Hetronic Int'l, Inc. v. Rempe

Decision Date09 April 2015
Docket NumberCase No. CIV–14–787–C.
Citation99 F.Supp.3d 1341
PartiesHETRONIC INTERNATIONAL, INC., Plaintiff, v. Torsten REMPE, Defendant, and Torsten Rempe, Counterclaimant, v. Hetronic International, Inc., and Methode Electronics, Inc., Counterclaim-defendants.
CourtU.S. District Court — Western District of Oklahoma

John N. Hermes, Philip R. Bruce, Samuel R. Fulkerson, McAfee & Taft, Oklahoma City, Ok, Debbie L. Berman, Michael H. Margolis, Jenner & Block LLP, Chicago, IL, for Plaintiff/Counterclaim–Defendants.

Amy J. Pierce, George S Corbyn, Jr., Corbyn Hampton PLLC, Oklahoma City, OK, for Defendant/Counter Claimant.

MEMORANDUM OPINION AND ORDER

ROBIN J. CAUTHRON, District Judge.

I. BACKGROUND

Plaintiff is Hetronic International, Inc. (Hetronic), a Delaware corporation that conducts business in the transportation, energy, electronics, and manufacturing industries. Its principal place of business is Oklahoma City. Hetronic is a subsidiary of Methode Electronics, Inc. (Methode). Methode is a publicly traded company; Hetronic is not. Defendant was president of Hetronic until September 2013. In November 2013, Defendant incorporated a new business, AZ Control Solutions, Inc. During Defendant's employment as president, Hetronic had contracts with several German companies (the “Fuchs Companies”) for the distribution and assembly of Hetronic products. Hetronic terminated those contracts and filed suit against the Fuchs Companies in June 2014 after discovering the Fuchs Companies allegedly were engaged in a scheme to compete with Hetronic, which included selling Hetronic systems independently and placing Hetronic's name on counterfeit parts. Hetronic filed this lawsuit in July 2014, alleging, in part, that Defendant assisted the Fuchs Companies in this scheme and that Defendant planned to use AZ Control Solutions, Inc., as the North American distributor for the Fuchs Companies. In the Answer (Dkt. No. 28), Defendant denies liability for Hetronic's claims and asserts the following five counterclaims against Hetronic and Methode: two claims of wrongful termination arising out of fraudulent transactions and consumer fraud; slander; tortious interference with prospective economic relations; and abuse of process. Hetronic and Methode now seek dismissal of all Defendant's counterclaims for failure to state a claim upon which relief may granted pursuant to Fed.R.Civ.P. 26(b). (Mot. to Dismiss Countercls., Dkt. No. 38.) Defendant has filed a Response (Dkt. No. 40). Hetronic and Methode have filed a Reply (Dkt. No. 42). The motion is at issue.

II. STANDARD OF REVIEW

The Supreme Court has made clear that to survive a motion to dismiss, a complaint must contain enough allegations of fact which, taken as true, “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ; see also Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a “probability requirement,” but it asks for more than a sheer possibility that a defendant has acted unlawfully.

Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (internal citations omitted). At the dismissal stage, the Court will accept all of the claimant's well-pleaded factual allegations as true and view them in the light most favorable to the claimant. Alvarado v. KOB–TV, L.L.C., 493 F.3d 1210, 1215 (10th Cir.2007). However, “conclusory allegations that lack ‘supporting factual averments are insufficient to state ... claim[s] on which relief can be based.’ In re Marsden, 99 Fed.Appx. 862, 866 (10th Cir.2004) (quoting Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir.1991) ). Dismissal is appropriate when the allegations in the complaint, treated as true, cannot “raise a claim of entitlement to relief.” Twombly, 550 U.S. at 558, 127 S.Ct. 1955.

III. ANALYSIS
A. Wrongful Termination

Employers generally may terminate at-will employees with or without cause at any time and without incurring any liability. Burk v. K–Mart Corp., 1989 OK 22, ¶ 5, 770 P.2d 24, 26. However, this standard is not without exception. Oklahoma law recognizes an actionable Burk tort “where an employee is discharged for refusing to act in violation of an established and well-defined public policy or for performing an act consistent with a clear and compelling public policy.” Id., ¶ 19, at 29. This tort also offers protection for both internal and external reporting of whistleblowers who rely on an employer's public-policy violation to support an actionable employment termination.” Darrow v. Integris Health, Inc., 2008 OK 1, ¶ 19, 176 P.3d 1204, 1215 (citing Barker v. State Ins. Fund, 2001 OK 94, ¶ 16, 40 P.3d 463, 465 ). A Burk tort, “is unique: it applies to only a narrow class of cases and it must be tightly circumscribed.” Barker, 2001 OK 94, ¶ 14, 40 P.3d at 468 (citing Burk, 1989 OK 22, ¶¶ 21–22, 770 P.2d at 29 ). To assert a viable Burk claim, Defendant must allege the following:

(1) an actual or constructive discharge (2) of an at-will employee (3) in significant part for a reason that violates an Oklahoma public policy goal (4) that is found in Oklahoma's constitutional, statutory, or decisional law or in a federal constitutional provision that prescribes a norm of conduct for Oklahoma and (5) no statutory remedy exists that is adequate to protect the Oklahoma policy goal.

Vasek v. Bd. of Cnty. Comm'rs of Noble Cnty., 2008 OK 35, ¶ 14, 186 P.3d 928, 932. Hetronic and Methode argue that Defendant's Burk claims must be dismissed because they do not fit in the “narrow class of cases in which the discharge is contrary to a clear mandate of public policy as articulated by constitutional, statutory or decisional law.” Burk, 1989 OK 22, ¶ 17, 770 P.2d at 28. Public policy is a judicial determination. Pearson v. Hope Lumber & Supply Co., Inc., 1991 OK 112, ¶ 5, 820 P.2d 443, 444.

1. In Counterclaim I, Defendant asserts he was fired because he refused to sign inaccurate quarterly financial reports and internally reported concerns regarding inaccurate accounting in Hetronic's Philippines division. (Answer, Dkt. No. 28, at 27–35.) Defendant argues his actions are protected pursuant to 21 Okla. Stat. §§ 1635 and 1636 and that termination based on these actions is a violation of Oklahoma's public policy.1 These criminal statutes prohibit the falsification of corporate records and apply to corporations “carrying on business, or keeping an officer thereof,” in Oklahoma. 21 Okla. Stat. §§ 1635, 1636 & 1644. “It is public policy in Oklahoma and everywhere to encourage the disclosure of criminal activity.” Lachman v. Sperry–Sun Well Surveying Co., 457 F.2d 850, 853 (10th Cir.1972). However, not every “employee allegation of illegal or unsafe employer's activity will withstand scrutiny in light of Burk. Darrow, 2008 OK 1, ¶ 20, 176 P.3d at 1216. In Hayes v. Eateries, Inc., 1995 OK 108, 905 P.2d 778, the Oklahoma Supreme Court held that an employee who was fired after reporting a co-employee's embezzlement did not have a viable Burk claim. [T]he situation involve[d] only the private or proprietary interests of the employer-employee relationship, not the direct interests of the general public as where the reporting involves the criminal wrongdoing of the employer or a co-employee perpetrated against the interests of the general public.” Id., ¶ 24, at 786. The Oklahoma Supreme Court distinguished the circumstances in Hayes from those situations where “the employee is terminated for seeking to vindicate his own legal rights or interests” or where the employee is “seeking to vindicate a public wrong where the victim of the crime could in any real or direct sense be said to be the general public.” Id., ¶¶ 23–24, at 786. The Oklahoma Supreme Court addressed this issue again in Darrow, 2008 OK 1, 176 P.3d 1204. In Darrow, a home health care agency employee was terminated after internally reporting possible Medicare fraud. Id., ¶¶ 2–5, at 1207–08. The Oklahoma Supreme Court distinguished Darrow from Hayes, finding that the fiscal integrity of home health care agencies implicated a “pervasive public interest.” Id., ¶¶ 17–20, at 1215–16. The employee's reports dealt with allegations of the falsification of documents in violation of 21 Okla. Stat. § 1589, which criminalizes the making of false entries in corporate books of accounts. See Darrow, ¶ 18, at 1215. The court held that [p]roviding legal recourse to an employee who asserts he was discharged for reporting violations of Oklahoma's criminal law where the public interest is so closely entwined clearly gives rise to a mandate of public policy on which a Burk claim may be rested.” Id. In the instant case, Defendant internally reported acts that allegedly violate 21 Okla. Stat. §§ 1635 and 1636. Defendant's allegations that Methode would use the inaccurate quarterly reports in its public SEC reporting and that shareholders would rely on the reports implicate a matter of public interest. Thus, Defendant's allegations sufficiently state a mandate of public policy on which a Burk claim may rest. Furthermore, Defendant's allegation that he was fired for refusing to sign the inaccurate reports could support a finding that Defendant was “seeking to vindicate his own legal rights or interests.”Hayes, 1995 OK 108, ¶ 23, 905 P.2d at 786. Although the Oklahoma Court of Civil Appeals case Gabler v. Holder & Smith, Inc., 2000 OK CIV APP 107, 11 P.3d 1269, is not binding precedent pursuant to 20 Okla. Stat. § 30.5, the Court finds it persuasive. The plaintiff, Gabler, alleged he was fired, in part, because he reported his employer kept two sets of corporate records. Id., ¶ 40, at 1277. The court held that Gabler, as former vice president, “could be found to be seeking to protect his own interests” and thus was...

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