Dowie v. Fleishman-Hillard Inc.

FILED
NOT FOR PUBLICATION MAR 18 2011
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
DOUGLAS R. DOWIE, No. 07-56494
Plaintiff - Appellant, D.C. No. CV-07-01746-GAF
v.
MEMORANDUM *
FLEISHMAN-HILLARD INC., a
corporation and OMNICOM GROUP,
INC., a corporation,
Defendants - Appellees.
Appeal from the United States District Court
for the Central District of California
Gary A. Feess, District Judge, Presiding
Argued March 2, 2009
Submitted March 8, 2011
Pasadena, California
Before: GOODWIN, BEEZER, and PAEZ, Circuit Judges.
Douglas Dowie appeals the district court’s dismissal of his complaint against
his former employer Fleishman-Hillard, Inc. (“FH”) and Omnicom Group, Inc.
(“Omnicom”), FH’s parent corporation. Dowie seeks indemnification for legal
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
defense fees and costs incurred following his indictment on conspiracy and wire
fraud charges, which stemmed from his involvement with fraudulent billings
submitted to certain FH clients. Although FH paid for his legal defense up to the
time of his indictment, Dowie argues he was owed ongoing indemnification of his
defense costs. Dowie’s complaint alleges the following claims: (1) that FH was
required to cover all of his defense costs under California Labor Code § 2802; (2)
that he is entitled to equitable indemnification; (3) that FH fraudulently concealed
that it would stop funding Dowie’s legal defense if he were indicted; (4) that he
detrimentally relied on FH’s promise to pay for his ongoing legal representation;
and (5) that FH breached a written contract requiring it to provide ongoing defense
funds.1
A jury convicted Dowie of conspiracy and wire fraud under 18 U.S.C. § 371and § 1343.2 Subsequently, the district court dismissed his civil claims for
indemnification under Rule12(b)(6) of the Federal Rules of Civil Procedure. We
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Dowie’s complaint also alleged a claim for breach of an oral contract, but
he has not appealed the district court’s dismissal of this claim.
2
We recently affirmed Dowie’s criminal conviction. See United States v.
Dowie, No. 07-50069, 2010 U.S. App. Lexis 26863 (9th Cir. Dec. 2, 2010)
(Unpub. Disp.). Submission of this appeal was deferred pending resolution of
Dowie’s criminal appeal.
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review the district court’s dismissal de novo, and may affirm on any basis fairly
supported by the record. Corrie v. Caterpillar, Inc., 503 F.3d 974, 979 (9th Cir.
2007). We affirm. Because the parties are familiar with the facts and procedural
history of the case, we do not recite them here except as necessary to our decision.
First, the district court did not err in dismissing Dowie claim to
indemnification under California Labor Code § 2802. The statute requires an
employer to indemnify an employee for legal expenses incurred as a result of
lawful or unlawful work-related acts, unless the employee “believed them to be
unlawful.” C AL. L ABOR C ODE § 2802(a). Dowie’s claim under § 2802 fails as a
matter of law because his involvement with fraudulent billings to FH clients
resulted in his conviction for the specific intent crimes of conspiracy and wire
fraud. To find a defendant guilty of these charges, a jury must conclude that he
had the intent “to accomplish an illegal objective,” United States v. Boone, 951
F.2d 1526, 1543 (9th Cir. 1991), and “knowledge of its fraudulent nature,” United
States v. Ciccone, 219 F.3d 1078, 1084 (9th Cir. 2000).
While admitting that he was convicted of specific intent crimes, Dowie
nonetheless argues that he did not know he was committing the crimes for which
he was convicted. This argument is unavailing because the issue was necessarily
decided in his criminal case. See Teitelbaum Furs, Inc. v. Dominion Ins. Co., 58
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Cal.2d 601, 607 (1962) (holding that “any issue necessarily decided in a prior
criminal proceeding is conclusively determined as to the parties if it is involved in
a subsequent civil action”) (partially superceded by statute on other grounds as
stated in People v. Yartz, 37 Cal.4th 529, 539 (2005)). Therefore, Dowie’s claim
fails to satisfy the provision in § 2802 restricting indemnification where an
employee knew his conduct was unlawful.
Second, the district court did not err in dismissing Dowie’s claim to
equitable indemnification. Under California law, the restitutionary doctrine of
equitable indemnification “permit[s], in appropriate cases, a right of partial
indemnity, under which liability among multiple tortfeasors may be apportioned on
a comparative negligence basis.” Am. Motorcycle Ass’n v. Superior Court, 20
Cal.3d 578, 586–90 (1978) (superceded by statute on other grounds as stated in
Miller v. Stouffer, 9 Cal.App.4th 70, 82 (1992)); see also Western Steamship Lines,
Inc. v. San Pedro Peninsula Hospital, 8 Cal.4th 100, 108–10 (1994) (outlining the
development of the equitable indemnification doctrine in California negligence
law). The district court dismissed this claim, finding that the facts alleged could
not support the application of this equitable doctrine. We agree.
Dowie’s losses did not result from tort liability, nor was FH a co-defendant.
Dowie cites no case law—nor have we found a case—that has applied this
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equitable doctrine to losses directly incurred from a criminal prosecution. Even
were the doctrine to be applicable in this context, intentional actors are not entitled
to apportionment under California law. See Thomas v. Duggins Constr. Co., 139
Cal.App.4th 1105, 1111–13 (2006). Because Dowie was charged with and
convicted of specific intent crimes, his claim to equitable indemnification of
related defense costs is unsupported by California law.
Third, the district court did not err in dismissing Dowie’s claims of
fraudulent concealment and promissory estoppel because Dowie failed to identify
damages resulting from FH’s alleged representations. To state a claim for
fraudulent concealment or misrepresentation under California law, a plaintiff must
plausibly allege damages resulting from a false representation, concealment, or
nondisclosure of fact. See Robinson Helicopter Co. v. Dana Corp., 34 Cal.4th 979,
990 (2004). Similarly, to support a claim for promissory estoppel under California
law, a plaintiff must allege an injury resulting from his reliance on a defendant’s
promise. See U.S. Ecology, Inc. v. California, 129 Cal.App.4th 887, 901 (2005).
As found by the district court, these claims fail because Dowie did not
plausibly allege damages resulting from FH’s alleged promise to pay all of his
legal fees. FH paid Dowie’s legal fees up to the point of his indictment, at which
point FH notified Dowie that it would no longer do so. Despite Dowie’s assertion
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that he would have initially retained less-expensive counsel had he known FH
would ultimately stop funding his defense, Dowie could have selected different
counsel after his indictment or even asked the district court to appoint counsel.
Instead, Dowie benefitted from FH’s payment of his pre-indictment legal fees and
then chose to continue to be represented by the same private firm throughout his
trial, knowing that FH would not pay for his post-indictment legal fees. Dowie’s
decision to continue to be represented by this firm—incurring relatively high legal
fees as a result—did not plausibly result from a non-disclosure by FH or Dowie’s
reliance on any promise identified in the complaint. Accordingly, these claims fail.
Finally, the district court did not err in dismissing Dowie’s claim for breach
of contract. Dowie’s claim is based on the portion of Omnicom’s bylaws related to
the corporation’s mandatory indemnification of third-party and derivative actions.
The plain terms of the bylaws, however, limit mandatory indemnification to
liabilities incurred by directors and officers of Omnicom. Despite Dowie’s
suggestion to the contrary, the bylaws cannot reasonably be read to expand
Omnicom’s mandatory indemnification duties beyond this limited group. See
Hope Nat’l Med. Ctr. v. Genentech, Inc., 43 Cal.4th 375, 395 (2008) (stating that
contract interpretation is a question of law for the court “when it is based on the
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words of the instrument alone”). Dowie does not allege that he was ever a director
or officer of Omnicom. Accordingly, this claim fails.
AFFIRMED.
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