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Downey v. Adloox Inc.

United States District Court, S.D. New York

February 28, 2017

KEVIN P. DOWNEY, Plaintiff,
ADLOOX INC., et al., Defendants.


          JESSE M. FURMAN United States District Judge

         In September 2015, Plaintiff Kevin Downey was hired by Defendant Adloox Inc. - an advertising technology company - as Vice President of Sales in its newly opened New York City office. Adloox Inc. (“Adloox U.S.”) is the United States-based, wholly owned subsidiary of Adloox (“Adloox France”), a French corporation (collectively, “Defendants”). Less than two months after hiring Downey, Adloox U.S. terminated his employment. Downey, who was fifty-one at the time of his termination, now sues Adloox U.S. and Adloox France, alleging age discrimination under the Age Discrimination in Employment Act (“ADEA”), 29 U.S.C. § 621 et seq.; the New York State Human Rights Law (“NYSHRL”), NY. Exec. Law § 296; and the New York City Human Rights Law (“NYCHRL”), N.Y.C. Admin. Code § 8-107. He also brings claims under New York law for fraudulent inducement and unjust enrichment. Defendants now move, pursuant to Rule 12 of the Federal Rules of Civil Procedure, to dismiss the Second Amended Complaint (the “Complaint”) in its entirety. (Docket No. 27).[1] For the reasons that follow, Defendants' motion to dismiss is GRANTED in part and DENIED in part.


         The relevant facts, taken from the Complaint and assumed to be true for purposes of this motion, can be stated briefly. See, e.g., Gonzalez v. Hasty, 651 F.3d 318, 321 (2d Cir. 2011). Downey, now fifty-two years old, has worked as a sales professional in the advertising technology industry since 1996. (Docket No. 26 (“Sec. Compl.”) ¶¶ 11-12, 26). In July 2015, executives from Adloox France (who, at some point, became executives of Adloox U.S. as well) traveled from Paris, France, to New York City to interview Downey for the position of Vice President of Sales North America. (Id. ¶¶ 16, 21, 27). At the time, Adloox France had no subsidiaries or representatives in the United States, but it was looking to establish a presence. (Id. ¶¶ 16, 21). As part of the hiring process, Adloox France asked Downey to prepare a presentation on how the company could enter the United States market and achieve a certain level of sales. (Id. ¶ 27). On July 29, 2015, Downey received a preliminary offer of employment. (Id. ¶ 28). As a condition of employment, however, Adloox executives advised Downey that he would first need to free himself from a non-compete agreement with his former employer. (Id. ¶¶ 29-30). Downey brought suit in New York State Supreme Court against his former employer, which resulted in the non-compete restrictions being declared unlawful. (Id. ¶ 31). He expended $40, 000 of his own money in doing so. (Id.).

         Once the non-compete issue was resolved, Downey began working for Adloox U.S. pursuant to an executed employment agreement. (Id. ¶ 32). Starting on September 7, 2015, he spent a few days training in Adloox's London office and then returned to the Adloox U.S. office in New York City, where his work included networking with industry contacts, selling Adloox services to potential customers, and interviewing potential sales associates for the New York office. (Id. ¶¶ 32-33). Downey reported directly to supervisors from Adloox France, as he was the sole Adloox U.S. employee at the time and Adloox U.S. and Adloox France were both managed by the same people acting as Chief Executive Officer, Chief Financial Officer, and Chief Operating Officer. (Id. ¶¶ 22-23). In late October 2015, Downey spent time preparing the company for a major marketing exhibition in New York. (Id. ¶ 38). On October 29, 2015, Downey turned over his list of business contacts at the request of the CEO (id. ¶ 39); the next day, Downey was fired via an email sent from the CFO in Paris. (Id. ¶ 40).

         Downey alleges that, during the course of his employment, his supervisors repeatedly referred to him as the “old timer.” (Id. ¶ 34). Additionally, while Downey was interviewing potential sales staff for Adloox U.S., company executives sent emails indicating a desire to employ only “young sharks” and instructing the company's recruiter to “target candidates aged ideally around 30 (35 big max).” (Id. ¶¶ 35-36). At one point, Downey recommended a candidate over the age of thirty-five, but an Adloox executive responded: “Too old/senior. We're looking for young sharks.” (Id. ¶ 37). After Downey was terminated, his position was filled by a thirty-one year old. (Id. ¶ 42). On March 4, 2016, Downey filed the instant action. (Docket No. 1).


         To survive a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, “a plaintiff asserting an employment discrimination complaint under the ADEA must plausibly allege that adverse action was taken against her by her employer, and that her age was the ‘but-for' cause of the adverse action.” Marcus v. Leviton Mfg. Co., Inc., 661 F. App'x 29, 31-32 (2d Cir. 2016) (summary order) (citing Vega v. Hempstead Union Free Sch. Dist., 801 F.3d 72, 87 (2d Cir. 2015)). The plaintiff need not prove discrimination, or even allege facts establishing every element of a prima facie case of discrimination, but he “must plead facts that give ‘plausible support to a minimal inference' of the requisite discriminatory causality.” Id. at 32 (quoting Littlejohn v. City of New York, 795 F.3d 297, 310-11 (2d Cir. 2015)). More specifically, the plaintiff “must supply sufficient factual material, and not just legal conclusions, to push the misconduct alleged in the pleading beyond the realm of the ‘conceivable' to the ‘plausible.'” Id. (citing Vega, 801 F.3d at 84).[2]


         As noted, Downey alleges age discrimination under the ADEA, NYSHRL, and NYCHRL as well as state law claims for fraudulent inducement and unjust enrichment. The Court will address the ADEA claim first, then turn to the remaining claims.

         A. The ADEA Claim

         Wisely, Defendants do not dispute that the allegations in the Complaint are sufficient to raise an inference of age discrimination. Given, among other things, evidence that supervisors repeatedly called Downey the “old timer, ” that executives explicitly advocated for hiring “young sharks” and rejected at least one candidate as “[t]oo old/senior, ” and that Adloox U.S. replaced Downey with a thirty-one year old, the allegations are plainly sufficient to give “‘plausible support to a minimal inference' of the requisite discriminatory causality.” Marcus, 661 F. App'x at 32 (quoting Littlejohn, 795 F.3d at 310-11). Instead, Defendants make two arguments for dismissal of Downey's ADEA claim. First, they contend that Downey's claim is barred - at least with respect to Adloox France - by Section 623(h)(2) of the Act, which provides that the statute “shall not apply where the employer is a foreign person not controlled by an American employer.” 29 U.S.C. § 623(h)(2); see also Id. § 630(a) (defining “person” to include “corporations” and similar entities). (Docket No. 28 (“Defs.' Mem.”), at 10-11; Docket No. 36 (“Defs.' Reply”), at 6-8). Second, they assert that Adloox U.S. is not an “employer” under the ADEA because it did not have “twenty or more employees” for each working day in each of twenty or more calendar weeks in the preceding or current calendar year.” 29 U.S.C. § 630(b). (Defs.' Mem. 6-10; Defs.' Reply 1-6). The Court will address each argument in turn.

         Defendants' argument that Downey's ADEA claim is barred - at least with respect to Adloox France - by Section 623(h)(2) is not without force given the plain language of the statute and Downey's own allegation that Adloox France “completely controls the business of” Adloox U.S., his direct employer. (Am. Compl. ¶ 19). The problem with the argument, however, is that it runs contrary to binding Second Circuit precedent. See Morelli v. Cedel, 141 F.3d. 39 (2d Cir. 1998). In Morelli, the plaintiff brought an ADEA claim against a Luxembourg bank, which had hired her to work in its New York branch office. See Id. at 41. The Court acknowledged that “an absolutely literal reading of § [623(h)(2)] might suggest that the ADEA . . . does not apply to the domestic operations of foreign employers - unless there is an American employer behind the scenes.” Id. at 42. “But, ” the Court continued, “the plain language of § [623(h)(2)] is not necessarily decisive if it is inconsistent with Congress' clearly expressed legislative purpose.” Id. Based on a review of the legislative “context” in which the statute was added, the Court concluded that “Congress's purpose was not to exempt the domestic workplaces of foreign employers from the ADEA's prohibition of age discrimination. Instead, the purpose of adding this exclusion was to limit the reach of an extraterritorial amendment adopted as part of the same legislation.” Id.[3]

         As the Court explained, Section 623(h)(2) was not part of the original ADEA. Id. Instead, it was added in 1984 in response to several court of appeals decisions holding that “the ADEA did not apply to ‘Americans employed outside the United States by American employers.'” Id. (quoting Cleary v. United States Lines, Inc., 728 F.2d 607, 610 (3d Cir. 1984)). The 1984 amendments expanded the ADEA's definition of “employee” to include “‘any individual who is a citizen of the United States employed by an employer in a workplace in a foreign country.'” Id. (quoting Pub. L. No. 98-459, § 802(a) (1984)). That revision, the Court explained, “was intended ‘to assure that the provisions of the ADEA would be applicable to any citizen of the United States who is employed by an American employer in a workplace outside the United States.'” Id. at 42-43 (quoting S. Rep. 98-467 (“S. Rep.”), at 27 (1984), reprinted in 1984 U.S.C.C.A.N. 2974, 3000). “The other 1984 amendments, ” including the addition of Section 623(h)(2), “conform the ADEA's reach to ‘the well-established principle of sovereignty, that no nation has the right to impose its labor standards on another country.'” Id. at 43 (quoting S. Rep. at 27). “Thus, ” the Court concluded, Section 623(h)(2) “of the ADEA merely limits the scope of the amended definition of employee, ...

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