Alvarado Morales v. Digital Equipment Corp.

• Citation: 669 F. Supp. 1173
• Decision Date: 20 February 1987
• Docket Number: Civ. No. 86-0464(PG).
• Parties: Abraham ALVARADO MORALES, et al., Plaintiffs, v. DIGITAL EQUIPMENT CORP., et al., Defendants.
• Court: U.S. District Court — District of Puerto Rico

669 F. Supp. 1173

Abraham ALVARADO MORALES, et al., Plaintiffs, v. DIGITAL EQUIPMENT CORP., et al., Defendants.

Civ. No. 86-0464(PG).

United States District Court, D. Puerto Rico.

February 20, 1987.

COPYRIGHT MATERIAL OMITTED

Jesús Hernández-Sánchez, Santurce, P.R., for plaintiffs.

Vicente J. Antonetti, Santurce, P.R., Ronald M. Green, Philip M. Berkowitz and Susan Romero, Epstein, Becker, Borsody & Green, New York City, for defendants.

OPINION AND ORDER

PEREZ-GIMENEZ, Chief Judge.

This matter is before the Court on defendants' motion for summary judgment to strike scandalous pleadings and to impose sanctions against plaintiffs' counsel. For the reasons stated below, we grant the defendants' motion in all respects.

I THE COMPLAINT

Plaintiffs, former employees of non-party Digital Equipment Corporation of Puerto Rico (Digital Puerto Rico), brought this putative class action against Digital Puerto Rico's parent corporation, Digital Equipment Corporation (Digital Corp.); and Ed Schwartz, Ilene Jacobs and George F. Doriot, as individuals and in their capacities as Digital Corp. officers.

Plaintiffs alleged in their first amended complaint, filed on June 19, 1986, that they were long-time employees of the defendants who had significantly contributed to Digital Corp.'s profits. Id. s 4. Plaintiffs alleged that despite their contributions, by continuing their paid employee status and not terminating their employment the defendants "tortured" and "brainwashed" plaintiffs with "concentration camp" tactics "which reminds us, american sic citizens of the brainwashed sic techniques used by Chinese communists in Korea and the North Vietnamese in Vietnam ..." Id. s 14(c).

Plaintiffs alleged that they and approximately 200 employees of Digital Puerto Rico's San Germán facility and approximately 80 employees of its Aguadilla facility were "targeted for dismissal" and forced to work "in a room which is about 1,200 square feet,"¹ which plaintiffs called a "concentration camp." First Amended Complaint s 14(a). They alleged that these employees were subject to continual harassment in the form of pressure to resign, pressure to forgo unemployment compensation, given no work to perform (while being paid), and kept separated from other employees. Id. s 14(b). Plaintiff contended that these acts resulted in a variety of disorders, both physical and emotional.

Plaintiffs alleged that the defendants were intentionally seeking to deprive plaintiffs of rights to severance pay under Puerto Rico law, and that the defendants refused to permit plaintiffs to meet with Puerto Rico Department of Labor representatives, in violation of plaintiffs' constitutional rights. Id. s 15. Each plaintiff and each employee similarly situated in the San Germán and Aguadilla plants within the "Transition Group" requested $100,000 in compensatory damages and $100,000 in punitive damages, id. s 15, for a total of $200,000,000 in damages. Id. s 17. Plaintiffs fail to indicate in their pleadings the method they used to calculate these damages.

II THE VOLUNTARY INCENTIVE RESIGNATION PLAN

In or about February 1986 Digital Puerto Rico offered certain of its employees in its Aguadilla and San Germán facilities a voluntary incentive resignation (VIR) plan in an effort to combat short-and-long-term work-force imbalances caused by technological changes, fluctuations in the quantity of work, and a need to become more competitive. See, Morales Deposition at 34-35. Under this plan, employees whose jobs were affected were provided with career counseling and training and permitted to look for jobs, during working hours, while being paid. Id. at 38. These employees reported to a "transition area" where they were provided with resources to seek alternative employment, counseling and training. Id. at 36-38.

Digital Puerto Rico offered affected employees a separation allowance designed to ease the transition between the end of their employment with Digital Puerto Rico and the beginning of their next position. Id. at 26-28. The amount of the payment was based on a formula of 4 weeks' pay for each full year of service completed as of the date the individual terminated employment, to a maximum of 15 years' service (or 60 weeks of allowance). See, Morales Dep. at 27. In addition, each affected employee received 13 weeks' pay, over and above the amount provided by the formula. Finally, each employee who accepted the terms of the VIR plan received 6 months of extended medical and dental coverage from the date of resignation.

The employees were given 4 months, until May 30, 1986, to decide whether they would accept these benefits. Id. at 26-28, 48-50. However, they were never told that their employment would be terminated if they declined the benefits; indeed, Mr. Morales testified that he understood that he could continue to report to the transition area, while being paid, until such time as he found alternative employment. Id.

III THE DEFENDANTS' MOTION

In lieu of answering the amended complaint, pursuant to Rules 12(b) and 56 of the Federal Rules of Civil Procedure, the defendants timely filed the instant motion for summary judgment.² In support of their motion, the defendants submitted a statement pursuant to Local Rule 311.12 setting forth material facts as to which they contend there are no genuine issues to be tried. The defendants also submitted the sworn affidavits of individual defendants Schwartz, Jacobs and Doriot, Mr. Sam Landol, Digital Puerto Rico's President, and of Digital Corp.'s attorney, Vicente J. Antonetti.³

The defendants' affidavits establish that the sole employer of the named plaintiffs is non-party Digital Puerto Rico. See, Affidavit of Edward A. Schwartz, s 7 (June 13, 1986) (hereinafter Schwartz Aff.); Affidavit of Ilene B. Jacobs, s 7 (June 13, 1986) (hereinafter Jacobs Aff.). (Indeed, plaintiffs' counsel conceded at oral argument, held on December 12, 1986, that he sued Digital Corp. in an effort to obtain diversity jurisdiction and hence a jury trial in federal court.) See also, Affidavit of Vicente J. Antonetti, ss 3, 4, 5 (June 13, 1986) (hereinafter Antonetti Aff.).

The defendant Digital Corp., a corporation organized and existing under the laws of Massachusetts, is not licensed to, nor does it, do business in Puerto Rico. Digital Puerto Rico, a wholly owned subsidiary of Digital Corp., is incorporated in Delaware and licensed to conduct business in Puerto Rico. See, Schwartz Aff. s 3; Jacobs Aff. s 3; Antonetti Aff. s 2. Each of the individual defendants is a resident and citizen of the Commonwealth of Massachusetts, and none has been served with the complaint or amended complaint in this matter. Schwartz Aff. ss 1, 2.

The affidavits submitted by defendants in support of their motion depict a genuine, conventional parent-subsidiary relationship between Digital Corp. and Digital Puerto Rico. Digital Puerto Rico formulates and implements its own personnel policies and advertising without Digital Corp.'s involvement. The two companies have separate corporate structures, facilities, work forces, business records, bank accounts, tax returns, financial statements, budgets, and corporate reports. They have separate and distinct Boards of Directors. Schwartz Aff. s 5; Jacobs Aff. s 4. None of the members of the Digital Corp. Board of Directors are residents of Puerto Rico, nor has any Digital Corp. board member had any personal involvement in the implementation of Digital Puerto Rico's personnel policies and procedures or with any of the factual issues forming the basis for the allegations of the amended complaint. Schwartz Aff. ss 1, 2.

Digital Puerto Rico contracts in its own name, funds its own pension plan, administers and funds its own benefit program for its employees, and has its own budget. Significantly, Digital Corp. and Digital Puerto Rico each establishes its own separate labor relations and personnel policies. No member of the Digital Corp. Board of Directors, moreover, has had any involvement whatsoever with the factual issues raised in the amended complaint. See, Schwartz Aff. ss 6, 7; Jacobs Aff. ss 5, 6; Antonetti Aff. s 2.

IV THE PLAINTIFFS' RESPONSE TO DEFENDANTS' SUMMARY JUDGMENT MOTION

In response to the defendants' sworn affidavits and Local Rule 311.12 statement, the plaintiffs submitted "sworn statements" of former Digital Puerto Rico employees Pedro E. Almodóvar Nazario, Angel Luis Quinones, and named plaintiff Abraham Alvarado Morales.⁴ See, Sworn Statement of Pedro E. Almodóvar Nazario (November 21, 1986) (hereinafter Nazario Statement); Sworn Statement of Angel Luis Quinones (November 16, 1986) (hereinafter (Quinones Statement); Sworn Statement of Abraham Alvarado Morales) (November 21, 1986) (hereinafter Morales Statement).

A. Plaintiffs' Affidavits Must Establish Material Issues of Fact and Must be Based on Personal Knowledge

To defeat a summary judgment motion, the affidavits of the opposing party may not present merely issues of fact, but must establish issues of "material fact." See, Fed.R.Civ.P. 56(e); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Berrigan v. Greyhound Lines, Inc., 782 F.2d 295, 300 (1st Cir.1986); Berkson v. Del Monte Corp., 743 F.2d 53, 55 n. 2 (1st Cir.1984), cert. denied, 470 U.S. 1056, 105 S.Ct. 1765, 84 L.Ed.2d 826 (1985); Hahn v. Sargent, 523 F.2d 461, 464 (1st Cir.1975), cert. denied, 425 U.S. 904, 96 S.Ct. 1495, 47 L.Ed.2d 754 (1976). Facts are material if they constitute a legal defense or if their existence or non-existence might affect the result of the action, or if the resolution of the issues they raise is so essential that the party against whom it is decided cannot prevail. 10A C. Wright, A. Miller & M. Kane, Federal Practice & Procedure: Civil § 2725 (1983 & Supp.1986). See, Hahn, 523 F.2d at 464; Hanover Ins. Co. v. Liberian Oceanway Corp., 398 F.Supp. 104, 109 (D.P.R.1975).

In opposing a summary judgment motion, ...