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Bridges v. McDonald's Corp.

December 21, 2009


The opinion of the court was delivered by: Robert M. Dow, Jr. United States District Judge

Judge Robert M. Dow, Jr.


Plaintiff Lisa Bridges filed a four-count complaint [1] on March 26, 2009, alleging violations of state and federal law by Defendants McDonald's Corporation and Lisa Emerson. Before the Court is Defendants' Motion to Dismiss Counts II, III, and IV of Plaintiff's complaint [11]. For the reasons stated below, Defendants' motion [11] is granted in part and denied in part.

I. Background*fn1

On February 13, 2006, McDonald's Corporation ("McDonald's") hired Lisa Bridges as its Senior Director of Executive Compensation. In her role as Senior Director of Executive Compensation, Bridges was responsible for certain aspects of McDonald's executive compensation and had input into the preparation of McDonald's 2007 proxy statement. Among other duties, Bridges' position required her to serve on the McDonald's "Proxy Team" and sub-certify in writing certain compensation-related disclosures in the company's proxy statement. Defendant Lisa Emerson served as Bridges' immediate supervisor during Bridges' tenure with McDonald's.

A detailed recitation of the complaint is not necessary to decide the legal issues raised by Defendants' motion to dismiss; broad brushstrokes will suffice. In her complaint, Bridges alleges three fraud schemes perpetrated by McDonald's in conjunction with its 2007 proxy statement. First, Bridges objected to McDonald's "2.99X Severance Compensation Cap Policy" as being too vague and not sufficiently transparent in its treatment of "gross-up" tax benefits that a terminated executive would receive.*fn2 Bridges alleges that despite her objection, as well as the objection of an outside consultant, McDonald's published to its shareholders the 2.99X Severance Compensation Cap Policy language that, according to Bridges, contained materially deceptive language, terms, and loopholes. Bridges also alleges that in January 2007, McDonald's devised a fraudulent scheme to conceal from shareholders executive Tim Fenton's country club perquisites. Bridges objected to McDonald's handling of Tim Fenton's compensation because she believed that it violated federal disclosure laws. Finally, Bridges alleges that McDonald's defrauded shareholders with respect to the termination of executive Mike Roberts and his entry into McDonald's "Executive Retention Plan."

In April 2007, McDonald's terminated Bridges. On June 29, 2007, Bridges filed an administrative complaint against McDonald's with the Occupational Safety and Health Administration ("OSHA") alleging that she was terminated in violation of Sarbanes-Oxley's whistle-blower provision, 18 U.S.C. § 1514A. Defendant Emerson was not named as a party in Bridges' administrative complaint. After OSHA found in favor of McDonald's and dismissed Bridges' complaint, Bridges appealed OSHA's determination to an Administrative Law Judge. Bridges voluntarily dismissed her administrative appeal on October 21, 2008. On March 26, 2009, Bridges filed the present action, bringing, in addition to her Sarbanes-Oxley claim against McDonald's, a Sarbanes-Oxley claim against Emerson and common law retaliatory discharge claims against McDonald's and Emerson. Defendants seek dismissal of Count II (SarbanesOxley claim against Emerson), Count III (common law retaliatory discharge claim against McDonald's) and Count IV (common law retaliatory discharge claim against Emerson).

II. Legal Standard on a Rule 12(b)(6) Motion

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of the complaint, not the merits of the case. See Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). To survive a Rule 12(b)(6) motion to dismiss, the complaint first must comply with Rule 8(a) by providing "a short and plain statement of the claim showing that the pleader is entitled to relief" (Fed. R. Civ. P. 8(a)(2)), such that the defendant is given "fair notice of what the * * * claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Second, the factual allegations in the complaint must be sufficient to raise the possibility of relief above the "speculative level," assuming that all of the allegations in the complaint are true. E.E.O.C. v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Twombly, 550 U.S. at 555). "Detailed factual allegations" are not required, but the plaintiff must allege facts that, when "accepted as true, * * * 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, --- U.S. ----, ----, 129 S.Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 555). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S.Ct. at 1949. "[O]nce a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint." Twombly, 550 U.S. at 563. The Court accepts as true all of the well-pleaded facts alleged by the plaintiff and all reasonable inferences that can be drawn therefrom. See Barnes v. Briley, 420 F.3d 673, 677 (7th Cir. 2005).

III. Discussion

A. Sarbanes-Oxley Whistle-Blower Retaliation Against Defendant Emerson

In Count II, Bridges brings a Sarbanes-Oxley ("SOX") claim against Defendant Emerson, her former supervisor, alleging that Emerson violated SOX's whistle-blower protection provisions on April 6, 2009, by terminating Bridges' employment. In their motion to dismiss, Defendants contend that Bridges failed to administratively exhaust this SOX claim because Bridges did not name Emerson individually as a respondent in Bridges' administrative charge.

The Sarbanes-Oxley Act "provides that no company subject to the Securities Exchange Act of 1934 may retaliate against an 'employee' who lawfully cooperates with an investigation concerning violations of the Act or fraud on the shareholders." Carnero v. Boston Scientfic Corp., 2004 WL 1922132. at *2 (D. Mass. Aug. 27, 2004) (quoting 18 U.S.C. § 1514A(a)). Section 1514A(b), the enforcement provision, allows any "person" who alleges discharge or discrimination in violation of § 1514A(a) to seek relief. SOX clearly requires the filing of an administrative charge as a prerequisite to bringing a civil suit. See 18 U.S.C. § 1514A(b) (2006); Smith v. Corning Inc., 2007 WL 2120375, at *2 (W.D.N.Y. July 23, 2007) (finding that "[i]t is undisputed that the Act requires a plaintiff to exhaust his administrative remedies before commencing an action in federal court"). Before an employee may assert a cause of action in federal court under the Sarbanes-Oxley Act, the employee must file a complaint, within ninety days after the date on which the violation occurs, with the Occupational Safety and Health Administration ("OSHA") and afford OSHA an opportunity to resolve the allegations administratively. See Willis v. VIE Financial Group, Inc., 2004 WL 1774575, at *3 (E.D. Pa. Aug. 6, 2004) (citing 18 U.S.C. § 1514A(b)(1)(A); 29 C.F.R. § 1980.103(c)); see also 18 U.S.C. § 1514(b)(2)(D).

Bridges filed an administrative complaint with OSHA on June 29, 2007, naming only McDonald's Corporation as the respondent. Defendants concede that Bridges filed a timely administrative complaint as to McDonald's, but contend that Bridges' failure to name Emerson as a respondent in the administrative complaint dooms any SOX claim against Emerson. Bridges contends that the administrative complaint that she filed with OSHA applies to Emerson ...

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