EQUAL EMPLOYMENT OPPORTUNITY COMMISSION v. MURICA LLC (2023)

ORDER

Before the Court is Defendant's Objections to Magistrate ¹ Report and Recommendations (D. 85). On July 24, 2023, Magistrate Judge Neureiter recommended that Defendant's Partial Motion to Dismiss (D. 22) be granted in part and denied in part (D. 82). As set for below, the Court OVERRULES Defendant's Objection, ADOPTS the Recommendation, and GRANTS IN PART and DENIES IN PART Defendant's partial motion to dismiss.

I. BACKGROUND

The Court incorporates the facts as set forth in Magistrate Judge Neureiter's Recommendation (D. 82). This civil action arises under Title VII of the Civil Rights Act of 1964 and Title I of the Civil Rights Act of 1991 and alleges unlawful employment practices on the basis of sex and unlawful retaliation and interference by Defendant against its employees.² The EEOC alleges that Defendant, operating as a restaurant and bar in Greeley, Colorado, sexually discriminated against its employees, created a sexually hostile work environment, and retaliated against the employees by firing, disciplining, and filing civil lawsuits against those who opposed the unlawful employment practices (D. 1). At the core of this case is Plaintiff's allegation that Defendant retaliated against the employees and other aggrieved individuals by filing a lawsuit in Weld County for, among other things, defamation and then pressuring the parties into settlement—wherein the individuals would halt pursuing the EEOC charges of discrimination (id. at 26; see also D. 22-3).

In the instant motion, Defendant moves to dismiss because (1) Plaintiff lacks standing, and the Court lacks subject matter jurisdiction over the EEOC claims because the claims are barred by the Weld County civil action; (2) Plaintiff fails to state a claim for injunctive relief against non-parties; and (3) Plaintiff fails to state a claim for piercing the corporate veil (D. 22 at 5-11). Magistrate Judge Neureiter recommended denying the motion to dismiss as to the first two claims but found that Plaintiff failed to allege a theory of alter ego between the corporate entity and individual and therefore recommended dismissing without prejudice Plaintiff's claim/remedy for piercing the corporate veil (id. at 12-14). Defendant timely filed its Objection, which will be addressed below (D. 85).

II. STANDARDS OF REVIEW

When a magistrate judge issues a recommendation on a dispositive matter, Federal Rule of Civil Procedure 72(b)(3) requires that the district judge “determine de novo any part of the magistrate judge's [recommendation] that has been properly objected to.” An objection to a recommendation is properly made if it is both timely and specific. United States v. 2121 East 30th St., 73 F.3d 1057, 1059–60 (10th Cir. 1996). An objection is sufficiently specific if it “enables the district judge to focus attention on those issues—factual and legal—that are at the heart of the parties’ dispute.” Id. at 1059. In conducting its review, “[t]he district judge may accept, reject, or modify the [recommendation]; receive further evidence; or return the matter to the magistrate judge with instructions.” Fed. R. Civ. P. 72(b)(3).

Because federal courts are courts of limited jurisdiction, a court, sua sponte, or a party may challenge subject matter jurisdiction at any stage of the proceedings. See Harris v. Illinois-California Exp., Inc., 687 F.2d 1361, 1366 (10th Cir. 1982). Under Rule 12(b)(1), a party may seek dismissal for lack of subject matter jurisdiction in two forms: (1) facial attack or (2) factual challenge. For the first, the moving party may “facially attack the complaint's allegations as to the existence of subject matter jurisdiction.” Merrill Lynch Bus. Fin. Servs., Inc. v. Nudell, 363 F.3d 1072, 1074 (10th Cir. 2004). When reviewing a facial attack, courts accept a complaint's allegations as true. See Pueblo of Jemez v. United States, 790 F.3d 1143, 1148 n.4 (10th Cir. 2015) (citation omitted). For the second, a party may go beyond the complaint's allegations by presenting evidence challenging the factual basis “upon which subject matter jurisdiction rests.” Nudell, 363 F.3d at 1074 (citation omitted). When reviewing a factual challenge, courts cannot “presume the truthfulness of the complaint's factual allegations,” and may consider documents outside the complaint without converting the motion to dismiss into a motion for summary judgment. Pueblo of Jemez, 790 F.3d at 1148 n.4. In this instance, the party invoking jurisdiction bears the burden of establishing subject matter jurisdiction. Basso v. Utah Power & Light Co., 495 F.2d 906, 909 (10th Cir. 1974).

Under Rule 12(b)(6), a court may dismiss a complaint for “failure to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true and interpreted in the light most favorable to the non-moving party, to state a claim to relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Additionally, the complaint must sufficiently allege facts supporting all the elements necessary to establish an entitlement to relief under the legal theory proposed; however, a complaint may be dismissed because it asserts a legal theory not cognizable as a matter of law. Forest Guardians v. Forsgren, 478 F.3d 1149, 1160 (10th Cir. 2007); Golan v. Ashcroft, 310 F. Supp. 2d 1215, 1217 (D. Colo. 2004). A claim is not plausible on its face “if [the allegations] are so general that they encompass a wide swath of conduct, much of it innocent,” and the plaintiff has failed to “nudge[ the] claims across the line from conceivable to plausible.” Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008) (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). In assessing a claim's plausibility, legal conclusions contained in the complaint are not entitled to the assumption of truth. See Kansas Penn Gaming, LLC v. Collins, 656 F.3d 1210, 1214 (10th Cir. 2011). The standard, however, remains a liberal pleading standard, and “a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and that a recovery is very remote and unlikely.” Dias v. City & Cty. of Denver, 567 F.3d 1169, 1178 (10th Cir. 2009) (internal quotations and citation omitted).

III. ANALYSIS

A. Conceded Claims and Objections Not Raised

Plaintiff did not object to the Recommendation's granting of the motion to dismiss without prejudice Plaintiff's claim of alter ego liability and piercing the corporate veil and, therefore, has conceded this issue (D. 82 at 12-13). Defendant also notes that it is only objecting to the portion of Judge Neureiter's Recommendation denying the partial motion to dismiss regarding claims brought on behalf of Alycia Ramos, Caitlin Betz, and Chase Decker (D. 85 at 2) and waives objections to the remainder of the Recommendation.

A party's failure to file written objections within the prescribed time precludes the party from a de novo determination by the district judge of the proposed findings and recommendations by the magistrate judge. Thomas v. Arn, 474 U.S. 140, 150, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985). When no objections are filed, the district court is “accorded considerable discretion” and may review the unchallenged portions of the magistrate judge's recommendation “under any standard it deems appropriate.” Summers v. State of Utah, 927 F.2d 1165, 1167 (10th Cir. 1991) (citation omitted). After reviewing the relevant filings, the Court concludes that Magistrate Judge Neureiter's analysis regarding the unobjected portions of the Recommendation was thorough and comprehensive, the recommendation to grant in part and deny in part the partial motion to dismiss is well-reasoned, and the Court finds no clear error. The Court adopts this portion of the Recommendation as an Order of the Court.

B. Defendant's Objection (D. 85, D. 97)

Defendant argues that Magistrate Judge Neureiter erred in concluding that the motion to dismiss was moot regarding the claims brought on behalf of Alycia Ramos, Caitlin Betz, and Chase Decker and that the Court does not have subject matter jurisdiction regarding the claim on behalf of these individuals (D. 85 at 4-8). For the following reasons, the Court overrules Defendant's Objection and adopts the Recommendation.

First, there is the issue of timing—Defendant filed this motion while the Weld County civil action was still pending and there were similar Title VII counterclaims by Ramos, Betz, and Decker (i.e., hostile work environment, retaliation, and workplace discrimination asserted against Defendant in the defamation suit) (see D. 22-3 at 23-24). The Recommendation noted:

Defendant first argues that the EEOC cannot assert[ ] claims based on the EEOC charges filed by Ms. Ramos, Ms. Betz, and Mr. Decker because “these individuals have already asserted Title VII claims concerning the same or similar allegations in the Weld County Action. (Dkt. #50 at 2, ¶ 6.) Had the Court issued this Report and Recommendation prior to April 2023, it would have to agree with Defendant. However, given that Ms. Ramos, Ms. Betz, and Mr. Decker settled their claims and the Weld County Action is closed, the Court rejects Defendant's position as moot.

(D. 82 at 8). In Equal Emp. Opportunity Comm'n v. Cont'l Oil Co., 548 F.2d 884, 888 (10th Cir. 1977), the Tenth Circuit held that, under Sections 706(f)(1) and (3) of Title VII of the Civil Rights Act of 1964, “when an individual has brought suit on his charge the EEOC may not sue but rather is limited to participation in the litigation through intervention in the private suit.” The Court determined that “[a]llowing a second suit to proceed on the charge would emasculate the provision.” Id. at 889. Had Defendant's civil action not been dismissed, it is possible that the Court would have ruled in its favor, but as it stands, there is no civil action in which the EEOC can intervene.

This case is distinguishable from Continental Oil for several reasons. First, there is no multiplicity of actions after Defendant settled and dismissed the state court defamation civil action. Second, Plaintiff clearly alleges that the act of bringing the defamation lawsuit was an act of retaliation against the employees in and of itself, which would not constitute a duplicitous lawsuit as the instant Complaint is raising substantially different issues that were neither raised nor addressed in the state court defamation action. See E.E.O.C. v. Swift Transp. Co., 76 F. Supp. 2d 1151, 1154 (D. Kan. 1999) (“In other words, the EEOC's complaint differs significantly from Ms. Meek's complaint both in terms of the scope of concern and the extent of relief sought. Thus, it would not be duplicitous to allow both suits to proceed, although consolidation may be appropriate.”).

Finally, and most importantly, this case is procedurally different from Continental Oil. The Tenth Circuit, in Continental Oil, noted that the EEOC took no immediate steps toward litigation. Therefore, the individuals requested and received “right to sue” letters from the EEOC and brought an independent suit against the employer in the United States District Court for the District of Colorado, wherein they requested back pay, injunctive relief, and declaratory judgment. Cont'l Oil Co., 548 F.2d at 885. In the instant case, Defendant brought a defamation lawsuit against Ramos, Betz, and Decker, wherein they raised Title VII claims as counterclaims in defense of the allegations against them and requested compensatory, actual, and punitive damages (D. 22-3 at 25). While Magistrate Judge Neureiter was diplomatic in his analysis by finding the issue merely moot, this Court will identify the more sinister ramification of ruling in Defendant's favor on this argument: that a defendant to an EEOC action could block the agency from pursuing claims of discrimination under § 706(f)(1) by filing a sham, retaliatory civil action in another court and force the charging parties to raise Title VII claims as a defense or counterclaim. Despite Defendant's argument that the Recommendation emasculates the provisions of § 706(f)(1), the Court finds that the Magistrate Judge protected the fundamental tenets of the law. Defendant fails to cite binding precedent to support its argument that a now-dismissed state civil action bars the EEOC in federal court under § 706(f)(1) from pursuing claims under Title VII. Accordingly, after conducting de novo review, the Court finds that Continental Oil is distinguishable and not binding in this case; thus, this Court has subject matter jurisdiction.

IV. CONCLUSION

Accordingly, this Court OVERRULES Defendant's Objection, and ADOPTS Magistrate Judge Neureiter's Recommendation (D. 82) consistent with the above analysis. Accordingly, Defendant's motion to dismiss (D. 22) is GRANTED IN PART and DENIED IN PART such that Plaintiff's claim/remedy for piercing the corporate veil is DISMISSED WITHOUT PREJUDICE but DENIED in all other respects (see D. 82 at 14).

FOOTNOTES

1.   On occasion, Defendant refers to the Honorable U.S. Magistrate Judge Neureiter in the Objection as “magistrate.” The correct title Defendant should use is Magistrate Judge or Judge and the Court expects Defendant to address Magistrate Judge Neureiter as such hereafter. See 28 U.S.C. § 631.

2.   The Court draws the operative facts as set forth in Plaintiff's Complaint (D. 1). The Court may refer to the counterclaims and settlement documents because the state court case is specifically referenced in Plaintiff's Complaint and central to Plaintiff's claim that Defendant's state court lawsuit against its employees is retaliation. See Prager v. LaFaver, 180 F.3d 1185, 1189 (10th Cir. 1999).

Gordon P. Gallagher, United States District Judge