Helen Armstrong v. Terry Reynolds ( 2022 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
HELEN ARMSTRONG, No. 20-15256
Plaintiff-Appellant,
D.C. No.
v. 2:17-cv-02528-
APG-DJA
TERRY REYNOLDS; STEVE GEORGE;
JESS LANKFORD; LARA PELLEGRINI,
Defendants-Appellees. OPINION
Appeal from the United States District Court
for the District of Nevada
Andrew P. Gordon, District Judge, Presiding
Argued and Submitted May 3, 2021
Seattle, Washington
Filed January 13, 2022
Before: Danny J. Boggs, * A. Wallace Tashima, and
Marsha S. Berzon, Circuit Judges.
Opinion by Judge Berzon
*
The Honorable Danny J. Boggs, United States Circuit Judge for
the U.S. Court of Appeals for the Sixth Circuit, sitting by designation.
2 ARMSTRONG V. REYNOLDS
SUMMARY **
Civil Rights
The panel affirmed in part and reversed in part the
district court’s dismissal of plaintiff’s claims brought
pursuant to 42 U.S.C. § 1983 and Nevada state law against
four state officials arising from plaintiff’s termination from
her workplace, Ear Nose and Throat Associates, after she
filed complaints with the Nevada Occupational Safety and
Health Administration regarding unsafe medical practices at
her workplace.
After attempting without success to raise her concerns
with her employer, plaintiff Helen Armstrong filed a
complaint with the Nevada Occupational Safety and Health
Administration (NOSHA). Nevada law supports and
encourages such reporting by prohibiting retaliation against
whistleblowers who report health and safety hazards. Nev.
Rev. Stat. § 618.445. Armstrong alleges that Ear, Nose and
Throat Associates (ENTA) retaliated against her, leading her
to return to NOSHA to file a second complaint. But when
Armstrong withdrew the whistleblowing complaint for fear
of further retaliation—before ENTA learned of it—NOSHA
notified ENTA about the complaint and, Armstrong alleges,
more retaliation followed. When she filed a third
whistleblowing complaint, NOSHA scuttled any
investigation. Eventually, ENTA fired Armstrong.
The panel first reversed the dismissal of Armstrong’s
procedural due process claim. The panel held that even
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
ARMSTRONG V. REYNOLDS 3
though Armstrong conceded that she was an at-will
employee, Nevada law has created limited exceptions to at-
will employment and protections for whistleblowers that can
support a property interest in continued employment.
Although the panel agreed with defendants that Armstrong
had not plausibly alleged that their conduct as state actors
caused her to be fired, citing Johnson v. Duffy, 588 F.2d 740,
743–44 (9th Cir. 1978), the panel noted that the information
contained in Armstrong’s briefing suggested that she might
be able to plausibly allege a relationship between the
defendants and her termination sufficient to sustain either a
“direct participation” or “setting in motion” theory.
Accordingly, the panel held that Armstrong must be granted
leave to amend her complaint.
The panel next considered Armstrong’s contention that,
in addition to interfering with her right to continued
employment by causing her to be fired, defendants deprived
her of a property interest in being reinstated by failing to
investigate her retaliation complaint, as they were obligated
to do under Nevada law. The panel agreed with Armstrong
that Nevada’s statute created a property interest beyond
continued employment, but not that that interest extended to
reinstatement. Thus, the panel held that the district court
erred in holding that Armstrong did not have a property right
in the investigation of her whistleblowing complaint because
§ 618.445 creates a protected property interest in an
investigation and in an action brought in court on behalf of
those whose claims have merit. The panel further
determined that the complaint plausibly alleged that the
process Armstrong received was essentially nonexistent and
so constitutionally deficient. The panel concluded that with
respect to the due process claim, Armstrong demonstrated a
protected property interest in an investigation and to some
degree, in continued employment.
4 ARMSTRONG V. REYNOLDS
The panel agreed with the district court that Armstrong
had not sufficiently alleged a substantive due process claim
based on a liberty interest. Thus, Armstrong had not
plausibly alleged that she was unable to pursue an entire
occupation, nor did the complaint allege any facts supporting
the calculation of 13 years of lost future employment, or
otherwise suggest that defendants’ actions entirely
precluded Armstrong’s ability to work as a human resources
professional elsewhere. Accordingly, the panel held that the
district court did not err in dismissing Armstrong’s
substantive due process claim and denying Armstrong leave
to amend her complaint.
Addressing the negligent infliction of emotional distress
claim—that NOSHA official Lara Pellegrini negligently
notified plaintiff’s employer about her complaint—the panel
held that the district court erred in concluding that the claim
was subject to Nevada’s discretionary function immunity
statute. Applying the Berkovitz-Gaubert test, the panel held
that Pellegrini had offered no cognizable social, political, or
economic reason for her allegedly negligent action. Finally,
the panel held that the district court did not err in dismissing
Armstrong’s civil conspiracy claim as barred by the
intracorporate conspiracy doctrine, but that the district court
abused its discretion in dismissing the claim without leave to
amend.
ARMSTRONG V. REYNOLDS 5
COUNSEL
Phillip Spector (argued), Messing & Spector LLP,
Baltimore, Maryland; Noah Messing, Messing & Spector
LLP, New York, New York; John Napier Tye,
Whistleblower Aid, Washington, D.C.; for Plaintiff-
Appellant.
Jeffrey Morgan Conner (argued) and Vivienne Rakowsky,
Deputy Assistant Attorneys General; Office of the Attorney
General, Las Vegas, Nevada; for Defendants-Appellees.
OPINION
BERZON, Circuit Judge:
Helen Armstrong witnessed unsafe medical practices in
her workplace, Ear Nose and Throat Associates (ENTA).
After attempting without success to raise her concerns with
her employer, Armstrong filed a complaint with the Nevada
Occupational Safety and Health Administration (NOSHA).
Nevada law supports and encourages such reporting by
prohibiting retaliation against whistleblowers who report
health and safety hazards. Nev. Rev. Stat. § 618.445.
Armstrong alleges that ENTA did retaliate against her,
leading her to return to NOSHA to file a second complaint
against ENTA. But when Armstrong withdrew the
whistleblowing complaint for fear of further retaliation—
before ENTA learned of it—NOSHA notified ENTA about
the complaint and, Armstrong alleges, more retaliation
followed. When she filed a third whistleblowing complaint,
NOSHA scuttled any investigation. Eventually, ENTA fired
Armstrong.
6 ARMSTRONG V. REYNOLDS
Armstrong sued four Nevada state officials in their
individual capacities under 42 U.S.C. § 1983, alleging that
the officials violated her substantive and procedural due
process rights and further alleging violations of both state
and federal statutes and regulations. She also brought
Nevada state law claims for civil conspiracy, intentional and
negligent infliction of emotional distress, fraud, and
malfeasance, misfeasance, or nonfeasance in office. The
district court dismissed all the claims.
Armstrong now appeals the dismissal of her due process,
negligent infliction of emotional distress (NIED), and civil
conspiracy claims. We reverse the dismissal of Armstrong’s
procedural due process and NIED claims, affirm the
dismissal of her substantive due process claim, reverse the
district court’s denial of leave to amend some of her claims,
and remand for further proceedings.
I.
Helen Armstrong worked as a supervisor in human
resources at ENTA. She had been with the company for
twenty-three years at the time of these events. In February
2014, Armstrong and a coworker filed whistleblower
complaints with NOSHA against ENTA, describing unsafe
practices, including the use of contaminated syringes and
sale of expired prescriptions. NOSHA investigated ENTA
and issued citations and fines for various health and safety
violations. But, Armstrong alleges, instead of simply paying
ARMSTRONG V. REYNOLDS 7
the fines and fixing the violations, ENTA began retaliating
against the whistleblowers. 1
Shortly after NOSHA opened its investigation,
Armstrong was removed from her role as a supervisor and
demoted. Following the close of NOSHA’s investigation,
Armstrong began to receive workplace write-ups and
complaints. Before Armstrong acted as a whistleblower, no
co-worker complaints had been filed against Armstrong in
her twenty-three years at ENTA; fifty were filed after the
investigation.
On May 30, 2014, Armstrong lodged a complaint with
NOSHA alleging illegal retaliation for her earlier
whistleblower filing. Shortly after that, Armstrong was
diagnosed with cancer. Worried about the loss of her health
insurance if she lost her job and concerned about facing
further retaliation once ENTA was informed of her new
complaint, Armstrong discussed her options with case
investigator Michael Ybarra and decided to withdraw her
claim. Ybarra made note of this conversation in
1
Our factual account follows Armstrong’s First Amended
Complaint (FAC), which is presumed true for present purposes. Knievel
v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005).
Both parties in this case attached exhibits to their briefing on the
motion to dismiss and referred to those exhibits in their briefs before this
court. The district court granted Defendants’ motion to dismiss without
addressing the material outside the pleadings or converting the motion
into one for summary judgment under Federal Rule of Civil Procedure
56. Our recitation of the facts in this case and our review of the district
court’s order is therefore limited to the contents of the complaint and
“evidence on which the complaint ‘necessarily relies’ if: (1) the
complaint refers to the document; (2) the document is central to the
plaintiff’s claim; and (3) no party questions the authenticity of the copy
attached.” Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006).
8 ARMSTRONG V. REYNOLDS
Armstrong’s file and specified that Armstrong made the
decision to withdraw to protect herself from retaliation,
noting that “her employer had not been notified of the
complaint.” (Capitalization simplified.)
But, on June 24, 2014, NOSHA’s Chief Investigator
Lara Pellegrini copied ENTA on a letter to Armstrong
acknowledging the withdrawal. Armstrong alleges that
Pellegrini admitted to others at NOSHA that sending the
letter copy to ENTA was a “mistake”; Pellegrini says she
sent the letter to ENTA because she was “[f]ollowing a
template letter from the OSHA manual.” Either way, instead
of the quiet end to the complaint process Armstrong had
hoped would help her keep her job and health insurance,
NOSHA informed an allegedly retaliatory employer that its
employee had continued to report violations of the law but
had given up on seeking redress. After ENTA learned of the
new complaint, Armstrong alleges, the retaliation she
experienced increased.
Armstrong met with Pellegrini on July 24, 2014,
expecting an apology. Pellegrini instead insisted she had
made no mistake, as she was required to send ENTA the
letter copy. The next day, Armstrong was “physically ill and
mentally destroyed” and so requested an additional day of
leave on top of her previously scheduled medical leave.
When she returned to work on Monday, July 28, 2014, she
was berated in front of her office colleagues and patients and
accused of violating company policy and lying about having
been ill the prior week. The first of several disciplinary
write-ups followed. Later that day, Armstrong was
hospitalized and required a heart stent implant.
Armstrong filed another retaliation complaint on August
14, 2014. She was fired from ENTA on November 17.
ARMSTRONG V. REYNOLDS 9
Armstrong alleges that NOSHA’s investigation of her
last complaint was effectively shut down by the Defendants,
acting in concert, through foot-dragging and subterfuge.
This sequence of events began on April 1, 2015, when
Ybarra sent ENTA a letter notifying it of Armstrong’s
amended complaint to NOSHA, in which she alleged that her
disciplinary write-ups and termination were retaliatory. In
the letter, Ybarra requested that ENTA provide a statement
responding to the allegation and any supporting
documentation, including personnel records, within 10
business days. Two days after Ybarra sent the letter,
Pellegrini reassigned the case to herself and thereafter
requested documents from Armstrong; Pellegrini never
followed up on the documents previously requested from
ENTA. When Armstrong objected to Pellegrini’s
assignment of the case to herself, Jess Lankford, NOSHA
Chief Administrative Officer and a defendant in this case,
reassigned the case to a new investigator, Rick Lucas. But
Pellegrini continued to be involved with the case after being
replaced: she met with ENTA’s attorney and corresponded
with ENTA about the status of the case, without copying
Armstrong on correspondence or otherwise communicating
with her.
According to Armstrong, other NOSHA officials also
blocked investigation of her case: Terry Reynolds, Deputy
Director of the Nevada Division of Business and Industry,
and Steve George, Administrator of the Division of
Industrial Relations, ordered investigators not to
communicate with her. Also, ENTA made a settlement offer
but NOSHA never told Armstrong about it. And, on July 16,
2015, Lucas was ordered by Lankford, Reynolds, and
George to “stand down”—apparently meaning entirely
suspend—the investigation, but Armstrong was never told
that the investigation was not going forward. From July until
10 ARMSTRONG V. REYNOLDS
November 2015, Armstrong and her representative
continued to reach out to Lucas and Lankford but received
no information about the status of the investigation or why it
had stopped.
On November 18, 2015, Lucas was allowed to restart the
investigation. Lucas again requested the documents—first
requested in April by Ybarra—that ENTA had never
provided. He then prepared a subpoena ordering ENTA to
provide documents supporting their decision to terminate
Armstrong. ENTA did not meet the deadline set for
producing the documents, but Lankford and George blocked
Lucas’s requests to issue the subpoena for the documents. In
the end, NOSHA never received any documentation from
ENTA supporting their allegations about Armstrong’s
misconduct.
On December 10, 2015, ENTA’s attorney emailed
NOSHA a copy of an indictment filed against Armstrong for
obtaining controlled substances by fraud or forgery.
According to the FAC, ENTA’s attorney acknowledged that
the criminal charges—which were eventually dismissed—
were irrelevant to the whistleblower investigation.
Nonetheless, and despite Lucas’s protests, Reynolds and
George directed that Armstrong’s file be closed. On
February 4, 2016, Lucas turned the file over to Pellegrini
without signing the final report. He then resigned in disgust.
Armstrong received a letter closing her case. She alleges
that, after that, her representative was denied access to
relevant documents in the investigation file.
The FAC alleges that Reynolds, George, Lankford,
Pellegrini, and unnamed Nevada state officials violated her
rights under 42 U.S.C. § 1983, the Due Process Clause, and
the Occupational Safety and Health Act, and committed
ARMSTRONG V. REYNOLDS 11
various state law violations. The district court granted
Defendants’ motion to dismiss. The court (1) dismissed
Armstrong’s procedural due process claim without prejudice
and her substantive due process claim with prejudice,
holding that she failed to allege a property interest in her
continued employment because she was an at-will
employee; (2) dismissed Armstrong’s state-law negligence
claims, including her claim for negligent infliction of
emotional distress, with prejudice, on the basis that the
defendants were entitled to discretionary-function
immunity; and (3) dismissed Armstrong’s state-law civil
conspiracy claim with prejudice, holding that her claim was
barred by the intracorporate conspiracy doctrine because it
alleged a conspiracy between members of the same agency. 2
Armstrong then filed a motion for leave to file a second
amended complaint. The motion was reviewed by a
magistrate judge, who recommended denying it. The district
court adopted the recommendation and dismissed the case
with prejudice. Armstrong timely appealed.
II.
The Due Process Clause “forbids the governmental
deprivation of substantive rights without constitutionally
adequate procedure.” Shanks v. Dressel, 540 F.3d 1082,
1090–91 (9th Cir. 2008). “A section 1983 claim based upon
procedural due process . . . has three elements: (1) a liberty
or property interest protected by the Constitution; (2) a
deprivation of the interest by the government; (3) lack of
2
The district court also dismissed the remainder of Armstrong’s
claims, which are not at issue in this appeal.
12 ARMSTRONG V. REYNOLDS
process.” Portman v. County of Santa Clara, 995 F.2d 898,
904 (9th Cir. 1993).
The district court addressed only the first element of
Armstrong’s procedural due process claim, holding that
“given her concession that she was an at-will employee,”
Armstrong “cannot state a valid cause of action for violation
of procedural due process because she has not alleged a
constitutionally protected liberty or property interest.”
Armstrong contends that Nevada law has created limited
exceptions to at-will employment and protections for
whistleblowers that can support a property interest. We
agree.
A.
“The Fourteenth Amendment’s procedural protection of
property is a safeguard of the security of interests that a
person has already acquired in specific benefits. These
interests—property interests—may take many forms.” Bd.
of Regents of State Colleges v. Roth, 408 U.S. 564, 576
(1972). Key to a property interest determination is whether
the person alleging a due process violation has an
entitlement to the benefit at issue, conferred through statute,
regulation, contract, or established practice. Property
interests “are not created by the Constitution. Rather they
are created and their dimensions are defined by existing rules
or understandings that stem from an independent source such
as state law—rules or understandings that secure certain
benefits and that support claims of entitlement to those
benefits.” Id. at 577.
Transposing these general precepts to the current
context, our question is whether an employee of a private
entity can acquire a limited property interest in continued
employment, protected against government interference
ARMSTRONG V. REYNOLDS 13
without due process, through the enactment of state laws
restricting the circumstances in which an otherwise at-will
employee may be disciplined or discharged. Our case law
establishes that, in appropriate circumstances, she can.
Merritt v. Mackey, 827 F.2d 1368 (9th Cir. 1987),
addressed a procedural due process property-based claim of
that ilk. In Merritt, a counselor working at a private
nonprofit corporation alleged that federal and state officials
forced his termination without a hearing by requiring that he
be fired as a condition of government funding for the
nonprofit. Id. at 1370. Merritt held “[i]t . . . indisputable
that an individual may have a protected property interest in
private employment.” Id. But to bring such a claim, the
plaintiff “must show that [she] had more than a ‘unilateral
expectation’ of continued employment; [she] must
demonstrate a ‘legitimate claim of entitlement.’” Id. at 1371(quoting Roth, 408 U.S. at 577).
Elucidating the “legitimate claim of entitlement”
concept in the context of private employment, we have held
that “[i]f under state law, employment is at-will, then the
claimant has no property interest in the job.” Portman,
995 F.2d at 904. In other words, if an employee can be fired
for any reason at any time, she has at most only a unilateral
expectation of continued employment. But—critically, for
present purposes—state laws can limit at-will employment,
even for employees who do not have employment contracts
assuring continued employment or limiting the
circumstances in which they can be disciplined or
discharged. See Merritt, 827 F.3d at 1371. And “when a
private employee is deprived of his employment through
government conduct, the cause of action available to the
employee is not merely the right to sue for interference with
14 ARMSTRONG V. REYNOLDS
contractual relationships”; the employee can bring a due
process claim against the government. Id.
Armstrong contends that Nevada’s protection against
discharge or discipline for safety and health whistleblowers
creates, even for otherwise at-will employees, a “legitimate
claim of entitlement” in retaining a job without being fired
for a prohibited reason. It does.
Nevada has created exceptions to at-will employment
that apply to all employees in the state. Relevant here is
Nevada’s protection of employees from being fired for
whistleblowing about health and safety issues: “A person
shall not discharge or in any manner discriminate against any
employee because the employee has filed any complaint or
instituted or caused to be instituted any proceeding” under
the state’s Occupational Safety and Health chapter. Nev.
Rev. Stat. § 618.445(1). Nevada also recognizes a common
law tort cause of action for discharge against an employer
who “terminat[es] an employee for reasons that violate
public policy,” including termination for whistleblowing.
Allum v. Valley Bank of Nev., 114 Nev. 1313, 1316–17, 1320
(1998). An employee’s status as an otherwise at-will
employee does not affect either the statutory or the common
law protection. Id. at 1317; see Nev. Rev. Stat. Ann.
§ 618.445. So although—absent a contract to the contrary—
employers in Nevada are free to fire employees for almost
any reason at any time, they may not discharge an employee
for reporting workplace hazards to the appropriate
authorities.
This protection, albeit limited, creates a legitimate
entitlement to protection from negative employment
consequences for making OSHA complaints, and so a
property interest. In general, “[a] law establishes a property
interest in employment if it restricts the grounds on which an
ARMSTRONG V. REYNOLDS 15
employee may be discharged.” Hayward v. Henderson,
623 F.2d 596, 597 (9th Cir. 1980) (quoting Maloney v.
Sheehan, 453 F. Supp. 1131, 1141 (D. Conn. 1978)).
Hayward pointed to a provision permitting discharge only
for “just cause” as an “example,” of a protection creating “a
right to continued employment.” Id. (quoting Maloney,
453 F. Supp. at 1141). By specifying a “just cause”
provision as an “example” of a broader category of job
protections giving rise to a property interest in continued
employment, Hayward indicated that laws more narrowly
creating restrictions on discharge could create a property
right in employment free from a discharge violating that
restriction.
DiMartini v. Ferrin, 906 F.2d 465 (9th Cir. 1990),
amending 889 F.2d 922 (9th Cir. 1989), reiterated that
suggestion, specifically noting that Nevada’s public policy
exceptions to at-will employment may create a limited
property interest. DiMartini concerned a Bivens action
against an FBI agent who allegedly instigated DiMartini’s
discharge from private employment because DiMartini
refused to cooperate with an FBI investigation. See 889 F.2d
at 923. Addressing qualified immunity, DiMartini held that
it was clearly established law that an employee has a “right
to be free from unreasonable government interference with
his private employment” but remanded to the district court
the question whether DiMartini had adequately alleged a
property right to support his due process claim. 906 F.2d
at 466–67. In a footnote, DiMartini explained that “[t]his
court has held that state law can create a constitutionally
significant property interest in private employment,” and
noted that:
“Nevada . . . recognizes that an at-will
employee has at least a limited right to
16 ARMSTRONG V. REYNOLDS
continued employment because he cannot be
terminated when the purpose of the
termination offends public policy.” See
Hansen v. Harrah’s, 100 Nev. 60, 675 P.2d
394 (1984) (Nevada adopts a public policy
exception to at-will employment rule and
recognizes a tort action for retaliatory
discharge resulting from employee filing of
worker’s compensation claim).
Id. at 467 n.4. Although, as Defendants correctly note,
DiMartini did not squarely determine “whether [a property]
interest existed in that case,” the DiMartini footnote does
follow the reasoning of Merritt and Hayward in indicating
that when the state restricts, broadly or narrowly, the
grounds upon which an employee can be discharged, the
state may establish a property interest in continuing
employment without being discharged for an impermissible
reason. (Emphasis added.)
Squarely addressing the question Merritt, Hayward, and
DiMartini left (barely) open, we now hold that Nevada’s
statutory and common law protections for whistleblowers
create a limited property interest for plaintiffs who plausibly
allege that they have been illegally terminated for health and
safety whistleblowing. Nevada law gives employees more
than a unilateral expectation that they will be able to keep
working without a retaliatory discharge. Nevada’s OSHA
statutes and case law prohibit employers from firing
employees for properly reporting OSHA violations or
otherwise exercising their NOSHA statutory rights. Nev.
Rev. Stat. § 618.445(1); Allum, 114 Nev. at 1316–17. All
Nevada employees who avail themselves of those rights are
provided a legitimate entitlement, established by the state,
ARMSTRONG V. REYNOLDS 17
not to be fired for those actions, and so have a property right
in continuing employment if they do exercise those rights.
This property interest is narrower than the interest held
by an employee with a contract assuring continued
employment for a specified time period or establishing that
discharge must be for cause. But limited property interests
in employment are not new. Federal Deposit Insurance
Corp. v. Henderson, 940 F.2d 465 (9th Cir. 1991), for
example, determined that an employment contract that
provided for at-will termination with a ninety-day notice
requirement, or for-cause termination with no notice, created
a property interest “limited to ninety days of employment.”
Id. at 470 n.8, 476. The limited nature of the interest may,
of course, affect the calculation of damages. And any
plaintiff claiming such a property interest must plausibly
allege the other elements of any procedural due process
claim: a deprivation of that interest by the government and a
lack of process. Portman, 995 F.2d at 904. But the restricted
nature of a governmental or contracted limitation on
employee discipline or discharge does not destroy the
prospect of any property interest in continued employment.
B.
Defendants acknowledge that the state offers protections
to whistleblowers that extend to otherwise at-will employees
but maintain that Armstrong was not entitled to those
protections. Armstrong, Defendants argue, has not made a
plausible showing that she was fired because she complained
about health and safety violations, as “Armstrong had
numerous workplace problems.” Defendants’ argument
fails.
Under Nevada law, a plaintiff alleging tortious discharge
for whistleblowing “must demonstrate that his protected
18 ARMSTRONG V. REYNOLDS
conduct was the proximate cause of his discharge,” rather
than establishing mixed motives for the discharge (which
suffices for some purposes under Title VII of the Civil
Rights Act of 1964, 42 U.S.C. § 2000e et seq., and other
statutes). Allum, 114 Nev. at 1319–20; 42 U.S.C. § 2000e-
2(m). But Armstrong is not relying on a mixed motives
theory.
The records the Defendants bring forward to
demonstrate that ENTA had cause to fire Armstrong, are the
very write-ups Armstrong alleges were pretextual and so part
of the retaliation for whistleblowing she experienced. She
alleges that these write-ups were generated to create the
appearance that there was cause to fire her when there was
not, pointing to the fact that she had not previously received
any write-ups in twenty-three years of employment and that
the first write-up was based on an alleged incident nine days
after NOSHA concluded its initial health and safety
investigation. On a motion to dismiss, taking Armstrong’s
factual allegations in her complaint as true, the presence of
allegedly pretextual reasons for firing do not defeat the
plausibility of Armstrong’s allegation that her termination
was retaliatory.
C.
Our conclusion that Armstrong had a property interest in
continued employment without discipline or discharge for
properly exercising her rights as a whistleblower does not
end our analysis. Defendants also contend that we should
affirm the district court’s dismissal of Armstrong’s claim
because she has not satisfied the second element of a § 1983
procedural due process claim, “a deprivation of the interest
by the government.” Portman, 995 F.2d at 904. Defendants
assert that even if Armstrong can show that “ENTA
retaliated against her, thereby creating a legitimate claim to
ARMSTRONG V. REYNOLDS 19
continued employment,” she has not plausibly alleged that
their conduct caused the deprivation of that interest. On this
point, we agree with Defendants.
The cases that established that government interference
in private employment could give rise to a procedural due
process claim all involved deliberate efforts by government
actors to cause the plaintiffs to be fired. In Merritt, the
government officials conditioned funding for the private
employer on its firing of the plaintiff. 827 F.2d at 1370. In
DiMartini, DiMartini alleged that the government official
subjected his employer to “threats, harassment and
intimidation” to cause DiMartini’s firing. 889 F.2d at 926.
But these cases do not set forth a general standard for when
government interference in private employment rises to the
level of a due process violation.
Defendants propose a test derived from state action
doctrine. They contend that Armstrong must show “conduct
of state actors exercising ‘coercive power’ or ‘such
significant encouragement, either overt or covert, that the
choice [to fire Armstrong] must in law be deemed to be that
of the state.’” See Am. Mfrs. Mut. Ins. Co. v. Sullivan,
526 U.S. 40, 52 (1999). Armstrong disagrees, contending
that we should apply this court’s precedents establishing
liability under § 1983, in which the “requisite causal
connection can be established not only by some kind of
direct personal participation in the deprivation, but also by
setting in motion a series of acts by others which the actor
knows or reasonably should know would cause others to
inflict the constitutional injury.” Gilbrook v. City of
Westminster, 177 F.3d 839, 854 (9th Cir. 1999) (quoting
Johnson v. Duffy, 588 F.2d 740, 743–44 (9th Cir. 1978)).
We agree with Armstrong that the Johnson framework
applies here. Unlike the plaintiffs in Sullivan, who brought
20 ARMSTRONG V. REYNOLDS
a § 1983 claim against private insurers, 526 U.S. at 47–48,
Armstrong brought her claim directly against the state
defendants. Defendants give no basis for applying cases
determining whether private action could be attributed to the
state when Armstrong has not sued the private actors in this
case.
Armstrong alleges that Defendants caused her
termination through their actions in the period from the
Pellegrini letter up to and including the termination itself.
But even under the more flexible standard of Johnson,
Defendants are correct that Armstrong has not plausibly
alleged in the FAC that they caused her firing. “To survive
a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to ‘state a claim to relief that
is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007)).
The only specific action the FAC alleges Defendants
affirmatively took before Armstrong’s termination was
Pellegrini’s copying of ENTA on the withdrawal letter,
thereby alerting ENTA to Armstrong’s first whistleblower
retaliation complaint. Armstrong contends that Pellegrini’s
letter “set[] in motion all of the retaliation to follow” and so
caused the deprivation of her property interest. But
Armstrong states that the letter was “mistakenly sent,” and
the letter is the basis for Armstrong’s negligent infliction of
emotional distress claim. Armstrong’s position, in other
words, is that the letter was sent negligently. “Where a
government official’s act causing injury to life, liberty, or
property is merely negligent, ‘no procedure for
compensation is constitutionally required.’” Daniels v.
Williams, 474 U.S. 327, 333 (1986) (citation omitted).
Armstrong has thus not plausibly alleged that she was
ARMSTRONG V. REYNOLDS 21
deprived by intentional actions of the Defendants of her
interest in continued employment free from retaliation as a
whistleblower.
In her briefing, Armstrong maintains that, following
Pellegrini’s mistake, Defendants “colluded with ENTA to
interfere in the whistleblower investigation to secure her
termination.” In support of this point, Armstrong’s briefs
rely primarily on evidence not included in the FAC. She
quotes, for example, from Ybarra’s declaration that he
“firmly believe[s]” that Armstrong was terminated “on
either approval or encouragement” of Defendants. This
assertion is not in the FAC at issue in this motion to dismiss;
in fact, the declaration Armstrong cites was not signed until
July 2019, after she filed her proposed Second Amended
Complaint.
Generally, though, plaintiffs should be granted leave to
amend their complaints unless “it is clear, upon de novo
review, that the complaint could not be saved by any
amendment.” Sonoma Cnty. Ass’n of Retired Emps. v.
Sonoma County, 708 F.3d 1109, 1118 (9th Cir. 2013)
(quoting Polich v. Burlington N., Inc., 942 F.2d 1467, 1472
(9th Cir. 1991)). If Armstrong can allege facts sufficient to
show that Defendants coordinated with ENTA in the period
after Pellegrini’s letter but before Armstrong’s termination,
such acts may be sufficient to sustain either a “direct
participation” or “setting in motion” theory under Johnson.
The information referred to in the briefing suggests that
Armstrong may possibly be able to plausibly allege such a
relationship between the Defendants and ENTA’s
termination of Armstrong. Accordingly, we hold that
Armstrong must be granted leave to amend her complaint.
22 ARMSTRONG V. REYNOLDS
D.
In addition to her contention that Defendants interfered
with her right to continued employment by causing her to be
fired, Armstrong maintains that the statutory protections
Nevada affords to whistleblowers create a property interest
in reinstatement in their jobs, and that the Defendants
deprived her of that interest by failing to investigate her
retaliation complaint, as they were obligated to do under
Nevada law. We agree with Armstrong that Nevada’s statute
creates a property interest beyond continued employment,
but not that that interest extends to reinstatement.
(1) We begin by noting that, in contrast to the allegations
Armstrong made regarding her termination, Armstrong has
plausibly alleged that Defendants took direct actions to
prevent any investigation of her final complaint and so to
preclude filing suit on her behalf. Armstrong represents that
Pellegrini and others in NOSHA took actions designed to
cover up their mistake of alerting ENTA to her further
whistleblowing. The FAC includes factual allegations that,
despite the efforts of two different NOSHA investigators,
Defendants prohibited any collection of evidence from
ENTA regarding Armstrong’s NOSHA complaint. In
particular, the FAC alleges that Pellegrini never followed up
to obtain the documents from ENTA initially requested by
Ybarra, and that George prevented Lucas from issuing an
already-prepared subpoena for those same documents
months later. And for the four months the investigation was
technically open, the FAC further states, Lankford and
George instructed Lucas not to investigate at all, without
informing Armstrong that the investigation was suspended.
The question before us, then, is whether NOSHA’s
alleged conduct in failing to pursue Armstrong’s claims
deprived her of a protected property interest. “[N]ot every
ARMSTRONG V. REYNOLDS 23
statute authorizing a benefit creates a property interest.”
Doyle v. City of Medford, 606 F.3d 667, 672 (9th Cir. 2010).
“Whether an expectation of entitlement is sufficient to create
a property interest ‘will depend largely upon the extent to
which the statute contains mandatory language that restricts
the discretion of the [decisionmaker].’” Allen v. City of
Beverly Hills, 911 F.2d 367, 370 (9th Cir. 1990) (alteration
in original) (quoting Jacobson v. Hannifin, 627 F.2d 177,
180 (9th Cir. 1980)). “[I]f the statute sets out conditions
under which the benefit must be granted or if the statute sets
out the only conditions under which the benefit may be
denied,” then the statute creates an entitlement to the benefit
sufficient to create a property interest. Id. (quoting City of
Santa Clara v. Andrus, 572 F.2d 660, 676 (9th Cir. 1978)).
But “[i]f ‘the decision to confer a benefit is unconstrained by
particularized standards or criteria, no entitlement exists.’”
Id. (internal quotation marks omitted) (quoting Fidelity Fin.
Corp. v. Fed. Home Loan Bank, 792 F.2d 1432, 1436 (9th
Cir. 1986)).
Nevada Revised Statutes § 618.445 prohibits retaliation
against whistleblowers for their communications to NOSHA
and provides that “[a]ny employee aggrieved by a violation
of [that prohibition] may file a complaint.” Id. § 618.445(1)–
(2). The statute goes on:
3. Upon receipt of the complaint by the
Division, the Administrator shall cause such
investigation to be made as the Administrator
deems appropriate. If upon investigation, the
Administrator determines that the provisions
of subsection 1 have been violated, the
Administrator shall bring an action in the
name of the Administrator in any appropriate
24 ARMSTRONG V. REYNOLDS
district court against the person who has
committed the violation.
4. If the court finds that the employee was
discharged or discriminated against in
violation of subsection 1, the employee is
entitled to reinstatement and reimbursement
for lost wages and work benefits.
Id. § 618.445(3)–(4). Although the statute does provide for
reinstatement of an unlawfully discharged employee, the
agency cannot grant reinstatement directly. Instead, the
agency is directed to investigate the complaint and bring an
action in court on behalf of an aggrieved employee, seeking
a judgment that would include reinstatement and
reimbursement. In that action, an employee is “entitled to
reinstatement” only “[i]f the court finds that the employee
was discharged or discriminated against in violation of
subsection 1.” Id. § 618.445(4) (emphasis added). So the
entitlement to reinstatement is, from the agency’s point of
view, contingent and not within its direct control.
(2) At the same time, the statute does require NOSHA to
investigate complaints and, if violations are found, file suit
to remedy the violations, including seeking reinstatement.
Can that mandatory obligation provide Armstrong with a
property interest in the agency’s conducting the required
investigation and litigation? Yes, it can.
Again, property interests “may take many forms,” Roth,
408 U.S. 564, 576, and “the types of interests protected as
‘property’ are varied and, as often as not, intangible, relating
‘to the whole domain of social and economic fact,’” Logan
v. Zimmerman Brush Co., 455 U.S. 422, 430 (1982) (quoting
Nat’l Mut. Ins. Co. v. Tidewater Transfer Co., 337 U.S. 582,
ARMSTRONG V. REYNOLDS 25
646 (1949) (Frankfurter, J., dissenting)). Neither party
before us has cited any cases considering whether provisions
requiring actions to be brought by the government created
property interests.
We have previously noted some tension in this court’s
case law on when a cause of action itself constitutes a
property interest for the purposes of a due process claim. See
In re Nat’l Sec. Agency Telecomms. Recs. Litig., 671 F.3d
881, 899 n.4 (9th Cir. 2011). The Supreme Court has held
that “a cause of action is a species of property protected by
the Fourteenth Amendment’s Due Process Clause.” Logan,
455 U.S. at 428. But this court has stated that statutes
precluding certain causes of action do not violate the Due
Process Clause, because “a party’s property right in any
cause of action does not vest until a final unreviewable
judgment is obtained.” Lyon v. Agusta S.P.A., 252 F.3d
1078, 1086 (9th Cir. 2001) (emphasis omitted) (quoting
Grimesy v. Huff, 876 F.2d 738, 743–44 (9th Cir. 1989)).
We need not resolve that tension here to determine
whether Armstrong’s interest in NOSHA’s treatment of her
complaint is cognizable. The Nevada statute at issue does
not create a cause of action for employees in Armstrong’s
position, allowing them to bring claims against their
employers. Instead, the statute establishes a process by
which the government agency is required to investigate and,
if merited, bring the action on the employee’s behalf. Nev.
Rev. Stat. § 618.445(3). That benefit is separate from the
potential viability of the cause of action itself, and so from a
potential final judgment of reinstatement. The benefit
provided by § 618.445 is that the time, money, and legal
expertise required to bring a claim in court will be provided
by the government, not the employee herself. Unlike the
cause of action itself, that benefit accrues regardless of the
26 ARMSTRONG V. REYNOLDS
final outcome of the court case, and so exists before
judgment is obtained and regardless of whether the judgment
is favorable. Cf. Lyon, 252 F.3d at 1086. The form of
benefit created by this statute is certainly of value within the
“whole domain of social and economic fact.” Logan,
455 U.S. at 430 (quoting Nat’l Mut. Ins. Co., 337 U.S. at 646(Frankfurter, J., dissenting)).
(3) To determine whether this benefit is a property
interest protected by the Due Process Clause, we must assess
“the extent to which the statute contains mandatory language
that restricts the discretion of the [decisionmaker].” Allen,
911 F.2d at 370 (alteration in original) (quoting Jacobson,
627 F.2d at 180). In the circumstances before us, § 618.445
does create such a protected property interest in an
investigation and in an action brought in court on behalf of
those whose claims have merit.
This inquiry turns primarily on an assessment of the
language of § 618.445. When interpreting state statutory
language, federal courts are ordinarily bound by the
decisions of the given state’s highest court. Ariz. Elec.
Power Co-op., Inc. v. Berkeley, 59 F.3d 988, 991 (9th Cir.
1995). But if that court has not yet spoken on the issue at
hand, “[o]ur task” is to “predict” how that court would
decide the issue. Platt v. Moore, 15 F.4th 895, 901 (9th Cir.
2021) (citing Alliance for Prop. Rights & Fiscal Resp. v. City
of Idaho Falls, 742 F.3d 1100, 1102 (9th Cir. 2013)).
Here, however, the Nevada statute at issue repeats,
almost verbatim, the federal OSHA enforcement statute,
which similarly mandates that the Secretary “shall cause
such investigation to be made as he deems appropriate” and
“shall bring an action” if the statute is violated. 29 U.S.C.
§ 660(c) (emphases added). This parallelism is no accident.
Federal law requires that, for a state OSHA plan to receive
ARMSTRONG V. REYNOLDS 27
approval from the federal reviewing body, it must be “at
least as effective in providing safe and healthful employment
and places of employment as” the federal OSHA statute.
29 U.S.C. § 667(c); see also, e.g., AFL-CIO v. Marshall,
520 F.2d 1030, 1033 (D.C. Cir. 1978). Nevada lawmakers
therefore likely included the relevant statutory language
regarding investigation and litigation of retaliation claims
into the state’s OSHA plan to assure that the plan would be
at least as effective as the federal version and, accordingly,
receive federal approval.
The NOSHA statute’s legislative history provides
support for this supposition. Joint hearing reports issued by
the Nevada Senate’s Commerce and Labor Committee and
the Nevada Assembly’s Labor and Management Committee
indicate that the relevant language was added into the
NOSHA statute in 1975 at the direct behest of the federal
reviewing body. See Nev. S. Com. & Lab. Comm. & Nev.
Assemb. Lab. & Mgmt. Comm., Rep. on J. Hearing 233, 253
(1975) (indicating that the addition of § 618.445 was
“required” by a “[f]ederal legislative review letter”); Nev. S.
Com. & Lab. Comm. & Nev. Assemb. Lab. & Mgmt.
Comm., Rep. on J. Hearing 138, 189 (1975) (same). Thus,
both the language and the substance of § 618.445 were
transplanted from federal law, rendering this dispute
essential one of interpreting the meaning of the federal
statute.
We are aware of three federal court of appeals decisions
that weigh in on the meaning of the “shall” language in
§ 660(c), the federal OSHA statute’s whistleblower
provision. In Wood v. Dep’t of Lab., 275 F.3d 107 (D.C. Cir.
2001), the plaintiff claimed that the Secretary of Labor had
determined that his employer violated § 660(c), but then
“unlawfully declined to file suit.” Id. at 109–10. The district
28 ARMSTRONG V. REYNOLDS
court dismissed the complaint on the ground that the
Secretary’s decision not to bring suit on behalf of the
plaintiff was not judicially reviewable. Id. at 110. The D.C.
Circuit affirmed the district court’s dismissal of the lawsuit,
but on a distinct ground: The D.C. Circuit held that, after
performing an investigation, the Secretary had found that the
employer did not violate § 660(c), and dismissal was
therefore appropriate because the federal OSHA statute
indicates that the Secretary “shall” bring suit only if he or
she determines that the statute was violated. Id. at 111–12.
The D.C. Circuit then went on expressly to reserve the
questions whether “the Secretary’s determination of a
violation vel non or her determination upon finding a
violation not to file a complaint are subject to review.” Id.
at 112 n.9.
The D.C. Circuit in Wood further noted that § 660(c)(2)
“designates the Secretary as the official who decides whether
and to what extent an investigation is ‘appropriate’ and,
based on that investigation, whether the complainant has
made out a claim that his employer discriminated against
him, by discharge or otherwise, for his protected activity.”
Id. at 112. Given the mandatory language of the statute—
that the Secretary “shall cause such investigation to be made
as he deems appropriate” and “shall bring an action” if the
statute is violated, see 29 U.S.C. § 660(c) (emphases
added)—we understand the D.C. Circuit’s observation as
speaking to a general filtering function the Secretary
performs with respect to facially insufficient complaints. In
other words, the Secretary may determine that a complaint is
facially insufficient and decline to order any further
investigation into the employee’s allegations, but the
Secretary may not refuse to investigate a facially valid
complaint.
ARMSTRONG V. REYNOLDS 29
Two other Circuit opinions support that interpretation of
the federal statute. In Secretary, U.S. Department of Labor
v. Lear Corp. Eeds & Interiors, 822 F.3d 556 (11th Cir.
2016), the Secretary opened an investigation into the
complainant’s case and quickly determined that the
employer did engage in retaliation. Id. at 560. The Eleventh
Circuit stated that the federal OSHA statute “does not
require that the Secretary complete his investigation before
determining that a retaliation violation occurred; instead, the
extent of the investigation is entirely discretionary. The
Secretary only has a duty to investigate a complaint to the
extent he ‘deems appropriate,’ which leaves to the Secretary
the decision of how much investigation to conduct upon
receipt of a retaliation complaint.” Id. This language
indicates that although the Secretary has an obligation to
perform some kind of investigation into a facially valid
complaint, the Secretary has discretion over the scope or
extent of the investigation.
Finally, in the course of explaining that Congress
intended for suits brought by the Secretary of Labor to be the
“exclusive means of redressing violations” of the statute,
Taylor v. Brighton Corp., 616 F.2d 256, 259 (6th Cir. 1980),
the Sixth Circuit remarked that the legislative history of
§ 660(c) indicates that “the Senate wanted the Secretary to
screen out frivolous complaints so as not to overburden the
hearing body.” Id. at 261. As the Sixth Circuit explained, a
predecessor version of § 660(c) required a record hearing as
part of the Secretary’s investigation into every complaint.
Id. But the Senate later re-assigned that task to the
Occupational Safety and Health Review Commission,
thereby confining “record hearings to cases the Secretary
found meritorious.” Id. at 261–62. Although the Senate and
House conferees eventually further narrowed the role of the
Review Commission so that the Secretary now prosecutes
30 ARMSTRONG V. REYNOLDS
§ 660(c) actions in the district courts rather than before the
Review Commission, this legislative history—in addition to
Congress’s decision to clarify that the Secretary need only
“cause such investigation to be made as he deems
appropriate”—indicates that Congress wanted to ensure that
the Secretary had the flexibility efficiently to dismiss
frivolous complaints.
In sum, federal precedent tends to support the view that
§ 660(c) places a mandatory burden on the Secretary of
Labor to perform at least some investigation into facially
valid complaints. And because the language and substance
of Nevada Revised Statutes § 618.445 are rooted in § 660(c),
this precedent indicates that the same mandatory burden
applies to the NOSHA Administrator as well.
Turning to Ninth Circuit case law, Wedges/Ledges of
California, Inc. v. City of Phoenix, 24 F.3d 56 (9th Cir.
1994), although far afield on its facts, is quite informative as
to the type of statutory language sufficient to give rise to a
property interest in a beneficiary. Wedges/Ledges addressed
a Phoenix City Code provision governing licenses for games
of skill and considered whether it created a property interest
in new licenses for qualified applicants. Id. at 59–60. The
Code provided that the City Treasurer “shall make a
determination as to whether or not [a proffered machine]
qualifies as a game of skill based on an evaluation of the
machine and recommendation by the police department and
other relevant information” and that owners of approved
machines “shall be issued” game license tags. Id. at 63(alteration in original) (quoting Phoenix City Code § 7-28).
The term “game of skill” was defined in the statute as “any
game, contest, or amusement of any description in which the
designating element of the outcome . . . is the judgment,
skill, or adroitness of the participant in the contest and not
ARMSTRONG V. REYNOLDS 31
chance.” Id. (alteration in original) (quoting Phoenix City
Code § 7-3).
Wedges/Ledges reasoned that the “game of skill” criteria
sufficiently constrained the City Treasurer’s discretion with
regard to evaluating whether a machine qualified as a game
of skill, and issuing a license if it did, to establish a property
right in licenses for qualifying games of skill. “The use of
the imperative in [the] provisions is sufficient to create an
expectation in applicants that, as long as their machines
qualify as games of skill, they have a right to obtain license
tags.” Id. The broad statutory mandate to consider the
“evaluation[s]” and “other relevant information” did not
provide discretion sufficient to undercut the property
interest, Wedges/Ledges held, as the Code “does not allow
the City Treasurer to rest its decision on anything other than
the ‘game of skill’ determination.” Id.
The Nevada whistleblower statute similarly uses
mandatory language. Like the ordinance at issue in
Wedges/Ledges, it first requires the Administrator to make a
determination: the “Administrator shall cause . . .
investigation to be made” as to whether “the provisions of
subsection 1” have been violated. Nev. Rev. Stat.
§ 618.445(3). The Administrator must base that
determination on those provisions, which specify that an
employer “shall not discharge or in any manner discriminate
against any employee because the employee has filed any
complaint or instituted or caused to be instituted any
proceeding . . . , has testified or is about to testify in any such
proceeding,” has reported an instance of workplace violence,
or has exercised “any right afforded by [the Occupational
Safety and Health] chapter.” Id. § 618.445(1). And just as
the Wedges/Ledges code provision specified that a license
must issue if the specific criteria were met, so under
32 ARMSTRONG V. REYNOLDS
§ 618.445, “the Administrator shall bring an action” if he
determines that the substantive provisions were violated. Id.
§ 618.445(3) (emphasis added).
Section 618.445(3) does allow the Administrator to
conduct “such investigation . . . as [he] deems appropriate.”
But, like the “other relevant information” the Treasurer was
allowed to consider in Wedges/Ledges, the Administrator’s
ability to decide how to investigate does not provide
discretion to base his decision whether to bring an action on
anything other than a determination as to whether the statute
was violated. Wedges/Ledges, 24 F.3d at 63. Likewise, in
Parks v. Watson, 716 F.2d 646 (9th Cir. 1983) (per curiam),
we determined that criteria including specific requirements
for notice and consent along with a broad directive to
consider “the public interest” nevertheless “define[d] an
articulable standard” sufficient to give rise to a property
interest in vacating city streets. Id. at 657.
In contrast, statutes that we have held do not establish
property rights offer the decisionmaker discretionary or
indeterminate grounds for action. Allen v. City of Beverly
Hills, 911 F.2d 367 (9th Cir. 1990), for example, addressed
a provision allowing layoffs “[w]henever in the judgment of
the Council it becomes necessary in the interests of economy
or because the necessity for a position no longer exists.” Id.
at 370. Allen held that this language was insufficiently
specific to provide the “particularized standards or criteria”
necessary to a protected property interest. Id. Similarly,
Jacobson v. Hannifin, 627 F.2d 177 (9th Cir. 1980), held that
a Nevada statute granting licensing authority “full and
absolute power and authority” to deny license applications
“for any cause deemed reasonable” did not establish a
property interest in obtaining the license. Id. at 180 (quoting
Nev. Rev. Stat. § 463.220(6)).
ARMSTRONG V. REYNOLDS 33
Nevada’s whistleblower protection statute sets forth
mandatory criteria the Administrator must assess to make his
determination. In so doing, the statute gives complainants a
“legitimate claim of entitlement” to an investigation of their
complaint and to an action being brought on their behalf if
the investigation shows a violation of the statutory
provisions. That legitimate entitlement is sufficient to
trigger procedural due process protection, although not to
determine what process is due when the agency considers
whether and how to investigate and whether to file suit.
A comparison to other agencies’ enforcement statutes
supports our conclusion. As mentioned, the Nevada statute
is patterned on the federal OSHA enforcement statute, which
similarly mandates that the Secretary “shall cause such
investigation to be made as he deems appropriate” and “shall
bring an action” if the statute is violated. 29 U.S.C. § 660(c)
(emphases added). Such mandatory language is rare in
similar enforcement provisions. Other statutory
enforcement provisions use language authorizing the agency
to bring claims but not mandating that it do so. For example,
the enforcement provision of the National Labor Relations
Act, 29 U.S.C. § 141 et seq., provides that the National
Labor Relations Board “shall have power to issue and cause
to be served” a complaint based on an unfair labor practice;
there is no mandate for it to do so. Id. § 160(b).
Title VII of the Civil Rights Act of 1964, 42 U.S.C.
§ 2000e et seq., includes a mix of mandatory and permissive
language: The Commission “shall make an investigation” of
any charge of an unfair employment practice and, if the
Commission finds reasonable cause to support the charge,
“shall endeavor to eliminate any such alleged unlawful
employment practice by informal methods of conference,
conciliation, and persuasion.” 42 U.S.C. § 2000e-5(b)
34 ARMSTRONG V. REYNOLDS
(emphases added). This investigation and conciliation is
mandatory; if the Commission does not endeavor to use
informal methods of enforcement, it may not bring a formal
action. Mach Mining, LLC v. EEOC, 575 U.S. 480, 486
(2015). But if informal efforts fail, “the Commission may
bring a civil action.” Id. § 2000e-5(f)(1) (emphasis added).
In short, the NOSHA statute’s mandatory language, key
to our analysis given Wedges/Ledges, is determinative of the
property interest question. The statute could have been
written to make the enforcement action discretionary, as
similar statutes do. But instead, bringing an action is
required if, after an investigation (also mandatory), a
violation is shown.
Defendants contend that, even if Armstrong has a
property interest, she cannot show any lack of process
because the whistleblower statute entitles Armstrong only to
“such investigation . . . as the Administrator deems
appropriate.” Nev. Rev. Stat. § 618.445(3). We do not agree
that the discretion provided to the Administrator as to the
particulars of the investigation undermines the mandatory
requirement—that there be an investigation, and that suit be
filed if the requisite violations are found.
First, the text of the statute directs that some
investigation be conducted. The statute mandates that “the
Administrator shall cause such investigation to be made as
the Administrator deems appropriate,” id. § 618.445(3), not
that the Administrator shall choose whether to investigate at
all. In the context of Title VII, the Supreme Court has held
that the statutory command that the Commissioner “shall
endeavor” to use informal means of enforcement “provides
the EEOC with wide latitude over the conciliation process”
but does not mean “Congress has . . . left everything to the
Commission.” Mach Mining, 575 U.S. at 488. Specifically,
ARMSTRONG V. REYNOLDS 35
the EEOC cannot “decline[] to make any attempt to
conciliate.” Id. (emphasis added). Similarly here, the wide
latitude the statute provides the Administrator to determine
the scope of investigation does not mean that he can entirely
decline to investigate.
As a general matter, we do not construe statutes in ways
that would raise serious doubts as to their constitutionality.
See Zadvydas v. Davis, 533 U.S. 678, 689 (2001) (citing
Crowell v. Benson, 285 U.S. 22, 62 (1932)). Were we to
hold that “such investigation . . . as the Administrator deems
appropriate” could include no investigation at all, the statute
would not provide constitutional process for the deprivation
of the protected property interest in filing suit if the statute
was violated. The Supreme Court has rejected the “bitter
with the sweet” approach to due process, which would have
allowed states to offer statutorily defined rights and
simultaneously limit the procedures employed to determine
or restrict those rights to something below constitutionally
adequate process. Cleveland Bd. of Educ. v. Loudermill,
470 U.S. 532, 541 (1985) (citing Arnett v. Kennedy, 416 U.S.
134, 167 (1974) (Powell, J., concurring in part and
concurring in result in part)). “While the legislature may
elect not to confer a property interest . . . , it may not
constitutionally authorize the deprivation of such an interest,
once conferred, without appropriate procedural safeguards.”
Arnett, 416 U.S. at 167 (Powell, J., concurring in part and
concurring in result in part). We decline to adopt
Defendants’ construction of § 618.445(3), which would—
contrary to the text of the statute—always allow the
Administrator to conduct no investigation before
determining that a petitioner was not entitled to an action
being brought on her behalf.
36 ARMSTRONG V. REYNOLDS
In other words, although some complaints may be
facially meritless and therefore not warrant an investigation,
the Administrator must undertake some investigation in
cases involving facially meritorious complaints. And the
requisites of pre-deprivation process should focus on
safeguards ensuring that facially meritorious complaints are
thoroughly investigated; one protection, for example, might
be requiring NOSHA to explain any failure to investigate.
(4) Having determined that the Nevada statute provides
a property interest in some investigation and in an action
brought on behalf of an employee if the agency concludes
that the complaint is merited, we finally turn to whether
Armstrong has alleged that she was deprived of this interest
without due process. “It is axiomatic that due process ‘is
flexible and calls for such procedural protections as the
particular situation demands.’” Greenholtz v. Inmates of
Neb. Penal & Corr. Complex, 442 U.S. 1, 12 (1979) (quoting
Morrissey v. Brewer, 408 U.S. 471, 481 (1972)). But we
need not determine at this stage what level of procedural
safeguards are constitutionally required for Nevada
whistleblower complainants generally. Armstrong’s
complaint plausibly alleges that the process she received was
essentially nonexistent and so constitutionally deficient.
First, Armstrong alleges that NOSHA never required
ENTA to provide any documentation supporting her
termination, and therefore never had any grounds on which
to make the determination—required by Nevada law—as to
whether the provisions of § 618.445(1) were violated.
Second, Armstrong contends that she did not receive a
decision from an impartial decisionmaker, as Pellegrini,
whose actions alerted ENTA to Armstrong’s whistleblowing
and, Armstrong maintains, led to much of the retaliation she
experienced, was involved throughout the process.
ARMSTRONG V. REYNOLDS 37
Pellegrini, Armstrong suggests, had reason to cover up the
retaliation that ensued because of her mistake, and so to
assist ENTA in denying a retaliatory motive. Armstrong
also contends that NOSHA never provided her with notice
of a settlement offer from ENTA, an action that undercut
Armstrong’s interest in some recovery while also
undermining the government’s interest in efficiency.
Finally, Armstrong alleges NOSHA withheld documents
pertinent to her case even after the case was closed. These
contentions support an inference that Armstrong did not
receive a fundamentally fair investigation before NOSHA
closed her case. 3
Defendants contest Armstrong’s account of the
procedural deficits Armstrong alleges—whether there was
any factual investigation of ENTA’s basis for discharge,
whether there was an impartial decisionmaker, and whether
Armstrong had an opportunity to respond to ENTA’s
position. But on a motion to dismiss we construe the
complaint’s allegations of material fact in the light most
favorable to the nonmoving party. Knievel, 393 F.3d
at 1072. So a dispute on the factual merits cannot affect our
resolution of this motion to dismiss. If, upon further
proceedings, Defendants establish that Armstrong was
afforded more process than she alleges, the district court will
need to determine in the first instance “what process the
State provided, and whether it was constitutionally
adequate.” Zinermon v. Burch, 494 U.S. 113, 126 (1990).
****
3
We express no view at this stage of the litigation as to whether fair
post-deprivation procedures alone would be constitutionally sufficient
without adequate pre-deprivation process.
38 ARMSTRONG V. REYNOLDS
In sum, the district court erred in holding that Armstrong
did not have a property right in the investigation of her
whistleblowing complaint. And Armstrong plausibly
alleged in the FAC that NOSHA deprived her of procedural
due process with regard to protecting that right.
III.
The district court dismissed Armstrong’s substantive due
process claim with prejudice, on the basis that Armstrong’s
private employment meant that she was unable to “establish
a protected property interest in her job for substantive due
process purposes.” We have determined that, with respect
to her procedural due process claim, Armstrong
demonstrated a protected property interest in an
investigation and to some degree, in continued employment.
But, albeit on a different basis, we agree with the district
court’s conclusion that Armstrong has not sufficiently
alleged a substantive due process claim.
“[P]roperty interests are protected by procedural due
process even though the interest is derived from state law
rather than the Constitution, [but] substantive due process
rights are created only by the Constitution.” Regents of
Univ. of Mich. v. Ewing, 474 U.S. 214, 229 (1985) (Powell,
J., concurring) (citing Roth, 408 U.S. at 577 (1972)). In
cases involving employment, “[w]e have held that a plaintiff
can make out a substantive due process claim if she is unable
to pursue an occupation and this inability is caused by
government actions that were arbitrary and lacking a rational
basis.” Engquist v. Or. Dep’t of Agric., 478 F.3d 985, 997
(9th Cir. 2007), aff’d on other grounds, 553 U.S. 591 (2008).
This substantive due process protection is based on a liberty
interest in an occupation, id., and “protects the right to
pursue an entire profession, and not the right to pursue a
particular job.” Id. at 998.
ARMSTRONG V. REYNOLDS 39
Engquist addressed for the first time the question
whether a substantive due process claim could succeed
against a public employer for actions that precluded pursuing
a particular occupation in the future. Id. In holding that such
a claim could be valid, Engquist analogized to a larger body
of case law concerning legislative action that restricted
membership in certain professions. See, e.g., Dittman v.
California, 191 F.3d 1020, 1029 (9th Cir. 1999). But
Engquist expressly limited substantive due process claims
against public employers to “extreme cases, such as a
‘government blacklist, which when circulated or otherwise
publicized to prospective employers effectively excludes the
blacklisted individual from his occupation, much as if the
government had yanked the license of an individual in an
occupation that requires licensure.’” Engquist, 478 F.3d
at 997–98 (quoting Olivieri v. Rodriguez, 122 F.3d 406, 408
(7th Cir. 1997)). Engquist reasoned that “[s]uch a
governmental act would threaten the same right as a
legislative action that effectively banned a person from a
profession, and thus calls for the same level of constitutional
protection.” Id. at 998.
Neither situation hypothesized in Engquist is directly
analogous to Armstrong’s contention that government actors
interfered with her ability to pursue private employment in
her field. But two cases decided before Engquist indicate
that government interference short of the Engquist
hypotheticals can support a plausible substantive due
process claim.
Lebbos v. Judges of Superior Ct., 883 F.2d 810 (9th Cir.
1989), held that a plaintiff alleged a valid substantive due
process claim where she contended that defendants
“deprived her of the ability to practice law” by confiscating
her mail and disrupting her financial transactions. Id. at 818.
40 ARMSTRONG V. REYNOLDS
And Benigni v. City of Hemet, 879 F.2d 473 (9th Cir. 1988),
upheld a jury’s verdict in the plaintiff’s favor on a due
process claim in which the plaintiff alleged that police
officers harassed the customers of his restaurant and bar,
intending to force him out of business. Benigni held that the
evidence before the jury—which included testimony that the
police engaged in five or six bar checks a night; followed,
ticketed, and arrested customers; and parked across the street
all evening—was sufficient to make out a substantive due
process claim for governmental interference in pursuing a
livelihood. Id. at 478.
Neither Lebbos nor Benigni articulated a general
standard for the level of government interference in private
employment needed to plausibly allege a substantive due
process violation. But both cases align with the overall
framework set forth in Engquist, limiting substantive due
process claims to extreme cases involving conduct
analogous to a prohibition on working in an entire profession
or in running legitimate businesses. Engquist, 478 F.3d
at 997–98. Without access to mail or the ability to conduct
financial transactions, Lebbos plausibly alleged that she was
unable to effectively practice law. Lebbos, 883 F.2d at 818.
The excessive and unreasonable police actions endured by
Benigni were deliberately designed to force him out of
business. Benigni, 879 F.2d at 478. The challenged
government actions in both cases involved extreme conduct
that had the same practical effect as if the government had
revoked Lebbos’s license to practice law or Benigni’s
license to operate a bar.
In contrast, Armstrong has not plausibly alleged that she
is unable to pursue an entire occupation due to Defendant’s
actions. Her complaint alleged that those actions caused “a
loss of 13 years of future employment, . . . loss of a clean
ARMSTRONG V. REYNOLDS 41
employment file, and loss of a neutral recommendation to
possible future employers.” But the complaint did not allege
any facts supporting the calculation of 13 years of lost future
employment, or otherwise suggest that Defendants’ actions
entirely precluded Armstrong’s ability to work as a human
resources professional elsewhere.
The district court denied Armstrong leave to amend the
substantive due process claim in her FAC, “because
amendment would be futile.” The district court did not
abuse its discretion in doing so.
In her briefs in this appeal, Armstrong contends that her
substantive due process claim is supported by her July 2019
declaration, in which she avers that Dr. Becker, the senior
partner of ENTA, “contacted my physician and my
pharmacy and attempted to black ball me throughout the
industry making further employment in my chosen field
impossible.” She also cites her proposed second amended
complaint, which included an allegation that Defendants’
actions “also resulted in damage to [Armstrong’s] standing
in the community and the possible loss of all future
employment in her chosen profession. [She] has not been
able to work since the denial of her rights to an appropriate
investigation by the Defendants of her claims against
ENTA.” 4 But neither document alleges facts showing that
the Defendants participated in causing, intended to cause, or
could reasonably foresee that their actions would cause a
private employer to “attempt[] to black ball [Armstrong]
throughout the industry.” Nothing in the second amended
4
The magistrate judge recommended that Armstrong’s substantive
due process claim in the proposed second amended complaint be denied
on the basis that the claim had been dismissed with prejudice, a
recommendation adopted by the district court.
42 ARMSTRONG V. REYNOLDS
complaint or Armstrong’s later-filed affidavit includes
allegations of Defendants’ conduct rising to the level of a
government blacklist or the revocation of a license to
practice a particular profession.
Accordingly, we hold that the district court did not err in
dismissing Armstrong’s substantive Due Process claim and
denying Armstrong leave to amend her complaint.
IV.
On appeal, Armstrong is pursuing her NIED claim only
against Pellegrini, for negligently copying ENTA on the
letter acknowledging the withdrawal of Armstrong’s claims
and falsely claiming that she had been required to do so.
Nevada law, an NIED claim by a direct victim has the same
elements as an intentional infliction of emotional distress
(IIED) claim, except that the plaintiff need only show that
the acts causing distress were committed negligently. 5 See
Abrams v. Sanson, 136 Nev. 83, 92 (2020). The elements of
IIED are: “(1) extreme and outrageous conduct with either
the intention of, or reckless disregard for, causing emotional
distress, (2) the plaintiff’s having suffered severe or extreme
5
Federal district courts in Nevada have often read Shoen v. Amerco,
Inc., 111 Nev. 735, 748 (1995), as differentiating between negligence
claims with emotional damages—available to direct victims—and NIED
claims—available only to bystanders. E.g., Ballentine v. Las Vegas
Metro. Police Dep’t, No. 2:14-cv-01584-APG-GWF, 2016 WL 950920,
at *4 (D. Nev. Mar. 7, 2016) (listing district court opinions so holding
and describing one as “explaining the Nevada Supreme Court’s holding
in Shoen”). But Abrams v. Sanson, 136 Nev. 83 (2020), recently
described Shoen as “allowing for negligent infliction of emotional
distress if the acts arising under intentional infliction of emotional
distress were committed negligently.” Id. at 92. We are bound by
decisions of the Nevada Supreme Court interpreting Nevada law. See
All. for Prop. Rts. & Fiscal Resp., 742 F.3d at 1102.
ARMSTRONG V. REYNOLDS 43
emotional distress and (3) actual or proximate causation.”
Star v. Rabello, 97 Nev. 124, 125 (1981). For NIED claims
brought for negligent actions committed directly against a
plaintiff, “either a physical impact must have occurred or . . .
proof of serious emotional distress causing physical injury
or illness must be presented.” Barmettler v. Reno Air, Inc.,
114 Nev. 441, 448 (1998) (internal quotation marks
omitted).
The district court did not address the substance of
Plaintiffs’ NIED claim, instead holding that Defendants
were immune from Armstrong’s state law negligence claims,
including NIED, under Nevada’s discretionary function
immunity statute. Nev. Rev. Stat. § 41.032(2). In this
appeal, Defendants similarly contend only that Armstrong’s
NIED claim is barred by discretionary function immunity. It
is not.
Nevada has generally waived its state sovereign
immunity. Nev. Rev. Stat. § 41.031(1). But Nevada retains
immunity for officers or employees of the state for actions
“[b]ased upon the exercise or performance or the failure to
exercise or perform a discretionary function or duty . . .
whether or not the discretion involved is abused.” Id.§ 41.032(2). In determining whether an act is protected by
the discretionary function statute, Nevada has adopted the
Berkovitz-Gaubert test, articulated by the Supreme Court in
the context of analyzing the Federal Tort Claims Act’s
discretionary function exception. Martinez v. Maruszczak,
123 Nev. 433, 446 (2007); see Berkovitz v. United States,
486 U.S. 531, 536–37 (1988); United States v. Gaubert,
499 U.S. 315, 322 (1991). The Berkovitz-Gaubert test
involves a two-step analysis: “to fall within the scope of
discretionary-act immunity, a decision must (1) involve an
element of individual judgment or choice and (2) be based
44 ARMSTRONG V. REYNOLDS
on considerations of social, economic, or political policy.”
Martinez, 123 Nev. 433, at 446–47. Gaubert further
explained that “[t]he focus of the inquiry is not on the agent’s
subjective intent in exercising the discretion conferred by
statute or regulation, but on the nature of the actions taken
and on whether they are susceptible to policy analysis.”
499 U.S. at 325. “Decisions at all levels of government,
including frequent or routine decisions, may be protected by
discretionary-act immunity, if the decisions require analysis
of government policy concerns.” Martinez, 123 Nev. at 447.
We have emphasized that “before turning to Berkovitz’s
two-step inquiry, we must first identify Plaintiffs’ ‘specific
allegations of agency wrongdoing.’” Young v. United States,
769 F.3d 1047, 1053 (9th Cir. 2014) (citing Berkovitz,
486 U.S. at 540). “[T]he precise action the government took
or failed to take (that is, how it is alleged to have been
negligent) is a necessary predicate to determining whether
the government had discretion to take that action.” Id.
at 1054.
Here, the district court broadly analyzed the
discretionary nature of Defendants’ “choices in how to
pursue and close [the] investigation.” But Armstrong’s
NIED claim against Pellegrini is premised not on the overall
manner in which the investigation was pursued and closed,
but on one specific aspect of Pelligrini’s actions: the FAC
alleges that Pellegrini “negligently made ENTA aware that
Armstrong had filed a whistleblower complaint,” “despite
investigator’s Ybarra’s log entry of June 16, 2014,” which
specified that Armstrong’s decision to withdraw was to
protect herself from retaliation because “her employer had
not been notified of the complaint.” (Capitalization
simplified.) Armstrong alleges that Pellegrini’s actions
contributed to her becoming “physically ill and mentally
ARMSTRONG V. REYNOLDS 45
destroyed,” and that the emotional distress of the subsequent
retaliation resulted in Armstrong’s hospitalization and
surgery the day she returned to work.
On the first prong of the Berkovitz-Gaubert test, we
conclude that Pellegrini’s specific decision to copy ENTA
on the letter she sent to Armstrong did “involve an element
of individual judgment or choice.” Martinez, 123 Nev. at
446–47. The 2011 OSHA manual, which was in effect at the
time, 6 gives little discretion to investigators when a
complainant withdraws her complaint. “In cases where the
withdrawal request is made orally, the investigator must send
the complainant a letter” describing the rights being waived,
and upon supervisor approval “a second letter must be sent
to the complainant.” (Emphases added.) Although other
sections mandate letters be sent “to the complainant, with a
copy to the respondent,” the withdrawal section makes no
mention of the employer. But the withdrawal section directs
investigators to “sample letters at the end of this chapter.”
The Sample Withdrawal Approval Letter copies the
Respondent in a cc: line, while explaining that “[a] letter of
this type must be sent to the complainant”—again, despite
the cc: line, not mentioning the respondent.
A “sample” letter does not dictate the content or form of
the letter or mandate that its structure be followed when it
does not match the circumstances. The rest of the OSHA
manual, which does read as mandatory, directs sending the
withdrawal letter to the complainant, with no mention of the
6
This OSHA manual is referred to in the complaint, is central to
determining discretionary function immunity, and is cited by both parties
without questioning the authenticity of the attached document. We
therefore look to the manual as a document on which the complaint
necessarily relies. See Marder, 450 F.3d at 448.
46 ARMSTRONG V. REYNOLDS
respondent. At best—and we shall so assume, without
deciding—the combination of the manual’s text and the
inclusion of the sample letter allows for the exercise of
judgment on whether to include the cc: line or not,
depending on whether doing so fits the circumstances.
Turning to the second prong of the Berkovitz-Gaubert
test, however, the specific discretionary action of copying
ENTA on the withdrawal letter was not susceptible to
“considerations of social, economic, or political policy.”
Martinez, 123 Nev. at 446. “[C]ertain acts, although
discretionary, do not fall within the ambit of discretionary-
act immunity because they involve negligence unrelated to
any plausible policy objectives.” Butler ex rel. Biller v.
Bayer, 123 Nev. 450, 466 (2007) (internal quotation marks
omitted). Although “the discretionary function exception
protects agency decisions concerning the scope and manner
in which it conducts an investigation so long as the agency
does not violate a mandatory directive,” Vickers v. United
States, 228 F.3d 944, 951 (9th Cir. 2000) (emphasis added),
that protection is based on the political and social judgments
that investigators must make as they investigate whether
legal violations have occurred. Cf. Sabow v. United States,
93 F.3d 1445, 1454 (9th Cir. 1996). The narrow decision to
copy ENTA on a letter acknowledging the withdrawal of
Armstrong’s complaint, by contrast, was made after her first
complaint was closed and before her last complaint was filed
or any investigation was conducted, and did not involve such
considerations.
Outside the investigation context, Butler ex rel. Biller v.
Bayer explicates the limits of the second prong of the
Berkovitz-Gaubert discretionary function analysis under
Nevada law. 123 Nev. at 466. Butler concerned the actions
of prison officials who left a quadriplegic parolee at an
ARMSTRONG V. REYNOLDS 47
unsuitable residence. Id. at 455–57. The Nevada Supreme
Court held that those actions were discretionary for the
purpose of Butler’s state law negligence claims, but not
subject to considerations of policy and so outside the
discretionary function exception. Id. at 466–67. Butler
explained that “several decisions, including the decision to
parole Butler and the formulation of any overarching prison
policies for inmate release are policy decisions that require
analysis of multiple social, economic, efficiency, and
planning concerns,” but “physically releasing Butler,
including the decision to leave Butler at Woods’ residence
despite the obvious lack of preparation” did not involve
political or economic considerations, and so was not within
discretionary function immunity. Id. at 466–67. Similarly,
the formulation of policies in the NOSHA manual was
subject to social, political, and economic analysis, and the
manner of carrying out an investigation could be as well, but
we see no basis for concluding—and Pellegrini has provided
none—that the allegedly negligent decision to copy ENTA
when sending the withdrawal letter involved such policy
considerations.
Pellegrini argues that “[t]he policy behind sending the
withdrawal letter is to let the whistleblower know, in writing,
that they still have rights although they have withdrawn the
claim,” and that the letter “lets [the whistleblower’s]
employer know that if they retaliate against the employe[e]
based on her whistleblowing activities, [NOSHA] is there to
advise her.” But the content of the letter is not the decision
at issue here. Even if it was, the content, although not the
exact language and form of the letter, is mandated by the
Manual. And although it might be a beneficial policy to let
employers know that employees are protected from
retaliation, the letter informed ENTA of whistleblowing
activity—filing the complaint—of which it was previously
48 ARMSTRONG V. REYNOLDS
unaware, without saying anything to warn against retaliation
based on that activity. If anything, copying the letter to
ENTA was likely to lead to more retaliation, not less—
exactly what Armstrong alleges.
In short, Pellegrini has offered no cognizable social,
political, or economic reason for the specific act of copying
ENTA on the template letter to Armstrong. The district
court therefore erred in concluding that Armstrong’s NIED
claim was subject to discretionary function immunity. As
Pellegrini has not argued that the dismissal can be affirmed
on any other ground, we do not consider the adequacy
otherwise of the NIED allegation in the complaint but simply
reverse the dismissal of Armstrong’s NIED claim.
V.
Finally, Armstrong argues that the district court erred in
dismissing her claim for civil conspiracy. “In Nevada, an
actionable civil conspiracy is defined as ‘a combination of
two or more persons, who by some concerted action, intend
to accomplish some unlawful objective for the purpose of
harming another which results in damage.’” Flowers v.
Carville, 266 F. Supp. 2d 1245, 1249 (D. Nev. 2003)
(quoting Collins v. Union Fed. Sav. & Loan Ass’n, 99 Nev.
284, 303 (1983)). 7 The FAC alleges that “Defendants
conspired and agreed among themselves in their individual
capacities and as persons in authority in the public agencies”
7
The Nevada Supreme Court does not appear to have squarely
addressed whether a civil conspiracy claim must be predicated on an
underlying state tort. Cf. Sprewell v. Golden State Warriors, 266 F.3d
979, 992 (9th Cir. 2001) (discussing the requirements of civil conspiracy
in California law). As both parties assume that a constitutional violation
can be the unlawful objective in a civil conspiracy claim, we likewise
assume without deciding that such a claim is valid under Nevada law.
ARMSTRONG V. REYNOLDS 49
to “deny due process to the Plaintiff, and to commit other
wrongs as outlined above and below.”
The district court dismissed Armstrong’s civil
conspiracy claim on the basis that it was barred by the
intracorporate conspiracy doctrine. Under that doctrine,
“[a]gents and employees of a corporation cannot conspire
with their corporate principal or employer where they act in
their official capacities on behalf of the corporation and not
as individuals for their individual advantage.” Collins,
99 Nev. at 303. In Collins, the Nevada Supreme Court
applied the intracorporate conspiracy doctrine to civil
conspiracy, citing similar application of the doctrine to state
civil conspiracy actions in Oregon and California. 8 Id.
Armstrong concedes that Defendants are part of the same
agency, as Nevada’s OSHA office is within the Division of
Industrial Relations, which is within the Department of
Business and Industry. Nev. Rev. Stat. § 618.235. But
Armstrong contends that she adequately pleaded a
conspiracy between Defendants and ENTA, so that the
intracorporate conspiracy doctrine is inapplicable. We
disagree. The FAC focused on a conspiracy among the
Defendants. It does not allege sufficient facts to support a
conspiracy involving ENTA.
8
Armstrong does not challenge the district court’s conclusion that
the intracorporate conspiracy doctrine would apply to government
employees sued in their individual capacities. We therefore assume
without deciding that Nevada would apply the doctrine to government
defendants. We note that in the context of federal conspiracy claims, this
court has expressly reserved the question “whether individual members
of a single government entity can form a ‘conspiracy’ within the meaning
of section 1985.” Portman, 995 F.2d at 910.
50 ARMSTRONG V. REYNOLDS
“When pleading a claim for civil conspiracy, a plaintiff
must plead with particular specificity as to ‘the manner in
which a defendant joined in the conspiracy and how he
participated in it.’” Century Sur. Co. v. Prince, 265 F. Supp.
3d 1182, 1194 (D. Nev. 2017), aff’d, 782 F. App’x 553 (9th
Cir. 2019) (quoting Arroyo v. Wheat, 591 F. Supp. 141, 144
(D. Nev. 1984)). The FAC alleged only that ENTA “did
everything it could to block, deny, delay, and buy all the time
needed to run out the clock” and “this delay was allowed,
encouraged, aided, and abetted by the Defendants.” The
FAC also alleged that NOSHA kept ENTA in the loop on
the progress of the investigation while stonewalling
Armstrong and her representative.
These contentions, even if assumed true, do not include
any allegations as to whether and when ENTA and NOSHA
joined in a specific agreement to deny Armstrong her
procedural due process rights. Allowing, encouraging,
aiding, and abetting—which is what NOSHA is alleged to
have done—is insufficient to support a plausible allegation
that ENTA and Defendants engaged in a concerted action
with an intent to accomplish an agreed-upon unlawful
objective. See Flowers, 266 F. Supp. 2d at 1249.
The district court therefore did not err in dismissing
Armstrong’s civil conspiracy claim as barred by the
intracorporate conspiracy doctrine. But we cannot agree
with the district court’s denial of leave to amend the
complaint as to the conspiracy claim. Again, “[a]s a general
rule, ‘[d]ismissal without leave to amend is improper unless
it is clear, upon de novo review, that the complaint could not
be saved by any amendment.’” Sonoma Cnty. Ass’n of
Retired Emps., 708 F.3d at 1118 (second alteration in
original) (quoting Polich v. Burlington N., Inc., 942 F.2d
1467, 1472 (9th Cir. 1991)). Armstrong’s briefs to the
ARMSTRONG V. REYNOLDS 51
district court, although not her complaint, include
contentions that ENTA “was also part of the conspiracy,”
and that Defendants joined together “with ENTA” to block
NOSHA’s investigation. And the extra-complaint materials
offered by Armstrong include a declaration by Rick Lucas
stating his “belie[f]” that Armstrong’s firing was based on
“direct coordination” between the Defendants and ENTA.
These bare allegations may not be sufficient to support a
civil conspiracy claim, but it is not clear Armstrong would
be unable to amend her complaint plausibly to allege facts
underlying those conclusions. If she can allege “direct
coordination” between ENTA and the Defendants for an
unlawful objective to harm her, it would be possible for her
state a claim for civil conspiracy, requiring leave to amend.
See Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1108
(9th Cir. 2003).
Accordingly, we hold that the district court’s dismissal
of Armstrong’s civil conspiracy claim was proper, but the
district court abused its discretion in dismissing without
leave to amend her complaint.
The judgment of the district court is REVERSED IN
PART and AFFIRMED IN PART. We REMAND for
further proceedings consistent with this opinion. Costs on
appeal are award to Armstrong.