# Morgan v. DS Smith Holdings, Inc.

> District Court, S.D. Ohio · September 26, 2023

URL: https://www.frixlaw.com/law-library/cases/10383392

## Case

- **Court:** District Court, S.D. Ohio
- **Decided:** September 26, 2023
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION - CINCINNATI
JAMES W. MORGAN, : Case No. 1:21-cv-481
Plaintiff, : Judge Matthew W. McFarland

INTERSTATE RESOURCES, INC., :
Defendant.

ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT
(Doc. 45)

This matter is before the Court on Defendant Interstate Resources, Inc. (“IRI”)’s
Motion for Summary Judgment (Doc. 45). Plaintiff James W. Morgan filed a
Memorandum in Opposition to the motion (Doc. 53), to which Interstate filed a Reply in
Support (Doc. 54). Thus, this matter is ripe for the Court’s review. For the reasons below,
IRI’s Motion for Summary Judgment (Doc. 45) is GRANTED.!
FACTS
Morgan, an American citizen born in 1958, entered into an Employment
Agreement with IRI in 2006 to be the company’s Executive Vice President. (Employment
Agreement, Doc. 1-2, Pg. ID 12-23; Compl., Doc. 1, { 9.) The Employment Agreement
states that it will “be executed, construed and performed in accordance with the laws of

1 The parties request oral arguments on IRI’s motion for summary judgment. (See Motion for Summary
Judgment, Doc. 45, Pg. ID 4014; Response in Opp., Doc. 53, Pg. ID 4224.) The undersigned finds that oral
arguments are not “essential to the fair resolution of the” motion before the Court. See S.D. Ohio Civ. R.
7.1(b)(2). Accordingly, the parties’ request is denied.

the Commonwealth of Virginia.” (Employment Agreement, Doc. 1-2, Pg. ID 23.)
In August 2017, DS Smith PLC acquired IRI and assumed Morgan’s Employment
Agreement. (Compl., Doc. 1, § 14; Morgan Dep., Doc. 27, Pg. ID 716; Offer Letter, Doc.
27-1, Pg. ID 1054-59.) At the time of the acquisition, DS Smith’s Group Chief Executive,
Miles Roberts, chose Morgan to become the Managing Director of the North American
branch of the company. (Id.)
I. Benefits of Morgan’s New Role
The Managing Director position included eligibility in a Deferred Share Bonus
Plan (“DSBP”) and a Performance Share Plan (“PSP”). (Offer Letter, Doc. 27-1, Pg. ID
1054-59.) These plans allocate certain awards that would become available to Morgan if
he remained with the company for at least three years after accepting the Managing
Director position. (Id.) If Morgan left the company before the three-year requirement was
met, those awards could still become available if he were deemed a “Good Leaver.”
(DSBP, Doc. 27-1, Pg. ID 1091.)
An employee could be considered a Good Leaver for various reasons, including
through “retirement with the agreement of his employer and the [Remuneration]
Committee” or for “any other reason, if the [Remuneration] Committee so decides.”
(DSBP, Doc. 27-1, Pg. ID 1091.) If an employee was terminated for under-performance,
the Remuneration Committee was not required to deem the employee a Good Leaver.
(Termination Guidance, Doc. 27-11, Pg. ID 1144.)
In October 2017, Morgan agreed to a change-in-control amendment to his
Employment Agreement. (Amendment, Doc. 27-1, Pg. ID 1052.) This amendment stated

that, in the event of a change in control of the company, Morgan could be eligible for a
severance payment if he (1) continued to work for the new owners for three months, if
requested by the new owners, and (2) voluntarily terminated his employment by August
25, 2019. (Id.)
II. Morgan’s Performance as Managing Director
As the Managing Director, Morgan acted as the head manager of the company’s
North American Packing and Paper (“NAPP”) business. (Morgan Dep., Doc. 27, Pg. ID
716, 725, 775-76.) As a part of this position, Morgan helped create annual and monthly
financial forecasts for NAPP. (Id. at Pg. ID 851-54.) In 2017 and 2018, NAAP met its
forecasts as predicted. (Id.) In 2019, however, NAPP began falling short. (See Financial
Performance Email, Doc. 27-1, Pg. ID 1165-66.)
At the beginning of 2019, NAPP was about $3.5 million below its forecasted
performance level. (Financial Performance Email, Doc. 27-1, Pg. ID 1165-66.) By April
2019, Roberts notified Morgan that he saw “a drop on over [$4 million] in the month,”
which was “a problem.” (Roberts’ Text, Doc. 44-1, Pg. ID 3968.) In June 2019, NAPP
missed its forecast by $1.3 million. (Summer Email Correspondence, Doc. 27-1, Pg. ID
1170.) By July 2019, NAPP’s forecast for earnings before interest, taxes, and amortization
(“EBTA”) had declined by $6.5 million. (Id.)
Still, the company as a whole continued to perform well. And, on July 2, 2019,
Roberts awarded Morgan a bonus for the company’s 2018/2019 performance. (Bonus
Letter, Doc. 27-1, Pg. ID 1061.) In the bonus letter, Roberts noted the “significant year of
progress” in the company’s business. ([d.) Additionally, Roberts noted that “[t]he North

American business [] acquired in 2017 continue[d] to perform well.” (Id.)
On July 18, 2019, Morgan informed Roberts that he was considering retirement
and had concerns about his eligibility for the DSBP and PSP awards, as well as the
change-in-control severance payment. (Morgan Dep., Doc. 27, Pg. ID 729-30.) In response,
Roberts allegedly told Morgan that he had nothing to be concerned about, that Morgan
“was in their plans for the future,” that “they were happy with what was going on,” and
that Morgan should have “no concerns about a change in control.” (Id. at Pg. ID 731.)
Roberts denies ever making such statements. (Roberts Dep., Doc. 35, Pg. ID 2364.)
NAPP continually failed to meet its objectives for the 2018/2019 fiscal year, which
Morgan discussed in an email sent out to NAPP employees at the end of July.
(Performance Email, Doc. 27-1, Pg. ID 1168-69.) The email stated that “[w]hile there were

many individual and team successes, the overall outcome fell short of Budget and most
of our established targets.” (Id. at 1168.) Most notably, Morgan touched on the fact that
(1) “NAPP had a miss on EBITA (92.7% of Budget), which put the division below the 95%
threshold,” (2) “[p]ackaging had a material miss on EBITA (42.2% of budget), which was
far below the 95% threshold,” (3) “Mill Productivity was 92.7% of Budget, while our
ROACE was below the 95% threshold at 91.4% and 89%,” and (4) “[p]acking delivery in
FY 18/19 was consistency below budget throughout the year.” (Id.) The email noted some

success in NAPP, such as the “short paper position” which offset decline. (Id. at Pg. ID
1169.)
Morgan maintains that the market caused NAPP’s decline. (Morgan Dep., Doc. 27,
Pg. ID 868-87.) In Morgan’s estimation, decreasing paper prices, coupled with the US.

trade war with China, created the perfect storm for a troubled market. (Id.) Morgan also
maintains that the European branch of the company continued to “move paper into the
U.S. but would not take any back,” meaning that NAPP was left with large amounts of
paper with no one to sell it to. (Id. at Pg. ID 868.) Roberts agreed that, to some extent, the
market affected NAPP’s financial position. (Roberts Dep., Doc. 35, Pg. ID 2444-45.) But
Roberts also found that Morgan’s management style had some impact on NAPP’s
performance. (Id.)
So, at the end of July, Roberts sent one of the company’s packaging managers,
Thomas Jakobsen, to NAPP to act as an internal consultant. (Jakobsen Dep., Doc. 36, Pg.
ID 2611-12; 2620-22; Jakobsen Role Correspondence, Doc. 36-1 at Page ID 2751-53.)
Jakobsen was born in Denmark in 1969. (Jakobsen Dep., Doc. 36, Pg. ID 2556-57.)
Previously, in May 2019, Roberts had discussions with Jakobsen about a more long-term
role with NAPP, but Jakobsen found that a temporary consulting position aligned more
with his family situation. (Jakobsen Role Correspondence, Doc. 36-1 at Page ID 2751-53.)
On a previous occasion, Roberts had communicated his plans for the future of
NAPP to Jakobsen. (See Organization Chart, Doc. 41, Pg. ID 3588-89.) On May 10, 2019,
Roberts emailed two hand-drawn charts of NAPP’s organizational structure to Jakobsen.
(Id.) In the “current” chart, Roberts laid out NAPP’s management structure as a pyramid,
with Morgan at the top as “MD.” (Id. at Pg. ID 3589.) In the “future” chart, Roberts
divided out NAPP’s top management, separating out the “MD” role into two positions
for a “Managing Director of Paper” and a “Managing Director of Packaging.” (Id.)
Roberts made no more specific identifications for those roles. (Id.)

While consulting, Jakobsen observed a number of problems with NAPP. These
problems included “a complete lack of NAPP strategy and direction,” “little real buy-in
to DSS strategy [] - words but no real action,” “no structure and processes to drive
improvement in any function,” and “huge capability issues in top management.”
(Jakobsen Dep., Doc. 36, Pg. ID 2611-12, 2620-22, 2647; Jakobsen Notes, Doc. 36-1, Pg. ID
2776-77.) Jakobsen concluded that the “clear underlying problem” was “top
management.” (Id.) These observations were expanded upon in an official report released
that September. (Analysis Report, Doc. 36-1, Pg. ID 2778-822.)
On August 20, 2019, Jakobsen expressed his concerns to Roberts, who “was not
surprised.” (Jakobsen Text, Doc. 35-1, Pg. ID 2540.) Roberts found that NAPP’s
performance had “significantly deteriorated” and specifically communicated to Morgan
that “the [NAPP’s packaging] results were very poor.” (Roberts Dep., Doc. 35, Pg. ID
2443; July 27, 2019 Email, Doc. 27-1, Pg. ID 1172-73.) Roberts inquired with Morgan
whether there was any sort of correction plan to remedy NAPP’s financial downfall.
(Roberts Dep., Doc. 35, Pg. ID 2442-44.) After repeated inquiries, Roberts found that
Morgan had “no clear action plan.” (Id.) Though, other employees maintain that NAPP
had “detailed plans on how to improve.” (Nelson Dep., Doc. 32, Pg. ID 2004.)
In August, discussions of Morgan’s termination began. On August 28, 2019,
Roberts emailed the legal department about terminating Morgan. (Roberts Dep., Doc. 35,
Pg. ID 2414.) Around this time, another supervisor informed NAPP’s Chief Financial
Officer, Kevin Ledbetter, that Morgan would soon be let go. (Ledbetter Dep., Doc. 31, Pg.
ID 1854-55.) And, on October 6, 2019, Roberts officially terminated Morgan for his role in

NAPP’s poor performance. (Roberts Dep., Doc. 35, Pg. ID 2332, 2416-17.)
Morgan maintains that he was blindsided by his termination. (Morgan Dep., Doc.
27, Pg. ID 829-30, 861-62.) Before he was terminated, Morgan maintains that he never
spoke with Roberts about his performance and Roberts never gave any other indication
that Morgan was “in trouble.” (Id.) Roberts maintains that he had several conversations
with Morgan about NAPP’s “unacceptable” performance. (Roberts Dep., Doc. 35, Pg. ID
2331.)
Other American employees over the age of 60 were also being terminated around
this time. (Morgan Dep., Doc. 27, Pg. ID 725-937.) Among these employees included
Susan Newman from human resources, John Cristo, a regional general manager, and Al
Cantrell, a managing director of paper. (Id.)
Following Morgan’s termination, the company appointed Ledbetter as the interim
Managing Director of NAPP. (Appointment Email, Doc. 27-1, Pg. ID 1182-83.) In the
meantime, the company looked for possible replacements for the position. (Id.; Roberts
Dep., Doc. 35, Pg. ID 2327, 2419-20.) Roberts specifically had discussions with Jakobsen
about taking the role, but Jakobsen was not interested. (Roberts Dep., Doc. 35, Page ID
2391-98; 2456; Denial of Offer Email, Doc. 35-1, Page ID 2517-19.) Jakobsen understood
these discussions to be an offer for the Managing Director position, though Roberts
maintains these were merely conversations. ([d.) Ledbetter was later terminated with
Good Leaver status in 2022 and was replaced by American Jeff Jones, born in 1966.
(Ledbetter Dep., Doc. 42, Pg. ID 3738, 3770-71.)

LAW & ANALYSIS
I. Requests for Judicial Notice
Before turning to IRI’s motion for summary judgment, the Court will first address
the parties’ requests for judicial notice of certain facts.
Under Federal Rule of Evidence 201, the Court “may judicially notice a fact that is
not subject to reasonable dispute because it” is either “generally known within the trial
court’s jurisdiction” or it “can be accurately and readily determined from sources whose
accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b). But “[a] fact is not the
proper subject of judicial notice if the notice is sought for a purpose that is ‘not relevant
or necessary to resolve [the] action.’” Jones v. Prudential Sec., Inc., 534 F. Supp. 3d 839, 841
(E.D. Mich. 2021) (quoting Cece v. Wayne Cnty., 758 F. App’x 418, 425 (6th Cir. 2018)).
Ultimately, if a party requests judicial notice “and the court is supplied with the necessary
information,” then the court “must take judicial notice.” Fed. R. Evid. 201(c)(2).
First, IRI asks this Court to take judicial notice of (1) “IRI’s Annual Reports filed
with the Virginia Secretary of State from 2007 through 2019,” (2) “[d]Jocuments produced
by the U.S. Equal Employment Opportunity Commission concerning [] Morgan’s charge
of discrimination,” and (3) “[e]xcerpts of pages from DS Smith [PLC’s] 2010 Annual
Report.” (IRI’s Judicial Notice Request, Doc. 45-3, Pg. ID 4011.) IRI has supplied
supporting documents for each request (See Hill Aff., Doc. 44), and Morgan does not
oppose IRI’s request. (See Response in Opp., Doc. 53.) Accordingly, the Court finds it
appropriate to take judicial notice of these facts and grants IRI’s Request (Doc. 45-3).
Next, Morgan requests that this Court take judicial notice of Lienbenberg v. DS

Smith Packaging LTD., et al., No. 220786/2019, Judgment, (Employment Tribunal June 29,
2020), a judicial decision rendered by the United Kingdom’s Employment Tribunal in the
England and Wales jurisdiction. (Morgan’s Judicial Notice Request, Doc. 51.) This case
centers on a claim filed by a former DS Smith PLC employee. (See id.) Morgan requests
judicial notice of this case because it cites statements made by Roberts and another
employee that are “directly relevant to the issues in Morgan’s case.” (Plaintiff's Reply to
Defendant’s Objections, Doc. 57.) But these allegedly “relevant” facts only pertain to
behavioral issues of Jakobsen and his ultimate dismissal as a Good Leaver. (See Plaintiff's
Statement of Facts, Doc. 53-1.) As demonstrated below, these facts are “not relevant or
necessary to resolve [this] action.’” Cece, 758 F. App’x at 425. Moreover, Morgan has not
provided the Court with any “necessary information” that would mandate this Court to
take judicial notice of the facts in that case. See Fed. R. Evid. 201(b). Accordingly, the Court
will not take judicial notice of Lienbenberg v. DS Smith Packaging LTD., et al., No.
220786/ 2019, Judgment, (Employment Tribunal June 29, 2020). Morgan’s Request (Doc.
51) is denied.
II. Motion for Summary Judgment
The Court now turns to IRI’s Motion for Summary Judgment (Doc. 45). When there
is no genuine dispute as to any material fact and the moving party is entitled to judgment
as a matter of law, the district court shall grant summary judgment. Fed. R. Civ. P. 56(a).
The moving party has the burden to conclusively show that no genuine issue of material
fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Lansing Dairy, Inc. v. Espy, 39
F.3d 1339, 1347 (6th Cir. 1994). If the moving party meets that burden, then it becomes

the nonmoving party’s responsibility to point to specific facts showing that there is a
genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).
A court is under no obligation to search the record for genuine issues of material
fact. Betkerur v. Aultman Hosp. Ass'n, 78 F.3d 1079, 1087 (6th Cir. 1996). And a “mere
scintilla” of evidence in support of the nonmoving party’s position is not enough to avoid
summary judgment. Daniels v. Woodside, 396 F.3d 730, 734 (6th Cir. 2005). Rather, to
preclude summary judgment, the nonmoving party must put forward probative
evidence on which a jury could reasonably reach a verdict in that party’s favor. Anderson,
477 US. at 251-52; Lansing Dairy, 39 F.3d at 1347. If the nonmoving party fails to make the
necessary showing for an element upon which it has the burden of proof, then the moving
party is entitled to summary judgment. Celotex, 477 U.S. at 323.
Morgan brings claims against IRI for: (1) national origin discrimination in violation
of Title VIL (2) national origin discrimination in violation of Ohio Revised Code § 4112,
(3) age discrimination in violation of the Age Discrimination in Employment Act
(“ADEA”), (4) negligent/intentional misrepresentation, and (5) fraudulent inducement.
(Compl., Doc. 1, 28-54.) IRI moves for summary judgment on all claims brought
against it. (Motion for Summary Judgment, Doc. 45.) The Court will take each in turn.
1) Federal Age and National Origin Discrimination Claims
Morgan brings claims against IRI for national origin discrimination under Title VII
and age discrimination under the ADEA. (Compl., Doc. 1, 44 28-32, 38-43). These
discrimination claims are both analyzed under the same framework, so the Court will
review them in tandem. See Blizzard v. Marion Tech. Coll., 698 F.3d 275, 283 (6th Cir. 2012)
10

(addressing age discrimination standard); Khamati v. Sec’y of the Dep't of the Treasury, 557
F. App’x. 343, 438 (6th Cir. 2014) (addressing national origin discrimination standard).
Title VII prohibits an employer from “ discriminat[ing] against any individual with
respect to his compensation, terms, conditions, or privileges of employment, because of
such individual's . . . national origin.” 42 U.S.C. § 2000e-2(a)(1). And the ADEA prohibits
an employer from discriminating against an employee “because of such individual's
age.” 29 U.S.C. § 623(a)(1). Where, as here, a plaintiff seeks to establish discrimination
through indirect, rather than direct, evidence, the Court applies the McDonnell Douglas
burden-shifting framework. Younis v. Pinnacle Airlines, Inc., 610 F.3d 359, 363 (6th Cir.
2010).
The first step of this framework requires a plaintiff to establish a prima facie case
for discrimination. Younis, 610 F.3d at 363. To establish a prima facie case, a plaintiff must
show that he was: (1) a member of a protected class, (2) qualified for the position, (3) the
victim of an adverse employment action, and (4) replaced by someone outside the
protected class. See Ang v. Procter & Gamble Co., 932 F.2d 540, 548 (6th Cir. 1991). Once the
plaintiff establishes his prima facie case, the burden shifts to the defendant to articulate a
legitimate, nondiscriminatory reason for the adverse employment action. Id. at 548. If the
defendant meets its burden, the burden shifts back to the plaintiff to demonstrate that the
defendant's reason was but a pretext for unlawful discrimination. Id.; see also Texas Dep’t
of Cmty. Affairs v. Burdine, 450 U.S. 248, 253 (1981).
The Court proceeds on the assumption that Morgan has proven his prima facie

case. IRI too satisfies its burden of showing that it terminated Morgan for a legitimate,
11

nondiscriminatory reason: Morgan’s management had a negative impact on NAPP’s
performance. (See Motion for Summary Judgment, Doc. 3985-86.) Poor performance is a
legitimate and nondiscriminatory reason for terminating an employee. Hussain v.
Highgate Hotels, Inc., 126 F. App’x. 256, 265 (6th Cir. 2005) (citation omitted). The burden
thus shifts back to Morgan to show that this reason is pretextual.
The fundamental question in the pretext analysis is: did the employer make the
adverse employment decision for the stated reason or not? Tingle v. Arbors at Hilliard, 692
F.3d 523, 530 (6th Cir. 2012). A plaintiff must produce sufficient evidence such that a
reasonable jury could doubt the employer's stated reason for its actions. McCart v. Univ.
of Cincinnati Found., No. 1:08-cv-656, 2010 U.S. Dist. LEXIS 34406, at *7 (S.D. Ohio Apr. 7,
2010). Plaintiffs may refute an employer's proffered legitimate reason by showing that
the reason (1) has no basis in fact, (2) did not actually motivate the challenged conduct,
or (3) was insufficient to warrant the challenged conduct. Wexler v. White's Fine Furniture,
Inc., 317 F.3d 564, 576 (6th Cir. 2003).
Morgan first argues that IRI’s reasoning was pretextual because outside market
forces caused NAPP’s poor performance, not Morgan’s management. (Response in Opp.,
Doc. 53, Pg. ID 4238-39.) But Morgan does not point to any evidence, other than his own
testimony, to show that market forces were the sole cause of NAPP’s poor performance.
(See id.) In fact, Jakobsen observed and reported that “top management” had a large role
in NAPP’s financial failings. (Jakobsen Dep., Doc. 36, Pg. ID 2611-12, 2620-22; Jakobsen
Notes, Doc. 36-1, Pg. ID 2776-77; Analysis Report, Doc. 36-1, Pg. ID 2778-22.) IRI
understood, then, that Morgan’s management had some role in NAPP’s poor
12

performance. (See Roberts Dep., Doc. 35, Pg. ID 2332, 2416-17.) IRI terminated Morgan
accordingly. This decision to terminate Morgan for what IRI believed to be the cause of
NAPP’s poor performance does not constitute pretext, even if Morgan’s management
ultimately was not the actual cause. See Seeger v. Cincinnati Bell Tel. Co., LLC., 681 F.3d
274, 285-86 (6th Cir. 2012) (As long as the employer held an honest belief in its proffered
reason, “the employee cannot establish pretext even if the employer’s reason is ultimately
found to be mistaken, foolish, trivial, or baseless.”). Accordingly, Morgan’s first
argument fails.
Morgan next argues that IRI’s proffered reason was pretextual because IRI actually
terminated Morgan to replace him with Jakobsen. (Response in Opp., Doc. 53, Pg. ID
4238-39.) In support of this argument, Morgan points to Roberts’ conversations with
Jakobsen about finding him a long-term role with NAPP, as well as Roberts’ discussions
with Jakobsen about taking the role of Managing Director after Morgan was terminated.
(See id.) But these conversations do not definitively show that the real reason for Morgan’s
termination was to fill the position with Jakobsen. And in any event, this type of evidence,
while relevant to establishing a prima facie case of discrimination, is usually not enough
to overcome pretext. Arnold v. Cincinnati Sportservice, Inc., No. 1:12-cv-460, 2013 U.S. Dist.
LEXIS 99011, at *26-27 (S.D. Ohio July 16, 2013) (“[Plaintiff] notes that the position was
offered to substantially younger women on two separate occasions, but . . . this is not
enough to establish pretext.”).
Finally, Morgan argues that IRI’s proffered reason was pretextual based on the
termination of other older American employees who were fired around the same time as

Morgan. (Response in Opp., Doc. 53, Pg. ID 4238-39.) But this argument also fails to show ~

pretext. The only evidence offered on these terminations comes directly from Morgan.
(See Morgan Dep., Doc. 27, Pg. ID Pg. ID 725-937.) Morgan provides only the names and
occupations of these employees; he provides no other relevant information on their
terminations. (I[d.) Without more, the Court has no way of relating these terminations to
Morgans. See Sprint/United Mgmt. Co. v. Medelsohn, 552 U.S. 379, 388 (2008) (Nothing that
the relevancy of this sort of evidence “is fact based and depends on many factors,
including how closely related the evidence is to the plaintiff's circumstances and theory
of the case.”). Moreover, courts in this circuit hesitate to rely on this sort of “me too”
evidence to show pretext. See Megivern v. Glacier Hills Inc., No. 11-10026, 2012 U.S. Dist.
LEXIS 20749, at *58-59 (E.D. Mich. Feb. 17, 2012) (collecting cases).
Morgan failed to overcome his burden to show that IRI’s proffered reason for
terminating Morgan was pretextual. Accordingly, summary judgment must be entered
in favor of IRI on Morgan’s federal discrimination claims.
Ohio National Origin Discrimination
The Court now turns to Morgan's national origin discrimination claim brought
under Ohio Revised Code § 4112. (See Compl., Doc. 1, /] 33-37.) IRI moves for summary
judgment on this claim, arguing that it should have been brought under Virginia law □
under the Employment Agreement’s choice-of-law provision—and that Virginia has no
parallel law to enforce against IRI. (Motion for Summary Judgment, Doc. 45, Pg. ID 3990.)
Morgan does not oppose this argument in his response. (See Response in Opp., Doc. 53.)
This failure alone entitles IRI to summary judgment on this claim. Brown v. VHS of
14

Michigan, Inc., 545 F. App’x 368, 372 (6th Cir. 2013) (“This Court’s jurisprudence on
abandonment of claims is clear: a plaintiff is deemed to have abandoned a claim when a
plaintiff fails to address it in response to a motion for summary judgment.”). But even if
this claim was properly brought under Ohio law, it would still fail under the framework
applied above. See Vechvitvarakul v. Health All, Of Greater Cincinnati, No. 1:10-cv-114, 2012
U.S. Dist. LEXIS 17674, at *24 (S.D. Ohio Feb. 13, 2012) (applying McDonell Douglas
framework to Ohio national origin discrimination claim). Accordingly, summary
judgment must be entered in favor of IRI on Morgan’s Ohio national origin
discrimination claim.
IV. Negligent/Intentional Misrepresentation and Fraudulent Inducement Claims
Next, the Court turns its attention to Morgan’s remaining claims for
negligent/intentional misrepresentation and fraudulent inducement. (See Compl., Doc.
1, {{ 44-54.) IRI moves for summary judgment on these claims, arguing that they fail
under the economic loss rule and because Morgan has not shown any misrepresentations
by IRI. (Motion for Summary Judgment, Doc. 45, Pg. ID 3990-92.)
Before the Court can consider the substance of these claims, it must first address
which state’s law applies. The Employment Agreement states that it will “be executed,
construed and performed in accordance with the laws of the Commonwealth of
Virginia.” (Employment Agreement, Doc. 1-2, Pg. ID 23.) IRI maintains that Morgan’s
negligent/intentional misrepresentation and fraudulent inducement claims are subject to
this choice-of-law provision because they relate to Morgan’s contractual rights under the
Employment Agreement. (Motion for Summary Judgment, Doc. 45, Pg. ID 3989-90.)
15

Morgan does not contest this assertion. (See Response in Opp, Doc. 53.) And, to be sure,
the Sixth Circuit has extended the scope of choice-of-law provisions with similar
language to tort claims when they relate to performance of an agreement. See Baumgardner
v. Bimbo Food Bakeries Distrib., Inc., 697 F. Supp. 2d 801, 804-06 (N.D. Ohio 2010) (collecting
cases). Accordingly, the Court will apply Virginia law to these claims.
IRI first argues that Morgan’s negligent/intentional misrepresentation and
fraudulent inducement claims fail under the economic loss rule. The economic loss rule
provides that a person may not recover damages for a tort where the damages are purely
economic losses rather than physical injury to a person or property. See Sensenbrenner v.
Rust, Orling & Neale, Architects, Inc., 374 S.E.2d 55, 57 (Va. 1988). The economic loss rule
is closely tied to the independent duty rule, which states that “in order to recover in tort,
the duty tortiously breached must be a common law duty, not one existing between the
parties solely by virtue of the contract.” Tingler v. Graystone Hopmes, Inc., 834 S.E.2d 244,
255, 264-65 (Va. 2019).
These rules are based on policy considerations underlying contract and tort law:
The law of torts is well equipped to offer redress for losses suffered by
reason of a breach of some duty imposed by law to protect the broad
interests of social policy. Tort law is not designed, however, to compensate
parties for losses suffered as a result of a breach of duties assumed only by
agreement. That type of compensation necessitates an analysis of the
damages which were within the contemplation of the parties when framing
their agreement. It remains the particular province of the law of contracts.
Sensenbrenner, 374 S.E.2d at 58 (citation omitted). Thus, when a plaintiff alleges economic
losses suffered from disappointed bargained-for expectations “assumed only by
agreement, the law of contracts, not the law of torts, provides the remedy for such
16

economic losses.” Filak v. George, 594 S.E.2d 610, 613 (Va. 2004).
“[T]o determine whether a claim is subject to the restrictions imposed by the
economic loss rule, a court must first determine the nature and source of the duty
allegedly violated.” Lynnwood Tech Holdings LLC v. NR Int. LLC, No. 2015-15954, 2017 Va.
Cir. LEXIS 52, at *14 (Va. Cir. Ct. Feb. 24, 201) (citation omitted). “If the duty does not
exist absent an agreement establishing that duty, then it is a duty based in contract, and
the economic loss rule applies.” Id.
The economic loss rule does not apply to Morgan’s negligent/intentional
misrepresentation and fraudulent inducement claims because they do not implicate a
duty arising out of the Employment Agreement. These claims center on the July 18, 2019
conversation between Roberts and Morgan, wherein Roberts seemingly encouraged
Morgan not to retire through allegedly misleading statements. (Response in Opp., Doc.
53, Pg. ID 241-44.) IRI maintains that the duty breached by Roberts under these claims
relate to the Employment Agreement. (Motion for Summary Judgment, Doc. 45, Pg. ID
3990-92.) But IRI does not point to any provision in the Employment Agreement that
would require Roberts to discuss retirement or job prospects in a particular way to
Morgan. (See id.) To be sure, “the duty not to mislead others to their detriment arises from
common law,” not the Employment Agreement. Fenner BL, LLC v. Fenner Garden Partners,
LLC, No. CL17-13859, 2018 Va. Cir. LEXIS 709, at *8 (Cir. Ct. 2018); Cf Richmond Metro.
Auth. v. McDevvitt St. Bovis, 507 S.E.2d 344, 347 (Va. 1998) (Because “each particular
misrepresentation by [the contractor] related to a duty or an obligation that was
specifically required by the [c]ontract,” the court concluded that the contractor’s
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misrepresentations did not “give rise to a cause of action for actual fraud.”).
Further, these claims allege damages that are not solely economic. Morgan alleges
that, as a result of his reliance on Roberts’ misrepresentations, he suffered damages in the
form of a loss of employee benefits and reputation, as well as mental anguish. (Response
in Opp., Doc. 56, Pg. ID 4244.) Morgan also seeks punitive damages. (Id.) While some of
these losses stem from the Employment Agreement, they are not all purely economic.
Accordingly, the economic loss rule does not apply.
The Court now turns to the substance of these claims. A central element to both
claims is the requirement for clear and convincing evidence of a false representation.
Hansen v. Stanley Marin Cos., 585 S.E.2d 567, 573 (Va. 2003) (Virginia courts consider fraud
and misrepresentation claims together because both counts “sound in fraud.”); Cromer v.
Molden Real Est. Corp., No. 84-L-100, 1991 Va. Cir. LEXIS 187, at *6 (Va. Cir. Ct. Sept. 26,
1991) (both actual and constructive fraud require a showing of a misrepresentation);
Chlanda v. Hiller, No. 21-3865, 2022 Va. Cir. LEXIS 348, at *8 (Va. Cir. Ct. June 3, 2022) (the
elements of a claim for fraudulent inducement include “statements of fact” that are “false
and material”). The misrepresentation must involve an affirmative false statement or
concealment by word or conduct that amounts to the equivalent of a false representation.
Lambert v. Downtown Garage, Inc., 553 S.E.2d 714, 717 (Va. 2001).
Morgan’s negligent/intentional misrepresentation and fraudulent inducement
claims fail because Morgan has shown no misrepresentation by IRI. Morgan maintains
that IRI made misrepresentations through Roberts when he and Morgan discussed
Morgan’s potential retirement on July 18, 2019. (Response in Opp., Doc. 53, Pg. ID 4242.)
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Morgan maintains that, during that conversation, Roberts “encouraged Morgan not to
retire and told Morgan he would be taken care of,” which were misrepresentations
because Roberts planned to fire Morgan when he made those statements. (Id.) But
Morgan cannot point to any evidence to show that Roberts intended to fire Morgan when
he made those statements to Morgan on July 18, 2019.
Morgan points to two conversations that Roberts had with Jakobsen to show that
Roberts had long-term intentions of firing Morgan. (Response in Opp., Doc. 53, Pg. ID
4239.) Morgan first points to Roberts’ hand-made charts that he sent to Jakobsen to show
intent (Response in Opp., Doc. 53, Pg. ID 4239), but these charts merely show that Roberts
hoped to restructure NAPP’s management. (See Organization Chart, Doc. 41, Pg. ID 3588-
89.) These charts do not show that Roberts intended to fire Morgan. Morgan next points
to Roberts’ conversations with Jakobsen in May 2019 about a potential long-term role for
Jakobsen at NAPP (Response in Opp., Doc. 53, Pg. ID 4239), but these conversations never
reference the Managing Director role and simply discuss finding a permanent position
for Jakobsen. (Jakobsen Dep., Doc. 36, Pg. ID 2556-57; Jakobsen Role Correspondence,
Doc. 36-1 at Page ID 2751-2753.) Neither piece of evidence shows that Roberts intended
to fire Morgan at the time of the July 18, 2019 conversation.
To be sure, the only instance where Roberts demonstrates some intention to
terminate Morgan—prior to actually terminating him—was on August 28, 2019. (See
Roberts Dep., Doc. 35, Pg. ID 2414.) On this date, Roberts corresponded with the
company’s legal department about firing Morgan. (Id.) This conversation, of course,
occurred after Morgan and Roberts’ July 18, 2019 conversation.
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Accordingly, Morgan cannot show that Roberts intended to fire Morgan during
the July 18, 2019 conversation. In turn, Morgan cannot establish that Roberts’ statements
were misrepresentations about Morgan’s job security. Morgan does not present any other
argument to show that IRI made misrepresentations to Morgan. As Morgan cannot show
by clear and convincing evidence that Roberts or IRI made any misrepresentations to
Morgan, his intentional/ negligent misrepresentation and fraudulent inducement claims
fail. Thus, summary judgment must be entered in favor of IRI on these claims.
CONCLUSION
Based on the foregoing, the Court GRANTS Defendant Interstate Resources, Inc.’s
Motion for Summary Judgment (Doc. 45) and TERMINATES this matter from its docket.
IT IS SO ORDERED.

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
West sTalled
By: :
JUDGE MATTHEW W. McFARLAND

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10383392. Public record. Not legal advice.