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Bowles v. Heath Consultants, Inc.

United States District Court, W.D. Tennessee, Western Division

March 16, 2017

HEATH CONSULTANTS, INCORPORATED, a Delaware Corporation, and GRANT CROTTS, individually, Defendants.



         Plaintiffs Angela D. Bowles and Vivian E. Rivera filed this action in the Chancery Court of Shelby County, Tennessee, for alleged violations of the Tennessee Human Rights Act (“THRA”), Tenn. Code Ann. § 4-21-101, et seq. and wrongful discharge in violation of Tennessee's common law. (ECF No. 1-2.) Defendants Heath Consultants, Inc., and Grant Crotts removed the action to this Court pursuant to 28 U.S.C. § 1332, diversity of citizenship. (ECF No. 1.) Plaintiffs have moved the Court to remand the action. (ECF No. 15.) Defendants have filed a response to the motion (ECF No. 21), and Plaintiffs have filed a reply to the response. (ECF No. 26.) For the reasons set forth below, the motion to remand is DENIED.[1]

         On a motion for remand, the removing party has the burden of establishing that removal was proper.[2] “The removal petition is to be strictly construed, with all doubts resolved against removal.”[3]

         A federal court has jurisdiction under § 1332 only if there is “complete diversity between all plaintiffs and all defendants.”[4] Complete diversity exists only when no plaintiff and no defendant are citizens of the same state.[5] In the present case, at the time of the filing of the complaint, Plaintiff Bowles was a citizen of Tennessee, Plaintiff Rivera was a citizen of Mississippi, Defendant Heath Consultants was a citizen of Delaware, and Defendant Crotts was a citizen of Tennessee. Therefore, on the face of the complaint, complete diversity does not exist, and a remand is necessitated.

         Defendants contend, however, that the motion to remand should be denied because Defendant Crotts was fraudulently joined. Specifically, Defendants contend that Crotts, who is alleged to have supervised Plaintiffs during their employment with Defendant Heath Consultants, cannot be individually liable under the THRA and that Plaintiffs' common law claims are preempted by the THRA. Defendants correctly note that, if the citizenship of Crotts is disregarded, there is complete diversity between the parties.[6]

         Fraudulent joinder is “a judicially created doctrine that provides an exception to the requirement of complete diversity.”[7] A defendant is fraudulently joined if it is “clear that there can be no recovery under the law of the state on the cause alleged or on the facts in view of the law ...”[8] “When a non-diverse party has been joined as a defendant, then in the absence of a substantial federal question the removing defendant may avoid remand only by demonstrating that the non-diverse party was fraudulently joined.”[9] The relevant inquiry is whether there is “a colorable basis for predicting that a plaintiff may recover against [a defendant].”[10] “[T]he Sixth Circuit has indicated that, in the absence of directly applicable state court precedent, a district court may look to analogous state laws in construing the validity of a claim under the law at issue.”[11] “The removing party bears the burden of demonstrating fraudulent joinder.”[12]

         The question before the Court is whether Defendant Crotts can be held individually liable under the THRA.[13] If so, complete diversity does not exist, and the action must be remanded. However, if Defendant Crotts cannot be held individually liable, then he was fraudulently joined, and Plaintiffs' motion must be denied.

         It is undisputed that, prior to July 1, 2014, Tennessee courts recognized that the THRA created individual liability when a plaintiff alleged that the defendant engaged in retaliatory acts against an employee who opposed a discriminatory practice under the THRA, made a complaint, or filed a charge.[14] It is also undisputed that, after July 1, 2014, there is no individual liability for discrimination claims. However, Plaintiffs contend that the “plain, unambiguous language” of the THRA retains individual liability for retaliation claims, even after the 2014 amendments, while Defendants contend that the amendments removed individual liability for both discrimination and retaliation claims.

         The THRA prohibits discriminatory practices, including retaliation.

It is a discriminatory practice for a person or for two (2) or more persons to (1) retaliate or discriminate in any manner against a person because such person has opposed a practice declared discriminatory by this chapter or because such person has made a charge, filed a complaint, testified, assisted or participated in any manner in any investigation, proceeding or hearing under this chapter.[15]

         In 2014 the Tennessee legislature amended the THRA for claims accruing on or after July 1, 2014, to eliminate aiding and abetting claims as an individual basis for liability and added “No individual employee or agent of an employer shall be liable for any violation of part 4 of this chapter that any employer shall be found to have committed.”[16] Part 4 of the THRA, entitled “Employment-Related Discrimination, ” lists prohibited employment practices such as

(1) fail[ing] or refus[ing] to hire or discharge any person or otherwise to discriminate against an individual with respect to compensation, terms, conditions, or privileges of employment because of such individual's race, creed, color, religion, sex, age or national origin; or
(2) limit[ing], segretat[ing] or classify[ing] an employee or applicants for employment in any way that would deprive or tend to deprive an individual of employment opportunities or otherwise adversely affect the status of an employee, because of race, creed, color, religion, sex, age, or national origin.[17]

         Part 4 of the THRA does not expressly refer to retaliation claims.

         Plaintiffs point out that, not only did the legislature specifically comment in part 3 that it was removing individual liability for discriminatory acts, but it also eliminated individual “aiding and abetting” liability. Plaintiffs reason that, if the legislature intended to remove individual liability for retaliation, then it would have taken the additional step of amending the retaliation provision to expressly state that there is no longer individual liability for retaliation claims under part 4 of the THRA.

         Defendants have responded that legislative history shows that the stated purpose of the 2014 amendments to the THRA was to clarify Tennessee's existing employment laws to harmonize state law with federal law, which disallows individual liability for both retaliation and discrimination claims, and that Plaintiffs' interpretation of the 2014 amendments draws an arbitrary and unnecessary line between retaliation and discrimination claims brought under the THRA. Defendants point to Senate Bill No. 2126 which amended Tennessee Code Annotated, Title 4, Chapter 21, relative to employment litigation, for claims accruing on or after July 1, 2014. The bill “specifie[d] that no individual employee or agent of an employer will be liable for any violation of human rights that an employer committed” (emphasis added).[18] Further, “the purpose of this act is to clarify existing Tennessee statutory employment law and to harmonize Tennessee law with federal law with regard to individual liability and damages caps in employment litigation.”[19] In order to achieve this purpose, the amendment omitted § 4-21-301(a)(2), which made it a discriminatory practice to “[a]id, abet, incite, compel or command a person to engage in any of the acts or practices declared discriminatory by this chapter, ” and inserted § 4-21-301(1)(b) which specifies that “[n]o individual employee or agent of an employer shall be liable for any violation of part 4 of this chapter that any employer shall be found to have committed.”[20]

         Plaintiffs argue that the use of the phrase “any violation of part 4 of this chapter” means that the 2014 amendments removed individual liability for employment-related discrimination but not for employment-related retaliation claims because the word “retaliation” does not appear in part 4. Plaintiffs also maintain that the Court cannot consider the legislative history of the amendments without first finding that the statute is ambiguous, and, according to ...

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