Court Opinion

ID: 4434037
Source: CourtListenerOpinion
Date Created: 2019-08-28 17:00:32.888431+00
Date Added: 2024-06-11T14:53:01.783938
License: Public Domain

In the

    United States Court of Appeals
                 For the Seventh Circuit
                     ____________________
No. 18-2753
MARTIN CHAIDEZ, et al.,
                                                Plaintiffs-Appellants,
                                 v.

FORD MOTOR COMPANY, et al.,
                                               Defendants-Appellees.
                     ____________________

         Appeal from the United States District Court for the
           Northern District of Illinois, Eastern Division.
           No. 1:17-cv-03244 — Charles R. Norgle, Judge.
                     ____________________

     ARGUED MAY 23, 2019 — DECIDED AUGUST 28, 2019
                ____________________

   Before BAUER, MANION, and BRENNAN, Circuit Judges.
    MANION, Circuit Judge. The plaintiﬀs, on behalf of them-
selves and those similarly situated, allege a racially discrimi-
natory hiring scheme that has resulted in a lack of Hispanic
and Latino line workers at Ford Motor Company’s Chicago
assembly plant. The district court dismissed the suit for fail-
ure to exhaust administrative remedies, holding the plaintiﬀs’
claims were not “like or reasonably related to” the claims as-
serted in their EEOC charges. Because we conclude that the
2                                                             No. 18-2753

claims included in Count II of the plaintiﬀs’ complaint were
properly exhausted before the EEOC, we vacate the district
court’s dismissal of Count II and remand for further proceed-
ings. We also modify the district court’s dismissal of Count I
to be without prejudice.
                            I. Background
   The seven named plaintiﬀs are Hispanic or Latino individ-
uals who applied for employment as line workers at Ford’s
Chicago assembly plant near Harvey, Illinois, but were not
hired. Allan Millender is a black Ford employee and the
Chairman of the United Auto Workers union for the Chicago
plant. The plaintiﬀs allege a conspiracy between Millender,
the staﬀ of the Harvey unemployment oﬃce, and unknown
Ford employees. This claimed conspiracy ensured the Chi-
cago plant predominantly hired black employees to the exclu-
sion of Hispanic and Latino applicants, allegedly because Mil-
lender believed black employees would be more likely to sup-
port him in his role as a union leader. This resulted in a pre-
dominantly black workforce at the plant and a dearth of His-
panic and Latino workers, despite a sizable minority of His-
panic and Latino people in the surrounding area.1
    The complaint alleges line workers at the Chicago plant
are hired exclusively through the Harvey unemployment of-
fice. The oﬃce collects application forms from individuals

1 The plaintiffs allege in their complaint that “[t]he lack of Hispanic or La-

tino workers is not consistent with the racial demographics of the areas
surrounding the Ford plant.” In their EEOC charges, they more specifi-
cally allege “Local towns boast the following Hispanic populations: Ham-
mond, Indiana (34%), Calumet City, Illinois (15%), Dixmoor, Illinois
(46.6%), Midlothian, Illinois (20%), Harvey, Illinois (19%).”
No. 18-2753                                                                   3

interested in applying for line worker positions at the Chicago
plant. These forms are then sent to Ford, which compiles the
information and forwards it to Aon Consulting, a third-party
firm that administers a variety of pre-employment tests. One
test Aon administers is a basic skills test. Applicants who pass
the required pre-employment tests, a drug test, and a back-
ground check are sent back to Ford to move forward in the
hiring process.
   The plaintiﬀs claim the actual operation of this hiring pro-
cess, under Millender’s influence and control, is discrimina-
tory against Hispanic and Latino applicants. In February
2016, the named plaintiﬀs each filed an EEOC charge, alleging
they were denied employment with Ford based on their race.2
These charges were largely, though not entirely, identical.
Each alleged Millender established a discriminatory hiring
process, setting forth the following allegations:
    (1) Hispanic and Latino applicants are intentionally dis-
        criminated against, or disparately impacted, by the
        pre-employment basic skills test;
    (2) Even those Hispanic and Latino applicants that do
        pass this test are discriminated against by having their
        applications “stalled in some other way;”
    (3) Those Hispanic or Latino applicants who are consid-
        ered by Ford are rarely, if ever, hired; and finally
    (4) Several non-Hispanic and non-Latino applicants have
        been hired without taking the basic skills test.

2Each charge indicates the complainant was represented by counsel from
Bizzieri Law Offices at the time of filing. The plaintiffs are still represented
by counsel from that firm in this appeal, in addition to other attorneys.
4                                                    No. 18-2753

    Only one plaintiﬀ (Stephanie Galan) alleged she person-
ally “took a pre-employment basic skills test.” The others
simply alleged they filled out a pre-application questionnaire
and were either never contacted or not ultimately hired. None
of the charges alleged the plaintiﬀs were prevented from tak-
ing the basic skills test, or that their contact information was
destroyed or mishandled by the unemployment oﬃce staﬀ or
not forwarded to Aon by Ford. Instead, each charge (even
those of the plaintiﬀs who did not allege they took the basic
skills test) included the following allegation: “By agreement
with the Harvey unemployment oﬃce, Hispanic applicants
are allowed to apply and take pre-employment tests, but
rarely pass basic skills testing.” Thus, the focus of the charges
was on the discriminatory impact or administration of the
basic skills test, or the intentional stalling of the applications
of and/or refusal to hire those applicants who passed the test.
    The plaintiﬀs each received “Right to Sue” letters from the
EEOC in January 2017. They commenced this case in federal
court in April 2017, seeking to certify it as a class action. They
set forth two claims under Title VII: disparate treatment
(Count I) and disparate impact (Count II). The complaint con-
tained allegations supporting two alternative theories of dis-
crimination: “Either the pre-employment testing creates an
impermissibly adverse impact on Hispanics and/or Latinos,
or Ford itself is excluding those of Hispanic and/or Latino de-
scent from being processed for hire.”
   Paragraphs 22–32 contain allegations supporting the first
theory: “the pre-employment testing creates an
No. 18-2753                                                     5

impermissibly adverse impact on Hispanics and/or Latinos.”
These paragraphs set forth the following allegations:
   (1) Ford almost exclusively hires line workers through the
       Harvey unemployment oﬃce;
   (2) Most, if not all, of the line workers hired are black;
   (3) The plaintiﬀs each applied for a line worker position
       through the Harvey unemployment oﬃce, and each
       was qualified for such position, but they were not
       hired due to their race;
   (4) Ford’s hiring process results in an almost exclusively
       black workforce; and
   (5) The lack of Hispanic and Latino line workers is incon-
       sistent with local racial demographics.
    Paragraphs 33–44 detail the second theory: “Ford itself is
excluding those of Hispanic and/or Latino descent from being
processed for hire.” More specifically, paragraph 33 describes
this theory as follows: “Alternatively, … the Harvey, Illinois
unemployment oﬃce, at the direction of, and in concert with
Millender, either does not accept, or destroys applications or
contact information forms from Hispanic and/or Latino appli-
cants; does not allow the applicants to take pre-employment
testing, or otherwise interferes with applications of Hispanic
and/or Latino applicants.” Paragraphs 33–44 set forth the fol-
lowing allegations:
   (1) At Millender’s direction, the Harvey unemployment
       oﬃce staﬀ “either do not forward [Hispanic appli-
       cants’ contact information] to Ford for further testing,
6                                                     No. 18-2753

       or interfere in some other way with the application
       process;”
    (2) Hispanic applicants who have submitted information
        forms “are not moved forward in the application pro-
        cess and are never allowed to begin pre-employment
        testing, let alone be hired;” and
    (3) Even if Hispanic applicants are “forwarded to [Ford]
        to be sent for pre-employment testing, … [Ford] fail[s]
        to forward the contact information of [the applicants]
        to its testing facility for hire.”
Thus, the focus of this second theory is on discrimination dur-
ing the application phase prior to testing, caused by the un-
employment oﬃce staﬀ and/or Ford employees preventing
Hispanic or Latino applicants from beginning testing at all.
    In sum, one theory alleges disparate impact caused by the
skills test (the “skills-test disparate impact” theory). The alter-
native theory alleges disparate treatment through pre-test de-
struction of or interference with applications at the unem-
ployment oﬃce, and/or Ford’s prevention of Hispanic or La-
tino applicants from testing at all (the “pre-test discrimina-
tion” theory). Count I (“Title VII-Disparate Treatment”) ex-
pressly relies on the allegations of Paragraphs 33–44 (setting
forth the pre-test discrimination theory). Count II (“Title VII-
Disparate Treatment”) relies on the allegations of Paragraphs
22–32 (setting forth the skills-test disparate impact theory).
    The district court dismissed the complaint in its entirety,
holding the allegations in the complaint were inconsistent
with, and contradictory to, the allegations in the EEOC
charges. The district court focused on the apparent contradic-
tion between the charges’ allegation that “Hispanic applicants
No. 18-2753                                                      7

are allowed to … take pre-employment tests” and the com-
plaint’s allegation that Hispanic applicants “are never al-
lowed to begin pre-employment testing.” Thus, the district
court held the claims in the complaint were not “like or rea-
sonably related to” the claims in the charges. Therefore, the
plaintiﬀs failed to exhaust their administrative remedies. The
court dismissed the entire case on that basis. The plaintiﬀs ap-
peal.
                         II. Discussion
     We review a district court’s decision to dismiss a com-
plaint de novo, accepting as true the complaint’s well-pleaded
allegations and drawing all reasonable inferences in the plain-
tiffs’ favor. Calderon-Ramirez v. McCament, 877 F.3d 272, 275
(7th Cir. 2017).
     The plaintiffs raise three issues on appeal. First, they argue
the district court erred by concluding the complaint’s claims
were not like or reasonably related to the claims made in the
EEOC charges. Second, they assert their complaint states
plausible claims for relief sufficient to survive a Rule 12(b)(6)
motion to dismiss. Third, they contend the district court
abused its discretion by not allowing the plaintiffs to amend
their complaint before dismissal.
   A. Failure to Exhaust Administrative Remedies
    The main issue presented in this case is whether the claims
asserted in the plaintiﬀs’ complaint are like or reasonably re-
lated to the claims they asserted in their EEOC charges. Before
bringing a Title VII claim, a plaintiﬀ must first exhaust his ad-
ministrative remedies by filing charges with the EEOC and
receiving a right to sue letter. Rush v. McDonald’s Corp., 966
F.2d 1104, 1110 (7th Cir. 1992). After doing so, a plaintiﬀ filing
8                                                       No. 18-2753

suit in federal court “may bring only those claims that were
included in her EEOC charge, or that are ‘like or reasonably
related to the allegations of the charge and growing out of
such allegations.’” Geldon v. S. Milwaukee Sch. Dist., 414 F.3d
817, 819 (7th Cir. 2005). This requirement has two purposes:
first, it allows the EEOC and the employer an opportunity to
settle the matter, and second, it ensures that the employer has
adequate notice of the conduct the employee is challenging.
Teal v. Potter, 559 F.3d 687, 691 (7th Cir. 2009).
    Claims are “like or reasonably related” when (1) “there is
a reasonable relationship between the allegations in the
charge and the claims in the complaint” and (2) “the claim in
the complaint can reasonably be expected to grow out of an
EEOC investigation of the allegations in the charge.” Cheek v.
W. & S. Life Ins. Co., 31 F.3d 497, 500 (7th Cir. 1994). The charge
and complaint “must, at minimum, describe the same conduct
and implicate the same individuals.” Id. at 501 (emphasis in
original). A plaintiﬀ cannot bring a new claim that is “incon-
sistent with” the claim in his EEOC charge, even if the new
claim “involves the same parties and the same facts as the
other claim.” Miller v. Am. Airlines, Inc., 525 F.3d 520, 526 (7th
Cir. 2008). The fact that the charge and complaint generally
assert the same kind of discrimination is not suﬃcient, with-
out some factual relationship between them. Cheek, 31 F.3d at
501.
   Determining whether the complaint and the EEOC
charges contain claims that are “like or reasonably related to”
each other requires a careful examination and comparison of
the charges and the complaint.3 Because the charges and

3Generally, a court must read the claims in the EEOC charge liberally,
because such charges are often initiated by laypersons rather than
No. 18-2753                                                          9

complaint must, “at minimum, describe the same conduct and
implicate the same individuals,” Cheek, 31 F.3d at 501 (empha-
sis added), we begin by focusing on the conduct described
and individuals implicated in each.
    When the plaintiﬀs submitted their charges to the EEOC,
they identified a specific discriminatory scheme: Hispanic
and Latino applicants are made to take a basic skills test that
at least some other applicants are not required to take, and
those who pass this testing phase are thereafter stalled by
Ford employees during the hiring process or simply not hired.
The charges each alleged Hispanic and Latino individuals are
allowed to begin testing, indicating the discrimination occurs
either through the testing itself or thereafter. The fact that six
of the seven plaintiﬀs did not allege they proceeded to testing
does not change the clear focus of the express allegations on
the test and post-test hiring process. The conduct of which
Ford was notified, and of which the EEOC and Ford had an
opportunity to seek settlement, was focused on the test and
the post-test hiring process.
    Furthermore, the only persons implicated in the charges
were Ford and Millender. Although the charges mentioned
the unemployment oﬃce multiple times, they only assert that
Ford hires almost exclusively through the unemployment of-
fice and that the oﬃce, by agreement, allows Hispanic and La-
tino applicants to begin testing. The charges contain no

lawyers. Teal, 559 F.3d at 691. However, where the plaintiff was repre-
sented by counsel when the EEOC charge was filed, “the argument for
liberal construction” is “weaken[ed].” Id. That is the case here.
10                                                         No. 18-2753

allegation of misconduct attributable to the unemployment
oﬃce.4
    Next, we turn to the claims and allegations of the plain-
tiﬀs’ complaint. In Count I of the complaint, the plaintiﬀs
claim a scheme of discrimination that focuses on the pre-test
application process, including new claims that Hispanic and
Latino applicants’ contact information is destroyed or inter-
fered with by employees at the Harvey unemployment oﬃce.
Count I alleges Hispanic and Latino applicants “are never al-
lowed to begin pre-employment testing.” This was not the
misconduct of which the EEOC charges placed Ford on notice
or provided an opportunity for settlement. As we stated in
Rush v. McDonald’s Corp.:
     An aggrieved [plaintiﬀ] may not complain to the EEOC
     of only certain instances of discrimination, and then
     seek judicial relief for diﬀerent instances of discrimina-
     tion. This limitation … gives the employer some warn-
     ing of the conduct about which the [plaintiﬀ] is ag-
     grieved, and it aﬀords the agency and the employer an
     opportunity to attempt conciliation without resort to
     the courts.
966 F.2d at 1110.

4 The most accusatory statement leveled against the unemployment office

in the charges is that “Mr. Millender’s agreement with the Harvey unem-
ployment office has ensured a gross underrepresentation of Hispanic
workers at Ford.” But the “agreement” referenced is the agreement to al-
low Hispanic and Latino applicants to apply and begin testing. Even con-
struing the charges liberally and drawing all reasonable inferences in the
plaintiffs’ favor, this statement can, at most, be understood to mean the
unemployment office was involved in allowing Hispanic applicants to
take a test that resulted in a disparate impact.
No. 18-2753                                                  11

    The plaintiﬀs are not saved by the charges’ allegation that
applications are in some instances “stalled in some other
way.” The charges alleged it was only “in the event that His-
panic applicants do pass basic skills testing” that their appli-
cations are “stalled in some other way.” Thus, this allegation
can only be understood to refer to the post-test hiring process
at Ford. The plaintiﬀs cannot use this single sentence to shoe-
horn into their EEOC charges new claims about pre-test mis-
handling of applications at the unemployment oﬃce.
    However, Count II describes conduct that is consistent
with the conduct described in the charges. Count II alleges a
disparate impact upon Hispanic and Latino applicants caused
by the skills test. By comparison, the charges also alleged, in
part, that the basic skills test caused a disparate impact on
Hispanic and Latino applicants. Count II implicates the same
individuals as the charges: Ford and Millender. Like the
charges, Count II only references the unemployment oﬃce’s
role in the hiring process generally, and that Ford hires line
workers almost exclusively through that oﬃce. The claims
and allegations included in Count II are consistent with the
claims and allegations in the charges.
    In sum, Count I’s new claims of pre-test discrimination are
not included in the EEOC charges. They are, at best, incongru-
ent with the allegations made in the charges (at worst, directly
contradictory). Thus, the claims are not “like or reasonably re-
lated” to the claims in the EEOC charges, and the district court
properly dismissed them on that basis. See Miller, 525 F.3d at
526. However, the complaint expressly asserts the pre-test dis-
crimination as an “alternative” theory. Count II asserted a
claim that was included in the EEOC charges: namely, the dis-
parate impact of the basic skills test. That claim was properly
12                                                   No. 18-2753

exhausted before the EEOC, and therefore Count II should
not have been dismissed.
     B. Adequacy of the Complaint
    Because the district court dismissed the suit for failure to
exhaust administrative remedies, the court did not address
whether the complaint stated plausible claims for relief suﬃ-
cient to survive a 12(b)(6) motion. However, we may aﬃrm
the judgment on any basis within the record. Rocha v. Rudd,
826 F.3d 905, 909 (7th Cir. 2016). Ford urges us to hold, in the
alternative to holding that the plaintiﬀs failed to exhaust their
administrative remedies, that the plaintiﬀs failed to state
plausible claims for relief.
    To survive a motion to dismiss, a plaintiﬀ must “state a
claim to relief that is plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). Since we aﬃrm the dismis-
sal of Count I, we focus only on the adequacy of the plaintiﬀs’
Count II disparate-impact claim. To plausibly state a dispar-
ate-impact claim under Title VII, a plaintiﬀ must demonstrate
the defendant has established an employment practice that
causes a disparate impact “on the basis of race, color, religion,
sex, or national origin.” Adams v. City of Indianapolis, 742 F.3d
720, 730–31 (7th Cir. 2014) (quoting 42 U.S.C. § 2000e-
2(k)(1)(A)(i)). Unlike a disparate-treatment claim, a disparate-
impact claim does not require the plaintiﬀ to show intentional
discrimination, “but the employer may defeat the claim by
showing that the challenged employment practice is job-re-
lated and consistent with business necessity.” Id. at 731. In Ad-
ams v. City of Indianapolis, we stated “[d]isparate-impact plain-
tiﬀs are permitted to rely on a variety of statistical methods
and comparisons to support their claims. At the pleading
No. 18-2753                                                                13

stage, some basic allegations of this sort will suﬃce.” Id. at
733.
    Ford relies on Adams to argue the plaintiﬀs have failed to
state a plausible disparate-impact claim. In Adams, we af-
firmed the dismissal of a “complex disparate-impact case”5
where the complaint “allude[d] to disparate impact in wholly
conclusory terms.” We noted complex-discrimination-claim
plaintiﬀs must plead a higher level of factual specificity, and
yet the complaint in Adams demonstrated “a complete lack of
factual content directed at disparate-impact liability.” Id.
    We note that although the discriminatory conspiracy de-
scribed in Count I is quite complex, Count II’s claim is more
straightforward. It alleges Ford’s pre-employment testing
process has created a racially disproportionate workforce and
a dearth of Hispanic or Latino workers. Count II alleges the
racial makeup of Ford’s workforce “is not consistent with the
racial demographics of the areas surrounding the Ford plant.”
It alleges Ford’s workforce is primarily black and lacks more
than even a small percentage of Hispanic and Latino workers.
It identifies the pre-employment testing process as the em-
ployment practice that has resulted in this disproportionate
lack of Hispanic and Latino line workers. The plaintiﬀs also

5 The disparate impact in Adams was allegedly the result of a complicated
testing process to determine promotion eligibility at the Indianapolis po-
lice and fire departments. The challenged process involved combining
several test scores, an interview, and a personnel file evaluation for each
candidate into a composite score and ranking each candidate according to
those scores, while also allowing for a degree of discretion in promotion
decisions. The plaintiffs alleged that the testing was racially and culturally
biased and that the process had been manipulated. Adams, 742 F.3d at 724–
25.
14                                                   No. 18-2753

attached as exhibits to their complaint several photographs of
the most recent classes of new hires at the Chicago plant as
support for their factual allegations regarding the racial
makeup of Ford’s workforce.
    Ford may present contrary evidence at the summary judg-
ment stage or at trial to show there is no suspect racial dispar-
ity, and the plaintiﬀs, for their part, will need to utilize the
discovery process to support their allegations with statistical
and comparative evidence. Adams, 742 F.3d at 733; Bennett v.
Schmidt, 153 F.3d 516, 519 (7th Cir. 1998); see also Vitug v. Mul-
tistate Tax Com’n, 88 F.3d 506, 513–14 (7th Cir. 1996) (aﬃrming
summary judgment against Title VII disparate-impact claim
where plaintiﬀ failed to provide suﬃcient statistical evidence
to show the challenged employment action had a negative ef-
fect on minority job applicants). Ford may also defeat the
plaintiﬀs’ claim by demonstrating the pre-employment test-
ing process is “job-related and consistent with business neces-
sity.” Adams, 742 F.3d at 731. But the plaintiﬀs’ “basic allega-
tions” regarding the disparity between the racial makeup of
Ford’s workforce and the surrounding area are suﬃcient to
survive a motion to dismiss. Id. at 733.
     C. Denial of Leave to Amend
   Finally, the plaintiﬀs argue the district court abused its
discretion by dismissing the complaint without leave to
amend. It is ordinarily true that “a plaintiﬀ whose original
complaint has been dismissed under Rule 12(b)(6) should be
given at least one opportunity to try to amend her complaint
before the entire action is dismissed.” NewSpin Sports, LLC v.
Arrow Electronics, Inc., 910 F.3d 293, 310 (7th Cir. 2018). How-
ever, Ford asserts the plaintiﬀs failed to properly request
leave to amend before the district court and it is too late to
No. 18-2753                                                   15

seek leave now. A district court does not “abuse its discretion
by failing to order, sua sponte, an amendment to [the com-
plaint] that [the plaintiﬀ] never requested.” Wagner v. Teva
Pharms. USA, Inc., 840 F.3d 355, 359 (7th Cir. 2016).
    It is not entirely true the plaintiﬀs never sought leave to
amend. The plaintiﬀs’ brief opposing Ford’s Motion to Dis-
miss included the following as the final sentence of its conclu-
sion: “In the alternative, Plaintiﬀs seek leave to amend their
Complaint.” Other circuits have held that this kind of single-
sentence request included within a responsive brief is not suf-
ficient to render the district court’s dismissal without leave to
amend an abuse of discretion. See, e.g., Calderon v. Kansas Dep’t
of Soc. & Rehab. Servs., 181 F.3d 1180, 1187 (10th Cir. 1999). We
agree. The plaintiﬀs’ single-sentence request, providing no
grounds for amendment or explanation of how an amended
complaint would cure the defects of their original complaint,
does not amount to a motion for leave to amend. The plaintiﬀs
never filed a proper motion seeking leave to amend, either be-
fore or after the district court entered judgment. See NewSpin
Sports, 910 F.3d at 311 (reversing a district court’s denial of
leave to amend where the plaintiﬀ timely filed a post-judg-
ment request to amend and attached a proposed amended
complaint). Under these facts, the district court did not abuse
its discretion by not granting leave to amend.
   However, given that the sole basis for dismissal was a fail-
ure to exhaust administrative remedies, the claims should
have been dismissed without prejudice, “thereby leaving the
plaintiﬀ[s] free to refile [their] suit when and if [they] ex-
haust[] all of [their] administrative remedies or drop[] the un-
exhausted claims.” Greene v. Meese, 875 F.2d 639, 643 (7th Cir.
1989). Although the plaintiﬀs’ Count I claims may no longer
16                                                    No. 18-2753

be timely, see 42 U.S.C. § 2000e-5(e)(1) (requiring EEOC
charges to be filed within 180 days of the challenged employ-
ment action), it is worthwhile to follow the proper course of
dismissal without prejudice and leave any potential timeli-
ness issue for the plaintiﬀs to work out. See, e.g., Teal, 559 F.3d
at 693 (remanding with instructions to dismiss without preju-
dice for failure to exhaust administrative remedies before the
EEOC, even though complained-of employment action oc-
curred nearly six years prior).
    Although the district court’s dismissal order made no
mention of whether the claims were dismissed with or with-
out prejudice, a dismissal is generally presumed to be with
prejudice. Fed. R. Civ. P. 41(b). But see Green, 875 F.2d at 643
(“[T]he norm regarding the character of dismissals for failure
to exhaust administrative remedies may be suﬃciently well
established to override the implication from Rule 41(b) of the
judge’s failure to specify that he was dismissing [the] case
without prejudice, [but] it would be better if judges were ex-
plicit on this score.”). In any event, it is within our power to
modify the judgment to be without prejudice for the claims
that were properly dismissed, and we do so.
                         III. Conclusion
   Accordingly, we AFFIRM the district court’s dismissal of
Count I but MODIFY the judgment to be without prejudice,
and we VACATE the dismissal of Count II and REMAND to
the district court for further proceedings consistent with this
opinion.