Opinion
Civil Action No. 04-CV-1236.
September 20, 2004
ORDER
AND NOW, this 20th day of September 2004, it is hereby ORDERED that the Motion to Dismiss (Doc. No. 10) filed by Counterclaim Defendant Chris Matthews on July 6, 2004 is DENIED. Counterclaim Defendant is instructed to Answer the Counterclaim no later than October 8, 2004.
Counterclaim Plaintiff Suresh Bhula served as an employee of the Hay Group, Inc. (HGI) for approximately twenty-three years. On or about March 1, 2003, Mr. Bhula signed an employment agreement, drafted by HGI, that entitled him to sixty day notice of any termination as well as to post-termination severance compensation and benefits, so long as the termination was not for just and reasonable cause as defined by the agreement. Def. Answer and Countercl. at 11 — 13. On February 6, 2004, Counterclaim Plaintiff was terminated by Counterclaim Defendant Chris Matthews, who is the President and Chairman of HGI. Id. at 11. Counterclaim Plaintiff alleges that he was terminated without just and reasonable cause and without the required sixty-day notice. Id. at 13-14. HGI has made no severance payments to Counterclaim Plaintiff under the employment agreement, nor has HGI provided Counterclaim Plaintiff with any of the post-termination benefits specified in that agreement.Id. at 11.
Dismissal for failure to state a claim is appropriate when it clearly appears that plaintiff can prove no set of facts in support of the claim which would entitle him to relief. See Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Robb v. City of Philadelphia, 733 F.2d 286, 290 (3d Cir. 1984). Such a motion tests the legal sufficiency of a claim while accepting the veracity of the claimant's allegations. See Markowitz v. Northeast Land Co., 906 F.2d 100, 103 (3d Cir. 1990); Sturm v. Clark, 835 F.2d 1009, 1011 (3d Cir. 1987); Winterberg v. CNA Ins. Co., 868 F. Supp. 713, 718 (E.D. Pa. 1994), aff'd, 72 F.3d 318 (3d Cir. 1995). A claim may be dismissed when the facts alleged and the reasonable inferences therefrom are legally insufficient to support the relief sought. See Pennsylvania ex rel. Zimmerman v. PepsiCo., Inc., 836 F.2d 173, 179 (3d Cir. 1988).
Counterclaim Plaintiff has alleged facts sufficient to bring a claim against Counterclaim Defendant Chris Matthews for violation of the Pennsylvania Wage Payment and Collection Law ("WPCL"). The WPCL defines an "employer" liable for unpaid wages to include agents and officers of Commonwealth business entities. 43 P.S. § 260.2a. Whether an agent or officer is subject to personal liability under the WPCL hinges on whether that person exercises a policy-making function within the business enterprise. See, e.g. Central Pa. Teamsters Pension Fund v. Burton, 634 F. Supp. 128, 131 (E.D. Pa. 1986), cited by Mohney v. McClure, 568 A.2d 682, 345 (Pa.Super.Ct. 1990). At the time of Counterclaim Plaintiff's dismissal, Chris Matthews was the President and Chairman of Hay Group, Inc., positions that naturally call for an active involvement in the creation of company policy. Counterclaim Plaintiff avers that Mr. Matthews had ultimate decision-making authority over whether to honor his employment agreement. Def. Ans. and Countercl. at 15. Therefore, this Court will allow Counterclaim Plaintiff to proceed with a claim against Mr. Matthews under the WPCL.
Counterclaim Defendant asserts an additional requirement for personal liability to attach to an individual corporate officer under the WPCL — that the employer be insolvent, bankrupt, or otherwise unable to make any wage payments due employees. Countercl. Def. Mot. Dismiss at 3-4. The existence of this requirement is not supported by the plain language of the statute or by precedent binding on this Court. In support of his proposition, Counterclaim Defendant cites Belcufine v. Aloe, 112 F.3d 633 (3rd Cir. 1997), a case in which the Third Circuit describes an officer's personal liability under the WPCL as "contingent on the corporation's failure to pay debts that it owes." Countercl. Def. Reply in Support of Mot. to Dismiss at 2. In Belcufine, employees of the Shenango Corporation sued corporate officers personally under the WPCL for the non-payment of employee benefits after the company had filed a bankruptcy petition. The Third Circuit found that the contingency necessary to hold the individual officers liable had not occurred because the Bankruptcy Code prevented Shenango from fulfilling postpetition claims on corporate funds. Because the Bankruptcy Code had essentially stripped the individual officers of their policy-making ability with regard to the payment of benefits, they could not be held liable under the WPCL for the corporation's failure to pay. Belcufine, 112 F.3d at 639-40. The Third Circuit stated, however, that the individual officers were arguably liable for any benefits that became due to the employees at any time prior to Shenango's bankruptcy filing. Id. at 635.
Though its discussion of the requirements for individual liability under the WPCL arose in the context of a corporate bankruptcy, the Third Circuit therefore requires only that a corporation fail to make payments that are due its employees, rather than requiring that a corporation be unable to make those payments. Here, Counterclaim Plaintiff alleges that he has not received the severance payments and other benefits due him under his employment agreement with HGI. Def. Answer and Countercl. at 15. If true, HGI's failure to provide Counterclaim Plaintiff with the benefits guaranteed under the employment agreement is a basis for asserting Counterclaim Defendant's personal liability under the WPCL.
For all these reasons, it is hereby ORDERED that the Motion to Dismiss (Doc. No. 10) is DENIED.