L'Annuziata and Abilgard Ruling: Motions to amend complaints

Consolidated cases:

CHRO No. 0210153
Fed No. 16aa200012

Commission on Human Rights and Opportunities ex rel. Paul L'Annunziata
 
and

CHRO No. 0110495
Fed No. 16aa11326

Commission on Human Rights and Opportunities ex rel.William Abildgaard
 
v.

New Horizons Computer Learning Center

August 7, 2003

Ruling re: Motions to amend complaints

I

    By motions dated April 2, 2003, the Commission on Human Rights and Opportunities ("commission") moves to amend the complaints. At the request of one or more of the parties, continuances were granted to file responses to the motions. New Horizons Computer Learning Center ("Learning Center") filed its opposition to the proposed amendments on June 20, 2003. New Horizons Worldwide, Inc. ("Worldwide") filed its objection on July 8, 2003. An evidentiary hearing was held on July 23, 2003. The transcript ("Tr.") was filed on August 6, 2003.
    For the reasons set forth herein, the commission's proposed amendments are found to be reasonable. The motions are granted and Learning Center's and Worldwide's ("respondents") objections are overruled. The respondents shall file and serve their answers to the amended complaints on or before August 21, 2003.

II

    With respect to the complaint filed by William Abildgaard ("Abildgaard"), the commission proposes: to (1) correct Abildaard's address; (2) amend the first sentence of paragraph 3 to say that on his first day of employment he was asked his age; (3) amend the first sentence of paragraph 8 to change an interview date from December of 2000 to the fall of 2000; and (4) add Worldwide as a respondent.
    With respect to the complaint filed by Paul L'Annunziata ("L'Annunziata"), the commission proposes to: (1) amend the first sentence of paragraph 7 to change an interview date from December of 2000 to the fall of 2000; and (2) add Worldwide as a respondent.
    In its amendments to both complaints, the commission proposes to pierce Learning Center's "corporate veil" in order to hold Worldwide also liable for Learning Center's allegedly discriminatory termination of the complainants. The commission further alleges that both Learning Center and Worldwide violated General Statutes §§ 46a-60(a)(1) and 46a-60(a)(5), and the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. 621 et seq.

III

    General Statutes § 46a-84(g) provides in part that "[t]he presiding officer … shall permit reasonable amendment to the complaint or answer …." Further, section 46a-54-79a(e) of the Regulations of Connecticut State Agencies provides in part that "[t]he presiding officer shall permit reasonable amendment of any complaint and shall allow the parties and intervenors sufficient time to prepare their case in light of the amendment." In determining the reasonableness of the amendment, "[f]actors to be considered include the timeliness of the application, the possibility of prejudice to the other party and whether the applicant's presence will enable the court to make a complete determination of the issues." (Citation omitted.) A. Secondino and Son, Inc. v. Anthony LoRicco, 19 Conn. App. 8, 14 (1989); Commission on Human Rights and Opportunities ex rel. Maria S. Rountree v. Seafood Peddler, CHRO No. 9830387, Memorandum of decision on motion to amend (May 14, 1999).
    Piercing a corporate veil for purposes of liability and damages is distinct from determining the reasonableness of a proposed amendment to add a respondent. However, to determine the reasonableness of the commission's amendments to add a parent corporation with the intention of piercing the corporate veil at public hearing, some consideration should also be given to the criteria for piercing a corporate veil. To determine whether piercing the corporate veil is proper, the Connecticut Supreme Court and previous commission decisions have endorsed two tests: the instrumentality rule and the identity rule. "The instrumentality rule requires, in any case but an express agency, proof of three elements: (1) Control, not mere majority or complete stock control, but complete domination, not only of finances but of policy and business practice in respect to the transaction attacked so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own; (2) that such control must have been used by the defendant to commit fraud or wrong, to perpetuate the violation of a statutory or other positive legal duty, or a dishonest or unjust act in contravention of plaintiff's rights; and (3) that the aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of." (Internal quotation marks omitted; citations omitted.) Tomasso v. Armor Construction & Paving, Inc., 187 Conn. 544, 553 (1982); Commission on Human Rights and Opportunities ex rel. Robert Henry v. Edwards Super Food Stores, CHRO No. 9510617, Ruling on Respondents' Motion to Dismiss and Commission's Motion for Stay, 3 (September 1, 1999).
    "The identity rule has been stated as follows: If plaintiff can show that there was such a unity of interest and ownership that the independence of the corporations had in effect ceased or had never begun, an adherence to the fiction of separate identity would serve only to defeat justice and equity by permitting the economic entity to escape liability arising out of an operation conducted by one corporation for the benefit of the whole enterprise." (Internal quotation marks omitted; citations omitted.) Tomasso, 187 Conn. 554; CHRO ex rel. Robert Henry, 4.

IV

    In its motions, the commission proposes, inter alia, to add Worldwide as a respondent. Although objecting to adding Worldwide as a respondent, Learning Center identifies no prejudice to it if Worldwide is added.
    Worldwide also objects to being added as a respondent. Worldwide claims that the amendment is untimely because "[a]ll information in support of the motion to amend was known to the Complainants and the Commission during the investigation of this matter." However, the commission contends that the motion is timely because Worldwide's role did not become clear until after the production of documents and related problems in obtaining the documents.
Worldwide contends that becoming a respondent at this late date would be prejudicial. However, the Connecticut Supreme Court has upheld an amendment belatedly adding a subsidiary corporation's parent corporation. Wroblewski v. Lexington Gardens, Inc., 188 Conn. 44 (1982). Specifically, Worldwide asserts that it would be prejudiced because there is no factual or legal basis for it to be named as a respondent, it was not the complainants' employer and it did not participate in the decisions to terminate the complainants' employment. These are factual issues relating to the merits of the complaints to be resolved at the public hearing.
    Worldwide further claims it would be prejudiced because it would not have had the benefit of the investigative stage of the commission's process. The purpose of the investigative stage is for "determining if there is reasonable cause for believing that a discriminatory practice has been or is being committed as alleged in the complaint." General Statutes § 46a-83(c). Worldwide offers no evidence that a finding of reasonable cause would not have been made had it been named as a respondent in the original complaint.
    Worldwide also contends that being added as a respondent at this time would deprive it of the ability to make a timely defense and subject it to the unnecessary costs of appearing in Connecticut where it has no presence. The public hearing can be continued if Worldwide can demonstrate that it actually requires more time to prepare its defense. However, since the commission served its motion on Worldwide in April, Worldwide already has had over three months to prepare for a public hearing that is still over a month away. Also, Worldwide is, indeed, effectively present in Connecticut if at the public hearing the commission and the complainants establish that the corporate veil between Learning Center and Worldwide should be pierced.
    According to Worldwide, its presence is not necessary to make a complete determination of the issues in these cases. However, if liability is found, if the corporate veil is pierced and even if Learning Center has sufficient assets to pay a damage award, the commission would still have an interest in seeking relief against Worldwide, such as a cease and desist order. General Statute § 46a-86(a).
    The consideration of other factors also supports the conclusion that the amendments are reasonable. Learning Center is a wholly owned subsidiary of Worldwide (CHRO Ex. 2, p. 66/67), and the two corporations share officers and directors. Despite the claim that William T. Daniels ("Daniels") was the president of Learning Center (Respondents' Exs. 1 and 2; Tr. 108), more credible are the documents filed with the state and federal governments by Learning Center and Worldwide. In its 1999, 2000 and 2001 filings with Connecticut's Secretary of the State, Learning Center identified Thomas J. Bresnan ("Bresnan") as Learning Center's president, chairman of the board and chief executive officer; Robert S. McMillan ("McMillan"), as chief financial officer; and Stuart O. Smith ("Smith"), as secretary. None of these people have Connecticut residence or business addresses. (CHRO Exs. 5, 6 and 7.)
    Bresnan, McMillan and Smith also appear in Worldwide's documents. In its 2000 and 2001 filings with the federal government, Worldwide identifies Bresnan as its president, chief executive officer and a director; McMillan as its vice president, treasurer, chief financial officer and a director; and Smith as its vice chairman of the board, secretary and director. (CHRO Ex. 2, p. 33/67, p. 35/67; CHRO Ex. 3, p. 36/61, p. 38/61.)
    On the complainants' 2000 W-2 form, Learning Center gives an address in Windsor, Connecticut. But, on the 2001 W-2 forms, Learning Center's address is in Anaheim, California. (CHRO Exs. 11 and 13.) Learning Center's California address is the same street number, suite number, city and state as Worldwide's principle executive office. (CHRO Exs. 3 and 4.)
There is unrebutted testimony that (1) Worldwide published and distributed to Learning Center detailed manuals of policies and procedures for Learning Center's required use. Mandatory hiring and termination procedures were included in these manuals. (CHRO Exs. 8 and 9; Tr. 34-37, 39, 43, 47-48, 81-83, 88-91, 94); (2) Learning Center provided detailed information to Worldwide on a weekly basis (CHRO Ex. 12; Tr. 41-43, 51-52); and (3) Daniels, one of the decision-makers involved in the complainants' terminations, spent three out of four weeks per month at Worldwide's California office. (Tr. 44, 98.)
    I note that this is a ruling on the reasonableness of motions to amend two complaints, not a ruling that the corporate veil is pierced as to liability and damages. Although these additional factors alone may not be sufficient for piercing the corporate veil to impose liability and damages at the public hearing, these factors do contribute to the reasonableness of the commission's proposed amendments to the complaints. As this is simply a ruling on the reasonableness of motions to amend, the commission and the complainants will still need to prove liability and damages at the public hearing and that the corporate veil should be pierced. The respondents retain the opportunity at the public hearing to present evidence disputing liability and damages and that, even if liability is found, the corporate veil should not be pierced.
    In its motions, the commission also proposes to correct Abildgaard's address, to amend paragraphs 3 and 8 of Abildgaard's complaint and to amend paragraph 7 of L'Annunziata's complaint. While these changes probably could have been made more timely, neither Learning Center nor Worldwide identifies any prejudice resulting from these proposed amendments. The correction of Abildgaard's address is simply ministerial. The change to paragraph 3 of Abildgaard's complaint appears reasonably related to paragraph 13b of the complaint. After reviewing the complaints and answers, the proposed identical amendments to paragraph 8 of Abildaard's complaint and paragraph 7 of L'Annuziata's complaint appear reasonable. These amendments are granted.

V

__________________________
Hon. Jon P. FitzGerald
Presiding Human Rights Referee

C:
Mr. P. L'Annunziata
Mr. W. Abildgaard
D. Metzger, Esq.
A. Simonetti, Esq.