DocketNumber: Civ. No. 11-718-SLR
Citation Numbers: 863 F. Supp. 2d 357
Judges: Robinson
Filed Date: 5/31/2012
Status: Precedential
Modified Date: 11/26/2022
MEMORANDUM OPINION
I. INTRODUCTION
On August 16, 2011, plaintiffs Lawrence Curlett (“Curlett”) and Stephen Duphily (“Duphily”) filed the present complaint against defendants Madison Industrial Services Team, Ltd. (“Madison”) and J.V. Industrial Companies (“JVIC”) alleging unjust termination in violation of the Delaware Whistleblowers’ Protection Act, 19 Del. C. § 1703 (“the Act”). Duphily also seeks to recover against defendants on conversion and unjust enrichment claims. The court has subject matter jurisdiction over the present action under 28 U.S.C. § 1332(a). Presently before the court is the defendants’ motion to dismiss for failure to state a claim upon which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). For the reasons set forth below, the. court grants defendants’ motion as it pertains to the Act and all claims against JVIC and reserves judgment as to the conversion and unjust enrichment claims pending determination of jurisdiction.
II. BACKGROUND
Beginning in 2005, Curlett, a Delaware resident, and Duphily, a Maryland resident, were employed by Madison, a Texas limited partnership, out of its Upland, Pennsylvania office. (D.I. 1 at ¶¶ 6-7, D.I. 6 at 8 ¶ 9) Duphily was working his way up to higher positions at Madison and was eager to be seen as a “team player.” (D.I. 1 at ¶ 8, 10) In the spring of 2006, Duphily allowed Madison to use some of his own scaffolding equipment on a job at the
Following his promotion, Duphily offered to allow Madison to continue to use his scaffolding as long as his employment continued. (Id. at ¶ 15) To better facilitate the use of his scaffolding, Duphily moved all of his equipment to a convenient location in New Jersey sometime around the summer of 2006. (Id. at ¶¶ 16-17) At approximately the same time, a power struggle ensued within Madison, which resulted in James Dougherty, Sr. (“Dougherty”) becoming one of the most influential people within Madison. (Id. at ¶ 18) Due to concerns for the safety of his equipment after the power struggle, Duphily moved his equipment from New Jersey to Madison’s location in Chester, Pennsylvania. (Id. at ¶ 20)
In late summer of 2007, Madison used approximately 200 pieces of Duphily’s scaffolding for a job in Philadelphia. (Id. at ¶ 22) Later that year, Duphily noticed that more of his scaffolding was missing. Duphily was told by Victor Padavani (“Padavani”), one of the foremen on the Philadelphia job, that Padavani had been taking the scaffolding to use on the Philadelphia job. (Id. at ¶ 23)
Near this same time, Padavani and a handful of other Madison employees formed a business called Delaware County Scaffolding Services (“DCS”).
Duphily was asked in March 2008 to review some DCS invoices. (Id. at ¶ 31) It was at this point that Duphily became aware that DCS was charging Madison double the market rate for scaffolding. (Id. at ¶ 32) Duphily showed the invoices to Curlett who agreed that it was inappropriate for a group of Madison employees to act as a vendor to Madison. (Id. at ¶ 33) Curlett also thought it was improper for DCS to use Duphily’s scaffolding and charge excessive rates that Madison then passed on to its own clients.
Waryga agreed with Duphily and Curlett that DCS’s relationship with Madison was improper and he took steps to end it. (Id. at ¶ 40) In May of 2008, Waryga held a meeting with Dougherty, Curlett, and others stating that Madison would no longer do business with DCS and that Duphily should not be identified as the whistleblower. (Id. at ¶ 41) Although he denied it at the meeting, it appears that Dougherty knew about DCS and that his son was in line to become a member. (Id. at ¶ 42) The complaint suggests that Madison and its parent company, JVIC, tolerated Dougherty’s wrongful activities because he generated a substantial amount of profit
Shortly after exposing DCS, Duphily was told by co-workers that Madison management, particularly Dougherty, was not happy that he had exposed DCS and wanted to fire him. (Id. at ¶ 47) At some point in the spring of 2008, Duphily also received what he thought were hostile emails from Dougherty. (Id. at ¶ 46) When Duphily asked Dougherty about one of the emails, Dougherty responded that it had been poorly worded and that Duphily had “taken it the wrong way.” (Id.) Duphily was reassigned to work under Dougherty and, at this time, he found out that his identity as a whistleblower was no longer confidential. (Id. at ¶¶ 48-49)
Duphily then began working under Mike Miller (“Miller”), who was an employee of JVIC. (Id. at ¶ 50) Although Duphily was supposedly working for Miller, Dougherty tried to intervene and have Duphily laid off. (Id. at ¶ 51) It appears that, even though Miller was in some type of position over Duphily, he was not Duphily’s direct supervisor. During this period, Dougherty still had control over Duphily’s assignments and his pay.
In late February of 2010, while Duphily was working on a job in Marcus Hook, Pennsylvania, his supervisor, Jim Thompson (“Thompson”), tried to coerce Duphily to sign some papers to support the recent layoff of an African-American foreman, A1 Dodson. (Id. at ¶¶ 53, 57) Duphily refused to sign the papers, resulting in the reversal of the layoff.
After working for some period as general foreman, but only being paid as a foreman, Duphily asked for an increase in his compensation. (Id. at ¶ 60) Shortly thereafter, his company truck and company credit cards were taken from him. (Id.) After working as general foreman at the foreman rate for six weeks, Duphily’s compensation was increased on roughly February 27, 2010. (Id. at ¶ 61) Less than two months later, on April 19, 2010, Duphily lost access to his computer and his email archive. (Id. at ¶ 62) On April 22, 2010, Duphily was told that his pay would revert to the foreman rate. (Id. at ¶ 63) When Duphily refused to have his pay lowered, he was laid off. (Id.)
After being laid off, Duphily attempted to retrieve his scaffolding equipment. (Id.
In October of 2010, Madison eliminated Curlett’s position as business manager and he took a lower position as lead field accountant. (Id. at ¶ 68) Curlett, at some point, had been told that Madison’s management wanted to fire him for his involvement in the DCS affair.
III. STANDARD OF REVIEW
In reviewing a motion filed under Federal Rule of Civil Procedure 12(b)(6), the court must accept all factual allegations in a complaint as true and take them in the light most favorable to plaintiffs. See Erickson v. Pardus, 551 U.S. 89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007); Christopher v. Harbury, 536 U.S. 403, 406, 122 S.Ct. 2179, 153 L.Ed.2d 413 (2002). A court may consider the pleadings, public record, orders, exhibits attached to the complaint, and documents incorporated into the complaint by reference. Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007); Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384-85 n. 2 (3d Cir.1994). A complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief, in order to give the defendants] fair notice of what the ... claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 545, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (interpreting Fed.R.Civ.P. 8(a)) (internal quotations omitted). A complaint does not need detailed factual allegations; however, “a plaintiffs obligation to provide the ‘grounds’ of his entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. at 545, 127 S.Ct. 1955 (alteration in original) (citation omitted). The “[f]actual allegations must be enough to raise a right to relief above the speculative level on the assumption that all of the complaint’s allegations are true.” Id. Furthermore, “[w]hen there are well-ple[d] factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1950, 173 L.Ed.2d 868 (2009). Such a determination is a context-specific task requiring the court “to draw on its judicial experience and common sense.” Id.
IV. DISCUSSION
A. Claims Brought Under the Act
The legislative history of the Act demonstrates that it has no application to actions taken by foreign employers in relation to workers employed outside of Dela
This conclusion is consistent with the language — “employees in the State” — contained in the synopsis of the Act. (Emphasis added) Such restrictive language is a clear indication that the legislature did not intend to provide protection to any class other than individuals employed in the State of Delaware.
B. Liability of JVIC
The claims against JVIC should be dismissed for several reasons. First, the text of § 1703 applies only to employers.
Mere ownership of a business does not establish the liability of a parent company for the actions of its subsidiary. The Delaware Court of Chancery held in Albert v. Alex. Brown Management Services, Inc., Civ.A. 762-N, Civ.A. 763-N, 2005 WL 2130607 (Del.Ch. Aug. 26, 2005), that close relationships, even to the point where the subsidiary’s management is run by the parent’s employees, are not sufficient to hold the parent liable for the subsidiary’s actions unless the “subsidiary is in fact a mere instrumentality or alter ego of its parent.” Id. at *9. As the complaint does not allege, nor does it even contain any facts to suggest, that Madison is an instrumentality or alter ego of JVIC, there is no authority to support the proposition that JVIC should be exposed to liability simply because it owns Madison.
Neither does the complaint assign any allegations of wrongdoing, in relation to § 1703, to either of the two JVIC employees mentioned by name. For a time, Duphily worked under Miller, a JVIC employee.
The other JVIC employee discussed in the complaint, Hooper, likewise does not give rise to liability on JVIC’s part. As a threshold matter, there is some inconsistency in the complaint as to whether Hooper even works for JVIC. At one point, Hooper is included as one of the people at Madison who protected the wrongful actions of DCS. (D.I. 1 at ¶ 45) At later points, Hooper is described simultaneously as upper management of Madison and an employee of JVIC.
V. CONCLUSION
For the foregoing reasons, the court shall grant defendants’ motion to dismiss as it relates to claims under the Act and all claims against JVIC. Because of the dismissal of these claims, the court has some concerns as to whether it will have jurisdiction over the conversion and unjust enrichment claims against Madison as they may fail to meet the amount in controversy requirement of 28 U.S.C. § 1332. Judgment on the dismissal of the conversion and unjust enrichment claims is reserved until the issue of the amount in controversy is resolved. The parties are instructed to file letter memoranda within thirty days, no longer than three pages, on why jurisdiction is, or is not, appropriate in light of this opinion.
ORDER
At Wilmington this 31st day of May, 2012, consistent with the memorandum opinion issued this same date;
IT IS HEREBY ORDERED that:
1. Defendants’ motion to dismiss (D.I. 5) is granted with respect to: a) all claims arising under 19 Del. C. § 1703; b) all claims against J.V. Industrial Companies, Limited Partnership.
2. Judgment on defendants’ motion to dismiss (D.I. 5) is reserved with respect to plaintiff Duphily’s conversion and unjust enrichment claims pending determination of amount in controversy.
3. The parties have thirty days to file letter memoranda of no more than three pages in length explaining why jurisdiction is or is not appropriate in light of the foregoing opinion.
. The facts as laid out have been adopted from plaintiffs' complaint. Any ambiguities or inconsistencies arising in this opinion derive from similar ambiguities and inconsistencies found in the complaint.
. Duphily and Curlett believe that DCS was formed in late 2007 or early 2008. (D.I. 1 at ¶ 24)
. This is the first indication in the complaint that anyone outside DCS was aware that DCS was using Duphily’s equipment. There is no indication of when Duphily found out or any actions that he may have taken to stop DCS from using his equipment.
. The complaint does not specify what any of these wrongful actions were, other than Dougherty's knowledge of DCS which plaintiffs characterize as fraud and racketeering.
. "[Dougherty] told [Duphily] that he should ship his scaffolding equipment to the Sunoco facility at Marcus Hook, Pennsylvania, where Duphily would be running a maintenance project.” (D.I. 1 at ¶ 53) "While Duphily's pay went up to the foreman scale ... it should have been [g]eneral [floreman scale ... but Miller told him that [Dougherty] had refused to authorize this.” (D.I. 1 at ¶ 56)
. The complaint does not state whether Dodson was laid off and re-hired at the same or different wage or position, or if his layoff was never finalized.
. This is apparently the basis for Duphily’s unjust enrichment claim.
. This is the basis for Duphily’s conversion claim.
. There is no discussion in the complaint of Curlett’s employment conditions at, or any retaliation by, Madison between the May 2008 meeting when Waryga determined to end the relationship with DCS and the elimination of Curlett’s position in October 2010 other than a statement that he had been told he had a "bulls-eye” on his back following the DCS affair.
. Specifically, 29 Del. C. § 5115 states in relevant part: “No public employee shall be discharged, threatened or otherwise discriminated against with respect to the terms or conditions of employment because that public employee reported, in a written or oral communication to an elected official, a violation or suspected violation of a law or regulation promulgated under the law of the United States, this State, its school districts, or a county or municipality of this State unless the employee knows that the report is false.”
. The court recognizes that plaintiff Curlett is a Delaware resident; nevertheless, the Act is directed to employees in the State, not residents of the State.
. The above discussion of the Act applies to JVIC and Madison, whereas this section applies to all claims against JVIC only.
. The Act provides in relevant part that "[a]n employer shall not discharge, threaten, or otherwise discriminate against an employee regarding the employee’s compensation, terms, conditions, location, or privileges of employment ... [bjecause the employee reports verbally or in writing to the employer or to the employee’s supervisor a violation, which the employee knows or reasonably believes has occurred or is about to occur, unless the employee knows or has reason to know that the report is false.” 19 Del. C. § 1703. "Violation” is defined in relevant part as “an act or omission by an employer, or an agent thereof, that is ... [mjaterially inconsistent with, and a serious deviation from, financial management or accounting standards implemented pursuant to a rule or regulation promulgated by the employer or a law, rule, or regulation promulgated under the laws of this state, a political subdivision of this state, or the United States, to protect any person from fraud, deceit, or misappropriation of public or private funds or assets under the control of the employer.” 19 Del. C. § 1702(6)(b).
. With regard to Duphily, the complaint states that "he was laid off on Monday, April 22, 2010.” (D.I. 1 at ¶ 63) With regard to Curlett, the complaint states that "[o]n or about June 7, 2011, [Curlett] was told that he had been 'laid off as [l]ead [fjield [a]ccountant.' ” (D.I. 1 at ¶ 70)
. " 'Employer' means any person, partnership, association, sole proprietorship, corporation or other business entity, including any department, agency, commission, committee, board, council, bureau, or authority or any subdivision of them in state, county or municipal government. One shall employ another if services are performed for wages or under any contract of hire, written or oral, express or implied.” 19 Del. C. § 1702(2).
. At no point does the complaint establish any connection between Curlett and any JVIC employees.
. "The information provided by [Duphily] to the upper management of Madison (including information reviewed by Hooper at [JVIC]) as described ...” (D.I. 1 at ¶¶ 72, 76)