Stone v. Charles Schwab & Company Incorporated

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WO
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
Dominik Stone,
Plaintiff,
v.
Charles Schwab & Company Incorporated,
Defendant.
No. CV-24-03047-PHX-SMB
ORDER
Pending before the Court is Defendant Charles Schwab & Co., Inc.’s Second Partial
Motion to Dismiss, (Doc. 36), and Plaintiff Dominik Stone’s, who is proceeding pro se,
Third Amended Complaint (“TAC”) (Doc. 35). Having reviewed the briefing and the
relevant case law, the Court grants Defendant’s Motion.
I. BACKGROUND
Plaintiff previously filed a SAC asserting ten claims against Defendant. (Doc. 26.)
Defendant moved to partially dismiss those claims pursuant to Federal Rule of Civil
Procedure (“Rule”) 12(b)(6). (Doc. 28.) The Court granted Defendant’s Motion as to all
counts except for Plaintiff’s claim for retaliatory discharge. (Doc. 33.) The remaining
counts failed to state a claim for relief. (Id.) The Court dismissed the following claims
with prejudice: failure to accommodate disability under the ADA and ACRA; failure to
promote under Title VII; wrongful termination in violation of the ACRA; and defamation.
(Id. at 17–18.) The Court granted Plaintiff leave to amend the following claims: pay
discrimination under the EPA and Arizona wage statutes; breach of good faith and fair
dealing; and fraudulent misrepresentation. (Id. at 17.)
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Plaintiff has since amended these claims, (Doc. 35), and Defendant now moves to
dismiss. (Doc. 36.)
II. LEGAL STANDARD
To survive a Rule 12(b)(6) motion for failure to state a claim, a complaint must meet
the requirements of Rule 8(a)(2). Rule 8(a)(2) requires a “short and plain statement of the
claim showing that the pleader is entitled to relief,” so that the defendant has “fair notice
of what the . . . claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555 (2007) (alteration in original) (quoting Conley v. Gibson, 355 U.S. 41,
47 (1957)). This notice exists if the pleader sets forth “factual content that allows the court
to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “Threadbare recitals of the elements of a
cause of action, supported by mere conclusory statements, do not suffice.” Id.
Dismissal under Rule 12(b)(6) “can be based on the lack of a cognizable legal theory
or the absence of sufficient facts alleged under a cognizable legal theory.” Balistreri v.
Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988). A complaint that sets forth a
cognizable legal theory will survive a motion to dismiss if it contains sufficient factual
matter, which, if accepted as true, states a claim to relief that is “plausible on its face.”
Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). Plausibility does not equal
“probability,” but requires “more than a sheer possibility that a defendant has acted
unlawfully.” Id. “Where a complaint pleads facts that are ‘merely consistent with’ a
defendant’s liability, it ‘stops short of the line between possibility and plausibility . . . .’”
Id. (quoting Twombly, 550 U.S. at 557).
In ruling on a Rule 12(b)(6) motion to dismiss, the well-pleaded factual allegations
are taken as true and construed in the light most favorable to the nonmoving party. Cousins
v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). However, legal conclusions couched as
factual allegations are not given a presumption of truthfulness, and “conclusory allegations
of law and unwarranted inferences are not sufficient to defeat a motion to dismiss.” Pareto
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v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998). A court ordinarily may not consider evidence
outside the pleadings when ruling on a Rule 12(b)(6) motion to dismiss. See United States
v. Ritchie, 342 F.3d 903, 907 (9th Cir. 2003). “A court may, however, consider materials—
documents attached to the complaint, documents incorporated by reference in the
complaint, or matters of judicial notice—without converting the motion to dismiss into a
motion for summary judgment.” Id. at 908.
III. DISCUSSION
Plaintiff’s TAC asserts the following counts against Defendant: (1) sex
discrimination and retaliation under Title VII;1 (2) retaliatory discharge; (3) violation of
the federal Equal Pay Act, 29 U.S.C. § 206(d), (4) violation of the Arizona Equal Pay Act,
A.R.S. § 23-341 et seq; (5) breach of the implied covenant of good faith and fair dealing;
(6) fraud and misrepresentation; and (7) intentional infliction of emotional distress. (Doc.
35 at 10–16). Defendant moves to dismiss claims two through seven pursuant to Rule
12(b)(6). (Doc. 36). The Court grants Defendant’s motion as to all counts but grants
Plaintiff leave to amend the retaliation claim.
A. Retaliatory Discharge—Count Two
The Court previously denied Defendant’s motion to dismiss Plaintiff’s retaliatory
discharge claim under the Arizona Employment Protection Act (“AEPA”). (Doc. 33
at 10–11). The Court found that Plaintiff plausibly alleged that Defendant wrongfully
terminated Plaintiff in retaliation for reporting Defendant’s allegedly discriminatory
conduct to Human Resources. (Id.) Defendant now argues that the Court should dismiss
this claim because Plaintiff must bring it under the Arizona Civil Rights Act (“ACRA”).
(Doc. 36 at 4.) The Court agrees.2 Accordingly, the Court dismisses Plaintiff’s retaliation
1 Because the Court previously dismissed Defendant’s Title VII claims with prejudice, the
Court will not entertain them again.
2 The Court’s previous Order should have recognized that the ACRA is also the exclusive
remedy for claims of retaliation with respect to an employee reporting allegedly
discriminatory conduct. See Chen v. Cozzoli LLC, No. CV-21-01025-PHX-DWL, 2022
WL 845190, at *4 (D. Ariz. Mar. 22, 2022) (finding that retaliation in response to reports
of discriminatory “violations cannot give rise to an AEPA claim because they are
separately actionable under ACRA”); A.R.S. § 23-1501(B) (AEPA) (“If the statute
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claim without prejudice and grants Plaintiff leave to amend and assert the claim under the
ACRA.
B. Pay Discrimination—Counts Three and Four
Plaintiff alleges Defendant, between December 2018 to March 2021,
disproportionately paid male employees more than Plaintiff in violation of the federal
Equal Pay Act (“EPA”) and Arizona Equal Pay Act (“Arizona EPA”). (Doc. 35 at 12–14.)
Plaintiff alleges that “[t]he differential was not based on seniority, merit, production, or
any other statutory defense” but instead “was because of sex, including discrimination
based on Plaintiff’s transgender status.” (Doc. 35 at 13.) Defendant argues that both
claims are time-barred under their respective statutes of limitations. (Doc. 36 at 5.) The
Court agrees.
1. The Equal Pay Act
“Congress enacted the Equal Pay Act (EPA) to combat pay disparities caused by
sex discrimination . . . .” Rizo v. Yovino, 950 F.3d 1217, 1219 (9th Cir. 2020). The EPA
states:
No employer . . . shall discriminate . . . between employees on the basis of
sex by paying wages to employees . . . at a rate less than the rate at which he
pays wages to employees of the opposite sex . . . for equal work on jobs the
performance of which requires equal skill, effort, and responsibility, and
which are performed under similar working conditions.
29 U.S.C. § 206(d)(1). A plaintiff must bring an EPA action “within two years after the
cause of action accrued,” or within three years if the “cause of action aris[es] out of a willful
violation.” 29 U.S.C. § 255(a). Otherwise, the action is time-barred.
Plaintiff claims the alleged EPA violations occurred between December 2018 and
March 8, 2021.3 (Doc. 35 at 12–13.) Plaintiff filed Plaintiff’s initial Complaint on
provides a remedy to an employee for a violation of the statute, the remedies provided to
an employee for a violation of the statute are the exclusive remedies for the violation of the
statute or the public policy prescribed in or arising out of the statute.”).
3 Plaintiff improperly asserts new facts in Plaintiff’s responsive pleading. (Doc. 38 at 8.)
The Court will not consider these allegations. See Cole v. Amazon.com Servs. LLC, 765 F.
Supp. 3d 1154, 1160 (W.D. Wash. 2025) (“It is axiomatic that a complaint cannot be
amended by the briefs in opposition to a motion to dismiss.” (citation modified)); see also
Strotek Corp. v. Air Transp. Ass’n of Am., 45 F. App’x 663, 664 (9th Cir. 2002) (holding
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September 13, 2024, more than three years after March 9, 2021. (Doc. 1-2 at 2.) Therefore,
even under the EPA’s longer statute of limitations, Plaintiff’s EPA action is time-barred.
Accordingly, the Court dismisses Plaintiff’s EPA claim with prejudice.
2. Arizona Equal Pay Act
Arizona’s EPA timeline is even more stringent. An action arising under the Arizona
EPA must be brought “within six months after the date of the alleged violation.”
§ 23-341(F); Shaw v. SynCardia Sys., Inc., No. CV 07-502 TUC JMR, 2008 WL 11446782,
at *4 (D. Ariz. Apr. 21, 2008) (denying as untimely an Arizona EPA claim filed eleven
months after the alleged violation). Plaintiff’s Arizona EPA claim parallels Plaintiff’s
federal EPA claim timeline. (Doc. 35 at 14–15.) Therefore, Plaintiff’s Arizona EPA claim
is time-barred because Plaintiff’s Complaint was filed well after the six-month statute of
limitations.4 (Doc. 1-2 at 2.) Accordingly, the Court dismisses Plaintiff’s Arizona EPA
claim with prejudice.
C. Breach of Good Faith and Fair Dealing—Count Five
Plaintiff alleges that Defendant, as an employer, provided the following “bargained-
for benefits”: “ratings, annual increases, bonus and [restricted stock units] eligibility, and
promotion consideration” as well as “participation in Schwab’s education-reimbursement
program with Colorado Technical University that supported Plaintiff’s B.S. in Computer
Science coursework.” (Doc. 35 at 14–15.) Plaintiff states that Defendant deprived Plaintiff
of these benefits by: downgrading Plaintiff’s performance review from exceeds
expectations to meets expectations, “imposing a Meet-only ceiling, misclassifying
Plaintiff’s role and pay band, and preselecting a less-qualified cisgender employee for
Senior Team Manager of Load Balancing (L59) without posting.” (Id. at 15.) Defendant
responds that Plaintiff’s claim is time-barred. (Doc. 36 at 6.) The Court agrees in part.
Generally, a claim for breach of the implied covenant of good faith and fair dealing
that “the district court did not err in limiting its analysis to the statements pled in [the
plaintiff’s] complaint”).
4 Again, Plaintiff improperly asserts new facts in the responsive briefing. (Doc. 38 at 8.)
The Court will not consider these facts here. See Cole, 765 F. Supp. 3d at 1160.
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is subject to a two-year statute of limitations. See Ryley v. Sparks L. Firm, P.C., No. 1
CA-CV 12-0178, 2013 WL 2389823, at *4 (Ariz. Ct. App. May 28, 2013). However,
where the “claim is based on a contract theory, a one year statute of limitations applies.”
Day v. LSI Corp., 174 F. Supp. 3d 1130, 1156 (D. Ariz. 2016), aff’d, 705 F. App’x 539
(9th Cir. 2017). Here, Plaintiff’s claim sounds in contract. Plaintiff states that the cited
benefits were “governed by Schwab’s annual merit-increase policies, bonus plan
documents, and RSU award terms.” (Doc. 35 at 15.) Therefore, the one-year statute of
limitation applies. See A.R.S. § 12-541(3) (directing a one-year statute of limitations for
“contract actions based on employee handbooks or policy manuals”); see also Day, 174 F.
Supp. 3d at 1156 (holding that plaintiff’s breach of the implied covenant of good faith and
fair dealing claim was based in contract theory, and thus subject to the one-year statute of
limitation, because plaintiff alleged “losses in earnings, stock grants, stock options,
restricted stock units, retirement benefits, and other employee benefits that he would have
received” from defendant).
Plaintiff’s claim is untimely in part. Plaintiff’s TAC states that the downgrading of
Plaintiff’s performance reviews, the “Meets-only ceiling,” and the misclassifying of
Plaintiff’s role occurred in 2021 and 2022. (Doc. 35 at 4.) However, Plaintiff’s Complaint
was not filed till September 2024. Therefore, these claims are time-barred. The remaining
conduct—promoting another employee without posting—allegedly occurred in October
2023 and is not time-barred. Nonetheless, this conduct fails to support a plausible claim
for breach of the implied covenant of good faith and fair dealing. “The covenant requires
that neither party do anything that will injure the right of the other to receive the benefits
of their agreement.” Wagenseller v. Scottsdale Mem’l Hosp., 710 P.2d 1025, 1038 (Ariz.
1985). Plaintiff fails to allege any facts demonstrating that Defendant promoting another
employee breached an employment agreement between Defendant and Plaintiff. See White
v. AKDHC, LLC, 664 F. Supp. 2d 1054, 1065 (D. Ariz. 2009) (explaining that the covenant
“protects an employee only to the extent that the employer denied the terminated employee
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benefits agreed to in the employment contract”).
Finally, Plaintiff appears to allege that Plaintiff’s termination itself deprived
Plaintiff of the RSUs and education-reimbursement program. (Doc. 35 at 9.) However,
“[a] claim for breach of the implied covenant may be viable if a plaintiff is alleging that
conduct other than the termination itself breached the covenant.” Day, 174 F. Supp. 3d
at 1156. Accordingly, the Court finds that Plaintiff fails to plausibly allege a timely claim
for breach of the implied covenant of good faith and fair dealing. The Court dismisses this
claim with prejudice.
D. Fraud—Count Six
Plaintiff’s TAC alleges Defendant fraudulently represented that “Plaintiff’s position
was being eliminated or streamlined and would not be backfilled.” (Doc. 35 at 15.) To
plausibly state a claim for fraud, Plaintiff must allege facts showing this statement to be
false. See Peery v. Hansen, 585 P.2d 574, 577 (Ariz. Ct. App. 1978). Plaintiff fails to do
so.
Plaintiff claims that Defendant’s statement was false because Defendant placed a
different employee into “the Senior Team Manager of Load Balancing (L59) role in the
same functional area” after laying off Plaintiff. (Doc. 35 at 15.) However, Plaintiff did
not hold this title. Plaintiff “held the title Senior Network Engineer (L58),” which “was
retitled to Senior Product Owner (L58).” (Doc. 35 at 4.) Moreover, Plaintiff admits that
the Senior Team Manager of Load Balancing (L59) position was vacant before Defendant
later filled this position, and it was a role Plaintiff was interested in. (Id. at 6.) Therefore,
Defendant did not backfill Plaintiff’s position by promoting a different employee to the
Senior Team Manager role; it filled a position that was apart from Plaintiff’s role and
previously vacant. Accordingly, the Court dismisses this claim with prejudice because
Plaintiff fails to allege facts showing Defendant’s statement to be false.
E. Intentional Infliction of Emotional Distress—Count Seven
Plaintiff alleges Defendant caused Plaintiff severe emotional distress due to a
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number of Defendant’s alleged acts, including: (a) unauthorized forwarding of Plaintiff’s
“coming-out email” beyond the intended recipients; (b) excluding Plaintiff from
advancement and recognition, (c) changing his performance review ratings, (d) allowing a
vendor to “deadname” Plaintiff (“which HR later acknowledged and apologized for after
Plaintiff complained”), (e) denying a salary increase after Plaintiff “nearly died from
complications from a medically necessary hysterectomy,” (f) “failing to address sexual
harassment despite Plaintiff’s reports,” and (g) “conducting a cursory HR investigation that
failed to prevent further retaliation and escalation of harm.” (Doc. 35 at 16.) Defendant
argues that Plaintiff fails to allege conduct that would support an intentional infliction of
emotional distress (“IIED”) claim. (Doc. 36 at 7–9.) The Court agrees.
To sustain an action for IIED, “a plaintiff must allege: (1) the defendant caused
severe emotional distress; (2) by extreme and outrageous conduct; (3) with intent to cause
emotional distress or with reckless disregard that such distress would result.” Fraser v.
State, No. 2 CA-CV 2025-0116, 2025 WL 3248333, at *7 (Ariz. Ct. App. 2025). “Extreme
and outrageous conduct is conduct so outrageous in character, and so extreme in degree, as
to go beyond all possible bounds of decency, and to be regarded as atrocious and utterly
intolerable in a civilized community.” Christakis v. Deitsch, 478 P.3d 241, 245 (Ariz. Ct.
App. 2020) (citation modified). “In the employment context, it is extremely rare to find
conduct sufficient to meet this standard.” Fraser, 2025 WL 3248333, at *7 (citation
modified).
Here, Plaintiff’s IIED allegations ring of typical workforce complaints. It is not
beyond all possible bounds of decency for an employer to refuse to promote an employee,
refuse a salary increase, alter performance ratings, or perform an unsatisfactory HR
investigation. See Mintz v. Bell Atl. Sys. Leasing Int’l, Inc., 905 P.2d 559, 563 (Ariz. Ct.
App. 1995) (“We readily agree with the trial court that [defendant’s] failure to promote
[plaintiff] does not ‘go beyond all possible bounds of decency,’ even if it was motivated
by sex discrimination or retaliation.”). Additionally, although forwarding Plaintiff’s
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coming-out email to other coworkers might lack “empathy and finesse,” such action is not
utterly intolerable. See id. at 564 (quoting Cox v. Keystone Carbon Co., 861 F.2d 390, 396
(3d Cir. 1988) (finding that defendant delivering a job reassignment letter to plaintiff while
she was in the hospital for severe emotional and psychological problems was not sufficient
for an IIED claim). This is particularly true in light of Plaintiff wanting everyone, even
third-party vendors, to respect Plaintiff’s new name, which would necessitate broad
transparency. (Doc. 35 at 7.) To that point, assuming Defendant could be responsible for
the speech of a third-party vendor, that vendor’s use of Plaintiff’s “deadname” does not
amount to extreme and outrageous conduct. IIED “liability clearly does not extend to mere
insults, indignities, threats, annoyances, petty oppressions, or other trivialities” because
“[t]here is no occasion for the law to intervene in every case where some one’s feelings are
hurt.” See Shepherd v. Costco Wholesale Corp., 441 P.3d 989, 994–995 (Ariz. Ct. App.
2019), reversed in part on other grounds by, 482 P.3d 390 (Ariz. 2021) (quoting
Restatement (Second) of Torts § 46 (A.L.I. 1965)). Finally, while Plaintiff does allege that
Plaintiff suffered sexual harassment in the workplace, Plaintiff fails to provide any detail
to support that allegation and assist the Court in determining whether the conduct was
“extreme and outrageous.”5
In sum, “the challenged conduct does not qualify as the sort of extremely rare,
atrocious and utterly intolerable conduct that completely violates human dignity and strikes
to the very core of one’s being, threatening to shatter the frame upon which one’s emotional
fabric is hung.” Lindvall v. L. Office of Daniel Hutto PLLC, No. CV-24-00768-PHX-
DWL, 2024 WL 4634082, at *5 (D. Ariz. 2024) (citation modified). Accordingly, the
Court dismisses Plaintiff’s IIED claim with prejudice.
IV. LEAVE TO AMEND
The Court only grants Plaintiff leave to amend Plaintiff’s retaliatory discharge
claim. The Court dismisses with prejudice Plaintiff’s claims for violation of the federal
5 Plaintiff once again improperly asserts new facts in the responsive briefing. (Doc. 38
at 8.) The Court will not consider these facts here. See Cole, 765 F. Supp. 3d at 1160.
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EPA and Arizona’s EPA, breach of the implied covenant of good faith and fair dealing,
fraud and misrepresentation, and IIED. Plaintiff may not amend these claims. See Fid.
Fin. Corp. v. Fed. Home Loan Bank of San Francisco, 792 F.2d 1432, 1438 (9th Cir. 1986)
(“The district court's discretion to deny leave to amend is particularly broad where the court
has already given the plaintiff an opportunity to amend his complaint.”).
Plaintiff’s amended complaint must follow the form detailed in Rule 7.1 of the Local
Rules of Civil Procedure. Within thirty (30) days from the date of entry of this Order,
Plaintiff may submit a fourth amended complaint. Plaintiff must clearly designate on the
face of the document that it is the “Fourth Amended Complaint.” The amended complaint
must be retyped or rewritten in its entirety and may not incorporate any part of the original
Complaint by reference.
V. CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Defendant’s Partial Motion to Dismiss is granted
(Doc. 36).
IT IS FURTHER ORDERED that if Plaintiff does not file a Fourth Amended
Complaint within thirty (30) days of the date of this Order, the Clerk of Court shall dismiss
this action without further order from the Court.
Dated this 5th day of March, 2026.
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