Opinion
Civil Action No. 00-453-A.
May 2, 2000.
H. Alan Young, Neil David Goldman Young, Goldman Van Beek, Alexandria, VA, for Plaintiff.
Claude D. Convisser, Claude D. Convisser Associates, PC, Alexandria, VA, for Defendant.
MEMORANDUM OPINION
Before the Court are the defendants' motions to dismiss Microstrategy's three count Complaint for lack of subject matter jurisdiction. Because we find that the only count in the complaint to allege a federal question does not present a case of actual controversy, we must dismiss that count for lack of subject matter jurisdiction. The remaining two counts raise claims involving purely questions of state law over which we decline to exercise our supplemental jurisdiction.
I. BACKGROUND
Plaintiff, Microstrategy Incorporated ("Microstrategy"), a Delaware corporation with its principal place of business in Vienna, Virginia, filed its complaint on March 16, 2000, against Betty J. Lauricia and Claude D. Convisser, both Virginia residents. Count I is against Lauricia alone and raises the only federal question. It seeks relief under the federal Declaratory Judgment Act, 28 U.S.C. § 2201, and the Fair Labor Standards Act (FLSA), 29 U.S.C. § 216 (b). Specifically, Count I seeks a declaration from this court that Microstrategy has not violated the anti-retaliation provision of the FLSA, 29 U.S.C. § 215(a)(3), in its treatment of Lauricia and that she is not entitled to any relief under the FLSA. It also seeks a declaration that Microstrategy would not violate Section 215(a)(3) if it were to terminate Lauricia' s employment. In effect, Count I asks a federal court to provide an employer with a ruling as to the legal consequences of a personnel action it would like to take. As Microstrategy has acknowledged during the hearing, this relief appears to be unprecedented.
The remaining counts which involve both defendants raise allegations solely arising under state law: theft of trade secrets and improper disclosure and misuse of confidential trade secrets and attorney client information (Count II) and breach of fiduciary duties (Count III). Because they are not at issue in this decision, these counts will not be further addressed.
Defendant Lauricia has been employed by Microstrategy as Vice President Corporate Development Operations since August 16, 1999. During her employment, she became concerned that Microstrategy might be violating various wage and hour laws concerning overtime pay. She eventually notified the United States Department of Labor about these concerns. She also alerted Microstrategy to her belief that it has discriminated against her on account of her age (over 40) and gender (female), and does so with other older and female employees. Microstrategy is concerned that Lauricia may have taken proprietary and confidential information about its workplace, including pay plans, and shared it with others, including the Department of Labor, the EEOC and her co-defendant, Claude Convisser. On March 14, 2000, Microstrategy placed Lauricia on administrative leave with pay. Defendant Convisser is an attorney who has been representing Lauricia in various matters involving Microstrategy, including this action.
II. DISCUSSION
The Declaratory Judgment Act, 28 U.S.C. § 2201(a), provides, in pertinent part:
In a case of actual controversy within its jurisdiction. any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.
The Act does not create an additional basis of federal subject matter jurisdiction, but merely provides an additional remedy in cases with an independent basis of federal jurisdiction. Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671 (1950) ("Congress enlarged the range of remedies available in the federal courts but did not extend their jurisdiction"); Gibraltar, Inc. v. Otoki Group, Inc., 104 F.3d 616, 618 (4th Cir. 1997) (the Act "does not provide a source of jurisdiction which is independent of substantive federal law").
Plaintiff argues that Lauricia's threat to sue it under Section 215(a)(3) of the FLSA provides an independent basis of federal jurisdiction. That threat was articulated in an eight-page letter Convisser sent to Microstrategy's Chief Financial Officer on March 13, 2000. In it, Convisser explained that Lauricia had complained to the Department of Labor and the EEOC about plaintiff. Specifically, on March 8, 2000, plaintiff filed a complaint with the Equal Employment Opportunity Commission ("EEOC Complaint") alleging that Microstrategy had violated Title VII and the ADEA by providing larger compensation packages (including more stock options) to male employees than to female employees, by failing to promote Lauricia to the position of Vice President of Corporate Development, and in retaliating against Lauricia by imposing a performance improvement plan which can lead to termination. Two days later she wrote to the Assistant District Director of the Department of Labor's Wage and Hour Division ("DOL Letter"), alleging that Microstrategy has not been in compliance with the FLSA because it considers all of its employees to be FLSA-exempt.
According to plaintiff, this Court has subject matter jurisdiction over Count I because the relief it seeks is the mirror-image of Lauricia's threatened lawsuit, over which the Court would undoubtedly have jurisdiction. The contures of such a lawsuit are suggested by Convisser in his letter to Microstrategy:
At the outset, let me caution you against taking any further actions against Ms. Lauricia or discriminating further against her in any way because of the complaints she has now lodged with two federal agencies. Any such action on Microstrategy's part would violate federal law in its own right and would prompt immediate legal action on Ms. Lauricia' part. See 42 U.S.C. § 2000e-3; 29 U.S.C. § 215(a)(3).
(Compl. Ex. 1 at 1.) Plaintiff also contends that the Declaratory Judgment Act exists to relieve it of "the possibility that a governmental agency would investigate her baseless claims, thereby causing severe business disruptions." (Plaintiff's Reply Brief at 6.) According to plaintiff, declaratory relief would free it from having to choose between two equally unattractive alternatives: terminate Lauricia and brace itself for the inevitable lawsuit, or retain an employee who has allegedly breached the company's trust.
A. The Court Does Not Have Subject Matter Jurisdiction
The Declaratory Judgment Act's express "case of actual controversy" requirement is coterminous with the "case or controversy" requirement of Article III. Aetna Life Ins. Co. of Hartford v. Haworth, 300 U.S. 227, 239-40 (1937) (the Act manifestly has regard to the constitutional provision and is operative only in respect to controversies which are such in the constitutional sense"); U.S. Const. art. III, § 2, cl. 1. For purposes of the Act and Article III, jurisdiction lies only if there is a "justiciable controversy" before the Court. A federal question is not justiciable if it is not ripe. "Justiciability concerns not only the standing of litigants to assert particular claims, but also the appropriate timing of intervention." Renne v. Geary, 501 U.S. 312, 320 (1991). Thus, a justiciable controversy must be "definite and concrete, touching on the legal relations of parties having adverse legal interests," rather than a "difference of dispute of a hypothetical or abstract character." Aetna, 300 U.S. at 240-41. As the Supreme Court has explained:
The difference between an abstract question and a `controversy' contemplated by the Declaratory Judgment Act is necessarily one of degree, and it would be difficult, if it would be possible, to fashion a precise test for determining in every case whether there is such a controversy. Basically, the question in each case is whether the facts alleged, under all the circumstances, show there is a substantial controversy, between parties having adverse legal interest of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.Golden v. Zwickler, 394 U.S. 103, 108 (1969) (emphasis added) (citations omitted).
Plaintiff contends that Lauricia's express threat to sue under the "anti-retaliation" provision of the FLSA if any adverse employment action were taken against her establishes a concrete controversy. We find that the Convisser letter, although clearly indicating that litigation of some kind is a real possibility, does not present a substantial controversy of sufficient immediacy and reality to warrant declaratory relief. First, the Convisser letter does not signal a guarantee that Lauricia will sue. In fact, the letter invites Microstrategy to reach an out-of-court resolution. (Compl. Ex. 1 at 1 (expressing hope that the parties will resolve dispute amicably), 7 (Lauricia' s willingness to leave Microstrategy as part of a compromise settlement)). Second, the letter does not state that Lauricia will immediately sue under the FLSA if she is fired. To the contrary, under the circumstances of this case, the most likely scenario is that Lauricia would wait until her administrative remedies were exhausted with respect to her pending EEOC claims, which the parties agree would be in September 2000, and only then file a single lawsuit encompassing all of her claims against Microstrategy.
Section 215(a)(3) of the FLSA, cited in the Convisser letter, provides:
[I]t shall be unlawful for any person . . . to discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to this chapter, or has testified or is about to testify in any such proceeding, or has served or is about to serve on any industry committee.29 U.S.C. § 215(a)(3). In its briefs, and at the hearing on defendants' motions to dismiss, plaintiff declined to argue that Microstrategy may have already made itself vulnerable to a Section 215(a)(3) lawsuit by placing Lauricia on administrative leave on March 14, 2000.
Generally, the EEOC has exclusive jurisdiction over charges of discrimination filed with it for 180 days, at which time, if either it has not filed a civil action or the dispute has not been settled, it issues a "right to sue" letter. 42 U.S.C. § 2000-e5(f)(1); See Davis v. North Carolina Dept. of Correction, 48 F.3d 134, 138 (4th Cir. 1995) ("discrimination claim brought by a private party cannot be heard by a federal district court until the EEOC has conducted an investigation and determined the validity of the claim").
In sum, the threatened lawsuit, with nothing more, is not sufficient to trigger jurisdiction under the Act. If it were, this court would be exercising jurisdiction merely to render advisory opinions. Jurisdiction is proper only where a court can provide specific relief through a decree of a conclusive character. Aetna, 300 U.S. at 241. If we exercised jurisdiction and subsequently ruled on plaintiff' s claim for declaratory relief, the resulting decree would only affect Lauricia' s potential FLSA claim; it would not conclusively resolve the disputes between these parties because it is highly likely that the parties would still be faced with Lauricia's currently pending EEOC claims. Also, it would not save Microstrategy from an investigation by governmental authorities because the EEOC would still be investigating Lauricia' s claim.
B. Even if There were Sublect Matter Jurisdiction, the Court Would Exercise Its Discretion and Dismiss this Action
Even if we had subject matter jurisdiction over Count I, the Declaratory Judgment Act grants a district court broad discretion as to whether to exercise or withhold jurisdiction. United Capitol Ins. Co. v. Kapiloff, 155 F.3d 488, 493 (4th Cir. 1998) (quoting Aetna Cas. Sur. Co. v. Ind-Com Elec. Co., 139 F.3d 419, 422 (4th Cir. 1998)) ("`district courts have great latitude in determining whether to assert jurisdiction over declaratory judgment actions'"). In light of the pending EEOC claims, it is clear that not all of Lauricia's claims against Microstrategy would be. resolved by this lawsuit. Furthermore, many key issues involved in the FLSA dispute are clearly relevant to any Title VII action. In particular, Microstrategy may well take the position that any adverse employment action was not based on a retaliatory or discriminatory basis. Whether such defense is pretextual would be an issue in both the FLSA and Title VII litigation.
In deciding whether to accept or decline jurisdiction over a Declaratory Judgment Action, the Court is to consider both concerns of practicality and principles of maximizing judicial economy See Centenial Life Ins. Co. v. Poston, 88 F.3d 255, 256-57 (4th Cir. 1996) (guoting Aetna Ca. Sur. Co. v. Quarles, 92 F.2d 321, 325 (4th Cir. 1937)) (where a parallel state court proceeding was pending, noting that Declaratory Judgment Act should not be used to "try a controversy piecemeal, or to try particular issues without settling the entire controversy, or to interfere with an action which has already been instituted'").
Finally, we note that the parties were unable to cite, and we are unable to find, a single precedent addressing the applicability of the Declaratory Judgment Act to this kind of a dispute. Most actions under the Declaratory Judgement Act arise in the context of intellectual property disputes or contract disputes between insurers and their insureds. See e.g. Diagnostic Unit Inmate Council v. Motion Picture Assoc. of Amer., Inc., 953 F.2d 376, 378 (8th Cir. 1992) (generally, there is an actual controversy for purposes of declaratory judgment where a defendant holding the copyright has either expressly or impliedly charged the plaintiff with infringement); Perfection Cobey-Co. v. City Tank Corp., 597 F.2d 419, 420-21 (4th Cir. 1979) (district court had jurisdiction to determine validity of entire patent); Aetna Life Ins. Co. v. Haworth, 300 U.S. 227 (1937) (dispute between an insurer and its insured over the extent of the insurer's coverage responsibility is an "actual controversy" within the meaning of the federal Declaratory Judgment Act, even though the tort claimant has not yet reduced his claim against the insured to judgment).
Maneja v. Waialua Agric. Co., Ltd., 349 U.S. 254 (1955), the one case cited by plaintiff involving both a request for declaratory relief and the FLSA is of no use to us. Maneja does not mention the Declaratory Judgment Act, nor does it provide any word of analysis as to what the basis of federal subject matter jurisdiction was in that case.
There is good reason why federal courts have not accepted jurisdiction in employment disputes under the Declaratory Judgment Act as plaintiff would have us do. In effect, Microstrategy is asking this court to place an imprimatur upon a proposed employment action. If we were to accept this role, a federal court would become a super-personnel advisor to wary employers. Moreover, by exercising jurisdiction over this complaint we would encourage pre-emptive strikes by employers against dissatisfied employees, potentially undercutting Congress's very clear direction that such disputes be first addressed through the administrative process. See Bell Atlantic Cash Balance Plan v. EEOC, 976 F. Supp. 376 (E.D. Va. 1997) (no "actual controversy" where plaintiffs attempted to "jump the gun" by suing defendant-agency before it had completed its investigation of discrimination charges filed by employees). To take a step in this direction would be a step towards the involvement of federal courts in the workplace of unprecedented magnitude. We decline to impose such a role on the federal judiciary.
CONCLUSION
For all these reasons, as well as those discussed during oral argument, defendants' motions to dismiss Count I for lack of subject matter jurisdiction have been granted, and this entire action has been dismissed without prejudice. We declined to exercise supplemental jurisdiction over Counts II and III because there is no federal interest implicated in these counts and because to go forward with them at this time would result in the kind of piecemeal litigation the Court should try to avoid.
An appropriate Order has already been issued.
The Clerk is directed to forward copies of this Memorandum Opinion to counsel of record.
Entered this 3 day of May, 2000.