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Equal Employment Opportunities Commission v. La Rana Hawaii

August 22, 2012

EQUAL EMPLOYMENT OPPORTUNITIES COMMISSION, PLAINTIFF,
v.
LA RANA HAWAII, LLC D/B/A SENOR FROG'S AND ALTRES, INC., DOE 1-15, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Leslie E. Kobayashi United States District Judge

ORDER(1) GRANTING IN PART AND DENYING IN PART DEFENDANT ALTRES, INC.'S MOTION TO DISMISS COMPLAINT FILED DECEMBER 30, 2011 AND (2) GRANTING DEFENDANT LA RANA HAWAII, LLC'S MOTION TO DISMISS COMPLAINT FILED DECEMBER 30, 2011

Before the Court is Defendant ALTRES, Inc.'s ("ALTRES") Motion to Dismiss Complaint Filed December 30, 2011 ("ALTRES Motion"), filed on March 15, 2012, [dkt. no. 14,] and Defendant La Rana Hawaii, LLC's ("La Rana") Motion to Dismiss Complaint Filed December 30, 2011 ("La Rana Motion"), filed on April 26, 2012 [dkt. no. 30]. Plaintiff United States Equal Employment Opportunity Commission ("EEOC") filed its memoranda in opposition on July 9, 2012, [dkt. nos. 41, 42,] and ALTRES and La Rana (collectively, "Defendants") filed their respective replies on July 16, 2012 [dkt. nos. 45, 46]. These matters came on for hearing on July 30, 2012. Appearing on behalf of the EEOC were Michael J. Farrell, Esq., and Amrita Mallik, Esq.; appearing on behalf of La Rana were Barbara A. Petrus, Esq., and Anne T. Horiuchi, Esq.; and appearing on behalf of ALTRES were Andrew L. Pepper, Esq., and Laura J. Maechtlen, Esq. After careful consideration of the motions, supporting and opposing memoranda, and the arguments of counsel, the ALTRES Motion is HEREBY GRANTED IN PART AND DENIED IN PART and the La Rana Motion is HEREBY GRANTED for the reasons set forth below.

BACKGROUND

I. The Complaint

The EEOC's Complaint against Defendants alleges violations of Title VII of the Civil Rights Act of 1964 ("Title VII") and Title I of the Civil Rights Act of 1991 ("Title I") for "unlawful employment practices on the basis of sex (female) and retaliation, and [] to provide appropriate relief to a class of female employees similarly situated to Charging Party Heather Colletto (collectively, the 'Claimants') who were adversely affected by such practices." [Complaint at pg. 1.] The EEOC alleges that Defendants subjected Claimants to unwelcome physical and verbal sexual conduct, disparate treatment, constructive discharge, and retaliation on the basis of sex. [Id. at pg. 2.]

The EEOC alleges that, during the relevant period between 2007 and 2008, ALTRES was under contract with La Rana for employment-related services, and Defendants were joint employers that "generally controlled the terms and conditions of the employment of the Claimants." [Id. at ¶ 8.] It argues that Defendants: (1) jointly hired and managed non-management employees; (2) shared common management over non-management employees, who were employed by both ALTRES and La Rana; (3) gave non-management employees an employee handbook containing sexual harassment policies created by ALTRES; and (4) instructed employees to direct complaints of sexual harassment to ALTRES, which investigated such allegations. [Id.]

At some unspecified time, employee Heather Colletto filed charges with the EEOC alleging violations of Title VII by La Rana and ALTRES. [Id. at ¶¶ 12, 15.] The EEOC investigated the charges and issued a Letter of Determination finding that Defendants subjected Colletto and a class of other similarly situated female employees to a hostile work environment, disparate treatment, constructive discharge, and retaliation in violation of Title VII. [Id. at ¶¶ 13, 15, 16.] The EEOC claims that it attempted to eliminate the allegedly unlawful employment practices and effect voluntary compliance with Title VII. [Id. at ¶ 17.]

The EEOC argues that, since at least 2007, Defendants engaged in unlawful employment practices in violation of Sections 703 and 704 of Title VII, 42 U.S.C. §§ 2000e-2 and 2000e-3. As to Section 703, the EEOC alleges "unwelcome sexual conduct, constructive discharge, and disparate treatment against females" that were "sufficiently severe and pervasive to adversely affect the terms and conditions of their employment and create a hostile, abusive work environment." [Id. at ¶ 20.] The EEOC alleges that: (1) there existed sexually explicit remarks by the owner toward a female server; sexual advances and demands by management officials to female employees; and sexual comments and unwanted touching of female employees' breasts and buttocks; (2) the conduct was unwelcome, and the female employees tried to rebuff or avoid the unwelcome conduct; (3) the sexual harassment was sufficiently severe and pervasive to create a hostile work environment; and (4) the female employees took steps to stop the harassment and complained to Defendants' management officials, but Defendants "failed to take reasonable steps to prevent and correct the harassment, but instead engaged in tangible employment actions of reducing the female employees' hours, giving them less favorable working conditions, terminating them and/or causing their constructive discharge[.]" [Id.]

Also regarding Section 703, the EEOC contends that Defendants subjected Colletto and other female employees to disparate treatment, as evidenced when Defendants assigned female employees to shorter work shifts, afforded them less desirable assignments with less earning opportunities, and stationed female employees only in certain areas of the restaurant. The EEOC also alleges that "Senor Frog's Human Resource Manager made [Defendants'] anti-female animus clear when at a meeting wherein other management [officials] explored the possibilities of hiring additional female bartenders, the Human Resources Manager disapprovingly rejected the idea saying he did not want more females as they were too much 'drama[.]'" [Id. at ¶ 22(c).]

As to Section 704, the EEOC alleges that Defendants retaliated against Colletto and other female employees for complaining of the hostile work environment: (1) female employees engaged in a protected activity when they complained of the unlawful sexual harassment to Defendants' management officials; (2) Defendants reduced female employees' work hours, gave them less favorable working conditions, and harassed them at work; and (3) Defendants constructively discharged Colletto for engaging in a protected activity, while similarly situated employees who did not complain did not face retaliation. [Id. at ¶ 21.]

The EEOC requests that the Court: (1) issue a permanent injunction enjoining Defendants from engaging in employment practices or retaliation that discriminate on the basis of sex; (2) order that Defendants institute and carry out policies, practices, and programs that provide equal employment opportunities; (3) order that Defendants pay backpay with prejudgment interest and other appropriate relief; (4) order that Defendants pay appropriate past and future pecuniary losses, and/or other appropriate relief; (5) order that Defendants pay compensation for past and future non-pecuniary losses; (6) order Defendants to pay punitive damages; (7) grant further relief as necessary; and (8) award the EEOC its costs. [Id. at pgs. 10-11.]

II. The Conciliation Process

Both the ALTRES Motion and the La Rana Motion discuss the EEOC's investigation and correspondence with Defendants preceding the instigation of the present action.

According to ALTRES, it received a copy of the EEOC's Charge of Discrimination ("Charge") on or around December 29, 2008. With respect to ALTRES, the Charge alleged that ALTRES ratified the hostile work environment and Colletto's constructive discharge by not taking "reasonable and/or necessary measures" to put a stop to the alleged wrongdoing. [Mem. in Supp. of ALTRES Motion at 2-3.]

The EEOC issued its Letter of Determination on or around June 27, 2011, in which it stated that, regarding Colletto's charges of discrimination:

No finding has been made with regards to Charging Party's allegations.

The Commission has determined that there is reasonable cause to believe that a class of female employees were subjected to sexual harassment, intimidation, adverse terms & conditions of employment and constructive discharge because of their sex, female and/or in retaliation for engaging in protected activity. [ALTRES Motion, Decl. of Andrew Pepper ("Pepper Decl."), Exh. 2 (emphasis omitted).]

On or around July 29, 2011, the EEOC wrote:

The policies, procedures, and/or practices that ALTRES had during this period with respect to addressing discrimination and harassment occurring at a client's worksite failed to prevent the discrimination that occurred in this case. As such, it is necessary for ALTRES to revise and/or implement measures to ensure the proper handling of such discrimination or harassment at a client's worksite. The injunctive relief proposed in the attached Agreement seeks to achieve that goal.

The Commission is seeking monetary relief for a class of aggrieved individuals, to include the following:

1) Payment of $800 to Ms. Beverly Subia. This amount represents lost wages.

2) Payment of $200,000 for each of the two (2) identified Class Member [sic], Ms. Beverly Subia and Ms. Connie Sanchez. This amount constitutes non-pecuniary compensatory damages (emotional distress, pain and suffering) for any other aggrieved individuals identified by the EEOC.

3) Establishment of a Class Fund in the amount of $500,000. This amount constitutes economic damages (lost wages, benefits, etc.) and non-pecuniary compensatory damages (emotional distress, pain and suffering) for any other aggrieved individuals identified by the EEOC.

[Pepper Decl., Exh. 3.] ALTRES responded by submitting a Freedom of Information Act ("FOIA") request for information regarding the alleged "class of aggrieved individuals" and "the bases for the EEOC's cause finding as to how the EEOC formulated its conciliation demand." [Mem. in Supp. of ALTRES Motion at 5 (quoting Pepper Decl., Exh. 4).] The EEOC denied the FOIA request on the ground that disclosure could interfere with law enforcement proceedings. [Id. (citing Pepper Decl., Exh. 5).]

Regarding the EEOC's investigation, ALTRES points to correspondence from the EEOC dated August 19, 2011, in which the EEOC represented that it reviewed documents and interviewed Colletto and relevant witnesses. The EEOC stated that it had identified three class members: Beverly Subia, Connie Sanchez, and Kristen Ertefai. ALTRES contends that, although the letter mentions "retaliation" in passing, it does not describe the retaliated or whether the class members engaged in a protected activity. Moreover, although the letter references "yet to be identified class members," ALTRES argues that the EEOC investigation was closed as of June 27, 2011, and the letter did not discuss how those class members would be identified. [Id. at 5-6 (citing Pepper Decl., Exh. 6).]

By correspondence dated August 31, 2011, the EEOC required a monetary settlement offer to continue negotiations: "as the EEOC asserted, 'ALTRES must make some offer of monetary relief for the class of aggrieved individuals in this case in order to demonstrate that they are engaging in this process in good faith and to enable EEOC to continue to work toward a resolution.'" [Id. at 7 (quoting Pepper Decl., Exh. 8).]

ALTRES settled with Colletto on August 29, 2011. [Id. (citing Pepper Decl. at ¶ 11).] On November 21, 2011, the EEOC notified ALTRES that it was ending the conciliation process. [Id. (citing Pepper Decl., Exh. 10).]

Similarly, according to La Rana, it also requested copies of documents relating to the allegations of Title VII violations on or around August 8, 2011. [Mem. in Supp. of La Rana Motion at 4 (citing La Rana Motion, Decl. of Barbara Petrus ("Petrus Decl."), Exh. E).] The EEOC responded that it would not provide the requested documents, but explained that it had reached its "'determination after conducting a thorough investigation, including a review of the charge of discrimination filed against [La Rana], providing [La Rana] the opportunity to respond to the charge, requesting and reviewing documents provided from [Colletto] and [La Rana] to support their positions, and interviewing [Colletto] and the relevant witnesses.'" [Id. at 5 (quoting Petrus Decl., Exh. F at 1) (brackets La Rana's).] The EEOC also stated that, "'in addition to these identified class members [Beverly Subia, Connie Sanchez, and Kristen Ertefai], there may be other yet to be identified class members who would be entitled to relief.'" [Id. (quoting Petrus Decl., Exh. F at 1) (emphasis added by movant)).]

By letter dated August 26, 2011, La Rana responded to the conciliation demand by stating that it had "no understanding of the bases for this alleged 'class action[,]'" because it had never received any charges or other documents related to the three Claimants. [Id. at 6 (quoting Petrus Decl., Exh. G at 1-2).] La Rana claims that it was unaware that the EEOC was investigating claims related to Subia, Sanchez, or Ertefai, and thus it did not have an opportunity to respond to allegations of discrimination or retaliation regarding the three Claimants. [Id. at 6-7.]

The EEOC responded by letter on the same day, stating that La Rana "was given ample notice of the nature and scope of EEOC's investigation, was given every opportunity to fully participate in EEOC's investigation and, in fact, did participate in EEOC's investigation." [Id. at 7 (quoting Petrus Decl., Exh. H at 1).] The EEOC requested that La Rana offer a monetary settlement to demonstrate that it was engaging in the conciliation process in good faith. [Id. (quoting Petrus Decl., Exh. H at 1).]

On September 14, 2011, La Rana stated that the EEOC had provided no indication that it was seeking "class" relief, as it did not indicate that it was investigating alleged misconduct toward any employee other than Colletto. La Rana contends that it could not assess the reasonableness of the EEOC's conciliation demand because it had no information regarding the alleged harassment and retaliation. La Rana also asserted that the $500,000 demand for a class fund was unreasonable. [Id. at 7-8 (citing Petrus Decl., Exh. I at 1-2).]

Counsel for La Rana and the EEOC held an in-person meeting, after which the EEOC asserted that La Rana had been aware of the scope of the claims. The EEOC did not offer new information, but rather repeated the facts asserted in the Charge. [Id. at 9-10 (citing Petrus Decl., Exh. J at 2).] On or around October 14, 2011, La Rana responded by stating that the number of class members was insufficient to justify $200,000 in compensatory and punitive damages per claimant. La Rana objected to the class fund as unreasonable because "the EEOC is demanding that [La Rana] make a 'nearly blind settlement offer' in order for the conciliation process to continue." [Id. at 10 (quoting Petrus Decl., Exh. K at 3).]

On or around October 20, 2011, the EEOC asserted that La Rana had been "repeatedly and unequivocally" put on notice of the alleged violations. It also reduced its demand for compensatory relief to $100,000 per Claimant and $350,000 for the class fund. [Id. at 11-12 (quoting Petrus Decl., Exh. L at 2).] In response, La Rana offered $11,250 for the three Claimants and an additional $11,250 for the class fund. [Id. at 13 (citing Petrus Decl., Exh. M at 2).] A week later, the EEOC ended the conciliation process, stating that it had "determined that efforts to conciliate the above-mentioned charge . . . have been unsuccessful." [Id. at 13-14 (quoting Petrus Decl., Exh. N).]

III. ALTRES Motion

A. Motion

The ALTRES Motion focuses primarily on two arguments:

(1) that the Court lacks subject matter jurisdiction because the EEOC did not comply with the compulsory conciliation obligation; and (2) that the Complaint alleges insufficient facts under Rule 12(b)(6) of the Federal Rules of Civil Procedure.

1. Subject Matter Jurisdiction

ALTRES argues that the Complaint should be dismissed because, on its face, it does not allege that the EEOC conciliated the claims in good faith. Before the EEOC has standing to bring suit against an employer: (1) an administrative charge must be filed against the employer; (2) the EEOC must give the employer notice of the charge; (3) the EEOC must investigate the charge; (4) the EEOC must issue a reasonable cause determination; and (5) the EEOC must engage in a good faith effort at conciliation. [Mem. in Supp. of ALTRES Motion at 11 (citing 42 U.S.C. § 2000e-5(b); EEOC v. Cal. Psychiatric Transitions, Inc., 644 F. Supp. 2d 1249, 1263-64 (E.D. Cal. 2009); EEOC v. Outback Steak House of Fla., Inc., 520 F. Supp. 2d 1250, 1262 (D. Colo. 2007)).] ALTRES argues that these prerequisites are jurisdictional limitations on the EEOC's ability to initiate a civil action. [Id. (citing EEOC v. Dillard's Inc., No. 08-CV-1780-IEG (PCL), 2011 WL 2784516, at *13 (S.D. Cal. July 14, 2011)).] It contends that the EEOC failed to allege facts showing that EEOC completed these pre-litigation requirements, or facts showing that its pre-litigation efforts "were sufficient to put [ALTRES] on notice that it potentially faced claims arising from a . . . class of current and former employees." [Id. at 11-12 (quoting Dillard's, Inc., 2011 WL 2784516, at *20).]

Next, ALTRES argues that the EEOC failed to conciliate all allegations in this action. It asserts that "[t]here is a split among the circuit courts of appeal as to how far a court may go in examining the substance of the conciliation negotiations between the parties." [Id. at 12-13 (citations omitted).] It argues that the Ninth Circuit has not decided this issue, but that district courts in this circuit follow the reasoning of EEOC v. Delight Wholesale Co., 973 F.2d 664, 669 (8th Cir. 1992), and focus on whether the EEOC "provided the employer with an opportunity to confront all the issues at the conciliation stage." [Id. at 13-14 (citing EEOC v. Lawry's Rests., Inc., CV 06-01963DDP (PLAX), 2006 WL 2085998, at *2 (C.D. Cal. July 17, 2006)).]

ALTRES argues that the split in circuits does not matter because, even under Delight Wholesale's deferential approach, the EEOC's actions in this case were insufficient. [Id. at 14.] It contends that the EEOC did not conciliate as to the unnamed class of "aggrieved individuals" it claims to represent; rather, it identified only two employees who were similarly situated to Colletto. ALTRES cites to EEOC v. CRST Van Expedited, Inc., 670 F.3d 897 (8th Cir. 2012),*fn1 for the proposition that the EEOC's failure to identify the total number of employees who were similarly situated to the charging party was a failure to conciliate on their behalf before filing suit. [Id. at 15.] ALTRES contends that "the EEOC must discover such individuals and wrongdoing during the course of its investigation." [Id. at 16 (quoting Dillard's Inc., 2011 WL 2784516) (emphasis ALTRES's).] ALTRES argues that, because the EEOC failed to identify or conciliate on behalf of employees other than Subia and Sanchez, the EEOC should be precluded from trying to represent a larger "class" of employees. [Id. at 17 (citing EEOC v. Bruno's Rest., 13 F.3d 285, 288 (9th Cir. 1993)).]

2. Conclusory Allegations

ALTRES argues that the Complaint contains conclusory statements rather than facts. It invokes Rule 8(a)(2) of the Federal Rules of Civil Procedure, which requires that a "'plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.'" [Id. at 18 (quoting Caviness v. Horizon Cmty. Learning Ctr., Inc., 590 F.3d 806, 812 (9th Cir. 2010)).]

3. Failure to State a Title VII Claim

ALTRES contends that the Complaint fails to allege facts to support a cognizable theory under Title VII. First, it argues that the EEOC does not provide facts showing that ALTRES and La Rana are joint employers. It argues that the EEOC "lumps together 'Defendants' owner[s], high level executives, management and employees.'" [Id. at 21.] Rather, "the employer charged with discrimination under Title VII must have been the plaintiff's functional employer at the time of the alleged discrimination for plaintiff to prevail." [Id. at 21 (citing City of Los Angeles v. Manhart, 435 U.S. 702, 718 n.33 (1978)).] Joint-employer liability may be shown where "'both employers control the terms and conditions of employment of the employee.'" [Id. (quoting EEOC v. Pac. Mar. Ass'n, 351 F.3d 1270, 1275 (9th Cir. 2003)).] ALTRES asserts that the Ninth Circuit "consider[s] all factors relevant to the particular situation" in an "economic reality test." [Id. (quoting Pac. Mar. Ass'n, 351 F.3d at 1275).] Considerations include: "whether the joint employer (1) supervised the employee, (2) had the power to hire and fire him, (3) had the power to discipline him, and (4) supervised, monitored, and/or controlled his work site." [Id. at 21-22 (citing Pac. Mar. Ass'n, 351 F.3d at 1277).]

ALTRES argues that the Complaint does not specifically allege that it "harassed, discriminated against, or retaliated against the Claimants. Instead, ALTRES is implicated solely by virtue of a few threadbare and conclusory allegations that it is a 'joint employer.'" [Id. at 22.] ALTRES contends that the Complaint ignores the pleading requirements of Rule 8, Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), by only offering conclusory allegations against ALTRES. It contends that "the EEOC must allege facts sufficient to state a claim against ALTRES as a joint employer under the Ninth Circuit's economic reality test." [Id. at 23.] It also argues that allegations in the Complaint contradict each other. [Id. at 23-24.]

Second, ALTRES argues that the Complaint fails to sufficiently allege that the Claimants were subjected to disparate treatment or sexual harassment by ALTRES. Regarding disparate treatment, ALTRES claims that the EEOC must prove a "causal connection" between an employee's protected status and the adverse employment action. [Id. at 25 (citing McDonnell Douglas Corp. v. Green, 411 U.S. 792, 801-02 (1973)).] The employee must show that the employer had a discriminatory motive. [Id.] Regarding hostile work environment, ALTRES argues that an employee must show that "the workplace is permeated with 'discriminatory intimidation, ridicule, and insult' that is 'sufficiently severe or pervasive to alter the conditions of the victim's employment and create an abusive working environment.'" [Id. (quoting Nat'l R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 115-16 (2002)).] ALTRES argues that, "[e]ven if the conduct is severe or pervasive, harassment is actionable only if it is directed at an employee 'because of' a protected status defined by Title VII." [Id. at 26 (citing Oncale v. Sundowner Offshore Servs., Inc., 523 U.S. 75, 80-81 (1998); Ross v. Douglas Cnty., 234 F.3d 391, 396 (8th Cir. 2000)).] Harassment and offensive behavior caused by personality conflicts, work-related conflicts, and general meanness are not actionable under employment discrimination laws. [Id. (some citations omitted) (citing Palesch v. Missouri Comm'n on Human Rights, 233 F.3d 560, 566-67 (8th Cir. 2000)).]

ALTRES contends that the EEOC "does not allege that the adverse actions complained of occurred 'because of' the Claimant's protected status. . . . [T]he EEOC alleges no facts to support its claim that the Claimants were treated differently because of their sex." [Id. at 27-28.] ALTRES argues that the Complaint's failure to allege the identity of the alleged perpetrators or dates on which the harassment occurred warrants dismissal. [Id. at 28 (citing Taylor v. Donley, No. CIV S-08-0869 JAM DAD PS, 2012 WL 292841, at *14 (E.D. Cal. Jan. 31, 2012)).] The Complaint additionally fails to identify the frequency of the unwelcome conduct, other than to allege that the sexual conduct was "pervasive" because it "occurred on a daily basis." [Id. (quoting Complaint at ¶ 20(c)).] ALTRES contends that these claims do not show that the EEOC is entitled to relief. [Id. at 29.]

Third, regarding retaliation, ALTRES contends that the Complaint "fail[s] to allege any facts supporting the conclusory statement that the Claimants 'complained' of 'unlawful sexual harassment.'" [Id. at 29-30 (quoting Complaint at ¶ 21).] ALTRES alleges that, because the Complaint fails to put forth a cognizable theory of discrimination or harassment, "even if female employees complained about alleged comments or conduct in the workplace, the allegations are insufficient to conclude that they have been opposing 'any practice made an unlawful employment practice' under Title VII or participating in a proceeding under Title VII." [Id. at 30 (citing 24 U.S.C. § 2000e-3(a); Burlington N. & Santa Fe Ry. Co. v. White, 548 U.S. 53, 56 (2006)) (emphasis ALTRES's).]

Fourth, ALTRES argues that the Complaint offers no facts to support its allegation that ALTRES caused the Claimants to be constructively discharged. ALTRES contends that, although the Complaint alleges that ALTRES "reduced the female employees' work hours, gave them less favorable working conditions, harassed them at work to the point of making the workplace too intolerable[,]" the Complaint does not satisfy the specificity requirement of Iqbal, Twombly, or Rule 8, because "it is wholly conclusory and fails to establish that any Claimant was compelled to resign." [Id. (quoting Complaint at ¶ 21; EEOC v. Bimbo Bakeries USA, Inc., Civil No. 1:09-CV-1872, 2010 WL 598641 (M.D. Pa. Feb. 17, 2010)).]

B. Memorandum in Opposition

1. Jurisdiction

In opposition to the ALTRES Motion, the EEOC argues that "this Court has subject matter jurisdiction over the instant action as this action involves (1) a federal question under federal statutes, and (2) the plaintiff in this case is an agency of the United States. The instant lawsuit is a government enforcement action brought by the EEOC pursuant to federal statute." [Mem. in Opp. to ALTRES Motion at 14.] Moreover, ALTRES claims that Congress specifically conferred jurisdiction of the EEOC's enforcement action on this Court ...


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