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.
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),
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).
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 corporations are nominally separate, they comprise an integrated enterprise. Radio Union, supra at 256. However, no one of the relevant factors is itself controlling. See Marshall v. Arlene Knitwear, Inc., 454 F. Supp. 715, 721, 17 FEP Cases 1233 (E.D.N.Y. 1978).
Second, a parent company may be liable for ADEA violations if the court finds the subsidiary is the "mere instrumentality" of the parent. Fanfan v. Berwind Corporation, 362 F. Supp. 793 (E.D. Pa. 1973). Under this test, the parent corporation will be held liable if (1) it controls the subsidiary to such a degree that the subsidiary is its instrumentality, (2) it is perpetuating a wrong, e.g., violating a statute, through its subsidiary, and (3) an unjust loss would result if the parent is allowed to be shielded by its separate corporate existence. Id. at 795.
Third, the court may disregard a parent corporation's separate existence when one company is "the alter ego" of the other and such disregard will "prevent fraud, illegality, or injustice, or when recognition of the corporate entity would defeat public policy or shield someone from liability of a crime." Publicker Industries v. Roman Ceramics, 603 F.2d 1065, 1069 (3d Cir. 1979) (quoting Zubik v. Zubik, 384 F.2d 267, 272 (3d Cir. 1967), cert. denied, 390 U.S. 988, 19 L. Ed. 2d 1291, 88 S. Ct. 1183 (1968)).
After reviewing all three tests, this Court recently wrote:
The Court perceives little substantive difference in the tests heretofore discussed. All are different expressions and means of conducting essentially the same inquiry. Under each test, the Court inquires as to the degree of interrelation between the parent corporation and the subsidiary concerning the conduct that is at issue in the litigation. Where the parent and subsidiary have acted jointly or where the subsidiary has acted as an extension of the parent, subject to its knowledge and involvement, the Court may disregard the parent's separate corporate existence.
Berkowitz v. Allied Stores of Penn-Ohio, Inc., 541 F. Supp. 1209, 1215, 31 FEP Cases 337 (E.D. Pa. 1982) (Broderick, J.).
Having reviewed the relevant law, I am persuaded that however vital Cannon may be in the personal jurisdiction context, its applicability has been vitiated in the substantive areas of labor and employment discrimination law. Therefore, Sumitomo cannot, as a matter of law under the authority of Cannon, be dismissed from the case under Fed.R.Civ.P. 12(b)(6). The moving papers and other documents attached thereto disclose a dispute of fact as to what extent Sumitomo and Summit interrelated, particularly with regard to the actions of Mr. Takeshi Iguchi, the president of Summit at the time of plaintiff's discharge, and to what extent the composition of Summit's Board of Directors, all of whom are key executives of Sumitomo, represented common management, ownership or control. Since a genuine dispute as to a material fact precludes the Court from converting a Rule 12(b)(6) motion into a motion for summary judgment under Fed.R.Civ.P. 56, see Mortensen v. First Federal Sav. and Loan Ass'n., 549 F.2d at 891, defendant Sumitomo's motion to dismiss is denied.
B. FLSA Claims
Defendants are correct that a cause of action arising out of a non-willful violation of FLSA must generally be commenced within two years after the cause of action accrues, and an action arising out of a willful violation must be commenced within three years after it accrues. From this, defendants reason that plaintiffs' claim for unpaid overtime, going back five years, is, as a matter of law, non-compensable. This position, however, does not account for the equitable tolling doctrine which "is read into every federal statute of limitation." Holmberg v. Armbrecht, 327 U.S. 392, 397, 90 L. Ed. 743, 66 S. Ct. 582 (1946).
Plaintiffs assert two grounds upon which equitable tolling may be applicable in this case. First, plaintiffs allege affirmative misrepresentations made by defendants to plaintiff Kamens. Complaint para. 28; Plaintiffs' Memo, Exhibit C. A misrepresentation, if proven, equitably tolls the statute of limitations even if it was not made negligently or fraudulently. Ott v. Midland-Ross Corp., 600 F.2d 24, 31-32, 19 FEP Cases 1465 (6th Cir. 1979); Restatement of Torts (Second) § 552C (1977).
Secondly, both plaintiffs allege in their affidavits that at no time during the course of their employment did they see a United States Department of Labor poster advising them of their minimum wage and overtime pay rights. All employers are required to display this poster, pursuant to 29 C.F.R. § 516.4. An employer's failure to post a statutorily required notice of this type tolls the running of any period of limitations. Bonham v. Dresser Industries, 569 F.2d 187, 193, 16 FEP Cases 510, (3d Cir. 1978). Plaintiffs' allegations as to grounds to invoke equitable tolling are sufficient to avoid partial dismissal of the FLSA claim for unpaid overtime.
C. Breach of Implied Covenants
Count III of the Complaint alleges that "employment contracts between plaintiffs and defendants included an implied covenant of good faith and fair dealing and an implied covenant that plaintiffs would be discharged only for good cause." Complaint para. 32.
Plaintiffs' common law claim is governed by a line of Pennsylvania and Third Circuit cases beginning with Geary v. United States Steel Corp., 456 Pa. 171, 319 A.2d 174 (1974) which held that "a cause of action exists for wrongful discharge where the employment termination contravenes a significant and recognized public policy." Novosel v. Nationwide Insurance Company, 721 F.2d 894, 898, 114 LRRM 3105 (3d Cir. 1983) (construing Geary, supra).
The next major case to consider the ramifications of Geary was Bonham v. Dresser Industries, Inc., supra. The Bonham Court concluded that "the Pennsylvania courts would not hold that termination of an at-will employee on the basis of age gives rise to an independent common law cause of action for breach of contract. . . ." Id. at 195. The rationale for this holding was that the Pennsylvania Human Relations Act ("PHRA"), 43 Pa.C.S.A. § 951 et seq., prohibiting discrimination in employment because of age and establishing a State authority to grant or seek relief from such discriminatory practice, constituted the exclusive state remedy for such discrimination. Bonham, supra at 195. The Court stated,
We do not believe that the courts of Pennsylvania would hold that the mere passage of the Human Relations Act created a separate common law claim where none had existed before, and where that void had been filled by that very legislation. Judicial reluctance to create such a remedy is evident in Geary, and we believe that the courts of Pennsylvania, if directly confronted with the issue, would hold that the Pennsylvania Human Relations Act and the procedure established therein provide the exclusive state remedy for vindication of the right to be free from discrimination based on age.