DeMaine v. Midwest Investment Services Group, Inc.
MEMORANDUM AND ORDER re: 7 MOTION to Dismiss Case /Complaint filed by Defendant Midwest Investment Services Group, Inc. is DENIED.. Signed by District Judge Rodney W. Sippel on 11/13/17. (LGK)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
) Case No. 4:17 CV 2403 RWS
MIDWEST INVESTMENT SERVICES )
GROUP, INC. D/B/A JOYCE
FACTORY DIRECT OF ST. LOUIS,
MEMORANDUM AND ORDER
Defendant Midwest Investment Services Group (“Midwest”) moves to
dismiss Cynthia DeMaine’s action against it on the grounds that DeMaine has split
two claims that should be brought in a single action. Midwest argues that
DeMaine’s entire 10-month employment should be considered the same
transaction or occurrence. DeMaine responds that the two claims are based on
different transactions and are independent of each other regarding evidence to be
presented and damages sought. I find that the two claims arise out of different
transactions and occurrences. Accordingly, I will deny Midwest’s motion to
On April 29, 2016 DeMaine filed a class action in Circuit Court of St. Louis
County, Missouri, seeking declaratory judgment, unpaid commissions, and
attorneys’ fees under state law claims. DeMaine alleges that Midwest paid
commissions that failed to fully compensate class members for their sales. The
petition named her as the class representative.
On August 3, 2016, DeMaine filed a Charge of Discrimination with the
Equal Employment Opportunity Commission and the Missouri Human Rights
Council, alleging that Midwest had created a hostile work environment based on
her gender. DeMaine alleges that her supervisors repeatedly harassed her through
degrading statements about her gender, that she was “often and continually singled
out as an example in sales meetings while pointing to her gender,” and that these
acts made her working environment unbearable. [ECF Doc. No. 1, p. 3.] After the
EEOC issued a Right to Sue Letter, DeMaine filed this gender discrimination
action in this court. She alleges that she was terminated and discriminated against
due to her gender and in retaliation for complaining about harassment at work.
Standard of Review
In ruling on a motion to dismiss, I must accept as true all factual allegations
in the complaint and view them in the light most favorable to the plaintiff. Hager
v. Ark. Dept. of Health, 735 F.3d 1009, 1013 (8th Cir. 2013). The federal rules
require only a “short and plain statement of the claim showing that the pleader is
entitled to relief.” Fed. R. Civ. P. 8(a)(2). An affirmative defense may be asserted
to prove that the pleader is not entitled to relief, if that defense is “apparent on the
face of the complaint, . . . which may include public records and materials
embraced by the complaint.” Noble Sys. Corp. v. Alorica Cent., LLC, 543 F.3d
978, 983 (8th Cir. 2008) (internal citations omitted). Claim splitting is one such
affirmative defense that is a form of claim preclusion or res judicata. See Friez v.
First American Bank & Trust of Minot, 324 F.3d 580, 581 (8th Cir. 2003). Res
judicata, in turn, “is a substantive issue in a diversity case and is controlled by state
law.” Butts v. Evangelical. Lutheran Good Samaritan Soc., 852 F.Supp.2d 1139,
1144 (D.S.D. 2012) (citing Hillary v. Trans World Airlines, Inc., 123 F.3d 1041,
1043 (8th Cir.1997). Accordingly, I will use Missouri state law to determine if
DeMaine has improperly split her claims, and if she has stated a claim upon which
relief can be granted.
Under Missouri law, the test for identifying claim splitting is “(1) whether
separate actions brought arise out of the same act, contract or transaction; or (2)
whether the parties, subject matter and evidence necessary to sustain the claim are
the same in both actions.” Hutnick v. Beil, 84 S.W.3d 463, 466 (Mo. App. E.D.
2002). For purposes of this test, the word “transaction” means the “aggregate of all
the circumstances which constitute the foundation for a claim.” Burke v.
Doerflinger, 695 F.2d 1103, 407 (Mo. App. 1983). “It also includes all of the facts
and circumstances out of which an injury arose.” Id. “What factual grouping
constitutes a ‘transaction’. . . [is] to be determined pragmatically.” Poe v. John
Deere Co., 695 F.2d 1103, 1106 (8th Cir. 1982) (interpreting Missouri Law). In
making that determination, I should consider “whether the facts are related in time,
space, origin, or motivation, whether they form a convenient trial unit, and whether
their treatment as a unit conforms to the parties’ expectations or business
understanding or usage.” Id.
Midwest cites three cases to prove that DeMaine’s ten-month employment
relationship itself constitutes “the transaction” for purposes of claim splitting. The
case that chiefly stands for this proposition is a Tenth Circuit case, Wilkes v.
Wyoming Department of Employment Division of Labor Standards, 314 F.3d 501
(10th Cir. 2002). In Wilkes, the court held that “all claims arising from the same
employment relationship constitute the same transaction or series of transactions
for claim preclusion purposes.” Id. at 504. Accordingly, the court found that
Wilkes’ Equal Pay Act claim (alleging that women were paid less than men at the
Wyoming Department of Employment) and her Title VII retaliation claim (alleging
that Wilkes was harassed for reporting an improper workplace relationship) were a
single claim for the purposes of res judicata.
The other two cases that Midwest cites for this proposition are district court
cases in the Eighth Circuit. First, in MacIntyre v. Lender Processing Servs., No.
12-1514 (PAM/SER), 2012 WL 4872678, (D. Minn. Oct. 15, 2012), the district of
Minnesota found that an employee’s claims—for unpaid bonuses and for gender
discrimination in promotions, pay, and severance packages—were improperly
split. Id. at *2. In reaching that conclusion, the court never defined the scope of the
“transaction” for claim splitting purposes. In another case, the Missouri Court of
Appeals found that a property owner’s claims—for defamation, deprivation of
constitutional rights, and trespassing—arose out of the same act, contract, or
transaction. Jordan v. Kan. City, 929 S.W.2d 882, 887 (Mo. App. W.D. 1996). In
Jordan, the plaintiff had sued the city’s Neighborhood and Community Services
Department, both for allegedly defaming him at a meeting of its board and for a
separate incident when an inspector of the department allegedly trespassed on
I find these cases unpersuasive in this context. The Tenth Circuit case,
Wilkes, is not controlling in this court. Additionally, only three years prior to
Wilkes, the Tenth Circuit had noted that “[n]o other court applying the
transactional test has held that suits arising from the same employment relationship
are thereby necessarily grounded upon the same transaction.” Yapp v. Excel Corp,
186 F.3d 1222, 1228 (10th Cir. 1999). In MacIntyre, the court never defined “the
transaction” as the entire employment relationship, as Midwest suggests. Finally,
Jordan does not involve an employment relationship at all, and its facts are
significantly different from the facts of this case.
conception of “the transaction” is overbroad.
Instead, I find that the DeMaine’s two cases arise out of different
transactions or occurrences. DeMaine’s claims in her state court case arise out of
Midwest’s alleged underpayment of commissions to “[a]ll persons employed by
[Midwest] as a Sales Representative in the past five years.” [ECF Doc. No. 8-1, p.
3]. These claims extend beyond DeMaine’s own employment relationship with
Midwest. They arise from payroll processing actions taken by Midwest for the
preceding five years and have no alleged link to her termination or harassment at
the hands of supervisors. Likewise, DeMaine’s harassment claims have no alleged
connection to payroll processing actions. Under these circumstances, DeMaine’s
claims, as alleged in her state and federal complaint, arise out of different
transactions or occurrences.
DeMaine’s claims could still fail the “transaction” test if “the parties, subject
matter and evidence necessary to sustain the claim are the same in both actions.”
Hutnick v. Beil, 84 S.W.3d 463, 466. Midwest does not argue this other possible
grounds for claim splitting. Instead, Midwest acknowledges that evidence relevant
to the gender discrimination claim “may not be directly relevant to [DeMaine’s]
state-law claim.” [ECF Doc. No. 14, p. 3.] Midwest then seeks to place the burden
on DeMaine, stating that “Plaintiff fails to establish that a jury could not hear”
evidence for both claims together. Id. This argument misconstrues the
“transaction” test for splitting that Midwest relies on. The test is not whether
evidence for two theories can be presented in the same case. Instead, the test is
whether evidence for the two claims is “the same.” Hutnick v. Beil, 84 S.W.3d at
466. Midwest has not shown that any evidence that would be offered in DeMaine’s
state class action would also be offered in her federal gender discrimination suit.
As a result, I find that DeMaine has not improperly split her claims.
Midwest’s defense of claim-splitting fails because DeMaine’s state court and
federal court claims arise from a different transaction or occurrence.
IT IS HEREBY ORDERED that Midwest’s motion to dismiss is
RODNEY W. SIPPEL
UNITED STATES DISTRICT JUDGE
Dated this 13th day of November, 2017.
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?