Under the terms of the divestiture plan, AT & T divested
itself of portions of the BOCs and transferred to them
sufficient facilities, personnel, systems and rights to
technical information so they could perform exchange
telecommunications and exchange access functions. AT & T also
kept appropriate assets for interexchange functions,
customer-premises equipment and directory advertising, through
the creation of subsidiaries whose stock was held by AT & T.
After these asset transfers were completed, the divested BOCs
were reorganized into seven regional operating companies,
including NYNEX, of which N Y Tel became a subsidiary. AT &
T-IS received an unspecified amount of additional assets from
N Y Tel in connection with the divestiture.
When a corporation sells substantially all its assets to
another, the purchasing corporation is only liable for the
former's liabilities under certain circumstances. For example,
the purchasing corporation is liable if there is an express or
implied agreement that the purchaser will assume liabilities.
Wheeler v. Snyder Buick, 794 F.2d 1228, 1236 n. 8 (7th Cir.
1986). No such agreement exists here. ABI, now AT & T-IS, did
not agree to assume N Y Tel's potential liabilities to its
employees either at the time it began operations or in
connection with divestiture.
In United States v. Western Elec. Co., Inc., 569 F. Supp. 1057
(D.D.C. 1983), aff'd sub nom. New York State Dept. of Public
Serv. v. United States, 464 U.S. 1013, 104 S.Ct. 542, 78
L.Ed.2d 719 (1983), the court approved certain aspects of AT &
T's reorganization plan with respect to divestiture, including
its plan for contingent liabilities. Under the plan, contingent
liabilities of the Bell System were apportioned among AT & T
and the Operating Companies on the basis of their relative net
investment as of the date of divestiture. The plan, while
setting forth a formula for the payment of post divestiture
judgments, did not create liability by one entity for the
pre-divestiture acts of another.
The purchasing corporation may also be liable under the
doctrine of successorship liability. Successorship liability
has been described as "an extra-contractual remedial tool for
imposing certain labor obligations on a new employer that has
taken over operations of an old employer." American Bell, Inc.
v. Fed. of Tel. Workers of Pa., 736 F.2d 879, 888 (3d Cir.
1984). It has specifically been held applicable to Title VII
cases. See EEOC v. MacMillan Bloedel Containers, Inc.,
503 F.2d 1086, 1092 (6th Cir. 1974); Wheeler v. Snyder Buick, Inc.,
794 F.2d 1228 (7th Cir. 1986). In all cases, it involves a
fact-specific determination. See MacMillan Bloedel,
503 F.2d 1086, 1092 (6th Cir. 1974); NLRB v. Hudson River Aggregates,
Inc., 639 F.2d 865, 869 (2d Cir. 1981) (NLRB case).
The relevant factors are whether the successor had prior
notice of the claim against the predecessor, the ability of
the predecessor to provide relief to the plaintiff, and the
continuity of business operations between the predecessor and
the successor, which includes such matters as continuity in
supervisory personnel, employees, physical plant, location,
nature of product or service and methods of producing the
product or service. Wheeler, 794 F.2d 1228; accord EEOC v.
Local 638, 700 F. Supp. 739, 743 (S.D.N.Y. 1988). While the
factors of notice and the ability of the predecessor to provide
relief have been deemed "critical," Wheeler, 794 F.2d at 1236,
no one factor or set of factors is controlling. See Fennell v.
TLB Plastics Corp., No. 84 Civ. 8775, 1989 WL 88717 (S.D.N Y
July 27, 1989).
AT & T-IS argues that neither the establishment of ABI nor
the subsequent divestiture by AT & T of the BOCs leads to
successorship liability against AT & T-IS. This Court agrees.
While plaintiff argues that there were similarities between NY
Tel and AT & T-IS, such as employees' salaries and medical
plans and that the date employees began work for N Y Tel was
used by AT & T-IS for pensions and employee stock plans, it is
undisputed that AT & T-IS had no notice of Long's claim
against N Y Tel because none of Long's charges were pending
when he was transferred to AT & T-IS. N Y Tel's capacity to
provide relief weighs against imposition of
liability upon AT & T-IS. This is not a case where, "[f]ailure
to hold a successor liable for the discriminatory practices of
its predecessor could emasculate the relief provisions of
Title VII by leaving the discriminatee without a remedy or
with a complete remedy." MacMillan Bloedel, 503 F.2d at
1091-92. Plaintiff's case is not barred because N Y Tel no
longer exists or because N Y Tel is unable to satisfy judgments
against it. Accordingly, plaintiff's claims against N Y Tel are
For the foregoing reasons, defendant's motion for summary
judgment is granted, except with respect to plaintiff's Title
VII claim based on discriminatory termination as to which
summary judgment is denied.