Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_15-cv-02552/USCOURTS-azd-2_15-cv-02552-0/pdf.json

Nature of Suit Code: 442
Nature of Suit: Civil Rights Employment
Cause of Action: 28:1441 Petition for Removal - Employment Discrimination

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Miguel Corzo,

Plaintiff,

v. 

Maricopa County Community College 

District, et al.,

Defendants.

No. CV-15-02552-PHX-ESW

ORDER 

Pending before the Court is Defendants’ fully briefed Motion to Dismiss or for 

More Definite Statement (Doc. 10). Defendants alternatively seek (i) dismissal of Count 

II of Plaintiff’s First Amended Complaint (Doc. 1-2 at 2-62), which alleges wrongful 

termination in violation of an implied-in-fact employment contract against the Maricopa 

County Community College District, or (ii) that the Court order Plaintiff to plead Count 

II with more particularity. The case was removed to the United States District Court 

from the Maricopa County Superior Court of Arizona by Notice of Removal filed 

December 15, 2015 (Doc. 1-2 at 91-98). The Federal Court has jurisdiction pursuant to 

28 U.S.C.§§ 1331, 1441(c). The parties have consented to proceeding before a 

Magistrate Judge pursuant to Rule 73, Fed. R. Civ. P. and 28 U.S.C.§ 636(c) (Docs. 6, 8).

After reviewing the parties’ submissions, the Court finds that Plaintiff has failed to 

set forth sufficient facts in his First Amended Complaint that, if true, set forth a cause of 

action in Count II for wrongful termination in violation of Arizona Employment 

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Protection Act (“AEPA”). However, Plaintiff has set forth sufficient additional facts in 

his Response to cure the deficiencies noted herein. Therefore, Defendants’ Motion to 

Dismiss will be denied. Defendants’ Motion for More Definite Statement will be 

granted, and the Court will order Plaintiff to file a Second Amended Complaint consistent 

with the additional factual allegations Plaintiff has set forth in Plaintiff’s Response and 

the Court’s findings herein.

I. FACTS

Assuming as true all well-pled factual allegations contained in Plaintiff’s First 

Amended Complaint and drawing all reasonable inferences therefrom, Plaintiff alleges 

the following facts in support of Count II. For purposes of this Rule 12(b)(6), Fed. R. 

Civ. P., Motion to Dismiss, the Court disregards any of the Defendants’ factual 

contentions to the contrary. See, e.g., Lee v. City of L.A., 250 F.3d 668, 688 (9th Cir.

2001) (“[F]actual challenges to a plaintiff's complaint have no bearing on the legal 

sufficiency of the allegations under Rule 12(b)(6).”). However, the Court may still 

consider any internal discrepancies or factual conflicts it finds within the complaint that 

undermine its plausibility. See, e.g., Maloney v. Scottsdale Ins. Co., 256 F. App'x 29, 31–

32 (9th Cir. 2007) (finding that a complaint failed to state a claim upon which relief could 

be granted based upon factually inconsistent allegations in a complaint that were not 

pleaded in the alternative, but incorporated into each cause of action).

Plaintiff worked for twenty-eight years for the Maricopa County Community 

College District (“the District”) in various capacities, most recently as a Director in the 

Information Technology Services (“ITS”) Department, managing various information 

data bases including the Student Information System (“SIS”). He did not have 

responsibility for, or oversight of, the ITS web server hardware, software, security, or 

monitoring functions to detect and prevent unauthorized access to the sensitive or 

confidential personal information of students and employees. His employment terms 

included information contained in the District’s Management, Administrative & 

Technology (“MAT”) Policy Manual and Employment Handbook.

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The District is a political subdivision of the State of Arizona, operating under 

color of State law. The District operates ten community colleges and several additional

educational facilities within Maricopa County.

Through audits performed by the Arizona State Auditor General from 2008 

through 2010, the District became aware of and was warned regarding a serious risk of 

theft, manipulation, or misuse of sensitive or confidential information by unauthorized 

users of its data. The first data breach occurred in 2008. Inadequate steps were taken by 

the District to prevent a subsequent data breach which occurred in 2011 and was 

discovered and reported to the District by the FBI. After the data breach of 2011 by 

unauthorized third parties, the District’s main public web server remained severely 

compromised and highly vulnerable to continued unauthorized access. The District 

remained aware of the inadequacies of its system through additional audits, internal 

communications, and commissioned consultant reports. Nevertheless, the District failed 

to take sufficient steps to protect its data from further unauthorized access. A massive 

data breach ensued in 2013, which compromised the confidential data of students and 

employees.

Prior to the 2013 data breach, Plaintiff became aware of the financial 

mismanagement of ITS projects, the lack of adequate data security measures, and the risk 

of a significant breach of confidential data. Plaintiff was aware that the District’s lack of 

adequate data security measures may result in a violation of State and Federal law. In 

2012, Plaintiff therefore reported to the Chancellor of the District the need to tighten ITS 

security, the risk of a data breach, and the financial mismanagement of ITS projects. 

Plaintiff also reported his intent to file EEOC claims for age and racial discrimination 

occurring in the ITS Department.

In 2012, Plaintiff filed a formal grievance through the MAT Employee Group and 

Professional Staff Association (PSA) against the District. Plaintiff also filed three claims

with the U.S. Equal Employment Opportunity Commission (“EEOC”). The District 

never responded to the MAT and PSA grievance as required by the District’s policies and 

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procedures.

In retaliation for engaging in protected activity through the reporting of (i) data 

security inadequacies endangering the confidential information of students and 

employees, (ii) the fiscal mismanagement of the District, and (iii) discriminatory 

practices within the ITS Department, Plaintiff claims that he was demoted, suffered a 

pay-cut, and was eventually terminated. The District failed to provide Plaintiff due 

process in accordance with the MAT policy manual and employee handbook during the 

District’s investigative and hearing procedures conducted regarding Plaintiff’s ultimate 

termination.

II. LEGAL STANDARDS

A. Rule 12(b)(6), Fed. R. Civ. P.

Rule 12(b)(6), Fed. R. Civ. P., is designed to “test[]the legal sufficiency of a 

claim.” Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). A Rule 12(b)(6) dismissal 

for failure to state a claim can be based on either (i) the lack of a cognizable legal theory 

or (ii) insufficient facts to support a cognizable legal claim. Conservation Force v. 

Salazar, 646 F. 3d 1240, 1242 (9th Cir. 2011), cert. denied, Blasquez v. Salazar, 132 S. 

Ct. 1762 (2012). In deciding a Rule 12(b)(6) motion to dismiss, Courts must consider all 

well-pled factual allegations in the Complaint as true and interpret them in a light most 

favorable to the non-moving party. Schlegel v. Wells Fargo Bank, NA, 720 F.3d 1204, 

1207 (9th Cir. 2013). While “a complaint need not contain detailed factual allegations 

. . . it must plead ‘enough facts to state a claim to relief that is plausible on its face.’”

Clemens v. Daimler Chrysler Corp., 534 F.3d 1017, 1022 (9th Cir. 2008) (quoting Bell 

Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “[A] well-pleaded complaint may 

proceed even if it strikes a savvy judge that actual proof of those facts in improbable, and 

‘that a recovery is very remote and unlikely.’” Twombly, 550 U.S. at 556 (quoting 

Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). “[F]or a complaint to survive a motion to 

dismiss, the non-conclusory ‘factual content,’ and reasonable inferences from that 

content, must be plausibly suggestive of a claim entitling the plaintiff to relief.” Moss v. 

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U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 

662, 678 (2009)). In other words, the complaint must contain enough factual content “to 

raise a reasonable expectation that discovery will reveal evidence” of the claim. 

Twombly, 550 U.S. at 556. Legal conclusions couched as factual allegations are not 

given a presumption of truthfulness, and “conclusory allegations of law and unwarranted 

inferences are not sufficient to defeat a motion to dismiss.” Pareto v. FDIC, 139 F.3d 

696, 699 (9th Cir. 1998).

B. Wrongful Termination—the AEPA

The AEPA applies to all employees, whether public or private. Mullenaux v. 

Graham County, 82 P.3d 362, 367 (Ariz. Ct. App. 2004); Cronin v. Sheldon, 991 P.2d 

231 (Ariz. 1999) (upholding the constitutionality of the statutory text). The legislature’s 

intent in enacting the AEPA was to limit the circumstances in which a terminated 

employee can sue an employer for wrongful termination to those situations involving a 

written contract of employment or an employer having violated public policy as set forth 

in the Arizona Constitution or statutes. Taylor v. Graham County Chamber of 

Commerce, 33 P.3d 518, 528 (Ariz. Ct. App. 2001) (quoting Johnson v. Hispanic 

Broadcasters of Tucson, Inc., 2 P.3d 687, 689 (Ariz. Ct. App. 2000)). To challenge a

termination of employment under the AEPA, an employee must demonstrate

one of four theories of liability in order to state a claim as a 

matter of law: (1) termination in breach of a written contract 

(signed by both the employer and employee or expressly 

included in an employment handbook) setting forth that the 

employment relationship shall remain in effect for a specified 

duration of time or otherwise expressly restricting the right of 

either party to terminate the employment relationship; (2) 

termination in violation of an Arizona statute; (3) termination 

in retaliation for the refusal to violate the Arizona 

Constitution or an Arizona statute; or (4) in the case of a 

public employee, if the employee has a right to continued 

employment under either the United States or Arizona 

Constitution.

Bodett v. Coxcom, Inc., 366 F.3d 736, 746 (9th Cir. 2004); ARIZ. REV. STAT. § 23–

1501(A)(2), (3)(a)-(c). Otherwise, an employment relationship is severable at will. 

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ARIZ. REV. STAT. § 23-1501(A)(2).

The AEPA codifies the few situations in which the presumption of at-will 

employment may be rebutted. Before the AEPA was enacted in 1996, wrongful 

termination cases were governed by common law and developing exceptions to the atwill employment doctrine. See Wagenseller v. Scottsdale Mem’l Hospital, 710 P.2d 

1025, 1033 (Ariz. 1985) (holding that at-will employees may be fired for good cause or 

for no cause, but not for bad cause); Leikvold v. Valley View Community Hospital, 688 

P.2d 170, 172 (Ariz. 1984) (holding that employer’s representations in a policy manual 

can become part of an employment contract, limiting employer’s ability to discharge 

employees). In Wagenseller, the Arizona Supreme Court specifically recognized that an 

implied-in-fact contract term may be implied from the conduct of the parties and operate 

as an exception to the at-will rule. 710 P.2d at 1037. In enacting the AEPA, however, 

the Arizona Legislature rejected the judicial expansion of exceptions to the at-will 

employment doctrine espoused in Wagenseller and its progeny. See AEPA Ch. 140, § 1, 

para. A, 1996 Ariz. Sess. Laws 683, 684. The AEPA explicitly changes the Court’s 

inquiry from whether an employment agreement is enforceable at common law to 

whether the employment agreement satisfies the statutory requirements of the AEPA.

See Johnson, 2 P.3d at 690.

In pertinent part, ARIZ. REV. STAT. § 23–1501(A)(2) provides:

The employment relationship is severable at the pleasure of 

either the employee or the employer unless both the employee 

and the employer have signed a written contract to the 

contrary setting forth that the employment relationship shall 

remain in effect for a specified duration of time or otherwise 

expressly restricting the right of either party to terminate the 

employment relationship. Both the employee and the 

employer must sign this written contract, or this written 

contract must be set forth in the employment handbook or 

manual or any similar document distributed to the employee, 

if that document expresses the intent that it is a contract of 

employment, or this written contract must be set forth in a 

writing signed by the party to be charged . . . .

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The first sentence of ARIZ. REV. STAT. § 23-1501(A)(2) is clear. In order to rebut 

the presumption of an at-will employment relationship for which no cause of action for 

wrongful termination lies, Plaintiff must prove that a written employment contract signed 

by both parties exists that meets either of two substantive requirements. The contract 

either (1) must state that the employment relationship has a specified duration of time or 

(2) must expressly restrict the right of either party to terminate the employment 

relationship. The second sentence of the statute, however, sets forth three alternative 

methods to establish the existence of an employment contract that meets the signing 

requirement as stated in sentence one. “Under traditional canons of statutory 

interpretation, because the second sentence is more specific as to the signing requirement 

than the first, the second sentence with its three alternatives will govern.” White v. 

AKDHC, LLC, 664 F. Supp. 2d 1054, 1062 (D. Ariz. 2009) (citing NLRB v. A-Plus 

Roofing, 39 F. 3d 1410, 1415 (9th Cir. 1994) (specific statutory provisions prevail over 

general provisions)). Specifically, the second sentence states that a written contract 

meeting either of the initial two substantive requirements must (1) be signed by both 

parties, (2) be signed by the party to be charged, or (3) be included in an employment 

handbook, manual, or similar document that expresses an intent for it to be an 

employment contract.

Therefore, to prevail on a wrongful termination claim for breach of contract under 

the AEPA, Plaintiff must prove that there is a written contract that meets one of the two 

substantive requirements of sentence one and one of the three alternative formalities of 

sentence two of ARIZ. REV. STAT. § 23-1501(A)(2). In determining whether Plaintiff has 

met his burden of proof, the Court must apply common law principals of contract 

interpretation and give effect to the parties’ intent. See White, 664 F. Supp. 2d at 1063, 

(citing Johnson, 2 P.3d at 689). In determining whether an employment agreement 

satisfies the requirements of ARIZ. REV. STAT. § 23-1501, the Arizona Supreme Court has 

applied the rules governing cases involving the statute of frauds. Johnson, 2 P.3d at 689. 

Hence, if an employment agreement is “reasonably susceptible” to the interpretation 

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asserted by its proponent, extrinsic evidence is admissible to interpret its terms, but not to 

supply a required element. Id. (citing Taylor v. State Farm Mut. Auto. Inc. Co., 854 P.2d 

1134, 1140 (Ariz. 1993)).

III. DISCUSSION

Count II of Plaintiff’s First Amended Complaint specifically alleges the breach of 

an “implied-in-fact” written contract “created through the terms and conditions set forth 

in an employee handbook” and that “such a contract was created through the District’s 

employee handbook.” ARIZ. REV. STAT. § 23-1501(A)(3)(a). (Doc. 1-2 at 53). In 

analyzing sentence one of ARIZ. REV. STAT. § 23-1501(A)(2), the Court finds that 

Plaintiff has not alleged a written contract that “otherwise expressly restricts the right of 

either party to terminate the employment relationship,” rather than procedural formalities 

for doing so. Id. Instead, Plaintiff alleges that “[t]he actions of the District demonstrate 

it intended the provisions of its employment manual to limit the District’s right to 

terminate the employment relationship.” (Doc. 1-2 at 53). Sentence one of ARIZ. REV.

STAT. § 23-1501(A)(2) requires that the written contract itself meet the substantive 

requirement of AEPA. The action and words of a contracting party from which the Court 

may imply-in-fact contract terms are not sufficient to meet the substantive hurdle of 

sentence one. See Johnson, 2 P.3d at 691 (“The word ‘expressly’ means ‘in direct or 

unmistakable terms[;] . . . ‘directly and distinctly stated; expressed, not merely implied or 

left to inference.’”) (citations omitted). However, the Court finds that Plaintiff has 

alleged additional facts in his Response which meet the AEPA’s substantive requirement. 

Plaintiff therefore will be allowed to amend his First Amended Complaint to allege the 

facts set forth in his Response.

As to the sentence two formalities of ARIZ. REV. STAT. § 23-1501(A)(2), Plaintiff 

fails to allege that the written terms and conditions of the employment handbook or MAT 

Manual “expresses the intent that it is a contract of employment . . . .” See Taylor v. 

Graham County Chamber of Commerce, 33 P.3d 518, 527 (Ariz. Ct. App. 2001) (finding 

that a signed, written contract is not required if the employee handbook expresses the 

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intent that it is a contract of employment). A more definitive statement is deemed 

necessary. The Court further finds that sufficient facts are alleged in Plaintiff’s Response 

to support the written contract formalities of sentence two, and amendment would set 

forth sufficient facts to satisfy a cause of action for wrongful termination. Leave to 

amend shall be granted.

The Court notes that though nothing in the AEPA prevents an employer and 

employee from further defining their relationship, the AEPA does require that the written 

contract minimally meet not only the written substantive requirement, but also one of 

three formalities to constitute a written contract from which a breach of contract action 

for wrongful termination may arise. See, e.g., Guz v. Bechtel National, Inc., 8 P.3d 1089, 

1101 (Cal. 2000) (“One example of a contractual departure from at-will status is an 

agreement that the employee will be terminated only for ‘good cause’ . . .” (citing Foley 

v. Interactive Data Corp., 765 P. 2d 373, 385 (Cal. 1988)). A breach of contract may 

occur beyond the context of public policy statutes and the wrongful termination of 

employment, however. Here, Plaintiff also has alleged that procedures adopted by his

employer, set forth in the employee handbook, and relied upon by the employee 

regarding investigation of wrong-doing and ultimate termination of a non-probationary 

employee were not followed by the District. Plaintiff alleges not only wrongful 

termination but also breach of an “employment agreement” and breach of the duty “to act 

fairly and in good faith regarding the employment contract.” (Doc. 1-2 at 53, ¶¶ 323, 

324). The Court finds that Count II of Plaintiff’s First Amended Complaint is 

ambiguous. Count II of Plaintiff’s Complaint seems to contain multiple theories of 

liability arising from the District’s actions and inaction during the parties’ employment 

relationship. See White, 664 F. Supp. 2d 1065 (“[A] viable claim for breach of the 

implied covenant may lie if a plaintiff is alleging that conduct other than the termination 

itself breached the covenant.”) (citing Comeaux v. Brown & Williamson Tobacco Co., 

915 F. 2d 1264, 1272 (9th Cir. 1990)). However, to support a claim for wrongful 

termination as Count II is entitled, Plaintiff specifically must allege facts beyond the 

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conduct of the parties to meet the AEPA requirements above and set forth a cause of 

action for wrongful termination under the AEPA on breach of contract. Plaintiff has 

done so in his Response (Doc. 11 at 12-16). The Court will grant Plaintiff leave to 

amend to add the factual allegations set forth in his Response as well as clarify and 

separate his theories of liability if Plaintiff intended to allege causes of action arising 

from conduct other than the termination itself. 

CONCLUSION 

For the reasons set forth herein, 

IT IS ORDERED denying Defendants’ Motion to Dismiss (Doc. 10). 

IT IS FURTHER ORDERED granting Defendants’ Motion for More Definite 

Statement (Doc. 10). 

IT IS FURTHER ORDERED that Plaintiff shall file a Second Amended 

Complaint alleging those facts set forth in his Response (Doc. 11 at 12-16) and clarifying 

and separating his cause(s) of action, if any, within ten (10) business days of the filing of 

this Order. 

Dated this 14th day of June, 2016. 

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