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Carlson v. Lewis County Hospital District No. 1

United States District Court, W.D. Washington, Tacoma

February 7, 2017

ERIC CARLSON, Plaintiff,
LEWIS COUNTY HOSPITAL DISTRICT No.1, a Washington governmental entity; ROSS JONES, a married man; JUDY RAMSEY, a married woman; KENTON SMITH, a married man; MARC FISHER, a married man; SHANNON KELLY, a married woman; SHERI HENDRICKS, a married woman, Defendants.


          ROBERT J. BRYAN United States District Judge

         This matter comes before the Court on the Plaintiff's Motion for Order of Partial Summary Judgment (Dkt. 38), the Defendants' opposition, or in the alternative, motion to delay the Plaintiff's motion under Fed.R.Civ.P. 56 (d) (Dkt. 54), and Defendants' Motion to Continue Trial Date and Extend Deadlines (Dkt. 62). The Court has considered the pleadings filed regarding the motions and the remaining record.

         On December 15, 2015, Plaintiff, a gay man, filed this case asserting claims for violation of his procedural due process and equal protection rights under the U.S. Constitution (pursuant to 42 U.S.C. § 1983) and for violations of the Washington Law Against Discrimination, RCW 49.60, et. seq. (“WLAD”) in connection with the termination of his employment. Dkt. 1. Plaintiff seeks damages, attorney's fees and costs. Id.

         Pending before the Court is Plaintiff's motion for partial summary judgment in which he moves for an order that: (1) Defendant Lewis County Hospital District No. 1 (“Hospital District”) violated Plaintiff's rights under WLAD, (2) Plaintiff's equal protections rights were violated, and (3) his procedural due process rights were violated. Dkt. 38. Defendants oppose the motion, arguing that it should be denied outright. Dkt. 54. If the motion is not denied at this point, Defendants move for a delay on consideration of the motion, pursuant to Fed.R.Civ.P. 56 (d), until the deposition of Seth Whitmer. Dkt. 54. For the reasons provided, the Plaintiff's motion (Dkt. 38) should be denied as to his claims under the WLAD and equal protection clause, denied without prejudice as to his due process claims, and the Defendants' Rule 56(d) motion regarding Plaintiff's due process claims (Dkt. 54) should be granted. Defendants' motion to continue the case deadlines (Dkt. 62) should be granted.


         A. FACTS

         Plaintiff Eric Carlson was hired by the Hospital District as the Chief Financial Operator of Morton General Hospital (“Morton”) on November 21, 2014. Dkt. 51-1, at 11. Seth Whitmer, the Chief Executive Officer (“CEO”) of Morton, made the decision to hire Plaintiff the day he interviewed him. Id., at 12. In his application, Plaintiff did not provide references from people for whom he had worked; the references listed were “character references.” Dkt. 51-1, at 17.

         The Hospital District is governed by an elected board of commissioners (“board”), who are the individually named Defendants here along with Shannon Kelly, the Human Resources Director for Morton. Dkt. 55-1, at 77. The board hires and fires the CEO (that is the only position for which they make personnel decisions), acts as a liaison between the hospital and the community, and monitors the hospital's finances. Dkt. 55-1, at 77. The CEO reports to the board. Dkt. 55-1, at 78.

         The parties dispute the state of Morton's accounting system at the time Plaintiff was hired. Plaintiff asserts it was “a disaster” (Dkt. 1) while Defendants state that there were “challenges, ” they deny that the accounting system was in as dire straits as asserted by Plaintiff (Dkt. 10).

         In December of 2014, Mr. Whitmer awarded Plaintiff a retention bonus. Dkt. 55-1, at 27. This was not unusual, though, because Mr. Whitmer gave “bonuses to nearly every person he hired.” Dkt. 55-1, at 27.

         Plaintiff testified that a former employer, Dr. Floyd Smith, played a role in sabotaging his position at Morton. Dkt. 55-1, at 9. Plaintiff states that he believes that Dr. Smith “started it, ” in fact. Dkt. 55-1, at 10. Plaintiff indicates that he believes that Dr. Smith contacted the “board of directors and told them that not only was [he] a homosexual but that [he] was a fraudulent person and that [he] somehow had this magical ability to send the hospital's money around the world to secret bank accounts and all sorts of stories.” Dkt. 55-1, at 9.

         Defendant Shannon Kelly, the Human Resources Director for Morton, states that she thinks that she was the first person to tell Mr. Whitmer about an opinion by a Western District of Washington bankruptcy judge that Plaintiff may have been involved in a fraud. Dkt. 55-1, at 29. That opinion is attached. In dicta, the opinion provides, in part: “[t]he Court believes there was a fraud perpetrated here, and [Plaintiff] Carlson was at least part of it. He was in difficult financial straits . . . He saw an opportunity to obtain control over an elderly woman's finances, and ultimately received $300, 000, money he used to finance his new venture.” Dkt. 54, at 34. In any event, Defendant Kelly became aware of this court opinion when she was contacted by Diane Markham. Dkt. 55-1, at 29. Ms. Markham, the Executive Director of the Eastern Lewis County Hospital Foundation, testified that she first heard about the bankruptcy opinion from other foundation members. Dkt. 55-2, at 24-27. Ms. Markham told Defendant Kelly that the document was publically available on the internet and that there were public “concerns.” Dkt. 55-1, at 29. Defendant Kelly told Mr. Whitmer about the document, but she did not read it. Dkt. 55-1, at 29-30.

         Defendant board member Kenton Smith first learned of the fraud allegation regarding Plaintiff in the bankruptcy court's opinion a few weeks before Plaintiff was fired. Dkt. 55-1, at 79. Defendant Smith testified that:

An almost James-Bondish lady came up to me in church and was walking by me. And I thought, well, I don't know the lady, but she's walking by me rather - - -rather close to me, and she was carrying some papers. And as we walked by, she slapped the papers under my arm, pulled my arm down, and said simply, “Read this” and kept walking. . . And even a week or two later, her husband met me at the door as I was leaving church . . . and he wanted to know if I had read those papers that his wife had given me a week earlier.

Dkt. 55-1, at 79. Defendant Smith later learned that the couple's (“last name Ferch”) adult daughter was a nurse at a doctor's office in Packwood, Washington. Dkt. 55-1, at 80. The record is not clear on the Ferch's connection with Plaintiff. Defendant Smith states that he read the bankruptcy court's opinion and then contacted Mr. Whitmer. Dkt. 55-1, at 81. Defendant Smith testified that he told Mr. Whitmer how he ended up getting the opinion and that “[he] thought [Mr. Whitmer] should take a look at [the opinion] and that's all [Defendant Smith] said.” Dkt. 55-1, at 81.

         Defendant board member Marc Fisher states that around that time, he was in a hardware store owned by Joy Watt. Dkt. 55-1, at 96. Ms. Watt called Defendant Fisher into her office and handed him the bankruptcy court's opinion regarding Plaintiff, and said, “you better read [this].” Dkt. 55-1, at 97. Defendant Fisher states that he did not read or discuss the document further with Ms. Watt. Dkt. 55-1, at 98. He later read the opinion. Dkt. 55-1, at 98. Defendant Fisher called Defendant Smith. Dkt. 55-1, at 98. Defendant Fisher states that he and Defendant Smith felt that this was serious - they had “a man that committed a fraud heading our finance department.” Dkt. 55-1, at 100.

         Defendant board member Ross Jones states that he first learned of ethical concerns the community had about Plaintiff's suitability for the CFO position at Morton through two community members: Don Bishop and Glenn Allen. Dkt. 55-1, at 46-47. Both men referred Defendant Jones to the bankruptcy judge's opinion. Dkt. 55-1, at 47. After reading the portion of the opinion that discusses the bankruptcy court's belief in Plaintiff's participation in the fraud, Defendant Jones contacted Defendant Fisher, who had also recently become aware of the opinion, and they discussed it. Dkt. 55-1, at 48. Defendant Jones expressed his concern that Plaintiff had engaged in “unethical behavior.” Dkt. 55-1, at 49.

         Defendant board member Judy Ramsey states that Joy Watt also told her about the bankruptcy court's opinion involving Plaintiff, and the next day, Defendant Fisher gave her a copy. Dkt. 55-2, at 7. While she did not read the entire document, she read the portion that discussed Plaintiff and allegations of fraud. Dkt. 55-2, at 6.

         In a December 17, 2014 executive session, the board members (except Defendant board member Sheri Hendricks who was in Arizona) discussed their concerns with Mr. Whitmer, about the judicial opinion and community members' “grave concerns” that Plaintiff had engaged in “unethical behavior” involving a fraud. Dkts. 55-1, at 50; 55-2, at 8-9. The board instructed Mr. Whitmer to look into it further. Dkt. 55-2, at 9. The board did not order a private investigator be hired. Dkt. 55-1, at 54. Further, each of the board members present at the meeting deny that any discussion of Plaintiff's sexual orientation occurred, particularly as a reason to fire Plaintiff. Dkts. 56, at 2; 57, at 2; 58, at 2; 59, at 2; and 61 at 2.

         On December 24, 2014, Defendant board member Sheri Hendricks received an email from Glenn Allen. Dkt. 55-1, at 58. She was in Arizona. Dkt. 39-6, at 5. Defendant Hendricks testified that was the first time she heard that there was a fraud allegation against Plaintiff. Dkt. 55-1, at 58. Defendant Hendricks states that Mr. Allen attached the bankruptcy court's opinion to the email. Dkt. 55-1, at 58. Defendant Hendricks read the opinion and then talked with Defendant Fisher and Defendant Smith. Dkt. 55-1, at 59. She told both men she was concerned. Dkt. 55-1, at 61.

         Defendant Smith states that one evening, while Defendant Fisher was at his home, he received a call from Dr. Floyd Smith. Dkt. 55-1, at 82. Dr. Smith, one of Plaintiff's prior employers, wanted to discuss Plaintiff's employment at Morton. Dkt. 55-1, at 82 and 100. The phone was placed on speaker. Dkt. 55-1, at 82 and 100. Dr. Smith told them that he lost money to Plaintiff, and that “no matter what, [Plaintiff] should not be in a position where he could handle money or accounts.” Dkts. 55-1, at 82. Dr. Smith testified that while Plaintiff worked for him, there were “financial irregularities, ” including “transfer of funds that couldn't adequately be explained.” Dkt. 55-2, at 14.

         Defendants Smith and Fisher then called Mr. Whitmer. Dkt. 39-3, at 5. Defendant Fisher states that he explained to Mr. Whitmer, “what we had, ” and asked “what he [was] going to do about it?” Dkt. 39-3, at 5. Defendant Fisher testified that he knew that Mr. Whitmer had the bankruptcy judge's opinion, but was “resisting, ” and was not going to read it. Dkt. 39-3, at 5. Defendant Fisher told Mr. Whitmer, “You have got to make a decision” about whether to keep Plaintiff. Dkt. 39-3, at 5. In response to Mr. Whitmer's concern that his job as CEO was at risk, Defendant Fisher replied that “[w]ell I don't know. I am just one vote.” Dkt. 55-1, at 110.

         Dr. Smith testified that he received a call from Mr. Whitmer about Plaintiff. Dkt. 55-2, at 19. The record does not provide the date of the call, but it was after Dr. Smith talked with Defendant Smith. Dkt. 55-2, at 19. Dr. Smith told Mr. Whitmer about his concerns regarding the financial irregularities he thinks Plaintiff engaged in while handling Dr. Smith's billing and accounts, and gave him a list of other people that would have information about Plaintiff's financial misconduct. Dkt. 55-2, at 19.

         Defendant Kelly testified that she was hesitant for them to terminate Plaintiff's employment. Dkt. 39-2, at 15. She states she “felt like [she] didn't have enough information” because the only information she had at the time was “[j]ust Seth [Whitmer] saying that he was terminating [Plaintiff] because of this statement the judge made regarding fraud.” Dkt. 39-2, at 15. Defendant Kelly states that she did not talk with any of board members about the termination of Plaintiff's employment. Dkt. 55-1, at 31.

         About December 28th or 29th, Mr. Whitmer called Defendant Hendricks (who was still in Arizona) and asked whether she was aware of the fraud allegation in the bankruptcy opinion involving Plaintiff. Dkt. 55-1, at 64. Defendant Hendricks told Mr. Whitmer that she read the opinion, was concerned about its implications, and had spoken to both Defendant Fisher and Defendant Smith. Dkt. 55-1, at 64.

         A little later, Mr. Whitmer called Defendant Hendricks again and told her that he was “setting [the termination of Plaintiff's employment] in motion.” Dkt. 55-1, at 70.

         Around December 31, 2014, a hearing was held between Mr. Whitmer and Plaintiff. Dkt. 39-2. Defendant Kelly was there as a note taker. Dkt. 39-2, at 7. Shana Garcia (Mr. Whitmer's assistant) was also present, at Mr. Whitmer's request, to “notate” Plaintiff's “mannerisms and his reactions” and to record his responses. Dkt. 55-2, at 33. Ms. Garcia testified that Plaintiff came in and Mr. Whitmer gave Plaintiff an opportunity to share what he knew about the bankruptcy case. Dkt. 55-2, at 34. Ms. Garcia states that Plaintiff “walked us through his side of the case” and Mr. Whitmer asked him questions. Dkt. 55-2, at 35. According to Defendant Kelly, at that meeting, Mr. Whitmer put Plaintiff on a leave of absence because “[Mr. Whitmer] was going to look into it further and [Plaintiff] would have an opportunity to share information about that.” Dkt. 55-1, at 31-32. Plaintiff testified that, at the first hearing, he told them he had not committed fraud. Dkt. 55-1, at 18. They decided to meet again. Dkt. 55-1, at 32.

         Plaintiff asked his attorney from the bankruptcy proceeding, Larry Fagerness, to contact Mr. Whitmer, and explain what happened in the case. Dkt. 55-1, at 19. Plaintiff believes that Mr. Fagerness did call Mr. Whitmer and gave him information about it. Dkt. 55-1, at 19.

         On January 5, 2015, Mr. Whitmer held another hearing with Plaintiff. Plaintiff states that at this hearing, he brought portions of the bankruptcy code to explain “why this was a completely made-up thing.” Dkt. 55-1, at 19. He explained the general factual context in both hearings, and at this second meeting, tried to show that he did not commit fraud under the bankruptcy code. Dkt. 55-1, at 20. Ms. Garcia reports that Mr. Whitmer informed Plaintiff that due to the fraud allegation, he could no longer serve as CFO. Dkt. 55-2, at 38. Ms. Garcia states that Plaintiff was not pleased. Dkt. 55-2, at 38. Plaintiff was told at this second hearing that Mr. Whitmer would be “in touch.” Dkt. 55-1, at 34.

         Plaintiff was then sent a letter terminating his employment. Dkt. 55-2, at 41. Plaintiff acknowledges that the letter does not contain the word “fraud” and is merely “boilerplate” language. Dkt. 51-1, at 21-22.

         After the termination of Plaintiff's employment at Morton, Mr. Whitmer related to the board that he let Plaintiff go. Dkt. 55-1, at 61. Defendant Hendricks thought Mr. Whitmer appeared “boastful” about firing Plaintiff. Dkt. 55-1, at 63. Each of the board members present at the meeting deny that any discussion of Plaintiff's sexual orientation ...

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