Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ared-2_05-cv-00271/USCOURTS-ared-2_05-cv-00271-0/pdf.json

Nature of Suit Code: 442
Nature of Suit: Civil Rights Employment
Cause of Action: 42:2000e Job Discrimination (Employment)

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 Carlton has filed two motions to dismiss. On the same day as Carlton filed a motion to

dismiss the amended complaint, Matthews filed a second amended complaint. Carlton

subsequently moved to dismiss the second amended complaint. The Court denies the motion to

dismiss the amended complaint as moot (Document #19) and addresses only the motion to

dismiss the second amended complaint.

IN THE UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF ARKANSAS

HELENA DIVISION

EDWARD MATTHEWS PLAINTIFF

v. No. 2:05CV00271 JLH

NEWPORT HEALTHCARE CENTER, INC.;

REGIONAL HEALTHCARE, INC.; REGIONAL

MANAGEMENT, INC.; HEATH CARLTON; 

LINDLEY HEALTHCARE, LLC; and

TRIFIELD, LLC DEFENDANTS

OPINION AND ORDER

Edward Matthews brings employment discrimination claims against Newport Healthcare and

Regional Healthcare as his former employers and against various other parties as successors in

interest to Newport and Regional. One of the parties alleged to be a successor in interest in this case

is Heath Carlton, who now presents a motion to dismiss for failure to state a claim or, in the

alternative, motion for summary judgment.1 On the grounds that Matthews is not a successor in

interest, the motion to dismiss is GRANTED.

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) should only be

granted if it appears beyond a doubt that the plaintiff can prove no set of facts to warrant a grant of

relief. Gilmore v. County of Douglas, Neb., 406 F.3d 935, 937 (8th Cir. 2005). In considering a

motion to dismiss, the complaint is construed in the light most favorable to the plaintiff. Coleman

v. Watt, 40 F.3d 255, 258 (8th Cir. 1994). All facts alleged are taken as true and all reasonable

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inferences drawn in the favor of the plaintiff. Creason v. City of Washington, 435 F.3d 820, 823 (8th

Cir. 2006). The Court, however, is “free to ignore legal conclusions, unsupported conclusions,

unwarranted inferences and sweeping legal conclusions case in the form of factual allegations.”

Wiles v. Capitol Indem. Corp., 280 F.3d 868, 870 (8th Cir. 2002).

Successorship liability has been recognized by courts in the employment discrimination

context. See e.g., Brzozowski v. Corr. Physician Servs., 360 F.3d 173, 177-79 (3d Cir. 2004);

Musikiwamba v. ESSI, Inc., 760 F.2d 740, 746-53 (7th Cir. 1985). But see Dominguez v. Hotel,

Motel, Rest. & Miscellaneous Bartenders Union, 674 F.2d 732, 733 (8th Cir. 1982) (no

successorship liability when ownership was acquired without notice or knowledge of discrimination

charges); Rego v. ARC Water Treatment Co. of Pa., 181 F.3d 396, 401-02 (3d Cir. 1999) (no

successorship liability where successor’s operations and work force lacked continuity with

predecessor and alternate successor had exclusive control over remedial measures to forestall

litigation). In this case, Matthews alleges that Carlton is a successor in interest to Newport

Healthcare or Regional Healthcare. Specifically, the second amended complaint states:

Edward Matthews (Plaintiff) is a resident of Jackson County, Arkansas, who worked

for Defendants Newport Health[c]are and Regional Healthcare, both domestic

corporations, operating for profit in Jackson County, Arkansas. Since the Complaint

was filed, Plaintiff has been informed that the nursing home in which he worked has

been sold, along with all its assets, to Defendant Trifield, LLC, who is therefore a

successor in interest of Defendants Newport Healthcare and Regional Healthcare.

In addition, Plaintiff believes that either Regional Management, Inc. or Heath Carlton

received benefits, profits from, or money from the sale of the home and stripped

Newport Healthcare Center and Regional Health, Inc., of all its assets, and are

therefore successors in interest to them. Consequently, this Court has personal

jurisdiction over the parties. 

Second Am. Compl. ¶ 1. Carlton moves to dismiss the claims against him on the basis that the

complaint does not sustain the conclusion that he is a successor in interest. Matthews urges the

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Court to deny the motion to dismiss, arguing that, under notice-pleading standards, the allegation that

Carlton is a successor in interest suffices and, in the case that it does not, amendment should be

allowed.

Applying the standards of review applicable to motions to dismiss, the Court finds that

allegation insufficient and amendment inappropriate in this case. Asserting that a party is a

successor in interest is a legal, not factual, allegation, and thus one that the Court may freely

disregard. Wiles, 280 F.3d at 870. Assuming as true the factual allegations that Carlton stripped

assets from the nursing home at which Matthews worked or somehow benefitted, profited, or

received money from its sale, Carlton is not a successor, as that term is used legally, nor is he a

successor in interest, another legal term of art. Cf. Explosives Corp. of Am. v. Garlam Enters. Corp.,

615 F. Supp. 364, 369 (D.P.R. 1985) (stripping a corporation of assets does not create a successor

liability claim). Black’s Law Dictionary defines a successor as a “corporation that, through

amalgamation, consolidation, or other assumption of interests, is vested with the rights and duties

of an earlier corporation.” BLACK’S LAW DICTIONARY 1473 (8th ed. 2004). A successor in interest

is one who “follows another in ownership or control of property” or who “retains the same rights as

the original owner, with no change in substance.” Id. In Musikiwamba, the court held that a

successor in interest “actually purchases the assets of the predecessor and continues the predecessor’s

business.” 760 F.2d at 753. Matthews does not allege that Carlton purchased the assets or in any

way continued the business on his own; indeed, to construe the complaint in such a way would

contradict the complaint, which states that the nursing home and all of its assets were sold to

Trifield, LLC. Matthews alleges that Carlton stripped assets from the nursing home and otherwise

benefitted, profited, or received money from the sale. No authority of which the Court is aware

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holds that a party who commits these acts is a successor in interest. Because Matthews pursues only

successorship liability, the Court expresses no opinion as to whether these actions could render

Carlton liable to Matthews on some other theory. Accepting the factual allegations in the complaint

as true, Carlton is not a successor in interest and the claims against him thus fail as a matter of law.

Accordingly, the Court grants the motion and hereby dismisses the claims against Carlton without

prejudice. Document #26.

IT IS SO ORDERED this 14th day of April, 2006.

J. LEON HOLMES

UNITED STATES DISTRICT JUDGE

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