Dugan v. Bell Telephone of Pennsylvania

• Decision Date: 27 September 1994
• Docket Number: Civ. A. No. 94-73.
• Citation: 876 F. Supp. 713
• Parties: Lawrence D. DUGAN and Kimberly L. Dugan, his wife, Plaintiffs, v. BELL TELEPHONE OF PENNSYLVANIA, a corporation; Bell Atlantic, a corporation; and Frank Hoffman, individually and as agent for Bell Atlantic, Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

876 F. Supp. 713

Lawrence D. DUGAN and Kimberly L. Dugan, his wife, Plaintiffs, v. BELL TELEPHONE OF PENNSYLVANIA, a corporation; Bell Atlantic, a corporation; and Frank Hoffman, individually and as agent for Bell Atlantic, Defendants.

Civ. A. No. 94-73.

United States District Court, W.D. Pennsylvania.

September 27, 1994.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Helen R. Kotler, Pittsburgh, PA, for Lawrence D. Dugan, Kimberly L. Dugan.

Martha Hartle Munsch, Mark S. Melodia, William C. Nowak, Reed, Smith, Shaw & McClay, Pittsburgh, PA, for Bell Telephone of Pennsylvania, Bell Atlantic.

Martha Hartle Munsch, William C. Nowak, Reed, Smith, Shaw & McClay, for Frank Hoffman.

MEMORANDUM OPINION

BLOCH, District Judge.

Presently before the Court is defendants' Rule 12(b) motion to dismiss plaintiffs' amended complaint. For the reasons set forth below, the Court will grant defendants' motion in part and deny it in part.

I. Background

Plaintiffs, Lawrence Dugan (Dugan) and his wife, filed an amended seven-count complaint on March 17, 1994, asserting the following claims: (1) Dugan against Bell Atlantic Corporation (Bell Atlantic), Bell Telephone Company of Pennsylvania (Bell of PA), and Frank Hoffman (Hoffman), a Bell Atlantic employee, for violations of the Racketeer Influenced and Corrupt Organizations Act (RICO); (2) Dugan against Bell Atlantic for violations of the Age Discrimination in Employment Act (ADEA) and the Pennsylvania Human Relations Act; (3) Dugan against Bell Atlantic and Hoffman for "negligence and/or intentional infliction of emotional distress;" (4) Dugan against Bell Atlantic and Hoffman for wrongful discharge; (5) Dugan against Bell Atlantic for breach of contract; (6) Dugan against Bell Atlantic for misrepresentation; and (7) Dugan's wife against Bell Atlantic and Bell of PA for loss of consortium.

The relevant facts alleged in plaintiffs' complaint are as follows. In 1971, Dugan obtained employment with Bell of PA and in 1980, he was promoted to a management position with Bell Atlantic, Bell of PA's parent corporation. Dugan performed successfully and obtained the position of supervisor at a record storage facility located in Greentree, Pennsylvania (the Greentree facility). Hoffman, a vice president with Bell Atlantic, headed the department for which Dugan worked. (Amended complaint, at ¶¶ 11-14).

1. Fraud at Bell of PA and the alleged cover-up

In 1986, Bell of PA began an internal investigation into alleged theft and fraud at one of its divisions. Bell of PA took no action regarding the matter, however, and in 1987, the Pennsylvania Public Utilities Commission (PUC) began to investigate Bell of PA.¹ The PUC began its inquiry after receiving complaints from an anonymous employee that Bell of PA's investigation had been prematurely terminated due to improper management influence. (Amended complaint, at ¶¶ 15-17).

PUC's investigation of Bell of PA created a public controversy that resulted in additional investigation by the Pennsylvania State Legislature. Early in 1989, the State Senate's Consumer Protection and Professional Licensure Committee (the State Senate Committee) began to inquire into allegations that Bell of PA and Bell Atlantic were retaliating against employees who were cooperating with PUC's investigation. (Amended complaint, at ¶¶ 41, 43).

The complaint alleges that in response to PUC's and the Senate Committee's investigations, Bell of PA, Bell Atlantic, and Hoffman (defendants) entered into an agreement to cover up waste and theft at Bell of PA and to retaliate against employees who refused to cooperate with their scheme. (Amended complaint, at ¶¶ 142-49). Defendants' actions were allegedly motivated by their desire to protect Bell Atlantic and Bell of PA from increased regulation and from negative publicity which could injure the companies' financial positions. (Amended complaint, at ¶ 150).

As part of the fraudulent scheme, between approximately June, 1987 and April, 1989, defendants allegedly provided to PUC, to the Senate Committee, and to company employees false information by way of sworn affidavits, letters, and telephone calls. The false information included statements that (1) denied that theft and fraud was occurring at Bell of PA, (2) denied Bell of PA's internal investigation had been prematurely terminated, and (3) misrepresented defendants' intentions to retaliate against employees who cooperated with PUC and the Senate Committee's investigations. (Amended complaint, at ¶ 144). In addition, defendants caused Bell of PA security personnel to use unlawful telephone taps and to pull toll records in order to identify employees who were divulging information so that "steps could be taken" to prevent their actions. (Amended complaint, at ¶¶ 20-31, 146(a)). In order to provide the appearance that defendants were seriously investigating fraud at Bell of PA, Hoffman was appointed to a new position called "inspector general" and was given responsibility for all fraud investigations at Bell of PA. (Amended complaint, at ¶¶ 27, 55, 151).

2. Dugan's involvement

In approximately, February, 1989, the Senate Committee subpoenaed Bell of PA's chief executive officer to turn over certain employee toll records to determine whether Bell of PA management had attempted to review them. (Amended complaint, at ¶¶ 43-44, 49). The records were stored at the Greentree facility that Dugan supervised. (Amended complaint, at ¶¶ 50-52). In order to prevent the disclosure of these documents, defendants allegedly conspired to destroy them. (Amended complaint, at ¶¶ 48, 70, 144(e), 146(a)). When defendant Hoffman ordered Dugan to release the records to unauthorized personnel, however, Dugan refused to cooperate.² The complaint asserts that because Dugan failed to participate in the destruction of the records, his job was targeted for termination. (Amended complaint, at ¶ 152).

3. Retaliation against Dugan

The complaint alleges that in March, 1990, after the public controversy surrounding the investigations of Bell of PA subsided, defendants began to investigate when the lease on the Greentree facility expired. (Amended complaint, at ¶ 81). In July, 1990, Dugan was told that the Greentree facility would be closed within a year. Various individuals allegedly promised him, however, that he would be placed in another position within Bell Atlantic. (Amended complaint, at ¶¶ 82-85, 178-80).

After the Greentree facility closed, Bell Atlantic allegedly refused to place Dugan in another permanent position. For three years, Dugan received temporary assignments while younger, less experienced employees were placed in permanent job openings that Dugan could have performed. (Amended complaint, at ¶¶ 89, 158-63). In doing so, Bell Atlantic allegedly discriminated against Dugan because of his age. (Amended complaint, at ¶ 154). Dugan questioned Bell Atlantic's human resources department about the unexplained difficulty in relocating him but received no satisfactory response. Dugan eventually filed a charge of age discrimination with the Pennsylvania Human Relations Commission and with the Equal Employment Opportunity Commission in January of 1993. (Amended complaint, at ¶¶ 96, 156-57).

Bell Atlantic ultimately discharged Dugan on January 14, 1993. (Amended complaint, at ¶ 131). At that time, Dugan was 47 years old. (Amended complaint, at ¶ 11).

II. Discussion

In ruling on a motion to dismiss under Fed.R.Civ.P. 12(b)(6), the Court must accept as true all allegations in the complaint. Further, a court must draw all reasonable inferences therefrom and view them in the light most favorable to the plaintiff. Rocks v. City of Philadelphia, 868 F.2d 644, 654 (3d Cir.1989). The question before the Court is not whether the plaintiffs will ultimately prevail; rather, the question is whether the plaintiffs can prove any set of facts in support of their claim that will entitle them to relief. Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232, 81 L.Ed.2d 59 (1984).

A. Dugan's RICO claims against defendants

The liberal standard which applies to Rule 12(b)(6) motions to dismiss non-RICO claims also applies to RICO claims. Rose v. Bartle, 871 F.2d 331, 355-56 (3d Cir.1989). Further, RICO's legislative history indicates that courts should construe the statute to effectuate its remedial purposes. Gardner v. Authorized Distribution Network, Inc., No. 91-5335, 1992 WL 245873, at *3 (E.D.Pa. Sept. 21, 1992) (citing Pub.L. 91-452, § 904(a), 84 Stat. 947).

1. RICO: in general

RICO authorizes civil suits by "any person injured in his business or property by reason of a violation of 18 U.S.C. § 1962." See 18 U.S.C. § 1964; Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1411 (3d Cir.), cert. denied, 501 U.S. 1222, 111 S.Ct. 2839, 115 L.Ed.2d 1007 (1991). Section 1962 contains four separate subsections, prohibiting the following activities: (1) investing income derived from a pattern of racketeering activity in the operation of an enterprise that engages in interstate commerce (§ 1962(a)), (2) acquiring or maintaining, through a pattern of racketeering activity, any interest or control over such an enterprise (§ 1962(b)), (3) conducting the affairs of an enterprise through a pattern of racketeering activity (§ 1962(c)), and (4) conspiring to violate any subsection described above (§ 1962(d)). 18 U.S.C. § 1962; Kehr Packages, 926 F.2d at 1411.

In the instant case, Dugan has alleged violations of §§ 1962(b), (c), and (d). Defendants have raised a number of alternative grounds for dismissal of all of Dugan's RICO claims. For the following reasons, the Court finds certain of defendants' arguments³ persuasive, and will dismiss Count I of the amended complaint in its entirety.

2. § 1962(b) claim

Section 1962(b) makes it unlawful:

for any person through a pattern of racketeering activity or through collection of an unlawful debt to acquire or maintain, directly or indirectly,

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