Summary
finding co-owners of business not employees under Title VII
Summary of this case from Feldman v. Hunterdon RadiologicalOpinion
Civil No. JFM-04-3042.
April 14, 2005
MEMORANDUM
Plaintiff Kristy Walls was employed as a receptionist by Defendant Avpro, Inc. for nine months from September 2002 to June 2003. In this action she asserts claims against Avpro for discrimination under Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000 et seq., wrongful discharge under state law, and invasion of privacy under state law. Additionally, she asserts state law claims for intentional infliction of emotional distress and invasion of privacy against individual Defendants Donald Bass and Robert Rabbitt, Jr. Defendants' motion to dismiss for lack of subject matter jurisdiction is presently pending. The motion will be granted.
If a defendant has fewer than fifteen employees, the defendant is not an employer and is not subject to Title VII. See 42 U.S.C. § 2000e(b) ; Arbabi v. Fred Meyers, Inc., 205 F. Supp. 2d 462, 465 (D. Md. 2002); see also Auld v. Law Offices of Cooper, Beckman, and Tuerk, Civ. No. 92-1356, 1992 WL 372949, *1 (4th Cir. Dec. 18, 1992) (unpublished) (if "[defendant] did not employ 15 employees during or in the year prior to [plaintiff's] tenure, there is no federal jurisdiction."). Here, the jurisdictional question turns on whether Defendants Bass and Rabbitt and/or a third person, Christopher Ellis, are employees of Avpro. Plaintiff asserts that they are; Avpro asserts that they are not.
The definition of "employee" in the statute is a "nominal definition" that is "completely circular and explains nothing." Clackamas Gastroenterology Assocs., P.C. v. Wells, 538 U.S. 440, 444 (2003) (citing a similar definition in the Americans with Disabilities Act of 1990, 42 U.S.C. § 12111(4) and quoting Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 322 (1992)). When Congress uses the term "employee" without defining it, the courts have concluded that Congress intended to describe the conventional master-servant relationship as understood in common law agency. Darden, 503 U.S. at 322-23. In determining who is an employee and who is an employer, the common law touchstone was "whether the individual controlled the means and manner of the worker's work performance." Clackamas, 538 U.S. at 449 (citing EEOC Compliance Manual § 605:0008 n. 71).
In Clackamas, the Court was called upon to determine whether particular shareholderdirectors were employees of a professional corporation. In doing so, the Court relied on a six factor test quoted from the EEOC Compliance Manual § 605:0009:
(1) Whether the organization can hire or fire the individual or set the rules and regulations of the individual's work;
(2) Whether and, if so, to what extent the organization supervises the individual's work;
(3) Whether the individual reports to someone higher in the organization;
(4) Whether and, if so, to what extent the individual is able to influence the organization;
(5) Whether the parties intended that the individual be an employee, as expressed in written agreements or contracts; and
(6) Whether the individual shares in the profits, losses, and liabilities of the organization.Clackamas, 538 U.S. at 449-50. "[T]he employer is the person, or group of persons, who owns and manages the enterprise. The employer can hire and fire employees, can assign tasks to employees and supervise their performance, and can decide how the profits and losses of the business are to be distributed." Id. at 450. All incidents of the individual's relationship with the organization must be considered with no one factor being decisive. Id. at 451 (citing NLRB v. United Ins. Co. of America, 390 U.S. 254, 258 (1968)).
Plaintiffs contend that Clackamas should not be applied outside the context of shareholder-directors of a professional corporation that was the subject of that case. (Pl.'s Opp'n, at 2-3). At least one court has held to the contrary. "[T]he [ Clackamas] framework is not limited to the narrow question of whether a shareholder-director is an employee. The six factors were selected because they provided guidance in resolving the more general issue of whether an individual `is an employee or alternatively, the kind of person the common law would consider an employer.' Indeed, the source of the factors — an EEOC compliance manual — identifies them as relevant to whether `partners, officers, members of boards of directors, and major shareholders qualify as employees.'" Solon v. Kaplan, 398 F.3d 629, 632-33 (7th Cir. 2005) (citations ommitted). I agree with this reasoning.
In the instant case, Defendants have presented the affidavits of Bass, Rabbitt, and Ellis. Each of the affiants declare that he (1) is one of the owners and managers of Avpro (2) sets his own hours, (3) reports to no higher authority at the organization, (4) cannot be terminated by the organization, (5) shares in profits and losses of the organization, (6) does not receive a salary, but is paid purely out of profits and losses, and (7) is personally liable for all debts of the organization. Additionally, Defendants point to the EEOC's determination in response to a complaint made contemporaneously with the instant Complaint that Avpro did not employ more than 15 employees during the relevant time period. (Pl.'s Opp'n, Ex. 3).
In response, Plaintiff has presented the affidavit of Susan Kopacz, a former account executive at Avpro. Kopacz avers that Bass, Rabbit, and Ellis were included in her count of the 15 employees at Avpro because they "openly discussed and emphasized that their compensation arrangement was identical to the rest of the sales force" and "stated that they received the same percentage that the rest of the sales force received . . . and the remainder went to the company." She further avers that "[t]hen, as owners of the company, they shared in the profit."
Plaintiff has also submitted her own affidavit and an earlier affidavit from Kopacz declaring that Avpro had more than 15 employees when plaintiff worked there. These affidavits are, however, entirely conclusory in nature. In response to a direct inquiry I made in a letter dated March 28, 2005, plaintiff made it clear that in order to reach the 15 employee figure, she is relying upon the inclusion of Bass, Rabbit, and/or Ellis in that number.
Kopacz's affidavit is not sufficient to create a genuine issue of material fact as to whether Bass, Rabbit, and Ellis are properly classified as employees for Title VII purposes. It addresses only the compensation arrangement these men had with Avpro, not the other factors delineated in Clackamas. Moreover, even as to the compensation issue, Kopacz's affidavit suggests that Bass, Rabbitt, and Ellis were not "employees" of Avrpo because regardless of what compensation they received as a sales person on a particular transaction, they ultimately shared in the company's profits.
For these reasons, Plaintiff's Title VII claim must be dismissed. Because Plaintiff has invoked federal jurisdiction solely on the basis of that claim, I decline to exercise supplemental jurisdiction over her state law claims under 28 U.S.C. § 1367(a). Because I have not ruled on the merits of those claims, Plaintiff may pursue them in state court if she chooses to do so.
ORDER
For the reasons stated in the accompanying memorandum, it is, this 14th day of April 2005ORDERED
1. Defendants' motion to dismiss is granted; and
2. This action is dismissed for lack of subject matter jurisdiction.