Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_03-cv-00860/USCOURTS-azd-3_03-cv-00860-1/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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International Business Machines ("IBM"), Dennis and Donna Grosser ("Grosser").

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Raymond K. Toy and Linda S. Toy,

husband and wife,

Plaintiffs, 

vs.

International Business Machines, a

corporation; Dennis Grosser and Jane Doe

Grosser, husband and wife,

Defendants. 

International Business Machines

Corporation, a corporation,

Defendant/Counterclaimant,

v.

Raymond K. Toy and Linda S. Toy,

husband and wife,

Plaintiffs/Counterdefendants.

 

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No. CIV 03-0860-PCT-DKD

ORDER

Pending before this Court are Defendants'1

 separate Motions for Summary Judgment.

With respect to Plaintiffs' individual claims against them, Defendants Grosser filed a Motion

for Summary Judgment on January 14, 2005 (Doc. #78), and Defendant IBM filed a Motion for

Summary Judgment on January 18, 2005 (Doc. #80). For the reasons stated below, the Court

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At the time of Plaintiff's employment with IBM, the pertinent sections of the Guidelines read,

"[o]bviously, you may not commercially market products or services in competition

with IBM's current or potential product offerings. Such activities are 'commercial' if

you receive direct or indirect remuneration of any kind... . [It is] your responsibility to

consult with your management or IBM counsel to determine whether your planned

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finds there is no genuine issue of material fact, and that Defendants Grosser are entitled to

judgment as a matter of law. IBM's Motion for Summary Judgment will be considered in a

separate order. The parties have consented to Magistrate Judge jurisdiction pursuant to 28

U.S.C. § 636(c) (Doc. #5).

BACKGROUND

Plaintiff Raymond Toy's (hereinafter "Toy") employment with Defendant IBM began

on April 26, 1978 and ended upon his termination on June 5, 2002 (DSOF ¶1). Toy alleges that

IBM discriminated against him on the basis of his age (age 43 at the time of termination) and

thus improperly terminated his employment with IBM. (Count 1). Toy further claims that his

termination was the proximate result of Defendant Dennis Grosser's (hereinafter "Grosser")

intentional interference with Toy's employment contract with IBM. Toy alleges that Grosser's

intentional interference occurred when Grosser contacted IBM over a matter which

subsequently led to an internal investigation of Toy's conduct, and eventually resulted in Toy's

termination. (Count 2).

In April 2002, Grosser, a retired IBM employee, telephoned IBM and told IBM that Toy

was operating a cabling business, Colorado River Communications ("CRC") and that the

business could be in competition with IBM (DSOF ¶2). Because Grosser was employed at

Havasu Regional Medical Center ("HRMC") at the time, and his supervisor was Plaintiff Linda

Toy, Raymond Toy's wife, Grosser asked that his name be kept confidential (DSOF ¶3). Due

to poor work performance, Grosser was terminated on May 2, 2002 (PSOF ¶2). 

Following Grosser's call to IBM, Tommy Reed, an IBM investigator, began an internal

investigation regarding the information provided about Toy, focusing on whether or not Toy had

violated section 5.12 of the Business Conduct Guidelines ("the Guidelines") (DSOF ¶4).2

 Mr.

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activity will compete with any of IBM's actual or potential businesses. This should be

done before you pursue any activity that might create a conflict of interest with IBM."

(BCG Section 5.1.2)

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Reed learned that IBM had solicited work from HRMC which declined the solicitation because

HRMC was being serviced by CRC instead (DSOF ¶8-9). On May 2, 2002, Mr. Grosser sent

Mr. Reed documents related to the sale of CISCO equipment and a copy of a proposal letter

dated March 11, 2002; the letter was addressed to Linda Toy, HRMC's Director of Information

Services, and signed by Raymond Toy, who was identified as CRC's President. 

As part of his internal investigation, Reed interviewed Toy on May 14, 2002 in Boulder,

Colorado; also present at the meeting was John Latimer, IBM's Manager of Security at the

Boulder site (DSOF ¶14). Toy initially denied his involvement with CRC but later admitted to

signing bids on behalf of CRC after Mr. Reed showed Toy a copy of a March 11, 2002 proposal

letter on which Toy's signature appeared (DSOF ¶15). At this meeting, Toy stated that he had

not mentioned the existence of CRC to any management representative (DSOF ¶16). Toy was

told that he could provide any additional information or documents if he wished to do so, and

was afforded the opportunity to ask questions before the interview concluded. IBM did not

receive any additional information from Toy (DSOF ¶17). At the end of the investigation, Reed

and his supervisor, Vira Brock, prepared a report based upon the information the investigation

had revealed, and concluded that Toy's company CRC was in the cabling business, it was in

direct competition with IBM, and Toy had thus violated the Guidelines (DSOF ¶19). 

Included among the documents that Grosser had sent to IBM on May 2, 2002, was a proposal

letter from Toy to his wife Linda at HRMC. This proposal letter appeared to include a sheet of

paper which suggests on its face that CRC was selling CISCO equipment. It is undisputed that

CRC never sold CISCO equipment. Plaintiff believes the inclusion of the CISCO document

bolsters his tortious interference claim to the extent that he can trace this erroneous assertion,

which would not exist but for Grosser providing it to IBM, to IBM's decision to terminate Toy.

Toy stated during the investigation that CRC was not involved in the sale of CISCO equipment

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and investigator Reed himself stated that although he initially believed CRC to be involved in

selling CISCO equipment, his investigation was more focused on CRC's commercial cabling

operation (DSOF ¶13, 53). Cathy Sprague of the Human Resources Department was also

consulted, and after meeting with Toy's supervisors, she too concluded that termination was

proper based on the results of IBM's investigation, and not on the information provided by

Grosser (DSOF ¶ 7, 23, Doc. #78 pg. 7, 8).

 On June 5, 2002, Toy was told by his first-line manager Dan Crecco that he was being

terminated for violating the Guidelines, but that Toy could appeal the termination decision

(DSOF ¶26). It was during this termination meeting that Toy mentioned for the first time that

he had, in fact, disclosed the existence of CRC to his former manager Mike Solan (DSOF ¶28).

At the end of this meeting, the decision to terminate Toy was upheld, but the issue of Toy's

alleged disclosure of CRC's existence was explored during a second investigation, or Toy's

appeal process, known as an "Open Door" investigation (DSOF ¶31).

Mike Liddicoat conducted the "Open Door" investigation and began by interviewing

Toy's former manager, Solan, in July 2002. During this interview Solan stated that at the time

of Toy's disclosure, he did not believe CRC to be a conflict because he thought CRC was

limited to residential cabling (DSOF ¶35). Toy told Liddicoat that the March 11 bid to HRMC

had been falsified and that he would provide Liddicoat with documents proving the falsification;

Toy failed to provide the documents and did not respond to Liddicoat's follow-up requests for

the documents (DSOF ¶39). At the conclusion of his investigation, Liddicoat issued a report

stating that Toy's termination was proper because Toy had failed to properly disclose CRC's

commercial cabling services to management (DSOF ¶41). On September 9, 2002, Toy was sent

a letter formally advising him that his termination had been upheld (DSOF ¶42).

SUMMARY JUDGMENT

For Grosser to prevail on a motion for summary judgment, he must show that there are

no genuine issues of material fact and that he is entitled to judgment as a matter of law.

Fed.R.Civ.P. 56(c). The disputed facts must be material such that they "might affect the

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outcome of the suit under governing law... ." Celotex v. Catrett, 477 U.S. 317, 322-23 (1986);

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute about a material fact is

genuine if the evidence is such that a reasonable jury could return a verdict for the non-moving

party. Id. at 248; Villodas v. Healthsouth Corporation, 388 F. Supp.2d 1096 (D. Ariz. 2004).

Summary judgment is appropriate against the 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." Celotex, 477 U.S. at 322-324; see also Citadel Holding Corp.

v. Roven, 26 F.3d 960, 964 (9th Cir. 1994). The party moving for summary judgment does not

have the burden to produce evidence showing the absence of a genuine issue of material fact

on issues in which the nonmoving party bears the burden of proof, but instead may discharge

its burden by showing that there is an absence of evidence to support the nonmoving party's

case. Celotex, 477 U.S. at 325. The party opposing a properly supported motion for summary

judgment "may not rest upon the mere allegation or denials of [the party's] pleading, but...must

set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e); see

also Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986).

Sufficient evidence supporting the claimed genuine issue of factual dispute is required to

proceed to trial to resolve the different versions of the truth. First Nat. Bank of Ariz. v. Cities

Service Co., 391 U.S. 253, 288-89 (1968). If evidence is merely colorable or is not significantly

probative, summary judgment may be granted. Anderson, 477 U.S. at 249-250. 

DISCUSSION

I. INTENTIONAL INTERFERENCE WITH A CONTRACT BY A THIRD PARTY.

Toy alleges that third-party Grosser was aware of Toy's employment contract with IBM,

and that Grosser wilfully and intentionally interfered with the contractual relationship. Toy

further asserts that Grosser's purpose in interfering was unjustified and that this caused or

contributed to Toy's termination and loss of income. Toy maintains that Grosser contacted IBM

knowing that doing so would create a substantial risk that Toy would lose his job or a source

of income. Toy believes that under these circumstances, punitive damages as well as

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compensatory and general damages are appropriate. Grosser argues that Toy is unable to

establish the critical elements of improper motive or causation with respect to an intentional

interference claim.

A person who intentionally and improperly interferes with a contract between a party and

a third person by inducing or otherwise causing the third person not to conform to the contract

is subject to liability to the other. Wagenseller v. Scottsdale Memorial Hospital, 147 Ariz. 370,

388 (1985) (citing Restatement (Second) of Torts §766), Wallace v. Casa Grande Union High

Sch. Dist. No. 82 Bd. of Governors, 184 Ariz. 419, 427 (Ariz. App.1995). In order to establish

tortious interference with a contractual relationship, five elements must be proven. First, the

plaintiff must prove the existence of a valid contractual relationship. Second, it must be shown

that the defendant had knowledge of the contract. Third, intentional interference by the

defendant must be shown to have induced or caused a breach or termination of the contract.

Fourth, the defendant must have acted improperly. And fifth, the resulting damages to the

plaintiff must be shown. Id. at 386 (citing Antwerp Diamond Exchange of America, Inc. v.

Better Bus. Bur., 130 Ariz. 523, 530 (1981)), Pasco v. Talco Recycling, Inc., 195 Ariz. 50, 62

(1999), Barrow v. Arizona Board of Regents, 158 Ariz. 71, 78 (Ariz. App. 1988). Grosser

argues that Toy failed to establish the third and forth elements: that the information Grosser

provided caused IBM to terminate his employment, and that Grosser's actions were improper.

A. CAUSATION OF BREACH 

Grosser argues that he did not cause Toy's termination but merely served as a starting

point for IBM's investigation. Grosser asserts that it was IBM's actual investigation that caused

the termination rather than his alerting IBM and providing a starting point for the investigation

(Doc. #78 pg. 6). In support, he offers the affidavit of Cathy Sprague of Human Resources,

where she states that it was IBM's decision to terminate Toy based on the results of IBM's

investigation and not on the information that Grosser provided. 

Toy asserts that for legal liability to attach with respect to causation in this case,

Grosser's action must only be a cause and not the cause of the breach (Doc. #85 pg. 7, 8). For

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this reason, Toy asserts that he has proven the causation element by virtue of Grosser being

responsible for contacting IBM, which then led to the investigation that ultimately resulted in

Toy's termination. Grosser, in turn, counters that Toy misconstrues the proximate cause

requirement for legal liability and maintains that under Arizona law, proof of proximate cause

is necessary and merely asserting that Grosser was a cause is not enough to meet the burden as

proximate cause must be the natural continuous sequence of events, unbroken by any

intervening cause (Doc. #95 pg. 4, 5), citing Saucedo v. Salvation Army, 200 Ariz. 179, 183, 24

P.3d 1274, 1278 (App. 2001). 

Specifically, Grosser argues that IBM did not rely on his disclosure to make its decision,

but that it relied on the results of the investigation instead. Grosser further asserts that in spite

of Toy's allegations that Grosser mislead IBM by including an unrelated document in his

disclosure, the primary focus of IBM's investigation was on Toy's company, CRC, and not on

the sale of CISCO equipment. To support his position, Grosser relies on investigator Reed's

statement that IBM was more concerned with CRC's operation of commercial cabling than it

was with CRC's relation to CISCO equipment. For these reasons, Grosser maintains that the

causation requirement has not been demonstrated because his actions are not closely connected

enough to IBM's breach of its contract with Toy. 

There is nothing in the record showing that there was any reason to be suspicious of Toy

and his conduct prior to Grosser's telephone call to Reed. In fact, Toy's managers at IBM were

disappointed to learn of Toy's situation involving termination because he had been such an

excellent employee. While Grosser maintains that IBM's investigation did not focus on the

unrelated CISCO document and that this document played no part in IBM's decision to

terminate Toy, Liddicoat's final report is less clear. After conducting the "open door"

investigation, Liddicoat wrote in his report that CRC's bids to HRMC "involved network

cabling services and CISCO hardware. [This] is a direct conflict with IBM services team. IBM

is in the business of selling cabling services and most importantly, reselling CISCO hardware"

(Doc. #88, Exhibit C, pg. 4). Thus, this written statement by Liddicoat is contrary to what

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Grosser and IBM claimed when asserting that the document related to the sale of CISCO

equipment had no bearing in the decision to terminate Toy. Based on Mr. Liddicoat's report,

it would appear that IBM might have considered the CISCO document and used it as proof of

a "conflict of interest."

 Assuming arguendo that Liddicoat's statement accurately reflects IBM's focus during

the investigation, Toy is unable to show that Grosser was the proximate cause of his

termination. It is not enough that Grosser merely alerted IBM of Toy's involvement with CRC

and sent documents unfavorable to Toy, or even that Grosser included an erroneous document

that made it appear that Toy's violation of the Guidelines was more threatening. Toy was

terminated after two thorough investigations were conducted, and after various supervisors,

managers, and personnel had met and discussed the situation. The legal cause of Toy's

termination was the fact that he had violated the company's guidelines – an independent

conclusion which IBM's internal investigations reached after considerable process and

independent deliberation and fact-finding. The Court finds that Toy has failed to show that

Grosser's interference was the proximate cause of his termination. 

B. ACTIONS BASED ON IMPROPER MOTIVE

To prove liability on the part of Grosser, Toy must also show that Grosser's actions were

improper as to motive or means. Wagenseller, 147 Ariz. at 388. If the interference creates

liability, the liability must be based on more than the act of the interference alone. Id. To

determine whether a particular action is improper, seven factors are considered: 1) the nature

of the actor's conduct, 2) the actor's motive, 3) the interests of the other with which the actor's

conduct interferes, 4) the interests sought to be advanced by the actor, 5) the social interests in

protecting the freedom of action of the actor and the contractual interests of the other, 6) the

proximity or remoteness of the actor's conduct to the interference, and 7) the relations between

the parties. Id. at 387 (citing Restatement (Second) of Torts §767). 

Toy asserts that Grosser's actions showed improper motive, the second factor of the

Wagenseller test. Toy argues that Grosser's motive was improper because Grosser contacted

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IBM with information about CRC because he knew his own job at HRMC was at risk. In short,

Toy argues that Grosser's motive was improper because his actions were committed in

anticipatory retaliation for his impending termination from HRMC. Toy believes Grosser knew

of his upcoming termination because of a Corrective Action Plan that was issued on April 17,

2002; Grosser was terminated on May 2, 2002. Toy also claims that Grosser's motive was

improper because among the documents that Grosser faxed to Reed was the document related

to CISCO equipment which was completely unrelated to the other documents. Toy asserts that

Grosser's actions were improper because Grosser waited to contact IBM only when he thought

his own job was in jeopardy, and then deliberately included the unrelated CISCO document in

order to mislead IBM that there would be a conflict of interest between CRC and IBM's own

services.

In response, Grosser asserts that Toy has failed to mention the remaining six factors of

the Wagenseller standard, thus conceding that there are no other factors demonstrative of

Grosser's improper actions other than improper motive. Grosser claims that Toy's theory of

retaliation with regard to his improper motive is flawed because Grosser was not terminated

from HRMC until after he had contacted IBM about Toy's cabling business. Thus, even though

Toy argues that Grosser knew of his impending termination due to the Corrective Action Plan

issued on April 17, 2002, Grosser contends that he did not believe the Plan would result in his

termination, because he had never before received any written warnings of unprofessional

behavior by his supervisor Linda Toy prior to April 17, 2002. In spite of the Corrective Action

plan, Grosser maintains he was unconcerned about termination because prior to the issuance of

the Plan he had received a positive evaluation by Linda Toy. As a result, Grosser maintains that

because he had no way of anticipating his termination, and because he was fired after having

alerted IBM about CRC, his actions were not retaliatory and his motive not improper. The

Court is hesitant to resolve issues of motive on summary judgment and will decline to do so.

Grosser is a retired, long-term IBM employee, who claims that he informed IBM about CRC

out of loyalty to his former employer, which is entirely plausible. On the other hand, the

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context of Grosser's deteriorating employment situation suggest the plausibility of an ill-motive.

Such issues are best left to the trier of fact. Thus, the Court finds that an issue of material fact

precludes summary judgment as to motive.

Notwithstanding the issue of fact on this element, Toy is unable to establish the causation

element of a claim for tortious interference with a contractual relationship and, accordingly, 

IT IS HEREBY ORDERED Defendants Grossers' Motion for Summary Judgment is

GRANTED (Doc. #78).

DATED this 26th day of September, 2005.

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