Summary
adding owner of the company as a party to plaintiff's workplace discrimination suit against company because owner potentially subject to personal liability for discrimination allegedly committed by company employees
Summary of this case from Gem Global Yield Fund Ltd. v. SurgiLIGHT, Inc.Opinion
02 Civ. 1492 (JSM) (JCF)
June 11, 2003
MEMORANDUM AND ORDER
The plaintiff, Catherine Liegey, brings this employment discrimination action against Ellen Figg, Inc. ("Ellen Figg"), Russell Kemp Company, Inc. ("RK"), MR Cutting Corp. ("MR"), and Martin Coleman, the Chief Executive Officer and President of these companies. Pursuant to Rules 15 and 20 of the Federal Rules of Civil Procedure, Ms. Liegey seeks to amend her complaint in order to add Randi Coleman as a defendant. For the reasons stated below, the plaintiff's motion is granted.
Background
From February 26, 2001 until June 19, 2001, Ms. Liegey worked as a merchandiser for Ellen Figg, RK, and MR, three companies that manufacture and distribute women's apparel. (Complaint dated February 25, 2002 ("Compl."), at ¶ 2, 3). Ms. Liegey asserts that during the period of her employment she was the victim of numerous incidents of sexual harassment by Mr. Coleman. (Compl., ¶¶ 17-20, 25-29). She also claims that she was the subject of retaliation based on her opposition to these discriminatory acts. (Compl., ¶¶ 36(d), 41(d)). Ms. Liegey alleges that the defendants retaliated against her by terminating her, denying her medical benefits, slandering her character to members of the New York fashion industry, and tortiously interfering with her business opportunities. (Compl., ¶¶ 36(d), 41(d)). She brings these claims pursuant to Title VII of the Civil Rights Act of 1964 ("Title VII"), the New York State Human Rights Law ("NYSHRL"), the New York City Administrative Code ("NYCRL"), the New York Labor Law, and common law.
Ms. Liegey alleged that Ellen Figg, RK, and MR are "wholly owned and operated by . . . Martin Coleman, the Chief Executive Officer and President of Ellen Figg, [RK], and MR." (Compl., ¶ 4). Accordingly, she named the three companies and Mr. Coleman as defendants in this action. Now, Ms. Liegey seeks to amend her complaint to join Mr. Coleman's wife, Randi Coleman, as a defendant based on her purported ownership of Ellen Figg.
The plaintiff avers that her initial research, which included analysis of Dun Bradstreet Company Reports, indicated that Mr. Coleman was the sole owner of Ellen Figg. (Affidavit of Eve I. Klein dated April 11, 2003 ("Klein Aff."), ¶ 4 Exh. A). In addition, the plaintiff notes that Ellen Figg's Consolidated Financial Statements, which were produced by the defendants during the course of discovery, "seemed to confirm [this] fact." (Klein Aff., ¶ 5). The plaintiff, who filed her complaint on February 26, 2002, claims that she first learned of Randi Coleman's ownership interests at Mr. Coleman's deposition, which took place on November 19, 2002. (Klein Aff., ¶ 6). During his deposition, Mr. Coleman acknowledged that Randi Coleman has owned one hundred percent of Ellen Figg's stock since the company's inception. (Deposition of Martin Coleman dated November 19, 2002 ("Martin Coleman Dep."), attached as Exh. C to Klein Aff., at 12).
On December 3, 2002, the plaintiff requested that the defendants "provide, among other things, a copy of all documents submitted by Ellen Figg to the Secretary of State regarding the incorporation and/or corporate structure of Ellen Figg in an effort to determine the actual ownership of the company." (Klein Aff., ¶ 8). The defendants refused to produce the requested information, arguing that it was all publicly available. (Letter from Michael A. London dated February 7, 2003, attached as Exh. D to the Affirmation of Michael A. London, Esq. in Opposition to Plaintiff's Motion to Amend the Complaint and Join an Additional Party dated April 30, 2002 ("London Aff."), at 2). Ultimately, on March 3, 2002, I ordered that the defendants produce Ellen Figg's corporate kit. (Order dated March 3, 2003 at 2). The defendants produced the corporate kit on March 7, and the plaintiff contends that it confirmed Randi Coleman's status as Ellen Figg's sole shareholder. (Klein Aff., ¶ 14).
Meanwhile, on February 3, 2002, the defendants deposed Randi Coleman. During that deposition, she admitted that she was the sole shareholder of Ellen Figg. (Deposition of Randi Coleman dated February 3, 2003 ("Randi Coleman Dep."), attached as Exh. H to the Klein Aff., at 21).
The plaintiff sought leave to amend her complaint on April 11, 2003.
Discussion
A. Amendment and Joinder
A motion to amend is generally governed by Rule 15(a) of the Federal Rules of Civil Procedure, which states that leave to amend "shall be freely given when justice so requires." Fed.R.Civ.P. 15(a); see John Hancock Mutual Life Insurance Co. v. Amerford International Corp., 22 F.3d 458, 462 (2d Cir. 1994) (notwithstanding the general rule, "it is within the sound discretion of the court whether to grant leave to amend"); Ronzani v. Sanofi S.A., 899 F.2d 195, 198 (2d Cir. 1990). Leave to amend should only be denied for such reasons as "(1) undue delay; (2) bad faith or dilatory motive on the part of movant; (3) repeated failure to cure deficiencies by amendments previously allowed; (4) undue prejudice to the opposing party; and (5) futility of the amendment." Silva Run Worldwide Ltd. v. Gaming Lottery Corp., No. 96 Civ. 3231, 2003 WL 1877341, at *1 (S.D.N.Y. April 14, 2003); see Foman v. Davis, 371 U.S. 178, 182 (1962).
Here, the plaintiff seeks to amend her complaint to join a party under Rule 20 of the Federal Rules of Civil Procedure. (Plaintiff's Memorandum of Law in Support of Motion to Amend Complaint and Join Additional Defendant ("Pl. Memo.") at 7). Rule 20(a) provides that:
The plaintiff also argues that Ms. Coleman may be properly joined pursuant to Rule 21. That rule, however, is concerned with misjoinder of parties. Thus, its provision that "parties may be dropped or added by order of the court . . .," refers to corrective action taken in the event of misjoinder. Since the plaintiff seeks only to add a defendant here, Rule 21 is inapplicable.
All persons . . . may be joined in one action as defendants if there is asserted against them jointly, severally, or in the alternative, any right to relief in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences and if any question of law or fact common to all defendants will arise in the action.
Fed.R.Civ.P. 20(a). Like Rule 15, the requirements of Rule 20(a) should be interpreted liberally in order "to enable the court to promote judicial economy by permitting all reasonably related claims for relief by or against different parties to be tried in a single proceeding." A.I.A. Holdings, S.A. v. Lehman Brothers, Inc., No. 97 Civ. 4978, 1998 WL 159059, at *5 (S.D.N.Y. April 1, 1998) (internal quotation marks and citation omitted); see Abner Realty, Inc v. Administrator of General Services Administration, No. 97 Civ. 3075, 1998 WL 410958, at *2 (S.D.N.Y. July 22, 1998) (commenting on the "great liberality of Rule 20(a)").
Here, the plaintiff has satisfied the joinder requirements. First, Ms. Liegey's claims against the defendants and Randi Coleman are based on common questions of law and fact. Under the NYSHRL, an individual may be held liable for workplace discrimination if she has "any ownership interest or any power to do more than carry out personnel decisions made by others." Patrowich v. Chemical Bank, 63 N.Y.2d 541, 542 (1984); see Tomka v. Seiler, 66 F.3d 1295, 1317 (2d Cir. 1995). Here, Randi Coleman has acknowledged her one hundred percent ownership interest in Ellen Figg. (Randi Coleman Dep. at 21; Martin Coleman Dep. at 12). As an owner of Ellen Figg, Randi Coleman may be personally liable upon a finding that Ellen Figg or Mr. Coleman engaged in workplace discrimination in violation of Section 296(1) of the NYSHRL because any determination regarding Ms. Coleman's liability flows directly from a finding that those defendants violated New York's anti-discrimination laws. Essentially, if Randi Coleman is ultimately found liable, her liability will stem from legal and factual issues common among all defendants.
The defendants argue that a nominee agreement between Mr. and Ms. Coleman, where Randi Coleman submits her resignation as an officer and director of Ellen Figg and agrees to vote in accordance with Mr. Coleman's instructions, prevents a finding of liability against Randi Coleman. (Nominee Agreement dated December 19, 1988, attached as Exh. C to London Aff.). The defendants argue that this agreement precludes the plaintiff from obtaining a judgment against Ms. Coleman. (London Aff., ¶¶ 8-9).
However, this nominee agreement only refers to Randi Coleman's responsibilities as an officer and director of Ellen Figg. Her status as the one hundred percent shareholder is not altered by this agreement. Thus, under Patrowich, Ms. Coleman's ownership interest alone may be sufficient to support her individual liability in this action.
Second, the plaintiff's claims against Randi Coleman arise out of the same transactions or series of transactions as the existing claims. Ms. Liegey's complaint accuses the defendants of gender discrimination and retaliation. The plaintiff posits that Randi Coleman's liability would stem from the same alleged incidents of discrimination and retaliation. (Klein Aff., ¶ 18). Thus, there is a transactional connection between the claims asserted against Mr. Coleman and the claims the plaintiff seeks to assert against Randi Coleman.
Moreover, the defendants have not demonstrated any compelling reason to prevent the plaintiff from amending her complaint. The defendants argue that because the plaintiff's motion is "untimely and lacking in good-faith" it should be denied. (London Aff., ¶ 19). Although this motion was filed towards the close of discovery, it is neither untimely nor made in bad faith. Ms. Liegey first learned of Randi Coleman's potential ownership interest in Ellen Figg at Martin Coleman's deposition on November 19, 2002. Upon learning that Randi Coleman may indeed be the sole shareholder of Ellen Figg, the plaintiff sought to depose Ms. Coleman and obtain the corporate kit of Ellen Figg.
Given the plaintiff's thorough effort to determine Randi Coleman's ownership interest, I do not find that she acted with undue delay or bad faith. Similarly, I do not believe that the defendants are prejudiced by the proposed amendment. In fact, the defendants concede that "only a limited amount of discovery will likely be required and necessary so as to assert and establish the necessary defenses" and oppose the claims against Randi Coleman. (London Aff., ¶ 28). Since the defendants have not presented a colorable reason for denying the plaintiff's request to amend its complaint, the plaintiff's motion is granted.
B. Costs
The defendants request that "in the event the Court grants [the] Plaintiff's application for leave to amend her Complaint . . . that [the] Plaintiff incur all costs associated with the amended pleading, including the instant opposition, the Answer, all discovery on the issue, and any dispositive motions that will need to be made concerning this issue." (London Aff., ¶ 25). The defendants justify their request for costs by noting that:
[t]his request is proper and warranted under these circumstances and this last minute major substantive amendment. Moreover, the facts of this particular litigation to date, including the conduct of [the] Plaintiff and her counsel as against Mr. Coleman personally warrant the awarding of costs so as to ensure that [Randi] Coleman is not abused in the same manner as her husband has been throughout this litigation.
(London Aff., ¶ 25).
Although the Court does have the authority to award costs as a condition imposed on an amending party, see Polycast Technology Corp. v. Uniroyal, Inc., 728 F. Supp. 926, 939 (S.D.N.Y. 1989), in this case, an award is not warranted. As noted above, the plaintiff's motion was not untimely, it was not made in bad faith, and the defendants will not suffer any prejudice from the amendment.
Conclusion
For the reasons discussed above, the plaintiff's motion for leave to amend her complaint is granted.
SO ORDERED.