Opinion
C. A. 6:23-cv-02078-TMC-JDA
10-20-2023
Shaun Rhodes, Plaintiff, v. Hubbell Lighting Inc. doing business as HLI Solutions Inc., Defendants.
REPORT AND RECOMMENDATION OF MAGISTRATE JUDGE
Jacquelyn D. Austin, United States Magistrate Judge
This matter is before the Court on Defendant's motion for partial dismissal. [Doc. 4.] Plaintiff alleges claims for employment discrimination under Title VII of the Civil Rights Act of 1964 (“Title VII”) and 42 U.S.C. § 1981 as well as a state-law claim for breach of contract. [Doc. 1-1.] Pursuant to the provisions of 28 U.S.C. § 636(b)(1)(A), and Local Civil 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 consideration.
Plaintiff brought suit in the Greenville County Court of Common Pleas on March 29, 2023. [Doc. 1-1.] On May 15, Defendant removed the action to this Court based on federal-question jurisdiction and filed its partial motion to dismiss. [Docs. 1; 4.] On May 26 and June 2, Plaintiff filed a response opposing the motion and Defendant filed a reply. [Docs. 8; 10.] Plaintiff filed a sur reply on June 4, 2023. [Doc. 11.] The motion is now ripe for review.
The Local Rules of Civil Procedure do not provide for sur-reply memoranda, nor did Plaintiff seek leave of Court to file his sur reply. The Court nonetheless has considered the memorandum.
The facts in this Background section are taken directly from Plaintiff's Complaint. [Doc. 1-1.].
Plaintiff is an African-American male who worked for Defendant as an at-will employee. [Doc. 1-1 ¶¶ 2, 24.] In early 2020, he accepted a promotion to the position of lab manager. [Id. ¶ 4, 6.] Because of his race, he was paid less than comparably situated white employees, including some employees who reported to him. [Id. ¶¶ 19, 20.] At one point, Plaintiff was told that his duties would be increasing and he would be managing additional employees. [Id. ¶¶ 12, 25d.] When Plaintiff, in a late-2000 video call with four of Defendant's executives, asked about his compensation in light of the added responsibilities, he did not receive a direct answer. [Id. ¶ 12.] However, Plaintiff could tell that the executives-all white men-were displeased with him for asking. [Id.]
In January 2021, “[f]or the first time, Plaintiff's employee review was of a lower rating.” [Id. ¶ 13.] “Over the next several months Plaintiff received different threats of adverse employment actions from each of the four men in the original video call.” [Id. ¶ 14.] Plaintiff decided to give up his then-current membership in the Diversity & Inclusion Group (“the Group”). [Id.] That afternoon, he received a video conference call from Defendant's vice president of human resources concerning his resignation from the Group. [Id. ¶ 15.] He told Plaintiff, “‘I know you don't want to be a part of it but be careful not to burn bridges.'” [Id.] Then, in May 2021, Plaintiff was issued a performance review plan, which was known to be a precursor to termination. [Id. ¶ 17.] The plan was not merited, and it contained false statements about Plaintiff. [Id.; id. ¶ 25e.] Plaintiff resigned later that month. [Id. ¶ 17.]
Plaintiff filed a discrimination charge, received a Notice of Right to Sue from the Equal Employment Opportunity Commission, and timely filed this action. [Id. ¶ 3.] As relief, Plaintiff seeks actual and punitive damages and costs, including attorneys' fees. [Id. at 9.]
APPLICABLE LAW
Motion to Dismiss Standard
Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a claim should be dismissed if it fails to state a claim upon which relief can be granted. When considering a motion to dismiss, the court should “accept as true all well-pleaded allegations and should view the complaint in a light most favorable to the plaintiff.” Mylan Lab'ys, Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993). However, the court “need not accept the legal conclusions drawn from the facts” nor “accept as true unwarranted inferences, unreasonable conclusions, or arguments.” E. Shore Mkts., Inc. v. J.D. Assocs. Ltd. P'ship, 213 F.3d 175, 180 (4th Cir. 2000). Further, for purposes of a Rule 12(b)(6) motion, a court may rely on only the complaint's allegations and those documents attached as exhibits or incorporated by reference. See Simons v. Montgomery Cnty. Police Officers, 762 F.2d 30, 31 (4th Cir. 1985). If matters outside the pleadings are presented to and not excluded by the court, the motion is treated as one for summary judgment under Rule 56 of the Federal Rules of Civil Procedure. Fed.R.Civ.P. 12(d).
With respect to well-pleaded allegations, the United States Supreme Court explained the interplay between Rule 8(a) and Rule 12(b)(6) in Bell Atlantic Corp. v. Twombly:
Federal Rule of Civil Procedure 8(a)(2) requires only “a short and plain statement of the claim showing that the pleader is entitled to relief,” in order to “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” While a complaint attacked by a Rule 12(b)(6) motion to
dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the “grounds” of his “entitle[ment] to relief” requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact).550 U.S. 544, 555 (2007) (footnote and citations omitted); see also 5 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1216, at 235-36 (3d ed. 2004) (“[T]he pleading must contain something more . . . than a bare averment that the pleader wants compensation and is entitled to it or a statement of facts that merely creates a suspicion that the pleader might have a legally cognizable right of action.”).
“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.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “The plausibility standard is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id.. The plausibility standard reflects the threshold requirement of Rule 8(a)(2)-the pleader must plead sufficient facts to show he is entitled to relief, not merely facts consistent with the defendant's liability. Twombly, 550 U.S. at 557; see also Iqbal, 556 U.S. at 678 (“Where a complaint pleads facts that are ‘merely consistent with' a defendant's liability, it ‘stops short of the line between possibility and plausibility of “entitlement to relief.”'” (quoting Twombly, 550 U.S. at 557)). Accordingly, the plausibility standard requires a plaintiff to articulate facts that, when accepted as true, demonstrate that the plaintiff has stated a claim that makes it plausible the plaintiff is entitled to relief. Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009).
DISCUSSION
The Parties' Positions
In its motion for partial dismissal, Defendant argues that Plaintiff's breach of contract claim should be dismissed for failure to state a claim. [Doc. 4.]
Plaintiff alleges that because he was an at-will employee, his contract for employment contained an implied covenant of good faith and fair dealing. [Doc. 1-1 ¶ 24.] He alleges that Defendant breached that covenant by paying him less than the employees who reported to him; paying him less than other lab managers; paying him less than what Defendant's established pay structure for his position, experience, and qualifications warranted; threatening him with adverse employment actions after he questioned his compensation when defendant assigned him additional responsibilities and subordinates to manage; and placing him on a performance improvement plan that was not merited and contained falsehoods about Plaintiff. [Id. ¶¶ 24-26.]
Defendant maintains that because Plaintiff was an at-will employee, his only enforceable right was the right to be paid for the work he performed at the agreed-upon rate. [Doc. 4-1.] Thus, Defendant argues that the actions Plaintiff alleges would not have violated his contractual rights. [Id.] Plaintiff responds that the covenant of good faith and fair dealing that is implied into all at-will contracts gave him the right to be treated fairly and in good faith during the employment relationship, and thus that the complained-of actions amounted to a breach of that contractual right. [Doc. 8.]
Analysis
The Court agrees with Defendant that it is entitled to dismissal of Plaintiff's breach of contract claim.
Under South Carolina law, “there is a presumption of at-will employment,” which means that either the employer or the employee can sever the employment relationship “at any time, for any reason or for no reason at all.” Prescott v. Farmers Tel. Coop., Inc., 516 S.E.2d 923, 925, 927 n.8 (S.C. 1999). A promise of at-will employment “creates no enforceable rights in favor of the employee other than the right to collect wages accrued for work performed.” Anthony v. Atl. Grp., Inc., 909 F.Supp.2d 455, 482 (D.S.C. 2012) (internal quotation marks omitted), aff'd, No. 12-2538 (4th Cir. July 12, 2013); White v. Roche Biomedical Lab'ys, Inc., 807 F.Supp. 1212, 1220 (D.S.C. 1992) (same), aff'd, No. 93-1033, 1993 WL 243709 (4th Cir. July 7, 1993).
“A federal court sitting in diversity or supplemental jurisdiction generally applies the relevant substantive law of the state in which the court sits.” Prysmian Cables & Sys. USA, LLC v. Szymanski, 573 F.Supp.3d 1021, 1036 n.5 (D.S.C. 2021).
Nonetheless, under South Carolina law, “[t]here exists in every contract an implied covenant of good faith and fair dealing.” Adams v. G.J. Creel & Sons, Inc., 465 S.E.2d 84, 85 (S.C. 1995). Thus, “[i]n the absence of an express provision therefor, the law will imply an agreement by the parties to a contract to do and perform those things that according to reason and justice they should do in order to carry out the purpose for which the contract was made.” Hall v. UBS Fin. Servs., Inc., 866 S.E.2d 337, 342 (S.C. 2021) (internal quotation marks omitted). And, the Supreme Court of South Carolina has specifically held that such an implied covenant “exists in an at-will employment contract.” Id. at 343.
In this case, Plaintiff has not alleged any action by Defendant that interfered with his right to receive the wages that accrued during his employment. To the extent he alleges he was treated unfairly in ways that did not affect his ability to receive the wages he earned, he does not plausibly allege the breach of any enforceable right he possessed under his at-will employment contract. See Anthony, 909 F.Supp.2d at 482; White, 807 F.Supp. at 1220.
Plaintiff suggests that Anthony and White are no longer good law in light of the 2021 Hall decision clarifying that an at-will contract contains an implied covenant of good faith and fair dealing. [Doc. 8 at 4-5.] The Court does not agree. “The covenant of good faith is read into contracts in order to protect the express covenants or promises of the contract, not to protect some general public policy interest not directly tied to the contract's purposes.” Williams v. Riedman, 529 S.E.2d 28, 38-39 (S.C. Ct. App. 2000) (internal quotation marks omitted), abrogated on other grounds in Hall, 866 S.E.2d at 342. Thus, such a covenant in an at-will contract may prevent an employer from acting in bad faith to prevent the employee from receiving the compensation he was promised. See, e.g., Sud v. Ness USA, Inc., No. 21-12330 (ES) (MAH), 2022 WL 1963711, at *7 (D.N.J. June 6, 2022) (holding that the plaintiff stated a claim for breach of an at-will employment contract when he alleged that his employer terminated him in bad faith for the sole purpose of avoiding the obligation to pay him a bonus that he otherwise would have earned). But the implied covenant does not give an employee a contractual right not to be threatened with adverse actions or subjected to actions short of termination. See Restatement of Employment Law § 2.01 cmt. f (2015) (“The at-will presumption applies not only to employer discharges of employees but also to other adverse employer actions or decisions falling short of discharge, including those that reasonably elicit a resignation from the employee.”). Nor does it give him a contractual right to receive wages higher than those the employer promised, even if the employer's motives for not paying more are discriminatory. Cf. Hall, 866 S.E.2d at 342 (reaffirming that “the right to fire the employee at any time and for any reason is an integral term of the at-will contract” (emphasis added)).
In Hall, the Supreme Court of South Carolina answered certified questions from this Court concerning at-will employment. The court determined that at-will employment relationships are contractual in nature and that implied covenants of good faith and fair dealing arise in such relationships. Hall, 866 S.E.2d at 340-42. The court also concluded that an employee's termination cannot serve as the basis for a claim by the employee for breach of the implied covenant but that if the termination is procured by a third party, it can serve as the basis for a claim of tortious interference with a contractual relationship. Id. at 342-45.
Plaintiff argues that employer's broad duty to treat an at-will employee fairly is akin to the duty of loyalty that an employee owes his employer. [Doc. 8 at 4-5 (citing Berry v. Goodyear Tire & Rubber Co., 242 S.E.2d 551, 552 (S.C. 1978), and Foreign Acad. & Cultural Exch. Servs. Inc. v. Tripon, 715 S.E.2d 331, 335 (S.C. 2011).] However, he offers no support for the suggestion that the Supreme Court of South Carolina would impose such comparable duties on employers, and the Court is not aware of any. See, e.g., Catherine Fisk & Adam Barry, Contingent Loyalty and Restricted Exit: Commentary on the Restatement of Employment Law, 16 Emp. Rts. & Emp. Pol'y J. 413, 419 (2012) (explaining that, under the Restatement, “[t]he employer owes no duty of loyalty to the employee and is free to pursue its self-interest by firing him”).
In sum, because Plaintiff has not plausibly alleged any breach by Defendant of Plaintiff's at-will employment contract, including the implied covenant of good faith and fair dealing, the Court recommends that Plaintiff's breach of contract claim be dismissed.
RECOMMENDATION
Wherefore, based upon the foregoing, the undersigned recommends that Defendant's motion for partial dismissal [Doc. 4] be GRANTED.
IT IS SO RECOMMENDED.