Wang v. General Motors, LLC et al
Filing
62
OPINION and ORDER Denying Defendant GM (China) Investment Co., LTD's 58 Motion to Dismiss Pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6). Signed by District Judge Linda V. Parker. (RLou)
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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
SHAWN WANG,
Plaintiff,
Civil Case No. 18-10347
Honorable Linda V. Parker
v.
GENERAL MOTORS, LLC and
GM (CHINA) INVESTMENT CO., LTD.,
Defendants.
___________________________________/
OPINION AND ORDER DENYING DEFENDANT GM (CHINA)
INVESTMENT CO., LTD.’S MOTION TO DISMISS PURSUANT TO
FEDERAL RULES OF CIVIL PROCEDURE 12(b)(2) AND 12(b)(6)
In this lawsuit, initiated on January 30, 2018, Plaintiff asserts the following
claims against Defendants: (i) age discrimination in violation of the federal Age
Discrimination and Employment Act (“ADEA”); (ii) age discrimination in
violation of Michigan’s Elliott-Larsen Civil Rights Act (“ELCRA”); (iii) race and
national origin discrimination in violation of Title VII of the Civil Rights Act of
1964 (“Title VII”); and (iv) race and national origin discrimination under the
ELCRA.1 Defendants are General Motors, LLC (“GM”) and GM (China)
Investment Co., Ltd. (“GMCIC”). The matter is presently before the Court on
1
Plaintiff also asserted a race and ethnic discrimination claim against
Defendants under 42 U.S.C. § 1981, but the Court dismissed the claim when ruling
on General Motor LLC’s previously filed motion to dismiss. (See ECF No. 34.)
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GMCIC’s Motion to Dismiss Pursuant to Federal Rules of Civil Procedure
12(b)(2) and (6). (ECF No. 58.) The motion has been fully briefed. (ECF Nos.
60, 61.) Finding the facts and legal arguments sufficiently presented in the parties’
briefs, the Court is dispensing with oral argument pursuant to Eastern District of
Michigan Local Rule 7.1(f).
I.
Applicable Standard of Review
In its motion, GMCIC argues that the Court lacks personal jurisdiction over
it and, alternatively, that Plaintiff’s claims against it fail as a matter of law.
GMCIC’s first argument is governed by Federal Rule of Civil Procedure 12(b)(2)
and its second argument by Rule 12(b)(6).
A court may decide a motion to dismiss for lack of personal jurisdiction by
relying “‘upon the affidavits alone … permit[ting] discovery in aid of deciding the
motion[,] or … conduct[ing] an evidentiary hearing to resolve any apparent factual
questions.’” Anwar v. Dow Chem. Co., 876 F.3d 841, 847 (6th Cir. 2017) (quoting
MAG IAS Holdings, Inc. v. Schmückle, 854 F.3d 894, 899 (6th Cir. 2017)). The
plaintiff has the burden of establishing the court’s jurisdiction over a defendant.
Id. Where the court decides the motion without an evidentiary hearing, the
plaintiff’s “burden is relatively slight[.]” Id. (internal quotation marks and
citations omitted). “‘To defeat dismissal in this context, plaintiffs need make only
a prima facie showing that personal jurisdiction exists.’” Id. (quoting MAG IAS
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Holdings, 854 F.3d at 899) (citing Air Prods. & Controls, Inc. v. Safetech Int’l,
Inc., 503 F.3d 544, 549 (6th Cir. 2007)).
The court must consider the pleadings and affidavits “‘in a light most
favorable to the plaintiff,’ without weighing ‘the controverting assertions of the
party seeking dismissal.’” Anwar, 876 F.3d at 847 (quoting Theunissen v.
Matthews, 935 F.2d 1454, 1459 (6th Cir. 1991)). While the defendant’s motion
should be denied if the plaintiff makes a prima facie showing, “the defendant’s
avenues to contest personal jurisdiction are not foreclosed[.]” Id. “‘[T]he
defendant can continue to contest personal jurisdiction by requesting an
evidentiary hearing or moving for summary judgment should the evidence suggest
‘a material variance from the facts’ as presented by plaintiffs.’” Id. (quoting MAG
IAS Holdings, 854 F.3d at 899) (quoting Neogen Corp. v. Neo Gen Screening, Inc.,
282 F.3d 883, 893 (6th Cir. 2002)).
“To survive a [Rule 12(b)(6)] motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible
on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting 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.” Id. (citing
Twombly, 550 U.S. at 556). The plausibility standard “does not impose a
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probability requirement at the pleading stage; it simply calls for enough facts to
raise a reasonable expectation that discovery will reveal evidence of illegal
[conduct].” Twombly, 550 U.S. at 556.
In deciding whether the plaintiff has set forth a “plausible” claim, the court
must accept the factual allegations in the complaint as true. Erickson v. Pardus,
551 U.S. 89, 94 (2007). This presumption, however, is not applicable to legal
conclusions. Iqbal, 556 U.S. at 668. Therefore, “[t]hreadbare recitals of the
elements of a cause of action, supported by mere conclusory statements, do not
suffice.” Id. (citing Twombly, 550 U.S. at 555).
II.
Factual and Procedural Background
A.
Plaintiff and His GM/GMCIC Employment
Plaintiff was born in China. (Pl.’s Aff. ¶ 3, ECF No. 60-4 at Pg ID 1266.)
He became a naturalized United States citizen in 1999, and currently maintains
only U.S. citizenship. (Id.)
In February 1989, Plaintiff began working for GM in Canada. (Id. ¶ 4, Pg
ID 1266.) In 1991, GM transferred Plaintiff’s employment to the United States.
(Id. ¶5, Pg ID 1266.) Plaintiff resided in Clarkston, Michigan. (See id. ¶ 6, Pg ID
1267.) On or about July 1, 2009, GM transferred Plaintiff to a new job assignment
at GMCIC. (Id. ¶ 6, Pg ID 1267.) The position was in Shanghai, China. (Id.)
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The letter offering Plaintiff the position in China was on letterhead
displaying the GM logo, referenced the “GMCIC Group,” and stated: “General
Motors is the world’s largest automotive manufacturer with aggressive growth
plans for China . . . join our fast growing China team.” (Am. Compl. ¶ 12, ECF
No. 43 at Pg ID 1051.) As a United States citizen, Plaintiff was required to have a
work visa and resident permit to work in China. (Pl.’s Aff. ¶ 8, ECF No. 60-4 at
Pg ID 1267.) GM’s Director of Engineering and Director of Human Resources
managed Plaintiff’s transfer to GMCIC. (Id. ¶ 7, Pg ID 1267.)
Plaintiff’s employment contract with GMCIC incorporated an Intellectual
Property Rights Agreement. (Pl.’s Aff. Ex. A, ECF No. 60-4 at Pg ID 1274-1299.)
This agreement related to Plaintiff’s relationship with GM, providing inter alia that
he assigned the intellectual property developed during his employment to GM,
would keep GM information confidential, and not accept employment with an
entity that competes with GM. (Id.) The agreement also contains a choice of law
provision which states that the laws of Michigan govern. (Id. at Pg ID 1278.)
Plaintiff paid United State federal and Michigan State taxes while working
in China. (Id. ¶ 9, Pg ID 1267.) GM managed Plaintiff’s taxes through KPMG
until 2012. (Id.) From 2012 until 2017, Plaintiff paid his federal and state taxes
himself. (Id.)
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On or about August 1, 2015, Charon Morgan became Director of
Engineering at GMCIC and, in that capacity, was Plaintiff’s immediate supervisor.
(Am. Compl. ¶ 15, ECF No. 43 at Pg ID 1051.) Plaintiff believes that Ms.
Morgan’s supervisor was Tobias2 Suenner, GMCIC’s Vice President for Vehicle
Engineering, who in turn reported to Kenneth L. Kelzer, who worked in the United
States as GM’s Vice President of Global Vehicle Components and Subsystems.
(Id. ¶ 16, Pg ID 1051-52; see also Pl.’s Aff. ¶ 27, ECF No. 60-4 at Pg ID 1270 &
Ex. C.)
On or about January 24, 2017, Ms. Morgan and Grace Zheng, GMCIC’s
Human Resources Manager, informed Plaintiff that he was going to be mandatorily
retired on July 3, 2017, when he turned sixty years old. (Am. Compl. ¶ 19, ECF
No. 43 at Pg ID 1052.) Plaintiff objected, noting that David Reeck, a colleague
who was transferred to GMCIC around the same time as Plaintiff, worked in China
for GMCIC until he was sixty-five years old. (Id. ¶ 20, Pg ID 1052.) Plaintiff
believes Mr. Reeck, who is a male Caucasian, is a United States Citizen and not of
Chinese national origin. (Id. ¶ 21, Pg ID 1052.) At a subsequent meeting with Ms.
Morgan on February 17, 2017, Plaintiff tried to reverse the decision to mandatorily
retire him. (Id. ¶ 22, Pg ID 1052.) In response, Ms. Morgan analogized Plaintiff’s
2
Plaintiff refers to this individual as “Toblas” Suenner in the Complaint;
however, documentation submitted to the Court indicates that the correct name is
“Tobias.” (See, e.g., Pl.’s Aff. Ex. C at 3, ECF No. 60-4 at Pg ID 1303.)
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situation to Kevin Wang, a locally hired engineer manager who was a Chinese
citizen. (Id. ¶ 23, Pg ID 1053.)
On February 23, 2017, Plaintiff sent Ms. Morgan an email, stating that the
decision to mandatorily retire him at age sixty contradicted a company
memorandum he became aware of in 2009, when he transitioned to his job position
in China. (Id. ¶ 24, Pg ID 1053.) Ms. Morgan responded to Plaintiff’s email on
February 24, 2017, “clarify[ing] that there’s no business needs to extend your
employment after your legal retirement age in China which is 60 years old
according to applicable China law.” (Id. ¶ 26, Pg ID 1053.)
In an email to Ms. Morgan and Ms. Zheng on March 13, 2017, Plaintiff
disputed Ms. Morgan’s claim that there was no business need to retain him,
pointing out that there was a posting for Plaintiff’s same and/or similar position
already on “GM Global Internal Jobs.” (Id. ¶ 28, Pg ID 1054.) The following day,
Ms. Zheng responded, asserting that “business need” refers to the continuation of
employment of the employee, not the job position. (Id. ¶ 32, Pg ID 1055.)
On May 16, 2017, Ms. Morgan and Ron Fraser authored a mass email using
the GM logo announcing that Plaintiff “will retire after 28 years of service.” (Id.
¶ 32, Pg ID 1055.) Plaintiff believes that Mr. Fraser is a GM Director, who works
in Detroit, Michigan. (Id. ¶ 34, Pg ID 1055; see also Pl.’s Aff. ¶ 32, ECF No. 60-4
at Pg ID 1271.) The email from Ms. Morgan and Mr. Fraser also announced that
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Gregory Schone had been appointed as the new manager of GM China
Engineering Laboratories and would be relocating to Shanghai, China. (Pl.’s Aff.
¶ 33, ECF No. 60-4 at Pg ID 1272.) Plaintiff believes that Mr. Schone is a
substantially younger Caucasian who had been working for GM in the United
States. (Id.)
On July 1, 2017, Plaintiff was involuntarily retired. (Am. Compl. ¶ 36, ECF
No. 43 at Pg ID 1055.) He thereafter returned to his home in Clarkston, Michigan
(Pl.’s Aff. ¶ 6, ECF No. 60-4 at Pg ID 1267), and filed a charge of discrimination
with the Equal Employment Opportunity Commission (“EEOC”). (Am. Compl.
¶ 38, ECF No. 43 at Pg ID 2, 6.) The EEOC issued a right-to-sue letter on January
17, 2018. (Id.) As indicated, Plaintiff initiated this lawsuit a short time later, on
January 30, 2018.
B.
The Relationship Between GM and GMCIC
GMCIC was established in China in 1998 pursuant to China’s laws and
regulations. (Treme Decl. ¶ 3, ECF No. 58-1 at Pg ID 1181.) GMCIC’s activities
are governed by the laws of China. (Id.) Mr. Treme, former HR Director for
GMCIC, states that GMCIC is a subsidiary of General Motors China LLC, which
in turn is a subsidiary of GM Global Holdings GmbH & Co KG, a subsidiary of
General Motors Holdings LLC. (Id. ¶ 5, Pg ID 1181.) According to Mr. Treme,
GMCIC was not capitalized by GM, receives no financial assistance or support
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from GM, and operates with total financial independence from GM. (Id. ¶ 4, Pg ID
1181.) Mr. Treme indicates that GMCIC and GM have separate bank accounts and
funds, maintain separate corporate and financial records, and have separate boards
of directors. (Id. ¶¶ 6, 7, Pg ID 1181.) He further indicates that the building
housing GMCIC’s headquarters is not shared with any other entity. (Id. ¶ 2, Pg ID
1181.)
In its most recent Form 10-K submission to the Securities and Exchange
Commission, however, GM lists GMCIC under the category of “Subsidiaries and
Joint Ventures.” (Pl.’s Aff. Ex. I, ECF No. 60-4 at Pg ID 1335.) GM’s media
website lists GMCIC as a “Wholly Owned Foreign Enterprise” and describes
GMCIC as “a wholly owned venture based in Shanghai” that “houses all of GM’s
local staff and is an investor in GM’s vehicle joint ventures in China.” (Pl.’s Resp.
Ex. 13, ECF No. 60-14.) The sign in front of the building where GMCIC is
located displays the GM logo and reads “General Motors” above “International
Operations and China Headquarters”. (Pl.’s Aff. Ex. G, ECF No. 60-4 at Pg ID
1330.)
According to Mr. Treme, GMCIC’s Board of Directors is responsible for all
aspects of the company’s affairs. (Id. ¶ 7-10, Pg ID 1181-82.) He attests that
determinations concerning employment matters (e.g. hiring, transfers, dismissals,
resignations, wages) are made by GMCIC’s Board of Directors or departments or
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persons authorized and designated by the board. (Id. ¶ 10, Pg ID 1182.) Mr.
Treme does not indicate who serves on GMCIC’s Board of Director’s, however.
Defendant does not otherwise provide this information.
GMCIC’s President is Matt Tsien, who also holds the title of Executive Vice
President of GM. (Pl.’s Aff. ¶ 31, ECF No. 60-4 at Pg ID 1271.) Mary Barra,
GM’s Chairman and CEO, is identified as the top of the “Leadership” of GM
China. (Pl.’s Aff. Ex. F, ECF No. 60-4 at Pg ID 1327.)
Mr. Treme claims that GMCIC’s human resources department operates
autonomously from GM. (Id. ¶ 12, Pg ID 1183.) Plaintiff maintains, however, that
GMCIC’s Human Resources reports to GM’s Human Resources in Michigan.
(Pl.’s Aff. Ex. C, ECF No. 60-4.) While HR Director, Mr. Treme reported directly
to individuals at GM in Michigan. (Id.) As Plaintiff points out, Mr. Treme does
not state in his affidavit whether he is a GM or GMCIC employee. Nor does Maria
Mora Vinueza, who took over as GMCIC’s HR Director in August 2018. (Vinueza
Aff., ECF No. 58-2.)
Plaintiff believes that GM appoints all of GMCIC’s senior managers. (Pl.’s
Aff. ¶ 24, ECF No. 60-4 at Pg ID 1270.) Most, if not all, of GMCIC’s senior
managers are “International Service Personnel” (“ISPs”) who are temporarily
assigned to GMCIC but remain employees of GM. (Id. ¶ 25, Pg ID 1270.) The
“home” units for all of GMCIC’s senior managers, including Ms. Morgan and
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Robert Treme, are within GM in the United States. (Pl.’s Aff. ¶ 26, ECF No. 60-4
at Pg ID 1270.) For example, Matt Tsien, President of GMCIC, is listed as a
senior leader of GM in Detroit, Michigan. (Id.)
Plaintiff’s salary was paid in Chinese Yuan, the official currency of China.
(Treme Aff. Exs. B, C, ECF No. 58-1 at Pg ID 1190, 1192-93.) Plaintiff indicates,
however, that his salary “was a direct exchange from [his] US salary according to
the exchange rate at the time, not according to the local standard.” (Pl.’s Aff. ¶ 12,
ECF No. 60-4 at Pg ID 1268.) Moreover, as the letter offering Plaintiff his
position with GMCIC reflects, he retained his corporate GM employee level.
(Treme Aff. Ex. B, ECF No. 58-1 at Pg ID 110.) Additionally, all GMCIC
employees have GM identifications and email addresses. (Id. ¶ 22, Pg ID 1270.)
Therefore, Plaintiff’s ID and email address did not change when he was transferred
to China. (Id.)
Maria Mora Vinueza, who has served as the HR Director of GMCIC since
August 1, 2018, attests that “GMCIC does not transact any business with
Michigan.” (Vinueza Aff. ¶ 5, ECF No. 58-2 at Pg ID 1202.) Plaintiff avers,
however, that his job responsibilities with GMCIC required him to frequently
interact with GM employees and travel to GM’s offices in the United States,
including Michigan. (Pl.’s Aff. ¶¶ 13-17, ECF No. 60-4 at Pg ID 1268.)
According to Plaintiff, GMCIC manages the supplier quality of imported
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automotive parts for GM’s plants in the United States, including Michigan, valued
at hundreds of millions of dollars annually. (Id. ¶ 15, Pg ID 1268.) The
laboratories Plaintiff managed at GMCIC interacted with more than twenty GM
laboratories in Michigan, sharing common processes and resources and exchanging
equipment. (Id. ¶ 17, Pg ID 1268.) In 2016, for example, Plaintiff traveled to
Michigan six times to work with GM teams, at which time he stayed in his
Clarkston, Michigan residence. (Id.)
GM engineering in the United States specified the equipment used in
GMCIC’s laboratories, much of which was purchased in the United States and
some of which was shipped directly from GM labs in Michigan. (Id. ¶ 18, Pg ID
1269.) Plaintiff’s lab in China was part of GM’s engineering organization in the
United States. (Id. ¶ 19, Pg ID 1269.) GM determined Plaintiff’s budget and
controlled his spending. (Id.)
C.
GM’s Motion to Dismiss and the Court’s Ruling
In response to Plaintiff’s initial complaint, GM filed a motion to dismiss in
which it sought dismissal of Plaintiff’s claims against it on the basis that GMCIC is
a foreign company that GM does not control. (See Op. and Order at 7, ECF No. 34
at Pg ID 875.) Applying the Sixth Circuit’s factors for deciding whether two
entities should be regarded as a single employer subject to joint liability for
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employment-related acts (see id. at 8, Pg ID 876),3 the Court found sufficient facts
to conclude that Plaintiff plausibly supported his assertion that GM controls
GMCIC. (Id. at 12, Pg ID 880.) The Court determined, for purposes of the motion
to dismiss, that GM and GMCIC are a single employer. (Id.)
III.
Applicable Law and Analysis
A.
Whether the Court has Personal Jurisdiction Over GMCIC
“Where a federal court’s subject matter jurisdiction over a case stems from
the existence of a federal question, personal jurisdiction over a defendant exists ‘if
the defendant is amenable to service of process under the [forum] state’s long arm
statute and if the exercise of personal jurisdiction would not deny the defendant
due process.’” Bird v. Parsons, 289 F.3d 865, 871 (6th Cir. 2002) (quoting Mich.
Coalition of Radioactive Material Users, Inc v. Griepentrog, 954 F.2d 1174, 1176
(6th Cir. 1992)). “To comply with due process, a court’s exercise of its power over
an out-of-state defendant must ‘not offend traditional notions of fair play and
substantial justice.’” Indah v. U.S. Sec. & Exchange Comm’n, 661 F.3d 914, 920
3
Those factors are: “(A) the interrelation of operations; (B) the common
management; (C) the centralized control of labor relations; and (D) the common
ownership or financial control, of the employer and the corporation.” 42 U.S.C.
§ 2000e-1(c)(3); 29 U.S.C. § 623(h)(3); see also Ambruster v. Quinn, 711 F.2d
1332, 1337 (6th Cir. 1983), abrogated on other grounds in Arbuagh v. Y & H
Corp., 546 U.S. 500 (2006); Murray v. Miner, 74 F.3d 402, 404 (2d Cir. 1996).
The factors are flexible and no single factor is determinative. Ambruster, 711 F.3d
at 1337-38; Murray, 74 F.3d at 404.
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(6th Cir. 2011) (quoting Int’l Shoe v. Washington, 326 U.S. 310, 316 (1945))
(additional quotation marks and citation omitted).
Michigan’s long-arm statute extends both general and limited jurisdiction
over resident individuals and corporations. See Mich. Comp. Laws § 600.701
(general, individuals); Mich. Comp. Laws § 600.705 (limited, individuals); Mich.
Comp. Laws § 600.711 (general, corporations); Mich. Comp. Laws § 600.715
(limited, corporations). The following relationships between a corporation and the
State are sufficient to establish general personal jurisdiction: (1) incorporation
under the State’s laws; (2) consent; or (3) “[t]he carrying on of a continuous and
systematic part of its general business within the [S]tate.” Id. § 600.711. Limited
personal jurisdiction occurs where the lawsuits arises out of an act by the
defendant, for example “[t]he transaction of any business within the [S]tate[]” or
doing an act in the state resulting in an action for tort. Id. § 600.715. Michigan’s
long-arm statute is coextensive with due process “if the particular acts or status of
a defendant first fit within a long-arm statute provision.” Green v. Wilson, 565
N.W.2d 813, 816 (Mich. 1997).
“Personal jurisdiction can be either general or specific, depending upon the
nature of the contacts that the defendant has with the forum state.” Bird, 289 F.3d
at 873. “For an individual, the paradigm forum for the exercise of general
jurisdiction is the individual’s domicile; for a corporation, it is an equivalent place,
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one in which the corporation is fairly regarded as at home … the place of
incorporation and principal place of business are paradigm bases for general
jurisdiction.” Daimler AG v. Bauman, 571 U.S. 117, 137 (2014) (internal
quotation marks, citation, ellipses and brackets removed). The corporation’s
“affiliations with the State” must be “‘so ‘continuous and systematic’ as to render
it essentially at home in the forum State.” Id. at 139 (brackets removed) (quoting
Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)).
“Specific jurisdiction, on the other hand, depends on an affiliation between the
forum and the underlying controversy, principally, activity or an occurrence that
takes place in the forum State and is therefore subject to the State’s regulation.”
Goodyear, 564 U.S. at 919 (internal quotation marks, brackets, and citation
omitted).
Plaintiff does not contend that GMCIC independently engaged in activities
in Michigan or maintained a relationship with the State sufficient to satisfy
Michigan’s long-arm statute or due process. Rather, Plaintiff relies on GM’s
contacts and relationship with Michigan, which he claims renders GMCIC
amenable to suit in the forum because GM controls GMCIC.
The Sixth Circuit has adopted the alter-ego theory of personal jurisdiction,
which “provides that a non-resident parent corporation is amenable to suit in the
forum if the parent company exerts so much control over the subsidiary that the
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two do not exist as separate entities but are one and the same for purposes of
jurisdiction.” Estate of Thomson v. Toyota Motor Corp. Worldwide, 545 F.3d 357,
362 (6th Cir. 2008). While the alter-ego theory is more often discussed in cases
where the parent is the non-resident over whom jurisdiction is sought based on its
subsidiary’s contacts with the forum, if the plaintiff proves “that the parent controls
the day-to-day operations of the subsidiary such that the subsidiary can be said to
be a mere department of the parent[,] … a court may exercise personal jurisdiction
over either the parent or the subsidiary based on the other’s connections to the
forum.” Simeone ex rel. Estate of Albert Francis Simeone, Jr. v. BombardierRotax GmbH, 360 F. Supp. 2d 665, 676-77 (E.D. Pa. 2005) (finding Austrianbased manufacturer of aircraft engine involved in plane crash subject to personal
jurisdiction under alter-ego theory based on parent company’s contacts with the
forum); Motown Record Co., L.P. v. iMesh.com, Inc., No. 03 Civ 7339, 2004 WL
503720, *4 (S.D.N.Y. Mar. 12, 2004) (concluding that Israeli subsidiary was
subject to personal jurisdiction under the alter-ego theory based on its parent’s
systematic and continuous contacts with the forum); see also David M. Holliday,
Am. Law of Prod. Liab. 3d Treatise § 48:96 (“Under the alter ego theory of
jurisdiction, personal jurisdiction over a parent corporation will give a state
personal jurisdiction over a nonresident subsidiary corporation if the parent so
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controls and dominates the subsidiary as in effect to disregard the latter’s
independent corporate existence[.]”).
In Anwar v. Dow Chemical Company, 876 F.3d 841 (6th Cir. 2017), the
court characterized the alter-ego test under federal law as requiring the plaintiff to
“demonstrate ‘unity of interest and ownership’ that goes beyond mere ownership’
and shared management personnel.” Id. at 849 (brackets omitted) (quoting Ranza
v. Nike, Inc., 793 F.3d 1059, 1073 (9th Cir. 2015)). The Sixth Circuit has
identified several relevant factors for deciding whether the alter-ego theory of
personal jurisdiction applies:
(1) sharing the same employees and corporate officers; (2)
engaging in the same business enterprise; (3) having the same
address and phone lines; (4) using the same assets; (5) completing
the same jobs; (6) not maintaining separate books, tax returns and
financial statements; and (7) exerting control over the daily affairs
of another corporation.
Estate of Thomson, 545 F.3d at 362-63. A similar non-exhaustive list of factors are
considered under Michigan law: “shared office space, shared board membership,
interconnected revenue and capital, support from the parent for the subsidiary in
the event of undercapitalization, payroll management, direction of policy and
decisions, and shared projects that the parent considers to be its own.” Anwar, 876
F.3d at 851 (citing United Ins. Grp Agency, Inc. v. Patterson, No. 299631, 2011
WL 5067251, at *2 (Mich. Ct. App. Oct. 25, 2011) (citing Seasword v Hilti, Inc.,
537 N.W.2d 221, 224 n.10 (Mich. 1995) and Herman v. Mobile Homes Corp., 26
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N.W.2d 757, 760 (Mich. 1947)). Nevertheless it is difficult to set forth an
exhaustive list of factors relevant to whether corporate formalities should be
respected due to “the infinite variety of fact situations that may arise.” Wm.
Passalacqua Builders, Inc. v. Resnick Developers S., Inc., 933 F.2d 131, 139 (2d
Cir. 1991); see also Midwest Precision Heating & Cooling v. NLRB, 408 F.3d 450,
459 (8th Cir. 2005) (“[W]e recognize the test of alter ego status is a flexible one,
such that lack of … any particular factor will not bar a finding of alter ego status.”)
(quotation marks and citation omitted). The focus is on the degree to which one
entity controls the other. See Anwar, 876 F.3d at 849 (quoting Ranza, 793 F.3d at
1073) (explaining that the alter-ego theory requires evidence “‘that the parent
controls the subsidiary to such a degree as to render the latter the mere
instrumentality of the former … exercising pervasive control over the subsidiary
… from broad policy decisions to routine matters of day-to-day operation.’”)
(original brackets omitted).
Viewing the pleadings and evidence in Plaintiff’s favor, the Court concludes
that he has satisfied his “relatively slight” burden and made a prima facie showing
that personal jurisdiction exists over GMCIC based on the alter-ego theory. On the
surface, GMCIC appears separate from GM. The corporations, according to Mr.
Treme and Ms. Vinueza, maintain separate offices, phone lines, bank accounts,
funds, records, Boards of Directors, and labor relations and human resources
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departments. However, it appears that the individuals who control GMCIC are in
fact GM employees assigned to work in China. The administrative chains of
command and organizational structure reflect that operational control over GMCIC
is the senior management of GM.
Mr. Treme states that GMCIC has its own Board of Directors, which “is the
highest authority of GMCIC and directs the overall management, supervision, and
control of the business[.]” (Treme Decl. ¶ 7, ECF No. 58-1 at Pg ID 1181.) Yet
GMCIC has not identified the individuals who sit on its Board of Directors, aside
from Ms. Vinueza. (See Vinueza Aff. ¶ 3, ECF No. 58-2 at Pg ID 1202.) As
Plaintiff points out, Ms. Vinueza and Mr. Treme never reveal in their declarations
whether they are GM or GMCIC employees. Further, Plaintiff indicates that the
budget and spending for the laboratories he managed while at GMCIC were
controlled by GM.
The top officials and managers at GMCIC serve similar positions at GM.
For example, Mr. Tsien serves as the President of GMCIC and as Executive Vice
President of GM. He reports to Ms. Barra, GM’s Chairman and CEO, who also is
listed as the top of the “Leadership” of GMCIC. The degree to which GMCIC’s
and GM’s managers overlap makes it difficult to conclude that their decisions are
independent. And even where supervisory personnel do not share dual roles, it
appears that they report directly to individuals at GM. For example, while serving
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as GMCIC’s Human Resources Director, Mr. Treme reported directly to John J.
Quattrone, Senior Vice President, Global Human Resources for GM.
Plaintiff’s evidence further reflects that GM regularly shifts managerial and
supervisory personnel between the two companies. For example, Plaintiff was
transferred from GM to GMCIC, and so was his replacement. Plaintiff’s move to
GMCIC was handled directly by two GM managers in the United States. Further,
the announcement of his retirement was signed by Ms. Charon and Mr. Fraser, a
GM Director in the United States working in Detroit, Michigan. This Court
already has found evidence suggesting that the employment decisions relevant to
Plaintiff’s lawsuit were made by GM employees in Michigan.
While GMCIC claims it maintains separate offices from GM, the Court
cannot ignore that the GM flag is flown out front and the building’s sign bears the
GM logo and states that it is GM’s “International Operations and China
Headquarters.” Further, GMCIC’s website suggests that it and GM are part of a
single, unitary enterprise. The Intellectual Property Rights Agreement
incorporated into Plaintiff’s GMCIC employment contract also suggests a lack of
corporate independence. And the choice-of-law provision in that agreement,
“though alone insufficient to establish jurisdiction, can ‘reinforce a deliberate
affiliation with the forum State and the reasonable foreseeability of possible
litigation there.’” Calphalon Corp. v. Rowlette, 228 F.3d 718, 723 (6th Cir. 2000)
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(quoting Burger King v. Rudzewicz, 471 U.S. 462, 482 (1985)). None of these
facts independently establish an alter-ego relationship. However, when considered
along with the evidence of common management and control, they support a prima
facie case for personal jurisdiction under the alter-ego theory.
For these reasons, the Court denies GMCIC’s motion to dismiss for lack of
personal jurisdiction.
B.
Whether Plaintiff’s Claims Against GMCIC are Subject to
Dismissal Under Rule 12(b)(6)
i.
Title VII and ADEA
GMCIC argues that Plaintiff’s Title VII and ADEA claims against it must be
dismissed because it is not controlled by GM and these statutes do not apply to
foreign employers with employees outside of the United States, unless the foreign
employer is controlled by an American employer. See 29 U.S.C. § 623(h)(2); 42
U.S.C. § 2000e-1(c)(2). GM made the same argument in seeking dismissal of
Plaintiff’s claims against it. The Court denied GM’s motion, concluding that
Plaintiff alleges enough facts to establish that GM and GMCIC are a single
employer and that, therefore, Plaintiff was employed by a foreign company
controlled by a United States company. (Op. & Order at 12 & n.4, ECF No. 34 at
Pg ID 880.) For the reasons discussed in that decision and in the subsection above,
the Court concludes that Plaintiff’s Title VII and ADEA claims against GMCIC
also are not subject to dismissal.
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ii.
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ELCRA
GMCIC argues that Plaintiff’s ELCRA claim against it must be dismissed
because China’s interest in applying its laws outweigh Michigan’s interest in
applying its laws in this instance. “Federal courts exercising supplemental
jurisdiction must apply the forum state’s choice of law rules to select the applicable
state substantive law.” Osborn v. Griffin, 865 F.3d 417, 443 (6th Cir. 2017)
(citations omitted). Under Michigan’s choice-of-law rules, the State’s laws are
presumed to apply unless “a ‘rational reason’ to do otherwise exists.” Sutherland
v. Kennington Truck Serv., Ltd., 562 N.W.2d 466, 471 (Mich. 1977). To make this
determination, courts first must decide “if any foreign state has an interest in
having its law applied.” Id. “If no state has such an interest, the presumption that
Michigan law will apply cannot be overcome. If a foreign state does have an
interest in having its law applied,” the court must “determine if Michigan’s
interests mandate that Michigan law be applied, despite the foreign interests.” Id.
GMCIC argues that “[c]ourts analyzing Michigan choice of law rules have
repeatedly found that ‘a foreign state undeniably has an interest in having its law
applied to an action filed by one of its citizens stemming from injury sustained
there.’” (Def.’s Mot. at 18, ECF No. 58 at Pg ID 1175 (emphasis removed)
(quoting Std. Fire Ins. Co. v. Ford Motor Co., 723 F.3d 690, 695 (6th Cir. 2013)).)
Although this Court found no reason to not apply the ELCRA when deciding GM’s
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motion to dismiss, GMCIC points out that GM never suggested that another forum
has an overriding interest in having its law applied. GMCIC maintains that China
has an overriding interest in having its law applied in this case as GMCIC is a
Chinese corporation operating pursuant to the laws of China and its alleged
conduct occurred while Plaintiff lived and worked in China. GMCIC argues that
cases finding that Michigan had an interest that mandated application of Michigan
law are distinguishable as the underlying action giving rise to the lawsuit occurred
in Michigan.
GMCIC has not identified the law of China that it believes should apply to
this litigation. It is unclear whether China provides for the civil rights protections
asserted by Plaintiff here. For this reason, this case is very different than those
cited by GMCIC. Where courts engage in a choice-of-law analysis, it is always
clear what the choices are. It is difficult for this Court to find that China has a
strong interest in having its law applied without knowing what that law provides.
Moreover, a court need only engage in a choice-of-law analysis when a difference
in law will make a difference to the outcome. New Hampshire Ins. Co. v.
Carleton, 502 F. App’x 478, 481 (6th Cir. 2012); Asher v. Unarco Material
Handling, Inc., 737 F. Supp. 2d 662, 667 (E.D. Ky. 2010) (citing Williams v. Toys
“R” Us, 138 F. App’x 798, 803 (6th Cir. 2005) (“The Court only needs to go
through the choice of law analysis when a conflict occurs between two states’
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laws.). But even if China has some interest in having its law govern, the Court
concludes that it does not override the presumption that Michigan law should apply
and Michigan’s interest in having its law applied.
Plaintiff, a United States citizen since 1999, lived in the United States (the
evidence suggests Michigan) from 1991 until 2009, when he transferred to his job
assignment in China. He was offered the GMCIC position while a Michigan
resident.4 Plaintiff returned to his home in the State after his employment in China
was terminated. Plaintiff claims that GM controlled GMCIC and that the decision
to terminate his position with GMCIC was made from GM’s Michigan
headquarters. While Plaintiff was in China when he was mandatorily retired, he
has experienced the effects of the decision back in Michigan.
4
GMCIC relies on the statement in Standard Fire that “a foreign sovereign
undeniably has an interest in having its law applied to an action filed by one of its
citizens stemming from injury there.” 723 F.3d at 695 (emphasis added). Plaintiff,
however, was not a citizen of China when he worked for GMCIC. He held only
U.S. citizenship. In Standard Fire, as well as other cases conducting choice-of-law
analyses, the courts also speak to the “residency” of the parties; however, it is
unclear whether they are equating residence with citizenship. “Citizenship …
turns on domicile. Domicile, a legal term of art, requires that a person both be
present in a state and have the intention to make his home there indefinitely or the
absence of an intention to make his home elsewhere. See, e.g., Prime Rate
Premium Fin. Corp., Inc. v. Larson, 930 F.3d 759, 765 (6th Cir. 2019) (internal
quotation marks and citations omitted). The evidence suggests that Plaintiff did
not intend to make China his home indefinitely and planned to return to Clarkston,
Michigan, eventually, where he maintained a residence.
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Moreover, Michigan has a strong interest in the enforcement of its civil
rights laws. The State’s interests include the prevention of discriminatory
employment decisions made by Michigan corporations concerning resident
employees, as well as those made for the corporations’ oversees employees and
employees of any entity controlled by a Michigan corporation. Plaintiff presents
sufficient evidence to determine for purposes of GMCIC’s motion to dismiss that
GM controls GMCIC and, from its Michigan headquarters, made the alleged
discriminatory decision to terminate Plaintiff’s employment. Refusing to apply
Michigan’s civil rights statute in this instance could encourage employers with
oversees operations seeking to terminate employees for unlawful reasons to move
those employees outside the forum’s reach and then execute the unlawful
employment action.
In short, the Court is not convinced that China has an interest in applying its
law to this dispute. In any event, the matter has connections to Michigan beyond
the fact that the alleged discriminatory employment decisions were made within its
borders such that the State’s interest in having its law applied outweigh any interest
of China.
Accordingly,
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IT IS ORDERED that GMCIC’s Motion to Dismiss (ECF No. 58) is
DENIED.
IT IS SO ORDERED.
s/ Linda V. Parker
LINDA V. PARKER
U.S. DISTRICT JUDGE
Dated: August 4, 2020
26
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