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Labor Law - Federal

Jeffrey D. Hanslick, Esquire
Traci Daffer Martin, Esquire
Benjamin A. McMillen, Esquire

Eighth Circuit affirms district court's grant of summary judgment in favor of hospital's CEO and various hospital board members on a doctor's action alleging that the hospital violated his due process rights and interfered with business expectancy, holding: (1) an independent contractor agreement did not provide the doctor with a reasonable expectation of continued employment in the hospital's emergency room; and (2) the hospital's contractual right to request the doctor's removal from the hospital precluded the doctor's claim for tortious interference with business expectancy.  Schueller v. Goddard, No. 09-3047, 2011 WL 292207 (8th Cir. Feb. 1, 2011).
Plaintiff Dr. Steven Schueller alleged that the CEO and various board members of Drew Memorial Hospital violated his due process rights and interfered with his business expectancy by requesting that he no longer serve as an independent contractor.  The hospital entered into an emergency service agreement with a different physician, Dr. William W. Williams, on August 2002.  That agreement provided that Williams would be the sole provider of emergency room staffing for the hospital, but it also provided that the hospital could request the immediate removal of "any physician at any time" from further service.  Plaintiff was not a party to the agreement.  In January 2003, Plaintiff entered into an independent contractor agreement with Dr. Williams, pursuant to which Plaintiff agreed to provide emergency room services at the hospital on behalf of Dr. Williams.  That agreement contained a provision stating that "either party may terminate this agreement . . . with reasonable cause . . . ."  As defined in the agreement, reasonable cause included "the request by [Drew Memorial] for the immediate removal of Independent Contractor from further service . . . ."  In December 2006, as a result of patient complaints, the CEO of the hospital asked Williams to remove Plaintiff from service at the hospital.  Accordingly, Williams notified Plaintiff that he would no longer be scheduled to work in the emergency room effective January 31, 2007.  Plaintiff sued the hospital in federal court under 42 USC Section 1983 and state law, and the district court granted summary judgment in favor of Defendants, from which Plaintiff appealed.
Held:  In affirming the district court's dismissal of Plaintiff's due process claim, the Eighth Circuit rejected Plaintiff's argument that he had a valid expectation of continued employment stemming from both the emergency service agreement and the independent contractor agreement.  Specifically, the court cited the unambiguous language in both agreements giving the hospital "sole discretion" to request Plaintiff's removal.  Such plenary discretion, the court reasoned, was inconsistent with Plaintiff having a legitimate claim of entitlement to continued employment.  What is more, the court maintained that even if Plaintiff expected to continue serving as an independent contractor, his expectation was unreasonable in light of the patient complaints and hospital's plenary discretion to request his removal. 
With respect to Plaintiff's business expectancy claim, the court held that the hospital's absolute right in the independent contractor agreement to request Plaintiff's removal precluded Plaintiff from making a prima facie case of tortious interference.  Specifically, the court reasoned that Plaintiff had failed to produce any evidence that the hospital "improperly interfered" with the independent contractor agreement between Plaintiff and Dr. Williams (an essential element of the claim under state law) by exercising its contractual right to request Plaintiff's removal in response to continuing complaints from its patients.  As such, the court affirmed the judgment of the district court.

The Missouri Bar Courts Bulletin, 11-Feb