Over the long holiday weekend, the Fifth Circuit issued the first EEO case of the year, one that points up an important federal pleading lesson in the era of Iqbal and Twombly. To wit, if you anticipate seeking a default judgment, make sure that your discrimination complaint is as complete as possible. The Fifth Circuit holds (2-1), in a matter of first impression, that deficiencies in a complaint cannot be cured by live testimony in a default judgment hearing. The court concludes, in the present case, that while the plaintiff presented a plausible case of age discrimination at the hearing, the complaint itself was insufficient to support the judgment.
Wooten v. McDonald Transit Associates, Inc., No. 13-11035 (5th Cir. Jan. 2, 2015): In his complaint, plaintiff Wooten alleged that he was a former employee of McDonald Transit, where he had worked from 1999 until May 1, 2011. The ADEA retaliation claim stated as follows:
"In October 2010, [Wooten] made a claim to the Equal Employment Opportunity Commission for age discrimination. After the claim was made and continuing until [his] employment ended, [McDonald Transit], in violation of the ADEA, discriminated and retaliated against [Wooten], and created a hostile work environment, until such time that plaintiff was constructively
discharged on or about May 1, 2011."
The complaint was reportedly served on McDonald Transit's registered agent, but not answered.
The district court ordered a prove-up hearing for entry of a default judgment under Federal Rule of Civil Procedure 55. At that hearing, Wooten elaborated on the claim:
"He testified that he was born in January 1956, making him fifty-four years old at the time he made his claim to the EEOC. He explained that during his tenure at McDonald Transit, he had been promoted from the position of Class B Mechanic to the position of Shop Foreman. He also described his retaliation claim in greater detail: he stated that he was demoted from Shop Foreman, lowering his pay by $2 an hour. He was given menial work, and his hours were changed. He was denied opportunities for addition al job-related certification. He stated that he 'never got [written] up, [and was] never reprimanded.'"
After entry of judgment, McDonald Transit moved to set aside the judgment, averring defects in service. The court denied the motion on a finding that the defendant was properly served (twice) and that it waived all of its defenses by not answering.
The Fifth Circuit reverses. It observes that the parties agreed that default was properly entered, as a procedural matter, and so the issue shifted to whether the allegations of the complaint were sufficient to support the judgment or (alternatively) whether they could be supplemented by the prove-up record.
The court first considers the substantive standard of the ADEA. It recites the familiar requirements that the plaintiff must allege (1) a protected activity (not in dispute here), (2) one or more materially adverse actions, and (3) a causal link between 1 and 2.
In an extended dictum, the opinion addresses an intracircuit conflict over whether an ADEA retaliation claimant must also allege that he or she "was qualified for his [or her] position." While Holtzclaw v. DSC Commc'ns Corp., 255 F.3d 254, 259 (5th Cir. 2001), expressly included this element, the panel majority declares that the case law has not been consistent and that this requirement arguably did not survive Burlington Northern & Santa Fe Railway Co. v. White, 548 U.S. 53 (2006).
The panel majority, applying the substantive standards of the act, holds that Wooten's complaint did not meet the "well-pleaded" standard required by Rule 55 (and Rule 12(b)(6), as well) and could not support a default judgment. "His few factual allegations," the majority concludes, "are inextricably bound up with legal conclusions (e.g., 'discriminated and retaliated' and 'created a hostile work environment' leading to 'constructive discharge')," and simply "parrot[s]" the language of the ADEA.
The majority also holds, though, that Wooten's testimony at his prove-up hearing filled out the allegations in the complaint. plaintiff testified about "a variety of concrete actions (changes in hours, reduced responsibilities, demotion, preclusion from job-related certification) that together might amount to an adverse employment action." (Ed. note: White tossed the requirement that a retaliatory action be employment-related, so this appears to be a slip of the judicial pen.) Causation could be established by the relatively short time between Wooten's filing the EEOC charge and being subject to adverse actions, while "qualifications" (to the extent required for an ADEA retaliation claim) was shown by Wooten's lengthy, relatively trouble-free tenure at McDonald Transit.
Yet because the panel majority finds the pleadings insufficient, it holds that the default judgment cannot stand. It thus decides, in a matter of first impression, that the pleadings cannot be supplemented by later hearing testimony.
Rule 55(b)(2), the panel notes, has long "authorize[d] a court considering an application for default judgment to 'conduct hearings . . . when, to enter or effectuate judgment,'" but specifically to "establish the truth of any allegation by evidence . . . or . . . investigate any other matter." Without adequate pleadings, the panel concludes, there is nothing to investigate.
Moreover - as a prudential matter - because "default judgments must be based on competent pleadings," the panel majority holds that "[r]ecognizing an exception to this established rule in cases where necessary facts omitted from the complaint emerge for the first time at a damages hearing would inject uncertainty into this body of law and unfairly disadvantage defaulting defendants."
The panel remands the case with a mandate to dismiss the complaint, with leave to amend.
Dissenting, Judge Weiner notes that the majority's newly-minted rule gives defaulting parties even more opportunities for mischief: "This result is inordinately lopsided and, even worse, favors the wearer of the black hat over the wearer of the white hat. Our default judgment jurisprudence carefully balances our preference for judgments on the merits with 'considerations of social goals, justice and expediency.' [Foot note omitted.] We do not honour this balance, much less retain it, by allowing the defaulting defendant to lie behind the log until after a Rule 55(b)(2) hearing, then have the option to jump into the fray and litigate the merits as though his default had never occurred."