Court Opinion

ID: 4198827
Source: CourtListenerOpinion
Date Created: 2017-08-25 00:01:07.583933+00
Date Added: 2024-06-11T14:40:16.107046
License: Public Domain

Case: 16-31034    Document: 00514131042     Page: 1   Date Filed: 08/24/2017

        IN THE UNITED STATES COURT OF APPEALS
                 FOR THE FIFTH CIRCUIT
                                                                   United States Court of Appeals
                                                                            Fifth Circuit

                                  No. 16-31034                            FILED
                                                                    August 24, 2017
                                                                     Lyle W. Cayce
BODY BY COOK, INCORPORATED; ROBERT COOK,                                  Clerk

             Plaintiffs - Appellants

v.

STATE FARM MUTUAL AUTOMOBILE INSURANCE; ALLSTATE
INSURANCE COMPANY; LIBERTY MUTUAL INSURANCE COMPANY;
GEICO GENERAL INSURANCE COMPANY; PROGRESSIVE SECURITY
INSURANCE COMPANY; TRAVELERS INSURANCE COMPANY;
RAMONA LATIOLAIS, individually and as corporate representative for
State Farm,

             Defendants - Appellees

                 Appeal from the United States District Court
                    for the Eastern District of Louisiana

Before HIGGINBOTHAM, GRAVES, and HIGGINSON, Circuit Judges.
STEPHEN A. HIGGINSON, Circuit Judge:
      Plaintiffs-Appellants—Body by Cook, Inc. and its owner, Robert Cook—
filed a lawsuit in federal district court alleging various civil rights violations
under 42 U.S.C. § 1981, § 1985, and Title VII, as well as several related state-
law claims. Defendants-Appellees are several national insurance companies—
State Farm Mutual Automobile Insurance, Allstate Insurance Co., Liberty
Mutual Insurance Co., GEICO General Insurance Co., Progressive Security
Insurance Co., and Travelers Insurance Co.—and a State Farm employee,
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                                  No. 16-31034
Ramona Latiolais. After twice allowing Plaintiffs to amend their complaint,
the district court dismissed all of Plaintiffs’ claims. Plaintiffs appealed, and we
AFFIRM in part and REVERSE in part.
                                         I
      Body by Cook is an automotive repair shop located in Slidell, Louisiana.
Robert Cook, an African American, is the sole owner of Body by Cook.
According to Plaintiffs, for several years Body by Cook sought to become a
referral repair shop—commonly known as a “Direct Repair Shop”—through
the “Direct Repair Programs” allegedly operated by Defendants. Plaintiffs
allege that, despite their qualifications, Body by Cook and Robert Cook have
“been refused entry into the [Direct Repair Programs,] and lesser qualified or
similarly situated, non-minority owned body shops have been granted access.”
Plaintiffs claim that Defendants discriminated against Body by Cook based on
Robert Cook’s race and conspired with one another to refuse Body by Cook
access to their Direct Repair Programs. Additionally, Plaintiffs allege that
Defendants retaliated against them by “virtually shutting Plaintiffs out from
any customer business of Defendants’ insureds.”
      Plaintiffs sued Defendants in the Eastern District of Louisiana on June
16, 2015. In their Second Amended Complaint (the “Complaint”), Plaintiffs
brought seven claims: (1) 42 U.S.C. § 1981 discrimination against all
Defendants; (2) § 1985 conspiracy against all Defendants; (3) § 1981 retaliation
against all Defendants; (4) § 1981 retaliation against State Farm and Latiolais;
(5) Title VII discrimination against State Farm; (6) Title VII retaliation against
State Farm; and (7) Louisiana state law claims for negligent training and
supervision against all corporate Defendants. Defendants filed motions to
dismiss the Complaint for failure to state a claim under Rule 12(b)(6) of the
Federal Rules of Civil Procedure. The district court granted the motions as to
the federal law claims and dismissed all the federal claims with prejudice. The
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district court declined to exercise supplemental jurisdiction over the remaining
state law claims and dismissed them without prejudice. Plaintiffs filed a timely
notice of appeal.
                                        II
      We review de novo a district court’s dismissal under Rule 12(b)(6). Doe
ex rel. Magee v. Covington Cty. Sch. Dist. ex rel. Keys, 675 F.3d 849, 854 (5th
Cir. 2012) (en banc). In doing so, we must accept all well-pleaded facts as true
and view all facts in the light most favorable to the plaintiff. Id. We need not,
however, accept the plaintiff’s legal conclusions as true. Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009). To survive a motion to dismiss, the plaintiff must plead
“enough facts to state a claim to relief that is plausible on its face.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility
when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.”
Iqbal, 556 U.S. at 678. “Our task, then, is to determine whether the plaintiff
has stated a legally cognizable claim that is plausible, not to evaluate the
plaintiff’s likelihood of success.” Covington, 675 F.3d at 854 (internal quotation
marks and citation omitted).
                                       III
      Plaintiffs’ primary argument on appeal is that the district court erred in
dismissing Plaintiffs’ claims notwithstanding the court’s ruling that the
Complaint satisfied Rule 8. Plaintiffs argue that Rule 12(b)(6) dismissal was
inappropriate because the district court found that “[t]he minimum pleading
requirements of Rule 8 [had] been satisfied in this case.” Plaintiffs contend that
a complaint that satisfies Rule 8 necessarily also satisfies the Rule 12(b)(6)
plausibility standard articulated in Twombly and Iqbal because those
decisions interpreted Rule 8. This argument miscomprehends the district
court’s analysis.
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      In their motions to dismiss, Defendants contended that the Complaint
violated Rule 8 because it was composed of generalized, group allegations.
Defendants argued that Plaintiffs’ “group pleading” tactics failed to provide
Defendants fair notice of the specific claims and allegations levied against each
of them.
      The district court rejected this argument, holding that the Complaint
was sufficient to apprise each Defendant of the particular facts and claims
alleged as to each Defendant. The district court noted that the Complaint
contained factual subsections with allegations specific to each Defendant, as
well as cause-of-action subsections that clearly identified the Defendant or
Defendants against which that particular claim was asserted. However, the
district court ultimately dismissed the Complaint under Rule 12(b)(6) because
it found the pleading legally insufficient to state any of Plaintiffs’ federal
claims.
      We have previously explained that a complaint may simultaneously
satisfy Rule 8’s technical requirements but fail to state a claim under Rule
12(b)(6). See Bank of Abbeville & Tr. Co. v. Commonwealth Land Title Ins. Co.,
201 F. App’x 988, 990 (5th Cir. 2006) (unpublished). “[M]ere compliance with
Rule 8 does not itself immunize the complaint against a motion to dismiss.” Id.
“Rule 8(a)(2) specifies the conditions of the formal adequacy of a pleading,” but
“[i]t does not specify the conditions of its substantive adequacy, that is, its legal
merit.” Id. (internal quotation marks and citation omitted). Thus, in Bank of
Abbeville, we held that the complaint satisfied Rule 8’s formal requirements
by pleading a short and plain statement of the claim, but that dismissal was
nevertheless proper because the plaintiff “would not be entitled to relief under
any set of facts or any possible theory that it could prove consistent with the
complaint’s allegations.” Id.; see also Haskett v. T.S. Dudley Land Co., 648 F.
App’x 492, 496 n.15 (5th Cir. 2016) (unpublished).
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      The district court here concluded that the Complaint complied with Rule
8 because it “at the very least provide[d] . . . Defendants minimally adequate
notice of Plaintiffs’ claims in this matter and the bases therefor.” That
conclusion is consistent with the district court’s ultimate dismissal of Plaintiffs’
federal claims for failure to state a claim on which relief could be granted. See
Bank of Abbeville, 201 F. App’x at 990. Plaintiffs’ argument to the contrary is
without merit.
                                        IV
      Plaintiffs argue that the district court erred in dismissing their federal
claims under Rule 12(b)(6). We address each claim in turn.
   A. Section 1981 Discrimination Claims
      Section 1981 provides that “[a]ll persons within the jurisdiction of the
United States shall have the same right in every State and Territory to make
and enforce contracts.” 42 U.S.C. § 1981(a). “Make and enforce contracts” is
defined as “the making, performance, modification, and termination of
contracts, and the enjoyment of all benefits, privileges, terms, and conditions
of the contractual relationship.” § 1981(b). To establish a § 1981 claim for
contractual discrimination, Plaintiffs must allege that (1) they are members of
a racial minority; (2) Defendants intended to discriminate on the basis of race;
and (3) the discrimination concerned one or more of the activities enumerated
in the statute—here, making a contract. Bellows v. Amoco Oil Co., 118 F.3d
268, 274 (5th Cir. 1997); Green v. State Bar of Tex., 27 F.3d 1083, 1086 (5th
Cir. 1994). The analysis of discrimination claims under § 1981 is identical to
the analysis of Title VII claims. Jones v. Robinson Prop. Grp. L.P., 427 F.3d
987, 992 (5th Cir. 2005).
      Here, Plaintiffs adequately plead the first element of a § 1981 claim by
alleging that Body by Cook is a “100% African American-owned body shop.”
Whether Plaintiffs successfully plead the second and third elements are closer
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questions.     We     first   examine      whether      Plaintiffs    adequately      allege
discriminatory intent.
       Although “naked allegation[s]” of discriminatory intent are too
conclusory to survive a motion to dismiss, see Albert v. Carovano, 851 F.2d 561,
572 (2d Cir. 1988) (en banc), discriminatory motive may be—and commonly
is—demonstrated by circumstantial evidence, Bellows, 118 F.3d at 274. An
allegation that similarly situated non-minorities received better treatment
“could create the necessary inference and set the predicate for establishing the
section 1981 claim.” See Crosby v. Kilgore, 9 F.3d 104, 1993 WL 481800, at *1
(5th Cir. 1993) (unpublished); cf. Lindsay v. Yates, 498 F.3d 434, 439–40 (6th
Cir. 2007) (holding that plaintiffs-purchasers pleaded a § 1981 claim by
alleging that (1) sellers advertised their house for sale; (2) plaintiffs signed a
purchase agreement and made deposit; and (3) sellers terminated the contract
three weeks after signing agreement and one day after agent learned buyers
were black). 1

       1  Although not a pleading standard, this court has looked to the “evidentiary
framework” set forth in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), to determine
whether a plaintiff pleads discriminatory intent. Haskett v. Cont’l Land Res., L.L.C., 668 F.
App’x 133, 134 (5th Cir. 2016) (unpublished); cf. Swierkiewicz v. Sorema N.A., 534 U.S. 506,
510 (2002) (holding that “[t]he prima facie case under McDonnell Douglas . . . is an
evidentiary standard, not a pleading requirement”). Under McDonnell Douglas, Plaintiffs
must demonstrate four elements to establish a prima facie case of racial discrimination at
the summary judgment phase: (1) membership in a protected class; (2) that they sought and
were qualified to receive an available contract; (3) that their contract proposal was rejected
or that they received a contract on unfavorable terms; and (4) similarly-situated individuals
or entities not in the protected class received a contract. Jeffrey v. Columbia Med. Ctr. at
Lancaster Subsidiary, LP, 48 F. App’x 103, 2002 WL 31016499, at *5 (5th Cir. 2002)
(unpublished); see also Hall v. Cont’l Airlines, Inc., 252 F. App’x 650, 654 (5th Cir. 2007)
(unpublished) (holding that the plaintiff failed to establish a prima facie case of racial
discrimination under § 1981 at the summary judgment phase because “she presented no
evidence that similarly situated individuals outside of her protected class were treated more
favorably”). While Plaintiffs do not need to satisfy these four elements to successfully plead
a § 1981 claim, see, e.g., Lindsay, 498 F.3d at 439–40, the McDonnell Douglas framework
demonstrates the types of factual allegations sufficient to support a plausible inference of
discriminatory intent.
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       With respect to most Defendants, Plaintiffs make only generalized
allegations regarding Defendants’ alleged disparate treatment of Body by Cook
versus non-minority-owned shops. These allegations are not specific enough to
plead discriminatory intent. They fail to identify which Defendant
discriminated or specific instances when Body by Cook was refused a contract
but a similarly situated non-minority owned body shop was given a contract.
See Hall v. Cont’l Airlines, Inc., 252 F. App’x 650, 653–54 (5th Cir. 2007)
(unpublished). Accordingly, as to most Defendants, Plaintiffs fail to plead
discriminatory intent.
       However, the Complaint contains more specific allegations regarding
State Farm’s discriminatory intent. Plaintiffs allege that a State Farm
representative visited and inspected Body by Cook and found that it met all of
State Farm’s qualifications for being a Direct Repair Shop, but that State Farm
declined to allow Body by Cook to participate in the Direct Repair Program. 2
Additionally, Plaintiffs allege that State Farm told Body by Cook that it was
not admitting body shops into its Direct Repair Program but State Farm then
admitted a non-minority-owned body shop with inferior equipment that did not
meet State Farm’s “qualifications.” These allegations that similarly situated
body shops were treated differently than Body by Cook and allowed into State
Farm’s Direct Repair Service program make plausible the inference that the
difference in treatment was because of Body by Cook’s minority-owned status.
See Haskett v. Cont’l Land Res., L.L.C., 668 F. App’x 133, 134 (5th Cir. 2016)
(unpublished); Jeffrey v. Columbia Med. Ctr. at Lancaster Subsidiary, LP, 48
F. App’x 103, 2002 WL 31016499, at *5 (5th Cir. 2002) (unpublished). 3

       2 Plaintiffs also allege that they sent Defendants their “brochure/application,” along
with a cover letter that informed Defendants that Body by Cook is minority owned.
       3 Plaintiffs also make several specific allegations regarding Progressive; however,

these allegations fall short. Plaintiffs allege that Progressive repeatedly refused to certify
Body by Cook as a Direct Repair Shop, that Progressive was aware that Body by Cook was
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      In addition to discriminatory intent, Plaintiffs must also plead that State
Farm’s discrimination concerned one or more of the activities enumerated in
the statute. Bellows, 118 F.3d at 274. “Any claim brought under § 1981 . . .
must initially identify an impaired ‘contractual relationship,’ under which the
plaintiff has rights,” but “[s]uch a contractual relationship need not already
exist, because § 1981 protects the would-be contractor along with those who
already have made contracts.” Domino’s Pizza, Inc. v. McDonald, 546 U.S. 470,
476 (2006) (internal citation omitted). Thus, because Body by Cook does not
allege an existing contract, it must plead facts that plausibly demonstrate that
State Farm’s alleged discrimination concerned a prospective contract. See
Grambling Univ. Nat’l Alumni Ass’n v. Bd. of Supervisors, 286 F. App’x 864,
869–70 (5th Cir. 2008) (unpublished).
      The Complaint does not state a plausible claim that Defendants refused
to contract with the individual Plaintiff, Robert Cook. The gravamen of the
Complaint is that Defendants refused to certify Body by Cook as a Direct
Repair Shop and allow Body by Cook to enter their Direct Repair Programs.
Cook, the sole shareholder of Body by Cook, is thus not the proper party to
contract with any of the Defendants and cannot bring a § 1981 claim. See
Bellows, 118 F.3d at 276 (concluding that the individual plaintiff had no
individual § 1981 claim against the defendant, because his claim was merely
derivative of the company plaintiff’s claim); Searcy v. Hous. Lighting & Power
Co., 907 F.2d 562, 565 (5th Cir. 1990) (holding that the plaintiff could not bring

minority-owned, and that during the same time period, Progressive sought out and approved
non-minority-owned body shops to join the Direct Repair Program. Plaintiffs do not
specifically plead, however, that Body by Cook was as qualified or more qualified than the
non-minority body shops that Progressive sought out and approved for its Direct Repair
Program. Plaintiffs have thus failed to plead discriminatory intent with respect to
Progressive. See Haskett, 668 F. App’x at 134; Jeffrey, 2002 WL 31016499, at *5.

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his individual § 1981 claim because the alleged discrimination would only
impair the contractual rights of the corporation and not the rights of the
plaintiff, the company’s sole shareholder).
       With respect to Body by Cook, the Complaint alleges that it “had contact
with State Farm to become a [Direct Repair Shop].” 4 State Farm allegedly sent
its Regional Director to inspect Body by Cook’s shop and found that it “met all
of State Farm’s criteria, but [Body by Cook] was still denied.” Further, Body
by Cook alleges that, after inquiring with Latiolais (a State Farm employee)
about why another, unqualified body shop was in the Direct Repair Program,
Body by Cook “received a letter stating that Plaintiffs were declined as a
[Direct Repair Shop].”
       These factual allegations are sufficient to plead the third element of Body
by Cook’s § 1981 claim against State Farm. Although not finely detailed, these
allegations create the plausible inference that Body by Cook attempted to enter
a contractual relationship with State Farm to become a Direct Repair Shop
and receive referrals from State Farm’s customers. Cf. Grambling, 286 F. App’x
at 870 (affirming district court’s dismissal of § 1981 contract discrimination
claim when complaint alleged no facts about any sort of relationship, let alone
a contractual relationship, between the plaintiff alumni association and the
defendant university). 5

       4  As noted before, Plaintiffs also allege that “Body by Cook sent Defendants its
brochure/application, along with a cover letter, asking to apply and become a part of their
[Direct Repair Programs].”
        5 Citing Grambling, the district court identified three purported sub-requirements

plaintiffs must satisfy to plead the third element of a § 1981 discrimination claim. According
to the district court, a plaintiff must (1) identify the content of the contract at issue, (2)
identify the particular contractual rights that were allegedly modified by the defendant’s
actions, and (3) plead facts showing that the defendant’s actions were motivated by
discriminatory intent. In Grambling, a university alumni association brought a § 1981 claim
against the university’s supervisory boards, alleging that the boards’ various acts and
omissions violated the association’s civil rights. Grambling, 286 F. App’x at 866. This court
affirmed the district court’s dismissal of the association’s complaint, explaining that the
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       We conclude that the district court erred in dismissing Body by Cook’s
§ 1981 contract claim against State Farm. 6 We agree with the district court’s
dismissal of Robert Cook’s § 1981 claim against State Farm and Plaintiffs’
§ 1981 claims against all other Defendants.
   B. Section 1985(3) Conspiracy Claims
       Plaintiffs allege that Defendants “acted as co[-]conspirators and
intentionally agreed and conspired with another body shop, Pike, to squeeze
Plaintiffs out.” Additionally, Plaintiffs claim that Defendants “agreed with
each other to discriminate on the basis of race against 100% African American-
owned body shops in connection with contracting, in violation of . . . 42 U.S.C.
§ 1985(3), resulting in an unfair lack of representation by African American-
owned body shops in [Direct Repair Programs].”
       Section 1985(3) prohibits conspiracies to deprive any person equal
protection of the laws. 42 U.S.C. § 1985(3); Lockett v. New Orleans City, 607
F.3d 992, 1002 (5th Cir. 2010). “To state a claim under § 1985(3), a plaintiff
must allege facts demonstrating (1) a conspiracy; (2) for the purpose of
depriving a person of the equal protection of the laws; and (3) an act in
furtherance of the conspiracy; (4) which causes injury to a person or a
deprivation of any right or privilege of a citizen of the United States.” Lockett,

complaint “wholly fail[ed] to state the basic elements of a section § 1981 claim.” Id. at 870.
The “closest” the association came to stating a viable § 1981 claim was its allegation that the
boards “replac[ed] the [association] with the Grambling Black & Gold Foundation, Inc. in
connection with the Bayou Classic.” Id. Provided with only the vague allegation that the
association was “replaced,” this court concluded that the complaint failed to identify the
content of the contract or any impaired contractual rights, and also failed to explain how the
decision to “replace” the association was racially motivated. Id. We do not read Grambling to
create concrete sub-requirements for pleading the third element of a § 1981 claim. Rather,
the opinion merely identifies specific deficiencies in the association’s complaint. Id.
       6 After dismissing all of Plaintiffs’ federal claims, the district court declined to exercise

supplemental jurisdiction over Plaintiffs’ remaining state-law claims for negligent training
or supervision. Because we reverse the district court’s dismissal of Body by Cook’s § 1981
claim against State Farm, we also reverse the district court’s dismissal of the state law
claims, and remand those claims for consideration on the merits.
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607 F.3d at 1002 (citing Hilliard v. Ferguson, 30 F.3d 649, 652–53 (5th Cir.
1994)). Importantly, the plaintiff must allege facts that suggest an agreement
among the alleged co-conspirators. See Green, 27 F.3d at 1089.
      Plaintiffs fail to plead facts suggesting an agreement between any of
Defendants. The only alleged connection between Defendants is that
“Defendants’ Motions are obviously the same work product with the same legal
arguments and cases, [which] leads Plaintiffs to believe that . . . Defendants
have conspired and continue to conspire against Plaintiffs.” These allegations
are insufficient to demonstrate an agreement to deprive Plaintiffs of the equal
protection of the laws. See id; see also Holdiness v. Stroud, 808 F.2d 417, 424
(5th Cir. 1987) (explaining that “[m]ere conclusory allegations are insufficient”
to state a claim under § 1985 and that plaintiffs “must plead the operative facts
upon which their claim is based”). Accordingly, the district court did not err in
dismissing Plaintiffs’ § 1985(3) conspiracy claims.
   C. Section 1981 Retaliation Claims
      Plaintiffs claim that Defendants retaliated against them for filing this
lawsuit and for “complaining about not being allowed to become a [Direct
Repair Shop] in their [Direct Repair Programs].” Plaintiffs allege that because
they have had “significantly less work from customers who are also insureds
of . . . Defendants,” and because Defendants’ briefing in this litigation has been
similar, Plaintiffs “believe that . . . Defendants have conspired and continue to
conspire . . . to retaliat[e] against Plaintiffs by virtually shutting Plaintiffs out
from any customer business of Defendants insureds” and “believe . . .
Defendants are trying to put Plaintiffs out of business (retaliating).”
      Plaintiffs also claim that State Farm and Ramona Latiolais retaliated
against them after they complained to State Farm about racial discrimination
and filed a complaint with the EEOC. Specifically, Plaintiffs allege that
Latiolais, a team manager at State Farm, had unilateral control over certifying
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a Direct Repair Shop and said that “she did not want Plaintiffs.” Plaintiffs
allege that her refusal to certify the Plaintiffs was “causally connected to the
Plaintiffs complaining about racial discrimination against them and the denial
to the [Direct Repair Program].”
      The elements of a § 1981 retaliation claim are (1) that the plaintiff
engaged in activities protected by § 1981; (2) that an adverse action followed;
and (3) a causal connection between the protected activities and the adverse
action. See Foley v. Univ. of Hous. Sys., 355 F.3d 333, 339, 340 n.8 (5th Cir.
2003). Even assuming that Plaintiffs plead the first two elements, Plaintiffs
fail to allege facts sufficient to demonstrate a causal connection between their
alleged protected activities (complaining to Defendants, the EEOC action, and
filing this lawsuit) and Defendants’ alleged adverse actions (refusals to
contract with Plaintiffs). See Leal v. McHugh, 731 F.3d 405, 417 (5th Cir. 2013).
To the contrary, the Complaint alleges that Defendants refused to contract
with Plaintiffs both before and after Plaintiffs complained about racial
discrimination, which suggests that Plaintiffs’ complaints and this lawsuit did
not cause Defendants to deny Body by Cook entry into their Direct Service
Programs. Plaintiffs’ conclusory beliefs that Defendants “are trying to put
Plaintiffs out of business” and are “virtually shutting Plaintiffs out from any
customer business of Defendants’ insureds” in retaliation for Plaintiffs filing a
lawsuit and complaining about racial discrimination are inadequate to
demonstrate a causal connection. See Eberle v. Gonzales, 240 F. App’x 622, 629
(5th Cir. 2007) (unpublished) (holding that the plaintiff’s subjective belief that
he was retaliated against, without more, was insufficient to establish a prima
facie case of retaliation). Likewise, Plaintiffs do not allege any facts suggesting
that State Farm and Latiolais refused to approve Body by Cook as a Direct
Repair Shop because Plaintiffs complained about racial discrimination and
filed an EEOC complaint. Plaintiffs’ conclusory assertion that the denial was
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causally connected to the Plaintiffs’ complaints is insufficient. See Leal, 731
F.3d at 417; Eberle, 240 F. App’x at 629.
   D. Title VII Discrimination and Retaliation Claims
      Robert Cook also claims that State Farm discriminated and retaliated
against him individually in violation of Title VII. Title VII of the Civil Rights
Act of 1964, 42 U.S.C. § 2000e et seq., “provides remedies to employees for
injuries related to discriminatory conduct and associated wrongs by
employers.” Univ. of Tex. Sw. Med. Ctr. v. Nassar, 133 S. Ct. 2517, 2522 (2013).
To maintain a claim under Title VII, the plaintiff must demonstrate an
“employment relationship” between the plaintiff and the defendant. See Deal
v. State Farm Cty. Mut. Ins. Co., 5 F.3d 117, 118–19 (5th Cir. 1993). However,
“Title VII’s prohibitions against discriminatory employment practices do not
apply only to an existing employment relationship but also to prospective
employment relationships that do not eventuate because of the discriminatory
conduct—as where an applicant for employment is denied employment for a
prohibited discriminatory reason.” Simmons v. Lyons, 746 F.2d 265, 270 (5th
Cir. 1984).
      Cook fails to allege facts sufficient to demonstrate the existence of a
prospective employment relationship. The Complaint alleges that State Farm
refused to certify Body by Cook as a Direct Repair Shop and contract with Body
by Cook as part of State Farm’s Direct Repair Program. Nowhere in the
Complaint, however, are there any allegations that Cook sought to work as an
employee of State Farm, or that individuals could become Direct Repair Shops
or enter the Direct Repair Programs. Further, Cook fails to plead facts
suggesting that he would enter an employment relationship with State Farm
if State Farm had contracted with Body by Cook through its Direct Repair
Program. Accordingly, the district court did not err in dismissing both of Cook’s

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Title VII claims. See Travis v. City of Grand Prairie, 654 F. App’x 161, 166 (5th
Cir. 2016) (unpublished).
                                        V
      In their opposition to Defendants’ motions to dismiss, Plaintiffs
requested an opportunity to file a third amended complaint if the district court
granted the motions. We review the district court’s denial of this request for
abuse of discretion. See McKinney v. Irving Indep. Sch. Dist., 309 F.3d 308, 312
(5th Cir. 2002). Although Rule 15(a) requires the district court to grant leave
to amend freely, “[l]eave to amend is in no way automatic.” Marucci Sports,
L.L.C. v. Nat’l Collegiate Athletic Ass’n, 751 F.3d 368, 378 (5th Cir. 2014). “The
district court is entrusted with the discretion to grant or deny a motion to
amend and may consider a variety of factors including ‘undue delay, bad faith
or dilatory motive on the part of the movant, repeated failures to cure
deficiencies by amendments previously allowed, undue prejudice to the
opposing party . . . , and futility of the amendment.’” Id. (quoting Jones, 427
F.3d at 994). Where justification for a denial is “readily apparent,” a district
court’s failure to explain its denial is not fatal to affirmance. Id. (quoting
Mayeaux v. La. Health Serv. & Indem. Co., 376 F.3d 420, 426 (5th Cir. 2004)).
      Here, the district court allowed Plaintiffs to amend their complaint
twice. The district court did not abuse its discretion by refusing Plaintiffs
another opportunity to plead their case and dismissing Plaintiffs’ federal
claims with prejudice.
                                       VI
      For the foregoing reasons, we REVERSE the district court’s dismissal of
Body by Cook’s § 1981 discrimination claim against State Farm, and we also
REVERSE the district court’s dismissal of Plaintiffs’ state law claims. We
REMAND those claims to the district court for further proceedings consistent
with this opinion. We AFFIRM the district court’s dismissal of all other claims.
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