Opinion
2:24-CV-00887-BHH-MGB
04-26-2024
Wayne Newman, Plaintiff, v. Ambry Genetics Corporation, Joe Bedell, and Jack Shandley, Defendants.
REPORT AND RECOMMENDATION
MARY GORDON BAKER UNITED STATES MAGISTRATE JUDGE
Plaintiff, through counsel, filed the instant employment action in the Charleston County Court of Common Pleas on September 1, 2023. (Dkt. No. 1, 1-1.) On January 19, 2024, Plaintiff filed an Amended Complaint. (Dkt. No. 1, 1-1.) Defendants removed the case to federal court on February 21, 2024. (Dkt. No. 1.)
Currently before this Court is Defendants' Motion to Stay the Proceedings and Compel Arbitration. (Dkt. No. 7.) Pursuant to the provisions of Title 28, United States Code, Section 636(b)(1)(A), and Local Rule 73.02(B)(2)(g), D.S.C., all pretrial matters in employment discrimination cases are referred to a United States Magistrate Judge. For the reasons stated herein, the undersigned RECOMMENDS that the Court GRANT Defendants' motion and compel arbitration.
FACTUAL SUMMARY
According to the First Amended Complaint, Plaintiff began working as an Account Executive for Defendant Ambry in November 2018. (Dkt. No. 1-1.) Plaintiff alleges that he enjoyed his job, and that he met and exceeded expectations at all times during his employment. (Id.) Plaintiff claims that he reported directly to Defendant Bedell and that Defendant Bedell gave him high scores on his employment evaluations, in addition to nominating him for leadership roles and awards. (Id.) Nevertheless, Plaintiff was terminated on April 22, 2022. (Id.) Plaintiff claims that he was “terminated [] 14 days after he cooperated in [an] internal investigation where a coworker reported that Defendant Bedell sexually harassed her.” (Id.)
More specifically, Plaintiff alleges that he “provided a written statement to human resources corroborating a female [employee's] report that she was sexually harassed by manager Bedell” on April 7, 2022, and that “[o]n April 22, 2022, Bedell and Monica Mullen [] from Human Resources [] terminated Plaintiff on a conference call.” (Id.) The statement followed an incident on March 29, 2022 during which Plaintiff, Defendant Bedell, Defendant Shandley, the alleged sexual harassment victim, and another co-worker were out to dinner with a client. (Id.) They shared a car back to their hotel. (Id.) During the car ride, Defendant Bedell allegedly “looked over his right shoulder and looked directly at [the victim] as he said ‘she's a big, fat girl with a big fat butt,'” and laughed. (Id.) According to the First Amended Complaint, Defendant Bedell repeated this statement and laughed again before suggesting that everyone sing karaoke.(Id.) Plaintiff claims that a co-worker made a comment about Defendant Bedell's behavior being inappropriate after everyone had returned to the hotel. (Id.) According to Plaintiff, Defendant Shandley “responded by laughing and then [saying] ‘that's [Bedell].'” (Id.) The First Amended Complaint explains that “Plaintiff took that [to] mean [] Bedell had acted in this manner before and Shandley accepts it for the norm.” (Id.)
The Incident Report attached to Defendants' reply paints the car ride differently. (Dkt. No. 9-1.) In the Incident Report, the victim claims that Defendant Bedell's statement was made “in a kind of sing song voice” and that when he did not get a response from anyone in the car he said “Don't you know what movie that is from?” and referenced Silence of the Lambs. (Id.)
On April 4, 2022, Plaintiff was asked by the Human Resources Department to provide a written statement detailing his recollection of the incident. (Id.) Plaintiff provided the requested statement on April 7. (Id.) According to the First Amended Complaint, Plaintiff's statement corroborated the alleged victim's account of the incident, but statements from Defendant Shandley and the other co-worker present in the car did not corroborate the alleged victim's story. (Id.)
Plaintiff claims that “Defendant Ambry failed to take any remedial measures against Bedell related to [the] report.” (Id.) Plaintiff further claims that Defendant Bedell “was aware that HR had investigated [the] complaint and that only Plaintiff corroborated [the victim's] account of what happened.” (Id.) Plaintiff claims that he was terminated on April 22, 2022, due to a purported reduction in force at the company. (Id.) Plaintiff alleges that this reason is “suspect” because: (1) “Defendants were in the process of offering shares to the public and planned to expand its sales force by an estimated 70 Sales Representatives by mid to end of Summer 2022,” (2) “at the time Plaintiff was terminated, Ambry was currently advertising for Account Executives Sales openings, which is the field Plaintiff worked in,” and (3) “Plaintiff was a top performer and longtime employee.” (Id.) Further, Plaintiff alleges that other members of his team were underperforming and placed on performance improvement plans yet were not terminated. (Id.)
Plaintiff claims that Defendant Bedell hosted a conference call with Plaintiff's team after he was terminated, during which Defendant Bedell and Defendant Shandley “made false and defamatory statements about Plaintiff's ability to perform his job.” (Id.) Plaintiff claims that Defendants Bedell and Shandley “continue to make false and defamatory statements to Plaintiff's customers and work colleagues falsely insinuating that Plaintiff had engaged in wrongdoing and the company had no choice but to fire him.” (Id.) According to Plaintiff, “Bedell and Shandley's false statements damaged Plaintiff's reputation in the medical sales industry” and “[a]s a result of Bedell's and Shandley's false and defamatory statements, Plaintiff was unable to find a position in [the] genetic oncology field.” (Id.)
Plaintiff claims that he has suffered mental anguish, loss of income, public embarrassment and humiliation, damage to his personal and professional reputation, and other damages because of Defendants' actions. (Id.) He therefore filed the instant civil action, alleging retaliation under Title VII of the Civil Rights Act of 1964 (“Title VII”), defamation, negligent supervision, tortious interference with a contract, and civil conspiracy. (Id.)
PROCEDURAL HISTORY
As noted, Plaintiff originally filed this lawsuit in the Charleston County Court of Common Pleas on September 1, 2023. (Dkt. No. 1, 1-1.) On January 19, 2024, Plaintiff filed an Amended Complaint. (Dkt. No. 1, 1-1.) Defendants then removed the case to federal court on February 21, 2024. (Dkt. No. 1.) On February 28, 2024, Defendants filed a Motion to Compel Arbitration and Stay the Proceedings (Dkt. No. 7). Plaintiff filed a response in opposition to Defendants' motion on March 13, 2024. (Dkt. No. 8.) Defendants replied to Plaintiff's response on March 20, 2024. (Dkt. No. 9.) After requesting and receiving leave to do so, Plaintiff filed a Sur Reply on April 2, 2024. (Dkt. Nos. 10, 11, 12.) Accordingly, the motion before the Court has been fully briefed and is ripe for disposition.
DISCUSSION
Defendants argue that Plaintiff's claims must be arbitrated because they are within the scope of a valid arbitration agreement. (Dkt. No. 7.) In response, Plaintiff contends that his claims relate to a sexual harassment dispute and, as such, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (“EFAA”) renders the arbitration agreement unenforceable. (Dkt. No. 8.) For the reasons set forth below, the undersigned finds that Plaintiff's claims do not fall within the purview of the EFAA. The undersigned therefore RECOMMENDS that Defendants' motion (Dkt. No. 7) be GRANTED, and that the parties be COMPELLED to arbitrate.
I. Relevant Law
A. Federal Arbitration Act
It is undisputed that the Federal Arbitration Act (“FAA”) governs the arbitrability of this dispute. (See generally Dkt. Nos. 7, 8, 9, 12.) Section 4 of the FAA, provides, in part, that a “party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court . . . for an order directing that such arbitration proceed in the manner provided for in such agreement.” 9 U.S.C. § 4. “[Q]uestions of arbitrability must be addressed with a healthy regard for the federal policy favoring . . . [and] any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.” Moses H. Cone Mem 'I Hosp. v. Mercury Const. Corp., 460 U.S. 1, 25-26 (1983). “In the Fourth Circuit, a litigant can compel arbitration under the FAA if he can demonstrate ‘(1) the existence of a dispute between the parties, (2) a written agreement that includes an arbitration provision which purports to cover the dispute, (3) the relationship of the transaction, which is evidenced by the agreement, to interstate or foreign commerce, and (4) the failure, neglect or refusal of [a party] to arbitrate the dispute.'” Adkins v. Lab. Ready, Inc., 303 F.3d 496, 500-01 (4th Cir. 2002) (citing Whiteside v. Teltech Corp., 940 F.2d 99, 102 (4th Cir. 1991)).
Plaintiff does not dispute that each of the elements necessary to compel arbitration is present in this case. (Dkt. No. 8.) Instead, Plaintiff argues that the First Amended Complaint asserts claims involving a sexual harassment dispute, making the arbitration agreement unenforceable under the EFAA. (Id.)
B. Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act
The EFAA, which was signed into law on March 3, 2022, amends the FAA as follows:
Notwithstanding any other provision of this title, at the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute, . . . no predispute arbitration agreement . . . shall be valid or enforceable with respect to a case which is filed under Federal, Tribal, or State law and relates to the sexual assault dispute or sexual harassment dispute.9 U.S.C. § 402(a). The EFAA defines a sexual harassment dispute as “a dispute relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law.” Id. at § 401(4).
Courts have determined that “to qualify as a ‘sexual harassment dispute' under EFAA, the sexual harassment claim must be sufficiently pled to survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6).” Mitura v. Finco Servs., Inc., No. 23-CV-2879 (VEC), 2024 WL 232323, at *3 (S.D.N.Y. Jan. 22, 2024), reconsideration denied, No. 23-CV-2879 (VEC), 2024 WL 1160643 (S.D.N.Y. Mar. 18, 2024) (referencing Johnson v. Everyrealm, Inc., 657 F.Supp.3d 535, 551 (S.D.N.Y. 2023); Yost v. Everyrealm, Inc., 657 F.Supp.3d 563, 577 (S.D.N.Y. 2023); Delo v. Paul Taylor Dance Found., Inc., No. 22-CV-9416 (RA), 2023 WL 4883337, at *4 (S.D.N.Y. Aug. 1, 2023)). This policy of requiring a sexual harassment claim to be capable of surviving a Rule 12(b)(6) motion vindicates the statute's purpose of providing sexual harassment claimants with a judicial forum while also respecting the FAA's well-established mandate that favors arbitration. Id. (referencing Yost, 657 F.Supp.3d at 586).
Case law interpreting the EFAA is limited, given that it was signed into law on March 3, 2022 and only applies to disputes or claims arising or accruing after that date. See Pub. L. 117-90 § 3. It appears that no court within the Fourth Circuit has considered the particular issue presented in this case. As such, the undersigned relies on out-ofcircuit precedent throughout much of this Report and Recommendation.
To survive a motion to dismiss under Rule 12(b)(6), a complaint must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). By contrast, a claim is properly dismissed if “the allegations in a complaint, however true, could not raise a claim of entitlement to relief.” Twombly, 550 U.S. at 558.
II. Analysis
As noted, Plaintiff argues that his claims relate to a sexual harassment dispute and are therefore subject to the exclusion from arbitration created by the EFAA. (Dkt. No. 8.) Defendants retort that Plaintiff's case is not a sexual harassment dispute because “Plaintiff has not asserted a claim for sexual harassment” and “neither this Court nor an arbitrator will ever have to decide whether sexual harassment occurred in this case.” (Dkt. No. 9 at 2.) Defendants further argue that “the underlying complaint that Plaintiff claims he was retaliated against for supporting was not a sexual harassment complaint.” (Id. at 3.) Defendants therefore contend that the EFAA does not apply to Plaintiff's claims. (See generally id.) For the reasons set forth in greater detail below, the undersigned agrees with Defendants and recommends that the parties be compelled to arbitrate.
First, Plaintiff does not and, importantly, cannot allege a sexual harassment claim based on the facts presented in the First Amended Complaint. (See generally Dkt. No. 1-1.) Plaintiff alleges that he was retaliated against for providing a witness statement recounting a comment Defendant Bedell made while on a car ride home from a work dinner. (Id.) He claims that he was terminated for providing this statement, and that Defendants subsequently defamed him. (Id.) In other words, Plaintiff's claims are premised upon whether he engaged in protected activity, whether he was fired in retaliation for engaging in that activity, and whether Defendants made false comments about Plaintiff that negatively impacted him. (Id.) As Defendants correctly note, no factfinder “will ever have to decide whether sexual harassment occurred in this case.” (Dkt. No. 9 at 2.) Because Plaintiff does not and cannot bring a sexual harassment claim that survives under Federal Rule of Civil Procedure 12(b)(6), his case does not fall within the purview of the EFAA.
Second, Plaintiff's assertions that his claims should be excused from arbitration because they relate to a sexual harassment dispute are unconvincing. (See generally Dkt. No. 8.) Black's Law Dictionary defines “dispute” as “[a] conflict or controversy, esp. one that has given rise to a particular lawsuit.” Dispute, Black's Law Dictionary (11th ed. 2019); see also Castillo v. Altice USA, Inc., No. 1:23-CV-05040 (JLR), 2023 WL 6690674, at *4 (S.D.N.Y. Oct. 12, 2023). The conflict or controversy giving rise to Plaintiff's lawsuit is his termination and the allegedly defamatory comments made by Defendants following his termination. (See generally Dkt. No. 11.) As noted, Plaintiff does not and cannot bring a sexual harassment claim, and he therefore cannot establish the existence of a “sexual harassment dispute” on his own. Further, nothing in the record before the Court indicates that the alleged victim filed a sexual harassment lawsuit, and Plaintiff has provided no evidence from which the Court could infer that a sexual harassment “conflict or controversy” otherwise exists here. In fact, the “sexual harassment complaint” referenced in Plaintiff's First Amended Complaint does not appear to actually allege sexual harassment. (Dkt. No. 9-1.)
As an exhibit to their reply, Defendants provided a copy of the incident report at issue. (Id.) The report contains no allegation of sexual harassment; rather, the report explains only that the alleged victim felt Defendant Bedell's comment was intended to “demean her.” (Id. at 2.) The alleged victim declined to escalate the situation for a full review by the Human Resources Department and instead elected to have a conversation with Defendant Bedell, during which he “reiterated that he was quoting from Silence of the Lambs . . . and then apologized stating that he meant no offense.” (Id. at 3) The alleged victim concluded her report by stating that she was “satisfied with the outcome” of the conversation. (Id.) Regardless of the fact that the alleged victim declined to file a sexual harassment claim in Court, the allegations contained in this incident reportcannot support a valid sexual harassment claim capable of surviving a Rule 12(b)(6) motion.
The allegations in Plaintiff's witness report also do not support the existence of a sexual harassment claim. (See generally Dkt. No. 9-2.) As with the alleged victim's incident report, Plaintiff's witness statement does not make any reference to sexual harassment or conduct that could be construed as such. (Id.) Plaintiff's witness statement explains that Defendant Bedell referred to a “fat lady” with a “big butt” when quoting from the movie Silence of the Lambs. (Id. at 2.) The witness statement further notes that Defendant Bedell was “acting a bit strange” and that his “comments and behavior were certainly suspect and surprising given the audience in the car.” (Id. at 3.)
Even if the allegations in the incident report could support a valid sexual harassment claim, the undersigned is not convinced that Plaintiff's claims would “relate to” any such sexual harassment claim. As Plaintiff notes, courts interpreting the EFAA have construed the phrase “relating to” broadly and have often found that retaliation claims fall within the purview of the EFAA. (Dkt. No. 8 at 4-6); see, e.g., Johnson, 657 F.Supp.3d at 551 (holding that “the text of § 402(a) makes clear that its invalidation of an arbitration agreement extends to the entirety of the case relating to the sexual harassment dispute, not merely the discrete claims in that case that themselves either allege such harassment or relate to a sexual harassment dispute (for example, a claim of unlawful retaliation for a report of sexual harassment)”); Molchanoff v. SOLV Energy, LLC, No. 23CV653-LL-DEB, 2024 WL 899384, at *3 (S.D. Cal. Mar. 1, 2024) (finding retaliation claim covered by the EFAA where plaintiff alleged that company “denied her application for employment in retaliation for lodging a complaint of sexual assault and harassment”); Hix v. Dave & Buster's Mgmt. Corp., Inc., No. 3:23-CV-623-AR, 2023 WL 9425283, at *9 (D. Or. Nov. 14, 2023) (“Here, Anderson alleges that she was forced out of her job because she engaged in the protected activity of reporting that she was experiencing sexual harassment. A retaliation claim is connected to conduct that is alleged to constitute sexual harassment when reporting that conduct is the alleged cause of the retaliation. Because the retaliation dispute is related to the conduct constituting sexual harassment, it is a sexual harassment dispute to which the EFAA applies.” (internal quotation marks and citation omitted)), adopted, 2024 WL 326592 (D. Or. Jan. 29, 2024). However, courts have done so only where the victim of retaliation was also the victim and/or reporter of the alleged sexual harassment. See, e.g., Johnson, 657 F.Supp.3d at 551; Mitura, 2024 WL 232323, at *5; Molchanoff, 2024 WL 899384, at *3; Hix, 2023 WL 9425283, at *9. Plaintiff has pointed the Court to no authority holding that a retaliation claim falls within the purview of the EFAA where the relation claim “related to” the sexual harassment of someone else. (See generally Dkt. No. 8.) The undersigned's independent review of case law in this area has similarly uncovered no support for Plaintiff's assertion that his claims are sufficiently related to a sexual harassment dispute such that he should be excused from arbitration pursuant to the EFAA.
The conclusion that the EFAA does not encompass claims brought by a plaintiff who did not personally experience or report sexual assault or harassment is further supported by the stated purpose of the statute. The stated purpose of the EFAA is to empower sexual harassment claimants to pursue their claims in a judicial, rather than arbitral, forum. See H.R. Rep. No. 117-234, at 3-4 (2022). Where, as here, a plaintiff brings claims that are based on a witness statement he provided-rather than a grievance he personally filed or sexual assault or harassment he personally experienced-that plaintiff is not a “sexual harassment claimant” and the EFAA's purpose is not served by allowing his case to be excused from arbitration and litigated in court. See id.
Based on the above, the EFAA does not prohibit arbitration of Plaintiff's claims. See Yost, 657 F.Supp. at 588 (concluding that EFAA had no bearing on litigation where plaintiff failed to allege sexual harassment claim sufficient to withstand a Rule 12(b)(6) motion); see also Mera v. SA Hosp. Grp., LLC, 675 F.Supp.3d 442, 448 (S.D.N.Y. 2023) (requiring arbitration of plaintiff's wage and hour claims brought on behalf of “‘all non-exempt employees'” because such claims were not sufficiently related to plaintiff's distinct claims that defendants failed to address sexual harassment that he personally experienced).
As noted, Plaintiff does not dispute that he signed a valid and binding arbitration agreement, and that under its terms all claims alleged in the First Amended Complaint are subject to arbitration. (See generally Dkt. Nos. 8, 12.) The undersigned therefore RECOMMENDS that Defendants' motion (Dkt. No. 7) be GRANTED, and that the parties be COMPELLED to ARBITRATE. See O'Bryant v. Flowers Foods, Inc., 629 F.Supp.3d 377, 383 (D.S.C. 2022) (referencing Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 91 (2000)) (“As the party resisting arbitration, Plaintiff bears the burden of establishing that the Arbitration Agreement is inapplicable or invalid.”).
Although Defendants have not provided a copy of the arbitration agreement at issue, the excerpt contained in Defendants' Motion to Compel Arbitration confirms that all of Plaintiff's claims fall within the scope of the agreement. (Dkt. No. 7-1 at 2.) As such, this case should be DISMISSED WITHOUT PREJUDICE, rather than STAYED. See Choice Hotels Int'l, Inc. v. BSR Tropicana Resort, Inc., 252 F.3d 707, 709-10 (4th Cir. 2001); Beasenburg v. Ultragenyx Pharm., Inc., No. 2:22-CV-4022-BHH, 2023 WL 5993169, at *6 (D.S.C. Sept. 15, 2023) (“[H]aving found that the parties' agreement is valid and that all of Plaintiff's claims are subject to arbitration . . ., the Court finds [it] appropriate to dismiss this action without prejudice.”); Anderson v. S. Fin. of S.C. Inc., No. 3:21-CV-2264-MGL-PJG, 2021 WL 5403755, at *3 (D.S.C. Oct. 15, 2021) (noting that “other courts within this circuit . . . have found that dismissal is appropriate when all of the issues in the case are covered by the arbitration agreement,” and collecting cases before recommending dismissal without prejudice rather than a stay), adopted, 2021 WL 5371476 (D.S.C. Nov. 18, 2021); Merritt v. Kolter Grp., LLC, No. 2:19-CV-1002-RMG, 2019 WL 2646838, at *2 (D.S.C. June 27, 2019) (“Here, the parties agree that all claims are subject to arbitration and the Court finds in its discretion that dismissal, rather than staying the proceedings pending an arbitral determination, is the proper remedy.”).
Although the parties have not briefed the issue of whether dismissal is appropriate in lieu of a stay, the instant recommendation of dismissal provides adequate notice to the parties, as they may address this procedural issue during the objection period if they so choose. See Anderson v. S. Fin. of S.C. Inc., No. 3:21-CV-2264-MGL-PJG, 2021 WL 5403755, at *4 (D.S.C. Oct. 15, 2021) (referencing Sparling v. Hoffman Const. Co., 864 F.2d 635, 637 (9th Cir. 1988) (“First, Active contends that dismissal was improper because Hoffman only requested a stay pending arbitration, not a dismissal. The fact that a dismissal was not requested, however, does not make it improper. A trial court may act on its own initiative to note the inadequacy of a complaint and dismiss it for failure to state a claim. The court must give notice of its intention to dismiss and give the plaintiff some opportunity to respond unless the plaintiffs cannot possibly win relief.” (internal quotations, citations, and alterations omitted)); Porter Hayden Co. v. Century Indem. Co., 939 F.Supp. 424, 429 (D. Md. 1996) (“For reasons not expressly stated in the record, defendants have sought a stay but not outright dismissal of this case. Nevertheless, federal district courts are vested with the inherent power to control and protect the administration of court proceedings.”), aff'd, 136 F.3d 380 (4th Cir. 1998)), adopted, 2021 WL 5371476 (D.S.C. Nov. 18, 2021).
CONCLUSION
Based on the foregoing, the undersigned RECOMMENDS that Defendants' Motion to Compel Arbitration and Stay the Proceedings (Dkt. No. 7) be GRANTED. The undersigned further RECOMMENDS that the parties be compelled to arbitrate and that this case be DISMISSED in full.
IT IS SO RECOMMENDED.
Notice of Right to File Objections to Report and Recommendation
The parties are advised that they may file specific written objections to this Report and Recommendation with the District Judge. Objections must specifically identify the portions of the Report and Recommendation to which objections are made and the basis for such objections. “[I]n the absence of a timely filed objection, a district court need not conduct a de novo review, but instead must ‘only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.'” Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310 (4th Cir. 2005) (quoting Fed.R.Civ.P. 72 advisory committee's note).
Specific written objections must be filed within fourteen (14) days of the date of service of this Report and Recommendation. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b); see Fed.R.Civ.P. 6(a), (d). Filing by mail pursuant to Federal Rule of Civil Procedure 5 may be accomplished by mailing objections to:
Robin L. Blume, Clerk United States District Court Post Office Box 835 Charleston, South Carolina 29402
Failure to timely file specific written objections to this Report and Recommendation will result in waiver of the right to appeal from a judgment of the District Court based upon such Recommendation. 28 U.S.C. § 636(b)(1); Thomas v. Arn, 474 U.S. 140 (1985); Wright v. Collins, 766 F.2d 841 (4th Cir. 1985); United States v. Schronce, 727 F.2d 91 (4th Cir. 1984).