Shaver v. Medicom Worldwide, Inc. et al
Filing
28
OPINION AND ORDER.....The defendants August 20, 2018 motion to dismiss is denied. (Signed by Judge Denise L. Cote on 11/28/2018) (gr)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
----------------------------------------X
:
HERBERT SHAVER,
:
Plaintiff,
:
:
-v:
:
MEDICOM WORLDWIDE, INC., MEDICOM
:
EDUCATION GROUP INC., CORONA
:
PRODUCTIONS, CORP., JEFFERY DUANE
:
STURGIS and JEFFERY DAVID STURGIS,
:
:
Defendants.
:
:
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18cv5700(DLC)
OPINION AND ORDER
APPEARANCES
For the plaintiff:
Daniel Altaras
Derek Smith Law Group, PLLC
One Penn Plaza, Suite 4905
New York, New York 10119
For the defendants:
Robert W. Small
Reger Rizzo & Darnall LLP
Cira Centre, 13th Floor
2929 Arch Street
Philadelphia, Pennsylvania 19104
DENISE COTE, District Judge:
Plaintiff Herbert Shaver alleges that his former employers,
Medicom Worldwide, Inc. (“Medicom Worldwide”), Medicom Education
Group Inc. (“Medicom Education”), Corona Productions, Corp.
(“Corona”), Jeffery Duane Sturgis (“Duane Sturgis”) and Jeffery
David Sturgis (“David Sturgis”), discriminated and retaliated
against him in violation of the Age Discrimination in Employment
Act, 29 U.S.C. § 623 et seq. (“ADEA”), the New York State Human
Rights Law, N.Y. Exec. Law § 290 et seq., and the New York City
Human Rights Law, N.Y.C. Admin. Code § 8-101 et seq.
The
defendants have moved to dismiss the amended complaint (“FAC”).
For the reasons that follow, the motion is denied.
Background
The following facts are taken from the FAC.
Shaver was
hired by Medicom Worldwide in June 2003 to be the Director of
Finance.
In 2004, Medicom Worldwide was divided into three
companies:
Medicom Worldwide, Medicom Education, and Corona
(collectively, “Medicom Entities”).
Medicom Worldwide, Medicom
Education, and Corona are each incorporated in Pennsylvania with
a principal place of business in Pennsylvania.
Duane Sturgis
owns the Medicom Entities, and David Sturgis is an officer of
the Medicom Entities.
David Sturgis is Duane Sturgis’s son.
Both individual defendants had supervisory authority over
Shaver.
Shaver worked for all three entities, had business cards
and letterhead indicating that he was the Chief Financial
Officer (“CFO”) for each corporate entity, and often called
clients and wrote letters to vendors as the CFO of each entity.
The FAC alleges that “[a]t all times material, Defendant Medicom
Worldwide, Defendant Medicom Education, and Defendant Corona
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Productions were joint employers of plaintiff.”
The FAC also
states that “[t]he exact number of employees at [the] Medicom
[entities] is unknown, but upon information and belief, there
are well more than the statutory minimum.”
Throughout Shaver’s employment, David Sturgis made comments
about Shaver’s age, which are described in some detail in the
FAC.
Shaver complained about these comments three times to the
director of human resources for the Medicom Entities between May
2015 and December 2016.
Shaver also reported David Sturgis’s
comments to Duane Sturgis in early 2016.
In 2016 and 2017,
David Sturgis discriminated and retaliated against Shaver by
systematically taking away Shaver’s fringe benefits and job
duties, including “a company cell phone, auto and repair
expenses, and access to the company petty cash.”
In December 2016, Duane Sturgis decided to sell the Medicom
Entities to David Sturgis.
When Shaver learned of this, he
informed Duane Sturgis that he was concerned that David Sturgis
would fire him or significantly reduce his hours, as David
Sturgis had done with two other employees over the age of 50.
As a result, Duane Sturgis and Shaver agreed that Shaver would
receive a six-month severance package in the event Shaver was
discharged.
In early 2017, David Sturgis increased the frequency of
negative comments he made to Shaver about his age.
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“These
comments were made to . . . Shaver on the phone while he was
working out of his home office located in New York.”
again reported these comments to Duane Sturgis.
Shaver
In early 2017,
Duane Sturgis sold the Medicom Entities to David Sturgis.
At
that time, the Medicom Entities removed two employees over 50
years of age from full-time positions, reducing the employees to
two shifts per week.
This change caused the two employees to
“lose their employee benefits and severance at a full-time
rate.”
On April 28, 2017, the Medicom Entities discharged Shaver.
The Medicom Entities offered Shaver “a substantially similar
position for only two days a week at forty (40) percent of his
previous salary” and without any employee benefits.
Shaver
accepted the new position but asked what severance he would
receive for being discharged from his full-time position.
heated exchange, David Sturgis rejected the request.
In a
A few days
later, Medicom Education offered Shaver a two-month severance
package.
Shaver rejected that package as inconsistent with his
agreement with Duane Sturgis, and was thereafter discharged.
Shaver filed a charge of unlawful discrimination with the
EEOC on December 19, 2017 (the “EEOC Charge”).
On April 30,
2018, Shaver received a right to sue letter from the EEOC.
The
original complaint was filed in this action on June 22 and did
not name Corona as a defendant.
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The defendants moved to dismiss the original complaint on
August 8, 2018.
An Order filed August 9 directed Shaver to file
any amended complaint or to oppose the motion to dismiss by
August 31, and noted that “[i]t is unlikely that [Shaver] will
have a further opportunity to amend.”
Shaver responded to the
motion to dismiss by filing the FAC on August 21, adding Corona
as a defendant.
The defendants filed a new motion to dismiss on
September 7, which became fully submitted on October 9.
Discussion
The defendants move to dismiss for lack of personal
jurisdiction and for failure to state a claim.
These arguments
are addressed in turn.1
I. Personal Jurisdiction
“In order to survive a motion to dismiss for lack of
personal jurisdiction, a plaintiff must make a prima facie
showing that jurisdiction exists.”
SPV Osus Ltd. v. UBS AG, 882
F.3d 333, 342 (2d Cir. 2018) (citation omitted).
“A plaintiff
The defendants also move to dismiss on the ground of forum non
conveniens. “The common-law doctrine of forum non conveniens
has continuing application in federal courts only in cases where
the alternative forum is abroad, and perhaps in rare instances
where a state or territorial court serves litigational
convenience best.” Sinochem Int’l Co. v. Malaysia Int’l
Shipping Corp., 549 U.S. 422, 430 (2007) (citation omitted).
The defendants seek a federal forum in Pennsylvania.
Accordingly, the motion to dismiss on forum non conveniens
grounds is denied.
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must have a state-law statutory basis for jurisdiction and
demonstrate that the exercise of personal jurisdiction comports
with due process.”
Charles Schwab Corp. v. Bank of Am. Corp.,
883 F.3d 68, 82 (2d Cir. 2018).
“In evaluating whether the
requisite showing has been made, [a court must] construe the
pleadings and any supporting materials in the light most
favorable to the plaintiff[].”
Licci ex rel. Licci v. Lebanese
Canadian Bank, SAL, 732 F.3d 161, 167 (2d Cir. 2013) (“Licci
II”).
A. New York Law Basis for Jurisdiction
The parties agree that personal jurisdiction, should it
exist, would be based on the New York long-arm statute, which
provides in relevant part as follows:
[A] court may exercise personal jurisdiction over any
non-domiciliary . . . who in person or through an
agent . . . transacts any business within the state or
contracts anywhere to supply goods or services in the
state.
N.Y.C.P.L.R. § 302(a)(1).
“A defendant need not physically
enter New York State in order to transact business, so long as
the defendant’s activities here were purposeful.”
Licci ex rel.
Licci v. Lebanese Canadian Bank, SAL, 673 F.3d 50, 61 (2d Cir.
2012) (citation omitted).
“Purposeful activities are those with
which a defendant, through volitional acts, avails itself of the
privilege of conducting activities within the forum State, thus
invoking the benefits and protections of its laws.”
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Eades v.
Kennedy, PC Law Offices, 799 F.3d 161, 168 (2d Cir. 2015)
(citation omitted).
If a defendant has transacted business
within the state within the meaning of New York C.P.L.R.
§ 302(a)(1), state law provides a basis for jurisdiction if “the
claim asserted . . . arise[s] from that business activity.”
Id.
(citation omitted).
Construing the pleadings and affidavits in the light most
favorable to Shaver, he has established a prima facie case that
personal jurisdiction exists over the defendants in New York.
The FAC alleges that Shaver “regularly worked” for the Medicom
Entities “out of his home office” in this state.
The FAC
further alleges that David Sturgis made discriminatory comments
to Shaver about Shaver’s age “on the phone while [Shaver] was
working out of his home office located in New York.”
An
affidavit submitted by David Sturgis admits that David Sturgis
“agreed” that Shaver could work from home two days per week.
By allowing Shaver to work from his home office in New York
on a part-time basis, the Medicom Entities voluntarily extended
their workforce into this state.
In particular, the defendants
have not rebutted or undermined the allegation in the FAC that
Shaver worked from home on a “regular[]” basis.
This indefinite
course of conduct is sufficient, under the New York long-arm
statute, to describe purposeful activity directed to New York
and to provide a basis for personal jurisdiction.
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B. Due Process
Even if authorized by state law, personal jurisdiction may
nonetheless be improper if it would violate the defendants’ due
process rights.
Due process considerations require that the defendant
have certain minimum contacts with the forum state
such that the maintenance of the suit does not offend
traditional notions of fair play and substantial
justice. Where, as in this case, the plaintiffs ask
the district court to assert specific jurisdiction
over the defendants, the jurisdictional inquiry
focuses on the affiliation between the forum and the
underlying controversy.
Licci II, 732 F.3d at 169-70 (citation omitted).
“Where the
defendant has had only limited contacts with the state it may be
appropriate to say that he will be subject to suit in that state
only if the plaintiff's injury was proximately caused by those
contacts.”
SPV Osus, 882 F.3d at 344 (citation omitted).
The
Second Circuit has observed that it would be a “rare” case where
New York C.P.L.R. § 302(a)(1) was satisfied by a defendant’s
transaction of business but the assertion of specific
jurisdiction arising out of the transaction nonetheless violated
due process.
See Licci II, 732 F.3d at 170.
The exercise of personal jurisdiction over the defendants
in this case does not violate due process.
The defendants’
course of conduct provides both minimum contacts and a
sufficient nexus between those contacts and Shaver’s age
discrimination claims.
Accordingly, the defendants’ motion to
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dismiss for lack of personal jurisdiction is denied.
II. Failure to State a Claim
The defendants move to dismiss the FAC on two principal
grounds.
First, Corona argues that Shaver’s ADEA claim is
untimely as to Corona, one of three entity defendants that
Shaver asserts employed him.
Second, the defendants contend
that the FAC does not adequately allege that Shaver was employed
by an employer with the ADEA’s statutory minimum of twenty
employees.
A. Relation Back
Corona was first named in the FAC, which was filed more
than 90 days after the plaintiff received his right to sue
letter from the EEOC.
Because the FAC relates back to the
original complaint, however, the motion to dismiss Shaver’s ADEA
claim against Corona is denied.
An ADEA claim must be brought within 90 days of a plaintiff
receiving a right to sue letter from the EEOC.
§ 626(e).
See 29 U.S.C.
An amended complaint that is filed after a statute of
limitations has run may relate back if:
(A) the law that provides the applicable statute of
limitations allows relation back;
(B) the amendment asserts a claim or defense that
arose out of the conduct, transaction, or occurrence
set out -- or attempted to be set out -- in the
original pleading; or
(C) the amendment changes the party or the naming of
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the party against whom a claim is asserted, if Rule
15(c)(1)(B) is satisfied and if, within the period
provided by Rule 4(m) for serving the summons and
complaint, the party to be brought in by amendment:
(i) received such notice of the action that it will
not be prejudiced in defending on the merits; and
(ii) knew or should have known that the action would
have been brought against it, but for a mistake
concerning the proper party's identity.
Fed. R. Civ. P. 15(c).
Because the FAC added Corona as a
defendant more than 90 days after the EEOC issued Shaver a right
to sue letter, the three requirements of 15(c)(1)(C) must be
satisfied.2
Corona was named in Shaver’s EEOC complaint.
And, the FAC
alleges discrimination arising out of the same conduct described
in Shaver’s original complaint.
These facts satisfy the first
two requirements of relation back.
Accordingly, the FAC relates
back if Corona “knew or should have known” that the action would
have been brought against it, but for a mistake concerning the
proper party’s identity.
Fed. R. Civ. P. 15(c)(1)(C)(ii).
“[A]
plaintiff’s knowledge of the existence of a party does not
foreclose the possibility that she has made a mistake of
identity about which that party should have been aware . . . .”
Krupski v. Costa Crociere S. p. A., 560 U.S. 538, 550 (2010).
The 90-day time to file a complaint after receiving a right-tosue letter from the EEOC is treated as a statute of limitations.
See Vernon v. Cassadaga Valley Cent. Sch. Dist., 49 F.3d 886,
889 (2d Cir. 1995).
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In fact, “[t]he reasonableness of [a plaintiff’s] mistake is not
itself at issue” in the Rule 15(c)(1)(C)(ii) inquiry.
Id. at
549.
Shaver’s brief opposing the motion to dismiss explains that
Shaver made a mistake about Corona’s role in employing him.
He
contends that he realized his error when the defendants moved to
dismiss his original complaint, and promptly amended to correct
his error.
Under Krupski, this is sufficient to allow the claim
against Corona to relate back to the original complaint.
Given
the interrelated business model of the three Medicom Entities
alleged in the FAC, Corona could reasonably have expected that
Shaver would add it as a defendant to this action.
Corona does
not identify any prejudice it has suffered from the delay in
naming it as a defendant.
Accordingly, the motion to dismiss
the ADEA claim against Corona is denied.
B. Employer Size
The defendants’ second principal ground for seeking
dismissal is their contention that none of the Medicom Entities
employs the 20-employee statutory minimum for the ADEA to apply.
For the reasons that follow, this portion of the motion is also
denied.3
The defendants have submitted extrinsic evidence in support of
their contention that none of the Medicom Entities employed at
least 20 employees. This evidence may not be considered at this
stage. The Supreme Court has explained that Title VII’s minimum
3
11
As the defendants acknowledge, there are at least two
theories whereby employees formally employed by separate
corporate entities may be aggregated.
These theories are a
joint employer and a single employer theory.
See generally
Arculeo v. On-Site Sales & Mktg., LLC, 425 F.3d 193, 197-98 (2d
Cir. 2005).
Each theory is a fact-intensive inquiry that
relates principally to how each purportedly separate employer
did or did not share control over its employees, and each theory
requires the balancing of several factors unique to each case.
On a single employer theory, a finding that nominally distinct
entities should be deemed a single integrated employer permits a
court to aggregate all employees of those entities.
198.
See id. at
On a joint employer theory, the court must examine the
workplace realities of each employee to determine whether an
employee formally employed by one company is jointly employed by
other companies.
See id. at 199.
The FAC plausibly alleges facts consistent with joint and
single employer theories of liability.
The FAC alleges that
Shaver, and perhaps other employees, performed similar services
employer size element is nonjurisdictional, and as such is
properly the subject of a Rule 12(b)(6), rather than Rule
12(b)(1), motion. See Arbaugh v. Y&H Corp., 546 U.S. 500, 51516 (2006). As is true of the minimum employer size provision of
Title VII, the ADEA’s minimum employer size provision is found
in a “definitions” section that does not speak in jurisdictional
terms. Compare 42 U.S.C. § 2000e(b) (Title VII), with 29 U.S.C.
§ 630(b) (ADEA).
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for each of the three entity defendants.
The FAC alleges that
Duane Sturgis and David Sturgis controlled each entity.
These
allegations plausibly allege that the three entities acted as a
single employer for its employees, or that certain employees of
one or more of the entities should be counted as jointly
employed by the other entities.
As evidenced by this discussion
(as well as by the defendants’ submission of extrinsic evidence
in support of their motion) these are complex factual questions
that cannot be resolved in this case on a motion to dismiss.
III. State Law Claims
The defendants’ motion to dismiss Shaver’s state law claims
assumes that Shaver’s ADEA claims have been dismissed.
Because
his ADEA claims survive, the defendants’ motion to dismiss is
denied as to Shaver’s state law claims.
Conclusion
The defendants’ August 20, 2018 motion to dismiss is
denied.
Dated:
New York, New York
November 28, 2018
__________________________________
DENISE COTE
United States District Judge
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