The opinion of the court was delivered by: ROBERT S. GAWTHROP, III
This case concerns allegations by an attorney, suing under the name John Doe, that he was discharged from his position at the law firm William Shapiro, Esquire, P.C., because he was diagnosed with AIDS. The complaint includes claims under the Americans with Disabilities Act (Count I), the Pennsylvania Human Relations Act (Count II), and under Pennsylvania common law for intentional infliction of emotional distress (Count III). Upon the following reasoning, I shall deny the motion as to Counts I and II, and grant it as to Count III.
The defendants move under Fed.R.Civ.P. 12(b)(1) to dismiss Count I, a claim under the Americans with Disabilities Act ("ADA" or "the Act"), for lack of subject matter jurisdiction. Their attack is not directed at the manner in which jurisdiction is pled, but rather calls into question the actual existence of jurisdiction. See Young v. Francis, 820 F. Supp. 940, 943 (E.D. Pa. 1993) (explaining distinction between facial and factual attacks on jurisdiction). Whereas on a motion to dismiss under Rule 12(b)(6) the plaintiff is entitled to have all reasonable inferences drawn in his favor, when jurisdiction is challenged under Rule 12(b)(1), the burden is on the plaintiff to prove jurisdiction exists. Lattanzio v. Security Nat'l Bank, 825 F. Supp. 86, 88 (E.D. Pa. 1993). In assessing a Rule 12(b)(1) motion, the parties may submit and the court may consider affidavits and other relevant evidence outside the pleadings. Berardi v. Swanson Memorial Lodge No. 48 of Fraternal Order of Police, 920 F.2d 198, 200 (3d Cir. 1990); Charles A. Wright & Arthur R. Miller, 5A Federal Practice and Procedure: Civil 2d § 1350, at 213 (1990).
The defendants claim that because Mr. Doe was one of only, at most, ten people employed by William Shapiro, Esq., P.C. ("the Shapiro Law Firm"), the firm is not covered by the ADA. The ADA defines the term employer as:
a person engaged in an industry affecting commerce who has 25 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding year, and any agent of such person.
42 U.S.C. § 12111(5)(A).
The plaintiff argues that all of the defendants should be consolidated for the purposes of meeting the ADA's jurisdictional requirement. The defendants concede that if this is done, the ADA's 25-employee floor is met.
When examination of several nominally separate corporate entities reveals that they essentially "function as one integrated enterprise," the court may treat them as a single employer under the Act. Beckwith v. International Mill Servs., 617 F. Supp. 187, 189 (E.D. Pa. 1985). Courts have typically considered four-factors in making this determination: (1) the interrelation of operations, (2) common management, (3) centralized control of labor relations, and (4) common ownership or financial control existing among the several entities. Berkowitz v. Allied Stores of Penn-Ohio, Inc., 541 F. Supp. 1209, 1215 (E.D. Pa. 1982); Beckwith, 617 F. Supp. at 189; Ratcliffe v. Insurance Co. of North America, 482 F. Supp. 759, 764 (E.D. Pa. 1980). In applying this four-factor test, courts appear to take a "totality of the circumstances" approach to the issue, treating the factors as guideposts rather than as items on a checklist. With this background in mind, I turn to application of the test.
Interrelation of Operations : Although the defendants contend that each defendant is engaged in a separate industry affecting commerce, it is more accurate to state that each contributes something to a single, common enterprise -- leasing equipment and selling securities backed by the accounts receivable on the leases. The integrated nature of this operation is illustrated, most simply, by the "Official Walnut Phone List" for November of 1992, which lists the Shapiro Law Firm attorneys under the heading "Legal Department." (Pls.' Mem. of Law at 28). A more in-depth investigation of the defendants' relationships reveals the same thing -- the Shapiro Law Firm functioned as the legal arm of the Walnut companies, managing collections on unpaid leases.
Walnut Equipment Leasing Co., Inc., a Delaware corporation ("Walnut-Delaware") and Walnut Equipment Leasing Co., Inc., a Pennsylvania corporation ("Walnut-Pennsylvania") are in the business of leasing equipment. (Depos. of William Shapiro at 30-32). Walnut-Pennsylvania has no employees, and functions only through its parent, Walnut-Delaware. (Depos. of William Shapiro at 32). Equipment Leasing Corporation of America ("ELCOA") is also in the equipment leasing business. (Depos. of William Shapiro at 36). Instead of originating leases, however, it purchases them from Walnut-Delaware. (Depos. of William Shapiro at 37). Walnut-Delaware uses the money it gains from selling leases to ELCOA and Walnut-Pennsylvania to purchase more equipment to be leased. (Depos. of William Shapiro at 45).
Welco Securities, Inc. is a licensed broker/dealer. (Depos. of William Shapiro at 52). ELCOA and Walnut-Delaware sell debenture securities through Welco Securities, Inc. (Depos. of William Shapiro at 52 & 56). It is from the sale of debenture securities that ELCOA obtains funds with which to purchase equipment leases from Walnut-Delaware. Financial Data, Inc. is a transfer agent that transfers ownership of securities and maintains records on behalf of Welco Securities, Inc. (Depos. of William Shapiro at 67). On the Official Walnut Phone List, the employees of Financial Data, Inc. are listed under the heading Welco Securities, and their paychecks are drawn on Walnut-Delaware. (Depos. at 68-69).
At least 90%, and possibly as many as 99%, of the cases handled by the Shapiro Law Firm during the relevant period were on behalf of Walnut-Delaware. (Pls.' Mem. of Law, at 13 & Ex. F). During the period of Mr. Doe's employment, when its own equipment leases or those of Walnut-Pennsylvania or ELCOA went into default, Walnut-Delaware would forward the lease files to William Shapiro. (Depos. of William Shapiro at 100-101). For leases outside of Pennsylvania, New York and New Jersey, a paralegal employed by Walnut-Delaware would prepare a complaint and draft correspondence in the name of the Shapiro Law Firm, under the supervision of Mr. Shapiro. (Depos. of William Shapiro at 103-105). All of the initial collection efforts, including preparation of demand letters and delivery of the judgment to the sheriff, were performed by Walnut-Delaware paralegals in the name of the Shapiro Law Firm. After 45 days, if the claim had not been resolved, the file was transferred to an attorney employed by the Shapiro Law Firm. (Depos. of William Shapiro at 105). Defaulted leases in Pennsylvania, New York, or New Jersey were transferred to a Shapiro attorney immediately. Once they received the files, it was the responsibility of the Shapiro Law Firm attorneys to collect on the defaulted leases and close the files, either by working with out-of-state counsel or by taking action locally.
The defendants have created a corporate labyrinth with each putatively independent entity intertwined with the business of the other. Most telling is the fact that employees of Walnut-Delaware routinely performed work in the name of the Shapiro Law Firm and its attorneys. It is apparent that the law firm in executing the final phase of Walnut-Delaware's collections efforts merely functioned as one component of an elaborate business plan.
In addition to being functionally interrelated, the defendants share an office suite, fax lines, printing services, and an "800 number." Walnut-Delaware, Walnut-Pennsylvania, WELCO Securities, Inc., and the Shapiro Law Firm are located at 101 West City Avenue, Bala Cynwyd, Pennsylvania. (Depos. of William Shapiro at 30, 32, 63, Aff. of John Doe, P 5). In addition, the employees of Financial Data, Inc. are located at this address. (Depos. of William Shapiro at 66). Although ELCOA has a Delaware address, the company does not maintain a representative there on a regular basis. The files stored at the Delaware suite are created at 101 West City Avenue, Bala Cynwyd and transported to Delaware by Kenneth Shapiro. (Aff. of John Doe, PP 3, 4). The receptionist at the Delaware office provides callers with a 800 number which accesses the Walnut Equipment Leasing voice mail system. As reflected by the Official Walnut Phone List, which lists only a three digit extension for each person, employees of Walnut, Welco Securities, Inc., and the Shapiro Law Firm communicate on a unified phone system. (Pls.' Mem. of Law at 28).
At the Bala Cynwyd office, each corporate defendant designates a separate door as its entrance; however, all of the doors lead to a single, contiguous work area in which employees of the various defendants are grouped by function. Demarcations between work areas are by book shelves, cubicles, and walls. (Aff. of John Doe, P 9). Employees of the various defendants move freely between work areas, and it is common for them to share office furniture, supplies, and copy machines. (Aff. of John Doe, P 9). Mr. Doe's health insurance, as an employee of the Shapiro Law Firm was provided by Walnut Equipment Leasing Co., Inc., and his paycheck, drawn on Shapiro Law Firm accounts, was sent in a Walnut Equipment Leasing Co., Inc. envelope. (Aff. of John Doe, PP 7, 8).
The defendants argue that because they each maintain separate pay rolls, books, records, and bank accounts, and because they file separate tax returns, the interrelation of operations requirement is not met. While these factors may be indicia of separateness, when compared with the overwhelming evidence of integration detailed above, they are not dispositive. The Shapiro's holdings are designed to, and indeed do, operate as a coherent whole. Thus, I conclude the interrelation of operations prong is fulfilled.
Common Management : Defendant William Shapiro and defendant Kenneth Shapiro are the top two officers of every corporate defendant. Specifically, William Shapiro is President of the Shapiro Law Firm, Walnut Equipment Leasing Co., Inc., Equipment Leasing Corporation of America, Financial Data, Inc., and Walnut Associates. He is Secretary/Treasurer of Welco Securities, Inc. Kenneth Shapiro is Secretary/Treasurer of the Shapiro Law Firm, Vice-President of Walnut Equipment Leasing Co., Inc., Equipment Leasing Corporation of America, and Walnut Associates, and President of Welco Securities, Inc. (Pls.' Mem. of Law, Ex. E, at 2-3, and Depos. of William Shapiro at 16-26, 67). Thus, management and control of the nominally independent defendant corporations is effectively centralized in the hands of William and Kenneth Shapiro.
Centralized Control of Labor Relations : The plaintiff during his tenure observed that "William and Ken Shapiro, separately and jointly controlled every significant aspect of labor relations and personnel policy on a day-to-day basis for all operations at 101 West City Avenue." (Aff. of John Doe, P 10). William Shapiro was responsible for managerial hiring at Walnut-Delaware and Financial Data, Inc. (Depos. of William Shapiro at 87-88). Mr. Shapiro, on at least one occasion, suggested that a Walnut-Delaware employee change positions and work for Financial Data, Inc. instead. After this suggestion was made, "[the employee's] ...