EEOC v. Orion Energy Systems Inc
Filing
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ORDER denying 17 Motion to Amend/Correct Answer. (cc: all counsel) (Griesbach, William)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
EQUAL EMPLOYMENT OPPORTUNITY COMMISSION,
Plaintiff,
v.
Case No. 14-CV-1019
ORION ENERGY SYSTEMS INC.,
Defendant.
ORDER DENYING MOTION TO AMEND ANSWER AND AFFIRMATIVE DEFENSES
This case comes before the court on Defendant Orion Energy Systems Inc.’s motion to
amend its answer and affirmative defenses to include a statute of limitations defense. For the reasons
below, the motion will be denied.
Orion Energy terminated Wendy Schobert’s employment on May 18, 2009. Schobert claims
the true reason she was fired was because she refused to participate in a wellness program
administered by Orion. Schobert filed an administrative complaint with the Equal Employment
Opportunity Commission on March 10, 2010, 296 days after she was terminated. The EEOC
thereafter commenced this action on behalf of Schobert alleging Orion administered involuntary
medical examinations and disability-related inquiries as part of the wellness program in violation of
Section 102 of the Americans with Disabilities Act (ADA), 42 U.S.C. § 12112(d)(4)(B), and further
that Orion retaliated against Schobert by firing her for objecting to the program and intimidated her
for exercising her right not to participate in it in violation of Section 503 of the ADA, 42 U.S.C.
§ 12203(a) & (b). Orion has asserted numerous affirmative defenses in response to the complaint
but, based on Schobert’s termination date and the fact that the applicable statute of limitations for
filing her administrative complaint is 300 days, Orion did not assert a statute of limitations defense.
On September 4, 2015, Orion filed a motion to amend its answer and affirmative defenses
to add a statute of limitations defense. The motion was based on deposition testimony of Wendy
Schobert in which she stated she knew she was going to be fired one week before the May 18, 2009
meeting. According to Schobert’s recollection of the May 18 meeting, she testified in the deposition
that after she was told she was terminated by Mike Potts, then Orion’s executive vice-president: “I
remember telling him [Potts] I wanted to let him know that I knew about the termination ahead of
time, that I had a good week heads-up on my termination because I overheard the conversation.
And that it wasn’t very professional that I knew about my termination ahead of time.” 8/12/2015
Dep. Tr. at 195:21–196:2, ECF No. 19-1 (emphasis added). Other parts of Schobert’s deposition
indicate that the conversation she overhead was between her manager and the director of human
resources at Orion, and that Schobert was able to infer at the time that these individuals were talking
about terminating her specifically because they were talking about having to wait until after Friday
May 15 when the sales and use tax filings were completed, and Schobert was the employee
responsible for such filings. See Def.’s Reply 7–8, ECF No. 23.
A party seeking to amend pleadings after the deadline to do so has expired must comply with
Rules 15 and 16 of the Federal Rules of Civil Procedure. Alioto v. Town of Lisbon, 651 F.3d 715,
719 (7th Cir. 2011). The party must show “good cause” as required under Rule 16(b)(4), and the
court will then grant leave to amend under Rule 15(a)(2) “when justice so requires.” See id. at
719–20. As for good cause, the court “primarily considers the diligence of the party seeking
amendment.” Trustmark Ins. Co. v. General & Cologne Life Re of America, 424 F.3d 542, 553 (7th
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Cir. 2005). But even if good cause is shown, that the amendment would be futile is a reason for
denying leave under Rule 15(a)(2). Dubicz v. Commonwealth Edison Co., 377 F.3d 787, 792 (7th
Cir. 2004).
Here, Orion argues it exercised diligence in seeking this amendment because it only learned
the basis for its statute of limitations defense after Schobert’s recent deposition, and because it
moved for leave to amend shortly thereafter. In response, the EEOC argues Orion had notice of this
issue as early as February 2011 when the EEOC was investigating Schobert’s initial complaint. See
Pl.’s Resp. Br. 3, ECF No. 21. In fact, although the EEOC does not argue the point, Orion has
known about the issue since May 22, 2009. Schobert testified that she told the VP who fired her
that she knew she would be terminated since one week earlier; Orion’s proposed statute of
limitations defense is premised on the truth of her testimony, but the same testimony establishes that
Orion has known the basis for its statute of limitations defense all along. I therefore find Orion has
not been diligent by waiting until this late date to assert a statute of limitations defense.
The EEOC also argues Orion’s amendment would be futile. The standard for denying a
motion to amend based on futility is the same as granting a motion to dismiss the would-be amended
pleading for failure to state a claim. See United States v. City of Indianapolis, 742 F.3d 720, 734
(7th Cir. 2014). In this case, dismissal of the amended pleading—an affirmative defense—would
technically come in the form of granting a Rule 12(f) motion “to strike from a pleading an insufficient
defense.” Courts routinely apply the traditional motion-to-dismiss analysis to motions to strike
“insufficient” defenses, however, see Renalds v. S.R.G. Restaurant Group, 119 F. Supp. 2d 800,
802–03 (N.D. Ill. 2000), so the distinction is without a difference. The question can be boiled down
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to whether the proposed affirmative defense has merit, assuming the facts are as the pleader says they
are.
The parties agree that the applicable statute of limitations here required that Schobert file her
EEOC charge within 300 days “after the alleged unlawful employment practices occurred.” See 42
U.S.C. § 12117(a) (incorporating 42 U.S.C. § 2000e-5(e)(1)). Under this statute, the date of the
discriminatory act controls, not necessarily the date of termination. This distinction matters, for
example, when the complained of act is the denial of tenure, and the individual denied tenure
continues to work until an effective termination date. See, e.g., Lever v. Northwestern University,
979 F.2d 552, 553 (7th Cir. 1992) (“Time starts to run with ‘the discriminatory act, not the point
at which the consequences of the act become painful.’” (quoting Chardon v. Fernandez, 454 U.S.
6, 8 (1981)). But because an employer may unilaterally decide to terminate, in order to prevent the
employee’s claim from accruing without her knowledge, courts including the Seventh Circuit use an
“unequivocal notice of termination” test. See Dvorak v. Mostardi Platt Associates, Inc., 289 F.3d
479, 486 (7th Cir. 2002) (discussing Bonham v. Dresser Indus., Inc., 569 F.2d 187, 191 (3d Cir.
1977)).
As explained by the Seventh Circuit, this test “states that termination occurs when the
employer shows, by acts or words, clear intention to dispense with the employee's services. There
are two prongs to the test, both of which must be satisfied to fix the date of termination. First, there
must be a final, ultimate, nontentative decision to terminate the employee. . . . Second, the employer
must give the employee unequivocal notice of its final termination decision.” Spurling v. C&M Fine
Pack, Inc., 739 F.3d 1055, 1061 (7th Cir. 2014) (internal citations omitted) (citing Dvorak and
Flannery v. Recording Indus. Ass’n of Am., 354 F.3d 632, 637 (7th Cir. 2004)). The “unequivocal”
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element of the test is based on the notion that “[a] mere threat to take some job action against an
employee is not enough to trigger the statute of limitations . . . . If the rule were otherwise, ‘litigants
would be forced to file a charge at every hint of termination in order to preserve their claims’ and
‘[t]he concomitant burden upon the EEOC would impact significantly the enforcement function of
the agency.’” Dauska v. Green Bay Packaging Inc., No. 12-CV-925, 2014 WL 3843547, at *5
(E.D. Wis. Aug. 5, 2014) (quoting Flannery, 354 F.3d at 641). In addition to being unequivocal,
this element of the test requires that the employer actually give notice to the employee.
Here, construing the facts in Orion’s favor means inferring that Orion’s decision to terminate
Schobert had become final by the time she overheard the conversation. However, one could not
infer based on the facts Orion puts forth that it provided Schobert unequivocal notice of termination
at that time. Indeed, as Orion concedes, its statute of limitations defense is based on the fact that
Schobert surreptitiously overheard a conversation about her termination.
Orion’s only argument that these circumstances start the 300-day clock is that, citing Dvorak,
“an employee-centric standard controls.” As the court understands it, Orion’s position is that
Schobert had unequivocal notice of termination because she had actual notice of termination and
because the conversation she heard was clear enough that she accurately concluded that she would
be fired. The court is not aware of any authority for such a standard, however. To the extent
Dvorak describes an “employee-centric” standard, the point is that the employer’s unilateral decision
to terminate does not start the clock. It does not follow that the employee’s hearing of that decision,
without the employer intentionally providing notice of any kind, does start the clock. Instead, the
rule is that “the employer must give the employee ‘unequivocal’ notice of its final termination
decision.” Flannery, 354 F.3d at 637 (emphasis added). Therefore, in this case, where the facts
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show an employee simply overheard a conversation that an unnamed employee would be fired, Orion
cannot meet this standard.
Accordingly, because Orion did not diligently pursue its statute of limitations defense and,
alternatively, because amendment would be futile, Orion’s motion for leave is DENIED.
SO ORDERED this 12th
day of November, 2015.
s/ William C. Griesbach
William C. Griesbach, Chief Judge
United States District Court
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