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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
REPUBLIC GROUP, LLC, MBE CAPITAL
PARTNERS, LLC, RAFAEL MARTINEZ,
CHELSEA MARTINEZ, REACHING NEW
HEIGHTS, CORP.,
Plaintiffs,
v.
BANK OF AMERICA, N.A. AND MERRILL,
LYNCH, A BANK OF AMERICA
COMPANY, JOHN DOES 1-10 AND ABC
CORP. 1-10 (BEING FICTITIOUS NAMES),
Defendant.
Civil Action No. 21-14634 (SDW) (JBC)
OPINION
January 18, 2022
WIGENTON, District Judge.
Before this Court is Defendants Bank of America, N.A. and Merrill Lynch, A Bank of
America Company’s (collectively, “Defendants” or “BOA”) Motion to Dismiss (D.E. 9) Plaintiffs
Republic Group, LLC (“Republic”), MBE Capital Partners, LLC (“MBE”), Rafael Martinez,
Chelsea Martinez, and Reaching New Heights, Corp.’s (“RNH”) (collectively, “Plaintiffs”)
Complaint (D.E. 1-3 (“Compl.”)) for failure to state a claim upon which relief can be granted
pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6). This Court having considered the
parties’ submissions, having reached its decision without oral argument pursuant to Rule 78, and
for the reasons stated herein, Defendants’ Motion to Dismiss is GRANTED.
NOT FOR PUBLICATION
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I.
FACTUAL HISTORY
Plaintiff Rafael Martinez (“Mr. Martinez”), a New Jersey resident of Dominican descent,
is the managing member of both Republic and MBE, companies designed to provide “cash flow
and investment opportunities to small, diverse, minority and female owned businesses and
individuals.” (See Compl. ¶¶ 8, 13-14.) His daughter, Chelsea Martinez (“Ms. Martinez”), is an
officer “and authorized signatory on the bank accounts maintained by” Republic, MBE, and RNH.
(Id. ¶ 9.) In the spring of 2020, MBE and Republic gained approval from “the United States Small
Business Association (“SBA”) to issue Paycheck Protection Program Loans (“PPP Loans”) to”
minority owned small businesses and deposited approximately $100,000,000.00 in Republic’s
BOA business account. (Id. ¶¶ 17-23.) However, beginning on or about May 20, 2020, BOA
“refused to honor checks or electronic payments presented against” Republic’s account and
informed Plaintiffs that it was “unable to support [Plaintiffs’] efforts to participate in the PPP
program …” (Id. ¶¶ 24-35.) Plaintiffs advised BOA that the purpose of the businesses was to
assist minority and women owned businesses. (Id. ¶¶ 28-31.) Plaintiffs allege that BOA “never
provided a legitimate, lawful or non-discriminatory reason for its refusal to honor checks and
electronic payments issued by Republic in connection with the PPP Loan Program” and, therefore,
the basis for its decision was “based solely upon Republic and MBE being a minority owned
business whose customers are predominately minority owned businesses.” (Id. ¶¶ 38-39.)
Plaintiffs further allege that BOA subsequently retaliated against Plaintiffs by closing both
Mr. and Ms. Martinez’s personal accounts and the business accounts for Republic, MBE and RNH
in August 2020. (Id. ¶¶ 41-50.)1 Plaintiffs assert that the sole reason for the closure of Mr. and
Ms. Martinez’s personal accounts and the business accounts for Republic, MBE and RNH was
1 RNH is a non-profit corporation with no involvement in the PPP Loan program. (Compl. ¶ 10, 17.)
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their status as minorities and minority owned businesses, and therefore, BOA would not have
closed such accounts if Plaintiffs were “white similarly situated customer[s]” or “similarly situated
white owned business[es].” (Id.)
In May 2021, Plaintiffs assert that BOA “unilaterally froze and subsequently closed a
borrower account claiming the borrower received PPP Funds by way of fraud.” (Id. ¶ 51.) Without
identifying the borrower, Plaintiffs conclude that BOA’s actions in freezing the borrower account
was racially motivated, and therefore, evidence of “continued discriminatory conduct toward
minority customers and bus[inesses], including Republic, MBE and Reaching New Heights”. (Id.
¶ 54.) While BOA later released the funds to the borrower, Plaintiffs allege that BOA failed to
provide an explanation as to the basis for the fraud to MBE or the borrower. (Id. ¶¶ 53-57).
Plaintiffs assert that BOA’s refusal to provide any reason for the initial refusal to honor payments
issued by Republic and MBE, as well as BOA’s subsequent closure of Mr. and Ms. Martinez’s
personal accounts and the business accounts for Republic, MBE and RNH demonstrate BOA’s
discriminatory and retaliatory conduct towards Plaintiffs. (See generally Compl. ¶¶ 24-57.)
II.
PROCEDURAL HISTORY
On August 31, 2020, Plaintiffs filed their original complaint, raising claims for
discrimination and retaliation pursuant to 42 U.S.C. § 1981 and the New Jersey Law Against
Discrimination, N.J.S.A. 10:5-1 et seq. (“NJLAD”), as well as claims pursuant to the New Jersey
Civil Rights Act (“NJCRA”) and for breach of contract. (See Republic Group, LLC, et al. v. Bank
of America, N.A., et al., Case No. 2:20-cv-12081 (D.N.J.). Defendants subsequently moved to
dismiss, and all briefs were timely filed. (Id.) On February 1, 2021, this Court dismissed Plaintiffs’
original complaint for discrimination, retaliation, and breach of contract against BOA. (Id.)2 On
2 In its Letter Opinion filed with the Clerk of the Court, dated February 1, 2021 (“Letter Opinion”) in Republic Group,
LLC, et al. v. Bank of America, N.A., et al., Case No. 2:20-cv-12081 (D.N.J.), the Court found that Plaintiffs’ claims
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March 2, 2021, Plaintiffs filed an amended complaint, but later dismissed their amended complaint
without prejudice on March 3, 2021. (Id.)
Thereafter, Plaintiffs filed a new complaint in the Superior Court of New Jersey, Law
Division, Bergen County asserting causes of action for discrimination, retaliation, and breach of
contract against BOA identical to their original complaint. (See generally Compl. ¶¶ 66-88.)
Defendants removed the case to this Court on August 5, 2021, and subsequently moved to dismiss
the complaint. Briefing was timely completed. (Compl. ¶¶ 9,13, 14.)
III.
LEGAL STANDARD
An adequate complaint must be “a short and plain statement of the claim showing that the
pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). This Rule “requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual
allegations must be enough to raise a right to relief above the speculative level[.]” Bell Atlantic
Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations omitted); see also Phillips v. Cty.
of Allegheny, 515 F.3d 224, 232 (3d Cir. 2008) (stating that Rule 8 “requires a ‘showing,’ rather
than a blanket assertion, of an entitlement to relief”).
When considering a motion to dismiss under Rule 12(b)(6), a court must “accept all factual
allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine
whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.”
Phillips v. Cty. of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008) (citation omitted). However, “the
tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable
to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere
for discrimination and retaliation under Section 1981 failed to state a claim for which relief could be granted because
Plaintiffs’ claims were merely conclusory and were insufficient to show that BOA engaged in discriminatory conduct.
The Court declined to exercise supplemental jurisdiction over Plaintiffs’ remaining state law claims. Plaintiffs
consented to the dismissal of their NJCRA claim because Defendants did not act under a color of law.
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conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); see also
Fowler v. UPMC Shadyside, 578 F.3d 203, 210–11 (3d Cir. 2009) (discussing the Iqbal standard).
If the “well-pleaded facts do not permit the court to infer more than the mere possibility of
misconduct,” the complaint should be dismissed for failing to show “that the pleader is entitled to
relief” as required by Rule 8(a)(2). Iqbal, 556 U.S. at 679.
IV.
DISCUSSION
A. Discrimination under Section 1981 Claim (Count I).
A plaintiff seeking to bring a claim under Section 1981 must demonstrate: “(1) that plaintiff
is a member of a racial minority; (2) intent to discriminate on the basis of race by the defendant;
and (3) discrimination concerning one or more of the activities enumerated in the statute, which
includes the right to make and enforce contracts.” Brown v. Philip Morris Inc., 250 F.3d 789, 797
(3d Cir. 2001) (citation omitted). Here, Plaintiffs still fail to plead facts that show that Defendants
intended to discriminate against Plaintiffs because of their race. Despite having a second
opportunity to replead their claims under Section 1981, Plaintiffs plead only that Mr. and Ms.
Martinez are members of a racial minority without pleading any facts demonstrating that Plaintiffs
were treated differently than any other individuals or businesses who are not members of a
protected class. (See Compl. ¶ ¶ 14-15, 32.) Through bald assertions, Plaintiffs allege that BOA
engaged in “continued discriminatory conduct toward minority customers and bus[inesses]” and
would have treated “white similarly situated customer[s]” differently. (Compl. ¶¶ 41-50, 54).
Despite alleging a “long standing banking relationship with [BOA]”, Plaintiffs have failed to plead
the existence of any prior PPP loan issues with BOA, identify customers that had PPP loan issues
with BOA, specify as to the PPP loan issues, or detail communications with BOA regarding the
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PPP loan issues. (Id. ¶ 21). Instead, Plaintiffs’ complaint is still fraught with conclusory allegations
absent of any facts to support their claims.
Plaintiffs’ reliance upon the allegation that BOA unilaterally closed a borrower account
claiming the borrower fraudulently received PPP Funds as evidence that BOA engaged in
discriminatory conduct toward minority customers falls flat. (See Compl. ¶ 51.) Without
identifying the borrower or specifying the details of the borrower’s account closure, Plaintiffs’
allegations of race-based discrimination is simply conclusory. As this Court previously noted in
its Letter Opinion dismissing Plaintiffs’ original complaint asserting identical Section 1981 claims,
Plaintiffs’ conclusion that BOA’s decision to decline Plaintiffs’ PPP Loan transactions was
motivated solely by BOA’s discriminatory intent, without further support, is “insufficient”.3 See,
e.g., Special Police Org. v. City of Newark, Civ. No. 19-8444, 2019 WL 4410066, at *3 (D.N.J.
Sept. 16, 2019) (dismissing Section 1981 claim where plaintiffs failed to “set forth any facts to
suggest that [they] were discriminated against based on their races or ethnicities”); Williams v.
Wells Fargo Bank, N.A., Civ. No. 16-1003, 2016 WL 4370033, at *4 (D.N.J. Aug. 10, 2016)
(dismissing Section 1981 claim where plaintiff failed to “establish that [d]efendant treated him
differently than others outside of the protected class who were similarly situated”) (citation
omitted). Without more, Plaintiffs’ complaint fails to allege facts sufficient to maintain claims
under Section 1981. Count I will therefore be dismissed.
B. Retaliation under Section 1981 Claim (Count II).
Plaintiffs’ attempt to assert a retaliation claim under Section 1981 fails for the same reasons
previously noted by this Court in its Letter Opinion dismissing Plaintiffs’ Section 1981 claims.
Section 1981 “also encompasses the claim of an individual (black or white) who suffers retaliation
3 See Letter Opinion filed in Republic Group, LLC, et al. v. Bank of America, N.A., et al., Case No. 2:20-cv-12081
(D.N.J.).
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because he has tried to help a different individual, suffering direct racial discrimination, secure
his § 1981 rights”. See, e.g., Estate of Olivia ex rel. McHugh v. New Jersey, 604 F.3d 788, 797-
798 (3d Cir. 2010) (quoting CBOCS West, Inc. v. Humphries, 553 U.S. 442 (2008)). To maintain
a claim for retaliation, a plaintiff must plead facts showing (1) that he engaged in a protected
activity; (2) that he suffered an adverse action; and (3) that there was a causal connection between
the protected activity and the adverse action. See, e.g., Estate of Olivia ex rel. McHugh v. New
Jersey, 604 F.3d at 798; Barker v. Our Lady of Mount Carmel School, Civ. No. 12-4308, 2016 WL
4571388, *12 (D.N.J. September 1, 2016). Notably, the Third Circuit has held that in a retaliation
case, “a plaintiff must demonstrate that there had been an underlying Section 1981 violation.” See
Estate of Olivia ex rel. McHugh v. New Jersey, 604 F.3d at 798.
Here, Plaintiffs’ complaint fails to plead a claim for retaliation under Section 1981. As a
threshold matter, Plaintiffs’ complaint fails to allege facts to support the requirement of an
underlying Section 1981 violation. Even if Plaintiffs’ complaint alleged facts to support an
underlying Section 1981 violation, Plaintiffs’ complaint is devoid of any facts to establish a prima
facie retaliation claim. Plaintiffs’ retaliation claim rests solely upon the allegation that BOA closed
Mr. and Ms. Martinez’s personal accounts and the business accounts for Republic, MBE and RNH.
(See Compl. ¶¶ 41-50.) However, Plaintiffs’ complaint lacks allegations surrounding BOA’s role
in the closure of the accounts or that BOA did anything other than close Plaintiffs’ accounts.
Simply alleging that Plaintiffs advised BOA that the purpose of the businesses was to assist
minority and women owned businesses is insufficient to conclude that BOA’s decision to close
the accounts was motivated by discriminatory intent. (See Compl. ¶¶ 28-31). The Complaint
does not set forth any facts to suggest that Plaintiffs were discriminated against based on their race,
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ethnicities, or genders. Without more, Plaintiffs’ complaint fails to allege facts sufficient to
maintain claims under Section 1981. Count II will therefore be dismissed.
C. NJLAD and Breach of Contract (Counts III and Count IV).
Although 28 U.S.C. § 1367 permits federal courts to exercise jurisdiction over state law
claims, “if the federal claims are dismissed before trial, even though not insubstantial in a
jurisdictional sense, the state claims should be dismissed as well.” United Mine Workers of Am.
v. Gibbs, 383 U.S. 715, 726 (1966); see also Stehney v. Perry, 907 F. Supp. 806, 825 (D.N.J. 1995)
(“[A] federal district court may decline to exercise its supplemental jurisdiction over state law
claims if all federal claims are dismissed.”); Washington v. Specialty Risk Servs., Civ. No. 12-
1393, 2012 WL 3528051, at *2 (D.N.J. Aug. 15, 2012) (noting that “where the claim over which
the district court has original jurisdiction is dismissed before trial, the district court must decline
to decide the pendent state claims”) (alterations in original) (citing Hedges v. Musco, 204 F.3d
109, 123 (3d Cir. 2000)) (internal citations omitted). Plaintiffs’ federal claims have been dismissed
and this Court declines to exercise supplemental jurisdiction over Plaintiffs’ remaining state law
claims.4
V.
CONCLUSION
For the foregoing reasons, Defendants’ Motion to Dismiss is GRANTED without
prejudice. Plaintiffs shall have one final opportunity to amend their complaint and state a timely
claim. If Plaintiffs choose to pursue this matter, Plaintiffs shall file an amended complaint within
thirty (30) days. An appropriate order follows.
/s/ Susan D. Wigenton
SUSAN D. WIGENTON, U.S.D.J.
4 If this Court were to address the substance of Plaintiffs’ NJLAD claim, it would likely be dismissed pursuant to Rule
12(b)(6) as well, because plaintiffs bringing such claims must satisfy pleading requirements similar to those for Section
1981 claims. See, e.g., Florentino v. City of Newark, Civ. No. 19-20155, 2020 WL 5105291, at *14 (D.N.J. Aug. 31,
2020) (identifying the pleading requirements of a successful NJLAD claim).
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Orig: Clerk
cc:
Parties
James B. Clark, III, U.S.M.J.
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