Karen Roof v. Bel Brands USA, Inc.

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 16a0084n.06
Case No. 15-5105
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
FILED
Feb 08, 2016
KAREN ROOF, ) DEBORAH S. HUNT, Clerk
)
Plaintiff-Appellant, )
) ON APPEAL FROM THE UNITED
v. ) STATES DISTRICT COURT FOR
) THE WESTERN DISTRICT OF
BEL BRANDS USA, INC.; HYRUM ) KENTUCKY
HORN, )
)
Defendants-Appellees. )
)
BEFORE: KEITH, CLAY, and WHITE, Circuit Judges.
PER CURIAM. Karen Roof (“Roof”) filed suit against her employer, Bel Brands USA,
Inc. (“Bel Brands”) in Kentucky state court alleging age and sex discrimination in violation of
the Kentucky Civil Rights Act (“KCRA”), Ky. Rev. Stat. Ann. § 344.040 (Banks-Baldwin 2001),
promissory estoppel, negligent hiring, retaliation under § 344.280, and civil conspiracy. Roof
also joined the age and sex discrimination, retaliation, and civil-conspiracy claims against a non-
diverse defendant, Hyrum Horn (“Horn”). Bel Brands removed the action to federal court on the
basis of diversity jurisdiction. 28 U.S.C. § 1332(a). Thereafter, Roof moved to remand the case
back to state court and Bel Brands moved for dismissal. The district court denied Roof’s motion
to remand and granted Bel Brands’ motion to dismiss. Roof then brought a motion to vacate,
which the district court also denied. Roof now challenges both the district court’s denial of her
motion to vacate the remand order and the court’s grant of Bel Brands’ motion to dismiss. We
agree with the district court’s disposition of the case, except we conclude that Roof’s sex-
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discrimination claim should not have been dismissed at this early stage of the proceedings.
Accordingly, we REVERSE only the district court’s dismissal of Roof’s sex-discrimination
claim, we AFFIRM in all other respects, and we REMAND the case for further proceedings
consistent with this opinion.
I.
BACKGROUND
Roof is a Kentucky resident and Bel Brands is a Wisconsin corporation with its principal
place of business in Chicago, Illinois. Roof has worked in various capacities since joining Bel
Brands in 1995.
In 2009, Bel Brands started using a computer system for inventory control. Roof and
another employee were responsible for all aspects of running this system. This caused Roof’s
workload to increase. At some point, Roof went to her employer and asked for a raise, which
was denied. In 2012, Bel Brands hired Horn as a supply chain manager. Horn created a
coordinator position, even though the new position included the duties Roof already performed.
Indeed, when Roof asked Horn if she could apply for this role, Horn responded that “there is no
reason you will not get it because you are already doing the job.” (R. 1-2, Complaint, PageID#
21, ¶ 43).
In 2013, Bel Brands laid off several of its employees, including a warehouse supervisor.
Bel Brands then advertised to fill the empty role. Roof asked Horn if she should apply for the
job and Horn responded “go for it.” (Id. at 22, ¶ 51). But Bel Brands instead hired Rod Inman
for the position and instructed Roof to train him. Horn assured Roof that he expected her to fill a
supervisor position by December 2013.
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Horn told Tiffany Overstreet, one of Roof’s co-workers, that Roof had applied for the
warehouse supervisor position. This caused Overstreet to become aggressive toward Roof,
leading to tension in the workplace. Roof voiced her concerns to Horn. Following a meeting
between Roof, Overstreet, Horn, Inman, and other human resources staff, Horn explained to
Roof that she was disqualified from being considered for a coordinator position. Eventually, Bel
Brands hired Paul Myers for the coordinator position.
Roof filed a complaint in Kentucky state court against Bel Brands, alleging age and sex
discrimination, promissory estoppel, negligent hiring, retaliation, and civil conspiracy. She also
joined age and sex discrimination, retaliation, and civil-conspiracy claims against Horn, a
Kentucky resident. Bel Brands removed this action to federal court on the theory that Roof had
fraudulently joined Horn in order to defeat federal jurisdiction. Roof moved the district court,
pursuant to 28 U.S.C. § 1447(c), to remand the case back to state court. And Bel Brands moved
for dismissal for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6). The district court
denied Roof’s motion to remand and granted Bel Brands’ motion to dismiss. Roof then brought
a motion to vacate the judgment pursuant to Fed. R. Civ. P. 59(e), which the district court also
denied.
On appeal, we consider two questions: (1) whether the district court erred in denying
Roof’s motion to vacate the remand order, and (2) whether the district court erred in granting Bel
Brands’ motion to dismiss.
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II.
DISCUSSION
Standard of Review
We review the denial of a Rule 59(e) motion for an abuse of discretion. Perez v. Aetna
Life Ins. Co., 150 F.3d 550, 554 (6th Cir. 1998) (en banc). A court abuses its discretion when it
“relies on clearly erroneous findings of fact or when it improperly applies the law.” Nolfi v.
Ohio Kentucky Oil Corp., 675 F.3d 538, 552 (6th Cir. 2012). “We review de novo a district
court’s order granting a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6).”
Mik v. Fed. Home Loan Mortg. Corp., 743 F.3d 149, 156 (6th Cir. 2014). In so doing, “[w]e
must construe the complaint in the light most favorable to the plaintiff and accept all allegations
as true.” Keys v. Humana, Inc., 684 F.3d 605, 608 (6th Cir. 2012).
Analysis
1. Roof’s Motion to Vacate the Remand Order
Roof argues that this action should be adjudicated in state court. She claims that the
district court erred in denying her motion to remand because she pleaded a viable cause of action
against a non-diverse defendant. Roof therefore asserts that the district court lacked subject
matter jurisdiction to hear her claims because complete diversity between the parties did not exist
at the time of removal. We disagree.
In reviewing the denial of a motion to remand a case to state court, we “determine
whether the action was properly removed in the first place.” Ahearn v. Charter Township of
Bloomfield, 100 F.3d 451, 453 (6th Cir. 1996) (citing Fakouri v. Pizza Hut of Am., Inc., 824 F.2d
470, 472 (6th Cir. 1987)). When removal is based on diversity grounds, “we must determine
whether complete diversity exists at the time of removal.” Coyne v. Am. Tobacco Co., 183 F.3d
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488, 492 (6th Cir. 1999). Diversity jurisdiction exists only when “all parties on one side of the
litigation are of a different citizenship from all parties on the other side of the litigation.” SHR
Ltd. P’ship v. Braun, 888 F.2d 455, 456 (6th Cir. 1989). Therefore, a party “seeking to bring a
case into federal court carries the burden of establishing diversity jurisdiction.” Certain
Interested Underwriters at Lloyd’s London, England v. Layne, 26 F.3d 39, 41 (6th Cir. 1994).
Fraudulent joinder of a non-diverse defendant does not defeat removal based upon
diversity jurisdiction. Coyne, 183 F.3d at 493 (citing Alexander v. Elec. Data Sys. Corp.,
13 F.3d 940, 949 (6th Cir. 1994)). To prove fraudulent joinder, the removing party must show
that the plaintiff cannot establish a cause of action against the non-diverse defendant. Id.
However, “if there is a colorable basis for predicting that a plaintiff may recover against non-
diverse defendants, this Court must remand the action to state court.” Id. Further, “[a]ny
disputed questions [of] fact and ambiguities in the controlling state law [should be resolved] . . .
in favor of the nonremoving party.” Alexander, 13 F.3d at 949 (third and fourth alterations in
original) (citation and internal quotation marks omitted).
The district court properly concluded that Roof could not have established a cause of
action against the non-diverse defendant under Kentucky state law, thereby permitting removal
of this action to federal court. The district court therefore did not abuse its discretion when it
denied Roof’s Rule 59(e) motion.
First, the district court correctly dismissed the age and sex discrimination claims as to
Horn because individual employees cannot be held liable under the KCRA. That act defines an
“employer” as “a person who has eight (8) or more employees . . . and an agent of such a
person.” Ky. Rev. Stat. Ann. § 344.030(2). Since the KCRA is modeled closely on Title VII of
the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., federal “decisions regarding the federal
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provision are most persuasive, if not controlling, in interpreting the [KCRA].” White v. Rainbo
Baking Co., 765 S.W.2d 26, 28 (Ky. Ct. App. 1988) (citation and internal quotation mark
omitted). We have previously held that an “individual employee/supervisor, who does not
otherwise qualify as an ‘employer,’ may not be held personally liable under Title VII” and have
applied the same analysis to the KCRA. Wathen v. Gen. Elec. Co., 115 F.3d 400, 405 (6th Cir.
1997). Because Horn is an employee/supervisor and not an employer, he would not be
personally liable for a violation of § 344.040. See id.
Second, although an individual can be held liable for retaliation under the KCRA, Morris
v. Oldham Cty. Fiscal Ct., 201 F.3d 784, 793-94 (6th Cir. 2000), the district court correctly
found that Roof’s allegations failed to support a retaliation claim. To show retaliation under the
KCRA, Roof must show that: “(1) [s]he . . . engaged in protected activity, (2) the employer
knew of the exercise of the protected right, (3) an adverse employment action was subsequently
taken against [her], and (4) there was a causal connection between the protected activity and the
adverse employment action.” Hamilton v. Gen. Elec. Co., 556 F.3d 428, 435 (6th Cir. 2009)
(second alteration in original).
Claims under the KCRA are analyzed similarly to claims under Title VII. Id. As we
discussed in Johnson v. University of Cincinnati, the Equal Employment Opportunity
Commission has given examples of what it considers to be protected activity. 215 F.3d 561, 579
(6th Cir. 2000). For example, complaining about allegedly unlawful practices and refusing to
obey orders believed to be unlawful under Title VII are protected activities for Title VII
purposes. Id.
In her complaint, Roof alleges that Horn retaliated against her after she complained about
Overstreet’s aggressive behavior towards her. We conclude that Roof’s discussion with Horn is
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not protected activity under the KCRA and, therefore, Roof has failed to establish a claim of
retaliation. Specifically, Roof’s statements to Horn are not protected because they did not
amount to opposition to an unlawful employment practice by Horn. For this reason, Roof could
not have established a cause of action for retaliation against Horn under Kentucky law.
Third, the district court properly dismissed Roof’s civil-conspiracy claim. As we have
previously explained, “[i]n Kentucky, civil conspiracy is not a free-standing claim; rather, it
merely provides a theory under which a plaintiff may recover from multiple defendants for an
underlying tort.” Christian Cty. Clerk ex rel. Kem v. Mortg. Elec. Registration Sys., Inc., 515 F.
App’x 451, 458-59 (6th Cir. 2013). Roof’s civil-conspiracy claim is based on Horn’s alleged
violations of law as discussed above. However, as Roof has no remaining claims against Horn,
her civil-conspiracy claim against him cannot survive as a matter of law.
In sum, the district court correctly found that Bel Brands met its heavy burden of proving
that there is not even “arguably a reasonable basis for predicting that [Kentucky] law might
impose liability” on Horn, the non-diverse defendant. Alexander, 13 F.3d at 949. Therefore, the
district court properly denied Roof’s motion to remand.
2. Bel Brands’ Motion to Dismiss
As discussed above, we agree with the district court’s dismissal of most of Roof’s claims
largely for the reasons it explained. With respect to Roof’s claim for sex discrimination,
however, we will vacate and remand for further proceedings.
a. The Sex-Discrimination Claim
In count I of her complaint, Roof alleges that she was denied a promotion because of her
sex in violation of the KCRA. Because the KCRA mirrors Title VII, we use the federal
standards for evaluating sex-discrimination claims. See Smith v. Leggett Wire Co., 220 F.3d 752,
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758 (6th Cir. 2000) (noting that claims under the KCRA are evaluated under the same standards
as federal discrimination claims). As we recently explained, a plaintiff is not required to plead
all elements of a prima facie case of discrimination in order to survive a motion to dismiss.
Keys, 684 F.3d at 609-10. Rather, a plaintiff must satisfy the plausibility standard of Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009), and Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).
This was our holding in Keys, supra, which applied Swierkiewicz v. Sorema N.A.1 to Iqbal and
Twombly and concluded that the district court improperly required the plaintiff to plead all
elements of a prima facie discrimination case to state a claim. Keys, 684 F.3d at 609-10. As
explained in Keys:
Federal Rule of Civil Procedure 8(a)(2) requires only “a short and plain statement
of the claim showing that the pleader is entitled to relief.” “Specific facts are not
necessary; the statement need only give the defendant fair notice of what the . . .
claim is and the grounds upon which it rests.” Erickson v. Pardus, 551 U.S. 89,
93, 127 S. Ct. 2197, 167 L. Ed. 2d 1081 (2007) (internal quotation marks omitted)
(quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167
L. Ed. 2d 929 (2007)). However, “[f]actual allegations must be enough to raise a
right to relief above the speculative level” and to “state a claim to relief that is
plausible on its face.” Twombly, 550 U.S. at 555, 570, 127 S. Ct. 1955. A
plaintiff must “plead[ ] factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009).
Keys, 684 F.3d at 608 (alterations in original).
Title VII and the KCRA make it unlawful for an employer to discriminate against an
employee on the basis of sex. 42 U.S.C. § 2000e–2(a); Ky. Rev. Stat. Ann. § 344.040(1)(a).
Roof’s complaint asserts that Bel Brands failed to promote her and failed to raise her pay, in
spite of her repeated requests, increased workload, and demonstrated qualifications for the
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534 U.S. 506, 511-12 (2002) (holding that plaintiffs alleging discriminatory treatment
are not required to plead facts establishing a prima facie case under McDonnell Douglas Corp. v.
Green, 411 U.S. 792 (1973), in part because its burden-shifting framework does not apply in
every discrimination case).
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positions. She also asserts that a male was promoted in her place, whom Roof then trained on
how to perform some crucial aspects of the job. While there is no doubt that Roof’s complaint is
not the most artfully drafted pleading, we nonetheless find that her complaint is sufficient on its
face under Iqbal and Twombly—especially when viewed in a light most favorable to Roof.
Roof’s complaint contains “sufficient factual content from which a court, informed by its judicial
experience and common sense, could draw the reasonable inference” that Bel Brands
discriminated against Roof because of her sex. See Keys, 684 F.3d at 610 (citation and internal
quotation marks omitted). We therefore conclude that the district court erred in dismissing her
sex-discrimination claim.
b. The Remaining Claims
Roof’s remaining claims—i.e., age discrimination, promissory estoppel, negligent hiring,
retaliation, and civil-conspiracy—were properly dismissed for the reasons fully explained by the
district court.
First, Roof has not alleged sufficient facts to support her claim of age discrimination.
Roof’s complaint does not allege, for example, that Myers or Inman—the employees who were
ultimately placed in the positions Roof sought—are in fact younger than she. And, while Roof
states that she is forty years of age, she provides no facts from which the district court could
determine that her age had something to do with why she was not promoted. We are “not
required to accept inferences drawn by [Roof] if those inferences are unsupported by the facts
alleged in the complaint.” Sam Han v. Univ. of Dayton, 541 F. App’x 622, 627 (6th Cir. 2013).
Moreover, “factual allegations must do more than create speculation or suspicion; they must
show entitlement to relief.” Id. (citing Twombly, 550 U.S. at 553-54). Roof’s allegations simply
lack the factual basis necessary to show entitlement to relief for age discrimination.
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Second, Roof asserts a promissory-estoppel claim based on Bel Brands’ promise to
promote her to a supervisory position. Under Kentucky law, promissory estoppel requires “[a]
promise which the promisor should reasonably expect to induce action or forbearance on the part
of the promisee . . . and which does induce such action or forbearance.” Sawyer v. Mills,
295 S.W.3d 79, 80 (Ky. 2009) (citation and internal quotation mark omitted). As the district
court correctly observed, Roof has not alleged that she otherwise changed or altered her conduct
based on what Bel Brands said. For example, she has not alleged that absent Bel Brands’
promise, she turned down a more lucrative opportunity or otherwise relied on any promise to her
detriment. The district court therefore correctly determined that Roof could not have established
a cause of action for promissory estoppel against Bel Brands under Kentucky law.
Third, Roof alleges negligent hiring, retention, and supervision, causing her emotional
distress. However, as the district court properly found, these claims are preempted by the
exclusivity provision of the Kentucky Workers’ Compensation Act (“KWCA”), Ky. Rev. Stat.
Ann. § 342.690(1) (2004). The KWCA provides the exclusive remedy where an employee is
injured by her employer’s negligent actions. See, e.g., Hardin v. Action Graphics, Inc.,
57 S.W.3d 844, 846 (Ky. App. 2001) (holding that exclusivity provision of the KWCA barred
wife’s loss-of-consortium claim). Roof’s claim is that Bel Brands was negligent in hiring and
supervising Horn and other agents who discriminated against Roof, which caused her
“emotional pain and suffering.” (R. 1-2 at 29, ¶ 135). This is precisely the sort of claim that is
preempted by the KWCA.
Fourth, Roof’s retaliation claim against Bel Brands fails for the same reason it fails
against Horn—she has not properly alleged that she was engaged in any protected opposition to
an unlawful practice. And fifth and finally, we conclude, as did the district court, that Kentucky
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would apply the intra-corporate conspiracy doctrine to bar Roof’s civil-conspiracy claim against
Bel Brands. The general rule in civil-conspiracy cases is that “a corporation cannot conspire
with its own agents or employees . . . [because the corporation and its employees] are members
of the same collective entity, [and so] there are not two separate people to form a conspiracy.”
Hull v. Cuyahoga Valley Joint Vocational Sch. Dist. Bd. of Educ., 926 F.2d 505, 509-10 (6th Cir.
1991) (citation and internal quotation marks omitted). This outcome is a logical extension of
Kentucky law and would likely be reached by a Kentucky court considering the issue since “a
corporation can only act through its agents,” Caretenders, Inc. v. Commonwealth, 821 S.W.2d
83, 86 (Ky. 1991), and because a conspiracy involves more than one person, see McDonald v.
Goodman, 239 S.W.2d 97, 100 (Ky. 1951). And we have previously recognized that most states
endorse the doctrine. See Bays v. Canty, 330 F. App’x 594, 594 (6th Cir. 2009) (predicting that
Ohio would adopt the intra-corporate conspiracy doctrine).
Roof’s claim is based on Bel Brands’ and Horn’s alleged conspiracy to violate the
KCRA. Horn is an employee of Bel Brands. Roof does not argue or allege that he was acting
outside of an agency capacity at any relevant time. Therefore, the intra-corporate conspiracy
doctrine bars Roof’s claims against Bel Brands.
CONCLUSION
For the reasons stated above, the district court’s dismissal of Roof’s sex-discrimination
claim is REVERSED and the case REMANDED for further proceedings. The district court’s
judgment is AFFIRMED in all other respects.
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