Marriott International, Inc. v. Danna
Filing
42
ORDER AND REASONS: IT IS ORDERED that Defendant Deon Danna's 36 motion to dismiss is GRANTED and Plaintiffs' claim against Defendant is DISMISSED, as set forth in document. Signed by Judge Ivan L.R. Lemelle on 8/22/2018. (jls)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
MARRIOTT INTERNATIONAL, INC., ET AL.
CIVIL ACTION
VERSUS
NO. 17-10590
DEON DANNA
SECTION "B"(3)
ORDER AND REASONS
Defendant
filed
a
motion
to
dismiss
Plaintiffs’
Amended
Complaint for lack of subject matter jurisdiction and failure to
state a claim. Rec. Doc. 36. Plaintiffs timely filed an opposition.
Rec. Doc. 37. Defendant then sought, and was granted, leave to
file a reply. Rec. Doc. 41.
For the reasons discussed below,
IT IS ORDERED that Defendant Deon Danna’s motion to dismiss
is GRANTED and Plaintiffs’ claim against Defendant is DISMISSED.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
Defendant worked at the Ritz Carlton in New Orleans from 2000
to 2010, when he was fired. Rec. Doc. 35 ¶ 17. In 2011, Defendant
sued Ritz Carlton and its corporate parent, Marriott, in Louisiana
state court, seeking damages for wrongful termination. Id. ¶ 18.
The lawsuit is ongoing. Id. In 2013, Defendant was hired by the
Sheraton in New Orleans. Id. ¶ 19. When Defendant applied for the
Sheraton
position,
he
signed
an
arbitration
agreement.
Id.
¶¶ 2-10. Plaintiffs allege that Defendant lied about his work
history
and
educational
qualifications
1
on
his
employment
application.
See
id.
¶¶ 28-30.
In
2016,
Marriott
purchased
Sheraton. Id. ¶ 12-14. In August 2017, Defendant resigned from his
position at Sheraton after his lies were discovered. Id. ¶¶ 19-20.
On October 12, 2017, Plaintiffs filed a Complaint to compel
arbitration. See Rec. Doc. 1. Defendant then filed a Motion to
Dismiss for lack of subject matter jurisdiction and failure to
state a claim. See Rec. Doc. 10. The Court granted Defendant’s
motion
to
dismiss
on
ripeness
grounds
because
Plaintiffs’
complaint sought to compel arbitration of claims that both parties
agreed did not arise out of Defendant’s employment at Sheraton.
See Rec. Doc. 30.
The Court subsequently granted Plaintiffs leave to file an
Amended
Complaint,
Plaintiffs’
claims
which
against
seeks
to
compel
Defendant.
See
arbitration
Rec.
Doc.
of
35.
Specifically, Plaintiffs seek, via arbitration, a declaratory
judgment that Defendant cannot obtain damages from Plaintiffs ever
again (or at least through 2032). See id. ¶ 42. Defendant then
filed the instant motion to dismiss, arguing that the Court lacks
subject matter jurisdiction and that Plaintiffs’ Amended Complaint
fails to state a claim. See Rec. Doc. 36.
LAW AND ANALYSIS
Plaintiffs’ Amended Complaint seeks to compel arbitration of
their claims against Defendant. See Rec. Doc. 35. The Federal
Arbitration Act (FAA) allows “[a] party aggrieved by the alleged
2
failure, neglect, or refusal of another to arbitrate under a
written agreement for arbitration” to seek “an order directing
that such arbitration proceed in the manner provided for in such
agreement.”
9
U.S.C.
§ 4.
Defendant
argues
that
Plaintiffs’
Amended Complaint should be dismissed for lack of subject matter
jurisdiction and failure to state a claim. See Rec. Doc. 36.
Because the Court concludes that there is no subject matter
jurisdiction,
the
Court
does
not
address
the
sufficiency
of
Plaintiffs’ pleadings.
On a Rule 12(b)(1) motion to dismiss for lack of subject
matter jurisdiction, the parties asserting jurisdiction bear the
burden
of
“alleg[ing]
a
plausible
set
of
facts
establishing
jurisdiction.” Physician Hosps. of Am. v. Sebelius, 691 F.3d 649,
652 (5th Cir. 2012). A federal district court has jurisdiction
over a complaint to compel arbitration when, “save for such
[arbitration]
agreement,
[the
district
court]
would
have
jurisdiction . . . [over] the subject matter of a suit arising out
of the controversy between the parties.” 9 U.S.C. § 4; see also
Lower Colo. River Auth. v. Papalote Creek II, LLC, 858 F.3d 916,
923 (5th Cir. 2017) (The FAA “does not enlarge federal-court
jurisdiction;
rather,
it
confines
federal
courts
to
the
jurisdiction they would have save for the arbitration agreement.”
(internal quotation marks and alteration omitted)).
3
“[A] party seeking to compel arbitration may gain a federal
court’s assistance only if, ‘save for’ the agreement, the entire,
actual ‘controversy between the parties,’ as they have framed it,
could be litigated in federal court.” Lower Colo. River Auth., 858
F.3d at 923 (citing Vaden v. Discover Bank, 556 U.S. 49, 66
(2009)). Accordingly, “any of the reasons that a federal court may
lack subject matter jurisdiction over the underlying dispute . . .
would similarly prevent a district court from having jurisdiction
to compel arbitration.”1
Id.
at 923. Because Plaintiffs lack
standing and have not pled a ripe controversy with Defendant,
Plaintiffs’ Amended Complaint must be dismissed. See Lower Colo.
River Auth., 858 F.3d at 927; Sample v. Morrison, 406 F.3d 310,
312 (5th Cir. 2005) (per curiam) (“[S]tanding and ripeness are
essential components of federal subject-matter jurisdiction.”).
A. Standing
Constitutional standing “is an essential and unchanging part
of the case-or-controversy requirement of Article III.”2 Lujan v.
1
Plaintiffs mistakenly argue that “resolution of any issue about
mootness or ripeness involves a merits issue, and is outside of
the limited confines of this Court’s review, which concerns the
validity and scope of the Arbitration Agreement.” Rec. Doc. 37.
Rather, as both the Supreme Court and the Fifth Circuit have
concluded, a district court must ensure that it has subject matter
jurisdiction over the underlying dispute between the parties
before considering a complaint to compel arbitration. See Vaden,
556 U.S. at 66; Lower Colo. River Auth., 858 F.3d at 923.
2 Plaintiffs would also need standing to sue under the arbitration
agreement, a question which turns in part on the terms of the
arbitration agreement—it is a question of state contract law. See
4
Defs. of Wildlife, 504 U.S. 555, 560-61 (1992). Constitutional
standing has three elements:
First, the plaintiff must have suffered an injury in
fact—an invasion of a legally protected interest which
is (a) concrete and particularized, and (b) actual or
imminent, not conjectural or hypothetical. Second, there
must be a causal connection between the injury and the
conduct complained of—the injury has to be fairly
traceable to the challenged action of the defendant, and
not the result of the independent action of some third
party not before the court. Third, it must be likely, as
opposed to merely speculative, that the injury will be
redressed by a favorable decision.
Id.
at
560-61
(internal
quotation
marks,
dispute
concerns
citations,
and
alterations omitted).
Plaintiffs’
underlying
a
declaratory
judgment. “[W]hen a plaintiff is seeking injunctive or declaratory
relief, a plaintiff must allege facts from which it appears there
is a substantial likelihood that he will suffer injury in the
future.” Bauer v. Texas, 341 F.3d 352, 358 (5th Cir. 2003). The
Supreme Court has “repeatedly reiterated that threatened injury
Perry v. Thomas, 482 U.S. 483, 492 (1987) (The “standing argument
simply
presents
a
straightforward
issue
of
contract
interpretation.” (internal quotation marks omitted)); Green Tree
Servicing, LLC v. House, 890 F.3d 493, 501-02 (5th Cir. 2018)
(applying state contract law to determine whether plaintiffs could
enforce arbitration agreement). “Under Louisiana law, ordinary
contract principles govern the question of who is bound by an
arbitration agreement.” Green v. Chase Manhattan Auto. Fin. Corp.,
No. 03-2179, 2003 WL 22872102, at *6 (E.D. La. Dec. 3, 2003)
(internal quotation marks omitted). But as discussed herein,
because Plaintiffs lack standing to pursue the underlying claim
against Defendant, the Court lacks subject matter jurisdiction
over the Amended Complaint to compel arbitration. See Lower Colo.
River Auth., 858 F.3d at 923.
5
must be certainly impending to constitute injury in fact, and that
allegations of possible future injury are not sufficient.” Clapper
v. Amnesty Int’l USA, 568 U.S. 398, 409 (2013) (internal quotation
marks, citations, and alteration omitted). A “theory of standing,
which relies on a highly attenuated chain of possibilities, does
not
satisfy
the
requirement
that
threatened
injury
must
be
certainly impending.” Id. at 410.
The injury that Plaintiffs anticipate is an award of damages
in Defendant’s state lawsuit for wrongful termination. See Rec.
Doc. 35 ¶ 40 (“[T]he disputes and claims described [in the Amended
Complaint] consist of and are based on any damages or losses that
Defendant is claiming against Marriott and/or Ritz-Carlton that
allegedly arose or were sustained by Defendant on or after” the
Defendant’s
employment
at
the
Sheraton.),
¶ 42
(explaining
declaration sought by Plaintiffs to protect against potential
damages award). Plaintiffs do not allege that Sheraton is a party
to Defendant’s state lawsuit. See Rec. Doc. 35 ¶ 18. Therefore,
Plaintiffs have not pled that Sheraton will incur damages liability
in Defendant’s state lawsuit, and accordingly have not pled an
injury in fact as to Sheraton.
Regardless,
the
alleged
injury
will
not
arise
unless
Defendant prevails in his state lawsuit and is awarded damages.
Courts are “reluctant to endorse standing theories that require
guesswork as to how independent decisionmakers will exercise their
6
judgment.” Clapper, 568 U.S. at 413. Moreover, “[i]t is just not
possible for a litigant to prove in advance that the judicial
system will lead to any particular result.” Whitmore v. Arkansas,
495 U.S. 149, 159 (1990).
This
is
problematic
for
Plaintiffs
because,
when
“[t]he
existence of one or more of the essential elements of standing
depends on the unfettered choices made by independent actors not
before the courts and whose exercise of broad and legitimate
discretion the courts cannot presume either to control or to
predict,” Plaintiffs bear the burden of alleging facts making it
plausible “that those choices have been or will be made in such
manner
as
to
produce
causation
and
permit
redressability
of
injury.” Lujan, 504 U.S. at 562 (internal quotation marks and
citations omitted). Plaintiffs’ Amended Complaint does not allege
facts that suggest Defendant will prevail in his state lawsuit and
win an award of damages, therefore Plaintiffs have not established
an “injury in fact” and lack standing to pursue the underlying
dispute. See Clapper, 568 U.S. at 410; Whitmore, 495 U.S. at 159.
Even if such damages are sufficiently certain to satisfy the
injury
prong
demonstrated
Defendant’s
Plaintiffs
of
that
lies
allege
the
standing
those
on
that
his
analysis,
damages
are
Sheraton
“Defendant’s
Plaintiffs
employment
wrongful
not
related
causally
have
to
application.
acts
and
false
statements in connection with his employment at the [Sheraton]
7
severed any causal or other connection, nexus or link with any
damages or losses allegedly caused by reason of the termination of
Defendant’s prior employment with the” Ritz Carlton. Rec. Doc. 35
¶ 42
(referring
to
Defendant’s
pre-existing
state
lawsuit).
Therefore, under the Lujan framework, Defendant’s lies on his
employment application are the “conduct complained of;” the lies
allegedly entitle Plaintiffs to relief. Lujan, 504 U.S. at 560
(“[T]here must be a causal connection between the injury and the
conduct complained of.”). This allegation is also central to the
viability of Plaintiffs’ claim because it ties the putative dispute
to the arbitration agreement that Defendant signed during the
Sheraton hiring process. See Rec. Doc. 35 ¶¶ 2-10. Therefore, the
potential future damages award “has to be fairly traceable to”
Defendant’s lies on his Sheraton employment application. Lujan,
504 U.S. at 560. Plaintiffs have not made such a showing. Instead,
they offer a tenuous explanation of how Defendant’s lies on his
Sheraton employment application are tied to any potential damages
award in Defendant’s pre-existing state lawsuit.
Reading Plaintiffs’ Amended Complaint generously, Plaintiffs
have alleged the following causal chain. First, Defendant’s preexisting state lawsuit for wrongful termination from the Ritz
Carlton seeks monetary damages because Defendant was unable to
secure a job with comparable pay after being terminated. See Rec.
Doc. 35 ¶¶ 23, 25. Second, a potential measure of damages in the
8
pre-existing state lawsuit is the differential between (1) what
Defendant would have earned if he continued working at the Ritz
Carlton and (2) Defendant’s actual earning potential since being
terminated from the Ritz Carlton. See id.; see also Rec. Doc. 37
at 7-8. Third, Defendant worked at the Sheraton after being
terminated from the Ritz Carlton. See Rec. Doc. 35 ¶¶ 19-22.
Fourth, Defendant was terminated from the Sheraton because of his
lies on his employment contract. See id. ¶ 42. Fifth, Defendant
secured another lower-paying job after being terminated from the
Sheraton. See id. ¶¶ 26-27. Therefore, if Defendant prevails in
his state-court lawsuit, the damages he is awarded will be caused
by Defendant’s lies on his Sheraton employment application. See
id. ¶ 42.
The alleged causal relationship between Defendant’s lies and
the potential damages in the state lawsuit breaks down under
scrutiny. The question of liability in Defendant’s state lawsuit
does not depend on Defendant’s lies on his Sheraton employment
application; the lies occurred after Defendant was terminated from
the Ritz Carlton. Whether Defendant’s termination from the Ritz
Carlton was permissible is not fairly traceable to Defendant’s
subsequent honesty, or lack thereof, when applying for a job at
the Sheraton. Absent such a fairly traceable causal relationship,
Plaintiffs would lack standing to pursue the desired declaratory
relief in federal district court. See Lujan, 504 U.S. at 560.
9
Therefore, this Court lacks jurisdiction over Plaintiffs’ efforts
to
accomplish
the
same
result
via
a
complaint
to
compel
arbitration. See Lower Colo. River Auth., 858 F.3d at 923.
Even
if
Defendant’s
lies
on
the
Sheraton
employment
application could play some role in calculating the quantum of
damages that might be awarded in the state lawsuit, the connection
would be too attenuated to satisfy the rigors of constitutional
standing. Plaintiffs do not explain how Defendant’s lies on his
Sheraton employment application will affect his future earnings.
See Rec. Docs. 35 ¶¶ 22-29, 40; 37 at 7-8. If the lies do play a
role, it will be as one of many considerations taken into account
by the expert witnesses, judge, and jury in Defendant’s state
lawsuit. “[B]ecause [Plaintiffs] can only speculate as to whether”
or how Defendant’s future earnings would be affected by Defendant’s
lies, as opposed to some other combination of factors, Plaintiffs
“cannot satisfy the ‘fairly traceable’ requirement.” Clapper, 568
U.S. at 413.
B. Ripeness
“[R]ipeness is a constitutional prerequisite to the exercise
of jurisdiction.” Lower Colo. River Auth., 858 F.3d at 922. “Under
Article III of the Constitution, federal courts are confined to
adjudicating
cases
controversy
for
and
controversies.
Article
III
And
to
jurisdictional
be
a
case
purposes,
or
the
litigation must be ripe for decision, meaning that it must not be
10
premature
or
speculative.”
Id.
(internal
quotation
marks
and
citations omitted). When deciding whether a complaint to compel
arbitration is ripe, a court “must look through the [complaint]
. . . to determine whether the underlying dispute presents a
sufficiently ripe controversy to establish federal jurisdiction.”
Id. (citing Vaden v. Discover Bank, 556 U.S. 49 (2009)).
“In the declaratory judgment context, whether a particular
dispute is ripe for adjudication turns on whether a substantial
controversy of sufficient immediacy and reality exists between
parties
having
adverse
legal
interests.”
Id.
at
924.
“A
controversy, to be justiciable, must be such that it can presently
be litigated and decided.” Brown & Root, Inc. v. Big Rock Corp.,
383 F.2d 662, 665 (5th Cir. 1965). In arbitration, Plaintiffs
intend to seek a declaratory judgment that, because Defendant lied
on his employment application, Defendant cannot seek damages from
Plaintiffs ever again (or at least through 2032). See Rec. Doc. 35
¶ 42. Defendant made the allegedly false statements in 2013, see
id. ¶¶ 29-30, so any controversy is immediate; if Defendant’s
alleged lies gave rise to a legal remedy, Plaintiff would be able
to seek such remedy now. See Venator Grp. Specialty, Inc. v.
Matthew/Muniot Family, LLC, 322 F.3d 835, 839-41 (5th Cir. 2003).
But Defendant challenges another aspect of ripeness, namely
that there are no “adverse legal interests” in controversy because
Plaintiffs have not articulated a cause of action that entitles
11
them to a declaratory judgment. See Rec. Doc. 36-2 at 8-11. When
granting leave for Plaintiffs to file their Amended Complaint, the
Court
reasoned
that
the
Amended
Complaint
“just
minimally
describe[s] a ripe controversy between” the parties because it
appeared that Plaintiffs intended “to assert the rights they
understand themselves to possess under Defendant’s employment
contract with Sheraton.” Rec. Doc. 34 at 9.
Upon
further
consideration
examination
of
of
Defendant’s
the
Amended
motion
to
Complaint,
dismiss
Defendant
and
is
correct.3 Nowhere in their Amended Complaint do Plaintiffs explain
the
legally-cognizable
claim
that
underpins
their
demand
for
declaratory relief.4 See 28 U.S.C. § 2201 (“In a case of actual
3
Defendant was actually an at will employee; Plaintiffs do not
allege an employment contract with Defendant. See Rec. Doc. 37-1
at 2 (The arbitration agreement states that it “is not intended to
be and shall not be deemed to constitute a contract of employment
for any specific duration, and that my employment shall be and
remain at will.”); 1-5 at 4 (Defendant’s signed employment offer
letter confirms that Defendant was an ‘at will’ employee and that
“except for [the offer] letter, there is and shall not be any
written contract between [Defendant] and [Sheraton] concerning
this offer of employment or [Defendant’s] prospective employment,
and that this [offer] letter is not intended to be and is not a
contract of employment.”).
4 The parties’ arbitration agreement incorporates the American
Arbitration Association’s National Rules for the Resolution of
Employment Disputes. See Rec. Doc. 37-1 at 1. Those rules create
a procedure for demanding arbitration. See id. Plaintiffs do not
appear to have initiated an arbitration proceeding against
Defendant, so the Court cannot examine those filings to identify
a legally-cognizable claim. See Am. Arbitration Ass’n, Employment
Arbitration Rules and Mediation Procedures 11-12 (2009),
https://www.adr.org/Rules (setting out the procedure for a party
to initiate an arbitration proceedings by filing a demand with the
12
controversy,” a district court “may declare the rights and other
legal relations of any interested party seeking such declaration.”
(emphasis added)). Neither do Plaintiffs explain why sweeping
declaratory relief would be a permissible remedy for Defendant’s
past lies, a discrete harm that would normally be redressed (if at
all) with compensatory damages.
In response to Defendant’s argument that “[P]laintiffs have
not provided any contentions or facts supporting any recognized
cause
of
action
against”
Defendant,
Rec.
Doc.
36-2
at
14,
Plaintiffs simply reassert that they have “disputes and claims”
against Defendant, see Rec. Doc. 37 at 7, 11-13, 15. Plaintiffs
further argue that they “have not filed their substantive claims
and disputes herein” because they are waiting until arbitration.
See id. at 15. Plaintiffs cannot keep Defendant and the Court in
suspense. The law does not provide a remedy for every dispute and
perceived injury, and a federal district court has jurisdiction
over only a subset of possible causes of action. Without pleading
the
“substantive
claims
and
disputes”
that
Plaintiffs
would
attempt to assert in arbitration, Plaintiffs have not pled facts
that plausibly establish a ripe controversy.
American Arbitration Association (AAA)); see also Am. Arbitration
Ass’n, Employment Arbitration Rules Demand for Arbitration,
https://www.adr.org/EmploymentForms
(instructing
claimant
to
“describe the nature of each claim” and to send a copy of the
demand to the AAA “[t]o begin proceedings”).
13
In a declaratory judgment action, “[a] party’s legal interest
must relate to an actual claim.” Collin Cty. v. Homeowners Ass’n
for Values Essential to Neighborhoods, (HAVEN), 915 F.2d 167, 171
(5th Cir. 1990) (internal quotation mark omitted). The declaratory
judgment is merely the remedy sought, a plaintiff’s pleadings must
establish the plaintiff’s entitlement to the declaratory judgment,
which requires pleading a valid cause of action. Failure to plead
an underlying legal claim against Defendant is fatal to Plaintiffs’
Amended Complaint. See In re Oil Spill, 808 F. Supp. 2d 943, 96667 (E.D. La. 2011) (dismissing claim for declaratory relief because
plaintiffs failed to “identif[y] a cause of action that would
entitle them to their requested relief”) (citing HAVEN, 915 F.2d
at 171). A court cannot adjudicate a complaint for declaratory
judgment when there is no underlying cause of action. Because
Plaintiffs have not pled a cause of action that would entitle them
to a declaratory judgment after being given an opportunity to do
so by amendment, the dispute underlying their Amended Complaint is
not ripe and this Court lacks subject matter jurisdiction. See
Lower Colo. River Auth., 858 F.3d at 923.
New Orleans, Louisiana, this 22nd day of August, 2018.
___________________________________
SENIOR UNITED STATES DISTRICT JUDGE
14
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