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Pasquale v. General Sciences

April 19, 2010


The opinion of the court was delivered by: Robert F. Kelly, Sr. J.


Presently before this Court are three Motions for Summary Judgment filed by General Sciences, Inc. ("GSI"), Peter Zavitsanos, Alice Zavitsanos and Evelyn Downs ("Downs") (collectively, "Defendants"): (1) a Motion for Summary Judgment Regarding Number of Employees ("Motion Regarding Employees"); (2) a Motion for Summary Judgment for Failure to Establish a Prima Facie Case; and (3) a Motion for Partial Summary Judgment for Claims Barred by Applicable Statute of Limitations. For the reasons set forth below, Defendants' Motion Regarding Employees will be granted and the remaining Motions will be denied as moot.


Plaintiff Nancy Pasquale ("Pasquale") filed a Complaint in this Court on April 24, 2009 against her former employer, GSI, and the individual Defendants, Peter Zavitsanos, Alice Zavitsanos and their daughter, Downs. In her Complaint, Pasquale claims that she was discriminated and retaliated against by Defendants after Alice Zavitsanos discovered in 2003 that she had engaged in an affair with Peter Zavitsanos. Pasquale claims that the discrimination and retaliation continued through September 15, 2006, the date she alleges she was fired from GSI. (Compl. ¶¶ 32-36.) Defendants deny these claims.

Defendants contend that GSI is "a relatively small research and development company which is owned by members of the Zavitsanos family including [Peter] Zavitsanos, [Alice] Zavitsanos and their children. Only [Peter] Zavitsanos and Downs are involved in the daily management and operations of the company." (Defs.' Br. Supp. Mot. Regarding Employees at 6.) Specifically, during the time of the alleged discrimination, Defendants assert that: (1) Peter Zavitsanos served as co-founder and a one-sixth shareholder*fn1 of GSI; (2) Alice Zavitsanos was a one-sixth shareholder of the company; (3) Downs served as co-founder, chief financial officer and a one-sixth shareholder in the company; and (4) Pasquale served as part-time facility security officer and secretary of the company. Defendants allege that Peter Zavitsanos and Downs exclusively controlled all aspects of GSI, shared in the company's profits and losses, were not supervised by any individual and did not report to someone higher in the company.

The only basis for this Court's original jurisdiction is set forth in Count I of the Complaint wherein Pasquale asserts a claim against GSI under Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991, 42 U.S.C. §2000(e) et seq. ("Title VII").*fn2

Defendants assert that if Count I is dismissed, we should "decline to retain jurisdiction over the state law claims and dismiss those claims without prejudice." (Defs.' Br. Supp. Mot. Regarding Employees at 7.)

On October 28, 2009, Defendants filed their Motion Regarding Employees. In their Motion, Defendants argue that GSI did not employ a sufficient number of employees to meet the definition of "employer" under Title VII, and therefore, Count I should be dismissed as a matter of law. Specifically, Defendants allege that GSI did not employ more than fourteen employees in 2005 or 2006.*fn3 Contrary to Defendants' assertions, Pasquale alleges that GSI employed at least sixteen people during 2005 and at least seventeen people during 2006. (Pl.'s Resp. in Opp'n to Mot. Regarding Employees, Pasquale Decl. Ex. C ¶¶ 6-7.) The individuals whose employment relationships are in dispute are: Peter Zavitsanos, Downs, Stokes, Ben Valocchi, Sr. and Ben Valocchi, Jr. (collectively, the "Valocchis"). (Hr'g Tr. 3:16-4:10, Mar. 19, 2010.)

In her counter-declaration, Downs describes Stokes as "an independent contractor who, from time to time, provided consulting services (chemical and thermal analysis and flight pay-load analysis) . . . ." (Downs Counter-Decl. ¶ 7.) In his affidavit, Stokes states that he was never an employee of GSI, but rather, an independent contractor who received a "1099-MISC form" accordingly. (Stokes Aff. ¶¶ 1-3.) Stokes also states in his affidavit that he has "never received any employee benefits such as[] a 401K plan, health benefits, etc. or any compensation other than that based on an hourly rate for consultation." (Stokes Aff. ¶ 4.) Defendants have also submitted tax records for 2005 and 2006 to support their contention that Stokes was an independent contractor and that "the extent of services that he provided to GSI varied from year to year depending on GSI's needs for such consulting services." (Downs Counter-Decl. Ex. 1; Defs.' Supplemental Br. Supp. Motion Regarding Employees at 3.) Defendants also argue that: (1) Stokes did not receive a paycheck; (2) no taxes were withheld from his non-employee compensation; and (3) he is not listed as an employee in the payroll records submitted to the Court.

In his affidavit, Ben Valocchi, Sr. states that he has performed accounting services for GSI for approximately 30 hours per month since 1985. (Valocchi Aff. ¶ 1.) He also states that he has received "the required annual IRS Form 1099" for his services. (Valocchi Aff. ¶ 2.) He further explains that his son, Ben Valocchi, Jr., a certified public accountant, "prepared periodic compilation financial statements and annual corporate tax returns as an independent contractor" for GSI. (Valocchi Aff. ¶ 4.) Finally, Ben Valocchi, Sr. asserts that he has "never received employee benefits." (Valocchi Aff. ¶ 3.)

In contrast, Pasquale has submitted a declaration and two undated documents described as "Organizational Charts" to support her claim that GSI employed at least sixteen people during 2005 and at least seventeen people during 2006. In her declaration, Pasquale alleges that Stokes was an employee of GSI in 2005 and 2006. (Pl.'s Resp. in Opp'n to Mot. Regarding Employees, Pasquale Decl. Ex. C ¶¶ 8, 13.) Pasquale further claims that Peter Zavitsanos and Downs were employees of GSI in 2005 and 2006. (Id. ¶¶ 9-12.) In support of this contention, Pasquale notes that Peter Zavitsanos and Downs were on GSI's payroll during the relevant years and that they received monthly paychecks from which standard withholding taxes were taken in those years.

(Id.) As such, Pasquale claims that "there clearly exists a disputed issue of material fact, which prevents the entry of summary judgment on the issue of whether GSI is a statutory 'employer' for purposes of Title VII . . . ." (Pl.'s Resp. in Opp'n to Mot. Regarding Employees at 11.)

On March 19, 2010, a hearing was held in order to allow the parties an opportunity to present further evidence in support of their respective positions on Defendants' Motion Regarding Employees. At the hearing, Pasquale testified that "in the last year or so before [she] left, [Stokes] was sharing an office" at GSI and that he used the company's materials. (Hr'g Tr. 14:3-10, Mar. 19, 2010.) When asked whether Stokes was "either supervised or answerable to Mr. Rozansky," Pasquale responded that he was. (Id. at 14:11-15.) Pasquale also testified that Ben Valocchi*fn4 worked at GSI "a couple times a week," "had a desk in [Downs's] office" at GSI, reported to Downs and used the company's materials. (Id. at 14:18-25.) Pasquale stated, however, that Stokes and the Valocchis were not on GSI's payroll. Pasquale further testified: (1) that Stokes's efforts varied upon the needs of GSI; (2) that he worked at the GSI office periodically;*fn5 (3) that he had a home office; (4) that he sent an invoice to GSI upon completion of a task and that he was paid each time that an invoice was submitted; and (5) that he received 1099 compensation because he was paid according to the invoices. Finally, Pasquale acknowledged that the Valocchis provided services to other individuals or entities besides GSI and that they maintained another office in Downingtown. (Id. at 17:9-22.)


Because Defendants make two distinct requests in their Motion Regarding Employees --

(1) that we grant summary judgment in their favor with respect to Count I, and (2) that we decline to exercise jurisdiction over the state law claims if we dismiss Count I -- we will treat Defendants' Motion as a motion for summary judgment regarding Count I and a motion to dismiss for lack of supplemental jurisdiction regarding Pasquale's remaining Counts. See Greenwood Partners, L.P. v. Cimnet, Inc., No. 2:01-6624, 2003 U.S. Dist. LEXIS 18099, at *3 (E.D. Pa. Sept. 26, 2003).

1. Summary Judgment

Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is proper if "there is no genuine issue as to any material fact and . . . the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). Essentially, the inquiry is "whether the evidence presents a sufficient disagreement to require submission to the jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986). The moving party has the initial burden of informing the Court of the basis for the motion and identifying those portions of the record that demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). An issue is genuine only if there is a sufficient evidentiary basis on which a reasonable jury could find for the non-moving party. Anderson, 477 U.S. at 249. A factual dispute is material only if it might affect the outcome of the suit under governing law. Id. at 248.

To defeat summary judgment, the non-moving party cannot rest on the pleadings, but rather, that party must go beyond the pleadings and present "specific facts showing a genuine issue for trial." Fed. R. Civ. P. 56(e)(2). Similarly, the non-moving party cannot rely on unsupported assertions, conclusory allegations, or mere suspicions in attempting to survive a summary judgment motion. Williams v. Borough of W. Chester, 891 F.2d 458, 460 (3d Cir. 1989) (citing Celotex, 477 U.S. at 325). Further, the non-moving party has the burden of producing evidence to establish prima facie each element of its claim. Celotex, 477 U.S. at 322-23. If the Court, in viewing all reasonable inferences in favor of the non-moving party, determines that there is no genuine issue of material fact, then summary judgment is proper. Id. at 322; Wisniewski v. Johns-Manville Corp., 812 F.2d 81, 83 (3d Cir. 1987).

2. Supplemental Jurisdiction

In United Mine Workers v. Gibbs, the Supreme Court established the concept that a district court could hear non-federal claims over which it did not have diversity jurisdiction provided those claims shared a "common nucleus of operative fact" with the claims that supported the court's original jurisdiction. 383 U.S. 715, 725 (1966). In 1990, Congress sought to "clarify and codify instances appropriate for the exercise of pendent or 'supplemental' jurisdiction in district courts" in 28 U.S.C. § 1367. Swint v. Chambers County Comm'n, 514 U.S. 35, 48 n.6 (1995); see also Sinclair v. Soniform, Inc., 935 F.2d 599, 603 (3d Cir. 1991) (treating 28 U.S.C. § 1367(a) as codifying the jurisdictional standard established in Gibbs).

Section 1367(a) states:

Except as provided in subsections (b) and (c) . . . in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.

28 U.S.C. § 1367(a). The "case and controversy" requirement is satisfied when the "state and federal claims . . . derive from a common nucleus of operative fact." Gibbs, 383 U.S. at 725. "In trying to set out standards for supplemental jurisdiction and to apply them consistently, [the Third Circuit has] observe[d] that, like unhappy families, no two cases of supplemental jurisdiction are exactly alike." Nanavati v. Burdette Tomlin Mem'l Hosp., 857 F.2d 96, 105 (3d Cir. 1988). If the federal and state claims "are merely alternative theories of recovery based on the same acts," then supplemental jurisdiction exists. Lyon v. Whisman, 45 F.3d 758, 761 (3d Cir. 1995) (quoting Lentino v. Fringe Employee Plans, Inc., 611 F.2d 474, 479 (3d Cir. ...

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