Brown v. Daikin Am. Inc.

• Decision Date: 27 June 2014
• Docket Number: Docket No. 12–2955–cv.
• Citation: 756 F.3d 219
• Parties: Todd BROWN, Plaintiff–Appellant, v. DAIKIN AMERICA INC., Daikin Industries Ltd., Defendants–Appellees.
• Court: U.S. Court of Appeals — Second Circuit

756 F.3d 219

Todd BROWN, Plaintiff–Appellant,

v.DAIKIN AMERICA INC., Daikin Industries Ltd., Defendants–Appellees.

Docket No. 12–2955–cv.

United States Court of Appeals, Second Circuit.

Argued: March 5, 2013.

Decided: June 27, 2014.

Philip P. Kalodner, Esq., Gladwyne, PA, for Plaintiff–Appellant.

Jerome P. Coleman (Adriana S. Kosovych, on the brief), Putney, Twombly, Hall & Hirson LLP, New York, NY, for Defendants–Appellees.

Before: LYNCH, LOHIER, and CARNEY, Circuit Judges.

SUSAN L. CARNEY, Circuit Judge:

This case involves claims of race and national origin discrimination arising from the termination of an individual's employment with the New York-based wholly-owned subsidiary of a Japanese corporation. The District Court dismissed the actions against the corporate parent and subsidiary for failure to state a claim. We conclude that, under the standards articulated in Cook v. Arrowsmith Shelburne, Inc., 69 F.3d 1235 (2d Cir.1995), the plaintiff, Todd Brown, sufficiently alleged that the corporate parent was part of a “single integrated enterprise” with its American subsidiary to be properly named as a co-defendant in a discriminatory discharge suit under Title VII and the New York State Human Rights Law. We also conclude that Brown plausibly alleged a claim of race or national origin discrimination against both the corporate parent and the subsidiary. On these counts, we VACATE the judgment of the District Court and REMAND for further proceedings consistent with this decision.

We agree with the District Court, however, that Brown's claim for breach of contract does not survive defendants' motions to dismiss because he failed to allege that either defendant maintained a written policy of terminating employees only for cause. Accordingly, we AFFIRM the judgment of the District Court dismissing Brown's contract claim.

BACKGROUND

We recite the facts as alleged in Brown's Complaint and Amended Complaint, noting any relevant differences.¹ We accept these facts as true for purposes of reviewing the District Court's grant of defendants' motions to dismiss. See Gatt Commc'ns, Inc. v. PMC Assocs. L.L.C., 711 F.3d 68, 74 (2d Cir.2013).

Brown—who is white and of United States national origin—is a former employee of Daikin America, Inc. (“Daikin America”), a Delaware corporation that is headquartered in Rockland County, New York, and engaged in the manufacture and sale of chemical products. Daikin America is a wholly-owned subsidiary of Daikin Industries Ltd. (“DIL”), a Japanese corporation based in Osaka, Japan. ² Brown worked in Daikin America's New Business Development Group (“the Group”) from approximately 2001 until 2009, when he was discharged as part of a company-wide reduction in force. During his time at Daikin America, Brown's performance reviews were consistently positive. Brown is fluent in Japanese and familiar with Japanese business culture. Before beginning work at Daikin America, he worked for a Japanese company for six years, during which he spent two years living and working in Japan.

In February 2009, when Brown's employment with Daikin America ended, the Group consisted of six employees, three of whom were white Americans, and three of whom were Japanese citizens of Japanese national origin. Each of the Japanese employees in the Group previously worked for DIL in Japan, but was assigned to Daikin America “to act as [Daikin America's] employee[ ]” while in the United States. Complaint (“Compl.”) ¶¶ 8, 21. Such inter-company “rotational” assignments lasted a period of years.³ As a result of the 2009 workforce reduction, the employment of Brown and one other white American in the Group was terminated. The remaining white American employee was transferred out of the Group, leaving three Japanese citizens employed in the Group.⁴ During the same reduction effort, Daikin America also terminated employees in three other business groups. In total, seven American employees (six of whom were white and one of whom was black) lost their jobs in the workforce reduction, but no Japanese employees were terminated.

Brown alleges that, for discriminatory reasons, Daikin America did not consider terminating any of the Japanese rotational employees or any employees of Japanese national origin who had been hired directly by Daikin America. ⁵ Brown further alleges that DIL and Daikin America maintained a policy of terminating employees only for cause, and that he accepted and remained at his job at Daikin America in part because of this policy.

After exhausting his administrative remedies with the Equal Employment Opportunity Commission, Brown filed a complaint against DIL and Daikin America in June 2010. In it, Brown contended that DIL and Daikin America violated Title VII of the Civil Rights Act of 1964 (“Title VII”), 42 U.S.C. § 2000e, et seq., and the New York State Human Rights Law (“NYSHRL”), N.Y. Exec. Law § 290, et seq., by discriminating against him on the basis of his race or national origin. In particular, he alleged that defendants terminated his employment without considering similar action against Japanese employees. He also alleged, in a separate count, that defendants violated an implied term of his employment contract—that he would be terminated only for cause.

Daikin America filed an answer to Brown's Complaint and DIL moved to dismiss under Federal Rule of Civil Procedure 12(b)(6). The District Court granted DIL's motion to dismiss, reasoning that DIL was not part of a “single integrated enterprise” with Daikin America for purposes of determining what entity or entities were Brown's “employer” under Title VII and the NYSHRL. The District Court ruled further that Brown did not plausibly allege that DIL had any input into the decision to terminate his employment. Brown v. Daikin Am., Inc., No. 10 Civ. 4688(CS), 2011 WL 10842873, at *5–8 (S.D.N.Y. Aug. 19, 2011). The court observed that even if DIL had some control over the decision to terminate, the Complaint's allegations supported only “the mere possibility of misconduct” by DIL, rather than stating a plausible claim of discrimination: the preferential treatment of Japanese employees was just as likely to have been based on their rotational status as their national origin. Id. at *10 (internal quotation marks omitted). Finally, the District Court dismissed Brown's breach of contract claim because the Complaint did not allege that DIL had violated a written policy limiting its right to discharge its employees. Id.

With the District Court's leave, Brown filed an Amended Complaint naming Daikin America as the sole defendant. The Amended Complaint remained in all but one material respect the same as the original Complaint: its factual narrative omitted any reference to the rotational status of the Japanese employees.

Daikin America moved to dismiss the Amended Complaint, and the District Court granted the motion in a bench opinion issued on June 22, 2012. Disapproving as “manipulative” Brown's omission from the Amended Complaint of his earlier allegations about the employee rotational program, the District Court chose to include those allegations in its analysis of the Amended Complaint for purposes of deciding the motion to dismiss. In light of these allegations, the District Court ruled that Brown had not plausibly alleged that his discharge occurred under circumstances giving rise to an inference of discrimination. The court explained that Brown was not similarly situated to the Japanese employees assigned to work at Daikin America because, unlike those colleagues, he was not a rotational employee. Because Brown had failed to allege that he was treated differently than Japanese employees who were similarly situated, he had failed to state claims cognizable under Title VII and the NYSHRL. The District Court dismissed Brown's breach of contract claim against Daikin America for the same reasons that it gave in support of its earlier dismissal of the parallel claim against DIL.

Brown now timely appeals from the judgment entered after dismissal with prejudice of both complaints.⁶

DISCUSSION

We review de novo the grant of a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. Patane v. Clark, 508 F.3d 106, 111 (2d Cir.2007). A complaint must be dismissed if it does not plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice,” id., and we “are not bound to accept as true a legal conclusion couched as a factual allegation,” Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (internal quotation marks omitted).

I. Title VII and NYSHRL Claims

Title VII makes it unlawful for an employer “to discharge any individual, or otherwiseto discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race ... or national origin.” 42 U.S.C. § 2000e–2(a)(1). The NYSHRL mirrors these federal obligations.⁷

Brown's claims against DIL turn at the threshold, however, on whether DIL may be held liable as an “employer” under the relevant provisions of Title VII and the NYSHRL. Accordingly, we turn first to this question, which we answer in the affirmative. We then address whether, in the Complaint and Amended Complaint considered together, Brown has stated a plausible claim of discrimination against DIL and Daikin America.

A. DIL's liability as Brown's “employer”

“[T]he existence of an employer-employee relationship is a primary...