El-Hallani et al v. Huntington National Bank

Filing 31

OPINION and ORDER granting Defendant's 27 Motion to Dismiss. Signed by District Judge Gerald E. Rosen. (JOwe)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
ALI EL-HALLANI, et al,
Plaintiffs,
No. 13-cv-12983
Hon. Gerald E. Rosen

vs.
HUNTINGTON NATIONAL BANK,
Defendant.
___________________________________/

OPINION AND ORDER GRANTING DEFENDANT’S MOTION TO
DISMISS
I. INTRODUCTION
Undeterred by this Court’s prior identification of all of the reasons why their
First Amended Complaint failed to meet Rule 8(a)’s pleading standard, Plaintiffs
have filed a Second Amended Complaint supported only by one new allegation.
That one allegation, the results of a last minute survey conducted by Plaintiffs’
process server of six individuals departing two of Defendant’s branches in metroDetroit, purports to identify four similarly situated individuals whom Defendant
treated differently. Not surprisingly, Defendant has again moved to dismiss. It has
also moved for sanctions. Having reviewed and considered Defendant’s Motion
and supporting brief, Plaintiffs’ response thereto, and the entire record of this
matter, the Court has determined that the relevant allegations, facts, and legal
1

arguments are adequately presented in these written submissions, and that oral
argument would not aid the decisional process. Therefore, the Court will decide
this matter “on the briefs.” See Eastern District of Michigan Local Rule 7.1(f)(2).
As set forth below, Plaintiffs’ sole additional evidence does not come close to
“nudg[ing] their claims across the line from conceivable to plausible.”

Bell

Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007); Ashcroft v. Iqbal, 556 U.S.
662, 680 (2009).

This Court now dismisses Plaintiffs’ Second Amended

Complaint with Prejudice.
II. PERTINENT FACTS
Because the parties and the Court are quite familiar with Plaintiffs’ prior
pleadings, the Court hereby incorporates its prior articulation of the facts at issue in
this matter. El-Hallani v. Huntington Nat. Bank, 2014 WL 988957, at *1-4 (E.D.
Mich. March 13, 2014) (Rosen, C.J.). Plaintiffs’ Second Amended Complaint is
basically a carbon copy of their First Amended Complaint, adding and/or
modifying just a few paragraphs to support their contention that Defendant closed
their bank accounts because of their race and/or national origin. (Plfs’ 2d. Am.
Compl., Dkt. # 23, at ¶¶ 30-35, 39). Specifically, Plaintiffs now incorporate four
exhibits: (1) a collection of documents that they say identifies four similarly
situated individuals whom Defendant treated differently; (2) an affidavit by Samia
Sareini that provides details concerning complaints the Arab American Civil

2

Rights League has received regarding “account closures from several local banks,
including Huntington National Bank;” (3) an affidavit by Hussein Dabaja that
provides information relative to his experience as a former employee at
Defendant’s Oakman branch in Dearborn, Michigan; and (4) an affidavit by coPlaintiff Mark Manuaeel that provides additional information concerning the
closure of his account. (Exs. A-D to Plfs’ 2d. Am. Compl., Dkt. ## 23-3, 23-4, 235, 26).
As an initial matter, the three affidavits are not “new” documents to this
litigation. Plaintiffs attached the very same affidavits in response to Defendant’s
Motion to Dismiss Plaintiffs’ First Amended Complaint. (Exs. B-D to Plfs’ Resp.,
Dkt. ## 17-3, 17-4, 17-5). This Court has already considered these affidavits,
finding in no uncertain terms that they did not shore up the plainly conclusory
allegations set forth in the First Amended Complaint sufficient to plausibly state a
claim for relief. El-Hallani, 2014 WL 988957, at *2-4, 10. Plaintiffs’ Response
does not even acknowledge this Court’s prior consideration of these affidavits, let
alone present any argument as to why this Court should view these affidavits any
differently this time around. Accordingly, the Court will not revisit its prior
conclusion that “the additional facts contained within [the three affidavits] do not
satisfy Twombly/Iqbal’s plausibility standard -- a standard that simply does not

3

permit this Court to breathe life into claims that are wholly supported by
conclusory allegations and formulaic recitations of the elements.” Id. at *10.
The only truly new allegations in Plaintiffs’ Second Amended Complaint are
the allegations related to Plaintiffs’ purported identification of four similarly
situated individuals whom Defendant treated differently. Those allegations are set
forth in Paragraph 30:
Several non-Middle Eastern and non-Arab similarly situated account
holders at Huntington National Bank have not had their bank accounts
closed with no explanation. See Exhibit A for a specific listing of the
non-Middle Eastern and non-Arab similarly situated account holders
at Huntington National Bank who have not had their bank accounts
closed with no explanation.
(Plfs’ 2d. Am. Compl., Dkt. # 23, at ¶ 30; see also ¶¶ 40, 50, 64, 81). Exhibit A is
a collection of documents relating to a survey conducted by an employee of Elite
Process Service. (Ex. A to Plfs’ 2d. Am. Compl., Dkt. # 26). That employee,
Patricia Carter, surveyed six individuals leaving Defendant’s branches in St. Clair
Shores and Warren, Michigan on April 1 and 2, 2014 -- the two days immediately
before Plaintiffs needed to file the Second Amended Complaint. (Id. at 3). The
ten question survey asked the following questions:
1.
2.
3.
4.

Name?
Address?
Telephone Number?
What do you consider your race: White; African-American; Asian;
Hispanic; or Other?
5. Do you currently bank with Huntington?

4

6. Do you have business accounts, personal accounts, or both with
Huntington?
7. What type of business has its account at Huntington?
8. How long have you had accounts with Huntington?
9. Has Huntington ever closed one of your accounts?
10. Do you use any of your Huntington accounts for improper or
illegal purposes?
(Id. at 4-7).
From this survey, Plaintiffs have identified four individuals whom they
contend Defendant treated differently.1 All four are white, have personal bank
accounts, have never used their accounts for an improper or illegal purpose, and
Defendant has never closed their accounts. (Id.). They live in Detroit, Roseville,
and St. Clair Shores, Michigan.2

(Id.).

Finally, the amount of time these

individuals have had accounts with Defendant varies: one is a new account holder;
one has banked with Defendant for “a few months;” one has banked with
Defendant for a year; and one responded with “n/a.” (Id.).

1

Carter’s affidavit indicates that she surveyed six individuals, but Plaintiffs only
attached four of these surveys. Plaintiffs’ documents make clear that they only
identify these four individuals as those similarly situated individuals whom
Defendant treated differently. (Ex. A to Plfs’ 2d. Am. Compl., Dkt. # 26, at 2).
Plaintiffs’ Response also refused to provide any information about those
individuals whom Carter interviewed, but did not sign an individual survey. (Plfs’
Resp., Dkt. # 29, at 27 n.3).
2
Plaintiffs assert that one of these customers lives in Taylor, Michigan. (Ex. A to
Plfs’ 2d. Am. Compl., Dkt. # 26, at 2). A review of this customer’s survey,
however, indicates that she lives on Taylor Street in Saint Clair Shores. (Id. at 7).
5

III. DISCUSSION
A.

Plaintiffs’ Second Amended Complaint Remains Deficient
Plaintiffs still maintain that Defendant discriminated against them on the

basis of their race and/or national origin in violation of 42 U.S.C. §§ 1981, 1982
and Michigan’s Elliott-Larsen Civil Rights Act (ELCRA), M.C.L. § 37.2302(a),
when it closed their bank accounts without explanation.3

Though Plaintiffs’

Second Amended Complaint ostensibly sets forth its new facts in the four attached
documents referenced above, this Court can consider these documents without
converting Defendant’s Rule 12(b)(6) motion into one for summary judgment.
Fed. R. Civ. P. 10(c); Commercial Money Ctr., Inc. v. Illinois Union Ins. Co., 508
F.3d 327, 335 (6th Cir. 2007) (“[D]ocuments attached to the pleadings become part
of the pleadings and may be considered on a motion to dismiss.”). Therefore, this
Court must follow the pleading standards set forth by Twombly/Iqbal:
Plaintiffs’ only burden at this stage is to allege facts that plausibly
support an inference of discrimination -- to set forth “sufficient
‘factual content’ from which [this] court . . . could ‘draw the
reasonable inference’” that Defendant closed Plaintiffs’ bank accounts
due to their race. This “plausibility” threshold “occupies that wide
3

Plaintiffs’ Second Amended Complaint again hints at a claim of religious
discrimination (Plfs’ 2d. Am. Compl., Dkt. # 23, at ¶¶ 4, 10, 12, 21-22, 29, 36-38,
40, 73-76, 78-83), but Plaintiffs’ Response does not argue that they are advancing
such a claim. Nor did Carter’s survey ask questions regarding religious affiliation.
For these reasons and those set forth in this Court’s prior Opinion, Plaintiffs have
failed to state a claim for relief under Section 1981, Section 1982, and ELCRA on
account of being (or perceived as being) Muslim. El-Hallani, 2014 WL 988957, at
*6.
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space between ‘possibility’ and ‘probability.’ If a reasonable court
can draw the necessary inference from the factual material stated in
the complaint, the plausibility standard has been satisfied.”
El-Hallani, 2014 WL 988957, at *5 n.2 (citing Keys v. Humana, Inc., 684 F.3d
605, 610 (6th Cir. 2012)); see also id. at *4-5 (discussing the standard of review
for Rule 12(b)(6) motions). Drawing upon this Court’s judicial experience and
common sense, Keys, 684 F.3d at 610, this Court concludes that Plaintiffs’ Second
Amended Complaint once more does not plausibly raise an inference of
discriminatory conduct and rather still just “infer[s] . . . the mere possibility of
misconduct” on behalf of Defendant. Iqbal, 556 U.S. at 678.
1.

Plaintiffs’ identification of alleged similarly situated individuals

This is a purported class action seeking to rectify allegedly discriminatory
banking practices. Plaintiffs assert that Defendant has closed at least twenty-five -maybe over one hundred -- bank accounts associated with Arab and/or Middle
Eastern individuals without explanation. (Plfs’ 2d. Am. Compl., Dkt. # 23, at ¶
10).

Yet, even after this Court’s Opinion identified the First Amended

Complaint’s numerous pleading flaws in this post-Twombly/Iqbal world and
expressly noted that it dismissed Plaintiffs’ First Amended Complaint without
prejudice “out of an abundance of caution,” El-Hallani, 2014 WL 988957, at *10,
all Plaintiffs could muster to salvage their claims is an eleventh hour survey of at

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most six of Defendant’s customers in the entire metro-Detroit area. This survey
simply does not cure Plaintiffs’ pleading defects.
At the outset and given the parties’ briefing on the issue, the Court is
compelled to once more highlight what role the identification of similarly situated
individuals who were allegedly treated differently plays for purposes of evaluating
a motion under Federal Rule of Civil Procedure 12(b)(6). It is well-settled that
complaints need not establish a prima facie case of discrimination in order to
satisfy Twombly/Iqbal. Id. at *5 n.2 (citing Keys, 684 F.3d at 609-10). The Court
is aware of no authority requiring a plaintiff in every circumstance to affirmatively
identify a similarly situated individual in order to adequately plead a claim of
discrimination. Doing so, of course, is likely one way to satisfy Twombly/Iqbal.
16630 Southfield Ltd. P’ship v. Flagstar Bank, F.S.B., 727 F.3d 502, 506 (6th Cir.
2013) (“No doubt disparate treatment of similarly situated people may support an
inference of discrimination.”). But pleaders beware. It is not enough to just allege
that an individual “is similarly situated and that his more favorable treatment . . .
evidences unlawful discrimination[. Such allegations] are . . . little more than
‘legal conclusions couched as factual allegations’ and need not be accepted as true
under Rule 12(b)(6) scrutiny.’” Rondigo, L.L.C. v. Twp. of Richmond, 641 F.3d
673, 684 (6th Cir. 2011) (citing Twombly, 550 U.S. at 555).

8

In support of its argument that Plaintiffs have not identified any similarly
situated individuals, Defendant contends that “Exhibit A is plainly devoid of any
evidentiary value” and therefore should not be considered. (Def’s Mtn., Dkt. # 27,
at 15). In contrast to a Rule 56 motion where the evidence must be admissible at
trial, Alexander v. Caresource, 576 F.3d 551, 558 (6th Cir. 2008), Rule 12(b)(6)
does not require a plaintiff to proffer admissible evidence in order to state a claim
for relief. Instead, it mandates that this Court assume that Plaintiffs’ allegations
are true -- even those that are “unrealistic or nonsensical.” Iqbal, 556 U.S. at 681
(“To be clear, we do not reject . . . bald allegations on the ground that they are
unrealistic or nonsensical. It is the conclusory nature of respondent’s allegations,
rather than their extravagantly fanciful nature, that disentitles them to the
presumption of truth.”); Penalbert-Rosa v. Fortuno-Burset, 631 F.3d 592, 596 (1st
Cir. 2011) (“Specific information, even if not in the form of admissible evidence,
would likely be enough at [the motion to dismiss] stage; pure speculation is not.”);
In re Packaged Ice Antitrust Lit., 723 F. Supp. 2d 987, 1012 n.15 (E.D. Mich.
2010) (Borman, J.) (“Whether the allegations in the complaint are based on
hearsay is not relevant to a motion under Rule 12(b)(6).”) (citation omitted).
Regardless of whether admissible or not, Carter’s survey must set forth sufficient
facts to infer discriminatory conduct in order for Plaintiffs to satisfy Rule 8(a)’s
pleading requirements. It fails to do so for at least four reasons.

9

First, Carter conducted the survey outside of two of Defendant’s branches in
Detroit’s northern and northeastern suburbs: Warren and St. Clair Shores. She
talked to customers who lived in Detroit, St. Clair Shores, and Roseville (another
northeastern suburb). But Plaintiffs live on the opposite side of the metro-Detroit
area in the northwestern and western suburbs of West Bloomfield and Canton.
They also do not suggest that they banked at the branches at which Carter
conducted her survey. These discrepancies in location do not merit an inference of
discriminatory conduct.
Second, the length of time in which these four individuals have had accounts
with Defendant completely undermines any claim of similarity to Plaintiffs.
Plaintiffs make clear that Defendant closed their accounts over a year ago in March
2013. Yet, two of the individuals just recently opened accounts, one has only
banked with Defendant for a year, and one responded with “n/a.”

At best,

Plaintiffs have identified only one individual who perhaps held an account with
Defendant at the time when it closed Plaintiffs’ accounts. That one white customer
across the entire metro-Detroit area maybe banked with Defendant at the same time
Defendant closed Plaintiffs’ accounts does not lead to a plausible inference of
discriminatory conduct.
Third, the customers’ responses regarding the core demographic
characteristic at issue in this litigation -- race/national origin -- raise more

10

questions than answers. Carter’s survey identifies five racial categories for the
participants to circle: White; African-American; Asian; Hispanic; or Other.
Despite alleging that Defendant systematically closed the bank accounts of those
who are Arab and/or Middle Eastern, Carter’s survey did not specifically list these
characteristics and rather just provided the participants with the ability to selfidentify as Arab and/or Middle Eastern in the “Other” field. Moreover, the U.S.
Census Bureau defines “white” as “a person having origins in any of the original
peoples of Europe, the Middle East, or North Africa. It includes people who
indicated their race as ‘White’ or report entries such as Irish, German, Italian,
Lebanese, Arab, Moroccan, or Caucasian.” Information on Race, U.S. Census
Bureau,

http://quickfacts.census.gov/qfd/meta/long_RHI125212.htm.4

As

Defendant rightly points out, “[t]he surveyed persons’ identification of themselves
as ‘white’ does not mean they are not of Arab or Middle Eastern ethnicity or
descent.” (Def’s Mtn., Dkt. # 27, at 16).5

4

The Court may consider this matter of public record without converting
Defendant’s motion to one for summary judgment. Commercial Money Ctr., 508
F.3d at 336.
5
On this point, Plaintiffs claim that Defendant suggests that “‘Arabs’ are not
proper plaintiffs in a § 1981 case.” (Plfs’ Resp., Dkt. # 29, at 32). Characterizing
Defendant’s argument as “frivolous,” “myopic,” and “disturbing,” Plaintiffs
request sanctions under Rule 11, this Court’s inherent power, and 28 U.S.C. §
1927. (Id. at 33). Plaintiffs’ characterization completely distorts Defendant’s
position: Nowhere in its pleadings does Defendant argue that Arabs cannot assert
claims under § 1981. And, as Plaintiffs hint (albeit by quoting directly from the
Supreme Court’s syllabus in Saint Francis College v. Al-Khazraji, 481 U.S. 604
11

And fourth, the response to Carter’s question regarding how the individuals
used their accounts is incredibly predictable. Carter asked each participant, “Do
you use your Huntington accounts for improper or illegal purposes?” Common
sense dictates that if a current customer departs their own bank and is then asked
by a stranger whether he or she was using a bank account for improper or illegal
purposes, the answer will be no.
In sum, this Court refuses to do an end-around Twombly/Iqbal by drawing an
inference of discrimination from the additional facts presented in Carter’s hastily
cobbled together survey. It is just common sense that Defendant -- a national bank
with a significant business presence in this District -- has hundreds if not thousands
of customers in metro-Detroit who are white, have accounts in good standing, and
have not used their accounts for any illegal or improper purposes. Plaintiffs’
Second Amended Complaint now identifies four customers -- all of whom reside in
different communities than Plaintiffs, banked at different branches than Plaintiffs,
and held accounts at different times than Plaintiffs -- as similarly situated
individuals. The nature of Carter’s survey and the allegations Plaintiffs draw from
this survey “are precisely the kinds of conclusory allegations that Iqbal and
Twombly condemned and thus told [courts] to ignore when evaluating a
(1987), which “constitutes no part of the opinion of the court”), nor could it. Id. at
613 (holding that § 1981 encompasses claims of “intentional discrimination solely
because of . . . ancestry or ethnic characteristics,” including those of Arabian
ancestry).
12

complaint’s sufficiency.” 16630 Southfield Ltd. P’ship, 727 F.3d at 506. Because
Plaintiffs rest their entire Second Amended Complaint on the identification of
these four individuals and because they “have not identified any similarly situated
individuals whom [Defendant] treated better,” id. at 506, Plaintiffs’ Second
Amended Complaint does not satisfy Twombly/Iqbal’s plausibility standard.6
2.

Plaintiffs’ other arguments

Though Plaintiffs’ Second Amended Complaint only added the results of
Carter’s survey discussed above, Plaintiffs’ briefing -- which reiterates arguments
they previously made in response to Defendant’s prior motion -- necessitates a
brief response. First, Plaintiffs’ briefing again suggests that this Court should infer
discriminatory conduct because Defendant allegedly closed profitable accounts
without explanation:
Closing profitable business accounts involving, in some cases, large
amounts of money is profoundly contrary to the manifest financial
6

To be sure, the identification of a similarly situated individual was not the only
path Plaintiffs could have walked down when crafting their pleading. They could
have, for example, set forth facts evidencing some discriminatory intent on behalf
of Defendant -- like a statement by one of “Defendant’s employees . . . reflecting a
discriminatory bias towards Arabs.” El-Hallani, 2014 WL 988957, at *10. But
they did not do so. They also could have provided some detail as to the nature of
the alleged twenty-five to one hundred accounts that Defendant closed without
explanation -- like a snapshot of their banking history to show the amount of
business conducted with Defendant -- sufficient to draw an inference that
Defendant’s conduct was so profoundly contrary to Defendant’s manifest financial
interests, so far outside of widely-accepted business norms, and so arbitrary on its
face that the conduct supports a rational inference of discrimination. See infra, at
13-15. But again, they did not do so.
13

interests of a banking institution, particularly where Plaintiffs and
other identified potential class members have not engaged in any
illegal activity, nor had they done anything to cause the bank to lose
money by having them as a customer. Indeed, on many occasions the
individual branches have attempted to discourage such closures,
precisely because the branches were making money having the
accounts open.
(Plfs’ Resp., Dkt. # 29, at 30). In examining § 1981 claims, the Sixth Circuit has
recognized that in order “to account for situations in the commercial establishment
context in which a plaintiff cannot identify other similarly situated persons,” a
plaintiff may show that he or she “received services in a markedly hostile manner
and in a manner which a reasonable person would find objectively discriminatory.”
Christian v. Wal-Mart Stores, Inc., 252 F.3d 862, 871 (6th Cir. 2001). Several
factors may demonstrate the “markedly hostile” conduct, including “whether the
conduct ‘is (1) so profoundly contrary to the manifest financial interests of the
merchant and/or her employees; (2) so far outside of widely-accepted business
norms; and (3) so arbitrary on its face, that the conduct supports a rational
inference of discrimination.’” Id. (citation omitted).
The problem with Plaintiffs’ position here is that a motion under Federal
Rule of Civil Procedure 12(b)(6) tests the sufficiency of a complaint, not additional
facts that are set forth in response to a motion to dismiss. Plaintiffs’ Second
Amended Complaint does not allege that Defendant closed profitable business
accounts or provide any information as to how much money was in their accounts

14

at the time of their closure, and the Court cannot consider these new “facts” for
purposes of Defendant’s motion. See Strayhorn v. Wyeth Pharm., Inc., 737 F.3d
378, 399 (6th Cir. 2013) (“[T]he appropriate method for adding new factual
allegations to a complaint is not via a[] . . . brief, but by filing an amended
complaint.”) (citation omitted); Thomason v. Nachtrieb, 888 F.2d 1202, 1205 (7th
Cir. 1989) (“It is a basic principle that the complaint may not be amended by the
briefs in opposition to a motion to dismiss.”).7 A close examination of Plaintiffs’
Second Amended Complaint with regards to this issue reveals only that Plaintiffs
have alleged that Defendant’s “conduct deviated from business norms in such a
manner to support an inference of discrimination” and that in 2008/2009, “local
managers would try to convince headquarters that certain accounts should not be
closed . . . [due to their] good relationships with their customers.” (Plfs’ 2d. Am.
Compl., Dkt. # 23, at ¶ 84; Ex. C to Plfs’ 2d. Am. Compl., Dkt. # 23-4, at ¶ 11).
On these facts alone, the Court again refuses to draw an inference of “markedly
hostile” conduct.
The second repeat argument deals with the notion that they have allegedly
identified at least twenty-five individuals who had their accounts closed by
Defendant. This Court has already addressed that allegation. See El-Hallani, 2014
WL 988957, at *9-10.

Other than generally referencing these twenty-five

7

And even were this Court to consider these facts, they are too general and
conclusory to draw an inference of “markedly hostile” conduct.
15

individuals again in their Second Amended Complaint, Plaintiffs do not assert any
additional facts that would permit this Court to draw an inference of discrimination
based on the closure of their accounts. Indeed, the opposite is true; with such a
bald assertion, the Court is left to wonder why the twenty-five other individuals
have failed to come forward with any additional facts to support this litigation.
Third, Plaintiffs again point to the fact that Defendant has not provided an
explanation for why it closed their accounts. This Court already addressed that
allegation as well: a defendant need not “come forward with an ‘obvious
alternative explanation’” for its conduct where a plaintiff’s complaint “merely
pleads facts consistent with liability.” Id. at *10 (citing HDC, LLC v. City of Ann
Arbor, 675 F.3d 608, 613 (6th Cir. 2012)).

A holding otherwise “would

improperly shift Rule 8(a)’s pleading burden away from a plaintiff’s obligation to
set forth facts sufficient to nudge[ ] . . . claims across the line from conceivable to
plausible.” Id. at *10 (citations omitted).
Fourth and finally, Plaintiffs briefly argue that Defendant’s “quarterly lists”
of accounts to close constitutes “direct evidence” of discrimination. (Plfs’ Resp.,
Dkt. # 29, at 30). “In discrimination cases, direct evidence is that evidence which,
if believed, requires the conclusion that unlawful discrimination was at least a
motivating factor in the [entity]’s actions.” Laderach v. U-Haul of Nw. Ohio, 207
F.3d 825, 829 (6th Cir. 2000) (citation omitted and emphasis added). Plaintiffs’

16

draw this “quarterly lists” allegation from the affidavit submitted by Hussein
Dabaja, which this Court already considered and deemed insufficient:
Dabaja’s observations as a former employee do not sufficiently span
the factual divide between possibility and plausibility. Notably,
Dabaja last worked for Defendant in September 2009 -- four years
before the facts at issue in this case. Though he attests that the
“closing lists” contained the names of Arab and Chaldean businesses
resulting in the closure of over 200 accounts from 2008 through 2009,
Dabaja presented no facts indicating that Defendant did so on account
of race and did so four years later when it closed Plaintiffs’ accounts.
. . . Dabaja’s attestation that similarly situated “non-Middle Eastern
bank account holders” did not suffer from similar closures is merely a
label and conclusion under Twombly that just “will not do.”
El-Hallani, 2014 WL 988957, at *10 (citing Twombly, 550 U.S. at 555).
Plaintiffs have therefore not pled any new facts sufficient to a state claim for
relief under Section 1981, Section 1982, and ELCRA. The Court now dismisses
Plaintiffs’ Second Amended Complaint with Prejudice.
B.

Sanctions Are Not Appropriate
Under 28 U.S.C. § 1927, this Court may impose an award of fees and costs

against an attorney “who so multiplies the proceedings in any case unreasonably
and vexatiously.”

The Sixth Circuit has explained that an award of fees is

appropriate under § 1927, with or “without a finding of bad faith,” if “an attorney
knows or reasonably should know that a claim pursued is frivolous or that his or
her litigation tactics will needlessly obstruct the litigation of nonfrivolous claims.”
Ridder v. City of Springfield, 109 F.3d 288, 298 (6th Cir. 1997) (citation omitted).

17

It has also noted “that the application of § 1927 is warranted when an attorney has
engaged in some sort of conduct that, from an objective standpoint, ‘falls short of
the obligations owed by a member of the bar to the court and which, as a result,
causes additional expense to the opposing party.’” Holmes v. City of Massillon,
Ohio, 78 F.3d 1041, 1049 (6th Cir. 1996) (citation omitted). This misconduct
“must amount to more than simple inadvertence or negligence that has frustrated
the trial judge.” Id.
Plaintiffs’ attorneys have put this Court in a bind. On the one hand, “[a]n
award of attorney’s fees against a losing plaintiff in a civil rights action is an
extreme sanction, and must be limited to truly egregious cases of misconduct.”
Ridder, 109 F.3d at 299 (quoting Jones v. Cont’l Corp., 789 F.2d 1225, 1232 (6th
Cir. 1986)). On the other hand, this Court previously took great measures to set
forth all of the various reasons why Plaintiffs’ First Amended Complaint did not
pass Rule 8(a)’s pleading standard, but allowed Plaintiffs to have a proverbial third
bite at the apple.

In the face of this Court’s Opinion, the Second Amended

Complaint incorporates the three affidavits -- without any changes -- despite this
Court’s express holding that the affidavits did not cure Plaintiffs’ pleading
deficiencies. The only other change to Plaintiffs’ pleading was the addition of a
survey conducted two days before Plaintiffs had to file their Second Amended
Complaint.

Plaintiffs’ counsel should have known that this sole additional

18

evidence does not even pass the straight-face test, let alone set forth facts sufficient
to plausibly draw the inference that Defendant closed Plaintiffs’ accounts due to
their race and/or ethnicity.
Though closer than most cases in which parties’ request Section 1927
sanctions, the filing of Plaintiffs’ Second Amended Complaint was not so
egregious so as to merit sanctions under Section 1927 given the Sixth Circuit’s
admonition regarding sanctioning a losing plaintiff in a civil rights action. Had
Defendant sought alternative relief through Federal Rule of Civil Procedure 11,
and had Plaintiffs continued on in the face of potential Rule 11 sanctions, this
Court might have viewed Defendant’s request for sanctions differently.8
IV. CONCLUSION
For these reasons and those set forth in this Court’s March 13, 2014
Opinion,
IT IS HEREBY ORDERED that Defendant’s Motion to Dismiss Plaintiffs’
Second Amended Class Action Complaint Under Rule 12(b)(6) and to Sanction

8

In the alternative to sanctions under Section 1927, Defendant moves for sanctions
under this Court’s inherent power to sanction bad faith conduct. (Def’s Mtn., Dkt.
# 27, at 22-24). The Court does not find that counsels’ conduct in this matter rises
to the level of bad faith. See, e.g., Issa v. Provident Funding Grp., 2010 WL
3245408, at *3-4 (E.D. Mich. Aug. 17, 2010) (Rosen, C.J.) (discussing the Sixth
Circuit’s standards for evaluating bad faith in another matter involving one of
Plaintiffs’ counsel, Kassem Dakhlallah).
19

Plaintiffs and their Counsel Pursuant to 28 U.S.C. § 1927 and the Inherent Power
of the Court [Dkt. # 27] is GRANTED IN PART AND DENIED IN PART.
IT IS FURTHER ORDERED that Plaintiffs’ Second Amended Complaint is
dismissed with prejudice.
IT IS SO ORDERED.

Dated: May 29, 2014

s/Gerald E. Rosen
Chief Judge, United States District Court

I hereby certify that a copy of the foregoing document was served upon the parties
and/or counsel of record on May 29, 2014, by electronic and/or ordinary mail.
s/Julie Owens
Case Manager, [phone]

20