Case Title: New Dimensions, Inc. v. Tarquini

Citation: 

Docket Number: 120760

State: virginia

Court: Virginia Supreme Court

Date: 2013-06-06T00:00:00Z

Document:
PRESENT:  All the Justices 
 
NEW DIMENSIONS, INC. 
 
 
 
 
 
 
 
 
     OPINION BY 
v.     Record No. 120760  
 
  JUSTICE S. BERNARD GOODWYN 
 
 
 
 
 
 
 
 
    June 6, 2013 
CATHERINE TARQUINI 
 
 
FROM THE CIRCUIT COURT OF PRINCE WILLIAM COUNTY 
Gaylord L. Finch, Jr. Judge 
 
In this appeal, we consider whether the circuit court 
erred in holding that the four defenses set forth in the 
federal Equal Pay Act, 29 U.S.C. § 206(d)(1), are affirmative 
defenses that are waived if not pled.  We conclude that while 
the defenses set forth in the Equal Pay Act are affirmative, 
they were not waived under the facts presented in this case, 
and the circuit court erred in precluding the introduction of 
evidence related to those defenses. 
Background 
 
 
 Catherine Tarquini filed an amended complaint against New 
Dimensions, Inc. (NDI) in the Circuit Court of Prince William 
County, alleging breach of contract, quantum meruit and 
violation of the Equal Pay Act (EPA).  Tarquini sought damages 
of $160,000 for her breach of contract and quantum meruit 
claims, and damages equal to the difference between her salary 
commission rate and that paid to NDI’s male employees, in 
addition to statutory liquidated damages, attorneys’ fees and 
costs for the EPA claim. 
 
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NDI answered.  NDI denied Tarquini’s allegation that it 
had violated the EPA but it did not affirmatively plead the 
defenses articulated in the statute.  The case proceeded to 
discovery, during which NDI disclosed the substance and nature 
of its alleged seniority and merit-based compensation system as 
an explanation for why Tarquini was paid less than other 
employees, both male and female, who held the same job.  Two 
business days before trial, Tarquini filed a motion in limine 
to prohibit NDI from presenting evidence in defense of the EPA 
claim because NDI had not pled any affirmative defense to the 
claim.  The circuit court granted the motion in limine and 
denied NDI’s motion for reconsideration. 
After a three-day bench trial, the circuit court issued a 
letter opinion and held that Tarquini was entitled to 
$33,985.53 in commissions under her express contract, and was 
not entitled to quantum meruit recovery because the express 
contract governed the parties’ relationship.  Based on its 
earlier ruling granting Tarquini’s motion in limine, the 
circuit court refused to consider NDI’s defenses to the EPA 
claim and awarded Tarquini $6,867.04 on the EPA claim, plus an 
equal amount of liquidated damages.  At a later hearing, the 
parties presented expert testimony and argument on the issue of 
attorneys’ fees and costs due Tarquini pursuant to the EPA.  
 
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The circuit court awarded Tarquini $116,282.50 in attorneys’ 
fees and $8,478.55 in costs on her EPA claim.  NDI appeals. 
Facts 
 
Tarquini interviewed for a position as a design and sales 
consultant with NDI, a homebuilding company, in 2005.  NDI 
offered Tarquini a commission of 2.12% of her total sales and 
stated that commissions would be paid in accordance with the 
construction draw schedule.  Tarquini accepted the position and 
was paid commissions at this rate.  However, other design and 
sales consultants previously hired by NDI, both male and 
female, were paid commissions of 2.25%. 
In 2007, Tarquini was terminated by NDI and was not paid 
commissions for certain sales she had secured, although work on 
these construction projects was substantially completed prior 
to her termination.  Tarquini retained counsel, and NDI sent 
Tarquini’s attorney a check in the amount of approximately 
$33,985.00, representing what it believed it owed in 
commissions.  Tarquini did not accept the check and filed this 
action. 
Analysis 
 
NDI argues that the circuit court erred in granting 
Tarquini’s motion in limine and preventing NDI from presenting 
evidence of its gender-neutral compensation system at trial.  
It asserts that it was not necessary for NDI to affirmatively 
 
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plead its gender-neutral compensation system as a defense 
because the EPA specifically sets forth such a compensation 
system as a defense.  NDI claims that it was not required to 
expressly plead any of the four enumerated statutory defenses, 
and that this Court has held that there is no requirement to 
affirmatively plead a defense that is evident from the subject 
of an action. 
NDI submits that the requirement that affirmative defenses 
be pled exists to prevent surprise or prejudice at trial, and 
that long before trial Tarquini was aware that NDI sought to 
present evidence of a gender-neutral compensation system in 
defense of her EPA claim.  According to NDI, no prejudice would 
have resulted from the presentation of such evidence. 
Tarquini replies that the circuit court properly granted 
her motion in limine because NDI failed to affirmatively plead 
its statutory defenses under the EPA.  She claims that it is 
well-established under Virginia law that affirmative defenses 
must be pled to prevent unfair surprise or prejudice at trial, 
and although this Court has not considered whether the EPA 
statutory defenses must be explicitly pled, federal courts have 
determined that they are affirmative defenses.  Thus, Tarquini 
argues, NDI’s failure to properly plead its affirmative 
defenses resulted in a waiver of those defenses, and that the 
 
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waiver was not excused by Tarquini’s awareness that such 
defenses were possible. 
 
 Whether the statutory defenses set forth in the EPA are 
affirmative defenses is a pure question of law that this Court 
reviews de novo.  See, e.g., Moreau v. Fuller, 276 Va. 127, 
133, 661 S.E.2d 841, 844-45 (2008).  This standard likewise 
applies to the determination of whether any such affirmative 
defenses would be waived if not pled.  See id.  These are 
questions of first impression. 
 
The EPA prohibits employers from discriminating on the 
basis of gender: 
No employer having employees subject to any 
provisions of this section shall discriminate, within 
any establishment in which such employees are 
employed, between employees on the basis of sex by 
paying wages to employees in such establishment at a 
rate less than the rate at which he pays wages to 
employees of the opposite sex in such establishment 
for equal work on jobs the performance of which 
requires equal skill, effort, and responsibility, and 
which are performed under similar working conditions, 
except where such payment is made pursuant to (i) a 
seniority system; (ii) a merit system; (iii) a system 
which measures earnings by quantity or quality of 
production; or (iv) a differential based on any other 
factor other than sex . . . . 
29 U.S.C. § 206(d)(1)(emphasis added). 
 
“To make out a prima facie case under the EPA, the burden 
falls on the plaintiff to show that the skill, effort and 
responsibility required in her job performance are equal to 
those of a higher-paid male employee.”  Wheatley v. Wicomico 
 
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Cnty., 390 F.3d 328, 332 (4th Cir. 2004).  Upon the plaintiff 
establishing a prima facie case, “the burden then shifts to the 
employer to prove, by a preponderance of evidence, that the pay 
differential is justified by the existence of one of the four 
statutory exceptions set forth in § 206(d)(1):  (1) a seniority 
system, (2) a merit system, (3) a system that measures earnings 
by quantity or quality of production, or (4) a differential 
based on any factor other than sex.”  Strag v. Board of Trs., 
55 F.3d 943, 948 (4th Cir. 1995).  If the employer successfully 
bears this burden, the plaintiff’s claim fails unless she is 
able to rebut the employer’s evidence.  Id. 
This case presents an instance in which application of 
reverse-Erie doctrine1 is appropriate:  a federal statutory 
cause of action brought for trial in state court.  This Court 
therefore applies federal substantive law and must determine 
whether Virginia procedural law governs the procedural aspects 
of the federal statutory cause of action. 
 
The federal law applicable in this case is the EPA.  
Whether the four enumerated exceptions to the statutory 
                     
1 Erie doctrine is the principle under which federal courts 
sitting in cases of diversity jurisdiction apply state 
substantive law and federal procedural law.  See Hanna v. 
Plumer, 380 U.S. 460, 473-74 (1965); Erie R. Co. v. Tompkins, 
304 U.S. 64, 78-79 (1938).  Reverse-Erie doctrine involves the 
application of state procedural law to federal substantive 
causes of action in state court.  See Felder v. Casey, 487 U.S. 
131, 151 (1988). 
 
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provisions are affirmative defenses is likewise a matter of 
federal substantive law.  See Blair v. Manhattan Life Ins. Co., 
692 F.2d 296, 299 (3d Cir. 1982) (“‘The question of which party 
bears the burden of proof in a diversity case ordinarily is a 
matter of substantive law within the meaning of Erie R. Co. v. 
Tompkins, 304 U.S. 64 (1938), and so is governed by state law.  
In such a case, the district court is obligated to determine 
the burden of proof in accordance with the law of the forum 
state . . . .’” (quoting DeMarines v. KLM Royal Dutch Airlines, 
580 F.2d 1193, 1200 (3d Cir. 1978))) (internal citations 
omitted).  The Supreme Court of the United States and other 
federal courts have categorized the EPA defenses as 
affirmative.  See, e.g., County of Washington v. Gunther, 452 
U.S. 161, 169 (1981) (“The Equal Pay Act is divided into two 
parts:  a definition of the violation, followed by four 
affirmative defenses.”); Corning Glass Works v. Brennan, 417 
U.S. 188, 196-97 (1974); Brinkley-Obu v. Hughes Training, Inc., 
36 F.3d 336, 344 (4th Cir. 1994) (“The defendant must prove one 
of four affirmative defenses to avoid liability.”).  We 
therefore hold that the enumerated EPA statutory defenses are 
affirmative defenses in accordance with federal law. 
Under Erie, in federal diversity actions substantive state 
law determines whether a defense is affirmative.  The Federal 
Rules of Civil Procedure “provide the manner and time in which 
 
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defenses are raised and when waiver occurs . . . .”  Arismendez 
v. Nightingale Home Health Care, Inc., 493 F.3d 602, 610 (5th 
Cir. 2007) (citation omitted).   The inverse is true in cases 
where state courts apply federal substantive law, subject to 
certain constraints.  See Felder, 487 U.S. at 150 (“Federal law 
takes state courts as it finds them only insofar as those 
courts employ rules that do not ‘impose unnecessary burdens 
upon rights of recovery authorized by federal laws.’” (quoting 
Brown v. Western Ry. Co., 338 U.S. 294, 298-99 (1949))). 
“Just as federal courts are constitutionally obligated to 
apply state law to state claims, so too the Supremacy Clause 
imposes on state courts a constitutional duty ‘to proceed in 
such manner that all the substantial rights of the parties 
under controlling federal law [are] protected.’”  Id. (quoting 
Garrett v. Moore-McCormack Co., 317 U.S. 239, 245 (1942)).  
Thus, federal substantive law is applied under state procedural 
rules to the extent that the state rules do not interfere with 
the consistent operation of federal law.  Id. at 151.  This 
Court must determine the procedural law applicable to the 
pleading of the EPA affirmative defenses in Virginia courts. 
The Virginia rules concerning the pleading of affirmative 
defenses are not expressly preempted by federal statute.  There 
is no statute-specific or blanket federal provision that could 
have been intended to apply to the pleading of the EPA 
 
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affirmative defenses, save Rule 8(c) of the Federal Rules of 
Civil Procedure.  The Commonwealth has a discrete interest in 
controlling litigation conducted in its courts under consistent 
rules, and we hold that application of Virginia pleading 
standards to the EPA affirmative defenses would not lead to a 
substantial difference in outcomes of state and federal EPA 
actions.  Therefore, we will apply Virginia procedural law 
concerning the pleading of affirmative defenses in EPA actions 
brought in Virginia courts. 
In doing so, this Court necessarily looks to the 
procedural pleading principles articulated in Monahan v. Obici 
Med. Mgmt. Servs., 271 Va. 621, 628 S.E.2d 330 (2006).  See 
Chesapeake & Ohio Ry. Co. v. Meadows, 119 Va. 33, 43, 89 S.E. 
244, 247 (1916) (applying Virginia procedure in FELA matter).  
Our jurisprudence has long “required that a party raise 
specific defenses (just as a plaintiff must give notice of 
claims) so that surprise and prejudice at trial from late 
revelation of unanticipated legal theories is avoided.”  
Monahan, 271 Va. at 632, 628 S.E.2d at 336.  “This has 
generally led to a requirement that affirmative defenses must 
be pled in order to be relied upon at trial.”  Id. 
 
This Court, however, has found exceptions to the general 
requirement that affirmative defenses be pled, including:  (1) 
where the issue addressed by the affirmative defense was not 
 
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disclosed in the plaintiff’s pleading; (2) where the 
affirmative defense is not an absolute bar to recovery; and (3) 
where the affirmative defense is “addressed by statute.”  Id. 
at 632-34, 628 S.E.2d at 336-37.  The affirmative defense at 
issue in Monahan was mitigation of damages, and in holding that 
the defense need not be specifically pled, this Court noted 
that “we express no opinion as to the specific pleading of any 
other affirmative defense.”  Id. at 634 n.11, 628 S.E.2d at 337 
n.11. 
Traditional affirmative defenses or special pleas that 
constitute an absolute bar to recovery include “statute of 
limitations, absence of proper parties, res judicata, usury, a 
release, prior award, infancy, bankruptcy, denial of 
partnership, bona fide purchaser, and denial of an essential 
jurisdictional fact alleged in the bill.”  Id. at 634, 628 
S.E.2d at 337.  The requirement that most such defenses be 
specifically pled arises from their collateral nature.  Where a 
defendant seeks to rely upon an affirmative defense not 
apparent from the allegations pled and unrelated to the 
elements of a plaintiff’s cause of action, that affirmative 
defense must be pled to avoid unfair surprise or prejudice to 
the plaintiff. 
Unlike traditional affirmative defenses, the EPA 
“affirmative defenses” are specifically listed as exclusions in 
 
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the statute that creates the cause of action.  The affirmative 
defenses are broad and include the general defense that the 
plaintiff was not discriminated against on the basis of gender.  
29 U.S.C. § 206(d)(1). 
The EPA does not on its face require that its affirmative 
defenses be pled.  See id.; cf. Jones v. Jones, 249 Va. 565, 
571-72, 457 S.E.2d 365, 369 (1995) (noting that the affirmative 
defense of the statute of limitations must be pled, per the 
statute).  Because the EPA defenses are stated in the statute 
creating the cause of action, and include any defense that the 
differential is based on a factor other than gender, the 
plaintiff is put on notice of the assertion of an affirmative 
defense when the defendant denies that any pay differential is 
based on gender.  In such an instance, there is little risk of 
prejudice or surprise resulting from not also requiring the 
pleading of an affirmative general defense. 
In this matter, for example, NDI’s answer denied 
Tarquini’s allegation that she was paid less because of her 
gender, putting her on notice of its defense.  Tarquini 
undisputedly acquired knowledge of NDI’s defense during the 
protracted litigation of the case.  No prejudice resulted from 
NDI generally denying the allegation that Tarquini was paid 
less because of her gender, without also affirmatively pleading 
 
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that it was asserting, as a defense, “a differential based on 
[a] factor other than sex.”  29 U.S.C. § 206(d)(1)(iv). 
We hold that because the four statutory defenses under the 
EPA are express exceptions contained within the statute that 
creates the cause of action, and because in such cases there is 
little risk of prejudice or surprise, Virginia procedural law 
does not require that such EPA affirmative defenses be pled to 
avoid waiver of the right to assert those defenses to the 
claim.  We therefore reverse the circuit court and hold that 
NDI did not waive its right to present evidence regarding its 
defenses to the EPA claim.2 
Conclusion 
Accordingly, for the reasons stated, we will reverse the 
judgment of the circuit court and remand this case for further 
proceedings consistent with this opinion. 
Reversed and remanded. 
                     
2 Given this holding, there is no need to address the issue 
of attorneys’ fees.