238 F. Supp. 3d 514
S.D.N.Y.2017Background
- Downey, age 51 at termination, was hired in Sept 2015 as VP of Sales for Adloox U.S., a newly formed wholly owned U.S. subsidiary of French parent Adloox France; he was terminated after ~2 months.
- Downey alleges supervisors called him the “old timer,” executives sought “young sharks” and directed recruiting for candidates ~age 30–35, and his role was later filled by a 31‑year‑old. He sued for age discrimination (ADEA, NYSHRL, NYCHRL) and for fraudulent inducement and unjust enrichment under New York law.
- Defendants moved to dismiss under Rule 12(b)(6), arguing (1) Section 623(h)(2) of the ADEA bars suit against a foreign employer not controlled by a U.S. employer, and (2) Adloox U.S. lacks the ADEA’s 20‑employee threshold (and similar thresholds under NY law).
- Complaint alleges Adloox France exercised control over Adloox U.S. (same executives, centralized management), and that Adloox U.S. was Downey’s direct employer; Downey also alleges work performed in the New York office.
- Court treated applicability of § 623(h)(2) as a merits question governed by Second Circuit precedent and applied the single‑employer / integrated‑enterprise test at the pleading stage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the ADEA applies to Adloox France (foreign parent) for Downey’s U.S. employment | Downey alleges Adloox France controls Adloox U.S.; thus foreign parent is liable under single‑employer theory | § 623(h)(2) excludes foreign employers not controlled by a U.S. employer, so foreign parent is immune | Court denied dismissal; under Morelli and Brown, § 623(h)(2) does not bar claims against foreign employers’ domestic operations when single‑employer alleged; factual inquiry reserved for later |
| Whether Adloox U.S. meets ADEA’s 20‑employee threshold | Downey pleads ≥20 employees and can aggregate parent/subsidiary employees under single‑employer doctrine | Adloox U.S. lacked 20 employees so it is not an "employer" under ADEA | Court denied dismissal; threshold is an element (not jurisdictional) and may be satisfied by treating entities as single employer at pleading stage |
| Coverage under NYSHRL and NYCHRL given residence/where termination occurred | Downey alleges employment activity and impact in New York (NY office, marketing event) | Defendants argue Downey is Connecticut resident and termination occurred outside NY so NY laws don’t apply | Court denied dismissal; plaintiff pleaded sufficient New York impact and single‑employer aggregation applies to state/city laws |
| Fraudulent inducement and unjust enrichment claims under NY law | Downey claims defendants induced him and appropriated his market blueprint and contacts | Defendants argue at‑will employment bars tort claim; valid employment contract precludes quasi‑contract recovery | Court granted dismissal of both claims: fraudulent inducement fails (no actionable false present fact or reasonable reliance); unjust enrichment barred by existence of an enforceable written employment contract |
Key Cases Cited
- Morelli v. Cedel, 141 F.3d 39 (2d Cir. 1998) (interpreting § 623(h)(2) as limiting ADEA’s extraterritorial reach but not exempting foreign employers’ domestic U.S. operations; ADEA construed to cover U.S. workplaces of foreign firms)
- Brown v. Daikin Am., Inc., 756 F.3d 219 (2d Cir. 2014) (endorsing single‑employer/integrated‑enterprise test and holding factual inquiry on control is usually inappropriate on motion to dismiss)
- Littlejohn v. City of New York, 795 F.3d 297 (2d Cir. 2015) (pleading standard for employment discrimination: facts must give plausible support for a minimal inference of discriminatory causation)
- McKennon v. Nashville Banner Publ’g Co., 513 U.S. 352 (U.S. 1995) (noting ADEA’s substantive provisions are modeled on Title VII; cited for analogy on statutory scope)