Creech v. Charlotte Area Transit System, Inc. et al

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
CIVIL ACTION NO. 3:23-CV-00328-RJC-SCR
THIS MATTER is before the Court on “Defendants’ Motion to Dismiss Plaintiff’s
Amended Complaint…” (Doc. No. 16) and “Plaintiff’s [Second] Motion to Remand” (Doc. No.
18), as well as the parties’ briefs and exhibits. (Doc. Nos. 17, 19, 20 & 21).
The Motions have been referred to the undersigned Magistrate Judge pursuant to 28 U.S.C.
§ 636(b)(1) and are now ripe for the Court’s consideration.
For the reasons set forth below, the undersigned respectfully recommends that Defendants’
Motion be granted, and Plaintiff’s Motion be denied as moot.
I. FACTUAL AND PROCEDURAL BACKGROUND
On May 2, 2023, Plaintiff filed his Complaint in Mecklenburg County Superior Court.
(Doc. No. 1) alleging claims against Defendants, his former employers, for “wrongful termination
in violation of public policy” and “hostile work environment,” along with a claim labeled
“intentional interference with a contract.” (Doc. No. 1-1 at 3-4).
TERRY CREECH, )
)
Plaintiff, )
)
v. )
)
)
MEMORANDUM AND
RECOMMENDATION
CHARLOTTE AREA TRANSIT
SYSTEM, INC., et al.,
)
)
)
Defendants. )
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On May 31, 2023, Plaintiff filed a “Second Amended Complaint.” (Doc. No. 1-2).
Although the pleading was not entirely clear, the Complaint presented a claim for violation of the
“FMLA,” a clear reference to the Family and Medical Leave Act (“FMLA”). Id. at 3. The pleading
also contained claims for “age and race protection,” including “wrongful termination” based on
“retaliation,” and “hostile work environment,” which Defendants understood to be claims under
Title VII of the Civil Rights Act of 1964 (“Title VII”). Id.; (Doc. No. 1 at 2). The Second
Amended Complaint also alleged claims for wrongful termination in violation of public policy and
“intentional interference with a contract” under North Carolina law. (Doc. No. 1-2 at 3).
As discussed below, Defendants contend that they were never properly served but “became
aware” of those filings on May 10, 2023, and June 1, 2023, respectively. (Doc. No. 1 at 1-2).
On June 2, 2023, that is, less than 30 days after they became aware of the initial Complaint,
Defendants removed the state court action to the United States District Court for the Western
District of North Carolina, alleging the existence of federal question subject matter jurisdiction
under Title VII and the FMLA. Id. at 2. Relevant to the Court’s analysis here, Defendants
maintained that they had not been properly served and stated “[i]n removing this action,
Defendants do not waive any defenses that may be available to them….” Id.
The same day, Defendants filed a “Motion for Extension of Time to Respond to Second
Amended Complaint,” in which they again stated that Defendants had not been properly served
and that “[i]n filing this motion, Defendants do not waive any defenses that may be available to
them….” (Doc. No. 4 at 1-2). The Court granted the Motion and extended Defendants’ deadline
to respond to August 2, 2023. See TEXT-ONLY ORDER entered June 2, 2023.
On July 3, 2023, Plaintiff filed his first Motion to Remand. (Doc. No. 5).
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On August 2, 2023, Defendants filed their Motion to Dismiss, or for a More Definite
Statement (Doc. No. 7), seeking either dismissal for lack of personal jurisdiction for failure to
properly serve Defendants or for failure to state a claim, or for Plaintiff to be required to again
amend his Complaint to “provid[e] a more definite statement so that Defendants can fairly
understand the basis for Plaintiff’s lawsuit.” (Doc. No. 7-1 at 1-2). In this Motion, Defendants
also recognized that the Second Amended Complaint could be construed to contain a claim for
violation of the of the Age Discrimination in Employment Act of 1967 (“ADEA”), as well as for
claims under Title VII and the FMLA. Id. at 3.
In his “Memorandum in Opposition of Defendants’ Motion to Dismiss, or, in the
Alternative, Motion to Ammend [sic] Complaint and Perfect Service,” (Doc. No. 8), Plaintiff
requested leave to file another amended complaint. Id. at 4. Plaintiff maintained “Defendant’s
[sic] claims of lack of personal jurisdiction based on improper service of process have either
already been remedied, or can easily be remedied without any prejudice to the [D]efendant,” but
provided no supporting documentation. Id. at 1.
On January 5, 2024, the Court ordered the following:
Plaintiff’s counsel incorrectly filed as an Affidavit a document captioned
Memorandum in Opposition of Defendants Motion to Dismiss, or, in the
Alternative, Motion to Ammend [sic] Complaint and Perfect Service, (Doc. No. 8).
Although filed as an Affidavit, no such affidavit is included therein. In addition,
despite the document caption reflecting a Motion to Amend the Complaint, there is
no substantive request other than leave necessary to conform this action as the court
deems proper or leave to take a dismissal on any claims barred. Id. To the extent
Plaintiff seeks to amend his complaint, Plaintiff shall file a motion to amend his
complaint on or before January 15, 2024. The motion to amend must fully comply
with the Federal Rules of Civil Procedure and the Local Rules of this District. If
Plaintiff files a motion to amend, then Defendants shall file their response within
10 days thereafter. If Plaintiff does not timely file a motion to amend, the Court
will promptly rule on the currently pending motions and briefing as filed. Further,
Plaintiff contends that he cured any service issues, but such argument was only
made by counsel in an opposition brief and no supporting proof of service has been
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submitted. Thus, on or before January 15, 2024, Plaintiff also shall file a proof of
service. So Ordered.
TEXT-ONLY ORDER entered January 5, 2024.
On January 17, 2024, Plaintiff sought and received an extension until January 31, 2024, to
comply with the Court’s January 5, 2024 Order. (Doc. No. 11); TEXT-ONLY ORDER entered
January 17, 2024.
On January 31, 2024, Plaintiff filed his Motion For Leave to Amend Complaint. (Doc. No.
13).
On February 13, 2024, the Court granted Plaintiff’s Motion to Amend and mooted without
prejudice the parties’ initial Motions to Remand and to Dismiss. TEXT-ONLY ORDER entered
February 13, 2024.
On March 2, 2024, Plaintiff timely filed his “Amended Complaint by leave [sic] of Court.”
(Doc. No. 15). In this pleading, Plaintiff attempted to remove all references to federal law and
proceed only under state law with self-labeled claims of “North Carolina Wrongful Termination
in violation of Public Policy”, “Intentional Interference with a contract”, and “Breach of Contract”.
Id. at 3. However, Plaintiff did not and has not filed any documentation concerning service, much
less an affidavit of service establishing proper service.
On March 25, 2024, Defendants renewed their Motion to Dismiss (Doc. No. 16), again
seeking either dismissal for lack of personal jurisdiction for failure to properly serve Defendants
or for failure to state a claim. (Doc. No. 17 at 1).
The same day, Plaintiff renewed his Motion to Remand, contending that remand is proper
now that the only remaining claims arise under state law and there is no other basis for federal
subject matter jurisdiction. (Doc. No. 18 at 1-2).
The parties’ Motions have been fully briefed and are ripe for disposition.
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II. STANDARD OF REVIEW
Defendants move to dismiss under several provisions of Rule 12 of the Federal Rules of
Civil Procedure, including for lack of personal jurisdiction under Rule 12(b)(2), for insufficient
process under Rule 12(b)(4), insufficient service of process pursuant to 12(b)(5), and for failure to
state a claim under Rule 12(b)(6) for dismissal. The Court discusses each in turn.
a. Rule 12(b)(2) Standard
A summons must be issued properly and served before a federal court may exercise
personal jurisdiction over a defendant. Omni Cap. Int’l, Ltd. v. Rudolf Wolff & Co., 484 U.S. 97,
104 (1987). “[A] court generally lacks personal jurisdiction over unserved parties.” Attkisson v.
Holder, 925 F.3d 606, 628 (4th Cir. 2019) (citing Koehler v. Dodwell, 152 F.3d 304, 307 (4th Cir.
1998)). “Thus, before a court may exercise personal jurisdiction over a defendant, there must be
more than notice to the defendant and a constitutionally sufficient relationship between the
defendant and the forum.” ESAB Grp., Inc. v. Centricut, Inc., 126 F.3d 617, 620 (4th Cir. 1997).
Under Rule 12(b)(2), the defendant must affirmatively raise a personal jurisdiction challenge, but
the plaintiff bears the burden of demonstrating personal jurisdiction at every stage. Grayson v.
Anderson, 816 F.3d 262, 267 (4th Cir. 2016) (citing Combs v. Bakker, 886 F.2d 673, 676 (4th Cir.
1989)). All reasonable inferences must be made in favor of the party asserting jurisdiction. White
v. Aetna Life Ins. Co., No. 3:20-CV-204-MOC-DSC, 2021 WL 467210, at *2 (W.D.N.C. Feb. 9,
2021); Washington v. Cedar Fair, L.P., No. 3:22-CV-244-MOC-DSC, 2023 WL 1456294, at *2
(W.D.N.C. Feb. 1, 2023).
b. Rule 12(b)(4) and Rule 12(b)(5) Standard
A motion to dismiss under Rule 12(b)(4) challenges the sufficiency or “form” of the
process, while a motion to dismiss under Rule 12(b)(5) challenges the service or lack of delivery
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of “service” of process. Westley v. Charlotte-Mecklenburg Cty. Police Dept., No. 3:19-cv-425-
FDW-DCK, 2021 WL 1971499, *3-4 (W.D.N.C. May 17, 2021) (granting defendant’s motion to
dismiss where there was no summons in the record and plaintiff failed to show sufficient service
of process of a second amended complaint on the defendant); see also, 5B Charles Alan Wright &
Arthur R. Miller, Federal Practice and Procedure § 1353 (4th ed. 2024). Once the sufficiency of
process or service of process is challenged by a motion to dismiss, a plaintiff must establish that
process was sufficient and service of process was effectuated in accordance with Rule 4 of the
Federal Rules of Civil Procedure. Scott v. Md. State Dep’t of Labor, 673 F. App’x 299, 304 (4th
Cir. 2016) (per curiam) (citing Dickerson v. Napolitano, 604 F.3d 732, 752 (2d Cir. 2010)); Elkins
v. Broome, 213 F.R.D. 273, 275 (M.D.N.C. 2003).
“Although actual notice typically warrants liberal construction of the rules, they ‘are there
to be followed, and plain requirements . . . may not be ignored.’” Scott, 673 F. App’x at 304
(quoting Armco, Inc. v. Penrod-Stauffer Bldg. Sys., Inc., 733 F.2d 1087, 1089 (4th Cir. 1984)).
Under North Carolina law, “a plaintiff who fails to comply with [service of process statutes], even
where actual notice occurs, does not properly serve the defendant.” Shaver v. Cooleemee
Volunteer Fire Dep’t, No. 1-07-cv-175, 2008 WL 942560, at *2 (M.D.N.C. 2008) (citing Stack v.
Union Reg’l Mem’l Med. Ctr., Inc., 614 S.E.2d 378, 382 (N.C. App. 2005)).
c. Rule 12(b)(6) Standard
In reviewing a Rule 12(b)(6) motion, “the court should accept as true all well-pleaded
allegations and should view the complaint in a light most favorable to the plaintiff.” Mylan Labs.,
Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993). The plaintiff’s “[f]actual allegations must be
enough to raise a right to relief above the speculative level.” Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 555 (2007). “[O]nce a claim has been stated adequately, it may be supported by showing
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any set of facts consistent with the allegations in the complaint.” Id. at 563. A complaint attacked
by a Rule 12(b)(6) motion to dismiss will survive if it contains enough facts to “state a claim to
relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly,
550 U.S. at 570). “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.
III. ANALYSIS
On the topic of his failure to properly serve Defendants, Plaintiff states only:
Defendants have properly articulated that Plaintiff’s action was removed before
service in State court was fully perfected. Under state law, Plaintiff would have
more time to complete service. Once Defendant’s [sic] gave notice of removal,
state law no longer had jurisdiction over this matter nor did state law rules of
service apply. Defendants should not be allowed to claim dismissal for lack of
service while it is still unclear which court will assume or resume jurisdiction in
this action. Ordinarily, under 28 U.S.C. § 1448 Plaintiff would be allowed to
complete service in Federal Court. However, the issue of whether to remand
remains open for this Court. What Defendants are requesting is premature.
(Doc. No. 20 at 1) (emphasis added). In short, Plaintiff concedes that despite the Court’s generous
treatment and clear admonishment to perfect service, Plaintiff has not adequately served the
Defendants. Rather, Plaintiff argues, without support, that the Court should grant his motion to
remand and leave the service issue to the state court. The Court finds the best practice here is to
address the clear lack of personal jurisdiction before turning to any other issue.
Where a defendant presents a district court with “a straightforward personal jurisdiction
issue,” the court is right to dismiss the case for lack of personal jurisdiction. See Ruhrgas AG v.
Marathon Oil Co., 526 U.S. 574, 588, (1999) (reversing Fifth Circuit and holding that district court
did not abuse its discretion by dismissing case for lack of personal jurisdiction).
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“[C]ourts may not exercise personal jurisdiction over a defendant where the procedural
requirements of service or the summons are not satisfied.” Schleehauf v. PCL Construction, No.
3:20-CV-515-RJC-DCK, 2021 WL 4484574, *5 (W.D.N.C. Sept. 3, 2021) (citing Blakeney v.
Goulston Techs., 3:19-CV-688-GCM, 2020 WL 5821979, at *1 (W.D.N.C. Sept. 30, 2020))
(dismissing complaint where there was deficient process, service of process, and lack of personal
jurisdiction).
It is well-settled that defendants who fail to raise service of process issues in a motion to
dismiss risk waiving those defenses. Indeed, a defendant is required to assert a personal
jurisdiction defense to preserve it. ABC Phones of N. Carolina, Inc. v. Yahyavi, No. 5:20-CV-
0090-BR, 2020 WL 4208923, at *2 (E.D.N.C. July 22, 2020) (citing Fed. R. Civ. P. 12(h)(1) and
Foster v. Arletty 3 Sarl, 278 F.3d 409, 414 (4th Cir. 2002)) (filing a notice of appearance, a notice
of removal, and response to plaintiff’s motion for a temporary restraining order with objections to
personal jurisdiction did not amount to waiver and noting that a “party waives its personal
jurisdiction defense if it does not raise it at the time it files a Rule 12 motion or an answer,
whichever is first.”). Defendants here raised the failure of service issue in the Notice of Removal
and at each subsequent step in the litigation. (Doc. Nos. 1, 4, 7 & 16). Defendants’ objection to
lack of personal jurisdiction due service defects was adequately and properly preserved.
Meanwhile, Plaintiff has failed to show that he properly served Defendants, and thus, the
Court lacks personal jurisdiction to reach the merits of the case. “Unless service is waived, proof
of service must be made to the court,” and “proof must be by the server’s affidavit.” Fed. R. Civ.
P. 4(l)(1). In this case, there is nothing in the record to indicate that Defendants were properly
served despite the Court’s allowing Plaintiff time and an opportunity to address and cure the issue.
Plaintiff has not submitted anything to satisfy the Court that there has been proper service on
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Defendants, and Plaintiff seems to acknowledge this defect.1 (Doc. No. 20 at 1).
Accordingly, the undersigned respectfully recommends that the Court grant Defendants’
Motion to Dismiss without prejudice under Federal Rules of Civil Procedure 12(b)(2) and 12(b)(5).
IV. RECOMMENDATION
FOR THE FOREGOING REASONS, the undersigned respectfully recommends that:
1. “Defendants’ Motion to Dismiss Plaintiff’s Amended Complaint…” (Doc. No. 16) be
GRANTED pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(5) and
that this matter be DISMISSED WITHOUT PREJUDICE. The undersigned
respectfully recommends that the Court not reach the merits of Defendants’ Motion to
Dismiss pursuant to Rule 12(b)(6) because it lacks personal jurisdiction for the reasons
stated above; and
2. “Plaintiff’s [Second] Motion to Remand” (Doc. No. 18) be DENIED AS MOOT.
V. TIME FOR OBJECTIONS
The parties are hereby advised that, pursuant to 28 U.S.C. § 636(b)(1)(C) and Rule 72 of
the Federal Rules of Civil Procedure, written objections to the proposed findings of fact,
conclusions of law, and recommendation contained in this Memorandum must be filed within
fourteen days after service of same. Failure to file objections to this Memorandum with the Court
constitutes a waiver of the right to de novo review by the District Judge. Diamond v. Colonial
Life, 416 F.3d 310, 315-16 (4th Cir. 2005). Moreover, failure to file timely objections will
1A plaintiff may effect service on a city under the Federal Rules of Civil Procedure by “delivering a copy of the
summons and of the complaint to its chief executive officer.” Fed. R. Civ. P. 4(j)(2)(A). A plaintiff may also effect
service on a city consistent with North Carolina law. Fed. R. Civ. P. 4(j)(2)(B). “[S]ervice upon anyone other than
the mayor, city manager, or clerk is insufficient to confer jurisdiction over a city” under N.C. Gen. Stat. § 1A-1, Rule
4(j)(5). Washington v. Cline, 761 S.E.2d 650, 660 (N.C. App. 2014) (citing Johnson v. City of Raleigh, 389 S.E.2d
849, 851-52 (N.C. App. 1990)).
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preclude the parties from raising such objections on appeal. Id. “In order ‘to preserve for appeal
an issue in a magistrate judge’s report, a party must object to the finding or recommendation on
that issue with sufficient specificity so as reasonably to alert the district court of the true ground
for the objection.’” Martin v. Duffy, 858 F.3d 239, 245 (4th Cir. 2017) (quoting United States v.
Midgette, 478 F.3d 616, 622 (4th Cir. 2007)).
The Clerk is directed to send copies of this Memorandum and Recommendation to the
parties’ counsel and to the Honorable Robert J. Conrad, Jr.
SO RECOMMENDED. Signed: November 20, 2024
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