Opinion
Civil Action No.: 4:18-cv-1336-RBH-TER
01-30-2019
RAQUEL LINDBLAD and TYRESHIA BRANTLEY, as an individual and on behalf of all others similarly situated, Plaintiffs, v. J&L SERVICES, INC., JOEL PELLICI, JR., RICK KAKALL, CARLO HAMADE, and McDONALD'S CORP., Defendant.
REPORT AND RECOMMENDATION
I. INTRODUCTION
This is an employment discrimination and retaliation case. Plaintiffs bring claims pursuant to Title VII of the Civil Rights Act of 1964 (Title VII), 42 U.S.C. § 2000(e) et seq. and 42 U.S.C. § 1981, as well as state law claims for wrongful termination and negligent/reckless supervision and retention. Presently before the court are two motions: Defendants J&L Services, Inc., Joel Pellici, Jr., Rick Jakall, and Carlo Hamade's partial Motion to Dismiss (ECF No. 18) and McDonald's Corp.'s Motion to Dismiss (ECF No. 37). All pretrial proceedings in this case were referred to the undersigned pursuant to the provisions of 28 U.S.C. § 636(b)(1)(A) and (B) and Local Rule 73.02(B)(2)(g), DSC. This report and recommendation is entered for review by the district judge.
This Defendant asserts that Plaintiffs erroneously named McDonald's Corporation, and that counsel would confer with Plaintiffs' counsel and request that Plaintiffs dismiss McDonald's Corporation and substitute McDonald's USA, LLC in its place. Because substitution has not yet occurred, the court will refer to this Defendant as McDonald's Corporation or McDonald's for ease of reference.
II. FACTUAL ALLEGATIONS
Plaintiff Lindblad, a white female, was a store manager at a McDonald's franchise owned by Defendant J&L Services, Inc., which is owned by Defendant Joel Pellici. Compl. ¶¶ 1, 29. One of her responsibilities as store manager was to hire employees. Compl. ¶ 29. Though she sought to hire qualified employees for available positions regardless of their race, her superiors-Defendant Rick Jakall, Area Supervisor for Pellici, and Defendant Carlo Hamade, Director of Operations for Pellici -prohibited her from considering applications submitted by applicants with "black sounding" names or names that suggested a non-Caucasian race or ethnicity in order to comply with "Defendants' policy" related to "demographics" and keeping restaurants "in balance." Compl. ¶¶ 30-33. Lindblad questioned Defendants about this "policy" because she believed the "policy" to be "illegal" since it prohibited her from hiring "person[s] of color." Compl. ¶ 39. Thereafter, Lindblad was subjected to reprimands for making hiring decisions based on qualifications as opposed to race, forced to work extended shifts and on pre-approved days off, forced to work when she was sick, not paid for sick leave for which she was previously compensated, and written up for conduct that did not violate any stated policies or procedures. Compl. ¶ 42. As a result, Plaintiff alleges that she began to suffer emotional distress to the point where she had no choice but to resign. Compl. ¶ 49. Lindblad filed an EEOC charge on or about November 22, 2018. Lindblad received a Notice of Right to Sue on or about March 30, 2018. Compl. ¶ 14.
Brantley applied for employment with Defendants but her application was disregarded on the basis that her name was deemed "black" or "minority." Compl. ¶ 1. Brantley filed an EEOC charge on or about March 15, 2018. Brantley received a Notice of Right to Sue on or about March 30, 2018. Compl. ¶ 15.
III. STANDARD OF REVIEW
Defendants seek dismissal of Lindblad's claims against them pursuant to Fed.R.Civ.P. 12(b)(6). A Rule 12(b)(6) motion examines whether Plaintiff has stated a claim upon which relief can be granted. The United States Supreme Court has made clear that, under Rule 8 of the Federal Rules of Civil Procedure, the complaint must contain sufficient factual matter, accepted as true, to state a claim that is plausible on its face. See Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The reviewing court need only accept as true the complaint's factual allegations, not its legal conclusions. Iqbal, 556 U.S. at 678; Twombly, 550 U.S. at 555.
Expounding on its decision in Twombly, the United States Supreme Court stated in Iqbal:
[T]he pleading standard Rule 8 announces does not require "detailed factual allegations," but it demands more than an unadorned, the defendant-unlawfully-harmed-me accusation. A pleading that offers "labels and conclusions" or "a formulaic recitation of the elements of a cause of action will not do." Nor does a complaint suffice if it tenders "naked assertion[s]" devoid of "further factual enhancement."Iqbal, 556 U.S. at 677-78 (quoting Twombly, 550 U.S. at 555, 556, 557, 570) (citations omitted); see also Bass v. Dupont, 324 F.3d 761, 765 (4th Cir.2003).
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." 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.
Defendant McDonald's Corp. also seeks dismissal of Plaintiffs' Title VII claims pursuant to Rule 12(b)(1), Fed.R.Civ.P. A motion to dismiss under Federal Rule of Civil Procedure 12(b)(1) examines whether the complaint fails to state facts upon which jurisdiction can be founded. It is the plaintiffs' burden to prove jurisdiction, and the court is to "regard the pleadings' allegations as mere evidence on the issue, and may consider evidence outside the pleadings without converting the proceeding to one for summary judgment." Richmond, Fredericksburg & Potomac R.R. Co. v. United States, 945 F.2d 765, 768 (4th Cir.1991).
IV. DISCUSSION
A. Defendants J&L Services, Inc., Joel Pellici, Jr., Rick Jakall, and Carlo Hamade's partial Motion to Dismiss
These Defendants seek to dismiss Lindblad's claims against them for hostile work environment in violation of Title VII (a portion of Count One), wrongful termination in violation of South Carolina public policy (Count Two), negligent/reckless supervision and retention (Counts Three and Four), and discrimination and hostile work environment in violation of 42 U.S.C. § 1981 (Counts Five and Six). In addition, Defendants Pellici, Jackall, and Hamade move this Court to dismiss all of Lindblad's claims asserted against them under Title VII. Defendants argue that Lindblad does not allege that she suffered any discrimination or a hostile work environment because of any of her protected traits under Title VII. They argue that Lindblad's state law claims are duplicative of her Title VII and § 1981 claims and, thus, are subject to dismissal. Finally they argue that Plaintiff's Title VII claims against the individual defendants are barred because Title VII does not impose individual liability.
The only claims that Plaintiff Raquel Lindblad asserts that Defendant J&L Services, Inc. is not moving to dismiss at this time are her claims for retaliation under Title VII and 42 U.S.C. § 1981. The only claim that the individual defendants are not moving to dismiss is Plaintiff's claim against them for retaliation under 42 U.S.C. § 1981.
1. Title VII and § 1981 Claims
As an initial matter, Lindblad asserts in her reply that she does not intend to assert any Title VII claims against the individual defendants and, to the extent such claims are reflected in the complaint, they are withdrawn.
In her first, fifth, and sixth causes of action, Plaintiff asserts that J&L Services violated Title VII and § 1981 by subjecting her to a hostile work environment and retaliation because she was exposed to systematic and pervasive discriminatory hiring practices based on race and ethnicity that Defendants demanded she follow as a condition of her employment. When she expressed her concerns about the discriminatory hiring practices she was subjected to intimidating, threatening, and unwelcome conduct intended to force her to impose and enforce the discriminatory practices.
Title VII makes it "an unlawful employment practice for an employer-(1) to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin...." 42 U.S.C. § 2000e-2(a)(1) (emphasis added). In addition, Title VII makes it an "unlawful employment practice for an employer to discriminate against any of his employees ... because he has opposed any practice made an unlawful employment practice by this subchapter, or because he has made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this subchapter." 42 U.S.C. § 2000e-3(a) (emphasis added).
Similarly, 42 U.S.C. § 1981 protects the equal right of "[a]ll persons within the jurisdiction of the United States" to "make and enforce contracts" without respect to race and defines "make and enforce contracts" to "includ[e] the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship." Further, § 1981 allows a "complaint of retaliation against a person who has complained about violation of another person's contract-related right." CBOCS West, Inc. v. Humphries, 553 U.S. 442, 445 (2008).
Defendants argue that Lindblad's Title VII and § 1981 claims are appropriately pleaded in the retaliation context, which Lindblad has asserted, rather than in the context of discrimination or hostile work environment because Lindblad alleges that Defendants took adverse action against her because of her resistence to what she believed to be discriminatory hiring practices, and not because of any protected class, i.e., her race, color, religion, sex, or national origin. Defendants point to Childress v. City of Richmond, 134 F.3d 1205, 1208 (4th Cir. 1998) for support. In Childress, the Fourth Circuit, in an equally divided, per curiam en banc decision, affirmed a District Court ruling that white male police officers did not have standing to bring an action for discrimination against female and black officers by the officers' supervisor. As Judge Luttig explained in his concurrence:
[I]n order to qualify as a "person aggrieved" authorized to bring a Title VII action, a plaintiff must be a member of the class of direct victims of conduct prohibited by Title VII, that is, the plaintiff must assert his own statutory rights and allege that he, not someone else, has been "discriminate[d] against ... with respect to his compensation, terms, conditions, or privileges of employment, because of [his] race, color, religion, sex, or national origin." It follows that, because the white male plaintiffs in the present case assert only the rights of third-parties to be free from race or sex-based discrimination in the workplace, they have not stated a cause of action under Title VII.Id. at 1209. The facts in Childress are distinguishable from those here. In Childress, white male officers alleged that their immediate supervisor, also a white male, made a number of disparaging remarks to and about female and black members of the police force, some in the presence of the black and female officers, and others made only in the presence of the white officers. Childress v. City of Richmond, Va., 120 F.3d 476, 478 (4th Cir. 1997), reh'g en banc granted, opinion vacated (Sept. 24, 1997), on reh'g en banc, 134 F.3d 1205 (4th Cir. 1998). The plaintiffs in Childress alleged that they suffered a hostile work environment based on their observations of their supervisor's disparaging comments towards members of a protected class. Here, Lindblad alleges that she was forced to participate in Defendants' discriminatory hiring practices.
Defendants also cite to Bermudez v. TRC Holdings, Inc., 138 F. 3d 1176, 1180 (7th Cir. 1998), which is more akin to the facts here. There, a white female sued her employer for race and sex discrimination, arguing that the company, an employment agency, engaged in discriminatory practices by searching for white candidates for placement with certain companies. The Seventh Circuit rejected her Title VII claims, holding that she was not the target of discrimination and noting "it is hard to see how [the plaintiff's theory] could be reconciled with the proposition that laws must be enforced by the victims (or by public prosecutors) rather than by third parties discomfited by the violations." Id.
There has been a split in the circuits that have addressed similar factual scenarios. For example, in Johnson v. Univ. of Cincinnati, 215 F.3d 561, 574-75 (6th Cir. 2000), the Sixth Circuit held that a white male affirmative action official at the defendant university could bring a discrimination claim under both Title VII and § 1981 based upon his advocacy for hiring minorities. The court stated "the fact that Plaintiff has not alleged discrimination because of his race is of no moment inasmuch as it was a racial situation in which Plaintiff became involved—Plaintiff's advocacy on behalf of women and minorities in relation to Defendant's alleged discriminatory hiring practices." Id. at 575. See also Stewart v. Hannon, 675 F.2d 846 (7th Cir. 1982) (court upheld claim of white plaintiff who sought to enjoin the defendants from administering an assistant principal examination, claiming that racial and ethnic discrimination existed in the test and excluded black and Hispanic candidates from positions as principals); EEOC v. Mississippi College, 626 F.2d 477 (5th Cir. 1980) (holding that a white college instructor sufficiently stated a claim when she asserted that the defendant college discriminated against blacks on the basis of race in recruitment and hiring); Clayton v. White Hall Sch. Dist., 875 F.2d 676, 679-80 (8th Cir. 1989) (upholding the claim of a white plaintiff who worked at a school cafeteria and complained that the school's policy allowed the children of teachers to attend the school regardless of where they lived but denying the same privilege for non-teaching staff constituted racially motivated discrimination because many of the non-teaching staff at the school were non-white racial minorities).
However, in 2011, the United States Supreme Court held that the term "aggrieved" in Title VII incorporated the "zone of interests" test, which enables suit by any person with an interest arguable sought to be protected by the statute. Thompson v. N. American Stainless, LP., 562 U.S. 170, 177 (2011)(internal citations omitted). The "zone of interests" test denies a right to review "if Plaintiff's interests are so marginally related to or inconsistent with the purposes implicit in the statute that it cannot reasonably be assumed that congress intended to permit the suit." Id. (internal citations omitted). The test excludes plaintiffs"who might technically be injured in an Article III sense but whose interests are unrelated to the statutory prohibitions in Title VII." Id. at 178. The Southern District of Florida in a published case, in addressing Thompson's new test, found plaintiff potentially stated a claim of discrimination under Title VII where plaintiff's complaint possibly suggested that defendant required plaintiff as part of her duties to be the delivery vehicle of defendant's discrimination against other employees, essentially a conduit of discrimination. Finn v. Kent Security Servs., 981 F. Supp. 2d 1293, 1300 (S.D. Fl. 2013). However, the Florida court did not decide whether plaintiff actually fell within the zone of interests of Title VII because the complaint there was not clear. Accepting the facts as true as pleaded in the instant case, at this stage, it cannot be said that Plaintiff's allegations display interests unrelated to the statutory prohibitions in Title VII. Accordingly, dismissal of Plaintiff's hostile work environment claims under Title VII and § 1981 at this point in the litigation is not appropriate.
2. Wrongful Termination
These Defendants also seek dismissal of Plaintiff's wrongful termination cause of action. Generally speaking, South Carolina law allows an employer to discharge an employee without incurring liability for good reason, no reason, or bad reason. Culler v. Blue Ridge Elec. Coop., 309 S.C. 243, 245, 422 S.E.2d 91, 92 (1992). However, the South Carolina Supreme Court has recognized a "public policy" exception to this doctrine. Ludwick v. This Minute of Carolina, Inc., 287 S.C. 219, 225, 337 S.E.2d 213, 216 (1985). In Ludwick, the court held that an employee has a tort cause of action for wrongful discharge where there is a retaliatory discharge of the at-will employee in violation of a clear mandate of public policy. Id. The public policy exception clearly applies in cases where the employer either (1) requires the employee to violate the law, or (2) the reason for the employee's termination is itself a violation of criminal law. Lawson v. South Carolina Dep't of Corrections, 340 S.C. 346, 350, 532 S.E.2d 259, 260 (2000).
However, the public policy exception does not extend to situations where the employee has an existing statutory remedy for wrongful termination. See Dockins v. Ingles Markets, Inc., 306 S.C. 496, 413 S.E.2d 18 (1992) (employee allegedly terminated in retaliation for filing complaint under Fair Labor Standards Act had existing statutory remedy for wrongful termination); see also Epps v. Clarendon County, 304 S.C. 424, 405 S.E.2d 386 (1991) (employee had an existing remedy for wrongful termination under Title 42 U.S.C. § 1983).
Here, Lindblad does have a remedy for discriminatory and retaliatory constructive discharge, and has pleaded as much in her causes of action under Title VII and § 1981. Lindblad argues that Defendants assertion that she has an existing statutory remedy is inconsistent with their argument that she fails to allege a discrimination claim. She argues that, at the least, her wrongful termination claim should be considered pleaded in the alternative, and, as such, she is not precluded from asserting it. However, the case law provides that a wrongful termination cause of action is available "to provide a remedy for a clear violation of public policy where no other reasonable means of redress exists," Stiles, 335 S.C. at 228, 516 S.E.2d at 452, not to provide a remedy when a plaintiff is unable to prove his claim under an available statutory remedy. The case law does not provide that a plaintiff must elect either a statutory remedy or a common law remedy, as Plaintiff seems to suggest. Indeed, courts have dismissed claims for wrongful discharge even where the plaintiff has not asserted a cause of action under the appropriate statutory provision. See, e.g., Dockins, 406 S.C. at 498, 413 S.E.2d at 19; Epps, 304 S.C. at 426, 405 S.E.2d at 387. Thus, it follows that the prohibition is not from a double recovery, but from pursuing a claim under common law when a statutory remedy exists. Therefore, because statutory remedies exist for Plaintiff's claims of discharge based on discrimination and retaliation, dismissal of Plaintiff's wrongful termination claim is proper.
This court has previously noted that "there is no reported case in South Carolina which allows a claim for wrongful discharge in violation of public policy in which the claimant has been constructively discharged." Moore v. Reintjes of the South, Inc., Civil Action No.2:00-2224-DCN, ECF No. 17, p. 13, n.1 (D.S.C. February 28, 2001) (Report and Recommendation) adopted by 2001 WL 876222 (D.S.C. May 1, 2001); see also Mason v. Mason, 412 S.C. 28, 63, 770 S.E.2d 405, 423 (Ct. App. 2015) (affirming special referee's denial of wrongful discharge claim where the plaintiff stopped working voluntarily).
3. Negligent Supervision and Retention
Finally, these Defendants argue that Plaintiff's claims for negligent supervision and retention are preempted by both the South Carolina Workers' Compensation Act (SCWCA), S.C. Code Ann. § 42-1-540, and by Title VII. The SCWCA provides,
The rights and remedies granted by this Title to an employee when he and his employer have accepted the provisions of this Title, respectively, to pay and accept
compensation on account of personal injury or death by accident, shall exclude all other rights and remedies of such employee, his personal representative, parents, dependents or next of kin as against his employer, at common law or otherwise, on account of such injury, loss of service or death.S.C. Code Ann. § 42-1-540. The South Carolina General Assembly has, therefore, vested the South Carolina Workers' Compensation Commission with exclusive original jurisdiction over an employee's work-related injuries. See Sabb v. S.C. State Univ., 567 S.E.2d 231, 234 (S.C. 2002). South Carolina courts, applying Section 42-1-540, have held that claims for negligent supervision specifically are covered by the SCWCA. See Id.; Dewese v. Sci. Applications Int'l Corp., No. 2:11-3024-DCN-BHH, 2012 WL 1902264, at *3 (D.S.C. May 2, 2012); Palmer v. House of Blues Myrtle Beach Rest. Corp., No. 4:05-3301-RBH, 2006 WL 2708278, at *3 (D.S.C. Sept. 20, 2006); Dickert v. Metro. Life Ins. Co., 311 S.C. 218, 428 S.E.2d 700 (S.C. 1993); Washington v. Hilton Hotels Corp., 2008 WL 747792, at * 4 (D.S.C. Mar.17, 2008); Edens v. Bellini, 359 S.C. 433, 597 S.E.2d 863 (S.C. App. 2004).
Lindblad argues that three exceptions to the SCWCA apply such that her negligent supervision and retention claims do not fall within the SCWCA. First, she argues that the mental-mental exception applies. To be compensable under the SCWCA, mental-mental injuries must have been caused by exposure to unusual and extraordinary conditions in her employment. Tennant v. Beaufort Cnty. Sch. Dist., 381 S.C. 617, 621 (2009); see also S.C. Code Ann. § 42-1-160 (B)(1) ("Stress, mental injuries, and mental illness arising out of and in the course of employment unaccompanied by physical injury and resulting in mental illness or injury are not considered a personal injury unless the employee establishes, by a preponderance of the evidence: (1) that the employee's employment conditions causing the stress, mental injury, or mental illness were extraordinary and unusual in comparison to the normal conditions of the particular employment.") (emphasis added). She argues that the alleged discriminatory hiring practices that caused her mental conditions were not extraordinary or unusual because they were Defendant's established procedures. Nevertheless, this exception does not apply because Plaintiff alleges that she suffered physical injuries in addition to emotional distress. See Complaint ¶¶ 43, 46, 68, 80 ("severe anxiety, emotional distress, migraines, and elevated blood pressure;" "the stress from the hostile work environment has manifested in physical symptoms;" "subjected to a hostile work environment that impaired her physical and emotional health;" "Lindblad suffered actual damages, including physical and emotional distress.").
Next, Lindblad argues that her claims fall outside the SCWCA because she has alleged intentional, injurious conduct by "alter egos" of the employer. See Dickert, 311 S.C. at 220, 428 S.E.2d at 701. However, Lindblad's claims for negligent supervision and retention are not intentional torts. Thus, this exception is not helpful to Lindblad either.
Finally, Lindblad argues that her claims qualify for the pecuniary damage exception, citing Hand v. SunTrust Bank, Inc., No. 6:11-cv-0501-JMC, 2012 WL 3834859, *2 (D.S.C. Sept. 4, 2012). In Hand, the district court rejected the defendant employer's argument that the plaintiff's claim for negligent misrepresentation was barred by the SCWCA's exclusivity provision because the plaintiff had not alleged that she had suffered any damages as a result of a personal injury: "In the instance case, Hand seeks damages associated with her termination of employment. The injury of which she complains is pecuniary in nature and not remotely related to any injury to her person." Id. The court distinguished the case before it from the cases cited by the employer on the basis that, in each of those cases, the plaintiff had asserted personal injuries arising from negligent supervision and retention. Id. Here, Lindblad does allege that she suffered damages as a result of personal injury. Therefore, her argument that her negligent supervision and retention claims are not barred by the SCWCA's exclusivity provision because she alleges pecuniary damages as well as personal injury damages is without merit.
In sum, each of Lindblad's arguments that her negligent supervision and retention claims are not barred by the SCWCA's exclusivity provision are unavailing and dismissal of these claims is appropriate.
As such, the court need not reach Defendants' argument that these claims are also barred by Title VII.
4. Recommendation
For the reasons discussed above, it is recommended that these Defendants' motion to dismiss be denied as Lindblad's hostile work environment in violation of Title VII (a portion of Count One), granted as to wrongful termination in violation of South Carolina public policy (Count Two) and negligent/reckless supervision and retention (Counts Three and Four), and denied as to discrimination and hostile work environment in violation of 42 U.S.C. § 1981 (Counts Five and Six).
B. Defendant McDonald's Corporation's Motion to Dismiss
McDonald's seeks dismissal of all claims asserted against it. It argues that this court lacks jurisdiction over Plaintiffs' Title VII claims against McDonald's because Plaintiffs did not name McDonald's as a respondent in their Equal Employment Opportunity Commission (EEOC) administrative charges. McDonald's also argues that Plaintiffs fail to set forth allegations of wrongdoing as to each defendant sufficient to give each defendant fair notice" of the claim. Bracey v. Horry Cty. Council, No. 4:17-cv-00399-RBH, 2018 WL 826725 (D.S.C. Feb. 12, 2018) (emphasis added).
As noted above, with a Rule 12(b)(1) motion for lack of subject matter jurisdiction, courts may consider evidence outside the pleadings without converting the proceeding to one for summary judgment." Richmond, Fredericksburg & Potomac R.R. Co., 945 F.2d at 768.
Plaintiffs Complaint alleges that Pellicci is the sole owner of J&L Services, Inc., which in turn, owns and operates various McDonald's franchise restaurants, including the restaurant located at Highway 544 Singleton Ridge Road, Red Hill, South Carolina 29526 where Lindblad was employed. Compl. ¶¶ 6-8. Brantley applied for employment at one of J&L Services, Inc.'s McDonald's franchise restaurants through an online application. Smith Decl. (Ex. 1 to McDonald's Motion.) Lindblad was hired by Pellicci to work at his McDonald's franchise. Compl. ¶ 4. Plaintiffs allege Jakall was the Area Supervisor for "a patch of Defendant Pellicci's stores," and Hamade was "the Director of Operations for Defendant Pellicci's franchise." Compl. ¶¶ 8-9. Defendants Jakall and Hamade allegedly supervised Lindblad's daily work activities, including hiring. Compl. ¶¶ 8-9, 31-33, 79.
McDonald's operates McDonald's restaurants and also franchises McDonald's restaurants throughout the United States. Compl. ¶ 2. With respect to franchising, McDonald's enters into a franchise agreement, which gives franchisees a license to use the McDonald's name, trademark, and business practices, and to benefit from an established method of operating a restaurant. See Franchise Agreement §§ 1-2. The execution of a business plan and operation of the business remain solely under the control of the franchisees. Franchise Agreement §§ 1-2
The terms of the McDonald's Franchise Agreement with Pellicci provides that Pellicci is responsible for compliance with all applicable laws and regulations related to his restaurant's business and employees and is exclusively liable for all violations of law. Franchise Agreement §12(k). The franchise agreement further states that McDonald's and Pellicci are not partners, associates, or joint employers. Franchise Agreement § 16. As alleged by Plaintiffs, decisions regarding the terms and conditions of employment of Pellicci's employees, such as the hiring, firing and discipline of those employees, are made exclusively by Pellicci and his franchise locations supervisors and not by McDonald's. Compl. ¶¶ 4, 29-33.
Lindblad's claims arise from "systemic and pervasive discriminatory employment practices perpetrated in thirteen franchised McDonald's Restaurants." Compl. ¶ 1. (emphasis added). Plaintiffs do not specifically allege that any employee of McDonald's created, implemented, took part in, or encouraged the allegedly discriminatory hiring practices. Compl. ¶¶ 28-52, 96-103. They also do not allege that they ever had any interactions with McDonald's employees. Compl. ¶¶ 28-52, 96-103.
In Lindblad's administrative charge to the EEOC, she asserted Title VII violations against "J&L Services (McDonald's Franchisee)." Compl. ¶ 14; Smith Decl., Ex. 2. Brantley filed an administrative charge with the EEOC for the alleged violations of Title VII against "J&L Services (d/b/a McDonald's)." Compl. ¶ 15; Smith Decl., Ex. 1.
2. Subject Matter Jurisdiction
"Before filing suit under Title VII, a plaintiff must exhaust her administrative remedies by bringing a charge with the EEOC." Smith v. First Union Nat'l Bank, 202 F.3d 234, 247 (4th Cir. 2000); see also 42 U.S.C. § 2000e-5(e)(1). The allegations contained in the administrative charge of discrimination generally limit the scope of any subsequent judicial complaint. King v. Seaboard Coast Line R.R. Co., 538 F.2d 581, 583 (4th Cir. 1976). Title VII precludes a plaintiff from stating a claim against any defendant not named as a respondent in an EEOC charge. 42 U.S.C. § 2000e-5(f)(1). This naming requirement serves to put the named party on notice of a claim against it before a lawsuit is filed, thereby permitting that party to resolve the claim by conciliation and voluntary compliance. See Mickel v. S.C. State Emp't Serv., 377 F.2d 239, 242 (4th Cir. 1976).
McDonald's argues that Plaintiffs administrative charges failed to put McDonald's on notice of Plaintiffs' claims against it because both EEOC charges (1) named as the sole respondent (and employer) "J&L Services," not McDonald's; and (2) provided only J&L Services address at "171 McDonald Ct., Myrtle Beach, SC 29588," not McDonald's address. (Smith Decl., Exs. 1-2.). As such, McDonald's seeks dismissal of the Title VII claims asserted against it.
Plaintiffs argue that the Fourth Circuit has recognized the judicially-developed "substantial identity" exception to the naming requirement. "Construed strictly . . . this [naming] requirement could present a virtually insurmountable barrier for Title VII claimants, many of whom file administrative charges without the assistance of counsel." Tietgen v. Brown's Westminster Motors, Inc., 921 F.Supp. 1495, 1498 (E.D.Va.1996); see also Alvarado v. Bd. of Trustees, 848 F.2d 457, 460 (4th Cir. 1988) ("Title VII does not require procedural exactness from lay complainants: 'EEOC charges must be construed with utmost liberality since they are made by those unschooled in the technicalities of formal pleading.' " (citing Kaplan v. Int'l Alliance of Theatrical & Stage Emps., 525 F.2d 1354, 1359 (9th Cir.1975))). Thus, "[a] plaintiff's failure to name a defendant in an EEOC charge does not bar a subsequent suit if 'the purposes of the naming requirement were substantially met,' i.e. if (1) all defendants received fair notice, and (2) the EEOC was able to attempt conciliation with the responsible parties." Davis v. BBR Mgmt., LLC, Civil Action No. DKC 10-0552, 2011 WL 337342, at *5 (D.Md. Jan.31, 2011) (quoting Vanguard Justice Soc. Inc. v. Hughes, 471 F.Supp. 670, 687 (D.Md.1979)).
Several district courts in the Fourth Circuit have applied the "identity of interest" or "substantial identity" test to determine whether a defendant had notice of the EEOC charges and participated in the conciliation process. See, e.g., Mayes v. Moore, 419 F.Supp.2d 775, 782-83 (M.D.N.C.2006); Jamieson v. Valle Bank, No. 7:05CV00165, 2005 WL 2233545 (W.D.Va. Sept. 13, 2005); Tietgen, 921 F.Supp. at 1498-99; see also Alvarado, 848 F.2d at 461 (explaining that the "Fourth Circuit has not had occasion to decide whether to adopt the substantial identity exception" but noting that EEOC v. American National Bank, 652 F.2d 1176, 1186 n. 5 (4th Cir.1981),quoted such language "with approval ... in dictum"). In applying the substantial identity test, courts consider four factors:
(1) Whether the role of the unnamed party could through reasonable effort by the complainant be ascertained at the time of the filing of the EEOC complaint;McAdoo v. Toll, 591 F.Supp. 1399, 1403 (D.Md.1984); see also Robinson v. S.C. Dep't of Corr., C.A. No. 5:10-2593-HMH-KDW, 2012 WL 581042, at *3 (D.S.C. Mar. 13, 2012); Grant v. I.N.I. Corp., Civil Action No. 4:11-cv-RBH-TER, 2012 WL 486881, t *3 (D.S.C. Jan. 26, 2012). Plaintiffs have failed to mention, much less address, these factors. McDonald's argues that each of these factors weighs heavily against application of the substantial identity exception to the naming requirement. First, Plaintiffs knew the identity of McDonald's at the their administrative charges. McDonald's notes that, in each charge, the parties listed the number of employees of the respondent as "appx. 500," implying that the charges were limited to J&L Services and did not include McDonald's. Second, J&L Services and McDonald's are not "so similar" for purposes of obtaining voluntary conciliation and compliance that it would be unnecessary to include McDonald's in the EEOC proceedings. As discussed above, Plaintiffs concede that McDonald's and J&L Services are separate corporate entities and therefore J&L Services' participation in the voluntary EEOC conciliation and compliance process did not lessen McDonald's right to participate in the process. Third, McDonald's would suffer unfair prejudice by remaining a party to Plaintiffs' Title VII claims because it was not given the opportunity to respond to the administrative charges or participate in the EEOC's resolution and conciliation process. See, e.g., Polite v. Spherion Staffing, LLC, No. 2:14-cv-4756-DCN-JDA, 2015 WL 1549050, * (D.S.C. April 7, 2015). Finally, Plaintiffs have not alleged that McDonald's made any representations to them with respect to its relationship with J&L Services.
(2) Whether, under the circumstances, the interest of the named party are so similar to the unnamed party's that for the purposes of obtaining voluntary conciliation and compliance it would be unnecessary to include the unnamed party in the EEOC proceedings;
(3) Whether its absence from the EEOC proceedings resulted in actual prejudice to the interests of the unnamed party; and
(4) Whether the unnamed party had in some way represented to the complainant that its relationship with the complainant is to be through the named party.
The relationship of franchisor/franchisee is not similar to other relationships that have been found to meet the substantial identity exception. Bile v. RREMC, LLC, No. 3:15-CV-51, 2015 WL 3902391, at *2 (E.D. Va. June 24, 2015); see also Baetzel v. Home Instead Senior Care, 370 F. Supp. 2d 631, 637-38 (N.D. Ohio 2005)(finding the substantial identity exception was not met because the interests of franchisor could reasonably diverge from those of the franchisee at the EEOC proceeding because the franchisee would find it more advantageous to contest the discrimination charge than would the franchisor, "whose interests extend to preserving goodwill for all of its franchises and protecting its customers from threats to their health or safety"), but see Hile v. Jimmy Johns Highway 55, Golden Valley, 899 F. Supp. 2d 843, 849 (D. Minn. 2012)(finding "a franchisor and its franchisees have an identity of interest in defending discrimination claims based on the franchisees' conduct, particularly when that conduct purportedly was undertaken due to the franchisor's unlawful policies. More importantly, whether there exists an identity of interest is a fact question ill-suited to resolution at this early juncture of the case."). "Courts have regularly found the identity of interest exception inapplicable in the franchisor-franchisee context when a plaintiff fails to identify the franchisor in the EEOC charge, and later sets forth conclusory allegations regarding the franchisor's 'right to control' the franchisee." Kearney v. Kessler Family LLC, No. 11-CV-06016, 2011 WL 2693892, at *7 (W.D.N.Y. July 11, 2011)(citing Reeve v. SEI/Aaron's, Inc., No. 06-CV-0642C, 2008 WL 905908, at *2 (W.D.N.Y. Mar. 31, 2008) and Manos v. Geissler, 377 F. Supp.2d 422 (S.D.N.Y.2005)) (dismissing Title VII claims for failure to satisfy statutory prerequisites because plaintiff did not provide notice of charge to the franchisor); see also Evans v. McDonald's Corp., 936 F.2d 1087, 1090 (10th Cir. 1991).
Although Plaintiffs address their "joint employer" allegations as support for their opposition to McDonald's motion to dismiss the Title VII claim, district courts in the Fourth Circuit have held that even if a plaintiff advances a theory of "joint employer, by which both entities may be considered" plaintiff's employer, such theory does not alter the requirement that "[an EEOC] charge must be filed against each employer to pursue a claim against that employer." Phillips v. Goodwill Indus., No. GLR-14-3256, 2015 WL 3844089, at *2 (D. Md. June 19, 2015) (citing EEOC Compliance Manual, § 2- III(B)(1)(a)(iii)(b)). Thus, because Plaintiffs failed to name McDonald's as a respondent in their EEOC administrative charges, this court lacks jurisdiction over their Title VII claims against McDonald's and dismissal is appropriate pursuant to Rule 12(b)(1).
3. Failure to State a Claim
McDonald's also argues that Plaintiffs fail to allege specific factual allegations against it to state a claim that is plausible on its face. As an initial matter, McDonald's asserts in its motion that it also joins the arguments raised by the remaining Defendants in their motion to dismiss. As such, dismissal of Lindblad's claims for wrongful termination and negligent supervision and retention is appropriate as to McDonald's for the same reasons set forth above. Thus, the only other claims to address are both Plaintiffs' claims for discrimination and retaliation under § 1981.
Unlike Title VII, there are no exhaustion requirements under § 1981. Doe v. Virginia Dep't of State Police, 713 F.3d 745, 774 n. 6 (4th Cir. 2013)(citing Lilly v. Harris-Teeter Supermarket, 720 F.2d 326, 334 (4th Cir. 1983) (recognizing previously settled rule that, as to discrimination "claims brought under 42 U.S.C. § 1981, exhaustion of EEOC remedies is not a prerequisite to filing suit")). McDonald's does not allege that Plaintiff's fail to allege facts sufficient to state a claim for discrimination and retaliation under § 1981; rather, it argues that Plaintiff fails to allege facts sufficient to state a claim against McDonald's under a theory of joint employer. With respect to McDonald's in particular, Plaintiffs allege that
2. McDonald's® is a chain of fast-food restaurants, some owned and operated by the chain's corporate parents, McDonald's® Corp., and others by franchisees. Together, both types of restaurants and McDonald's® Corp. form a unified business system—the self-proclaimed McDonald's® System—that operates through uniform standards controlled by McDonald's® Corp.Compl. ¶¶ 2, 3, 10, 52 (emphasis added).
3. In order to maximize its profits, McDonald's® Corp. has control over nearly every aspect of its restaurants' operations. Though nominally independent, franchised McDonald's® restaurants are predominantly controlled by McDonald's® Corp. McDonald's® Corp. exercises control through its franchise agreement with franchisees; policies and manuals governing every aspect of restaurant operations; continual oversight by corporate representatives and in-store computer systems; mandatory computer systems generating employees' schedules and assignments; comprehensive training of all restaurant employees from general managers to cooks; and involvement with hiring decisions.
. . .
10. Defendant McDonald's® Corp. ("McDonald's") owns, operates, and leases restaurants in South Carolina and promulgates a system of rules, directives, and/or commands that all McDonald's® franchisees must follow.
. . .
52. Upon information and belief, McDonald's® exercises actual control over the day-to-day operations and activities of the other Defendants herein. Upon information and belief, McDonald's® supervised and controlled the other Defendants' policies and practices, including but not limited to supervising and controlling its practices, policies and procedures governing racial discrimination, harassment and retaliation, such that the other Defendants were alter egos of McDonald's. Accordingly, McDonald's® is accountable for their actions.
These allegations are sufficient at this stage of the litigation to state a claim against McDonald's as a joint employer of Lindblad and potential employer of Brantley. See Butler v. Drive Auto. Indus. of Am., 793 F.3d 404, 410 (4th Cir. 2015) (setting forth the factors to consider in determining whether an individual is jointly employed). Accordingly, dismissal of Plaintiffs' § 1981 claims are not appropriate at this stage of the litigation.
4. Recommendation
For the reasons discussed above, it is recommended that McDonald's motion to dismiss be granted as to Plaintiffs' Title VII claims (Count One and a portion of the Class Cause of Action), Lindblad's wrongful termination in violation of South Carolina public policy claim (Count Two), and Lindblad's negligent/reckless supervision and retention claims (Counts Three and Four), and denied as to Plaintiffs' discrimination, hostile work environment in violation and retaliation in violation of 42 U.S.C. § 1981 claims (Counts Five and Six and a portion of the Class Cause of Action).
V. CONCLUSION
Therefore, it is recommended that the Motions to Dismiss (ECF No. 18, 37) be denied in part and granted in part. Specifically, it is recommended that Defendants J&L Services, Inc., Joel Pellici, Jr., Rick Jakall, and Carlo Hamade's motion to dismiss be denied as Lindblad's hostile work environment in violation of Title VII (a portion of Count One), granted as to wrongful termination in violation of South Carolina public policy (Count Two) and negligent/reckless supervision and retention (Counts Three and Four), and denied as to discrimination and hostile work environment in violation of 42 U.S.C. § 1981 (Counts Five and Six).
Further, it is recommended that McDonald's motion to dismiss be granted as to both Plaintiffs' Title VII claims (Count One and a portion of the Class Cause of Action), Lindblad's wrongful termination in violation of South Carolina public policy claim (Count Two), and Lindblad's negligent/reckless supervision and retention claims (Counts Three and Four), and denied as to both Plaintiffs' discrimination, hostile work environment in violation and retaliation in violation of 42 U.S.C. § 1981 claims (Counts Five and Six and a portion of the Class Cause of Action).
s/Thomas E. Rogers, III
Thomas E. Rogers, III
United States Magistrate Judge January 30, 2019
Florence, South Carolina