Morgan et al v. Freightliner of Arizona LLC et al

Filing 29

ORDER granting in part and denying in part 14 Motion to Dismiss and granting in part and denying in part 15 Motion to Dismiss. Signed by Judge Cindy K Jorgenson on 6/2/2017. (see Order for complete details)(SIB)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Virginia R. Morgan and David A. Vivaldo,)
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Plaintiffs,
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vs.
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Freightliner of Arizona, LLC, et al.,
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Defendants.
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No. CIV 16-498-TUC-CKJ
ORDER

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Pending before the Court are the Motion to Dismiss (Doc. 14) filed by Defendants

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Freightliner of Arizona, LLC; FSWAZ, Ltd.; FAZP, Inc.; FAZF, Inc.; Danny R. Cuzick and

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Jane Doe Cuzick; and Theril H. Lund and Jane Doe Lund and the Motion to Dismiss (Doc.

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15) filed by Defendants Freightliner of Arizona, LLC, Redgate Arizona, LLC, and Redgate

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Partners, LLC dba Velocity Vehicle Group. Plaintiffs have filed a Combined Response and

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Opposition to Defendants’ Motions to Dismiss (Doc. 18). Defendants have filed Replies

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(Docs. 21 and 22). Oral argument was presented to the Court on May 22, 2017.

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I.

Factual Allegations and Procedural Background1

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In a transaction that closed in February 2015, Defendant Freightliner of Arizona, LLC

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(“Freightliner”), was transferred from Defendants FSWAZ, Ltd. (“FSWAZ”), FAZP, Inc.

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(“FAZP”), and FAZF, Inc. (“FAZF”), Danny R. Cuzick and Jane Doe Cuzick (“the

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Cuzicks”), and Theril H. Lund and Jane Doe Lund (the “Lunds”) (collectively, “Seller

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Unless otherwise stated, the facts are taken from the Complaint (Doc. 1).

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Defendants”) to Redgate Arizona, LLC (“Redgate”), Redgate Partners, LLC (“Redgate

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Partners”) (collectively, “Redgate Defendants”). Redgate Defendants’ Motion to Dismiss

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states Freightliner sells and services trucks. Motion to Dismiss (Doc. 15), p. 3.

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A. Employment History and Wage/Fair Labor Standards Act (“FLSA”) Allegations

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Virginia R. Morgan (“Morgan”) began working for Freightliner in February 2013 as

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a Customer Service Representative (“CSR”). Morgan continues to be an employee of

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Freightliner. Morgan is a female and, at all relevant times, has been over the age of 40.

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David A. Vivaldo (“Vivaldo”) began working for Freightliner in January 2014 as a CSR.

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In May 2015 Freightliner, citing budgetary and over-staffing concerns, terminated Vivaldo’s

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employment. Vivaldo is a Hispanic male of Mexican ancestry.

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As CSRs, Morgan and Vivaldo’s duties included “greeting customers, advising them

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in connection with their service needs, coordinating warranty repairs, and serving as the

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interface between the customer and the actual performance of mechanic labor on a vehicle.”

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Complaint (Doc. 1), ¶ 25. “During the vast majority of Plaintiffs’ work time during the

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relevant periods, Plaintiffs did not engage in the sales or servicing of parts or vehicles. . .

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Plaintiffs spent most of their time relaying information to and from clients and on paperwork

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and recordkeeping.” Id. at ¶42.

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Morgan, almost without exception, worked in excess of 40 hours per workweek from

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February 2013 through June 2015. Morgan did not receive wages for all hours worked and

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was not paid a rate at or above the Arizona and/or federal minimum wages, and/or did not

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receive overtime compensation as required by federal law. Vivaldo, almost without

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exception, worked in excess of 40 hours per workweek from January 2014 through May

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2015. Vivaldo did not receive wages for all hours worked and was not paid a rate at or

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above the Arizona and/or federal minimum wages, and/or did not receive overtime

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compensation as required by federal law.

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At all times relevant, Freightliner classified Morgan and Vivaldo as exempt from the
overtime pay requirements of the FLSA.
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B. Allegations Regarding Discrimination and Retaliation Against and Resulting Emotional
and Physical Distress of Morgan

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“At all times relevant, Morgan has been a hardworking, exemplary employee[,]” Id.
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at ¶ 46, and customers and fellow employees regularly praise her job performance.
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However, “[c]ertain Freightliner employees . . . , with the knowledge and acquiescence of
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Freightliner management, acted abusively and in a manner inconsistent with what should be
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tolerated in a modern workplace.” Id. at 47.
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Supervisor Joshua Lomeli (“Lomeli”) provided Morgan with inaccurate, unfair
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reviews of her performance that negatively affected her pay. Lomeli assigned Morgan to
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night and weekend shifts where she would receive no assistance to perform her work.
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However, Lomeli assigned younger (under 40) males more desirable shifts, were given
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assistance during such shifts, and were constantly praised and rewarded for lesser and
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inferior work performance.
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Lomeli required Morgan to perform inordinate amounts of work, sometimes over 80
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hours per workweek. Younger male counterparts who worked much less and were less
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productive received a greater rate of pay and greater total pay than Morgan.
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Lomeli’s authority to fire Morgan, supervise Morgan, control Morgans’ work
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schedule and conditions of employment, determine her rate of pay, maintain
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employment-related records on Morgan provided Lomeli with economic control or control
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over the nature and structure of the employment relationship between Freightliner and
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Morgan.
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At various times, Morgan asked Lomeli, one on one and during staff meetings, to
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explain why she would receive less desirable shifts, more work, more scrutiny, and less pay
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than her younger, male counterparts. Lomeli would typically respond by telling Morgan to
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“shut up” and to not to bring up such issues. Id. at 61. Whenever Morgan would attempt
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to obtain information regarding her pay or status and/or make her work circumstances better,
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Lomeli would expose her to even greater scrutiny and give her more work.
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Morgan attempted to report Lomeli’s conduct and her unfair work conditions to
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Freightliner’s human resources personnel. Morgan’s attempts to contact Freightliner’s

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director of human resources, Gordon Evans, was not successful.

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While Lomeli was the supervisor, Matthew Davidson (“Davidson”), a Freightliner

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foreman and friend of Lomeli’s, often made improper comments of an unwelcome, sexual,

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and harassing nature that were outrageous and specifically calculated to embarrass/harm

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Morgan and marginalize her in the workplace. Examples of the conduct are provided in the

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Complaint.

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discrimination/equal employment opportunity training to Plaintiffs or their coworkers at

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Freightliner’s Tucson facility when Davidson made the comments. Morgan made attempts

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to report this conduct to Freightliner human resources personnel, but Freightliner failed to

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address the issues until counsel for Morgan demanded Freightliner remedy the situation.

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Plaintiffs allege the discrimination against Morgan was due to sex and age.

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As a result of the work environment and the circumstances created by Freightliner,

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Morgan suffered anxiety attacks (accompanied by rapid heart rate, profuse perspiration, and

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uncontrollable shaking), insomnia, headaches, and depression. This includes the stress

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caused by the unfair pressure to perform at high levels (which was not placed on her

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younger, male colleagues) and the long hours she worked (which her younger, male

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colleagues did not have to work). Morgan suffered various adverse physical symptoms

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including, without limit, vomiting, stomach cramps, diarrhea, transient appetite, and unusual

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menstrual discharge/cramps.

See e.g. Complaint, ¶¶ 65-67.

Freightliner had not provided any non-

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C. Allegations Regarding Discrimination and Retaliation Against and Resulting Emotional
and Physical Distress of Vivaldo

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“[A]t all times relevant, Vivaldo was a hardworking, exemplary employee.” Id. at
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74. Customers and fellow employees regularly praised his job performance.
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Lomeli gave Vivaldo less desirable shifts, no assistance, a bigger work load, and
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significantly more work hours with less pay than his counterparts who were not members
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of any protected class, or no pay at all. Lomeli’s authority over Vivaldo provided Lomeli
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with economic control or control over the nature and structure of the employment

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relationship between Freightliner and Vivaldo.

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Plaintiffs allege the discrimination against Vivaldo was due to his race, color, and/or

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national origin. In contrast, Freightliner and Lomeli treated white and other than Hispanic-

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origin employees more favorably by providing them with more favorable working

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conditions such as better shifts and assistance from other employees.

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Because of the discrimination perpetrated primarily by Lomeli, Vivaldo received less

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pay, if any, for certain work than his counterparts that were not part of any protected class.

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Despite Vivaldo’s excellent work, Freightliner terminated Vivaldo’s employment in

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May 2015 citing supposed budgetary and over-staffing concerns. A non-Hispanic male was

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hired to fill Vivaldo’s position.

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Freightliner’s failure to train against and prevent the work environment created by

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Freightliner and its employees, and its termination of Vivaldo’s employment have caused

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substantial financial loss and significant emotional and physical distress to Vivaldo. As a

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result of the work environment and the circumstances created by Freightliner, Vivaldo

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suffered extreme depression, anxiety and nervousness, and insomnia. Freightliner providing

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the race-based unfair treatment, the racially-motivated outrageous termination of his

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employment despite his excellent work, and the long hours he worked under inordinate

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pressure caused Vivaldo to suffer various adverse physical symptoms including, without

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limit, body aches, fatigue, insomnia, headaches, vomiting, diarrhea, and transient appetite.

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D. Tolling Agreement

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The parties have entered into a Second Tolling Agreement with an effective date of

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April 22, 2016 (the “Tolling Agreement”). Among other things, the parties agreed that any

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and all claims filed by Plaintiffs between July 15, 2016, and July 31, 2016, would be

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considered timely and that the defending parties would not “assert a laches defense or any

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other time-based doctrine or defense, rule, or statute, that could limit the [Plaintiffs’] right

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to assert, preserve, and or prosecute any of the Claims [as defined].” Complaint, ¶89.
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E. Litigation

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Morgan filed a charge of discrimination with the Equal Employment Opportunity

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Commission ("EEOC") and received a notice of right to sue on June 27, 2016. 1d. at ¶ 36.

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Vivaldo filed a charge of discrimination and received a notice of right to sue on June 24,

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2016. Id. at 38.

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On July 28, 2016, Plaintiffs filed a Complaint with this Court. Plaintiffs allege
claims for the following:

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a. Count I – Fair Labor Standards Act

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b. Count II – Title VII / Arizona Civil Rights Act

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c. Count III – Equal Pay Act

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d. Count IV – Age Discrimination in Employment Act / ACRA

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e. Count V – A.R.S. § 23-355

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f. Count VI – Arizona Minimum Wage Act

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g. Count VII – Intentional Infliction of Emotional Distress

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On September 9, 2016, Seller Defendants filed a Motion to Dismiss (Doc. 14). Seller

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Defendants seek dismissal with prejudice of the FLSA claim in Count I, the color

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discrimination claims in Counts II, V, VI, and VII, the wage claims in Count V, the

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minimum wage claims in Count VI, and the intentional infliction of emotional distress

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claims in Count VII. Seller Defendants also seek dismissal with prejudice of the Cuzicks,

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the Lunds, FSWAZ, FAZP, and FAZF. Also on September 9, 2016, the Redgate Defendants

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filed a Motion to Dismiss (Doc. 15). The Redgate Defendants join in and adopt the Seller

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Defendants’ Motion to Dismiss. Additionally, the Redgate Defendants seek dismissal of

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Redgate and Redgate Partners.

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Plaintiffs filed a Response to the Motions to Dismiss on October 12, 2016; Seller
Defendants and Redgate Defendants each filed a Reply on November 7, 2016.

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On January 10, 2017, Plaintiffs filed a Notice of Filing Supplemental Authority (Doc.
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II.

Complaint and Plausibility Pleading Standard

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A complaint is to contain a "short and plain statement of the claim showing that the

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pleader is entitled to relief[.]" Fed.R.Civ.P. 8(a). Nonetheless, a complaint must set forth

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a set of facts that serves to put defendants on notice as to the nature and basis of the

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claim(s).

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The United States Supreme Court has found that a plaintiff must allege “enough facts

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to state a claim to relief that is plausible on its facts.” Bell Atlantic Corp. v. Twombly, 550

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U.S. 544, 570 (2007). While a complaint need not plead “detailed factual allegations,” the

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factual allegations it does include “must be enough to raise a right to relief above the

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speculative level.” Id. at 555; see also Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011)

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("If there are two alternative explanations, one advanced by defendant and the other

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advanced by plaintiff, both of which are plausible, plaintiff's complaint survives a motion

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to dismiss[.]"). Indeed, Fed.R.Civ.P. 8(a)(2) requires a showing that a plaintiff is entitled

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to relief “rather than a blanket assertion” of entitlement to relief. Id. at 1965 n. 3. The

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complaint “must contain something more . . . than . . . a statement of facts that merely

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creates a suspicion [of] a legally cognizable right to action.” Id. at 1965.

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The Court also considers that the Supreme Court has cited Twombly for the

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traditional proposition that “[s]pecific facts are not necessary [for a pleading that satisfies

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Rule 8(a)(2)]; the statement need only ‘give the defendant fair notice of what the . . . claim

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is and the grounds upon which it rests.” Erickson v. Pardue, 551 U.S. 89, 93(2007).

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Indeed, Twombly requires “a flexible ‘plausibility standard,’ which obliges a pleader to

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amplify a claim with some factual allegations in those contexts where such amplification is

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needed to render the claim plausible.” Iqbal v. Hasty, 490 F.3d 143, 157-58 (2nd Cir.

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2007); see also Moss v. U.S. Secret Service, 572 F.3d 962 (9th Cir. 2009) (for a complaint

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to survive a motion to dismiss, the non-conclusory “factual content,” and reasonable

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inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff

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to relief).

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When a court is considering a motion to dismiss, allegations that are mere conclusion
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are not entitled to the assumption of truth if unsupported by factual allegations that allow

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the court "to draw the reasonable inference that the defendant is liable for the misconduct

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alleged." Ashcroft v. Iqbal, 556 U.S. 662, 663-64 (2009). This Court must take as true all

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allegations of material fact and construe them in the light most favorable to Plaintiffs. See

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Cervantes v. United States, 330 F.3d 1186, 1187 (9th Cir. 2003). In general, a complaint

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is construed favorably to the pleader. See Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct.

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1683, 40 L.Ed.2d 90 (1974), overruled on other grounds, 457 U.S. 800. Nonetheless, the

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Court does not accept as true unreasonable inferences or conclusory legal allegations cast

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in the form of factual allegations. Western Mining Council v. Watt, 643 F.2d 618, 624 (9th

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Cir. 1981).

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If a court determines that dismissal is appropriate, a plaintiff must be given at least

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one chance to amend a complaint when a more carefully drafted complaint might state a

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claim. Bank v. Pitt, 928 F.2d 1108, 1112 (11th Cir. 1991). Moreover, when dismissing with

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leave to amend, a court is to provide reasons for the dismissal so a plaintiff can make an

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intelligent decision whether to file an amended complaint. See Bonanno v. Thomas, 309

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F.2d 320 (9th Cir. 1962); Eldridge v. Block, 832 F.2d 1132 (9th Cir. 1987).

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III. Count I – Fair Labor Standards Act

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Seller Defendants assert Plaintiffs, as CSRs, are exempt services advisors under the

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FLSA. The Ninth Circuit Court of Appeals has recently addressed the issues raised by the

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parties as to this claim in Navarro v. Encino Motorcars, LLC, 845 F3d 925 (9th Cir. 2017);

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see also Encino Motorcars, LLC v. Navarro, — U.S. —, 136 S. Ct. 2117, 2127, 195 L. Ed.

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2d 382 (2016). Under this authority, dismissal of the FLSA claim is not appropriate. As

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discussed with counsel during oral argument and in light of the pending Petition for Writ

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of Certiorari before the United States Supreme Court, the Court will deny with leave to

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resubmit the request for dismissal of this claim.

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IV. Counts II, V, VI, and VII – Color Discrimination Claims

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The parties have not cited to any Ninth Circuit cases that address the issue of

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sufficient factual allegations as to color as opposed to race or national origin. Another

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district court has stated:

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[T]he Court finds Cooper v. Jackson-Madison Co. Gen. Hosp. Dist., 742 F.Supp.2d
941 (W.D.Tenn. 2010), to be highly persuasive in regard to this question. Like
Plaintiff did here, the Cooper plaintiff brought claims in federal court against his
employer for both race and color discrimination. Cooper, 742 F.Supp.2d at 945.
Also like Plaintiff did here, the Cooper plaintiff checked the box for race
discrimination on his EEOC charge, but left the box for color discrimination blank.
Id. at 949; (Mot. to Dism. Ex. 1). Moreover, the EEOC charge in this case and that
in Cooper contained strikingly similar language describing the alleged discriminatory
acts. See (Mot. to Dism. Ex. 1) (“Respondent discriminated against me because of
my race, Black.”); Cooper, 742 F.Supp.2d at 945 (“Plaintiff alleged that he ‘was
discriminated against . . . because of [his] race, White.”).
The Cooper court, relying in part on an EEOC compliance manual, explained the
difference between race and color discrimination, stating that color discrimination
“arises when the particular hue of the plaintiff's skin is the cause of the
discrimination, such as in the case where a dark-colored African-American individual
is discriminated against in favor of a light-colored African-American individual.”
Cooper, 742 F.Supp.2d at 950-51. As the “thrust” of the Cooper plaintiff's EEOC
charge was that he was discriminated against “because of his Caucasian race,” and
the allegations in his charge “[did] not suggest that he was discriminated against
because he was, for example, a fair-skinned Caucasian,” the court found that the
plaintiff had only exhausted his administrative remedies as to the race discrimination
claim, but not as to the color discrimination claim. Id.

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Plaintiff's EEOC charge here is similarly devoid of allegations of discrimination
based on his skin tone, and like the Cooper plaintiff, the basis of Plaintiff's EEOC
charge was that he was discriminated against because of his race. See (Mot. to Dism.
Ex. 1–2). Because Plaintiff's EEOC charge contains no allegations that that would
allow the EEOC to infer and investigate a claim of color discrimination, Plaintiff's
color discrimination claim is not like or reasonably related to his EEOC charge.
Plaintiff, therefore, has failed to exhaust his administrative remedies as to the color
discrimination claim, and the Court lacks subject-matter jurisdiction over the claim.
Accordingly, the color discrimination claim will be dismissed.

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Richardson v. HRHH Gaming Senior Mezz, LLC, 99 F. Supp. 3d 1267, 1273-74 (D. Nev.

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2015); see also Gill v. Bank of Am. Corp., No. 2:15-CV-319-FTM-38CM, 2015 WL

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4349935, at *1 (M.D. Fla. July 14, 2015).

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In this case, the Charge of Discrimination made by Vivaldo is similar to those in

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Cooper and Richardson.2 Vivaldo did not check the “color” box. Vivaldo’s narrative

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portion of the Charge of Discrimination states:

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III.

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DISCRIMINATION STATEMENT: I believe Respondent discriminated
against met because of my race, national origin, Mexican, and because I
opposed a practice made unlawful under the Arizona Civil Rights Act, as
amended, and Title VII of the Civil Rights Act of 1964, as amended. The
particulars are:

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A.

In or about February, 2014, I was hired as a Service Advisor/Customer
Service Representative. Service Manager Josh Lomeli is my
supervisor.

B.

In or about March, 2014 I learned that I was being paid less than my
similarly situated co-workers who are not of Mexican national origin.

C.

On or about March 14, 2015, I asked Lomeli about the difference
between my pay and that of my co-workers who are not of Mexican
national origin. Lomeli instructed me to not raise the issue again, did
not address my concerns, and I was subsequently assigned less
desirable shifts.

D.

On or about May 19, 2015 I was laid-off allegedly because Respondent
had too many Customer Service Representative.

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I believe that despite Respondent’s claims of overstaffing, I was
replaced by a non-Hispanic male.

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I believe and therefore allege that but for my national origin, Mexican,
I would not be paid less than my similarly situated co-workers who are
not of Mexican national origin. I further believe and therefore allege
that but for my national origin and having complained of
discriminatory treatment, I would not have been assigned less desirable
shifts and laid-off.

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Charge of Discrimination (Doc. 14), pp. 14-15.
Additionally, the allegations in the Complaint focus on Vivaldo’s race and national

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origin.

The Complaint states:

"Vivaldo is a Hispanic male of Mexican ancestry."

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The Court considers the Charge of Discrimination as it is referred to in the Complaint
and provides the basis for subject matter jurisdiction. See United States v. Ritchie, 342 F.3d
903, 908 (9th Cir. 2003) (holding that “[e]ven if a document is not attached to a complaint,
it may be 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”); Branch v. Tunnell, 14
F.3d 449, 454 (9th Cir. 1994) (overruled on other grounds by Galbraith v. Cnty. of Santa
Clara, 307 F.3d 1119 (9th Cir. 2002) (“documents whose contents are alleged in a complaint
and whose authenticity no party questions, but which are not physically attached to the
pleading, may be considered in ruling on a Rule 12(b)(6) motion to dismiss.”).
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Complaint (Doc. 1), ¶ 75; "Vivaldo is Hispanic and of Mexican descent . . . " Id. at ¶ 122;

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Vivaldo is "a Hispanic man of Mexican descent[.]??” Id. at ¶ 133. Indeed, the Complaint

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does not include any non-conclusory factual allegations as to Vivaldo’s color.

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Vivaldo’s Charge of Discrimination does not contain any allegations that would have

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provided the EEOC an opportunity to infer and investigate a claim of color discrimination.

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Rather, his color discrimination claim is not like or reasonably related to his Charge of

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Discrimination. The Court finds Vivaldo has failed to exhaust his administrative remedies

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as to the color discrimination claims. The Court lacks subject-matter jurisdiction over the

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color claims and the Motions to Dismiss will be granted as to these claims.

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V. Counts V and VI – A.R.S. § 23-355 and Minimum Wage

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Seller Defendants state, in their reply, that they defer any argument regarding

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minimum wage until discovery has been completed. The Court will deny this portion of the

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Motion to Dismiss with leave to resubmit.

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However, Seller Defendants continue to assert the claims as to unpaid wages must

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be dismissed. Specifically, Seller Defendants assert that, as Defendants are not public

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employees, they were not required to pay overtime to Plaintiffs. The applicable statutes

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states:

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“If an employer, in violation of [Title 23, Chapter 2, Employment Practices and
Working Conditions], fails to pay wages due any employee, the employee may
recover in a civil action against an employer or former employer an amount that is
treble the amount of the unpaid wages.”

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A.R.S. § 23-352. This Arizona law only specifically requires overtime compensation to be
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made by public employers. See A.R.S. §§ 23-391, 23-392.
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Nonetheless, Plaintiffs argue in their response that they reasonably expected
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compensation. The applicable statute provides for treble damages if “nondiscretionary
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compensation for labor or services actually performed and for which the employee had a
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reasonable expectation,” is not paid. A.R.S. § 23-355 (emphasis added). Plaintiffs argue
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they had a reasonable expectation because a reasonable employer would comply with federal
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and state laws requiring overtime compensation. However, Plaintiffs’ Complaint includes

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no such allegations. Similarly, the Joint Report, which potentially could have clarified

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Plaintiffs’ claims, does not include any such allegations. Further, the Complaint does not

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include any other allegation that, e.g., any Defendant had a policy or practice for such

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compensation, which may have warranted a reasonable expectation. The Court finds

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dismissal of the claims for unpaid wages with leave to amend, as it relates to claims for

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relief other than that contingent upon Navarro, is appropriate.

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VI. Count VII – Intentional Infliction of Emotional Distress
For purposes of this Order, the Court accepts the Complaint as stating essentially
three intentional infliction of emotional distress claims:
A. Intentional infliction of emotional distress based on the alleged sex and/or age
discrimination against Morgan.

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B. Intentional infliction of emotional distress based on the alleged race and/or
national origin discrimination against Vivaldo.

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C. Intentional infliction of emotional distress of both Morgan and Vivaldo based on
the alleged failure of Freightliner to adequately train its employees and the alleged
failure of Freightliner to take action based on the complaints of Morgan.3

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To state a claim for intentional infliction of emotional distress, a plaintiff must allege

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(1) the conduct of defendant was "extreme" and "outrageous," (2) defendant intended to

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cause emotional distress or recklessly disregarded the near certainty that such conduct would

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result from his conduct, and (3) severe emotional distress did occur as a result of defendant's

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conduct. Citizen Publishing Co. v. Miller, 210 Ariz. 513, 517, 115 P.3d 107, 111 (2005);

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Wells Fargo Bank v. Arizona Laborers, Teamsters, and Cement Masons Local No. 395

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It does not appear Plaintiffs are alleging an intentional infliction of emotional distress
claim regarding the FLSA allegations. Indeed, liability is not appropriate where a defendant
“has done no more than to insist upon his legal rights in a permissible way, even though he
is well aware that such insistence is certain to cause emotional distress.” Mintz v. Bell
Atlantic Systems Leasing Intern, Inc., 183 Ariz. 550, 554, 905 P.2d 559, 563 (Ct. App. 1995).
Defendants arguably had a legal basis to not conclude Plaintiffs were not exempt under the
FLSA (e.g., modified regulation that was inconsistent with prior regulations).
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Pension Trust Fund, 201 Ariz. 474, 38 P.3d 12 (2002) (discussing difference between

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negligent and intentional torts). A trial court is to act as a gatekeeper to determine whether

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the alleged actions are “so outrageous in character and so extreme in degree, as to go beyond

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all possible bounds of decency, and to be regarded as atrocious and utterly intolerable in a

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civilized community[.]” Mintz v. Bell Atlantic Systems Leasing Intern, Inc., 183 Ariz. 550,

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54, 905 P.2d 559, 563 (App. 1995); see also Bodett v. CoxCom, Inc., 366 F.3d 736, 747 (9th

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Cir. 2004). Additionally, the Court need not determine whether Defendants’ conduct was

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outrageous enough to create liability, only whether reasonable persons could differ as to

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whether the conduct is “extreme and outrageous.” Lucchesi v. Stimmell, 149 Ariz. 76, 79,

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716 P.2d 1013, 1016 (1986); Restatement (Second) of Torts § 46 (1965), comment h (“It is

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for the court to determine, in the first instance, whether the defendant's conduct may

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reasonably be regarded as so extreme and outrageous as to permit recovery, or whether it

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is necessarily so. Where reasonable men may differ, it is for the jury, subject to the control

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of the court, to determine whether, in the particular case, the conduct has been sufficiently

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extreme and outrageous to result in liability.”).

16

Indeed, in Mintz, the court stated that it is “extremely rare to find conduct in the

17

employment context that will rise to the level of outrageousness necessary to provide a basis

18

for recovery for the tort of intentional infliction of emotional distress claim. Id. The acts

19

must be "'so outrageous in character and so extreme in degree, as to go beyond all possible

20

bounds of decency, and to be regarded as atrocious and utterly intolerable in a civilized

21

community.'" Mintz, 183 Ariz. at 554, 905 P.3d at 563 (citation omitted); see also Midas

22

Muffler Shop v. Ellison, 133 Ariz. 194, 198, 650 P.2d 496, 500 (App. 1982) (liability for

23

intentional infliction of emotional distress does not extend to mere insults, indignities,

24

threats, annoyances, petty oppressions, or other trivialities); Patton v. First Fed. Savs. &

25

Loan Ass'n of Phoenix, 118 Ariz. 473, 476, 578 P.2d 152, 155 (1978) (harsh or unfair

26

conduct that falls within the realm of acceptable business practices is not extreme and

27
28
- 13 -

1

outrageous).4 Further, the defendant must either intend to cause emotional distress or

2

recklessly disregard the near certainty that such distress will result from his conduct. Ford

3

v. Revlon, 153 Ariz. 38, 43, 734 P.2d 580 (1987).

4

A case-by-case analysis is necessary because the terms “outrageous conduct” and

5

“severe emotional distress” evade precise legal definition. Lucchesi v. Stimmell, 149 Ariz.

6

at 79, 716 P.2d at 1016. One factor used by courts to analyze these terms is the “position

7

occupied by the defendant.” Id. (citing Rest 2d Torts § 46 comment e (“Comment e”). That

8

comment states:

9
10
11
12

The extreme and outrageous character of the conduct may arise from an abuse by the
actor of a position, or a relation with the other, which gives him actual or apparent
authority over the other, or power to affect his interests . . . [H]owever, the actor has
not been held liable for mere insults, indignities, or annoyances that are not extreme
or outrageous.
Comment e.5

13

During oral argument, counsel for Plaintiffs stated that, as to these claims, there are

14

no additional facts that could be added to an amended complaint that would cure any

15

deficiencies.

16
17

A. Intentional Infliction of Emotional Distress – Discrimination Against Morgan

18

In Coffin v. Safeway, Inc., 323 F. Supp. 2d 997, 1003-04 (D. Ariz. 2004), the plaintiff

19

alleged her supervisor had made repeated unwanted sexual overtures, made verbal sexual

20

remarks to her, would caress plaintiff's hands in a sexual manner, and would walk up close

21
22
23
24
25
26
27
28

4

In discussing discrimination claims, the Supreme Court has stated “simple teasing,
offhand comments, and isolated incidents (unless extremely serious)” are not sufficient to
establish a claim. Clark County School Dist. v. Breeden, 532 U.S. 268, 271 (2001) (citation
omitted).
5

For purposes of this Order and because Defendants have not raised the issue, the
Court will assume Davidson’s alleged actions were in the scope and course of his
employment. Therefore, Defendants could be held vicariously liable for intentional infliction
of emotional distress if Davidson’s conduct was extreme and outrageous. See e.g. Loos v.
Lowe's HIW, Inc., 796 F. Supp. 2d 1013, 1023 (D. Ariz. 2011).
- 14 -

1

behind her and tell plaintiff he wanted to rub up against her body. Additionally, the Coffin

2

plaintiff alleged that female employees had complained to the store manager about the

3

supervisor’s behavior and that no action was taken to protect female employees. Noting that

4

the case was at the initial filing stage, rather than in summary judgment proceedings, the

5

Coffin court determined plaintiff had adequately alleged a claim for intentional infliction of

6

emotional distress.

7

In Thorp v. Home Health Agency-Arizona, Inc., 941 F.Supp.2d 1138 (D. Ariz. 2013),

8

the plaintiff alleged that, almost immediately after plaintiff began working for his employer,

9

the employer “made the topic of drug use and abuse, sex and sexual activity, the mockery

10

of religious and moral stances on private issues, and/or the religious and moral choices of

11

the [company’s] employees almost daily topics of conversation[.]” 951 F.Supp.2d at 1141.

12

The allegations in Thorp were numerous; the Court will mention only those particularly

13

egregious: the employer’s president and director “exclaimed that he didn't want the

14

Mormons and Jehovahs consorting against him;” asked plaintiff “if he would ‘do’ the office

15

manager if given the opportunity;” talked about how he would “do” the office manager;

16

stated he would have a female co-worker pay him back with sexual favors is she borrowed

17

money; when learning Jehovah's Witnesses do not vote, stated, “Why can't you vote?! It's

18

your f* * *ing right as an American![;]” advised plaintiff that one of the supervisors “goes

19

around f* * *ing humping everything that moves[;]” “ordered all employees into an office

20

to watch a training video which turned out to be an explicit version of the song ‘F* * *

21

You,’ which was laced with profanity[;]” discussed sexually “fisting” the waitress at a resort

22

during a work function and wondering “what it would be like if god was fisting the office

23

manager?[;]” Id. at 1142. A supervisory employee and administrator told plaintiff that she

24

“cringes every time [the president/director] does something like that because it's a lawsuit

25

just waiting to happen.” Id. at 1141. The Thorp plaintiff reported the abuse multiple times

26

to his supervisors and/or human resources. “Despite Plaintiff's many complaints, no

27

supervisor took action on Plaintiff's behalf, other than to advise Plaintiff to avoid or ignore

28

[the president/director], which was impossible to do given that [he] was Plaintiff's
- 15 -

1

supervisor.” Id. at 1142. The Thorp plaintiff also alleged that, as a result of his complaints,

2

“his job duties were significantly escalated, requiring him to do twice the work of someone

3

else in his position, and to perform other tasks not required of other similarly-ranked

4

employees, as well as work on holidays that were identified as non-working holidays in the

5

employee handbook, and, in addition, his previously-approved time off was cancelled.” Id.

6

The Thorp court found that, because reasonable minds could differ about whether the

7

president/director’s alleged conduct was sufficiently outrageous, dismissal was not

8

appropriate.

9

However, in Loos v. Lowe's HIW, Inc., 796 F. Supp. 2d 1013 (D. Ariz. 2011), the

10

plaintiff had alleged her supervisor engaged in sexual talk, made sexual gestures in her

11

presence, and attempted to involve her in some conversations with sexual topics. That court

12

found the plaintiff had not alleged facts demonstrating the supervisor’s conduct was “so

13

outrageous in character and so extreme in degree, as to go beyond all possible bounds of

14

decency, and to be regarded as atrocious and utterly intolerable in a civilized community.”

15

796 F.Supp.2d at 1023-24 (quoting Mintz, 905 P.2d at 563).

16

Although Plaintiffs allege unfair treatment similar to that discussed in Thorpe, the

17

allegations regarding the conduct of Lomeli and Davidson are much more comparable to

18

Loos rather than either Coffin or Thorpe. Further, "Arizona law is clear . . . that an employer

19

is rarely liable for intentional infliction of emotional distress when one employee sexually

20

harasses another." Craig v. M & 0 Agencies, Inc., 496 F.3d 1047, 1059 (9th Cir. 2007).

21

Neither Lomeli’s nor Davidson’s conduct was “so outrageous in character and so extreme

22

in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious

23

and utterly intolerable in a civilized community." Mintz, 183 Ariz. at 554, 905 P.3d at 563.

24

The Court finds dismissal of this claim to be appropriate. As counsel stated there were no

25

additional facts that could cure a deficiency, the Court will dismiss this claim without leave

26

to amend.

27
28
- 16 -

1

B. Intentional Infliction of Emotional Distress – Discrimination Against Vivaldo

2

In Williams v. Worldwide Flight SVCS., Inc., 877 So. 2d 869 (Fla.Dist.Ct.App.3d.

3

Dist. 2004), the plaintiff alleged the supervisor called the African-American employee a

4

"nigger" and "monkey" and constantly threatening the employee with job termination for no

5

apparent reason. The court, applying Florida law which required “outrageous conduct,”

6

found such conduct did not rise to the level that could be reasonably regarded as so extreme

7

and outrageous such that the plaintiff could recover damages for intentional infliction of

8

emotional distress and determined the plaintiff had failed to state a claim upon which relief

9

could be granted.

10

In Lockamy v. Truesdale, 182 F. Supp. 2d 26 (D.D.C. 2001), the plaintiff alleged the

11

supervisor sabotaged and unfairly scrutinized his work, denied him the opportunity to work

12

overtime, told him that he could not address Caucasian employees by their first names, told

13

him that he could not speak to certain African-American employees, cursed at him, and told

14

him that he could not use a typewriter that others in his department could use. Applying

15

District of Columbia law, which required extreme and outrageous conduct, the court

16

determined the plaintiff did not allege conduct that was sufficiently extreme and outrageous

17

to support a claim for intentional infliction of emotional distress..

18

In Greene v. Trustees of Columbia University, 234 F. Supp. 2d 368 (S.D.N.Y. 2002),

19

the plaintiff alleged the supervisor called anAfrican-American employee "Buckwheat" and

20

"Buck" and making other racial slurs for over one year. Applying New York law on

21

summary judgment, which required “extreme and outrageous conduct,” the court found the

22

conduct did not rise to the level of intentional infliction of an emotional distress claim.

23

Here, the allegations regarding the conduct of Lomeli do not rise to the level of the

24

conduct discussed in Williams, Lockamy, or Greene. As sexual harassment rarely warrants

25

a claim for intentional infliction of emotional distress under Arizona law, the Court finds the

26

conduct alleged here for racial and/or national origin discrimination is not “so outrageous

27

in character and so extreme in degree, as to go beyond all possible bounds of decency, and

28

to be regarded as atrocious and utterly intolerable in a civilized community." Mintz, 183
- 17 -

1

Ariz. at 554, 905 P.3d at 563. The Court finds dismissal of this claim to be appropriate.

2

Again, as counsel stated there were no additional facts that could cure a deficiency, the

3

Court will dismiss this claim without leave to amend.

4
5

C. Intentional Infliction of Emotional Distress – Training by and Response by Freightliner

6

Although the Loos court concluded the plaintiff had not alleged facts demonstrating

7

the supervisor’s alleged conduct was outrageous and extreme such that a it supported a

8

claim of intentional infliction of emotional distress, the court also discussed whether the

9

employer’s conduct in failing to address the problem sufficiently stated a claim of

10

intentional infliction of emotional distress. That court stated, “The [Ford v. Revlon, Inc.,

11

153 Ariz. 38, 734 P.2d 580 (Ariz. 1987)] court found that the corporate defendant's repeated,

12

ongoing failure to take any action to stop the sexual assaults and harassment committed by

13

its supervisory employee constituted intentional infliction of emotional distress. Loos, 796

14

F.Supp.2d at 1024 (citing Ford, 734 P.2d at 586). The Ford Court determined that Revlon’s

15

conduct could be characterized as extreme and outrageous because the plaintiff had made

16

numerous managers aware of her supervisor's conduct, both within the policies of the

17

company and without, to bring the harassment to Revlon’s attention. Id. at 585. Although

18

Revlon had actual knowledge the supervisor had “subjected Ford to physical assaults, vulgar

19

remarks, that Ford continued to feel threatened by Braun, and that Ford was emotionally

20

distraught, all of which led to a manifestation of physical problems[,]” the supervisor was

21

not confronted for nine months and was not censured for another three months. Id. at 585-

22

86; see also Craig, 196 F.3d at 1059 (“Liability for the employer typically attaches only

23

when a company utterly fails to investigate or remedy the situation.”).

24

Seller Defendants argue that Plaintiffs allege Freightliner addressed the conduct of

25

Lomeli and Davidson. Motion to Dismiss (Doc. 14), p. 9. Indeed, Plaintiffs alleged that

26

“Freightliner failed to address such issues until Morgan demanded, through counsel, that

27

Freightliner remedy the situation.” Complaint (Doc. 1), ¶ 68. Plaintiffs’ allegation means

28

that Freightliner did not address the conduct because of Morgan’s complaints; rather, it was
- 18 -

1

only when legal counsel intervened that Freightliner addressed the complaints. The Court

2

cannot ascertain from the allegations how long of a delay occurred prior to Freightliner

3

taking any action.

4

unreasonable delay occurred.

In other words, Plaintiffs do not include any allegation that an

5

Regarding the allegations as to Vivaldo, Vivaldo alleges the unfair treatment,

6

harassment, and employment termination caused emotional distress. This, in and of itself,

7

does not constitute extreme and outrageous conduct. However, the Court also considers

8

whether these allegations in conjunction with the allegations that Freightliner did not

9

provide any training as to employee conduct, in reference to both Morgan and Vivaldo,

10

sufficiently alleges intentional infliction of emotional distress. However, as there are no

11

allegations as to how long of a delay occurred before Freightliner rectified the problems, the

12

Court finds Plaintiffs have not stated sufficient facts to make the intentional infliction of

13

emotional distress claims plausible. Dismissal of the intentional infliction of emotional

14

distress claims based on the lack of training and the response of Freightliner is appropriate.

15

Further, the Court will dismiss this claim without leave to amend as counsel stated there

16

were no additional facts that could cure a deficiency.

17
18

VII. Requested Dismissal of the Cuzicks, the Lunds, FSWAZ, FAZP, and FAZF

19

The parties disagree whether the individually named Defendants may be liable.

20

Plaintiffs assert the Complaint acknowledges they lack sufficient information to determine

21

which Defendants may be liable for damages.

22

The Court recognizes Arizona law provides as follows:

23

Liability to third parties

24

Except as provided in this chapter, a member, manager, employee, officer or agent
of a limited liability company is not liable, solely by reason of being a member,
manager, employee, officer or agent, for the debts, obligations and liabilities of the
limited liability company whether arising in contract or tort, under a judgment,
decree or order of a court or otherwise.

25
26
27

A.R.S. § 29-651 (footnote omitted).

28
- 19 -

1

A. Substantive Claims Against Individual Defendants

2

Defendants argue Plaintiffs have not made any substantive allegations against the

3

Cuzicks or the Lunds. Defendants assert that a complaint that merely tenders "naked

4

assertions devoid of further factual enhancement" fails to show that the pleader is entitled

5

to relief. Iqbal, 556 U.S. at 678 (brackets and quotation marks omitted).

6

As there are no direct allegations as to the Cuzicks, the Lunds, FSWAZ, FAZP, and

7

FAZF and Arizona law prohibits liability solely on the status of possible defendants, there

8

is no basis for liability. This does not present a situation where discovery may lead to

9

liability; rather, it is the status of these Defendants under the Arizona statute that prohibits

10

the liability. Dismissal of the claims against these Defendants is appropriate. However, as

11

a more carefully drafted complaint might state a claim upon which relief may be granted,

12

the Court will grant leave to amend as to this claim. Bank, 928 F.2d at 1112.

13
14

B. Liability Under the FLSA and the Equal Pay Act

15

Defendants assert that Count I, the FLSA claim, and Count III, the Equal Pay Act

16

claim, can only be asserted against an employer. 29 U.S.C. §§ 206(a), 206(d), 207(a). As

17

Freightliner hired Plaintiffs, Defendants assert these claims against the Cuzicks and the

18

Lunds must be dismissed. Similarly, Redgate Defendants seek dismissal of these claims

19

against them.

20

Plaintiffs assert, however, that persons acting directly or indirectly in the interest of

21

the employer are subject to individual liability under the FLSA. 29 U.S.C. § 203; Boucher

22

v. Shaw, 572 F.3d 1087, 1091 (9th Cir. 2009). However, the Complaint does not allege any

23

individual Defendant that may have acted directly or indirectly such that the imposition of

24

liability would be appropriate. For example, in Boucher the plaintiff had alleged individual

25

defendants handled employment matters, had responsibility for financial matters, and had

26

control of the plaintiff’s employment, among other things. Id. at 1091. Although no similar

27

direct or indirect actions are alleged in this case, Plaintiffs argue that they have alleged

28

sufficient facts to state claims for relief that are plausible. Twombly, 550 U.S. at 570. The
- 20 -

1

Court disagrees. Plaintiffs’ claims merely rise to speculation, with a possibility that

2

discovery could provide a basis for a claim. As pointed out by Defendants, Plaintiffs have

3

not even alleged the Cuzicks or the Lunds acted in the interests of the employer. This fails

4

to state a claim upon which relief may be granted under Twombly. The Court will dismiss

5

this claim with leave to amend.

6

Plaintiffs have not disputed Defendants’ assertion that actions under the Equal Pay

7

Act must be asserted against an employer. These claims will be dismissed against the

8

Cuzicks and the Lunds.

9

Defendants’ Motion to Dismiss, dismissal of Redgate Arizona, LLC, and Redgate Partners,

10

LLC, for the same reason is appropriate. The Court will dismiss with leave to amend these

11

claims against these parties.

Additionally, as Redgate Defendants have joined in Seller

12
13

C. Liability Under State Wage Laws

14

Defendants assert the wage claims may only be asserted against an employer. See

15

A.R.S. § 23-355 (providing an "employee may recover in a civil action against an

16

employer") and § 23-350(3) (defining employer); A.R.S. § 23-364(G) and ("employer" can

17

be required to pay wages owed to employee) and § 23-362(B) (defining employer).

18

Therefore, Defendants asserts that, since Freightliner was Plaintiffs’ employer, the state law

19

wage claims fails against individual Defendants. Similarly, Redgate Defendants seek

20

dismissal of these claims against them.

21

Plaintiffs assert that, under Arizona law, an employer may include "any individual,

22

partnership, association, joint stock company, trust or corporation…employing any

23

person[,]" A.R.S. § 23-350(3), or "any corporation, proprietorship, partnership, joint venture,

24

limited liability company, trust, association, political subdivision of the state, individual or

25

other entity acting directly or indirectly in the interest of an employer in relation to an

26

employee . . ." A.R.S. § 23-362(B). However, Plaintiffs have not alleged any facts that any

27

individual defendants acted either directly or indirectly in the interests of Freightliner.

28

Again, Plaintiffs’s claim is speculative and dismissal is appropriate. The Court will dismiss
- 21 -

1

this claim against these parties with leave to amend.

2
3

D. Liability for State Federal Anti-Discrimination Claims

4

Similarly, Defendants assert the anti-discrimination claims may not be asserted

5

against individual Defendants. An individual cannot be held personally liable for a violation

6

of Title VII or the ACRA. See Walsh v. Nevada Dep 't of Human Res., 471 F.3d 1033, 1038

7

(9th Cir. 2006); De La Torre v. Merck Enters., Inc., 540 F. Supp. 2d 1066, 1079 n. 10 (D.

8

Ariz. 2008); Ransom v. State of Arizona Bd. of Regents, 983 F. Supp. 895, 904 (D. Ariz.

9

1997). Therefore, Defendants assert the anti-discrimination claims in Count II must be

10

dismissed against the individual Defendants

11

Further, individual liability is prohibited under the Age Discrimination in

12

Employment Act ("ADEA"), asserted in Count IV. Miller v. Maxwell's Int'l Inc., 991 F.2d

13

583, 588-89 (9th Cir. 1993) (the ruling "that individual defendants cannot be held liable for

14

damages under Title VII . . . is applicable to suits under the ADEA.").

15

The Ninth Circuit has “consistently held that Title VII does not provide a cause of

16

action for damages against supervisors or fellow employees.” Holly D. v. California Inst.

17

of Tech., 339 F.3d 1158, 1179 (9th Cir. 2003). Indeed, the “any agent” language in the

18

definition of an employer is intended to “impose respondeat superior liability upon

19

employers for the acts of their agents,” not upon the agents themselves. U.S. E.E.O.C. v.

20

AIC Sec. Investigations, Ltd., 55 F.3d 1276, 1281 (7th Cir. 1995); see also Miller, 991 F.2d

21

at 588 (“No employer will allow supervisory or other personnel to violate Title VII when

22

the employer is liable for the Title VII violation.”). As liability is limited to the employer

23

under Title VII, the ADA, and the ADEA, dismissal of the claims without leave to amend

24

against the individual defendants is appropriate.

25

Plaintiffs do not dispute Defendants’ arguments as to the ACRA. Dismissal without

26

leave to amend of these claims (Counts II and IV) as to individual Defendants is appropriate.

27
28
- 22 -

1

E. Factual Allegations to Support Claim of Intentional Infliction of Emotional Distress
Against the Cuzicks and the Lunds

2
Defendants assert Plaintiffs have not alleged any facts that either the Cuzicks or the
3
Lunds took any action against Plaintiffs or had any intention to cause emotional distress.
4
Although Plaintiffs argue that sufficient facts have been alleged to warrant allowing the
5
claims to proceed to discovery, Plaintiffs do not specifically address the argument that no
6
allegations of liable conduct by either the Cuzicks or the Lunds have been made. The lack
7
of such allegations does not address whether there is a basis for an intentional infliction of
8
distress claim, only whether these specific Defendants have engaged in the conduct at issue.
9
Moreover, to the extent the claims are against individual members of limited liability
10
companies, Plaintiffs appear to be seeking an exception to A.R.S. § 29-651, which prohibits
11
such individual liability. Additionally, Plaintiffs do not cite to any authority that provides
12
for such an exception. Plaintiffs have not provided any basis for the Court to conclude that
13
these claims fail, not only because the Complaint does not allege specific acts of
14
wrongdoing, but also because the Complaint "lists [the members] as defendants solely for
15
their association with the limited liability corporation." Jaffe v. Empirian Prop. Mgmt., Inc.,
16
No. 1 CA-CV 10-0850, 2012 WL 723194, at *10 (Ariz. Ct. App. Mar. 6, 2012).
17
Dismissal of these claims against the Cuzicks and the Lunds without leave to amend
18
is appropriate.
19
20
F. Liability of FSWAZ, FAZP, or FAZF
21
Defendants assert that, just as with the individual Defendants, Plaintiffs have made
22
no substantive allegations against FSWAZ, FAZP, or FAZF. Specifically, because Plaintiffs
23
have not alleged they were employed by any of these entities, these entities cannot be liable
24
under Counts I through VI. Further, where none of these entities are alleged to have taken
25
any action regarding Plaintiffs, they cannot be liable under Count VII, the intentional
26
infliction of emotional distress claim.
27
Dismissal of the claims against FSWAZ, FAZP, and FAZF with leave to amend is
28
- 23 -

1

appropriate.

2
3

VIII. Requested Dismissal of Redgate Arizona and Redgate Partners

4

Redgate Defendants assert Plaintiffs have made no allegation of a direct claim against

5

Redgate Defendants. Further, Redgate Defendants assert that any attempt to state a claim

6

for successor liability of Redgate Defendants fails because Plaintiffs have not alleged

7

Redgate Defendants had notice of the potential claims and have not alleged that Seller

8

Defendants are incapable of providing adequate relief for conduct occurring while Seller

9

Defendants operated Freightliner. of Arizona. As pointed out by Redgate Defendants,

10
11

successor liability requires:

12

(1) the continuity of operations and workforce of the successor and predecessor
employers; (2) the notice to the successor employer of its predecessor’s legal
obligation; and (3) the ability of the predecessor to provide adequate relief directly.

13

Bates v. Pacific Maritime Ass’n, 744 F.2d 705, 709-10 (9th Cir. 1984). The Supreme Court

14

has stated that, with notice, the “potential liability . . . can be reflected in the price [a buyer]

15

pays for the business.” Golden State Bottling Co., Inc. v. NLRB, 414 U.S. 168, 185 (1973).

16

However, the Complaint does not allege Redgate Defendants had notice of any legal

17

obligation to Plaintiffs. Similarly, the Complaint does not allege Seller Defendants cannot

18

provide adequate relief.

19

Plaintiffs assert, however, that federal courts have developed a common-law doctrine

20

of successorship liability in employment law cases that “provides an exception from the

21

general rule that a purchaser of assets does not acquire a seller's liabilities.” Chi. Truck

22

Drivers, Helpers & Warehouse Workers Union (Indep.) Pension Fund v. Tasemkin, Inc., 59

23

F.3d 48, 49 (7th Cir.1995). Plaintiffs assert successorship doctrine extends to legal

24

obligations arising under the National Labor Relations Act (“NLRA”), the Fair Labor

25

Standards Act (“FLSA”), Title VII of the Civil Rights Act of 1964 (“Title VII”), and the

26

Family and Medical Leave Act (“FMLA”), among others. See e.g., Fall River Dyeing &

27

Finishing Corp. v. NLRB, 482 U.S. 27, (1987) (NLRA); Steinbach v. Hubbard, 51 F.3d 843

28

(9th Cir. 1995) (FLSA); Bates v. Pac. Maritime Ass’n, 744 F.2d 705 (9th Cir. 1984) (Title
- 24 -

1

VII); Sullivan v. Dollar Tree Stores, Inc., 623 F.3d 770, 780–81 (9th Cir. 2010) (FMLA).

2

Because the origins of successor liability are equitable, fairness is a prime consideration in

3

its application. Criswell v. Delta Air Lines, Inc., 868 F.2d 1093, 1094 (9th Cir. 1989). The

4

successorship inquiry in the labor-law context is much broader. Golden State Bottling Co.

5

v. NLRB, 414 U.S. 168, 182 n. 5 (1973). “The refusal to [adhere to the strict corporate- law

6

definition] is attributable to the fact that, so long as there is a continuity in the employing

7

industry, the public policies underlying the doctrine will be served by its broad application.”

8

Id. (internal quotation marks omitted). Plaintiffs assert Defendants should not be allowed

9

to escape liability and this Court should allow Plaintiffs to show, after discovery, that each

10

Defendant is liable as alleged.

11

However, as pointed out by Redgate Defendants, the equity concerns discussed by

12

Plaintiffs are not at issue in this case where Freightliner is still in business, as opposed to

13

going out of business or declaring bankruptcy as in the cases cited by Plaintiffs. Because

14

additional allegations may provide a basis for liability, dismissal with leave to amend is

15

appropriate.

16
17

IX. Amended Complaint

18

The Court having determined that dismissal with leave to amend is appropriate as to

19

specified claims and specified Defendants, the Court will afford Plaintiffs an opportunity

20

to submit an amended complaint.

21
22

Accordingly, IT IS ORDERED:

23

1.

24
25
26
27
28

The Motion to Dismiss (Doc. 14) is GRANTED IN PART AND DENIED IN

PART.
2.

The Motion to Dismiss (Doc. 15) is GRANTED IN PART AND DENIED IN

PART.
3.

The request to dismiss Count I, the FLSA claim, is DENIED WITH LEAVE

TO RESUBMIT.
- 25 -

1
2

4.

claims, are DISMISSED WITHOUT LEAVE TO AMEND.

3
4

Counts II, V, IV, and VII, to the extent they relate to the color discrimination

5.

The request to dismiss Counts V and VI, the A.R.S. § 23-355 and minimum

wage claims, as they relate to the FLSA claim, is DENIED WITH LEAVE TO RESUBMIT.

5

6.

Counts V and VI, the A.R.S. § 23-355 and minimum wage claims, to the

6

extent they are not related to the FLSA claim, are DISMISSED WITH LEAVE TO

7

AMEND.

8
9

7.

Count VII, as it relates to the intentional infliction of emotional distress

claims, is DISMISSED WITHOUT LEAVE TO AMEND.

10

8.

The claims against FSWAZ, Ltd.; FAZP, Inc.; FAZF, Inc.; Danny R. Cuzick

11

and Jane Doe Cuzick; and Theril H. Lund and Jane Doe Lund; Redgate Arizona, LLC, and

12

Redgate Partners, LLC dba Velocity Vehicle Group, are DISMISSED WITH LEAVE TO

13

AMEND.

14

Defendants are DISMISSED WITHOUT LEAVE TO AMEND.

15

9.

However, the federal and state anti-discrimination claims against these

FSWAZ, Ltd.; FAZP, Inc.; FAZF, Inc.; Danny R. Cuzick and Jane Doe

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Cuzick; and Theril H. Lund and Jane Doe Lund; Redgate Arizona, LLC, and Redgate

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Partners, LLC dba Velocity Vehicle Group, are DISMISSED from this action, subject to

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claims for which relief may granted being alleged against them in an amended complaint.

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10.

Plaintiffs shall file any amended complaint within 20 days of the date of this

Order.
DATED this 2nd day of June, 2017.

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