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Liverpool v. Con-Way

May 15, 2009


The opinion of the court was delivered by: John Gleeson, United States District Judge


Machel Liverpool brings this diversity action under 28 U.S.C. § 1332, alleging that defendants violated state tort and labor law by making false and damaging statements regarding a drug test Liverpool took while working as a truck driver for Con-Way Central Express. Defendants move to dismiss, alleging that Liverpool has failed to establish personal jurisdiction over Con-Way, Inc., that his claims are barred by a contractual limitations provision, and that he has failed to state a claim under any theory of liability. For the following reasons, the motion to dismiss for lack of jurisdiction is denied and the motion to dismiss for failure to state a claim is granted with respect to Liverpool's sixth cause of action and denied in all other respects.


Liverpool's complaint was filed on October 6, 2008, and amended on December 5, 2008. The following facts are drawn from the plaintiffs' amended complaint and are assumed to be true for the purposes of this motion.

On March 19, 2004, Liverpool was hired by Con-Way Central Express as a warehouse worker.*fn1 He began work as a truck driver several months later. As a truck driver, he was subject to random drug tests pursuant to company and Department of Transportation ("DOT") policy. When Liverpool was directed to take a drug test, he would "punch out of work" and report to the testing site. Amended Compl. ¶ 17. He would not return to work following the test. Liverpool followed the instructions he received from his employer regarding the tests and never received any indication that his practice of punching out and not returning to work for the remainder of the day was improper.

On January 8, 2007, at some time before 8:00 A.M., Liverpool arrived at work. He was told to report for a drug test and punched out. Knowing that the testing site did not open until 9:00 or 9:30 A.M., and that he therefore "had some time until the testing site opened," Liverpool "went in his car to meet a young woman of his acquaintance and to spend intimate time with her." Id. at ¶¶ 25-26. He arrived at the testing site "sometime around 10:00 AM or 10:30 AM and was administered the drug test." Id. at ¶ 27. He did not return to work on January 8, but "worked as usual" from January 9 to January 11. Id. at ¶ 29. On January 11, 2007, Liverpool's local human resources manager was informed that the result of the drug test was "negative, dilute." Id. at ¶ 30. Liverpool had received the same result, "without adverse comment or adverse employment consequences," from at least one other test he had taken during his employment. Id. at ¶ 31.

On January 15, 2007, when Liverpool reported for work, he was directed to his Terminal Manager. This manager asked him where he went before reporting for the January 8 drug test and why he did not return to work after the test. Liverpool stated that he went to a Wendy's restaurant for breakfast before the test. Liverpool was subsequently informed that ConWay had discovered that Wendy's did not serve breakfast, and that Liverpool was being terminated "because of overall poor attendance and dishonesty." Id. at ¶ 35.

After his discharge, Liverpool applied for unemployment benefits. His former employer opposed his claim, alleging that he "'was discharged for excessive absenteeism.'" Id. at ¶ 38. On February 21, 2007, the Department of Labor ("DOL") approved Liverpool's claim. Con-Way's appeal was denied on April 16, 2007.

In February 2007, Liverpool applied for and accepted a job as a truck driver for JB Hunt. Due to a "family medical emergency," he left this job after one day. Id. at ¶ 46. He resumed his search for employment as a truck driver in the fall of 2007 and applied for a job with Bavarian Motor Transport ("BMT"). Liverpool was not offered a job, even though a position that matched his qualifications was available. He subsequently learned that BMT had received a "'Drug/Alcohol Disclosure'" from USIS, a database that collects work history information in the trucking industry. Id. at ¶ 50. He also learned that Con-Way had told a BMT representative that Liverpool had failed a drug test.

Liverpool also re-applied for a job with JB Hunt. JB Hunt's investigator was told by Con-Way that Liverpool "did not pass a drug test with them." Id. at ¶ 54. Liverpool offered to rebut this claim, but was told that JB Hunt could not hire him.

On November 5, 2007, Liverpool began working for Central Transport, Inc. as a truck driver. One week later, he was told that "a hold had been put on his employment." Id. at ¶ 60. Central Transport terminated Liverpool's employment a few days later. Liverpool requested an explanation, and received a copy of a report Con-Way had sent to Central Transport stating that he "'had refused a random, post-accident or reasonable suspicion test on January 8, 2007.'" Id. at ¶ 61. Central Transport also reported to the USIS database that it had terminated Liverpool because of this report. Accordingly, this information is available to any prospective employer in the industry.

Liverpool's December 5, 2008 amended complaint alleges that Con-Way's statements regarding the January 8 drug test were defamatory, that Con-Way made these statements in retaliation for Liverpool's application for unemployment benefits, and that ConWay's actions render it liable to Liverpool under a theory of prima facie tort. On February 6, 2009, the defendants filed a motion to dismiss, arguing that the Court does not have jurisdiction over Con-Way, Inc. and that Liverpool's complaint fails to state a claim against any of the defendants. I heard oral argument on the motion on April 17, 2009.


A. Personal Jurisdiction Over Con-Way, Inc.

1. Jurisdiction Over Foreign Corporations in New York State

In this district, service of process establishes personal jurisdiction over a defendant who is subject to the jurisdiction of the New York State Supreme Court. See Fed. R. Civ. P. 4(k)(1)(A). Properly construed, Liverpool's attempt to establish jurisdiction over ConWay, Inc. implicates three distinct theories of personal jurisdiction, two arising under N.Y. C.P.L.R. § 301 and one arising under C.P.L.R. § 302. A brief discussion of each theory will aid in assessing the parties' jurisdictional claims.

a. Corporations "Doing Business" in New York and N.Y. C.P.L.R. § 301

Prior to the enactment of New York's "long arm" jurisdictional statute, "a foreign corporation, not authorized to do business in this State, was held amenable to local suit only if it was engaged in such a continuous and systematic course of 'doing business' here as to warrant a finding of its 'presence' in this jurisdiction." Simonson v. Int'l Bank, 14 N.Y.2d 281, 285 (1964). This theory of personal jurisdiction was apparently first announced in New York in the 1917 decision Tauza v. Susquehanna Coal Co., 220 N.Y. 259 (1917) (Cardozo, J.), and is based on the proposition that an entity's in-state presence vests the state's courts with jurisdiction over it. See Tauza, 220 N.Y. at 268 ("All that is requisite is that enough be done to enable us to say that the corporation is here.") (emphasis added).

In 1945, the United States Supreme Court rejected the proposition that the Due Process Clause required such presence as a prerequisite to personal jurisdiction. Int'l Shoe Co. v. State of Wash., Office of Unemployment Comp. and Placement, 326 U.S. 310, 316 (1945). While the Supreme Court's evolving due process jurisprudence "broadly expanded the power of this State to subject foreign corporations and nonresident individuals, not 'present' in the forum, to the personal jurisdiction of its courts, the Legislature took no steps to exercise that power until the enactment of the CPLR." Simonson, 14 N.Y.2d at 286. Furthermore, while the new jurisdictional statutes contained provisions, such as C.P.L.R. § 302, "enlarging the bases for acquiring personal jurisdiction over foreign corporations and nonresident persons," Simonson, 14 N.Y.2d at 284, they also contained provisions preserving older theories of jurisdiction. Specifically, § 301 provides that "[a] court may exercise such jurisdiction over persons, property, or status as might have been exercised heretofore." Accordingly, the Court of Appeals, citing § 301, has continued to develop and apply the principle that a foreign defendant may subject itself to personal jurisdiction in New York by "doing business" here. See Delagi v. Volkswagenwerk AG, 29 N.Y.2d 426, 430 (1972).

Cases following Tauza also establish that a corporation may be deemed present through the conduct of an affiliate or a subsidiary. In Taca International Airlines, S.A. v. Rolls-Royce of England, Ltd., 15 N.Y.2d 97, 99 (1965), the Court of Appeals considered the jurisdictional implications of the relationship between Rolls-Royce of England, Ltd. ("Rolls-Royce Ltd."), a British corporation that itself conducted no business in New York, and Rolls-Royce Inc., a "separately incorporated" entity that was indisputably doing business in New York. The Court opined that the dispositive question was whether, factually, Rolls-Royce Inc. was "a really independent entity" or "a mere department" of Rolls-Royce Ltd. Id. at 102. After cataloguing the numerous ways in which Rolls-Royce Ltd. exercised control over Rolls-Royce Inc., the court held that Ltd. "was doing extensive business in our State through its local department separately incorporated as [Rolls-Royce] Inc.," and was therefore amenable to personal jurisdiction. Id. In Volkswagenwerk AG v. Beech Aircraft Corp., 751 F.2d 117, 120-22 (2d Cir. 1984), the Second Circuit synthesized the line of cases interpreting Taca's "mere department" language and established four factors to be weighed in determining whether a separate corporate entity is merely a department of another for jurisdictional purposes: "common ownership;" "financial dependency of the subsidiary on the parent;" "the degree to which the parent corporation interferes in the selection and assignment of the subsidiary's executive personnel and fails to observe corporate formalities;" and "the degree of control over the marketing and operational policies of the subsidiary exercised by the parent."

Frummer v. Hilton Hotels International, Inc., 19 N.Y.2d 533 (1967), announced a related theory of vicarious personal jurisdiction. In that case, the plaintiff was injured in a Hilton Hotel in London. He sued Hilton Hotels (U.K.) Ltd. ("HHUK"), a British corporation that operated the hotel in question, and Hilton Hotels Corp. and Hilton Hotels International, "both of which are Delaware corporations doing business in New York." Id. at 535. In determining whether HHUK was doing business in New York, the Court first examined the case of Bryant v. Finnish National Airline, 15 N.Y.2d 426 (1965), where it found that a corporation was "doing business" in New York when it "has a lease on a New York office, . . . employs several people and . . . has a bank account here, . . . does public relations and publicity work for defendant here including maintaining contacts with other airlines and travel agencies [,]. . . transmits requests for space to defendant in Europe and helps to generate business." Id. at 537 (quoting Bryant, 15 N.Y.2d at 432 (omissions in Frummer)). The Court then observed that, "[i]n the case before us, these same services are provided for the defendant [HHUK] by the Hilton Reservation Service . . . ." Id. After detailing the similarities between the Reservation ...

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