Employment – District court wrongly dismissed casino employee’s FMLA/USERRA suit

Where an employee sued a casino for violating federal employment laws, the district court erred when it found a Tribe was a necessary and indispensable party to this litigation. Even if the Tribe was the employer, that does not automatically make it a necessary party.

Background

William Peterson III used to work at Harrah’s Cherokee Casino Resort in North Carolina. After he was fired and denied an opportunity to be rehired, Peterson sued Harrah’s NC Casino Company LLC, and its corporate parent, asserting employment discrimination and retaliation claims under the Family and Medical Leave Act, or FMLA and the Uniformed Services Employment and Reemployment Rights Act, or USERRA.

The district court dismissed Peterson’s complaint after finding that the Tribal Casino Gaming Enterprise, or TCGE, a wholly owned and operated enterprise of the Eastern Band of Cherokee Indians, is a necessary and indispensable party to this litigation.

Analysis

Pursuant to Rule 12(b)(7), a defendant may move to dismiss a complaint for “failure to join a party under Rule 19” before filing a responsive pleading. Because Rule 12(b)(7) incorporates Rule 19, a motion to dismiss under Rule 12(b)(7) turns on Rule 19’s standards.

Rule 19 “sets forth a two-step inquiry for a district court to determine whether a party should be joined in an action.” First the district court must determine whether the party is ‘necessary’ to the action under Rule 19(a).” “[S]econd, if a necessary party is unavailable,” the court must determine whether the party is indispensable under Rule 19(b) such that the “proceeding [cannot] continue in that party’s absence.”

Here, the district court began its analysis by finding that “TCGE was [Peterson’s] employer.” And given Bridges’s declaration stating, among other things, that all the casino employees, save one, were “employees of TCGE” and that TCGE issued Peterson’s paychecks, the court’s finding was not clearly erroneous.

That said, the court’s finding that TCGE was Peterson’s employer does not resolve whether TCGE is a necessary party to this suit. As an initial matter, the district court did not find that Harrah’s was not also Peterson’s employer. Both the FMLA and USERRA allow for the possibility of joint employers. And while joint employers can be the equivalent of joint tortfeasors, it is well settled that a joint tortfeasor is “not ipso facto [a] ‘necessary’ part[y] under Rule 19(a).”

More importantly, the district court’s finding that TCGE was Peterson’s employer does not necessarily mean that TCGE hired, fired or controlled Peterson or established any policies relevant to Peterson’s claims. The district court did not find that TCGE possessed exclusive authority to hire, fire or control Peterson, or that Harrah’s lacked that authority. And the evidence before the district court would not have supported such a finding.

Harrah’s has not shown, and the district court did not find, that TCGE was the only entity (or even an entity) that could be ordered to reinstate Peterson to his job. Nor did the district court find that TCGE’s presence was necessary for the court to award Peterson monetary damages, regardless of whether those damages are “wage-related” or not. At bottom, the district court’s finding that TCGE was Peterson’s employer does not automatically make TCGE a necessary party. And it says very little, if anything, about what the district court could or could not order Harrah’s to do in this suit.

The district court concluded that TCGE was a necessary party because “[a]ny judgment on [Peterson’s] claims would impair TCGE’s contractual interests with [Harrah’s] and, thus ‘its fundamental economic relationship with the private party . . .”.

The district court did not identify what contractual interest would be impaired by this case, and it is not obvious what the court had in mind. Nor has Harrah’s been able to identify a single contractual obligation this lawsuit implicates.

Throughout its opinion, the district court relied heavily on this court’s decision in Yashenko v. Harrah’s NC Casino Co., 446 F.3d 541 (4th Cir. 2006), to find that this suit is likely to impair TCGE’s contractual interests. But Yashenko involved a challenge to a tribal policy explicitly embedded in the management agreement between Harrah’s and the Tribe. Here, by contrast, neither the district court nor Harrah’s has identified any contractual provision or tribal policy implicated by Peterson’s claims.

Vacated and remanded.

Peterson, III v. Harrah’s NC Casino Company, LLC, Case No. 23-2316, March 12, 2026. 4th Cir. (Rushing), from WDNC at Asheville (Cogburn Jr.). Daniel Gray Leland for Appellant. Kevin Michael Cleys for Appellees. VLW 026-2-091. 14 pp.

Full-Text Opinion

VLW 026-2-091
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