United States District Court, W.D. Virginia, Roanoke Division
Elizabeth K. Dillon Elizabeth K. Dillon United States
Virginia Transformer Corp. (VTC) asserts claims against one
of its former salespeople, defendant Alexander Ebbert. VTC
filed suit in state court, asserting a breach of contract
claim. Ebbert filed a counterclaim that included federal
claims (a race discrimination and retaliation claim under 42
U.S.C. § 1981) and a breach of contract claim; he then
removed the case to this court. He later amended,
it is his first amended counterclaim (Dkt. No. 13) that is
the operative counterclaim.
before the court are two motions, which were fully briefed
and were argued before the court. The first is VTC's
motion to dismiss the first amended counterclaim in its
entirety, which asserts several different grounds for
dismissal. (Dkt. No. 16.) The second is Ebbert's motion
for leave to file a second amended counterclaim. (Dkt. No.
23.) In it, Ebbert seeks leave to amend his counterclaim to
add what the parties refer to collectively as the
“Title VII Counterclaims.” The eight proposed
Title VII Counterclaims consist of a discrimination claim and
a separate retaliation claim on four separate grounds: race
(Caucasian), religion (Jewish), national origin (American),
and sex (gay). VTC opposes allowing amendment (Dkt. No.
24) and argues that amendment would be futile.
response to the futility arguments and at the hearing, Ebbert
requested that, if the court were to deny the motion for
leave to amend, he be permitted to file a new amended
counterclaim (which has not yet been provided to the court).
court has considered the arguments of the parties and their
briefing, and sets forth its rulings below.
STANDARDS OF REVIEW
regard to Ebbert's motion to amend, Federal Rule of Civil
Procedure 15(a) directs that leave to amend a complaint
“shall be freely given when justice so requires.”
The court should only deny leave to amend a pleading
“when the amendment would be prejudicial to the
opposing party, there has been bad faith on the part of the
moving party, or the amendment would be futile.”
Edwards v. City of Goldsboro, 178 F.3d 231, 242 (4th
Cir. 1999) (quoting Johnson v. Oroweat Foods Co.,
785 F.2d 503, 509 (4th Cir. 1986)).
VTC contends that amendment would be futile, arguing that
none of the claims in the proposed second amended
counterclaim could survive a Rule 12(b)(6) motion to
dismiss.To survive such a motion, a plaintiff's
allegations must “state a claim to relief that is
plausible on its face.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). This standard
“requires the plaintiff to articulate facts, when
accepted as true, that ‘show' that the plaintiff
has stated a claim entitling him to relief, i.e.,
the ‘plausibility of entitlement to relief.'”
Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir.
2009) (quoting Iqbal, 556 U.S. at 678). The
plausibility standard requires more than “a sheer
possibility that a defendant has acted unlawfully.”
Iqbal, 556 U.S. at 678.
determining whether Ebbert has met this plausibility
standard, the court must accept as true all well-pleaded
facts in the complaint and any documents incorporated into or
attached to it. Sec'y of State for Defence v. Trimble
Navigation Ltd., 484 F.3d 700, 705 (4th Cir. 2007).
Further, it must “draw all reasonable factual
inferences from those facts in [Ebbert's] favor, ”
Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th
Cir. 1999), but it “need not accept legal conclusions
couched as facts or ‘unwarranted inferences,
unreasonable conclusions, or arguments, '” Wag
More Dogs, LLC v. Cozart, 680 F.3d 359, 365 (4th Cir.
2012) (quoting Giarratano v. Johnson, 521 F.3d 298,
302 (4th Cir. 2008)).
Exhaustion of Title VII Counterclaims
regard to the Title VII Counterclaims, VTC opposes the motion
to amend to add those claims on the grounds that amendment is
futile. In addition to arguing that each claim is subject to
dismissal under Rule 12(b)(6) for failure to state a claim,
VTC also contends that those claims cannot be considered by
this court because-despite the EEOC's issuance of a
right-to-sue letter-the right-to-sue letter was issued less
than 180 days after Ebbert filed his charge of
discrimination. Specifically, he filed his charge “in
January 2018, ” (Dkt. No. 13 at 1 n.1), and the EEOC
issued its notice of right-to-sue on July 17, 2018. The
parties have not identified the exact date that he filed his
charge, but because the notice itself indicates that less
than 180 days have passed, he presumably filed his charge
after January 17, 2018. VTC argues that, because the EEOC did
not retain authority over his underlying charges for the
statutory period of 180 days, as set forth in 42 U.S.C.
§ 2000e-5(f)(1), those claims have not been
administratively exhausted and must be dismissed.
court noted in its recent opinion in Hardy v Lewis Gale
Medical Center, 7:18-cv-218, ECF No. 49, at 11- 19 (Mar.
19, 2019 Amended Mem. Op. & Order), as amended
(Mar. 27, 2019), which addressed this same issue, there is a
split of authority as to whether courts can consider claims
in a case where the EEOC issued its right-to-sue notice prior
to the expiration of the 180-day statutory period EEOC has to
resolve the claims. Id. at 12. In large part, the
issue turns on whether or not the EEOC's regulation on
this issue, 29 C.F.R. § 1601.28(a)(2), which purports to
give authority to the EEOC to issue early right-to-sue
notices, is a valid exercise of EEOC's rule-making
Hardy, this court concluded that EEOC's
regulation was not entitled to deference and could not alter
the statutory scheme, and thus that EEOC was not permitted to
issue right-to-sue notices earlier than 180 days. The court
incorporates its reasoning in Hardy and reaches the
same result here. Accordingly, because Ebbert received his
right-to-sue notice less than 180 days after filing his
charge, that notice is ineffective to constitute a complete
exhaustion of ...