1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 Carlos M. Rondon Clavo, No. CV-24-08025-PCT-KML
10 Plaintiff, ORDER
11 v.
12 Midwestern University, et al.,
13 Defendants. 14 15 Plaintiff Carlos M. Rondon Clavo, a physician from Venezuela, made medical 16 mistakes during the second year of his residency at Kingman Regional Medical Center. 17 Defendant Kingman terminated his residency. Dr. Clavo filed this suit claiming the 18 termination was discriminatory and violated his contracts with both Kingman and 19 defendant Midwestern University, the private educational institution that sponsored the 20 residency program. Kingman and Midwestern have each filed motions to dismiss the 21 current complaint. Those motions are granted, but Dr. Clavo may amend three of his 22 claims. 23 I. Factual Background 24 Dr. Clavo, who is Hispanic, obtained his medical degree in Venezuela before 25 immigrating to the United States. (Doc. 38 at 3.) After a series of post-doctoral fellowships, 26 in 2019 he matched through the National Resident Matching Program with Kingman 27 Regional Medical Center, a hospital in northern Arizona. (Doc. 38 at 2–4.) Kingman’s 28 emergency room residency program is sponsored by Midwestern University, a private 1 university accredited by the Accreditation Council for Graduate Medical Education 2 (“ACGME”). (Doc. 38 at 4.) 3 Dr. Clavo was required to sign a “residency employment agreement” that governed 4 the terms of his relationship with Kingman.1 (Doc. 41-1.) The agreement provided 5 Kingman would “employ” Dr. Clavo as a resident for his PGY-2 year (post-grad-year 2, 6 i.e., the second year following his medical school graduation), from July 1, 2021 to June 7 30, 2022. (Doc. 41-1.) Under the agreement, Dr. Clavo agreed to care for Kingman patients 8 in exchange for the salary, bonus and benefits explicitly described. (Doc. 41-1 at 3, 7.) 9 Either party could terminate the agreement in various ways. (Doc. 41-1 at 8–9.) Among 10 those, Kingman could immediately terminate Dr. Clavo “for cause” on written notice if he 11 engaged in an act, omission, or pattern of conduct that “pose[d] a danger to patient 12 welfare[.]” (Doc. 41-1 at 8.) 13 Dr. Clavo’s complaint admits he made medical mistakes at Kingman during that 14 PGY-2 year. (Doc. 38 at 8.) In October 2021, he accidentally placed a catheter incorrectly 15 during a central line procedure, but “acted promptly to prevent injury to the patient” and 16 “took full responsibility for the error.” (Doc. 38 at 8.) Nonetheless, Kingman placed Dr. 17 Clavo on “remediation,” a disciplinary sanction with potential to escalate, requiring him to 18 perform additional procedures under the supervision of defendant Dr. Justina Truong. 19 (Doc. 38 at 2.) 20 While Dr. Clavo was completing his first period of remediation, he disagreed with 21 his attending physician Dr. Merrill (who is not a named defendant) regarding a 22 1 Dr. Clavo refers to the operative document as a “residency agreement” and claims 23 Kingman explicitly identifies itself as “the School” in the agreement. (Doc. 38 at 4.) But the document he references and attaches to his complaint is not a residency agreement, nor 24 is Kingman a party to it: it is a “student intern agreement and release” releasing an unnamed company from liability arising from Dr. Clavo’s participation in some type of clinical 25 experience involving paramedics. (Doc. 38-1.) Kingman attached the actual residency agreement to its motion to dismiss and asked the court to incorporate it by reference. (Docs. 26 41 at 5, 41-1.) Dr. Clavo did not oppose Kingman’s request or contest the residency agreement’s authenticity in his response. (See Doc. 44.) Because the complaint refers 27 extensively to the residency employment agreement, it is central to Dr. Clavo’s breach-of- contract claim against Kingman, and no party questions its authenticity, the court treats the 28 document as part of the complaint and assumes its contents are true for purposes of the motion to dismiss. See Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006). 1 cardiovascular diagnosis. (Doc. 38 at 9–10.) Although Dr. Clavo expressed his opinion 2 “privately and respectfully” and was ultimately correct in the diagnosis, Dr. Merrill 3 chastised him for being “aggressive” and reported him for “insubordination,” thereby 4 invoking “racist stereotypes of Hispanic or Latino men[.]” (Doc. 38 at 9–10.) Kingman 5 then placed him on another remediation plan justified by perceived gaps in his medical 6 knowledge. (Doc. 38 at 11.) The second remediation plan required Dr. Clavo to “discuss 7 ALL patient care decisions . . . with an attending physician on the service” until April 1, 8 2022, and warned that he could be removed from active clinical duties if it appeared at any 9 time that patient safety was compromised. (Doc. 38-1 at 105.) 10 A month later, in January 2022, Dr. Clavo encountered a patient with a leg fracture 11 and administered a moderate dose of ketamine as an anesthetic, consistent with his PGY-2 12 status and Kingman policy.2 (Doc. 38 at 11, 13.) He tried to find attending physician Dr. 13 Jahnny before doing so, but Jahnny was busy attending to other patients and Dr. Clavo 14 decided “time was of the essence” in sedating the patient. (Doc. 38 at 11.) Dr. Jahnny 15 arrived in time to help reduce the fracture and initially complimented Dr. Clavo’s work but 16 later claimed Dr. Clavo did not timely inform him about the procedure. (Doc. 38 at 12.) 17 Kingman terminated Dr. Clavo in a written letter dated February 4, 2022. (Doc. 31- 18 1 at 109.) The letter referenced the fracture reduction, stating Dr. Clavo had “performed 19 another unsupervised procedure without the attending physician’s consent while in active 20 remediation for a similar event.” (Doc. 31-1 at 109.) The termination letter invoked the 21 paragraph of the resident employment agreement permitting “immediate termination for 22 cause” where a resident’s act, omission, or pattern of conduct poses a danger to patient 23 welfare. (Doc. 31-1 at 109.) 24 Dr. Clavo requested an appeal hearing, which Midwestern administered in 25 2 Kingman contests Dr. Clavo’s assertion that he acted within policy in administering the 26 ketamine and asks for “judicial notice” of its sedation policy. (Doc. 41 at 6.) The sedation policy is not a matter of public record and therefore cannot be judicially noticed without 27 converting the motion to one for summary judgment. See Fed. R. Civ. P. 12(d). Unlike for the residency employment agreement, the incorporation-by-reference exception does not 28 apply because the sedation policy is not central to Dr. Clavo’s claims and the complaint does not refer to it extensively. See supra note1. 1 accordance with a written “academic and disciplinary action due process policy.” (Docs. 2 38 at 14, 38-1 at 2.) The appeal committee voted to terminate Dr. Clavo from the residency 3 program on May 20, 2022. (Doc. 38 at 14.) 4 Nearly nineteen months later, Dr. Clavo filed a complaint in the U.S. District Court 5 for the Northern District of Illinois, which was later transferred to the District of Arizona. 6 (Doc. 18.) Dr. Clavo amended the complaint. (See Doc. 38.) The first amended complaint 7 alleges five counts arising from the termination: 8 1. Title VII discrimination and retaliation based on race and national origin against 9 Kingman; 10 2. Unlawful discrimination under 42 U.S.C. § 1981 against Kingman and four 11 individually-named physician defendants (Drs. Nelcamp, Sergent, Truong, and 12 Dawson) who participated in supervising and terminating Dr. Clavo; 13 3.
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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 Carlos M. Rondon Clavo, No. CV-24-08025-PCT-KML
10 Plaintiff, ORDER
11 v.
12 Midwestern University, et al.,
13 Defendants. 14 15 Plaintiff Carlos M. Rondon Clavo, a physician from Venezuela, made medical 16 mistakes during the second year of his residency at Kingman Regional Medical Center. 17 Defendant Kingman terminated his residency. Dr. Clavo filed this suit claiming the 18 termination was discriminatory and violated his contracts with both Kingman and 19 defendant Midwestern University, the private educational institution that sponsored the 20 residency program. Kingman and Midwestern have each filed motions to dismiss the 21 current complaint. Those motions are granted, but Dr. Clavo may amend three of his 22 claims. 23 I. Factual Background 24 Dr. Clavo, who is Hispanic, obtained his medical degree in Venezuela before 25 immigrating to the United States. (Doc. 38 at 3.) After a series of post-doctoral fellowships, 26 in 2019 he matched through the National Resident Matching Program with Kingman 27 Regional Medical Center, a hospital in northern Arizona. (Doc. 38 at 2–4.) Kingman’s 28 emergency room residency program is sponsored by Midwestern University, a private 1 university accredited by the Accreditation Council for Graduate Medical Education 2 (“ACGME”). (Doc. 38 at 4.) 3 Dr. Clavo was required to sign a “residency employment agreement” that governed 4 the terms of his relationship with Kingman.1 (Doc. 41-1.) The agreement provided 5 Kingman would “employ” Dr. Clavo as a resident for his PGY-2 year (post-grad-year 2, 6 i.e., the second year following his medical school graduation), from July 1, 2021 to June 7 30, 2022. (Doc. 41-1.) Under the agreement, Dr. Clavo agreed to care for Kingman patients 8 in exchange for the salary, bonus and benefits explicitly described. (Doc. 41-1 at 3, 7.) 9 Either party could terminate the agreement in various ways. (Doc. 41-1 at 8–9.) Among 10 those, Kingman could immediately terminate Dr. Clavo “for cause” on written notice if he 11 engaged in an act, omission, or pattern of conduct that “pose[d] a danger to patient 12 welfare[.]” (Doc. 41-1 at 8.) 13 Dr. Clavo’s complaint admits he made medical mistakes at Kingman during that 14 PGY-2 year. (Doc. 38 at 8.) In October 2021, he accidentally placed a catheter incorrectly 15 during a central line procedure, but “acted promptly to prevent injury to the patient” and 16 “took full responsibility for the error.” (Doc. 38 at 8.) Nonetheless, Kingman placed Dr. 17 Clavo on “remediation,” a disciplinary sanction with potential to escalate, requiring him to 18 perform additional procedures under the supervision of defendant Dr. Justina Truong. 19 (Doc. 38 at 2.) 20 While Dr. Clavo was completing his first period of remediation, he disagreed with 21 his attending physician Dr. Merrill (who is not a named defendant) regarding a 22 1 Dr. Clavo refers to the operative document as a “residency agreement” and claims 23 Kingman explicitly identifies itself as “the School” in the agreement. (Doc. 38 at 4.) But the document he references and attaches to his complaint is not a residency agreement, nor 24 is Kingman a party to it: it is a “student intern agreement and release” releasing an unnamed company from liability arising from Dr. Clavo’s participation in some type of clinical 25 experience involving paramedics. (Doc. 38-1.) Kingman attached the actual residency agreement to its motion to dismiss and asked the court to incorporate it by reference. (Docs. 26 41 at 5, 41-1.) Dr. Clavo did not oppose Kingman’s request or contest the residency agreement’s authenticity in his response. (See Doc. 44.) Because the complaint refers 27 extensively to the residency employment agreement, it is central to Dr. Clavo’s breach-of- contract claim against Kingman, and no party questions its authenticity, the court treats the 28 document as part of the complaint and assumes its contents are true for purposes of the motion to dismiss. See Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006). 1 cardiovascular diagnosis. (Doc. 38 at 9–10.) Although Dr. Clavo expressed his opinion 2 “privately and respectfully” and was ultimately correct in the diagnosis, Dr. Merrill 3 chastised him for being “aggressive” and reported him for “insubordination,” thereby 4 invoking “racist stereotypes of Hispanic or Latino men[.]” (Doc. 38 at 9–10.) Kingman 5 then placed him on another remediation plan justified by perceived gaps in his medical 6 knowledge. (Doc. 38 at 11.) The second remediation plan required Dr. Clavo to “discuss 7 ALL patient care decisions . . . with an attending physician on the service” until April 1, 8 2022, and warned that he could be removed from active clinical duties if it appeared at any 9 time that patient safety was compromised. (Doc. 38-1 at 105.) 10 A month later, in January 2022, Dr. Clavo encountered a patient with a leg fracture 11 and administered a moderate dose of ketamine as an anesthetic, consistent with his PGY-2 12 status and Kingman policy.2 (Doc. 38 at 11, 13.) He tried to find attending physician Dr. 13 Jahnny before doing so, but Jahnny was busy attending to other patients and Dr. Clavo 14 decided “time was of the essence” in sedating the patient. (Doc. 38 at 11.) Dr. Jahnny 15 arrived in time to help reduce the fracture and initially complimented Dr. Clavo’s work but 16 later claimed Dr. Clavo did not timely inform him about the procedure. (Doc. 38 at 12.) 17 Kingman terminated Dr. Clavo in a written letter dated February 4, 2022. (Doc. 31- 18 1 at 109.) The letter referenced the fracture reduction, stating Dr. Clavo had “performed 19 another unsupervised procedure without the attending physician’s consent while in active 20 remediation for a similar event.” (Doc. 31-1 at 109.) The termination letter invoked the 21 paragraph of the resident employment agreement permitting “immediate termination for 22 cause” where a resident’s act, omission, or pattern of conduct poses a danger to patient 23 welfare. (Doc. 31-1 at 109.) 24 Dr. Clavo requested an appeal hearing, which Midwestern administered in 25 2 Kingman contests Dr. Clavo’s assertion that he acted within policy in administering the 26 ketamine and asks for “judicial notice” of its sedation policy. (Doc. 41 at 6.) The sedation policy is not a matter of public record and therefore cannot be judicially noticed without 27 converting the motion to one for summary judgment. See Fed. R. Civ. P. 12(d). Unlike for the residency employment agreement, the incorporation-by-reference exception does not 28 apply because the sedation policy is not central to Dr. Clavo’s claims and the complaint does not refer to it extensively. See supra note1. 1 accordance with a written “academic and disciplinary action due process policy.” (Docs. 2 38 at 14, 38-1 at 2.) The appeal committee voted to terminate Dr. Clavo from the residency 3 program on May 20, 2022. (Doc. 38 at 14.) 4 Nearly nineteen months later, Dr. Clavo filed a complaint in the U.S. District Court 5 for the Northern District of Illinois, which was later transferred to the District of Arizona. 6 (Doc. 18.) Dr. Clavo amended the complaint. (See Doc. 38.) The first amended complaint 7 alleges five counts arising from the termination: 8 1. Title VII discrimination and retaliation based on race and national origin against 9 Kingman; 10 2. Unlawful discrimination under 42 U.S.C. § 1981 against Kingman and four 11 individually-named physician defendants (Drs. Nelcamp, Sergent, Truong, and 12 Dawson) who participated in supervising and terminating Dr. Clavo; 13 3. A due process violation under the Fifth and Fourteenth Amendments against 14 Kingman, Midwestern, Dr. Sergent, and Dr. Nelcamp; 15 4. Breach of contract against Kingman; 16 5. Breach of contract against Midwestern. 17 (Doc. 38.) 18 Kingman and the individually-named physicians are represented by the same 19 counsel, who moved to dismiss all counts alleged against them. (Doc. 41.) Midwestern is 20 represented by a different attorney who moved to dismiss Counts 3 and 5.3 (Doc. 40.) 21 II. Analysis 22 “To survive a motion to dismiss, a complaint must contain sufficient factual matter, 23 accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 24 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) 25 (internal citations omitted)). This is not a “probability requirement,” but a requirement that 26 the factual allegations show “more than a sheer possibility that a defendant has acted 27 3 Midwestern mistakenly refers to “Count IV” throughout its motion but makes clear it is 28 moving to dismiss the breach-of-contract claim against it, which is Count 5. (Doc. 40 at 1, 4-8.) 1 unlawfully.” Id. A claim is facially plausible “when the plaintiff pleads factual content that 2 allows the court to draw the reasonable inference that the defendant is liable for the 3 misconduct alleged.” Id. “[D]etermining whether a complaint states a plausible claim is 4 context specific, requiring the reviewing court to draw on its experience and common 5 sense.” Id. at 663–64. 6 III. Employment and Contractual Discrimination Claims (Counts 1 and 2) 7 Kingman purported to terminate Dr. Clavo based on his medical mistakes. 8 Acknowledging he made these mistakes, Dr. Clavo’s complaint alleges Kingman 9 nonetheless had a discriminatory motive for terminating his contract—that he is 10 Venezuelan and Hispanic—as shown by Dr. Truong invoking racist stereotypes in 11 describing him as “aggressive” and Kingman treating him differently from other residents 12 who made similar mistakes. (Doc. 38 at 9–11.) The Kingman defendants move to dismiss 13 Counts 1 and 2 based on a lack of causation, arguing Dr. Clavo cannot show discrimination 14 motivated his termination given the complaint’s admission to the same medical mistakes 15 Kingman cited as justification for firing him. (Doc. 41 at 7–10.) 16 A plaintiff alleging employment discrimination under Title VII must plausibly plead 17 facts showing his protected trait was a “motivating factor” in the alleged adverse 18 employment practice. See Bostock v. Clayton Cnty., 590 U.S. 644, 657 (2020). Under this 19 standard, an employer violates Title VII when it “intentionally fires an individual employee 20 based in part” on a protected characteristic, even if “other factors besides the plaintiff’s 21 [protected characteristic] contributed to the decision.” Id. at 659. The plaintiff’s protected 22 characteristic “need not be the sole or primary cause of the employer’s adverse action.” Id. 23 at 665. So, even if medical mistakes were the main reason Kingman terminated Dr. Clavo’s 24 residency, he would sufficiently plead causation under a Title VII disparate-treatment 25 theory by alleging facts suggesting race and national origin were also motivating factors in 26 the decision. 27 As part of its causation argument, Kingman also urges dismissal of the 28 discrimination claims because Dr. Clavo has not alleged facts suggesting that defendant 1 Dr. Nelcamp, the actual decisionmaker on the termination, was motivated by 2 discriminatory animus. (Doc. 38 at 9.) But if Dr. Clavo were to allege facts permitting an 3 inference that Dr. Truong, his supervisor, was motivated by bias and she influenced or 4 participated in the remediations that gave rise to Dr. Nelcamp’s ultimate termination 5 decision, that may be sufficient. See Poland v. Chertoff, 494 F.3d 1174, 1182–83 (9th Cir. 6 2007) (collecting cases holding that a subordinate’s bias may be imputed to the 7 decisionmaker where the adverse action relies on factors influenced by the subordinate). 8 Kingman’s request to dismiss based on Dr. Nelcamp’s personal lack of discriminatory 9 animus is therefore rejected. 10 Kingman’s Title VII causation arguments ask too much of the complaint, but its 11 final argument—that Dr. Clavo has not alleged facts supporting that the comparator 12 residents were similarly-situated in having made comparably-serious mistakes, nor that 13 they were outside of his protected class (Doc. 41 at 10–11)—is well-taken. A plaintiff 14 bringing a disparate treatment claim must allege facts plausibly “giv[ing] rise to an 15 inference of unlawful discrimination,” either through “direct or circumstantial evidence of 16 discriminatory intent” or because “similarly situated individuals outside [his] protected 17 class were treated more favorably[.]” Freyd v. Univ. of Ore., 990 F.3d 1211, 1228–29 (9th 18 Cir. 2021); see Sillah v. Burwell, 244 F. Supp. 3d 499, 512 (D. Md. 2017) (plaintiff need 19 not make comparator allegations if other facts give rise to inference of discrimination, but 20 must show comparator was similarly situated in all relevant aspects where she does make 21 such allegations). The first amended complaint apparently attempts to do both. (See Doc. 22 38 at 9 (Drs. Truong and Merrill described Dr. Clavo as “aggressive,” thereby “invoking 23 racist stereotypes of Hispanic or Latino men, harkening unsubstantiated inferences of 24 aggression or machismo”); 10 (he reported stereotyping to no avail); 10 (he was treated 25 differently from peers who misdiagnosed patients but received “feedback with an emphasis 26 on education or learning opportunities” instead of discipline).) 27 Dr. Clavo’s allegation that his supervisors called him “aggressive” does not by itself 28 give rise to an inference of unlawful discrimination, and his allegations regarding 1 comparator residents suffer from fatal flaws. To show a comparator is similarly situated, a 2 plaintiff must allege “they have similar jobs and display similar conduct.” Vasquez v. Cnty. 3 of L.A., 349 F.3d 634, 641 (9th Cir. 2003) (footnote omitted). This includes engaging in 4 “problematic conduct of comparable seriousness” to the plaintiff’s. Id. Although Dr. Clavo 5 alleges the comparator residents “misdiagnosed patients,” this is not problematic conduct 6 of comparable seriousness to that which Kingman argues justified his termination, namely 7 the botched catheterization, multiple specified deficiencies in managing patient care, and 8 performing an unsupervised sedation procedure without an attending physician present 9 while in active remediation. (Doc. 38-1 at 101–09.) Also, neither Dr. Clavo’s complaint 10 nor his response to the motion to dismiss address whether the comparator residents were 11 outside of his protected classes. Count 1 is therefore dismissed. See Bastidas v. Good 12 Samaritan Hosp. LP, 774 F. App’x 361, 363–64 (9th Cir. 2019). 13 Count 2 alleges a claim for racial discrimination in contracting under 42 U.S.C. 14 § 1981. This statute’s causation requirement is more rigorous than for a Title VII disparate- 15 treatment claim and requires Dr. Clavo to “initially plead and ultimately prove that, but for 16 race, [he] would not have suffered the loss of a legally protected right.” Comcast Corp. v. 17 Nat’l Assoc. of Afr. Am.-Owned Media, 589 U.S. 327, 341 (2020). Nonetheless, racial 18 animus need not be “the sole reason” for an adverse contractual action. Sharifi Takieh v. 19 Banner Health, 515 F. Supp. 3d 1026, 1045–46 (D. Ariz. 2021), aff’d sub nom. Takieh v. 20 Banner Health, No. 21-15326, 2022 WL 474170 (9th Cir. Feb. 16, 2022). That “a 21 defendant has mixed motives—i.e., legitimate and illegitimate reasons for an alleged act— 22 does not, in and of itself, render a § 1981 claim implausible.” Id. at 1045 (footnote omitted). 23 Thus, if Dr. Clavo had alleged that non-Hispanic residents who had “‘similar jobs and 24 displayed similar conduct,’ including ‘engag[ing] in problematic conduct of comparable 25 seriousness[,]’” were not terminated, his § 1981 claim could potentially survive at this early 26 stage. Bastidas, 774 F. App’x at 363–64 (quoting Vasquez, 349 F.3d at 641); see Sharifi 27 Takieh, 515 F. Supp. 3d at 1045 (noting § 1981’s but-for causation standard could plausibly 28 have been met if plaintiff had alleged defendant would not have revoked non-Arab 1 physician’s privileges despite similar problems). 2 As discussed above, Dr. Clavo did not allege those or similar facts. The complaint 3 makes the bare assertion that other residents who made medical mistakes were treated 4 differently (Doc. 38 at 10, 13), but nowhere provides facts supporting that their conduct 5 was comparably serious to Dr. Clavo’s, nor even that the comparator residents were not 6 Hispanic. Count 2 is therefore also dismissed. 7 Because Dr. Clavo may be able to allege additional facts regarding discriminatory 8 intent and the comparator residents that would plausibly support his Title VII and 42 U.S.C. 9 § 1981 claims, he is granted leave to amend Counts 1 and 2. See Fed. R. Civ. P. 15(a)(1)(2). 10 IV. Due Process Violation Claim (Count 3) 11 Count 3 asserts a due process claim directly under the Fifth and Fourteenth 12 Amendments alleging Kingman, two physician defendants, and Midwestern deprived Dr. 13 Clavo of his liberty and property interests in his reputation and medical license. (Doc. 38 14 at 17–18.) Dr. Clavo admits 42 U.S.C. § 1983 is the proper vehicle for these claims and 15 asks the court to imply that statute into his complaint. (Doc. 44 at 8–9.) So construed, the 16 § 1983 claim is dismissed because none of the named defendants are state actors. 17 To establish liability under § 1983, a plaintiff must show the deprivation of a right 18 secured by the Constitution and laws of the United States “committed by a person acting 19 under color of state law.” Chudacoff v. Univ. Med. Ctr. of S. Nev., 649 F.3d 1143, 1149 20 (9th Cir. 2011) (simplified). In other words, “the conduct allegedly causing the deprivation 21 of a federal right [must] be fairly attributable to the State.” Caviness v. Horizon Cmty. 22 Learning Ctr., Inc., 590 F.3d 806, 812 (9th Cir. 2010) (quoting Lugar v. Edmondson Oil 23 Co., 457 U.S. 922, 937 (1982)). No matter how wrong their conduct, private entities can 24 only be subject to § 1983 liability under a state action theory. Heineke v. Santa Clara Univ., 25 965 F.3d 1009, 1012 (9th Cir. 2020). 26 The complaint alleges Kingman and Midwestern are state actors based on their 27 receipt of federal funds from the Center for Medicare and Medicaid Services. (Doc. 38 at 28 18.) The Ninth Circuit has squarely rejected that theory as to both private hospitals and 1 private universities like those here. Id. at 1013–14 (holding university’s receipt of 2 government funds, compliance with generally-applicable laws, and being subject to 3 penalties such as loss of funding are all “insufficient to convert private action into that of 4 the state”); Chudacoff, 649 F.3d at 1149 (distinguishing public hospital, which may be 5 liable under the Fourteenth Amendment for physician credentialing decisions, from private 6 hospitals whose only links to the state are the receipt of federal funds or being subject to 7 state regulation). So too have other courts around the country, including in the 8 employment-at-a-private-hospital situation present here. See, e.g., Beckerich v. St. 9 Elizabeth Med. Ctr., 563 F. Supp. 3d 633, 639 (E.D. Ky. 2021) (“Private hospitals, no 10 matter how much federal funding they may receive, are generally not state actors for 11 purposes of constitutional questions.”); McDaniel v. Loyola Univ. Med. Ctr., No. 13-CV- 12 06500, 2014 WL 4269126, at *9 (N.D. Ill. Aug. 28, 2014); Jackson v. E. Bay Hosp., 980 13 F. Supp. 1341, 1356 (N.D. Cal. 1997). Count 3 is therefore dismissed. 14 IV. Breach of Contract Claims (Counts 4 and 5) 15 The complaint asserts a breach-of-contract claim against Kingman in Count 4 and 16 against Midwestern in Count 5. Defendants move to dismiss these claims for slightly 17 different reasons, Kingman arguing that the residency employment agreement is the 18 operative contract and triggers Arizona’s one-year statute of limitations for claims alleging 19 breaches of employment contracts (Doc. 41 at 13-14) and Midwestern arguing the due 20 process policy Dr. Clavo invokes is not a valid contract at all (Doc. 40 at 4-9). 21 In Arizona, a plaintiff alleging breach of contract must allege facts establishing the 22 existence of a valid and enforceable contract, how that contract was breached, and the 23 damages he suffered. Thomas v. Montelucia Villas, LLC, 302 P.3d 617, 621 (Ariz. 2013) 24 (recognizing elements of breach-of-contract claim). For an enforceable contract to exist, 25 there must be an offer, an acceptance, and consideration, with “consideration” defined as 26 “a benefit to the promisor or a loss or detriment to the promisee[.]” K-Line Builders, Inc. 27 v. First Fed. Sav. & Loan Ass’n, 677 P.2d 1317, 1320 (Ariz. Ct. App. 1983). Arizona law 28 imposes a one-year statute of limitations in which to bring actions alleging “breach of 1 an . . . employment contract including contract actions based on employee handbooks or 2 policy manuals that do not specify a time period in which to bring an action.” A.R.S. § 12- 3 541(3). 4 Count 4, Dr. Clavo’s breach-of-contract claim against Kingman, is dismissed under 5 this statute of limitations. His residency employment agreement with Kingman, which 6 spells out Dr. Clavo’s duration and conditions of employment, salary, and benefits (see 7 Doc. 41-1), is a written employment contract to which the one-year limitations period 8 applies. See Lytikainen v. Schaffer’s Bridal LLC, 409 F. Supp. 3d 767, 774 (D. Ariz. 2019) 9 (an employment contract is one “between an employer and employee in which the terms 10 and conditions of employment are stated” and includes all contracts “related to ‘the nature, 11 conditions, or duration’ of employment”) (quoting Redhair v. Kinerk, Beal, Schmidt, Dyer 12 & Sethi, P.C., 183 P.2d 544, 546, 548–49 (Ariz. Ct. App. 2008)). And Dr. Clavo makes no 13 argument to the contrary, instead focusing solely on the word “student” in a “student intern 14 release and agreement” he made with an unnamed company that is not Kingman and 15 therefore cannot support his breach-of-contract claim against it (Doc. 44 at 9–10). See 16 supra note 1. 17 Section 12-541(3)’s one-year statute of limitations starts when a plaintiff “knows 18 or, in the exercise of reasonable diligence, should know the facts underlying the cause [of 19 action].” See Gust, Rosenfeld & Henderson v. Prudential Ins. Co. of Am., 898 P.2d 964, 20 966 (Ariz. 1995). In employment breach-of-contract actions based on a termination, that is 21 the date the employment relationship ended. Lytikainen, 409 F. Supp. 3d at 777. Kingman 22 terminated Dr. Clavo on February 4, 2022 (Doc. 38-1 at 109), but he did not file suit until 23 twenty months later, on December 14, 2023 (Doc. 1). Count 4 is therefore dismissed under 24 A.R.S. § 12-541(3). 25 Dr. Clavo’s breach-of-contract claim against Midwestern is also dismissed but for 26 a different reason. The “contract” Dr. Clavo alleges was breached in Count 5 was 27 Midwestern’s “Academic and Disciplinary Action ‘Due Process’ Policy.” (Docs. 38 at 19– 28 20, 38-1 at 2–9.) This document is not an enforceable contract and is not supported by 1 consideration in the form of any obligation on Dr. Clavo’s part. See Wagenseller v. 2 Scottsdale Mem’l Hosp., 710 P.2d 1025, 1038 (Ariz. 1985) (distinguishing between policy 3 statements and contracts, and analyzing conditions under which policy statements may be 4 incorporated into contracts); Carroll v. Lee, 712 P.2d 923, 926 (Ariz. 1986) (“Mutuality of 5 obligation is a requirement for a valid contract[.]”). The policy doesn’t even mention Dr. 6 Clavo’s name, let alone hint at a promise or detriment on his behalf, and Dr. Clavo’s 7 complaint and briefing do not add coherence to the consideration question. See Castrillon 8 v. St. Vincent Hosp. & Health Care Ctr., Inc., 51 F. Supp. 3d 828, 842–43 (S.D. Ind. 2014) 9 (holding medical resident had not identified a contract for purposes of her breach-of- 10 contract claim where she relied on ACGME due process standards, which are “akin to 11 regulations established by an administrative body, rather than a contract governing the 12 relationship between two entities.”); Mares v. Miami Valley Hosp., 671 F. Supp. 3d 812, 13 818 (S.D. Ohio 2023) (in the medical residency context, distinguishing between 14 employment contract with hospital, enrollment contract with academic program, and 15 manual spelling out academic discipline process). Because the complaint does not contain 16 allegations plausibly establishing the existence of a valid and enforceable contract between 17 Dr. Clavo and Midwestern, Count 5 is dismissed. However, because Dr. Clavo may be able 18 to point to some other valid agreement governing his relationship with Midwestern, he may 19 amend Count 5. 20 V. Leave to Amend 21 As discussed above, Dr. Clavo is granted leave to amend the discrimination claims 22 alleged in Counts 1 and 2 and the breach-of-contract claim against Midwestern in Count 5. 23 But a court need not grant leave to amend when it is clear that any amendment would be 24 futile. See In re Cloudera, Inc., 121 F.4th 1180, 1190 (9th Cir. 2024). Given the reasons 25 for dismissal, that is the situation with Counts 3 and 4. See, e.g., Deutsch v. Turner Corp., 26 324 F.3d 692, 718 & n.20 (9th Cir. 2003) (amendment would be futile where claim was 27 time-barred); Ismail v. Cnty. of Orange, 693 F. App’x 507, 512 (9th Cir. 2017) (amendment 28 would be futile as to defendants who were not state actors). Dr. Clavo may therefore amend Counts 1, 2, and 5 only. 2\| VI. Conclusion 3 Both motions to dismiss are granted and all counts in the first amended complaint dismissed. Dr. Clavo may amend his claims for employment discrimination under Title 5 || VII, discrimination in contracting under 42 U.S.C. § 1981, and breach of contract against 6 || Midwestern only. 7 Accordingly, 8 IT IS ORDERED the motions to dismiss (Docs. 40, 41) are GRANTED. The due 9 || process claim and breach of contract claim against Kingman are DISMISSED WITHOUT 10|| LEAVE TO AMEND. The Title VII, 42 U.S.C. § 1981, and breach of contract claim 11 || against Midwestern are DISMISSED WITH LEAVE TO AMEND. 12 IT IS FURTHER ORDERED no later than April 1, 2025, plaintiff shall file an 13} amended complaint consistent with this order. The Clerk of Court is directed to enter a judgment of dismissal with prejudice in the event no amended complaint is filed by that 15 || date. 16 Dated this 18th day of March, 2025. 17 18 V, op a | G. / 19 ahh AE Honorable Krissa M. Lanham 20 United States District Judge 21 22 23 24 25 26 27 28
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