United States District Court, D. Arizona
ORDER
Dominic W. Lanza United States District Judge.
Pending
before the Court are (1) a Rule 12(b)(6) motion for partial
dismissal (Doc. 39) filed by Defendants Gatsby Enterprises
Incorporated, Jude C. Hudson, Rosalie Hudson, Aaron Lee, and
Paragon Technology & Development Incorporated
(collectively “Defendants”), (2) Plaintiff Cathy
Ly's motion for leave to amend her complaint (Doc. 50),
and (3) Ly's motion to enforce the parties' purported
settlement agreement (Doc. 55). For the following reasons,
Defendants' motion to dismiss will be granted in part and
denied in part, Ly's motion for leave to amend will be
granted, and Ly's motion to enforce will be denied.
BACKGROUND
I.
Factual Allegations
Ly
brings this suit against Defendants, her former employers,
related to her employment between March 2016 and February
2018. Among other things, Ly alleges that Defendants
discriminated against her (1) based on her sex by treating
her less favorably than similarly-situated males, and (2)
based on her disability by demoting her immediately after
discovering her pregnancy and pregnancy-related
disability.[1] The factual allegations related to these
claims, taken as true for the purpose of Defendants'
motion to dismiss, are as follows.
Defendants
“employ[] roughly 20-25 employees and operate[] out of
a commercial office suite in Scottsdale, Arizona.”
(Doc. 31 ¶ 10.) Ly began working for Defendants as an
unpaid Graphics Designer intern in March 2016. (Id.
¶ 43.) During her four-month internship, Defendants paid
a full-time male employee to perform the same or similar kind
of work Ly performed. (Id. ¶¶ 47,
63.)[2]
Ly was the only employee ever required to begin employment as
an unpaid intern. (Id. ¶ 50.)
In July
2016, Defendants offered Ly full-time employment in the
position of Marketing and Communications Director at an
annual base salary of $60, 000, which was far below industry
standards for comparable positions in the region.
(Id. ¶ 51.) Defendants also agreed to increase
Ly's annual salary to $72, 000 on her one-year
anniversary in July 2017. (Id. ¶ 52.)
In July
2017, Defendants only raised Ly's salary to $66, 000.
(Id. ¶ 66.) Defendants didn't raise
Ly's salary to $72, 000 until approximately October 2017.
(Id. ¶ 67.) Even with the raise, Ly was paid
“significantly lower annual compensation than
similarly-situated male employees.” (Id.
¶ 64.)
In
December 2017, Defendants denied Ly a significant bonus they
had paid unconditionally to all other similarly-situated male
employees. (Id. ¶ 69.) They also revoked
Ly's “modified work schedule privileges” but
didn't revoke the modified schedules of other
similarly-situated male employees. (Id. ¶ 70.)
On
January 5, 2018, Defendants granted Ly “a disability
accommodation to work from home that related to a serious
pregnancy complication and resulting medical
condition.” (Id. ¶ 72.) The accommodation
was recommended by Ly's medical provider. (Id.)
On an
unspecified date in January 2018, Defendants demoted Ly to
the role of Marketing Coordinator and immediately hired a
less-senior and less-experienced male employee to fill her
former position. (Id. ¶ 71.) This occurred
“immediately after [Defendants] received actual notice
of her pregnancy and pregnancy-related disability.”
(Id. ¶ 134.)
At all
relevant times, Ly was the only female employed by
Defendants. (Id. ¶ 63.)
II.
Procedural Background
On
April 6, 2018, Ly filed this action in state court. (Doc. 1-1
at 3.)
On July
3, 2018, Ly amended her complaint. (Id. at 27-51.)
On
August 3, 2018, Defendants removed the case to this Court.
(Doc. 1.)
On
December 17, 2018, Ly filed her Second Amended Complaint
(“SAC”). (Doc. 31.)
On
January 11, 2019, Defendants filed a motion for partial
dismissal under Rule 12(b)(6). (Doc. 39.) The parties later
filed a stipulation to extend certain deadlines so they could
pursue mediation. (Doc. 46.) This caused the Court to delay
consideration of the motion to dismiss. (Doc. 47.)
On June
25, 2019, the parties informed the Court their mediation had
been “unsuccessful.” (Doc. 49.)
On July
1, 2019, Ly filed a motion for leave to amend her SAC. (Doc.
50.)
On July
23, 2019, Ly filed a motion entitled “Motion to Enforce
Settlement and Stay Discovery Deadlines.” (Doc. 55.) In
a nutshell, it argues that the parties continued engaging in
settlement negotiations after the unsuccessful mediation,
that these discussions culminated in the execution of a
written settlement agreement on July 9, 2019, and that
Defendants later reneged on that agreement. (Id.)
On
September 4, 2019, the Court informed the parties that it
wished to hear argument on the pending motions on September
12, 2019, and further noted that, although the parties
hadn't requested an evidentiary hearing on the motion to
enforce, the Court would be willing to hold such a hearing at
either party's request. (Doc. 63.)
On
September 5, 2019, the Court issued a tentative order
addressing the three pending motions. (Doc. 64.)
On
September 6, 2019, Ly informed the Court that she wanted an
evidentiary hearing. (Doc. 65.)
On
September 12, 2019, the Court conducted an evidentiary
hearing, during which four witnesses testified, and then
heard argument on the pending motions.
DISCUSSION
I.
Motion To Dismiss
A.
Legal Standard
“[T]o
survive a motion to dismiss, a party must allege
‘sufficient factual matter, accepted as true, to state
a claim to relief that is plausible on its face.'”
In re Fitness Holdings Int'l, Inc., 714 F.3d
1141, 1144 (9th Cir. 2013) (quoting Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009)). “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. (quoting Iqbal, 556 U.S. at 678).
“[A]ll well-pleaded allegations of material fact in the
complaint are accepted as true and are construed in the light
most favorable to the non-moving party.” Id.
at 1144-45 (citation omitted). However, the court need not
accept legal conclusions couched as factual allegations.
Iqbal, 556 U.S. at 679-80. The court also may
dismiss due to “a lack of a cognizable legal
theory.” Mollett v. Netflix, Inc., 795 F.3d
1062, 1065 (9th Cir. 2015) (citation omitted).
B.
Analysis
1.
Sex Discrimination
In
Count Five of the SAC, Ly asserts a claim for
“Sex/Retaliation Discrimination” in violation of
Title VII of the Civil Rights Act. (Doc. 31 ¶¶
121-131.) Similarly, in Count Seven, Ly asserts a claim for
“Sex/Retaliation Discrimination” in violation of
the Arizona Civil Rights Act (“ACRA”).
(Id. ¶¶ 143-153.) In their motion,
Defendants seek dismissal of these claims[3] because Ly
hasn't sufficiently pleaded that “similarly
situated individuals outside of her protected class were
treated more favorably.” (Doc. 39 at 3-7.) According to
Defendants, Ly must allege she was similar to her proposed
comparators “in all material respects, ” which
typically requires allegations that proposed comparators
“[had] the same supervisor, [were] subject to the same
standards, and . . . engaged in the same conduct.”
(Id. at 3-4.) Defendants contend Ly hasn't
pleaded facts related to these categories, only
vague and conclusory allegations. (Id.)
In
response, Ly argues she doesn't need to plead a prima
facie case of sex discrimination because “the
prima facie standard set forth under McDonnell
Douglas, [4] is an evidentiary standard, not a pleading
requirement.” (Doc. 42 at 2-3.) Ly also contends that,
in any event, she has alleged a prima facie case because the
SAC specifically alleges she was demoted and replaced as
Marketing and Communications Director “with a less
senior and less experienced male employee.”
(Id. at 4, citing Doc. 31 ¶¶ 124, 156.)
This, she argues, “is sufficient to properly plead the
existence of similarly situated male counterparts who
received more favorable treatment.” (Id. at
4.) In addition, Ly argues the SAC alleges “she is the
only female employed by Defendants, and the
only employee being subjected to the negative
treatment that she identifies.” (Id. at 5.)
Finally, she identifies “roughly thirty (30) paragraphs
of allegations in support of showing the disparate treatment
she experienced when compared to her male
counterparts.” (Id.)
As an
initial matter, Ly is correct that her complaint doesn't
need to track the McDonnell Douglas framework in
order to survive a motion to dismiss. In McDonnell
Douglas, the Supreme Court established “the order
and allocation of proof” in a Title VII case. 411 U.S.
at 800. That framework “is a tool to assist plaintiffs
at the summaryjudgment stage so that they
may reach trial.” Austin v. Univ. of Oregon,
925 F.3d 1133, 1136 (9th Cir. 2019) (citation omitted)
(emphasis added). As the Supreme Court reiterated in
Swierkiewicz v. Sorema N. A., 534 U.S. 506 (2002),
“[t]he prima facie case under McDonnell
Douglas . . . is an evidentiary standard, not a pleading
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