Labor & Employment Law Daily Dentist secretly recorded at meetings, fired after safety complaints advances wiretap, fraud, contract breach claims
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Tuesday, January 14, 2020

Dentist secretly recorded at meetings, fired after safety complaints advances wiretap, fraud, contract breach claims

By Marjorie Johnson, J.D.

Though his employer argued that a receptionist recorded a meeting to help ensure she understood important changes being made in the dental department, it could still be civilly liable under the Wiretap Act for its interception by procurement.

A dentist who claimed he was fraudulently enticed into entering into a four-year employment agreement with a healthcare clinic, and then after complaining about unsafe and unlawful working conditions was subjected to secret recordings of his communications and a trumped-up disciplinary termination, defeated summary judgment on his claims for violations of the Wiretap Act, misrepresentation and fraud, and breach of contract. A federal magistrate judge in California also allowed him to advance his common law claim for wrongful discharge, except insofar as he claimed the clinic violated an inapplicable provision of the California Health & Safety Code (Boseovski v. McCloud Healthcare Clinic, Inc., January 7, 2020, Cota, D.).

The dentist entered into a four-year employment agreement with the clinic after allegedly being promised several benefits and reassured that it was not a high-volume practice. However, shortly after his tenure began, he discovered several unsafe and unlawful conditions, which he reported. Management later “began a campaign to manufacture reasons to terminate” him, including “intercepting through an electronic device his oral communications with the dental staff.” He was ultimately terminated, purportedly due to his misuse of prescription software and poor “chair-side” manner. He subsequently brought this lawsuit alleging several claims.

Wiretap claim. The dentist’s wiretap claim was premised on Sections 2511 and 2520 of the federal Wiretap Act. Specifically, Section 2511(1)(a) imposes criminal liability on any person who “intentionally intercepts, endeavors to intercept, or procures any other person to intercept or endeavor to intercept, any wire, oral, or electronic communication.” Section 2520(a) allows any person whose communications are intercepted in violation of Section 2511 to bring a civil action against the “person or entity” which engaged in that violation.

Interception by procurement. The clinic claimed that the dentist’s wiretap claim failed for several reasons. First, citing the Fifth Circuit’s opinion in Peavy v. WFAA-TV, Inc., it claimed that it did not directly intercept the dentist’s communications and could only be held liable for its own conduct as opposed to anyone acting on its behalf. The magistrate judge disagreed, noting that there was no in-circuit authority that had adopted the Fifth Circuit’s opinion and other district courts had questioned it.

While Peavy concluded that the plain language of Sec. 2520(a), as amended in 1986, narrowed the class of possible civil defendants in the way the clinic suggested, the Fifth Circuit failed to consider that the amendment also added language allowing a civil action against the “person or entity” who engaged in the violation the underlying criminal statute (Section. 2511)—which still contained the “or procures another person” language. Thus, the magistrate found that the deletion of the procurement language in Section 2520(a) was of “no moment.” The clinic could be still be held civilly liable if it violated the underlying criminal statute by way of procurement.

Receptionist’s motivation and consent irrelevant. The magistrate also rejected the clinic’s contention that it was entitled to summary judgment on the Wiretap Act claim since a party to a recorded conversation is not liable unless he or she makes the recording for some criminal or tortious purpose and the receptionist who recorded a meeting at issue had done so to help her understand the procedural changes about to be implemented. However, whether she had a defense was irrelevant since she was not a party to this action.

While the clinic also argued that she consented to the recording, she didn’t necessarily consent to the clinic’s interception, and there was evidence that a dental assistant and others had also made recordings. And even if the dentist did not have an expectation of privacy in the contents of the recordings, he was clearly not aware of the clinic’s interception of his communications.

Fraud claims advance. The dentist also advanced his common law claims of fraud and negligent misrepresentation, as well as his claim that the clinic violated California Labor Code Section 970’s prohibition against false representation in employment agreements. The magistrate rejected the clinic’s contention that these claims were barred by California’s statute of frauds, which invalidates oral contracts that cannot be completed within a year. Since it was undisputed that the dentist signed a written employment contract, the statute of frauds did not apply.

Breach of contract. The magistrate also rejected the clinic’s contention that the plain language of his employment agreement barred his breach of contract claim since his employment was at-will. While the agreement clearly contained an at-will termination provision, it also contained termination-for-cause provisions. And because he was clearly fired based on allegations of inappropriate behavior and complaints from staff, his termination fell under the for-cause provision and not the at-will provision.

Wrongful discharge. The dentist also brought a claim for wrongful discharge in violation of public policy, in which he alleged that he was terminated following his complaints of unsafe working conditions. He claimed that the underlying public policy supporting his claim arose under several statutes. The clinic argued that the provision at issue in one of those statutes—Section 1278.5 of the California Health & Safety Code—could not form a basis for his claim since it only applied to healthcare facilities that admit patients for longer than 24-hour periods, which the clinic did not do. The magistrate agreed and held that the dentist’s claim could proceed only to the extent that it was not premised on violation of Section 1278.5.

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