DERRICK K. WATSON, District Judge.
The United States Equal Employment Opportunity Commission ("EEOC" or the "Commission") alleges sexual harassment, constructive discharge, and retaliation claims against each of the three Defendants on behalf of five former male employees. The alleged discriminating official in each instance, according to the EEOC, is the Owner and President of Discovering Hidden Hawaii Tours, Leopoldo Malagon III, whom the EEOC asserts controlled each of the Defendant entities. Defendants move to dismiss: (1) as untimely all claims on behalf of Claimants 1 and 2 because the events associated with their claims occurred more than 300 days before the Charging Party filed his November 2015 discrimination charge with the EEOC; (2) the retaliation claim brought by Claimant 1 due to the absence of an adverse employment action; (3) the constructive discharge allegations of Claimants 1, 3 and 4 as insufficiently pled; (4) Claimant 4's sexual harassment claim because the harassment, as alleged, was neither severe nor pervasive; and (5) any claims against Hawaii Tours and Transportation Inc. and Big Kahuna because they were not the employers of any claimant.
For the reasons set forth below, Defendants' Motion to Dismiss is GRANTED. The EEOC is permitted leave to file an amended complaint consistent with the terms of this Order.
On November 10, 2015, the Charging Party filed a Charge of Discrimination, alleging sexual harassment against his former employer, Discovering Hidden Hawaii Tours, Inc. ("DHT"). Decl. of Eric Yau, Ex. 1 (11/10/15 Charge); Dkt. No. 24-2. During the course of investigating the Charge, the EEOC discovered additional claimants, each allegedly suffering similar harassment based on sex (male) while employed by Defendants, and some also experiencing retaliation and constructive discharge. According to the EEOC, its investigation revealed a pattern or practice that began as early as 2006, wherein Malagon sexually harassed male employees by making sexual comments, propositioning them for sex at the office and at his home, and initiating unwelcome physical touching. Complaint ¶¶ 19, 21. On February 15, 2017, the EEOC filed this lawsuit under 42 U.S.C. § 2000e-5(f)(1) and (3) ("Section 706") on behalf of the Charging Party and Claimants 1, 2, 3, and 4 against DHT, Hawaii Tours and Transportation Inc., and Big Kahuna Luau, Inc., under the theory that Defendants operate as a single enterprise controlled by Malagon, DHT's Owner and President. Complaint ¶¶ 8-11. The Complaint alleges that DHT employed the Charging Party as a Vice President of Sales and Marketing, and that Malagon subjected the Charging Party to repeated incidents of sexual harassment from May 2015 through August 2015. When the Charging Party complained to Defendants' human resources personnel about Malagon's conduct, Defendants took no corrective action and, shortly thereafter, Malagon threatened to fire him and withhold his bonuses. Complaint ¶ 19.a. The Charging Party resigned in August 2015 as a result of the harassment and retaliation. Complaint ¶ 19.a.
Claimant 1 worked for DHT as a social media marketing and reservations manager. The EEOC alleges that in October 2010, Malagon subjected Claimant 1 to unwelcome sexual harassment, including making comments of a sexual nature and inviting Claimant 1 to lunch. When Claimant 1 complained to his supervisor that Malagon's conduct made him uncomfortable, the supervisor responded by suggesting that Claimant 1 accept Malagon's lunch invitation, "implying that his continued employment was contingent on Claimant 1's acquiescence to sexual contact." Complaint ¶ 19.b. Claimant 1 agreed to go to lunch, but Malagon instead took Claimant 1 to his apartment, where Claimant 1 "complied with Malagon's request for oral sex." Complaint ¶ 19.b. Claimant 1 later communicated to Malagon that the incident was "not ok," then complained to his supervisor and called a hotline number to report the incident. Complaint ¶ 19.b. Defendants not only failed to take corrective action but issued Claimant 1 a poor performance review two months after he reported Malagon's conduct. Claimant 1 resigned as a result of the harassment. Complaint ¶ 19.b.
The Commission alleges that Claimant 2 was employed from February 2012 through May 2013 as an internet marketer and sales manager. During his job interview, Malagon subjected Claimant 2 to unwelcome sexual harassment and touching. Complaint ¶ 19.c.
Claimant 3 worked for DHT as a bartender from May 2015 through July 2015. Complaint ¶ 19.d. He was allegedly subjected to unwelcome sexual harassment by Malagon on multiple occasions, which involved comments and questioning of a sexual nature and showing Claimant 3 photographs of Malagon and others engaged in sexual acts. Complaint ¶ 19.d. Claimant 3 resigned "in part as a result of the harassment." Complaint ¶ 19.d.
Claimant 4 also worked as a bartender, from July 2015 to August 2015, although the particular entity he worked for is not specified. Malagon allegedly subjected Claimant 4 to unwelcome sexual comments while recruiting him for "employment with Defendants" and continued to make "comments of a sexual nature during his employment." Complaint ¶ 19.e. The unwelcome sexual comments included asking what "sexual stuff Claimant 4 was into, and talking about sex parties and orgies." Complaint ¶ 19.e.
The Complaint alleges generally that the "conduct described in Paragraph 19 resulted in the constructive discharge of male employees who were forced to resign because of the harassment," Complaint ¶ 20, and that "Malagon's treatment of Charging Party and Claimants 1 through 4 is illustrative of a pattern or practice of sexual harassment dating from at least 2006 through the present." Complaint ¶ 21.
Defendants move to dismiss the claims brought on behalf of Claimants 1 and 2 because the acts they complained of occurred more than 300 days before the Charging Party filed his Charge with the EEOC in November 2015. Defendants also move to dismiss as insufficiently pled the retaliation and constructive discharge claims of all claimants. With respect to Claimant 4 only, Defendants seek dismissal of the sexual harassment claim because the Complaint fails to allege harassing conduct that was severe and pervasive. Finally, the Motion requests dismissal of Big Kahuna (which had not yet come into existence at the time of the events in the Complaint) and Hawaii Tours and Transportation because neither was an employer of any claimant.
The EEOC argues that all of the claims have been timely brought because, taken as a whole, the Complaint pleads facts demonstrating a pattern or practice of sexual harassment that extends and is actionable beyond the 300-day limitation period. It also contends that the Complaint includes sufficient facts to support the asserted sexual harassment, constructive discharge and retaliation claims.
Federal Rule of Civil Procedure 12(b)(6) authorizes the Court to dismiss a complaint that fails "to state a claim upon which relief can be granted." Rule 12(b)(6) is read in conjunction with Rule 8(a), which requires only "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2).
Pursuant to Ashcroft v. Iqbal, "[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" 555 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 554, 570 (2007)). "[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions." Id. Accordingly, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. (citing Twombly, 550 U.S. at 555). Rather, "[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly, 550 U.S. at 556). Factual allegations that only permit the court to infer "the mere possibility of misconduct" do not constitute a short and plain statement of the claim showing that the pleader is entitled to relief, as required by Rule 8(a)(2). Id. at 679.
A court may consider certain documents attached to a complaint, as well as documents incorporated by reference into a complaint "if the plaintiff refers extensively to the document or the document forms the basis of the plaintiff's claim." United States v. Ritchie, 342 F.3d 903, 909 (9th Cir. 2003); see also id. at 908 (A court may "consider certain materials—documents attached to the complaint, documents incorporated by reference in the complaint, or matters of judicial notice—without converting [a Rule 12(b)(6)] motion to dismiss into a motion for summary judgment."). Because the EEOC Charge is referenced in the Complaint and is a matter of public record, the Court grants the parties' request to take judicial notice of that document. See, e.g., Onodera v. Kuhio Motors Inc., 2013 WL 4511273, at *2 (D. Haw. Aug. 23, 2013) (citing EEOC v. Global Horizons, Inc., 860 F.Supp.2d 1172, 1193 n.5 (D. Haw. 2012); Gallo v. Bd. of Regents of Univ. of Cal., 916 F.Supp. 1005, 1007 (S.D. Cal. 1995)). The Court also takes judicial notice of the articles of incorporation and public records attached to the parties' briefs. See Fed.R.Evid. 201(b); Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001).
As detailed below, the Court grants Defendants' Motion with respect to the untimely claims brought on behalf of Claimants 1 and 2 that are based upon allegations beyond the 300 days before the initial Charge was filed with the EEOC. Because the constructive discharge allegations with respect to Claimants 3 and 4, and the sexual harassment claim of Claimant 4 are insufficiently pled, those claims are likewise dismissed. Finally, the Complaint fails to allege sufficient facts to state a Title VII claim against Hawaii Tours and Transportation Inc. or Big Kahuna, where the allegations do not establish that either was an employer of any claimant. Defendants' Motion is therefore granted, but with leave to amend consistent with the instructions below.
Defendants seek dismissal of the claims brought on behalf of Claimants 1 and 2, where the Complaint contains no allegations that either claimant was harassed, retaliated against or constructively discharged within 300 days of the Charging Party filing his November 10, 2015 Charge. The Commission relies upon the "continuing violation" doctrine to extend the 300-day period, arguing that, because it is pursuing a pattern-or-practice claim, the statute of limitations does not apply as to individual claimants because the hostile work environment affected all claimants. Because the Court concludes that the continuing violation doctrine does not operate in the manner urged by the EEOC and does not cover individuals who did not themselves suffer any unlawful employment practice within the 300-day limitation period, Defendants' Motion is granted as to the untimely claims brought on behalf of Claimants 1 and 2.
"A statute-of-limitations defense, if `apparent from the face of the complaint,' may properly be raised in a motion to dismiss." Seven Arts Filmed Entm't Ltd. v. Content Media Corp., 733 F.3d 1251, 1254 (9th Cir. 2013) (quoting Conerly v. Westinghouse Elec. Corp., 623 F.2d 117, 119 (9th Cir. 1980)); see also Rivera v. Peri & Sons Farms, Inc., 735 F.3d 892, 902 (9th Cir. 2013) ("When an affirmative defense is obvious on the face of a complaint, . . . a defendant can raise that defense in a motion to dismiss.") (citing Cedars-Sinai Med. Ctr. v. Shalala, 177 F.3d 1126, 1128-29 (9th Cir. 1999)). That said, "a complaint cannot be dismissed unless it appears beyond doubt that the plaintiff can prove no set of facts that would establish the timeliness of the claim." Supermail Cargo, Inc. v. United States, 68 F.3d 1204, 1206-07 (9th Cir. 1995) (citation and quotation marks omitted). In making such a determination, the Court is not "required to accept as true allegations that contradict. . . matters properly subject to judicial notice[.]" Seven Arts, 733 F.3d at 1254 (internal quotation marks omitted). In this case, the statute of limitations issues are apparent on the face of the Complaint.
Title VII requires that a "charge shall be filed by or on behalf of the person aggrieved within three hundred days after the alleged unlawful employment practice occurred." 42 U.S.C. § 2000e-5(e)(1); see also EEOC v. Global Horizons, Inc., 904 F. Supp. 2d at 1090 n.2 (D. Haw. 2012) ("The 300-day limitations period is applicable in this case because Title VII extends the 180-day period to 300 days if filed in a `worksharing' jurisdiction. . . . Hawaii and California are both `worksharing' states such that administrative claims filed with the EEOC are deemed `dual-filed' with the state's local agency and vice versa.") (citations omitted). Generally, for hostile work environment claims of a continuing nature, the aggrieved employee must allege "at least one discrete act had occurred within the 300-day time frame." Porter v. Cal. Dep't of Corr., 419 F.3d 885, 892 (9th Cir. 2004) (citing Nat'l R.R. Passenger v. Morgan, 536 U.S. 101, 114 (2002)).
The parties dispute whether, when the EEOC brings a Section 706 pattern or practice hostile work environment claim on behalf of a class of aggrieved employees, it may extend liability to include employees who suffered the same type of harassment outside of the 300-day limitation period. As discussed below, the weight of authority supports Defendants' position that the continuing violation doctrine properly applies to include only the additional, otherwise time-barred claims of aggrieved individuals who suffered at least one unlawful employment action within 300 days of the filing of the Charge, but does not permit the inclusion of employees who did not themselves suffer any unlawful employment practice within that 300-day period.
The EEOC acknowledges that the Complaint contains no allegation that Claimants 1 or 2 suffered from harassment, retaliation, or constructive discharge within the 300-day period before the Charging Party filed his Charge on November 10, 2015. The EEOC also appears to acknowledge that neither Claimant can make such an allegation. Instead, the Commission contends that, because it raised a pattern or practice claim, "a hostile work environment can constitute a continuing violation involving actions beyond the 300-day limitation," as long as "all acts constituting the claim are part of the same unlawful employment practice and any act occurred within the 300-day charge filing period" as to any member of the class. Mem. in Supp. at 6, 7 (citing U.S. EEOC v. Global Horizons, Inc., 904 F.Supp.2d 1074, 1094 (D. Haw. 2012) (additional citations omitted)). Under the EEOC's proposal, the continuing violation doctrine protects those who have slept on their rights and resurrects their otherwise expired claims, whenever a subsequent employee whom the dilatory one may never know or be aware of fortuitously appears on scene, is subject to the same type of harassing conduct, and sees fit to file a timely charge. That cannot be the rule.
Although the Ninth Circuit does not appear to have been presented with this precise question, it has ruled that the 300-day limitation period applies to the claims of individual employee class members in the context of a Section 706 case brought by the EEOC. In Arizona ex rel. Horne v. Geo Group, Inc., the Ninth Circuit held "that the EEOC and the [Arizona Civil Rights] Division may maintain their claims on behalf of aggrieved employees provided that the employee has alleged at least one act of misconduct that occurred within 300 days prior to the date the first aggrieved employee, Alice Hancock, filed her charge." Horne, 816 F.3d at 1194.
Recent district court decisions agree that Section 706 limits the class of employees on whose behalf the EEOC may seek relief to those individuals who were allegedly subjected to unlawful employment practices during the 300 days before the date of the initial Charge. See, e.g., EEOC v. FAPS, Inc., 2014 WL 4798802, at *24 (D.N.J. Sept. 26, 2014) ("The plain language of Section 706(e)(1) clearly precludes the EEOC from seeking relief for individuals who could not have filed an EEOC charge during the filing period."); EEOC v. U.S. Steel, 2012 WL 3017869, at *5-7 (W.D. Pa. July 23, 2012) (dismissing pattern or practice claims brought by EEOC on behalf of employees who were subject to an alcohol breath test and/or termination more than 300 days before the filing of the Charge and noting that "multiple applications of an employer policy to different individuals on separate occasions would constitute multiple violations and not a single continuing violation."); EEOC v. PBM Graphics Inc., 877 F.Supp.2d 334, 353-54 (M.D.N.C. 2012) ("[T]he EEOC may not seek relief on behalf of individuals who allegedly suffered discrimination more than 180 days prior to the filing of the EEOC's charge, and the continuing violation doctrine, which revives stale claims, not stale parties, is inapplicable to the facts of this case, at least for individuals who suffered discrimination entirely outside of the statutory period, unless the worker also experienced discrimination within the statutory period as well."); EEOC v. Freeman, 2010 WL 1728847, at *5-6 (D. Md. Apr. 27, 2010) (noting that "the continuing violation doctrine permits the inclusion of additional, but otherwise time-barred, claims—not the inclusion of otherwise time-barred parties" and opining that "the continuing violation doctrine should not be invoked to expand the class of individuals for whom the EEOC can seek relief under Title VII"); EEOC v. Burlington Med. Supplies, Inc., 536 F.Supp.2d 647, 658-59 (E.D. Va. 2008) (Holding in pattern or practice sexual harassment case that the "EEOC's special statutory mandate does not entitle it to expand substantive rights, such as reviving stale claims that would not otherwise be actionable under Title VII. . . . The Court therefore holds that only those class members experiencing injury within the 300-day limitations period will be entitled to individual relief at trial.") (citation and quotation marks omitted).
The district court's decision in EEOC v. Freeman is illustrative. There, the court concluded that the continuing violation doctrine was inapplicable to claims of a pattern or practice of refusing to hire job applicants based on race, national origin, and sex discrimination. 2010 WL 1728847, at *6. Addressing the parties' reliance upon Morgan and the "unique nature of hostile environment claims," the court noted that "an employer may be liable for acts occurring outside of the 300-day filing period, provided that (1) at least one act contributing to the claim occurs within the filing period, and (2) the acts falling outside of the 300-day filing period are part of the same actionable hostile environment claim." Id. at *5 (citation omitted). Freeman concluded that "the continuing violation doctrine permits the inclusion of additional, but otherwise time-barred, claims—not the inclusion of otherwise time-barred parties. This equitable exception to the 300-day filing period allows an individual who filed a timely charge to recover for acts outside the filing period if the nature of the claim involves `repeated conduct' constituting a single `unlawful employment practice.'" Id. at *6 (quoting Morgan, 536 U.S. at 115). The district court reasoned that where the EEOC seeks to enlarge the number of individuals entitled to recover rather than the claims a single individual may bring, the doctrine has no applicability. Id.
The Commission here is seeking to provide relief for individuals who did not themselves experience any unlawful employment actions during the 300-day filing window. Although framed as a "pattern or practice" claim, using the continuing violation doctrine under the circumstances alleged here would expand the doctrine beyond its traditional boundaries. The doctrine allows claims "composed of a series of separate acts that collectively constitute one `unlawful employment practice.'" Morgan, 536 U.S. at 117. In its proper application, "[i]t does not matter that some component acts of the claim fall outside the statutory time period" as to each individual employee because the claim is "based on the cumulative effect of individual acts" suffered by that same employee. Id. These are not the circumstances here. The continuing violation doctrine should not be expanded to cover individuals who did not suffer any act of discrimination, harassment, or retaliation within the 300-day limitation period.
Although the Court's conclusion limits the class of individuals for whom the EEOC may seek relief under Section 706, like any limitations period, the timely charge requirement incorporates other policy and fairness considerations. Notably, "[t]his procedure services an important purpose: it provides repose for employers and prevents them from having to defend against long-stale claims." Bloomberg, 751 F. Supp. 2d at 645 (citing Occidental Life Ins. Co. v. EEOC, 432 U.S. 355, 371-72 (1977)); see also Freeman, 2010 WL 1728847, at *5 (finding that "concerns of open-ended liability and the need for prompt notification of the asserted violations to the employer" also weigh in favor of applying the timely charge requirement to claims brought under Section 707 by the EEOC).
In sum, any claims that accrued before January 14, 2015—300 days prior to the filing of the initial Charge on November 10, 2015—are time-barred. Because the Complaint only alleges conduct relating to Claimants 1 and 2 that occurred well-before this date (in 2010 and 2012-13, respectively), their claims are untimely. Defendants' Motion is therefore granted to the extent it seeks dismissal of the untimely claims brought on behalf of Claimants 1 and 2.
The EEOC alleges that certain male claimants were forced to resign because of Malagon's sexual harassment. Defendants move to dismiss these constructive discharge claims because the Complaint does not sufficiently allege that any claimant was forced to quit to escape intolerable working conditions. Because the Court has already dismissed the allegations relating to Claimant 1 as untimely, it addresses only Claimants 3 and 4 below, and finds that the Complaint fails to allege facts necessary to support the elements of their constructive discharge claims.
"`Under the constructive discharge doctrine, an employee's reasonable decision to resign because of unendurable working conditions is assimilated to a formal discharge for remedial purposes. The inquiry is objective: Did working conditions become so intolerable that a reasonable person in the employee's position would have felt compelled to resign?'" Poland v. Chertoff, 494 F.3d 1174, 1184 (9th Cir. 2007) (quoting Penn. State Police v. Suders, 542 U.S. 129, 141 (2004)). Stated similarly,
Poland, 494 F.3d at 1184 (quoting Brooks v. City of San Mateo, 229 F.3d 917, 930 (9th Cir. 2000)).
Here, there are no allegations that either Claimant 3 or 4 provided notice of Malagon's alleged conduct to anyone in order to allow Defendants the opportunity to address the harassment. See, e.g., EEOC v. Wedco, Inc., 65 F.Supp.3d 993, 1007 (D. Nev. 2014) (granting summary judgment for employer where the "EEOC offer[ed] no evidence that [the employee] provided Wedco with a reasonable opportunity to remedy the alleged racial harassment" and did not report any of the harassing conduct); Connolly v. Remkes, 2014 WL 5473144, at *10 (N.D. Cal. Oct. 28, 2014) (dismissing with leave to amend where plaintiff "does not allege that she gave her employer a `reasonable chance to work out a problem' before quitting, which means that she `has not been constructively discharged'. . . [a]t most, [plaintiff] has alleged that [she] chose to resign without confronting [her supervisor] about his actions") (quoting Tidwell, 93 F.3d at 494).
Even assuming that Claimants 3 and 4 could not be "expected to remain on the job while seeking redress," Penn. State Police, 542 U.S. at 147, the Complaint does not sufficiently allege that they resigned specifically as a result of intolerable working conditions. The allegations with respect to Claimant 3, for instance, are vague as to whether his working conditions became intolerable so as "to overcome the normal motivation of a competent, diligent, and reasonable employee to remain on the job to earn a livelihood," Brooks, 229 F.3d at 930, or that he resigned due to the harassment. Rather, the Complaint alleges merely that, "[a]t least in part as a result of the harassment, Claimant 3 resigned from Defendants' employment." Complaint ¶ 19.d.; see, e.g., Duffy v. Paper Magic Grp., Inc., 265 F.3d 163, 171 (3d Cir. 2001) (holding that where former employee's decision to leave her job was "based, in part, on her son's recent graduation from college and her resultant financial ability to leave," the employee was not constructively discharged due to continued pattern of age discrimination). Nor does the Complaint specifically allege if or when Claimant 4 even resigned, much less why. See Green v. Brennan, 578 U.S. 1769, 1776 (2016) (holding that a plaintiff does not have a "complete and present cause of action" for constructive discharge until he or she resigns because "the matter alleged to be discriminatory in a constructive-discharge claim necessarily includes the employee's resignation") (internal quotation marks omitted); EEOC v. La Rana Hawaii, LLC, 888 F.Supp.2d 1019, 1047 (D. Haw. 2012) ("This allegation fails to allege "the element that requires the plaintiff to have actually quit.'") (quoting Hubbard v. Bimbo Bakeries USA, Inc., 270 Fed. Appx. 607, 609 (9th Cir. 2008)).
Because the Complaint as currently pled fails to sufficiently allege constructive discharge on behalf of Claimants 3 and 4, Defendants' Motion is granted as to this claim. Because amendment may be possible, dismissal is with leave to amend. See Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) (en banc) (When dismissing a complaint for failure to state a claim, "a district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts.") (quoting Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995)).
Defendants move to dismiss the sexual harassment claim brought on behalf of Claimant 4 because the Complaint fails to allege that he was subjected to unwelcome conduct that was severe or pervasive. An employer is liable under Title VII for conduct giving rise to a hostile environment where the employee proves (1) that he was subjected to verbal or physical conduct of a harassing nature, (2) that this conduct was unwelcome, and (3) that the conduct was sufficiently severe or pervasive to alter the conditions of the victim's employment and create an abusive working environment. Horne, 816 F.3d at 1206 (citing Kortan v. Cal. Youth Auth., 217 F.3d 1104, 1109-10 (9th Cir. 2000)). Because the allegations do not amount to conduct that was either "severe or pervasive" enough to alter the conditions of Claimant 4's employment, the EEOC fails to state a claim for harassment based upon sex.
The Complaint alleges that Malagon subjected Claimant 4 to "unwelcome sexual comments during the recruitment of Claimant 4 for employment with Defendants and continued to make comments of a sexual nature during his employment" as a bartender between July 2015 and August 2015. Complaint ¶ 19.e. "These comments included but were not limited to asking what `sexual stuff' Claimant 4 was into, and talking about sex parties and orgies." Complaint ¶ 19.e. This represents the entirety of the allegations that are specific to Claimant 4, as the Commission has not brought retaliation or constructive discharge claims on his behalf.
The alleged comments regarding "sexual stuff" made during his recruitment and at unspecified times and of unspecified duration during his employment do not meet the legal standard for an actionable claim. "`Conduct must be extreme to amount to a change in the terms and conditions of employment.' To be actionable under Title VII, `a sexually objectionable environment must be both objectively and subjectively offensive, one that a reasonable person would find hostile or abusive, and one that the victim in fact did perceive to be so.'" Montero v. AGCO Corp., 192 F.3d 856, 860 (9th Cir. 1999) (quoting Faragher v. City of Boca Raton, 524 U.S. 775, 787-88 (1998)). Courts determine whether an environment is sufficiently hostile or abusive by "`looking at all the circumstances,' including the `frequency of the discriminatory conduct; its severity; whether it is physically threatening or humiliating, or a mere offensive utterance; and whether it unreasonably interferes with an employee's work performance.'" Kortan, 217 F.3d at 1110 (quoting Faragher, 524 U.S. at 787-88). Such supporting allegations are missing here.
Looking at the totality of the circumstances alleged, the EEOC does not demonstrate either the severity or pervasiveness required in order for the conduct to sufficiently have altered the conditions of Claimant 4's employment and created an abusive working environment, based upon the sparse factual details provided.
Here, the allegations indicate that Malagon's comments were "unwelcome" and of a "sexual nature," but the Complaint does not allege the dates or frequency of the comments, nor whether Claimant 4 found the comments and questioning about what "sexual stuff" he "was into" to be subjectively offensive, nor whether the comments interfered with his ability to perform his job. In addition to the missing details, what is lacking is the context to plausibly demonstrate severity or pervasiveness. "Title VII is not a `general civility code.' A violation is not established merely by evidence showing `sporadic use of abusive language, gender-related jokes, and occasional teasing.'" EEOC v. Prospect Airport Servs., Inc., 621 F.3d 991, 998 (9th Cir. 2010) (quoting Faragher, 524 U.S. at 788 ). "Simple teasing, offhand comments, and isolated incidents (unless extremely serious) will not amount to discriminatory changes in the terms and conditions of employment." Faragher, 524 U.S. at 788.
Because the Complaint does not include allegations of conduct by Malagon or any defendant that was sufficiently severe or pervasive to alter the conditions of Claimant 4's employment, the Motion is granted. Because amendment of this claim may be possible, dismissal is with leave to amend.
Defendants seek dismissal of two entities—Hawaii Tours and Transportation and Big Kahuna—because neither was allegedly an employer of the Charging Party or any claimant. The Charging Party, Claimant 1 and Claimant 3 all worked for DHT. See Complaint ¶ 19.a.b.d. The Complaint does not specify which of the Defendant entities employed Claimants 2 and 4.
The Complaint alleges that Malagon was "the sole partner, president, treasurer, and director" of DHT. Complaint ¶ 8. The Commission alleges that Hawaii Tours and Transportation's "sole function was to lease and operate vehicles used by DHT in their tours" and that Malagon "controlled the operations of Hawaii Tours and Transportation Inc., including the authority to hire/fire employees." Complaint ¶ 9. Hawaii Tours and Transportation is owned by Danielle Diamond, Malagon's spouse. Complaint ¶ 9. The Complaint also alleges that Hawaii Tours and Transportation is the registered agent for service of Big Kahuna, and that Malagon "managed the luau event operated by Big Kahuna Luau, Inc., including supervision of work by employees and third party vendors." Complaint ¶ 10. The Commission maintains that the various Defendants may be liable for discrimination against the class of former employees under one or more theories of multiple entity liability, and that it should not be expected to further untangle these corporate relationships at the pleading stage. The Court addresses both entities and the EEOC's theories of liability in turn.
Defendants urge the Court to dismiss Big Kahuna because it was not incorporated in the State of Hawaii until October 20, 2015, after the Charging Party and all claimants allegedly left Defendants' employment. See Petrus Decl., Ex B. (Big Kahuna Articles of Incorporation); Dkt. No. 9-4.
Even assuming the truth of its allegations, that "Malagon managed the luau event operated by Big Kahuna Luau, Inc., including supervision of work by employees," the Complaint fails to allege plausible facts showing that Big Kahuna could have been an employer (or joint employer) of any of the Claimants or the Charging Party where Big Kahuna did not even exist at the time of any of the incidents of harassment described in the Complaint. See EEOC v. La Rana Hawaii, LLC, 888 F.Supp.2d 1019, 1046 (D. Haw. 2012) ("The EEOC must allege specifically what wrongdoing it is assigning to each Defendant. If the EEOC intends to proceed on a theory of joint employer liability, it must allege facts sufficient to support its contention that both Defendants controlled the terms and conditions of the Claimants' employment.") (citing EEOC v. Pac. Mar. Ass'n, 351 F.3d 1270, 1275-77 (9th Cir. 2003)).
Accordingly, because the Complaint does not allege any unlawful conduct during the time period after Big Kahuna was incorporated on October 20, 2015, the Commission fails to plausibly allege facts that Big Kahuna was an employer of any claimant.
The Commission conclusorily alleges that DHT, Hawaii Tours and Transportation, and Big Kahuna acted as one another's "successor, agent, alter ego, employee, indirect employer, joint employer, integrated enterprise and/or under the direction and control of the others." Complaint ¶ 11. The Complaint, however, does not include sufficient facts to support the legal conclusion. To the extent it seeks to hold Hawaii Tours and Transportation liable as a joint employer, the Complaint does not allege facts showing that such a joint employment relationship actually exists.
In making such a determination, the Ninth Circuit applies an "economic reality test" that takes into account "all factors relevant to the particular situation." Global Horizons, 860 F. Supp. 2d at 1183 (quoting EEOC v. Pac. Mar. Ass'n, 351 F.3d 1270, 1275 (9th Cir. 2003)). "For example, the Ninth Circuit has considered whether the alleged 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 the employee and his work site." Global Horizons, 860 F. Supp. 2d at 1183 (citing Pac. Mar. Ass'n, 351 F.3d at 1277).
There are no allegations that Hawaii Tours and Transportation exhibited any of these powers or characteristics with respect to any claimant. The Complaint alleges that Claimant 3 was employed by DHT—not Hawaii Tours and Transportation—and fails to allege that anyone at Hawaii Tours and Transportation, including Malagon's wife,
In any event, there are no allegations that Hawaii Tours and Transportation acted as a joint employer with DHT—that it controlled the terms and conditions of any claimant's employment. The Commission's "conclusory allegation that [Defendants] were [claimants'] joint employer under Title VII . . . is insufficient to withstand a Rule 12(b)(6) motion." Shah v. Littelfuse Inc., 2013 WL 1828926, at *3-4 (N.D. Ill. Apr. 29, 2013) (quotation marks omitted); cf. Pruitt v. Pers. Staffing Grp., LLC, 2016 WL 6995566, at *4 (N.D. Ill. Nov. 30, 2016) (holding that plaintiffs stated plausible Title VII claims against defendant as their joint employer when allegations showed that defendant "had certain control over Plaintiffs' employment"); Tritsis v. BankFinancial Corp., 2016 WL 5171785, at *2 (N.D. Ill. Sept. 21, 2016) (holding that plaintiff, an executive officer at a bank, sufficiently alleged that an entity was her joint employer when she alleged that the entity "exerted a significant degree of control" over her employment by determining bank executives' eligibility for stock options).
Without more, the allegations in the Complaint are insufficient to establish the factors necessary for DHT and Hawaii Tours and Transportation to be considered joint employers.
Defendants also seek dismissal on the basis that Hawaii Tours and Transportation and DHT are not alter egos and that the Complaint fails to set forth sufficient factual allegations to allow the EEOC to pierce the corporate veil. The Court agrees.
"Generally speaking, a corporation will be deemed the alter ego of another `where recognition of the corporate fiction would bring about injustice and inequity or when there is evidence that the corporate fiction has been used to perpetrate a fraud or defeat a rightful claim.'" Hillhouse v. Hawaii Behavioral Health, LLC, 2015 WL 3448706, at *3 (D. Haw. May 29, 2015) (quoting Robert's Haw. Sch. Bus, Inc. v. Laupahoehoe Transp. Co., 91 Haw. 224, 241, 982 P.2d 853, 870 (1999)). Robert's set forth the legal standard for establishing alter ego liability—
Robert's, 91 Hawai`i at 241-43, 982 P.2d at 870-72 (citations omitted) (some alterations in Robert's).
Although the Complaint alleges that Malagon was the "sole partner, president, treasurer, and director" of DHT, Complaint ¶ 9, and that his spouse, Danielle Diamond, was the owner of Hawaii Tours and Transportation, Complaint ¶ 9, it does not allege that Diamond or Hawaii Tours and Transportation "influenced or governed" Malagon or DHT, or that Diamond or Hawaii Tours and Transportation had "parental control of [DHT's] internal affairs or daily operations." Ranza v. Nike, Inc., 793 F.3d 1059, 1073 (9th Cir. 2015). To the contrary, the EEOC alleges that Malagon and/or DHT de facto controlled Hawaii Tours and Transportation: "Malagon controlled the operations of Hawaii Tours and Transportation Inc., including the authority to hire/fire employees." Complaint ¶ 9. To be clear, the Complaint fails to allege facts that Hawaii Tours and Transportation was a parent corporation of DHT, was a shareholder of DHT, or had any ownership interest in DHT, or that DHT was a subsidiary of Hawaii Tours and Transportation. Because the Complaint alleges that Malagon was the "sole partner . . . and director of [DHT]," Complaint ¶ 9, the EEOC has not plausibly alleged that Hawaii Tours and Transportation is the alter ego of DHT.
In sum, as currently pled, the factual allegations in the Complaint are not sufficient to establish that either Hawaii Tours and Transportation or Big Kahuna was an employer of any claimant, and Defendants' Motion is granted. Because amendment may be possible, dismissal is with leave to amend.
Because amendment of the claims and parties dismissed by this Order may be possible, the Commission is granted leave to amend to address the deficiencies identified herein, by no later than November 3, 2017. Should it choose to amend the dismissed causes of action as to any claimant and/or Defendant, the Commission must allege additional facts as to each element required to state a claim. The Court cautions the EEOC to carefully consider whether it can allege facts stating a cognizable claim on behalf of any claimant, and as to each Defendant, in any amended complaint it considers filing with this Court.
For the foregoing reasons, Defendants' Motion to Dismiss is GRANTED. The EEOC is granted leave to file an amended complaint to attempt to cure the deficiencies noted in this Order by November 3, 2017.
IT IS SO ORDERED.
See Robert's, 91 Hawai`i at 241-43, 982 P.2d at 870-72 (citations omitted).
