Macdonald v. Unisys Corp.

• Decision Date: 12 June 2013
• Docket Number: Civil Action No. 12–1705.
• Citation: 951 F.Supp.2d 729
• Parties: Carole MacDONALD, et al., Plaintiffs, v. UNISYS CORPORATION, Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

951 F.Supp.2d 729

Carole MacDONALD, et al., Plaintiffs,

v.UNISYS CORPORATION, Defendant.

Civil Action No. 12–1705.

United States District Court, E.D. Pennsylvania.

June 12, 2013.

Carol A. Mager, Rahul Munshi, Susan M. Saint–Antoine, Console Law Office LLC, Philadelphia, PA, for Plaintiffs.

Joseph J. Costello, Lauren E. Buechner, Paul C. Evans, Morgan, Lewis & Bockius LLP, Philadelphia, PA, Joseph A. Teklits, Unisys Corporation, Blue Bell, PA, for Defendant.

MEMORANDUM

ANITA B. BRODY, District Judge.

Plaintiffs Carole MacDonald, Marilyn Salisbury, John Golisz, Richard Takac, Juanita Cluffer–Washington, and Hexin McPhee bring this action against Defendant Unisys Corporation (“Unisys”) for violation of the Age Discrimination in Employment Act (“ADEA”), 29 U.S.C. § 621 et seq. Plaintiffs bring this action individually and as a collective action on behalf of themselves and all other former Unisys internal IT department employees who were located in the United States and were forty years old or older at the time of their terminations, pursuant to the ADEA, 29 U.S.C. § 626(b), incorporating section 16(b) of the Fair Labor Standards Act, 29 U.S.C. § 216(b). I exercise federal jurisdiction over Plaintiffs' ADEA claims, pursuant to 28 U.S.C. § 1331. Unisys has filed a Motion to Dismiss and Compel Arbitration. For the reasons set forth below, I will deny Unisys' motion.

I. BACKGROUND¹

Plaintiffs Carole MacDonald, Marilyn Salisbury, John Golisz, Richard Takac, Juanita Cluffer–Washington, and Hexin McPhee are former employees of Defendant Unisys. In 2010, Unisys entered into a Master Services Agreement with Hexaware Technologies, Inc. (“Hexaware”), an IT outsourcing services corporation. Pursuant to the Master Services Agreement, Unisys agreed to outsource a portion of its internal IT function to Hexaware. As a result of the Master Services Agreement to outsource, Unisys decided to terminate Plaintiffs and many other internal IT department employees. All of the internal IT department employees in the United States that Unisys decided to terminate were immediately offered employment with Hexaware. Unisys informed the terminated employees that if they did not accept employment with Hexaware, they would be considered “to have voluntarily resigned,” and would not be eligible for severance or state unemployment benefits. Compl. Ex. H.

Not every employee in the internal IT department was terminated. Unisys provided no rationale for how it selected which employees to terminate in the internal IT department. Those selected by Unisys for termination were “predominantly older, more senior workers”; whereas those retained by Unisys were “younger, less-experienced employees.” Compl. ¶ 37. In total, approximately 230 Unisys employees worldwide were terminated in April 2010 or shortly thereafter. In the United States, 77 Unisys employees were terminated and then offered employment by Hexaware, and 76 accepted Hexaware's employment offer. Of the 77 employees who were terminated by Unisys, 70 were age 40 or older.

Plaintiffs were among the 76 employees in the United States who were terminated by Unisys, and accepted Hexaware's employment offer. Plaintiffs were terminated by Unisys in April 2010. Before beginning their employment with Hexaware, Plaintiffs entered into Employment Agreements with Hex aw are. Each Employment Agreement established that Plaintiffs'employment with Hexaware would begin on May 1, 2010. Def.'s Mot. Exs. B–G ¶ 1. Additionally, each Employment Agreement contained the following arbitration clause: “Any disagreement or claim ... arising out of or relating to the terms and conditions of your employment or this Agreement, the breach thereof, or its termination (an “Arbitrable Dispute”) shall be finally settled by arbitration ....” Id. at ¶ 17. Furthermore, each Employment Agreement stated: “This [Agreement] is executed in and shall be governed by and construed in accordance with the laws of the State of New Jersey without giving effect to any conflict of laws provision.” Def.'s Mot. Exs. B–F ¶ 23, G ¶ 24.

During the months of May, June, and July 2010, the former Unisys employees who were now working for Hexaware, continued to report to the same Unisys managers at the same office locations and sit at their same workstations. Moreover, these employees continued to use their Unisys email addresses, phone numbers, sign-on names, passwords, ID badges, and keys.

Plaintiffs' employment with Hexaware did not last long. Less than six months to a year after beginning their employment with Hexaware, Unisys directed Hexaware to terminate Plaintiffs.

Plaintiffs' allege that their “termination by Unisys, immediate hiring by Hexaware, and eventual termination by Hexaware constituted a ‘sham transfer’ which was orchestrated by [Unisys] in an effort to eliminate older workers from its workforce.” Compl. ¶¶ 84, 106, 131, 154, 176, 200. Thus, Unisys initiated this “two-step process of termination,” and “instructed Hexaware to terminate certain older workers from Hexaware as a final step in the effort to eliminate older workers from [Unsisys'] workforce.” Id. at ¶¶ 58, 85, 107, 132, 155, 177, 201.

II. LEGAL STANDARD

In deciding a motion to compel arbitration, a district may either employ the motion to dismiss standard under Federal Rule of Civil Procedure 12(b)(6) or the motion for summary judgment standard under Federal Rule of Civil Procedure 56. Guidotti v. Legal Helpers Debt Resolution, L.L.C., 716 F.3d 764, 771–76 (3d Cir.2013). The Third Circuit has provided the following guidance on when each standard is appropriate to apply:

[W]hen it is apparent, based on the face of a complaint, and documents relied upon in the complaint, that certain of a party's claims are subject to an enforceable arbitration clause, a motion to compel arbitration should be considered under a Rule 12(b)(6) standard without discovery's delay. But if the complaint and its supporting documents are unclear regarding the agreement to arbitrate, or if the plaintiff has responded to a motion to compel arbitration with additional facts sufficient to place the agreement to arbitrate in issue, then the parties should be entitled to discovery on the question of arbitrability before a court entertains further briefing on the question.

Id. at 776 (citation omitted) (internal quotation marks omitted). “Indeed, any time the court must make a finding to determine arbitrability, pre-arbitration discovery may be warranted.” Id. at 775 n. 5. If a court denies a motion to compel arbitration under Rule 12(b)(6) to allow discovery on the question of arbitrability, “[a]fter limited discovery, the court may entertain a renewed motion to compel arbitration, this time judging the motion under a summary judgment standard.” Id. at 776.

Unisys brings its motion to dismiss and compel arbitration under Rule 12(b)(6).² Unisys, a nonsignatory to the Employment Agreements entered into between Hexaware and Plaintiffs, seeks to enforce the arbitration clauses contained in the Employment Agreements. A key question in this case is whether the claims against Unisys are subject to an enforceable agreement to arbitrate; therefore, the appropriateness of deciding this motion under Rule 12(b)(6) is at issue.

III. DISCUSSION

In Count I, Plaintiffs allege that Unisys violated the ADEA when it terminated internal IT department employees in April 2010. Plaintiffs bring Count I on behalf of themselves and all other Unisys internal IT department employees located in the United States age 40 or older who were terminated by Unisys in April 2010. In Count II, Plaintiffs allege that Unisys violated the ADEA when it directed Hexaware to terminate its employees who had formerly worked for Unisys in the internal IT department. Plaintiffs bring Count II on behalf of themselves and all other Unisys internal IT department employees located in the United States age 40 or older who were terminated by Unisys in April 2010 and were shortly thereafter terminated from employment with Hexaware. Unisys moves to dismiss and compel arbitration of Plaintiffs' claims against it based on the arbitration provisions contained in the Employment Agreements Plaintiffs entered into with Hexaware.

Both parties agree that the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., governs this dispute. The FAA “creates a body of federal substantive law establishing and governing the duty to honor agreements to arbitrate disputes.” Century Indem. Co. v. Certain Underwriters at Lloyd's, London, 584 F.3d 513, 522 (3d Cir.2009). “Congress designed the FAA to overrule the judiciary's longstanding reluctance to enforce agreements to arbitrate and its refusal to put such agreementson the same footing as other contracts, and in the FAA expressed a strong federal policy in favor of resolving disputes through arbitration.” Id. (citations omitted). “Because arbitration is a matter of contract, before compelling arbitration pursuant to the Federal Arbitration Act, a court must determine that (1) an enforceable agreement to arbitrate exists, and (2) the particular dispute falls within the scope of that agreement.” Kirleis v. Dickie, McCamey & Chilcote, P.C., 560 F.3d 156, 160 (3d Cir.2009) (citation omitted). “It is well established that the Federal Arbitration Act (FAA), reflects a strong federal policy in favor of the resolution of disputes through arbitration. But this presumption in favor of arbitration does not apply to the determination of whether there is a valid agreement to arbitrate between the parties.” Id. (citation omitted) (internal quotation marks omitted); see also Century Indem., 584 F.3d at 527 (concluding that the presumption in favor of arbitrability “probably does not apply” to whether a valid agreement to arbitrate exists).

“When a dispute consists of several claims, the court must determine on an issue-by-issue basis whether a party bears a duty to arbitrate.” Trippe Mfg. Co. v. Niles Audio Corp., 401 F.3d 529,...