Manning v. Erhardt + Leimer, Inc.

IGNATIUS MANNING, Plaintiff, v. ERHARDT + LEIMER, INC. and ERHARDT + LEIMER GMBH, Defendants.

17-CV-348

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF NEW YORK

February 7, 2020

DECISION & ORDER

On April 24, 2017, the plaintiff, Ignatius Manning, commenced this action under the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. §§ 621-634, and the New York Human Rights Law ("NYHRL"), N.Y. Exec. Law §§ 290-301. Docket Item 1. On June 30, 2017, this Court referred this case to United States Magistrate Judge Hugh B. Scott for all proceedings under 28 U.S.C. §§ 636(b)(1)(A) and (B). Docket Item 5. On January 3, 2018, defendant Erhardt + Leimer GmBH ("E + L GmBH") moved to dismiss for lack of subject matter jurisdiction or, in the alternative, lack of personal jurisdiction, Docket Item 21; on January 25, 2018, Manning responded, Docket Item 29; and on February 1, 2018, E + L GmBH replied, Docket Item 30. On April 20, 2018, Judge Scott issued a Report and Recommendation ("R&R") finding that E + L GmBH's motion should be granted on both jurisdictional grounds. Docket Item 32.

On May 4, 2018, Manning objected to the R&R for thirteen separate reasons. Docket Item 33. On May 29, 2018, E + L GmBH responded to the objections. Docket Item 36. And on June 12, 2018, Manning replied. Docket Item 37.

A district court may accept, reject, or modify the findings or recommendations of a magistrate judge. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b)(3). A district court must conduct a de novo review of those portions of a magistrate judge's recommendation to which objection is made. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b)(3).

This Court has carefully and thoroughly reviewed the R&R, the record in this case, the objection and response, and the materials submitted by the parties. For the following reasons, the Court respectfully declines to adopt Judge Scott's recommendation to grant E + L GmBH's motion.

DISCUSSION

The Court assumes the reader's familiarity with the facts alleged in the complaint, see Docket Item 1, and Judge Scott's analysis in the R&R, see Docket Item 23.

I. PLEADING STANDARD

E + L GmBH moved to dismiss on the grounds that, as a foreign corporation, it is not covered by the ADEA. Manning first objects to Judge Scott's applying the Rule 12(b)(1) standard, rather than the Rule 12(b)(6) standard, in deciding that motion. Application of the allegedly incorrect standard prejudiced him, he argues, because a court "'can refer to evidence outside the pleadings' when resolving a motion to dismiss under . . . [Rule] 12(b)(1)," Broidy Capital Mgmt. LLC v. Benomar, 944 F.3d 436, 441 (2d Cir. 2019) (quoting Luckett v. Bure, 290 F.3d 493, 496-97 (2d Cir. 2002))—as Judge Scott indeed did here—but the same is not true of a Rule 12(b)(6) motion. Rather, "[i]If, on a motion under Rule 12(b)(6) . . . , matters outside the pleadings are presented toand not excluded by the court, the motion must be treated as one for summary judgment under Rule 56 [and a]ll parties must be given a reasonable opportunity to present all the material that is pertinent to the motion." Fed. R. Civ. P. 12(d).

A. Scope of Section 623(h)(2) of the ADEA

Section 623(h)(2) of the ADEA provides that the statute "shall not apply where the employer is a foreign person not controlled by an American employer." The Second Circuit addressed that language in Morelli v. Cedel, 141 F.3d 39 (2d Cir. 1998). The court observed that "[a]n absolutely literal reading of [the statute] might suggest that the ADEA . . . does not apply to the domestic operations of foreign employers—unless there is an American employer behind the scenes." Id. at 42 (emphasis in original). But the court then noted that such a reading would be "inconsistent with Congress' clearly expressed legislative purpose" in enacting that section—namely, to "limit the reach of a [separate] extraterritorial amendment adopted as part of the same legislation." Id. So the court looked beyond the statutory text to determine whether the ADEA covered the domestic operations of foreign employers. And the court concluded that it did.

The court was persuaded by the fact that that the Americans with Disabilities Act of 1990 and Title VII of the Civil Rights Act of 1964 covered a foreign employer's domestic operations, and it observed that no international comity principles suggested the ADEA should be interpreted otherwise. In light of these considerations, as well as the general imperative to construe civil rights legislation "liberally to achieve its [remedial and humanitarian] purpose," the Second Circuit "agree[d] with the [Equal Employment Opportunity Commission], the agency charged with the enforcement of the ADEA, that the law generally applies to foreign firms operating on U.S. soil." Id. at 43,44 (citations omitted). For that reason, the court found a foreign bank that had hired the plaintiff "to work in its New York office" subject to the ADEA. Id. at 41, 44.

With Morelli as the backdrop, Manning's objection raises two issues for this Court. First, the Court must decide whether the scope of section 623(h)(2) is a jurisdictional question or, instead, a question going to the merits of Manning's claims. Second, the Court must decide whether Morelli compels it—or, at the very least, persuades it—to find that E + L GmBH can be held liable under the ADEA.

B. 12(b)(1) or 12(b)(6)

As to the first question, this Court agrees with Manning that whether E + L GmBH can be held liable under the ADEA is an issue that implicates the merits. Therefore, that issue should be analyzed not under Rule 12(b)(1) of the Federal Rules of Civil Procedure (that is, as a motion to dismiss for lack of subject matter jurisdiction) but instead under Rule 12(b)(6) (that is, as a motion to dismiss for failure to state a claim upon which relief may be granted).

Although the Morelli court analyzed the scope of the ADEA as a jurisdictional issue, that framing was not determinative to its holding and thus is mere dicta.¹ Moreover, since Morelli was decided, the Supreme Court has "tried . . . to bring some discipline to the use of the term jurisdiction." Sebelius v. Auburn Reg'l Med. Ctr., 568U.S. 145, 153 (2013) (citation omitted). Indeed, it has done so on facts analogous to those presented here.

In Arbaugh v. Y & H Corporation, the Supreme Court held that the "employee-numerosity requirement" of Title VII, found within the "definitions" section of that act and limiting Title VII's coverage to only those employers with fifteen or more employees, was "simply an element of a plaintiff's claim for relief." See 546 U.S. 500, 509, 516 (2006). The Court explained that, "[o]f course, Congress could make the employee-numerosity requirement 'jurisdictional,' just as it has made an amount-in-controversy threshold an ingredient of subject-matter jurisdiction in delineating diversity-of-citizenship jurisdiction under 28 U.S.C. § 1332."² Id. at 514-15. But it had not done so. Id. ("[N]either [28 U.S.C] § 1331, nor Title VII's jurisdictional provision, 42 U.S.C. § 2000e-5(f)(3) (authorizing jurisdiction over actions 'brought under' Title VII), specifies any threshold ingredient akin to 28 U.S.C. § 1332's monetary floor."). "Instead, the 15-employee threshold appears in a separate provision that 'does not speak in jurisdictional terms or refer in any way to the jurisdiction of the district courts.'" Id. at 515 (quoting Zipes v. Trans World Airlines, Inc., 455 U.S. 385, 394 (1982)).

Like the numerosity requirement of Title VII, the scope of the ADEA is a definitional question. As the Morelli court explained, section 623(h)(2) was added to the ADEA in 1984 "to limit the reach of . . . extraterritorial amendment[s] adopted as part ofthe same legislation . . . [that] amplified the definition of 'employee' in [section] 11(f) of the ADEA" to include "any individual who is a citizen of the United States employed by an employer in a workplace in a foreign country." 141 F.3d at 42 (emphasis added) (citations omitted); see also id. at 43 ("[Section 623(h)(2)] merely limits the scope of the amended definition of employee, so that an employee at a workplace in a foreign country is not protected under the ADEA if the employer is a foreign person not controlled by an American employer." (emphasis added)). In other words, section 623(h)(2) effectively defines the term "employer" and, like the definition of "employee" in Title VII, the definition here is "simply an element of a plaintiff's claim for relief." See Arbaugh, 546 U.S. at 509; see also Downey v. Adloox Inc., 238 F. Supp. 3d 514, 520 n.2 (S.D.N.Y. 2017) (positing that although "the distinction [was] immaterial" to resolution of the case before it, "the question of whether [s]ection 623(h)(2) bar[s] suit [against the foreign parent company of a wholly-owned domestic subsidiary which employed the plaintiff] . . . is almost certainly a merits one, not a jurisdictional one"); cf. Rabe v. United Air Lines, Inc., 636 F.3d 866, 869 (7th Cir. 2011) (holding that although "[a]n employee's status as a foreign worker may prevent her success on the merits in a Title VII or ADEA case, . . . it is not a barrier to the court's power to adjudicate her case" because that issue "goes to the merits of a claim rather than the court's subject matter jurisdiction").

Because the ADEA does not otherwise prescribe a federal court's jurisdiction over claims brought under its provisions, this Court has jurisdiction under the general authority of 28 U.S.C. § 1331 to adjudicate any "colorable claim 'arising under' the Constitution or laws of the United States." See Arbaugh, 546 U.S. at 513 (quoting 28U.S.C. § 1331). And whether E + L GmBH is an employer covered by the ADEA is a question going to the merits of Manning's claim that appropriately is analyzed under Rule 12(b)(6). This Court defers addressing the merits of E + L GmBH's arguments concerning the scope of the ADEA until after it addresses E + L GmBH's motion to dismiss for...