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ZIEGLER v. DELAWARE COUNTY DAILY TIMES

February 5, 2001

WAYNE ZIEGLER
v.
DELAWARE COUNTY DAILY TIMES A DIVISION OF THE GOODSON HOLDING COMPANY, ET AL.



The opinion of the court was delivered by: Dalzell, J.

MEMORANDUM

In this case, a 62 year old man brings claims of age discrimination in connection with his termination as circulation director of the Delaware County Daily Times. We here consider the defendants' motion for summary judgment.

I. Factual Background*fn1

From 1989 until 1998, Goodson Newspaper Group owned the Daily Times. In February or March, 1998, a newspaper broker contacted the Journal Register Company ("JRC") and reported that the Goodson Newspaper Group's papers were for sale. JRC is a publicly-traded*fn4 corporation that owns and operates well over one hundred newspapers*fn5 nationwide. On May 17, 1998, JRC entered into a contract to purchase the Goodson Newspaper Group, which then included newspapers in Massillon, Ohio, Oneida, New York, Kingston, New York, Ardmore and Pottstown, Pennsylvania, as well as the Daily Times.*fn6 The sale closed on July 15, 1998.

Immediately following the closing, Ziegler, then sixty years old, was terminated as Circulation Director of the Daily Times. Michael Starn, then thirty-six years old, replaced him. This action followed.

II. Procedural History

A. Plaintiff's Claims

In his Complaint, Ziegler claims age discrimination against the Delaware County Daily Times, JRC, Robert Jelenic (JRC's CEO), and William Higginson (JRC's Vice-President of Production). Counts 1 (against the Daily Times) and 2 (against JRC) allege that these firms violated the Age Discrimination in Employment Act (ADEA) and the Pennsylvania Human Relations Act (PHRA) in that their decision to terminate Ziegler was based in whole or in part on his age. Counts 3 (against Robert Jelenic) and 4 (against William Higginson) allege that these men violated the PHRA, and in particular 42 Pa. Con. Stat. Ann. 955(e), by aiding, abetting, inciting, compelling, and/or coercing Ziegler's wrongful age-based termination, or by obstructing or preventing people from complying with the ADEA or PHRA.

B. Defendant's Motion for Summary Judgment

After the close of discovery, the defendants*fn7 filed for summary judgment as to all counts. With respect to Count 2, defendants argue that JRC was not Ziegler's employer and therefore cannot be held liable under the ADEA or the PHRA for an allegedly discriminatory employment action. With respect to both Counts 1 and 2, defendants contend that they have proffered a legitimate, non-discriminatory explanation for Ziegler's termination, and there is no showing that this explanation was a pretext. Defendants also urge that Counts 3 and 4 are procedurally barred for failure to exhaust administrative remedies, and that, moreover, Counts 3 and 4 fail because there is no showing that Jelenic or Higginson in fact aided or abetted any unlawful discriminatory practice.

III. Analysis*fn8

A. Overview of Employment Discrimination Law

We begin with the legal structure under which our analysis must progress.

Under the ADEA, it is "unlawful for an employer . . . to fail or refuse to hire or to discharge any individual or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's age." 29 U.S.C. § 623(a)(1). When a plaintiff alleges disparate treatment, "liability depends on whether the protected trait (under the ADEA, age) actually motivated the employer's decision." Hazen Paper Co. v. Biggins, 507 U.S. 604, 610, 113 S.Ct. 1701 (1993). That is, the plaintiff's age must have "actually played a role in [the employer's decisionmaking] process and had a determinative influence on the outcome." Ibid.

Reeves v. Sanderson Plumbing Prods., Inc., 120 S.Ct. 2097, 2105 (2000).

Claims under the ADEA and PHRA*fn9 are assessed using the analytical framework developed for Title VII claims under Price Waterhouse v. Hopkins, 490 U.S. 228, 109 S.Ct. 1775 (1989) and McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817 (1973) and their progeny, Keller v. Orix Credit Alliance, Inc., 130 F.3d 1101, 1108 (3d Cir. 1997).

Under Price Waterhouse, "if a plaintiff `show[s] by direct evidence that an illegitimate criterion was a substantial factor in the decision,' the burden of persuasion shifts to the employer `to show that the decision would have been the same absent discrimination.'" Keller, 130 F.3d at 1113 (quoting Price Waterhouse, 490 U.S. at 276, 109 S.Ct. at 1804 (O'Connor, J., concurring)) (emphasis in Keller)*fn10.

Alternatively, the McDonnell Douglas analytic model permits a plaintiff to go forward in the absence of direct evidence of discrimination. The McDonnell Douglas model consists of three steps. "First, the plaintiff must produce evidence that is sufficient to convince a reasonable factfinder to find all of the elements of a prima facie case," Keller, 130 F.3d at 1108. If the plaintiff makes such a showing, we move to step two. "The burden of production (but not the burden of persuasion) shifts to the defendant, who must then offer evidence that is sufficient, if believed, to support a finding that it had a legitimate, nondiscriminatory reason for the discharge," Keller, 130 F.3d at 1108. If the defendant cannot satisfy this burden, we enter judgment for the plaintiff. Conversely, if the defendant satisfies the burden, the presumption of discrimination created by the prima facie case disappears, Reeves, 120 S.Ct. at 2106, and we then proceed to step three. In step three, the plaintiff must submit evidence from which the factfinder could find that the defendant's allegedly legitimate reason was a pretext for discrimination, Reeves, 120 S.Ct. at 2106.

The assessment of the defendants' motion for summary judgment that follows will track these analytic steps.

B. The Journal Register

Company's Status as a Proper Defendant

Before beginning our discussion of the Price Waterhouse or McDonnell Douglas frameworks, we must first address a threshold question, namely, whether JRC was Ziegler's employer for purposes of liability under the ADEA or PHRA. In their motion for summary judgment, defendants argue that in order for JRC to be liable under Count 2, we must first find that JRC was Ziegler's employer, since liability for Ziegler's termination under the PHRA or ADEA lies with his employer. In response, Ziegler argues that JRC, as the Delaware County Daily Times's corporate parent at the time Ziegler was terminated, was in fact Ziegler's employer*fn11.

Marzano v. Computer Science Corp., 91 F.3d 497 (3d Cir. 1996)*fn12 addressed the circumstances under which a corporate parent and one of its subsidiaries can be treated as a single employer for purposes of employment discrimination law.*fn13 In Marzano, our Court of Appeals essentially analyzed this question as analogous to the question of piercing the corporate veil in the particular circumstances of employment, and looked initially to applicable state law*fn14 for guidance.

In Pennsylvania*fn15, there is a strong presumption against piercing the corporate veil, Miners, Inc. v. Alpine Equip. Corp., 722 A.2d 691, 694 (Pa.Super. 1998) (citing Lumax Indus., Inc. v. Aultman, 669 A.2d 893, 895 (Pa. 1995)). Pennsylvania courts have also recognized*fn16 that there are two separate types of veil piercing theories: the "alter ego" theory, in which a plaintiff seeks to hold a controlling owner of a corporation liable, and "single entity" theory, in which a plaintiff argues that two corporations share common ownership and are in fact operating as a single corporate combine.*fn17 With respect to "alter ego" veil piercing, "factors which may, at times, justify disregarding the corporate form and holding the shareholder(s) liable include intermingling of personal and corporate affairs, undercapitalization, failure to adhere to corporate formalities, or using the corporate form to perpetrate a fraud," Commonwealth v. Vienna Health Prods., Inc., 726 A.2d 432, 434 (Pa. Cmwlth. 1999). In "single entity" veil piercing, "two or more corporations are treated as one because of identity of ownership, unified administrative control, similar or supplementary business functions, involuntary creditors, and insolvency of the corporation against which the claim lies," Miner's, Inc., 722 A.2d at 695.*fn18

In addition to looking to state corporate law, the Marzano panel looked to decisions in other circuits, and quoted at length from Johnson v. Flowers Indus., Inc., 814 F.2d 978 (4th Cir. 1987), in which the Fourth Circuit held that the presumption that a corporate subsidiary, and not the parent, was the individual's employer could be overcome in one of two ways:

First, the parent could control the employment practices and decisions of the subsidiary. If the parent company hired and fired the subsidiary employees, routinely shifted them between the two companies, and supervised their daily operations, it would be hard to find that the parent was not their employer. Second, the parent might so dominate the subsidiary's operations that the parent and the subsidiary are one entity and thus one employer. For example, the subsidiary may be highly integrated with the parent's business operations, as evidenced by the commingling of funds and assets, the use of the same work force and business offices for both corporations, and the severe undercapitalization of the subsidiary. The parent might also fail to observe such basic corporate formalities as keeping separate books and holding separate shareholder and board meetings.

Marzano, 91 F.3d at 513 (quoting Johnson, 814 F.2d at 981).

With this guidance, we now move to examine the relationship between JRC and the Daily Times. As Marzano makes clear, we begin with the presumption that the corporate parent is not the employer, and we will consequently proceed by canvassing the validity of Ziegler's arguments as to why the veil should be pierced.

We should note at the outset that there is no claim here that JRC ever directly employed Ziegler. To the extent that Ziegler was "employed" by JRC for ADEA purposes, it was through the Daily Times.*fn19 Consequently, the only time in which Ziegler could have been a JRC employee was in the few hours between the closing of the sale of the Goodson Newspaper Group to JRC and Ziegler's termination, Ex. D, Defs.' Mem. of Law (Dep. of Frank Gothie) at 124-25 (noting that he was informed that closing had occurred by a phone call in the late morning of July 15, 1998 and that "shortly" afterward he began the process of informing the four terminated Daily Times employees, including Ziegler).

In any event, Ziegler organizes his general arguments regarding the relationship between JRC and the Daily Times along four lines: functional integration of operations, centralized control of labor relations, common management, and common ownership.*fn20 These categories correspond largely to the "single entity" veil piercing theory.

Ziegler first argues that there is a functional integration of operations between JRC and the Daily Times. In support of this contention, Ziegler points to deposition testimony showing that JRC centralizes aspects of certain functions, such as information systems and printing, of the papers it owns, Pl.'s Mem. of Law at 46. Ziegler also notes evidence showing that when a JRC paper in Coatesville, Pennsylvania was closed, its subscription list was forwarded to a JRC-owned paper in West Chester, Pennsylvania, and observes that JRC's website contains hyperlinks to the websites of its component papers, Pl.'s Mem. of Law at 46-47.*fn21

With respect to centralized control of labor relations, Ziegler points out that the 1998 W-2 form for Michael Starn, Ziegler's replacement, lists JRC as Starn's employer and that both Starn and Frank Gothie, the Daily Times's publisher, received JRC stock options as part of their compensation, Pl.'s Mem. of Law at 48. Ziegler also points out that in answers to interrogatories, Robert Jelenic, JRC's CEO, stated that he had to power to, inter alia, hire, transfer, and discharge the employees of JRC or of facilities JRC owned, Pl.'s Mem. of Law at 48, Ex. U, Pl.'s Mem. of Law (Defendants' Responses to Interrogatories). Further, Ziegler cites Frank Gothie's testimony that after JRC's purchase of the Goodson Newspaper Group was announced, Gothie became aware that JRC had a model for the number of people that it expected to be on the staff of a newspaper the size of the Daily Times, and that under this model, the Daily Times would have to reduce the number of people on its staff in certain ways after JRC's ...


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