ALEXANDER et al v. SVC MANUFACURING, INC. et al

Filing 99

ORDER - granting in part and denying in part 59 Motion for Leave to File. *** SEE ORDER ***. Signed by Magistrate Judge Denise K. LaRue on 2/27/2014. (CKM)

UNITED STATES DISTRICT COURT
for the SOUTHERN DISTRICT OF INDIANA,
INDIANAPOLIS DIVISION
SHA’RON ALEXANDER, et al.,

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) CAUSE NO. 1:12-cv-1468-SEB-DKL
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Plaintiffs,
vs.
SVC MANUFACTURING, INC., et al.,
Defendants.

ORDER
Motion for Leave to File Second Amended Complaint [doc. 59]

Plaintiffs move for leave to file a proposed second amended complaint [doc. 59-2]
(“Proposed Complaint”), making the following changes to the Amended Complaint [doc. 49]:
(1) adding PepsiCo, Inc. as a defendant to Counts 1 and 2; (2) add two plaintiffs, Erwin
Purcell and Charles Weathers, to (a) Count 1’s claim of discrimination under 42 U.S.C. §
1981 (but not Title VII) against SVC Manufacturing, Inc. (“SVC”) and PepsiCo Inc. and (b)
Count 3’s claim of violation of the duty of fair representation under 29 U.S.C. § 185 against
the United Steel Workers and Local Union No. 1999 of the United Steel Workers
(“Unions”); (3) drop currently named plaintiffs Howard Harris and Latonya Dickerson
from Count 1’s claim of violation of Title VII because it is has been discovered that they
failed to file charges with the EEOC; (4) amend the race of Melna Rogers from Hispanic to
Asian; and (6) clarify that Plaintiffs were employed by SVC Manufacturing, Inc.

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On August 23, 2013, the Court dismissed, without prejudice, defendants Stokely
Van-Camp, Inc.; The Quaker Oats Company; Quaker Oats Capital Corporation; and
PepsiCo, Inc. (“the Parent Defendants”) because Plaintiff did not plead enough facts to
establish that these defendants — the hierarchy of parent entities of SVC — could be found
to have directed the discrimination alleged in the Amended Complaint or were a party to the
collective bargaining agreement that is alleged to have been breached. Thus, the Court
found that the Amended Complaint failed to state claims against the Parent Defendants that
were plausible on their faces.

Defendants United Steel, Paper and Forestry, Rubber, Manufacturing, Energy,
Allied Industrial and Service Workers International Union, and Local Union No. 1999 of
United Steelworkers, (both, collectively, “Unions”), object to the addition of proposed
plaintiffs Erwin Purcell and Charles Weathers to the claim against the Unions for breach
of the duty of fair representation (Count 3) because their claims are barred by the sixmonths statute of limitations and their claims do not relate back. SVC has not opposed
Plaintiffs’ motion.

PepsiCo, Inc.’s addition as defendant to Counts 1 and 2. Plaintiffs, former
employees of SVC , allege that they were terminated purportedly for falsifying documents
relating to claims for unemployment compensation but their completions of the documents
were in accordance with “Plant Rule No. 1 found in PepsiCo, Inc.’s Associate and Salaried
Associate Resource Manual” and this reason was merely a pretext for discrimination
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against minorities and retaliation for exercising FMLA rights. Proposed Complaint ¶ 13.

Plaintiffs rely on their new allegations in ¶¶ 13, 25, 26, and 27 as their factual
showing “regarding the role of PepsiCo, Inc. in directing the discriminatory and illegal
activities . . . .” They allege that Bob Badgley, “PepsiCo” Director of Labor Relations, and
Sarah Leese, “PepsiCo” HR Manager, “formulated, directed, and administered the
personnel policy that resulted in the discriminatory acts and illegal terminations” and
“directed as well as commanded the personnel actions that resulted in the discriminatory
acts and illegal terminations.”

Proposed Complaint ¶ 25.

By using the appellation

“PepsiCo”, which the Proposed Complaint defines as the collective reference to both SVC and
PepsiCo, Inc., id. ¶ 1.a., instead of “PepsiCo, Inc.”, the Court assumes that both Mr. Badgley
and Ms. Leese are, at least formally, employed by and serve in their respective positions
for SVC.

The allegation that the “Plant Rule No. 1,” which Plaintiffs followed in filing for
unemployment compensation for the past twenty years, Proposed Complaint ¶¶ 13 and 15,
also appears in a PepsiCo Inc. personnel manual does not, by itself, show or render
plausible that PepsiCo, Inc. directed or otherwise compelled SVC to adopt the same policy
inconsistently with parent-subsidiary corporate formalities. In addition, even if PepsiCo,
Inc. had a role in SVC’s adoption of Plant Rule No. 1, the allegation that Plant Rule No. 1
was used or newly enforced in such a way as a pretext for discrimination does not
implicate PepsiCo, Inc. in the pretextual discriminatory application of the rule.
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In ¶ 26, Plaintiffs allege facts as “indicia that Bob Badgley and Sarah Leese are
PepsiCo, Inc. employees.” In her dismissal order, the district judge noted that Plaintiffs’
previous allegations in the Amended Complaint “clearly do not meet” the standard for
piercing the corporate veils of the hierarchy of parents above SVC (culminating in PepsiCo,
Inc.) and that Plaintiffs did not maintain that their allegations were sufficient to pierce the
veils. Order Granting Motion to Dismiss [doc. 51] at [5]. In their present motion, Plaintiffs
state that their new allegations are intended to show “the role of PepsiCo, Inc. in directing
the discriminatory and illegal activities,” not directly to pierce the corporate veils of the
dismissed parents/subsidiaries in order to reach PepsiCo, Inc., Motion for Leave to File
Second Amended Complaint [doc. 59] ¶ 2, and their Proposed Complaint does not make a
direct, explicit allegation that SVC is the alter ego of PepsiCo, Inc. or that the corporate veils
between them are otherwise pierced. However, by alleging that Badgley and Leese are
actually (or additionally) employees of PepsiCo, Inc., an alter-ego or veil-piercing claim is
necessarily asserted.

The allegations that PepsiCo, Inc. controls all the terms and conditions of Badgley
and Leese’s employment and their ability to hire and terminate employees; that PepsiCo,
Inc. trains and evaluates them; and that both represent themselves as PepsiCo, Inc.
employees are just enough facts to render plausible that Badgley and Leese are PepsiCo,
Inc. employees and, therefore, were acting on behalf of PepsiCo, Inc. when engaged in their
alleged discriminatory acts

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In addition, the allegation in ¶ 26 that Badgley and Leese sought approval from
PepsiCo, Inc.’s Corporate and Compliance and Legal Department “[i]n performing the
discriminatory acts and illegal terminations” is sufficient to render plausible that,
regardless of alter-ego or veil-piercing doctrine, PepsiCo, Inc. was involved in directing the
alleged discriminations. Discovery might reveal that the approvals sought by Badgley and
Leese from PepsiCo, Inc. and the communications between them did not alert PepsiCo, Inc.
to the discriminatory nature of the actions subsequently taken, or that PepsiCo, Inc.’s
communications did not constitute direction of discriminatory acts, but the allegation is
sufficient to allow addition of PepsiCo, Inc. as a defendant at this time.

Because the Court finds that the allegations of ¶ 26 are sufficient to permit the
addition of PepsiCo, Inc. as a defendant to Counts 1 and 2, the sufficiency of ¶ 27’s
allegations are not addressed. Any problem with the allegations may be addressed by the
appropriate motion.

Addition of Edwin Purcell and Charles Weathers to Count 3. The Unions object
that the addition of Edwin Purnell and Charles Weathers to Count 3 is futile because the
statute of limitations has already run on their claims and their claims do not relate back to
the filing of the original complaint under Fed. R. Civ. P. 15. In response, Plaintiffs do not
contest that the statute of limitations has expired on Purnell’s and Weathers’s claims and
such appears to be correct. Plaintiffs argue, instead, that because Purnell and Weathers
allege the same facts and circumstances arising out of the same occurrence as alleged in the
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Amended Complaint, their claims should relate back and, therefore, be considered timely.

Relation back of amendments under Fed. R. Civ. P. 15(c) generally does not permit
the addition of plaintiffs past the expiration of the statute of limitations except in certain
cases of class actions, which this case is not. See Paskuly v. Marshall Field & Co., 646 F.2d
1210, 1211 (7th Cir. 1981); Otto v. Milwaukee County, No. 07-C-427, 2007 WL 3228118 (E.D.
Wis., Oct. 30, 2007); Hawkins v. Groot Industries, Inc., 210 F.R.D. 226 (N.D. Ill. 2002). While
the original Complaint gave the Unions notice of the existing Plaintiffs’ claims, it gave them
no notice that, but for a mistake concerning the identity of Purcell and Weather, they would
have been named as plaintiffs as well. Therefore, leave is not granted to add Purcell and
Weathers as plaintiffs to Count 3.

Remaining amendments. There being no objection, leave is granted to make the
remaining amendments.
Conclusion
Plaintiff’s Motion for Leave to File Second Amended Complaint [doc. 59] is GRANTED
in part and DENIED in part as follows:
1. Leave is denied to add Erwin Purcell and Charles Weathers as plaintiffs on Count
3.
2. Leave is granted to add PepsiCo, Inc. as a defendant to Counts 1 and 2.
3. Leave is granted to add Erwin Purcell and Charles Weathers as plaintiffs to

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Count 1’s claim of race discrimination in violation of 42 U.S.C. § 1981.
3. Leave is granted to drop plaintiffs Howard Harris and Latonya Dickerson from
Count 1’s claim of race discrimination in violation of Title VII.
4. Leave is granted to change the race of plaintiff Melna Rogers from Hispanic to
Asian.
5. Leave is granted to clarify that Plaintiffs were employed by SVC Manufacturing,
Inc.
SO ORDERED this date: 02/27/2014

_______________________________
Denise K. LaRue
United States Magistrate Judge
Southern District of Indiana

Distribution to all ECF-registered counsel of record via ECF-generated e-mail.

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