Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_04-cv-01210/USCOURTS-azd-3_04-cv-01210-3/pdf.json

Nature of Suit Code: 442
Nature of Suit: Civil Rights Employment
Cause of Action: 42:2000e Job Discrimination (Employment)

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Betty Ann St. George, et al., 

Plaintiffs, 

vs.

Home Depot U.S.A., Inc., a foreign

corporation; et al., 

Defendants. 

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No. CV-04-1210-PCT-LOA

ORDER

This matter arises on Defendants' Motion for Summary Judgment on Plaintiffs'

Negligent Hiring Claim (Count III) and Request for Attorneys' Fees (docket # 334) and

Motion for Summary Judgment on Plaintiffs' Negligent Supervision and Negligent Retention

Claims (Counts IV & V) and Request for Attorneys' Fees (docket # 336), filed on April 19

and 21, 2006, respectively. This matter was formally reassigned to the undersigned

Magistrate Judge on September 21, 2006 after all parties voluntarily and unambiguously

consented to magistrate judge jurisdiction. (docket # 377 and # 379). The district court has

jurisdiction under 28 U.S.C. § 1331, based on Plaintiffs' federal Title VII claims; it has

pendent jurisdiction over the related state law claims under 28 U.S.C. § 1367(a). 

Case 3:04-cv-01210-LOA Document 386 Filed 11/02/06 Page 1 of 16
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1

 Pending receipt of the Court's courtesy, working copies on or before November 8,

2006, the Court has reviewed the original Statements of Facts (docket # 348, # 362, # 363

and # 371) in addition to the working copies of other pleadings the Court has in its

possession.

2

 Richard Nelson, Dave Musen, Alan Dempsey, Kenny Anderson and Bob Radcliff

were initially named as defendants but were dismissed from this lawsuit by stipulation on

July 14, 2005. (docket # 108) Phyllis Herchenroeder, a plaintiff, was also dismissed by

stipulation on January 21, 2005. (docket # 29)

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After considering all the pleadings submitted on the subject motions, the

parties' Statements of Facts1

 and relevant case law, the Court concludes that no genuine

dispute of material fact exists whether Defendants are liable pursuant to the willful

misconduct exception to Arizona's exclusive worker's compensation scheme and the

negligent hiring, supervising and retaining theories of liability. Therefore, Defendants are

entitled to summary judgment as a matter of law on Counts Three, Four and Five of the Third

Amended Complaint. Defendants' requests for an award of attorneys' fees, however, will be

denied. Oral argument of the subject motions scheduled for November 28, 2006 at 4:00 p.m.

will be vacated as unnecessary to assist the Court in resolution of these motions.

BACKGROUND

This lawsuit is brought by twenty-one women (collectively "Plaintiffs") who

work or previously worked at the Home Depot store # 452 in Prescott, Arizona from shortly

before it opened to the public in December, 1997 to June 14, 2004 when Plaintiffs

commenced this lawsuit. Plaintiffs' Third Amended Complaint, filed on March 23, 2005,

alleges six claims of liability against Home Depot and eight individual defendants2

 who

worked with Plaintiffs in a supervisory or managerial capacity at the Prescott Home Depot.

Felix Pareja (Store Manager), Steve Maychek (Assistant Store Manager) and John Johnson

(Assistant Store Manager) are the only remaining individual defendants. The Third

Amended Complaint alleges the following theories of liability: 1) sex discrimination in

employment in violation of Title VII of the Civil Rights Act, 42 U.S.C. § 2000e et seq.

(Count One); 2) retaliation in violation of Title VII of the Civil Rights Act, 42 U.S.C. §

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3

 Both pending motions are nearly identical except, of course, for setting forth the

different elements that a plaintiff must prove to establish a prima facie case of each

negligence claim.

4

 It is undisputed herein that when a federal court exercises jurisdiction over pendent

state law claims, it is bound to follow interpretations of state law by the state's highest court.

Aydin Corp. v. Loral Corp., 718 F.2d 897, 904 (9th Cir.1983); West v. American Telephone

& Telegraph Co., 311 U.S. 223, 236, 61 S.Ct. 179, 183, 85 L.Ed. 139 (1940); Erie Railroad

Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 822, 82 L.Ed. 1188 (1938).

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2000e et seq (Count Two); 3) negligent hiring in violation of Arizona law (Count Three); 4)

negligent supervision in violation of Arizona law (Count Four); 5) negligent retention in

violation of Arizona law (Count Five); and 6) intentional infliction of emotional distress in

violation of Arizona law (Count Six).

Defendants allege that this federal court lacks subject matter jurisdiction over

the negligent hiring, supervising and retaining claims because Arizona's workers'

compensation statute is the exclusive remedy for Plaintiffs' alleged work-related injuries.

(docket # 334 at 2; docket # 336 at 2) Both defense motions3

 cite as controlling4 authority

Arizona statutes (A.R.S. §§ 23-1022(A) and (B)) and Arizona cases (Irvin Investors, Inc. v.

Superior Ct. (Kuehne), 800 P .2d 979, 981-82 (Ariz.Ct.App.1990); Gamez v. Brush Wellman,

Inc., 34 P.3d 375 (Ariz.Ct.App.2001) in support of their arguments that the district court

lacks jurisdiction over Plaintiffs' negligence claims. Defendants also cite persuasive district

court authority discussing Arizona law (Mosakowski v. PSS World Med., Inc., 329 F.Supp.2d

1112, 1131 (D.Ariz.2003)) on the issues. In response to the dispositive motions, Plaintiffs

acknowledge Arizona's exclusivity provision generally deprives courts of subject matter

jurisdiction in a tort action by an employee against his or her employer but cite the wilful

misconduct exception contained in A.R.S. § 23-1022(A) and "two seminal cases," docket #

343 at 4; docket # 347 at 4, (Ford v. Revlon, Inc., 153 Ariz. 38, 44, 734 P.2d 580, 586 (1987)

and the Northern District of California case Greenfield v. America West Airlines, 2004 WL

2600135 (N.D Cal. Nov. 16, 2006) as authority that the pending motions should be denied.

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To demonstrate, as they must, that a question of fact exists for jury resolution,

Plaintiffs initially refer the Court to their well-pleaded paragraphs in the Third Amended

Complaint alleging claims of negligent hiring (docket # 47, ¶¶ 58, 60-61); negligent

supervision (Id., ¶¶ 63-68) and negligent retention (Id., ¶¶ 71-75). (docket # 343 at 7; # 347)

Plaintiffs then direct the Court to their Statements of Facts ("PSOF") that during all relevant

times, Plaintiffs complained to store management about numerous incidents of verbal and

physical sexual harassment and retaliation by male managers and male associates, (PSOF ¶¶

22-28); that Plaintiffs were exposed to widespread and daily occurrences of various forms

of sexual harassment which constituted a pattern and practice of harassment creating a hostile

work environment, (PSOF ¶ 26); and that Plaintiffs reported these incidences to various

managers in Home Depot # 452, including store managers, assistant store managers,

department supervisors, and human resource managers, but corrective measures were not

taken to remedy the harassment, (PSOF ¶¶ 22-30). Plaintiffs further allege that Defendant

Home Depot negligently hired the three individual defendants (Felix Pareja, Steve Machek,

and John Johnson) who were in the highest levels of management in Home Depot # 452 and

had the ultimate responsibility to prevent sexual harassment, but who participated in sexual

harassment themselves and ratified the sexual harassment of Plaintiffs by other male

managers and male associates, (PSOF ¶¶ 22-25, 28). Plaintiffs' Response also proffers legal

conclusions that Plaintiffs' injuries were "not unexpected" under A.R.S 1043.01(B); did not

result from an "accident" but were caused by "intentional" acts, "largely due to the length of

time over which the injuries were sustained and management's failure to remedy ongoing acts

of harassment that [management] knew were occurring. ([P]SOF ¶¶ 22-29[.]" (docket # 343

at 8)

Plaintiffs' Response (docket # 347 at 10-15) provides specific factual details

in this record beginning with a 1998 California class action consent decree that required

training of Home Depot human resources personnel, (PSOF ¶¶ 31, 32). Some of the facts

Plaintiffs proffer for purposes of defeating the pending motions are: (1) that from December

1997 until January 2002, while the provisions of the consent decree were in force, Plaintiffs

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complained of sexual harassment, both verbally and in writing, primarily to male supervisors,

including Store Managers Dave Musen and his successor, Defendant Felix Pareja, and

assistant store managers to no avail, (PSOF ¶¶ 22-29); (2) that Home Depot #452 had no

person serving in an human resource capacity for the first two months of its operation and

did not have a human resource manager until January 2002, (PSOF ¶ 34); (3) that on March

9, 1998, John Johnson was employed as Assistant Manager Administration and was

responsible for all human resources within Home Depot #452, (PSOF ¶¶ 34, 36). Plaintiffs

testified in their depositions that Johnson was willing to listen to their complaints about

sexual harassment by male managers and male associates, but he was not willing to

reprimand the offenders or implement any corrective action, (PSOF ¶ 28). Johnson's typical

response to female associates who complained about sexual harassment was: "What do you

want me to do about it?" (PSOF ¶ 29); (4) Priscilla Ingolia assumed control over all human

resource functions for Home Depot # 452 in October 2000, when she was promoted by

Defendant Pareja to the position of Assistant Development Supervisor, a position she

retained until January 2002, when she was promoted to the position of Human Resource

Manager, (PSOF ¶¶ 41, 42). Plaintiffs testified that Ms. Ingolia was not competent in her

position, and they ultimately ceased making complaints to her, (PSOF ¶ 45). Robert Cox,

a regional Home Depot HRM, assessed that Ms. Ingolia did not meet the minimum

qualifications for the position, (PSOF ¶ 46). Ms. Ingolia testified that she was not familiar

with EEOC guidelines concerning sexual harassment, although she testified that she had been

trained on EEO standards and employment practices seven or eight years earlier, (PSOF ¶

48); (5) Defendant Felix Pareja became the Store Manager on January 18, 1999, (PSOF ¶

49). Plaintiff Janet Reavis testified that when she reported to Defendant Pareja that a male

associate was sexually harassing her, Defendant Pareja responded "whaa whaa whaa," then

proceeded to physically push Plaintiff Reavis out of his office, (PSOF ¶ 53). Several

Plaintiffs testified that from mid-1998 through 2003, they were called, among others, the Cword, "whore" and "bitch" by male managers and male associates, including by Pareja,

(PSOF ¶¶ 22, 55). Plaintiff Betty Ann St. George testified that Defendant Pareja yelled at

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5

 A.R.S. § 23-1043.01(B) provides:

 A mental injury, illness or condition shall not be considered a personal injury by

accident arising out of and in the course of employment and is not compensable

pursuant to this chapter unless some unexpected, unusual or extraordinary stress

related to the employment or some physical injury related to the employment

was a substantial contributing cause of the mental injury, illness or condition.

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her "Are all of you on the f---ing rag, you all f---ing bitch and whine at the same time?"

(PSOF ¶ 57); and (6) Plaintiff Karen Blystra wrote a written statement that she had been

sexually assaulted by a male associate, John Entz , when he repeatedly poked her breast with

his finger, (PSOF ¶ 60). Defendant Pareja testified that Entz was an "old man" and that

Plaintiff Blystra could have simply run away from him, (PSOF ¶ 62.).

Both Plaintiffs' Responses also cite A.R.S. § 23-1043.01(B) which precludes

workers' compensation benefits for an employee's mental injuries, illnesses, and conditions

incurred on-the-job unless caused by "some unexpected, unusual or extraordinary stress

related to the employment or some physical injury related to the employment was a

substantial contributing cause of the mental injury, illness or condition." A.R.S. § 23-

1043.01(B). 5

 The Court is unsure why Plaintiffs cite this statute except, perhaps, to show

that Arizona's workers' compensation system is not fair under some circumstances to an

employee, who has not opted out of the system, because not all on-the-job injuries are

compensable but, nevertheless, the employee has given up the right to sue with very few

exceptions.

Defendants' Replies (docket # 349 and # 351) do not attempt to contest the

specific aggravating facts raised in Plaintiffs' Responses, but rather, focus on the legal issues

before the Court.

SUMMARY JUDGMENT

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A Court must grant summary judgment if the pleadings and supporting

documents, viewed in the light most favorable to the nonmoving party, “show that there is

no genuine issue as to any material fact and that the moving party is entitled to judgment as

a matter of law.” Rule 56(c), FRCvP ; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106

S.Ct. 2548, 2552 (1986); Jesinger v. Nevada Fed. Credit Union, 24 F.3d 1127, 1130 (9th Cir.

1994). Substantive law determines which facts are material. Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 248, 106 S.Ct. 2505, 2510 (1986); Jesinger, 24 F.3d. at 1130. In addition,

“[o]nly disputes over facts that might affect the outcome of the suit under the governing law

will properly preclude the entry of summary judgment.” Anderson, 477 U.S. at 248, 106

S.Ct. at 2510. The dispute must be genuine, that is, “the evidence is such that a reasonable

jury could return a verdict for the nonmoving party.” Id.

A principal purpose of summary judgment is “to isolate and dispose of

factually unsupported claims.” Celotex, 477 U.S. at 323-24, 106 S. Ct. at 2553. Summary

judgment is appropriate against a party who “fails to make a showing sufficient to establish

the existence of an element essential to that party’s case, and on which that party will bear

the burden of proof at trial.” Id. at 322, 106 S.Ct. at 2553; Citadel Holding Corp. v. Roven,

26 F.3d 960, 964 (9th Cir. 1994). The moving party need not disprove matters on which the

opponent has the burden of proof at trial. Celotex, 477 U.S. at 323, 106 S.Ct. at 2552.

The party opposing summary judgment “may not rest upon the mere allegations

or denials of [the party’s] pleadings, but. . . must set forth specific facts showing that there

is a genuine issue for trial.” Rule 56(e), FRCvP; Matsushita Elec. Indus. Co., Ltd. v. Zenith

Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 1356 (1986); Brinson v. Lind Rose Joint

Venture, 53 F.3d 1044, 1049 (9th Cir. 1995). There is no issue for trial unless there is

sufficient evidence favoring the nonmoving party. If the evidence is merely colorable or is

not significantly probative, summary judgment may be granted. Anderson, 477 U.S. at 249-

50, 106 S.Ct. at 2511. However, “[t]he evidence of the non-movant is to be believed, and

all justifiable inferences are to be drawn in his [or her] favor.” Id. at 255, 106 S.Ct. at 2513

(citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59, 90 S.Ct. 1598,1608-1609 (1970)).

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In evaluating the evidence submitted by both parties, all evidence and inferences to be drawn

therefrom must be construed in the light most favorable to the nonmoving party. T.W. Elec.

Services v. Pacific Elec. Contractors Ass'n., 809 F.2d 626, 630-31 (9th Cir.1987).

In Anderson, the Supreme Court explained that the summary judgment standard

mirrors the standard for a directed verdict. Anderson, 477 U.S. at 250-52. The inquiry under

each is the same: whether the evidence presents a sufficient disagreement to require

submission to a jury or whether it is so one-sided that one party must prevail as a matter of

law. Put another way, summary judgment should be granted where the nonmoving party fails

to offer evidence from which a reasonable jury could return a verdict in its favor. Id. at 252.

The mere existence of a scintilla of evidence in support of the non-moving party's position

is not sufficient. Id.

Whatever facts which may establish a genuine issue of fact must both be in the

district court’s file and set forth in the opposing pleadings and statement of facts. Carmen v.

San Francisco Unified School District, 237 F.3d 1026, 1029 (9th Cir. 2001). The trial court:

may determine whether there is a genuine issue of fact, on summary judgment,

based on the papers submitted on the motion and such other papers as may be

on file and specifically referred to and facts therein set forth in the motion

papers. Though the court has discretion in appropriate circumstances to

consider other materials, it need not do so. The district court need not examine

the entire file for evidence establishing a genuine issue of fact, where the

evidence is not set forth in the opposing papers with adequate references so

that it could conveniently be found.

Id. at 1031. 

Additionally, on a motion for summary judgment, the trial court is not permitted to weigh the

evidence, pass upon credibility, or speculate as to the ultimate findings of fact. Pepper &

Tanner, Inc. v. Shamrock Broadcasting, Inc., 563 F.2d 391, 393 (9th Cir. 1977).

DISCUSSION

A. Arizona's Workers' Compensation Scheme

Arizona law provides that “[t]he right to recover compensation pursuant to this

chapter for injuries sustained by an employee . . . is the exclusive remedy against the

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employer or any co-employee acting in the scope of his employment [.]” A.R.S. §

23-1022(A) (emphasis added); Irvin Investors, Inc., 800 P .2d at 981-82 (holding that the

plaintiff's negligence claims against her former employer were barred by Arizona's workers'

compensation law, “which provides the exclusive remedy for workers injured on the job”)

(citing A.R.S. §§ 23-906, 23-1022); Gamez, 34 P.3d at 378 (“It is well settled that workrelated injury claims are generally addressed exclusively under Arizona's workers'

compensation scheme.”) (citing A.R. S. § 23-1022(A)). A.R.S. § § 23-1022(A), 23-906(A)

(“Employers who comply with the provisions of § 23-961 or 23-962 as to securing

compensation . . . shall not be liable for damages at common law or by statute, except as

provided in this section, for injury or death of an employee wherever occurring[.]”); Ringling

Bros. & Barnum & Bailey Combined Shows, Inc. v. Superior Ct. (Farias), 680 P.2d 174,

181-82 (Ariz.Ct.App.1983) (holding that the trial court lacked subject matter jurisdiction

over the plaintiffs' negligent infliction of emotional distress claim based on the exclusive

nature of Arizona's workers' compensation statutes); Mosakowski, 329 F.Supp.2d at 1131

(“Because, pursuant to the holding in Irvin Investors, Arizona law precludes an employee

from bringing a tort action based on negligent hiring and negligent retention against their

employer, Defendant is entitled to judgment as a matter of law in its favor on Plaintiff's claim

of negligence.”).

1. Intentional Infliction of Emotional Distress v. Negligence Claims

Plaintiffs rely heavily upon Ford v. Revlon, Inc., supra., to sustain their

negligence claims as jury questions in this case. In the Court's view despite similar factual

claims in both cases, Plaintiffs' reliance on Ford is misplaced because, simply stated, Ford

dealt with an intentional theory of liability and Plaintiffs herein allege negligence theories.

In Ford, the Arizona Supreme Court held that the plaintiff's tort claim for

intentional infliction of emotional distress against her employer was not barred by Arizona's

workers' compensation laws. As Plaintiffs' correctly point out, Ford's claim arose from her

employer's failure to respond to Ford's complaints, made over a period in excess of eight

months, that her supervisor had committed repeated and flagrant acts of sexual harassment.

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6

 Two members of the Arizona Supreme Court concurred in the result, but disagreed

with the majority's analysis on the issue of whether the Arizona workers' compensation law

bars Ford from tort recovery. Vice Chief Justice Feldman's concurring opinion observed that

the injury clearly resulted from an "accident" and that the employer's inaction, though

intentional, did not rise to the level of "wilful misconduct" within the meaning of the statute.

Id. at 589. The concurring opinion concluded that the Ford's claim for intentional infliction

of emotional distress was not barred because the essence of the alleged wrong was sexual

harassment, which is not an inherent or necessary risk of employment but involves a

violation of rights protected by law and privacy. Id. at 591.

Since this minority view can not be deemed to the law of Arizona, this Court sees no

point in analyzing non-controlling law.

7

 A.R.S. § 23-1021(B) provides, in relevant part:

Every employee who is covered by insurance in the state compensation fund

and who is injured by accident arising out of and in the course of employment

. . . shall be paid such compensation. . . . (emphasis added). 

8 Evidence established that this tort was committed through defendant's action

and inaction to plaintiff's complaints made over a period in excess of eight

months. Such action and inaction and the resulting emotional injury to the

plaintiff were therefore not “unexpected,” accidental, or physical in nature so

as to limit plaintiff's recovery to the workmen's compensation claim . . . The

acts by [the offender] and [the employer] were not “accidents.” Indeed, the

jury found both parties liable for the intentional offenses in which they

engaged . . . An injured employee may enforce common-law liability against

his or her employer if not encompassed by statute. 

Ford, 734 P.2d at 586.

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734 P.2d at 586. A majority6

 of the Arizona Supreme Court reasoned that plaintiff's

"emotional distress and her development of physical complications caused by her stressful

work environment," Id., did not result from an "accident" within the meaning of A.R.S. §

1021(B),7

 but were caused by intentional. acts, largely due to the length of time over which

the injuries were sustained.8 The court also noted that, in light of Ford's numerous

complaints, her mental injury was not unexpected under A.R.S. § 23-1043.01(B). Id. 

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9

 Irvin Investors involved a female employee at a fast-food restaurant who was

sexually assaulted, on two occasions, by a male co-worker who had previously molested

another employee at the restaurant. Her action against the employer was for the

psychological injuries she suffered and was based on a claim of negligent hiring, supervising

and retaining the employee who caused her injury. 800 P.2d at 980.

Vice Chief Justice Feldman was the only Arizona Supreme Court member to vote for

review of Irvin Investors. Id. at 979. One may properly infer that the Supreme Court's denial

of review of a Irvin Investors attests its approval of the result reached by the Court of

Appeals. Hagen v. U.S. Fidelity and Guar. Ins. Co., 138 Ariz. 491, 675 P.2d 1310 (Ariz.

1984) ("[W]hile denial of review usually attests our approval of the result reached by the

court of appeals, it does not necessarily indicate our approval of the legal analysis contained

in the opinion.").

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With the benefit of both the analysis by the Arizona Court of Appeals in Irvin

Investors, Inc., supra., with somewhat similar facts9

 and identical negligence allegations , and

the district court in Mosakowski, supra., it is clear Ford is not helpful to Plaintiffs.

. . . Irvin Investors is more closely related to the instant matter than the Ford

case, because in Irvin Investors, the court addressed plaintiff’s claim of

negligent retention and hiring, the same claim plead by plaintiff, while

the Ford case addressed a claim for intentional infliction of emotional

distress, which requires that the plaintiff show that the defendant’s acts

were intentional, i.e., that the defendant’s acts per se fit the exception to

the exclusive remedy provision of Arizona’s workers’ compensation

statute. The cases may be reconciled to stand for the proposition that a

negligence claim is precluded by the workers’ compensation statute

while a claim for intentional infliction of emotional distress is not

precluded.

329 F. Supp. 2d 1112. 

Like Irvin Investors and Mosakowski, because Plaintiffs' claims of negligent

hiring, supervising and retaining allege that they were injured as a result of negligent

workplace conduct, such claims are barred by Arizona's workers' compensation scheme.

Finally, this Court gives no weight to the California case, Greenfield, relied

upon by Plaintiffs. Greenfield examines and analyzes California law as it relates to a

California cause of action for negligent supervision. It provides the Court no help interpreting

Arizona law from the highest Arizona court. Supra., at n. 3.

2. Wilful Misconduct Exception

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10 Having represented Allen throughout this case, the undersigned Magistrate Judge

is painfully aware of how narrowly Arizona courts construe the wilful misconduct exception.

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Plaintiffs mention the wilful misconduct exception in A.R.S. § 23-1022(A) to

Arizona's exclusive remedy for employee suits against employers without any discussion of

its nexus to Defendants' dispositive motion. (docket # 343 at 4; docket # 347 at 4) This Court

infers from the lack of attention which Plaintiffs give this exception that they concede that

such exception does not apply in this case vis a vis the negligence claims. If the Court's

assumption is incorrect and Plaintiffs do intend to claim that the wilful misconduct exception

creates a question of fact on their negligence claims, then Arizona law clearly bars the

applicability of the wilful misconduct exception in this case.

Defendants do not dispute that Arizona's exclusive remedy provisions of its

workers' compensation statutes do not apply when the employee's injury is caused by the

employer's “willful misconduct,” which is defined as “an act done knowingly and purposely

with the direct object of injuring another.” A.R.S. §§ 23-1022(A) & 23-1022(B). But as the

Arizona cases have consistently held for decades and as Mosakowski demonstrates "[t]he

Arizona courts are reluctant to find that employers have acted with wilful misconduct [.]"

Mosakowski, 329 F. Supp.2d at 1130. Cf. Diaz v. Magma Copper Co., 190 Ariz. 544, 551,

950 P.2d 1165, 1172 (Ariz. App.1997) (holding that the defendant employer's acts did not

constitute willful misconduct, even though the defendant employer ignored safety hazards

and delayed the access of paramedics to the employee until the employee was extricated from

a mine, because there was no evidence that the employer's objective was to injure the

deceased); Allen v. Southwest Salt Co., 149 Ariz. 368, 718 P.2d 1021 (Ariz. App.1986)10

(where gross negligence in maintaining hazardous workplace and in failing to make safety

modifications on harvester manufactured by employer did not show a deliberate intent to

inflict injury on employee who was severely injured by harvester); Serna v. Statewide

Contractors, Inc., 6 Ariz. App. 12, 429 P.2d 504 (Ariz. App.1967) (employer's conduct did

not amount to willful misconduct sufficient to take the action out of the Workers'

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Compensation Act when employer disregarded repeated warnings by state safety inspectors

regarding twenty-five foot deep trench, knew that previous cave-in had occurred, had

instructed decedents that in the event of a cave-in they were to try to crawl inside a sewer

pipe in the ditch and wait until they were dug out, and at the time of the fatal occurrence, the

decedents tried but failed to reach the pipe).

In Gamez, one of the more recent Arizona cases discussing the willful

misconduct, reiterates:

It would appear that our statute [wilful misconduct statute; A.R.S. 23-1022] as

well as the principles governing the interpretation of the workmen's

compensation statutes which provide for suit at common law for the

employer's willful misconduct require that there be deliberate intention as

distinguished from some kind of intention presumed from gross negligence.

(citation omitted) The Arizona statute is most restrictive in this regard.

34 P.3d at 379

While one might convincingly argue that Arizona's worker's compensation scheme is unfair

to the employee under some circumstances, it is for the Arizona legislature or the people of

Arizona to change it, not a court engaging in judicial legislation. There being no question of

fact, either directly supporting or reasonably inferring from the evidence presented, that

Defendants Pareja, Maychek and Johnson or any other Home Depot employees intended

("purposely with the direct object of injuring another") to injure or intended to cause injuries

to any Plaintiff by their crude, offensive and wholly unwelcome workplace behavior,

Defendants' motions in this regard will be granted.

B. Request for Attorneys' Fees Pursuant to A.R.S. § 12-349

Defendants seek an award of reasonable attorneys' pursuant to A.R.S. § 12-349

for successfully defending the negligent hiring, negligent supervision and negligent retention

claims brought by Plaintiffs. (docket # 334 at 11; docket # 336 at 5) Defendants argue that

A.R.S. § 12-349 and Phoenix Newspapers, Inc. v. Dept. of Corrections, State of Arizona, 934

P.2d 801, 807 (Ariz. App. 1997) mandate fee awards for filing frivolous lawsuits. They

argue that since there were numerous Arizona and district court cases adverse to the viability

of Plaintiffs' negligence claims and that defense counsel, through a letter to Plaintiffs' counsel

with relevant legal research enclosed therein, attempted to have Plaintiffs' voluntarily dismiss

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such claims, Defendants must be awarded their reasonable attorneys' fees in defeating these

claims. Defendants assert "these claims were groundless, harassing and in bad faith,

especially after Home Depot’s counsel educated Plaintiffs’ counsel as to the law in this area

and gave him an opportunity to voluntarily dismiss these claims." (Id. at 6)

Arizona Revised Statute § 12-349 provides, in relevant part:

 A. Except as otherwise provided by and not inconsistent with another statute,

in any civil action commenced or appealed in a court of record in this state, the

court shall assess reasonable attorney fees, expenses and, at the court's

discretion, double damages of not to exceed five thousand dollars against an

attorney or party, including this state and political subdivisions of this state, if

the attorney or party does any of the following:

1. Brings or defends a claim without substantial justification.

2. Brings or defends a claim solely or primarily for delay or harassment.

3. Unreasonably expands or delays the proceeding.

4. Engages in abuse of discovery.

C. Attorney fees shall not be assessed if after filing an action a voluntary

dismissal is filed for any claim or defense within a reasonable time after the

attorney or party filing the dismissal knew or reasonably should have known

that the claim or defense was without substantial justification.

F. In this section, "without substantial justification" means that the claim or

defense constitutes harassment, is groundless and is not made in good faith.

A.R.S. § 12-349(A), (C) and (F) (emphasis added). 

While an award of reasonable attorneys' is mandatory if a claim is pursued without

substantial justification, Arizona law is equally clear that the statute requires that the action

be groundless, harassing and in bad faith for fees to be awarded. Phoenix Newspapers, Inc.,

934 P.2d at 807 (trial court reversed in awarding attorneys' fees pursuant to A.R.S. § 12-349

because the statute uses the conjunctive “and,” "all three elements must be present.") (citing

Gilbert v. Board of Medical Examiners, 155 Ariz. 169, 180, 745 P.2d 617, 628 (App.1987),

abrogated by statute on other grounds).

The Court finds that Defendants have failed to meet their burden of proof

(preponderance of the evidence) and that Plaintiffs' and/or Plaintiffs' counsel's failure to

voluntarily dismiss Counts Three, Four and Five does not meet the Arizona test of "without

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substantial justification, " viz., the claims alleged constituted harassment, were groundless

and were not made in good faith. Id.

While Defendants make a case that Plaintiffs' negligence claims were

groundless under well-established Arizona law, they provide no argument, much less any

evidence, that Plaintiffs asserted these claims with the express or implied intent to harass

Defendants coupled with a bad faith motive. The Court submits that the Arizona legislature

likely required all three elements to be present before attorneys' fees may be awarded, by

analogy to Title VII cases, to prevent the "chilling effect" such awards would have all but

"airtight" civil rights or tort claims. Christiansburg Garment Co. v. E.E.O.C., 434 U.S. 412,

421 (1978); Barrett v. American Medical Response, N.W. Inc., 230 F.Supp.2d, 1160, 1166

(D. Oregon 2001). If claimants and defendants were to risk paying an award of reasonable

attorneys fees solely because they lost a good faith attempt to expand the common law by

asserting novel claims or defenses, the common law would become stagnate and cease to

grow in response to needs to serve the ends of justice. Ontiveros v. Borak, 136 Ariz. 500,

505, 667 P.2d 205 (Ariz. 1983) ("Inherent in the common law is a dynamic principle which

allows it to grow and to tailor itself to meet changing needs within the doctrine of stare

decisis, which, if correctly understood, was not static and did not forever prevent the courts

from reversing themselves or from applying principles of common law to new situations as

the need arose. If this were not so, we must succumb to a rule that a judge should let others

'long dead and unaware of the problems of the age in which he lives, do his thinking for him.'

” (quoting Justice Douglas, Stare Decisis, 49 Colum.L.Rev. 735, 736 (1949)). Defendants

request for an award of reasonable attorneys fees will be denied.

Accordingly,

IT IS ORDERED that Defendants' Motion for Summary Judgment on

Plaintiffs' Negligent Hiring Claim (Court III) and Request for Attorneys' Fees (docket # 334)

and Defendants' Motion for Summary Judgment on Plaintiffs' Negligent Supervision and

Negligent Retention Claims (Courts IV & V) and Request for Attorneys' Fees (docket # 336),

are GRANTED in part as follows: (1) no genuine dispute of material fact exists whether

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Defendants, or any of them, are liable under the willful misconduct exception to Arizona's

exclusive worker's compensation scheme or on Plaintiffs’ negligent hiring, supervision and

retention claims of liability and, therefore, Defendants are entitled to summary judgment on

those claims as a matter of law, and (2) are DENIED in part as to Defendants' requests for

an award of attorneys' fees.

IT IS FURTHER ORDERED that oral argument currently set for on

Tuesday, November 28, 2006 at 4:00 p.m. is hereby VACATED. The parties submitted

pleadings and memoranda thoroughly discussed the law and evidence in support of their

positions. Oral argument would not aid the Court's decisional process. Mahon v. Credit Bur.

of Placer County, Inc., 171 F.3d 1197, 1200 (9th Cir.1999).

IT IS FURTHER ORDERED that Defendants' Motion to Strike and Notice

of Objection to Portions of Plaintiffs' Statement of Facts (docket # 350) and Motion to Strike

and Notice of Objection to Portions of Plaintiffs' Statement of Facts (docket # 352) are

DENIED as moot.

Dated this 1st day of November, 2006.

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