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McElroy v. FirstEnergy Corp.

United States District Court, W.D. Pennsylvania

November 13, 2019




         Defendant FirstEnergy Corp. ("FirstEnergy") has moved to dismiss the First Amended Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons stated herein, FirstEnergy's Motion to Dismiss will be granted.

         I. Procedural History and Factual Background

         Shawn McElroy and his wife Amber McElroy ("Plaintiffs") originally commenced this action in the Court of Common Pleas of Beaver County. It was then removed to this Court by FirstEnergy. (ECF No. 1). After FirstEnergy's Motion to Dismiss the original Complaint was denied and it filed an Answer, Plaintiffs filed their First Amended Complaint. (ECF No. 19). Thereafter, FirstEnergy filed the pending motion to dismiss (ECF No. 22) which has been fully briefed (ECF Nos. 23, 27, 29) and is ripe for disposition.

         According to the allegations of the First Amended Complaint, Plaintiff Shawn McElroy was employed as a security guard for Securitas Security Services USA, Inc. (ECF No. 19, ¶ 11). On July 22, 2017, Mr. McElroy was conducting an inspection of the Beaver Valley Nuclear Power Plant in Beaver County in the course of his duties. (Id., ¶¶ 8, 11). The power plant is owned, maintained and controlled by the property owner, FirstEnergy Generation, LLC ("FirstEnergy Generation"). (Id., ¶ 9). Plaintiffs allege that as Mr. McElroy was walking down a stairway at the power plant, a "deteriorated and rotted wooden stairway step collapsed," causing him to trip and sustain various injuries and damages. (Id., ¶¶ 12, 14-16). According to Plaintiffs, FirstEnergy Nuclear Operating Company ("FirstEnergy Nuclear") had notice that the stairs on the stairway were deteriorated and dangerous. (Id., ¶ 13).

         Plaintiffs allege that FirstEnergy, an Ohio corporation, is the parent of a "conglomerate" of subsidiary corporations whose main purpose is to generate, transmit and disperse electrical supply. (Id., ¶3). According to the First Amended Complaint, FirstEnergy has created a "corporate web" of subsidiaries in a "fraudulent attempt to create layers upon layers of insulation and protection under the guise of legitimate corporate creation" and that these subsidiaries are "grossly undercapitalized," leading them to "continually file for bankruptcy protection to skirt financial, contractual, and tortious conduct." (Id., ¶¶ 5-7). In support of these allegations, Plaintiffs attach an exhibit which purports to set forth 203 bankruptcy actions involving "FirstEnergy." (Id., ¶ 7 citing Exhibit A). Both FirstEnergy Generation and FirstEnergy Nuclear are alleged to be alter-egos of FirstEnergy. (Id., ¶¶ 9, 13).

         In the First Amended Complaint, Plaintiffs set forth three causes of action. Count I sets forth a "Piercing the Corporate Veil/Alter Ego" claim against FirstEnergy by Mr. McElroy in which he contends that FirstEnergy is liable for his injuries because the alter-ego corporations formed by FirstEnergy are shams that were "created for the purpose of defrauding and injuring [him]." (Id., ¶ 18). Plaintiffs allege that FirstEnergy "seeks to skirt liability through its maze of incorporation of grossly undercapitalized and bankrupt entities, while maintaining and operating a nuclear facility in the Commonwealth, and boasting that it draws revenue from those very bankrupt entities . . . ." (Id., ¶ 20) (citing FirstEnergy's 2017 annual report attached as Exhibit B). According to Plaintiffs, FirstEnergy's corporate form is an illusion which should be disregarded and it should be held liable for the conduct of its alter-egos. (Id., ¶¶ 22, 23).

         In Count II, Mr. McElroy sets forth a claim of negligence against FirstEnergy in which he alleges, among other things, that FirstEnergy negligently provided and maintained premises that were unsafe and defective. (Id., ¶ 27). Count III states a cause of action for loss of consortium by Mr. McElroy's wife, Amber McElroy. (Id., ¶ 29).

         In moving for dismissal, FirstEnergy argues that Plaintiffs' claim of piercing the corporate veil/alter ego fails as a matter of law because under Ohio law, Plaintiffs cannot satisfy the three prongs necessary to pierce the corporate veil. (ECF No. 23 at 4). Further, it contends that because Counts II and III are dependent upon the same theory, they also fail to state a claim because as the First Amended Complaint reflects, FirstEnergy was not the owner or possessor of the premises on which Mr. McElroy was allegedly injured. (Id. at 9).

         In turn, Plaintiffs maintain that under either Pennsylvania law, which they contend applies to the resolution of FirstEnergy's motion, or alternatively, Ohio law, the First Amended Complaint sufficiently pleads a claim for piercing the corporate veil. (ECF No. 27).

         II. Discussion

         A. Standard of Review

         Under Rule 12(b)(6), a motion to dismiss may be granted only if, accepting all well-pleaded allegations in the complaint as true and viewing them in the light most favorable to the plaintiff, a court finds that plaintiffs claims lack facial plausibility." Warren Gen. Hosp. v. Amgen Inc., 643 F.3d 77, 84 (3d Cir. 2011) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007)). "This requires a plaintiff to plead "sufficient factual matter to show that the claim is facially plausible," thus enabling "the court to draw the reasonable inference that the defendant is liable for misconduct alleged." Id. (quoting Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009)). While the complaint "does not need detailed factual allegations ... a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555. See also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

         As noted by the Court of Appeals for the Third Circuit in Malleus v. George,641 F.3d 560, 563 (3d Cir. 2011), a 12(b)(6) inquiry includes identifying the elements of a claim, disregarding any allegations that are no more than conclusions and then reviewing the well-pleaded allegations of the complaint to evaluate whether the elements of the claim are sufficiently alleged. A court may consider the complaint, exhibits attached to the complaint, matters of public record and "undisputedly authentic documents if ...

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