Harding v. Kellam ( 1998 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
WILLIAM R. HARDING,
Plaintiff-Appellant,
v.
THOMAS P. KELLAM, individually and
No. 97-1360
in his official capacity as Assistant
Vice-President, Federal Reserve
Bank of Richmond,
Defendant-Appellee.
Appeal from the United States District Court
for the Eastern District of Virginia, at Richmond.
Richard L. Williams, Senior District Judge.
(CA-96-489)
Argued: April 7, 1998
Decided: July 15, 1998
Before WIDENER and LUTTIG, Circuit Judges, and
CHAMBERS, United States District Judge for the
Southern District of West Virginia,
sitting by designation.
_________________________________________________________________
Affirmed by unpublished opinion. Judge Chambers wrote the opinion,
in which Judge Widener and Judge Luttig joined.
_________________________________________________________________
COUNSEL
ARGUED: Sa'ad El-Amin, EL-AMIN & CRAWFORD, Richmond,
Virginia, for Appellant. Joseph Dudley McCluskey, LECLAIR
RYAN, P.C., Richmond, Virginia, for Appellee. ON BRIEF: Beverly
Crawford, EL-AMIN & CRAWFORD, Richmond, Virginia, for
Appellant. David E. Nagle, LECLAIR RYAN, P.C., Richmond, Vir-
ginia; Everette G. Allen, Jr., John W. Vaughan, Jr., HIRSCHLER,
FLEISCHER, WEINBERG, COX & ALLEN, Richmond, Virginia,
for Appellee.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
CHAMBERS, District Judge:
I.
FACTS
This case involves a claim of employment discrimination based on
race. Petitioner William R. Harding is an African-American male.
Since March 16, 1973, Petitioner was an employee of the Federal
Reserve Bank of Richmond, Virginia ("Bank"). Petitioner was
employed as a cash teller in the Cash Division of the Bank. On Octo-
ber 19, 1994, Respondent Thomas P. Kellam became Petitioner's
supervisor. Respondent is a Caucasian male. Following Respondent's
appointment as Petitioner's supervisor, Petitioner was "written up" for
a series of bank policy infractions. The infractions basically involved
errors in the counting or control of money. In addition, Petitioner
repeatedly was cited for "poor attitude," excessive tardiness, exces-
sive absences and custody control violations.
In August 1994, Respondent recommended that the Federal
Reserve Bank terminate Petitioner's employment. The Bank's offi-
cers, however, opted not to terminate Petitioner's employment but to
reassign him to a different position. The new position was three
grades below Petitioner's former position as a teller. Accompanying
2
the loss of status from the three grade reduction was a fifteen percent
(15%) diminution in Petitioner's salary. The demotion of Petitioner
occurred in January 1995.
On June 16, 1996, Petitioner filed a complaint against his former
supervisor alleging workplace discrimination based on race in viola-
tion of 42 U.S.C. § 1983.1 Respondent filed his answer on August 20,
1996. On February 2, 1997, Respondent filed a motion for summary
judgment pursuant to Federal Rule of Civil Procedure 56. In his
motion for summary judgment, Respondent alleged that Petitioner's
section 1983 claim did not afford a proper basis for relief. Respondent
argued that the Federal Reserve Bank was not an instrumentality of
the state. Therefore, Respondent asserted, Petitioner was unable to
fulfill section 1983's state action requirement. On February 18, 1998,
Petitioner filed a response to Respondent's summary judgment
motion. In his response, Petitioner conceded that section 1983 was not
a proper remedy for redressing his claim. Petitioner stated that "[w]ith
respect to the § 1983 claim, plaintiff concedes that in light of the
recent holding in Johnson v. Runyon2 (1996 U.S. App. LEXIS 17698)
(4th Cir.), this claim must be dismissed . . . . The Johnson Court con-
cluded that the plaintiff's attempts to raise claims of discrimination
against his federal employer were not properly raised because Title
VII was the exclusive, preemptive administrative and judicial scheme
for the redress of federal employment discrimination." Petitioner
asserted that section 1981 was the proper remedial scheme for
redressing his employment discrimination grievance in this case.
_________________________________________________________________
1 Petitioner's section 1983 action was premised on Respondent's
alleged violations of Petitioner's rights under the Fifth and Fourteenth
Amendments to the United States Constitution.
2 Johnson v. Runyon, 91 F.3d 131 (4th Cir. 1996) (TABLE DECI-
SION), is an unpublished disposition of this Court. Local Rule of Appel-
late Procedure 36(c) provides that citation of an unpublished opinion is
disfavored except for establishing res judicata, collateral estoppel, or the
law of the case. The rule also requires notice and service upon the parties
when citing an unpublished opinion of this Court. The Runyon Court
cited Newbold v. United States Postal Service , 614 F.2d 46, 47 (5th Cir.
1982), and Brown v. General Services Administration, 425 U.S. 820, 829
(1976), for the proposition that Title VII is the exclusive remedy for
redressing claims of employment discrimination against a federal
employer.
3
On February 18, 1997, Petitioner also filed a motion to amend his
complaint pursuant to Federal Rule of Civil Procedure 15 to add a
cause of action under section 1981. As a justification for the amended
complaint, Petitioner's counsel asserted that he meant to include a
section 1981 count in the original complaint but it was inadvertently
deleted through a typographical error. Petitioner's motion to amend
the complaint was filed six days (four working days) prior to trial. On
February 21, 1997, the trial court denied Plaintiff's motion to amend
his complaint and granted summary judgment in favor of Respondent.
As a basis for denying the amended complaint motion, the trial court
held that allowing Petitioner to amend his complaint just six days
before trial would be prejudicial to Respondent. The district judge
found that Petitioner had not stated a cause of action under section
1981 in his original complaint, that Respondent had been preparing
for a section 1983 trial since August 1996 and that it was unfair to
allow a new cause of action on the eve of trial. The trial court also
rejected Petitioner's typographical error argument. The court found
that Petitioner intentionally struck the section 1981 action from the
original complaint. In fact, the trial court found that the section 1981
claim was "covered in white out."
In granting Respondent's motion for summary judgment, the trial
court referenced Petitioner's concession that section 1983 is not appli-
cable to this case. The trial court found that the Federal Reserve Bank
is a federal creation with no ties to any state entity. After finding that
the Bank is a federal creation, the trial court cited Johnson v. Runyon
(1996 U.S. App. LEXIS 17698) (4th Cir. July 19, 1996), for the prop-
osition that the exclusive remedy for a claim of employment discrimi-
nation against the Bank is Title VII of the Civil Rights Act of 1964.
Petitioner appeals the trial court's granting of Respondent's summary
judgment motion and the trial court's denial of the Rule 15 motion.
II.
DISCUSSION
A. Denial of the Rule 15 Motion
Federal Rule of Civil Procedure 15(a) allows parties to amend their
pleadings after obtaining leave from the district court. See Fed. R.
4
Civ. P. 15(a). District courts are encouraged to grant leave freely
"when justice so requires." See Deasy v. Hill, 833 F.2d 38, 40 (4th
Cir. 1987). However, the decision to grant or deny a motion to amend
is vested in the sound discretion of the trial court judge. Id. Accord-
ingly, this Court may disturb a trial judge's decision regarding a Rule
15 motion only upon finding an abuse of discretion. See Gladhill v.
General Motors Corp., 743 F.2d 1049, 1052 (4th Cir. 1984).
Although Rule 15 encompasses a preference for liberal leave to
amend pleadings, a motion to amend should not be granted if it will
cause undue prejudice to the opposing party or if the party seeking to
amend acted in bad faith. See Island Creek Coal Company v. Lake
Shore, Inc., 832 F.2d 274, 279 (4th Cir. 1987). Leave to amend also
should not be granted if the amendment will cause undue delay or if
the party seeking to amend acted with a dilatory motive. See
Sandcrest Outpatient Services v. Cumberland County Hospital Sys-
tems, Inc., 853 F.2d 1139, 1148-49 (4th Cir. 1988). The timeliness of
a plaintiff's motion to amend is a critical factor in assessing dilatory
motive, undue delay, bad faith, and prejudice. See Gladhill, 743 F.2d
at 1052. Motions to amend that are filed near the time of trial are dis-
favored and require special scrutiny. See Deasy , 833 F.2d at 41.
In the instant case, Petitioner sought to amend his complaint just
six days before trial. Petitioner sought to add a cause of action under
section 1981 of the Civil Rights Act of 1866. In denying Petitioner's
motion, the trial court held that the untimely nature of the amendment
would cause "extreme prejudice" to the opposing party. The trial court
found that Respondent had spent the "past eight months . . . preparing
to try a section 1983 case." Petitioner argued that his complaint stated
all the elements of a section 1981 action; it just failed to allege the
actual statute. The trial court, however, found that Petitioner's com-
plaint did not state a cause of action under section 1981. Petitioner
challenges the trial court's findings by arguing that there are no sub-
stantive differences between section 1983 and section 1981. Accord-
ingly, Petitioner contends, Respondent will not be prejudiced by the
late amendment. Petitioner is incorrect in his assessment.
Petitioner maintains that the substance of his intentional discrimi-
nation claim based on race will not be altered by the substitution of
a claim under section 1981. He argues that the single distinguishing
5
factor between the section 1983 claim and the section 1981 claim is
the need to show state action under section 1983. Petitioner asserts
that under either section 1983 or section 1981, Respondent still faces
the same disparate treatment claim based on race. Petitioner contends
that if the substance of the two claims is identical, then Respondent
suffers no prejudice from an eleventh hour amendment. Petitioner's
assertion fails to consider all the forms of prejudice that Respondent
may suffer.
The Court agrees with Petitioner's assertion that the substance of
the factual claim of discrimination may be affected minimally by a
substitution of statutes in this case. However, despite the substantial
similarities between the two statutes, Respondent still may suffer prej-
udice from a late-hour substitution of a section 1981 claim. One form
of prejudice stems from a difficult choice in the preparation of
Respondent's defense. If Petitioner had included a section 1981 claim
in his original complaint, Respondent would have faced the strategic
decision of whether to characterize himself as an agent of a private
corporation or as an agent of the United States government. See, e.g.,
Brown v. General Services Administration, 425 U.S. 820, 829 (1976);
Research Triangle Institute v. Board of Governors of the Federal
Reserve System, 132 F.3d 985, 987-88 (4th Cir. 1997); Scott v. Fed-
eral Reserve Bank of New York, 704 F. Supp. 441 (S.D.N.Y. 1989).
Such a choice in characterization may have serious legal conse-
quences for Respondent and the Bank. Forcing Respondent to make
such a difficult tactical decision on the eve of trial is unfair.
The unfairness to Respondent is heightened by Petitioner's unwar-
ranted delay in seeking to amend his complaint. Petitioner initially
predicated his action only under section 1983. An essential element
of a section 1983 claim is state action. See United States v. Price, 383
U.S. 787, 794 n.7 (1966). The absence of state action in this suit
against an officer of the Federal Reserve Bank is glaringly apparent.
Petitioner should have recognized the absence of the state action ele-
ment at a much earlier stage in the litigation process. It was Petition-
er's burden to recognize the missing component of his claim and
initiate the proper remedial action in a timely manner. Conversely, by
allowing Petitioner to substitute a new claim on the eve of trial,
Respondent is exposed to a potentially onerous burden at a critical
stage in the litigation process. Respondent need not bear this burden.
6
"The burden rests primarily upon the plaintiff to amend his complaint,
not upon the defendant to anticipate a new claim." Deasy, 833 F.2d
at 41. In view of Petitioner's absence of a compelling reason for the
late amendment and the potential harm to Respondent, this Court can-
not find that the trial judge abused his discretion by disallowing Peti-
tioner's motion to amend his complaint.
B. Motion for Summary Judgment
In granting Respondent's motion for summary judgment, the trial
court found that Petitioner could not demonstrate the presence of state
action. Hence, the trial court granted summary judgment in regard to
the section 1983 claim. In addition, the trial court found that this
Court's holding in Johnson v. Runyon is directly applicable to the
instant action. In accordance with his findings, the trial court held that
the exclusive remedy for employment discrimination claims against
federal employers is Title VII of the Civil Rights Act of 1964. See 42
U.S.C. § 2000(e) et seq. This Court conducts a de novo review of a
trial court's summary judgment determinations. Karpel v. INOVA
Health System Services, 134 F.3d 1222, 1226 (4th Cir. 1998). In con-
ducting its review, the Court notes that a motion for summary judg-
ment pursuant to Rule 56 of the Federal Rules of Civil Procedure is
proper if the pleadings, depositions, answers to interrogatories, admis-
sions on file, and affidavits, if any, reveal that there is no genuine
issue of material fact suitable for submission to a jury. Celotex Corp.
v. Catrett, 477 U.S. 317, 322-23 (1986). In the trial court's evaluation
under Rule 56, the evidence presented must be viewed in a light most
favorable to the non-moving party and the non-moving party is enti-
tled to the benefit of all reasonable inferences. Liberty Lobby, 477
U.S. at 255; Celotex Corp., 477 U.S. at 322-23.
In the instant case, the trial court first examined the sufficiency of
Petitioner's section 1983 claim. In order to succeed under section
1983, a plaintiff must show (1) state action, (2) a deprivation of a
Constitutional or other right conferred by a law of the United States,
and (3) causation. See Wyatt v. Cole, 508 U.S. 158, 161-63 (1992).
The absence of any one of the three elements precludes a section 1983
claim. Summary judgment in a section 1983 action is appropriate if,
after examining the facts in a light most favorable to the non-moving
7
party, one or more of the essential components cannot be demon-
strated.
In the instant case, the trial court found that Petitioner failed to
show state action in his section 1983 claim. As state action is an
essential element of a section 1983 claim, the trial court correctly
granted summary judgment when it found an absence of this essential
element.
Petitioner concedes the absence of state action and does not chal-
lenge the trial court's findings. Petitioner, however, disputes the trial
court's award of summary judgment to Respondent. Petitioner argues
that his failure to prove an essential element of his section 1983 claim
renders this action subject to dismissal under Rule 12(b)(6) of the
Federal Rules of Civil Procedure; he asserts that a judgment on the
merits under Rule 56 is improper. Petitioner's assertion draws an arti-
ficial distinction between Rule 12(b)(6) and Rule 56.
Federal Rule of Civil Procedure 12(b)(6) allows courts to dismiss
an action if the complaint fails to state a claim upon which relief can
be granted. Mylan Laboratories, Inc. v. Matkari , 7 F.3d 1130, 1134
(4th Cir. 1993). A court must deny a motion to dismiss under Rule
12(b)(6) unless, after accepting as true the well-pleaded facts in the
complaint and viewing them in a light most favorable to the plaintiff,
it appears beyond a doubt that the plaintiff can prove no set of facts
that will entitle it to relief. Brooks v. City of Winston-Salem, 85 F.3d
178, 181 (4th Cir. 1996). Rule 12(b)(6) is functionally similar to Rule
56 but it differs in two important respects. First, as the Court has dis-
cussed, Rule 12(b)(6) and Rule 56 place different burdens on the par-
ties. Second, the two rules encompass different parameters of
consideration. Rule 12(b)(6) restricts the court to consider only the
pleadings, while Rule 56 permits the court to consider matters outside
the pleadings such as affidavits, admissions on file, answers to inter-
rogatories and depositions. See Fleming v. Lind-Waldock & Co., 922
F.2d 20, 23 (1st Cir. 1990).
Petitioner argues that the trial court restricted its consideration only
to the sufficiency of the complaint. Accordingly, Petitioner argues,
the trial court should have treated the summary judgment motion as
a Rule 12(b)(6) motion. Petitioner maintains that the trial court should
8
analyze the complaint under the more stringent standards encom-
passed by Rule 12(b)(6). Petitioner stated during oral argument that
if the trial court concludes that the complaint fails to state a cogniza-
ble claim, it should dismiss the complaint without prejudice. Petition-
er's argument fails on multiple levels.
The most obvious flaw in Petitioner's argument stems from the
assertion that the trial court simply focused on a defect in the com-
plaint. The trial court found an absence of state action. The trial court
made this finding after the close of discovery and upon consideration
of the motion for summary judgment initiated by Respondent. In con-
sidering the motion for summary judgment, the trial court was permit-
ted to look beyond the pleadings to determine if state action existed.
Nothing in the record indicates that the trial court failed to examine
all the information that the parties' presented. The summary judgment
order does not, in any way, suggest that the trial court confined itself
to the complaint in reaching its decision.
Recharacterizing the motion for summary judgment as a Rule
12(b)(6) dismissal motion also does not help Petitioner's argument.
State action is not present in this case. Even employing the stringent
standards of a Rule 12(b)(6) motion, Petitioner cannot prevail in his
section 1983 action. Accordingly, dismissal of the claim is proper
under either Rule 56 or Rule 12(b)(6). In this context, Petitioner errs
when he argues that a Rule 12(b)(6) dismissal differs from a judgment
on the merits under Rule 56. "For it is well settled law that the failure
to state a proper cause of action calls for a judgment on the merits and
not for a dismissal for want of jurisdiction." Bell v. Hood, 327 U.S.
678, 681 (1946). Any dismissal rendered in such a case is the func-
tional equivalent of judgment on the merits. See id. Hence, under
either Rule 56 or Rule 12(b)(6), a dismissal of the action yields an
identical result.
In addition to the section 1983 claim, the trial court found that Peti-
tioner's Fifth and Fourteenth Amendment claims also failed. The trial
court predicated its finding on Johnson v. Runyon, where the Court
held that Title VII is the exclusive remedy for claims of employment
discrimination against agents of the federal government. The Court
agrees with the trial court's disposition of Petitioner's constitutional
9
claims. However, we find no need to decide whether the Bank is a
federal or private employer in the context of this decision.
The trial court correctly held that Title VII is the exclusive remedy
for claims of employment discrimination against the federal govern-
ment. Brown v. General Services Administration , 425 U.S. 820, 829
(1976). Accordingly, if the Bank is a federal employer, then Title VII
precludes Petitioner's constitutional claims. However, if the Bank is
a private actor, then the constitutional claims also fail. The Fourteenth
Amendment can be invoked only if state action is present. See West
v. Atkins, 487 U.S. 42, 49 (1988). Similarly, the Fifth Amendment,
standing alone, requires the presence of a federal actor. See San Fran-
cisco Arts and Athletics, Inc. v. United States Olympic Committee,
483 U.S. 522, 542 (1987). Hence, regardless of whether the Bank is
a federal or private employer, Petitioner's constitutional claims are
not cognizable.
III.
CONCLUSION
For the foregoing reasons, the judgment of the district court is
affirmed.
AFFIRMED
10