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FALBAUM v. POMERANTZ

July 24, 1995

JACOB V. FALBAUM, ANTHONY E. GILL, EMILE LEWKOWIEZ, and RAYMOND TERWILLIGER, Plaintiffs, against JOHN J. POMERANTZ, ALAN GOLUB, LAURA H. POMERANTZ, HERMAN GORDON, and B. MICHAEL THROPE, Defendants. LEE L. KISHBAUGH, Plaintiff, - against - JOHN J. POMERANTZ, ALAN GOLUB, LAURA H. POMERANTZ, HERMAN GORDON, and B. MICHAEL THROPE, Defendants.


The opinion of the court was delivered by: MIRIAM GOLDMAN CEDARBAUM

 CEDARBAUM, J.

 Leslie Fay, a women's clothing manufacturer, is a debtor-in-possession in bankruptcy proceedings in this District. Five former managerial employees sue four current employees of Leslie Fay and Leslie Fay's outside counsel for age discrimination in their "individual capacities" under federal, New York State, Pennsylvania, and New York City law. Jurisdiction is based on a federal question, 28 U.S.C. § 1331, and diversity of citizenship. 28 U.S.C. § 1332.

 Defendants move to dismiss the complaints on the ground that only the employer is suable and that they are not subject to personal liability under the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. §§ 621 et seq., the New York State Human Rights Law, N.Y. Exec. Law §§ 290 et seq. (McKinney 1993) ("NYHRL"), and the Pennsylvania Human Relations Act ("PHRA"), Pa. Stat. Ann. tit. 43, §§ 951 et seq. (1991 & Supp. 1994). In addition, defendants move to dismiss plaintiffs' claims under the PHRA and the New York City Civil Rights Law ("NYCCRL"), Admin. Code of New York City § 8-101 et seq. (1986 & Supp. 1994), for failure to exhaust administrative remedies.

 The complaints also assert claims of legal malpractice and breach of fiduciary duty against Herman Gordon, Leslie Fay's general counsel, and B. Michael Thrope, Leslie Fay's outside counsel. At oral argument, I granted defendants' motion to dismiss the claims against Gordon and Thrope but reserved decision on the balance of defendants' motion. (Tr. Feb. 2, 1995 at 34.) For the reasons that follow, defendants' motion to dismiss is granted in part and denied in part.

 Background

 Plaintiff Jacob V. Falbaum was Director of Physical Distribution for the Dress Division of Leslie Fay; Anthony E. Gill was Production Manager; Emile Lewkowiez was Director of Quality Control; Raymond J. Terwilliger was Vice President of Human Resources; and Lee L. Kishbaugh was Factory Manager for the Dress Division. Defendants are the Chairman of the Board of Directors and Chief Executive Officer of Leslie Fay, a Senior Vice President, the President, and the General Counsel, who is also a Senior Vice President. Leslie Fay is not named as a defendant in either complaint. Defendants are alleged to be "agents of Leslie Fay who in their supervisory positions instigated, authorized, required, caused, and aided and abetted" age discrimination. (Falbaum Amend. Compl. at P 7; Kishbaugh Compl. at P 6.) Specifically, defendants are alleged to have "conceived, devised and conspired" to implement a discriminatory "reduction-in-force" program, pursuant to which plaintiffs were terminated. (Falbaum Amend. Compl. at P 30; Kishbaugh Compl. at P 28.) In addition, defendants are alleged to have "conspired among themselves and with others to retaliate against those individuals, including plaintiffs, who opposed or protested against defendants' willful and deliberate discriminatory acts and practices, and requested or recommended remedial action with respect thereto." (Falbaum Amend. Compl. at P 31; Kishbaugh Compl. at P 31.)

 Discussion

 I. Age Discrimination in Employment Act

 The ADEA makes it unlawful for an "employer," inter alia, to discharge an individual on the basis of age. 29 U.S.C. § 623(a)(1). An employer is defined as "a person engaged in an industry affecting commerce who has twenty or more employees." 29 U.S.C. § 630(b). The statute further defines an employer to include "any agent of such a person." Id. Defendants move to dismiss the ADEA claims on the ground that the statutory reference to "agent" authorizes only employer liability for the conduct of employees acting within the scope of their employment, but does not provide an independent cause of action against such employees personally. This question -- whether supervisory personnel may be personally liable under the ADEA for acts undertaken in their capacities as agents -- has sharply divided courts in recent years.

 The ADEA's definition of employer, including the term "agent," is very similar to that found in other civil rights laws such as Title VII of the Civil Rights Act of 1964 ("Title VII"), 42 U.S.C. § 2000e(b) and the Americans with Disabilities Act ("ADA"), 42 U.S.C. § 12111(5)(A). The issue of the personal liability of agents has also been addressed in cases arising under those statutes, and courts have relied on those cases to interpret the ADEA. See, e.g., Birkbeck v. Marvel Lighting Corp., 30 F.3d 507, 510-511 (4th Cir.), cert. denied, 130 L. Ed. 2d 600, 115 S. Ct. 666 (1994). Several Circuits have held that an individual may not be personally liable for conduct performed as an agent under either the ADEA, the ADA or Title VII. See E.E.O.C. v. AIC Sec. Investigations, Ltd., 55 F.3d 1276 (7th Cir. 1995) (individuals may not be personally liable as agents under ADA); Birkbeck, 30 F.3d at 510-511 (individuals may not be personally liable as agents under ADEA); Grant v. Lone Star Co., 21 F.3d 649, 651-53 (5th Cir.) (individuals may not be personally liable as agents under Title VII), cert. denied, 130 L. Ed. 2d 491, 115 S. Ct. 574 (1994); Sauers v. Salt Lake County, 1 F.3d 1122, 1125 (10th Cir. 1993) (same); but see Ball v. Renner, 54 F.3d 664, 668-69 (10th Cir. 1995) (declining to reach issue in Title VII case absent proof that defendant exercised managerial/supervisory authority over plaintiff); see also Miller v. Maxwell's Int'l Inc., 991 F.2d 583, 587 (9th Cir. 1993) (individuals may not be personally liable as agents under either the ADEA or Title VII), cert. denied, 114 S. Ct. 1049, 127 L. Ed. 2d 372 (1994); Busby v. City of Orlando, 931 F.2d 764, 772 (11th Cir. 1991) (individual may not be liable in individual capacity under Title VII); cf. Lenhardt v. Basic Inst. of Technology, Inc., 55 F.3d 377, 381 (8th Cir. 1995) (individuals may not be liable as agents under Missouri Human Rights Act patterned after Title VII).

 The Second Circuit has not been presented with the question, and the decisions in this district have divided. See, e.g., Coraggio v. Time Inc. Magazine Co., 1995 U.S. Dist. LEXIS 5399, No. 94 Civ. 5429 (MBM), 1995 WL 242047, at *9 (S.D.N.Y. 1995) (individuals may not be personally liable under Title VII, but may be named in their "official capacities"); Dirschel v. Speck, 1994 U.S. Dist. LEXIS 9257, No. 94 Civ. 0502 (LMM), 1994 WL 330262, at *6 (S.D.N.Y. 1994) (individual may be personally liable as agent under Title VII); Reilly v. Metro-North Commuter R.R. Co., 1994 U.S. Dist. LEXIS 6693, No. 93 Civ. 7317 (PKL), 1994 WL 202720, at *1 (S.D.N.Y. 1994) (dismissing Title VII claim against individual where no evidence that plaintiff would be prejudiced by proceeding against employer); Donato v. Rockefeller Fin. Servs., 1994 U.S. Dist. LEXIS 17709, No. 93 Civ. 4663 (LLS), 1994 WL 695690 (S.D.N.Y. 1994) (denying leave to amend complaint to add individual defendant where plaintiff would "suffer no prejudice" from proceeding against employer alone); Bramesco v. Drug Computer Consultants, 834 F. Supp. 120, 123 (S.D.N.Y. 1993) (individual may not be personally liable under Title VII and the ADEA absent specific allegations of age discrimination against individual defendant and prejudice in dropping individual defendant from the case); Archer v. Globe Motorists Supply Co., 833 F. Supp. 211, 214 (S.D.N.Y. 1993) (dismissing Title VII and ADEA claims against individual defendants, but noting that allegations of "individualized personal misconduct" might support personal liability); Allen v. City of Yonkers, 803 F. Supp. 679, 683 (S.D.N.Y. 1992) (individuals may not be personally liable as agents under Title VII); Bridges v. Eastman Kodak Co., 800 F. Supp. 1172, 1180 (S.D.N.Y. 1992) (individuals may be personally liable as agents under Title VII); Elias v. Sitomer, 1992 U.S. Dist. LEXIS 18627, No. 91 Civ. 8010 (MBM), 1992 WL 370419, at *5 (S.D.N.Y. 1992) (individual may be personally liable as agent under the ADEA); Cheng v. Tams Consultants, Inc., 1991 U.S. Dist. LEXIS 6095, No. 90 Civ. 5832 (CSH), 1991 WL 79198, at *3 (S.D.N.Y. 1991) (supervisory personnel may be personally liable as agents under Title VII); Lehtinen v. Bill Communications, Inc. 1989 U.S. Dist. LEXIS 3707, 59 Fair Empl. Prac. Cas. (BNA) 1077, 1081 (S.D.N.Y. 1989) (individual who "participated in the decision making process" resulting in the alleged discrimination may be personally liable under Title VII); Bradley v. Consolidated Edison Co., 657 F. Supp. 197, 207 (S.D.N.Y. 1987) (employees acting within scope of their authority may not be personally liable under Title VII); Tuber v. Continental Grain Co., 36 Fair Empl. Prac. Cas. (BNA) 933, 937 (S.D.N.Y. 1984) (individuals who "controlled some aspect of [plaintiff's] conditions of employment" are employers under Title VII); Women in City Gov't United v. City of New York, 515 F. Supp. 295, 299 (S.D.N.Y. 1981) (trustees who approve retirement plan may not be personally liable under Title VII); Rodgers v. Grow-Kiewit Corp., 93 Lab. Cas. (CCH) P 13,431, at 20,541 (S.D.N.Y. 1981) (individual may not be personally liable as agent under the ADEA); Hannahs v. New York State Teachers' Retirement System, 2 E.B.C. 1642, 26 Fair Empl. Prac. Cas. (BNA) 527, 532 (S.D.N.Y. 1981) (individuals may not be personally liable under Title VII insofar as they act "pursuant to their official duties"); Bradley v. Rockland County Community Mental Health Ctr., 25 Fair Empl. Prac. Cas. (BNA) 225, 228 (S.D.N.Y. 1980) (individual may be personally liable as agent under Title VII if he "personally participated in the decision making process that forms the basis of the alleged discrimination"); Friend v. Union Dime Sav. Bank, 24 Fair Empl. Prac. Cas. (BNA) 1307, 1310 (S.D.N.Y. 1980) (individuals may not be personally liable as agents under ADEA).

 Consideration of this issue must begin with the plain language of the statute, which is ordinarily dispositive. Connecticut Nat'l Bank v. Germain, 503 U.S. 249, 253-254, 117 L. Ed. 2d 391, 112 S. Ct. 1146 (1992). However, "where the result of a literal interpretation of statutory language is absurd, or where the obvious purpose of the statute is thwarted by such slavish adherence to its terms, [the court] may look beyond the plain language" of the statute. Grand Light & Supply Co. v. Honeywell, Inc., 771 F.2d 672, 677 (2d Cir. 1985) (citations omitted). This is particularly appropriate where there is an alternative interpretation of the statute consistent with the legislative purpose. See Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 575, 73 L. Ed. 2d 973, 102 S. Ct. 3245 (1982). The plain language of the ADEA makes it unlawful for an "employer" to discriminate on the basis of age. In defining this term, the statute specifically exempts persons or entities who employ fewer than twenty employees. By further defining an "employer" to include liability for the conduct of persons acting as "agent[s]," the ADEA adopts the familiar doctrine of respondeat superior, under which a principal is liable for the tortious conduct of its agent. See Birkbeck, 30 F.3d at 510 (term "agent" incorporates doctrine of respondeat superior). The common law rule is that an employer may be liable for the intentional torts of its employees if they are committed within the scope of employment. See Shager v. Upjohn Co., 913 F.2d 398, 404-05 (7th Cir. 1990). This rule applies to the intentional tort of discriminatory discharge. See id. at 405 ("[A] supervisory employee who fires a subordinate is doing the kind of thing that he is authorized to do, and the wrongful intent with which he does it does not carry his behavior so far beyond the orbit of his responsibilities as to excuse the employer.") (citing Restatement (Second) of Agency § 228 (1957)).

 The language of the statute suggests that agents might be liable for their conduct under the ADEA, particularly since under general principles of agency law, liability of a principal under the doctrine of respondeat superior does not extinguish the liability of a culpable agent. See Katara v. D.E. Jones Commodities, Inc., 835 F.2d 966, 972 (2d Cir. 1987); Restatement (Second) of Agency, §§ 343, 359C(1), 217B(1) (1957). However, the ADEA does not expressly provide a cause of action against agents -- as noted above, the statute only makes it unlawful for an "employer" to discriminate on the basis of age. Although the statute defines an "employer" to include an "agent," treating an agent as subject to suit in an individual capacity appears to conflict with the ADEA's careful definition of "employer" to exempt employers of fewer than twenty persons. Whether this exemption evidences a congressional desire to protect small employers from the burdens associated with litigating discrimination claims, see, e.g., Miller, 991 F.2d at 587, or to protect the associational rights of individuals and small entities, see Jendusa v. Cancer Treatment Ctrs. of Am., Inc., 868 F. Supp. 1006, 1013-15 (N.D. Ill. 1994), imposing independent personal liability on individual employees in their capacity as agents appears to be at odds with the text and structure of the statute. Individuals who are acting as agents are the "smallest of legal entities," Grant, 21 F.3d at 649, and "if Congress decided to protect small entities with limited resources from liability, it is inconceivable that Congress intended to allow civil liability to run against individual employees." Miller, 991 F.2d at 587; compare Jendusa, 868 F. Supp. at 1014 (given congressional desire to protect associational rights of small ...


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