Denty v. SmithKline Beecham ( 1997 )

Opinions of the United
1997 Decisions States Court of Appeals
for the Third Circuit
3-17-1997
Denty v. SmithKline Beecham
Precedential or Non-Precedential:
Docket 96-1554
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Recommended Citation
"Denty v. SmithKline Beecham" (1997). 1997 Decisions. Paper 63.
http://digitalcommons.law.villanova.edu/thirdcircuit_1997/63
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 96-1554
___________
GARLAND DENTY,
Appellant
vs.
SMITHKLINE BEECHAM CORPORATION;
(Caption amended per the Clerk's 7/22/96 order)
___________
Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civ. No. 93-cv-06978)
___________
Argued
February 6, 1997
Before: STAPLETON and MANSMANN, Circuit Judges
and RESTANI, Judge.*
(Filed March 17, l997)
___________
Ronald H. Surkin, Esquire (ARGUED)
Alexander A. DiSanti, Esquire
Nancy C. DeMis, Esquire
L. Keith Lipman, Esquire
Richard, DiSanti, Gallagher,
Schoenfeld & Surkin
25 West Second Street
P.O. Box 900
Media, PA 19063
Attorneys for Appellant
Steven B. Feirson, Esquire (ARGUED)
David M. Howard, Esquire
Paul D. Snitzer, Esquire
Dechert, Price & Rhoads
1717 Arch Street
4000 Bell Atlantic Tower
Philadelphia, PA 19103
Attorneys for Appellee
* Honorable Jane A. Restani, Judge, United States Court
of International Trade, sitting by designation.
1
C. Gregory Stewart, Esquire
Gwendolyn Young Reams, Esquire
Carolyn L. Wheeler, Esquire
Robert J. Gregory, Esquire (ARGUED)
Equal Employment Opportunity Commission
1801 L Street, N.W., Room 7032
Washington, DC 10507
Attorneys for Amicus Curiae - Appellant
___________
OPINION OF THE COURT
__________
MANSMANN, Circuit Judge.
Before us is the certified question of whether the Age
Discrimination in Employment Act and the Pennsylvania Human
Relations Act are applicable to the denial of a promotional
opportunity based upon age to an individual working in
Philadelphia, Pennsylvania, in the employ of a United States
subsidiary controlled by a foreign parent corporation not itself
controlled by an American corporation, where the promotional
opportunity is a position with the foreign corporation outside
the United States. Because we do not believe Congress intended
the ADEA should be applied extraterritorially under the facts
here, we will affirm the judgment of the district court.
I.
The relevant facts on summary judgment are not
disputed. In 1984, Garland Denty was hired by Smith Kline
French, a Pennsylvania corporation, as Director of Quality
Assurance. Denty held this job until January 1989, when he was
given the title, Director of Manufacturing Operations/Technical
2
Services, International. Denty held these positions at Smith
Kline's Philadelphia office. Smith Kline subsequently merged
with the Beecham Group plc, a British corporation in 1989; the
resulting corporation, SmithKline Beecham plc (SB plc), is
incorporated and headquartered in the United Kingdom. Denty
continued working for SmithKline Beecham Corporation (SBC), the
wholly-owned American subsidiary of SB plc.
As a consequence of the merger, five new positions were
created with SB plc in foreign locations. Denty alleges that in
1990, he was told he would be promoted to one of these positions.
Yet, he was subsequently denied the promotion allegedly because
of his age which, at that time, was fifty-two. Denty further
contends that these positions were filled with men younger than
he. The promotion decisions were made by SB plc executives in
England while Denty worked for SBC in Philadelphia.
On December 27, 1993, Denty instituted the present
action against SBC,1 alleging violations of the ADEA and PHRA for
failure to promote, deprivation of employment opportunities, and
age discrimination. Thereafter, SBC filed a motion for summary
judgment, arguing inter alia that the ADEA did not apply to
Denty's failure-to-promote claim. The district court granted
summary judgment for SBC on the failure-to-promote claim. In so
doing, the district court found that the statutory language of
1. The district court considered whether SBC was the proper
defendant. The court resolved the issue by ruling that it would
allow Denty leave to amend his complaint to name SB plc as a
defendant if it did not rule against him on SBC's summary
judgment motion. Denty v. SmithKline Beecham Corp., 907 F. Supp.
879, 881-82 (E.D.Pa. 1995).
3
the ADEA, and by extension the PHRA, did not provide for
extraterritorial application of the Act against a foreign
corporation for failure to promote to positions outside of the
United States. The court specifically ruled that "[t]he relevant
work site is the location of [the position for which the
plaintiff applied], not the location of Denty's employment at the
time of the alleged discrimination." Denty v. SmithKline Beecham
Corp., 907 F. Supp. 879, 884 (E.D. Pa. 1995). The court further
opined that there was no distinction in the ADEA between a
"failure to hire" case, in which the discrimination occurs in the
country where the job site is located, and a "failure to promote"
situation. Id. Finally, the district court rejected Denty's
contention that SBC and SB plc were indistinguishable and should
be considered as a "single employer," holding instead that the
proper inquiry was "whether Denty sought employment with an
employer ``controlled' by an American firm." Id. at 885.
Denty then moved for certification to allow an
immediate appeal pursuant to 28 U.S.C. § 1292(b), which the
district court granted on May 10, 1996. The question certified
for appeal is:
whether the Age Discrimination in Employment Act and
the Pennsylvania Human Relations Act are
applicable to the denial of a promotional
opportunity based upon age to an individual
working in Philadelphia, PA, in the employ of
a foreign corporation not controlled by an
American corporation, where the promotional
opportunity is a position with that same
foreign corporation outside the United
States?
4
Denty petitioned for permission to appeal under 28 U.S.C. §
1292(b) from a certified interlocutory order of the district
court. We granted Denty's motion on June 21, 1996.
We review the district court's grant of summary
judgment de novo. Antol v. Perry, 82 F.3d 1291, 1294-95 (3d Cir.
1996).
II.
We begin our analysis with the longstanding principle
of American law that "legislation of Congress, unless a contrary
intent appears, is meant to apply only within the territorial
jurisdiction of the United States." EEOC v. Arabian American
Oil Co., 499 U.S. 244, 248 (1991). The Supreme Court stated that
in applying this rule, courts should determine if the "language
in the [relevant Act] gives any indication of a congressional
purpose to extend its coverage beyond places over which the
United States has sovereignty or has some measure of legislative
control." Id. (quoting Foley Bros., Inc. v. Filardo, 336 U.S.
281, 285 (1949)). If Congress wishes to go beyond the purely
domestic realm, there must be an "affirmative intention . . .
clearly expressed." Id. (quoting Benz v. Compania Naviera
Hidalgo, S.A., 353 U.S. 138, 147 (1957). We turn, therefore,
to the plain language of the ADEA.
Codified at 29 U.S.C. § 623(a), the ADEA states in
pertinent part:
It shall be unlawful for an employer . . . to fail or
refuse to hire or to discharge any individual
or otherwise discriminate against any
individual with respect to his compensation,
5
terms, conditions, or privileges of
employment, because of such individual's
age[] . . . .
Prior to 1984, the ADEA did not contain any provision addressing
extraterritorial reach. Instead, the ADEA adopted language from
the Fair Labor Standards Act, 29 U.S.C. §§ 216(d) and (e), which
provided that no "employee whose services during the workweek are
performed in a workplace within a foreign country" was protected.
Consequently, we held in Cleary v. United States, 728 F.2d 607,
610 (3d Cir. 1984), that the ADEA could not be applied to
Americans employed outside the United States by American
employers.
In 1984, Congress responded to Cleary and subsequent
cases2 by amending the ADEA to provide for limited
extraterritorial application. First, Congress amended the
definition of "employee" to include "any individual who is a
citizen of the United States employed by an employer in a
workplace in a foreign country." 29 U.S.C. § 630(f). Second,
Congress enacted the key provision in this case, 29 U.S.C. §
623(h)3, which states:
Practices of foreign corporations controlled by
American employers; foreign persons not
2. See, e.g., Lopez v. Pan Am World Services, Inc., 813 F.2d
1118 (11th Cir. 1987); S.F. DeYoreo v. Bell Helicopter Textron,
Inc., 785 F.2d 1282 (5th Cir. 1986); Ralis v. RFE/RL, Inc., 770
F.2d 1121 (D.C. Cir. 1985); Pfeiffer v. Wm. Wrigley Jr. Co., 755
F.2d 554 (7th Cir. 1985); Zahourek v. Arthur Young and Co., 750
F.2d 827 (10th Cir. 1984); Thomas v. Brown & Root, Inc., 745 F.2d
279 (4th Cir. 1984).
3. This subsection was originally codified as 29 U.S.C. §
623(g), creating the incongruity of two subsection "g's." This
mistake was remedied by a 1986 amendment.
6
controlled by American employers; factors
determining control
(1) If an employer controls a corporation
whose place of incorporation is in a foreign
country, any practice by such corporation
prohibited under this section shall be
presumed to be such practice by such
employer.
(2) The prohibitions of this section shall
not apply where the employer is a foreign
person4 not controlled by an American
employer.
(3) For the purpose of this subsection the
determination of whether an employer controls
a corporation shall be based upon the--
(A) interrelation of operations,
(B) common management,
(C) centralized control of labor
relations, and
(D) common ownership or financial
control,
of the employer and the corporation.
As the Supreme Court noted in Arabian, "[t]he expressed purpose
of these changes was to ``mak[e] provisions of the Act apply to
citizens of the United States employed in foreign countries by
U.S. corporations or their subsidiaries.'" 499 U.S. at 259
(quoting S. Rep. No. 98-467, at 2 (1984), reprinted in 1984
U.S.C.C.A.N. 2974, 2975).
Viewing the 1984 amendments together, the district
court here concluded that the "ADEA applies abroad only when (1)
the employee is an American citizen and (2) the employer is
controlled by an American employer." 907 F. Supp. at 883. Our
4. "The term ``person' means one or more individuals,
partnerships, associations, labor organizations, corporations,
business trusts, legal representatives, or any organized group of
persons." 29 U.S.C. § 630(a).
7
reading of the plain language of the statute compels us to agree.
5
The legislative history likewise necessitates this conclusion:
The purpose behind the amendment is to insure that the
citizens of the United States who are
employed in a foreign workplace by U.S.
corporations or their subsidiaries enjoy the
protections of the [ADEA]. When considering
this amendment, the Committee was cognizant
of the well-established principle of
sovereignty, that no nation has the right to
impose its labor standards on another
country. That is why the amendment is
carefully worded to apply only to citizens of
the United States who are working for U.S.
corporations or their subsidiaries. It does
not apply to foreign nationals working for
such corporations in a foreign workplace and
it does not apply to foreign companies which
are not controlled by U.S. firms. Moreover,
it is the intent of the Committee that this
amendment not be enforced where compliance
with its prohibitions would place a U.S.
company or its subsidiary6 in violation of the
laws of the host country.
5. As the district court noted, the employment decisions
at issue involved Denty's application for positions in the United
Kingdom and Australia. The relevant work site for ADEA purposes,
therefore, is the location of these positions. We find support
for this conclusion in the fact that the language of the ADEA
does not distinguish between failure to hire and failure to
promote situations. Accordingly, we find Lopez v. Pan Am World
Servs., Inc., 813 F.2d 1118 (11th Cir. 1987), indistinguishable
from the case before us. Nor does the Tenth Circuit's decision
in Zahourek v. Arthur Young and Co., 750 F.2d 827 (10th Cir.
1984), inform our decision here. There, the court of appeals
held that the ADEA did "not apply to the termination of
employment of an American citizen by an American employer where,
as here, the ``workplace' is Honduras." Id. at 828-29 (footnote
omitted). The 1984 amendment to the ADEA, without reference to
where the discriminatory effect occurred, now specifically
protects a person in Zahourek's position: an American citizen
working for an American company abroad. Indeed, the focus of the
amendment is now upon the degree of control exercised by an
American company over the conduct of the discriminating
corporation.
6. The Committee codified their intent at 29 U.S.C. § 623(f),
which reads in pertinent part:
8
S. Rep. No. 98-467, at 2, reprinted in 1984 U.S.C.C.A.N. at 3000-
01. We emphasize that the job for which Denty applied is in the
United Kingdom with the parent company, not in the United States
with the subsidiary.
The EEOC guidelines, promulgated in response to the
1984 amendments, do not convince us otherwise. The guidelines
provide that "the ADEA does not apply to foreign firms operating
outside the United States, unless those firms are controlled by
U.S. employers. On the other hand, the ADEA does apply to
foreign firms operating on U.S. soil." EEOC Policy Guidance, N-
915.039, Empl. Prac. Guide (CCH) 5183, 6531 (March 3, 1989).
Here the record is clear that Denty is currently employed by a
U.S. subsidiary of a British parent corporation. SB plc controls
the American subsidiary, not the other way around. Clearly,
then, the ADEA cannot be applied extraterritorially to create
liability on the part of SB plc given the facts of this case.
We reject the EEOC's argument that by failing to apply
the ADEA extraterritorially here, Denty will fall into a "black
hole." To the contrary, Denty does not fall into a "black hole"-
(..continued)
It shall not be unlawful for an employer . . . to take
any action otherwise prohibited under
subsection[] (a) . . . where such practices
involve an employee in a workplace in a
foreign country, and compliance with such
subsection[] would cause such employer, or a
corporation controlled by such employer, to
violate the laws of the country in which such
workplace is located[.]
This section has been commonly referred to as the "foreign law
exception."
9
-he is protected by British law. The fact that British law does
not protect individuals forty years of age or older from
discrimination is not our concern. Moreover, Congress considered
the possibility of a "black hole" and yet chose not to extend the
ADEA, recognizing the well-established principle of sovereignty.
The EEOC's argument, thus, misses the mark.
The language of section 623(h)(2) could not be more
clear--the ADEA does not apply when a foreign corporation
controls an American corporation and the employment is with the
foreign parent abroad. Accordingly, we will affirm the judgment
of the district court.7
7. Denty's failure-to-promote claim under the Pennsylvania Human
Relations Act (PHRA) must likewise be dismissed as no evidence
exists to show the Pennsylvania legislature intended to apply the
PHRA to employment decisions made by foreign corporations for
positions located outside the United States.
10