Court Opinion

ID: 3010528
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Date Created: 2015-10-13 20:53:36.741211+00
Date Added: 2024-06-11T12:46:30.996030
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Opinions of the United
1997 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

3-17-1997

Denty v. SmithKline Beecham
Precedential or Non-Precedential:

Docket 96-1554

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Recommended Citation
"Denty v. SmithKline Beecham" (1997). 1997 Decisions. Paper 63.
http://digitalcommons.law.villanova.edu/thirdcircuit_1997/63

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                   UNITED STATES COURT OF APPEALS
                       FOR THE THIRD CIRCUIT
                            ___________

                               No. 96-1554
                               ___________

          GARLAND DENTY,
                           Appellant

                           vs.

          SMITHKLINE BEECHAM CORPORATION;

          (Caption amended per the Clerk's 7/22/96 order)
                           ___________

          Appeal from the United States District Court
            for the Eastern District of Pennsylvania
                   (D.C. Civ. No. 93-cv-06978)
                           ___________

                              Argued
                         February 6, 1997
         Before:   STAPLETON and MANSMANN, Circuit Judges
                    and RESTANI, Judge.*

                      (Filed     March 17, l997)
                               ___________

Ronald H. Surkin, Esquire (ARGUED)
Alexander A. DiSanti, Esquire
Nancy C. DeMis, Esquire
L. Keith Lipman, Esquire
Richard, DiSanti, Gallagher,
Schoenfeld & Surkin
25 West Second Street
P.O. Box 900
Media, PA 19063

          Attorneys for Appellant

Steven B. Feirson, Esquire (ARGUED)
David M. Howard, Esquire
Paul D. Snitzer, Esquire
Dechert, Price & Rhoads
1717 Arch Street
4000 Bell Atlantic Tower
Philadelphia, PA 19103

          Attorneys for Appellee

*         Honorable Jane A. Restani, Judge, United States Court
of International Trade, sitting by designation.

                                   1
C. Gregory Stewart, Esquire
Gwendolyn Young Reams, Esquire
Carolyn L. Wheeler, Esquire
Robert J. Gregory, Esquire (ARGUED)
Equal Employment Opportunity Commission
1801 L Street, N.W., Room 7032
Washington, DC 10507

            Attorneys for Amicus Curiae - Appellant

                              ___________

                         OPINION OF THE COURT
                              __________

MANSMANN,    Circuit Judge.

            Before us is the certified question of whether the Age

Discrimination in Employment Act and the Pennsylvania Human

Relations Act are applicable to the denial of a promotional

opportunity based upon age to an individual working in

Philadelphia, Pennsylvania, in the employ of a United States

subsidiary controlled by a foreign parent corporation not itself

controlled by an American corporation, where the promotional

opportunity is a position with the foreign corporation outside

the United States.    Because we do not believe Congress intended

the ADEA should be applied extraterritorially under the facts

here, we will affirm the judgment of the district court.

                                  I.

             The relevant facts on summary judgment are not

disputed.    In 1984, Garland Denty was hired by Smith Kline

French, a Pennsylvania corporation, as Director of Quality

Assurance.    Denty held this job until January 1989, when he was

given the title, Director of Manufacturing Operations/Technical

                                  2
Services, International.   Denty held these positions at Smith

Kline's Philadelphia office.   Smith Kline subsequently merged

with the Beecham Group plc, a British corporation in 1989; the

resulting corporation, SmithKline Beecham plc (SB plc), is

incorporated and headquartered in the United Kingdom.    Denty

continued working for SmithKline Beecham Corporation (SBC), the

wholly-owned American subsidiary of SB plc.

           As a consequence of the merger, five new positions were

created with SB plc in foreign locations.     Denty alleges that in

1990, he was told he would be promoted to one of these positions.

 Yet, he was subsequently denied the promotion allegedly because

of his age which, at that time, was fifty-two.    Denty further

contends that these positions were filled with men younger than

he.   The promotion decisions were made by SB plc executives in

England while Denty worked for SBC in Philadelphia.

           On December 27, 1993, Denty instituted the present

action against SBC,1 alleging violations of the ADEA and PHRA for

failure to promote, deprivation of employment opportunities, and

age discrimination.   Thereafter, SBC filed a motion for summary

judgment, arguing inter alia that the ADEA did not apply to

Denty's failure-to-promote claim.   The district court granted

summary judgment for SBC on the failure-to-promote claim.     In so

doing, the district court found that the statutory language of

1. The district court considered whether SBC was the proper
defendant. The court resolved the issue by ruling that it would
allow Denty leave to amend his complaint to name SB plc as a
defendant if it did not rule against him on SBC's summary
judgment motion. Denty v. SmithKline Beecham Corp., 907 F. Supp.
879, 881-82 (E.D.Pa. 1995).

                                3
the ADEA, and by extension the PHRA, did not provide for

extraterritorial application of the Act against a foreign

corporation for failure to promote to positions outside of the

United States.      The court specifically ruled that "[t]he relevant

work site is the location of [the position for which the

plaintiff applied], not the location of Denty's employment at the

time of the alleged discrimination."      Denty v. SmithKline Beecham

Corp., 907 F. Supp. 879, 884 (E.D. Pa. 1995).     The court further

opined that there was no distinction in the ADEA between a

"failure to hire" case, in which the discrimination occurs in the

country where the job site is located, and a "failure to promote"

situation.    Id.    Finally, the district court rejected Denty's

contention that SBC and SB plc were indistinguishable and should

be considered as a "single employer," holding instead that the

proper inquiry was "whether Denty sought employment with an

employer `controlled' by an American firm."     Id. at 885.

             Denty then moved for certification to allow an

immediate appeal pursuant to 28 U.S.C. § 1292(b), which the

district court granted on May 10, 1996.     The question certified

for appeal is:
whether the Age Discrimination in Employment Act and
          the Pennsylvania Human Relations Act are
          applicable to the denial of a promotional
          opportunity based upon age to an individual
          working in Philadelphia, PA, in the employ of
          a foreign corporation not controlled by an
          American corporation, where the promotional
          opportunity is a position with that same
          foreign corporation outside the United
          States?

                                   4
Denty petitioned for permission to appeal under 28 U.S.C. §

1292(b) from a certified interlocutory order of the district

court.   We granted Denty's motion on June 21, 1996.

            We review the district court's grant of summary

judgment de novo.     Antol v. Perry, 82 F.3d 1291, 1294-95 (3d Cir.

1996).

                                 II.

            We begin our analysis with the longstanding principle

of American law that "legislation of Congress, unless a contrary

intent appears, is meant to apply only within the territorial

jurisdiction of the United States."      EEOC v. Arabian American

Oil Co., 499 U.S. 244, 248 (1991).     The Supreme Court stated that

in applying this rule, courts should determine if the "language

in the [relevant Act] gives any indication of a congressional

purpose to extend its coverage beyond places over which the

United States has sovereignty or has some measure of legislative

control."   Id. (quoting Foley Bros., Inc. v. Filardo, 336 U.S.
281, 285 (1949)).    If Congress wishes to go beyond the purely

domestic realm, there must be an "affirmative intention . . .

clearly expressed."    Id. (quoting Benz v. Compania Naviera

Hidalgo, S.A., 353 U.S. 138, 147 (1957).        We turn, therefore,

to the plain language of the ADEA.

            Codified at 29 U.S.C. § 623(a), the ADEA states in

pertinent part:
It shall be unlawful for an employer . . . to fail or
          refuse to hire or to discharge any individual
          or otherwise discriminate against any
          individual with respect to his compensation,

                                  5
          terms, conditions, or privileges of
          employment, because of such individual's
          age[] . . . .

Prior to 1984, the ADEA did not contain any provision addressing

extraterritorial reach.   Instead, the ADEA adopted language from

the Fair Labor Standards Act, 29 U.S.C. §§ 216(d) and (e), which

provided that no "employee whose services during the workweek are

performed in a workplace within a foreign country" was protected.

 Consequently, we held in Cleary v. United States, 728 F.2d 607,

610 (3d Cir. 1984), that the ADEA could not be applied to

Americans employed outside the United States by American

employers.

          In 1984, Congress responded to Cleary and subsequent

cases2 by amending the ADEA to provide for limited

extraterritorial application.   First, Congress amended the

definition of "employee" to include "any individual who is a

citizen of the United States employed by an employer in a

workplace in a foreign country."    29 U.S.C. § 630(f).   Second,

Congress enacted the key provision in this case, 29 U.S.C. §

623(h)3, which states:
Practices of foreign corporations controlled by
          American employers; foreign persons not

2. See, e.g., Lopez v. Pan Am World Services, Inc., 813 F.2d
1118 (11th Cir. 1987); S.F. DeYoreo v. Bell Helicopter Textron,
Inc., 785 F.2d 1282 (5th Cir. 1986); Ralis v. RFE/RL, Inc., 770
F.2d 1121 (D.C. Cir. 1985); Pfeiffer v. Wm. Wrigley Jr. Co., 755
F.2d 554 (7th Cir. 1985); Zahourek v. Arthur Young and Co., 750
F.2d 827 (10th Cir. 1984); Thomas v. Brown & Root, Inc., 745 F.2d
279 (4th Cir. 1984).

3. This subsection was originally codified as 29 U.S.C. §
623(g), creating the incongruity of two subsection "g's." This
mistake was remedied by a 1986 amendment.

                                6
          controlled by American employers; factors
          determining control

          (1) If an employer controls a corporation
          whose place of incorporation is in a foreign
          country, any practice by such corporation
          prohibited under this section shall be
          presumed to be such practice by such
          employer.

          (2) The prohibitions of this section shall
          not apply where the employer is a foreign
          person4 not controlled by an American
          employer.

          (3) For the purpose of this subsection the
          determination of whether an employer controls
          a corporation shall be based upon the--
          (A) interrelation of operations,
          (B) common management,
          (C) centralized control of labor
          relations, and
          (D) common ownership or financial
                              control,

of the employer and the corporation.

As the Supreme Court noted in Arabian, "[t]he expressed purpose

of these changes was to `mak[e] provisions of the Act apply to

citizens of the United States employed in foreign countries by

U.S. corporations or their subsidiaries.'" 499 U.S. at 259

(quoting S. Rep. No. 98-467, at 2 (1984), reprinted in 1984

U.S.C.C.A.N. 2974, 2975).

          Viewing the 1984 amendments together, the district

court here concluded that the "ADEA applies abroad only when (1)

the employee is an American citizen and (2) the employer is

controlled by an American employer." 907 F. Supp. at 883.    Our

4. "The term `person' means one or more individuals,
partnerships, associations, labor organizations, corporations,
business trusts, legal representatives, or any organized group of
persons." 29 U.S.C. § 630(a).

                               7
reading of the plain language of the statute compels us to agree.
5
    The legislative history likewise necessitates this conclusion:

The purpose behind the amendment is to insure that the
          citizens of the United States who are
          employed in a foreign workplace by U.S.
          corporations or their subsidiaries enjoy the
          protections of the [ADEA]. When considering
          this amendment, the Committee was cognizant
          of the well-established principle of
          sovereignty, that no nation has the right to
          impose its labor standards on another
          country. That is why the amendment is
          carefully worded to apply only to citizens of
          the United States who are working for U.S.
          corporations or their subsidiaries. It does
          not apply to foreign nationals working for
          such corporations in a foreign workplace and
          it does not apply to foreign companies which
          are not controlled by U.S. firms. Moreover,
          it is the intent of the Committee that this
          amendment not be enforced where compliance
          with its prohibitions would place a U.S.
          company or its subsidiary6 in violation of the
          laws of the host country.

5.        As the district court noted, the employment decisions
at issue involved Denty's application for positions in the United
Kingdom and Australia. The relevant work site for ADEA purposes,
therefore, is the location of these positions. We find support
for this conclusion in the fact that the language of the ADEA
does not distinguish between failure to hire and failure to
promote situations. Accordingly, we find Lopez v. Pan Am World
Servs., Inc., 813 F.2d 1118 (11th Cir. 1987), indistinguishable
from the case before us. Nor does the Tenth Circuit's decision
in Zahourek v. Arthur Young and Co., 750 F.2d 827 (10th Cir.
1984), inform our decision here. There, the court of appeals
held that the ADEA did "not apply to the termination of
employment of an American citizen by an American employer where,
as here, the `workplace' is Honduras." Id. at 828-29 (footnote
omitted). The 1984 amendment to the ADEA, without reference to
where the discriminatory effect occurred, now specifically
protects a person in Zahourek's position: an American citizen
working for an American company abroad. Indeed, the focus of the
amendment is now upon the degree of control exercised by an
American company over the conduct of the discriminating
corporation.

6. The Committee codified their intent at 29 U.S.C. § 623(f),
which reads in pertinent part:

                                  8
S. Rep. No. 98-467, at 2, reprinted in 1984 U.S.C.C.A.N. at 3000-

01.   We emphasize that the job for which Denty applied is in the

United Kingdom with the parent company, not in the United States

with the subsidiary.

           The EEOC guidelines, promulgated in response to the

1984 amendments, do not convince us otherwise.   The guidelines

provide that "the ADEA does not apply to foreign firms operating

outside the United States, unless those firms are controlled by

U.S. employers.   On the other hand, the ADEA does apply to

foreign firms operating on U.S. soil."   EEOC Policy Guidance, N-

915.039, Empl. Prac. Guide (CCH) 5183, 6531 (March 3, 1989).

Here the record is clear that Denty is currently employed by a

U.S. subsidiary of a British parent corporation.   SB plc controls

the American subsidiary, not the other way around.   Clearly,

then, the ADEA cannot be applied extraterritorially to create

liability on the part of SB plc given the facts of this case.

           We reject the EEOC's argument that by failing to apply

the ADEA extraterritorially here, Denty will fall into a "black

hole."   To the contrary, Denty does not fall into a "black hole"-

(..continued)
It shall not be unlawful for an employer . . . to take
          any action otherwise prohibited under
          subsection[] (a) . . . where such practices
          involve an employee in a workplace in a
          foreign country, and compliance with such
          subsection[] would cause such employer, or a
          corporation controlled by such employer, to
          violate the laws of the country in which such
          workplace is located[.]

This section has been commonly referred to as the "foreign law
exception."

                                9
-he is protected by British law.      The fact that British law does

not protect individuals forty years of age or older from

discrimination is not our concern.      Moreover, Congress considered

the possibility of a "black hole" and yet chose not to extend the

ADEA, recognizing the well-established principle of sovereignty.

 The EEOC's argument, thus, misses the mark.

          The language of section 623(h)(2) could not be more

clear--the ADEA does not apply when a foreign corporation

controls an American corporation and the employment is with the

foreign parent abroad.    Accordingly, we will affirm the judgment

of the district court.7

7. Denty's failure-to-promote claim under the Pennsylvania Human
Relations Act (PHRA) must likewise be dismissed as no evidence
exists to show the Pennsylvania legislature intended to apply the
PHRA to employment decisions made by foreign corporations for
positions located outside the United States.

                                 10