Zagaruyka and Associates v. HealthSmart Benefit Solutions Inc

UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF OKLAHOMA

ZAGARUYKA & ASSOCIATES, )

)

Plaintiff/Counterdefendant, )

)

v. ) Case No. CIV-18-697-G

)

HEALTHSMART BENEFIT )

SOLUTIONS INC. d/b/a )

HEALTHSMART, )

)

Defendant/Counterplaintiff, )

)

CAROL PROCTOR, )

)

Counterdefendant. )

ORDER

Now before the Court is Defendant HealthSmart Benefit Solutions Inc.,’s

(“HealthSmart”) Motion for Judgment on the Pleadings to Dismiss the Complaint (Doc.

No. 29). Citing Federal Rule of Civil Procedure 12(c), Defendant moves for a judgment

in its favor on all claims asserted in the First Amended Complaint for failure to state a

plausible claim.1 Plaintiff has not responded. For the reasons stated below, the Court finds

Defendant’s motion should be granted.

1 HealthSmart has asserted various counterclaims against Plaintiff and another individual,

which are not at issue in its Motion. Def.’s Mot. ¶ 3; see Second Am. Answer & First Am.

Counterclaim (Doc. No. 20).

SUMMARY OF THE PLEADINGS2

Plaintiff Zagaruyka & Associates (“Zagaruyka”) is a sole proprietorship recruiting

firm owned and operated by Ashley Zagaruyka. Compl. ¶ 1 (Doc. No. 1-2).3 Plaintiff

entered into a contract with HealthSmart to recruit qualified employee candidates for a

nonrefundable retainer fee. Id. ¶¶ 1, 10, 11. The contract provided that the retainer fee

would be nonrefundable if Plaintiff “presented at least two qualified candidates within 60

days following the date the search was begun, but [HealthSmart] fill[ed] the positions

‘through its own efforts or through another source.’” Id. ¶ 11 (quoting unidentified

contract). The full retainer would be “due within ten (10) working days” if HealthSmart

eliminated the employment position for which Plaintiff had commenced a search for

candidates. Id. ¶ 12 (quoting unidentified contract). However, the contract provided a

guarantee that if a candidate recruited by Plaintiff and hired by HealthSmart was

“terminated for any reason within thirty (30) days [of] the date the candidate commen[ced]”

employment, Plaintiff would replace the candidate at no additional charge. Id. ¶ 13

(quoting unidentified contract).

Over the course of the contractual relationship, HealthSmart expanded Zagaruyka’s

role to include human-resource consulting, change-management training, and employee-

2 In the background narrative, the Court has assumed the truthfulness of all well-pleaded

facts in the Complaint and draws all reasonable inferences therefrom in the light most

favorable to Plaintiff. See W. Watersheds Project v. Michael, 869 F.3d 1189, 1193 (10th

Cir. 2017); Colony Ins. Co. v. Burke, 698 F.3d 1222, 12228 (10th Cir. 2012).

3 Plaintiff's action was timely removed from state court; accordingly, the Court will use

federal nomenclature when addressing the pleadings.

reference verification, and “ask[ed] that Plaintiff put its requests for services before the

requests” of Plaintiff’s other clients. Id. ¶¶ 17, 18. Plaintiff states HealthSmart exerted

“behavioral and financial control” over its operation in that: (1) HealthSmart employees

had “supervisory responsibility over Plaintiff and directed her work in furtherance of

[HealthSmart]’s business operations”; (2) “Plaintiff was required to comply with

[HealthSmart]’s instructions in terms of written and unwritten policies, procedures, and

directives”; and (3) HealthSmart had a “high degree of control over Plaintiff’s work.” Id.

¶¶ 30. Plaintiff further asserts that HealthSmart “was significantly dependent on” its

services and “prevented Plaintiff from providing services to others.” Id. ¶ 31. Finally,

Plaintiff alleges it “was required to pay a portion of HealthSmart’s operating expenses.”

Id.

As a result of HealthSmart’s increased demands and “control over the terms and

conditions of the employment arrangements,” Plaintiff alleges Zagaruyka lost its other

clients, “lost [its] status [as] an independent contractor,” “and became an employee of

[HealthSmart]” within the meaning of the Fair Labor Standards Act (“FLSA”) and the State

of Oklahoma’s Protection of Labor Act, Okla. Stat. tit. 40, §§ 165.1 et seq. Compl. ¶¶ 6,

19, 30, 32, 36. Plaintiff also states that during the course of Zagaruyka’s relationship with

HealthSmart, HealthSmart deviated from the payment terms of the contract and failed to

pay for its services. Id. ¶ 20, 22, 27. HealthSmart terminated its relationship with Plaintiff

in an email dated August 2, 2017. Id. ¶ 21.

Plaintiff asserts claims for: (1) a declaratory judgment that Zagaruyka was an

employee of HealthSmart and is entitled to the rights and benefits of employment pursuant

to the laws of the United States and the State of Oklahoma; (2) violations of the Fair Labor

Standards Act, 29 U.S.C. §§ 201 et seq., the Oklahoma Protection of Labor Act, Okla. Stat.

tit. 40, §§ 160 et seq., and the Oklahoma Minimum Wage Act, id. tit. 40, §§ 197.1 et seq.;

and (3) bad faith breach of contract. Compl. ¶¶ 39, 49, 54-55.

HealthSmart moves for judgment on the pleadings on the following grounds: (1)

Plaintiff relies on vague, generalized, and conclusory assertions to establish employee

status; (2) Plaintiff fails to state facts indicating alleged overtime calculations; (3) there is

no Oklahoma statute requiring that overtime compensation be paid to private employees;

(4) as a business owner Zagaruyka is not entitled to the protections of the Oklahoma Labor

Protection Act or Oklahoma Minimum Wage Act; and (5) there is no claim for bad faith

breach of contract outside the context of insurance. See Def.’s Mot. ¶¶ 14, 15, 16, 18.

STANDARD OF REVIEW

Rule 12(c) provides that “[a]fter the pleadings are closed—but early enough not to

delay trial—a party may move for judgment on the pleadings.” Fed. R. Civ. P. 12(c).

Motions under Rule 12(c) and Rule 12(b)(6) are governed by the same standard. See

Colony Ins. Co., 698 F.3d at 1228; Aspenwood Inv. Co. v. Martinez, 355 F.3d 1256, 1259

(10th Cir. 2004). Therefore, “[a] motion for judgment on the pleadings under Rule 12(c)

is treated as a motion to dismiss under Rule 12(b)(6).” Atl. Richfield Co. v. Farm Credit

Bank of Wichita, 226 F.3d 1138, 1160 (10th Cir. 2000).

Plaintiff failed to respond to HealthSmart’s Motion or to seek an extension of time

to respond. Local Civil Rule 7.1(g) provides that “[a]ny motion that is not opposed within

21 days may, in the discretion of the court, be deemed confessed.” However, “a district

court may not grant a motion to dismiss for failure to state a claim ‘merely because [a party]

failed to file a response.’” Issa v. Comp USA, 354 F.3d 1174, 1178 (10th Cir. 2003)

(alteration in original) (quoting Reed v. Bennett, 312 F.3d 1190, 1194 (10th Cir. 2002)).

“[I]t is well established that a ‘complaint should not be dismissed for failure to state a claim

unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his

claim which would entitle him to relief.’” Id. at 1177-78 (quoting Hall v. Bellmon, 935

F.2d 1106, 1109 (10th Cir. 1991)). Thus, the Court “must still examine the allegations in

the plaintiff's complaint and determine whether the plaintiff has stated a claim upon which

relief can be granted,” despite Plaintiff's failure to respond to the Motion. Id. at 1178.

Federal Rule of Civil Procedure 8(a)(2) provides that a pleading stating a claim for

relief must contain “a short and plain statement of the claim showing that the pleader is

entitled to relief.” 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)); see Robbins v. Oklahoma, 519 F. 3d 1242, 1247 (10th Cir. 2008).4 Under

this standard, “the mere metaphysical possibility that some plaintiff could prove some set

of facts in support of the pleaded claims is insufficient; the complaint must give the court

reason to believe that this plaintiff has a reasonable likelihood of mustering factual support

4 Although Plaintiff’s action was initiated in state court, the Federal Rules of Civil

Procedure and the U.S. Supreme Court’s standards in Twombly, Iqbal, and their progeny

govern the sufficiency of her claims. See Fed. R. Civ. P. 81(c)(1); McKnight v. Linn

Operating, Inc., No. CIV-10-30-R, 2010 WL 9039794, at *1 (W.D. Okla. Apr. 1, 2010).

for these claims.” Robbins, 519 F.3d at 1247 (internal quotation marks omitted). “Factual

allegations must be enough to raise a right to relief above the speculative level . . . .”

Twombly, 550 U.S. at 555 (footnote and citation omitted). “A claim has facial plausibility

when the plaintiff pleads factual content that allows the court to draw the reasonable

inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678.

“We accept all facts pleaded by the non-moving party as true and grant all

reasonable inferences from the pleadings in favor of the same.” Colony Ins. Co., 698 F.3d

at 1228 (alteration and internal quotation marks omitted); see also Sprint Nextel Corp. v.

Middle Man, Inc., 822 F.3d 524, 530 (10th Cir. 2016); Sanders v. Mountain Am. Fed.

Credit Union, 689 F.3d 1138, 1141 (10th Cir. 2012). Examining the factual allegations in

this manner, a Rule 12(c) motion should be granted if “the moving party has clearly

established that no material issue of fact remains to be resolved and the party is entitled to

judgment as a matter of law.” Colony Ins. Co., 698 F.3d at 1228 (internal quotation marks

omitted); Sprint Nextel Corp., 822 F.3d at 530; Sanders, 689 F.3d at 1141.

“Determining whether a complaint states a plausible claim for relief will . . . be a

context-specific task that requires the reviewing court to draw on its judicial experience

and common sense.” Iqbal, 556 U.S. at 679; see Robbins, 519 F.3d at 1248 (stating that

“the degree of specificity necessary to establish plausibility and fair notice, and therefore

the need to include sufficient factual allegations, depends on context”). The Tenth Circuit

has held that the Iqbal/Twombly pleading standard is “a middle ground between heightened

fact pleading, which is expressly rejected, and allowing complaints that are no more than

labels and conclusions or a formulaic recitation of the elements of a cause of action, which

the Court stated will not do.” Khalik v. United Air Lines, 671 F.3d 1188, 1191 (10th Cir.

2012) (internal quotation marks omitted). “[S]pecific facts are not necessary”; the pleader’s

allegations need only provide the defendant “fair notice of what the claim is and the

grounds upon which it rests.” Id. at 1192 (omission and internal quotation marks omitted).

“Twombly and Iqbal do not require that the complaint include all facts necessary to carry

the plaintiff’s burden.” Id. (internal quotation marks omitted).

DISCUSSION

I. Claims Based on Employee Status

To determine whether Plaintiff has stated claims for declaratory judgment and

violation of federal and state labor and wage acts, the Court must evaluate whether Plaintiff

has adequately pled facts to plausibly show that Zagaruyka is an employee of HealthSmart

rather than an independent contractor. See Coen v. SemGroup Energy Partners G.P., LLC,

310 P.3d 657, 662 (Okla. Civ. App. 2013) (stating that to establish a wage claim under the

Oklahoma Protection of Labor Act, the plaintiff has the burden of demonstrating an

employer-employee relationship existed); Reagor v. Okmulgee Cty. Family Res. Ctr., 501

F. App’x 805, 808 (10th Cir. 2012) (citing 29 U.S.C. § 207(a) in stating that “[t]he FLSA

requires overtime pay of time and a half of regular pay for an employee” and the plaintiff

bears the burden to demonstrate he or she is entitled to the protection of the FLSA); Okla.

Stat. tit. 40, § 165.9(A) (stating that an “[a]ction by an employee to recover unpaid wages

and liquidated damages may be maintained in any court of competent jurisdiction by any

one or more employees”); id. tit. 40, § 197.5 (stating every employer shall pay a specified

minimum wage “to each of his employees”).

HealthSmart contends that neither the terms of the contract nor the application of

the “economic realities” test establishes that Zagaruyka was an employee of HealthSmart.

Def.’s Mot. ¶¶ 9, 10, 12. HealthSmart attaches what it represents is the only contract

between itself and Plaintiff.5 See Contract (Doc. No. 29-1). In support of Zagaruyka’s

status as an employee, Plaintiff relies on the definition of “independent contractor” stated

in Page v. Hardy, 334 P.2d 782, 784 (Okla. 1959), and the “economic realities test” applied

in FLSA cases.

The Court agrees with HealthSmart that the Contract between the parties lacks any

provisions delineating how Zagaruyka is to perform her recruiting services, the time

Zagaruyka is to devote to such services, or that Zagaruyka provide these services

exclusively to HealthSmart. See Contract. The Court also finds that the Contract refers to

payment for these services as a service fee to be paid in installments in addition to a

commission based on the salary of a successful candidate rather than as wages or salary.

Id. ¶ 4.

In determining whether an individual is an employee rather than an independent

contractor, however, the Court’s “inquiry is not limited by any contractual terminology or

5 “[N]otwithstanding the usual rule that a court should consider no evidence beyond the

pleadings on a Rule 12(b)(6) motion to dismiss, ‘the district court may consider documents

referred to in the complaint if the documents are central to the plaintiff’s claim and the

parties do not dispute the documents’ authenticity.’” Alvarado v. KOB-TV, L.L.C., 493

F.3d 1210, 1215 (10th Cir. 2007) (quoting Jacobsen v. Deseret Book Co., 287 F.3d 936,

941 (10th Cir. 2002)). Plaintiff references, and purports to quote, a contract with

HealthSmart repeatedly throughout its Complaint. The Court finds that the contract

referenced by Plaintiff is clearly central to its claims and its authenticity is undisputed given

Plaintiff’s failure to respond to HealthSmart’s Motion.

by traditional common law concepts of ‘employee’ or ‘independent contractor.’” Baker v.

Flint Eng’g & Constr. Co., 137 F.3d 1436, 1440 (10th Cir. 1998) (internal quotation marks

omitted). “Instead, the economic realities of the relationship govern, and the focal point is

whether the individual is economically dependent on the business to which he renders

service . . . or is, as a matter of economic fact, in business for himself.” Id. (omission in

original) (internal quotation marks omitted)). This is true for claims raised pursuant to the

FLSA, Oklahoma Minimum Wage Act, and Oklahoma Protection of Labor Act. See id.;

Page, 334 P.2d at 784; Okla. Admin Code § 380:30-1-2. The economic realities test

applied under the FLSA turns on six factors:

(1) the degree of control exerted by the alleged employer over the worker;

(2) the worker’s opportunity for profit or loss; (3) the worker’s investment in

the business; (4) the permanence of the working relationship; (5) the degree

of skill required to perform the work; and (6) the extent to which the work is

an integral part of the alleged employer’s business.

Henderson v. Inter-Chem Coal Co., Inc., 41 F.3d 567, 570 (10th Cir. 1994) (citing Dole v.

Snell, 875 F.2d 802, 805 (10th Cir. 1989)).6 “The overarching inquiry is based on the

totality of the circumstances, and no single factor is dispositive.” Acosta v. Paragon

Contractors Corp., 884 F.3d 1225, 1235 (10th Cir. 2018).

6 The definition of “independent contractor” relied on by Plaintiff mirrors the factors of the

economic realities test: “an independent contractor is one who engages to perform certain

service for another, according to his own manner and method, free from control and

direction of his employer in all matters connected with the performance of the service,

except as to the result or product of the work.” Page, 334 P.2d at 784. This definition, and

an eleven-factor test, is recited in the Oklahoma Administrative Code, Okla. Admin. Code

§ 380:30-1-2. Plaintiff fails to address or identify these factors. However, because these

eleven factors are incorporated in the economic realities test of the FLSA, the Court need

not address them separately.

A. Control Over Zagaruyka

With regard to the first factor—degree of control—Plaintiff alleges that “the

behavioral and financial control manifested over it by [HealthSmart] demonstrate[s] that

Ms. Zagaruyka was an employee rather than an independent contractor.” Compl. ¶ 30. In

support thereof, Plaintiff alleges: (1) HealthSmart employed supervisors and managers

who had “supervisory responsibility over” Zagaruyka’s work; (2) “Plaintiff was required

to comply with [HealthSmart]’s instructions in terms of written and unwritten policies,

procedures, and directives”; (3) HealthSmart “exert[ed] a high degree of control over

Plaintiff’s work”; (4) HealthSmart’s “business was significantly dependent on” Plaintiff’s

services; (5) HealthSmart “prevented Plaintiff from providing services to others”; and (6)

“Plaintiff was required to pay a portion of [HealthSmart]’s operating expenses.” Id. ¶¶ 30,

31. Plaintiff’s allegations lack any factual support and amount to no more than conclusory

statements. The Court finds the facts alleged are insufficient to determine this factor in

favor of Plaintiff.

B. Opportunity for Profit or Loss

The Court finds that the Contract terms referenced by Plaintiff establish that

Zagaruyka had the ability to profit based on its performance in recruiting, screening, and

referring appropriate candidates to HealthSmart. Contract ¶ 2. The more qualified the

candidate, the greater profit Zagaruyka would earn in the form of a percentage of that

candidate’s salary if he or she were hired. Id. ¶ 4. Zagaruyka could directly affect profit

by seeking out larger numbers of highly qualified job candidates for HealthSmart. Plaintiff

does not allege any other payment arrangement in its Complaint. Thus, Plaintiff’s earnings

were dependent on Zagaruyka’s judgment or initiative in identifying the best qualified

candidates for HealthSmart. This factor indicates Zagaruyka was an independent

contractor rather than an employee.

C. Investment in the Business

“To analyze this factor, we compare the investments of the worker and the alleged

employer.” Acosta, 884 F.3d at 1236. “The mere fact that workers supply their own tools

or equipment does not establish status as independent contractors; rather, the relevant

investment is the amount of large capital expenditures, such as risk capital and capital

investments, not negligible items, or labor itself.” Id. (internal quotation marks omitted).

“In making a finding on this factor, it is appropriate to compare the worker’s individual

investment to the employer’s investment in the overall operation.” Baker, 137 F.3d at

1442.

The Complaint lacks any recitation of facts indicating HealthSmart provided any of

Zagaruyka’s supplies or equipment necessary to “source, recruit[,] and screen candidates.”

Contract ¶ 2. Neither the Contract nor the Complaint indicates any facts regarding

Plaintiff’s or HealthSmart’s capital expenditures or investments in the business of

recruiting candidates. The facts alleged are insufficient to find this factor in favor of

Plaintiff.

D. Permanence of the Working Relationship

“‘[I]ndependent contractors’ often have fixed employment periods and transfer from

place to place as particular work is offered to them, whereas ‘employees’ usually work for

only one employer and such relationship is continuous and of indefinite duration.” Baker,

137 F.3d at 1442 (internal quotation marks omitted). Plaintiff alleges Zagaruyka had

multiple clients other than HealthSmart. Compl. ¶ 18. The Court finds that this factor

weighs in favor of Zagaruyka’s status as an independent contractor.

E. Degree of Skill Required to Perform Work

In considering this factor, if the job requires specialized skills, “the worker is more

likely to be considered an independent contractor.” Acosta, 884 F.3d at 1237 (citing Dole,

875 F.2d at 811). “These specialized skills are distinct from general ‘“occupational skills”

that “any good employee in any line of work must [have].”’” Id. (alteration in original)

(quoting Dole, 875 F.2d at 811). Independent contractors make independent judgments

and exercise their skills in an independent manner. Baker, 137 F.3d at 1442. Plaintiff was

contracted to “actively source, recruit and screen candidates” by “forumlat[ing] criteria for

candidate selection” and utilizing specialized skills outlined the Contract. Contract ¶ 2.

Plaintiff does not allege Zagaruyka’s skills were general occupational skills. Thus, this

factor indicates Zagaruyka was an independent contractor.

F. Integral Part of the Employer’s Business

This factor turns “on whether workers’ services are a necessary component of the

business.” Baker, 137 F.3d at 1443. As alleged in the Complaint, HealthSmart “is the

nation’s largest independent administrator of health plans for self-funded employers with

over 1,600 team members.” Compl. ¶¶ 2, 25. Plaintiff is a sole proprietorship. Id. ¶¶ 1,

26. While Plaintiff alleges that HealthSmart’s demands for services became greater over

its contractual relationship, Plaintiff fails to state any facts describing HealthSmart’s

reliance on its recruiting services. The Court notes that the Contract provides for

recruitment of candidates for a single position and that Plaintiff has failed to challenge

HealthSmart’s assertion that this is the only written contract existing between the parties.

Def.’s Mot. ¶ 5. Recruitment services for one position for a national corporation hardly

renders Plaintiff an integral part of HealthSmart’s business.

Although Plaintiff alleges it “had no less than fifteen (15) candidates that were at

various points of consideration within [HealthSmart]’s hiring process,” and was committed

to providing “other services” requested by HealthSmart, Plaintiff states no facts indicating

whether the fifteen candidates were related to the position subject to the Contract or other

positions or what “other services” to which it was committed. Compl. ¶ 31. Further, the

Contract contains no exclusivity requirement on the part of Plaintiff or HealthSmart with

regard to recruiting services. HealthSmart was contractually free to recruit candidates

independently of Plaintiff, and Plaintiff was free to recruit on behalf of other clients. Thus,

this factor indicates Zagaruyka was an independent contractor.

G. Conclusion

Considering the totality of the circumstances alleged in the Complaint, the Court

finds that Plaintiff’s allegations lack sufficient specificity to establish any of the factors of

the economic realities test in its favor. Therefore, Plaintiff has failed to state sufficient

facts that Zagaruyka was plausibly an employee of HealthSmart under the Fair Labor

Standards Act, the Oklahoma Minimum Wage Act, or the Oklahoma Protection of Labor

Act. Accordingly, Plaintiff’s claims for declaratory judgment7 and for violations of FLSA,

7 The Declaratory Judgment Act, 28 U.S.C. § 2201, “confer[s] on federal courts unique and

substantial discretion in deciding whether to declare the rights of litigants.” See Wilton v.

the Oklahoma Labor Protection Act, and Oklahoma Minimum Wage Act must be

dismissed.

II. Claim of Bad Faith Breach of Contract

Plaintiff asserts that HealthSmart acted “willful[ly] and malicious[ly], or, at the

least,” breached “the implied covenant of good faith and fair dealing giv[ing] rise to an

action in tort for which consequential and, in a proper case, punitive, damages may be

sought.” Compl. ¶ 55. HealthSmart contends: (1) that Plaintiff states only “a series of

bald, conclusory allegations” in attempting to state this claim; and (2) such a bad-faith

claim does not exist in Oklahoma law outside the insurance context. Def.’s Mot. ¶ 18.

“Under common law each contract carries an implicit and mutual covenant to act

toward each other in good faith. However, the Oklahoma Supreme Court has not

recognized an action for a breach of the implied covenant of good faith and fair dealing in

a commercial contract unless there was gross recklessness or wanton negligence by a

Seven Falls Co., 515 U.S. 277, 286 (1995); see also United States v. City of Las Cruces,

289 F.3d 1170, 1179-80 (10th Cir. 2002). Existence of a ‘case or controversy’ is a

prerequisite to federal jurisdiction under both the U.S. Constitution and the Declaratory

Judgment Act. See U.S. Const. art. III, § 2, cl. 1; 28 U.S.C. § 2201. The burden of

establishing the existence of an actual case or controversy rests with the party seeking the

declaration. Cardinal Chem. v. Morton Int’l, Inc., 508 U.S. 83, 95 (1967). In order to

determine whether a case or controversy exists, the Court must determine “whether the

facts alleged, under all the circumstances, show that there is a substantial controversy,

between parties having adverse legal interests, of sufficient immediacy and reality to

warrant the issuance of a declaratory judgment.” Maryland Cas. Co. v. Pac. Coal & Oil

Co., 312 U.S. 270, 273 (1941). As discussed above, Plaintiff has failed to state sufficient

facts to show that Zagaruyka was an employee. Therefore, there is no “case or

controversy” regarding Zagaruyka’s status as an employee, and HealthSmart’s Motion

must be granted on this issue.

party.” Roberson v. PaineWebber, Inc., 998 P.2d 193, 201 (Okla. Civ. App. 2000) (citing

Beshara v. S. Nat’l Bank, 928 P.2d 280, 288 (Okla. 1996)). Nor does Oklahoma law

recognize such an action in the absence of a special relationship, as “parties should be free

to contract for any lawful purpose and upon such terms as they believe to be in their mutual

interest.” Rodgers v. Tecumseh Bank, 756 P.3d 1223, 1226-27 (Okla. 1988). Thus, the

Oklahoma Supreme Court has also held that “there is no implied obligation of good faith

and fair dealing in reference to termination in any employment-at-will contract.” Burk v.

K-Mart Corp., 770 P.2d 24, 29 (Okla. 1989).

In its Complaint, Plaintiff quotes the Oklahoma Supreme Court’s decision in First

National Bank & Trust Co. of Vinita v. Kissee, 859 P.2d 502, 509 (Okla. 1996), in support

of Plaintiff’s contention that the “common law imposes [the] implied covenant upon all

contracting parties.” Compl. ¶ 52. However, the Kissee decision qualified its recognition

of the common law by noting “that in Ro[d]gers v. Tecumseh Bank, [the Oklahoma

Supreme Court] held that without ‘gross recklessness or wanton negligence on behalf of a

party’ to a commercial contract, a breach of the implied covenant of good faith and fair

dealing merely results in a breach of contract.” Id. (footnote omitted) (quoting Rodgers,

756 P.2d at 1227). “In Ro[d]gers, [the Oklahoma Supreme Court] emphasized the special

relationship between an insurer and insured which differentiates insurance contracts from

commercial contracts” and found that no such special relationship existed in the contract

at issue. Id. Indeed, “Oklahoma has, at virtually every opportunity, rejected claims seeking

to create the tort of bad faith in actions outside of the insurance context.” Harris v. Chevron

U.S.A., Inc., No. CIV-15-94-C, 2015 WL 3746989, at *3 (W.D. Okla. June 15, 2015).

Plaintiff fails to allege any facts indicating a special relationship with HealthSmart

to support a finding of an implied covenant of good faith and fair dealing in the contract or

that HealthSmart acted with gross recklessness or wanton negligence. Plaintiff asserts

HealthSmart’s “actions were intentional and calculated to impose harm” and “were willful

and malicious.” Compl. §[ 53, 54, 55. These allegations are conclusory, speculative, and

otherwise insufficient to support a claim for bad faith breach of contract. Therefore,

Plaintiff's claim for bad faith breach of contract must be dismissed.

CONCLUSION

Defendant HealthSmart Benefit Solutions Inc.,’s Motion for Judgment on the

Pleadings (Doc. No. 29) is GRANTED. Judgment on these claims shall be entered at the

conclusion of the litigation. Only HealthSmart’s counterclaims remain at issue.

IT IS SO ORDERED this 25th day of October 2019.

(Vuahy B. Kado

{,sesla lete

United States District Judge