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Davenport v. HansaWorld USA, Inc.

United States District Court, S.D. Mississippi, Eastern Division

May 20, 2014


Order Filed: June 30, 2014

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For Kimberlee Davenport, Plaintiff: Daniel M. Waide, LEAD ATTORNEY, MCHARD & ASSOCIATES, PLLC, Hattiesburg, MS.

For Hansaworld, USA, A foreign corporation doing business in Mississippi, Defendant: William T. Siler, Jr., LEAD ATTORNEY, Jason T. Marsh, PHELPS DUNBAR, LLP - Jackson, Jackson, MS; Krissy Casey Nobile, PHELPS DUNBAR, LLP - Tupelo, Tupelo, MS.

For Hansworld Holding Limited, Parent company of Hansaworld, USA, Defendant: Jason T. Marsh, PHELPS DUNBAR, LLP - Jackson, Jackson, MS.

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This matter is before the Court on the Defendant HansaWorld USA, Inc.'s (" HansaWorld USA" ) Partial Motion to Dismiss or, in the Alternative, for Summary Judgment (" Motion to Dismiss" ) [69], and the Defendant HansaWorld Holding Limited's (" HansaWorld Holding" ) Motion to Dismiss [94]. Having considered the submissions of the parties, the record, and the applicable law, the Court finds that both motions should be granted.


Plaintiff Kimberlee Davenport asserts several federal and state law claims against her former employer, HansaWorld USA, in this action. Davenport was employed by HansaWorld USA as a sales manager through a written Contract of Employment [13-4] fro January of 2011 to October of 2012. It appears that HansaWorld USA is a software company. HansaWorld USA was incorporated in California in July of 2009, and maintains its principal offices in Florida. HansaWorld USA was registered to do business in Mississippi from February of 2010 to December of 2011. HansaWorld Holding is the parent company and sole shareholder of HansaWorld USA. HansaWorld Holding was organized under the laws of Ireland and maintains its headquarters in that country.

On December 13, 2012, Davenport filed suit against HansaWorld USA and Karl Bohlin (an adult resident citizen of Sweden) in this Court. ( See Compl. [1].) Subject matter jurisdiction is asserted under Title 28 U.S.C. § § 1331 (federal question) and 1343 (civil rights). Davenport alleges that she experienced sexual harassment by several individuals, and that Bohlin, her direct and immediate supervisor, was the primary perpetrator of the harassment. Davenport further contends that as one of the few U.S. employees of HansaWorld USA, she " was often singled out and ridiculed for her national origin as being an 'American.'" (Compl. [1] at ¶ 15.) Davenport claims that she was wrongfully terminated after complaining about the purported sexual harassment and about HansaWorld USA's alleged disregard of U.S. tax and immigration laws pertaining to employee pay. Based on these and other allegations, the Complaint asserts liability under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. (" Title VII" ), for discrimination based on sex and national origin, retaliation, and hostile work environment. The following state law claims are also included in the Complaint: defamation; malicious interference with employment; intentional and negligent infliction of emotional distress; discharge in violation of public policy; breach of contract; breach of good faith and fair dealing; and negligent supervision and training.

On April 16, 2013, Davenport filed her Amended Complaint [28], joining HansaWorld UK Ltd. and HansaWorld Ireland as Defendants. Through this pleading, Davenport claimed that HansaWorld USA is the alter ego and subsidiary of HansaWorld UK Ltd. and HansaWorld Ireland. Davenport further asserted that all HansaWorld companies share the same Board of Directors. No new causes of action were alleged in the Amended Complaint [28].

On April 23, 2013, HansaWorld USA moved to dismiss the Amended Complaint for lack of personal jurisdiction and improper venue. ( See Doc. No. [30].) HansaWorld

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USA alternatively sought to transfer venue to the U.S. District Court for the Southern District of Florida. On September 25, 2013, the Court entered its Memorandum Opinion and Order [45], concluding that dismissal was unwarranted on the grounds urged by HansaWorld USA, and that good cause did not exist for the transfer of this action to the Southern District of Florida.

On October 24, 2013, Davenport's claims against Bohlin, HansaWorld UK Ltd., and HansaWorld Ireland were dismissed with prejudice via an Agreed Order of Dismissal with Prejudice [51].

On January 10, 2014, Davenport filed her Second Amended Complaint [62]. This pleading only names HansaWorld USA and HansaWorld Holding as Defendants. Davenport claims that HansaWorld USA is the alter ego and subsidiary of HansaWorld Holding; that the Defendants share the same Board of Directors and bank accounts; and, that employees " of all HansaWorld companies are fluid and work for and between the HansaWorld sister companies." (2d Am. Compl. [62] at pp. 2-3.) The Second Amended Complaint contains the same causes of action as the original Complaint, minus Davenport's claim for malicious interference with employment against Bohlin.

On January 16, 2014, HansaWorld USA filed its Motion to Dismiss [69]. This motion is aimed only at Davenport's Title VII cause of action. On March 5, 2014, HansaWorld Holding filed its Motion to Dismiss [94]. HansaWorld Holding seeks the dismissal of the Second Amended Complaint [62] on two grounds: (1) lack of personal jurisdiction and (2) insufficient service of process. HansaWorld Holding also joins in HansaWorld USA's request for the dismissal of Davenport's Title VII claims. The subject motions have been fully briefed and the Court is ready to rule.


I. HansaWorld USA's Motion to Dismiss [69]

HansaWorld USA argues that Davenport's Title VII claims fail because it does not have the requisite number of employees to qualify as a statutory " employer." Under Title VII, an " employer" is defined as " a person engaged in an industry affecting commerce who has fifteen or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calender year . . . ." 42 U.S.C. § 2000e(b). The term " employee" is defined as " an individual employed by an employer," but does not encompass certain government officials. 42 U.S.C. § 2000e(f). " With respect to employment in a foreign country, such term [employee] includes an individual who is a citizen of the United States." Id.

HansaWorld USA contends that dismissal is required under Federal Rule of Civil Procedure 12(b)(6) since the Complaint is devoid of any allegations indicating that it is an employer under Title VII. HansaWorld USA alternatively contends that summary judgment is appropriate on this issue under Federal Rule of Civil Procedure 56.

A. Federal Rule of Civil Procedure 12(b)(6)

1. Standard of Review

To withstand a motion to dismiss under Rule 12(b)(6), " a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell A. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). " A claim has facial plausibility when the plaintiff pleads factual

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content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. ; see also In re Great Lakes Dredge & Dock Co., 624 F.3d 201, 210 (5th Cir. 2010) (" To be plausible, the complaint's '[f]actual allegations must be enough to raise a right to relief above the speculative level.'" ) (quoting Twombly, 550 U.S. at 555). A complaint containing mere " labels and conclusions, or a formulaic recitation of the elements" is insufficient. Bowlby v. City of Aberdeen, Miss., 681 F.3d 215, 219 (5th Cir. 2012) (citation and internal quotation marks omitted). Although courts are to accept all well-pleaded facts as true and view those facts in the light most favorable to the nonmoving party, courts are not required " to accept as true a legal conclusion couched as factual allegation." Randall D. Wolcott, M.D., P.A. v. Sebelius, 635 F.3d 757, 763 (5th Cir. 2011) (citations omitted). Ultimately, the court's task " is to determine whether the plaintiff has stated a legally cognizable claim that is plausible, not to evaluate the plaintiff's likelihood of success." In re McCoy, 666 F.3d 924, 926 (5th Cir. 2012) (citing Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010)).

2. Analysis

The United States Supreme Court has held that § 2000e(b)'s employee numerosity requirement " is an element of a plaintiff's claim for relief, not a jurisdictional issue." Arbaugh v. Y & H Corp., 546 U.S. 500, 516, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006). Thus, a defendant charged with employment discrimination cannot wait until after the close of evidence to seek and obtain dismissal based on the ground that it employs fewer than fifteen people. See id. at 504. There are divergent district court opinions regarding whether a complaint asserting a claim for relief under Title VII must specifically allege the number of employees employed by the defendant in order to survive Rule 12(b)(6) scrutiny. Compare Prystawik v. BEGO USA, No. 13-134 S, 2013 WL 2383680, at *2-3 (D.R.I. May 30, 2013) (granting the defendant's motion to dismiss where the complaint did not allege the number of employees), and Morrow v. Keystone Builders, Inc., No. 2:08-4119-CWH, 2010 WL 3672354, at *8 (D.S.C. Sept. 15, 2010) (" Plaintiff's Amended Complaint fails to state a claim for which relief can be granted under Title VII because the Plaintiff fails to allege facts establishing an essential element of her claim--that her employer employed fifteen or more employees." ), with LeBlanc v. Del. County Bd. of Prison Inspectors, No. 10-3704, 2011 WL 2745800, at *5 (E.D. Pa. July 14, 2011) (denying a motion to dismiss with respect to a complaint that presented no specific factual allegations as to the number of individuals employed by the defendant, but pleaded facts allowing the Court to reasonably infer that the numerosity requirement was met), Powers v. Avondale Baptist Church, No. 3:06cv363-J-33MCR, 2007 WL 2310782, at *2-3 (M.D. Fla. Aug. 9, 2007) (noting that the employee numerosity requirement is more appropriately considered in the context of summary judgment in denying a Rule 12(b)(6) request for dismissal) (citation omitted), and Berry v. Lee, 428 F.Supp.2d 546, 559 (N.D. Tex. 2006) (denying the defendants' requests for dismissal under Rule 12(b)(6) without prejudice to their ability to move for summary judgment where the complaint did not specifically allege that any defendant employed fifteen or more individuals).

Davenport's Second Amended Complaint [62] does not specify the number of employees employed by HansaWorld USA. However, this pleading and Davenport's Equal Employment Opportunity Commission

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Charge of Discrimination (" EEOC Charge" ) [63] clearly assert that HansaWorld USA employed multiple employees. ( See 2d Am. Compl. [62] at ¶ ¶ 10, 15, 20, 47; EEOC Charge [63] at p. 1.)[1] Davenport's opposition to the Motion to Dismiss further posits that " at least forty-five (45) employees had an employment relationship with HansaWorld USA." (Davenport's Mem. in Supp. of Opp. to Mot. to Dismiss [73] at ¶ 41.)

A court should not ordinarily dismiss a claim based on a pleading defect without granting leave to amend. See Hart v. Bayer Corp., 199 F.3d 239, 248 n.6 (5th Cir. 2000) (citations omitted). It thus appears that the grant of HansaWorld USA's Rule 12(b)(6) request for dismissal would amount to an exercise in futility and only delay proceedings while Davenport amends the pleadings to assert that HansaWorld USA employed at least forty-five individuals. The Court finds that the dismissal of Davenport's Title VII cause of action under Rule 12(b)(6) would be improvident under these circumstances, and that the employee numerosity requirement should be addressed under Rule 56. Cf. Powers, 2007 WL 2310782, at *2-3; Berry, 428 F.Supp.2d at 559.[2]

B. Federal Rule of Civil Procedure 56

1. Standard of Review

Rule 56 provides that " [t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). " Where the burden of production at trial ultimately rests on the nonmovant, the movant must merely demonstrate an absence of evidentiary support in the record for the nonmovant's case." Cuadra v. Houston Indep. Sch. Dist., 626 F.3d 808, 812 (5th Cir. 2010) (citation and internal quotation marks omitted). The nonmovant must then " come forward with specific facts showing that there is a genuine issue for trial." Id. " 'An issue is material if its resolution could affect the outcome of the action.'" Sierra Club, Inc. v. Sandy Creek Energy Assocs., L.P., 627 F.3d 134, 138 (5th Cir. 2010) (quoting Daniels v. City of Arlington, Tex., 246 F.3d 500, 502 (5th Cir. 2001)). " An issue is 'genuine' if the evidence is sufficient for a reasonable jury to return a verdict for the nonmoving party." Cuadra, 626 F.3d at 812 (citation omitted).

The Court is not permitted to make credibility determinations or weigh the evidence. Deville v. Marcantel, 567 F.3d 156, 164 (5th Cir. 2009) (citing Turner v. Baylor Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir. 2007)). When deciding whether a genuine fact issue exists, " the court must view the facts and the inferences to be drawn therefrom in the light most favorable to the nonmoving party." Sierra Club, Inc., 627 F.3d at 138. However, " [c]onclusional allegations and denials, speculation, improbable inferences, unsubstantiated assertions, and legalistic argumentation

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do not adequately substitute for specific facts showing a genuine issue for trial." Oliver v. Scott, 276 F.3d 736, 744 (5th Cir. 2002) (citation omitted). Summary judgment is mandatory " 'against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.'" Brown v. Offshore Specialty Fabricators, Inc., 663 F.3d 759, 766 (5th Cir. 2011) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)).

2. Analysis

HansaWorld USA makes the following pertinent assertions of fact in support of summary judgment: (i) HansaWorld USA " has never employed more than fifteen (15) total employees for each working day in each of twenty or more calendar weeks during any calendar year" ; (ii) " all HansaWorld companies combined have never employed fifteen (15) or more United States citizens for each working day in each of twenty or more calendar weeks in any given calendar year" ; and (iii) HansaWorld USA employed a total of thirteen (13) people during the calender years of 2010 through 2012, only six (6) of whom are U.S. citizens. (Jay Decl. [69-1] at ¶ ¶ 3-5.)[3] HansaWorld USA also makes the legal argument that foreign citizens employed abroad do not count toward § 2000e(b)'s employee numerosity requirement.

Davenport's central factual assertion in opposition to summary judgment is that while she was employed by HansaWorld USA, she " regularly worked with and interacted with . . . [forty-five (45) individuals] who had employment relationships with HansaWorld USA" . (Davenport Aff. [72-1] at ¶ 3.) Davenport contends HansaWorld USA and HansaWorld Holding are an integrated enterprise [4] that, along with several different HansaWorld branches or companies operating around the globe, employs hundreds of individuals. At times, Davenport refers to the integrated enterprise as " HansaWorld Group" . Davenport further disputes HansaWorld USA's argument that non-U.S. citizens are excluded from the employee count under § 2000e(b). As a fall-back argument, Davenport contends the integrated enterprise of HansaWorld Group includes twenty (20) U.S. business partners and that it is reasonable to infer that each business partner employs at least one (1) U.S. citizen.

In rebuttal, HansaWorld USA extensively disputes Davenport's contention that it should be considered an employer of its U.S. business partners' employees. HansaWorld USA also submits the Declaration of Vadims Zuravlovs, " the Chief Legal Advisor for HansaWorld Legal Department," stating that HansaWorld Holding did not have any employees during the calendar years of 2010 through 2012. (Zuravlovs Decl. [81-1] at ¶ ¶ 2-3.) HansaWorld USA thus asserts that even if it and HansaWorld Holding are considered to be an integrated enterprise, the employee numerosity requirement under Title VII is not met. HansaWorld USA nonetheless admits that " there are other HansaWorld entities organized abroad", and concedes, solely for purposes of the Motion to Dismiss

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, " that the Court may assume that all HansaWorld entities are a single enterprise." (HansaWorld USA's Rebuttal in Supp. of Mot. to Dismiss [91] at p. 22.) HansaWorld USA also assumes (solely for purposes of the subject motion) that it employs " fifteen (15) or more individuals counting foreign employees employed abroad." (HansaWorld USA's Rebuttal in Supp. of Mot. to Dismiss [91] at p. 8.) HansaWorld USA is willing to make these concessions or assumptions based on two positions: (1) foreign citizens employed abroad do not count in determining whether an entity is an employer under Title VII; and (2) " no HansaWorld company has ever employed fifteen or more U.S. citizens or foreign nationals employed in the U.S. for the requisite period of time under Title VII." (HansaWorld USA's Rebuttal in Supp. of Mot. to Dismiss [91] at ...

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