Posted May 3rd, 2019.
By Danielle Nichole Smith
Law360 (May 3, 2019, 8:14 PM EDT) — Volkswagen AG can’t escape a worker’s suit alleging it instituted a policy to rid the company of older employees as part of a rebranding strategy after a Tennessee federal judge rejected the German automaker’s challenge to his ability to hear the case.
U.S. District Judge Travis R. McDonough said in his order that Jonathan Manlove, the worker bringing the Age Discrimination in Employment Act suit, sufficiently alleged that the court had jurisdiction over Volkswagen and adequately served the company in the case. The judge denied the company’s bid to dismiss the suit against it, which also names Volkswagen Group of America Inc. and Volkswagen Group of America Chattanooga Operations LLC as defendants.
Judge McDonough applied a three-part test established by the Sixth Circuit for determining whether a court has specific jurisdiction over a defendant. Although Volkswagen AG hadn’t “expressly” contested that the first and third prongs of the test were met, the judge chose to address them anyway.
The first part of the test was satisfied by Manlove’s allegations that Volkswagen AG controlled the daily activities of Volkswagen Chattanooga and thus “purposefully availed itself of the privilege of acting in Tennessee,” the judge said. And Manlove met his burden of showing that Volkswagen AG had enough of a connection to Tennessee to make the court’s exercise of jurisdiction of it reasonable, the judge found.
Further, Manlove sufficiently showed that his case stemmed from Volkswagen AG’s activities in Tennessee, a fact the company disputed, satisfying the second prong of the test, Judge McDonough ruled. Volkswagen AG said his claims didn’t arise in Tennessee because the policy he challenged — the so-called Pact for the Future — was created in Germany, but the judge was not convinced.
The judge noted that Manlove had alleged that the company instituted a global policy that resulted in Volkswagen Chattanooga denying him a promotion and ultimately demoting him.
“Even without allegations that VWAG employees directly participated in decisions related specifically to Manlove’s employment, Manlove’s amended complaint sufficiently alleges facts demonstrating that his claims arise out of VWAG’s activities in Tennessee,” Judge McDonough said.
The judge was also not convinced by Volkswagen AG’s claim that Manlove failed to properly serve the company his amended complaint. The company’s interpretation of a Tennessee civil procedure rule meant to avoid the inconvenience of serving companies in foreign countries would create the “absurd result” of letting plaintiffs serve foreign companies’ local subsidiaries only if they were also in foreign countries.
Manlove sued Volkswagen in June, accusing the automaker of violating U.S. discrimination laws by instituting a plan to get rid of management positions held by older employees as part of two related strategic rebranding and labor campaigns — TRANSFORM 2025+ and Pact for the Future. He amended his complaint in September and asked the court for an injunction in December that would block the company from carrying out the policy and interfering with his career.
In January, Judge McDonough granted Volkswagen motion to compel arbitration on Manlove’s ADEA claims even though the judge said “there is no question” that the agreement let Manlove pursue his injunction in court. It wasn’t his call to let Manlove proceed, the judge said, citing language in the agreement directing arbitrators to decide disputes over arbitrability. The arbitrator ruled the following month that Manlove could seek the injunctive relief in federal court.
“Today was a big win for workers in a global economy. The court rightly recognized that a foreign corporation that directs policies in the United States must defend them here as well,” Kevin Sharp, an attorney for Manlove said. “Judge McDonough’s ruling keeps Volkswagen AG in this lawsuit, which will allow us to pursue comprehensive relief for the workers who have been harmed by the pact.”
Counsel and representatives for Volkswagen didn’t immediately respond to requests for comment Friday.
The proposed class is represented by Kevin Sharp, Leigh Anne St. Charles and Andrew Melzer of Sanford Heisler Sharp LLP.
Volkswagen is represented by Charles B. Lee, Bradford G. Harvey, Megan B. Welton and Jessica Malloy-Thorpe of Miller & Martin PLLC, and Michael W. Johnston and Rebecca Cole Moore of King & Spalding LLP.
The case is Manlove v. Volkswagen Aktiengesellschaft et al., case number 1:18-cv-00145, in the U.S. District Court for the Eastern District of Tennessee.
–Additional reporting by Braden Campbell. Editing by Stephen Berg.