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Courtney Holladay v. Cme Group

November 16, 2012


The opinion of the court was delivered by: Judge Sharon Johnson Coleman


Plaintiff Courtney Holladay ("Holladay") filed a second amended complaint on August 24, 2012 against CME Group*fn1 , Chicago Mercantile Exchange, Inc., the Chicago Board of Trade (collectively "CME Group"), MWD Trading, and Mark Downs ("Downs"). Holladay alleges in Count IV of her second amended complaint that after filing a charge of discrimination with the Illinois Department of Human Rights ("IDHR"), CME Group retaliated against her by initiating an investigation against her. In Count V, Holladay alleges that CME Group violated Section 22(b) of the Commodities Exchange Act ("CEA") when, while on notice of Downs' violations of CME Group's bylaws and rules prohibiting sexual harassment, CME Group permitted Downs to sexually harass Holladay by failing to enforce its bylaws. CME Group now moves to dismiss Counts IV and V. CME Group's motion to dismiss is granted in part and denied in part. Background

The CME Group defendants are self-regulatory organizations ("SROs") under the CEA. In January 2008, Downs, as president of MWD Trading, hired Holladay as a clerk to work in the Cattle Pit of the Chicago Board of Trade. Holladay alleges that from January 2008 through November 2012, Downs sexually harassed her, subjecting her to offensive bodily contact and comments. Holladay states further that CME Group and MWD Trading were aware of Downs' harassment and failed to prevent such conduct by enforcing their anti-sexual harassment policy then in effect.

Holladay alleges that on January 19, 2011, she filed a complaint with the IDHR against CME Group for sexual harassment, discrimination, and retaliation. Holladay states that CME Group was on notice that its members, namely Downs, were violating its bylaws pursuant to the CEA which prohibits sexual harassment and that after receiving her discrimination charge, CME Group requested an interview with her. When Holladay attempted to meet with CME Group, pursuant to their requests, Holladay alleges that CME Group rejected her offer for an interview and imposed "excessive conditions" upon the interview. Holladay claims that CME Group threatened her with a fine of up to a million dollars and placed her under formal investigation. Holladay claims further that CME Group's investigation was merely a pretext for unlawful retaliation. CME Group states that it threatened to fine and investigate Holladay due to her failure to comply with CME Group's bylaws and regulations requiring her to provide an interview.

On August 24, 2012, Holladay filed her second amended complaint against CME Group alleging that CME Group violated Section 22(b) of the CEA when it permitted Downs to sexually harass Holladay by failing to enforce its bylaws and sexual harassment policy. Holladay alleges further that CME Group retaliated against her by initiating an investigation and threatening to charge her fees for filing a charge with the IDHR. CME Group has filed a motion to dismiss Counts IV and V of Holladay's second amended complaint.

Legal Standard

In order to survive a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), a complaint must contain sufficient factual allegations to state a claim to relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662 (2009). This standard is met when the plaintiff pleads factual content that "allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. A motion to dismiss is decided solely on the face of the complaint and any attachments that accompanied its filing. Miller v. Herman, 600 F.3d 726, 733 (7th Cir. 2010). Accordingly, the court must accept all well-pleaded factual allegations in the complaint as true, and draw all reasonable inferences in the plaintiff's favor. Erickson v. Pardus, 551 U.S. 89, 94 (2007).


1. Count IV: Retaliation

CME Group moves to dismiss Count IV of Holladay's second amended complaint as barred by absolute immunity, preempted by the CEA, and for failure to state a claim upon which relief can be granted.

Initially, the Court notes that none of the courts in this circuit have addressed the precise issue of whether SROs under the CEA are immune from suits for acts of a quasi-judicial or prosecutorial capacity or the extent of that immunity should it exist. Circuits that have addressed this issue seem to agree that the dual nature of SROs, under the Securities and Exchange Commission, as private companies that carry out regulatory and oversight functions should afford them some level of immunity for such acts. Weissman v. NASD, 500 F.3d 1293, 1296 (11th Cir. 2007). However, SROs do not enjoy complete immunity from suits. See Sparta Surgical Corp. v. NASD, 159 F.3d 1209, 1214 (9th Cir. 1998). Accordingly, while the circuit courts agree that some level of protection should be afforded SROs for activities normally performed by the government, what actions fall within the ambit of immunity protection is unclear. Here, the Court finds that the alleged retaliatory disciplinary acts of CME Group are beyond the scope of immunity afforded SROs for actions of a quasi-judicial/prosecutorial nature.

CME Group's second argument is that Holladay's retaliation claim is preempted by the CEA. Section 22(b) of the CEA does not automatically or completely preempt state-law claims. McKerr v. Bd. of Trade, No. 12 C 5008, 2012 U.S. Dist. LEXIS 115933, 14-17 (N.D. Ill. Aug. 15, 2012). "While the CEA may well prohibit state regulation of the commodities field, that finding does not compel the preemption of state common law claims." Khalid Bin Talal Bin Abdul Azaiz Seoud v. E.F. Hutton & Co., 720 F. Supp. 671, 679-680 (N.D. Ill. 1989). The Court finds that the IHRA, forming the basis of Holladay's retaliation claim in Count IV, envisions no administrative agency involvement which might conflict with the jurisdiction of the Commodity Futures Trading Commission, and thus, it is not preempted. W & W Farms, Inc. v. Chartered Systems Corp., 542 F. Supp. 56, 59-60 (N.D. Ind. 1982).

Lastly, CME Group argues that Holladay has again failed to make out a claim of retaliation under the IHRA because she acknowledges that CME Group has stated a legitimate, non-discriminatory reason for its decision to investigate her. Holladay argues that even though CME Group proffers a non-discriminatory reason for its investigation, CME Group's reason is pretextual. To allege a prima facie case of retaliation, Holladay must allege that: (1) she engaged in a protected activity; (2) CME Group committed an adverse act against her; and (3) a causal nexus existed between the protected activity and the adverse act. Maye v. Illinois Human Rights Comm'n, 224 Ill. App. 3d 353, 360 (Ill. App. Ct. 1st Dist. 1991).

If a prima facie case is established, a rebuttable presumption arises that CME Group unlawfully discriminated against Holladay. CME Group must then articulate, but not prove, a legitimate, nondiscriminatory reason for its decision in order to rebut the presumption. If CME Group articulates a legitimate, nondiscriminatory reason, Holladay must then prove by a preponderance of the evidence that CME Group's articulated reason was not its true reason, but instead a pretext for unlawful discrimination. Id. In order to establish pretext, the complainant carries the ultimate burden of showing that a discriminatory reason more likely motivated the employer or that the employer's proffered explanation is unworthy of credence. Ryan v. Robert Bosch ...

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