Brown v. Daikin America Inc. , 756 F.3d 219 ( 2014 )

12-2955-cv
Brown v. Daikin America Inc.
United States Court of Appeals
FOR THE SECOND CIRCUIT
______________
August Term, 2012
(Argued: March 5, 2013 Decided: June 27, 2014)
Docket No. 12-2955-cv
______________
TODD BROWN,
Plaintiff-Appellant,
–v.–
DAIKIN AMERICA INC., DAIKIN INDUSTRIES LTD.,
Defendants-Appellees.
______________
B e f o r e:
LYNCH, LOHIER, and CARNEY, Circuit Judges.
______________
Appeal from a final judgment of the United States District Court for the
Southern District of New York (Seibel, J.) dismissing plaintiff Todd Brown’s
original Complaint against defendant Daikin Industries Ltd. (‚DIL‛) and
Brown’s Amended Complaint against defendant Daikin America Inc. (‚Daikin
America‛) pursuant to Federal Rule of Civil Procedure 12(b)(6). Brown, a white
male of United States national origin, alleges that DIL and Daikin America (DIL’s
wholly-owned subsidiary) discriminated against him on the basis of his race and
national origin in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C.
§ 2000e, et seq., and the New York State Human Rights Law (‚NYSHRL‛), N.Y.
Exec. Law § 290, et seq., when they terminated his employment as a part of a
workforce reduction at Daikin America. Brown claims that Daikin America,
acting at DIL’s direction, wrongfully failed to consider for termination those
employees of Japanese national origin who previously worked for DIL and
would likely return to DIL in the future. We conclude that Brown has
sufficiently alleged that DIL and Daikin America are a ‚single integrated
enterprise‛ for purposes of Title VII and the NYSHRL, and that Brown has stated
a plausible discrimination claim against both entities as his employer. We
therefore VACATE the District Court’s judgment dismissing those claims and
REMAND for further proceedings consistent with this opinion. Because Brown
has not alleged, however, the existence of an express written policy limiting
Daikin America or DIL’s authority to terminate his employment without cause,
Brown failed to state a claim for breach of implied contract. We therefore
AFFIRM the District Court’s judgment as to that claim.
AFFIRMED IN PART, AND VACATED AND REMANDED IN PART.
______________
PHILIP P. KALODNER, ESQ., Gladwyne, Pennsylvania, for
Plaintiff-Appellant.
JEROME P. COLEMAN (Adriana S. Kosovych, on the brief),
Putney, Twombly, Hall & Hirson LLP, New York,
New York, for Defendants-Appellees.
______________
2
SUSAN L. CARNEY, Circuit Judge:
This case involves claims of race and national origin discrimination arising
from the termination of an individual’s employment with the New York-based
wholly-owned subsidiary of a Japanese corporation. The District Court
dismissed the actions against the corporate parent and subsidiary for failure to
state a claim. We conclude that, under the standards articulated in Cook v.
Arrowsmith Shelburne, Inc., 69 F.3d 1235 (2d Cir. 1995), the plaintiff, Todd Brown,
sufficiently alleged that the corporate parent was part of a ‚single integrated
enterprise‛ with its American subsidiary to be properly named as a co-defendant
in a discriminatory discharge suit under Title VII and the New York State
Human Rights Law. We also conclude that Brown plausibly alleged a claim of
race or national origin discrimination against both the corporate parent and the
subsidiary. On these counts, we VACATE the judgment of the District Court and
REMAND for further proceedings consistent with this decision.
We agree with the District Court, however, that Brown’s claim for breach
of contract does not survive defendants’ motions to dismiss because he failed to
allege that either defendant maintained a written policy of terminating
3
employees only for cause. Accordingly, we AFFIRM the judgment of the District
Court dismissing Brown’s contract claim.
BACKGROUND
We recite the facts as alleged in Brown’s Complaint and Amended
Complaint, noting any relevant differences.1 We accept these facts as true for
purposes of reviewing the District Court’s grant of defendants’ motions to dismiss.
See Gatt Commc’ns, Inc. v. PMC Assocs. L.L.C., 711 F.3d 68, 74 (2d Cir. 2013).
Brown — who is white and of United States national origin — is a former
employee of Daikin America, Inc. (‚Daikin America‛), a Delaware corporation
that is headquartered in Rockland County, New York, and engaged in the
manufacture and sale of chemical products. Daikin America is a wholly-owned
subsidiary of Daikin Industries Ltd. (‚DIL‛), a Japanese corporation based in
1 After the District Court dismissed with prejudice Brown’s claims against DIL, Brown
filed an Amended Complaint that included claims against only Daikin America. For purposes
of evaluating the claims against DIL, we consider the allegations as pled in the initial
Complaint. See In re Crysen/Montenay Energy Co., 226 F.3d 160, 162 (2d Cir. 2000) (‚We see no
reason to require repleading of a claim or defense that explicitly has been denied.‛). In
evaluating Brown’s claims against Daikin America, we consider the allegations pled in the
Amended Complaint along with those allegations from the original Complaint specifically
incorporated by the District Court as a result of its finding that Brown manipulated some of the
allegations in response to Daikin America’s motion to dismiss.
4
Osaka, Japan.2 Brown worked in Daikin America’s New Business Development
Group (‚the Group‛) from approximately 2001 until 2009, when he was
discharged as part of a company-wide reduction in force. During his time at
Daikin America, Brown’s performance reviews were consistently positive.
Brown is fluent in Japanese and familiar with Japanese business culture. Before
beginning work at Daikin America, he worked for a Japanese company for six
years, during which he spent two years living and working in Japan.
In February 2009, when Brown’s employment with Daikin America ended,
the Group consisted of six employees, three of whom were white Americans, and
three of whom were Japanese citizens of Japanese national origin. Each of the
Japanese employees in the Group previously worked for DIL in Japan, but was
assigned to Daikin America ‚to act as *Daikin America’s+ employee[ ]‛ while in
the United States. Complaint (‚Compl.‛) ¶¶ 8, 21. Such inter-company
‚rotational‛ assignments lasted a period of years.3 As a result of the 2009
2 DIL owns Daikin Holdings (USA), Inc., which in turn owns Daikin America.
3 As noted by the District Court, the Amended Complaint does not contain an allegation
to this effect. Brown concedes, however, for purposes of this appeal, that we may read both the
Complaint and the Amended Complaint as alleging the existence of a rotational system in
5
workforce reduction, the employment of Brown and one other white American
in the Group was terminated. The remaining white American employee was
transferred out of the Group, leaving three Japanese citizens employed in the
Group.4 During the same reduction effort, Daikin America also terminated
employees in three other business groups. In total, seven American employees
(six of whom were white and one of whom was black) lost their jobs in the
workforce reduction, but no Japanese employees were terminated.
Brown alleges that, for discriminatory reasons, Daikin America did not
consider terminating any of the Japanese rotational employees or any employees
of Japanese national origin who had been hired directly by Daikin America.5
Brown further alleges that DIL and Daikin America maintained a policy of
which Japanese employees who had previously worked for DIL came to the United States to
work for Daikin America, with the expectation that the employees would later return to DIL.
4 The other American in the Group who lost his job was Frank Plahutnik, Jr. As we
discuss below, Plahutnik also sued Daikin America under Title VII to protest his discharge.
Plahutnik’s case was assigned to Judge Seibel, as a case related to Brown’s action. See Plahutnik
v. Daikin Am., Inc., 912 F. Supp. 2d 96 (S.D.N.Y. 2012).
5 Although the original Complaint alleges that Daikin America did not consider
terminating the rotational Japanese employees because only DIL had the power to reassign or
discharge them, the Amended Complaint charges more summarily that discriminatory reasons
lay behind Daikin America’s failure to consider Japanese employees for termination. See infra
pp. 8-9.
6
terminating employees only for cause, and that he accepted and remained at his
job at Daikin America in part because of this policy.
After exhausting his administrative remedies with the Equal Employment
Opportunity Commission, Brown filed a complaint against DIL and Daikin
America in June 2010. In it, Brown contended that DIL and Daikin America
violated Title VII of the Civil Rights Act of 1964 (‚Title VII‛), 42 U.S.C.
§ 2000e, et seq., and the New York State Human Rights Law (‚NYSHRL‛), N.Y.
Exec. Law § 290, et seq., by discriminating against him on the basis of his race or
national origin. In particular, he alleged that defendants terminated his
employment without considering similar action against Japanese employees. He
also alleged, in a separate count, that defendants violated an implied term of his
employment contract — that he would be terminated only for cause.
Daikin America filed an answer to Brown’s Complaint and DIL moved to
dismiss under Federal Rule of Civil Procedure 12(b)(6). The District Court
granted DIL’s motion to dismiss, reasoning that DIL was not part of a ‚single
integrated enterprise‛ with Daikin America for purposes of determining what
entity or entities were Brown’s ‚employer‛ under Title VII and the NYSHRL.
7
The District Court ruled further that Brown did not plausibly allege that DIL had
any input into the decision to terminate his employment. Brown v. Daikin Am.,
Inc., No. 10 Civ. 4688 (CS), 2011 WL 10842873, at *5-8 (S.D.N.Y. Aug. 19, 2011).
The court observed that even if DIL had some control over the decision to
terminate, the Complaint’s allegations supported only ‚the mere possibility of
misconduct‛ by DIL, rather than stating a plausible claim of discrimination: the
preferential treatment of Japanese employees was just as likely to have been
based on their rotational status as their national origin. Id. at *10 (internal
quotation marks omitted). Finally, the District Court dismissed Brown’s breach
of contract claim because the Complaint did not allege that DIL had violated a
written policy limiting its right to discharge its employees. Id.
With the District Court’s leave, Brown filed an Amended Complaint
naming Daikin America as the sole defendant. The Amended Complaint
remained in all but one material respect the same as the original Complaint: its
factual narrative omitted any reference to the rotational status of the Japanese
employees.
8
Daikin America moved to dismiss the Amended Complaint, and the
District Court granted the motion in a bench opinion issued on June 22, 2012.
Disapproving as ‚manipulative‛ Brown’s omission from the Amended
Complaint of his earlier allegations about the employee rotational program, the
District Court chose to include those allegations in its analysis of the Amended
Complaint for purposes of deciding the motion to dismiss. In light of these
allegations, the District Court ruled that Brown had not plausibly alleged that his
discharge occurred under circumstances giving rise to an inference of
discrimination. The court explained that Brown was not similarly situated to the
Japanese employees assigned to work at Daikin America because, unlike those
colleagues, he was not a rotational employee. Because Brown had failed to allege
that he was treated differently than Japanese employees who were similarly
situated, he had failed to state claims cognizable under Title VII and the
NYSHRL. The District Court dismissed Brown’s breach of contract claim against
Daikin America for the same reasons that it gave in support of its earlier
dismissal of the parallel claim against DIL.
9
Brown now timely appeals from the judgment entered after dismissal with
prejudice of both complaints.6
DISCUSSION
We review de novo the grant of a motion to dismiss pursuant to Federal
Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can
be granted. Patane v. Clark, 508 F.3d 106, 111 (2d Cir. 2007). A complaint must be
dismissed if it does not plead ‚enough facts to state a claim to relief that is
plausible on its face.‛ Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). ‚A
claim has facial plausibility when the plaintiff pleads 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). ‚Threadbare
recitals of the elements of a cause of action, supported by mere conclusory
6Brown subsequently filed a Rule 60(b) motion in the District Court, seeking
reconsideration of the language in the court’s June 22, 2012 bench opinion, which Brown
contends ‚unfairly accus*ed+ him of having done a ‘bait and switch[,]’ of ‘having blatantly
changed his statement of the facts’ and of setting forth ‘manipulated allegations’ in his
Amended Complaint.‛ Brown did not seek reconsideration, however, of the court’s ruling that
the Amended Complaint failed to state a claim. The District Court denied Brown’s Rule 60(b)
motion by order dated July 18, 2012.
By letter dated December 13, 2012, Brown requested leave to file a second Rule 60(b)
motion, arguing that the District Court had filed a ‚directly contrary and inconsistent decision‛
in the case brought by Brown’s colleague, Plahutnik. In an order dated February 28, 2013, the
District Court responded that it would ‚entertain the motion if the case is remanded to *it+,‛ as
the motion ‚raises a substantial issue.‛
10
statements, do not suffice,‛ id., and we ‚are not bound to accept as true a legal
conclusion couched as a factual allegation,‛ Twombly, 550 U.S. at 555 (internal
quotation marks omitted).
I. Title VII and NYSHRL Claims
Title VII makes it unlawful for an employer ‚to discharge any individual,
or otherwise to discriminate against any individual with respect to his
compensation, terms, conditions, or privileges of employment, because of such
individual’s race . . . or national origin.‛ 42 U.S.C. § 2000e-2(a)(1). The NYSHRL
mirrors these federal obligations.7
Brown’s claims against DIL turn at the threshold, however, on whether
DIL may be held liable as an ‚employer‛ under the relevant provisions of Title
VII and the NYSHRL. Accordingly, we turn first to this question, which we
answer in the affirmative. We then address whether, in the Complaint and
Amended Complaint considered together, Brown has stated a plausible claim of
discrimination against DIL and Daikin America.
7 ‚*B+ecause New York courts rely on federal law when determining claims under the
New York *State+ Human Rights Law,‛ we analyze these claims in tandem. Hicks v. Baines, 593
F.3d 159, 164 (2d Cir. 2010) (citing Reed v. A.W. Lawrence & Co., 95 F.3d 1170, 1177 (2d Cir. 1996)).
11
A. DIL’s liability as Brown’s “employer”
‚*T+he existence of an employer-employee relationship is a primary
element of [a] Title VII claim[ ].‛ See Gulino v. N.Y. State Educ. Dep’t, 460 F.3d 361,
370 (2d Cir. 2006); see also 42 U.S.C. § 2000e(b) (defining an ‚employer‛ as ‚a
person engaged in an industry affecting commerce who has fifteen or more
employees,‛ as well as ‚any agent of such a person‛). An employer-employee
relationship is also required to sustain analogous claims under the NYSHRL. See
Eisenberg v. Advance Relocation & Storage, Inc., 237 F.3d 111, 113 (2d Cir. 2000).
Although Brown acknowledges that Daikin America — not DIL — is his direct
employer, he contends that DIL also should be considered his employer for
purposes of Title VII and NYSHRL liability because DIL and Daikin America
constitute a ‚single integrated enterprise.‛ Appellant’s Br. at 34. We agree.
‚To prevail in an employment action against a defendant who is not the
plaintiff’s direct employer, the plaintiff must establish that the defendant is part
of an ‘integrated enterprise’ with the employer, thus making one liable for the
illegal acts of the other.‛ Parker v. Columbia Pictures Indus., 204 F.3d 326, 341 (2d
Cir. 2000). In essence, a court must consider whether ‚an employee, formally
12
employed by one entity, . . . has been assigned to work in circumstances that
justify the conclusion that the employee is at the same time constructively
employed by another entity.‛ Arculeo v. On-Site Sales & Mktg., L.L.C., 425 F.3d
193, 198 (2d Cir. 2005). Whether two related entities are sufficiently integrated to
be treated as a single employer is generally a question of fact not suitable to
resolution on a motion to dismiss. See, e.g., Knowlton v. Teltrust Phones, Inc., 189
F.3d 1177, 1184 (10th Cir. 1999); Salemi v. Boccador, Inc., No. 02 Civ. 06648 (GEL),
2004 WL 943869, at *4 (S.D.N.Y. Apr. 29, 2004).
In Cook v. Arrowsmith Shelburne, Inc., 69 F.3d 1235 (2d Cir. 1995), we
adopted a four-part ‚single-employer‛ test to determine when, for Title VII
purposes, a parent company such as DIL may be considered the employer of its
subsidiary’s employees. Id. at 1241. Under this test, ‚[a] parent and subsidiary
cannot be found to represent a single, integrated enterprise in the absence of
evidence of (1) interrelation of operations, (2) centralized control of labor
relations, (3) common management, and (4) common ownership or financial
control.‛ Id. at 1240 (quoting Garcia v. Elf Atochem N. Am., 28 F.3d 446, 450 (5th
Cir. 1994)). ‚Although no one factor is determinative . . . control of labor
13
relations is the central concern.‛ Murray v. Miner, 74 F.3d 402, 404 (2d Cir. 1996)
(citations omitted).
Here, the District Court ruled that Brown sufficiently alleged that DIL and
Daikin America maintained interrelated operations and were under common
ownership.8 The court nonetheless held that Brown failed adequately to allege
that the two entities constituted a single integrated enterprise because he did not
plausibly allege centralized control of labor relations and common management.
Accepting Brown’s well-pled allegations as true, we conclude that the District
Court erred in this respect.
To satisfy the single-employer test, a plaintiff need not allege that the
parent exercises ‚total control or ultimate authority over hiring decisions,‛ so
long as he alleges that there is ‚an amount of participation *by the parent+ that is
8 In finding Brown’s allegation of interrelated operations to be sufficient, the District
Court relied on the Complaint’s allegations that ‚DIL closely directed the operations of . . .
[Daikin America] and its employees, . . . the approval of DIL was required as to all significant
actions by *Daikin America+ and its employees,‛ and DIL ‚closely supervised‛ Daikin
America’s New Business Development Group ‚by e-mail, by telephone conference calls, in
visits to [Daikin America] by DIL executives and in required visits by [Daikin America]
employees . . . to DIL in Japan.‛ Brown, 2011 WL 10842873, at *6 (quoting Compl. ¶¶ 5, 8-9, 12).
The court further explained that ‚the very system of assigning employees from one company to
work for a period of years at another company suggests a significant degree of interrelated
operations.‛ Id. Finally, the District Court found that ‚there is no dispute as to common
ownership, because both Plaintiff and Defendants acknowledge that [Daikin America] is wholly
owned by DIL.‛ Id. at *7. We agree with the District Court’s assessment of these two factors.
14
sufficient and necessary to the total employment process.‛ Cook, 69 F.3d at 1241
(internal quotation marks omitted). In determining whether a plaintiff
adequately alleges centralized control over labor relations — the most important
prong in the four-part test — the central question is ‚*w+hat entity made the final
decisions regarding employment matters related to the person claiming
discrimination?‛ Id. at 1240 (citations omitted). For example, in Cook our Court
found that a parent corporation had the requisite degree of control over labor
relations to be held liable along with its subsidiary as the plaintiff’s employer
where (a) the parent processed applications for employment for the subsidiary
and approved personnel status reports; (b) the subsidiary ‚cleared all major
employment decisions‛ with the parent; and (c) the plaintiff was hired and fired
by employees of the parent. Id. at 1241.
Similarly, in Parker v. Columbia Pictures Industries, 204 F.3d 326 (2d Cir.
2000) (Sotomayor, J.), we found a genuine issue of material fact regarding
whether two entities constituted an integrated enterprise sufficient to hold both
liable as the plaintiff’s employer under the NYSHRL and the Americans with
Disabilities Act, 42 U.S.C. § 12101, et seq. There, the plaintiff filed disability
15
discrimination claims against his former employer, Sony Pictures Entertainment,
Inc. (‚SPE‛) — a subsidiary of the parent corporation — and SPE’s sibling
company, Columbia Pictures Industries, Inc. (‚CPI‛), which was also a
subsidiary of the parent. To support his claim that the two siblings comprised an
‚integrated enterprise,‛ the plaintiff produced ‚numerous documents, including
disability forms and payroll authorizations,‛ listing CPI as his employer. Id. at
341. Although the record contained evidence reflecting that the siblings
maintained separate human resources departments, the plaintiff also produced
pay stubs that showed his earnings as being ‚paid on behalf of Columbia
Pictures Industries‛ through ‚SPE Corporate Services, Inc.‛ Id. (internal
quotation marks omitted). Citing Cook, we held that, under the circumstances, ‚a
reasonable jury could conclude that CPI exercised sufficient control over the
terms and conditions of *plaintiff’s+ employment to qualify as his ‘employer’ for
purposes of a discrimination claim.‛9 Id.
9 Although Parker involved sibling corporations, its reasoning applies equally to cases
involving a parent and subsidiary. See Arculeo, 425 F.3d at 198 (explaining that ‚*a+ single
employer situation exists where two nominally separate entities are actually part of a single
integrated enterprise,‛ and that examples of this situation include ‚parent and wholly-owned
subsidiary corporations, or separate corporations under common ownership and management‛
(internal quotation marks omitted)).
16
Here, Brown alleged that DIL ‚closely directed the operations of its wholly
owned subsidiary, Daikin America‛ and that DIL’s approval ‚was required as to
all significant actions by Daikin America.‛ Compl. ¶ 5. Brown charged that DIL
‚immuniz[ed]‛ Japanese rotational employees from discharge by directing
Daikin America to discharge only employees who were not Japanese, id. ¶ 39,
and by prohibiting Daikin America from reassigning or discharging Japanese
rotational employees, id. ¶ 25. Taken together, these allegations sufficiently
suggest that DIL exercised centralized control over Daikin America’s decisions
about which employees to terminate in the course of the workforce reduction,
and that DIL, by protecting Japanese employees from discharge, effectively
ensured that employees of other races or national origins, like Brown, would be
terminated.
We recognize that Brown does not plead facts suggesting that DIL had
significant responsibility for other aspects of Daikin America’s labor relations.
Cf. Cook, 69 F.3d at 1241. For instance, Brown does not allege that DIL
participated in the decision to hire him or expressly directed Daikin to end his
employment. Nor, for that matter, does he allege common management.
17
Nonetheless, at this early stage in the litigation, the control that Brown alleged
DIL to have exercised over Daikin America’s employment actions — lying at the
core of Brown’s charges of discrimination — is adequate to sustain the action
against DIL.
Because Brown has pleaded facts that, if true, demonstrate that Daikin
America and DIL conducted interrelated operations, had common ownership,
and were subject to centralized control of labor relations, we conclude that he has
plausibly alleged that DIL and Daikin America both were his employer for
purposes of his Title VII and NYSHRL claims.
B. Plausible claim of race or national origin discrimination
We next address defendants’ contention that Brown has failed to state a
claim of race or national origin discrimination. It has been suggested that
whether a Title VII plaintiff must plead a prima facie case under the framework
set forth in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), to survive a
motion to dismiss, or whether the plaintiff must simply allege facts sufficient to
raise a right to relief above the speculative level, is not an entirely settled
18
question in our Circuit.10 We are skeptical of these suggestions because the
Supreme Court held in Swierkiewicz v. Sorema, N.A., 534 U.S. 506 (2002), that a
that a plaintiff need not plead facts establishing a prima facie case under
McDonnell Douglas to survive a motion to dismiss, id. at 515, and went out of its
way in Twombly to reaffirm that holding, 550 U.S. 544, 569-70. Nevertheless, we
need not undertake to resolve the question here because Brown’s discrimination
claim is sufficient under either standard: it is facially plausible, gives defendants
10 Before its decisions in Twombly and Iqbal, the Supreme Court held that Title VII
plaintiffs need not plead facts establishing a prima facie case of discrimination under McDonnell
Douglas because ‚the ordinary rules for assessing the sufficiency of a complaint apply.‛
Swierkiewicz v. Sorema, N.A., 534 U.S. 506, 508, 511 (2002). When Swierkiewicz was decided,
however, the adequacy of pleadings was governed by the ‚no-set-of-facts‛ test articulated in
Conley v. Gibson, 355 U.S. 41 (1957) — a test that was ‚retired‛ by Twombly and Iqbal. Iqbal, 556
U.S. at 670. The Supreme Court nevertheless reaffirmed Swierkiewicz in Twombly, explaining
that ‚Swierkiewicz did not change the law of pleading, but simply re-emphasized . . . [that] a
heightened pleading standard for Title VII cases was contrary to the Federal Rules’ structure of
liberal pleading requirements.‛ 550 U.S. at 569-70.
Although this Court has not addressed the issue in a published opinion since Iqbal, we
have applied Swierkiewicz in a summary order. See Chepak v. Metro. Hosp., -- F. App’x --, 2014
WL 552682, at *1 (2d Cir. Feb. 13, 2014) (explaining that a Title VII complaint ‚need not allege
specific facts establishing a prima facie case of discrimination under McDonnell Douglas . . . . At
the pleading stage, we consider only whether the complaint includes factual allegations
sufficient ‘to raise a right to relief above the speculative level’‛ (citations omitted)). Courts in
our Circuit have reconciled Swierkiewicz, Twombly, and Iqbal by concluding that, to survive a
motion to dismiss, a Title VII plaintiff’s complaint must be facially plausible and allege
sufficient facts to give the defendant fair notice of the basis for the claim; it need not, however,
make out a prima facie case. See Mohawk v. William Floyd Sch. Dist., No. 13 Civ. 2518 (JS) (GRB),
2014 WL 838162, at *2 (E.D.N.Y. Mar. 3, 2014) (collecting cases). Nonetheless, some courts have
questioned the continuing vitality of Swierkiewicz. See, e.g., Fowler v. UPMC Shadyside, 578 F.3d
203, 211 (3d Cir. 2009).
19
fair notice of the basis for his claim, and alleges facts sufficient to establish a
prima facie case under McDonnell Douglas.
To state a prima facie case of discriminatory discharge under Title VII, a
plaintiff must allege that: (1) he falls within a protected group; (2) he held a
position for which he was qualified; (3) he was discharged; and (4) ‚the
discharge occurred under circumstances giving rise to an inference of
discrimination.‛ Windham v. Time Warner, Inc., 275 F.3d 179, 187 (2d Cir. 2001)
(internal quotation marks omitted). A plaintiff may demonstrate circumstances
giving rise to an inference of discrimination by alleging that he was treated less
favorably than similarly situated employees of other races or national origins.
See Graham v. Long Island R.R., 230 F.3d 34, 39 (2d Cir. 2000).
Here, defendants do not dispute that Brown adequately alleged the
following: that he is a member of a protected class, was qualified to hold his job,
and suffered an adverse employment action when defendants terminated his
employment. Instead, defendants argue that Brown’s allegations do not support
an inference of discrimination because the Japanese rotational employees at
Daikin America were not ‚similarly situated‛ to Brown and the other American
20
employees. Therefore, defendants argue, the companies had no duty to consider
the Japanese employees for termination as part of the workforce reduction, and
Brown has not provided a basis for inferring that his termination was
discriminatory. We are not persuaded.
To establish an inference of discrimination, a plaintiff must allege that ‚she
was similarly situated in all material respects to the individuals with whom she
seeks to compare herself.‛ Id. (internal quotation marks omitted). What will
constitute ‚all material respects‛ will vary from case to case, of course. We have
said that the judgment rests on ‚whether the plaintiff and those [she] maintains
were similarly situated were subject to the same workplace standards.‛ Id. at 40.
The plaintiff’s and comparator’s circumstances must bear a ‚reasonably close
resemblance,‛ but need not be ‚identical.‛ Id. Ordinarily, ‚*w+hether two
employees are similarly situated . . . presents a question of fact,‛ rather than a
legal question to be resolved on a motion to dismiss. Id. at 39.
Defendants first argue that the Japanese employees were not similarly
situated to Brown because they were employed by DIL, and Brown was
employed by Daikin America. As we have said above, however, for purposes of
21
the workforce reduction, DIL and Daikin America constituted a single integrated
enterprise. Therefore, Brown has adequately alleged that he and the Japanese
employees had a common employer. See Compl. ¶ 8 (alleging that the Japanese
rotational employees were assigned ‚for a period of years to Daikin America to
act as its employees‛ (emphasis added)); Am. Compl. ¶ 21 (alleging that Daikin
America ‚did not terminate any of its employees of the Japanese race and/or of
Japanese national origin‛ (emphasis added)).
Defendants next argue that Brown failed to allege plausibly that he and the
Japanese employees were similarly situated because he did not plead any facts
about the Japanese employees’ ‚job function, experience, qualifications, [or] rate
of pay.‛ Appellees’ Br. at 20. Employees may be similarly situated, however, if
they are ‚subject to the same standards governing performance evaluation and
discipline.‛ Norville v. Staten Island Univ. Hosp., 196 F.3d 89, 96 (2d Cir. 1999)
(internal quotation marks omitted). Here, Brown alleges that he worked in the
New Business Development Group with three Japanese employees, two of
whom reported to the same supervisor as he did. Drawing all reasonable
inferences in Brown’s favor, as we must, both Brown and the Japanese
22
employees in the Group are plausibly alleged to be subject to the same
performance evaluation and disciplinary standards, and therefore similarly
situated in their employment circumstances.11
Finally, defendants argue that even if Brown was similarly situated to the
Japanese employees, he fails to state a claim because there were other plausible,
non-discriminatory reasons for the allegedly disparate treatment. This argument
— in some ways a repackaging of defendants’ first argument — also fails. That
there may be other explanations for the defendants’ employment decisions does
not render Brown’s allegations of discrimination inadequate as a matter of law.
Whether there existed non-pretextual, non-discriminatory explanations for the
defendants’ employment decisions — a question as to which the defendants bear
the burden of production, see McDonnell Douglas, 411 U.S. at 802-03 — is not
properly decided on a motion to dismiss for failure to state a claim. Cf. Plahutnik,
912 F. Supp. 2d at 105 (denying Daikin America’s motion for summary judgment
because ‚that Japanese rotational employees were not considered for downsizing
11The District Court further concluded that Brown’s allegations in this respect fell short
because Brown conceded in his Complaint that employment and termination decisions for the
assigned Japanese employees could be made only by DIL. Brown, 2011 WL 10842873, at *9; see
also Compl. ¶ 25. Yet because we hold that DIL and Daikin America constitute a single
employer for purposes of Brown’s discrimination claims, this concession is irrelevant.
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is enough to meet Plaintiff’s de minimis burden . . . of raising an inference of
discrimination‛).12
We conclude, therefore, that Brown has stated a plausible claim of
discrimination against both DIL and Daikin America. Accordingly, we vacate
the District Court’s dismissal of Brown’s Title VII claim against DIL and Daikin
America, and remand for proceedings consistent with this opinion. For the same
reasons, we also vacate and remand the District Court’s dismissal of Brown’s
NYSHRL claim against both defendants.
II. Breach of Implied Contract
Finally, we briefly address Brown’s claim that Daikin America and DIL
breached an implied term of his employment contract by terminating his
employment without cause. In this regard, Brown alleges that it was the policy
of both Daikin America and DIL not to terminate employees for economic
12 The plaintiff in Plahutnik was the other non-Japanese American in the Group whose
employment was terminated at the same time as Brown’s. 912 F. Supp. 2d at 98. In denying
Daikin America’s motion for summary judgment in that case, the District Court concluded that
Plahutnik had raised a genuine issue of material fact as to whether Daikin America had
discriminated against him by failing to consider Japanese rotational employees for termination.
Id. at 105. Brown’s factual allegations are materially identical to the allegations of Plahutnik,
and yet the District Court ruled that Plahutnik was able to survive summary judgment on this
issue, while Brown’s complaints required dismissal for failure to state a claim. As the District
Court appeared to recognize, see supra note 6, these decisions are difficult to reconcile.
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reasons, but only ‚for cause,‛ and that he accepted and remained at his job in
part in reliance on this policy.
Under New York law, ‚‘employment for an indefinite or unspecified term’
is presumed to be ‘at will and . . . freely termina[ble] by either party at any time
without cause or notice.’‛ Reddington v. Staten Island Univ. Hosp., 511 F.3d 126,
137 (2d Cir. 2007) (quoting Horn v. N.Y. Times Co., 100 N.Y.2d 85, 91 (2003))
(alterations in original). An employee may rebut the presumption of at-will
employment, however, by demonstrating an ‚express limitation in the individual
contract of employment curtailing an employer’s right to terminate at will.‛
Baron v. Port Auth. of N.Y. & N.J., 271 F.3d 81, 85 (2d Cir. 2001) (internal quotation
marks omitted). As we have observed, ‚[t]he New York Court of Appeals has
admonished that this is a ‘difficult pleading burden’ and that ‘*r+outinely issued
employee manuals, handbooks and policy statements should not lightly be
converted into binding employment agreements.’‛ Id. (internal citations,
footnote, and alteration omitted).
Here, we see no basis for concluding that the employment relationship
between Brown and defendants was anything other than at will. Brown’s
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employment was not governed by a written contract. Brown did not allege that
Daikin America or DIL had an express written policy limiting their rights to
discharge employees. Rather, Brown asserts merely that he was ‚reassured on
several occasions by his superiors that the policy of Daikin America and DIL was
not to terminate on the basis of . . . financial difficulties, and that he should not
fear termination on such basis.‛ Compl. ¶ 19; see also Am. Compl. ¶ 16. This
allegation is insufficient to establish an implied contract that supervenes New
York’s presumption of at-will employment.
Accordingly, the District Court properly dismissed his breach of contract
claim for failure to state a claim.
CONCLUSION
For the foregoing reasons, we AFFIRM the District Court’s dismissal of
Brown’s breach of contract claim, VACATE the District Court’s judgment
dismissing Brown’s Title VII and NYSHRL claims, and REMAND for further
proceedings consistent with this opinion.
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