U.S. Equal Employment Opportunity Commission v. Akebono Brake Corporation
3:16-cv-03545
D.S.C.Mar 29, 2018Background
- EEOC sued Akebono under Title VII alleging religious discrimination by refusing to hire Clintoria Burnett and failing to accommodate her religious requirement to wear skirts/dresses; EEOC contends acts occurred through Akebono’s temporary labor services provider (TLSP).
- Akebono denied liability and filed a third-party complaint against TLSP Carolina Personnel Services, Inc. (CPS) and alleged successor Carolina Industrial Staffing, Inc. (CIS) seeking indemnification, contribution, and contract-based relief.
- CPS and CIS moved for judgment on the pleadings; Magistrate Judge Hodges recommended granting those motions based on obstacle preemption and Rule 14 limitations.
- Magistrate found claims for contribution or indemnity arising from Title VII exposure are preempted (obstacle preemption) and that Akebono’s non-derivative claims cannot be brought as third-party claims under Rule 14.
- District Judge Currie reviewed objections de novo, rejected Akebono’s arguments that it sought only a factual defense or could rely on Rule 18 joinder, and adopted the Report, dismissing third-party claims in this action while leaving open Akebono’s ability to sue CPS/CIS in an independent action for non-preempted claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether third-party claims for indemnity or contribution based on Title VII liability may proceed | EEOC disavows holding Akebono vicariously liable for acts solely of CPS; seeks relief only from Akebono for conduct it participated in | Akebono seeks indemnity/contribution from CPS to the extent CPS’s acts cause Akebono’s liability | Obstacle preemption bars third-party indemnity/contribution claims tied to Title VII liability; such claims cannot proceed here |
| Whether Rule 14 permits joinder of Akebono’s asserted claims against CPS/CIS | N/A (EEOC’s position is that it will not seek to hold Akebono liable for CPS-only acts) | Akebono contends Rule 14 allows bringing CPS in because CPS "may be liable for all or part" of claims against Akebono | Rule 14 permits only derivative claims (liability of third-party must be secondary); no proper derivative claim exists here, so Rule 14 joinder is improper |
| Whether Akebono can instead use Rule 18 to join non-derivative claims against CPS/CIS | N/A | Akebono argues Rule 18 allows broad joinder of any claims against an opposing party | Rule 18 applies only once the party is properly before the court; because Rule 14 joinder fails, Rule 18 cannot cure the improper third-party pleading here |
| Whether district court dismissal precludes Akebono from suing CPS/CIS separately on independent (non-preempted) claims | EEOC: not applicable | Akebono: some asserted claims (breach of contract, promissory estoppel) are standalone and not indemnity | Court limited dismissal to third-party claims in this action; Akebono may pursue independent actions against CPS/CIS for claims not barred by obstacle preemption |
Key Cases Cited
- Mathews v. Weber, 423 U.S. 261 (U.S. 1976) (standard for district court review of magistrate judge recommendations)
- Diamond v. Colonial Life & Accident Ins. Co., 416 F.3d 310 (4th Cir. 2005) (district court need not de novo review unobjected portions of magistrate report absent clear error)
- Deutsche Bank Nat. Trust Co. v. Tyner, 233 F.R.D. 460 (D.S.C. 2006) (analysis distinguishing derivative third-party claims permissible under Rule 14 from non-derivative claims)