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Carlson v. CSX Transportation, Inc.

United States Court of Appeals, Seventh Circuit

July 10, 2014

STEPHANIE SUE CARLSON, Plaintiff-Appellant, Cross-Appellee,
CSX TRANSPORTATION, INC., Defendant-Appellee, Cross-Appellant

Argued: March 31, 2014.

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[Copyrighted Material Omitted]

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Appeals from the United States District Court for the Southern District of Indiana, Evansville Division. No. 3:11-cv-66-RLY-WGH -- Richard L. Young, Chief Judge.

For Stephanie S. Carlson, Plaintiff - Appellant (13-1944): Darlene Carole Robinson, Attorney, Robinson & Associates, Oakland City, IN.

For Csx Transportation, Incorporated, Defendant - Appellee (13-1944): M. Scott McIntyre, Attorney, Baker & Hostetler, Llp, Cincinnati, OH.

For STEPHANIE S. CARLSON, Plaintiff - Appellee (13-2054): Darlene Carole Robinson, Attorney, ROBINSON & ASSOCIATES, Oakland City, IN.

For CSX TRANSPORTATION, INCORPORATED, Defendant - Appellant (13-2054): M. Scott McIntyre, Attorney, BAKER & HOSTETLER, LLP, Cincinnati, OH.

Before WOOD, Chief Judge, and WILLIAMS and HAMILTON, Circuit Judges.


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Hamilton, Circuit Judge.

This appeal requires us to revisit the pleading requirements for discrimination and retaliation claims under Title VII of the Civil Rights Act of 1964, including claims for retaliation where the employee alleges an ongoing pattern of retaliation. We must also clarify the scope and effect of the Railway Labor Act's mandatory arbitration provision when an employee alleges discrimination or retaliation in violation of federal statutes.

Plaintiff Stephanie Carlson brought several sex discrimination and retaliation claims under Title VII against her employer, defendant CSX Transportation, Inc., a railway company. She also brought a related

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contract claim based on the settlement she had reached with CSX of an earlier discrimination lawsuit. CSX moved to dismiss, arguing that Carlson's claims were implausible and that some were precluded by the Railway Labor Act (RLA) because they were based on company decisions justified by the terms of a collective bargaining agreement.

For the most part, the district court agreed with CSX, dismissing the majority of Carlson's claims for failure to state a claim upon which relief could be granted and finding that the RLA precluded the remaining claims. Carlson has appealed. We conclude that none of her claims should have been dismissed. The allegations in her complaint are easily sufficient to state claims for sex discrimination and retaliation. And the RLA, which requires that claims arising under collective bargaining agreements in the railway and airline industries be decided in arbitration, does not preclude Carlson's claims, which arise under Title VII and a private contract between Carlson and CSX.

Upon granting CSX's motion to dismiss, the district court also denied as moot a motion for summary judgment that CSX had filed while its motion to dismiss was pending. CSX has cross-appealed and asked us to grant summary judgment in its favor if we conclude (as we do) that the district court erred by dismissing Carlson's claims on the pleadings. We decline to rule on the summary judgment motion that the district court did not consider. We remand the case for further proceedings.

I. Factual and Procedural Background

We present the relevant facts based on Carlson's allegations, which we must accept as true on appeal from the grant of a Rule 12(b)(6) motion to dismiss. E.g., Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007); Luevano v. Wal-Mart Stores, Inc., 722 F.3d 1014, 1027 (7th Cir. 2013). Carlson began her career with CSX in 2002 as a clerk. After seeking unsuccessfully to advance in the company, she filed a lawsuit in 2007 alleging sex discrimination. She was promoted twice while that lawsuit was pending, first in 2008 to the position of substitute yardmaster in Birmingham, Alabama, and then in 2009 to the company's manager trainee program. In May 2009 while she was still in manager training, she and CSX negotiated a settlement of her lawsuit. According to her complaint, her superiors at CSX then made the training program intolerable by belittling her, assigning her extra work, and giving her unjustifiably poor evaluations, leaving her no viable choice but to drop out.

Upon leaving the training program, Carlson asked to be reinstated as a substitute yardmaster in Birmingham. Her request was denied. She alleges that the initial explanation she received was that no positions were available, a contention that Carlson knew was untrue. Later a company representative told her that she was denied the position because she had not completed 60 " starts" (shifts) as a substitute yardmaster when she previously held the position. But CSX had allowed a male employee Carlson knows to return to a substitute yardmaster position despite his not having completed 60 starts.

After learning that she could not resume work as a substitute yardmaster in Birmingham, Carlson took a lower-paying position as a clerk in Evansville, Indiana. Two substitute yardmaster positions were posted for Birmingham in September 2009. Carlson applied for them but was rejected. A company representative told her she was ineligible for the positions because Birmingham was outside of her district, though Carlson knows a male employee

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who was allowed to transfer across districts. When substitute yardmaster positions later opened up in her district in Indiana, Carlson applied for those as well, but she was not even interviewed. She alleges that the people ultimately hired for those positions were less qualified than she.

Carlson filed charges with the Equal Employment Opportunity Commission regarding these events. After completing the EEOC process, she filed this federal lawsuit alleging violations of Title VII, see 42 U.S.C. § 2000e-2 (discrimination) and § 2000e-3 (retaliation), and state contract law. (She actually filed suit in both Alabama and Indiana district courts, but the suits were consolidated in the Southern District of Indiana.) She alleges that her poor treatment in manager training amounted to a constructive demotion motivated by hostility to her sex and in retaliation for her EEOC complaints and the 2007 lawsuit. She also alleges that CSX for the same reasons refused to reinstate her to the substitute yardmaster position she had previously held and refused to select her for any of the substitute yardmaster positions that opened up later. Her contract claim is that CSX breached a no-retaliation clause of the agreement to settle her 2007 law-suit.

In granting CSX's motion to dismiss, the district court rejected most of Carlson's claims under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief could be granted. Carlson v. CSX Transp., Inc., No. 3:11-cv-66-RLY-WGH, 2013 WL 869762, at *6-8 (S.D. Ind. Mar. 5, 2013). The only exceptions were her claims based on the decision not to reinstate her as a substitute yardmaster in Alabama immediately after she left the manager training program. The court concluded that the discrimination claim was plausible because Carlson had identified a male comparator and that the retaliation claim was plausible because she was denied the position within one month of the resolution of her 2007 lawsuit. Regarding Carlson's sex discrimination claims relating to the other substitute yardmaster positions, the court explained that she did not state plausible claims for relief because each claim lacked either an allegation that the position was filled by someone else or an allegation that the person who filled the position was male. Her retaliation claims relating to those positions, the court said, were implausible because of the amount of time that had passed (several months) between any protected activity and the denial decisions.

The court also explained that Carlson's sex discrimination and retaliation claims based on being forced out of the manager training program were insufficient. No one at the program had said anything about her sex or told her she would be expelled from the program. Her allegations were " conclusory," the court wrote, and she had not provided " evidence of intolerable working conditions.", [WL] at *7. Moreover, Carlson had not cited any constructive demotion cases, i.e., cases where an employee was forced out of a position yet remained employed by the company. (The parties and the district court used the term " constructive discharge," though a more precise description of what Carlson alleges is constructive demotion.)

In dismissing her contract claim, the court gave two related reasons. Her allegations about the settlement agreement were vague (intentionally so because she did not want to risk a claim that she had breached the confidentiality terms), and she had not fixed that problem by providing the court a copy of the agreement.

Returning to the two claims that had survived Rule 12(b)(6)--sex discrimination and retaliation based on CSX's refusal to ...

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