Brown v. Daikin America Inc.
2014 U.S. App. LEXIS 12130
2d Cir.2014Background
- Todd Brown, a white U.S. national, worked in Daikin America’s New Business Development Group from ~2001–2009 and was terminated in a 2009 workforce reduction; his reviews were positive.
- Daikin America is a New York–headquartered, wholly‑owned U.S. subsidiary of Daikin Industries Ltd. (DIL), a Japanese parent; several Japanese nationals assigned to Daikin America were rotational employees who previously worked for DIL and were expected to return to Japan.
- In the reduction, Brown and one other American were terminated while the three Japanese rotational employees in his group remained employed; across the company, seven U.S. employees were terminated and no Japanese employees were.
- Brown alleged Title VII and NYSHRL claims for race and national‑origin discrimination, claiming Daikin America, at DIL’s direction, exempted Japanese employees from consideration for termination.
- The district court dismissed DIL (for failure to plead a single integrated enterprise and plausible discrimination) and later dismissed claims against Daikin America (finding Brown not similarly situated to rotational Japanese employees); it also dismissed Brown’s breach‑of‑implied‑contract claim for lack of an express written limitation on at‑will termination.
- The Second Circuit considered the pleadings (Complaint and Amended Complaint together), held Brown sufficiently alleged a single integrated enterprise and a plausible discrimination claim, vacated and remanded those claims, but affirmed dismissal of the contract claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether DIL can be liable as Brown’s “employer” under Title VII/NYSHRL (single integrated enterprise) | Brown: DIL exercised centralized control over employment decisions (directed operations, required approvals, immunized rotational Japanese employees), so parent and subsidiary form a single integrated enterprise | DIL: lacked centralized control/management over labor relations; only Daikin America made final employment decisions | Held: Allegations plausibly show interrelated operations, common ownership, and sufficient centralized control of labor relations — DIL may be treated as Brown’s employer; case remanded |
| Whether Brown pleaded a plausible discrimination claim under Title VII/NYSHRL | Brown: He was similarly situated to Japanese employees in the same group subject to same standards; being terminated while rotational Japanese employees were retained gives inference of discrimination | Defendants: Japanese rotational employees were not similarly situated (employed by DIL/rotational), and non‑discriminatory explanations (rotational status) explain disparate treatment | Held: At pleading stage, Brown plausibly alleged comparators and circumstances giving rise to an inference of discrimination; dismissal vacated and remanded |
| Whether Brown needed to plead a McDonnell Douglas prima facie case at pleading stage | Brown: Not required; pleadings need only be facially plausible and give fair notice (Swierkiewicz/Twombly) | Defendants: Plaintiff must plead facts showing prima facie case to survive dismissal | Held: Court need not resolve dispute; Brown’s claim suffices under either standard (facially plausible and meets prima facie elements) |
| Whether an implied contract barred at‑will termination (breach of implied contract) | Brown: Company policy (oral reassurances) limited terminations to for‑cause, and he relied on that policy | Defendants: No written policy; New York presumes at‑will employment absent express written limitation | Held: Affirmed dismissal — Brown failed to allege an express written policy, so at‑will presumption stands |
Key Cases Cited
- Cook v. Arrowsmith Shelburne, 69 F.3d 1235 (2d Cir. 1995) (adopted four‑part single‑employer test: interrelation of operations, centralized control of labor relations, common management, common ownership)
- Parker v. Columbia Pictures Indus., 204 F.3d 326 (2d Cir. 2000) (evidence of payroll/administrative overlap can create fact issue on single‑employer status)
- Arculeo v. On‑Site Sales & Mktg., L.L.C., 425 F.3d 193 (2d Cir. 2005) (employee assigned to work for another entity may be constructively employed by both)
- Swierkiewicz v. Sorema, N.A., 534 U.S. 506 (2002) (Title VII plaintiffs need not plead McDonnell Douglas prima facie case to survive dismissal)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (complaint must be facially plausible; pleading standards clarified)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (legal conclusions not accepted as factual allegations)
- McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973) (burden‑shifting framework for employment discrimination cases)
- Windham v. Time Warner, 275 F.3d 179 (2d Cir. 2001) (elements of prima facie discriminatory discharge claim)
- Graham v. Long Island R.R., 230 F.3d 34 (2d Cir. 2000) (similarly situated requirement for comparator analysis)
- Gulino v. New York State Educ. Dept., 460 F.3d 361 (2d Cir. 2006) (existence of employer‑employee relationship is a primary element of Title VII claim)