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U.S. Equal Employment Opportunity Commission v. Akebono Brake Corp.

United States District Court, D. South Carolina, Columbia Division

February 8, 2017

U.S. Equal Employment Opportunity Commission, Plaintiff,
v.
Akebono Brake Corporation, Defendant. Akebono Brake Corporation, Third-Party Plaintiff,
v.
Carolina Personnel Services, Inc., and Carolina Industrial Staffing, Inc., Successor in Interest for Carolina Personnel Services, Inc. Third-Party Defendants.

          REPORT AND RECOMMENDATION

          SHIVA V. HODGES COLUMBIA, UNITED STATES MAGISTRATE JUDGE.

         This matter comes before the court on the motions for judgment on the pleadings by Carolina Personnel Services, Inc. (“CPS”) [ECF No. 45], and Carolina Industrial Staffing, Inc. (“CIS”) [ECF No. 47]. The motions having been fully briefed [ECF Nos. 54, 55, 56, 58], they are ripe for disposition. All pretrial proceedings in this case were referred to the undersigned pursuant to the provisions of 28 U.S.C. § 636(b)(1)(B) and Local Civ. Rule 73.02(B)(2)(g) (D.S.C.). Because the motions are dispositive, this report and recommendation is entered for the district judge's consideration. For the reasons that follow, the undersigned recommends the district judge grant the motions for judgment on the pleadings.

         I. Factual Background

         Burnett filed a Charge of Discrimination raising a claim of religious discrimination related to her hire by CPS at the direction of Akebono Brake Corporation (“Akebono”) and her subsequent termination. [ECF Nos. 14 at ¶ 38;19 at ¶ 6]. The U.S. Equal Employment Opportunity Commission (“EEOC”) filed this case based on the allegations in the Charge of Discrimination.

         The EEOC alleges that Akebono enlisted the services of a temporary labor services provider to meet the operational needs of its facility located in West Columbia, South Carolina. [ECF No. 19 at ¶ 17]. Akebono's Third Party Complaint alleges that CPS was that temporary labor services provider. [ECF No. 14]. The EEOC further alleges that Akebono and CPS operated under a Staffing Agreement for the provision of the labor services and are joint employers of the individuals CPS recruited and hired to be placed at Akebono's facility. [ECF No. 19 at ¶ ¶ 18, 25]. The EEOC alleges Akebono is “liable as a joint employer of Burnett for the discriminatory actions alleged” and liable for “harm[ing] the employer-employee relationship between Burnett and [CPS].” Id. at ¶¶ 26-27. However, the EEOC also alleges that Akebono is the “sole entity responsible for the decision to revoke the offer of employment made to Burnett . . .” Id. at ¶ 41.

         In its second cause of action for an alleged failure to accommodate Burnett's religious beliefs, the EEOC alleges that CPS informed someone in Akebono's Human Resources Department about Burnett's religious belief regarding an inability to wear pants. Id. at ¶ 48. Akebono has expressly denied that this alleged conversation took place. [ECF No. 21 at ¶ 48]. The EEOC has not alleged that Burnett herself had any communication or contact with Akebono; but rather all communication with regard to Burnett came through CPS. [ECF No. 19, ¶¶ 37-39, 48].

         Akebono and CPS entered into a contract in which CPS promised to (1) handle and resolve all complaints or issues reported by Assigned Employees [ECF No. 14 at ¶ 17]; (2) provide support to [Akebono] for any issues regarding [CPS] associated and Assigned Employees, id. at ¶ 18; (3) communicate proactively with [Akebono] and Recruiter, and provide 24-hour access to Account and Operations Managers, id. at ¶ 19; (4) immediately notify [Akebono] of any allegations of discrimination or harassment made to, or made known to [CPS] or filed with a federal, state, county or municipal court or any federal, state, or local administrative agency by a current or former Assigned Employee allegedly occurring in connection with an Assigned Employee's assignment under this Agreement, id. at ¶ 20; and (5) cooperate fully and to provide assistance to the other party in the investigation and resolution of any complaints, claims, actions, or proceedings that may be brought or that any way involve Assigned Employees [Section 13 of the Agreement], id. at ¶ 22.

         Akebono filed a third-party complaint against CPS and CIS, raising claims of breach of contract, breach of implied duty of good faith and fair dealing, equitable indemnification, contribution, and promissory estoppel. [ECF No. 14]. Akebono alleges that CPS breached its contract by, inter alia, failing to properly inform and notify Akebono that there existed potential issues related to religious discrimination and religious accommodation related to Burnett's efforts to seek and obtain employment with CPS. Id. at ¶ 52. Akebono's claims against CIS arise out of the dissolution and sale of CPS to CIS during the pendency of Burnett's allegations against CPS and Akebono before the EEOC. Id. at ¶ 40. Akebono alleges that CIS acquired or otherwise became legally responsible for CPS's liabilities, including any liabilities arising out of CPS's agreement with Akebono. Id. at ¶ 41.

         II. Discussion

         A. Legal Standard

         After pleadings are closed, a party may move for judgment on the pleadings. Fed.R.Civ.P. 12(c). “A motion for judgment on the pleadings under Rule 12(c) is assessed under the same standards as a motion to dismiss under Rule 12(b)(6).” Occupy Columbia v. Haley, 738 F.3d 107, 115 (4th Cir. 2013). To withstand a motion for judgment on the pleadings, a complaint must contain facts sufficient to “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, (2007); Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). Mere “labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555. “In resolving a motion pursuant to Rule 12(b)(6) or Rule 12(c), a district court may . . . consider a ‘written instrument' attached as an exhibit to a pleading.” Occupy Columbia, 738 F.3d at 116. Under Rule 10(c) “[a] copy of a written instrument that is an exhibit to a pleading is part of the pleading for all purposes.” Fed.R.Civ.P. 10(c).

         B. Analysis

         CPS and CIS both argue that Akebono's third-party claims are preempted by “obstacle preemption.” The doctrine of obstacle preemption prescribes that state law claims are preempted when they “‘stand[] as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.'” Freightliner Corp. v. Myrick, 514 U.S. 280, 287 (1995) (quoting Hines v. Davidowitz, 312 U.S. 52, 67 (1941)). Under Fourth Circuit precedent, liability-shifting claims are preempted when allowing the defendant to shift its liability to someone else would frustrate the regulatory scheme created by Congress in the underlying federal statute. Equal Rights Ctr. v. Niles Bolton Assocs., 602 F.3d 597, 601 (4th Cir. 2010). Preemption is particularly appropriate when the statute at issue provides a comprehensive regulatory scheme designed to promote and incentivize compliance with federal law. Id. at 601-02.

         In response, Akebono argues that it “does not seek to shift its entire liability because the Amended Complaint contains allegations, which if proven, would subject Akebono to liability for CPS' conduct.” [ECF No. 54 at 11]. Specifically, Akebono notes one allegation in the amended complaint-“[CSP] did not offer Burnett alternative employment opportunities following the revocation of the offer to work in [Akebono's] West Columbia plant”-that ...


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