Trezza v. Soans Christian Acad., Inc., CIVIL ACTION NO. 18-1626

SANDRA TREZZA v. SOANS CHRISTIAN ACADEMY, INC. ET AL.

CIVIL ACTION NO. 18-1626

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

MARCH 25, 2019

MEMORANDUM

SURRICK, J.

Presently before the Court is a Motion to Dismiss Plaintiff's Complaint by Defendants Soans Christian Academy, Inc., Grace Trinity United Church of Christ, and the Pennsylvania Southeast Conference United Church of Christ. (ECF No. 11.) For the following reasons, the Motion will be granted.

I. BACKGROUND

Plaintiff Sandra Trezza brings this wrongful discharge action under federal and state whistleblower laws and under Pennsylvania common law. She alleges that she was terminated as Director of Soans Christian Academy (the "Academy"), a childcare facility located in Philadelphia, Pennsylvania, after she reported substantial wrongdoing and waste by the facility.

Plaintiff was hired as the Director of the Academy on August 31, 2017. (Compl. ¶ 31, ECF No. 1.) She was hired by her supervisor, Chandra Soans. (Appointment Letter, Def.'s MTD Ex. B, ECF No. 11.) At the time, the Academy was a new childcare facility that planned to open for the 2017-2018 schoolyear. (Compl. ¶ 31.) Some of Plaintiff's responsibilities as Director included drafting foundational documents for the Academy, recruiting families for enrollment, and giving tours of the childcare facility. (Id. ¶ 32.) The Academy utilizes federal funding through the Head Start Program. (Id. ¶¶ 25-26.) Head Start is a program administered through the United States Department of Health and Human Services that aims "to promote the school readiness of low-income children by enhancing their cognitive, social, and emotional development." 42 U.S.C. § 9831. As a Pennsylvania childcare facility, the Academy is subject to various state regulations governing, among other things, the health and safety training of its employees. See 55 Pa. Code §§ 3270.1, 3270.31(e).

Plaintiff alleges that she reported the Academy's failure to abide by (1) certain state regulations and (2) requirements for obtaining federal funding through the Head Start program. Specifically, Plaintiff alleges that the Academy violated state law by encouraging her to falsely certify her completion of a required health and safety class. (Compl. ¶¶ 35-41.) The Complaint also alleges that the Academy and Mr. Soans instructed families how to fraudulently receive funding through the Head Start program, and that Plaintiff refused to sign eligibility paperwork for those families she believed were ineligible. (Id. ¶¶ 42-49.) Finally, Plaintiff alleges that she was reprimanded by Mr. Soans after she disclosed to the Philadelphia School District that two teachers at the Academy did not possess the requisite documentation for compliance with the Head Start program. (Id. ¶¶ 50-56.) On October 19, 2017, Mr. Soans told Plaintiff that she "made [him] look bad" to the School District. (Id. ¶ 57.) The following day, Plaintiff was terminated. (Id. ¶ 58.) Plaintiff alleges that she was terminated as a result of engaging in protected whistleblowing activities.

On April 18, 2018, Plaintiff filed a Complaint. In Count I, Plaintiff alleges that Defendants violated the Pennsylvania Whistleblower Act, 43 P.S. § 1422, et seq. In Count II, Plaintiff alleges that Defendants wrongfully discharged Plaintiff under the public policy exception to Pennsylvania's common law doctrine of employment at will. In Count III, Plaintiff alleges that Defendants retaliated against her in violation of the False Claims Act ("FCA"), 31U.S.C. § 3730, et seq. Plaintiff brings these claims against four Defendants: (1) the Academy, (2) the Grace Trinity United Church of Christ ("Grace Trinity Church"); (3) Grace Neighborhood Development Corporation ("Grace Development"); and (4) the Pennsylvania Southeast Conference United Church of Christ ("PASEC"). Defendants now move to dismiss the Complaint against three of the Defendants: the Academy; the Grace Trinity Church; and the PASEC, contending that none of these entities were Plaintiff's "employer." Defendants do not seek dismissal of the claims against Grace Development.

II. LEGAL STANDARD

Rule 8 of the Federal Rules of Civil Procedure provides that a complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Federal Rule of Civil Procedure 12(b)(6) provides that a complaint may be dismissed for "failure to state a claim upon which relief can be granted." "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A complaint that merely alleges entitlement to relief, without alleging facts that show entitlement, must be dismissed. See Fowler v. UPMC Shadyside, 578 F.3d 203, 211 (3d Cir. 2009). "This 'does not impose a probability requirement at the pleading stage,' but instead 'simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary element." Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (quoting Twombly, 550 U.S. at 556).

III. DISCUSSION

As noted above, Defendants do not seek dismissal of any of Plaintiff's claims against Grace Development at this juncture. Rather, Defendants seek to dismiss all three of Plaintiff'sclaims against the remaining Defendants, contending that they are not Plaintiff's employer and therefore are not liable for her alleged damages. In support of this, Defendants attach as exhibits to their Motion to Dismiss two documents: (1) Plaintiff's Appointment Letter dated August 29, 2017; and (2) Plaintiff's Termination Letter dated October 20, 2017 (Termination Letter, Def.'s MTD Ex. C).¹ Both letters are from Grace Development and written on Grace Development letterhead. The subject line of the Termination Letter provides "Termination of your Position as Director and Employment with [Grace Development]." (Termination Letter.)

Plaintiff does not dispute that Grace Development was her employer. Plaintiff instead argues that the other Defendants should not be dismissed from this case because they, together with Grace Development, constitute a "single employer." (Pl.'s Resp. 7, ECF No. 13.) Plaintiff relies on the "single employer test," which is also referred to as the "integrated enterprise" test. The single employer test was created by the National Labor Relations Board ("NLRB") for use in labor cases. In NLRB v. Browning-Ferris Industries of Pennsylvania, Inc., the Third Circuit described the single employer test:

A "single employer" relationship exists where two nominally separate entities are actually part of a single integrated enterprise so that, for all purposes, there is in fact only a "single employer." The question in the "single employer" situation,then, is whether the two nominally independent enterprises, in reality, constitute only one integrated enterprise. . . .

In answering questions of this type, the Board considers the four factors . . . : (1) functional integration of operations; (2) centralized control of labor relations; (3) common management; and (4) common ownership. Thus, the "single employer" standard is relevant to the determination that separate corporations are not what they appear to be, that in truth they are but divisions or departments of a single enterprise. "Single employer" status ultimately depends on all the circumstances of the case and is characterized as an absence of an arm's length relationship found among unintegrated companies.

691 F.2d 1117, 1122 (3d Cir. 1982) (internal quotation marks and citations omitted) (emphasis in original).

Relying on this test, Plaintiff contends that the four Defendants named in the Complaint "are all a part of the same functional enterprise and together, as one unit, manage the operations of the Academy." (Pl.'s Resp. 8.) Specifically, she argues that common addresses among the Defendants support a finding of integrated operations, alleging that Grace Neighborhood and Grace Trinity Church share a registered business address, and that the Academy and Grace Development share a business address. Plaintiff also argues that common management and common ownership support a finding that all Defendants constitute a single employer. In support of this, she alleges that her supervisor, Mr. Soans, served as Executive Director of Grace Neighborhood and Senior Pastor of Grace Trinity Chruch, while his wife, Betsy Soans, served as President of the Academy.

The problem with Plaintiff's argument is that the Third Circuit has not explicitly adopted the single employer test for assessing who is liable under the FCA's anti-retaliation provision.²We are not aware of any case in which the Third Circuit has addressed application of the single employer test in the context of the FCA. Based upon other Third Circuit decisions, however, we conclude that the Third Circuit would not adopt the single employer test when considering FCA retaliation claims.

Most notably, the Third Circuit has rejected application of the single employer test in Title VII cases. In Nesbit v. Gears Unlimited, Inc., 347 F.3d 72, 85 (3d Cir. 2003), the court considered whether "two entities should together be considered an 'employer' for Title VII purposes." Id. The Court analyzed the policy behind the single employer test and decided that the framework was inapplicable in the context of Title VII cases. See id. (noting that "given the different policies animating" Title VII and the National Labor Relations Act, the "NLRB's [single employer] test does not self-steer to the Title VII context"). The court rationalized that the single employer test is instead "designed to determine whether the NLRB may decide a particular labor dispute." Id.; accord Papa v. Katy Indus., Inc., 166 F.3d 937, 942-43 (7th Cir. 1999) (rejecting the NLRB's "single employer...