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DRANKWATER v. MILLER

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK


July 30, 1993

WENDY DRANKWATER, Plaintiff,
v.
ARNOLD MILLER and MATRIX ESSENTIALS, INC., Defendants.

The opinion of the court was delivered by: SHIRLEY WOHL KRAM

MEMORANDUM OPINION AND ORDER

 SHIRLEY WOHL KRAM, U.S.D.J.

 In this diversity action involving claims of tortious interference with a contract, intentional infliction of emotional distress, negligent infliction of emotional distress and unlawful discrimination under § 296 of the New York Human Rights Law, defendants Arnold Miller ("Miller") *fn1" and Matrix Essentials, Inc., ("Matrix") (collectively "defendants") move, pursuant to Rule 19 of the Federal Rules of Civil Procedure, for an order dismissing the complaint on the ground that plaintiff Wendy Drankwater ("Drankwater") failed to join an indispensable party whose presence divests this court of diversity jurisdiction. Specifically, defendants contend that (1) plaintiff's employer, Emiliani of New York, Inc. ("Emiliani"), *fn2" is a party that should be joined if feasible; (2) Emiliani is a New York Corporation whose joinder would defeat diversity; *fn3" and (3) this court cannot proceed in equity and good conscience pursuant to Rule 19(b) in the employer's absence. Drankwater opposes the motion. For the reasons set forth below, defendants' motion to dismiss the complaint for failure to join an indispensable party is denied.

 BACKGROUND4

 Drankwater entered into an employment contract with Emiliani in January of 1990. At that time, Emiliani had a distribution contract with Matrix whereby Emiliani sold Matrix beauty products to beauty salons in New York. Drankwater was hired as a sales consultant to Emiliani and was responsible for selling Matrix products to various beauty salons throughout the County of New York.

 Drankwater alleges that during her employment at Emiliani, Miller, the majority shareholder and Chief Executive Officer of Matrix, made various sexual advances and suggestions to her beginning with their first meeting in August 1990 and continuing until August 1991. Miller and Drankwater first met at a national sales meeting of Matrix sales representatives in Reno, Nevada. While there, Drankwater won an automobile in a raffle sponsored by Matrix. Complaint at P 8. In November 1990, Miller met Drankwater again at a sales meeting at the Emiliani office in Union, New Jersey, and he asked her to "give him a ride in the car she had won." Id. at P 9. That evening, Miller called Drankwater at home and made "lewd, improper, and unlawful statements to her" that allegedly constituted sexual harassment. Id. at P 10. Drankwater did not consent to the statements and responded negatively to them. Id. In March 1991, Miller met Drankwater again at a trade show at the Jacob Javits Center in New York City. Again, he allegedly made comments to her that constituted sexual harassment, and again, Drankwater did not consent and responded negatively to his remarks. Id. at P 11. Drankwater further alleges that as a result of her refusal to accept these advances, Miller "instructed, advised and/or requested" Drankwater's superiors at Emiliani to terminate her employment. Id. at P 14. On August 20, Drankwater was terminated by Emiliani. Id. at P 15. Drankwater claims that her dismissal was "wrongful and without legitimate cause or justification." Id. at P 16.

 Based on the foregoing facts, Drankwater sues defendants for (1) tortious interference with a contract, alleging that as a result of her refusal to accept Miller's advances, defendants willfully induced Emiliani to terminate Drankwater's employment contract, Id. at P 22; (2) intentional infliction of emotional distress, alleging that defendants abused their position of actual or apparent power and engaged in a course of extreme and outrageous conduct that knowingly caused Drankwater emotional distress, Id. at P 25; (3) negligent infliction of emotional distress, on the ground that defendants breached the special duty owed to Drankwater arising from the special relationship between defendants and Drankwater, Id. at PP 28-29; (4) aiding, abetting, inciting, encouraging, or coercing Emiliani to engage in wrongful discrimination, namely, to terminate Drankwater's employment contract based on her sex and in retaliation for her refusal to accept Miller's advances. Id. at P 32.

 Defendants now move to dismiss the complaint, pursuant to Federal Rule of Civil Procedure 19, for failure to join an indispensable party. Defendants argue that the complaint should be dismissed on the grounds that: (1) Emiliani is a party to be joined if feasible; (2) Emiliani cannot be joined in this action because diversity jurisdiction would be defeated; and (3) the court cannot proceed in equity and good conscience in Emiliani's absence. *fn5"

 In response, Drankwater claims that Emiliani is not a necessary or indispensable party, but rather a permissive party whose joinder is regulated by Federal Rule of Civil Procedure 20. This claim is based on Drankwater's assertion that Emiliani and defendants are joint tortfeasors who need not be joined in a single lawsuit as their liability is joint and several. See Temple v. Synthes Corp., Ltd., 498 U.S. 5 (1990) (error to label joint tortfeasors indispensable). In the alternative, Drankwater argues that defendants fail to satisfy the dictates of Rule 19.

 DISCUSSION

 Rule 19 of the Federal Rules of Civil Procedure *fn6" sets forth a two-step inquiry for determining whether an action must be dismissed for failure to join an indispensable party. See Associated Dry Goods Corp. v. Towers Fin. Corp., 920 F.2d 1121, 1123 (2d Cir. 1990). The first prong focuses on whether the parties should be joined if feasible. Specifically, Rule 19(a) provides, in relevant part:

 

A person who is subject to service of process and whose joinder will not deprive the court of jurisdiction over the subject matter of the action shall be joined as a party in the action if (1) in the person's absence complete relief cannot be accorded among those already parties, or (2) the person claims an interest relating to the subject of the action and is so situated that disposition of the action in the person's absence may (i) as a practical matter impair or impede the person's ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of the claimed interest.

 Under the second prong, Rule 19(b), a court must determine whether it can proceed in equity and good conscience without that party. Fed. R. Civ. P. 19(b). Unless Rule 19(a)'s threshold standard is met, however, the court need not consider whether dismissal under Rule 19(b) is warranted. Associated Dry Goods Corp. v. Towers Fin. Corp., 920 F.2d 1121, 1123 (2d Cir. 1990).

 As a general rule, in determining whether a party is indispensable, the preference is for non-dismissal. The Second Circuit has stated that, "very few cases should be terminated due to the absence of non-diverse parties unless there has been a reasoned determination that their nonjoinder makes just resolution of the action impossible." Jaser v. New York Property Ins. Underwriting Assoc., 815 F.2d 240, 242 (2d Cir. 1987). Therefore, Rule 19 should be applied narrowly.

  A. Rule 19(a)(1)

 In this case, defendants contend that unless Emiliani is made a party to this action, "complete relief cannot be accorded among those already parties." See Fed. R. Civ. P. 19(a)(1). According to defendants, the alleged harm to Drankwater stems from wrongful termination. As neither Miller nor Matrix was her employer, however, neither has the power to reinstate her to her former position. Thus, defendants contend that the Court is unable to consider the full range of available remedies or grant complete relief. The Court disagrees.

 A review of Drankwater's complaint against Miller and Matrix indicates that she seeks only monetary damages. Complaint at 7-8. Therefore, the inability to order reinstatement does not preclude the Court from awarding complete relief. As the Second Circuit recognizes, "the term complete relief refers only 'to relief as between the persons already parties, and not as between a party and the absent person whose joinder is sought.'" Arkwright-Boston Mfr. Mut. Ins. Co. v. New York, 762 F.2d 205, 209 (2d Cir. 1985) (quoting 3A J. Moore, Moore's Federal Practice § 19.07-1[1], at 19-96 (2d ed. 1984)). Thus, the Court need only consider the money damages requested in the complaint and need not concern itself with other remedies that might be available if Emiliani were joined.

 B. Rule 19(a)(2)(i) *fn7"

 Pursuant to Rule 19(a)(2)(i), a person shall be joined if "the person claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person's absence may (i) as a practical matter impair or impede the person's ability to protect that interest." Defendants contend that if Emiliani is not made a party to the instant action, its ability to protect its interest in other future litigations will be impaired. Specifically, defendants contend that because a disposition of the instant case against Miller and Matrix requires a determination as to whether Drankwater's discharge by Emiliani was based on sex discrimination, Emiliani's interests in other litigations may be impaired. Defendants point out in their brief that Drankwater has already filed a claim with the Equal Employment Opportunity Commission ("EEOC") against Emiliani, and may file a suit against Emiliani under the New York Human Rights Law at a later date. See Defendant's Memorandum of Law in Support of Motion ("Def. Mem."), at 8-9. Further, Drankwater may instigate an action against Emiliani for negligent or intentional infliction of emotional distress. Defendants argue that a determination against defendants in this case necessarily results in a determination that Emiliani terminated Drankwater because of sex discrimination; with such a factual finding on the record, Emiliani would suffer the effects of "negative precedent," and its ability to defend itself in any one of these potential suits would be impaired.

 Some courts have held that establishment of "negative precedent" can provide the requisite prejudice to the absent party under Rule 19(a)(2). See Pulitzer-Polster v. Pulitzer, 784 F.2d 1305 (5th Cir. 1985); Spiro v. Parker Bros., No. 91 Civ. 7759, 1992 U.S. Dist. LEXIS 11500 (S.D.N.Y. Aug. 4, 1992).

 In Spiro, the plaintiffs were 75% part owners of a copyright in a game manufactured and distributed by Parker Brothers. The plaintiffs sued Parker Brothers for not using best efforts to market the product and for not producing royalties. When Parker Brothers moved for dismissal of the action for failure to name the other part owners of the copyright (the owners of the remaining 25% interest), the court held that the minority owners were necessary parties to be joined if feasible. Spiro v. Parker Bros., 1992 U.S. Dist. LEXIS at *2-3. According to the court, disposition of the action without the minority owners could impair their ability to protect their 25% interest as a successful defense by Parker Brothers could have an adverse precedential effect on any subsequent claims by the absent parties. Id. at * 4.

 In this case, however, the Court does not find the "negative precedent" argument compelling. In Spiro, the only distinction between the 75% interest holders and the 25% interest holders was the stake in the copyright. Thus, the exact same contentions would be advanced in a suit between the 75% interest holders (plaintiffs) and Parker Brothers as would be advanced in a suit between the 25% interest holders (absent parties) and Parker Brothers. The causes of action would be exactly the same as would the facts to be established.

 Here, however, Drankwater's causes of action against Miller and Matrix are essentially tort claims, whereas Drankwater's causes of action against Emiliani would arise from breach of the employment contract. Thus, the action between Drankwater and Emiliani would be substantially different from the instant action and the weight of negative precedent less forceful. Furthermore, as to Emiliani's ability to protect himself from negative precedent in a subsequent case against Miller and Matrix (Emiliani v. Miller and Matrix), defendants do not specifically articulate, and the Court cannot speculate, what causes of action Emiliani might assert against Miller and Matrix.

 Moreover, while it may be true that a court in a later litigation may consider an earlier finding, it is plain that a prior finding would not be binding upon Emiliani since Emiliani was not a party to the instant action. See Parklane Hosiery Co. v. Shore, 439 U.S. 322, 327 (1979). Thus, the Court finds the "negative precedent" argument unpersuasive and insufficient alone to support a finding that Emiliani should be joined if feasible.

 C. Rule 19(a)(2)(ii)

 Rule 19(a)(2)(ii) provides that joinder is necessary where "the person claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person's absence may (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of the claimed interest . . . ." With respect to this provision, defendants contend that unless Emiliani is named a party to this action, they face a substantial risk of incurring double, multiple, or otherwise inconsistent obligations. Specifically, the defendants are concerned that at some future time, Drankwater may sue Emiliani, and Emiliani may file a third party complaint against defendants, claiming generally "that if any unlawful discrimination took place, Matrix and Miller are responsible." Def. Mem. at 12. Were defendants exonerated in this action, a finding against them in this potential, future suit would subject them to inconsistent liabilities. *fn8" Def. Mem. at 12. Further, even if Drankwater "is successful in establishing in this action that such discrimination occurred and that Mr. Miller or Matrix participated in such discrimination," Def. Mem. at 12, it might be determined in a subsequent action against Emiliani that Drankwater's termination was for legitimate reasons and no sex discrimination occurred, again subjecting defendants to inconsistent liabilities. Id. at 12.

 The Court finds these scenarios excessively speculative. See Federal Deposit Ins. Corp. v. Home Sav. Bank, CV 90-2037, 1993 U.S. Dist. LEXIS 1988 (E.D.N.Y. Feb. 9, 1993) (Court rejects movants' argument that a potential, future suit with a potential, consequent third party action places movants at "direct and substantial risk of multiple, inconsistent obligations" because argument is "speculative at best"). At this point, no other suit is pending by Drankwater against Emiliani; thus, there is no present danger that Emiliani will file a third party complaint against defendants or that there will be an inconsistent determination in an action between Drankwater and Emiliani. Although Drankwater has an administrative claim pending with the EEOC in New Jersey, there is the possibility that the matter will be resolved by the EEOC and Drankwater will never sue Emiliani in state or federal court. In addition, Emiliani's assertions in the EEOC action so far indicate no basis on which to sue defendants. For example, in the EEOC investigation, Emiliani contended that Drankwater was terminated because she violated company policy by "selling to non-legitimate salons." Drankwater v. Emiliani, EEOC Probable Cause Determination, Charge No. 171920195, at 1 (May 27, 1993). Emiliani made no mention of interference, contribution or coercion by defendants. Although Emiliani is in no way bound by such statements, the Court finds that the risk that defendants will incur multiple or inconsistent obligations is not substantial.

 Accordingly, the Court finds that defendants have not met their burden of showing that Emiliani is a party to be joined if feasible pursuant to Rule 19(a). Having determined that Rule 19(a)'s threshold standard has not been met, there is no need to consider the jurisdiction issue or to undertake an analysis to determine whether the court can proceed in equity and good conscience in Emiliani's absence. Defendants' motion to dismiss for failure to join an indispensable party is denied.

 CONCLUSION

 For the reasons set forth above, defendants' motion, pursuant to Rule 19 of the Federal Rules of Civil Procedure, for an order dismissing the complaint for failure to join an indispensable party, is denied. The parties shall appear for a pretrial conference on Friday, September 10, 1993, at 10:30 a.m.

 SO ORDERED.

 SHIRLEY WOHL KRAM

 UNITED STATES DISTRICT JUDGE

 Dated: New York, NY

 July 30, 1993


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