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Michael G. Chalfont v. U.S. Electrodes

December 28, 2010

MICHAEL G. CHALFONT
v.
U.S. ELECTRODES, ET AL.



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

MEMORANDUM

Plaintiff Michael G. Chalfont filed this employment discrimination action alleging that he lost, and was not rehired for, a job as Engineering Manager for Defendant U.S. Electrodes on account of his disabled status and age. In addition to asserting claims against U.S. Electrodes, he asserts claims against CenterLine (Windsor) Limited ("CenterLine"), which he alleges is the parent company of U.S. Electrodes, and David M. Beneteau, the President of U.S. Electrodes and a vice president of CenterLine. Defendants have moved to dismiss the Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the following reasons, we grant the Motion in part and deny it in part.

I. BACKGROUND

The Amended Complaint alleges that CenterLine is a Canadian company, which manufactures custom-designed welding and metalwork equipment and distributes its products worldwide. (Am. Compl. ¶ 11.) In 1991, it formed U.S. Electrodes for the purpose of manufacturing welding cap electrodes, primarily for the automobile industry. (Id. ¶ 12.) CenterLine representatives, including Beneteau, approached Plaintiff, who had expertise in making cap electrodes using an advanced cold-forming technique, and asked him to assist in creating, designing and implementing a manufacturing facility for U.S. Electrodes in Telford, Pennsylvania. (Id. ¶¶ 13- 14.) On May 31, 1991, U.S. Electrodes hired Plaintiff as the Engineering Manager for its Telford facility. (Id. ¶ 16.) Throughout his almost eighteen years of employment, Plaintiff performed his job in a satisfactory manner. (Id. ¶ 28.) Nevertheless, on January 6, 2009, Plaintiff was laid off from his position with the company. (Id.)

Plaintiff alleges that the following events preceded his layoff. On May 21, 2007, Plaintiff suffered an acute myocardial infarction. (Id. ¶ 22.) He was "diagnosed with coronary artery disease, status post myocardial infarction, and was started on a drug protocol." (Id.) Plaintiff informed "CenterLine management of his heart condition and treatment." (Id. ¶ 23.) Thereafter, in October 2007, Plaintiff was diagnosed with Acute Myelogenous Leukemia. (Id. ¶ 24.) He promptly informed U.S. Electrodes's General Manager, Barry Clymer, of his diagnosis and need for treatment, and Clymer, in turn, informed management officials at CenterLine. (Id. ¶¶ 24-25.)

Plaintiff was on medical leave from U.S. Electrodes for chemotherapy treatment from October 2007 until May 2008. (Id. ¶ 26.) He returned to light duty work on May 5, 2008, due to limitations on his ability to do heavy lifting and extremely strenuous activity. (Id.) On January 18, 2009, Clymer advised Plaintiff, who was then 59 years old, that he was being temporarily laid off due to lack of work. (Id. ¶¶ 36, 55.) At the same time, the company's production employees were also laid off. (Id. ¶ 37.) In contrast, "key administrative staff," including Clymer and Defendant Beneteau, retained their jobs. (Id.) Beginning on February 8, 2009, U.S. Electrodes recalled most of its production staff, but did not recall Plaintiff. (Id. ¶¶ 39-40.) "[M]anagement officials at CenterLine made statements to the effect that they wanted to get rid of Plaintiff because he would be a 'liability' if his cancer reoccurred or he relapsed." (Id. ¶ 41.) Meanwhile, Plaintiff's duties were reassigned to younger employees. (Id. ¶ 42.) On May 15, 2009, U.S. Electrodes informed Plaintiff that his medical benefits were ending effective June 30, 2009. (Id. ¶ 44.)

In June 2009, CenterLine's Board of Directors decided to in-source production of cap electrodes at CenterLine's Canadian facility. (Id. ¶ 45.) As a result, manufacturing operations at U.S. Electrodes's Telford facility were moved to a CenterLine facility in Canada. (Id.) In June and July 2009, Plaintiff met with Beneteau and asked that he be considered for a position with CenterLine. (Id. ¶ 46.) However, neither Beneteau nor any representative of U.S. Electrodes or CenterLine offered Plaintiff employment. (Id. ¶ 47.) In contrast, other employees who had been laid off were offered employment at CenterLine. (Id. ¶ 48.) These employees were younger and had less experience than Plaintiff. (Id.)

Plaintiff commenced this action against U.S. Electrodes, CenterLine and Beneteau in June of 2010. He asserts claims under the Americans with Disabilities Act ("ADA"), 42 U.S.C. § 12101 et seq., the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621 et seq., the Pennsylvania Human Relations Act ("PHRA"), 43 Pa. Cons. Stat. Ann. § 951 et seq., and section 510 of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 2240. He also asserts a breach of contract claim.*fn1 Plaintiff essentially alleges that he was laid off and not rehired on account of his age and disability, in order to deprive him of rights to which he was entitled under an employee benefit plan, and in breach of an employment contract. Defendants have moved to dismiss the Amended Complaint in its entirety for failure to state claims upon which relief may be granted pursuant to Federal Rule of Civil Procedure 12(b)(6).

II. LEGAL STANDARD

When considering a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), we look primarily at the facts alleged in the complaint and its attachments. Jordan v. Fox, Rothschild, O'Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir. 1994). We take the factual allegations of the complaint as true and draw all reasonable inferences in favor of the plaintiff. Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) (citing Pinker v. Roche Holdings Ltd., 292 F.3d 361, 374 n.7 (3d Cir. 2002)). Legal conclusions, however, receive no deference, and the court is "not bound to accept as true a legal conclusion couched as a factual allegation." Papasan v. Allain, 478 U.S. 265, 286 (1986) (cited with approval in Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

A plaintiff's pleading obligation is to set forth "a short and plain statement of the claim," Fed. R. Civ. P. 8(a)(2), which gives the defendant "'fair notice of what the . . . claim is and the grounds upon which it rests.'" Twombly, 550 U.S. at 555 (alteration in original) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). The "complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 570). In this regard, it is not "sufficient to allege mere elements of a cause of action; instead 'a complaint must allege facts suggestive of [the proscribed] conduct.'" Phillips, 515 F.3d at 233 (alteration in original) (quoting Twombly, 550 U.S. at 563 n.8)). "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 129 S. Ct. at 1949 (citing Twombly, 550 U.S. at 556). In the end, we will grant a Rule 12(b)(6) motion if the factual allegations in the complaint are not sufficient "to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555 (citing 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, at 235-36 (3d ed. 2004)).

III. DISCUSSION

Defendants argue that Plaintiff has failed to state claims upon which relief may be granted against any of the three Defendants for a number of reasons. First, they argue that Plaintiff has not and cannot state ADA, ADEA or PHRA claims against CenterLine based on his job loss, because CenterLine was not his employer. Second, they argue that Plaintiff has not and cannot state claims against CenterLine under the ADEA, ADA and PHRA based on CenterLine's own failure to hire him following his lay off because CenterLine is a foreign corporation that is not subject to the statutory prohibitions on discriminatory hiring. Third, they argue that we should dismiss the ADA, ADEA and PHRA claims against Centerline because Plaintiff failed to exhaust his administrative remedies against CenterLine. Fourth, they argue that we should dismiss Plaintiff's ADEA claim against U.S. Electrodes because he has not alleged that U.S. Electrodes had twenty employees during the relevant time period, as the statute requires. Fifth, they argue that Plaintiff has not stated a claim under the ADEA and PHRA against any Defendant for age discrimination because he has failed to allege facts that plausibly suggest that he was laid off because of his age. Sixth, they argue that Plaintiff has not stated a claim under the ADA and PHRA against any Defendant for disability discrimination because he has failed to allege facts supporting his assertion that he is disabled. Seventh, they argue that Plaintiff has not alleged the necessary elements of a claim under ERISA. Eighth, they argue that Plaintiff, as an at-will employee, has not and cannot state a cognizable breach of contract claim based on his termination. We will address each argument in turn.

A. CenterLine as Employer

Defendants argue that Plaintiff cannot assert ADA, ADEA or PHRA claims against CenterLine based on his initial job loss and U.S. Electrodes's failure to rehire him, because he has not alleged sufficient facts to support a plausible claim that CenterLine was his employer. Plaintiff does not dispute that only an employer can be held statutorily liable for an allegedly discriminatory lay-off. He argues, however, that the allegations in his Amended Complaint are sufficient to support a claims against both U.S. Electrodes and CenterLine as his employers, relying on authority that permits two related entities to be considered either a "single employer" or a "joint employer" under certain specified circumstances.

1. Single Employer

As a general matter, "when a subsidiary hires employees, there is a strong presumption that the subsidiary, not the parent company, is the employer." Marzano v. Computer Science Corp., Inc., 91 F.3d 497, 513 (3d Cir. 1996) (citation omitted); see also Ziegler v. Delaware County Daily Times, 128 F. Supp. 2d 790, 801 (E.D. Pa. 2001) (stating that "there is a presumption that a corporate parent is not the ADEA 'employer' of its subsidiaries' employees"). However, a parent company can be considered a "single employer" with its subsidiary if the parent has directed the subsidiary's discriminatory act, or if the affairs of the parent and subsidiary are so operationally or financially entangled that, as an equitable matter, we must consider them substantively consolidated and collectively responsible for the discriminatory conduct. See Nesbit v. Gears Unlimited, Inc., 347 F.3d 72, 85-87 (3d Cir. 2003). Plaintiff argues that the allegations of the Amended Complaint are sufficient to set forth a plausible claim under either of these two "single employer" theories.

a. Parent's Direction of Subsidiary's Discriminatory Act

Plaintiff first argues that the Amended Complaint sufficiently alleges that CenterLine directed U.S. Electrodes's discriminatory acts. He relies on the allegations in the Amended Complaint that the President of U.S. Electrodes, which laid him off, is a Vice President of CenterLine; that CenterLine knew about Plaintiff's health problems and medical treatment, regarded him as having a disability, and wanted to get rid of him because he would be a liability if the cancer recurred; and that CenterLine's Board of Directors made a decision to in-source the work done at the Telford plant five months after Plaintiff was laid off, and then did not offer him a job in Canada. (Am. Compl. ¶¶ 10, 23-25, 34, 41, 45.)

However, these allegations do not support a plausible claim that CenterLine directed U.S. Electrodes to discriminate against Plaintiff based on his age or disability. Indeed, Plaintiff never explicitly alleges that CenterLine instructed or directed U.S. Electrodes to lay off Plaintiff in January of 2009, or to refuse to re-hire him thereafter. Instead, he asks us to infer such direction from the above-stated events, which, at best, give rise only to a "sheer possibility" that CenterLine directed U.S. Electrodes to discriminate against him based on his age or a disability. Iqbal, 129 S. Ct. at 1949 ("The plausibility standard . . . asks for more than a sheer possibility that a defendant has acted unlawfully." (citing Twombly, 550 U.S. at 556)). Accordingly, ...


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