U.S. Equal Emp't Opportunity Comm'n v. Discovering Hidden Haw. Tours, Inc.

U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff, v. DISCOVERING HIDDEN HAWAII TOURS, INC. d/b/a/ DISCOVER HAWAII TOURS,HAWAII TOURS AND TRANSPORTATION INC., and BIG KAHUNA LUAU, INC., Defendants.

CIVIL NO. 17-00067 DKW-KSC

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF HAWAI'I

September 21, 2017

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS WITH LEAVE TO AMEND

INTRODUCTION

The United States Equal Employment Opportunity Commission ("EEOC" or the "Commission") alleges sexual harassment, constructive discharge, and retaliation claims against each of the three Defendants on behalf of five former male employees. The alleged discriminating official in each instance, according to the EEOC, is the Owner and President of Discovering Hidden Hawaii Tours, Leopoldo Malagon III, whom the EEOC asserts controlled each of the Defendant entities.

Defendants move to dismiss: (1) as untimely all claims on behalf of Claimants 1 and 2 because the events associated with their claims occurred more than 300 days before the Charging Party filed his November 2015 discrimination charge with the EEOC; (2) the retaliation claim brought by Claimant 1 due to the absence of an adverse employment action; (3) the constructive discharge allegations of Claimants 1, 3 and 4 as insufficiently pled; (4) Claimant 4's sexual harassment claim because the harassment, as alleged, was neither severe nor pervasive; and (5) any claims against Hawaii Tours and Transportation Inc. and Big Kahuna because they were not the employers of any claimant.

For the reasons set forth below, Defendants' Motion to Dismiss is GRANTED. The EEOC is permitted leave to file an amended complaint consistent with the terms of this Order.

BACKGROUND

I. The EEOC's Allegations

On November 10, 2015, the Charging Party filed a Charge of Discrimination, alleging sexual harassment against his former employer, Discovering Hidden Hawaii Tours, Inc. ("DHT"). Decl. of Eric Yau, Ex. 1 (11/10/15 Charge); Dkt. No. 24-2. During the course of investigating the Charge, the EEOC discovered additional claimants, each allegedly suffering similar harassment based on sex (male) while employed by Defendants, and some also experiencing retaliation and constructive discharge. According to the EEOC, its investigation revealed a pattern or practice that began as early as 2006, wherein Malagon sexually harassed maleemployees by making sexual comments, propositioning them for sex at the office and at his home, and initiating unwelcome physical touching. Complaint ¶¶ 19, 21.

On February 15, 2017, the EEOC filed this lawsuit under 42 U.S.C. § 2000e-5(f)(1) and (3) ("Section 706") on behalf of the Charging Party and Claimants 1, 2, 3, and 4 against DHT, Hawaii Tours and Transportation Inc., and Big Kahuna Luau, Inc., under the theory that Defendants operate as a single enterprise controlled by Malagon, DHT's Owner and President. Complaint ¶¶ 8-11. The Complaint alleges that DHT employed the Charging Party as a Vice President of Sales and Marketing, and that Malagon subjected the Charging Party to repeated incidents of sexual harassment from May 2015 through August 2015. When the Charging Party complained to Defendants' human resources personnel about Malagon's conduct, Defendants took no corrective action and, shortly thereafter, Malagon threatened to fire him and withhold his bonuses. Complaint ¶ 19.a. The Charging Party resigned in August 2015 as a result of the harassment and retaliation. Complaint ¶ 19.a.

Claimant 1 worked for DHT as a social media marketing and reservations manager. The EEOC alleges that in October 2010, Malagon subjected Claimant 1 to unwelcome sexual harassment, including making comments of a sexual nature and inviting Claimant 1 to lunch. When Claimant 1 complained to his supervisor that Malagon's conduct made him uncomfortable, the supervisor responded bysuggesting that Claimant 1 accept Malagon's lunch invitation, "implying that his continued employment was contingent on Claimant 1's acquiescence to sexual contact." Complaint ¶ 19.b. Claimant 1 agreed to go to lunch, but Malagon instead took Claimant 1 to his apartment, where Claimant 1 "complied with Malagon's request for oral sex." Complaint ¶ 19.b. Claimant 1 later communicated to Malagon that the incident was "not ok," then complained to his supervisor and called a hotline number to report the incident. Complaint ¶ 19.b. Defendants not only failed to take corrective action but issued Claimant 1 a poor performance review two months after he reported Malagon's conduct. Claimant 1 resigned as a result of the harassment. Complaint ¶ 19.b.

The Commission alleges that Claimant 2 was employed from February 2012 through May 2013 as an internet marketer and sales manager. During his job interview, Malagon subjected Claimant 2 to unwelcome sexual harassment and touching. Complaint ¶ 19.c.

Claimant 3 worked for DHT as a bartender from May 2015 through July 2015. Complaint ¶ 19.d. He was allegedly subjected to unwelcome sexual harassment by Malagon on multiple occasions, which involved comments and questioning of a sexual nature and showing Claimant 3 photographs of Malagon and others engaged in sexual acts. Complaint ¶ 19.d. Claimant 3 resigned "in part as a result of the harassment." Complaint ¶ 19.d. Claimant 4 also worked as a bartender, from July 2015 to August 2015, although the particular entity he worked for is not specified. Malagon allegedly subjected Claimant 4 to unwelcome sexual comments while recruiting him for "employment with Defendants" and continued to make "comments of a sexual nature during his employment." Complaint ¶ 19.e. The unwelcome sexual comments included asking what "sexual stuff Claimant 4 was into, and talking about sex parties and orgies." Complaint ¶ 19.e.

The Complaint alleges generally that the "conduct described in Paragraph 19 resulted in the constructive discharge of male employees who were forced to resign because of the harassment," Complaint ¶ 20, and that "Malagon's treatment of Charging Party and Claimants 1 through 4 is illustrative of a pattern or practice of sexual harassment dating from at least 2006 through the present." Complaint ¶ 21.

II. Defendants' Motion To Dismiss

Defendants move to dismiss the claims brought on behalf of Claimants 1 and 2 because the acts they complained of occurred more than 300 days before the Charging Party filed his Charge with the EEOC in November 2015. Defendants also move to dismiss as insufficiently pled the retaliation and constructive discharge claims of all claimants. With respect to Claimant 4 only, Defendants seek dismissal of the sexual harassment claim because the Complaint fails to allege harassing conduct that was severe and pervasive. Finally, the Motion requests dismissal ofBig Kahuna (which had not yet come into existence at the time of the events in the Complaint) and Hawaii Tours and Transportation because neither was an employer of any claimant.

The EEOC argues that all of the claims have been timely brought because, taken as a whole, the Complaint pleads facts demonstrating a pattern or practice of sexual harassment that extends and is actionable beyond the 300-day limitation period. It also contends that the Complaint includes sufficient facts to support the asserted sexual harassment, constructive discharge and retaliation claims.¹ Moreover, the EEOC maintains that it plausibly alleges facts showing that all three Defendants functioned as one employer, and form part of the same integrated enterprise, which inflicted or condoned the pattern or practice of sexual harassment that underlies the EEOC's suit.

STANDARD OF REVIEW

Federal Rule of Civil Procedure 12(b)(6) authorizes the Court to dismiss a complaint that fails "to state a claim upon which relief can be granted." Rule 12(b)(6) is read in conjunction with Rule 8(a), which requires only "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2).

Pursuant to Ashcroft v. Iqbal, "[t]o 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.'" 555 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 554, 570 (2007)). "[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions." Id. Accordingly, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. (citing Twombly, 550 U.S. at 555). Rather, "[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). Factual allegations that only permit the court to infer "the mere possibility of misconduct" do not constitute a short and plain statement of the claim showing that the pleader is entitled to relief, as required by Rule 8(a)(2). Id. at 679.

A court may consider certain documents attached to a complaint, as well as documents incorporated by reference into a complaint "if the plaintiff refers extensively to the document or the document forms the basis of the plaintiff's claim." United States v. Ritchie, 342 F.3d 903, 909 (9th Cir. 2003); see also id. at 908 (A court may "consider certain materials—documents attached to the complaint, documents incorporated by reference in the complaint, or matters of judicial notice—without converting [a Rule 12(b)(6)] motion to dismiss into amotion for summary judgment."). Because the EEOC Charge is referenced in the Complaint and is a matter of public record, the Court grants the parties' request to take judicial notice of that document. See, e.g., Onodera v. Kuhio Motors Inc., 2013 WL 4511273, at *2 (D. Haw. Aug. 23, 2013) (citing EEOC v. Global Horizons, Inc., 860 F. Supp. 2d 1172, 1193 n.5 (D. Haw. 2012); Gallo v. Bd. of Regents of...