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Nesselrotte v. Allegheny Energy

March 16, 2009


The opinion of the court was delivered by: Judge Nora Barry Fischer



This case stems from Plaintiff Toni M. Nesselrotte's ("Plaintiff" or "Nesselrotte") termination from her position as Senior Attorney at Defendant Allegheny Energy, Inc. After her termination, Plaintiff commenced the instant action claiming that Defendants Allegheny Energy, Inc. and Allegheny Energy Services Corp. (collectively, "Allegheny") discriminated and retaliated against her on the basis of age in violation of the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621 et seq. (Counts I and II), and discriminated and retaliated against her on the basis of sex in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-2(a)(Counts III and IV), and retaliated against her under the Pennsylvania Human Relations Act ("PHRA"), 43 Pa. Cons. Stat. § 951, et seq. (Count V)(Docket No. 76). Plaintiff has also brought claims of discrimination and retaliation based on age and gender discrimination in violation of the PHRA against Defendant David Hertzog ("Hertzog"),*fn1 who served as Allegheny Energy Service Corp.'s Vice President and General Counsel during the time period at issue (Count VI)(Docket No. 76). Before this Court is Defendants' Motion for Summary Judgment (Docket No. 126).*fn2 For the reasons outlined herein, Defendants' motion is GRANTED, in part, and DENIED, in part.


Defendant Allegheny Energy, Inc. is a utility company which, in July 2003, was on the verge of filing for bankruptcy and began to implement company-wide changes.*fn3 (Docket No. 227 at ¶¶ 1-2). At that time, Alleghenyhired a new Chairman, President and CEO, Paul Evanson ("Evanson"), who had previously been a member of Allegheny's upper-level management team. (Id. at ¶ 2). Evanson's task was to restructure Allegheny to save it from bankruptcy. (Id. at ¶ 3). In July of 2003, Evanson hired Defendant Hertzog to assist him with Allegheny's restructuring. (Id. at ¶ 4).

Hertzog was an attorney with over 30 years experience in the areas of securities law, mergers, and acquisitions, and private equity, including accounting matters related to financial reporting. (Id. at ¶ 5). Additionally, he had a legal background in the areas of SEC filings, financial accounting, and compliance with the Sarbanes-Oxley Act. Moreover, Hertzog had successfully run his own firm, Hertzog, Calamari & Gleason, in New York City for over 20 years, a firm that in 1999 merged with Winston & Strawn,*fn4 where Hertzog was a senior partner until joining Allegheny in July 2003. (Docket No. 227 at ¶¶ 6-7).

Upon his arrival at Allegheny, Hertzog was tasked by Evanson to run Allegheny's legal department, as well as the company's communications, environmental, security, and human resources divisions. (Id. at ¶ 9). At that time, Plaintiff had been employed by Allegheny's legal department for 21 years. (Id. at ¶ 150). Allegheny's legal department was organized regionally, with attorneys in various locations, including: Greensburg, Pennsylvania; Hagerstown, Maryland; and Fairmont, West Virginia. (Id. at ¶ 12).*fn5 Hertzog decided to reorganize Allegheny's legal department by: (1) hiring three deputy general counsel to report directly to him and supervise the remaining attorneys in the legal department; (2) consolidating the legal department geographically to Allegheny's corporate headquarters in Greensburg, Pennsylvania; and (3) redefining Allegheny's in-house legal positions according to specific substantive practice areas, thereby eliminating generalist positions. (Id. at ¶ 16).

In connection with the reorganization, Hertzog notified many existing in-house attorneys that they would be given the opportunity to compete for one of the legal department's specialized positions. (Docket No. 227 at ¶ 17). A Labor and Employment Specialist position was created*fn6 as a result of the restructuring; the position required the provision of legal advice to and counseling of others within Allegheny concerning employment and labor law issues, as well as the active and capable oversight of employment litigation, including discrimination charges and complaints. (Id. at ¶¶ 18-20).*fn7

In November of 2003, Defendant Hertzog met with Plaintiff and informed her of the requirements for the Labor and Employment Specialist. (Id. at ¶ 23). Plaintiff assured Hertzog that she could handle the demands of the position. (Id. at ¶ 24). At this point, Plaintiff thought she had been given the position of Labor and Employment Specialist because, as she understood it, she was going to be the point person concerning human resources issues internally going forward; however, Defendants assert that Plaintiff was merely given the opportunity to try out for the job to determine whether she could handle its demands.*fn8 (Id. at ¶¶ 25-26).

Prior to November of 2003, Plaintiff had never been responsible for all labor and employment issues for Allegheny company-wide. (Id. at ¶ 27). Before Hertzog's arrival, Plaintiff spent about half her time handling non-labor and employment matters, such as real estate and contract issues. (Id. at ¶¶ 29-30). Though Plaintiff had experience in workers' compensation and human resources, the parties dispute whether Plaintiff was a specialist in the areas of labor and employment law. (Id. at ¶¶ 28, 31). As a part of the legal department's restructuring, the decision was made to outsource Allegheny's workers' compensation work to outside counsel.(Docket No. 227 at ¶ 32).

In connection with Allegheny's restructuring of its legal department, the decision was made to close its Fairmont, West Virginia office. (Id. at ¶ 57). Hertzog alerted Plaintiff and other in-house attorneys in the Fairmont office that the office would be closing before the end of 2004 and that he would let the attorneys in Fairmont know about their employment status when the closing was officially announced. (Id). On October 11, 2004, in conjunction with a meeting held in Fairmont to announce that office's closing, Hertzog formally notified Plaintiff that she had not been selected as Allegheny's Labor and Employment Specialist. (Id. at ¶¶ 58-59). Plaintiff was also not asked to relocate. (Id.). At this time, Plaintiff was 51 years old. (Id. at ¶ 155). Her termination was effective October 31, 2004. (Id. 227at ¶¶ 61, 160).

In November of 2004, Allegheny reissued a job posting for the Labor and Employment Specialist position that read, in part: ". . . responsible for all employment litigation and general employment law. In particular, the client is looking for general employment law, ERISA and labor negotiation experience. Must have minimum 10 years experience in employment law, excellent academic qualifications, and some major law firm experience . . ." (Id. at ¶ 109). Allegheny ultimately hired Kimberlee Ullner for the position of Labor and Employment Specialist. (Docket No. 227 at ¶ 93). At the time she was hired, Ullner was 35 years old, unmarried, and did not have children. (Id. at ¶ 168). The parties dispute the number of years of experience Ullner had in the area of employment law. (Id. at ¶ ¶ 94,169).

On December 7, 2004, Plaintiff filed a Charge of Discrimination with the Equal Employment Opportunity Commission ("EEOC").(Docket No. 249). In that Charge, Plaintiff alleged that she had been discriminated against on the basis of age by Defendants Allegheny andHertzog. (Id. at ¶ 69). Plaintiff also alleged that Hertzog had retaliated against her for her participation in an internal investigation which took place in September of 2004. (Docket No. 227 at ¶ 70). Five months later, on May 20, 2005, Plaintiff filed an Amended Charge of Discrimination with the EEOC. In her Amended Charge, Plaintiff alleged that she had been discriminated against because she was a married female with dependent children. (Id. at ¶ 71). Plaintiff also alleged that Defendants retaliated against her based on the fact that Allegheny sued her husband's coal company, NESCO, Inc. ("NESCO"), for the non-delivery of coal on March 1, 2005.*fn9 (Id. at ¶¶ 72 and 209).

The EEOC conducted an investigation of Plaintiff's discrimination allegations. (Docket No. 227 at ¶ 73). On or about July 20, 2006, the EEOC sent correspondence to Plaintiff dismissing her charges of discrimination against Allegheny and Hertzog, stating specifically that the agency was unable to conclude that Plaintiff's age or sex were factors in Plaintiff's alleged harm, and that it was unlikely that further investigation would result in a finding of a violation against Allegheny. (Id. at ¶¶ 73, 77 ).


Plaintiff commenced the instant civil action on October 16, 2006, by filing a complaint against Allegheny Energy, Inc.,*fn10 Allegheny Energy Service Corporation, and David B. Hertzog. (Docket No. 1). Defendants filed an answer on December 12, 2006. (Docket No. 5). At that time, the case was assigned to Judge Gary L. Lancaster. Subsequently, this case was reassigned to the undersigned Judge on August 31, 2007. (Docket No. 53).

On September 20, 2007, Defendants filed a Motion for Leave to File an Amended Answer and Counterclaims to assert claims for breach of fiduciary duty and breach of contract, and the affirmative defense of after-acquired evidence. (Docket No. 56). Plaintiff filed a Motion to Amend/Correct her Complaint on September 27, 2007 to allege retaliation based on Allegheny's counterclaims. (Docket No. 59). A hearing was held on October 9, 2007, during which the Court heard argument from the parties as to said motions, and additionally advised that it would entertain discovery motions and a motion to enlarge discovery. (Docket No. 62). Thereafter, Plaintiff filed a Motion for Extension of Time to Complete Discovery. (Docket No. 64). Said motion was granted and discovery was extended until February 4, 2008, by order dated October 23, 2007. (Docket No. 70).

On October 25, 2007, this Court issued an order granting in part and denying in part Defendants' Motion for Leave to File Amended Answer and Counterclaims and granting Plaintiff's Motion for Leave to Amend Complaint. (Docket No. 74). Defendants filed a First Amended Answer on October 30, 2007, in which Allegheny asserted counterclaims for breach of contract and breach of fiduciary duty. (Docket No. 75). Plaintiff filed a First Amended Complaint on October 31, 2007, in which she amended her original complaint to include a claim of retaliation in violation of Title VII of the Civil Rights Act of 1964. (Docket No. 76). Subsequently, on November 5, 2007, Defendants filed a Motion for Reconsideration as to the Court's October 25, 2007 order. (Docket No. 78).

On November 15, 2007, Plaintiff filed an Answer to Defendants' Counterclaims. (Docket No. 81), and Defendants filed a Second Amended Answer. (Docket No. 84). The Court granted Defendants' Motion for Reconsideration on December 3, 2007, and ordered that Defendants file an Amended Answer within twenty (20) days. (Docket No. 88). Accordingly, on December 7, 2007, a Third Amended Answer was filed by Defendants, in which they asserted the affirmative defense of after-acquired evidence, and Allegheny reasserted its counterclaims for breach of fiduciary duty and breach of contract. (Docket No. 92). Plaintiff filed an Answer to Defendant's Amended Counterclaims on December 26, 2007. (Docket No. 101).

On March 4, 2008, Defendants filed a Motion for Summary Judgment on Plaintiff's claims (Docket No. 126). The Motion for Summary Judgment was also accompanied by a brief in support (Docket No. 127), a Concise Statement of Undisputed Material Facts (Docket No. 128), and an appendix (Docket No. 129). Generally, Plaintiff would have had thirty (30) days to respond to the motion by filing a responsive statement of material facts, a memorandum in opposition, and any appendix. W.D.Pa.L.R. 56.1(C). However, prior to filing the instant motion for summary judgment, Defendants filed a Motion for Monetary Sanctions and for Disqualification of Plaintiff's Counsel ("Motion for Sanctions and Disqualification"). (Docket No. 115). Accordingly, the Court held in abeyance Plaintiff's responses to Defendant's Motion for Summary Judgment until its ruling on the Motion for Sanctions and Disqualification. (See Docket No. 141).

On July 23, 2008, this Court issued a Memorandum Opinion denying Defendants' Motions for Sanctions and Disqualification (Docket No. 195). Defendants supplemented their briefs in support of their motions for summary judgment on August 29, 2008.*fn11 Plaintiff timely responded with a Brief in Opposition to Defendants' Motion for Summary Judgment (Docket No. 205), and a Counterstatement of Material Facts on October 7, 2008. (Docket No. 209). Defendants filed a Reply Brief in Support of their Motion for Summary Judgment on November 5, 2008 (Docket No. 213), along with a Reply in Support of their Statement of Undisputed Material Facts, in which Defendants responded to Plaintiff's Counterstatement of Material Facts. (Docket No. 215). On November 17, 2008, Plaintiff filed a Motion for Leave to File a Sur-Reply to Defendants' Reply in Support of Motion for Summary Judgment (Docket No. 221), and this Court granted said motion, ordering Plaintiff's Sur-Reply by December 4, 2008. (Docket No. 222). Hence, Plaintiff filed a Sur-Reply Brief in Opposition to Defendants' Motion for Summary Judgment. (Docket No. 226). Plaintiff also filed a Sur-Reply in Opposition to Defendants' Statement of Undisputed Material Facts and Response to Plaintiff's Counterstatement of Material Facts and Consolidated Statement of Facts. (Docket No. 227).*fn12 As the motion is more than fully briefed, it is now ripe for disposition.


Summary judgment may only be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED.R.CIV.P. 56(c). Pursuant to Rule 56, the Court must enter summary judgment against the party "who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A motion for summary judgment will not be defeated by the mere existence of some disputed facts, but will be defeated when there is a genuine issue of material fact. Anderson v. Liberty Lobby, 477 U.S. 242, 247-248 (1986).

A dispute of fact is genuine if the evidence is such that a reasonable jury could return a verdict for the non-moving party. McGreevy v. Stroup, 413 F.3d 359, 363 (3d Cir. 2005). In determining whether the dispute is genuine, the court's function is not to weigh the evidence or to determine the truth of the matter, but only to determine whether the evidence of record is such that a reasonable jury could return a verdict for the non-moving party. McGreevy, 412 F.3d at 249. As to materiality, the relevant substantive law identifies which facts are material. Anderson, 477 U.S. at 248. "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Id. "Factual disputes that are irrelevant or unnecessary will not be counted." Id.

In evaluating the evidence, the Court must interpret the facts in the light most favorable to the non-moving party, and draw all reasonable inferences in their favor. Watson v. Abington Twp., 478 F.3d 144, 147 (3d Cir.2007). However, the court must not engage in credibility determinations at the summary judgment stage. Simpson v. Kay Jewelers, 142 F.3d 639, 643 n.3 (3d Cir.1998) (quoting Fuentes v. Perskie, 32 F.3d 759, 762 n.1 (3d Cir.1994)).


At the outset, the Court notes that the parties disagree as to the nature of the discrimination claims brought by Plaintiff. Defendants contend that Plaintiff's discrimination claims amount to a "failure to hire" case, as her claims stem from the fact that she was not hired for the Labor and Employment Specialist Position. (Docket No. 213 at 1). Plaintiff, however, contends that her discrimination claims are based on a theory of unlawful termination, as she believes that her age and sex were a determinative factor in Defendants' decision to terminate her. (Docket No. 226 at 3).

Plaintiff's Amended Complaint sets forth a claim for unlawful termination in violation of the ADEA and Title VII. (Docket No. 76 at ¶¶ 44, 57). Nowhere in Plaintiff's Amended Complaint does she frame her discrimination claims as based on Allegheny's failure to hire her for the position of Labor and Employment Specialist. (Docket No. 76). Further, Plaintiff's EEOC charge and amended charges set forth claims for unlawful termination, not failure to hire. (Docket No. 249). In their Third Amended Answer, Defendants also admitted that Plaintiff was told on October 11, 2004 that she was being terminated as of October 31, 2004. (Docket No. 92 at ¶ 24). In addition, the deposition testimony of Hertzog demonstrates that he viewed the act in question as a decision toterminate Plaintiff rather than a decision not to hire her:

Question: When was the decision made to terminate Toni Nesselrotte?

Hertzog: My best recollection was the decision was made sometime in June, July period of '04.

Question: And why was the decision made?

Hertzog: Because we did not believe she had the capabilities to handle the job.

(Docket No. 129-2 at 172-173)(emphasis added).

Accordingly, based on the claims set forth in Plaintiff's Amended Complaint, Plaintiff's EEOC charges, Defendants' Third Amended Answer, and the testimony of Hertzog, the Court concludes that Plaintiff's discrimination claims are properly analyzed under ...

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