United States District Court, E.D. Pennsylvania
E.K. PRATTER UNITED STATES DISTRICT JUDGE
Michael Hisey's second attempt to sue his former
employer, QualTek USA, LLC, and two QualTek executives for
claims arising from QualTek's termination of Mr.
Hisey's employment. Mr. Hisey brings claims here for (1)
breach of contract, (2) violation of the Pennsylvania Wage
Payment and Collection Law, and (3) retaliation under 42
U.S.C § 1981. In a previous lawsuit, Mr. Hisey's
claims were premised chiefly on employment discrimination and
were dismissed by a Florida federal court, without prejudice,
for forum non conveniens.
move to dismiss, making two basic arguments. First, they seek
to apply several preclusion rules because the action is
allegedly duplicative of Mr. Hisey's prior suit. Those
principles are claim preclusion, claim splitting, and
judicial estoppel. Second, they assert that several alleged
pleading deficiencies in the complaint require dismissal.
Defendants also move for sanctions-including the sanction of
dismissal-based on the same preclusion arguments.
forth below, the Court rejects all of the defendants'
preclusion arguments. The Court also dismisses in its
entirety the Pennsylvania Wage Payment and Collection Law
claim and dismisses the § 1981 retaliation claim against
the individual defendants only (granting leave to amend). Mr.
Hisey's breach of contract claim survives, as does his
§ 1981 claim against QualTek.
Hisey was the Chief Business Officer for QualTek USA, LLC-a
multinational telecommunications company-from April 29, 2013
until December 4, 2014. Two separate aspects of Mr.
Hisey's employment with QualTek are relevant to this
action: First, Mr. Hisey's economic interest in QualTek;
and second, Mr. Hisey's allegations that QualTek and its
employees engaged in unlawful conduct. Each is addressed in
Economic Interest Units
employees at QualTek are granted "Economic Interest
Units" in QualTek's "Economic Interest Unit
It appears, based on a review of the Economic Interest Unit
Plan, that each "Unit" conferred upon an employee
represents a one percent (1%) financial stake in QualTek
(after reductions for certain debts, expenses, and
grant of each Unit is subject to certain conditions. As Mr.
Hisey's Economic Interest Unit offer letter states,
"the Units vest over time, but are subject to forfeiture
in whole or in part," and employees with Units are
required to "continue to be employed by the Company or
its subsidiaries in order to receive any economic benefits
under the Plan." Amended Compl., Ex. A (Offer Letter).
Those limitations are discussed in greater detail in the
Economic Interest Unit Plan itself and are outlined below.
Terms of the Units
According to the Economic Interest Unit Plan, employees'
Units are effective "only for so long as the Participant
remains an Employee of [QualTek], and shall be immediately
cancelled and forfeited if the Participant ceases to be an
Employee of [QualTek] for any reason, unless redeemed
pursuant to [terms identified] below." Amended Compl.,
Ex. A (Plan ¶ 6(f)). Once an employee's employment
is terminated, the circumstances of that termination dictate
whether the employee is compensated for his or her Units.
Effect of Termination on Units' Status
the Economic Interest Unit Plan, an employee who is
terminated must (1) forfeit unvested Units entirely,
without compensation, and (2) allow QualTek to redeem
vested Units pro rata, based on a formula reflecting
QualTek's estimated market value. Redemption means that
QualTek pays the terminated employee for his or her Units.
upon employment termination, Units are forfeited or redeemed
turns on two factors: (1) whether the Units are vested, and
(2) whether the employment was terminated without cause or
Vesting of Units
Unit vests pursuant to two independent mechanisms, one based
on the passage of time and one based on the performance of
QualTek. Over the five years following the grant of a Unit,
50% of the Unit can vest pursuant to automatic,
time-passage-based vesting, and 50% of the Unit can vest
pursuant to performance-based vesting.
a portion (up to 50%) of each Unit vests automatically over
time. Over the five years immediately following the grant of
a Unit, that Unit vests 10% per year, beginning one year
after the Unit was granted. In other words, if a Unit is
granted on January 1, 2020, 10% of that Unit vests on January
1, 2021, and then another 10% vests on January 1 in each of
the subsequent four years. Before January 1, 2021, however,
that Unit is unvested.
a portion of each Unit (up to 50%) has the possibility of
vesting based on the performance of QualTek over the five
years immediately following the grant of a
Unit is not vested, any terminated
employee forfeits the Unit, regardless of whether employment
is terminated without cause or with cause.
Unit is vested, whether a
terminated employee's Units are redeemed turns on whether
the employment is terminated with or without cause.
Termination Without Cause or With Cause
vested Units only, employees whose employment is terminated
without cause (or due to death or
disability) shall have that Unit redeemed by QualTek. A
redeemed Unit is bought back by QualTek, with payments made
in annual installments.
with cause (or because the employee
voluntarily quit) causes forfeiture of that Unit.
only employees with vested Units
whose employment is terminated without
cause are entitled to redemption of their
Mr. Hisey's Economic Interest Units.
January 24, 2014, Mr. Hisey and QualTek entered into an
agreement that granted Mr. Hisey 3 Units (i.e., a 3%
stake in QualTek). On December 4, 2014, before any of the
Units were vested, QualTek terminated Mr. Hisey's
employment. Mr. Hisey alleges that his employment was
terminated without cause. QualTek did not redeem any of Mr.
Hisey's unvested Units.
Mr. Hisey's Allegations of
Hisey alleges that while he worked for QualTek, he reported
several instances of racial discrimination and was fired as a
result of those reports. Mr. Hisey alleges that he was aware
of several instances of employees at QualTek using racial
slurs or racially insensitive language and that he reported
those offending employees to QualTek executives. Mr. Hisey
also allegedly filed a formal complaint of race
discrimination after QualTek executives refused to offer an
ownership interest to an African-American employee but
offered the same ownership interest to similarly qualified
white employees. According to Mr. Hisey, he was fired eleven
days after filing this formal complaint.
dispute has a somewhat fraught history, much of which
predates this Eastern District of Pennsylvania action. The
chart below briefly summarizes the procedural history:
Hisey I (Florida lawsuit that preceded this
EEOC issues right to sue letter
Hisey I complaint filed in Florida state court
Hisey I removed to S.D. Fla.
Hisey I dismissed for forum non conveniens
Hisey I reconsideration of dismissal denied
Hisey /parties participate in Eleventh Circuit Court
of Appeals mediation
Hisey I dismissal affirmed by Eleventh Circuit Court
Hisey II (this action filed in E.D.
Hisey II complaint filed
Hisey II motion for sanctions filed
Hisey II first motion to dismiss filed
Hisey II amended complaint filed
Hisey II second motion to dismiss filed
December 2015, about a year after Mr. Hisey was fired, he
sued QualTek and two of its executives (Joseph Kestenbaum and
Christopher Hisey) in Florida state court. See Hisey v.
QualTek USA, LLC, et al, No. 16-60197 (S.D. Fla.)
("Hisey I''). Mr. Hisey brought ten claims: (1)
Florida law wrongful termination; (2) Florida law medical
disclosure violation; (3) Florida law unlawful employment
practices; (4) Broward County hostile work environment
violation; (5) Broward County sexual orientation
discrimination; (6) Title VII wrongful termination; (7) Title
VII sex discrimination; (8) Title VII hostile work
environment; (9) Title VII retaliation; and (10) ADA
discrimination. Notice of Removal and Complaint, Hisey I
(Doc. No. 1). The crux of these claims was that QualTek
and its employees discriminated against Mr. Hisey for being
gay and because of a medical condition.
removed Hisey I to the federal court in the Southern
District of Florida. Id. The district court
dismissed Mr. Hisey's lawsuit for forum non
conveniens, because Mr. Hisey's employment contract
included a forum selection clause requiring that he bring
suit in Pennsylvania. See generally Order Granting
Mot. to Dismiss, Hisey I (Doc. No. 25). Mr. Hisey
moved for reconsideration of the dismissal, which the court
denied. Mot. for Reconsideration and Order Denying Mot. for
Reconsideration, Hisey I (Doc. Nos. 26, 27). In its
order denying reconsideration, the court emphasized that the
dismissal was without prejudice because forum non
conveniens dismissal is not on the merits. See
Order Denying Mot. for Reconsideration at 2, Hisey I
(Doc. No. 27) ("Dismissal on grounds of forum non
conveniens is not a determination on the merits and is
therefore without prejudice.").
Eleventh Circuit Court of Appeals affirmed the dismissal for
forum non conveniens. See generally Hisey v. QualTek USA,
LLC, 753 Fed.Appx. 698 (11th Cir. 2018). In the briefing
and during oral argument, Mr. Hisey argued for reversal
because, among other reasons, even though the district
court's dismissal was without prejudice, the
effect of the dismissal would be with prejudice
because his Title VII and ADA claims became time-barred
during the initial district court litigation. See,
e.g., Brief of Appellant at vii-viii, Hisey v.
QualTek USA, LLC, No. 16-13477 (11th Cir. Aug. 5, 2016).
Nonetheless, the Eleventh Circuit Court of Appeals left in
place the dismissal, stating that "dismissal (or
forum non conveniens of a lawsuit brought by one who has
violated a contractual obligation by filing suit in a forum
other than the one specified in a valid forum-selection
clause results in no injustice on the plaintiff who loses out
completely through the running of the statute of
limitations." Hisey v. Qualtek USA, LLC, 753
Fed.Appx. at 705 (quotation and citation omitted).
Mr. Hisey's Florida action concluded and his Title VII
and ADA claims time-barred, he filed this action against the
same defendants, alleging (1) breach of contract, (2)
violation of the Pennsylvania Wage Payment and Collection
Law, and (3) a 42 U.S.C. § 1981 claim for retaliation.
Defendants moved to dismiss and for sanctions, arguing that
the new action is barred by claim preclusion, claim
splitting, and judicial estoppel, as well as asserting that
the complaint fails to state a claim. After Mr. Hisey amended
his complaint, the defendants renewed their motion to
dismiss. The Court heard oral argument on the motion.
defendants moved both to dismiss Mr. Hisey's claims and
for sanctions against Mr. Hisey. Because the substance of
motion for sanctions is entirely duplicative of
Defendants' motion to dismiss, the Court addresses the
motion to dismiss first. The Court grants in part and denies
in part the motion to dismiss, but rejects all of the
arguments regarding preclusion, which form the basis of
Defendants' motion for sanctions. Consequently, the Court
denies the motion for sanctions.
Motion to Dismiss
defendants' motion to dismiss can be divided generally
into two categories. First, Defendants make arguments based
on various principles of preclusion, all of which implicate
the alleged overlap between this action and Mr. Hisey's
previously filed (and dismissed) Florida lawsuit. Second,
Defendants make arguments about alleged pleading deficiencies
that purportedly undermine each of Mr. Hisey's claims.
The Court rejects all of the defendants' preclusion
arguments, refuses to dismiss the breach of contract claim,
dismisses the WPCL claim with prejudice, and dismisses the
§ 1981 claim against the individual defendants only,
without prejudice and with leave to amend.
"a complaint attacked by a Rule 12(b)(6) motion to
dismiss does not need detailed factual allegations, a
plaintiffs obligation to provide the 'grounds' of his
'entitlement to relief requires more than labels and
conclusions, and a formulaic recitation of the elements of a
cause of action will not do." Bell Atl, Corp. v.
Twombly, 550 U.S. 544, 555 (2007) (citations omitted).
To survive a Rule 12(b)(6) motion, therefore, the plaintiff
must plead "factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged." Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009). Specifically, "[f]actual
allegations must be enough to raise a right to relief above
the speculative level." Twombly, 550 U.S. at
555. The question is not whether the plaintiff "will
ultimately prevail. .. but whether [the] complaint [is]
sufficient to cross the federal court's threshold."
Skinner v. Switzer, 562 U.S. 521, 530 (2011)
(citation and quotation omitted). Thus, assessing the
sufficiency of a complaint is "a context-dependent
exercise" because "[s]ome claims require more
factual explication than others to state a plausible claim
for relief." W. Pa. Allegheny Health Sys., Inc. v.
UPMC, 627 F.3d 85, 98 (3d Cir. 2010) (citations
evaluating the sufficiency of a complaint, the Court adheres
to certain accepted benchmarks. For one, the Court "must
consider only those facts alleged in the complaint and accept
all of the allegations as true." ALA, Inc. v. CCAIR,
Inc., 29 F.3d 855, 859 (3d Cir. 1994) (citation
omitted); see also Twombly, 550 U.S. at 555 (stating
that courts must "assum[e] that all the allegations in
the complaint are true (even if doubtful in fact)"). The
Court must accept as true all reasonable inferences emanating
from the allegations and view those facts and inferences in
the light most favorable to the nonmoving party. Rocks v.
City of Phila., 868 F.2d 644, 645 (3d Cir. 1989).
admonition does not demand that the Court ignore or discount
reality. The Court "need not accept as true unsupported
conclusions and unwarranted inferences," Doug Grant,
Inc. v. Greate Bay Casino Corp., 232 F.3d 173, 183-84
(3d Cir. 2000) (citations and quotation omitted), and
"the tenet that a court must accept as true all of the
allegations contained in a complaint is inapplicable to legal
conclusions. Threadbare recitals of the elements of a cause
of action, supported by mere conclusory statements, do not
suffice." Iqbal, 556 U.S. at 678 (citation
omitted). If a claim "is vulnerable to 12(b)(6)
dismissal, a district court must permit a curative amendment,
unless an amendment would be inequitable or futile."
Phillips v. Cty. of Allegheny, 515 F.3d 224, 236 (3d
Cir. 2008) (citation omitted).
Whether Preclusion Requires Dismissal of Mr. Hisey's
argue that three theories of preclusion require dismissal:
(1) claim preclusion, (2) claim splitting, and (3) judicial