from 1999 until October 2003. WCI is a homebuilding and real estate services company that primarily focuses on master-planned communities in Florida. Mr Hanna originally worked for WCI as a project manager and was subsequently promoted to President of WCI's Palm Beach County and Treasure Coast homebuilding division.

While preparing WCI's fiscal year 2003 business plan, Mr. Hanna began to voice concerns that the plan was neither reasonable nor realistic, and that there was a significant likelihood that the plan could mislead the investing public. Mr. Hanna also expressed concerns that WCI's top officials, including defendants Hoffman and Starkey, were knowingly misleading investors about WCI's business plan. In late September 2003, defendant Rudolph met privately with Mr. Hanna and listened to Mr. Hanna's concerns about WCI's business plan and the false impression WCI was giving to the investor community. Two weeks later, WCI terminated Hanna without prior notice and informed him that the company wanted a "coaching change."

Mr. Hanna alleges that he was fired in retaliation for voicing his concerns regarding WCI's business practices. As a result of his alleged wrongful termination, Mr. Hanna has filed a two count complaint against the defendants. Count I seeks damages for retaliation under the Sarbanes-Oxley Act; Count II seeks damages under the Florida Whistleblower Act.

On December 12, 2003, pursuant to the procedural provisions of the Sarbanes-Oxley Act, Mr. Hanna filed an administrative enforcement action with the Department of Labor ("DOL"). See 18 U.S.C. § 1514A(b)(1)(A). On June 15, 2004, after not receiving any type of decision from the DOL within 180 days from the date he filed his administrative complaint, Mr. Hanna advised the DOL of his intent to file a federal lawsuit in the district court in fifteen days. See 29 C.F.R.1980.114. Thirteen days later, on June 28, 2004, the DOL issued its preliminary findings indicating that there was no reasonable cause to believe that WCI was guilty of violating the Sarbanes-Oxley Act. On June 30, 2004, consistent with his fifteen-day notice, Mr. Hanna filed this lawsuit seeking this court's de novo review of his retaliation claims. The issue presented in this motion to dismiss is whether Mr. Hanna's district court lawsuit is barred for failure to appeal the Department of Labor's June 28, 2004 preliminary findings to an administrative law judge pursuant to 49 U.S.C. § 42121(b)(2)(A).

JURISDICTION AND VENUE

This court has federal question jurisdiction over Mr. Hanna's action pursuant to 28 U.S.C. § 1331 because his action is brought under 18 U.S.C. § 1514A (i.e. the "Sarbanes-Oxley Act"). This court has supplemental jurisdiction over Mr. Hanna's state law whistleblower claim pursuant to 28 U.S.C. § 1367(a).

Venue is proper in this district pursuant to 28 U.S.C. § 1391(a)(2) because a substantial part of the events or omissions giving rise to the claim occurred in the Southern District of Florida.

DISCUSSION

A. STANDARD OF REVIEW

A motion to dismiss is appropriate only when it is demonstrated "beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). For the purpose of a motion to dismiss, the complaint is construed in the light most favorable to the plaintiff, and all facts alleged by the plaintiff are accepted as true. See Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984); see also Wright v. Newsome, 795 F.2d 964, 967 (11th Cir.1986) ("[W]e may not ... [dismiss] unless it appears beyond doubt that the plaintiff can prove no set of facts in support of the claims in the complaint that would entitle him or her to relief.") (citation omitted). Furthermore, the threshold is "exceedingly low" for a complaint to survive a motion to dismiss for failure to state a claim. Ancata v. Prison Health Servs., Inc., 769 F.2d 700, 703 (11th Cir.1985). Regardless of the alleged facts, however, a court may dismiss a complaint on a dispositive issue of law. See Marshall County Bd. of Educ. v. Marshall County Gas Dist., 992 F.2d 1171, 1174 (11th Cir.1993).

Under established Eleventh Circuit precedent, a document attached to a motion to dismiss may be considered by the court without converting the motion into one for summary judgment if the attached document is: (1) central to the plaintiff's claim; and (2) undisputed. Horsley v. Feldt, 304 F.3d 1125, 1134 (11th Cir.2002). The court may also consider a document central to plaintiffs' complaint that the defense appends to its motion to dismiss if its contents are not in dispute. Harris v. Ivax Corp., 182 F.3d 799, 802 (11th Cir.1999). "Undisputed" in this context means that the authenticity of the document is not challenged. Horsley, 304 F.3d at 1134.

B. DEFENDANTS' MOTION TO DISMISS

1. Overview of the Procedure for Filing a Sarbanes-Oxley Act Civil Enforcement Action

The Sarbanes-Oxley Act "provides that no company subject to the Securities Exchange Act of 1934 may retaliate against an employee who lawfully cooperates with an investigation concerning violations of the Act or fraud on the shareholders." Carnero v. Boston Scientfic Corp., No. 04-10031, 2004 WL 1922132, 2004 U.S. Dist. LEXIS 17205 (D.Mass. Aug. 27, 2004). The Sarbanes-Oxley Act specifically mandates the following procedure for bringing a civil enforcement action:

b) Enforcement action.

(1) In general. A person who alleges discharge or other discrimination by any person in violation of subsection (a) may seek relief under subsection (c), by —

(A) filing a complaint with the Secretary of Labor; or

(B) if the Secretary has not issued a final decision within 180 days of the filing of the complaint and there is no showing that such delay is due to the bad faith of the claimant, bringing an action at law or equity for de novo review in the appropriate district court of the United States, which shall have jurisdiction over such an action without regard to the amount in controversy.

(2) Procedure.

(A) In general. An action under paragraph (1)(A) shall be governed under the rules and procedures set forth in section 42121(b) of title 49, United States Code.

18 U.S.C. § 1514A (emphasis added). In other words, "[b]efore an employee can assert a cause of action in federal court under the Sarbanes-Oxley Act, the employee must file a complaint with the Occupational Safety and Health Administration (`OSHA') and afford OSHA the opportunity to resolve the allegations administratively." Willis v. VIE Financial Group, Inc., No. 04-435, 2004 WL 1774575, 2004 U.S. Dist. LEXIS 15753 (E.D.PA. Aug. 6, 2004) (citing 18 U.S.C. § 1514A(b)(1)(A); 29 C.F.R. § 1980.103(c)).

Under the procedure mandated by 49 U.S.C. § 42121 and set forth in 29 C.F.R. § 1980.105(A), "within 60 days of the filing of the [administrative] complaint, OSHA [then] issues written findings of whether or not there is reasonable cause to believe that the [defendant] has discriminated against the employee in violation of the Act." Willis, at *3, 2004 U.S. Dist. LEXIS 15753, *8; 29 C.F.R. § 1980.105(a). If, as in Mr. Hanna's case, "the Assistant Secretary concludes that a violation has not occurred, the Assistant Secretary will notify the parties of that finding." 29 C.F.R. § 1980.105(c). Then, according to 29 C.F.R. § 1980.106(a), "[a]ny party who desires review, including judicial review, of the findings and preliminary order ... must file any objections and/or a request for a hearing on the record within 30 days of receipt of the findings and preliminary order." Finally, pursuant to 29 C.F.R. § 1980.106(b)(2), "[i]f no timely objection is filed with respect to either the findings or the preliminary order, the findings or preliminary order, as the case may be, shall become the final decision of the Secretary, not subject to judicial review."

2. Procedural Posture of Mr. Hanna's Administrative Complaint

Contrary to the guidelines set forth in 29 C.F.R. § 1980.105(a), Mr. Hanna did not receive OSHA's preliminary findings "within 60 days of the filing of [his administrative] complaint." Rather, it is undisputed that OSHA issued its...