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Hillhouse v. Hawaii Behavorial Health, LLC

United States District Court, D. Hawaii

May 29, 2015

RAELYNN J. HILLHOUSE, Plaintiff,
v.
HAWAII BEHAVORIAL HEALTH, LLC; GEORGE CHOPIVSKY, JR. in his individual capacity, Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION FOR PARTIAL DISMISSAL OF SECOND AMENDED COMPLAINT FILED ON FEBRUARY 25, 2015

LESLIE E. KOBAYASH UNITED STATES DISTRICT JUDGE

Before the Court is Defendants Hawaii Behavioral, LLC (“HBH”) and George Chopivsky, Jr.’s (“Chopivsky, ” collectively “Defendants”) Motion for Partial Dismissal of Second Amended Complaint Filed on February 25, 2015 (“Motion”), filed on March 11, 2015. [Dkt. no. 72.] Plaintiff Raelynn J. Hillhouse (“Plaintiff”) filed her memorandum in opposition on April 13, 2015, and Defendants filed their reply on April 20, 2015. [Dkt. nos. 76, 77.] This matter came on for hearing on May 4, 2015. After careful consideration of the Motion, supporting and opposing memoranda, and the arguments of counsel, Defendants’ Motion is HEREBY GRANTED IN PART AND DENIED IN PART for the reasons set forth below.

BACKGROUND

The relevant factual and procedural background of this case is set forth in this Court’s: (1) September 18, 2014 Order Granting in Part and Denying in Part Defendant Chopivsky’s Motion for Partial Dismissal of Complaint Filed on March 28, 2014 (“9/18/14 Order”); and (2) October 31, 2014 Order Granting in Part and Denying in Part Defendant Hawaii Behavioral Health, LLC’s Amended Motion for Partial Dismissal of Complaint Filed on March 28, 2014 (“10/31/14 Order”). [Dkt. nos. 42, 45.[1] The Court will only repeat the background that is relevant to the instant Motion.

Plaintiff filed her complaint, on March 28, 2014, against her former employer, HBH, and its majority owner, Chopivsky (in his individual capacity), asserting federal question jurisdiction pursuant to Title VII of the Civil Rights Act of 1964, as amended (“Title VII”), 42 U.S.C. § 2000e-1, et seq., and supplemental jurisdiction pursuant to 28 U.S.C. § 1367. The lawsuit focuses on a series of allegedly discriminatory and retaliatory actions, based on Plaintiff’s gender and sexual orientation, beginning in July 2011, that culminated in her resignation from HBH in May 2012. Specifically, Plaintiff alleges that former President of HBH and friend of Chopivsky, Alexander J. Hoinsky (“Hoinsky”), sexually harassed her and, after she complained, Chopivsky and HBH retaliated against her.

In the 9/18/14 Order, this Court, inter alia, dismissed Plaintiff’s claims against Chopivsky for discrimination and retaliation pursuant to Haw. Rev. Stat. § 378-2, and retaliation against a whistleblower pursuant to the Hawai`i Whistleblower Protection Act (“HWPA”), Haw. Rev. Stat. § 378-62. 2014 WL 4662378, at *7-8. It reasoned, however, that while the recent Hawai`i Supreme Court case of Lales v. Wholesale Motors Co., 133 Hawai`i 332, 328 P.3d 341 (2014), foreclosed individual liability under § 378-2 against co-employees and supervisors, that case, Sam Teague, Ltd. v. Hawai’i Civil Rights Commission, 89 Hawai`i 269, 276, 971 P.2d 1104, 1111 (1999), and Schefke v. Reliable Collection Agency, Ltd., 96 Hawai`i 408, 32 P.3d 52 (2001), did not foreclose individual liability against a majority member of a limited liability corporation (“LLC”) under an alter ego theory. 2014 WL 4662378, at *4-7. The Court, thus, dismissed those claims without prejudice, and suggested that Plaintiff could conceivably plead an alter ego claim, following the standard and factors as laid out in Robert’s Hawaii School Bus, Inc. v. Laupahoehoe Transportation Co., 91 Hawai`i 224, 982 P.2d 853 (1999). Id. at *6-7.

Further, the Court found this district court’s decision, Onodera v. Kuhio Motors Inc., Civil No. 13-00044 DKW-RLP, 2014 WL 1031039 (D. Hawai`i Mar. 13, 2014), extending the logic of Lales to the HWPA, persuasive and therefore dismissed that claim without prejudice, again permitting amendment under the alter ego theory. Id. at *8. Last, in a footnote, this Court rejected Plaintiff’s attempt to use her memorandum in opposition to refashion her § 378-2 claim as an aider and abettor claim, which would permit individual liability. The Court suggested that, even if she was granted leave to amend the claim, Chopivsky could only be found liable for acts to which he “aided and abetted others.” Id. at *7 n.2.

Also significant for this Motion, in the 10/31/14 Order, the Court, inter alia, dismissed without prejudice Plaintiff’s defamation claim against HBH, reasoning that it was preempted by the Hawai`i workers’ compensation law. 2014 WL 5528239, at *7-8. All of the defamatory actions alleged occurred before May 2012 and were preempted.[2] Id. at *8.

On February 25, 2015, Plaintiff filed her Second Amended Complaint (Corrected) (“Second Amended Complaint”), [3] in which she brought, inter alia, the following claims: unlawful retaliation, pursuant to § 378-2(a)(2), against Chopivsky as the alter ego of HBH (“Count IV”); unlawful retaliation, pursuant to § 378-2(a)(3), against Chopivsky as an aider and abettor (“Count V”); retaliation against a whistleblower, pursuant to the HWPA, against Chopivsky as the alter ego of HBH (“Count VII”); defamation against HBH and Chopivsky (“Count X”); and invasion of privacy against HBH and Chopivsky (“Count XII”).[4] [Dkt. no. 68 (Second Amended Complaint) at ¶¶ 134-48, 155-60, 170-75, 185-90.] Plaintiff seeks the following relief: general and/or compensatory damages; special damages; punitive and/or liquidated or exemplary damages; attorneys’ fees and costs; other legal and equitable relief available under the state and federal statutes; and any other appropriate relief. [Id. at pgs. 60-61.]

Defendants move to dismiss all of these claims with prejudice, arguing that, even after amendment, they fail to state claims upon which relief can be granted. [Mem. in Supp. of Motion at 2-3.]

DISCUSSION

I. Alter Ego Claims (Counts IV and VII)

Defendants argue that Plaintiff’s alter ego claims should be dismissed because alter ego liability is not cognizable under § 378-2 and the HWPA.[5] [Id. at 6-9, 14; Reply at 1-5, 9.] Plaintiff responds that Hawai`i law actually supports alter ego liability in this context and, following the Court’s guidance in the 9/18/14 Order, she has sufficiently alleged such a claim. [Mem. in Opp. at 6-14, 16-17.]

In the 9/18/14 Order, this Court concluded that:

  • Lales does not foreclose individual owner liability under Chapter 378 and, in fact, recognizes it as distinguishable from individual employee liability[;]” 2014 WL 4662378, at *5 (emphasis in 9/18/14 Order);

  • - “Hawai`i law recognizes that, ‘[a] member or manager shall not be personally liable for any debt, obligation, or liability of the company solely by reason of being or acting as a member or a manager[, ]’” id. at *6 (emphasis in 9/18/14 Order) (quoting Haw. Rev. Stat. § 428-303), but that “Hawai`i courts recognize an exception to complete insulation of LLC members from liability, ‘where recognition of the corporate fiction would bring about injustice and inequity or when there is evidence that the corporate fiction has been used to perpetrate a fraud or defeat a rightful claim[;]’” id. (some citations and internal quotation marks omitted) (quoting Simental v. Simental, No. CAAP–12–0000656, 2014 WL 3796666, at *7 (Hawai`i Ct. App. July 31, 2014)); and - “under this theory, if Plaintiff could show that Chopivsky was the alter ego of HBH, she may possibly have a cognizable claim against Chopivsky as an ‘employer’ under Chapter 378[, ]” id. (footnote omitted).

Although it acknowledged that it was aware of no Hawai`i or Ninth Circuit case law dealing with the specific issue before it, and that two federal circuit courts have found no individual liability in the analogous Title VII context, this Court dismissed the § 378-2 claims without prejudice. Id. at *7 & n.1. It concluded that, “[e]ven viewed in the light most favorable to her, Plaintiff has not pled any facts that tend to show she could meet either the general alter ego standards of ‘unity of interest’ or ‘fraud, ’ or any of the specific factors from Robert’s.” Id. at *7 (citing Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005)).

In their memoranda, the parties do not offer further binding or persuasive law to inform the Court as to whether the Hawai`i Supreme Court would recognize an alter ego exception to the general LLC limit on liability in the § 378-2 context.[6] The Court thus takes the same position as it did in the 9/18/14 Order. That is, although it could predict whether the Hawai`i Supreme Court would permit alter ego liability in the § 378-2 context, it need not do so. It finds that, even if an alter ego claim is cognizable, Plaintiff still fails to allege sufficient facts to state an alter ego claim in this case.

As described in the 9/18/14 Order, Robert’s sets forth the legal standard and factors for proving alter ego liability and determining whether ...


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