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KAMENS v. SUMMIT STAINLESS

March 29, 1984

RUTH KAMENS, et al.
v.
SUMMIT STAINLESS, INC., et al.



The opinion of the court was delivered by: KELLY

KELLY, District Judge:

 -- This is an action brought against defendant Summit Stainless, Inc. ("Summit") and its parent corporation Sumitomo Corporation of America ("Sumitomo") by two former employees of Summit, Ruth Kamens ("Kamens") and Pearl Shander ("Shander"). Plaintiffs allege the following: 1) they were discharged on account of their age in violation of the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621, et seq. (Count I); 2) they are owed overtime compensation pursuant to the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq. (Count II); 3) their termination breached implied covenants of good faith and fair dealing, and an implied covenant that they would be discharged only for good cause (Count III); 4) certain actions taken in connection with their termination, i.e., the release letter defendants sought to have plaintiffs execute, constituted actionable duress or coercion. (Count IV).

 Defendants bring the present motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) on the following grounds:

 1) The Complaint should be dismissed in its entirety as to defendant Sumitomo in that Sumitomo is not an "employer" under the ADEA and FLSA and did not participate in any of the conduct alleged in the Complaint.

 2) Count II, asserting claims for unpaid overtime, should be partially dismissed as barred by the statute of limitation applicable to FLSA claims.

 3) Count III should be dismissed since the statutory remedy for age discrimination forecloses common law remedies.

 4) Count IV should be dismissed against defendants since no cause of action lies under state law for attempted coercion or duress.

 In deciding a Rule 12(b)(6) motion to dismiss, the Court must, of course, take all plaintiffs allegations as true and all inferences favorable to the plaintiff will be drawn. Conley v. Gibson, 355 U.S. 41, 45-46, 41 LRRM 2089, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957); Bryson v. Brand Insulations, Inc., 621 F.2d 556, 559 (3d Cir. 1980); Mortensen v. First Federal Sav. and Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977).

 FACTS

 Plaintiffs, Ruth Kamens and Pearl Shander, were both employed as bookkeepers at Summit. Kamens had been employed by Summit and a predecessor company (Stainless Plates, Inc.) for ten years. Shander had been employed by Summit and a predecessor company (Rising Sun Stainless, Inc.) for nineteen years. At the time of their discharge on December 27, 1982, Kamens was 64 years old and Shander was 63 years old. Plaintiffs allege that they were replaced by three younger employees, ages 25, 36 and 32. The Company informed plaintiffs that their positions had been eliminated as part of a corporate reorganization and that the new positions created as a result thereof required qualifications plaintiffs didn't possess. Plaintiffs' Memorandum of Law in Opposition to Defendant's Motion to Dismiss ("Plaintiffs' Memo") Exhibits A and B. At the time they were terminated, defendant sought to have plaintiffs execute a letter release. In consideration of plaintiffs' agreement to waive all claims they might have against defendants, defendants promised to provide letters of recommendation to future potential employers, to maintain health insurance coverage for approximately 18 months, and to pay $6,000 as severance. Defendants also promised not to challenge plaintiffs eligibility for unemployment benefits. Id.

 DISCUSSION

 A. Defendant Sumitomo's Motion to Dismiss

 The major thrust of defendant Sumitomo's motion to dismiss is that the corporate veil doctrine, as articulated by the Supreme Court in Cannon Mfg. Co. v. Cudahy Packing Co., 267 U.S. 333, 336-37, 69 L. Ed. 634, 45 S. Ct. 250 (1925), *fn1" insulates a parent corporation from liability for action taken by its subsidiary. See also Indian Coffee Corp. v. Proctor & Gamble Co., 482 F. Supp. 1098, 1104 (W.D. Pa. 1980); Scalise v. Beech Aircraft Corporation, 276 F. Supp. 58, 62 (E.D. Pa. 1967). *fn2" Plaintiffs argue that under certain conditions, the corporate veil may be pierced and a parent company held liable along with its subsidiary.

 A review of the relevant law demonstrates that federal courts have developed three tests for determining whether a parent company is to be considered an "employer" of the employees of its subsidiary corporation within the meaning of the ADEA and FLSA statutes. The "integrated enterprise" test was first developed in labor relations cases and later applied to Title VII and ADEA cases. See Radio Union v. Broadcast Serv., 380 U.S. 255, 58 LRRM 2545, 13 L. Ed. 2d 789, 85 S. Ct. 876 (1965) (per curiam) (labor relations); Williams v. New Orleans Steamship Association, 341 F. Supp. 613, 4 FEP Cases 666 (E.D. La. 1972) (Title VII); Linskey v. Heidelberg Eastern, Inc., 470 F. Supp. 1181, 19 FEP Cases 1183 (E.D.N.Y. 1979) (Title VII and ADEA). In applying the test, the court considers (1) the interrelation of operations, (2) common management, (3) common control of labor relations, and (4) common ownership or financial control between the parent and subsidiary corporations. Based upon these factors, the court determines whether, even if the ...


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