Betz v. Fed. Home Loan Bank of Des Moines
| Decision Date | 19 July 2021 |
| Docket Number | 4:21-cv-00022 |
| Parties | Linda BETZ, Plaintiff, v. FEDERAL HOME LOAN BANK OF DES MOINES, Zeeshan Kazmi, Sunil Mohandas, and Mike Wilson, Defendants. |
| Court | U.S. District Court — Southern District of Iowa |
Megan C. Flynn, Michael J. Carroll, Hockenberg & Flynn, P.C., West Des Moines, IA, for Plaintiff.
Debra Hulett, Haley Hermanson, Nyemaster Goode PC, Des Moines, IA, for Defendants.
Before the Court is a Motion to Dismiss State Law Claims or for Summary Judgment on Count VIII filed by Defendants Federal Home Loan Bank of Des Moines, Zeeshan Kazmi, Sunil Mohandas, and Mike Wilson. ECF No. 6. Plaintiff Linda Betz responded to Defendants’ Motion, ECF No. 23, and Defendant filed a Reply, ECF No. 34. Neither party requested oral argument, and the Court does not believe oral argument will substantially aid it in resolving the issues before it. Therefore, the matter is fully submitted.
Defendant Federal Home Loan Bank of Des Moines (FHLB) is a federally chartered corporation organized under the Federal Home Loan Bank Act of 1932 (FHLBA), 12 U.S.C. §§ 1421 – 1449. ECF No. 1-11 ¶ 3. Defendant Wilson was CEO of Defendant FHLB at all relevant times. Id. ¶ 5. Defendant Mohandas was the Chief Risk Officer of Defendant FHLB at all relevant times. Id. ¶ 6.
On March 19, 2018, Plaintiff began her employment with FHLB as the Chief Information Security Officer. Id. ¶¶ 10, 12. Plaintiff was hired to correct deficiencies in FHLB's information security. Id. ¶¶ 41, 43. Prior to her hiring, she had twenty-two years of experience in the field of information security and an additional fifteen years of experience in the technology field generally. Id. ¶ 11. During Plaintiff's employment with FHLB, she received positive job performance feedback as well as a raise. Id. ¶¶ 13, 14.
In September or October 2019, Defendant Kazmi was hired as FHLB's Interim Chief Information Officer as an independent contractor. Id. ¶¶ 15, 16. Plaintiff alleges that not long after Kazmi started at FHLB, it became apparent that he is sexist and treats female and male employees differently. Id. ¶ 17. Plaintiff further alleges Wilson and Mohandas tolerated Kazmi's sexist behavior and promoted him rather than correcting his behavior. Id. ¶ 18. On September 18, 2019, Wilson introduced Kazmi to Plaintiff. Id. ¶ 19. During this introduction, Kazmi complimented Plaintiff on her involvement in a leadership strategy meeting held out of state. Id. ¶ 19. Approximately one month after their meeting, however, Kazmi made comments to Plaintiff regarding differences he saw between men and women and their relationships with work in the context of what he viewed "is wrong with [FHLB]." Id. ¶¶ 20–21. Plaintiff was shocked by Kazmi's comments to her and reported them to FHLB's Senior Vice President of Human Resources, Nancy Betz.1 Id. ¶ 22. Plaintiff asked Nancy to be discreet because Plaintiff was still trying to build a relationship with Kazmi; Nancy told Plaintiff she would convey Plaintiff's complaint to Wilson without revealing Plaintiff's identity. Id. ¶¶ 23–25.
Plaintiff alleges she attempted to engage with Kazmi by arranging two meetings with him to discuss substantive information security issues. Id. ¶ 26. Despite being Plaintiff's direct supervisor, Kazmi rarely met with her. Id. ¶ 27. In contrast, Kazmi regularly met with his only other direct supervisee, who was male. Id. ¶¶ 28–29. Kazmi also worked directly with Plaintiff's subordinates without telling Plaintiff even when Plaintiff offered to help with meetings. Id. ¶ 30.
Plaintiff alleges that many FHLB employees had complaints about Kazmi. Id. ¶ 31. At one point, the FHLB Human Resources department installed an employee feedback box. Id. ¶ 37. Plaintiff completed a card listing her complaints and put it in the box. Id. ¶ 38. Plaintiff also submitted two ethics complaints about Kazmi. Id. ¶ 39.
Plaintiff alleges other FHLB employees also believed Defendant Mohandas treated female employees more negatively as compared to male employees. Id. ¶ 32. Despite Plaintiff's role and experience, Mohandas did not solicit Plaintiff's advice regarding FHLB's information security system or take actions based on Plaintiff's input. Id. ¶ 41. Mohandas and Kazmi disagreed with Plaintiff as to FHLB's information security risk, presented their own conclusions to FHLB's Board of Directors, and did not invite Plaintiff to the Board meeting. Id. ¶¶ 45–50.
On January 3, 2020, Plaintiff's employment with FHLB was terminated. Id. ¶ 52. That same day, FHLB filed a Form 8-K with the Securities and Exchange Commission (SEC), notifying the SEC of Plaintiff's employment termination. Id. ¶ 98. Wilson informed Plaintiff that FHLB had "decided to go in a different direction" with information security, one that was "more risk-based." Id. ¶¶ 53, 54. Plaintiff questions Wilson's reason for firing her when he was expected to retire later that month. Id. ¶ 56. Plaintiff alleges the reason Wilson gave was a pretext and the real reason she was fired was because Mohandas and Kazmi—whom Wilson supported—disapproved of female employees, especially those who disagreed with them. Id. ¶¶ 57, 58. Plaintiff also alleges it was her adherence to her viewpoints on FHLB's information security risk and her expression of those views that resulted in the termination of her employment. Id. ¶ 59.
On January 21, 2021, Plaintiff filed her First Amended and Substituted Petition at Law and Jury Demand in the Iowa District Court for Polk County. ECF No. 1-11. Defendants removed the action to federal court. ECF No. 1. In her state-court pleading, Plaintiff alleges sex discrimination, harassment, and retaliation against all Defendants in violation of the Iowa Civil Rights Act (ICRA), Iowa Code §§ 216.1 – 216.22, and Title VII (Counts I–IV). She further alleges defamation, invasion of privacy (false light), and blacklisting against all Defendants (Counts V–VII). Plaintiff alleges tortious interference with her employment rights against Defendant Kazmi (Count VIII) and civil conspiracy against all individual Defendants (Count IX). Plaintiff also alleges wrongful termination in violation of public policy of the State of Iowa against all Defendants (Count X).
On February 3, Defendants filed their motion to dismiss Counts I, III, V, VI, VII, VIII, IX, and X of Plaintiff's First Amended and Substituted Petition pursuant to Federal Rule of Civil Procedure 12(b)(6) for failing to state a claim upon which relief can be granted.2 ECF No. 6.
"Under [ Rule] 12(b)(6), the factual allegations in the complaint are accepted as true and viewed most favorably to the plaintiff." Hager v. Ark. Dep't of Health , 735 F.3d 1009, 1013 (8th Cir. 2013). In order "[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "A pleading that merely pleads ‘labels and conclusions,’ or a ‘formulaic recitation’ of the elements of a cause of action, or ‘naked assertions’ devoid of factual enhancement will not suffice." Hamilton v. Palm , 621 F.3d 816, 817–18 (8th Cir. 2010) (quoting Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 ). "Determining whether a claim is plausible is a ‘context-specific task that requires the reviewing court to draw on its judicial experience and common sense.’ " Id. (quoting Iqbal , 556 U.S. at 679, 129 S.Ct. 1937 ).
Defendants assert a multitude of arguments and alternative arguments for why all of Plaintiff's claims except Counts II and IV—her Title VII claims for sex discrimination and harassment and retaliation against FHLB—must fail at the motion-to-dismiss stage. The Court addresses each issue in turn below.
In their Motion, Defendants argue Plaintiff's sex discrimination and retaliation claims under the ICRA (Counts I and III) are completely preempted by the FHLBA's "dismiss at pleasure" provision, 12 U.S.C. § 1432(a). Alternatively, Defendants contend that if the Court declines to dismiss these claims based on complete preemption, the Court should apply its preemption analysis from Ewing v. Federal Home Loan Bank of Des Moines , 645 F. Supp. 2d 707 (S.D. Iowa 2009), and conclude that, to the extent Plaintiff's claims under the ICRA are in direct conflict with Title VII, such claims are preempted. Defendants further argue Plaintiff's state common-law claims for tortious interference with Plaintiff's employment rights, civil conspiracy, and wrongful termination in violation of public policy (Counts VIII through X) are completely preempted by the FHLBA.
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