The opinion of the court was delivered by: FRANKLIN VAN ANTWERPEN, District Judge
Plaintiff has filed a complaint with this court against Defendants
Jack D's, Inc., ("Jack D's") and Giacomo and Leslie DiMaio ("the
DiMaios"), individually, for sexual harassment (Count I), sexual
discrimination (Count II), wrongful termination (Count III), intentional
infliction of emotional distress (Count IV), negligence (Count V), and
employment discrimination under the Pennsylvania Human Relations Act
(PHRA) (Count VI). Before us now is Defendants' Motion to Dismiss all
claims against the DiMaios, individually, and Counts III, IV, V, and VI
against Jack D's, and Defendants' Motion to Strike Plaintiff's demand
for a jury trial on her PHRA claim. For the reasons stated below we
grant Defendants' Motion to Dismiss in part and deny it in part, and deny
Defendants' Motion to Strike as moot.
Plaintiff has alleged the following facts. On or about January 1, 2003,
working as a waitress at Jack D's, a restaurant and bar located in
Hamburg, Pennsylvania. Jack D's is owned by Jack and Leslie DiMaio. From
the outset of her employment at Jack D's, Plaintiff was subjected to
sexual comments, innuendos, and groping by two male co-workers, Gaspare
DiMarco and Corey Cummings. Although Plaintiff repeatedly complained to
them about the conduct of her co-workers, the DiMaios did not investigate
the matter or take any sort of disciplinary action against DiMarco or
Cummings. The harassment continued and on February 12, 2003, DiMarco
forced Plaintiff into a dark area of the bar and raped her. Plaintiff
reported the incident to the DiMaios and police, whereupon Mr. DiMaio
called Plaintiff a "liar" and terminated her employment.
Federal Rule of Civil Procedure 12(b)(6) permits a court to dismiss a
claim in whole or in part "for failure to state a claim upon which relief
can be granted." In reviewing a motion to dismiss under Rule 12(b)(6),
the Court must accept as true all the allegations set forth in the
complaint and must draw all reasonable inferences in favor of
plaintiff's. See Ford v. Schering Plough Corp.,
145 F.3d 601, 604 (3d Cir. 1998). Dismissal is proper only if plaintiffs can
prove no set of facts in support of their claims which would entitle
them to relief. Id.
A. Defendants' Motion to Dismiss the DiMaios in their
Defendants argue that Plaintiff's complaint against the DiMaios
individually should be dismissed because piercing the corporate veil of
Jack D's is not warranted. The issue of whether a corporate veil may be
pierced is a matter of state law. See Star Creations Investment Co.,
Ltd. v. Alan Amron Development, Inc., 1995 U.S. Dist. LEXIS 11967,
*34 (E.D. Pa. 1995). In
Pennsylvania, there is no specific test for determining whether the
corporate veil may be pierced. Plastipak Packaging, Inc. v.
DePasquale, 75 Fed. Appx. 86, 88 (3d Cir. 2003), citing First
Realvest, Inc. v. Avery Builders, Inc., 410 Pa. Super. 572,
600 A.2d 601, 604 (Pa. Super. 1991). Rather, the courts employ a "totality of
the circumstances test." Plastipak, 75 Fed. Appx. at 88. Using
this test, Pennsylvania courts have generally been willing to pierce the
corporate veil "whenever necessary to prevent injustice." Id.,
citing Rinck v. Rinck, 363 Pa. Super. 593, 526 A.2d 1221, 1223
(Pa. Super. 1987). Such a broad standard has invited the
consideration of a variety of factors and theories when determining
whether to pierce the corporate veil. As we understand her complaint, the
principle theories which Plaintiff apparently relies on here are the
equitable doctrine of piercing the corporate veil, the participation
theory, and/or the "alter ego" theory.
Plaintiff argues that we should disregard the corporate entity in this
case because it was used to "defeat public convenience, justify wrong
either to third parties dealing with the corporation, or internally or
between shareholders (derivative suits), perpetrate fraud or similar
reprehensible conduct." Sam's v. Redevelopment Authority of New
Kensington, 431 Pa. 240, 244, 244 A.2d 779, 781 (Pa. 1968). This is
essentially the equitable doctrine of piercing the corporate veil, which
is invoked "to prevent the perpetration of wrong; to prevent its use as a
shield for illegal and wrongful conduct; or where its use, as a technical
device, brings about injustice or an inequitable solution so that justice
and public policy demand it be ignored." Wicks v. Milzoco,
503 Pa. 614, 620-21 (Pa. 1983). However, Plaintiff offers little to support
the application of this doctrine to this case, merely stating that "[i]n
the instant case, there has been both tortious and criminal conduct . . .
Even accepting the allegations contained in Plaintiff's
complaint as true, the existence of tortious and criminal conduct
alone is not sufficient grounds for piercing the corporate veil.
Pennsylvania courts generally find that "the corporate entity should be
upheld unless specific, unusual circumstances call for the application of
an exception." Zubik v. Zubik, 384 F.2d 267, 273 (3d Cir.
1967). Moreover, they have imposed limitations on the use of the
"equitable doctrine of piercing the corporate veil," declining to apply
it "where the rights of innocent parties are involved and the corporation
is used for a legal purpose, as otherwise the entire theory of the
corporate entity would be made useless." Wicks, 503 Pa. at
620-21. It is not enough, therefore, to allege that illegal or wrongful
activities occurred at a corporation. The corporation itself must have
been organized for the purpose of perpetrating the wrongs or shielding
them when they occur. Plaintiff has not alleged here that Jack D's was
created for an illegal purpose or that it exists to act as a shield for
wrongful conduct or injustice. Therefore, the equitable doctrine of
piercing the corporate veil does not compel us to pierce the corporate
veil in this case.
Although she does not articulate it as such, Plaintiff alternatively,
and indirectly, asserts the "participation theory," under which a
corporate officer can be held individually liable as an actor for
participating in tortious activity. See Wicks, 503 Pa.
at 621. The Supreme Court of Pennsylvania has endorsed the following
definition of "participation theory":
The general, if not universal, rule is that an
officer of a corporation who takes part in the
commission of a tort by the corporation is
personally liable therefor; but that an officer of
a corporation who takes no part in the commission
of the tort committed by the corporation is not
personally liable to third persons for such tort,
nor for the acts of other agents, officers or
employees of the corporation in committing it,
unless he specifically directed the particular act
to be done or participated, or cooperated therein.
Id. at 621-22, citing 3 A Fletcher,
Cyclopedia of the Law of Private Corporations § 1137, p.
207 (perm. ed. rev. 1975).
It appears from this definition that a corporate officer may only be held
individually liable if he or she has taken some sort of affirmative act
in furtherance of the alleged tort. Indeed, the court noted that
corporate officers may only be held liable for misfeasance, and not "mere
nonfeasance." Id. at 622. Accordingly, the Wicks
court reasoned that the fact that "a corporate officer should have known
the consequences of the liability creating corporate act . . . is
insufficient to create liability." Id. at 622-23. Since the
plaintiff in Wicks alleged not only that the corporate officers
of a home building company knew of an unreasonable risk, but that knowing
this, they still ordered construction to proceed, the court held
that such allegations were sufficient to defeat a motion to dismiss.
Id. at 623.
Returning to the case at hand, we find that Plaintiff has failed to
allege facts which would show that the DiMaios directed, participated, or
cooperated in tortious conduct. Plaintiff has alleged that tortious and
criminal conduct occurred, but she has not alleged that the DiMaios were
complicit in it. Furthermore, although Plaintiff has alleged that she
complained to the DiMaios and that they did nothing in response to
investigate or stop the harassment, we believe that this failure to act
does not rise to the level of affirmative action required by the court in
Wick, and is more akin to nonfeasance than misfeasance. As
such, we find that under the facts alleged, the DiMaios could not be held
individually liable under the "participation theory."
Finally, Plaintiff argues that the DiMaios should be held individually
liable under the "alter ego" theory. Under the alter ego theory, the
court may pierce a corporate veil in order to "prevent fraud, illegality
or injustice, or when recognition of the corporate entity would defeat
public policy or shield someone from public liability for a crime."
Kaplan v. First Options of Chicago. Inc., 19 F.3d 1503
(3d Cir. 1994). citing Carpenter's Health & Welfare Fund,
727 F.2d 279
, 284 (3d Cir. 1983). A court will only proceed under this
theory "if it is also shown that a corporation's affairs and personnel
were manipulated to such an extent that it became nothing more than a
sham used to disguise the alter ego's use of its assets for his own
benefit in fraud of its creditors." Kaplan at 1521. Indicators
that a corporation is an alter ego of an individual include:
failure to observe corporate formalities, non
payment of dividends, insolvency of the
debtor corporation at the time, siphoning of funds
of the corporation by the dominant shareholder,
non functioning of other officers or
directors, absence of corporate records, and the
fact that the corporation is merely a facade for
the operations of the dominant stockholder or
Id., citing United States v. Pisani, 646 F.2d 83
88 (3d Cir. 1981).
In furtherance of her claim that the DiMaios are alter egos of Jack
D's, Plaintiff alleges in her Amended Complaint that
8. The assets of Individual Defendants, Jack
DiMaio and Leslie DiMaio, are one and the same as
those of corporate Defendant, and the Individual
Defendants and Corporate Defendant are alter egos
of each other.
9. Corporate Defendant, is so closely affiliated
with as to be an alter ego of the Individual
Defendants. The actions of one are attributable,
in whole or in part to the actions of the other.
Defendants argue that these statements are insufficient to
withstand a Motion to Dismiss because they are conclusions of law and
thus do not contain facts which could support a claim against the
DiMaios. Defendant analogizes the instant case to Lumax Industries
v. Mary Carol Aultman, 543 Pa. 38, 669 A.2d 893 Pa. 1995), in which
the Pennsylvania Supreme Court held that a demurrer was improperly denied
where the plaintiff merely alleged that the individual was the only
person involved in the corporation and acted on behalf of herself and
used the corporation to unjustly seek protection from the corporate form.
Id. at 41. However, as Plaintiff correctly
points out, Pennsylvania state courts require "fact pleading," which is a
higher standard than the "notice pleading" required in federal courts.
See Fed.R.Civ.P. 8. In support of this argument, Plaintiff
cites a recent case from this court, in which the court denied a motion
to dismiss an alter ego claim because "a plaintiff is not required to
specifically plead the alter ego theory." Meshkov v. UNUM Provident
Corp., 209 F. Supp.2d 459, 461 (E.D. Pa. ...