The Equal Employment Opportunity Commission ("EEOC") brought this Title VII action against two corporations, Defendant Phase 2 Investments Inc. ("Phase 2"), and Defendant CWP West Corp. t/a Mister Car Wash ("Mister"), alleging that a previous corporation, Maritime Autowash, Inc. ("Maritime"), subjected a class of Hispanic employees to a hostile work environment and that both Defendants are liable. Both Defendants have moved to dismiss or in the alternative for summary judgment. (See Phase 2 Mot. Summ. J., ECF No. 15; Mister Mot. Summ. J., ECF No. 23). The EEOC has responded in opposition to both motions (ECF Nos. 19, 25) and both Defendants have replied (ECF Nos. 22, 41).
I. Background
a. The Charging Parties' employment, complaints of discrimination, and termination
Maritime was a Maryland corporation that maintained two car washes, including one in Edgewater, Maryland. (Am. Compl. ¶¶ 4, 6, ECF No. 5; Decl. Elmer Escalante ¶ 5, ECF No. 19-1.) A number of Hispanic employees worked at the Maritime facility in Edgewater, including Elmer Escalante, Godofredo Esquivel Platero, Luis Serrano, Jose Luis Dominguez,
On April 23, 2013, agents from United States Immigration and Customs Enforcement ("ICE") conducted an audit of Maritime. (Aff. David Podrog ¶ 4, ECF No. 15-3.) On May 7, 2013, ICE informed Maritime that thirty-nine of its employees were not authorized to work in the United States, including the nine Charging Parties. (Id. ¶¶ 5-6.) ICE further informed Maritime that, unless the thirty-nine employees could provide valid identification and employment eligibility documentation, Maritime would suffer civil, and perhaps even criminal, penalties if it continued to employ them. (Notice of Suspect Documents 2, ECF No. 15-4.) According to the Charging Parties, after being informed of the employees' status, Maritime General Manager Kyle Decker "held a meeting with the Hispanic employees and told [them] that he and Owner [David] Podrog had made a decision to give those employees without proper documentation $150 so that they could obtain new papers and be re-hired ... under new names." (E.g., Escalante Decl. ¶ 11; Decl. Godofredo Esquivel ¶ 5, ECF No. 19-2.)
After being rehired, on July 27, 2013 the Charging parties and other Hispanic employees complained to David Podrog and Kyle Decker about the mistreatment they had been suffering. (E.g. , Escalante Decl. ¶ 19; Decl. Luis Serrano ¶ 10, ECF No. 19-3.) Decker "indicated" that the employees would only get a thirty minute lunch break that day, and if they did not report back to work at 1:00 pm, they would be fired. (E.g. , Escalante Decl. ¶ 19.) The Charging Parties and other Hispanic employees did not report back to work at 1:00 p.m., and Maritime fired them. (E.g., Escalante Decl. ¶¶ 19-20; Esquivel Decl. ¶¶ 11-12.) (According to David Podrog, Maritime only fired seven of the Charging Parties, as well as other employees identified by ICE, and only because they were unable to provide documentation proving that they were eligible to work. (Podrog Aff. ¶ 12.) )
b. EEOC's investigation
On July 30, 2013 the Charging Parties submitted intake questionnaires to the EEOC. (Intake Questionnaires, Decl. Rosemarie Rhodes Attach. A, ECF No. 19-10.) On February 4, 2014, the Charging Parties signed formal Charges of Discrimination, and notice of these Charges was then sent to Maritime. (See, e.g. , Escalante Charge of Discrimination, ECF No. 15-6 (signed February 4, 2014); Escalante Notice of Charge of Discrimination, Decl. Rosemarie Rhodes Attach. D, ECF No. 19-10 (dated February 25, 2014).) The Charging Parties began their employment at Maritime at different times, and thus their Charges of Discrimination allege different dates for the earliest date on which the alleged discrimination took place, but most of the Charges allege that the latest date on which discrimination took place was July 27, 2013-the date on which the Charging Parties were fired. (E.g. , Escalante Charge of Discrimination; Dominguez Charge of Discrimination, ECF No. 15-9.)
During the course of its investigation, the EEOC served Maritime with a subpoena, to which Maritime was not responsive. In 2015, the EEOC came to this court to enforce the subpoena. See EEOC v. Maritime Autowash, Inc. , Civ. No. GLR-15-869,
c. Defendants' changes in ownership
While the EEOC was working to enforce its investigatory powers, corporate changes were underway at Maritime. In 2014 Mister began the process of purchasing Maritime's assets. (See Decl. Casey Lindsay ¶ 3, ECF No. 23-2.) Both parties, Maritime and Mister, entered into a letter of intent which specified a purchase price "in excess of $15,000,000." (Id. ¶¶ 3-4.) After signing the letter, "the parties commenced the due diligence process and began negotiating the terms of an asset purchase agreement." (Id. ¶ 5.)
Mister did much to protect itself from any potential liability that Maritime might incur. The purchase was "intentionally structured as an asset acquisition to avoid assuming any existing liabilities of Maritime," (Lindsay Decl. ¶ 7), and the asset purchase agreement ("APA") explicitly provided that, except for any liabilities incurred after the closing date, and any liabilities specifically assumed by Mister, the "Buyer is not assuming or becoming liable for any liabilities of Seller." (APA § 1.3, ECF No. 23-5.) All liabilities that Mister expressly assumed were listed in a Schedule attached to the APA, and this Schedule made no mention of any employment discrimination liability. (See APA Schedule 1.3.) Maritime and Mr. Podrog agreed to indemnify and hold harmless Mister "from and against any damages [and] liabilities ... of any kind or nature whatsoever...arising out of ... any failure by [Maritime] to perform and fully discharge any of the Excluded Liabilities as set forth in this Agreement." (Id. § 8.2.)
Mister also explored Maritime's potential liabilities as part of its due diligence process. (See Decl. Sarah Ross ¶¶ 3-4, ECF No. 23-3.) Mister asked Maritime "to disclose any and all pending lawsuits or claims by employees." (Id. ¶ 3.) Maritime responded in October 2014, by "forward[ing] position statements" its counsel had prepared in response to the Charges of Discrimination that the Charging Parties had filed in 2014. (Id. ¶ 4.) In addition to these position statements, Maritime sent a letter from its counsel "stating that Maritime Autowash had an Employment
On January 21, 2015, the parties closed the referenced deal, and Mister took ownership of Maritime's assets, including the Edgewater facility that had employed the Charging Parties. (See APA.) Even after its due diligence, Mister did not negotiate for a lower price, and paid over $15 million, "the largest amount Mister Car Wash had ever paid for two stores in the history of the company." (Mister Mot. Summ. J. Mem. Supp. 6, ECF No. 23-1; Decl. Lindsay ¶ 8.) As to branding, by the terms of the APA Mister had only purchased a limited license to use Maritime's trademark for twelve months after the closing date (see APA § 1.2), and Mister set about transitioning away from Maritime's public facing marketing materials, such as its signage and social media. (See Ross Decl. ¶¶ 9-11.) Mister did not change Maritime's website for several months after the sale, and continued to use Maritime's social media. (Rhodes Decl. ¶ 5 and Attachs. B & C.) But by October of 2015, Mister was no longer using Maritime's website or social media. (Ross Decl. ¶ 11.) As a result of an "unrelated trademark infringement claim over the name 'Mister Car Wash' " the outdoor signage continued to show "Maritime Autowash," but that has since been converted as well. (Id. ¶ 12.)
Mister also made considerable internal changes, such as capital improvements worth roughly $600,000, changes to the car washing process in order to make the experience consistent with Mister's other facilities, and personnel changes. (See id. ¶¶ 14-15, 21-24.) Mister offered employment to all of Maritime's employees (not including the Charging Parties, who were not employees of Maritime at the time of the acquisition), but required all of the employees to provide valid documentation showing they were authorized to work in the United States. (Id. ¶¶ 16-18.) Mister was only able to hire 31% of Maritime's employees (id. ¶ 18), but still, as of June 2015, almost half of Mister's workforce were former Maritime employees (Rhodes Decl. ¶ 5). Mister asserts that it had to hire many new "production-level employees" (those who physically clean the cars), and due to the inexperience of these new employees Mister had to "suspend its high-revenue detailing services at both stores, resulting in a significant decrease in the profits of each store." (Id. ¶¶ 19-20.) In other words, according to Mister, as a result of the differences between Maritime and Mister, it had to spend over $600,000 and lost revenue.
To complicate matters further, after Maritime sold its Maryland car wash facilities, it too experienced some corporate change. On March 13, 2015, Phase 2 Investments ("Phase 2") was incorporated in Florida. (Podrog Aff. ¶ 3.) David Podrog, who was President of Maritime, is also the
d. The EEOC's claims and the current posture of the dispute
After resolving the enforcement of the subpoena before the Fourth Circuit, after Maritime sold its assets to Mister, and after Maritime then merged with Maritime Autowash II to form Phase 2, the EEOC finally concluded its investigation and sent both Defendants a Letter of Determination. (See Letter of Determination, ECF No. 41-3.)
The EEOC's amended complaint alleged that Hispanic employees at Maritime were "relegated" to lower paid positions, denied overtime, and denied their fair share of tips. (Am. Compl. ¶¶ 36-37; 42-43.) It alleged that Maritime would require the Charging Parties to perform additional tasks that it did not request of its non-Hispanic employees, such as cleaning the "car tunnel and machinery, powerwash[ing] the property, perform[ing] landscaping duties," and performing tasks at Maritime's manager's homes, all without additional compensation. (Id. ¶¶ 46, 48-49.) Furthermore, the EEOC alleged that Maritime treated the Charging Parties and other Hispanic employees differently at work, forcing them to eat outside, "drink unfiltered water, and utilize an unlocked unisex bathroom which needed repair." (Id. ¶ 51.) It alleged that Maritime would not let them take full lunch breaks or take other work breaks, and that Maritime did not provide them with access to the indoor facilities or proper equipment to perform their work. (Id. ¶¶ 52-55.) The complaint described verbal harassment as well, alleging that Managers at Maritime would swear at the Charging Parties, "bark[ ] commands to them," and threaten to fire them. (Id. at ¶ 57.)
Phase 2 filed a motion to dismiss under Rule 12(b)(6) or for summary judgment on October 27, 2017 (ECF No. 15) and Mister filed a motion to dismiss under Rules 12(b)(1) and 12(b)(6) or for summary judgment on November 27, 2017 (ECF No. 23). The EEOC also moved for attorney's fees under Rule 4(d)(2) after effecting alternative
II. Nature of the motions and their standards
The motions submitted by Defendants are captioned as motions to dismiss under Rule 12(b)(6) (and, for Mister's motion, Rule 12(b)(1) ) or "in the alternative" for summary judgment. As both Defendants make challenges to subject-matter jurisdiction, the Court considers each of Defendants' motions in part under Rule 12(b)(1). See Neal v. Residential Credit Solutions, Inc. , Civ. No. JKB-11-3707,
The burden of proving subject-matter jurisdiction is on the plaintiff. See Adams v. Bain ,
The Defendants have also brought motions to dismiss that the Court will construe as motions for summary judgment. "The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a) ; Celotex Corp. v. Catrett ,
III. Analysis
There is much overlap between the arguments presented by both Defendants. Therefore, the Court will not address each motion separately. Rather, it will first address fundamental challenges brought by the Defendants-to the EEOC's standing and this Court's jurisdiction-and then proceed to the Defendants' substantive arguments.
a. Standing
Mister never employed the Charging Parties, the discriminatory actions alleged in the Amended Complaint were not performed by Mister, and the EEOC only named Mister as a Defendant under a theory of "successor liability." Mister makes much of these facts. In addition to making substantive arguments that it would be inequitable to apply successor liability in this case, Mister makes additional preliminary challenges based on the fact that it never employed the Charging Parties: namely, that the EEOC lacks standing to assert claims against Mister, and that this Court does not have subject-matter jurisdiction over the claims against Mister. The Court will first address Mister's standing argument, and then turn to jurisdiction. The Court will address the substantive issue of whether it is equitable to hold Mister liable as a successor only after establishing the EEOC's standing and the Court's jurisdiction over the claims in this case.
Mister argues that because it never employed the Charging Parties "there is no fairly traceable connection between the Claimants' alleged injuries and Mister Car Wash," and therefore the EEOC lacks standing. (Mister Mot. Summ. J. Mem. Supp. at 17-18.) The "Claimants," by which Mister seems to mean the Charging Parties, did not bring this case. The EEOC did. And the EEOC has standing to bring it. The EEOC is bringing this case under the statutory authority granted to it by Title VII, to vindicate the public's interest. See Gen. Tel. Co. of the Northwest, Inc. v. EEOC ,
b. Jurisdiction
Even if the fact that the Charging Parties were never employed by Mister does not defeat the EEOC's constitutional standing, Mister still argues that it does defeat the Court's subject-matter jurisdiction over the claims against it. Furthermore, both Defendants argue that the Court does not have jurisdiction over certain claims because the Charging Parties did not exhaust their administrative remedies.
i. "Successor jurisdiction"
Mister clearly believes that because it never employed the Charging Parties this Court does not have jurisdiction over the claims against Mister. It is unclear why. Mister appears to argue that charging parties must be "employees" of a defendant in order for a court to have jurisdiction over Title VII claims against that defendant, and that the Charging Parties here were never "employees" of Mister. Whether an aggrieved person was an "employee" under Title VII, however, does not determine whether the Court has jurisdiction over the underlying claim. See Donatello v. Cty. of Niagara , 15-CV-39V,
The requirement that an administrative charge of discrimination must be filed against a defendant before suit in a Title VII case, however, is jurisdictional. See Jones v. Calvert Grp., Ltd. ,
Title VII does not explicitly establish liability for successor entities, but many courts have imposed such liability nonetheless. See Lipscomb v. Techs., Servs., & Information, Inc. , Civ. No. DKC-09-3344,
The notion of successor liability as an exception to Title VII's jurisdictional requirements raises troubling issues. Courts have noted that "[s]uccessor liability [under Title VII] is an equitable determination," Prince v. Kids Ark Learning Center, LLC ,
MacMillan , a leading case on successor liability in Title VII, provides a route around this odd result. In MacMillan , an employee filed charges with the EEOC against her employer, Flintkote Company.
The Sixth Circuit discussed the dual purpose behind the charging requirement. "First, it notifies the charged party of the asserted violation. Secondly, it brings the charged party before the EEOC and permits effectuation of the Act's primary goal, the securing of voluntary compliance with the law."
The statutory mandate of informal settlement and conciliation is not served by requiring an aggrieved person to charge each new successor company. Such a requirement might encourage evasion through corporate transfers. Even in the case of bona fide transfers of ownership, the delays which would be involved in refiling charges might be substantial and result in prejudice to the discriminatee. Furthermore, serious questions would be presented as to whether a charge filed against a successor would be barred by the statute of limitations.
Id. at 1093. The Sixth Circuit then concluded that "[s]ince MacMillan had notice of the charge against Flintkote and had custody and control of all related documents, requiring a 'second 'filing' by the aggrieved party ... would serve no purpose other than the creation of an additional procedural technicality.' " Id. (omission in the original) (quoting Love v. Pullman Co. ,
The Court finds the reasoning in MacMillan convincing. There is, in effect, a preliminary question of "successor jurisdiction," as well as a more substantive question of "successor liability." This first question does not require the Court to engage in a balancing of equities to make a determination. Rather, the question is whether jurisdictional requirements were met as against the predecessor corporation, and then whether the successor corporation had notice of the charge and an opportunity to voluntarily comply with the law. Put differently: A federal court has jurisdiction over a Title VII claim against a defendant-employer who was not named in an administrative charge of discrimination when the theory of liability rests on the actions of a different employer who was named in the charge of discrimination, and the defendant-employer had notice of the charge and an opportunity to voluntarily comply prior to the plaintiff bringing the claim in court.
Here, Mister may not have been named in the charges of discrimination, but it has been given ample notice of these charges prior to the initiation of
ii. Exhaustion
Both Defendants argue that the scope of the Charging Parties' charges of discrimination limits the scope of the EEOC's action here because the Court does not have jurisdiction over claims not raised in the charges of discrimination. Essentially, the Defendants argue that because the charging documents do not assert a charge of "race" discrimination, and do not outline various specific practices, the EEOC did not exhaust a race discrimination claim, or any Title VII claims based on those specific practices. The Defendants are mistaken.
"The allegations contained in the administrative charge of discrimination generally operate to limit the scope of any subsequent judicial complaint." Evans v. Techs. Applications & Serv. Co. ,
As far as determining what claims were stated in the initial charge, "courts construe [administrative charges] liberally." Chacko v. Patuxent Inst. ,
Beyond claims explicitly stated in a charge or inferred on the basis of a liberal construction, a plaintiff may bring a
In other words, a charge must contain sufficient information to let the defendant know that conduct that might have been uncovered in a later investigation was on the table from the beginning. Thus, if an individual plaintiff alleges only race discrimination, and in a manner that does not put the defendant employer on notice that the plaintiff may have experienced, for example, sex discrimination, that plaintiff may not later bring a claim of sex discrimination in court. See Bryant v. Bell Atlantic Md., Inc. ,
Similarly, if a plaintiff's EEOC charge details only "one type of discrimination-such as discriminatory failure to promote-and the claim encompasses another type-such as discrimination in pay and benefits," the claim may be barred. Chacko ,
The Charging Parties' charges are mostly identical except for the name of the employee. (See Charges of Discrimination, ECF Nos. 15-6 through 15-14.) The Charging Parties selected "National Origin" and "Retaliation" as the bases of discrimination. The sections outlining the "particulars" of the discriminatory behavior vary only in the first sentence, which provides different dates for when the different employees began their employment, as well as their different positions. The rest of these sections are substantially the same for each:
I [...] From the beginning of my employment I was subjected to unequal terms and conditions of employment than my younger, non Hispanic coworkers by Management. However, in April 2012, when Kyle Decker became the General Manager it became more difficult at work. Examples include but not limited to working longer hours with shorter breaks, not having proper equipment, assigned additional duties, and paid less wages.
Furthermore, I was denied promotional opportunities. I trained new younger non Hispanic employees on the requirements of the job and shortly after they would be promoted.
I also was being subjected to harassment which created a hostile work environment. Anytime I attempted to complain to management, I was threatened with discharge and sent home. Management used profanity while speaking to me. They used words such as fuck you and called me mother fucker. This was not an uncommon occurrence. I have also been reprimanded for leaving at my scheduled time off and threatened with discharge. In January 2013, I complained to General Manager Kyle Decker, but he did not address my concerns. On July 27, 2013, I initially complained to Manager Chris Dogson, but he explained that he did not have the authority to do anything. Afterwards, I attempted to speak with Mr. Decker and owner David Podrog, but instead I was discharged.
II. Respondent did not address my concerns nor provided me with a reasonable explanation for the above action.
III. I believe I have been discriminated against because of my national origin, Hispanic when I was subjected to harassment, intimidation, and a hostile work environment, unequal terms and conditions, assignment, discipline, promotion, wages and in retaliated for having engaging in protected activity, in violation of Title VII of the Civil Rights Act of 1964, as amended when discharged.
IV. I believe that Hispanics as a class have been discriminated against with respect to harassment, intimidation, hostile work environment, unequal terms and conditions of employment, assignment, discipline, discharge, promotion, wages, and retaliation. [sic]
(See, e.g. , Escalante Charge of Discrimination, ECF No. 15-6.)
Read liberally, these charges assert a claim of race discrimination. To be sure, in some instances the line between national origin discrimination and race discrimination will not be "so thin as to be indiscernible." Adames ,
When given a liberal construction, these charges also encompass much of the behavior outlined in the EEOC's complaint, or at least those allegations are reasonably related to the original charges. Furthermore, to the extent that there are allegations in the complaint that go beyond the behavior in the charging documents, those allegations could reasonably have grown out of an investigation conducted by the
Charge Complaint Alleged that the Charging Parties were Alleges that the Charging Parties were required "subjected to unequal terms and conditions of to "eat outside ... drink unfiltered water, and employment." utilize an unlocked unisex bathroom." Alleged that the Charging Parties were forced Alleges that the Charging Parties were denied to work "longer hours with shorter breaks, and overtime and full tips and forced to perform paid less wages." additional duties without compensation. Alleged that the Charging Parties were "not Alleges that "Defendants provided higher [given] proper equipment." quality collared shirts and warm jackets to the non-Hispanic employees," and "when [the Charging Parties were] cleaning the tunnel or the 12,000 gallon underground recycling tanks ... Defendants provided them with used boots that had holes in them."
(See Am. Compl. ¶¶ 41-55; e.g. , Escalante Charge of Discrimination.) In these, and other, instances the EEOC's complaint simply puts meat on the bones of the allegations put forth by the Charging Parties in their charges.
What exactly the EEOC uncovered during its years-long investigation is not dispositive in this case. The issue here is one of notice: the charging documents must contain enough material that the Defendant would have been able to comprehend the accusation, investigate on its own, and either root out the problem or come to the conciliation table with eyes wide open. For example, in General Electric , two male charging parties alleged racial discrimination, and accused the defendant of discriminating via a biased testing procedure.
Both Defendants additionally argue that any claims by a "class" of Hispanic employees are not exhausted because, beyond the Charging Parties, no members of this class filed charges of discrimination. This argument is without merit. The EEOC need not present a charge of discrimination filed by either an employee or the EEOC for each and every employee against whom the employer allegedly discriminated. See Gen. Elec. Co. ,
c. Substantive Issues
Having determined that the EEOC has standing, the Court has jurisdiction over the claims against Mister, and the claims have been properly exhausted, the Court can now move to the Defendants' numerous substantive arguments as to why judgment should be granted in their favor on these claims. The Court will first discuss Mister's successor liability, then both Defendants' arguments regarding the statute of limitations, and finally the impact of the Charging Parties' immigration status on this case.
i. Successor Liability
In addition to making the argument that the Court does not have jurisdiction over the claims against Mister because Mister never "employed" the Charging Parties, Mister has also made the substantive argument that it should not be treated as a successor for liability purposes under Title VII. Although the Fourth Circuit has not addressed successor liability under Title VII at all (either in the context of a "jurisdictional exception" or as an alternative basis for liability), the Court is on better traveled ground here as many other courts have addressed what factors should be considered in determining whether a successor corporation should be liable under Title VII for the actions of its predecessor.
To begin, successor liability under Title VII is a matter of federal common law. See Reed v. Lawrence Chevrolet, Inc. ,
More specifically, courts often look to the nine equitable factors set forth in MacMillan :
1) whether the successor company had notice of the charge, 2) the ability of the predecessor to provide relief, 3) whether there has been a substantial continuity of business operations, 4) whether the new employer uses the same plant, 5) whether he uses the same or substantially the same work force, 6) whether he uses the same or substantially the same supervisory personnel, 7) whether the same jobs exist under substantially the same working conditions, 8) whether he uses the same machinery, equipment and methods of production and 9) whether he produces the same product."
Notice. This is a different notice inquiry from notice for the purposes of "successor jurisdiction" as discussed above. There, the Court was concerned with whether the Defendant had notice of the charges prior to the EEOC bringing its complaint in this Court, and thus whether the Defendant had the benefit of the notice and conciliation requirements that undergird Title VII's exhaustion requirement. Now the Court considers whether Mister had notice of these charges prior to purchasing Maritime's assets. Such notice can be actual or constructive. See Lipscomb ,
Mister admits that it had some notice of these charges prior to purchasing Maritime's assets. (See Mister Mot. Summ. J. Mem. Supp. at 28 (noting that Mister asked Maritime to "disclose any and all pending lawsuits and claims by employees," and that Maritime "provided position statements earlier prepared by its counsel responding to EEOC charges").) It is admittedly unclear of the extent of that notice-i.e. what exactly Mister knew about the EEOC charges and the status of that investigation prior to purchasing Maritime-but it knew that Maritime was facing potential employment discrimination liability. At the very least, Maritime had constructive notice. In Lipscomb , the plaintiff did not allege that the defendant had any notice of the charge.
To be fair, Mister does not so much argue that it entered this deal blindly, but
The ability of the predecessor to provide relief. This factor is easily decided in favor of holding Mister liable as a successor. The Court need not look deeply into the current solvency of Phase 2 or the continuing availability of Maritime's supposed $1 million employment discrimination liability insurance policy because "to the extent that injunctive relief is appropriate, it is axiomatic that the current, rather than the former, employer would be the appropriate party" to provide that relief. Lipscomb ,
Continuity of business. This final factor is the closest, but tips slightly in favor of finding Mister liable as a successor. To be sure, Mister has changed much at the Edgewater facility since its purchase, and the EEOC makes too much out of Mister's temporary use of Maritime's marketing materials during the transition. The Court is satisfied for these purposes that the transaction between Maritime and Mister was not a sham, entered into on paper only to escape liability-the legal equivalent of a new coat of paint. See Ecurie Alford, Ltd. ,
Looking to the MacMillan factors, however, Mister is running substantially the same business. Mister is using the same facility and much of the same workforce (although it seems little to none of the same supervisory personnel); roughly the same jobs exist under roughly the same conditions; and (although with substantive upgrades) Mister is using the "same machinery, equipment and methods of production." MacMillan ,
The Court finds that Mister had some actual notice as well as constructive notice of the pendency of the EEOC's charges against Maritime when Mister purchased Maritime's assets, that neither Maritime nor Phase 2 is capable of providing all of the relief that the EEOC has requested, and that Mister is running largely the same business as Maritime. For these reasons, the Court finds it equitable to hold Mister jointly and severally liable for any liability that Maritime, i.e. Phase 2, may incur in this case.
ii. Statute of Limitations
In addition to various jurisdictional and procedural hurdles, Title VII has its own statute of limitations. In Maryland, a Title VII claim is untimely unless a charge of discrimination is filed (by either an aggrieved employee or the EEOC) within 300 days of the unlawful employment action. See Gilbert v. Freshbikes, LLC ,
Defendants argue that the "charges" for purposes of the statute of limitations were the Charging Parties' formal charges filed on February 4, 2014. They further argue that some of the actions alleged by the EEOC are "discrete acts" that cannot be considered as part of a hostile work environment claim, and to which the continuing violation doctrine does not apply. The sum of the Defendants' arguments is that the Court can only consider alleged non-discrete acts that occurred after April 10, 2013 (300 days prior to February 4, 2014). Mister further argues that when the Court ignores all untimely acts and discrete acts, the remaining alleged acts are not sufficiently severe or pervasive so as to state a claim for hostile work environment. The Defendants are largely wrong. First, the Court can consider all alleged actions that occurred after October 3, 2012 , not April 10, 2013. Second, it can consider discrete actions that occurred after October 3, 2012, and it can consider non-discrete actions that occurred prior to that date. Third, when the Court considers all of these actions, the EEOC has presented sufficient alleged acts to state a claim for hostile work environment. The Court will explain each conclusion in turn.
First, the Court has little trouble deciding that the operative date for filing "charges" was July 30, 2013, when the Charging Parties submitted intake questionnaires, and not February 4, 2014, when the Charging Parties filed formal charges. Making all factual inferences in the Plaintiff's favor, these questionnaires satisfy the Holowecki standard: they contain, at least, a "written statement sufficiently precise to identify the parties, and to describe generally the action or practices complained of," 29 C.F.R. 1601.12(b), and they request that the agency take remedial action, see Holowecki ,
Second, the continuing violation doctrine clearly applies to this case. The EEOC's complaint asserts, at bottom, one cause of action under Title VII: a hostile work environment. Although the EEOC labels Count I "Hostile Work Environment" and Count II "Inferior Economic Terms and Conditions of Employment," both counts allege that the same conduct violated the same statutory provisions. Thus, the Court will look past the formal (and hollow) statement of two claims and view the EEOC's complaint as alleging a single count of hostile work environment.
The EEOC alleges that the Charging Parties were subjected to a hostile work environment comprised of actions that occurred "[s]ince at least April 1, 2006." (Am. Compl. ¶ 34.) The Charging Parties were fired on July 27, 2013. (Id. ¶¶ 61-62; e.g. , Escalante Decl. ¶ 19.) Thus, some of the actions comprising the hostile work environment were alleged to have occurred between October 3, 2012, and July 27, 2013, which is within the filing period. The EEOC's hostile work environment claim is therefore timely, and the Court can consider actions that contributed to the hostile work environment but occurred prior to October 3, 2012, under the continuing violation doctrine.
There is one final issue with regard to the statute of limitations: consideration of "discrete acts." Both Defendants correctly note that the continuing violation doctrine does not permit a plaintiff to rehabilitate claims of discrete acts of discrimination simply by alleging that they were part of a "hostile work environment." As the Morgan Court noted: "discrete discriminatory acts are not actionable if time barred, even when they are related to acts
The EEOC alleges that the Charging Parties were subjected to a number of discrete actions. However, the nature and posture of this case make this fact largely inconsequential, even if the parties expend a number of pages discussing it. The EEOC alleges that the acts constituting the hostile work environment, including the discrete acts, occurred since April 2006, and therefore occurred during the filing period. Accordingly, the Court finds that all of the acts alleged can be considered as part of the EEOC's timely hostile work environment claim. It is worth noting here that, despite the already lengthy history of this case, with a trip to the Fourth Circuit, a years-long investigation, multiple corporate transfers, and a sizeable memorandum and order already issued by this Court, this case nevertheless remains in relative infancy. Formal discovery has not yet begun. On the limited record before the Court, and granting all inferences in the Plaintiff's favor, then, the Court finds that instances of all the alleged actions occurred within the filing period.
i. Title VII and Undocumented Aliens
Finally, the Court will address the elephant in the room; this is the issue that "Maritime presse[d]" two years ago before the Fourth Circuit, and that Phase 2 hangs its hat on here: must this case be dismissed if the Charging Parties were undocumented aliens? See Maritime Autowash ,
Title VII of the Civil Rights Act was passed in 1964 "to achieve equality of employment opportunities and remove barriers that have operated in the past to favor an identifiable group of white employees over other employees." Griggs v. Duke Power Co. ,
Three things, however, have changed since Title VII was passed. First, the Supreme Court decided the seminal case of McDonnell Douglas Corp. v. Green ,
The second relevant occurrence between the passage of Title VII and today was that Congress, in 1986, passed the Immigration Reform and Control Act, Pub. L. No. 99-603,
[T]he committee does not intend that any provision of this Act would limit the powers of State or Federal labor standards agencies such as the ... Equal Employment Opportunity Commission ... to remedy unfair practices committed against undocumented employees for exercising their rights before such agencies or for engaging in activities protected by these agencies.
Third, and finally, in 1998 the Fourth Circuit decided Egbuna v. Time-Life Libraries, Inc . In that case, a Nigerian plaintiff who was unauthorized to work in the United States brought a suit against his former employer alleging that the employer had not rehired him because he had participated in an EEOC matter. In 1989, the plaintiff had started working for Time-Life Libraries Inc. ("TLLI") on the authority of a student work visa. Egbuna ,
The Fourth Circuit noted that a Title VII plaintiff "may seek equitable remedies from the courts for the discriminatory employment practices of an employer," remedies such as "hiring of the applicant, reinstatement, back pay, and injunctions against further violations."
Egbuna remains the law in this Circuit and has not been revisited. A year after Egbuna , the Fourth Circuit was again confronted with similar facts: a foreign national unauthorized to work in the United States brought a Title VII suit after being denied a transfer to the United States. See Chaudhry ,
This Court recently held in Egbuna that a foreign national who applies for a job in the United States is entitled to Title VII protection only upon a successfulshowing that the applicant was qualified for employment. A foreign national is qualified for employment if the applicant was an alien authorized for employment in the United States at the time in question.
Considering the language in Egbuna and Chaudhry , it is perhaps understandable to surmise, as Phase 2 apparently has, that Title VII is fully inapplicable when the allegedly aggrieved employees are unauthorized to work in the United States, i.e. that discrimination against undocumented aliens is not, in fact, an unlawful employment practice under Title VII. Considering the history of Title VII, the import of an employee's "qualifications," the purpose behind the law, and the facts behind Egbuna and Chaudhry , however, that conclusion strikes this Court as wrong. Rather, Egbuna and Chaudhry stand for a more specific, and obvious, proposition: that an undocumented alien alleging (at least) a discriminatory failure to hire cannot present a prima facie case under McDonnell Douglas because IRCA makes that person legally unqualified for the position.
On the common sense front, a plaintiff's "qualifications" for a position do not appear in every Title VII prima facie case. Where, as here, the plaintiff alleges a hostile work environment, "a plaintiff must show that there is (1) unwelcome conduct; (2) that is based on the plaintiff's [protected characteristic]; (3) which is sufficiently severe or pervasive to alter the plaintiff's conditions of employment and to create an abusive work environment; and (4) which is imputable to the employer." See Guessous ,
Although the Fourth Circuit has not addressed this issue, and explicitly refused to reach its merits two years ago in this case, it expressed understandable reservations about the position advanced by Phase 2 here. "The employer," the Fourth Circuit noted, "is asking the court for carte blanche to both hire illegal immigrants and then unlawfully discriminate against those it unlawfully hired. Maritime would privilege employers who break the law above those who follow the law." Maritime Autowash ,
So, discrimination against an employee on the basis of his race, national origin, or participation in EEOC investigations is an unlawful employment practice under Title VII even if that employee is an undocumented alien, and the EEOC may therefore pursue its claim here. But that does not entirely end the matter. Egbuna and Chaudhry may not require dismissal, but they, and Hoffman Plastic , do cabin the nature of the relief that the EEOC may seek in this case. See Restaurant II ,
IV. Conclusion
The EEOC has standing to bring this claim and the Court has jurisdiction over all of the claims against both Defendants. The Court will therefore deny the Defendants' motions to dismiss in part, as they are in part construed as motions to dismiss under Rule 12(b)(1). Making all factual inferences in the EEOC's favor, the Court finds it is not inappropriate to hold Mister liable as a successor, that the claims against Mister and Phase 2 are timely, and that the alleged discrimination against undocumented aliens in this case constitutes an unlawful employment practice. For
Notes
An earlier Order of this Court struck Mister's reply from the record and ordered that it refile its reply with certain omissions and redactions. (See Order, ECF No. 39.)
As these motions are treated as factual challenges to subject matter jurisdiction as well as motions for summary judgment the facts recited here draw from the record as a whole, see Khoury v. Meserve,
The Complaint spells this employee's name as "Dominguez" (Am. Compl. ¶ 34), and his name on his Declaration is "Dominguez," (see ECF No. 19-4), but his name on his Charge of Discrimination is "Dominquez," (see ECF No. 15-9). The Court will use the spelling "Dominguez."
One of the Charging Parties, Godofredo Platero alleged that the latest the discrimination took place was July 26, 2013, not July 27. (ECF No. 15-7.) Gabriel Espinosa's Charge of Discrimination does not provide dates for the earliest or latest times that discrimination allegedly took place. (ECF No. 15-10.)
The letter is addressed to Maritime and Mister. Phase 2 and Mister are the "Defendants" in this action. Considering that Phase 2 is, under Florida law, responsible for any liabilities of Maritime, and that Phase 2 has not challenged that fact, the Court will use the term "Defendant" to refer to both Maritime and Phase 2.
It would be inappropriate to consider Defendants' jurisdictional challenges under Rule 56, as summary judgment goes to the merits of a case. See Coe v. Baltimore City Fire Dept. , Civ. No. WDQ-11-1282,
Mister argues that it is not a successor to Maritime for purposes of Title VII liability, but nowhere argues that successor liability does not apply to Title VII.
It may be worth noting at this juncture that charges of discrimination were never technically filed against Phase 2, either. Only Maritime was named as a respondent in charges of discrimination in this case. Although Phase 2 does not challenge the Court's jurisdiction on this ground, the Court's reasoning as to why it has jurisdiction over the claims against Mister applies with equal force as to why the Court has jurisdiction over the claims against Phase 2-i.e. that liability is premised on Maritime's actions for which Phase 2 is responsible (under Florida statutory law, as opposed to Federal common law) and Phase 2 had sufficient notice and an opportunity to conciliate. It is also worth noting that the Court's holding does not require the EEOC (or an individual Title VII plaintiff) to literally send notice of a charge of discrimination to a successor defendant, as the EEOC did here. (There may be a case where a successor and predecessor are so similar that the Plaintiff can carry its burden of proving subject-matter jurisdiction by alleging that the successor had notice and an opportunity to conciliate by way of the predecessor. In fact, MacMillan seems to be such a case; it does not appear that the EEOC ever sent MacMillan notice of the charge of discrimination. See
In other words, the Charging Parties did not allege in their charges that Maritime's managerial staff singled them out for being from, say, Argentina, or El Salvador.
The Court will briefly note that the Defendants' arguments regarding exhaustion were based on the scope of the Charging Parties' charges of discrimination, not the scope of the Letter of Determination. (See Phase II Mot. Summ. J. Mem. Supp. at 15-18; Mister Mot. Summ. J. Mem. Supp. at 18-19.) Mister suggests that the Letter of Determination was deficient in some respects in its Reply, but does properly raise that argument. (See Mister Reply at 3; Mem. 17, ECF No. 40 (noting that Mister did not raise the argument that EEOC failed to conciliate claims but "[t]hen, in [its] reply it appeared to argue for the first time that the EEOC failed to conciliate.").) Regardless, the Letter of Determination is sufficient. It did not explicitly state that "race" discrimination was at issue, but for the reasons explained above that is not a troubling defect. Furthermore, it stated that the claims were on behalf of a class of aggrieved employees, and therefore the Defendants had an opportunity to conciliate such claims.
The fact that Mister did not lower its purchase price, while perhaps unfortunate for Mister in hindsight, is immaterial here. What matters is that Mister had the opportunity to negotiate for a lower price, and the sophistication to uncover the possible need to do so. After all, Mister did have the forethought and sophistication to indemnify itself against both Maritime and Mr. Podrog. (APA § 8.2.)
Mister argues in its reply that this case is very similar to Prince v. Kids Ark Learning Center, LLC , in which the Eighth Circuit upheld a district court's decision finding that a successor was not liable even though it maintained the same business on the same facility with roughly the same staff.
Phase 2 argues that because the Intake Questionnaires are significantly redacted, including portions describing the discriminatory conduct, "we must assume that the EEOC is hiding critical information that refutes its argument." (Phase 2 Reply 7, ECF No. 22.) Given the posture of this motion, that is exactly wrong. The Court makes all inferences in favor of the Plaintiff, not against it. See Scott v. Harris ,
The EEOC engages in some very curious pleading practices, changing a handful of words in Count II but otherwise alleging the same conduct. The only real difference between Count I and II is that in Count II the EEOC alleges that "[t]he effect of the practices complained of above in Counts I and II has been to deprive [the] Charging Parties ... and a class of aggrieved Hispanic employees of equal employment opportunities and otherwise adversely affect their status as employees because of race and national origin." (Am. Compl. ¶ 82.) As best as the Court can tell, this is simply a conclusory and formulaic restatement of the third element of a hostile work environment claim. See Guessous v. Fairview Property Invs., LLC ,
The Court will briefly note that the applicability of the continuing violation doctrine to this case mitigates, somewhat, the impact of the Court's finding concerning the date of the charge. Regardless of whether the "charge," for the purposes of the statute of limitations, was filed on July 30, 2013 or February 4, 2014, some of the alleged conduct allegedly occurred within the filing period. The parties were employed at some point during either filing period (October 2, 2013 to July 30, 2013 or April 10, 2013 to February 4, 2014), and the conduct allegedly occurred during their entire employment.
For example, the EEOC alleges that the Charging Parties and class of aggrieved employees were sworn at (a non-discrete act) and passed over for promotion (a discrete act) "since April 2006." Making all inferences in the EEOC's favor, the Court finds that some of the Charging Parties and/or members of the class were sworn at and passed over for promotion during the filing period.
Egbuna itself suggests that its scope is cabined to the hiring/firing context. The court distinguished the case from Sure-Tan, Inc. v. N.L.R.B. ,
It perhaps bears repeating that the EEOC is the party that has brought this case. It was not brought by any of the Charging Parties themselves, and none of the Charging Parties (or any employee of Maritime) is an intervenor in this action.
The immigration status of the Charging Parties was apparently not particularly relevant here either, at least initially. In other words, even if in the eyes of Egbuna (and IRCA) the Charging Parties were "unqualified" for their positions as a matter of law, it certainly seems that in the eyes of Maritime they were "qualified" for their positions. It hired them.
Nor does it seem to have any bearing on the possibility of recovery for non-economic damages, such as emotional pain and suffering, related to other alleged unequal treatment beyond pay. See 42 U.S.C. § 1981a.