Body by Cook, Inc. v. State Farm Mutual Automobile Insurance

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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