Labor & Employment Law Daily Wrap Up, COVERAGE, LIABILITY—1st Cir.: Employee fired by Hong Kong subsidiary fails to revive U.S. lawsuit, (May 28, 2025)

By Marjorie Johnson, J.D.

The Hong Kong-based employee failed to allege sufficient facts or legal theories to impute the foreign subsidiary’s allegedly unlawful employment actions onto its U.S.-based parent company.

An employee who worked for 20 years at a U.S. logistics company’s facility in Massachusetts before relocating to work for the company’s Hong Kong subsidiary, and five years later was terminated after ostensibly being credibly accused of sexual harassment, failed to revive his Title VII, breach of contract, and tort claims brought against both the U.S. company and its foreign subsidiary. Affirming dismissal of his claims “albeit on somewhat different reasoning,” the First Circuit held that the district court lacked personal jurisdiction over the Hong Kong subsidiary, and the employee failed to plausibly allege facts upon which his alleged wrongful termination—a core component of each of his claims—could be imputed to the U.S. parent company (Keane v. Expeditors International of Washington, Inc., No. 24-1971 (1st Cir. May 27, 2025)).

Relocation. From 1998 to 2018, the employee worked as a global account manager for Expeditors US at the company’s facility in Peabody, Massachusetts. In 2016, the company asked him to relocate to Hong Kong to work for its wholly owned subsidiary, Expeditors HK. He claimed that during the negotiations, Expeditors US officials verbally agreed that his employment status would remain with the US company and that his move to Hong Kong would be temporary.

2018 agreement. In 2018, he entered into a written employment agreement setting forth the terms of his Hong Kong relocation, which stated his employment would be with the Expeditors US North Asia Regional Office and was signed on behalf of Expeditors US. Under that agreement, he moved to and began working in Hong Kong in September 2018.

2023 agreement. On September 25, 2023, he entered into a new employment contract under which he continued to work in Hong Kong at the HK subsidiary’s offices and which undisputably designated Expeditors HK as his employer.

Sexual harassment complaint. The employee claimed that days earlier, a sales rep filed a sexual harassment complaint against him concerning his conduct during a recent company event in Hong Kong. The HK subsidiary investigated the allegation, subjected him to a disciplinary proceeding, and on December 11, terminated his employment. His termination letter stated that the sexual harassment allegation had been “substantiated,” his actions were “a serious violation of Expeditors' Code of Business Conduct,” and “[t]his was the second allegation of sexual harassment made against [him].” According to the employee, the prior alleged harassment occurred while he was working for Expeditors US in Massachusetts.

Sues both companies. He filed this lawsuit alleging that Expeditors US breached the 2018 oral and written contracts and that Expeditors HK breached the 2023 contract. He also brought claims against both companies alleging discrimination in violation of Title VII, tortious interference with business relations, and negligent infliction of emotional distress. In particular, he alleged that Expeditors HK shared common management with Expeditors US, and that the US parent company wielded direct and substantial command over its business activities.

VP’s affidavit. However, Expeditors HK’s Regional VP signed an affidavit which stated in relevant part that the subsidiary has no business ties to Massachusetts and is “organized under the laws of Hong Kong and registered to do business in Hong Kong.” The VP also averred that the subsidiary “maintains its own ledgers and accounting books; prepares its own business plans, payroll, budget and financial statements; administers and controls its own health plan and related benefits; and controls the decisions regarding hiring and firing of its employees.”

Dismissal of claims. The district court granted the defendants' motion to dismiss all claims against Expeditors HK and the non-contract claims against Expeditors US for lack of personal jurisdiction and dismissed the contract claims against Expeditors US under the doctrine of forum non conveniens. In particular, the court rejected the employee’s argument that the HK subsidiary was subject to personal jurisdiction as its parent company’s “alter ego,” explaining that “[b]esides pointing to the overlapping leadership of the companies,” he failed to offer any evidence “to refute the fact that Expeditors US and Expeditors HK observe corporate formalities as distinct entities.”

No personal jurisdiction over HK subsidiary. On appeal, the First Circuit affirmed dismissal for lack of personal jurisdiction as to Expeditors HK on the alternative ground that, even crediting the employee’s allegations concerning the HK subsidiary’s conduct in Massachusetts, that alleged conduct was not an “important” or even “material” element of proof for his claims, as required by the Due Process Clause. Significantly, he failed to rebut the HK company’s evidence that it maintained its own ledgers and accounting books; and prepared its own business plans, payroll, budget and financial statements; controlled its own health plan and related benefits; and controlled its hiring and firing decisions.

US parent company not subject to liability. The First Circuit also rejected the employee’s attempt to hold Expeditors US accountable for the actions of its foreign subsidiary in terminating the employee, concluding that he failed to allege sufficient facts to pierce the corporate veil or otherwise hold the parent company liable. At the core of each of the employee’s claims, including those against the US parent company, was that he was “unlawfully” and “summarily” terminated by the HK subsidiary. However, he failed to allege sufficient facts from which liability for the foreign subsidiary’s actions could be imputed to the U.S. parent company.

While he claimed that the CEO of Expeditors US was a director of Expeditors HK, and that a senior VP of the parent company was also a director of the subsidiary, “common management, alone, generally will not permit disregard of the formal barriers between separate legal entities,” explained the First Circuit. He also alleged that the subsidiary was required to implement and follow the parent company’s code of business conduct, personnel policies, and business directives, but this was insufficient to demonstrate “pervasive control.”

The case is No. 24-1971.

Judge: Lynch, S.

Attorneys: Adam P. Clermont (The Law Society of Hong Kong) for David Keane. Matthew J. Lynch (Littler Mendelson) for Expeditors International of Washington, Inc.

Companies: Expeditors International of Washington, Inc.

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