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June 4, 1998


The opinion of the court was delivered by: DUBOIS



 JUNE 4, 1998

 This matter comes before the Court on Motion for Partial Summary Judgment Pursuant to Federal Rule of Civil Procedure 56 of Defendants Safeguard Scientific, Inc. ("SSI") and Interactive Marketing Ventures, Inc. ("IMV"). Defendants seek partial summary judgment on the grounds: (1) that SSI cannot be held liable for the allegedly discriminatory employment practices of IMV because the two corporations are not a "single employer" for purposes of Title VII, 42 U.S.C. ยง 2000e et. seq. ; (2) that plaintiff, Juanita C. Martin ("plaintiff" or "Ms. Martin") has produced insufficient evidence that she gave "additional consideration" when accepting employment at IMV and thus cannot overcome the presumption that her employment was at-will and may not, therefore, maintain her state law claim that her termination was a breach of contract; (3) that plaintiff has demonstrated neither "extreme and outrageous conduct" on the part of defendants nor produced the medical evidence necessary for her intentional infliction of emotional distress claim to survive; and (4) that plaintiff cannot claim damages for lost wages or benefits from IMV after May 31, 1996, because IMV initiated a "mass layoff" on that date.

 The Court will grant defendants' Motion with respect to the issue of whether IMV and SSI were a single employer because there is no genuine issue of material fact as to that claim. The Court will, however, deny defendants' Motion as to the issues of whether (a) the presumption that plaintiff's employment was at-will has been overcome and (b) plaintiff can recover damages for the period after May 31, 1996. The Motion with respect to plaintiff's claim of intentional infliction of emotional distress will be denied as moot because plaintiff has voluntarily withdrawn that claim.


 The following facts are drawn from the affidavits, depositions, documentary evidence and papers submitted by the parties. Where the evidence is contradictory, or facts are disputed, the Court so indicates. In deciding this Motion, the Court relies only on undisputed facts.

 Charles Andes, Chief Executive Officer ("CEO") of IMV at times relevant to this case, had considerable experience with direct marketing, having served as CEO of Franklin Mint for approximately thirteen years in the 1970s and 1980s. In 1994 he drew on this experience and developed the concept of an "interactive marketing database company." Mr. Andes brought this new concept of direct marketing to SSI, a publicly traded investment company, seeking start-up capital for IMV. SSI invested heavily in IMV. All of IMV's start-up capital - an investment of five million dollars - came from SSI; in exchange, SSI obtained a 70% equity stake in IMV. The remaining 30% was allocated to Mr. Andes for distribution "at his discretion" among the IMV managers he hired.

 After making its investment, IMV became what SSI refers to as a "partnership company." Although called a "partnership company," IMV had an independent corporate existence, with its own articles of incorporation, by-laws and board of directors. As part of SSI's oversight of its substantial investment in this "partner," SSI officers assumed positions on IMV's board. In addition, SSI provided a portfolio of services to IMV such as administrative support, tax advice and legal services. While it nominally charged IMV for some of these services, it never collected this money because IMV never generated independent operating revenue.

 IMV had a unique management structure, also created by Mr. Andes. The top managers of IMV were organized into teams of "senior partners" who were equals within the company's management structure. It was into this group of "senior partners" that plaintiff was recruited. Plaintiff had worked at Franklin Mint until 1991 where she ultimately rose to the position of Executive Creative Director. After leaving Franklin Mint, plaintiff established a consulting business called "Innovation." By the end of 1994, she was on retainer to two clients who were paying her $ 9,000 a month for her services. After expenses, her 1994 net taxable income was $ 5,455.

 Plaintiff was induced to leave her consulting practice by the promise of a job as creative director and "senior partner" at IMV. Her recruitment onto the IMV team began when Charles Wickard, a "senior partner" at IMV and a former colleague of plaintiff's at Franklin Mint, recommended her as a candidate to Mr. Andes. Mr. Andes contacted plaintiff in February, 1995 and she met with him that same month at SSI headquarters, where his office was located. The next day she accompanied him on SSI's corporate jet to Connecticut where she met with representatives of SSI as well as representatives of another SSI "partnership company" and a potential corporate customer of IMV.

 Plaintiff was offered a job by Mr. Andes upon their return to Pennsylvania. She asserts that she accepted the position upon the understanding that her base salary was to be $ 110,000 per year, supplemented by an additional $ 110,000 in guaranteed "project management fees." In addition, plaintiff alleges that Mr. Andes promised plaintiff a position as CEO of another start-up company which was to specialize in the marketing of collectibles.

 After this promising start, however, things quickly turned sour for plaintiff. Shortly after beginning work at IMV, although hired as a "senior partner/creative director," plaintiff was assigned to work under other "senior partners" - called "senior partners-in-charge" - who had ultimate decision making authority for their projects. This arrangement resulted in friction. At least two senior partners-in-charge complained to Mr. Andes about plaintiff's performance. After those initial complaints, plaintiff's termination was considered by Mr. Andes and Richard Miles (another "senior partner" at IMV), and the ramifications of firing her were then explored with attorneys working for SSI. Instead of terminating her at that time, Mr. Andes issued a memorandum seeking to clarify plaintiff's role in relation to senior partners-in charge. According to defendants, problems continued, however, and by the end of August, 1995, Mr. Andes, again in consultation with Mr. Miles, decided to terminate plaintiff. Plaintiff was terminated in August, 1995.

 During this period, plaintiff alleges that she was subject to repeated episodes of harassment. She claims that as the only female "senior partner" her authority was consistently undercut until she was eventually fired. Although hired as a "senior partner" she was, she claims, treated as less-than-equal by other "senior partners." Plaintiff alleges that this treatment was manifested in many ways, including her exclusion from meetings and a refusal to give her any significant authority (such as by appointing her to lead a project) or to provide her with information necessary to do her job. When plaintiff complained, as she says she consistently did, her complaints were ignored. In addition, plaintiff alleges that she was subject to sexually offensive language and innuendo from a number of other officers of IMV, including at least one incident in which she was shown sexually explicit pornography. Her complaints about these incidents were also, she says, ignored.

 In May 1996, IMV, under the direction of a new CEO, Hillary Grinker, engaged in a "mass lay-off" of "senior partners." Before taking this step, Ms. Grinker consulted SSI attorneys. Despite this layoff, after May 1996, at least some former "senior partners" continued to be paid by IMV as consultants. As of August 1997, defendants assert that IMV stopped functioning as an operating entity.


 Summary Judgment Standard

 Under Federal Rule of Civil Procedure 56, a motion for summary judgment must be granted when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56.

In an employment discrimination case, "the burden of persuasion on summary judgment remains unalterably with [the employer] as movant. The employer must persuade the court that even if all of the inferences which could reasonably be drawn from the evidentiary materials of record were viewed in the light most favorable to [the plaintiff], no reasonable jury could find in [the plaintiff's] favor."

 Marzano v. Computer Science Corp., Inc., 91 F.3d 497, 502 (3d Cir. 1996) (quoting Sorba v. Pennsylvania Drilling Co., Inc., 821 F.2d 200, 201-02 (3d Cir. 1987), cert. denied, 484 U.S. 1019, 98 L. Ed. 2d 679, 108 S. Ct. 730 (1988)). With this standard in mind, the Court turns to the grounds upon which defendants seek partial summary judgment.

 Are IMV and SSI a "Single Employer" for purposes of Title VII?

 1. Legal Standard

 While the Third Circuit has not directly addressed the exact question posed by this case - under what circumstances might a majority equity holder be held liable, under Title VII, for the discriminatory employment acts of the corporation in which it holds stock - it has written, in Marzano v. Computer Science Corp., Inc., 91 F.3d 497, 502 (3d Cir. 1996), on the nearly identical question of a parent corporation's liability for the employment decisions of a wholly owned subsidiary. Although not wholly owned, because SSI controlled more than fifty percent of IMV's equity, the Court will hereinafter refer to IMV as the "subsidiary" of SSI. *fn1"

 The parties urge the Court to analyze the question at issue by applying a four-factor test established by the National Labor Relations Board ("NLRB") to determine if two apparently independent entities are actually a "single employer." While this "single employer" test was not expressly applied by the Third Circuit in Marzano, the circuit court has approved the test in other circumstances. In N.L.R.B. v. Browning-Ferris Industries, 691 F.2d 1117 (3d Cir. 1982), the Third Circuit was required to determine, on appeal from an administrative decision of the NLRB, whether Browning-Ferris Industries was a "joint employer" which could be held liable for unfair trade practices. That opinion provides a detailed description of the "single employer" doctrine:

A "single employer" relationship exists where two nominally separate entities are actually part of a single integrated enterprise so that, for all purposes, there is in fact only a "single employer." The question in the "single employer" situation, then, is whether the two nominally independent enterprises, in reality, constitute only one integrated enterprise. . . . In answering questions of this type, the Board considers the four factors approved by the Radio [and Television Broadcast Technicians Union 1264 v. Broadcast Serv. Of Mobile, Inc., 380 U.S. 255, 256, 13 L. Ed. 2d 789, 85 S. Ct. 876 (1965)] court . . . : (1) functional integration of operations; (2) centralized control of labor relations; (3) common management; and (4) common ownership. Thus, the "single employer" standard is relevant to the determination that "separate corporations are not what they appear to be, that in truth they are but divisions or departments of a single enterprise." NLRB v. Deena Artware, Inc., 361 U.S. 398, 4 L. Ed. 2d 400, 80 S. Ct. 441 . . . (1960). "Single employer" status ultimately depends on all the circumstances of the case and is characterized as an absence of "arm's length relationship found among unintegrated companies." Local 627, Internation Union of Operating Engineers v. NLRB, 171 U.S. App. D.C. 102, 518 F.2d 1040, 1045-46 (1975), aff'd on this issue sub nom. South Prairie Construction Union of Operating Engineers, 425 U.S. 800, 48 L. Ed. 2d 382, 96 S. Ct. 1842 . . . (1976) . . . .

 Browning-Ferris, 691 F.2d at 1122 (emphasis in original) (some citations omitted). This "single employer" test is commonly referred to as the "integrated enterprise test." See, e.g., Frank v. U.S. West, Inc., 3 F.3d 1357 (10th Cir. 1993); Beckwith v. Internat'l Mill Services, Inc., 617 F. Supp. 187, 189 (E.D. Pa. 1985).

 In Marzano, a female employee brought, inter alia, a Title VII discrimination action against her former employer and its parent. In the course of its opinion, the circuit court addressed - for the first time in the Third Circuit - the extent of a parent corporation's liability for the employment decisions of a wholly owned subsidiary. The court, in determining the appropriate standard for deciding whether or not the parent could be held liable, turned to principles of corporate law and framed the issue as one of whether the corporate veil could be pierced. Examining New Jersey corporate law (the state of incorporation), the court first noted that shareholders are normally "insulated from the liabilities of corporate enterprise . . . even in the case of a parent corporation and its wholly owned subsidiary . . . ." Marzano, 91 F.3d at 513 (internal quotations omitted). To strip entities of that insulation, a court must find that a "subsidiary was a mere instrumentality of the parent corporation . . . [that is, that] the parent so dominated the subsidiary that it had no separate existence but was merely a conduit for the parent." Id. (internal quotations omitted).

 The plaintiff in Marzano argued that the parent should be held liable because: (1) plaintiff was initially hired by the parent and always believed she was employed by the parent; (2) when the division for which she initially worked merged with another subsidiary, there were no apparent changes in management; (3) plaintiff received paychecks from the parent for some time and belonged to the parent's pension plan; (4) the policy at issue in the suit was based on one promulgated by the parent; and (5) plaintiff was regularly involved with the corporate parent while employed at the subsidiary.

 The Third Circuit concluded that the facts recited above, even if proved, did not demonstrate that the subsidiary and its parent "were so interrelated and integrated in their activities, labor relations and management that" the corporate veil should be pierced. Id. at 514 (internal quotation omitted). While the court did not adopt a specific test (instead examining all the circumstances in order to determine the degree of interrelationship) the factors it mentioned - integration of activities, labor relations and management - are three of the four factors in the National Labor Relations Board's "single employer" test. *fn2" This Court concludes therefore, that in the context of employment discrimination, the four-factor "integrated enterprise test" is most appropriate. *fn3" See also Daliessio v. Depuy, Inc., 1998 U.S. Dist. LEXIS 605, C.A. No. 96-5295, 1998 WL 24330 (E.D. Pa. Jan. 23, 1998) (employing the "integrated enterprise test" on motion of parties under Federal Rule of Civil Procedure 12(b)(1) in context of determining whether defendants were "employer" within the meaning of Title VII); Beckwith v. Internat'l Mill Services, Inc., 617 F. Supp. 187, 189 (E.D. Pa. 1985); Ratcliffe v. Insurance Co. of North America, 482 F. Supp. 759, 764 (E.D. Pa. 1980) (cited with approval by Marzano).

 This conclusion does not end the Court's inquiry, however, for the proper application of this test must still be determined. A review of the case law of this and other circuits shows that the four-pronged inquiry is not to be rigidly applied. "'[A] plaintiff's status as an employee under Title VII can be determined only upon a careful analysis of the myriad facts surrounding the employment relationship in question.'" Graves v. Lowery, 117 F.3d 723, 729 (3d Cir. 1997) (quoting Miller v. Advanced Studies, 635 F. Supp. 1196 (N.D. Ill. 1986)). Thus, other factors may be considered. For instance, "although employee expectations are not dispositive of employer status, they are relevant to our analysis." 117 F.3d at 728-29 (citing Armbruster v. Quinn, 711 F.2d 1332, 1337 (6th Cir. 1983)).

 While the Court must examine the "myriad facts" of plaintiff's employment relationship, some factors have more weight than others. Sole ownership alone is never enough to establish parent liability, see, e.g., Frank v. U.S. West, Inc., 3 F.3d 1357, 1364 (10th Cir. 1993), and although no one factor dominates, control over employment carries significant weight. See Swallows v. Barnes & Noble Book Stores, Inc., 128 F.3d 990, 994 (6th Cir. 1997); Frank, 3 F.3d at 1363; Rogers v. Sugar Tree Products, Inc., 7 F.3d 577, 582 (7th Cir. 1993). There is also a "strong presumption" that a parent is not the employer of its subsidiary's employees. Frank, 3 F.3d at 1362. Indeed, "the courts have found parent corporations to be employers only in extraordinary circumstances." Johnson v. Flowers Industries, Inc., 814 F.2d 978, 981 (4th Cir. 1987). Moreover, it is never sufficient to establish only that a chain of command eventually ends at the parent's headquarters. See Frank, 3 F.3d at 1362. If "stockholders were liable whenever they exercised their rightful control, limited liability would be a meaningless fiction because few individuals establish a corporation and then ignore it." Johnson, 814 F.2d at 980.

 With these principles in mind, the Court turns to the facts in the case at bar.

 2. Evidence of "Single Employer" Status

 The parties have produced a voluminous record for the Court's review. While each side places its own spin on the evidence in that record, and the deposition testimony with respect to certain conclusions are occasionally flatly at odds, many of the essential facts are undisputed. To the extent that there is a dispute as to potentially material facts, the Court sets out the disagreement.

 a. Functional Integration of Operations

 With respect to integrated operations the parties have offered evidence that:

IMV employees were enrolled in a benefit plan ...

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