The opinion of the court was delivered by: ROBERT P. PATTERSON, JR.
Robert P. Patterson, Jr., U.S.D.J.
Pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, MMAR Group, Inc. and its principal shareholders, Cory Miner and Paul Brown (collectively, "the MMAR Defendants"), move to dismiss a diversity suit brought on April 30, 1993 by John Murray, James Berardi, Robert Petitti, and Joseph Hurley. The complaint seeks to hold the MMAR Defendants liable, under the single employer doctrine, for the contractual obligations of (1) Gnubrokers Holding, Inc. ("GHI") and its three subsidiaries, Gnubrokers of Governments, Inc., Gnubrokers Management, Inc., and Gnubrokers of Corporates, Inc. (collectively, "Gnubrokers Companies"), and (2) GHI's predecessor in interest, Fundamental Brokers, Inc. ("FBI"). On September 15, 1993, plaintiffs moved for class certification, citing common questions of law and fact with 56 other litigants. On June 15, 1994, plaintiffs moved to amend their complaint to add claims of piercing the corporate veil between the MMAR Defendants and the Gnubrokers Companies. Defendants now move to dismiss the complaint for failure to state a claim upon which relief can be granted, and oppose plaintiffs' motion to amend the complaint. For the reasons that follow, defendants' motion to dismiss the complaint is granted, and plaintiffs' motion to amend the complaint is denied. Although no ruling on the class certification issue is made at this time, the determinations made herein are dispositive of that motion.
According to the complaint, in July 1989 and January 1990, plaintiffs, who are all citizens of New Jersey and former government bond brokers employed by FBI, brought two related suits against FBI in the Southern District of New York ("the Berardi actions"), alleging that FBI breached its contract as to two-year compensation guarantees and bonus awards in 1987-88 and 1988-89.
In October 1990, MMAR, a Texas securities broker, learned that FBI was for sale. MMAR had notice of FBI's liability exposure for breach of contracts related to compensation guarantees and bonus awards. In order to shield MMAR and themselves from such liability, Brown and Miner formed a separate corporation, GHI, for the purpose of acquiring FBI's assets; Brown and Miner each held 38.5% of GHI's shares. In February 1991, GHI and FBI entered an asset purchase agreement, transferring FBI's assets to GHI. In this agreement, the complaint alleges, GHI expressly assumed FBI's liabilities for many compensation claims of employees, including any liabilities arising from the Berardi actions.
After the asset sale was consummated in February 1991, GHI continued to operate FBI's brokerage business out of the same offices as before, and used FBI letterhead in its communications; telephones were answered with the name of "FBI" or "Fundamental." In turn, the MAAR Defendants were intimately involved in the operation of both FBI and the Gnubrokers Companies. For example, MMAR held itself out to the FBI employees and the press as FBI's new owners; MMAR paid Brown and Miner's salaries as directors of GHI; MMAR charged various of its own expenses to the Gnubrokers Companies, or used Gnubrokers facilities without reimbursement; and the MMAR Defendants controlled various employment and litigation decisions relating to FBI employees.
In July 1992, in the Berardi actions, Judge Martin of this District entered judgments against FBI and in favor plaintiffs totalling roughly $ 1 million. These judgments remain unsatisfied.
Involuntary Chapter 7 bankruptcy proceedings were filed against FBI and GHI in the Southern District in August 1992. In October 1992, the three Gnubrokers subsidiaries filed voluntary Chapter 7 petitions in the Northern District of Georgia; these proceedings subsequently were transferred to the Southern District. Plaintiffs filed proofs of claims in the bankruptcy proceedings, as did many other FBI employees who had employment-related claims. During the pendency of that proceeding, the instant complaint was filed.
A. Defendants' Motion to Dismiss
A complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief. See Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957). When passing on a motion to dismiss, the court must accept the allegations in the complaint as true and construe them in favor of the pleader. See Scheuer v. Rhodes, 416 U.S. 232, 236, 40 L. Ed. 2d 90, 94 S. Ct. 1683 (1974); Cruz v. Beto, 405 U.S. 319, 322, 31 L. Ed. 2d 263, 92 S. Ct. 1079 (1972).
Both the individual and class action claims for relief in the complaint state as grounds for relief that "the MMAR Defendants so dominated the day-to-day operations of the Gnubrokers Companies, which assumed FBI's liabilities to plaintiffs . . . as to render the MMAR Defendants liable to plaintiffs under the single employer doctrine." Under that doctrine, two entities may be regarded as a single employer, and therefore subject to joint liability for the acts of the entity that is plaintiffs' immediate employer, if they have (1) interrelated operations, (2) common management, (3) centralized control of labor relations, and (4) common ownership. Perry v. Manocherian, 675 F. Supp. 1417, 1425 (S.D.N.Y. 1987); accord, Armbruster v. Quinn, 711 F.2d 1332, 1337 (6th Cir. 1983).
As plaintiffs concede, the doctrine applies to claims that fundamentally implicate employer-employee relationships. See, e.g., Armbruster, 711 F.2d at 1338 (applying doctrine to Title VII claims); Carpenters Local Union No. 1846 of the United Brotherhood of Carpenters & Joiners of America v. Pratt-Farnsworth, Inc., 690 F.2d 489, 507 (5th Cir. Unit B 1982), cert. denied, 464 U.S. 932, 78 L. Ed. 2d 305, 104 S. Ct. 335 (1983) (applying doctrine to NLRA claims). In such contexts, the doctrine enables a wronged employee to impose liability on an entity that, although not his employer of record, exercises sufficient control over employment decisions to bear responsibility for the wrong in question. In order for the doctrine to apply, therefore, the two entities must share control at the time of the alleged wrong. See, e.g., Parliament House Motor Hotel v. EEOC, 444 F.2d 1335, 1340-41 (5th Cir. 1971) (allowing discovery against former corporate owner of hotel where "the two may well have constituted a single employer at the ...