Equal Employment Opportunity Commission v. M.G. Oil Company

Filing 41

ORDER denying 27 Motion for Reconsideration ; denying 27 Motion to Certify Judgment. Signed by U.S. District Judge Karen E. Schreier on 1/25/2018. (JLS)

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
SOUTHERN DIVISION
EQUAL EMPLOYMENT OPPORTUNITY
COMMISSION,
Plaintiff,
vs.

4:16-CV-04131-KES
ORDER DENYING MOTION FOR
RECONSIDERATION AND DENYING
MOTION TO CERTIFY JUDGMENT

M.G. OIL COMPANY,
d/b/a HAPPY JACK’S,
Defendant
On August 10, 2017, the court entered order granting motions to strike
and dismiss defendant, M.G. Oil Company’s, third-party complaint. Docket 23.
On that same date, the court also entered a judgment dismissing TestPoint
Paramedical, LLC as a third-party defendant. Docket 24. M.G. Oil now moves
for reconsideration of the court’s August 10, 2017 order or, in the alternative,
for an order certifying that the court’s judgment dismissing TestPoint was a
final judgment under Federal Rule of Civil Procedure 54(b). Docket 27. Plaintiff,
the Equal Employment Opportunity Commission (EEOC), and TestPoint oppose
M.G. Oil’s motion. For the reasons that follow, the court denies M.G. Oil’s
motion.
BACKGROUND
On April 8, 2013, Kim Mullaney applied for a job in Sioux Falls, South
Dakota with Happy Jack’s, which is owned by M.G. Oil. Docket 2 ¶15.

Contingent on the successful completion of a drug test, Mullaney was offered a
position with M.G. Oil. Id. Mullaney took her drug test on April 9, 2013. Id.
At the time Mullaney took her drug test, M.G. Oil had a contract with
TestPoint to have TestPoint analyze the drug tests of M.G. Oil’s prospective
employees. Docket 7 ¶ 4. Under this contract, TestPoint was required to inform
M.G. Oil whether the prospective employee’s test results were negative or nonnegative for drugs. Id. M.G. Oil asserts that before TestPoint shared the results
of a prospective employee’s drug test with M.G. Oil, TestPoint was required to
send all non-negative drug tests to a medical review officer to determine
whether the non-negative result was caused by the prospective employee’s
lawful use of a prescription drug. Id. ¶ 5. Whenever a prospective employee’s
non-negative result was caused by lawful use of a prescription drug, TestPoint
was required to report the test result to M.G. Oil as negative. Id. ¶ 6. Per M.G.
Oil’s company policy, if a prospective employee’s drug test was reported to M.G.
Oil as non-negative, M.G. Oil would terminate the conditional offer of
employment. Docket 2 ¶ 17; Docket 7 ¶ 10.
TestPoint reported to M.G. Oil that Mullaney’s drug test result was nonnegative. Docket 2 ¶ 17; Docket 7 ¶ 9. Because Mullaney’s drug test result was
non-negative, M.G. Oil withdrew its conditional offer of employment consistent
with the company’s drug test policy. Docket 2 ¶ 17; Docket 7 ¶ 10. M.G. Oil
contends that when it withdrew Mullaney’s conditional offer of employment,
TestPoint provided no indication that Mullaney’s drug test had not been sent to
a medical review officer to verify the result. Docket 7 ¶ 9.
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Mullaney claims she is a disabled person under Sections 3 and 101(8) of
the Americans with Disabilities Act (ADA), 42 U.S.C. §§ 12102 and 12111(8),
and has impairments of her neck and back. Docket 2 ¶ 14. Mullaney alleges
that after M.G. Oil withdrew her employment offer she explained to M.G. Oil
that the non-negative drug test result was caused by her lawful use of a
prescription pain killer that she took to manage her impairments. Id. ¶ 18.
Mullaney also claims that despite her explanation, M.G. Oil refused to
reconsider its decision not to rehire her. Id. ¶ 20.
Claiming to fit the ADA’s disabled person description, Mullaney filed her
charge against M.G. Oil with the EEOC. Id. ¶ 7. On Mullaney’s behalf, the
EEOC sent a conciliation letter to M.G. Oil, alerting the company of the alleged
discriminatory actions that it took against Mullaney and seeking appropriate
relief. Id. ¶ 8. M.G. Oil and the EEOC could not reach an agreement about how
to resolve Mullaney’s complaint with M.G. Oil. Id. ¶ 10. After the EEOC’s letter
concerning Mullaney’s alleged discrimination failed to resolve the dispute, the
EEOC filed suit against M.G. Oil on Mullaney’s behalf. Id. ¶¶ 9-10.
The EEOC’s complaint alleges that M.G. Oil has discriminated against
Mullaney and has used unlawful employment practices both in violation of
Title I of the ADA. Id. ¶¶ 3, 12. In response to these allegations, M.G. Oil filed a
third-party complaint against TestPoint, claiming that if M.G. Oil was found to
be liable to Mullaney for discrimination, then TestPoint was liable to it for all
(indemnification) or part (contribution) of the judgment because TestPoint
breached its contract with M.G. Oil and was negligent. Docket 7 ¶¶ 13-23.
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The EEOC moved to strike M.G. Oil’s third-party complaint. Docket 11. And
TestPoint moved to dismiss M.G. Oil’s third-party complaint for failure to state
a claim upon which relief can be granted. Docket 14.
On August 10, 2017, the court entered order granting the EEOC’s motion
to strike and granting TestPoint’s motion to dismiss M.G. Oil’s third-party
complaint. Docket 23. In granting these motions, the court relied upon the
United States Supreme Court’s decision in Northwest Airlines, Inc. v. Transport
Workers Union, 451 U.S. 77 (1981), and upon the United States Court of
Appeals for the Eighth Circuit’s decision in Travelers Casualty & Surety Co. of
America v. IADA Services., Inc., 497 F.3d 862 (8th Cir. 2007). See Docket 23 at
5-8. In fact, the court concluded that the impact of the decisions in Northwest
Airlines and Travelers required the court, reasoning by analogy, to conclude
that M.G. Oil’s third-party claims for contribution and indemnification were
impermissible under Title I of the ADA. Id. at 9 (citing Nw. Airlines, 451 U.S. at
98 and Travelers, 497 F.3d 867-68).
LEGAL STANDARD
The Federal Rules of Civil Procedure generally do not recognize uniform
standards for a court to analyze a motion to reconsider. In this case, M.G. Oil
brings its motion to reconsider under Federal Rule of Civil Procedure 54(b),
which provides that “any order or other decision . . . that adjudicates fewer
than all the claims or the rights and liabilities of fewer than all the parties . . .
may be revised at any time before the entry of a judgment adjudicating all the
claims and all the parties' rights and liabilities.” Fed. R. Civ. P. 54(b); see also
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Julianello v. K-V Pharm. Co., 791 F.3d 915, 923 n.3 (8th Cir. 2015) (noting that
Rule 54(b) is the appropriate rule under which to bring a motion to reconsider
when final judgment has not been entered on any of plaintiff's claims). Under
Rule 54(b), district courts have “the inherent power to reconsider and modify
an interlocutory order any time prior to the entry of judgment.” K.C.1986 Ltd.
P'ship v. Reade Mfg., 472 F.3d 1009, 1017 (8th Cir. 2007) (quotation and
citation omitted). “While the specific standard for a motion made under
Rule 54(b) is unclear, generally courts have found the standard . . . ‘to be less
exacting than would be a motion under Federal Rule of Procedure 59(e), which
is in turn less exacting than the standards enunciated in Federal Rule of
Procedure 60(b).’ ” Planned Parenthood Minn., N.D. v. Daugaard, 946 F. Supp.
2d 913, 925 (D.S.D. 2013) (quoting Colombe v. Rosebud Sioux Tribe, 835 F.
Supp. 2d 736, 750 (D.S.D. 2011), overruled on other grounds by Colombe v.
Rosebud Sioux Tribe, 747 F.3d 1020 (8th Cir. 2014)); see also Doctor John's,
Inc. v. City of Sioux City, 438 F. Supp. 2d 1005, 1027 (N.D. Iowa 2006).
Although the court's reconsideration of interlocutory orders might be less
rigorous than that of final orders for Rules 59(e) or 60(b), courts “should look to
the kinds of consideration under those rules for guidance.” Doctor John's, 438
F. Supp. 2d at 1027 (quotation and citation omitted). Like other motions to
reconsider, “[i]t is generally held that a court may amend or reconsider any
ruling under Rule 54(b) to correct any clearly or manifestly erroneous findings
of facts or conclusions of law.” Jones v. Casey's Gen. Stores, 551 F. Supp. 2d
848, 854 (S.D. Iowa 2008) (quotations and citation omitted).
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DISCUSSION
I.

Motion to Reconsider
Following the conclusion of briefing on the motions to strike and

dismiss—but before the court entered its August 10, 2017 order—the United
States Court of Appeals for the Ninth Circuit issued its opinion in the case City
of Los Angeles v. AECOM Services, Inc., 854 F.3d 1149 (9th Cir. 2017). M.G. Oil
contends that the Ninth Circuit’s decision in AECOM Services provides a
significant change in law that warrants reconsideration of the court’s August
10, 2017 order dismissing M.G. Oil’s third-party complaint. See Docket 28 at 2.
In AECOM Services, the issue before the Ninth Circuit was whether
Title II of the ADA and Section 504 of the Rehabilitation Act of 1973, 29 U.S.C.
§ 794, “preempt a city's state-law claims for breach of contract and de facto
contribution against contractors who breach their contractual duty to perform
services in compliance with federal disability regulations[.]” AECOM Services,
854 F.3d at 1152 (italics in original). The plaintiffs in AECOM Services, sued
the City of Los Angeles alleging that “the City’s FlyAway bus facility and
service—a bus system that provides transportation between Los Angeles
International Airport and various locations—failed to meet the accessibility
standards set forth in Title II of the ADA, . . . Section 504 of the Rehabilitation
Act, . . . and various California statutes.” Id. The plaintiffs specifically alleged
that the FlyAway bus facility in Van Nuys, California was constructed in a way
that made it inaccessible for use by disabled individuals. Id. In response to the
plaintiffs’ complaint, the City of Los Angeles filed a third-party complaint
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against AECOM Services, Inc., alleging that AECOM, as the successor-ininterest to the party hired by the City to construct the Van Nuys FlyAway
facility, was contractually obligated to indemnify the City for all claims to the
extent that those claims resulted “from the negligent and/or intentional
wrongful acts or omissions of [AECOM], its subcontractors, officers, agents,
servants, [or] employees.” Id. (emphasis and alterations in original).
AECOM Services moved to dismiss the City of Los Angeles’s third-party
complaint on the theory the City’s indemnification claim was preempted by
Title II of the ADA and Section 504 of the Rehabilitation Act. See id. at 1153.
The district court granted AECOM Services’ motion to dismiss on preemption
grounds. See id. On appeal, the Ninth Circuit analyzed and described the
boundaries of federal preemption law and discussed how federal preemption
law related to AECOM Service’s appeal. See id. at 1154-1161. The Ninth Circuit
also analyzed the legislative histories behind Title II of the ADA and
Section 504 of the Rehabilitation Act. Id. at 1159-60. What the Ninth Circuit
found telling about the legislative histories of these statutes was that neither
statutes’ legislative history “addresses claims for state-law indemnification or
contribution filed by a public entity against a contractor.” Id. at 1160. Thus,
after reviewing federal case law on point and the legislative histories of the acts,
the Ninth Circuit concluded that the district court erred in dismissing the City
of Los Angles’ third-party claims for contribution and indemnity because the
claims there were based only on the actions directly attributed to AECOM
Services and would not lead to a complete shift away from the City’s liability
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under Title II of the ADA or Section 504 of the Rehabilitation Act. See id. at
1160-61.
M.G. Oil argues that the Ninth Circuit’s decision in AECOM Services
shows that M.G. Oil’s claims for contribution and indemnity in this case are
not preempted under Title I of the ADA. See Docket 28 at 5-6. M.G. Oil’s
reliance on AECOM Services, however, appears to be based on M.G. Oil’s
misreading of the court’s August 10, 2017 order as a preemption opinion. For
example, M.G. Oil argues that the court’s August 10, 2017 order “relied heavily
on the Eighth Circuit’s decision in Travelers . . . , which held that sate
common-law claims for contribution are preempted under ERISA.” Id. at 3
(citing Docket 23 at 7-8) (emphasis in original). M.G. Oil reiterates this
argument in its reply brief stating “[c]learly, this Court’s prior ruling dismissing
the third-party claim, . . . depend[ed] on a misunderstanding of the scope of the
Eighth Circuit’s application of preemption in Travelers . . . .” Docket 33 at 2.
The court’s August 10, 2017 order did not, as M.G. Oil suggests, find
that M.G. Oil’s claims for contribution and indemnity were preempted under
Title I of the ADA. 1 Instead, the court’s decision, although citing Travelers as
analogous authority, relied most heavily upon the Supreme Court’s decision in
Northwest Airlines. See Docket 23 at 5-10.
The court’s August 10, 2017 order uses the word “preemption” only once.
Docket 23 at 8. That singular use of the word “preemption” appears in a
passage where the court quotes from the Eighth Circuit’s decision in Travelers.
Id. at 7-8 (quoting Travelers, 497 F.3d at 868). Thus, given that the court’s
August 10, 2017 order provided no preemption analysis and did not use the
word “preemption” in any other portion of the order, the court rejects M.G. Oil’s
attempt here to paint the decision as resting on preemption grounds.
1

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In Northwest Airlines, the Supreme Court had to decide whether parties
could seek the remedy of contribution in suits brought under Title VII and the
Equal Pay Act. Nw. Airlines, 451 U.S. at 79-80. In addressing this question, the
Supreme Court declined to imply a right to contribution under Title VII or the
Equal Pay Act because to recognize that right would interfere with Congress’s
decision to omit the remedy from the protections of the Title VII and the Equal
Pay Act. Id. at 97-98. Supporting the Court’s conclusion not to imply the
remedy of contribution under Title VII or the Equal Pay Act is the presumption
that Congress’s decision to omit a remedy from a statute “is strongest when
Congress has enacted a comprehensive legislative scheme including an
integrated system of procedures for enforcement.” Id. at 97. And because
Title VII of the Civil Rights Act of 1964 and the Equal Pay Act of 1963 were
comprehensive legislative schemes that included integrated procedures for
enforcement, the Supreme Court concluded that “[t]he judiciary may not, in the
face of such comprehensive legislative schemes, fashion new remedies that
might upset carefully considered legislative programs.” Id. at 97 (footnote
omitted). 2
In the August 10, 2017 order, the court found that the enforcement
provisions of Title I of the ADA and Title VII were identical. Docket 23 at 9.
After making this finding, the court, relying on the Supreme Court’s decision in
Although not cited in the August 10, 2017 order, it is worth noting that the
Supreme Court has cited Northwest Airlines for the proposition that, in the
absence of an act of Congress granting parties the remedy, “[t]here is no
general federal right to contribution.” Paroline v. United States, 134 S. Ct. 1710,
1725 (2014) (citing Nw. Airlines, 451 U.S. at 96-97).
2

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Northwest Airlines, concluded that M.G. Oil’s claims for contribution and
indemnity against TestPoint were barred under Title I of the ADA and
dismissed M.G. Oil’s third-party complaint. Id. at 9-10. While this court’s
August 10, 2017 order primarily relied on the Northwest Airlines decision,
M.G. Oil’s briefing on its motion to reconsider fails to address this issue. 3
Given that the court’s decision in the August 10, 2017 order did not rely
on preemption grounds, the court declines to give the Ninth Circuit’s decision
in AECOM Services any weight. Further, even when the court considers the
Ninth Circuit’s decision in AECOM Services, the court does not believe that the
Ninth Circuit’s decision supports granting M.G. Oil’s motion for reconsideration
of the August 10, 2017 order. Supporting this conclusion are several factors.
First, the ADA claims in AECOM Services were brought under Title II, which
governs the accessibility of public accommodations, and not under Title I,
which bars employment discrimination against persons with disabilities.
See AECOM Services, 854 F.3d at 1152. Second, the plaintiffs in AECOM
Services brought claims under both federal law and California state law. See id.
Finally, the Ninth Circuit’s decision in AECOM Services does not cite the
Supreme Court’s decision in Northwest Airlines nor any other decision that this
court relied on in granting the motions to strike and dismiss M.G. Oil’s thirdparty complaint. Thus, because M.G. Oil has failed to show that the court’s
August 10, 2017 order was based on clearly erroneous findings of fact or
In fact, M.G. Oil’s briefing on its motion to reconsider cites the Supreme
Court’s decision in Northwest Airlines only once. See Docket 33 at 8 (citing Nw.
Airlines, 541 U.S. at 88 n.20).
3

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conclusions of law, see Jones, 551 F. Supp. 2d at 854 (quotations and citation
omitted), M.G. Oil’s motion for reconsideration under Rule 54(b) is denied.
II.

Interlocutory Appeal
As an alternative basis, M.G. Oil argues that if the court decides not to

reconsider the August 10, 2017 order dismissing the third-party complaint, the
court should certify the August 10, 2017 order as a final order under
Rule 54(b). Docket 28 at 8-9. The EEOC and TestPoint oppose M.G. Oil’s
motion arguing that Rule 54(b) certification is inappropriate given the current
posture of this matter.
The Eighth Circuit has directed district courts to undertake a two-step
analysis when deciding whether to grant Rule 54(b) certification. Williams v.
Cty. of Dakota, 687 F.3d 1064, 1067 (8th Cir. 2012). In this analysis, a district
court “ ‘must first determine that it is dealing with a final judgment . . . . in the
sense that it is an ultimate disposition of an individual claim.’ ” Id. (quoting
Outdoor Cent., Inc. v. Greatlodge.com, Inc., 643 F.3d 1115, 1118 (8th Cir.
2011)). “Second, ‘[i]n determining that there is no just reason for delay, the
district court must consider both the equities of the situation and judicial
administrative interests, particularly the interest in preventing piecemeal
appeals.’ ” Id. (quoting Outdoor Cent., 643 F.3d at 1118). “Interlocutory appeals
are ‘generally disfavored’ and ‘only the special case . . . warrants an immediate
appeal from a partial resolution of the lawsuit.’ ” Dean v. Cty. of Gage, 807 F.3d
931, 937-38 (8th Cir. 2015) (quoting Clark v. Baka, 593 F.3d 712, 714–15 (8th
Cir. 2010) (per curiam)).
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After reviewing the arguments presented by the parties here, the court
concludes that Rule 54(b) certification of the decision to dismiss M.G. Oil’s
third-party complaint is not proper. As the Eighth Circuit has made clear, “[a]n
order dismissing a third-party claim for contribution or indemnity should
rarely be certified for immediate appeal under Rule 54(b).” Interstate Power Co.
v. Kansas City Power & Light Co., 992 F.2d 804, 807 (8th Cir. 1993) (citation
omitted). This is because the decision of whether contribution or indemnity is
warranted “is collateral to and dependent upon a finding of liability.” Id. at 808
(internal quotation and citation omitted). Here that means that in order for
M.G. Oil to be able to seek contribution or indemnity from TestPoint, assuming
the remedies are even available, there must first be a finding by the court that
M.G. Oil is liable for the harm alleged by the EEOC. Thus, because granting
M.G. Oil’s request for Rule 54(b) certification before answering the threshold
question of whether M.G. Oil is liable would lead to a waste of judicial
resources, the court will not certify its August 10, 2017 order as final.
CONCLUSION
The court concludes that M.G. Oil has failed to show that the court’s
August 10, 2017 order was based on clearly erroneous findings of fact or
conclusions of law. The court also concludes that to grant M.G. Oil’s request to
certify the August 10, 2017 order as a final order under Rule 54(b) would lead
to a waste of judicial resources and would only encourage piecemeal appeals of
issues that might not materialize. Thus, it is

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ORDERED that M.G. Oil’s motion for reconsideration, or in the
alternative, certification that the August 10, 2017 order is a final order under
Rule 54(b) (Docket 27) is denied.
DATED January 25, 2018.
BY THE COURT:
/s/ Karen E. Schreier
KAREN E. SCHREIER
UNITED STATES DISTRICT JUDGE

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