In the case of Redding v. United States Parachute Assn., Inc., 2023-Ohio-884, an appellate court held that a former member of the United States Parachute Association (“USPA”) may have pled sufficient facts to overcome a motion to dismiss an Ohio Whistleblower claim under R.C. 4113.52, but failed in his other cause of action because there was no privity of contract between the former member and the USPA when the former member tried to renew his expired membership.
In this case, the former member argued that (1) USPA wrongfully refused to renew the membership in violation of USPA’s own handbook; (2) USPA breached a contract between itself and the former member in refusing to renew the membership; (3) USPA breached a duty of good faith and fair dealing by not renewing the former member’s membership; (4) USPA acted negligently in not treating the former member “in the same manner as all other individual and Group members”; (5) USPA violated R.C. 1729.24 and the Sarbanes-Oxley Act (“SOX”) in “s[eeking] to exact revenge against the former member for filing complaints with the Federal Aviation Administration (“FAA”); (6) USPA intentionally interfered with the former member’s business interests and; (7) a co-defendant skydiving center breached R.C. 4113.52 in firing the former member after he filed complaints with the FAA.
In response, USPA argued that (1) the former member’s first three claims relating to violations of USPA’s handbook, breach of contract and breach of good faith and fair dealing are all invalid because there was no contract between USPA and the former member. USPA also argued that: (2) USPA did not act negligently in not renewing the former member’s membership because it owed the former member no duty; (3) USPA did not violate R.C. 1729.24 or SOX because both statutes are inapplicable to the facts of the case and; (4) USPA did not intentionally interfere with the former member’s business interests because USPA was not aware of any potential interests the former member had that may have been affected by the decision to not renew the former member’s membership. USPA was not named in the former’s last claim against the skydiving center for breach of R.C. 4113.52.
The appellate court agreed with USPA relating to the former member’s claim that USPA violated its own handbook in refusing to renew the former member’s membership, explaining that the former member, “as a non-member, is not entitled to rely upon USPA’s compliance with the Manual as a basis for [the] claim that [the former member] and appellees had some contractual relationship which was breached by USPA’s decision not to renew membership.” 2023-Ohio-884 ¶ 15.
The appellate court agreed with USPA relating to the former member’s claims that USPA breached both the party’s contract and a duty of good faith and fair dealing, explaining that, though “membership with the USPA constitutes a contract, we previously concluded that, under these facts, appellant, at the relevant time, was a non-member” and therefore the was no contract. Id. at ¶ 21.
The appellate court agreed with USPA that USPA did not act negligently in not renewing the former member’s membership because USPA owed the former member no duty, explaining that, though the handbook imposed a duty on USPA to treat all individuals and group members equally, the former member was not a member at the time the complaint alleges the harm occurred.
The appellate court agreed with USPA that R.C. 1729.24 and SOX were inapplicable to the facts of the case, explaining that it did not appear that the former member was alleging USPA committed “self-dealing” under R.C. 1729.24, nor did SOX apply because USPA never employed the former member.
The appellate court agreed with USPA on the former member’s claim of intentional interference with business interests, explaining that the former member:
[F]ailed to allege that any appellee had any knowledge of any business relationship [the former member] possessed with area drop zones; moreover, although [the former member] claimed [the] membership was terminated by appellees “wrongful” actions, [the complaint] does not specifically assert appellees’ intentional actions caused a breach of any business relationship of which appellees were, or in particular, USPA was aware. 2023-Ohio-884 ¶ 39.
The appellate court, however, agreed with the former member’s argument that the claim against the skydiving company under R.C. 4113.52 was improperly dismissed by the trial court, explaining that “reviewing the complaint in appellant’s favor, [the former member’s] allegation is sufficient to overcome a motion to dismiss. And, to the extent discovery is, at best, incomplete, we cannot say that appellant’s complaint . . . lacked substantive merit or was otherwise frivolous.” 2023-Ohio-884 ¶ 44.
The appellate court held that the lower court properly dismissed all the former member’s claims except for the under R.C. 4113.52 claim, which was remanded for further proceedings.
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Authors: Matthew John Markling and the McGown & Markling Team.
Note: This blog entry does not constitute – nor does it contain – legal advice. Legal jurisprudence is like the always-changing Midwestern weather. As a result, this single blog entry cannot substitute for consultation with a McGown & Markling attorney. If legal advice is needed with respect to a specific factual situation, please feel free to contact a McGown & Markling attorney.