Hisey v. QualTek USA, LLC
| Decision Date | 16 August 2019 |
| Docket Number | CIVIL ACTION No. 18-5129 |
| Parties | MICHAEL HISEY, Plaintiff, v. QUALTEK USA, LLC et al., Defendants. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
MICHAEL HISEY, Plaintiff,
v.
QUALTEK USA, LLC et al., Defendants.
CIVIL ACTION No. 18-5129
UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA
AUGUST 16, 2019
MEMORANDUM
PRATTER, J.
This is Michael Hisey's second attempt to sue his former employer, QualTek USA, LLC, and two QualTek executives for claims arising from QualTek's termination of Mr. Hisey's employment. Mr. Hisey brings claims here for (1) breach of contract, (2) violation of the Pennsylvania Wage Payment and Collection Law, and (3) retaliation under 42 U.S.C § 1981. In a previous lawsuit, Mr. Hisey's claims were premised chiefly on employment discrimination and were dismissed by a Florida federal court, without prejudice, for forum non conveniens.
Defendants move to dismiss, making two basic arguments. First, they seek to apply several preclusion rules because the action is allegedly duplicative of Mr. Hisey's prior suit. Those principles are claim preclusion, claim splitting, and judicial estoppel. Second, they assert that several alleged pleading deficiencies in the complaint require dismissal. Defendants also move for sanctions—including the sanction of dismissal—based on the same preclusion arguments.
As set forth below, the Court rejects all of the defendants' preclusion arguments. The Court also dismisses in its entirety the Pennsylvania Wage Payment and Collection Law claim and dismisses the § 1981 retaliation claim against the individual defendants only (granting leave to amend). Mr. Hisey's breach of contract claim survives, as does his § 1981 claim against QualTek.
Page 2
Michael Hisey was the Chief Business Officer for QualTek USA, LLC—a multinational telecommunications company—from April 29, 2013 until December 4, 2014. Two separate aspects of Mr. Hisey's employment with QualTek are relevant to this action: First, Mr. Hisey's economic interest in QualTek; and second, Mr. Hisey's allegations that QualTek and its employees engaged in unlawful conduct. Each is addressed in turn.
I. Economic Interest Units
Certain employees at QualTek are granted "Economic Interest Units" in QualTek's "Economic Interest Unit Plan."2 It appears, based on a review of the Economic Interest Unit Plan, that each "Unit" conferred upon an employee represents a one percent (1%) financial stake in QualTek (after reductions for certain debts, expenses, and distribution preferences).
The grant of each Unit is subject to certain conditions. As Mr. Hisey's Economic Interest Unit offer letter states, "the Units vest over time, but are subject to forfeiture in whole or in part," and employees with Units are required to "continue to be employed by the Company or its subsidiaries in order to receive any economic benefits under the Plan." Amended Compl., Ex. A (Offer Letter). Those limitations are discussed in greater detail in the Economic Interest Unit Plan itself and are outlined below.
Page 3
A. Terms of the Units
According to the Economic Interest Unit Plan, employees' Units are effective "only for so long as the Participant remains an Employee of [QualTek], and shall be immediately cancelled and forfeited if the Participant ceases to be an Employee of [QualTek] for any reason, unless redeemed pursuant to [terms identified] below." Amended Compl., Ex. A (Plan ¶ 6(f)). Once an employee's employment is terminated, the circumstances of that termination dictate whether the employee is compensated for his or her Units.
B. Effect of Termination on Units' Status
Under the Economic Interest Unit Plan, an employee who is terminated must (1) forfeit unvested Units entirely, without compensation, and (2) allow QualTek to redeem vested Units pro rata, based on a formula reflecting QualTek's estimated market value. Redemption means that QualTek pays the terminated employee for his or her Units.
Whether, upon employment termination, Units are forfeited or redeemed turns on two factors: (1) whether the Units are vested, and (2) whether the employment was terminated without cause or with cause.
C. Vesting of Units
Each Unit vests pursuant to two independent mechanisms, one based on the passage of time and one based on the performance of QualTek. Over the five years following the grant of a Unit, 50% of the Unit can vest pursuant to automatic, time-passage-based vesting, and 50% of the Unit can vest pursuant to performance-based vesting.
First, a portion (up to 50%) of each Unit vests automatically over time. Over the five years immediately following the grant of a Unit, that Unit vests 10% per year, beginning one year after the Unit was granted. In other words, if a Unit is granted on January 1, 2020, 10% of that Unit
Page 4
vests on January 1, 2021, and then another 10% vests on January 1 in each of the subsequent four years. Before January 1, 2021, however, that Unit is unvested.
Second, a portion of each Unit (up to 50%) has the possibility of vesting based on the performance of QualTek over the five years immediately following the grant of a Unit.3
If a Unit is not vested, any terminated employee forfeits the Unit, regardless of whether employment is terminated without cause or with cause.
If a Unit is vested, whether a terminated employee's Units are redeemed turns on whether the employment is terminated with or without cause.
D. Termination Without Cause or With Cause
For vested Units only, employees whose employment is terminated without cause (or due to death or disability) shall have that Unit redeemed by QualTek. A redeemed Unit is bought back by QualTek, with payments made in annual installments.
Termination with cause (or because the employee voluntarily quit) causes forfeiture of that Unit.
Thus, only employees with vested Units whose employment is terminated without cause are entitled to redemption of their Units.
Page 5
E. Mr. Hisey's Economic Interest Units.
On January 24, 2014, Mr. Hisey and QualTek entered into an agreement that granted Mr. Hisey 3 Units (i.e., a 3% stake in QualTek). On December 4, 2014, before any of the Units were vested, QualTek terminated Mr. Hisey's employment. Mr. Hisey alleges that his employment was terminated without cause. QualTek did not redeem any of Mr. Hisey's unvested Units.
II. Mr. Hisey's Allegations of Retaliation4
Mr. Hisey alleges that while he worked for QualTek, he reported several instances of racial discrimination and was fired as a result of those reports. Mr. Hisey alleges that he was aware of several instances of employees at QualTek using racial slurs or racially insensitive language and that he reported those offending employees to QualTek executives. Mr. Hisey also allegedly filed a formal complaint of race discrimination after QualTek executives refused to offer an ownership interest to an African-American employee but offered the same ownership interest to similarly qualified white employees. According to Mr. Hisey, he was fired eleven days after filing this formal complaint.
This dispute has a somewhat fraught history, much of which predates this Eastern District of Pennsylvania action. The chart below briefly summarizes the procedural history:
Page 6
| Hisev I (Florida lawsuit that preceded this action) | |
| EEOC issues right to sue letter | 11/24/2015 |
| Hisey I complaint filed in Florida state court | 12/14/2015 |
| Hisey I removed to S.D. Fla. | 2/1/2016 |
| Hisey I dismissed for forum non conveniens | 4/13/2016 |
| Hisey I reconsideration of dismissal denied | 5/12/2016 |
| Hisey I parties participate in Eleventh Circuit Court of Appeals mediation | 9/23/2016 |
| Hisey I dismissal affirmed by Eleventh Circuit Court of Appeals | 10/9/2017 |
| Hisev II (this action filed in E.D. Pa.) | |
| Hisey II complaint filed | 11/28/2018 |
| Hisey II motion for sanctions filed | 11/28/2018 |
| Hisey II first motion to dismiss filed | 1/28/2019 |
| Hisey II amended complaint filed | 2/19/2019 |
| Hisey II second motion to dismiss filed | 2/26/2019 |
In December 2015, about a year after Mr. Hisey was fired, he sued QualTek and two of its executives (Joseph Kestenbaum and Christopher Hisey) in Florida state court. See Hisey v. QualTek USA, LLC, et al., No. 16-60197 (S.D. Fla.) ("Hisey I").5 Mr. Hisey brought ten claims: (1) Florida law wrongful termination; (2) Florida law medical disclosure violation; (3) Florida law unlawful employment practices; (4) Broward County hostile work environment violation; (5) Broward County sexual orientation discrimination; (6) Title VII wrongful termination; (7) Title VII sex discrimination; (8) Title VII hostile work environment; (9) Title VII retaliation; and (10) ADA discrimination. Notice of Removal and Complaint, Hisey I (Doc. No. 1). The crux of these claims was that QualTek and its employees discriminated against Mr. Hisey for being gay and because of a medical condition.
QualTek removed Hisey I to the federal court in the Southern District of Florida. Id The district court dismissed Mr. Hisey's lawsuit for forum non conveniens, because Mr. Hisey's
Page 7
employment contract included a forum selection clause requiring that he bring suit in Pennsylvania. See generally Order Granting Mot. to Dismiss, Hisey I (Doc. No. 25). Mr. Hisey moved for reconsideration of the dismissal, which the court denied. Mot. for Reconsideration and Order Denying Mot. for Reconsideration, Hisey I (Doc. Nos. 26, 27). In its order denying reconsideration, the court emphasized that the dismissal was without prejudice because forum non conveniens dismissal is not on the merits. See Order Denying Mot. for Reconsideration at 2, Hisey I (Doc. No. 27) ("Dismissal on grounds of forum non conveniens is not a determination on the merits and is therefore without prejudice.").
The Eleventh Circuit Court of Appeals affirmed the dismissal for forum non conveniens. See generally Hisey v. QualTek USA, LLC, 753 F. App'x 698 (11th Cir. 2018). In the briefing and during oral argument, Mr. Hisey argued for reversal because, among other reasons, even though the district...
To continue reading
Request your trial