Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_08-cv-00890/USCOURTS-azd-2_08-cv-00890-0/pdf.json

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

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Garrett White, M.D., a North Carolina

citizen, 

Plaintiff, 

vs.

AKDHC, LLC, dba Arizona Kidney

Disease & Hypertension Center, an

Arizona limited liability company,

Defendant. 

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

No. CV08-0890-PHX-NVW

ORDER

Plaintiff Garrett White (“White”) has asserted four claims against Defendant

Arizona Kidney Disease & Hypertension Center, LLC (“AKDHC”) arising from

AKDHC’s termination of White’s employment. The claims include breach of contract,

breach of the implied covenant of good faith and fair dealing, violation of 42 U.S.C.

§ 2000e-2, and violation of 42 U.S.C. § 1981. Now pending before the Court is

Defendant AKDHC’s Motion for Summary Judgment (doc. # 68) on all four claims. 

I. Legal Standard for Summary Judgment

The Court should grant summary judgment if the evidence shows there is no

genuine issue as to any material fact and the moving party is entitled to judgment as a

matter of law. Fed. R. Civ. P. 56(c). The moving party must produce sufficient evidence

to persuade the Court that there is no genuine issue of material fact. Nissan Fire &

Case 2:08-cv-00890-NVW Document 92 Filed 10/02/09 Page 1 of 22
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 2 -

Marine Ins. Co., Ltd. v. Fritz Cos., Inc., 210 F.3d 1099, 1102 (9th Cir. 2000). 

Conversely, to defeat a motion for summary judgment, the nonmoving party must show

that there are genuine issues of material fact. Anderson v. Liberty Lobby, Inc., 477 U.S.

242, 250 (1986). A material fact is one that might affect the outcome of the suit under the

governing law, and a factual issue is genuine “if the evidence is such that a reasonable

jury could return a verdict for the nonmoving party.” Id. at 248. 

The party seeking summary judgment bears the initial burden of informing the

court of the basis for its motion and identifying those portions of the pleadings,

depositions, answers to interrogatories, and admissions on file, together with the

affidavits, if any, which it believes demonstrate the absence of any genuine issue of

material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The nature of this

responsibility varies, however, depending on whether the moving party or the nonmoving

party would bear the burden of proof at trial on the issues relevant to the summary

judgment motion. If the nonmoving party would bear the burden of persuasion at trial,

the moving party may carry its initial burden of production under Rule 56(c) by

producing “evidence negating an essential element of the nonmoving party’s case,” or by

showing, “after suitable discovery,” that the “nonmoving party does not have enough

evidence of an essential element of its claim or defense to carry its ultimate burden of

persuasion at trial.” Nissan Fire, 210 F.3d at 1105-06; High Tech Gays v. Defense Indus.

Sec. Clearance Office, 895 F.2d 563, 574 (9th Cir. 1990). 

When the moving party has carried its burden under Rule 56(c), the nonmoving

party must produce evidence to support its claim or defense by more than simply showing

“there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co.

v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Where the record, taken as a whole,

could not lead a rational trier of fact to find for the nonmoving party, there is no genuine

issue of material fact for trial. Id. 

In the context of summary judgment, the court presumes the nonmoving party’s

evidence is true and draws all inferences from the evidence in the light most favorable to

Case 2:08-cv-00890-NVW Document 92 Filed 10/02/09 Page 2 of 22
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 3 -

the nonmoving party. Eisenberg v. Ins. Co. of North America, 815 F.2d 1285, 1289 (9th

Cir. 1987). If the nonmoving party produces direct evidence of a genuine issue of fact,

the court does not weigh such evidence against the moving party’s conflicting evidence,

but rather submits the issue to the trier of fact for resolution. Id. 

II. Factual Background

Viewed in the light most favorable to White, the pertinent facts are as follows.

In early September 2003, Garrett White, an African American nephrologist, interviewed

in person at AKDHC for a position as a physician. His interviewers included Susan

Price, CEO and shareholder of AKDHC, and several physician shareholders, including

Dr. Ed Laurel, Dr. Isabel Guerra, Dr. Rick Mishler, Dr. Bob Moffitt, Dr. Yogesh Amin,

Dr. Savas Petrides, Dr. Jim Ferraro, Dr. Ariv Swaminathan, and Dr. Paul Sandler. All of

these named interviewers voted to hire White after the interview.

On September 12, 2003, White and AKDHC, through its CEO Susan Price,

entered into an employment relationship when both White and Price signed an

employment agreement (“Employment Agreement”). Provision 2 of the Employment

Agreement states that the term of the agreement “shall continue until terminated as

hereinafter provided.” Provision 11, entitled “Termination,” specifies that the agreement

“may be terminated by either party hereto without cause upon ninety (90) days written

notice to the other party” and that AKDHC “shall have the right at all time to discharge

Employee for cause.” No other provisions address the severability of the employment

relationship between White and AKDHC. Provision 7 of the Employment Agreement

states that AKDHC will maintain facilities and provide equipment, drugs, supplies, and

personnel required by White to perform his duties during his employment. Finally, the

Employment Agreement also includes an “Exclusive Service” provision, stating that

employees “shall not, without the written consent of Company, directly or indirectly,

render services of a professional nature to or for any person or firm for

compensation . . . .” White also received a Physician Guide, which, among other things,

reiterates the “Exclusive Service” provision and states that “[a]ll fees and compensation

Case 2:08-cv-00890-NVW Document 92 Filed 10/02/09 Page 3 of 22
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 4 -

received or realized as a result of the rendition of professional services by a physician

shall belong to and be paid and delivered to the Company.” AKDHC alleges that these

provisions form the basis for the company’s purported “common pot” policy, which

requires all physicians to remit to AKDHC any payments they receive for giving lectures

or seminars outside of AKDHC during working hours, which are from 7am to 5pm. 

Over the next three years, on behalf of White, AKDHC wrote three letters

(“Mortgage Letters”) for the purpose of providing financial information to facilitate

White’s acquisition of a mortgage. The first, written sometime prior to January 2004,

outlines White’s five-year projected salary and benefit package and appears on its face to

be signed by Susan Price. The second, dated February 13, 2006, and the third, dated

February 16, 2006, were signed by AKDHC’s Director of Finance and both briefly

outline White’s projected salary and bonus structure for the period beginning in 2006 and

ending in 2009. Although the January 2004 letter refers to the salary and benefit package

as increasing on a “guaranteed scale,” none of the letters refers in any way to the term or

severability of the employment relationship between White and AKDHC. 

Also during White’s employment with AKDHC, in a January 2006 resolution,

AKDHC’s board of directors eliminated a $42,000 buy-in requirement for incoming

physician partners (“BOD Resolution”). In its place, the board adopted a new five-year

salary and bonus scale that reflects the new five-year partnership track. According to the

BOD Resolution, “there is a ‘sweat equity’ over the course of 5 years of a little over

$1,000,000 to full partnership status.” It does not expressly mention the severability of

employment relationships between AKDHC and its physicians. This BOD Resolution

applied to White, who was a non-shareholder physician at the time it was adopted. 

From 2004 onward, White entered into at least two contracts with Ortho Biotech, a

pharmaceutical company, pursuant to which White gave lectures sponsored by Ortho

Biotech in exchange for fees. He received $2,500 in 2005 and $2,000 in 2006. While

White had oral authorization from AKDHC to give the lectures, he did not have express

Case 2:08-cv-00890-NVW Document 92 Filed 10/02/09 Page 4 of 22
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 5 -

authorization to keep the payments received for giving the lectures. Nonetheless, White

kept all payments received from Ortho Biotech. 

On September 11, 2006, Price wrote a letter to White regarding various instances

of his alleged inappropriate behavior and statements to other workers, and violations of

AKDHC’s “common pot” policy for failing to remit to AKDHC the payments he received

from Ortho Biotech. In the letter, which was signed by Price in her official capacity as

CEO of AKDHC, Price stated that “[t]he Governance Committee will conduct a peer

review investigation, at which time you will have the opportunity to candidly discuss

these specific situations in depth.” White responded with a letter dated September 12,

2006, in which he “welcome[d] the opportunity to discuss the details regarding issues of

[his] conduct at AKDHC to the Governance Committee.” Neither the Employment

Agreement nor the Physician Guide expressly guarantees to employees the right to a

formal Governance Committee hearing prior to termination of employment. 

 On September 15, 2006, AKDHC held a shareholders’ meeting to discuss White’s

alleged misconduct, including his failure to remit to the company “pot” all payments

received from Ortho Biotech. At the meeting, all seventeen shareholders who were

present voted to terminate White’s employment. Of those who initially interviewed and

voted to hire White, all but Dr. Paul Sandler, who was absent, voted to terminate him. 

The minutes of the meeting refer to the general concern that White’s “intellectual

dishonesty will always be in question.” 

AKDHC tendered a notice of termination to White on September 18, 2006,

without holding a formal Governance Committee hearing and without giving White an

opportunity to explain his alleged misconduct. The notice stated that the termination was

without cause and would be effective December 17, 2006, ninety days from the date of

the notice. The notice required White to return all office property, including keys and a

phone, immediately, but assured him that AKDHC would continue to pay his full salary,

benefits, and a bonus to him for ninety days, which AKDHC did. White was denied

access to AKDHC’s facilities, supplies, and patient records and files during the ninetyCase 2:08-cv-00890-NVW Document 92 Filed 10/02/09 Page 5 of 22
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

In his deposition, White claims that Dr. Patel kept for himself honoraria and

payments received for giving lectures outside the workplace. However, his assertion was

admittedly not based on personal knowledge but rather hearsay, which will not be considered

as evidence for purposes of summary judgment. See Fed. R. Evid. 802. White has failed to

produce any admissible evidence of his assertion.

- 6 -

day period. Also on September 18, 2006, AKDHC’s Executive Assistant, Susan Luz,

sent a memorandum to other hospitals in the area at which White had staffing privileges. 

It stated that “[e]ffective this date, please note that Dr. Garrett White is no longer

associated with Arizona Kidney Disease & Hypertension Center” and it provided a

forwarding address and phone number for White.

White is the only physician employee ever to have been terminated by AKDHC.

Other physicians at AKDHC have been reprimanded for communication and behavioral

misconduct in the workplace, but none of them is African American and none has been

terminated. These physicians include Dr. Donald Schon, a physician shareholder; Dr.

Paul Sandler, a physician shareholder; Dr. David Raskin, a physician shareholder; Dr.

Georgetta Bidwell, a non-shareholder phyician; Dr. Isabel Guerra, a physician

shareholder; and Dr. Nilesh Patel, a non-shareholder physician. None of these physicians,

nor any other physician at AKDHC, has kept payments and honoraria received for giving

lectures outside the workplace.1

III. Analysis

A. Breach of Contract

1. The EPA applies to White’s breach of contract claim.

The severability of employment relationships in Arizona is presently governed by

the Employment Protection Act (“EPA”), codified at A.R.S. § 23-1501. See generally

Cronin v. Sheldon, 195 Ariz. 531, 991 P.2d 231 (1999) (upholding the constitutionality of

the statutory text); Taylor v. Graham County Chamber of Commerce, 201 Ariz. 184, 33

P.3d 518 (Ct. App. 2001) (applying the EPA). Prior to the adoption of the EPA,

employment relationships were governed largely by Arizona common law, which

Case 2:08-cv-00890-NVW Document 92 Filed 10/02/09 Page 6 of 22
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 7 -

presumed that employment relationships were both contractual in nature and terminable at

will by either party, but also included several exceptions to the at-will doctrine. Fallar v.

Compuware Corp., 202 F. Supp. 2d 1067, 1075 (D. Ariz. 2002). The EPA codifies the atwill presumption and specifies very few situations in which the presumption may be

rebutted. See Taylor, 201 Ariz. at 192, 33 P.3d at 526.

The EPA also makes clear that a terminated employee may only assert a claim

against an employer in limited circumstances. See Johnson v. Hispanic Broadcasters of

Tucson, Inc., 196 Ariz. 597, 599, 2 P.3d 687, 689 (Ct. App. 2000) (noting that the

legislature’s intent in enacting the EPA was to “limit the circumstances in which a

terminated employee can sue an employer . . .”). According to A.R.S. § 23-1501(3)(a),

one of the few circumstances in which a terminated employee may assert a claim against

an employer is if “[t]he employer has terminated the employment relationship of an

employee in breach of an employment contract, as set forth in paragraph 2 of this section,

in which case the remedies for the breach are limited to the remedies for a breach of

contract.” As it applies to breach of contract claims, the EPA “changes our inquiry from

whether the employment agreement is enforceable at common law to whether the

employment agreement satisfies the statutory requirements.” Johnson, 196 Ariz. at 600, 2

P.3d at 690; see also Rita A. Meiser, DeMasse v. ITT Corporation: A New Legal

Landscape for Employee Handbooks?, 36 ARIZ. ATT’Y 22, 23 (2000) (“[W]here an

employment contract exists, and the contract meets the rigid criteria of the statute, a

breach of contract claim lies for actions by the employer which violate the contract.”). 

As such, the EPA not only applies to White’s breach of contract claim, but governs

it exclusively. As AKDHC points out, White’s characterization of his claim as one

arising from a breach of certain salary and bonus provisions, and not arising from the

termination of his employment, is a transparent attempt to avoid complying with the strict

statutory requirements of the EPA. White’s characterization also contradicts his Second

Amended Complaint, in which he claims that “[w]hen Defendant terminated Dr. White in

Case 2:08-cv-00890-NVW Document 92 Filed 10/02/09 Page 7 of 22
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 8 -

the third year of his five (5) year contract, it breached the contract.” Therefore, the EPA

governs all aspects of White’s breach of contract claim.

2. White was presumptively an at-will employee under the EPA.

 In pertinent part, A.R.S. § 23-1501(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 . . . .

The general rule, then, is simply that employment relationships in Arizona are

presumptively severable by either party at any time, or, in other words, presumptively at

will. Taylor, 201 Ariz. at 193, 33 P.3d at 527. Taken in conjunction with A.R.S.

§ 23-1501(3)(a), A.R.S. § 23-1501(2) dictates that to prevail on a breach of contract claim

against an employer, an employee must show that the employer breached a contract that

meets the requirements of A.R.S. § 23-1501(2). 

In this case, it is undisputed that White and AKDHC entered into an employment

relationship in the state of Arizona on September 12, 2003, when both parties signed the

Employment Agreement. Under the EPA, the employment relationship was

presumptively severable at will, allowing either White or AKDHC to terminate the

relationship with or without cause, subject only to the requirement of ninety days’ notice. 

Therefore, unless there is a genuine issue of material fact as to whether the at-will

presumption was rebutted by a qualifying written contract in this case, summary judgment

in favor of AKDHC on the breach of contract claim is warranted.

3. White has failed to rebut the at-will presumption.

While the general at-will presumption contained within the first sentence of A.R.S.

§ 23-1501(2) is relatively easy to understand, courts have recognized that the remainder

of the provision, which enumerates the situations in which the presumption may be

Case 2:08-cv-00890-NVW Document 92 Filed 10/02/09 Page 8 of 22
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 9 -

rebutted, is less than a “model of clarity.” Taylor, 201 Ariz. at 193, 33 P.3d at 527. What

can be deciphered with relative ease is that a terminated employee wishing to assert a

breach of contract claim against an employer must show that both parties entered into a

written contract that either (1) states that the employment relationship has a specified

duration, or (2) otherwise expressly restricts the right of either party to terminate the

employment relationship. 

The confusion stems from the fact that while the first sentence requires both

parties to sign the written contract, the second sentence provides alternatives to that

requirement. Specifically, the second sentence states that a written contract meeting

either of the initial two substantive requirements must (1) be signed by both parties, or (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. 

Under traditional canons of statutory interpretation, because the second sentence is more

specific as to the signing requirement than the first sentence, the second sentence with its

three alternatives will govern. See NLRB v. A-Plus Roofing, 39 F.3d 1410, 1415 (9th Cir.

1994) (“It is a well-settled canon of statutory interpretation that specific provisions

prevail over general provisions.”); Markair, Inc. v. CAB, 744 F.2d 1383, 1385 (9th Cir.

1984) (noting the “well-settled rule of statutory construction that the specific terms of a

statute override the general terms.”). 

Therefore, to prevail on his breach of contract claim, White bears the burden of

showing that there is a written contract that meets one of the two substantive requirements

and one of the three formalities outlined in A.R.S. § 23-1501(2). In determining whether

an employment contract or other document satisfies these requirements, we “apply

common law principles of contract interpretation” and “give effect to the parties’ intent.” 

Johnson, 196 Ariz. at 599, 2 P.3d at 689.

Case 2:08-cv-00890-NVW Document 92 Filed 10/02/09 Page 9 of 22
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 10 -

a. The Employment Agreement does not rebut the at-will

presumption.

Provision 2 of the Employment Agreement states that the term of the agreement

“shall continue until terminated as hereinafter provided.” Provision 11, entitled

“Termination,” specifies that the agreement “may be terminated by either party hereto

without cause upon ninety (90) days written notice to the other party” and that AKDHC

“shall have the right at all time to discharge Employee for cause.” No other provision

addresses the severability of the employment relationship between White and AKDHC. 

Although the Employment Agreement is a written contract signed by both White

and AKDHC, it fails to meet the other requirements of A.R.S. § 23-1501(2) because it

neither (1) states that the employment relationship has a specified duration, nor (2)

otherwise expressly restricts the right of either party to terminate the employment

relationship. The ninety-day notice requirement is not an express restriction on

AKDHC’s right to terminate White’s employment, but rather a procedural formality that

must be observed if AKDHC chooses to exercise its right to terminate. If anything, the

contract language affirms the at-will employment status. Therefore, the Employment

Agreement cannot be used as a basis for White’s breach of contract claim unless it was

modified to meet the requirements of A.R.S. § 23-1501(2). Because no other documents

satisfy the requirements of A.R.S. § 23-1501(2), as explained below, the Court need not

reach the issue of whether each document modified the Employment Agreement.

b. The Mortgage Letters do not rebut the at-will presumption.

The three Mortgage Letters outline White’s projected salary and bonus structure

for the purpose of facilitating his acquisition of a mortgage. Although there is some

dispute as to whether the January 2004 letter was authorized, viewed in the light most

favorable to White, all three letters were signed by an agent of AKDHC. As such, all

three letters meet the formality requirement of A.R.S. § 23-1501(2), because they were all

signed by AKDHC, the party to be charged.

Case 2:08-cv-00890-NVW Document 92 Filed 10/02/09 Page 10 of 22
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 11 -

The letters do not, however, meet either of the substantive requirements of A.R.S.

§ 23-1501(2). First, none of the letters states that the employment relationship has a

specified duration. White contends that the “guaranteed” salary and bonus projections

qualify as a statement that the employment relationship has a specified duration of at least

five years. This argument lacks merit because, unlike some states, Arizona does not

follow the presumption that guaranteed per-year compensation makes the employment

relationship one of a specified duration. Horizon Corp. v. Weinberg, 23 Ariz. App. 215,

217, 531 P.2d 1153, 1155 (1975) (“[A] hiring at a specified sum per week, month or year,

is, in the absence of special circumstances, no more than an indefinite hiring.”). See also

Johnson, 196 Ariz. at 600, 2 P.3d at 690 (concluding that a contract clause guaranteeing

the plaintiff a first year income of $52,000 does not qualify as a commitment for a certain

duration under A.R.S. § 23-1501(2)). Second, none of the letters includes language that

expressly restricts the right of either White or AKDHC to terminate the employment

relationship. Therefore, the Mortgage Letters are an insufficient basis for White’s breach

of contract claim.

c. The BOD Resolution does not rebut the at-will presumption. 

As mentioned, in the January 2006 BOD Resolution, AKDHC’s board changed the

partnership requirements from a $42,000 one-time buy-in to a five-year partnership track

in which physicians are expected to provide “sweat equity” in exchange for full

partnership status at the end of the five-year period. As a preliminary matter, the BOD

Resolution meets the formality requirements of A.R.S. § 23-1501(2), because the

proposal was unanimously passed by all board members and the minutes were signed by

Price, AKDHC’s CEO and agent. 

However, it fails to meet either of the two substantive requirements. First, it does

not state that the employment relationship is one of a specified duration. As explained

above, Arizona does not follow the presumption that guaranteed per-year compensation

makes the employment relationship one of a specified duration. As to the second

requirement, White argues that the BOD Resolution “expressly restricted AKDHC’s right

Case 2:08-cv-00890-NVW Document 92 Filed 10/02/09 Page 11 of 22
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 12 -

to terminate Dr. White’[s] employment,” but fails to indicate which language supports his

contention. While the BOD Resolution does address the partnership track and

salary/bonus structure, it does not include any language that expressly restricts the right of

either AKDHC or its physicians to terminate the employment relationship. The BOD

Resolution is entirely consistent with the at-will and ninety-day notice terms of the

Employment Agreement. Physicians who have remained at-will employees for five years

and are deemed suitable will be made shareholders without the previous $42,000 buy-in. 

Nothing in the text of the BOD Resolution suggests that the at-will term of the

Employment Agreement is repealed and that AKDHC obligates itself to employ for five

years (and then admit as a shareholder) anyone whom it thinks not worth the legal battle

to discharge for cause. Therefore, the BOD Resolution is not a qualifying contract under

the EPA and cannot be used to support White’s breach of contract claim.

d. The Physician Guide does not rebut the at-will presumption.

The Physician Guide includes AKDHC’s policies and practices, and White signed

a Statement of Acceptance, acknowledging that he received it. The Physician Guide fails

to meet either of the substantive requirements of A.R.S. § 23-1501(2), because there is no

language in the Guide stating that the employment relationship has a specified duration

and there is no language that otherwise expressly restricts the right of either party to

terminate the employment relationship. Therefore, the Physician Guide also fails to rebut

the at-will presumption and does not support White’s breach of contract claim.

4. AKDHC is entitled to summary judgment on White’s breach of

contract claim.

Because the material facts relevant to White’s breach of contract claim are

undisputed, and because there are no qualifying contracts that rebut the at-will

employment presumption, AKDHC is entitled to summary judgment in its favor on the

breach of contract claim. 

Case 2:08-cv-00890-NVW Document 92 Filed 10/02/09 Page 12 of 22
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 13 -

B. Breach of Implied Covenant of Good Faith and Fair Dealing

The covenant of good faith and fair dealing is implied in every contract, including

at-will employment contracts. See Wagenseller v. Scottsdale Mem’l Hosp., 147 Ariz.

370, 385, 710 P.2d 1025, 1040 (1985), superseded in part by A.R.S. § 23-1501. The

covenant “requires that neither party do anything that will injure the right of the other to

receive the benefits of their agreement.” Id. at 383, 710 P.2d at 1038. Therefore, it

protects an employee only to the extent that the employer denied the terminated employee

benefits agreed to in the employment contract. Id. at 385, 710 P.2d at 1040. 

In the context of a pure at-will employment contract with no agreed-to benefits and

no promise of continued employment or tenure, a termination without cause does not

breach the implied covenant of good faith and fair dealing. Id. at 386, 710 P.2d at 1041;

see also Consumers Int’l v. Sysco Corp., 191 Ariz. 32, 37, 951 P.2d 897, 902 (Ct. App.

1997) (reiterating that the Wagenseller court rejected the argument that the covenant of

good faith and fair dealing prevents a “no cause” termination of an at-will employment

relationship). However, 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. 

See, e.g., Comeaux v. Brown &Williamson Tobacco Co., 915 F.2d 1264, 1272 (9th Cir.

1990).

1. AKDHC did not breach the implied covenant of good faith and fair

dealing by terminating White without cause. 

In this case, as concluded above, White was an at-will employee of AKDHC,

because none of the documents alleged by White to have created a five-year employment

contract rebutted the at-will presumption. Furthermore, AKDHC chose to terminate

White without cause and continued to pay White’s full salary, benefits, and a bonus for

ninety days after notice was given. In accordance with Arizona law, because White was

employed at will and because AKDHC terminated the relationship without cause, the

mere act of terminating White’s employment did not breach the implied covenant of good

Case 2:08-cv-00890-NVW Document 92 Filed 10/02/09 Page 13 of 22
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 14 -

faith and fair dealing. Therefore, White’s claims that the termination itself and

AKDHC’s failure to pay White’s salary through 2009 are without merit.

2. AKDHC did not breach the implied covenant of good faith and fair

dealing by refusing to allow White to continue practicing medicine

during the ninety-day period after notice of termination.

Provision 7 of the Employment Agreement states that AKDHC will maintain

facilities and provide equipment, drugs, supplies, and personnel required by White to

perform his duties during his employment. However, while Provision 11 does require

AKDHC to give a ninety-day notice of termination, it does not expressly require AKDHC

to allow White to continue providing services for AKDHC during the ninety-day period. 

In short, once relieved with pay, White had no duties for which he needed equipment,

drugs, supplies, and personnel.

 Moreover, White has no identified damages arising from AKDHC’s refusal to

allow him to practice during the ninety-day period. Damages are an essential element of

a claim for breach of the implied covenant of good faith and fair dealing. See United

Dairymen of Arizona v. Schugg, 212 Ariz. 133, 139, 128 P.3d 756, 762 (Ct. App. 2006);

see also Riggs v. Bank of Am., N.A., 2009 U.S. Dist. LEXIS 6264, at *8 (D. Ariz. Jan. 29,

2009). Damages for breach of the implied covenant of good faith and fair dealing are

usually limited to ordinary contract damages. United Dairymen of Arizona, 212 Ariz. at

139, 128 P.3d at 762. Such damages could not be shown because, absent specific terms

suggesting a different intent, in the usual employment contract the provision of services is

for the benefit of the employer, not the employee. The employee’s expectation is pay and

related benefits. The employer may forfeit the services to avoid risk of harm to patient

and business relations from the continued presence of a distrusted person.

Therefore, White’s second argument that AKDHC breached the covenant by

failing to provide White with continued “facilities, equipment, supplies, personnel, and

access to patient records and files” during the ninety-day period is unfounded. 

Case 2:08-cv-00890-NVW Document 92 Filed 10/02/09 Page 14 of 22
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

 In his Complaint, White alleged that the memorandum was only evidence of racial

discrimination that supported his Title VII and 42 U.S.C. § 1981 claims. In his Response to

Defendant’s Motion for Summary Judgment, however, White abandoned that argument and

instead alleged that the memorandum breached the implied covenant of good faith and fair

dealing. Therefore, it is considered under the implied covenant claim.

- 15 -

3. AKDHC did not breach the implied covenant of good faith and fair

dealing by notifying other hospitals that White was no longer

associated with AKDHC.2

On September 18, 2006, the same day it provided White with notice of

termination, AKDHC sent a memorandum to a number of hospitals in the area at which

White had staffing privileges. The memorandum correctly informed the hospitals that

White was no longer associated with AKDHC, effective September 18, 2006. This was

no breach of the implied covenant of good faith and fair dealing. The memorandum

reveals no ill-will or bad faith. It was necessary to end White’s apparent authority to act

on behalf of AKDHC. Finally, White offers no evidence of contract damages from this,

which is necessary for breach of the implied covenant of good faith and fair dealing. 

United Dairymen of Arizona, 212 Ariz. at 139, 128 P.3d at 762. 

4. AKDHC did not breach the implied covenant of good faith and fair

dealing by failing to hold a formal Governance Committee hearing

before terminating White’s employment.

As explained above, the covenant of good faith and fair dealing is implied in all

contracts and requires each party to avoid hindering the other party’s right to receive the

benefits of the contract. From the outset, it is unclear from White’s argument exactly

what underlying contract guarantees to him the right to appear before the Governance

Committee before termination. The Employment Agreement does not mention the

Governance Committee. The Physician Guide merely defines the purpose of the

Governance Committee without conferring on employees a right to a formal Governance

Committee hearing under any circumstances. 

The September 11, 2006 letter from Price to White states, in apparent reference to

various instances of White’s alleged misconduct, “The Governance Committee will

Case 2:08-cv-00890-NVW Document 92 Filed 10/02/09 Page 15 of 22
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 16 -

conduct a peer review investigation, at which time you will have the opportunity to

candidly discuss these specific situations in depth.” The letter is signed by Price in her

official capacity as CEO of AKDHC. White responded with his September 12, 2006

letter, in which he “welcome[d] the opportunity to discuss the details regarding issues of

[his] conduct at AKDHC to the Governance Committee.” 

This exchange of letters did not create a contractual right to appear before the

Governance Committee, because there was no consideration. Therefore, the letters did

not constitute an enforceable contract or a valid modification of the existing Employment

Agreement. As such, they cannot be used as a basis for White’s claim of breach of the

implied covenant of good faith and fair dealing.

Moreover, the Governance Committee ultimately referred the matter directly to the

Board of Directors without a recommendation. The Governance Committee’s nonbinding promise to hear White ceased to matter when it took itself out of the process, and

nothing bound the Board to hear White. 

5. AKDHC is entitled to summary judgment on White’s claim of

breach of the implied covenant of good faith and fair dealing.

Because no material facts relevant to the claim of breach of the implied covenant

of good faith and fair dealing are disputed, and because AKDHC did not breach the

implied covenant of good faith and fair dealing under those facts, summary judgment in

favor of AKDHC is warranted on this claim.

C. Matters Not Relevant to the Breach of Contract and Implied Covenant

Claims

The parties’ briefs and statements of facts have labored through many criminations

and recriminations. They are not weighed here because the case does not turn on their

merits. Under Arizona contract law and the EPA, employers are not required to make

best, good, or even sensible decisions when hiring and firing, any more than employees

are when signing on and quitting. Absent contract terms, no process is required of either

party, and neither is barred from being wrong, careless, unfair, or even foolish. It is

enough that the employment relationship no longer pleases one side or the other. The

Case 2:08-cv-00890-NVW Document 92 Filed 10/02/09 Page 16 of 22
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 17 -

parties have joined battle on the cause and fault for the distrust and acrimony into which

they have descended, but the Court relucts.

D. Race Discrimination

Title VII of the Civil Rights Act of 1964 makes it unlawful for employers “to fail

or refuse to hire or to discharge any individual, or otherwise to discriminate against any

individual with respect to his compensation, terms, conditions, or privileges of

employment, because of such individual's race, color, religion, sex, or national origin.” 

42 U.S.C. § 2000e-2(a)(1). Similarly, 42 U.S.C. § 1981(a) guarantees that “all 

persons . . . shall have the same right . . . to make and enforce contracts . . . as is enjoyed

by white citizens . . . .” Title VII claims and claims based on 42 U.S.C. § 1981 may be

addressed together, because § 1981 claims are analyzed under the same framework as

Title VII claims. See Newman v. Fed. Express Corp., 266 F.3d 401, 406 (6th Cir. 2001).

To survive summary judgment on a Title VII claim of racial discrimination, an

employee must make a prima facie showing that (1) the employee belonged to a protected

class, (2) the employee was qualified for the job, (3) the employee was subjected to an

adverse employment action, and (4) similarly situated employees not in the employee’s

protected class received more favorable treatment. Moran v. Selig, 447 F.3d 748, 753

(9th Cir. 2006); Kang v. U. Lim Am., Inc., 296 F.3d 810, 818 (9th Cir. 2002). The proof

required to establish the prima facie case is “minimal and does not even need to rise to the

level of a preponderance of the evidence.” Wallis v. J.R. Simplot Co., 26 F.3d 885, 889

(9th Cir. 1994). If the plaintiff establishes his or her prima facie case of discrimination,

the burden shifts to the defendant to articulate a legitimate, nondiscriminatory reason for

the adverse employment action. Id. If the defendant is successful, the burden shifts back

to the plaintiff to prove that the defendant’s reason was a pretext. Id; see also Tarin v.

County of Los Angeles, 123 F.3d 1259, 1264 (9th Cir. 1997) (applying the burden-shifting

framework in the context of a claim of racial discrimination). 

Case 2:08-cv-00890-NVW Document 92 Filed 10/02/09 Page 17 of 22
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 18 -

1. White’s prima facie showing of racial discrimination fails for lack of

showing that similarly situated employees not in his protected class

received more favorable treatment.

White is African American and therefore belongs to a protected class. See

Cornwell v. Electra Cent. Credit Union, 439 F.3d 1018, 1031 (9th Cir. 2006) (noting that

African Americans are a protected class). Though AKDHC contests it, the evidence on

summary judgment more than supports the conclusion that White was qualified for his

position as a nephrologist. There is no dispute that White was subjected to an adverse

employment action, because his employment was terminated. See Brooks v. City of San

Mateo, 214 F.3d 1082, 1093 (9th Cir. 2000) (noting that termination constitutes an

adverse employment action for Title VII purposes). Therefore, White has established the

first three elements of his prima facie case. 

However, White fails on the fourth element of the prima facie case - that other

employees not in his protected class received more favorable treatment and that he was

similarly situated to those employees “in all material respects.” Moran, 447 F.3d at 755. 

Employees are similarly situated when “they have similar jobs and display similar

conduct.” Vasquez v. County of Los Angeles, 349 F.3d 634, 641 (9th Cir. 2003). 

Furthermore, employees in supervisory positions with more responsibility are not

similarly situated to lower-level employees. Id. 

As to the issue of favorable treatment, viewed in the light most favorable to White,

the evidence shows that other physicians at AKDHC, including Drs. Schon, Sandler,

Raskin, Bidwell, Guerra, and Patel, were reprimanded and counseled for inappropriate

behavior and statements to other workers, but were not terminated. None of these

physicians was African American. This suggests that other employees not in White’s

protected class received more favorable treatment than White in this respect. Indeed, the

evidence suggests that the inappropriate behavior and statements to other workers was not

a sufficient cause of termination for AKDHC, as they were first brought up on the eve of

the termination, long after they occurred. 

Case 2:08-cv-00890-NVW Document 92 Filed 10/02/09 Page 18 of 22
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 19 -

However, on this record White was not similarly situated to these other employees

in all material respects. First, while it is true that at least one physician, Dr. Patel, was a 

non-shareholder physician at the time he was reprimanded, just as White is a nonshareholder physician, most other physicians who were reprimanded were shareholders. 

Shareholders are not similarly situated to non-shareholder employees in the same sense

that supervisors are not similarly situated to lower level employees. More lenient

treatment of shareholder physicians compared to non-shareholder physicians is to be

expected. 

Second, and more importantly, while White received and kept payments from

Ortho Biotech without authorization from AKDHC, no other physician at AKDHC,

including Dr. Patel, has kept honoraria and payments for giving lectures without

AKDHC’s authorization. This difference is objectively material, and it is AKDHC’s

primary proffered reason for terminating White. Without a basis for comparison, it

cannot be said that AKDHC would have interpreted the “Exclusive Service” provision in

the Employment Agreement any differently in the case of an employee outside of White’s

protected class, or would not have terminated such an employee for taking such payments

personally. Therefore, White has failed to establish a prima facie case of racial

discrimination.

2. In the alternative, there is no evidence that AKDHC’s articulated 

legitimate nondiscriminatory reason for terminating White was a

pretext for race.

If White had made a prima facie case of race discrimination, the burden would

shift to the employer to articulate a legitimate, nondiscriminatory reason for the adverse

employment action. Wallis, 26 F.3d at 885. Like the prima facie case, that burden is

usually met easily, and AKDHC easily meets it here. Specifically, White took honoraria

and payments from Ortho Biotech and others in contravention of AKDHC’s alleged

“common pot” policy and its interpretation of the Employment Agreement. The minutes

of the September 15, 2006 meeting at which the shareholders unanimously voted to

Case 2:08-cv-00890-NVW Document 92 Filed 10/02/09 Page 19 of 22
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 20 -

terminate White refer to their concern that White’s “intellectual dishonesty will always be

in question.” The parties dispute whether the “Exclusive Service” provision of the

Employment Agreement prohibits White from taking such compensation. It certainly can

be read fairly to do so, and it is enough to escape liability that AKDHC enforced its

interpretation of its contract without regard to race, even if its interpretation is debatable

under contract theory, which the Court need not decide.

If the employer successfully articulates a legitimate, nondiscriminatory reason for

terminating the employee, the employee must show that the stated reason was merely a

pretext for some other discriminatory motive. Wallis, 26 F.3d at 885. To show pretext,

the plaintiff can produce direct evidence showing that “the discrimination more likely

motivated the employer” or indirect evidence showing that “the employer’s explanation is

unworthy of credence.” Vasquez, 349 F.3d at 641. Direct evidence consists of clearly

racist or discriminatory statements or actions by the employer, and very little direct

evidence is required to raise a genuine issue of material fact. Coghlan v. Am. Seafoods

Co., 413 F.3d 1090, 1095 (9th Cir. 2005). However, if the plaintiff can only produce

indirect, circumstantial evidence, it must be “specific and substantial” to defeat summary

judgment. Id.

White has failed to produce any direct evidence that racial animus motivated

AKDHC’s decision to terminate him. He has failed to point to any racial or

discriminatory statements or actions by AKDHC. In fact, White did not even argue

pretext in his Response to AKDHC’s Motion for Summary Judgment. Viewed in the

light most favorable to White, while it is true that White is both African American and the

only physician employee ever to have been hired or discharged by AKDHC, White has

offered no evidence that this is anything more than a coincidence. 

White has also failed to produce specific and substantial indirect evidence showing

that AKDHC’s reason for terminating him lacks credence, especially in light of the “same

actor” presumption, to which AKDHC is entitled. “[W]here the same actor is responsible

Case 2:08-cv-00890-NVW Document 92 Filed 10/02/09 Page 20 of 22
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 21 -

for both the hiring and the firing of a discrimination plaintiff, and both actions occur

within a short period of time, a strong inference arises that there was no discriminatory

motive.” Bradley v. Harcourt, Brace & Co., 104 F.3d 267, 270-71 (9th Cir. 1996)

(applying the presumption where the person who made the decision to terminate the

plaintiff was the same person who hired the plaintiff one year earlier). This presumption

has been applied even where the adverse employment action did not rise to the level of a

termination and where the time difference between the hiring and the adverse

employment action was three years. See Coghlan, 413 F.3d at 1097; Schnabel v.

Abramson, 232 F.3d 83, 91 (2d Cir. 2000). The inference is based upon the principle that

an employer’s initial desire to hire an employee is “strong evidence that the employer is

not biased against the protected class to which the employee belongs.” Coghlan, 413

F.3d at 1096. The plaintiff must therefore make an “extraordinarily strong showing of

discrimination” to rebut the presumption and avoid summary judgment. Id. at 1097. 

AKDHC is entitled to the “same actor” inference because almost all of the

shareholders who unanimously voted to terminate White were the same shareholders who

initially voted unanimously to hire White. Susan Price was among this group of

shareholders. All of these shareholders certainly knew that White was African American,

because many of them interviewed him before voting to hire him. Nothing here suggests

that at least ten shareholders developed a racial bias against African Americans in the

three years between White’s hiring and termination. 

White has failed to rebut the presumption, because he cannot point to anything

other than the fact that he is the only African American physician ever to have been hired

or fired by AKDHC. As mentioned above, there is no evidence that other non-African

American physicians at AKDHC have failed to remit honoraria received for giving

lectures outside the workplace. Therefore, there is no basis from which to infer that

AKDHC’s proffered reason for the termination, namely White’s admitted failure to remit

honoraria to AKDHC, was a pretext for race, even if the “common pot” remittance policy

is unclear and debatable. There is also no basis to conclude that AKDHC would have 

Case 2:08-cv-00890-NVW Document 92 Filed 10/02/09 Page 21 of 22
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 22 -

treated non-African American physician employees any differently under the

circumstances. Because White has failed to raise a genuine issue of material fact as to his

racial discrimination claims, AKDHC is entitled to summary judgment on both racial

discrimination claims. 

IT IS THEREFORE ORDERED that Defendant’s Motion for Summary Judgment

(doc. # 68) is granted. 

IT IS FURTHER ORDERED that the Clerk of the Court enter judgment in favor

of Defendant and that Plaintiff take nothing. The Clerk shall terminate this action.

DATED this 1st day of October, 2009.

Case 2:08-cv-00890-NVW Document 92 Filed 10/02/09 Page 22 of 22