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United States District Court, Southern District of New York

May 9, 2003


The opinion of the court was delivered by: Denise Cote, United States District Judge.


Plaintiff Sharon Haugh ("Haugh") has moved for reconsideration of an Order dismissing the ADEA claim against foreign defendant Schroders plc ("Schroders"), for leave to amend the complaint to provide further support for such a claim, or for certification of an appeal pursuant to 28 U.S.C. § 1292(b). For the following reasons, the motions are denied.

It is undisputed that Haugh was employed by defendant Schroders Investment Management North America, Inc. ("SIMNA"), an American subsidiary of Schroders. The decision to fire Haugh, the Chair of SIMNA, was made by the CEO of Schroders, Michael Dobson ("Dobson"). On January 22, 2003, the ADEA claim against SIMNA was dismissed, and the Court declined to exercise supplemental jurisdiction over the state law claims against Schroders and Dobson for age discrimination.

Under Rule 15(a), Fed.R.Civ.P., once a responsive pleading has been served, a party may amend its pleadings "only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires." Rule 15(a), Fed.R.Civ.P. The Supreme Court has emphasized that a refusal to grant leave to amend must be justified by grounds such as undue delay or prejudice, bad faith, or futility of amendment. Foman v. Davis, 371 U.S. 178, 182 (1962); see also Milanese v. Rust-Oleum Corp., 244 F.3d 104, 110 (2d Cir. 2001). Amendment of a pleading is futile if the proposed claim would not survive a motion to dismiss under Rule 12(b)(6), Fed.R.Civ.P. Dougherty v. Town of N. Hempstead Bd. of Zoning Appeals, 282 F.3d 83, 88 (2d Cir. 2002); Ricciutti v. N.Y.C. Transit Auth., 941 F.2d 119, 123 (2d Cir. 1991). A court may dismiss an action pursuant to Rule 12(b)(6), Fed.R.Civ.P., only if it appears beyond doubt that the plaintiff can prove no set of facts in support of her claim that would entitle her to relief. Harris v. City of New York, 186 F.3d 243, 247 (2d Cir. 1999).

The motion to amend rests principally on the plaintiff's contention that the single employer doctrine, developed in the 2 context of Title VII, can be applied to Schroders, the foreign parent of plaintiff's employer, to bring it within the jurisdiction of the ADEA as Haugh's "employer". Haugh further argues that the ADEA's limitation on its applicability to foreign employers is not a bar to the use of the single employer doctrine.

Section 623(h)(2) of the ADEA provides that "[t]he prohibitions of [the ADEA] shall not apply where the employer is a foreign person not controlled by an American employer." 29 U.S.C. § 623(h)(2); Morelli v. Cedel, 141 F.3d 39, 41-42 (2d Cir. 1998). There is no corollary to this provision in Title VII. Haugh contends that the restriction contained in Section 623(h)(2) only applies where the employee works abroad, and that it has no force whatsoever where the employee works in the United States, as was true for Haugh.

As explained in Morelli, Section 623(h)(2) was enacted in response to court decisions that had applied provisions of the Fair Labor Standards Act to hold that the ADEA does not apply to Americans employed abroad by American companies. Morelli, 141 F.3d at 42. Congress amended the ADEA to make it explicit that covered employees included those employed abroad by foreign corporations controlled by American employers. Id. In construing Section 623(h)(2), Morelli found that "[a]t a minimum, this provision means that the ADEA does not apply to the foreign operations of foreign employers — unless there is an American employer behind the scenes." Id. (emphasis in original).

Morelli found that the ADEA protects an employee working in the United States for a domestic branch of a foreign corporation. Morelli, 141 F.3d at 44. It concluded that Congress did not intend to "exempt the domestic workplaces of foreign employers." Id. at 42. The Morelli court concluded that while an "absolutely literal reading of [Section 623(h)(2)] might suggest that the ADEA also does not apply to the domestic operations of foreign employers," its analysis of the relevant Section's legislative history revealed that Section 623(h)(2) "merely limits the scope of the amended definition of employee, so that an employee at a workplace in a foreign country is not protected under the ADEA if the employer is a foreign person not controlled by an American employer." Id. at 42, 43. The purpose of Section 623(h)(2) was to protect the principle of sovereignty. "[N]o nation has the right to impose its labor standards on another country." Id. at 43 (citation omitted). The ADEA also protects an employee, who is a United States citizen, working abroad for a United States corporation. Id. at 42-43.

The plaintiff argues that she can proceed against Schroders because it can be shown that Schroders and SIMNA were effectively the same entity pursuant to the single employer doctrine. This doctrine was developed by the National Labor Relations Board in the context of labor disputes and applied in Cook v. Arrowsmith Shelburne, Inc., 69 F.3d 1235, 1240 (2d Cir. 1995), to Title VII cases. It has since been used by district courts in ADEA cases.*fn1

The single employer doctrine cannot, however, overcome the bar presented by the unambiguous language of Section 623(h)(2). While the single employer doctrine may make Schroders the "employer" of the plaintiff, Section 623(h)(2) provides that the ADEA shall not apply where the "the employer is a foreign person not controlled by an American employer." 29 U.S.C. § 623(h)(2). This unambiguous statutory language is an insurmountable obstacle to the proposed amendment.

While the holding in Morelli would permit a different conclusion, in particular its conclusion that the ADEA protects an employee working in the United States for a branch of a foreign corporation, Morelli, 141 F.3d at 44, the Morelli court did not have to confront the issue presented here: whether the single employer doctrine can trump unambiguous statutory language. In Morelli, the plaintiff's direct employer was a foreign corporation. Here, it is undisputed that the plaintiff's direct employer is SIMNA, an American corporation. While it would appear that principles of sovereignty and even international comity may permit Congress to draw the line differently, it did not do so. As plaintiff cannot overcome this bar on an ADEA cause of action against Schroders, any amendment would be futile, and the motion to amend must be denied.*fn2

Haugh's motion for certification on appeal under 28 U.S.C. § 1292(b) is also denied. Section 1292(b) provides in relevant part that

When a district judge, in making in a civil action an order not otherwise appealable under this section, shall be of the opinion that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation, he shall so state in writing in such order. The Court of Appeals which would have jurisdiction of an appeal of such action may thereupon, in its discretion, permit an appeal to be taken from such order, if application is made to it within ten days after the entry of the order.
28 U.S.C. § 1292(b) (emphasis supplied); Karaha Bodas Co., L.L.C. v. Perusahaan Pertanbangan Minyak Dan Gas Bumi Negara, 313 F.3d 70, 81 (2d Cir. 2002).

This statute is to be strictly construed, as the power to grant an interlocutory appeal "must be strictly limited to the precise conditions stated in the law," Klinghoffer v. S.N.C. Achille Lauro, 921 F.2d 21, 25 (2d Cir. 1990) (quoting Gottesman v. General Motors Corp., 268 F.2d 194, 196 (2d Cir. 1959)), which is why "it continues to be true that only `exceptional circumstances'" warrant certification, id. (quoting Coopers & Lybrand v. Livesay, 437 U.S. 463, 475 (1978)). See also Westwood Pharmaceuticals, Inc. v. National Fuel Gas Dist. Corp., 964 F.2d 85, 89 (2d Cir. 1992) (district courts should "exercise great care in making a § 1292(b) certification").

The motion for certification must be denied. At a minimum, Haugh has not shown that an immediate appeal would materially advance the ultimate outcome of the litigation.


The motions to amend, for reconsideration and certification are denied.


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