Bomberger v. Benchmark Builders, Inc.

Filing 24

MEMORANDUM re MOTION to Dismiss Counts II and III of First Amended Complaint (D.I. 7 ). Signed by Judge Richard G. Andrews on 4/13/2017. (nms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

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STEVEN W. BOMBERGER,
Plaintiff,
V.

BENCHMARK BUILDERS, INC.,
a Delaware corporation,
Defendant.

Civ. No. 16-1071-RGA

MEMORANDUM

Plaintiff filed this action against Defendant claiming violations of the Age Discrimination
in Employment Act ("ADEA") under 29 U.S.C. § 621 et seq. ("Count I"), the Delaware
Discrimination in Employment Act ("DDEA") under 19 Del. C. § 710 et seq. ("Count II"), and
the Delaware Common Law Covenant of Good Faith and Fair Dealing ("Count III"). (D.I. 4 at iM!
39-50). Presently before the Court is Defendant's Motion to Dismiss Count II and Count III of
Plaintiff's First Amended Complaint. (D.I. 7). The issues have been fully briefed. (D.I. 8, 11,
17). For the reasons set forth below, Defendant's Motion is GRANTED.

I.

BACKGROUND
This dispute arises out of Plaintiff Steven W. Bomberger' s termination of employment

from Defendant Benchmark Builders, Inc. in June, 2015. Bomberger was an employee, minority
shareholder and former President of Benchmark. (D.I. 4 at if 5). In 1988, Bomberger co-founded
Benchmark with Francis Julian, Richard Julian and Gene Julian. (Id. at if 6). Bomberger executed
an employment agreement with Benchmark which included a provision for acquiring stock, and
which stated, "[t]he redemption price of all stock is the book value of the stock shares." (Id. at iM!
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7-8) (alteration in original). In 1994, the four principal shareholders entered into a share
repurchase agreement that provided a mechanism for determining the buyback price of stock
when any shareholder left the company. 1 (Id. at iM! 10-11 ).
The Complaint alleges that in late 2012, Francis and Richard attempted to shift
management control to their children (the "Successor Generation") through a proposal "to amend
the [share repurchase agreement] so that a Principal Shareholder could transfer stock to his
children." (Id. at ii 21 ). This proposal did not benefit Bomberger because he did not have
children working for Benchmark. (Id.). Shortly after the amendment, "the Successor Generation
began asserting control over Benchmark" and brought in younger employees. (Id. at ii 23). At an
April 24, 2015 meeting of the Benchmark Board, Bomberger suggested to Francis, Richard, and
others within Benchmark that he would resign if they were going to dissolve Benchmark and
attempt to freeze him out of the company as they had done to Gene. (Id. at ii 26). Those present

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The relevant portions of the share repurchase agreement are Articles 4 and 5. Article 4 governs resale upon
termination and states:

"If the employment of an employee with the corporation is terminated (a) from the date of this
agreement by employee's resignation, discharge, with or without cause, disability, or any other
reason except the employee's death or total disability ... , employee shall be bound to sell to
corporation forthwith, and corporation shall be bound to purchase from employee, the shares at the
lower of (1) the sale price at which they were originally sold pursuant to this agreement by
corporation to employee ... or (2) the then current book value of the shares."
(D.I. 4 at ii 12). Article 5 governs resale upon retirement or total disability and states:

"In the event a Principal Shareholder ceases to be employed by the corporation by reason of
retirement or total disability, he must offer to sell his shares to the other Principal Shareholders in
the manner provided in Article 2 hereof ... Principal Shareholders must give at least three years
notice of intent to sell stock in order for the other Principal Shareholders to prepare for payment ...
Retirement is defined as a voluntary termination on or after a Shareholder's sixty-second birthday.
Any termination, other than one due to death or total disability, prior to a Principal Shareholder's
sixty-second birthday shall result in a resale on termination in accordance with Article 4."
(Id. at ii 13).

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at the meeting interpreted this as a resignation, and on May 29, 2015, Francis "sent Bomberger a
letter that purported to 'confirm [Bamberger's] resignation as President of the Company' and
unilaterally set June 30, 2015 as Bamberger's last day of employment with Benchmark." (Id. at il
28) (alteration in original). The letter also stated that Benchmark would repurchase Bamberger's
shares at $747.00 per share, which was significantly less than net book value, and "that
Bomberger would be replaced by Matthew Egan," who was fifteen years younger than
Bomberger. (Id. at iMf 28-29). Francis subsequently sent an email to Benchmark's staff and trade
partners that falsely stated Bomberger was retiring. (Id. at il 48). Bomberger was nine months
away from turning fifty-nine, at which time he would have been able to give three years notice of
intent to retire pursuant to Article 5 of the share repurchase agreement. (Id. at il 28). A retirement
pursuant to Article 5 would have required Benchmark to repurchase Bomberger' s 150 shares for
their full net book value of $3,925.15 per share, which was significantly higher than both the
original purchase price of $100.00 per share and the $747.00 per share price stated in the May
29, 2015 letter. 2 (Id. at il 32). Thus, by terminating his employment before he turned fifty-nine,
Benchmark denied Bomberger more than $476,000. (Id. at il 33).
Bomberger submitted an Intake Questionnaire to the Delaware Department of Labor (the
"DDOL") on October 8, 2015, which was 118 days after his termination. 3 (Id. at il 36). The

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Upon termination ofBomberger's employment, Benchmark should have repurchased the shares at the original
purchase price of $100 .00 per share pursuant to Article 4 of the share repurchase agreement. Benchmark appears to
have decided arbitrarily to repurchase the shares at $747.00 per share. In either event, Bomberger was denied the net
book value of $3 ,925 .15 per share, which he would have received upon retirement pursuant to Article 5 of the share
repurchase agreement.
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Although the May 29, 2015 letter set June 30, 2015 as Bomberger's last day of employment, his employment was
actually terminated on June 12, 2015. (D.I. 4 at iJ 35).

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document stated, in bold type, "THAT COMPLETION OF THE ENCLOSED FORMS

DOES NOT CONSTITUTE FILING A CHARGE OF DISCRIMINATION." (D.I. 4-2 at 2).
On October 26, 2015, Bomberger filed a charge of discrimination with the DDOL alleging
violations of the DDEA and ADEA. (D.I. 4-4 at 2). The DDOL determined that it did not have
jurisdiction and transferred Bomberger's complaint to the EEOC. (D.I. 4 at if 37). On September
27, 2016, "[t]he EEOC issued Bomberger a Notice of Right to Sue," but Bomberger was never
issued a Delaware Right to Sue Notice by the DDOL. (Id. at if 38).

II.

LEGAL STAND ARD
Rule 8 requires a complainant to provide "a short and plain statement of the claim

showing that the pleader is entitled to relief ...."Fed. R. Civ. P. 8(a)(2). Rule 12(b)(6) allows
the accused party to bring a motion to dismiss the claim for failing to meet this standard. A Rule
12(b)(6) motion maybe granted only if, accepting the well-pleaded allegations in the complaint
as true and viewing them in the light most favorable to the complainant, a court concludes that
those allegations "could not raise a claim of entitlement to relief." Bell At/. Corp. v. Twombly,
550 U.S. 544, 558 (2007).
"Though 'detailed factual allegations' are not required, a complaint must do more than
simply provide 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of
action."' Davis v. Abington Mem 'l Hosp., 765 F.3d 236, 241 (3d Cir. 2014) (quoting Twombly,
550 U.S. at 555). I am "not required to credit bald assertions or legal conclusions improperly
alleged in the complaint." In re Rockefeller Ctr. Props., Inc. Sec. Litig., 311F.3d198, 216 (3d
Cir. 2002). A complaint may not be dismissed, however, "for imperfect statement of the legal
theory supporting the claim asserted." Johnson v. City ofShelby, 135 S. Ct. 346, 346 (2014).

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A complainant must plead facts sufficient to show that a claim has "substantive
plausibility." Id. at 347. That plausibility must be found on the face of the complaint. Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009). "A claim has facial plausibility when the [complainant] pleads
factual content that allows the court to draw the reasonable inference that the [accused] is liable
for the misconduct alleged." Id. Deciding whether a claim is plausible will be a "context-specific
task that requires the reviewing court to draw on its judicial experience and common sense." Id.
at 679.

III.

DISCUSSION
A. Violation of the DDEA (Count II)
Benchmark's Motion to Dismiss Count II of the Complaint is granted because Bomberger

did not timely file a charge of discrimination with the DDOL as required by the DDEA. 4 The
intake questionnaire submitted by Bomberger 118 days after his termination does not constitute a
charge of discrimination. This Court, consistent with the Supreme Court in Fed. Express Corp. v.
Holowecki, 552 U.S. 389 (2008), has previously held that an intake questionnaire is not charge of
discrimination when the questionnaire cannot "be construed as a request to take action" and
explicitly states that completion of the form does not constitute a charge. See Hayes v. Delaware
State University, 726 F. Supp. 2d 441, 453 (D. Del. 2010) (holding intake questionnaire filed
with DDOL that specifically stated it "does not constitute the filing of a charge" was not a charge
despite similarities in content between the two documents). The intake questionnaire in this case,

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At the time Bomberger filed his charge of discrimination, the DDEA required "[a]ny person claiming to be
aggrieved by a violation of this chapter [to] first file a charge of discrimination within 120 days of the alleged
unlawful employment practice .... " 19 Del. C. § 712(c)(l). Although the statute was amended to extend the filing
deadline to 300 days, the amendment only became effective on July 19, 2016, nine months after Bomberger filed his
charge.

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similar to the intake questionnaire in Hayes, stated in in bold type, "THAT COMPLETION OF

THE ENCLOSED FORMS DOES NOT CONSTITUTE FILING A CHARGE OF
DISCRIMINATION." (D.I. 4-2 at 2). The DDOL did not consider the questionnaire to be a
charge, and it cannot be construed as a request to take action because it does not contain any
specific requests for relief. Because the intake questionnaire makes clear it is not a charge of
discrimination, and Bomberger only submitted an actual charge more than 120 days after his
termination, his claim is time-barred by the statute.
Bomberger argues that even if the intake questionnaire does not constitute a charge of
discrimination, the amendment to the DDEA extending the filing deadline for a charge to 300
days should apply retroactively to save his claim. (D.I. 11 at 16-18). I refuse to apply the
amendment retroactively because Benchmark's substantive rights will be affected. Statutory
amendments generally apply prospectively "unless the legislature expressly states, to the
contrary, that the amendments shall be retrospective ... [or the amendment] relates to practice,
procedure or remedies and does not affect substantive or vested rights." Fountain v. State, 139
A.3d 837, 841 (Del. 2016) (quoting Hubbard v. Hibbard Brown & Co., 633 A.2d 345, 354 (Del.
1993)). Retroactive application is not appropriate if"a person's rights and obligations will be
affected." Konstantopoulous v. Westvaco Corp., No. 90-146-CMW, 1992 U.S. Dist. LEXIS
9466, at *19 (D. Del. June 19, 1992). In this case, the amendment to the DDEA extending the
filing deadline to 300 days does not state that it applies retroactively. The amendment is not
necessarily procedural because retroactive application would subject Benchmark to a claim
which would not otherwise exist, thereby affecting its rights and obligations. Therefore, the
amendment cannot be applied retroactively and Plaintiff's claim is time-barred.

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B. Violation of the Delaware Common Law Covenant of Good Faith and Fair
Dealing (Count III)

Benchmark's Motion to Dismiss Count III of the Complaint is granted because
Benchmark did not falsify Bomberger's employment records. In the employment context, there
are four circumstances in which an employer's actions may violate the implied covenant of good
faith and fair dealing:
(i) [W]here the termination violated public policy; (ii) where the employer
misrepresented an important fact and the employee relied "thereon either to accept
a new position or remain in a present one"; (iii) where the employer used its
superior bargaining power to deprive an employee of clearly identifiable
compensation related to the employee's past service; and (iv) where the employer
falsified or manipulated employment records to create fictitious grounds for
termination.
Lord v. Souder, 748 A.2d 393, 400 (Del. 2000) (citing E.l DuPont de Nemours & Co. v.
Pressman, 679 A.2d 436, 442-44 (Del. 1996). Bomberger asserts he has alleged facts that

satisfy the fourth circumstance.
First, he argues Benchmark created a false reason for terminating him when it made
up that he had voluntarily resigned. (D.I. 11 at 20-21). Creating a false reason for
termination, however, does not satisfy the fourth circumstance of Lord and is therefore
insufficient grounds for bringing a claim for breach of the implied covenant. See Reed v.
Agilent Techs., Inc., 174 F. Supp. 2d 176, 191 (D. Del. 2001) ("[E]mployers are only

culpable for the manufacture of grounds for dismissal, not for the statement of a false
reason for dismissal.").
Bomberger next argues that Benchmark's May 29, 2015 letter and its emails to staff
and trade partners, which falsely claimed that Bomberger voluntarily resigned, constituted
falsifications of employment records. (D.I. 11 at 20-21). This argument is also misplaced
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because the fourth circumstance of Lord requires that the employer actually falsify or
manipulate employment records to create fictitious grounds for termination. Benchmark's
conduct, however, amounted to no more than a memorializing of its false reasons for
termination in writing. This is insufficient to sustain a claim for breach of the implied
covenant.
IV.

CONCLUSION

For the foregoing reasons, Defendant's Motion to Dismiss Count II and Count III of the
First Amended Complaint pursuant to Fed. R. Civ. P. 12(b)(6) (D.I. 7) is GRANTED. Plaintiff
has not requested leave to amend. It does not appear that Plaintiff could amend his Complaint to
state the claims he has asserted in Counts II and Ill. Thus, leave to amend is not granted.
An appropriate order will be entered.

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