In April 2013, Capua Law Firm won for its client an important decision remanding a contract and employment dispute between an employer and former employee back to state court. The employer had brought suit against the former employee under state law alleging, among other things, breach of contract and declaratory judgment under the North Carolina Equal Employment Practices Act, N.C. Gen. Stat. § 143-442.1 et seq. (the “NCEEPA”), which provides, “it is the public policy of this State to protect…employment without discrimination ….” In the declaratory judgment claim, the employer sought declaratory adjudication that it had terminated the employee for cause and that the termination was neither discriminatory nor retaliatory.
The employee removed the case to federal court and argued that employer’s claims for declaratory relief under the NCEEPA were in fact an attempt to litigate the employee’s anticipated Title VII discrimination claims peremptorily and thus created federal question jurisdiction. The District Court disagreed and remanded the matter to state court.
In doing so, the District Court reiterated the long established “well-plead complaint rule.” It noted that “federal courts have jurisdiction to hear ‘only those cases in which a well-plead complaint establishes either that federal law creates the cause of action or that the plaintiff’s right to relief depends on a resolution of a substantial question of federal law.'” Importantly, the District Court found that declaratory judgment actions under the NCEEPA are not preempted by Title VII and arise exclusively under North Carolina law, even if the two statutes are analyzed the same.
As for the former employee’s argument that the employer’s lawsuit was a retaliatory act in itself because it came after the former employee’s EEOC filing, the US District Court found such arguments “misguided” and that the employer’s claims seeking declaratory judgment “as to the lawfulness of termination is permissible.”
For the full text of the decision, please see the Western District of North Carolina’s Memorandum and Order.