Goyette v. DCA Advertising Inc., No. 91 Civ. 3518 (KC)

• Decision Date: 06 August 1993
• Docket Number: No. 91 Civ. 3518 (KC),92 Civ. 1425 (KC).
• Parties: Russell GOYETTE, Bernice Rice Gerstein, Irving Benig, Judith Teller, and Robert Ross, Plaintiffs, v. DCA ADVERTISING INC. and Dentsu Inc., Defendants. Julius FILICIA, Plaintiff, v. DCA ADVERTISING INC. and Dentsu Inc., Defendants.
• Court: U.S. Court of Appeals — Fifth Circuit

830 F. Supp. 737

Russell GOYETTE, Bernice Rice Gerstein, Irving Benig, Judith Teller, and Robert Ross, Plaintiffs, v. DCA ADVERTISING INC. and Dentsu Inc., Defendants.

Julius FILICIA, Plaintiff, v. DCA ADVERTISING INC. and Dentsu Inc., Defendants.

Nos. 91 Civ. 3518 (KC), 92 Civ. 1425 (KC).

United States District Court, S.D. New York.

August 6, 1993.

COPYRIGHT MATERIAL OMITTED

OPINION AND ORDER

CONBOY, District Judge:

Russell Goyette, Bernice Rice Gerstein, Irving Benig, Judith Teller, Robert Ross, and Julius Filicia (collectively "plaintiffs") are all former employees of DCA Advertising Inc. ("DCA"), a wholly owned subsidiary of Dentsu, Inc. ("Dentsu") (collectively "defendants").¹ The plaintiffs claim that defendants fired them on the basis of national origin, i.e., because plaintiffs are American, and thus violated Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. ("Title VII"), and the New York Human Rights Law, N.Y. Exec.Law § 290 et seq. ("Human Rights Law").

Dentsu has moved to dismiss the complaint against it pursuant to Rules 12(b)(2) and 12(b)(6) of the Federal Rules of Civil Procedure ("Fed.R.Civ.P.") asserting that (1) this Court lacks personal jurisdiction over Dentsu under N.Y.Civ.Prac.L. & R. §§ 301, 302; (2) Dentsu is not plaintiffs' direct employer within the meaning of Title VII; (3) Dentsu does not employ fifteen people within the meaning of Title VII; (4) Dentsu is not engaged in an industry affecting commerce within the meaning of Title VII; (5) Dentsu is not an "employer" within the meaning of the Human Rights Law; (6) Plaintiffs' omission of Dentsu in the original EEOC complaint precludes Dentsu from being a defendant in this action; and (7) that Dentsu is entitled to prefer to employ in executive positions persons of Japanese national origin over Americans under Article VIII(1) of the Treaty of Friendship, Commerce, and Navigation between the United States and Japan ("FCN Treaty"). For the reasons stated below, we transform this motion into one for summary judgment and grant the motion for summary judgment in part and deny it in part.

Background

Dentsu, a Japanese corporation, is the world's largest advertising and communications company.² Its headquarters and principal place of business are located in Tokyo, Japan. Dentsu maintains no office, place of business, or bank accounts in the United States. It also does not lease or own any real property in the United States.

DCA is Dentsu's wholly owned subsidiary and is incorporated in New York State. DCA, whose headquarters and principal place of business are also in New York, maintains separate payrolls, telephone numbers, offices, bank accounts, lines of credit, and accounting records from Dentsu. Dentsu has made no loans to DCA but has supplied it with at least $8 million in capital. Dentsu is, however, represented in DCA by a group of ten expatriate executives who work at DCA in the United States, but are natives and citizens of Japan. In some business contexts, these employees refer to themselves as "Dentsu employees," and Dentsu regulates many of the terms of their employment, including their compensation and when they may be fired. Expatriates comprise 7% of the DCA workforce, occupying three of the senior executive positions at DCA, including the two top offices of President and Executive Vice President/General Manager.

Dentsu approval is required for any major decision made by DCA and Dentsu approval is also needed in connection with the firing of any expatriate employee. Dentsu does not, however, have any control over the employment of non-expatriate employees. In addition, Dentsu assisted DCA with several "pitches" for accounts that were important to both firms. DCA's main clientele consists of American subsidiaries of Dentsu's Japanese clients. Sometimes the American clients of DCA send the fees for their accounts directly to Dentsu, which retains one third of the fees and forwards the remainder to DCA. On occasion, Dentsu, as opposed to DCA, has received direct payment for services rendered by DCA employees working on Dentsu's clients' accounts.

DCA fired plaintiffs in September 1990. In all, twenty-two American-born employees and one employee of Japanese national origin³ were terminated in an action characterized by DCA as necessary to increase profitability of the company. It is undisputed that Dentsu did not order these specific employees to be fired and that Dentsu did not even know, until after the firings, who was actually let go. An American, Ray Freeman, DCA's Chief Operating Officer, actually created the plan for the discharges but the two top officers of DCA, Toshio Naito and Kiyoshi Eguchi, both expatriates, approved the changes. Dentsu mandated as a general rule, however, that none of DCA's expatriate employees could be fired until a job was found for them back in Japan. Plaintiffs assert that it was because of this policy that none of the expatriate executives employed at DCA were fired in September 1990.

On October 3, 1990, plaintiffs sent a letter to both DCA and Dentsu describing the potential discrimination claims that plaintiffs might file against Dentsu and DCA with the appropriate administrative agency, i.e., the Equal Employment Opportunity Commission ("EEOC"). The defendants' joint attorney responded to this letter by telling plaintiffs that any further action by plaintiffs in this matter should be addressed only to DCA, not Dentsu. On November 5, 1990, plaintiffs' filed their complaints against defendant DCA with the EEOC.⁴ The EEOC did not attempt any conciliation efforts on behalf of the parties before the plaintiffs received their right-to-sue letters and took their grievances to the courts.

On May 24, 1991, plaintiffs filed suit in this Court against both DCA and Dentsu under Title VII and the Human Rights Law.

Discussion

When the court is presented with materials outside the pleadings both in support of and in opposition to a 12(b)(6) motion, it is required to either exclude the additional materials and decide the motion solely based on the complaint, or to convert the motion to one for summary judgment under Fed. R.Civ.P. 56. See Fonte v. Board of Managers of Continental Towers Condominium, 848 F.2d 24, 25 (2d Cir.1988); Carter v. Stanton, 405 U.S. 669, 671, 92 S.Ct. 1232, 1234, 31 L.Ed.2d 569 (1971); see generally 5 C. Wright & A. Miller, Federal Practice and Procedure § 1366 (1990 & Supp.1992) (discussing the proper circumstances in which a court may convert a motion to dismiss into a motion for summary judgment). The court may convert the motion to dismiss into one for summary judgment after "all the parties are given reasonable opportunity to present all material made pertinent to such a motion by Rule 56." In re G. & A. Books, Inc., 770 F.2d 288, 295 (2d Cir.1985), cert. denied, 475 U.S. 1015, 106 S.Ct. 1195, 89 L.Ed.2d 310 (1986). Although under Fed.R.Civ.P. 56(c) a party must be given adequate notice and time to prepare its supporting materials, "the district court's conversion of a 12(b)(6) motion into one for summary judgment is governed by principles of substance rather than form." Id. A party cannot complain of lack of a reasonable opportunity to file relevant materials if both sides have already filed with the Court affidavits, depositions, or other evidence admissible at trial. See id.; see also Nat'l Association of Pharmaceutical Mfrs., Inc. v. Ayerst Laboratories, 850 F.2d 904, 911 (2d Cir.1988) (holding that when only the party moving to dismiss the complaint files supporting letters and affidavits, the opposing party must be deemed to have adequate notice that the motion to dismiss might be transformed into one for summary judgment).⁵

In the instant case, both parties have submitted several affidavits, depositions, and other documents to the Court in support of and in opposition to the motion to dismiss. The parties have also completed discovery and therefore have had a reasonable opportunity to present all relevant material to the Court. The parties cannot be surprised if the Court considers the materials they themselves have both submitted. The Court therefore elects to convert this motion to dismiss into a motion for summary judgment.

On a motion for summary judgment, the Court must determine whether there are any genuine issues of material fact. See Fed. R.Civ.P. 56; Donohue v. Windsor Locks Bd. of Fire Commissioners, 834 F.2d 54, 57 (2d Cir.1987). The court must construe the record in the light most favorable to the non-moving party. Id. If no reasonable trier of fact could find for the non-moving party, then the court may grant a motion for summary judgment. See Taggart v. Time, Inc., 924 F.2d 43, 46 (2d Cir.1991).

A. This Court has Personal Jurisdiction Over Dentsu.

When the parties in a case have conducted discovery and there remain no disputed issues of fact with respect to the issue of personal jurisdiction, the court must determine whether personal jurisdiction exists as a matter of law. See Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir.), cert. denied, 498 U.S. 854, 111 S.Ct. 150, 112 L.Ed.2d 116 (1990).

In this case, the parties have already conducted discovery and have submitted affidavits with factual support for their relative positions. The 12(b)(2) motion filed by the defendant Dentsu does not contest any of the plaintiffs' facts relevant to the question of our personal jurisdiction over Dentsu.⁶

When subject matter jurisdiction is based on a question of federal law and the federal statute does not provide for national service of process, courts must look to the forum state's long-arm statute to determine if the defendant is amenable to service of process, a prerequisite of personal jurisdiction. Omni Capital Int'l v. Rudolf Wolff & Co., Ltd., 484 U.S. 97, 108, 108 S.Ct. 404, 411, 98 L.Ed.2d 415 (1987); see also Canterbury Belts, Ltd. v. Lane Walker Rudkin, Ltd., 869 F.2d 34, 40 (2d Cir.1989) (st...