Lee Williams v. Tech Mahindra Americas Inc ( 2023 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
Nos. 21-1365 & 21-1394
____________
LEE WILLIAMS, individually and in his representative
capacity,
Appellant
v.
TECH MAHINDRA (AMERICAS) INC.
____________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. No. 3-20-cv-04684)
District Judge: Honorable Brian R. Martinotti
____________
Argued: December 14, 2021
Before: GREENAWAY, JR., KRAUSE, and PHIPPS,
Circuit Judges.
(Filed: June 14, 2023)
____________
Mark A. Hammervold [ARGUED]
Daniel Kotchen
KOTCHEN & LOW
1918 New Hampshire Avenue, N.W.
Washington, DC 20009
Counsel for Appellant
Kenneth Gage [ARGUED]
Daniel Richards
PAUL HASTINGS
200 Park Avenue
30th Floor
New York, NY 10166
Counsel for Appellee
_______________________
OPINION OF THE COURT
_______________________
PHIPPS, Circuit Judge.
In this putative class action, a fired employee sues his
former employer alleging a pattern or practice of race
discrimination against non-South Asians in violation of
42 U.S.C. § 1981. The employee had previously attempted to
join another class action against the company but after that case
was stayed, he filed this suit – years after his termination.
The employer moved to dismiss the complaint under Rule
12(b)(6) as untimely. In response, the employee conceded that
the relevant statutes of limitations had expired, and instead he
resorted to two forms of tolling: wrong-forum and American
Pipe.
The District Court concluded that American Pipe tolling
did not allow the employee to commence a successive class
action, and the employee does not contest that ruling. But the
District Court dismissed the complaint without considering the
applicability of wrong-forum tolling. On de novo review, that
was error: the unavailability of American Pipe tolling does not
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inherently preclude wrong-forum tolling. And because tolling
is appropriately addressed by district courts in the first
instance, we will vacate the dismissal order and remand the
case to the District Court.
I. FACTUAL ALLEGATIONS AND
PROCEDURAL HISTORY
Tech Mahindra (Americas), Inc. is an information
technology company incorporated in New Jersey and wholly
owned by a like-named major Indian corporation. Tech
Mahindra has over 5,000 employees across approximately 25
offices in the United States, including several offices in New
Jersey. The company’s workforce consists of about 90% South
Asians although that group comprises only 1–2% of the United
States population and around 12% of the relevant labor market.
In addition, Tech Mahindra annually applies for and receives
approvals for thousands of H-1B visas. It uses those visas,
which permit hiring foreign workers for specialty occupations,
to staff a significant percentage of its labor force with South
Asians.
In May 2014, Tech Mahindra hired Lee Williams, a
Caucasian American. The following month, Williams began
working in the company’s Columbus, Ohio office as a
Regional Manager and Senior Director of Business
Development. He was one of only two non-South Asians in
his sales group, and he reported to a South Asian supervisor.
During his time with Tech Mahindra, Williams also attended
three of the company’s regional conferences, where the
majority of attendees were South Asian and where Hindi was
often spoken to his exclusion.
Williams’s tenure with the company was short-lived. In
June 2015, his manager informed him that because he was not
meeting his sales goals, he would be placed on a sixty-day
performance improvement plan. Then, on August 19, 2015,
Tech Mahindra terminated his employment.
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As a non-South Asian fired by Tech Mahindra, Williams
was a member of a putative class action against the company
for claims of racial discrimination. See Grant v. Tech
Mahindra (Americas), Inc., 2019 WL 7865165, at *1 (D.N.D.
Dec. 5, 2019) (identifying the claims brought by the putative
class). That suit was filed by another former Tech Mahindra
employee, Roderick Grant, on August 10, 2018, in federal
court in North Dakota. Tech Mahindra originally moved to
dismiss Grant’s claims, but it withdrew that motion to seek to
compel Grant to arbitrate. Grant opposed that motion and, on
June 5, 2019, sought leave to amend his complaint to add
Williams as a named plaintiff. On February 6, 2020, the
district court in North Dakota granted Tech Mahindra’s motion
to compel individual arbitration, denied Grant’s motion for
leave to amend, and stayed the case. See Grant v. Tech
Mahindra (Americas), Inc., 2020 WL 589529, at *1 (D.N.D.
Feb. 6, 2020).
Williams then filed this putative class action on April 21,
2020 – approximately four years and eight months after his
employment with Tech Mahindra ended. Invoking the
jurisdiction of the United States District Court for the District
of New Jersey, see 28 U.S.C. § 1331, he brought a single claim
for disparate treatment on the basis of race under 42 U.S.C.
§ 1981, seeking class-wide relief. Williams’s claim alleged
that Tech Mahindra engaged in a pattern or practice of racial
discrimination against its non-South Asian employees and
applicants that extended to the company’s hiring, staffing,
promotion, and termination practices.
As it did in Grant’s case, Tech Mahindra moved to dismiss
Williams’s complaint. It did so on three grounds: lack of
Article III standing; failure to allege a plausible claim of race
discrimination; and untimeliness under the statute of
limitations. Williams defended his standing and the
plausibility of his allegations, but he did not deny that the
longest applicable statute of limitations, four years, had already
expired. See 28 U.S.C. § 1658(a). Instead, he argued that the
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statute of limitations should be tolled on two distinct theories:
wrong-forum tolling and American Pipe tolling, see Am. Pipe
& Constr. Co. v. Utah, 414 U.S. 538 (1974).
The District Court rejected several of Tech Mahindra’s
arguments, but it ultimately granted the motion and dismissed
Williams’s complaint without prejudice. It concluded that
Williams had standing and that he was likely a member of the
putative class in the Grant action. Next, in evaluating the
timeliness of Williams’s claim, the District Court considered
American Pipe tolling, under which the filing of a putative
class action suspends the statute of limitations for absent class
members’ individual claims. See Crown, Cork & Seal Co. v.
Parker, 462 U.S. 345, 353–54 (1983); 3 William B.
Rubenstein, Newberg and Rubenstein on Class Actions § 9:53
(6th ed. 2022). But in recognizing that the Supreme Court in
China Agritech, Inc. v. Resh, 138 S. Ct. 1800 (2018), had
declined to extend American Pipe tolling to successive class
actions, the District Court determined that Williams could not
maintain a class action. As for his remaining individual action,
Williams had to plead that but for his race he would not have
suffered the loss of any legal interests protected by § 1981. See
Comcast Corp. v. Nat’l Ass’n of Afr. Am.-Owned Media,
140 S. Ct. 1009, 1019 (2020); Carvalho-Grevious v. Del. State
Univ., 851 F.3d 249, 256–58 (3d Cir. 2017). And, upon
considering Williams’s complaint, the District Court
determined that it did not plausibly allege but-for causation on
an individual basis. Accordingly, it dismissed Williams’s
claim without prejudice. Instead of amending his pleading,
Williams elected to stand on his complaint and appeal, which
triggered this Court’s appellate jurisdiction. See 28 U.S.C.
§ 1291; Weber v. McGrogan, 939 F.3d 232, 240 (3d Cir. 2019).
II. DISCUSSION
Williams’s principal contention on appeal is that the
District Court erred by dismissing his class action as untimely
without addressing his wrong-forum tolling argument. In
response, Tech Mahindra asserts that the ground on which the
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District Court rejected American Pipe tolling – the Supreme
Court’s decision in China Agritech – also bars wrong-forum
tolling. But Tech Mahindra overreads China Agritech, which
was a “clarification of American Pipe’s reach,” not a broad
holding announcing a limit on other traditional forms of
equitable tolling. China Agritech, 138 S. Ct. at 1810; see also
Blake v. JP Morgan Chase Bank NA, 927 F.3d 701, 709 (3d
Cir. 2019) (“China Agritech is clear and unequivocal: courts
may not toll new class actions under American Pipe, period.”).
See generally D.J.S.-W. ex rel. Stewart v. United States,
962 F.3d 745, 750 (3d Cir. 2020) (identifying three traditional
forms of equitable tolling: deception tolling, extraordinary-
circumstances tolling, and wrong-forum tolling).
Nor do the rationales in China Agritech for precluding the
application of American Pipe tolling to successive class actions
extend to wrong-forum tolling. The rule of China Agritech
serves several salutary purposes: it discourages duplicative
lawsuits, promotes fairness to both sides, and avoids the
perpetual stacking of repetitive claims. See Blake, 927 F.3d at
709. But allowing traditional equitable tolling in the class
action context does not undermine the force of China
Agritech’s limitation on American Pipe. That is so because to
benefit from one of the traditional forms of equitable tolling, a
plaintiff must make individualized showings that he pursued
his claim with diligence and that extraordinary circumstances
beyond his control prevented a timely and proper assertion of
his rights. See Menominee Indian Tribe of Wis. v. United
States, 577 U.S. 250, 255–57 (2016); Doherty v. Teamsters
Pension Tr. Fund of Phila. & Vicinity, 16 F.3d 1386, 1394 (3d
Cir. 1994) (holding that while not every “poor choice by a
lawyer or law firm that lands a party in the wrong forum merits
equitable tolling[,] . . . some mistakes in extraordinary
circumstances merit forbearance”).
Equitable tolling of a class action therefore would not be
permitted when a plaintiff “could have sought lead-plaintiff
status or brought his own claim” but made no effort to do so
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until after the limitations period had expired. Blake, 927 F.3d
at 709. For the same reason, traditional equitable tolling will
not permit “class claimants [to] stack their claims forever” or
“breed duplicative lawsuits . . . after class certification was
denied,” id., because outside the American Pipe context, a lack
of diligence in timely asserting one’s rights (or the absence of
extraordinary circumstances beyond the litigant’s control) is
fatal to a request for equitable tolling, see China Agritech,
138 S. Ct. at 1808; Menominee, 577 U.S. at 255–57.
Accordingly, the reasons for not extending American Pipe
tolling to class claims do not negate the application of
traditional forms of equitable tolling in that context.
Thus, it was error for the District Court to dismiss
Williams’s class action allegations as untimely without
considering wrong-forum tolling. And because the application
of equitable tolling is normally a matter reserved to the sound
discretion of the district court, we will vacate the District
Court’s judgment and remand the case without retaining
jurisdiction. See Doherty, 16 F.3d at 1394; Island Insteel Sys.,
Inc. v. Waters, 296 F.3d 200, 218 (3d Cir. 2002).
Tech Mahindra argues against this outcome. It contends
that the Supreme Court’s decision in Comcast, which
underscores the need for § 1981 plaintiffs to establish but-for
causation, demonstrates that Williams was required to plead
but-for causation on an individual basis to overcome a motion
to dismiss. 140 S. Ct. at 1019 (“To prevail, a plaintiff must
initially plead and ultimately prove that, but for race, it would
not have suffered the loss of a legally protected right.”). It is
certainly true that, as the Supreme Court held in Comcast, for
a plaintiff to prevail on a § 1981 claim he must prove that but
for his race, he would not have been discriminated against in
the making or enforcing of contracts. Id. at 1019. But Comcast
was neither an employment discrimination case nor a class
action, see id. at 1013, and therefore it does not impinge in the
least on the indirect methods of proof formulated by the
Supreme Court for employment discrimination claims under
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Title VII of the Civil Rights Act of 1964. And those methods
of proof, such as the McDonnell Douglas burden-shifting
framework for individual actions or the Teamsters pattern-or-
practice approach for class actions, may be applied to claims
under § 1981 for employment discrimination when the
methods of proof were formulated “in a context where but-for
causation was the undisputed test.” Comcast, 140 S. Ct. at
1019; Int’l Bhd. of Teamsters v. United States, 431 U.S. 324,
362 (1977) (“The proof of the pattern or practice supports an
inference that any particular employment decision, during the
period in which the discriminatory policy was in force, was
made in pursuit of that policy.” (emphasis added)); see, e.g.,
Patterson v. McLean Credit Union, 491 U.S. 164, 186–88
(1989) (applying McDonnell Douglas to an individual § 1981
claim); 1 cf. Carvalho-Grevious, 851 F.3d at 257 (explaining
that the but-for causation standard for retaliation claims under
Title VII “does not conflict with [the] continued application of
the McDonnell Douglas paradigm” (internal quotation marks
omitted)). Consequently, at the motion-to-dismiss stage,
plausible allegations of the essential components of an indirect
method of proof will suffice for stating the elements, including
but-for causation, of a disparate treatment claim based on race
under § 1981. See Martinez v. UPMC Susquehanna, 986 F.3d
261, 266 (3d Cir. 2021) (“To defeat a motion to dismiss, it is
sufficient to allege a prima facie case.”).
Tech Mahindra counters that Williams conceded his ability
to obtain class-wide relief by not disputing the District Court’s
holding that he failed to plead but-for causation on an
individual basis. See Zimmerman v. HBO Affiliate Grp.,
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See also Burgis v. N.Y.C. Dep’t of Sanitation, 798 F.3d 63, 69
(2d Cir. 2015) (holding that the pattern-or-practice method is
available under § 1981); Rutstein v. Avis Rent-A-Car Sys., Inc.,
211 F.3d 1228, 1237 (11th Cir. 2000) (“Teamsters applies in
employment discrimination cases brought under section 1981
to the same degree that it applies in cases brought under Title
VII.”).
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834 F.2d 1163, 1169 (3d Cir. 1987) (“It is well settled that to
be a class representative on a particular claim, the plaintiff
must himself have a cause of action on that claim.”). But the
allegations required of a plaintiff at the pleading stage of a case
depend on what that plaintiff “must prove in the trial at its end.”
Comcast, 140 S. Ct. at 1014. So, to determine the allegations
needed for a complaint to survive a motion to dismiss, it is
necessary to “work backwards from the endgame.” Martinez,
986 F.3d at 265. And unlike individual claims, the liability
phase in a pattern-or-practice case does not focus on “the
reason for a particular employment decision, . . . but on a
pattern of discriminatory decisionmaking.” Cooper v. Fed.
Rsrv. Bank of Richmond, 467 U.S. 867, 876 (1984) (quoting
Teamsters, 431 U.S. at 360 n.46); see also Hohider v. United
Parcel Serv., Inc., 574 F.3d 169, 178–79 (3d Cir. 2009).
Accordingly, a class plaintiff’s burden in making out a
prima facie case of discrimination is different from that of an
individual plaintiff “in that the [former] need not initially show
discrimination against any particular present or prospective
employee,” including himself. United States v. City of New
York, 717 F.3d 72, 84 (2d Cir. 2013). As a result, Williams
was not required to plead but-for causation on an individual
basis to avoid dismissal given the availability of the pattern-or-
practice method of proof at later stages of the case. See
Swierkiewicz v. Sorema N.A., 534 U.S. 506, 511–12 (2002)
(refusing to require a disparate-treatment plaintiff “to plead
more facts than he may ultimately need to prove to succeed on
the merits” of his claim); see also In re Ins. Brokerage Antitrust
Litig., 618 F.3d 300, 324 n.24 (3d Cir. 2010) (cautioning that a
plaintiff cannot be forced to “commit to a single method of
proof at the pleading stage”); Connelly v. Lane Const. Corp.,
809 F.3d 780, 788 (3d Cir. 2016) (same). Under these
principles, as long as Williams’s complaint plausibly alleges a
prima facie case under the pattern-or-practice method, his
§ 1981 claim cannot be dismissed on the ground that he failed
to plead that race was the but-for cause of any individual class
member’s injury, including his own.
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III. CONCLUSION
For these reasons, we will vacate the District Court’s order
and remand the case for the District Court to consider whether
wrong-forum tolling applies and/or whether Williams has
plausibly pleaded a prima facie pattern-or-practice claim.
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