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Giddings v. Media Lodge, Inc.

United States District Court, D. South Dakota, Southern Division

April 12, 2018




         Plaintiff Caleb Giddings, a Senior Airman in the United States Air Force Reserves, accepted a job as the director of sales for Media Lodge, Inc. (Media Lodge) in the spring of 2015. Shortly thereafter, Giddings left to serve active duty for five-plus months with the Air Force. After returning from active duty, Giddings allegedly was demoted and then terminated from Media Lodge without cause. Giddings sued Media Lodge, Media Lodge's Chief Executive Officer Jeff Siegel, Media Lodge's majority owner IA Tech, LLC (IA Tech), Adams Keegan, Inc., and Adams Keegan-GA, LLC alleging that they violated the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). Doc. 41. Media Lodge, Siegel, and IA Tech (collectively "Media Lodge Defendants") filed a motion arguing that the Federal Arbitration Act and the arbitration clause in Giddings's employment agreement required this Court to stay or dismiss Giddings's case and compel arbitration. Doc. 18. Adams Keegan, Inc. and Adams Keegan-GA, LLC (collectively "Adams Keegan" or "Adams Keegan Defendants"), then moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), arguing that Giddings failed to state a claim upon which relief could be granted as against the Adams Keegan Defendants. Doc. 45. This Court granted the Media Lodge Defendants' motion to compel arbitration under the arbitration clause, but stayed the case rather than dismissing it. Doc. 65. For the reasons explained below, this Court now denies the Adams Keegan Defendants' motion to dismiss and stays the claims against them.

         I. Facts Relevant to Motion to Dismiss

         Media Lodge is an electronic media marketing company whose content targets outdoor enthusiasts interested in hunting, shooting, and fishing. Doc. 41 at ¶ 3. At all times relevant to the amended complaint, Media Lodge maintained a place of business in Sioux Falls, South Dakota. Doc. 41 at ¶4. Adams Keegan, Inc., a Tennessee corporation, is a national human resources and professional employer organization (PEO) that provides businesses with human resources management services, including hiring and retention services. Doc. 41 at ¶ 8. Adams Keegan-GA is a Georgia company owned and operated by Adams Keegan, Inc. Doc. 41 at ¶ 10. It provides the same services as Adams Keegan, Inc. to clients in the Atlanta, Georgia area. Doc. 41 at ¶ 10. According to Giddings, Media Lodge and Adams Keegan both qualify as his employers under USERRA. Doc. 41 at ¶¶8-9, 13. Giddings alleges that "all Media Lodge employees were employed through Adams Keegan, including those working at its Sioux Falls, South Dakota location;" that "Adams Keegan contracted to provide employees through a lease agreement to Media Lodge, including but not limited to, providing payroll and human resources services;" and that "Adams Keegan retains the authority to hire and fire employees, dictate work rules including the employment handbook policies and procedures and to set the conditions of employment for employees who work at Media Lodge." Doc. 41 at ¶¶ 8-9.

         In early April 2015, Giddings signed an employment agreement with Media Lodge to work as a director of sales. Doc. 21-1; Doc. 41 at ¶ 17. Among other things, Giddings's responsibilities as director of sales included selling advertising for Media Lodge's network of websites. Doc. 41 at ¶ 18. The employment agreement, which stated that it was between "Media Lodge" and "Caleb Giddings, " set forth Giddings's salary and benefits, Media Lodge's noncompete and confidentiality policies, and the circumstances under which Media Lodge could terminate Giddings's employment. Doc. 21-L The employment agreement did not mention Adams Keegan. Doc. 21-1.

         Giddings went on mandatory active duty with the United States Air Force from late April 2015 until September 30, 2015. Doc. 41 at ¶ 21. Giddings alleges that when he returned to work upon completing his service, he was assigned sales accounts with a poor likelihood of yielding commissions rather than the high-performing sales accounts he had before going on military leave, Doc. 41 at ¶ 37, told that he would either have to accept a demotion to a lesser-paying contract position or be "transitioned" out of the company, Doc. 41 at ¶4l, and eventually was terminated, Doc. 41 at ¶44. Although Giddings's allegations describing these actions focus on Media Lodge and Siegel, he alleges that "Defendants" (a term that encompasses the Adams Keegan Defendants, Media Lodge, IA Tech, and Siegel), "were involved in the decisions to take" the actions. Doc. 41 at ¶45. Giddings asserts that Defendants violated USERRA by failing to properly reemploy him, demoting him without just cause, and terminating him without just cause. Doc. 41 at ¶¶ 49-75. This Court held a hearing on the motions in this case in late 2017.

         II. Standard of Review and Requests for Judicial Notice

         On a motion to dismiss under Rule 12(b)(6), courts must accept a plaintiffs factual allegations as true and construe all inferences in the plaintiff's favor, but need not accept a plaintiffs legal conclusions. Retro Television Network, Inc. v. Luken Commc'ns, LLC, 696 F.3d 766, 768-69 (8th Cir. 2012). To survive a motion to dismiss for failure to state a claim, a complaint 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). Although detailed factual allegations are unnecessary, the plaintiff must plead enough facts 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 is plausible on its face "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged, " Iqbal, 556 U.S. at 678, "even if it strikes a savvy judge that actual proof of those facts is improbable, and 'that a recovery is very remote and unlikely, '" Twombly, 550 U.S. at 556 (quoting Scheuer v. Rhodes. 416 U.S. 232, 236 (1974)). Still, "conclusory statements" and "naked assertion[s] devoid of further factual enhancement" do not satisfy the plausibility. standard. Iqbal, 556 U.S. at 678 (alteration in original) (citation and internal marks omitted).

         When determining whether to grant a Rule 12(b)(6) motion, a court generally must ignore materials outside the pleadings, but it may "consider matters incorporated by reference or integral to the claim, items subject to judicial notice, matters of public record, orders, items appearing in the record of the case, and exhibits attached to the complaint whose authenticity is unquestioned . . . without converting the motion into one for summary judgment." Dittmer Props., L.P. v. FDIC. 708 F.3d 1011, 1021 (8th Cir. 2013) (internal marks omitted) (quoting Miller v. Redwood Toxicology Lab., Inc., 688 F.3d 928, 931 n.3 (8th Cir. 2012)). Both parties requested in briefing that this Court take judicial notice of matters outside Giddings's amended complaint.

         Giddings asks this Court to take judicial notice of his employee handbook, an order from a Georgia state court in a case Media Lodge brought against GunUp, Inc., [1] and portions of the Rule 30(b)(6) deposition given by Susan Lokey, Media Lodge's Chief Financial Officer, in the Georgia case. According to Giddings, these documents are evidence that Media Lodge and Adams Keegan both qualify as his employers, under USERRA. The employee handbook identifies "GunBroker.Com"[2] as Giddings's employer, Doc. 48-1 at 6, but also includes a page describing the "co-employment" relationship between GunBroker.Com and Adams Keegan, Inc., Doc. 48-1 at 7.[3] Lokey testified in her Rule 30(b)(6) deposition that Adams Keegan was her employer, that Media Lodge has no employees, and that Adams Keegan leased her and all of Media Lodge's employees to Media Lodge.[4] Doc. 49-1 at 3-6. The order Giddings seeks to introduce concerned whether the Georgia state court had personal jurisdiction over GunUp, Inc. Doc. 25-6. In concluding that personal jurisdiction was lacking, the Georgia state court relied on Lokey's deposition to find that Media Lodge had no employees itself but rather leased its employees from Adams Keegan. Doc. 25-6 at 3.

         This Court deems it improper to take judicial notice of the employee handbook, the Georgia state court order, or parts of Lokey's deposition when ruling on the motion to dismiss. Although Giddings argues that judicial notice of the employee handbook is appropriate because he referenced the handbook in paragraph nine of his amended complaint, Doc. 47 at 4 n.6, 10, "[a] mere passing reference or even references ... to a document outside of the complaint does not, on its own, incorporate the document into the complaint itself." Williams v. Time Warner Inc., 440 Fed.Appx. 7, 9 (2d Cir. 2011) (unpublished). Giddings's reference to the employee handbook in paragraph nine of his amended complaint states that upon information and belief, "Adams Keegan retains the authority to hire and fire employees, dictate work rules including the employment handbook policies and procedures and to set the conditions of employment for employees who work at Media Lodge." Doc. 41 at ¶ 9. This passing reference is not sufficient to incorporate the employee handbook into Giddings's amended complaint.[5] Williams, 440 Fed.Appx. at 9. Nor is the employee handbook "embraced by the pleadings" as Giddings appears to suggest in his brief. Doc. 47 at 10. After all, Giddings's amended complaint does not discuss the contents of the employee handbook, and his USERRA claims are in no way based on die handbook's terms. See Ashanti v. City of Golden Valley. 666 F.3d 1148, 1151 (8th Cir. 2012) (explaining that documents embraced by the pleadings "include 'documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading'" (quoting Kushner v. Beverly Enters.. Inc.. 317 F.3d 820, 831 (8th Cir. 2003))). Giddings's argument concerning the Georgia order and excerpts of Lokey's deposition fares no better. He contends mat judicial notice of these documents is appropriate because tiiey are "public filings." Doc. 47 at 2-3, 10. Rule 201 of the Federal Rules of Evidence allows courts to take judicial notice of "adjudicative facts" appearing in public documents, but only if mose facts are "not subject to reasonable dispute."[6] Fed.R.Evid. 201. Under this standard, courts can take judicial notice of the existence of a public document, but cannot consider the statements or findings contained merein for me trutiti of the matter asserted. Insulate SB, Inc. v. Advanced Finishing Svs.. 797 F.3d 538, 543 n.4 (8th Cir. 2015) (declining, at the motion to dismiss stage, to consider a summary judgment order and a deposition transcript as evidence that the defendant engaged in wrongdoing); Kushner, 317 F.3d at 829-30 (declining to consider government sentencing memorandum for me truth of the matters asserted merein when a considering motion to dismiss). Lokey's testimony and me Georgia state court findings based on this testimony are subject to reasonable dispute; there is evidence that Media Lodge had its own employees, including Giddings himself, and that Adams Keegan was merely Media Lodge's payroll processor and PEO. And while Giddings asserts that he is simply asking this Court to take judicial notice of the existence of Lokey's testimony and the Georgia state court order, these documents will benefit Giddings only if this Court considers the contents of the documents for the truth of the matters asserted. Indeed, the arguments Giddings makes in his brief show that taking Lokey's testimony and the court order as true is exactly what Giddings wants this Court to do. See Doc. 47 at 1-2 (asserting that the documents Giddings asks this court to take judicial notice of "plainly show[] a dispute of material fact regarding the Adams Keegan Defendants' status as a joint or co-employer with Media Lodge and IA Tech as it relates to Plaintiffs claims"); Doc. 47 at 7 n.7 ("Given the presumed truth of Plaintiff's factual allegations regarding the co-employer/joint employer relationship with Media Lodge and IA Tech, and the additional evidence presented by the Handbook, the [Georgia state court order], and [Lokey's] testimony, Plaintiff has adequately pled joint employer liability'against the Adams Keegan Defendants.").

         Adams Keegan meanwhile asks this Court to take judicial notice of certain "facts" contained in Media Lodge's motion to compel arbitration, Media Lodge's brief and Jeff Siegel's declaration in support of this motion, Giddings's employment agreement, and the documents Giddings submitted when opposing Media Lodge's motion, including Giddings's own declaration. Doc. 52 at 22. Some of the allegations or statements in these documents support that Media Lodge was Giddings's sole employer. This Court will consider Giddings's employment agreement because it is embraced by the pleadings; Giddings's amended complaint concerns his employment relationship and lists the compensation he was promised under the employment agreement, Doc. 41 at ¶ 18, his claim that all defendants demoted him relies on the alleged reduction of this promised compensation, Doc. 41 at ¶¶ 41-42, 61, and the parties do not question the authenticity of the employment agreement. Ashanti, 666 F.3d at 1151 (explaining that documents embraced by the pleadings "include 'documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading'" (quoting Kushner, 317 F.3d at 831)). Adams Keegan argues that this Court can consider or take judicial notice of the other documents because the documents are "items appearing in the record of the case." Dittmer Props., 708 F.3d at 1021 (quoting Miller, 688 F.3d at 931 n.3). But a court cannot consider or take judicial notice of statements in a document simply because it has been filed in the case. 21B Kenneth W. Graham, Jr., Federal Practice and Procedure Evid. § 5106.4 (2d ed.) ("It seems clear that a court cannot notice pleadings or testimony as true simply because these statements are filed with the court."); see also Stagemever v. Ctv. of Dawson, 192 F.Supp.2d 998, 1002 n.2 (D. Neb. 2002) (declining to consider affidavit filed by other defendants in a separate motion to dismiss). The other documents Adams Keegan seeks to have judicially noticed are offered to "prove me truth of the ) matters within them and inferences to be drawn from them-matters which [Giddings] disputes." Kushner, 317 F.3d at 832. This Court deems it improper to take judicial notice of the assertions in these documents when considering a motion to dismiss.

         III. Analysis

         Congress enacted USERRA to counteract employment discrimination based on military service. Maxfield v. Cintas Corp. No. 2, 427 F.3d 544, 551 (8th Cir. 2005). To that end, USERRA guarantees returning service members a right of reemployment to either the position they would have been in had they not left for military service or a "position of like seniority, status and pay, the duties of which the person is qualified to perform, " 38 U.S.C. § 4313(a)(2)(A); 38 U.S.C. § 4312; prohibits discrimination as to any benefit of employment after a service member is reemployed, 38 U.S.C. § 4311, and prevents employers from firing without cause returning service members within a certain number ...

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