Court Opinion

ID: 1030943
Source: CourtListenerOpinion
Date Created: 2013-07-05 08:22:54.833038+00
Date Added: 2024-06-11T09:18:02.900994
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                               No. 08-2062

WILLIAM C. HARDIN, JR.,

                Plaintiff - Appellant,

           v.

BELMONT    TEXTILE   MACHINERY   COMPANY; WALTER  RHYNE,
individually and in his official capacity as a corporate
officer; JEFFREY RHYNE, individually and in his official
capacity as corporate President,

                Defendants - Appellees.

Appeal from the United States District Court for the Western
District of North Carolina, at Charlotte.   Graham C. Mullen,
Senior District Judge. (3:05-cv-00492-GCM)

Argued:   September 23, 2009                 Decided:   December 8, 2009

Before KING and AGEE, Circuit Judges, and James P. JONES, Chief
United States District Judge for the Western District of
Virginia, sitting by designation.

Affirmed in part and reversed           and    remanded    in   part   by
unpublished per curiam opinion.

ARGUED: William Everett Moore, Jr., GRAY, LAYTON, KERSH,
SOLOMON, SIGMON, FURR & SMITH, PA, Gastonia, North Carolina, for
Appellant. George Bryan Adams, III, VAN HOY, REUTLINGER, ADAMS
& DUNN, Charlotte, North Carolina, for Appellees.      ON BRIEF:
Philip M. Van Hoy, VAN HOY, REUTLINGER, ADAMS & DUNN, Charlotte,
North Carolina, for Appellees.
Unpublished opinions are not binding precedent in this circuit.

                                2
PER CURIAM:

      William C. Hardin, Jr., appeals the district court’s orders

disposing of his claims against his former employer, Belmont

Textile    Machinery      Company        (“Belmont”)      and     its     owners     and

officers, Jeffrey and Walter Rhyne.                    Hardin contends that the

district court erred by dismissing or granting summary judgment

as to his claims for (1) wrongful retaliatory discharge under

North Carolina law; (2) common law fraud; (3) wrongful discharge

due to age and disability discrimination; and (4) violation of

North Carolina’s Wage and Hour Act.               Hardin also argues that the

district court erred by not remanding the case to state court

for   resolution    of    his   state     law   claims     after    the    court    had

disposed of his federal claims.

      We   remand   the    case     to    the   district        court   for   further

consideration      of    Hardin’s    claim      that    Belmont    violated        North

Carolina’s Wage and Hour Act by failing to repay his voluntary

salary reductions.         We affirm the district court’s decision as

to Hardin’s other claims.

                                          I.

      Belmont manufactures machines and parts used to twist and

treat yarn.        In 1997 Belmont hired Hardin as an engineering

manager and Hardin rose in the company’s ranks, reaching the

                                           3
position    of     controller       and   vice     president       before    he    was

terminated in 2005.

     Starting in late 2001, the company struggled financially.

Because    of    these    difficulties,       Belmont’s        president,     Jeffrey

Rhyne, met with the company’s salaried employees and asked them

to take a voluntary pay cut beginning in November of 2001.                         The

employees were free to determine whether they wanted to reduce

their salary, and if so, how much.                  Rhyne told employees that

Belmont would repay them if and when the company returned to

profitability.      Hardin voluntarily participated in the requested

salary reduction.

     In    2002,    Hardin     received       a    pay    raise    retroactive      to

November   2001.         Because    the   company        was   still   experiencing

financial difficulties, Rhyne asked Hardin to take an additional

salary    reduction      by   not    receiving      the    money    due     from   the

retroactive raise.        Hardin agreed.          In 2003, Belmont had further

financial difficulties and turned, once again, to its salaried

employees including Hardin for help.                The company again promised

that the reductions would be repaid if and when the company

returned to profitability.

     While Belmont’s financial future became stable in 2005, its

relationship with Hardin turned rocky.                   In July 2005, the firm

fired Hardin, then sixty years old, after it discovered that

Hardin was, among other things, moonlighting for another firm on

                                          4
company time.      Neither Hardin nor any other employees, including

the Rhynes, have been repaid the voluntary salary reductions.

Belmont contends that the conditions of repayment have not yet

been met because the company has not reached “a sufficient level

of profitability.” (Appellees’ Br. 38.)

     In response to his discharge, Hardin sued Belmont and the

Rhynes in state court, and the case was timely removed to the

district   court    below.    The    defendants      then   filed   a   motion    to

dismiss under Federal Rule of Civil Procedure 12(b)(6).                          The

district court dismissed several of Hardin’s claims, including

the claim that his discharge violated a North Carolina statute

that prohibits retaliatory action against a state employee for

reporting, or refusing to carry out, unlawful activity.

     After   completing       discovery,       the     defendants       moved    for

summary judgment on the remaining claims.                   The district court

granted the motion.      In its decision, the court concluded that:

(1) Hardin could not claim protection based on North Carolina’s

whistleblower      statute;    (2)    Hardin    had    failed   to      prove    the

elements of a fraud claim; (3) Hardin had insufficient proof of

age discrimination; and (4) the statute of limitations barred

                                        5
Hardin’s claim for unpaid wages under the North Carolina Wage

and Hour Act. 1

                                             II.

           Our review of a district court’s dismissal for failure to

state a claim is conducted under a de novo standard of review.

Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1998).

In   considering       a   motion       to   dismiss,     the    complaint’s      factual

allegations       must     be   accepted      as   true   and     the   facts    must    be

construed in the light most favorable to the plaintiff.                          Id.

       Our review of a summary judgment order also occurs under a

de novo standard.               Cont’l Airlines, Inc. V. United Airlines,

Inc., 277 F.3d 499, 508 (4th Cir. 2002).                        In such a review, we

must       determine   whether     there     is    a   genuine     dispute   about      any

material facts.          Id.     A grant of summary judgment is improper if

such a dispute exists.            Id.

                                             A.

       Hardin argues that he has a claim for wrongful discharge

based on North Carolina’s public employee whistleblower statute.

We disagree.

       1
       The district court also resolved                         other   claims    against
Hardin, which he has not appealed.

                                              6
      The    North      Carolina       whistleblower             statute      prohibits    the

retaliatory        discharge     of      a    state        employee      who    reports,     or

refuses to carry out, unlawful activity.                            N.C. Gen. Stat. § 126-

85 (2007).         While Belmont is not a state entity and therefore

section     126-85      does     not     by         its     terms     apply    to     Hardin’s

employment, he argues that the “public policy” created by the

statute     may    serve    as     the       basis        for   a    common    law    wrongful

discharge       claim      under       state         law,       applicable      to    private

employment.

      We agree with the district court that the limited public

policy exceptions recognized by North Carolina law to the at-

will employment doctrine do not include the state whistleblower

statute, since there is no indication that its protections were

intended to apply to the public generally.                           See Buser v. S. Food

Serv., Inc., 73 F. Supp. 2d 556, 566 (M.D.N.C. 1999).

                                               B.

      The district court also correctly determined that Hardin

was   unable      to    prove    under       North        Carolina      law    that   Belmont

committed fraud.

      To prove common law fraud, a plaintiff must demonstrate

that:     (1)     the   defendant        made       a     false      representation     of    a

material fact; (2) the defendant knew that the statement was

false at the time of utterance; (3) the defendant made the false

statement with the intention that the plaintiff would act upon

                                                7
it; (4) the plaintiff acted upon the false statement; and (5)

the plaintiff suffered injury.            See Myers & Chapman v. Thomas G.

Evans, Inc., 374 S.E.2d 385, 391 (N.C. 1988).

     There is no evidence that Jeffrey Rhyne misrepresented any

material    facts   when   he    asked    employees      to   voluntarily      forgo

salaries because the firm was broke.                 Hardin, Rhyne, and other

company    officials    testified      that    the     company   faced     a   bleak

financial     outlook   in      2001   and     2002,     when    the   reductions

occurred.      Hardin   agreed     that      when    Rhyne    made   the   request,

Hardin knew the salary contributions were necessary to avoid

additional layoffs and to prevent the firm from closing.                        The

company’s financial statements corroborated this testimony.

     Rhyne’s     repayment       promise      cannot     constitute        a   false

representation of a material fact because there is no evidence

that Rhyne intended to break the promise when he asked employees

for help.     Hardin conceded in his deposition testimony that when

Rhyne asked for the salary reduction Rhyne intended to repay the

money when the firm became profitable.                  Hardin also testified

that he understood his contribution was “a risky loan” and that

it was possible the company would never be able to repay him.

(J.A. 177.)

                                         8
     Based on these undisputed facts, we conclude the district

court did not err by concluding that Hardin failed to establish

a prima facie case of fraud. 2

                                                  C.

     We       also    uphold        the    district          court’s    grant    of    summary

judgment against Hardin on his claim of wrongful discharge on

account of his age and disability.

     In       North    Carolina,          employees          discriminated      against      may

pursue a wrongful discharge cause of action against an employer

based    on    the     North      Carolina        Equal       Employment     Practices       Act

(“EEPA”), N.C. Gen. Stat. § 143-422.2 (2007). Wrongful discharge

claims    asserted          under    the    EEPA       are    analyzed     under      the   same

burden-shifting scheme as federal discrimination statutes.                                  N.C.

Dep’t of Corr. v. Gibson, 301 S.E.2d 78, 82–84 (N.C. 1983).

     If a plaintiff has no direct evidence of discrimination, he

may establish a prima facie case of discrimination.                                   McDonnell

Douglas Corp. v. Green, 411 U.S. 792, 802-04 (1973).                               To do so,

a plaintiff must demonstrate: “(1) that he is a member of a

protected class; (2) that he suffered from an adverse employment

action;   (3)        that    at     the    time       the    employer   took    the    adverse

employment action he was performing at a level that met his

     2
         The district court alternatively concluded that the
statute of limitations barred Hardin’s fraud claim. Because of
our holding, it is unnecessary to address this issue.

                                                  9
employer's legitimate expectations; and (4) that the position

was    filled       by   a    similarly    qualified        applicant     outside     the

protected class.”            King v. Rumsfeld, 328 F.3d 145, 149 (4th Cir.

2003).       Whether an employee is performing at a level that meets

legitimate expectations is based on the employer’s perception.

Id.

       We agree with the district court that Hardin’s claim of

wrongful      discharge       fails   because      he   has    no   direct    proof    of

discrimination and his allegations do not create a prima facie

case.

       Hardin       agreed    that    no   “age-related       comments”      were    made

about him during his employment (J.A. 274) and because any such

direct proof of discrimination is lacking, Hardin must create a

prima facie case under the McDonnell Douglas standard.                              King,

328 F.3d at 149.             Hardin’s proof must show, among other things,

that    at    the    time     of   termination,     Belmont     officials        believed

Hardin met the company’s legitimate work expectations and that

Belmont replaced Hardin with someone outside of the protected

classification.          Hardin failed to establish either element.

       The    record     contains     ample      evidence     showing     that    Belmont

officials       thought       Hardin’s     performance        was   sub    par.       For

example, Hardin was terminated because he worked for another

firm while on the clock for Belmont.                    Hardin’s subordinates had

lodged complaints about his abrasive demeanor and poor attitude.

                                            10
And, while working for Belmont as a corporate officer, Hardin

usurped a business opportunity for Belmont by secretly working

for a third party with which Belmont hoped to contract.

     From     this       evidence      Belmont’s         opinion   as        to    Hardin’s

performance       is   clear     --    Hardin      did    not   meet    the       company’s

reasonable expectations.

     Moreover, the record is devoid of evidence showing that

Belmont   replaced       Hardin       with   a    worker    outside     the       protected

class.    In fact, officials testified that the company absorbed

his position and used a part-time contractor to perform some of

the work.

     Hardin also asserted a claim directly under the federal Age

Discrimination in Employment Act, 29 U.S.C.A. §§ 621-634 (West

2008).      For    the    same    reasons        outlined   above,      we    agree   that

summary judgment was also appropriate as to this claim.

                                             D.

     Hardin contends that under North Carolina’s Wage and Hour

Act (the “Act”), Belmont owes Hardin the wages he contributed in

the voluntary salary reductions.                  Specifically, the Act requires

an employer to pay all wages when due, N.C. Gen. Stat. § 95-25.6

(2007), and, once an employee leaves the company for any reason,

no later than the next regular payday, N.C. Gen. Stat. § 95-25.7

(2007).

                                             11
       The    district     court    concluded    that     the     Act’s     two-year

statute      of   limitations,     N.C.   Gen.   Stat.    §   95-25.22(f)(2007),

barred this claim.          On appeal, Hardin argues two points.                 First,

Hardin contends that his claim under section 95-25.7 could have

accrued only after his termination.                 Hardin also asserts that

the district court erred by basing its conclusion upon his one

deposition answer as to when Belmont regained profitability.                        We

agree with Hardin that his claim is not barred by the statute of

limitations.

       The district court held that the statute of limitations had

run    because     it    found   that   Hardin   believed     that    Belmont      had

returned to profitability and thus owed him the return of his

voluntary salary reductions long before he was terminated.                         The

district court relied on language in Hamilton v. Memorex Telex

Corp., 454 S.E.2d 278, 282 (N.C. Ct. App. 1995), a case also

involving a claim for unpaid wages under the Act, in determining

that   Hardin’s     claim    was   time   barred.    In   Hamilton,        the   North

Carolina Court of Appeals upheld a trial court’s conclusion that

a plaintiff’s claim for paid vacation time was not barred by the

statute of limitations because his claim under the Act did not

accrue    until     he   left    employment.     Id.      While      the   court     in

Hamilton noted that “[t]he statute begins to run on the date the

promise is broken” –- language cited by the district court –- it

also pointed out that “[i]n no event can the limitations period

                                          12
begin to run until the injured party is at liberty to sue.” Id.

(quoting Glover v. First Union Nat’l Bank of N.C., 428 S.E.2d

206, 208 (N.C. Ct. App. 1993)).

      At least one of Hardin’s contentions is premised on the

Act’s obligation to pay all wages due once employment ends. He

had   no   cause   of    action   under      section   95-25.7     until   Belmont

refused to pay him the voluntary salary reductions after he was

fired.       Since Hardin was terminated in June of 2005 and this

suit was filed in October of that year, the action was properly

instituted within the two-year limitations period.

      Hardin also argues that even under the district court’s

view of when his cause of action accrued, it erred in relying

upon a single answer from his deposition as the basis for the

conclusion     that     the   statute   of    limitations     barred    his   wage

claim.

      During his December 2006 deposition, Hardin testified that

Rhyne had pledged to return the voluntary salary reductions once

the   firm    became    profitable.       While     looking   at    a   financial

spreadsheet dated June 1, 2005, Hardin stated that the company

had   become    profitable     three    and    a   half   years    earlier.     At

another point in the deposition, however, Hardin indicated that

the company had reached minimal profitability in March 2004,

which corresponded with Rhyne’s deposition testimony.

                                        13
     Using       the    district    court’s       interpretation     of     Hardin’s

answer the cause of action would have accrued about December

2001, or, three and a half years prior to June 2005.                          Hardin

claims     his    deposition       answer        meant   the    company     regained

profitability three and a half years before the December 2006

deposition, in June 2003, the first quarter of the 2004 fiscal

year.

     Hardin’s      explanation      about     his    deposition    answer    is   not

entirely    satisfactory.          But   the      record   is   otherwise     clear.

Several company officials testified that the 2004 fiscal year,

which ended on March 31, 2004, was the first time since 2000

that the company had earned a profit.                      Hardin filed suit on

October 25, 2005, within two years after this milestone.

     For these reasons, we find that the district court erred in

determining      that    the   statute      of    limitations     barred    Hardin’s

claim under the North Carolina Wage and Hour Act. 3

     3
       Belmont argues that the Act does not apply to Hardin’s
claim because the voluntary salary reductions do not qualify as
wages under the statutory definition. However, the statute
broadly defines wages to include “other amounts promised when
the employer has a policy or a practice of making such
payments,” N.C. Gen. Stat. § 95-25.2(16) (2007), which would
include Hardin’s claim.

     Of course, Belmont contends that the voluntary salary
reductions are not yet due because the company has not obtained
“sufficient” profitability to pay them. The correct construction
of Belmont’s promise and whether it has been broken are issues
for determination after remand.

                                         14
                                              E.

        Hardin’s   last       assignment      of     error      is    that      the     district

court    should    have       remanded    the      state     claims        to     state    court

instead of dismissing them after the court had dismissed his

federal claims.

        Federal courts may have supplemental jurisdiction over a

state cause of action if both the state and federal claims arise

from the same transaction or occurrence.                             28 U.S.C.A. § 1367

(West 2006); UMWA v. Gibbs, 383 U.S. 715, 725 (1966).                                        The

supplemental       jurisdiction          doctrine        “indicates             that     federal

courts generally have discretion to retain or dismiss state law

claims     when    the    federal      basis       for     an    action         drops     away.”

Shanaghan v. Cahill, 58 F.3d 106, 109 (4th Cir. 1996).                                    Once a

trial     court    extinguishes        all     federal       claims,         it    has     broad

discretion in deciding whether to retain jurisdiction. Id. at

110.

       The federal issues before the district court were closely

connected to Hardin’s state claims.                        And, the district court

also had a long and close familiarity with the facts.                                      Given

these    circumstances,         the    district       court          did   not     abuse     its

discretion    when       it    ruled     on    all    of     the       issues      raised     by

Belmont’s summary judgment motion.

                                              15
                              III.

     For   the   foregoing   reasons,    the   district    court’s

determination as to Hardin’s unpaid wage claim is reversed and

that claim is remanded for further proceedings. The district

court’s judgment as to the remaining claims is affirmed.

                                              AFFIRMED IN PART AND
                                     REVERSED AND REMANDED IN PART

                               16