Hall v. Family YMCA of Greater Augusta

Filing 16

ORDER AND OPINION denying 7 Motion to Dismiss for Failure to State a Claim. Signed by Honorable J Michelle Childs on 7/25/2017.(asni, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
AIKEN DIVISION
Shadie Hall,

)
)
Plaintiff,
)
)
v.
)
)
Family YMCA of Greater August d/b/a
)
YMCA Child Development Academy, LLC, )
)
Defendant.
)
____________________________________)

Civil Action No.: 1:17-cv-00337-JMC

ORDER AND OPINION

Plaintiff Shadie Hall (“Plaintiff”) filed an action alleging claims for breach of contract and
breach of contract with fraudulent intent in the Court of Common Pleas for Aiken County against
her former employer Defendant Family YMCA of Greater Augusta, doing business as YMCA
Child Development Academy, LLC (“Defendant”). 1 (ECF No. 1-1.) Asserting the court’s diversity
jurisdiction under 28 U.S.C. § 1332, Defendant removed the action to this court (ECF No. 1) and,
thereafter, filed, pursuant to Fed. R. Civ. P. 12(b)(6), a motion to dismiss Plaintiff’s complaint for
failing to state a claim for which the court could grant relief (ECF No. 7). For the reasons that
follow, the court DENIES Defendant’s Rule 12(b)(6) motion to dismiss.
I. RELEVANT FACTUAL AND PROCEDURAL BACKGOUND
Plaintiff filed her complaint in state court on November 29, 2016, (ECF No. 1-1 at 16) and,
in it, alleges the following facts. Plaintiff worked for Aiken-Barnwell Community Action Agency,
Inc. (“ABCAA”) from 2005 to August 16, 2015, as the director of ABCAA’s early care and
education program and its Head Start program. (Id. at 7.) On August 17, 2015, Plaintiff was

1

Defendant asserts that it is correctly identified as YMCA Child Development Academy, LLC.
(ECF No. 7-1 at 1 n.1.)
1

“transferred” to work for Defendant in the role of director of its Head Start program, after
Defendant began receiving the grant that had previously funded ABCAA. (Id.) Under the transfer,
“all policies that governed ABCAA would remain intact and would govern Defendant’s
workplace” and its employees, including Plaintiff. (Id.) As part of her duties, Plaintiff was to
ensure compliance with all applicable federal and state regulations and guidelines in the
implementation of the Head Start program. (Id. at 8.)
During the course of her roughly four-month employment with Defendant, Plaintiff
observed Defendant failing to comply with applicable safety and other regulations and reported
these failures to her supervisors. (See id. at 8-10). She continuously told her supervisors that
playground and facility conditions were unsafe and violated regulations, that insecticides were
required to be used on playgrounds and facilities, that Defendant’s buses required registration
cards, and that staff were required to undergo annual training from a state agency. (Id.) During the
course of her employment, Defendant failed to provide Plaintiff with a professional development
plan, even though Defendant is required to provide such a plan to all employees who are
compensated through Head Start funding. (Id. at 10.) “Against company policy,” Defendant also
failed to provide Plaintiff a job description until November 6, 2015. (Id.)
Of particular note for this order, Defendant began to institute a policy of requesting and
reviewing employees’ driving records, and a poor driving record disclosed by the review would
negatively affect an employee’s employment with Defendant. (Id. at 8-9.) Plaintiff believed that
Defendant’s newly instituted policy was not permitted because, “under the transfer,” “Defendant
was to abide by the policies and procedures of ABCAA.” (Id. at 9.) When Plaintiff requested
information on this new policy in October 2015, Defendant, in retaliation, moved Plaintiff to its
Augusta office, even though the employees she supervised were in Aiken. (Id. at 9-10.) After

2

reviewing the driving record of a certain employee, Nadia Jones, Defendant decided to terminate
Jones because of her poor driving record. (Id. at 10.) When Defendant requested that Plaintiff sign
Jones’ termination letter, Plaintiff refused to do so “because Defendant failed to follow
employment policies that required Defendant to seek approval of any termination from the Policy
Council according to Head Start Personnel Policies & Procedures,” which Plaintiff describes as
the “governing termination policy.” (Id.) In retaliation for her informing Defendant of the
governing termination policy and for her refusal to sign Jones’ termination letter, Defendant began
to assign Plaintiff frivolous tasks or tasks that could not be completed in the time Defendant
allotted. (Id.)
On November 6, 2015, Defendant “wrote Plaintiff up alleging that Plaintiff had failed to
perform designated assignments.” (Id.) Plaintiff alleges that the write-up was a pretext and was in
retaliation for her “performing her job under the governance of the ABCAA policies,” and,
“knowing that she had performed . . . her job . . . under the governing policies,” Plaintiff refused
to sign the write-up when it was presented to her and, instead, “voiced her concerns about being
written up.” (Id.) On November 19, 2015, the Policy Council convened a meeting, to which
Plaintiff was invited. (Id. at 11.) At the meeting, Defendant informed Plaintiff that her services
were no longer needed and that she was being replaced because of alleged negligence, failure to
follow instructions, and deliberate non-performance of work. (Id.) Defendant’s chief executive
officer told Plaintiff that she could choose to resign, in which case she would retain temporary
benefits and receive a good reference, or to be terminated, in which case no benefits or good
reference would be provided. (Id.) “Plaintiff did not feel as if she was given adequate opportunity
to rebut the allegations” but “informed the Council that she had followed Defendant’s policies and

3

procedures.” (Id.) Plaintiff did not resign, and Defendant presented her a termination letter
effective November 19, 2015. (Id.)
Based on the allegations in her complaint, Plaintiff asserts two claims against Defendant.
In the first claim for breach of contract, Plaintiff alleges that she entered into an employment
contract with Defendant, in which she agreed to perform her job duties in exchange for, among
other things, “Defendant’s guarantees that . . . she would be protected from discrimination.” (Id.
at 12.) Plaintiff alleges that “Defendant maintains an employment handbook and its own policies
and procedures” and that Plaintiff relied on the promises contained in Defendant’s handbook and
Defendant’s policies and procedures.” (Id.) She further alleges that “Defendant breached its
employment contract with Plaintiff . . . by failing to protect Plaintiff from the retaliatory acts of
Defendant’s managers after Plaintiff reported safety violations” and by “failing to follow the
review plan it developed to improve Plaintiff’s work performance.” (Id. at 12-13.)
In her second claim for breach of contract with fraudulent intent, Plaintiff re-alleges the
same grounds for breach that she alleged in her first claim. (See id. at 13-14.) In addition, Plaintiff
alleges that Defendant breached the terms of the employment contract “by reason of an intentional
design on its part to defraud Plaintiff of her employment.” (Id. at 14.) She further alleges that she
has been maligned and that “Defendant acted in a malicious, deliberate, intentional way, and with
a deliberate indifference to the rights of Plaintiff.” (Id.) Plaintiff asserts that “Defendant’s
continuance of harassment and retaliatory acts towards Plaintiff did not comply with the terms of
the employment contract” and that “Defendant sought out and fraudulently breached the agreement
. . . by deliberately refusing to follow its own anti-discrimination and anti-harassment policies.”
(Id.)

4

Defendant removed the action to this court on February 3, 2017, (ECF No. 1) and filed the
instant Rule 12(b)(6) motion to dismiss on February 24, 2017 (ECF No. 7). In its motion and
subsequent briefing, Defendant argues that Plaintiff’s complaint fails to sufficiently allege the
existence of a contract that altered her at-will employment status, that the handbook to which
Plaintiff refers in her complaint, as a matter of law, does not amount to a contract that altered her
at-will employment status, and that Plaintiff’s complaint fails to sufficiently allege that Defendant
engaged in fraudulent activity in the alleged breach. (See ECF Nos. 7, 7-1, 12.) Plaintiff responds
that she has alleged sufficient factual matter to establish the existence of an employment contract
and Defendant’s fraudulent activity in breaching it, and Plaintiff challenges Defendant’s attempt
to have the court consider an employee handbook that it attaches to its motion to dismiss. (See
ECF No. 11.) Having received the parties’ briefing and oral argument (see ECF Nos. 7-1, 11, 12,
15), Defendant’s motion to dismiss is ripe for disposition.
II. LEGAL STANDARD
A Rule 12(b)(6) motion for failure to state a claim upon which relief can be granted
“challenges the legal sufficiency of a complaint.” Francis v. Giacomelli, 588 F.3d 186, 192 (4th
Cir. 2009) (citations omitted); see also Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th
Cir. 1992) (“A motion to dismiss under Rule 12(b)(6) . . . does not resolve contests surrounding
the facts, the merits of a claim, or the applicability of defenses.”). To be legally sufficient a
pleading must contain a “short and plain statement of the claim showing that the pleader is entitled
to relief.” Fed. R. Civ. P. 8(a)(2). A Rule 12(b)(6) motion “should not be granted unless it appears
certain that the plaintiff can prove no set of facts which would support its claim and would entitle
it to relief.” Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993). When considering a
Rule 12(b)(6) motion, the court should accept as true all well-pleaded allegations and should view

5

the complaint in a light most favorable to the plaintiff. Ostrzenski v. Seigel, 177 F.3d 245, 251 (4th
Cir. 1999); Mylan Labs., 7 F.3d at 1134. “To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant is liable for the misconduct
alleged.” Id. (citing Twombly, 550 U.S. at 556).
III. ANALYSIS
Defendant’s arguments for dismissal are (A) that the complaint fails to sufficiently allege
the existence of a contract that altered Plaintiff’s at-will employment status; (B) that the employee
handbook on which Plaintiff’s complaint relies, as a matter of law, does not create a contract that
altered Plaintiff’s at-will employment status; and (C) that the complaint fails to sufficiently allege
that Defendant engaged in fraudulent activity in breaching the contract. The court addresses each
of these arguments in turn.
A. Existence of a contract altering at-will employment status
“South Carolina[2] has long recognized the doctrine of employment at-will.” Brailsford v.
Fresenius Med. Ctr. CAN Kidney Ctrs., LLC, No. 2:15-cv-00239-DCN, 2015 WL 4459032, at *3

2

As this court’s diversity jurisdiction is implicated, South Carolina choice of law rules apply. See
Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496-97 (1941); see also CACI Int'l, Inc. v. St.
Paul Fire & Marine Ins. Co., 566 F.3d 150, 154 (4th Cir. 2009). Although neither party directly
addresses which jurisdiction’s substantive law should govern the complaint’s allegations regarding
the existence of a contract or Defendant’s fraudulent intent according to South Carolina choice of
law rules, the court notes that, in their briefing and at the motion hearing, both parties have cited
to South Carolina law with respect to both issues. Accordingly, the court applies South Carolina
substantive law. See Cosey v. Prudential Life Ins. Co., 735 F.3d 161, 169 n.7 (4th Cir. 2013) (citing
Am. Fuel Corp. v. Utah Energy Dev. Co., 122 F.3d. 130, 134 (2d Cir. 1997)); Tehram-Berkeley v.
Tippetts-Abbett, 888 F.2d 239, 242 (2d Cir. 1989); Schiavone Constr. Co. v. Time, Inc., 735 F.2d
94, 96 (3d Cir. 1984).
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(D.S.C. July 21, 2015) (citing Mathis v. Brown & Brown of S.C., Inc., 698 S.E.2d 773, 778 (S.C.
2010)); accord Weaver v. John Lucas Tree Expert Co., No. 2:13-cv-01698-PMD, 2013 WL
5587854, at *4 (D.S.C. Oct. 10, 2013). “Under the doctrine of at-will employment, an ‘at-will
employee may be terminated at any time for any reason or for no reason, with or without cause.’”
Weaver, 2013 WL 5587854, at *4 (quoting Legette v. Nucor Corp., 2:12-cv-1020-PMD, 2012 WL
3029650, at *3 (D.S.C. July 25, 2012)) (citing King v. Marriott Int'l, Inc., 520 F. Supp. 2d 748,
755 (D.S.C. 2007); Barron v. Labor Finders of S.C., 713 S.E.2d 634, 636 (S.C. 2011)). “‘Of
course, an employer and employee may choose to contractually alter the general rule of
employment at-will and restrict their freedom to discharge without cause or to resign with
impunity.’” Brailsford, 2015 WL 4459032, at *3 (quoting Prescott v. Farmers Tel. Co-op., Inc.,
516 S.E.2d 923, 925 (S.C. 1999)). “Because employment is presumed to be at-will, in order to
survive a motion to dismiss on a claim for breach of contract of employment, a plaintiff must plead
sufficient factual allegations to establish the existence of an employment contract beyond the atwill relationship.” Id. (citing Weaver, 2013 WL 5587854, at *4). Thus, to assess a claim for breach
of contract, “it is first necessary to determine whether a contract was formed,” as “[i]t is axiomatic
that to recover under a theory of breach of contract, a valid contract must have existed between the
parties.” Weaver, 2013 WL 5587854, at *5 (citing, inter alia, Fung Lin Wah Enters. Ltd. v. E. Bay
Imp. Co., 465 F. Supp. 2d 536, 542-43 (D.S.C. 2006); Tidewater Supply Co. v. Indus. Elec. Co.,
171 S.E.2d 607, 608 (S.C. 1969)); accord Brailsford, 2015 WL 4459032, at *3.
Contracts will be either bilateral or unilateral in nature, and, in the employment context
where no formal written agreement between the employer and employee appears to exist, 3 the
contract, if any, is likely unilateral, meaning that, in response to the employer’s offered promises,

3

Plaintiff does not argue that she had a formal written employment agreement with Defendant.
7

the employer accepts, not by making a reciprocal promise, but by commencing performance. See
Weaver, 2013 WL 5587854, at *5 (citing Sauner v. Pub. Serv. Auth. of S.C., 581 S.E.2d 161, 16566 (S.C. 2003). Prescott, 516 S.E.2d at 926; Small v. Springs Indus., Inc., 357 S.E.2d 452, 454
(S.C. 1987); Int'l Shoe Co. v. Herndon, 133 S.E. 202, 203 (S.C. 1926)). Under South Carolina law,
a unilateral employment contract exists when the employer makes a specific offer, the offer is
communicated to the employee, and the employee commences performance of employmentrelated duties in reliance on the offer. Id. at *5-6 (citing Sauner, 581 S.E.2d at 165-66; Prescott,
516 S.E.2d at 926; 82 Am. Jur. 2d Wrongful Discharge § 84 (1992)). In addition, “[t]o alter an
employee’s at-will status under South Carolina law, a contract . . . must limit either the duration
of the employment or the employer’s right to terminate the employee.” Id. at *6 (citing Wadford
v. Hartford Fire Ins. Co., No. 3:87-2872-15, 1988 WL 492127, at *4 (D.S.C. Aug. 11, 1988); Lord
v. Kimberly-Clark Corp., 827 F. Supp. 2d 598, 602-05 (D.S.C. 2011)). “In sum, to survive [a
motion to dismiss] with respect to [a] breach of contract claim, [a plaintiff-employee] needs to
have set forth sufficient factual allegations in [her c]omplaint to state a facially plausible claim
that the [p]arties entered into a contract with terms of employment that limited the duration of the
relationship or the right of termination or both.” Id. (citing Battle v. Nikanth, LLC, No. 2:13-543PMD, 2013 WL 4874976, at *5 (D.S.C. Sept. 11, 2013)); accord Brailsford, 2015 WL 4459032,
at *4.
“‘An employee handbook may create a contract altering an at-will arrangement.’”
Brailsford, 2015 WL 4459032, at *3 (brackets omitted) (emphasis added in Brailsford) (quoting
Nelson v. Charleston Cnty. Parks & Recreation Comm’n, 605 S.E.2d 744, 747 (S.C. Ct. App.
2004)). “A handbook forms an employment contract when: ‘(1) the handbook provision(s) and
procedure(s) in question apply to the employee, (2) the handbook sets out procedures binding on

8

the employer, and (3) the handbook does not contain a conspicuous and appropriate disclaimer.’”
Id. (quoting Grant v. Mount Vernon Mills, Inc., 634 S.E.2d 15, 20 (S.C. Ct. App. 2006)). “In order
for a handbook to alter an employee’s at-will status and create an employment contract, the
employer must ‘phrase the document’s language in mandatory terms giving rise to a promise, an
expectation and a benefit to an employee,’” id. at *4 (brackets omitted) (quoting Nelson, 605
S.E.2d at 747) (citing Hessenthaler v. Tri-Cnty. Sister Help, Inc., 616 S.E.2d 694, 698 (S.C. 2005);
Grant, 634 S.E.2d at 20), because “‘[w]hen definite and mandatory, such [language] impose[s] a
limitation on the employer’s right to terminate an employee at any time, for any reason.’” id. (citing
Grant, 634 S.E.2d at 20). “‘When the evidence conflicts or is capable of more than one inference,
the issue of whether an employee handbook constitutes a contract should be submitted to the jury;
however, a court should intervene to resolve the handbook issue as a matter of law if the handbook
statements and the disclaimer, taken together, establish beyond any doubt that an enforceable
promise either does or does not exist.’” Id. (brackets and ellipsis omitted) (quoting Grant, 634
S.E.2d at 20).
Here, Defendant argues that, under Twombly and Iqbal, the complaint contains insufficient
factual allegations establishing the existence of an employment contract between Defendant and
Plaintiff that altered the default at-will employment status. (See ECF No. 7-1 at 3-5; ECF No. 12
at 1-2.) However, Defendant does not appear to argue that Plaintiff has failed to sufficiently plead
the existence of a unilateral employment contract. More specifically, Defendant does not appear
to argue that Plaintiff’s complaint fails to plead that Defendant made a specific offer of
employment to Plaintiff, that the offer was communicated to Plaintiff, or that Plaintiff began to
perform job-related duties for Defendant in reliance on the offer. In fact, Defendant’s summary of
the complaint’s allegations seems to confirm that it sufficiently pled the existence of a unilateral

9

contract. (See ECF No. 7-1 at 2 (“Defendant took over [ABCAA] and inherited Plaintiff as an
employee. Plaintiff was hired by and began working for Defendant as the Head Start Director that
same day.” (internal citations omitted)).) In any event, the court concludes that Plaintiff’s
complaint sufficiently pleads the elements of a unilateral employment contract. The complaint
states that Plaintiff was “transferred” from ABCAA to Defendant as a result of Defendant winning
the grant that had previously been awarded to ABCAA and that as part of the transfer, polices that
had governed ABCAA would continue to govern the former employees of ABCAA. (ECF No. 11 at 7.) Plaintiff further alleges that she began working for Defendant after the transfer occurred.
(Id. at 8.) Viewing these factual allegations in the light most favorable to Plaintiff, the court has
no trouble determining that the “transfer” constituted an offer by Defendant for Plaintiff to
continue to perform duties similar to (if not the same as) those that she previously been assigned
when she was employed by ABCAA, that this offer was communicated to Plaintiff, and that
Plaintiff accepted the offer by commencing performance of those duties in reliance on Defendant’s
offer, including its promise to continue the policies that had governed ABCAA.
The real thrust of Defendant’s argument is not that Plaintiff has failed to allege the
existence of a unilateral contract but, instead, that Plaintiff has failed to sufficiently allege that the
contract altered the default at-will employment status under South Carolina law. (See ECF No. 71 at 4 (“What Plaintiff does not allege . . . is that the handbook or the[] ‘unidentified’ policies and
procedures upon which she relies altered her status as an at-will employee.”); id. (“Plaintiff has
not . . . allege[d] the existence of any contract of employment that altered her at-will employee
status or limited Defendant’s ability to terminate her for any reason, at any time.”).) The court
disagrees. The complaint alleges that, after ABCAA’s employees were “transferred” to Defendant,
“all policies that governed ABCAA would remain intact and would govern Defendant’s

10

workplace,” “Defendant’s employees,” and “Plaintiff’s employment.” (ECF No. 1-1 at 7.) Plaintiff
further alleges that some (though perhaps not all) of these policies were contained in an employee
handbook. (Id. at 12.) In describing Plaintiff’s co-worker Jones’ termination, the complaint alleges
that, under these policies, Jones could not be terminated without first seeking the approval of the
Policy Council. (Id. at 10.) Furthermore, reading the entire complaint in the light most favorable
to Plaintiff, the court may draw the reasonable inference that it alleges that, under the policies on
which Plaintiff relied, employees such as her could not be terminated in retaliation for reporting
to their superiors non-compliance with federal and state regulations applicable to the Head Start
program.
In the court’s view, these allegations sufficiently plead the existence of an employment
contract that altered Plaintiff’s at-will status. First, the complaint alleges the existence of an
employee handbook that was applicable to ABCAA employees and later applicable to Defendant’s
employees, and the complaint details some of the handbook’s provisions. At this stage, the court
is obligated to accept these well-pled factual allegations as true, Ostrzenski, 177 F.3d at 251; Mylan
Labs., 7 F.3d at 1134, meaning the court accepts, for purposes of deciding Defendant’s Rule
12(b)(6) motion, that ABCAA issued an employee handbook that contained provisions preventing
it from terminating employees in retaliation for reporting non-compliance with applicable
regulations or without seeking the Policy Council’s approval. 4 See Conner v. City of Forest Acres,

4

Defendant appears to argue that the court cannot accept an allegation of the existence of a
handbook or allegations as to the details of provisions within it if the complaint fails to identify
the handbook or fails to cite to specific provisions of the handbook or if the plaintiff fails to attach
the handbook to the complaint. (See ECF No. 7-1 at 4-5; ECF No. 12 at 2). This argument was
more clearly asserted at the motion hearing. Defendant has cited no legal authority supporting this
view, aside from Iqbal’s general proclamation that conclusory legal assertions should not be
accorded the presumption of truth that is accorded well-pled factual allegations. In deciding Rule
12(b)(6) motions, courts accept as true a complaint’s allegations as to the terms of a purported
contract when the allegations are factually sufficient (not mere conclusory legal assertions) and
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560 S.E.2d 606, 610 (S.C. 2002) (“Because an employee handbook may create a contract, the issue
of the existence of an employment contract is proper for a jury when its existence is questioned
and the evidence is either conflicting or admits of more than one inference.”)
Second, the complaint sufficiently alleges that the handbook amounted to an employment
contract. As explained above, the mere existence of an employee handbook, alone, does not create
a contract altering the at-will arrangement. Brailsford, 2015 WL 4459032, at *3. To form an
employment contract, the ABCAA handbook must have applied to Plaintiff, must set out
procedures that are binding on Defendant, must not contain a conspicuous and appropriate
disclaimer, and must be phrased in mandatory language that gives rise to a promise to Defendant.
Id. at *3-4. Read in the light most favorable to Plaintiff, the complaint sufficiently alleges that the
ABCAA handbook applied to Plaintiff and contained, in mandatory language, termination
procedures that were binding on Defendant. The complaint contains no allegations regarding a
disclaimer in the handbook. Nevertheless, even if the complaint had alleged the existence of a
conspicuous and appropriate disclaimer, the procedural posture of this case combined with the
other allegations regarding the ABCAA handbook would prevent the court from concluding that
the handbook, as pled, does not amount to an enforceable contract. As explained above, a court
may determine, as a matter of law, that an employee handbook does not amount to an enforceable
contract, but only when the statements in the handbook and any disclaimer, taken together,
establish beyond doubt that the handbook does not create contractual obligations. See id. at *4.

are not contradicted by a properly considered contract attached to the pleadings or to the Rule
12(b)(6) motion. See Lindquist v. Tanner, No. 2:11-3181, 2012 WL 3839235, at *3 (D.S.C. Sept.
4, 2012); Kaiser-Flores v. Lowe’s Home Ctrs., Inc., No. 5:08-cv-45-V, 2009 WL 762198, at *4
(W.D.N.C. March 19, 2009). In the court’s view, Plaintiff’s allegations as to the existence of a
handbook and the provisions within it are more than mere empty legal conclusions; they are wellpled factual assertions that the court must accept as true under Rule 12(b)(6) analysis.
12

Here, the allegations of the complaint are the only indications of the handbook’s contents that the
court may consider, 5 and the allegations describe a handbook that applied to Plaintiff and contained
mandatory, binding termination procedures. Thus, regardless of the presence of a disclaimer, the
court could not determine at this stage, as a matter of law, that the handbook does not constitute
an employment contract. See Lord, 827 F. Supp. 2d at 602 (“‘An employee manual that contains
promissory language and a disclaimer is inherently ambiguous, and a jury should interpret whether
the manual creates or alters an existing contractual relationship.’” (internal quotation marks
omitted) (quoting Horton v. Darby Elec. Co., Inc., 599 S.E.2d 456, 460 (2004))).
Third, the complaint sufficiently alleges that the contract embodied by the provisions of
the handbook altered the at-will employment arrangement. The complaint alleges that policies in
the ABCAA handbook applied to all employees who had been transferred to Defendant’s
employment, including Plaintiff. In discussing Jones’ termination, the complaint further alleges
that the policies in the ABCAA handbook prevented Defendant from terminating employees
without first seeking approval of the Policy Council. In the court’s view, these allegations
sufficiently plead that the terms of the employment contract limited Defendant’s right to terminate
Plaintiff. See Weaver, 2013 WL 5587854, at *5. Furthermore, as the court explained above, when
read in the light most favorable to Plaintiff, the complaint as a whole alleges that the policies
contained in the handbook prevented Defendant from terminating employees in retaliation for

5

See Part III.B, infra.
13

reporting non-compliance with applicable regulations. 6 This too, in the court’s view sufficiently
alleges that the terms of the employment contract limited Defendant’s right to terminate Plaintiff. 7
In sum, the court concludes that the complaint sufficiently alleges that Defendant and
Plaintiff entered into a unilateral contract with terms embodied in the ABCAA handbook that
limited Defendant’s right to terminate Plaintiff, thereby altering the default at-will arrangement.
Thus, the court rejects Defendant’s assertion that dismissal is appropriate on the ground that the

6

Citing Brailsford, King, and Frasier v. Verizon Wireless, No. 8:08-cv-356, 2008 WL 724037
(D.S.C. Mar. 17, 2008), Defendant argues that anti-retaliation policies embodied in a handbook
are insufficient to form an employment contract that displaces at-will status. (ECF No. 7-1 at 6.)
In the court’s view, the cases cited by Defendant are distinguishable because, in each of them, the
handbook language presented only a generalized policy statement that could not create the
expectation of guaranteed employment if the policy was not followed because it did not promise
specific treatment in specific situations. See Brailsford, 2015 WL 4459032, at *4; Frazier, 2008
WL 724037, at *2; King, 520 F. Supp. 2d at 756-57. However, the language of an anti-retaliation
policy can create an enforceable employment contract if it is not generalized but, instead, promises
specific treatment in specific situations, such as expressly stating that the employee will not be
terminated for filing internal complaints. See Lord, 827 F. Supp. 2d at 604. Here, the court must
accept the well-pled allegations of Plaintiff’s complaint that the applicable handbook prevented
Defendant from terminating her employment in retaliation for reporting Defendant’s noncompliance with regulations. Thus, the handbook, as pled, contains a non-generalized policy,
promising that Plaintiff would not have her employment terminated in retaliation for the specific
actions she took. Accordingly, the rule stated in Brailsford, King, and Frazier is inapplicable.
7

At the motion hearing, Defendant seemed to argue that, when an employee alleges a breach of
an employment contract by pointing to an employer’s failure to abide by a handbook’s provision,
the court, in determining whether the handbook limits the employer’s right to terminate the
employee and thereby constitutes an enforceable contract, may look only to the provision that the
employee claims the employer breached. Thus, Defendant seemed to argue that the court may only
consider whether the handbook’s anti-retaliation provision limited Defendant’s right to terminate
Plaintiff. To the extent Defendant makes this argument, it appears to have raised it for the first
time at the motion hearing, and, for this reason, the court is disinclined to consider it. See Mulvey
Constr., Inc. v. BITCO Gen. Life Ins. Corp., No. 1:07-0634, 2015 WL 6394521, at *7 (S.D.W. Va.
Oct. 1, 2015); N.C. All. for Transp. Reform v. U.S. Dep’t of Transp., 713 F. Supp. 2d 491, 510
(M.D.N.C. 2010). In any event, Defendant cites no authority (and the court has unearthed no
authority) for the proposition that a court assessing the existence of an employment contract
alleged to arise from an employee handbook may only look to the provision of the handbook
alleged to have been breached in determining whether the handbook contains mandatory,
promissory language that limits the employer’s right to terminate the employee. Accordingly, the
court rejects Defendant’s argument in this vein.
14

complaint failed to sufficiently allege the existence of an employment contract that altered
Plaintiff’s at-will status.
B. Employee handbook creating contract altering at-will employment status
Defendant next argues that, assuming Plaintiff sufficiently pled in her complaint the
existence of a contract that altered the at-will arrangement, the complaint is nonetheless subject to
dismissal because the very handbook to which Defendant points as the source of her contractual
rights demonstrates without a doubt that it is not an enforceable employment contract. (See ECF
No. 7-1 at 5-7; ECF No. 12 at 2-3.) Accordingly, for the court’s consideration, Defendant attaches
as an exhibit to its motion to dismiss a handbook titled “YMCA Child Development Academy,
LLC[] Personnel Handbook” issued in October 2015 (the “YMCA handbook”). (See ECF No. 72.) Defendant argues that the court’s review of the YMCA handbook would demonstrate that it
contains no mandatory promises regarding termination or procedures. (ECF No. 7-1 at 5-7.) Thus,
Defendant appears to be advancing a form of the “exhibit-prevails rule, which provides that ‘in the
event of conflict between the bare allegations of the complaint and any exhibit attached, the exhibit
prevails.’” Goines v. Valley Comty. Servs. Bd., 822 F.3d 159, 166 (4th Cir. 2016) (quoting
Fayetteville Inv'rs v. Commercial Builders, Inc., 936 F.2d 1462, 1465 (4th Cir. 1991)).
Plaintiff argues that Defendant is putting the shoes on before the socks. In Plaintiff’s view,
the court may not consider the YMCA handbook in deciding Defendant’s Rule 12(b)(6) motion to
dismiss because Plaintiff contests the authenticity of the YMCA handbook and because Plaintiff
has not relied on the YMCA handbook in her complaint. (See ECF No. 11 at 8-9.)
This court recently addressed the circumstances in which it may consider documents
attached to a Rule 12(b)(6) motion to dismiss:
Although courts “generally do not consider extrinsic evidence when
evaluating the sufficiency of a complaint,” in a motion under Rule 12(b)(6),
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there are exceptions: for example, courts “may properly consider documents
attached to a . . . motion to dismiss ‘so long as they are integral to the complaint
and authentic.’” Anand v. Ocwen Loan Servicing, LLC, 754 F.3d 195, 198 (4th
Cir. 2014) (quoting Philips v. Pitt Cty. Mem. Hosp., 572 F.3d 176, 180 (4th
Cir. 2009)). Thus the court may consider documents that are “integral to and
explicitly relied on in the complaint” when the [plaintiff] “do[es] not challenge
[their] authenticity.” Phillips v. LCI Int’l, Inc., 190 F.3d 609, 618 (4th Cir.
1999); accord Zak v. Chelsea Therapeutics Int'l, Inc., 780 F.3d 597, 606-07
(4th Cir. 2015)[.] The Fourth Circuit has explained that
“[t]he rationale underlying this exception is that the
primary problem raised by looking to documents outside
the complaint—lack of notice to the plaintiff—is dissipated
where plaintiff has actual notice and has relied upon these
documents in framing the complaint. What the rule seeks
to prevent is the situation in which a plaintiff is able to
maintain a claim of fraud by extracting an isolated
statement from a document and placing it in the complaint,
even though if the statement were examined in the full
context of the document, it would be clear that the
statement was not fraudulent.”
Am. Chiropractic Ass’n v. Trigon Healthcare, Inc., 367 F.3d 212, 234 (4th Cir.
2004) (internal quotation marks, brackets, and ellipsis omitted) (quoting In re
Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997)); see
also Pension Benefits Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192,
1196 (3rd Cir. 1993) (“[A] court may properly consider a concededly authentic
document upon which the complaint is based when the defendant attaches such
a document to its motion to dismiss . . . . Otherwise, a plaintiff with a legally
deficient claim could survive a motion to dismiss simply by failing to attach a
dispositive document.”).
United States v. Savannah River Nuclear Solutions, LLC, No. 1:16-cv-00825-JMC, 2016 WL
7104823, at *6 (D.S.C. Dec. 6, 2016).
Here, the court agrees with Plaintiff that it may not consider the YMCA handbook that
Defendant attached to its motion to dismiss. First, Plaintiff contests the attachment’s authenticity,
and, therefore, the court will not consider it. See Turnage v. JPMorgan Chase Bank, No. 2:112916-RMG, 2012 WL 12354226, at *4 (D.S.C. Apr. 13, 2012) (declining to consider document

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because plaintiff challenged its authenticity). 8 Second, and more importantly, Plaintiff is correct
that the document is not referenced in her complaint and does not appear to be integral to it.
Throughout her complaint, Plaintiff explicitly alleges that the policies contained in the handbook
issued by her former employer, ABCAA, remained applicable to her “transfer” to employment
with Defendant and that a handbook issued by ABCAA prior to her employment with Defendant,
not the YMCA handbook (which on its face was not issued until well after Plaintiff’s employment
with Defendant commenced), is the source of her contractual rights. Because the YMCA handbook
is not integral to Plaintiff’s complaint, because the complaint does not explicitly rely on the YMCA
handbook, and because Plaintiff challenges the YMCA handbook’s authenticity, the court will not
consider it in deciding Defendant’s motion.
In the course of responding to Defendant’s arguments regarding the YMCA handbook,
Plaintiff asserted that “it is [her] contention that Defendant was controlled by policies and
procedures of ABCAA.” (ECF No. 11 at 9.) Focusing on this aspect of Plaintiff’s response,
Defendant attaches to its reply a document titled “[ABCAA] . . . Personnel Policies and
Procedures” issued in December 2013 (the “ABCAA handbook”). (ECF Nos. 12-1, 12-2.)
Defendant asserts that this document is the handbook on which Plaintiff’s complaint explicitly
relies, that it is integral to the complaint, and that therefore the court may consider it in deciding
8

It is not entirely clear whether a court may consider a document attached to a defendant’s motion
to dismiss over the plaintiff’s challenge to the document’s authenticity if the court finds that the
document is in fact authentic. Compare Zak v. Chelsea Therapeutics Int’l, Ltd., 780 F.3d 597, 60607 (4th Cir. 2015) (“Consideration of a document attached to a motion to dismiss ordinarily is
permitted only when the document is integral to and explicitly relied on in the complaint and when
the plaintiffs do not challenge the document’s authenticity.” (emphasis added) (internal quotation
marks and brackets omitted)), with Tessler v. Nat’l Broad. Co., Inc., 364 F. App’x 5, 7 (4th Cir.
2010) (explaining that district court did not abuse its discretion by rejecting plaintiff’s challenge
to the authenticity of materials attached to motion to dismiss). To the extent the court has the
authority to consider such a document upon a finding that it is authentic, the court declines to make
such a finding with respect to the YMCA handbook in this order.
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the instant motion. (ECF No. 12 at 3-4.) Relying nearly exclusively on the disclaimer contained
on the first page of the ABCAA handbook, Defendant argues that the handbook to which Plaintiff
points in her complaint, under South Carolina law, cannot amount to an employment contract
altering the at-will arrangement. (See id.) At the motion hearing—the first opportunity Plaintiff
had to address the ABCAA handbook attached to Defendant’s reply—Plaintiff challenged the
authenticity of the ABCAA handbook and, because, she argued, it was not clear whether the
document attached to the reply is the same as the handbook to which she points in her complaint,
Plaintiff also suggested that her complaint does not rely on the ABCAA handbook.
The court would reject Defendant’s argument regarding the ABCAA handbook for reasons
similar to those for which it rejects Defendant’s argument regarding the YMCA handbook:
Plaintiff challenges its authenticity, and it is not clear that the complaint relies on the YMCA
handbook that Defendant attached to its reply. However, assuming without deciding that the court
could consider the ABCAA handbook in deciding the instant motion, the court nonetheless
concludes that it does not establish without a doubt and as a matter of law the non-existence of an
employment contract.
Three portions of the document are relevant here. First, the disclaimer on the first page of
the handbook, which is bolded and capitalized, reads:
PURSUANT TO SECTION 41-1-110 OF THE 1976 SOUTH
CAROLINA CODE OF LAWS, AS AMENDED, NOTHING IN THESE
PERSONNEL POLICIES & PROCEDURES OR IN ANY OF THE
AGENGY’S OTHER PUBLICATIONS IS INTENDED TO CREATE,
NOR SHALL IT BE INTERPRETED TO CREATE, A CONTRACT OR
AGREEMENT OF EMPLOYMENT, OR ANY PART OF A
CONTRACT OR AGREEMENT OF EMPLOYMENT, EITHER
EXPRESS OR IMPLIED. THE RELATIONSHIP BETWEEN [ABCAA]
AND ITS EMPLOYEES IS STRICTLY THAT OF EMPLOYMENT AT
WILL.
(ECF No. 12-1 at 3.)
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Second, in a separate addendum applicable to Head Start employees, under the heading
titled “Separations,” the ABCAA handbook provides, in relevant part, the following:
The Head Start Director shall inform a Head Start employee in writing
that dismissal will be recommended to the Policy Council. This written notice
shall contain, at a minimum:
The charges on which the dismissal is based.
The employee’s right to access all documentation to be used by
[ABCAA] in substantiating the charges against the employee.
A statement that no new or additional charges not previously
communicated to the employee in writing may be brought out against the
employee.
A statement advising the employee of their right to be represented by a
person of their choosing, at their own expense.
The date, time, and location of the Policy Council meeting at which the
dismissal will be considered.
A statement advising the employee that he/she will have a minimum of
five (5) working days from the date of the notification letter to prepare for the
dismissal hearing.
The Policy Council shall hold a meeting to hear both sides of the case
no more than ten (10) working days from the date of the letter recommending
dismissal. The Policy Council shall notify the Executive Director and/or the
Head Start Director, in writing, of the decision no more than twelve (12)
working days from the date of the letter recommending dismissal.
If the Policy Council approves the dismissal, the employee will be
given two (2) weeks written notice prior to the separation, This notice shall
specify the reason for the termination and the last date of employment,
If the Policy Council disapproves the recommendation for dismissal,
all termination proceedings will cease and all adverse documents pertaining to
the dismissal shall be removed from the employee’s permanent record.
The decision of the Policy Council is final.
(Id. at 14-15.)

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Third, the Head Start addendum contains an extremely detailed process for aggrieved Head
Start employees to appeal adverse actions under a section titled “Appeal Procedures.” (See ECF
No. 12-2 at 28-30.) Features of the appeal process include the filing of a written appeal to the
Executive Director; the Policy Council’s written acknowledgement of the appeal; the Policy
Council’s responsibility to arrange for witnesses, a hearing room, recording devices, and
presentation of records and evidence; timely completion of the appeal hearing; provisions for
producing a transcript of the hearing; the rights of an aggrieved employee to counsel, crossexamination, and the presentation of her own evidence; a final decision on the appeal by the Policy
Council; and the right to appeal the decision to the Executive Director on procedural but not
substantive matters. (See id.) It is not clear to the court whether or how the appeal process applies
to terminations of Head Start employees.
Having reviewed these provisions of the ABCAA handbook, the court is unable to
determine at this time, as a matter of law, that it undoubtedly does not create an enforceable
employment contract that displaces the default at-will arrangement. First, to the extent that
Defendant relies on the handbook’s disclaimer invoking S.C. Code. Ann. § 41-1-110 (2016), 9 the
court concludes that Defendant’s reliance is misplaced. Section 41-1-110 only precludes the
9

The statute, in full, provides:
It is the public policy of this State that a handbook, personnel manual, policy,
procedure, or other document issued by an employer or its agent after June 30,
2004, shall not create an express or implied contract of employment if it is
conspicuously disclaimed. For purposes of this section, a disclaimer in a
handbook or personnel manual must be in underlined capital letters on the first
page of the document and signed by the employee. For all other documents
referenced in this section, the disclaimer must be in underlined capital letters
on the first page of the document. Whether or not a disclaimer is conspicuous
is a question of law.

S.C. Code Ann. § 41-1-110 (2016).
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existence of an employment contract based on an employee handbook or personnel manual when
the disclaimer is on the first page of the document, underlined, capitalized, and signed by the
employee. S.C. Code. Ann. § 41-1-110; see Hessenthaler, 616 S.E.2d at 697 n.5. Here, the
disclaimer in the ABCAA handbook attached to Defendant’s reply is not underlined and, although
the page on which it appears contains a signature line, it is not signed by Plaintiff. (See ECF No.
12-1 at 3.) Therefore, the court cannot find that the disclaimer is conspicuous as a matter of law
under § 41-1-110. See McClurkin v. Champion Labs., Inc., No. 0:11-cv-02401-CMC, 2011 WL
5402970, at *3 (D.S.C. Nov. 8, 2011).
Second, assessing the handbook outside the context of § 41-1-110, the court concludes that
it does not undoubtedly demonstrate that it does not create contractual obligations. When the
disclaimer in a handbook fails to comply with the requirements of § 41-1-110, a reviewing court
proceeds to the determination of whether the disclaimer may otherwise be found to be conspicuous
and whether, taken together, the disclaimer and the provisions in the handbook undoubtedly
demonstrate that the handbook does or does not create a contract displacing at-will employment.
See Brailsford, 2015 WL 4459032, at *4; Hessenthaler, 616 S.E.2d at 697-98.
Here, even if the court concluded that the disclaimer in the ABCAA handbook is
conspicuous as a matter of law, it would nonetheless conclude that the handbook does not
undoubtedly demonstrate that it does not create contractual obligations. In the court’s view, the
provisions in the Head Start addendum to the handbook regarding separation constitute mandatory
language limiting the right of Defendant to terminate Head Start employees. Specifically, the
provisions expressly prohibit Defendant from terminating Head Start employees unless the Policy
Council approves the termination after the hearing described in the provision occurs. It further
expressly states that “all termination proceedings will cease,” meaning, in the court’s view, that

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Defendant may not terminate a Head Start employee if the Policy Council rejects the dismissal
recommendation. Furthermore, to the extent the appeal procedure outlined in the Head Start
addendum applies to employee terminations, these procedures also limit Defendant’s right to
terminate Head Start employees if aggrieved employees are deprived of the rights afforded them
under the appeal procedure provisions. See Hessenthaler, 616 S.E2d at 698 (“Mandatory,
progressive discipline procedures may constitute enforceable promises. Such procedures typically
provide that an employee may be fired only after certain steps are taken. When definite and
mandatory, these procedures impose a limitation on the employer’s right to terminate an employee
at any time, for any reason.” (internal citations omitted)). Because the ABCAA handbook contains
binding, mandatory language limiting Defendant’s right to terminate, the presence of a
conspicuous disclaimer that does not comply with § 41-1-110 would not permit the court to
conclude, as a matter law, that the handbook does not create enforceable contractual obligations.
See Brailsford, 2015 WL 4459032, at *4; Lord, 827 F. Supp. 2d at 602.
In sum, the court rejects Defendant’s arguments that Plaintiff’s claims should be dismissed
because one of the handbooks it attached to its briefing on the instant motion demonstrate that it
does not create an employment contract. The court cannot consider the YMCA handbook at this
stage, and the court concludes that the ABCAA handbook, even if appropriately considered, does
not undoubtedly demonstrate that it does not create enforceable contractual obligations.
C. Allegations of fraudulent activity
Lastly, Defendant argues that Plaintiff’s complaint fails to sufficiently allege that
Defendant, in breaching the employment contract, engaged in fraudulent activity. (ECF No. 7-1 at
8.) In Defendant’s view, the complaint merely asserts the allegation that Defendant breached the

22

contract by engaging in fraudulent activity, a conclusory legal allegation that should not be
accorded the presumption of truth under Rule 12(b)(6) analysis. (Id.)
The court disagrees with Defendant. In doing so, the court relies primarily on the South
Carolina Supreme Court’s treatment of a breach-with-fraudulent-intent claim in Conner v. City of
Forest Acres, 560 S.E.2d 606 (2002). In Conner, the Supreme Court explained:
In order to have a claim for breach of contract accompanied by a
fraudulent act, the plaintiff must establish three elements: (1) a breach of
contract; (2) fraudulent intent relating to the breaching of the contract and not
merely to its making; and (3) a fraudulent act accompanying the breach.
Harper v. Ethridge, 348 S.E.2d 374 (Ct.App.1986). The fraudulent act is any
act characterized by dishonesty in fact or unfair dealing. Id. “Fraud,” in this
sense, “assumes so many hues and forms, that courts are compelled to content
themselves with comparatively few general rules for its discovery and defeat,
and allow the facts and circumstances peculiar to each case to bear heavily
upon the conscience and judgment of the court or jury in determining its
presence or absence.” Sullivan v. Calhoun, 108 S.E. 189, 189 (1921) (citation
omitted).
. . . . [The employee]’s claim is that the [employer] fabricated
pretextual reasons for [the employee]’s termination knowing the reasons were
false and did not justify termination for cause. Viewing the evidence in the
light most favorable to [the employee], as we must, we find there is a genuine
issue of material fact as to whether the [employee] fraudulently breached its
contract.
Conner, 560 S.E.2d at 612 (parallel citations omitted). Although Conner was decided in the
summary judgment context, it instructs that an employee adequately pleads fraudulent activity in
a breach-with-fraudulent-intent claim by sufficiently alleging that the employer terminated the
employment on pretextual grounds knowing that the grounds for termination were false. See
McClurkin, 2011 WL 5402970, at *5 (“Fabricating pretextual reasons for an employee’s
termination may constitute the fraudulent act that must accompany the breach of contract.”).
Here, viewed in the light most favorable to Plaintiff, the complaint alleges that certain of
Defendant’s managers (who are specifically identified in the complaint) sought to terminate her
employment because she continually reported to them instances of non-compliance with
23

regulations applicable to the Head Start program Defendant administered and because she
attempted to vindicate contractual rights afforded her and other employees under the handbook
and other policies and procedures that governed Defendant. The complaint further alleges that
these managers contrived reasons to terminate Plaintiff’s employment—by assigning her frivolous
tasks or tasks that could not be completed, by transferring her to Defendant’s Augusta office when
her work was more easily accomplished in Aiken, by failing to provide her a professional
development plan, and by failing to provide her a job description until just prior to her
termination—that were a pretext for their real reasons for terminating her. These allegations
sufficiently plead that Defendant fabricated pretextual reasons to terminate Plaintiff’s employment
and, therefore, sufficiently plead that Defendant, in breaching the employment contract, engaged
in fraudulent activity. Accordingly, the court rejects Defendant’s final ground for dismissal.
IV. CONCLUSION
For the foregoing reasons, Defendants’ Rule 12(b)(6) motion to dismiss the complaint
(ECF No. 7) is DENIED.
IT IS SO ORDERED.

United States District Court Judge
July 25, 2017
Columbia, South Carolina

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