ATEF A. ELZEFTAWY v. PERNIX GROUP, INC. a Delaware Corporation, and DOES 1-100, inclusive
No. 18-cv-06971
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION
August 8, 2020
MEMORANDUM OPINION AND ORDER
In November 2016, Atef Elzeftawy sustained serious injuries to his left leg and foot while working at a construction site for his employer, Pernix Group, Inc., a construction company headquartered in Lombard, Illinois. See R. 1, Compl. at 4, 13.12 Nearly two years later, Elzeftawy brought this lawsuit against Pernix, alleging a cornucopia of federal and state claims. More specifically, he alleges violations of the following federal statutes:
(Counts 7-11);
If there is any way of making sure that a case gets off to a slow start, it is to plead a prolix 102-page, 173-paragraph complaint, as Elzeftawy did. Not at all surprisingly, Pernix has filed a motion to dismiss Counts 16-18 for lack of particularity under
I. Background
For purposes of this motion, the Court accepts as true the factual allegations in the Complaint, Erickson v. Pardus, 551 U.S. 89, 94 (2007), as well as those in Elzeftawy‘s response brief (to the extent they are consistent with the Complaint), see Heng v. Heavner, Beyers & Mihlar, LLC, 849 F.3d 348, 354 (7th Cir. 2017). See also Thompson v. Ill. Dep‘t of Prof. Reg., 300 F.3d 750, 753 (7th Cir. 2002) (on a Rule 12(b)(6) motion, the pleadings “consist generally of the complaint, any exhibits attached thereto, and supporting briefs.“) (citing
Elzeftawy, an Egyptian-American and Muslim resident of California, started working for Pernix in 2012. See, e.g., Compl. at 9, 12. At the time of the alleged injury, Elzeftawy was working on a construction project in South Korea as Senior Director of Engineering and Special Projects. See R. 26-1, Pl.‘s Resp. Br., Exh. 2, 1/30/18 EEOC Charge at 9;5 id. at Exh. 3, 4/10/18 EEOC Charge at 18; Compl. at 9-10. Elzeftawy had recently been promoted to this position after years of “award winning service“—including an award from the U.S. Government for Best Design and Efficiency—and after bringing in over $100 million dollars in business for Pernix from federal government contracts. Compl. at 9-10.
In the summer and fall of 2016, just a few months before he was injured, Elzeftawy and other employees complained about safety issues at the company to Nidal Zayed (Pernix Group‘s CEO and President) and to Ed McSweeney (President of Pernix General, as well as Elzeftawy‘s supervisor).
In early January 2017, Elzeftawy‘s health-care providers cleared him to return to work (though just for desk duty and no travel). See Compl. at 14. He immediately told Zayed and McSweeney that he wanted to come back to work. Id. Shortly after, Elzeftawy‘s doctors cleared him for travel, so he then informed Pernix in January and February 2017 (as well as continuously afterward) that he was willing to move anywhere in the world for a position. Id. at 23. In fact, according to Elzeftawy, he was qualified for several open positions, including desk jobs like Senior Civil Estimator and Planning and Scheduling Analyst, as well as field jobs like Project Manager and Site Civil Engineer. Id. at 30. Pernix knew about his qualifications, including his decades of experience in various engineering-related positions (such as logistics, purchasing, project control, and others), as well as the nature and extent of his job duties as Senior Director of Engineering and Special Projects, from the FMLA forms he filled out and submitted in December 2016. Id. at 14. Despite this, Pernix never gave him his old job back nor offered him any other position. Id. at 20.
Instead, Elzeftawy claims that McSweeney told him there were no positions available for him in January 2017, which was allegedly a lie. Compl. at 22. Then, when Elzeftawy emailed Zayed to follow-up, Zayed responded that although they had considered a “place for [Elzeftawy] on Maputo[,]” the “feeling” was that they did not have a spot for Elzeftawy there “at present.” Id. Apparently, while McSweeney gave Elzeftawy the cold shoulder and “stonewalled” him, Zayed (and HR Director Watson) promised him that they were trying to find him a position. Id. at 24. But according to Elzeftawy, they were just pretending, because they never offered him anything, not even when he sent them various resumes or asked them about open positions that he had found on his own. Id. at 24-25. Although there was a glimmer of hope in May 2017, when Pernix proposed a Consulting Agreement with the promise that they would continue to look for a more permanent position, Zayed ultimately nixed the idea. Id. at 26. And in September 2017, when Elzeftawy expressed interest in an open position that Zayed‘s brother (who was the Director of Corporate and Marketing Services) had told him about, no one ever responded to the inquiry. Id. In fact, Pernix requested an exit interview with Elzeftawy the following month—something that is ordinarily done when an employee leaves a company. Id. Although it is unclear whether Elzeftawy went through with the exit interview, he does allege that, to this day, no one has ever informed him whether he was actually discharged. Id. So his employment status has essentially been in a state of limbo since his injury in November 2016.
According to Elzeftawy, Pernix‘s conduct, including its failure to provide him
II. Legal Standard
Under
“A motion under
That
III. Analysis
A. Federal-Law Claims
1. The Family Medical Leave Act (Count 1)
a. Employee Eligibility
First, Elzeftawy alleges that Pernix retaliated against him for requesting leave under the Family Medical Leave Act, and interfered with his rights under the Act more generally, including by refusing to rehire him. Compl. at 39-40. To state any claim under the FMLA, a plaintiff must be eligible for FMLA protection in the first place. See, e.g., Pagel v. TIN, Inc., 695 F.3d 622, 627 (7th Cir. 2012). To be eligible under the FMLA, an employee must have worked for their employer for at least 12 months and for at least 1,250 hours during the previous 12-month period.
To start, Elzeftawy alleges only that he was entitled to an FMLA leave, see, e.g., Compl. at 10, 13, 15, but it is well-established that entitlement to medical leave and eligibility as an employee are two separate things. Compare
b. Extraterritorial Reach of the FMLA
Pernix also argues that the FMLA claims should be dismissed because the
Although neither the Supreme Court nor the Seventh Circuit has determined whether the FMLA applies extraterritorially, it is well-established that when “a statute gives no clear indication of an extraterritorial application, it has none,” reflecting the “presumption that United States law governs domestically but does not rule the world[.]” Kiobel v. Royal Dutch Petroleum Co., 569 U.S. 108, 115 (2013) (cleaned up). Nothing in the FMLA overcomes that presumption: there is nothing in the text of the statute to suggest that it covers employment outside the United States, so the presumption against extraterritoriality applies in full force. See Souryal v. Torres Advanced Enter. Sols., LLC, 847 F. Supp. 2d 835, 841-43 (E.D. Va. 2012) (because FMLA does not apply extraterritorially, it could not reach claims related to employment at U.S. Embassy in Iraq). Moreover, the federal labor regulations that apply to the FMLA also say that the law “applies only to employees who are employed within any State of the United States, the District of Columbia or any Territory or possession of the United States. Employees who are employed outside these areas are not counted for purposes of determining employer coverage or employee eligibility.”
It is also worth noting that there is no reason to think that the phrase “employed within” in
Based on the statutory and regulatory text, Elzeftawy has essentially pleaded himself out of court on his FMLA claims by conceding that he was working on a project in South Korea in November 2016. It is true that Elzeftawy alleges that he has been a California resident since July 2015, Compl. at 4, but the FMLA is not concerned with residency, just with employment. Indeed, by alleging in his response brief that he had worked for Pernix in California before going to Korea, Elzeftawy has indicated that he was not employed in California when he was injured (in other words, when his alleged entitlement to FMLA leave would have been triggered). In short, even giving Elzeftawy the benefit of all reasonable inferences, his allegations permit only an inference that he was employed in South Korea—anything else on these facts would be impermissibly speculative. As a result, the FMLA does not authorize his claims.
Against this, Elzeftawy argues that Pernix is equitably estopped from raising an ineligibility defense. He contends that Pernix should not be allowed to assert now that he is not eligible for FMLA protection—not when it had told him way back in 2016 that he was eligible for and entitled to FMLA leave. See Pl.‘s Resp. Br. at 7. As the Seventh Circuit explained in Dormeyer v. Comerica Bank-Illinois, 223 F.3d 579, 582 (7th Cir. 2000), “an employer who by his silence misled an employee concerning the employee‘s entitlement to family leave might, if the employee reasonably relied and was harmed as a result, be estopped to plead the defense of ineligibility to the employee‘s claim of entitlement to family leave.” See also Collins v. Midwest Med. Records Ass‘n, 2007 WL 7166826, at *2 (E.D. Wis. Oct. 5, 2007) (“Equitable estoppel in the context of an FMLA claim has been applied in numerous cases where the employer‘s conduct has caused an employee to justifiably and detrimentally rely on the employer‘s representation as to the availability of FMLA leave.“) (citing Kosakow v. New Rochelle Radiology Assocs., 274 F.3d 706, 724-27 (2d Cir. 2001), Woodford v. Cmty. Action of Greene Cty., Inc., 268 F.3d 51, 57 (2d Cir. 2001), and Duty v. Norton-Alcoa Proppants, 293 F.3d 481, 493-94 (8th Cir. 2002)). But even assuming that equitable estoppel can somehow make the extraterritorial application of the FMLA permissible (as opposed to just preventing Pernix from asserting a defense of ineligibility), Elzeftawy has not adequately alleged the elements of the doctrine.
Generally, equitable estoppel requires a plaintiff to plausibly allege the following three elements: “(1) misrepresentation by the party against whom estoppel is asserted; (2) reasonable reliance on that
For all these reasons, Count 1 of Elzeftawy‘s Complaint must be dismissed. But this dismissal is without prejudice for now, to give Elzeftawy a chance to plausibly (and in good faith) allege that he was somehow actually employed in the United States,8 and that he was otherwise eligible for FMLA protection.
2. Title I of the ADA (Count 2)
Elzeftawy also brings a number of claims against Pernix under the ADA. “The ADA is designed to prohibit discrimination against employees whose disabilities have no bearing on their ability to perform a given job, but also to ensure employment opportunities for disabled persons who are otherwise qualified for a
a. Timeliness of ADA Claims
Starting with timeliness, the ADA adopts Title VII‘s procedures in requiring, before an employee files a lawsuit, that the employee first file a timely administrative charge with the EEOC and then receive a right-to-sue notice from the EEOC. See
This timing requirement, however, is an affirmative defense. Laouini v. CLM Freight Lines, Inc., 586 F.3d 473, 475 (7th Cir. 2009). Elzeftawy did not need to “anticipate and overcome affirmative defenses” in the Complaint. See Sidney Hillman Health Ctr. of Rochester v. Abbott Labs., Inc., 782 F.3d 922, 928 (7th Cir. 2015) (cleaned up). Here, though, given that both parties have submitted the relevant purported charges, the Court will go ahead and consider Pernix‘s timeliness defense (including on the Title VII claims, which will be discussed in the next section)—with the caveat that further factual development may be cause for reconsideration.
Pernix argues, based on a charge that Elzeftawy filed with the EEOC in May 2018, that the ADA claims should be dismissed because the charge was filed more than 300 days after the underlying conduct occurred. See R. 23-4, Def.‘s Br., Exh. 2, 5/18/18 EEOC Charge at 4; see also Pl.‘s Resp. Br. at 1, 9 (essentially conceding the authenticity of the May 2018 charge). The charge, which is stamped as “received” by the EEOC, states that “on or about December 1, 2016, [Elzeftawy] requested a reasonable accommodation” and that since that date, he has “not been allowed to return to work.” 5/18/18 EEOC Charge at 4. Based on this, Pernix argues that Elzeftawy‘s reasonable accommodation claim is time-barred because the December 1, 2016 request—the date of the alleged unlawful employment practice, in Pernix‘s view—falls well outside the 300-day window. Def.‘s Br. at 16. But Elzeftawy responds that the May 2018 charge was not the only charge he filed; he also filed a charge with the EEOC on January 30, 2018. See Pl.‘s Resp. Br. at 1, 9; 1/30/18 EEOC Charge. A copy of this purported January 2018 charge—consisting of a letter to the
In Pernix‘s view, though, the Court should decline to consider the January 2018 document. Pernix contends that Elzeftawy‘s attorney‘s declaration “obscures and complicates the sequence of events surrounding Plaintiff‘s purported submission of his EEOC charges to the proper administrative bodies[,]” and so “the authenticity of the EEOC charges is unclear ... .” R. 27, Def.‘s Reply Br. at 10. Pernix, however, fails to explain not only how the declaration “obscures” the sequence of events, but also how that has any bearing on the authenticity of the document at this stage of the case. Cf. Verfuerth v. Orion Energy Sys., Inc., 65 F. Supp. 3d 640, 649-50 (E.D. Wis. 2014) (rejecting plaintiff‘s “conclusory and unsupported” allegation of inauthenticity as to defense exhibit attached to Rule 12(b)(6) motion). Because Pernix did not adequately develop this argument—which is probably meritless9 anyway—it is forfeited.
Nevertheless, it is worth discussing the substantive question at hand: that is, whether Elzeftawy‘s exhibit containing a copy of the purported January 2018 charge may properly be considered in deciding Pernix‘s Rule 12(b)(6) motion. It is true that when documents outside the pleadings are presented on a motion to dismiss, the Court must generally treat the motion as one for summary judgment and all parties must then “be given a reasonable opportunity to present” all relevant materials.
Having established that the exhibit may properly be considered, the Court must next determine whether the document could reasonably constitute a “charge” under the ADA. Generally, “a charge is sufficient when” the EEOC “receives from the person making the charge a written statement sufficiently precise to identify the parties, and to describe generally the action or practices complained of[,]”
Here, Elzeftawy clearly sets out the identity of the parties in the January 30, 2018 letter by providing Pernix‘s name, as well as its Illinois address, a telephone ...
number, and the number of individuals it employs. 1/30/18 EEOC Charge at 9. He also alleges the misconduct with sufficient specificity, describing, for example, his injury (and when and where it occurred), his efforts to return to work, and Pernix‘s failure to provide him with a position, even though there were “dozens” of available jobs that he was qualified for and able to perform. Id. Moreover, the letter could plausibly be construed as authorizing the EEOC to commence an investigation and take remedial action. See E.E.O.C. v. Union Pacific R.R. Co., 867 F.3d 843, 849 (7th Cir. 2017). Elzeftawy refers to the letter as a “charge” in the text itself, stating that he “want[s] this charge filed with both the EEOC and the State or local Agency ... .” 1/30/18 EEOC Charge at 9. The letter also asserts that Elzeftawy “will cooperate fully with them in the processing of [his] charge in accordance with their procedures.” Id. Looking at Elzeftawy‘s statements together, they could reasonably be construed as a request for the EEOC (as well as state and local agencies) to “activate [their] machinery and remedial processes[,]” see Fed. Express Corp., 552 U.S. at 402—especially considering Elzeftawy was unrepresented at the time. See Fugate v. Dolgencorp, LLC, 555 Fed. App‘x 600, 604-605 (7th Cir. 2014) (plaintiff‘s statement to EEOC investigator—5 days before statute of limitations expired, and having previously discussed the alleged misconduct—that she “wanted to proceed” with ADEA claims could reasonably be construed as a request for remedial action) (non-precedential disposition). Plus, at this stage of the litigation, there is nothing to suggest that the EEOC did not construe the January 2018 letter as a charge. See Downes v. Volkswagen of Am., Inc., 41 F.3d 1132, 1138 (7th Cir. 1994) (while “inaction by the EEOC should not, for time limit purposes, bar an ADEA
Circling back to the issue of timeliness, this means that Elzeftawy‘s ADA claims are limited to conduct that occurred on or after around April 5, 2017 (300 days before January 30, 2018). In other words, although Elzeftawy may present circumstantial evidence of pre-April 5, 2017 conduct to support the timely ADA claims, he may not recover any damages for pre-April 5, 2017 conduct. See Nat‘l R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 113 (2002) (a plaintiff-employee is not barred from “using ... prior [time-barred] acts as background evidence in support of a timely claim.“), superseded in non-relevant part by statute,
b. Scope of EEOC Charge – Reasonable Accommodation Claim
But Elzeftawy‘s ADA claims not only have to be timely, they also have to be within the scope of the allegations in the EEOC charge. Under the ADA, “a plaintiff filing suit in federal court may bring only those claims that were included in her EEOC charge, or that are like or reasonably related to the allegations of the charge and growing out of such allegations.” See Chaidez v. Ford Motor Co., 937 F.3d 998, 1004 (7th Cir. 2019) (cleaned up). “Claims are ‘like or reasonably related’ when (1) there is a reasonable relationship between the allegations in the charge and the claims in the complaint and (2) the claim in the complaint can reasonably be expected to grow out of an EEOC investigation of the allegations in the charge.” Id. (cleaned up). “The charge and complaint must, at minimum, describe the same conduct and implicate the same individuals.” Id. (cleaned up) (emphases in original).
Here, Pernix argues that Elzeftawy‘s reasonable accommodation claim is outside the scope of the May 2018 EEOC charge. Elzeftawy asks the Court to disregard this argument because Pernix neglected to provide or consider the other EEOC charges he filed (and in any event, he argues, this issue should wait until after discovery). See Pl.‘s Resp. Br. at 8. But Elzeftawy‘s response never addresses—not even in the alternative—the substance of Pernix‘s arguments: that is, he never argues that the ADA claims fall within the scope of any of the purported charges. Normally, this would result in forfeiture. But on reply, Pernix also fails to advance any argument as to the scope of the January 2018 charge—even though Elzeftawy had attacked Pernix‘s initial failure to do so. What‘s more, Pernix also fails to address Elzeftawy‘s point regarding the need for discovery.
Having said all that, it is plain that the ADA claim for reasonable accommodation does fall within the scope of the January 2018 charge. The Complaint alleges that “within two months of [his] disabling injury and continuing through the end of 2017, [Pernix] refused to provide a reasonable accommodation, ... refused to find and give him open positions, [and] lied to him about the lack of open positions and their purported attempts to find such ... .” Compl. at 42. Elzeftawy also alleges that in January 2017, he was qualified and able to perform any number of available engineering-related desk jobs (and then later that month, jobs that required travel, too), but Pernix refused to give him any of these positions, hiring less qualified, non-disabled individuals instead. See id. at 14, 41-42. Similarly, the January 2018 charge alleges that Elzeftawy was
It is also worth recognizing that the outcome would be the same even if Elzeftawy‘s January 2018 letter did not constitute a valid EEOC charge, and the analysis turned instead on the May 2018 charge. On this, Pernix argues that (1) the Complaint fails to “corroborate” Elzeftawy‘s allegation in the May 2018 EEOC charge that he requested a reasonable accommodation on December 1, 2016, (2) that the EEOC charge does not describe the nature of the requested accommodation, and (3) the EEOC charge does not allege any other request for a reasonable accommodation. See Def.‘s Br. at 15-16. But a plaintiff “need not allege in an EEOC charge each and every fact that combines to form the basis of each claim in her complaint.” Teal v. Potter, 559 F.3d 687, 691 (7th Cir. 2009) (cleaned up). So whether the Complaint alleges that Elzeftawy requested a reasonable accommodation exactly on December 1, 2016 is largely irrelevant, because there is no requirement that the allegations in a complaint be identical to (or as detailed as) those in the underlying EEOC charge. Compare, e.g., E.E.O.C. v. Concentra Health Servs., Inc., 2006 WL 2024240, at *2-3 (N.D. Ill. July 12, 2006) (analyzing the more-detailed allegations in EEOC charge to determine whether plaintiff successfully stated retaliation claim under Title VII), aff‘d, 496 F.3d 773 (7th Cir. 2007), with Whitehead v. AM Int‘l, Inc., 860 F. Supp. 1280, 1288-89 (N.D. Ill. 1994) (dismissing retaliatory discharge claim despite “detailed facts” in the complaint, because EEOC charge failed to “give rise to the slightest hint of a retaliatory discharge claim as alleged” in the complaint), aff‘d, 99 F.3d 1142 (7th Cir. 1996). Rather, the question is simply whether the claims in the Complaint are like or reasonably related to the factual allegations in the EEOC charge; whether the EEOC charge contains more detail than the Complaint in some respects (or vice versa) does not change the analysis on scope.
That said, the May 2018 charge—which, unlike the January 2018 charge, was prepared by the EEOC and is on a standard form used by the agency—is sparse on details. It says that (1) Elzeftawy requested a reasonable accommodation in December 2016, but was not allowed to return to work, was not selected for available positions, and was eventually laid off, and (2) that Elzeftawy believed he was discriminated against due to his disability, race, national origin, age, and religion. See 5/18/18 EEOC Charge. There is not even a mention of the disabling injury—though to be fair (and as will be discussed further in the next section), Elzeftawy suggests that the May 2018 charge
c. Reasonable Accommodation
In addition to arguing that Elzeftawy failed to exhaust his administrative remedies, Pernix challenges the sufficiency of the allegations on the failure-to-accommodate claim. Generally, to state a failure-to-accommodate claim under the ADA, a plaintiff must adequately plead: (1) that they are a qualified individual with a disability; (2) their employer was aware of the disability; (3) and the employer failed to reasonably accommodate the disability. See Brumfield, 735 F.3d at 631. Here, Pernix does not dispute that Elzeftawy adequately alleged the first two elements. See Def.‘s Br. at 18-20. Instead, Pernix argues—unsuccessfully—that Elzeftawy‘s failure-to-accommodate claim should be dismissed because (1) he only lists “generalized job titles” and then merely “concludes” he was able to perform them, and (2) he never alleges that he told Pernix he could perform his former position with or without a reasonable accommodation. Def.‘s Br. at 19.
Starting with the latter, Pernix‘s argument misunderstands the law on reasonable accommodations. The ADA generally defines a “qualified individual” with a disability as “an individual who, with or without reasonable accommodation, can perform the essential functions of the employment position that such individual holds or desires.” Brumfield, 735 F.3d at 631 (quoting
Similarly, Pernix‘s argument that Elzeftawy does not adequately describe the positions he can allegedly perform (or how he is able to perform them) also fails. According to Pernix, Elzeftawy should have included the “actual job functions or associated duties” of those positions. Def.‘s Br. at 19. But Pernix has it all wrong. It is true that the Complaint lists, without much detail, several positions that were allegedly open and that Elzeftawy could have performed even with his disability, such as “Planning and Scheduling Analyst” and “Senior Civil Estimator.” See Compl. at 30. But these allegations are actually more detailed than they need to be. Given the other facts in the Complaint regarding (1) Elzeftawy‘s extensive past work experience, (2) the nature of his disability, and
Pernix also complains that Elzeftawy “bluntly concludes” that he was able to perform the various positions he listed, Def.‘s Br. at 19, implying that he should have explained exactly how he could perform those positions with his disability. But the only caselaw Pernix cites in support of this argument is an unpublished decision from another district, discussing not the standard for pleading a failure-to-accommodate claim under the ADA, but instead the standard for a disparate treatment claim on the basis of sex. See id. (quoting Wade v. Morton Bldgs., 2010 WL 378508, at *6 (C.D. Ill. Jan. 27, 2010)). Putting aside that Wade is neither relevant to Elzeftawy‘s claims nor binding on this Court, the decision does articulate the following well-established principle: that a recitation of the elements of a claim cannot, on its own, support an inference of plausibility. See Wade, 2010 WL 378508, at *6. In other words, a plaintiff must allege more than mere legal conclusions to survive a motion to dismiss. See, e.g., Iqbal, 556 U.S. at 678-79. Here, though, Elzeftawy‘s allegations that he was able to work as a Planning and Schedule Analyst (or any of the other jobs he identifies) is not a legal conclusion at all, but a factual statement concerning his physical capabilities at the time. And at the pleading stage, this fact must be accepted as true.
In short, all of Pernix‘s arguments against Elzeftawy‘s failure-to-accommodate claim fail, so the claim survives.
d. ADA Disparate Treatment
Pernix also argues that the Complaint fails to state a plausible claim for disparate treatment under the ADA. Def.‘s Br. at 16-18. A plaintiff bringing a disparate treatment claim (also known as intentional discrimination) under the ADA “must allege that he is disabled within the meaning of the Act, is nevertheless qualified to perform the essential functions of the job either with or without reasonable accommodation, and has suffered an adverse employment action because of his disability.” Tate v. SCR Med. Transp., 809 F.3d 343, 345 (7th Cir. 2015). On this claim, Pernix essentially argues that Elzeftawy fails to adequately plead that he suffered an adverse employment action due to his disability. See Def.‘s Br. at 17-18. The Court disagrees.
First, the Complaint adequately alleges an adverse employment action under the ADA. For purposes of disparate treatment, an adverse employment action generally “falls into one of three categories: (1) termination or reduction in compensation,
Pernix, however, seems to suggest that Elzeftawy could not have suffered an adverse employment action because he does not allege that he sought placement in any of the positions he lists in the Complaint, or that any of the positions were even available at the time of his “termination.” See Def.‘s Br. at 17. But as discussed above, Elzeftawy does not even need to identify any specific positions that he could have performed—it would have been enough had he alleged that Pernix effectively terminated his employment despite the availability of multiple positions throughout 2017 within his restrictions and qualifications. Under the federal notice-pleading regime, Elzeftawy is not required to allege additional details about when each position was available, nor how and when he sought placement for each one. In any event, though, the Complaint does allege—in the very same paragraph that lists examples of several open positions—that Elzeftawy “made it clear” to Pernix that he was willing to travel anywhere in the world for a job. Compl. at 30. And not only is it obvious that the list of positions is non-exhaustive, but Elzeftawy also alleges repeatedly that he continued to ask Pernix for a position, even telling them about a few available positions that he had found on his own. See, e.g., id. at 24-25. In other words, this argument is plainly wrong.
Having established that the Complaint plausibly alleges an adverse employment action, the next question is whether the facts plausibly suggest a connection between the adverse action and Elzeftawy‘s disability. The Complaint suggests that Pernix‘s allegedly discriminatory course of conduct began as early as January 2017—just two months after Elzeftawy was injured—when he asked to return to work to a “desk job” position. The Complaint also alleges that McSweeney had expressed anger in the past at disabled employees who got hurt on the job or who had serious health conditions that would then force the company to comply with
According to Pernix, though, in order to adequately plead that he suffered an adverse employment action because of his disability, Elzeftawy must also allege that similarly situated employees without a disability were treated more favorably. Def.‘s Br. at 16-18. But Pernix is wrong: the failure to allege similarly situated comparators does not doom Elzeftawy‘s disparate treatment claim under the ADA. For one, pleading standards “are different from the evidentiary burden a plaintiff must subsequently meet” at trial or on summary judgment. See Luevano, 722 F.3d at 1028. So Elzeftawy may eventually choose to prove his disparate treatment claim using the framework laid out in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), which requires, in part, evidence of similarly situated comparators. See Bunn v. Khoury Enters., Inc., 753 F.3d 676, 685 (7th Cir. 2014). At the pleading stage, though, Elzeftawy does not need to allege facts to support a prima facie case of disability discrimination. Luevano, 722 F.3d at 1028 (“[U]nder a notice pleading system, it is not appropriate to require a plaintiff to plead facts establishing a prima facie case“).
But because this issue may come up again on summary judgment, it is worth noting that the McDonnell Douglas framework does not apply in every employment discrimination case, and plaintiffs may show discriminatory animus even in the absence of similarly situated comparators. See Luevano, 722 F.3d at 1028; Timmons v. Gen. Motors Corp., 469 F.3d 1122, 1126-27 (7th Cir. 2006). Here, Pernix argues that Elzeftawy‘s ADA claim for disparate treatment is “completely undermine[d]” by his allegations that he had seen non-Muslims and non-Middle Easterners who had suffered work-related disabilities but who were not discriminated against. See Def.‘s Br. at 18 (citing Compl. at 23). Aside from the fact that these allegations were made in the context of Elzeftawy‘s race, national origin, and religious discrimination claims, Pernix fails to recognize that sometimes “a plaintiff cannot identify similarly situated employees[,]” Timmons, 469 F.3d at 1126 (emphasis added). Indeed, it would not be surprising if this was true for Elzeftawy‘s ADA claims; given the unique facts of this case, it might be difficult to find another employee who was “directly comparable to [Elzeftawy] in all material respects[,]” Patterson v. Avery Dennison Corp., 281 F.3d 676, 680 (7th Cir. 2002). Luckily for Elzeftawy, though, he is not required to find such a comparator. The legal standard is simply whether “the circumstances surrounding the adverse action indicate that it is more likely than not that his disability was the reason for it[,]” Timmons, 469 F.3d at 1126 (cleaned up), and there are many ways to make such a showing.
Ultimately, on the more relevant question of pleading standards, Elzeftawy has adequately stated a disparate treatment claim under the ADA.
e. ADA Retaliation
In addition to prohibiting “employers from discriminating against qualified
Unlike the standard used in disparate treatment claims, an adverse employment action for purposes of a retaliation claim is simply one that would have dissuaded a reasonable worker from engaging in protected activities like filing a charge with the EEOC, requesting a reasonable accommodation, or otherwise opposing disability discrimination. See, e.g., Rowlands, 901 F.3d at 798; Lewis v. Wilkie, 909 F.3d 858, 867 (7th Cir. 2018). See also Casna v. City of Loves Park, 574 F.3d 420, 427 (7th Cir. 2009) (“[T]he anti-retaliation provision of the ADA uses similar language to that in Title VII; thus, courts look to Title VII retaliation cases for guidance in deciding retaliation cases under the ADA.“) (cleaned up).
Here, Elzeftawy essentially alleges that Pernix refused to let him return to work in retaliation for his requesting a reasonable accommodation, for “standing up for his rights concerning his disability,” and for “opposing ... [Pernix‘s] illegal acts and omissions concerning [his] disability.” See Compl. at 42. Although the latter allegation is much too vague—there is nothing to suggest, for example, that Elzeftawy complained to supervisors about McSweeney‘s angry comments regarding disabled workers—the Complaint obviously contains enough facts to support the inference that Elzeftawy repeatedly requested a reasonable accommodation. And there is no question that refusing to allow a disabled employee to return to work—even when they are qualified for multiple open positions—is the type of conduct that would dissuade a reasonable worker from requesting accommodations in the future, or from engaging in other protected activity under the ADA. So Elzeftawy‘s retaliation claim under the ADA survives.11
To sum up, then: all of Elzeftawy‘s ADA claims survive—but only as to conduct occurring within the 300 days before January 30, 2018.
3. Title VII (Count 3)
Elzeftawy also brings claims under Title VII, which forbids employers from discriminating based on race, color, religion, sex, or national origin. Abrego v. Wilkie, 907 F.3d 1004, 1012 (7th Cir. 2018) (citing
a. Timeliness
Once again, though, Pernix argues that Elzeftawy‘s Title VII claims are time-barred because the underlying alleged conduct occurred outside the limitations period. See Def.‘s Br. at 7-8; Def.‘s Reply Br. at 10. But the timeliness of the Title VII claims is not as easy to determine as Elzeftawy‘s ADA claims. First, the January 2018 charge makes no mention whatsoever of any misconduct based on race, national origin, color, ancestry, or religion. See 1/30/18 EEOC Charge. Elzeftawy asserts (without any further argument) that the May 2018 charge—which mentions at least some of these categories—“relates back” to the date of the January 2018 charge. Pl.‘s Resp. Br. at 9. See 5/18/18 EEOC Charge. But even if Elzeftawy had not forfeited the argument by failing to adequately develop it, he would still be wrong. Generally, a charge may only “be amended to cure technical defects or omissions, including failure to verify the charge, or to clarify and amplify allegations made therein.”
To make matters more complicated, though, Elzeftawy also provides a copy of another purported charge that he sent to the EEOC on April 10, 2018 as an amendment to the January 2018 charge. R. 26-1, Pl.‘s Resp. Br., Exh. 3, 4/10/18 EEOC Charge. Indeed, on May 14, 2018, in what appears to be an email to the EEOC investigator on the case, Elzeftawy attaches the signed May 2018 form and explains that he is “agreeing to sign the Amended Charges only with the supplemental and corrected facts set forth” in the April 2018 letter. See R. 26-1, Pl.‘s Resp. Br., Exh. 5 at 1; McCarty Decl. ¶ 9. Cf. Swearnigen-El v. Cook Cty. Sheriff‘s Dep‘t, 602 F.3d 852, 865 (7th Cir. 2010) (“Allegations outside the body of the charge may be considered when it is clear that the charging party intended the agency to investigate the allegations.“) (cleaned up). It is not hard to understand why Elzeftawy had such a condition—the April 2018 document is extremely detailed, and apparently written by Elzeftawy himself, whereas the May 2018 form is very brief and was likely filled out by someone at the EEOC. In fact, the April 2018 letter contains numerous allegations concerning discrimination based on race, national origin, color, ancestry, and religion. See, e.g., 4/10/18 EEOC Charge at 19-20 (“I have heard Mr. McSweeney make obscene and derogatory remarks about Turkish people, Middle-Easterners, Muslims and others“); id. at 20 (“I have seen others ... who are Caucasian, non-minorities, apparently non-Muslims[] who had suffered work-related disabilities and were ... apparently not harassed, discriminated against, ... and wrongfully discharged“). Like the May 2018 charge, though, these allegations do not “grow out” of the subject matter of the initial charge describing disability discrimination,
But Elzeftawy‘s April 2018 letter does constitute a “charge” on its own: it not only identifies Pernix as the employer (even providing details about various relevant subsidiaries), but it can also reasonably be construed as asking the EEOC to take remedial action. Elzeftawy writes that Pernix‘s “illegal mistreatment” of him “needs to be stop[ped],” expresses his “hope[s]” that his “Charge of Discrimination brings about compensation” for him and for his family, and asks the EEOC for a Right to Sue letter. 4/10/18 EEOC Charge at 22-23. A reasonable EEOC investigator would interpret these statements as a request for the agency “to activate its machinery and remedial processes,” Holowecki, 552 U.S. at 402. So although the April 2018 charge cannot relate back to the January 2018 charge—at least with respect to the non-disability-related allegations—it can serve as a stand-alone charge supporting Elzeftawy‘s Title VII claims. This does mean, however, that the Title VII claims are limited to conduct that occurred within 300 days of April 10, 2018—so any Title VII claims that premise liability on conduct before June 14, 2017 are time-barred. This includes Elzeftawy‘s allegations that McSweeney made racist comments about Muslims and Middle Easterners in the summer of 2016, and that Elzeftawy complained about and opposed these comments that same year. See, e.g., Compl. at 20-21.
Importantly, though, this does not mean that the Title VII claims are dismissed; they are simply limited to conduct within the 300-day window. So, for instance, although the primary factual basis in the Complaint for Elzeftawy‘s hostile work environment claim seems to be McSweeney‘s derogatory comments about Muslims and Middle Easterners in the summer of 2016, see, e.g., Compl. at 10, this still does not doom the claim. For one, plaintiffs are generally not required to plead the specific dates of unlawful conduct—especially when, as here, the dates are only really relevant for purposes of an affirmative defense. See, e.g., Richards v. Mitcheff, 696 F.3d 635, 637 (7th Cir. 2012) (“Complaints need not anticipate defenses and attempt to defeat them.“); Flanagan v. Excel Staffing Sols., LLC, 2018 WL 558499, at *3 (N.D. Ill. Jan. 25, 2018) (holding that plaintiff was not required to plead specific dates or times when he and other African-Americans were discriminated against).
Second, even if the 2016 comments cannot form the basis of any Title VII claims, they do bolster the plausibility of Elzeftawy‘s other allegations. According to Elzeftawy, McSweeney engaged in “rants ... regarding Middle-Easterners in general,” which reasonably suggests that he made such derogatory comments more than once. Compl. at 31. McSweeney also allegedly told Elzeftawy that the company should no longer hire Muslims, and that it should get rid of the Muslim employees already working there. Id. at 21. In addition, the April 2018 charge says that Elzeftawy “heard Mr. McSweeney make obscene and derogatory remarks about Turkish people, Middle-Easterners, Muslims and others (who he seemed to lump[] in with terrorists).” 4/10/18 EEOC Charge at 20. Reading these allegations together (and in the light most favorable to Elzeftawy), it is plausible to infer that McSweeney engaged in this conduct on multiple occasions, and that at least some of it fell within the 300-day window. The same principles apply to Elzeftawy‘s other Title VII claims (and the ADA claims, too). So all in all, the fact that Elzeftawy‘s Title VII claims are limited to a specific time period
WL 558499, at *6 (“It is not clear, on the face of Flanagan‘s complaint, that his Title VII claims are time-barred. Therefore, the claims cannot be dismissed at this stage.“).
Aside from the timeliness issue, Pernix initially argues that the Title VII claims were outside the scope of the May 2018 EEOC charge. See Def.‘s Br. at 6-8. But apart from unsuccessfully challenging the authenticity of Elzeftawy‘s other charges, supra Part III(A)(2)(a), Pernix abandons the argument on reply, Def.‘s Reply Br. at 9-11, so the Court will not address it.
b. Adequacy of Title VII Claims
i. Hostile Work Environment
Pernix does raise one final argument against Count 3 of the Complaint: that Elzeftawy failed to adequately plead hostile work environment and retaliation claims under Title VII. Def.‘s Br. at 9-13.13 Starting with the former: “To state a Title VII hostile work environment claim, a plaintiff must allege (1) she was subject to unwelcome harassment; (2) the harassment was based on her national origin or religion (or another reason forbidden by Title VII); (3) the harassment was severe or pervasive so as to alter the conditions of employment and create a hostile or abusive working environment; and (4) there is basis for employer liability.” Huri v. Office of the Chief Judge of the Cir. Ct. of Cook Cty., 804 F.3d 826, 833-34 (7th Cir. 2015). Elzeftawy alleges that Pernix illegally harassed him due to his national origin, race, color, ancestry, and religion. Compl. at 45. But unlike on the ADA claims, Pernix does not argue that Elzeftawy failed to allege a connection between the harassment and the various aforementioned categories. Instead, Pernix argues that the hostile work environment claim should be dismissed because the alleged conduct does not rise to the requisite level of severity, and because Elzeftawy fails to allege that McSweeney was a supervisor (for purposes of employer liability). Def.‘s Br. at 9-11.
First, it bears emphasizing—given Pernix‘s assertions to the contrary—that the workplace does not have to be “hellish” to be actionable. Cf. Def.‘s Br. at 9 (quoting Perry v. Harris Chernin, Inc., 126 F.3d 1010, 1013 (7th Cir. 1997)). Since 1997, the Seventh Circuit has repeatedly repudiated the “hellish” standard it previously articulated in Perry, including as recently as 2019. See, e.g., Gates v. Bd. of Ed. of the City of Chi., 916 F.3d 631, 633 (7th Cir. 2019) (holding that district court erred in part because it “relied on the ‘hellish’ standard, which is not a standard a plaintiff must satisfy.“). Invocation of the “hellish” standard must stop. Instead, as mentioned above, “[t]o rise to the level of a hostile work environment, conduct must be sufficiently severe or [pervasive] to alter the conditions of employment such that it creates an abusive relationship.” Huri, 804 F.3d at 834 (emphasis in original). In addition, “[i]t is important to recall that harassing
Here, Elzeftawy alleges throughout the Complaint that McSweeney was his supervisor (as well as the President of Pernix Federal, one of the divisions of Pernix Group). See, e.g., Compl. at 8-9, 14. He also alleges that McSweeney perpetrated the harassment—which, to repeat, involved rants equating Muslims and Middle Easterners with terrorists, and stating that Muslims should not be allowed to work at Pernix. These facts do not support the inference that McSweeney‘s harassing comments were an “incessant part of the workplace environment[,]” Jackson, 474 F.3d at 499 (emphasis added), even if he did make them more than once. Nevertheless, they do create a plausible inference that McSweeney‘s comments were more than “simple teasing” or “offhand” statements—they were actually abusive and severe. See Faragher v. City of Boca Raton, 524 U.S. 775, 788 (1998) (cleaned up). Indeed, given the power dynamics involved, the fact that McSweeney was Elzeftawy‘s supervisor magnifies the severity of the harassment (and provides a potential basis for employer liability). See Alamo, 864 F.3d at 550 (in determining whether a workplace is hostile, “[t]he specific circumstances of the working environment and the relationship between the harassing party and the harassed ... bear on whether that line is crossed.“) (cleaned up); Andonissamy v. Hewlett-Packard Co., 547 F.3d 841, 848 (7th Cir. 2008) (“Under Title VII, an employer can be vicariously liable for a hostile work environment created by a supervisor[.]“).
It is true, as Pernix points out, that it is not entirely clear whether McSweeney‘s comments were always directed at Elzeftawy specifically, and normally the impact of second-hand harassment is not as great as when directed at the plaintiff. See Def.‘s Br. at 9 (quoting Russell v. Bd. of Trs. of the Univ. of Ill. at Chi., 243 F.3d 336, 343 (7th Cir. 2001)). But accepting the allegations in the Complaint as true, McSweeney‘s comments did not merely float into the ether—he apparently acted on them, and to Elzeftawy‘s detriment. So at this point, it is reasonable to infer that the harassment was directed at Elzeftawy given that (1) he is both Muslim and Middle Eastern and (2) that McSweeney ultimately did not allow him to return to work. This means the hostile work environment claim under Title VII survives—though only with respect to post-June 14, 2017 harassment.
ii. Title VII Retaliation
Turning to Elzeftawy‘s retaliation claim under Title VII, Pernix first argues that the Complaint fails to allege conduct constituting protected activity under Title VII. Def.‘s Br. at 12. As with retaliation claims under the ADA, “Title VII requires the plaintiff to allege that []he engaged in statutorily protected activity and was subjected to an adverse employment action as a result.” Carlson v. CSX Transp., Inc., 758 F.3d 819, 828 (7th Cir. 2014) (cleaned up). Protected activities include opposing employment practices made unlawful under Title VII, whether internally or by filing a charge or participating in a Title VII investigation. See, e.g., Salas, 493 F.3d at 924 (citing
According to Pernix, though, the Complaint also fails to allege that anyone in management or human resources knew about Elzeftawy‘s complaints. Generally, there “can be no causal link between protected activity and an adverse employment action if the employer remained unaware of the protected activity.” Miller v. American Family Mut. Ins. Co., 203 F.3d 997, 1008 (7th Cir. 2000) (cleaned up). But here, the facts suggest that Pernix—by way of McSweeney and Zayed—was aware of Elzeftawy‘s complaints. For one, immediately after describing McSweeney‘s suggestion to reduce the number of Muslim employees at Pernix, the Complaint alleges the following: “[a]lthough [McSweeney] and [Zayed] knew that Atef was an Egyptian-American Muslim, and Atef showed his opposition to such, they not only openly talked about such, but steered Pernix Group in that direction with less and less Muslims being employed ... .” Compl. at 21. Although this allegation could have been written much more clearly, it does suggest that Elzeftawy “showed his opposition“—to the discriminatory hiring practices referenced—directly to Zayed and McSweeney, both of whom held executive and supervisory positions, see, e.g., id. at 14.15 Moreover, the Complaint suggests that on at least one occasion, Elzeftawy complained about McSweeney‘s statements to McSweeney himself. Id. at 21. So Elzeftawy has plausibly alleged that Pernix knew about his complaints.
Nevertheless, Pernix is ultimately correct that the Complaint fails to plead a causal link between Elzeftawy‘s complaints and an adverse employment action. To be clear, Count 3—containing the Title VII claims—does not actually specify the allegedly retaliatory conduct. But considering there is no other employment action in the Complaint that could be interpreted as adverse, it is reasonable to infer that Elzeftawy is once again invoking Pernix‘s refusal—starting in January 2017—to allow him to return to work. The issue, however, is the absence of any facts to support the inference that Pernix‘s decision was motivated by Elzeftawy‘s complaints. And unlike on the ADA claims, Elzeftawy‘s protected activity under Title VII is not even close in time to Pernix‘s conduct in January 2017 and onwards—there was a period of around six months between the two. That is, Elzeftawy opposed McSweeney‘s statements and Pernix‘s
For the reasons discussed above, Elzeftawy‘s retaliation claim under Title VII is dismissed (for now without prejudice in case he can allege facts to suggest a causal link). Elzeftawy‘s other Title VII claims—for disparate treatment and hostile work environment—survive as to conduct occurring within 300 days of the April 10, 2018 charge (and in the event Elzeftawy successfully re-alleges the retaliation claim, that would also be limited to the 300-day window).
4. 42 U.S.C. § 1981 (Count 4)
Elzeftawy also brings a number of claims under
But courts define “race” much more broadly under Section 1981 than Pernix suggests. In St. Francis Coll. v. Al-Khazraji, 481 U.S. 604, 607, 613 (1987). Based on the legislative history of Section 1981, which “had its source in the Civil Rights Act of 1866,” as well as on 19th century dictionary and encyclopedic definitions, the Supreme Court concluded that “Congress intended to protect from discrimination identifiable classes of persons who are subjected to intentional discrimination solely because of their ancestry or ethnic characteristics.” Id. at 612-13. So the plaintiff, who was born in Iraq, could make out a case under Section 1981 if he was discriminated against “based on the fact that he was born an Arab, rather than solely on the place or nation of his origin, or his religion ... .” Id. at 613.
It is true that someone who is Egyptian-American, like Elzeftawy, is simply a native of the country of Egypt or descended
But whether Elzeftawy has alleged enough facts to show that he has stated a claim under Section 1981 is an entirely different question. Elzeftawy brings Section 1981 claims for disparate treatment, hostile work environment, and retaliation, but as Pernix correctly points out, a few of the underlying factual allegations refer only to Elzeftawy‘s religion, not his race or his ancestry. See, e.g., Compl. at 21 (alleging that McSweeney suggested Pernix would be more competitive in the bidding process for U.S. government contracts if it did not have Muslim employees). At the same time, though, considering that the majority of the factual allegations reference Elzeftawy‘s religion in connection with his ancestry and ethnicity, it is not at all clear that he meant to limit any of the claims to just his religion. See, e.g., Compl. at 10 (alleging that Elzeftawy opposed McSweeney‘s “racist[] comments about Muslims and Middle-Easterners ... whom he seemingly lumped in with ‘terrorists‘“); id. at 21 (alleging that although McSweeney and Zayed knew Elzeftawy “was an Egyptian-American Muslim,” they still openly talked about hiring less Muslim employees). Not only that, Elzeftawy alleges race discrimination in both the April and May 2018 charges (even if Section 1981 claims do not require plaintiffs to go through the EEOC first, the Court may still consider the circumstantial facts alleged in the charges). For these reasons, the Court will infer in Elzeftawy‘s favor that in the few allegations referencing only religion, Elzeftawy actually meant to say “Middle Eastern Muslim” or “Egyptian-American Muslim.”
Having said that, courts analyze Section 1981 claims using the same standards as Title VII (and aside from challenging the sufficiency of the Complaint‘s allegations on race, Pernix does not make any other arguments on the Section 1981 claims). See Baines v. Walgreen Co., 863 F.3d 656, 661 (7th Cir. 2017). So as with Count 3, Elzeftawy‘s Section 1981 claims for disparate treatment and hostile work environment survive, but his retaliation claim is dismissed (without prejudice) for failure to adequately plead a causal connection. (The difference is that the Section 1981 claims do not require exhaustion through the EEOC and are not limited to any specific time period.)
5. Federal False Claims Act (Count 5)
Elzeftawy‘s final federal claim is brought under the False Claims Act (FCA), which “prohibits the submission of false and fraudulent claims for payment to
For one, Elzeftawy‘s allegations that he engaged in protected activity under the FCA are far too vague. The Complaint merely alleges, in a conclusory fashion, that Elzeftawy “opposed, investigated, and tried to stop the illegal conduct, practices and policies and false claims.” Compl. at 12. See also id. at 16 (alleging that Elzeftawy engaged in “efforts to stop what he in good faith believed to be fraudulent certifications“); id. at 50 (“Plaintiff investigated such false certifications and false claims and tried to stop such“). On a motion to dismiss, though, facts that “are actually legal conclusions or elements of the cause of action ... may be disregarded ....” McCauley v. City of Chi., 671 F.3d 611, 617 (7th Cir. 2011). Here, Elzeftawy‘s allegations are nothing more than a vague recitation of the element of protected activity—that is, “efforts to stop” violations of the FCA—so they are devoid of factual content and need not be accepted as true.
But even if the allegations of protected activity were plausible, the Complaint still fails to state a retaliation claim. As with Title VII and ADA retaliation claims, employees must adequately allege that they were retaliated against because of their efforts to stop violations of the False Claims Act. But if employers do not know about the protected activity in the first place, then they cannot possibly have retaliated against the employee. And there is nothing in the Complaint to suggest that any Pernix supervisor, executive, HR associate, or other decision-maker knew of Elzeftawy‘s efforts to “stop” the alleged false certifications—to infer otherwise would be pure speculation. Indeed, on these facts, it is equally probable that Elzeftawy merely complained to a co-worker, and that Pernix never knew of his “efforts” at all. Ultimately, because Elzeftawy‘s allegations fail to “raise a right to relief above the speculative level,” see Twombly, 550 U.S. at 555, his retaliation claim under the FCA must be dismissed, though without prejudice to additional facts that might help establish the requisite causal connection.
B. State-Law Claims
1. California Statutory Claims
a. The California Family Rights Act (Count 6) and the California Fair Housing and Employment Act (Count 7-11)
Turning to the state-law claims, Elzeftawy brings Count 6 under the California
Like the FMLA, the CFRA makes it an “unlawful employment practice for any employer ... to refuse to grant a request by any employee with more than 12 months of service with the employer, and who has at least 1,250 hours of service with the employer during the previous 12-month period ... to take up a total of 12 workweeks in any 12-month period for family care and medical leave.”
For its part, Pernix contends that the CFRA cannot apply because the conduct alleged does not implicate California, see, e.g., Def.‘s Br. at 22-24, 26-27, arguing, essentially, that Elzeftawy‘s CFRA claim “implicates the so-called presumption against extraterritorial application[,]” Sullivan v. Oracle Corp., 254 P.3d 237, 248 (Cal. 2011).17 As a general matter, “the statutes of a state have no force beyond its boundaries.” Oman v. Delta Air Lines, Inc., 889 F.3d 1075, 1080 (9th Cir. 2018) (quoting N. Alaska Salmon Co. v. Pillsbury, 162 P. 93, 94 (Cal. 1916)). And as with the federal presumption, California courts “presume the [California] Legislature did not intend a statute to be operative, with respect to occurrences outside the state, ... unless such intention is clearly expressed or reasonably to be inferred from the language of the act or from its purpose, subject matter, or history.” Id. (cleaned up). In fact, “[t]he presumption against extraterritoriality has a mirror-image relative in the form of a presumption in favor of intraterritorial application[,]” meaning “courts ordinarily interpret California statutes to apply to conduct occurring anywhere within California‘s borders, absent evidence [that] a more limited scope was intended.” Ward v. United Airlines, Inc., 466 P.3d 309, 317 (Cal. 2020) (emphasis in original). With respect to the CFRA (and FEHA generally), there is nothing in the text or legislative history to suggest that the California Legislature intended them to apply to unlawful conduct committed outside California. See, e.g., Guillory v. Princess Cruise Lines, Ltd., 2007 WL 102851, at *4-5 (Cal. Ct. App. Jan. 17, 2007). So the presumption against extraterritoriality applies to the CFRA, and to FEHA.
The next question is whether Elzeftawy‘s “proposed application” of the CFRA “would cause it to operate, impermissibly, with respect to occurrences outside” California. Sullivan, 254 P.3d at 248. Elzeftawy relies on Kearney v. Salomon Smith Barney, Inc., 137 P.3d 914 (Cal. 2006) to argue that the CFRA (and the other California statutes he has invoked) should apply because he is a California resident and because Pernix‘s conduct injured him while he was in California. See, e.g., Pl.‘s Resp. Br. at 25. It is true that in Kearney, the California Supreme Court upheld a California resident‘s claim against an out-of-state defendant under § 637.2 of the California Penal Code, even though the misconduct had occurred in Georgia. 137 P.3d at 930-31. But Kearney is distinguishable. Primarily, the California Supreme Court clarified that applying a California statute to “a multistate event in which a crucial element ... occurred in California” is not an extraterritorial application of that statute—at least not under the unique circumstances presented in Kearney. Id. (cleaned up). As the state high court emphasized, the out-of-state misconduct in that case depended on certain events—the secret recording of California residents while they were engaging in confidential conversations—occurring contemporaneously in California. Id. The outcome turned not on the plaintiffs’ residency, but on the connection between California and a crucial element of the claim. In other words, Kearney does not stand for the proposition that California statutes may apply to out-of-state conduct by a foreign defendant so long as a California resident is injured—rather, the connection of that misconduct to the state of California is still key. This is consistent with the California Supreme Court‘s general position that the presumption against extraterritoriality is a presumption “against an intent to encompass conduct occurring in a foreign jurisdiction in the prohibitions and remedies of a domestic statute.” Diamond Multimedia Sys., Inc. v. Superior Court, 968 P.2d 539, 554 n.20 (Cal. 1999) (cleaned up) (emphasis added).
As a matter of fact, the California Supreme Court recently considered whether Section 226 of the California Labor Code applies to state residents who work principally outside California, and it explicitly rejected residency as the determinative factor. Ward, 466 P.3d at 317. The court reasoned that “[a]pplication of [S]ection 226 to those who work primarily outside the state, based only on their choice to reside [there], would create overlap and potential conflict-of-laws concerns” when California law differs from the law of the state where the employee primarily works. Id. at 323. Instead, “when it comes to the regulation of interstate employment,” and given that “many employment relationships ... will have elements of both” extra- and intra-territorial work, “[t]he better question is what kinds of California connections will suffice to trigger the relevant provisions of California law.” Id. at 318-19.
That said, “the connections that suffice for purposes of one statute may not necessarily suffice for another.” Ward, 466 P.3d at 319. With respect to FEHA (which encompasses the CFRA), “[t]he majority of courts in California and other jurisdictions have found that the extraterritorial application of FEHA is determined by the situs of both employment and the material elements of the cause of action, as opposed to
Starting with the former, Ward makes it clear that Califorina need not be the exclusive site of employment. In Ward, the California Supreme Court held that the application of Section 226 of the California Labor Code “logically depends on whether the employee‘s principal place of work is in California.” Ward, 466 P.3d at 320. Employees who work in California most of the time would be protected under Section 226, as would employees who do not work principally in any one state, but who have a “definite base of operations in California” and perform at least some work there. Id. at 324. See also Sullivan, 254 P.3d at 239, 243 (holding that nonresident employees of a California company who worked primarily in their home states, but who also worked in California “for entire days or weeks” at a time, were entitled to Labor Code protections); id. at 242-43 (conversely, California law would generally “not apply to nonresident employees of out-of-state businesses who enter California temporarily during the course of the workday.“). Of course, it is true that “each law must be considered on its own terms[,]” and that Ward concerned the California Labor Code, not FEHA. Id. at 319. Nevertheless, Ward (and Sullivan) strongly suggests that the CFRA and FEHA would apply even if an employee works out-of-state, so long as the employee‘s work is substantially connected to California.
Here, we know that Elzeftawy was injured on a job site in South Korea, but we do not know whether South Korea was his primary work location. Elzeftawy tries to do some damage control in his response brief, alleging that he worked for Pernix in California before going to South Korea. Pl.‘s Resp. Br. at 29. He also alleges that while he was on leave for his injury in California, Pernix “sought [his] assistance with work” and that he “initially patiently responded to the interference” with his leave. See id.; Compl. at 19. But even accepting these allegations as true, there is nothing to suggest that Elzeftawy‘s “work” in California was anything more than occasional and transient, or that his work in
For one, Elzeftawy wrote in the April 2018 EEOC Charge that his injury “was caused by safety and health issues that [he] had complained about on multiple occasions[,]” implying that he had been at the South Korea job site for some time before November 2016. See 4/10/18 EEOC Charge at 16. What‘s more, Elzeftawy makes multiple references to having “worked all over the world,” including for Pernix. For example, between September 2012 and August 2015, Elzeftawy opened a Pernix location in Dubai, and established and managed Pernix programs in Guam. Id. at 17-18; see also Compl. at 23 (“[Plaintiff] indicated ... that he was willing to move or travel anywhere in the world for his work (as he previously had done for [Pernix])“). But despite including a detailed work history dating back to 1999, nowhere in the April 2018 Charge does Elzeftawy ever mention working in California. And most importantly, of course, he also concedes that he was working on a U.S. government project in South Korea at the time of the injury. So even giving Elzeftawy the benefit of all reasonable inferences, the facts point to minimal work-related contact with California. Cf. Sullivan, 254 P.3d at 243 (although California law does not generally follow California residents wherever they go throughout the United States, it might follow resident employees of California employers who just “leave the state temporarily ... during the course of the normal workday.“).
Turning to the second factor in the extraterritoriality analysis, the Court must examine where “the material elements of the cause of action” occurred—that is, the location of the alleged proscribed conduct. The California Court of Appeal examined a similar issue in Guillory, which is perhaps the most factually analogous case to Elzeftawy‘s. Guillory, 2007 WL 102851. There, the employee was a California resident who worked primarily outside the state (on the high seas and—unlike Elzeftawy—for a company with corporate offices in California). Id. at *1. The California court held that FEHA did not apply to the employee because “the material elements of [her] cause of action occurred outside California“—in particular, the determination that she was unfit to continue working on the ship (due to a high-risk pregnancy) and the decision to make her disembark. Id. at *4-5. In other words, the employee‘s FEHA claim contemplated extraterritorial application because both the alleged misconduct and the locus of the work took place outside California—and even though the employer and the employee had strong residency ties to the state, this was still not enough to overcome the presumption. Ultimately, California‘s interest in protecting its residents from employment misconduct is significantly weakened
when there is a minimal connection between the relevant conduct and the state. See Ward, 466 P.3d at 318.
As in Guillory, the facts in Elzeftawy‘s case also suggest that the alleged unlawful conduct occurred outside California.19 The relevant conduct is Pernix‘s alleged
The same goes for the FEHA claims,
Because Counts 6-11 of the Complaint, as alleged, would require an impermissibly extraterritorial application
2. California Labor Code (Counts 12 and 14)
Elzeftawy also brings claims under Sections 6310 and 6400 (Count 12), and section 1102.5 (Count 14) of the California Labor Code.
a. Sections 6310 and 6400 (Count 12)
Starting with Count 12, Sections 6310 and 6400 of the California Labor Code—which are part of the California Occupational Safety and Health Act of 1973 (Cal-OSHA)—prohibit retaliation against employees who complain about or report workplace health and safety violations or injuries (whether internally or to outside government agencies). See Ferrick v. Santa Clara Univ., 181 Cal. Rptr. 3d 68, 81 (Cal. Ct. App. 2014). See also
Pernix, however, argues that Elzeftawy‘s claims under Sections 6310 and 6400 of the California Labor Code must be dismissed because Cal-OSHA does not apply under the alleged circumstances. Def.‘s Br. at 28. Pernix is correct. Cal-OSHA extends only to “places of employment” within California. Taylor v. Lockheed Martin Corp., 92 Cal. Rptr. 2d 873, 881 (Cal. Ct. App. 2000). Section 6303 of the Act defines “place of employment” as “any place ... where employment is carried on,
As explained earlier in this Opinion, the facts alleged fail to raise a reasonable inference that Elzeftawy‘s “place of employment” was in California. Although Elzeftawy once again mentions that Pernix asked him to work in December 2016 while he was on leave, Pl.‘s Resp. Br. at 29, given all the other facts saying that he primarily worked in South Korea, see supra Part III(B)(1)(a), this is not enough to adequately plead that his “place of employment” was in California. Nor can it be said—on these facts—that Elzeftawy‘s cause of action arose in California. The California Legislature enacted Cal-OSHA “for the purpose of assuring safe and healthful working conditions” in places of employment in California. See
Because Elzeftawy has failed to adequately allege that his “place of employment” was in California, his claims under Sections 6310 and 6400 of the California Labor Code must be dismissed (though without prejudice to allow Elzeftawy an opportunity to amend).
b. Section 1102.5 (Count 14)
Next up is Count 14 of the Complaint, which is basically a retaliation claim under Section 1102.5 of the California Labor Code. “Labor Code section 1102.5 is a whistleblower statute, the purpose of which is to encourag[e] workplace whistle-blowers to report unlawful acts without fearing retaliation.” Soukup v. Law Offices of Herbert Hafif, 139 P.3d 30, 48 (Cal. 2006). Section 1102.5(b) prohibits employers from “retaliat[ing] against an employee for disclosing information ... to a government or law
For his part, Elzeftawy alleges that Pernix‘s actions against him were motivated by his opposition to Pernix‘s violations of the FMLA, the ADA, Title VII, Section 1981, the federal False Claims Act, the California Fair Housing and Employment Act, the California Family Rights Act, the California False Claims Act, and the California Labor Code. Compl. at 78-79. To survive dismissal, though, Elzeftawy must—as with any retaliation claim—plausibly allege that (1) he engaged in a protected activity, (2) Pernix subjected him to an adverse employment action (that is, conduct that would dissuade protected activity), and (3) there is a causal link between the two. See Soukup, 139 P.3d at 48. Unfortunately for Elzeftawy, his claim fails on the third element.
Before getting to the question of causation, though, it is necessary to identify the relevant protected activity. Under Section 1102.5(b), an employee engages in a protected activity if he reports reasonably based suspicions of illegal conduct to a government agency, or internally to someone with authority over the employee or with authority to investigate or correct the misconduct. See Mokler v. Cty. of Orange, 68 Cal. Rptr. 3d 568, 580-81 (Cal. Ct. App. 2007); Siazon v. Hertz Corp., 2019 WL 1170778, at *16 (N.D. Cal. Mar. 13, 2019) (collecting cases). In addition, under Section 1102.5(c), an employee is also protected if he refuses to participate in a work activity that he reasonably believes would constitute a violation of federal or state law.
Here, Elzeftawy does not allege that he ever refused to participate in an activity because he thought it would be illegal; rather, he asserts in Count 14 that he “[stood] up for his rights” and that he opposed Pernix‘s allegedly illegal practices. See Compl. at 79. This vague recitation of what generally constitutes “protected activity” cannot support a retaliation claim. See, e.g., McCauley, 671 F.3d at 617. Nevertheless, there is one allegation earlier in the Complaint that might qualify as a report of illegal activity within the meaning of Section 1102.5: Elzeftawy‘s Summer 2016 complaint to McSweeney regarding McSweeney‘s own racist comments about Muslims and people from the Middle East. Compl. at 10, 20-21. Cf. Jaramillo v. Cty. of Orange, 133 Cal. Rptr. 3d 751, 763 (Cal. Ct. App. 2011) (assistant sheriff‘s report to county sheriff regarding county sheriff‘s own misconduct was protected activity under § 1102.5).
Generally, “exclusively internal administrative” matters—such as requesting additional staff to ensure school safety, or forwarding student complaints about a teacher—would not qualify as a disclosure intended to “blow the whistle” on a legal violation. See Siazon, 2019 WL 1170778, at *15 (quoting Conn v. W. Placer Unified Sch. Dist., 113 Cal. Rptr. 3d 116, 131 (Cal. Ct. App. 2010)). But even if it is not clear exactly what Elzeftawy said to McSweeney, given the context of Pernix‘s alleged practice of intentionally hiring fewer Muslims, it cannot be said that Elzeftawy‘s complaint about McSweeney‘s racism was a routine workplace grievance. Cf. Patten v. Grant Joint Union High Sch. Dist., 37 Cal. Rptr. 3d 113, 118 (Cal. Ct. App. 2005) (“To exalt ... internal personnel disclosures with whistleblower status would ... thrust the judiciary into micromanaging employment practices and create a legion of undeserving protected ‘whistleblowers’ arising from routine workings and communications“). At this stage, and looking at the Complaint as a whole, Elzeftawy has plausibly alleged that he disclosed “reasonably based suspicions” that McSweeney was violating federal and state anti-discrimination laws (such as Title VII, Section 1981, and the California Fair Housing and Employment Act). See, e.g., Madrid v. Cty. of Mono, 2014 WL 2889910, at *5 (E.D. Cal. June 25, 2014) (plaintiff‘s report that another employee had falsified a police report constituted protected activity under § 1102.5 even if plaintiff did not cite a specific law).
Unfortunately for Elzeftawy, though, he has still failed to state a claim under Section 1102.5. As with his retaliation claims under Title VII and § 1981, Elzeftawy has not adequately plead a causal connection between the aforementioned protected activity and Pernix‘s alleged adverse action against him. But having already marched through this analysis above—in Parts (A)(3)(b)(ii) and (A)(4)—the Court will not repeat it here.
In any event, aside from the failure to adequately plead the elements of retaliation, Count 14 also suffers from the same deficiency as the CFRA and FEHA claims. Namely, there is nothing to suggest that Section 1102.5 permits extraterritorial application, and Elzeftawy has failed to plausibly connect either his place of employment or Pernix‘s alleged unlawful retaliation to California. See Oman v. Delta Air Lines, Inc., 889 F.3d 1075, 1079 (9th Cir. 2018) (“[I]f the liability-creating conduct occurs outside of California, California law generally should not govern ... unless the Legislature explicitly indicates otherwise, which it did not in the Labor Code[].“); Weinberg v. Valeant Pharmaceuticals Int‘l, 2017 WL 6543822, at *6 (C.D. Cal. Aug. 10, 2017) (on Section 1102.5 claim, plaintiff failed to rebut presumption against extraterritoriality where no retaliatory decision-making occurred in California, and the only work-related connection to California was plaintiff remotely accessing and working with data stored on California computer servers).
For all these reasons, Elzeftawy‘s Section 1102.5 claim must be dismissed (though without prejudice).
3. California False Claims Act (Count 13)
Elzeftawy also brings a retaliation claim under the California False Claims Act (CFCA),
In contrast to its federal counterpart (which applies only to false claims submitted to the U.S. government), United States v. King-Vassel, 728 F.3d 707, 711 (7th Cir. 2013), the CFCA “is intended to supplement governmental efforts to identify and prosecute fraudulent claims made against state and local governmental entities[,]” John Russo Indus. Sheetmetal, Inc. v. City of Los Angeles Dep‘t of Airports, 240 Cal. Rptr. 3d 217, 220-21 (Cal. Ct. App. 2018) (emphasis added) (cleaned up). See also State of California v. Altus Finance, 116 P.3d 1175, 1182 (Cal. 2005). In other words, the CFCA is limited to false claims
Here, Elzeftawy sues Pernix under Section 12653(a), which protects employees from retaliation for investigating or trying to stop violations of the CFCA, not its federal analogue or any other statute. See
4. California Unfair Competition Law (Count 19)
Moving to Count 19, Elzeftawy brings a claim under California‘s Unfair Competition Law (UCL),
Once again, Pernix raises the presumption against extraterritoriality—which “applies to the UCL in full force[,]” Sullivan, 254 P.3d at 198—to argue that Count 19 should be dismissed. But while Pernix is ultimately correct, the question of extraterritoriality in the context of the Unfair Competition Law is more complicated than when applied to FEHA or to any of the other California statutes discussed above. This is because some California courts “have held that a UCL claim may be brought by a plaintiff who is a resident of California, regardless of where the alleged misconduct occurred.” Adobe Sys. Inc. v. Blue Source Grp., Inc., 125 F. Supp. 3d 945, 972 (N.D. Cal. 2015) (citing Norwest Mortgage, Inc. v. Superior Court, 85 Cal. Rptr. 2d 18, 23 (Cal. Ct. App. 1999), and Yu v. Signet Bank/Virginia, 82 Cal. Rptr. 3d 304, 313-14 (Cal. Ct. App. 1999)). A closer look at these decisions, however, reveals that they are distinguishable from the facts in Elzeftawy‘s case.
For one, although the California residents in Norwest could assert their Unfair Competition Law claims regardless of where the misconduct occurred, the California Court of Appeal mentioned this in passing, without any explanation. 85 Cal. Rptr. 2d at 23. Meanwhile, and contrary to the facts here, the defendant in Norwest was a company incorporated in California, and the relevant misconduct was directly related to California real estate. Id. at 20. So the UCL claim in Norwest involved significantly more contacts with California than Elzeftawy‘s, and on that basis, this Court cannot conclude that Norwest‘s holding was based solely on the plaintiffs’ residency in California.
As for the Yu decision, that case too did not engage in any substantive analysis of the extraterritorial reach of the Unfair Competition Law. Rather, in rejecting the argument that “California cannot regulate conduct that is lawful in other states[,]” the court explained that “[i]n the absence of any federal preemption, a defendant who is subject to jurisdiction in California and who engages in out-of-state conduct that injures a California resident may be held liable for such conduct in a California court.” Yu, 82 Cal. Rptr. 3d at 313 (emphasis added). So Yu does not stand for the proposition that a UCL claim may survive against an out-of-state defendant, based on out-of-state conduct, solely because the plaintiff is a California resident; rather, the defendant must be subject to personal jurisdiction in California, too. As a general matter, personal jurisdiction requires a defendant to have made “certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” Int‘l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (cleaned up). But at this point, there is nothing in the Complaint to suggest that Pernix maintained enough “minimum contacts” with the state of California such that it could have reasonably anticipated being haled into court there—just the opposite, in fact. See Walden v. Fiore, 571 U.S. 277, 284-85 (2014); Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985). See also Walden, 571 U.S. at 285 (“[O]ur ‘minimum contacts’ analysis looks to the defendant‘s contacts with the forum State itself, not ... with persons who reside there. ... [T]he plaintiff cannot be the only link between the defendant and the forum.“). In short, neither Norwest nor Yu stands for the proposition that the UCL automatically applies to any claim brought by a California resident.
Absent a specific controlling case on the UCL, the Court again turns to the general California principles on extraterritoriality explained above. That is, in determining whether Elzeftawy‘s proposed application of the UCL “would cause it to operate, impermissibly, with respect to occurrences outside” California, Sullivan, 254 P.3d at 248, the strength of the connection between the claim and the state of California is vital, see Ward, 466 P.3d at 318-319. For his part, Elzeftawy alleges that Pernix violated the UCL by knowingly misrepresenting the applicability of the FMLA in its written employment policies, and by engaging in unlawful conduct under
But that is not all: even putting aside the issue of extraterritoriality, most of Elzeftawy‘s Unfair Competition Law claims would need to be dismissed anyway. As previously mentioned, Count 19 is largely premised on the “unlawful” category of UCL liability (based on Pernix‘s alleged violations of the FMLA, the ADA, Title VII, the FCA, Section 1981, the CFRA, FEHA, the California Labor Code, and the CFCA). See Compl. at 95-99; see also Asencio v. Miller Brewing Co., 283 Fed. App‘x 559, 561 (9th Cir. 2008) (“[W]here the plaintiff alleges violations of a statute only, the ‘cause of action alleges unfair competition that is unlawful rather than unfair or deceptive.‘“) (quoting In re Vaccine Cases, 36 Cal. Rptr. 3d 80, 93 (Cal. Ct. App. 2005)). But UCL claims for “unlawful” conduct are “incidental to and depend upon the validity (or invalidity) of the preceding claims for relief.” Krantz v. BT Visual Images, L.L.C., 107 Cal. Rptr. 209, 219 (Cal. Ct. App. 2001). In other words, the claims cannot survive where the plaintiff has failed to adequately allege violations of the underlying statutes. Compare, e.g., Candelore v. Tinder, Inc., 228 Cal. Rptr. 3d 336, 350-51 (Cal. Ct. App. 2018) (“Because we conclude the complaint adequately states a claim for violation of the Unruh Act, we also conclude the allegations are sufficient to state a claim under the ‘unlawful’ prong of the UCL.“), with Rubenstein v. The Gap, Inc., 222 Cal. Rptr. 3d 397, 406 (Cal. Ct. App. 2017) (where plaintiff failed to state claims under the California False Advertising Law or the Consumers Legal Remedies Act, plaintiff could not “state a cause of action under the ‘unlawful prong’ of the UCL” premised on either statute). In Elzeftawy‘s case, this means that even if the UCL did apply extraterritorially, most of his UCL claims would still fail, because most of his underlying claims did too. All in all, Count 19 of the Complaint must be dismissed, but without prejudice in the event Elzeftawy can cure the deficiencies discussed above.
One last point: Pernix also argues that Elzeftawy lacks standing to bring the UCL claims. In order to have standing under the UCL, plaintiffs must establish that they “(1) suffered an injury in fact and (2) lost money or property as a result of the unfair competition.” Birdsong v. Apple, Inc., 590 F.3d 955, 959 (9th Cir. 2009) (citing
5. California Common-Law Fraud (Counts 16-18)
In addition to the statutory claims, Elzeftawy brings three claims for fraud under California common law: False Promise (Count 16), Intentional Misrepresentation (Count 17), and Concealment (Count 18). Compl. at 83-95. Pernix argues that Illinois law should apply to Elzeftawy‘s fraud claims, and the Court agrees. Generally, when a federal district court that is sitting in diversity or exercising supplemental jurisdiction has to decide which state‘s substantive law to apply, the court must apply the forum state‘s choice-of-law principles—in this case, Illinois. See McCoy, 760 F.3d at 684. Illinois law, which “applies the choice-of-law analysis from the Restatement (Second) of Conflict of Laws[,]” Dobbs v. DePuy Orthopedics, Inc., 842 F.3d 1045, 1049 (7th Cir. 2016), “tells us that the law of the state with the ‘most significant relationship to the occurrence and the parties’ applies in the event of a conflict[,]” Bd. of Forensic Document Exam‘rs, Inc. v. Am. Bar Ass‘n, 922 F.3d 827, 831 (7th Cir. 2019) (quoting Barbara‘s Sales, Inc. v. Intel Corp., 227 Ill. 2d 45, 61 (Ill. 2007)). But the “most significant relationship” test does not come into play unless there is difference in law that would affect the outcome—absent such a disagreement, the law of the forum state applies. See Crichton v. Golden Rule Ins. Co., 576 F.3d 392, 397 n.1 (7th Cir. 2009) (citing Int‘l Administrators, Inc. v. Life Ins. Co. of North America, 753 F.2d 1373, 1376 n.4 (7th Cir. 1985)).
Here, there is no conflict between California and Illinois common-law fraud, so Illinois law would apply. Specifically, all California fraud claims have five basic elements: “(a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or scienter); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” Grant v. Aurora Loan Servs., Inc., 736 F. Supp. 2d 1257, 1270 (C.D. Cal. 2010) (quoting Small v. Fritz Cos., Inc., 65 P.3d 1255, 1258 (Cal. 2003)). Similarly, the five elements of common law fraud in Illinois are: “(1) a false statement of material fact; (2) defendant‘s knowledge that the statement was false; (3) defendant‘s intent that the statement induce the plaintiff to act; (4) plaintiff‘s reliance upon the truth of the statement; and (5) plaintiff‘s damages resulting from reliance on
Elzeftawy has adequately pled all three of his fraud claims under Illinois law. He alleges that, in December 2016, while he was recovering in California, Pernix promised him on multiple occasions that he could return to his previous position or to a similar one once his medical leave was over. Compl. at 83-84, 88-89, 93-94. Pernix not only made these same representations to Elzeftawy throughout 2017 (through Watson, Zayed, and McSweeney), but also promised to tell him about any open positions that he might be qualified for. Id. Elzeftawy maintains that he relied on Pernix‘s promises—which were made both orally and in writing—by not seeking other opportunities, and that his reliance was reasonable given his extensive work experience. Id. at 85-86, 90. But according to Elzeftawy, Pernix not only failed to follow through, but also actively lied about its intentions to place him in another position and concealed from him the existence of numerous open positions, causing him emotional distress and financial loss. Id. at 87, 92, 95. These facts satisfy the elements of an Illinois fraud claim—that is, that Pernix intentionally made false promises and representations to Elzeftawy regarding his employment status and the availability of open positions; that—in reasonable reliance on Pernix‘s promises—Elzeftawy did not seek other jobs; and that he was injured as a result. See Connick, 675 N.E.2d at 591.
According to Pernix, though, Elzeftawy‘s claims for common-law fraud fail for lack of particularity no matter which state‘s law applies. Def.‘s Br. at 34-35. Fraud claims brought in federal court—including those brought under state law—are subject to the heightened pleading requirements of Rule 9(b). See
But Pernix‘s argument does not hold up. Specifically, Elzeftawy has alleged the who (Watson, Zayed, McSweeney); the what (misrepresentations and false promises regarding the existence of open positions and Elzeftawy‘s ability to return to work, and concealment of intentions and availability of positions); the where (while Elzeftawy was in California, and as may be reasonably inferred, from Pernix headquarters in Illinois); the when (2017 and December 2016); and the how (orally and in writing). The specificity of these allegations serves the purpose of Rule 9(b): to ensure “that the charge of fraud is responsible and supported, rather than defamatory and extortionate.” Ackerman v. Northwestern Mut. Life Ins. Co., 172 F.3d 467, 469 (7th Cir. 1999). No more is required at this point—especially in light of Elzeftawy‘s extensive allegations in other parts of the Complaint—so Counts 16-18 of the
6. California Wrongful Employment Action in Violation of Public Policy (Count 15)
Finally, Elzeftawy alleges a California common law claim for “wrongful adverse employment action in violation of public policy.” Compl. at 80-83. In California, “[t]o support such a cause of action, the [public] policy in question must satisfy four requirements: First, the policy must be supported by either constitutional or statutory provisions. Second, the policy must be public in the sense that it inures to the benefit of the public rather than serving merely the interests of the individual. Third, the policy must have been articulated at the time of the discharge. Fourth, the policy must be fundamental and substantial.” Ross v. RagingWire Telecomms., Inc., 174 P.3d 200, 208 (Cal. 2008) (cleaned up). The statutory or constitutional provision “must sufficiently describe the type of prohibited conduct to enable an employer to know the fundamental public policies that are expressed in that law and to have adequate notice of the conduct that will subject the employer to tort liability to the employees it discharges.” Id. (cleaned up). According to Elzeftawy, Pernix violated California public policy, “as embodied” in the FLMA, ADA, Title VII, Section 1981, FCA, FEHA, CFCA, CFRA, and the California Labor Code. Compl. at 80-82.
Pernix once again makes a choice-of-law argument. As with Counts 16-18 of the Complaint, Illinois law also applies to Count 15, though for different reasons: this time there is a conflict between California and Illinois law. Although Illinois recognizes a common-law claim for wrongful discharge in violation of public policy, it is more limited than California‘s. “Illinois courts decline to extend the tort of wrongful discharge [in violation of public policy] to cases ... where statutory remedies already serve as adequate deterrents to the alleged misconduct.” United States v. Cancer Treatment Ctrs. of America, 2002 WL 31497338, at *3 (N.D. Ill. Nov. 7, 2002) (citing United States ex rel. Chandler v. Hektoen Inst. for Med. Research, 35 F. Supp. 2d 1078, 1082 (N.D. Ill. 1999)). See also Baker v. Miller, 636 N.E.2d 551, 558-59 (Ill. 1994) (finding that employee covered by Illinois Human Rights Act cannot bring claim for violation of the employment discrimination section of the Illinois Constitution, because the Act is the exclusive remedy for such an action); Mein v. Masonite Corp., 464 N.E.2d 1137, 1139 (Ill. App. Ct. 1984) (holding that plaintiff cannot maintain an action for wrongful discharge for a violation of the policy embodied in the Illinois Human Rights Act, which already “contains a comprehensive series of remedies” for such violations); More v. Roadway Exp., Inc., 1998 WL 292417, at *7 (N.D. Ill. May 19, 1998) (“Where ... Illinois provides a statutory remedy for the particular type of misconduct that violates public policy, no independent common law tort is recognized; the person instead must proceed under the statute.“). In other words, whereas California allows claims for wrongful discharge in violation of public policy to be predicated on policies expressed
“When applying the most significant relationship test, a court should consider (1) where the injury occurred; (2) where the injury-causing conduct occurred; (3) the domicile of the parties; and (4) where the relationship of the parties is centered.” Esser v. McIntyre, 661 N.E.2d 1138, 1141 (Ill. 1996). Here, some of the injuries—such as Elzeftawy being denied a reasonable accommodation and being effectively terminated—occurred in California, where Elzeftawy is also domiciled. But it is not entirely clear where other injuries—such as McSweeney‘s alleged harassment—occurred, because the Complaint does not allege a location. On the other hand, the facts point to the injury-causing conduct originating in Illinois, where Pernix is headquartered. Likewise, and although the international nature of Elzeftawy‘s work muddles the question a bit, the facts—as presently alleged—weigh in favor of Illinois as the center of the parties’ relationship, given the Court‘s reasonable inference that the relevant Pernix decision-makers are likely based at headquarters. On balance, then, Illinois law applies because Illinois has the most significant relationship to Elzeftawy‘s claims, not California.
Ultimately, this means that Count 15 must be dismissed, because Elzeftawy cannot state an Illinois common-law claim for wrongful discharge predicated on California public policy. This dismissal is without prejudice to allow Elzeftawy to bring an Illinois claim for wrongful discharge in violation of public policy (with the caveat that such a claim must be limited to policies lacking a statutory remedy).
IV. Conclusion
For the reasons discussed, the Court decides as follows. On the federal claims:
- the FMLA claim (Count 1) is dismissed without prejudice;
- the ADA claims (Count 2) survive, but liability is limited to conduct occurring 300 days before January 30, 2018;
- the Title VII claims (Count 3) for disparate treatment and hostile work environment survive, but liability is limited to conduct that happened on or after June 14, 2017, and the Title VII claim for retaliation is dismissed without prejudice;
- the Section 1981 claims (Count 4) for disparate treatment and hostile work environment survive, and the Section 1981 claim for retaliation is dismissed without prejudice; and
- the U.S. False Claims Act claim (Count 5) is dismissed without prejudice.
On the state-law claims:
- the CFRA and FEHA claims (Counts 6-11) are dismissed without prejudice;
- the claims under Sections 6310 and 6400 of California Labor Code (Count 12) are dismissed without prejudice;
- the claim under Section 1102.5 of the California Labor Code (Count 14) is dismissed without prejudice;
- the California False Claims Act claim (Count 13) is dismissed with prejudice;
-
the Unfair Competition Law claim (Count 19) is dismissed without prejudice; - the common-law fraud claims (Counts 16-18) survive; and
- the claim for wrongful adverse employment action in violation of California public policy is dismissed without prejudice (Count 15).
For the dismissals that are without prejudice, Elzeftawy may file an amended complaint to fix (if possible) the deficiencies identified in this Opinion by August 24, 2020. Otherwise, those dismissals will convert to a with-prejudice dismissal. The Court urges Elzeftawy to bear in mind the warnings against unnecessary complexity in any amended pleading and in the case overall.
The status hearing of August 21, 2020 is reset to September 11, 2020, at 8:30 a.m. (but just to track the case, the case will not be called). By August 28, 2020, the parties shall file a joint status report, R. 5, proposing a discovery schedule for the surviving claims. Because there might be an amended complaint, and in light of the sheer prolixity of the current complaint, the Court will not require (yet) a partial answer to the surviving claims. But discovery must get going on the surviving claims. The Mandatory Initial Discovery standing order does apply to this case, and the parties shall use (in proposing the discovery schedule) an MID disclosure date of September 8, 2020 (even if an amended complaint is filed) on the surviving claims and move on from there.
ENTERED:
s/Edmond E. Chang
Honorable Edmond E. Chang
United States District Judge
DATE: August 8, 2020
Notes
Although the defense does not raise the issue, it merits mentioning that “[i]n order to be entitled to file a civil action in court based on FEHA violations, an employee must first exhaust administrative remedies. ... An employee exhausts administrative remedies by filing a complaint with the [Department of Fair Employment and Housing] within one year of the occurrence of the allegedly unlawful act, and obtaining a notice of the right to sue ... .” Ayala v. Frito Lay, Inc., 263 F. Supp. 3d 891, 902 (E.D. Cal. 2017) (citing Blum v. Superior Court, 141 Cal. App. 4th 418, 422 (Cal. Ct. App. 2006)). See also Schifando v. City of Los Angeles, 79 P.3d 569, 572-73 (Cal. 2003). Given the exhaustion and timeliness issues presented by the ADA and Title VII claims, Elzeftawy might want to take a closer look at his FEHA claims (and narrow them as appropriate) should he wish to replead them.
Similarly, Elzeftawy should keep in mind that even the most expansive definition of California extraterritoriality is still limited by federal due process. It is well-established “that for a State‘s substantive law to be selected in a constitutionally permissible manner, that State must have a significant contact or significant aggregation of contacts, creating state interests, such that choice of its law is neither arbitrary nor fundamentally unfair.” Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 818 (1985) (cleaned up). As presently alleged, the facts in the Complaint make the application of California law constitutionally questionable at best.