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Noel v. Mitsubishi UFJ Financial Group Inc.

United States District Court, D. Arizona

October 16, 2019

Jeffrey John Noel, Plaintiff,
v.
Mitsubishi UFJ Financial Group Incorporated, et al., Defendants.

          ORDER

          HONORABLE STEVEN P. LOGAN UNITED STATES DISTRICT JUDGE

         Defendant MUFG Union Bank, N.A. (“MUFG”) moves for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c) (Doc. 29). The Court rules as follows.

         I. BACKGROUND

         Plaintiff was employed as a Sanctions Compliance Analyst by American Express between June 26, 2017 and January 11, 2018 (Doc. 27 at ¶ 3.1). On April 17, 2018, Plaintiff was solicited on LinkedIn by a corporate recruiter on behalf of MUFG (Doc. 27 at ¶ 3.2). On May 16, 2018, MUFG offered Plaintiff a position as a Sanctions Escalations Analyst, subject to a background check and fingerprinting (Doc. 27 at ¶¶ 3.4, 3.6-3.7). MUFG withdrew its offer of employment upon learning that Plaintiff had pled “no contest” to a charge of home invasion in 2005 (Doc. 27 at ¶¶ 3.9-3.12). Plaintiff claims that MUFG's policy of disqualifying applicants with convictions for employment violates Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-2(a)(1). Plaintiff argues that MUFG's neutral policy has a disparate impact on men, who are arrested and convicted in numbers disproportionate to their representation in the general public (Doc. 27 at ¶¶ 3.14-3.15).

         II. LEGAL STANDARD

         Rule 12(c) of the Federal Rules of Civil Procedure permits a party to move for judgment on the pleadings once the “pleadings are closed-but early enough not to delay trial.” Fed.R.Civ.P. 12(c). Judgment on the pleadings is appropriate “when the moving party clearly establishes on the face of the pleadings that no material issue of fact remains to be resolved and that it is entitled to judgment as a matter of law.” Enron Oil Trading & Transp. Co. v. Walbrook Ins. Co., 132 F.3d 526, 529 (9th Cir. 1997) (quotation omitted). Rule 12(c) motions are evaluated under the same standard as Rule 12(b)(6) motions-that is, “all allegations of material fact are assumed to be true and construed in the light most favorable to the non-moving party.” Unisource Worldwide, Inc. v. Swope, 964 F.Supp.2d 1050, 1054 (D. Ariz. 2013). Generally, courts “may not consider materials outside the pleadings in adjudicating a Rule 12(c) motion.” Gerow v. Washington, 383 Fed. App'x 677, 678-79 (9th Cir. 2010). Exceptions to the general rule are limited to: (1) documents “whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the [plaintiff's] pleading” and (2) situations where “a court may take judicial notice of ‘matters of public record outside the pleadings.'” Xcentric Ventures, L.L.C. v. Borodkin, 934 F.Supp.2d 1125, 1134 (D. Ariz. 2013) (alteration in original) (quotation omitted).

         III. ANALYSIS

         Defendant argues that Plaintiff's claim fails as a matter of law because Plaintiff's crime barred MUFG from employing him under Section 19 of the of the Federal Deposit Insurance Act (Doc. 29 at 4-6), MUFG had a legitimate business necessity for not hiring him (Doc. 29 at 6-7), and MUFG had no obligation to file an application for a waiver on behalf of Plaintiff with the Federal Deposit Insurance Corporation (“FDIC”) (Doc. 29 at 7-8).

         Federal law bars “any person who has been convicted of any criminal offense involving dishonesty or a breach of trust” from becoming employed by an institution insured by the FDIC. 12 U.S.C. § 1829(a)(1). Violations of this statute, more commonly known as Section 19, can result in fines of $1, 000, 000 per day, imprisonment for up to five years, or both. 12 U.S.C. § 1829(b). Disqualified persons and banking institutions wishing to hire, or continue to employ, disqualified persons may apply for waivers from the FDIC. Because MUFG is an FDIC-insured institution, it is subject to Section 19's requirements.[1]

         Although not addressed explicitly by Section 19, the FDIC's Statements of Policy provide that “dishonesty” is defined as, whether directly or indirectly, “to cheat or defraud; to cheat or defraud for monetary gain or its equivalent; or wrongfully to take property belonging to another in violation of any criminal statute.” Statement of Policy Pursuant to Section 19 of the Federal Deposit Insurance Act (“Statement of Policy”), 63 FR 66177-01 at *66185, 1998 WL 822873 (F.R.) (Dec. 1, 1998); see also Statements of Policy, Federal Deposit Insurance Corporation, available at https://www.fdic.gov/regulations/laws/rules/ 5000-1300.html (last visited Oct. 16, 2019).[2] “Dishonesty includes acts involving want of integrity, lack of probity, or a disposition to distort, cheat, or act deceitfully or fraudulently, and may include crimes which federal, state or local laws define as dishonest.” Id.

         Here, Plaintiff pled no contest to first degree home invasion in Michigan in October 2005 (Doc. 27 at ¶ 3.9, Exhibit 9). Michigan law provides as follows:

A person who breaks and enters a dwelling with intent to commit a felony, larceny, or assault in the dwelling, a person who enters a dwelling without permission with intent to commit a felony, larceny, or assault in the dwelling, or a person who breaks and enters a dwelling or enters a dwelling without permission and, at any time while he or she is entering, present in, or exiting the dwelling, commits a felony, larceny, or assault is guilty of home invasion in the first degree if at any time while the person is entering, present in, or exiting the dwelling either of the following circumstances exists:
(a) The person is armed with a dangerous weapon.
(b) Another person is lawfully present in the ...

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