Morelli v. Cedel

• Citation: 141 F.3d 39
• Decision Date: 26 March 1998
• Docket Number: D,No. 546,546
• Parties: 76 Fair Empl.Prac.Cas. (BNA) 709, 21 Employee Benefits Cas. 2921 Ida MORELLI, Plaintiff-Appellant, v. CEDEL, Defendant-Appellee. ocket 97-7277.
• Court: U.S. Court of Appeals — Second Circuit

Page 39

141 F.3d 39

76 Fair Empl.Prac.Cas. (BNA) 709,

21 Employee Benefits Cas. 2921

Ida MORELLI, Plaintiff-Appellant, v. CEDEL, Defendant-Appellee.

No. 546, Docket 97-7277.

United States Court of Appeals, Second Circuit.

Argued Oct. 21, 1997.

Decided March 26, 1998.

Steven G. Eckhaus, Eckhaus & Olson, New York City, for Plaintiff-Appellant.

Gary D. Friedman, Mayer, Brown & Platt, New York City, for Defendant-Appellee.

Before NEWMAN, CALABRESI and CUDAHY, ^* Circuit Judges.

CUDAHY, Circuit Judge:

This appeal requires us to decide whether the domestic employees of certain foreign corporations are protected under the Age Discrimination in Employment Act of 1967 (the ADEA), and, if so, whether a foreign corporation's foreign employees are counted for the purpose of determining whether the corporation has enough employees to be subject to the ADEA. We answer both questions in the affirmative.

Background

After the defendant fired the plaintiff, the plaintiff sued the defendant. The plaintiff's amended complaint asserted that the defendant violated the ADEA, 29 U.S.C. §§ 621-634, the Employment Retirement Security Act (ERISA), 29 U.S.C. §§ 1001-1461, and New York State's Human Rights Law, N.Y.Exec.Law §§ 290-301. The district court dismissed the complaint on the grounds that the defendant was not subject to the ADEA, see Fed.R.Civ.P. 12(b)(1) (lack of jurisdiction over the subject matter), and that the ERISA count did not state a claim upon which relief could be granted, see Fed.R.Civ.P. 12(b)(6). The court also dismissed the state law claim. The plaintiff appeals the dismissal of her federal claims.

As alleged in the complaint, the facts relevant to this appeal are as follows. The plaintiff, Ida Morelli, was born on April 11, 1939. The defendant is a Luxembourg bank. On or about June 29, 1984, the defendant hired the plaintiff to work in its New York office. On or about February 26, 1993, the plaintiff became an assistant to Dennis Sabourin, a manager in the defendant's New York office. Mr. Sabourin summoned the then 54-year-old plaintiff to his office on January 18, 1994, handed her a separation agreement, and insisted that she sign it.

Under the terms of the separation agreement, a copy of which was attached to the complaint, the plaintiff would resign, effective April 30, 1994. She would continue to receive her salary and benefits until the effective date of her resignation, but she would be relieved of her duties as an employee, effective immediately. Both the defendant and the employee would renounce all claims arising out of "their past working relationship." Mr. Sabourin told the plaintiff that she would receive the three months' severance pay, medical coverage for three months, and her pension only on the condition that she sign the agreement on the spot. The plaintiff had never seen the separation agreement before and had no warning that she was going to be asked to resign. But in the face of Mr. Sabourin's ultimatum, she did sign the agreement immediately and returned it to him. The defendant, however, never provided her with a pension distribution.

Discussion

1. Age Discrimination

(a) Does the ADEA cover a U.S.-based branch of a foreign employer?

The ADEA was enacted in 1967 to prevent discrimination by employers on the basis of age. See Pub.L. No. 90-202, § 2, 81 Stat. 602 (codified at 29 U.S.C. § 621(b)); Lorillard v. Pons, 434 U.S. 575, 577, 98 S.Ct. 866, 868, 55 L.Ed.2d 40 (1978). In order to determine whether the defendant is subject to the ADEA, we must first determine whether the ADEA generally protects the employees of a branch of a foreign employer located in the United States.

It is undisputed that Cedel is a foreign employer with fewer than 20 employees in its sole U.S. branch. There being no contested facts on the motion to dismiss under Rule 12(b)(1), we review the district court's dismissal de novo. See Rent Stabilization Ass'n v. Dinkins, 5 F.3d 591, 594 (2d Cir.1993).

Section 4(h)(2) of the ADEA provides that "[t]he prohibitions of [the ADEA] shall not apply where the employer is a foreign person not controlled by an American employer." 29 U.S.C. § 623(h)(2). At a minimum, this provision means that the ADEA does not apply to the foreign operations of foreign employers--unless there is an American employer behind the scenes. See Denty v. SmithKline Beecham Corp., 109 F.3d 147, 150-51 (3d Cir.1997). An absolutely literal reading of § 4(h)(2) might suggest that the ADEA also does not apply to the domestic operations of foreign employers. But the plain language of § 4(h)(2) is not necessarily decisive if it is inconsistent with Congress' clearly expressed legislative purpose. See Tomka v. Seiler Corp., 66 F.3d 1295, 1313-14 (2d Cir.1995); see also Matimak Trading Co. v. Khalily, 118 F.3d 76, 87 (2d Cir.1997); Haberman v. Finch, 418 F.2d 664, 666 (2d Cir.1969).

Section 4(h)(2) was not part of the original ADEA. It was added in 1984. See Pub.L. No. 98-459, § 802(b)(2), 98 Stat. 1792 (1984); Pub.L. No. 99-272, § 9201(b)(3), 100 Stat. 171 (1986) (clerical correction). The context in which it was added reveals that Congress' purpose was not to exempt the domestic workplaces of foreign employers from the ADEA's prohibition of age discrimination. Instead, the purpose of adding this exclusion was to limit the reach of an extraterritorial amendment adopted as part of the same legislation.

In 1984, before § 4(h)(2) was added, several courts of appeals had concluded that the ADEA did not apply to "Americans employed outside the United States by American employers." Cleary v. United States Lines, Inc., 728 F.2d 607, 610 (3d Cir.1984); see also, e.g., Thomas v. Brown & Root, Inc., 745 F.2d 279, 281 (4th Cir.1984) (per curiam); Zahourek v. Arthur Young & Co., 750 F.2d 827, 828-29 (10th Cir.1984). These decisions were based in part on language in § 7 of the ADEA, 29 U.S.C. § 626, which prescribes enforcement procedures by reference to certain provisions of the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 201-219, the national wage and hour law. Those FLSA provisions specify that the FLSA does not apply "with respect to any employee whose services during the workweek are performed in a workplace within a foreign country." 29 U.S.C. § 213(f); see 29 U.S.C. § 216(d)(1); Cleary, 728 F.2d at 608-09. The courts of appeals held that the ADEA incorporated the FLSA's prohibition on extraterritorial application. See, e.g., Cleary, 728 F.2d at 609. Within a few months of the 1984 court decisions, Congress amended the ADEA in a way that superseded the holding of these cases by "provid[ing] for limited extraterritorial application" of the ADEA. Denty, 109 F.3d at 149-50.

The 1984 amendments amplified the definition of "employee" in § 11(f) of the ADEA, which had previously embraced any "individual employed by any employer," except for certain elected public officials and political appointees. See Pub.L. No. 90-202, § 11(f) (1967); Pub.L. No. 93-259, § 28(a)(4) (1974). One of the 1984 amendments specified that "[t]he term 'employee' includes any individual who is a citizen of the United States employed by an employer in a workplace in a foreign country." Pub.L. No. 98-459, § 802(a) (1984).

Companion amendments dealt with the cases of foreign persons not controlled by an American employer--now § 4(h)(2) of the ADEA--and foreign corporations controlled by American employers--now § 4(h)(1):

If an employer controls a corporation whose place of incorporation is in a foreign country, any practice by such corporation prohibited under this section shall be presumed to be such practice by such employer.

Id. § 803(b)(2); Pub.L. No. 99-272, § 9201(b)(3) (1986), codified at 29 U.S.C. § 623(h)(1). The amendments also included a "foreign law exception"--now ADEA § 4(f)(1)--insulating employers from liability for "practices involv[ing] an employee in a workplace in a foreign country" where compliance with the ADEA "would cause [the] employer, or a corporation controlled by such employer, to violate the laws of the country in which such workplace is located." Pub.L. No. 98-459, § 803(b)(1) (1984), codified at 29 U.S.C. § 623(f)(1).

The 1984 revision to the definition of "employee" in § 11(f) was intended "to assure that the provisions of the ADEA would be applicable to any citizen of the United States who is employed by an American employer in a workplace outside the United States." S.Rep. 98-467, at 27 (1984), reprinted in 1984 U.S.C.C.A.N. 2974, 3000 (S.Rep.); see EEOC v. Arabian American Oil Co., 499 U.S. 244, 258-59, 111 S.Ct. 1227, 1235-36, 113 L.Ed.2d 274 (1991). The other 1984 amendments, to § 4 of ADEA, conform the ADEA's reach to "the well-established principle of sovereignty, that no nation has the right to impose its labor standards on another country." S.Rep. at 27. Thus § 4(h)(2) of the ADEA merely limits the scope of the amended definition of employee, so that an employee at a workplace in a foreign country is not protected under the ADEA if the employer is a foreign person not controlled by an American employer. See id. at 27-28 ("[T]he amendment.... does not apply to foreign companies which are not controlled by U.S. firms.") (emphasis added). There is no evidence in the legislative history that these amendments were intended to restrict the application of the ADEA with respect to the domestic operations of foreign employers.

Further, the plain language of the corresponding foreign-employer exclusions in Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e-2000e-17, and the Americans with Disabilities Act of 1990 (ADA), 42 U.S.C. §§ 12101-12213, indicates that a foreign employer's domestic operations are not excluded from the reach of those statutes. The Title VII and ADA exclusions are expressly limited to the "foreign operations of an employer that is a foreign person not controlled by an American employer," 42 U.S.C. §§ 2000e-1(c)(2), 12112(c)(2)(B) (emphasis added), so these...