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Toscano v. Regions Financial Corp.

United States District Court, N.D. Alabama, Southern Division

March 28, 2018

AUGUST B. TOSCANO, Plaintiff,
v.
REGIONS FINANCIAL CORPORATION, et al. Defendants.

          MEMORANDUM OPINION AND ORDER

          MADELINE HUGHES HAIKALA, UNITED STATES DISTRICT JUDGE

         The order concerns a motion in which defendants Regions Financial Corporation and Regions Bank (collectively Regions) ask the Court to dismiss plaintiff August Toscano's second amended complaint. (Doc. 56). Absent outright dismissal, Regions asks the Court to strike Mr. Toscano's jury demand. (Doc. 57). Mr. Toscano opposes the motion to dismiss but not the motion to strike the jury demand. (Doc. 65). For the reasons stated below, the Court grants the motion to dismiss in part and grants the motion to strike the jury demand.

         I. FACTUAL BACKGROUND

         Mr. Toscano, a native of Brazil, currently is a citizen of Florida. (Doc. 57, p. 3). Mr. Toscano asserts that he is a member of protected classes based on his race, ethnicity, and national origin. (Doc. 53, p. 7). From 2006 until his termination in July 2014, Mr. Toscano worked for Regions Bank as the “Human Resources Executive for the East Region.” (Doc. 53, pp. 2, 7). Regions Bank is a subsidiary of Regions Financial Corporation, a Delaware corporation headquartered in Birmingham, Alabama. (Doc. 53, p. 8).

         According to Mr. Toscano's second amended complaint, two factual narratives support his claims. First Mr. Toscano alleges that executives at Regions engaged in fraudulent business practices while Mr. Toscano worked for the bank. One of these practices, the “vendor kick-back scheme, ” involved a recruiting service that paid kickbacks to certain Regions's executives in exchange for those executives' agreement to pay inflated invoices that the recruiter submitted to Regions. (Doc. 53, p. 3). Another practice, the “loan fraud scheme, ” involved Regions's attempts to manipulate its apparent profitability by reporting uncollectable loans as collectable on its balance sheets. (Doc. 53, p. 3). Mr. Toscano alleges that he became aware of these practices and that he reported the issues to other executives at Regions. (Doc. 53, pp. 10-17). Mr. Toscano contends that Regions retaliated against him because he reported these illegal business practices.

         Second, Mr. Toscano alleges that executives within Regions's management were “engaging in discriminatory, sexist, demoralizing, and degrading behavior towards . . . female employees.” (Doc. 53, p. 19). Mr. Toscano asserts that he reported complaints several co-workers made to him concerning the offensive or inappropriate behavior of Regions's executives towards female employees. (Doc. 53, p. 19-20). As a regional HR Executive, Mr. Toscano also investigated and reported allegations of racial discrimination in Regions's hiring practices in Georgia. (Doc. 53, pp. 23-24). Mr. Toscano alleges that executives at Regions responded to his reports by attempting to discredit them and then by retaliating against him. (Doc. 53, pp. 20-21, 24-26).

         Mr. Toscano alleges that after he reported the illegal business practices and the complaints of sex and race discrimination to Regions executives, he “was suddenly ostracized” and told by his superiors that “he could not be trusted and [that he] was not a good ‘cultural' fit at Regions.” (Doc. 53, p. 22). After Mr. Toscano reported the allegations of misconduct at Regions, he began to receive lower performance ratings, “was ignored in meetings[, ] and removed from key projects.” (Doc. 53, p. 22). Mr. Toscano alleges that Regions was attempting to create a pretext for his eventual termination. (Doc. 53, p. 23). In addition, Mr. Toscano alleges that his termination was based in part on his efforts to report misconduct within the company. (Doc. 53, p. 4).[1]

         On July 15, 2014, Regions terminated Mr. Toscano without cause. (Doc. 53, p. 28). Because Regions terminated Mr. Toscano without cause, Regions became obligated to provide Mr. Toscano with several forms of severance compensation as well as certain benefits in accordance with a Severance Protection Agreement (SPA) that the parties executed in 2007. (Doc. 53, p. 28). On September 26, 2014, consistent with the terms of the SPA, Mr. Toscano executed a “General Release” of any claims he had against Regions. (Doc. 56-1, pp. 36-37). Regions argues that this release bars Mr. Toscano's present action. (Doc. 56-1, p. 2). Mr. Toscano, in turn, argues that the release did not become effective because Regions did not provide all of the payments and benefits that the SPA required. (Doc. 65, p. 2).

         Mr. Toscano sued Regions in Florida state court on December 31, 2015, asserting six causes of action: (1) retaliation in violation of Title VII; (2) discrimination in violation of Title VII; (3) retaliation under the False Claims Act; (4) retaliatory discharge in violation of the Dodd-Frank Act; (5) retaliation in violation of Florida law; and (6) breach of contract. (Doc. 2; Doc. 53). Regions removed Mr. Toscano's case to the Middle District of Florida on February 12, 2016. (Doc. 1). On Regions's motion, the District Court for the Middle District of Florida transferred the case to this Court. (Docs. 27, 33). By joint stipulation of the parties, Mr. Toscano filed an amended complaint on January 12, 2017. (Doc. 39). With the Court's leave, Mr. Toscano filed a second amended complaint on April 7, 2017. (Doc. 53). Regions now asks the Court to dismiss the second amended complaint. (Docs. 56, 57).

         II. STANDARD OF REVIEW

         In ruling on the defendants' motion to dismiss, the Court must consider whether Mr. Toscano has alleged facts that “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The facts that Mr. Toscano alleges must “allow [the court] to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. At the motion to dismiss stage, the Court “must and do[es] assume that any well-pleaded allegations in the amended complaint are true.” Edwards v. Prime, Inc., 602 F.3d 1276, 1284 (11th Cir. 2010).

         When evaluating a motion to dismiss, a court may consider certain materials outside of the complaint without converting a motion to dismiss into one for summary judgment. See Russo v. Fifth Third Bank, 634 Fed.Appx. 774, 775 n.2 (11th Cir. 2015).

[W]here the plaintiff refers to certain documents in the complaint and those documents are central to the plaintiff's claim, then the Court may consider the documents part of the pleadings for purposes of Rule 12(b)(6) dismissal, and the defendant's attaching such documents to the motion to dismiss will not require conversion of the motion into a motion for summary judgment.

Crespo v. Coldwell Banker Mortg., 599 Fed.Appx. 868, 872 n.1 (11th Cir. 2014) (quoting Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1369 (11th Cir. 1997)).

         III. DISCUSSION

         a. Whether the General Release Bars Mr. Toscano's Claims

         Although Mr. Toscano did not attach copies of the SPA or the general release to his complaint, both agreements are central to Mr. Toscano's claim for breach of contract. (See Doc. 53, pp. 28-29, 39-41). Regions attached these documents to its motion to dismiss. (Doc. 56-1, pp. 36-37; Doc. 69-1). In construing the effect of the SPA and the release, the Court relies on general principles of contract law. See In Re Managed Care, 756 F.3d 1222, 1232 (11th Cir. 2014). “District Courts must construe contracts to give effect to the parties' intentions.” In Re Managed Care, 756 F.3d at 1232. The SPA states that it “will be governed by and construed in accordance with the law of the State of Alabama applicable to contracts made and to be performed entirely within that state.” (Doc. 69-1, pp. 13-14). Because the release is an outgrowth of SPA, (see Doc. 56-1, p. 36), the Court also will use Alabama contract law to construe the release.

         Under Alabama law, “[a] previous settlement of claims is an affirmative defense to an action.” Cherry v. Pinson Termite & Pest Control, LLC, 206 So.3d 557, 565 (Ala. 2016). “‘When parties . . . make a final settlement between themselves, such settlement is as binding on them in many respects as a decree of a court.'” Oaks v. City of Fairhope, 515 F.Supp. 1004, 1032 (S.D. Ala. 1981) (quoting Burks v. Parker, 68 So. 271, 272 (Ala. 1915)). A valid settlement agreement is conclusive as to any claims that the parties intended to include within the terms of their agreement. Ex Parte PinnOak Res., LLC, 26 So.3d 1190, 1200 (Ala. 2009).

         1. The Scope and Validity of the Release

         The language of Mr. Toscano's agreement with Regions states that he released:

any and all manner of action, causes of action, suits, claims and demands whatsoever heretofore existing, now existing or which may hereafter ripen, directly or indirectly, from the beginning of time until the date hereof whether arising under any applicable provisions of statutory or common law with the exception of any employee benefits which cannot be freely alienated under ERISA.

(Doc. 56-1, p. 37). Mr. Toscano executed the release on September 26, 2014, several months after his termination on July 15, 2014. (Doc. 56-1, p. 37; Doc. 53, pp. 2, 6). Mr. Toscano does not dispute that all of the facts underlying his claims for retaliation and discrimination occurred while he was employed at Regions. Consequently, these claims either existed when Regions terminated Mr. Toscano, or the claims ripened shortly after his termination as in the case of those claims covered by his EEOC charge. (Doc. 65, p. 9). Either way, the claims Mr. Toscano presents in counts I, II, III, IV, and V of his second amended complaint are covered by the plain language of the release. Because Mr. Toscano asserts causes of action granted to him by federal remedial statutes in those counts, the Court must examine the circumstances surrounding his execution of the release. See Sparks v. Sunshine Mills, Inc., 2013 WL 4760964, at *7 (N.D. Ala. Sept. 4, 2013).

         To conclude that Mr. Toscano has waived his federal rights, the Court must find that Mr. Toscano's assent to the release provision was knowing and voluntary. Sparks, 2013 WL 4760964, at *7 (citing Bledsoe v. Palm Beach City, 133 F.3d 816, 819 (11th Cir. 1998)). In examining this issue, the Court may consider:

the plaintiff's education and business experience; the amount of time the plaintiff considered the agreement before signing it; the clarity of the agreement; the plaintiff's opportunity to consult with an attorney; the employer's encouragement or discouragement of consultation with an attorney; and the consideration given in exchange for the ...

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