Riggs v. Home Builders Institute

• Decision Date: 18 March 2002
• Docket Number: No. 01CV0412.,01CV0412.
• Citation: 203 F.Supp.2d 1
• Parties: Frank RIGGS, Plaintiff, v. HOME BUILDERS INSTITUTE, et al., Defendants.
• Court: U.S. District Court — District of Columbia

Page 1

203 F.Supp.2d 1

Frank RIGGS, Plaintiff, v. HOME BUILDERS INSTITUTE, et al., Defendants.

No. 01CV0412.

United States District Court, District of Columbia.

March 18, 2002.

Debra Susan Katz, David J. Marshall, Bernabei & Katz, Washington, DC, for Frank Riggs, plaintiff.

Paul J. Kennedy, Littler Mendelson, P.C., Washington, DC, Erica K. Smith, Peter Robert Spanos, Littler Mendelson, Atlanta, GA 30326, for Home Builders Institute, defendant.

Stephen R. Smith, Powell, Goldstein, Frazer & Murphy, Washington, DC, for National Association of Home Builders, defendant.

MEMORANDUM OPINION

THOMAS F. HOGAN, Chief Judge.

Plaintiff Frank Riggs has sued his former employer, Home Builders Institute ("HBI"), its affiliate, the National Association of Home Builders ("NAHB"), and two NAHB officers, Thomas Downs and Robert Mitchell, for wrongful termination, tortious interference with contract and prospective advantage, and civil conspiracy. Defendants HBI, NAHB, Downs, and Mitchell have moved to dismiss the complaint for failure to state a claim upon which relief can be granted, pursuant to Federal Rule of Civil Procedure 12(b)(6). Upon careful consideration of the defendants' motions to dismiss, the oppositions and replies thereto, and the entire record herein, the Court will deny HBI's motion and will grant in part and deny in part NAHB's motion.

I. BACKGROUND¹

From 1991 to 1993 and from 1995 to 1999, Plaintiff Frank Riggs served as a U.S. Representative in Congress from California's 1st District. In the 105th Congress, he served as Chairman of the U.S. House Subcommittee on Early Childhood, Youth and Families and authored legislation concerning special education, job training, vocation and technical education, charter schools, and other youth-related issues. After leaving Congress in 1999, he worked briefly with the Heritage Foundation as a Visiting Fellow in Education Studies. Compl. ¶ 3.

Defendant NAHB is a national trade association of home-building contractors with 210,000 members who are organized into local and state home builders associations. Id. ¶ 5. Defendant Thomas Downs is NAHB's Executive Vice President and Chief Executive Officer. Id. ¶ 6. Defendant Robert Mitchell is NAHB's President. Id. ¶ 7. Defendant HBI is a non-profit organization that serves as the educational and training arm of NAHB and is structured as a nonprofit public benefit school, exempt from taxation under section 501(c)(3) of the Internal Revenue Code, 26 U.S.C. § 501(c)(3). HBI's mandate is to enhance the professionalism of NAHB members through continuing education and to train and place skilled workers into productive industry careers through contracts with the federal government and the private sector. Id. ¶ 4.

In late 1999, HBI and NAHB agreed to expand HBI's mission to champion the homebuilding industry among a new generation of youth. In September 1999, HBI acquired a $1 million grant from the U.S. Department of Labor ("DOL") as part of a school-to-work initiative to introduce thousands of students to the skills and occupations in the home construction industry. Id. ¶¶ 8-9. HBI and NAHB also formed a search committee to recruit a new president for HBI to lead its expanded educational mission. Id. ¶ 10.

After interviewing Riggs, HBI hired him as its President and Chief Executive Officer ("CEO") on December 6, 1999 to spearhead its education mission. Id. ¶¶ 10-13. Under a job description provided to Riggs, he would report to Thomas Woods, the Chairman of HBI's Board of Trustees. The job description emphasized HBI's independence from NAHB. Id. ¶ 10. But NAHB officers, including Downs and Mitchell, nonetheless expected Riggs to play a political role on behalf of NAHB and to use his influence as a former Congressman and national leader of the Republican Party to advance NAHB's efforts to influence political campaigns and legislation. Id. ¶ 15.

In January 2000, Downs asked Riggs to attend political receptions in his capacity as President and CEO of HBI for former Congressman Newt Gingrich and Congressman Rick Lazio at NAHB's International Builders Show. Riggs attended, but felt "uncomfortable with Downs'[s] request that he play a political role on NAHB's behalf — particularly with Mr. Lazio, who, as Chairman of the House of Representatives Housing Subcommittee at the time, was an influential member of the U.S. House of Representatives on issues of importance to NAHB." Id. Downs subsequently asked Riggs to attend the Republican National Convention in August 2000. Downs also emphasized to Riggs at the time that NAHB had established a $1 million "soft money" fund to distribute to the presidential campaigns through national party committees or independent efforts such as "Builders for Bush." Riggs declined to attend the convention, stating to Downs that HBI's status as a tax-exempt educational organization prohibited him from participating in partisan political campaigns. Id. ¶ 16. Downs also urged Riggs to participate in NAHB's weekly Senior Executive Council meetings, at which NAHB's political and legislative agenda was routinely discussed. Id. ¶ 17. Mitchell invited Riggs to attend NAHB's Strategic Implementation Meeting held February 18-20, 2000 in Palm Harbor, Florida. Riggs attended the Meeting, but excused himself from a half-day session entitled "Legislative Agenda/National Election Year," fearing that the session would focus on NAHB plans to influence legislation and political campaigns. Official minutes from the session reflect that NAHB members discussed a proposed resolution to support a presidential candidate in the 2000 election, the formation of political action and fund-raising groups, and a range of legislative initiatives concerning Brownfields, international lumber, and Social Security. Id. ¶ 18.

NAHB's leadership reacted angrily to Riggs's refusal to involve himself in political and legislative activities that he believed would violate section 501(c)(3) of the Internal Revenue Code and various DOL regulations, including 20 C.F.R. § 638.814(a) and (b), and his insistence upon HBI's legal autonomy from NAHB. Compl. ¶¶ 19-23. NAHB officers, including Downs and Mitchell, mounted a campaign to remove Riggs from the HBI presidency by undermining his efforts as President. Id. ¶¶ 24-25. Despite a decision made by HBI staff during a March 2000 retreat to transfer NAHB's continuing member education and training programs from NAHB to HBI, for example, Riggs experienced hostility and obstruction from Downs and Mitchell when trying to implement the strategic plan. Id. ¶ 26. Downs further refused Riggs's request to present the plan to senior officials of NAHB at a meeting to be held at the Greenbrier in April 2000, choosing instead merely to refer to a letter written by Riggs. Id. ¶¶ 27-30. Minutes from the meeting reflect that senior officers at the meeting discussed the "`reporting relationship' between HBI's president and NAHB's CEO as a `difficult situation that need[ed] to be addressed immediately'" and decided to contact their appointees to the HBI Board to determine "future action." Id. ¶ 30.

On April 17, 2000, Downs informed Riggs that NAHB's senior officers had unanimously decided to terminate his employment. Id. ¶ 31. HBI's Board of Trustees were not involved in the decision of NAHB's senior officers to terminate Riggs's employment, and Woods refused to give Riggs permission to address the full HBI Board of Trustees about his termination out of deference to NAHB and its senior officers. Id. ¶¶ 32-33. Woods then exerted pressure upon Riggs to submit his resignation, and having not received his resignation by May 5, 2000, the Executive Committee of HBI's Board of Trustees voted to terminate his employment, which was ratified by the full board on May 13, 2000. Id. ¶¶ 34-38.

On February 26, 2001, Riggs filed a complaint against Defendants, alleging three counts.² Count I charges HBI with wrongful discharge in violation of public policy. Id. ¶¶ 41-47. Count II alleges tortious interference with contract and prospective advantage against NAHB, Downs, and Mitchell. Id. ¶¶ 48-54. Count III charges all the defendants with civil conspiracy to wrongfully terminate his employment with HBI. Id. ¶¶ 55-58. Riggs seeks an award of compensatory and consequential damages in an amount of no less than $2.000,000, punitive damages against each of the defendants in the amount of $5,000,000, reinstatement and back pay, and attorneys' fees and costs. Id. at 24.³ All the defendants have moved to dismiss Riggs's complaint, contending that it fails to state a claim upon which relief may be granted, pursuant to Federal Rule of Civil Procedure 12(b)(6).

II. DISCUSSION

A. Standard of Review

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) will be granted only if "it appears 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); see Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984) ("A court may dismiss a complaint only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations."). In reviewing such a motion, the Court must construe the complaint in the light most favorable to plaintiff and must accept as true all allegations and all reasonable factual inferences drawn from well-pleaded factual allegations. See Square D. Co. v. Niagara Frontier Tariff Bureau, Inc., 476 U.S. 409, 411, 106 S.Ct. 1922, 90 L.Ed.2d 413 (1986); In re United Mine Workers Employee Benefit Plans Litig., 854 F.Supp. 914, 915 (D.D.C.1994). "However, the court need not accept inferences drawn by plaintiffs if such inferences are unsupported by the facts set out in the complaint. Nor must the court accept legal conclusions cast in the form of factual allegations." Kowal v. MCI Communications Corp., 16 F.3d 1271, 1276 (D....