Opinion
CV 00-1320-AS
February 11, 2002
Craig A. Crispin, Marlee J. Buckson, Portland, OR, for Plaintiff.
Brooks F. Cooper, Portland, OR, for Defendant Tessa Complete Health Care, Inc.
R. Craig Stassi, Fairview, OR, Defendant Pro Se.
FINDINGS AND RECOMMENDATION
The matters before the court are plaintiff's motion (doc. 23) for partial summary judgment; defendant Tessa Complete Health Care, Inc.'s (Tessa), motion (doc. 53) for partial summary judgment; and defendant R. Craig Stassi, D.C.'s (Stassi), pro se motion (doc. 57) to alter/amend/correct paragraph 12 of his original answer.
INTRODUCTION
In her complaint, plaintiff brings eight claims for relief against defendants:
First Claim: Unpaid wages, together with attorney fees, costs, and pre-judgment and post-judgment interest, pursuant to the Federal Labor Standards Act (FLSA);
Second Claim: Liquidated damages pursuant to the FLSA;
Third Claim: Unpaid overtime, together with statutory penalties, attorney fees, costs, and pre-judgment and post-judgment interest, pursuant to Oregon law;
Fourth Claim: Unpaid wages, together with statutory penalties, and attorney fees and costs, pursuant to Oregon law;
Fifth Claim: Statutory penalties for violation of Oregon's registered business name statute, together with attorney fees and costs;
Sixth Claim: $17,717.27, plus the value of employment benefits, for breach of contract;
Seventh Claim: Damages for lost wages and benefits, or reinstatement, for violation of the Family Medical Leave Act (FMLA), together with attorney fees, costs, and liquidated damages; and
Eighth Claim: Damages for violation of the Oregon Family Leave Act (OFLA), together with attorney fees and costs.
Plaintiff moves for partial summary judgment on the issue of liability as to all of her claims. She also moves for summary judgment on the penalties sought under her third, fourth, and fifth claims, and on the damages sought under her sixth claim.
Defendants Tessa and Stassi filed a combined opposition to plaintiff's motion. "Defendants," as used herein, means both Tessa and Stassi. Defendants Spine and Rehabilitation Centers of America, Inc. (Spine/America), Spine and Rehabilitation Centers of Oregon, P.C. (Spine/Oregon), and American Outsource Strategies, Inc. (AOS), have not appeared since their counsel withdrew on March 20, 2001.
Defendant Tessa cross-moves for partial summary judgment on plaintiff's FMLA and OFLA claims (seventh and eighth claims).
Oral argument was not requested.
FACTUAL BACKGROUND
Since approximately 1993, plaintiff did receptionist, billing and collections work, but the identity of her employer during the applicable time period is a disputed issue. The parties do not dispute that there was an employment agreement dated May 1, 1998, between plaintiff and Spine/Oregon.
Plaintiff became pregnant and began a maternity leave on July 4, 2000. While on maternity leave, plaintiff and Stassi had discussions about her return to work, but the content of those conversations is disputed. Plaintiff's employment ended during the first few days of August 2000, but the reasons therefor are disputed.
LEGAL STANDARDS — MOTION FOR SUMMARY JUDGMENT
Summary judgment should be granted if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). If the moving party shows that there are no genuine issues of material fact, the non-moving party must go beyond the pleadings and designate facts showing an issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). A scintilla of evidence, or evidence that is merely colorable or not significantly probative, does not present a genuine issue of material fact. United Steelworkers of America v. Phelps Dodge, 865 F.2d 1539, 1542 (9th Cir. 1989).
The substantive law governing a claim determines whether a fact is material. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); see also, T.W. Elec. Service v. Pacific Elec. Contractors, 809 F.2d 626, 630 (9th Cir. 1987). Reasonable doubts as to the existence of a material factual issue are resolved against the moving party. T.W. Elec. Service, 809 F.2d at 631. Inferences drawn from facts are viewed in the light most favorable to the non-moving party. Id. at 630-31.
CROSS-MOTIONS FOR PARTIAL SUMMARY JUDGMENT
First, as a preliminary matter, plaintiff argues that defendants' response to her concise statement of material facts is inadequate under Local Rule 56.1(f), and that therefore paragraphs 3, 4, 5, 6, 7, 11, 13, 16, and 19 of the statement should be deemed to be admitted. Although I agree that defendants' statement is inadequate under the rule, I decline to conclude that all the paragraphs listed by plaintiff should be deemed to be admitted. On the record before the court, there appears to be no dispute that plaintiff's duties were largely clerical; Tessa's handbook defines exempt and non-exempt employees; plaintiff was owed compensation for unpaid vacation time; and defendants were engaged in interstate commerce for purposes of the FSLA. Therefore, paragraphs 4, 5, 13, 16, and 19 dealing with these issues are deemed to be admitted. However, the record before the court indicates substantial dispute as to paragraphs 3, 7, and 11 dealing with overtime, the alleged violation of Oregon's assumed business name statute, and coverage under the FMLA and OFLA, and possibly as to paragraph 6 dealing with unreimbursed expenses. Therefore, although defendants' response is technically inadequate, I conclude that in the interests of having the substantive issues litigated on their merits, these paragraphs are not deemed to be admitted by defendants.
Second, plaintiff has argued in her opposition to defendants' partial motion for summary judgment that the court should deny defendants' motion based on defendants' alleged failure to permit discovery into the issues raised by the motion. Plaintiff contends that defendants' lack of adequate responses has prevented plaintiff from acquiring the documents and information necessary to defend against defendants' motion. In this connection, plaintiff filed a motion to compel discovery on the same day she filed her opposition. I note that plaintiff has also moved for summary judgment on the issues on which defendants have moved for summary judgment. I decline to evaluate whether the cross-motions for summary judgment on plaintiff's seventh and eighth claims should be granted on the basis of plaintiff's arguments about discovery failures. The court will consider the motion to compel discovery after the proper responses and replies have been filed, not in conjunction with summary judgment motions that, unfortunately, appear to have been filed prior to completion of discovery.
A. Identity of Plaintiff's Employer.
A major issue raised by plaintiff's first through fourth claims (Oregon and FLSA claims for unpaid wages and overtime) is the identity of her employer during the relevant time period.
1. FLSA.
For purposes of the FSLA, "employer" includes "any person acting directly or indirectly in the interest of an employer in relation to an employee." 29 U.S.C. § 203. Joint employment is contemplated by the FSLA, and the joint employment regulation promulgated under the FSLA provides in relevant part that:
[a] single individual may stand in the relation of an employee to two or more employers at the same time under the Fair Labor Standards Act of 1938, since there is nothing in the act which prevents an individual employed by one employer from also entering into an employment relationship with a different employer. A determination of whether the employment by the employers is to be considered joint employment or separate and distinct employment for purposes of the act depends upon all the facts in the particular case.29 C.F.R. § 791.2 (emphasis added).
2. Defendants' Arguments.
Defendants Tessa and Stassi argue that plaintiff's employers during the applicable time period were Spine/Oregon and, thereafter, AOS. Relying on the affidavit of Stassi filed with defendants' opposition to plaintiff's motion, defendants recite the following history of plaintiff's employment: prior to 1998, plaintiff was employed by Capacities Unlimited (Capacities), which thereafter sold the Fairview clinic in which plaintiff worked to defendant Spine/Oregon. Stassi Aff. ¶¶ 2-3. Capacities terminated plaintiff's employment, and she became an employee of Spine/Oregon under the terms of a May 1998 employment agreement with Spine/Oregon. Id. Around that time, Spine/Oregon terminated plaintiff's employment and, pursuant to an employee leasing agreement between Spine/Oregon and defendant AOS, she became an employee of AOS. Id. at ¶ 4. She was an employee of AOS from mid-1998 until June 30, 2000, when she became an employee of Tessa. Id. at ¶ 5.
Further, relying on the affidavit of Dr. Brian Regan, the President and CEO of Tessa, filed with defendants' opposition to plaintiff's motion, defendants argue that from approximately 1998 until the fall of 2000, Tessa provided administrative services to Spine/Oregon in exchange for an administrative service fee. The services included accounting, billing, collections, and systems support. Regan Aff. ¶ 3. When Tessa began to provide these services to Spine/Oregon, all non-medical personnel (including plaintiff) became employees of AOS, an employee leasing organization that employed, paid, managed, hired, and fired its employees. Id. at ¶ 4. Dr. Regan states that plaintiff was not employed by or paid by Tessa until June 30, 2000, and until that date, Tessa had no authority or control over plaintiff or her terms of employment. Id. at ¶ 5.
Thus, from mid-1998 through June 30, 2000, defendants Tessa and Stassi argue that:
(a) Neither Tessa nor Stassi had authority to hire, fire, reprimand, or promote plaintiff, and neither of them calculated her payroll, issued her paychecks, or determined her eligibility for vacation pay and other benefits. All of these functions were under the ultimate control of defendant AOS.
(b) Defendant Tessa had no involvement in plaintiff's work schedule or conditions of employment and defendant Stassi had only advisory input on employment-related decisions, with the ultimate decisions being made by defendant AOS.
(c) Defendant Stassi managed only plaintiff's day-to-day work activities at the clinic.
(d) While a small file relating to day-to-day activities was kept at the clinic, the majority of the permanent records related to plaintiff's employment (tax records, work eligibility forms, payroll history, benefits eligibility) were maintained and kept by defendant AOS.
Stassi also states in his affidavit that he has no recollection of plaintiff ever working more than 40 hours in any given week and that he is certain he never asked or commanded plaintiff to work overtime. Thus, if she did work overtime, it was not based on his request or permission. Stassi Aff. at ¶ 12. As to plaintiff's claim that some of the overtime she worked was to translate documents for the clinic, Stassi states that he told plaintiff that if she did translating, it would be as an independent contractor and that she should bill Spine/Oregon for the work at an hourly rate. He states that plaintiff told him she understood that translating work was separate and apart from her employment by AOS. Id. at ¶¶ 15-21.
Therefore, defendants argue that even if plaintiff is able to prove that she is due unpaid wages and overtime, there are genuine issues of material fact as to whether either defendants Stassi or Tessa should be considered her employer for purposes of these claims.
3. Plaintiff's Arguments.
Plaintiff argues that until June 30, 2000, when Tessa assumed control of the clinic where she worked, she worked under several employers concurrently: (a) Stassi doing business as Fairview Spine Rehabilitation Center, (b) Tessa, (c) Spine/America, and (d) Spine/Oregon. She contends that AOS was not one of these employers because it merely acted on behalf of Tessa as an employee leasing and payroll processing service.
She argues that the definition of "employer" under the FLSA is so broad that it encompasses both Tessa and Stassi as her employers for purposes of her FLSA claim, even if the parties never intended to create an employer/employee relationship. Thus, she argues that defendant Tessa is liable as her employer under her first claim for relief, and defendant Stassi is also liable individually pursuant to 29 U.S.C. § 203(d) as a "person acting directly or indirectly in the interest of an employer in relation to an employee."
Plaintiff disputes the statements of defendants Tessa and Stassi about their lack of authority or control over her, arguing that the statements are conclusory and unsupported by the record.
According to plaintiff, Stassi directed her work, set her hours, approved her pay, granted time off, and in all respects controlled her work. Thus, she argues that Stassi exercised sufficient supervision and control to impose individual liability under 29 U.S.C. § 203(d). She acknowledges she was paid by AOS for a period of time, and also by Tessa for a period, but argues that during those periods Stassi continued to make decisions about and control her employment.
Plaintiff argues that Stassi's deposition testimony may at times contradict the affidavit he submitted to the court, and that Stassi cannot use inconsistencies created by an inconsistent affidavit to create a issue of fact precluding summary judgment. For example, plaintiff points to Stassi's deposition testimony that AOS was a payroll service for Tessa and Spine/America, and that once Capacity sold its clinics in 1998, both he and plaintiff became employees of Tessa and Spine/America.
As to overtime, plaintiff asserts that from approximately September 1997 through the end of her employment, she worked in excess of 40 hours during most weeks, and that Stassi approved her pay for each pay period, which pay did not include the overtime hours. She asserts that Stassi also assigned translation tasks to her, which she accomplished outside her regular work hours as directed and allowed by Stassi. She acknowledges that to recover under federal law for unpaid overtime for the period extending beyond two years before filing and to collect liquidated damages under the FLSA, she must show wilfulness. (Under Oregon law, plaintiff is not entitled to recover overtime compensation for periods more than two years before filing). Plaintiff contends that wilfulness here is demonstrated by the description of her position as that of office staff, and by the fact that Stassi observed the nature of plaintiff's work on a daily basis and knew or should have known that her duties made her a non-exempt employee under wage and hour laws.
Plaintiff argues that although defendants have paid her for unpaid vacation, the payment was made after a period exceeding 30 days, thereby making defendants liable for penalties. Plaintiff also asserts that at the time her employment ended, she was due unreimbursed mileage and expenses, which remain unpaid. As to these claims, plaintiff argues that it is undisputed that Tessa took control of the operation as of June 30, 2000, which was before plaintiff's employment ended, and Tessa is liable for these amounts.
4. Discussion.
There are fact issues, both as to the identity of plaintiff's employer and her entitlement to overtime pay, that preclude summary judgment.
The parties dispute many of the facts and circumstances surrounding plaintiff's employment, including who managed, controlled, and administered plaintiff's employment. The applicable period of time for plaintiff's wage and overtime claims is the period prior to June 30, 2000, since she went on maternity leave on July 4, 2000, and never returned to work. Although the record in this case indicates that plaintiff became an employee of defendant Tessa as of June 30, 2000, it does not indicate the nature of the transition or whether Tessa retained successor liability for employee claims arising before June 30, 2000. Further, the facts are unclear as to the legal or contractual relationship of Tessa, Spine/America, Spine/Oregon, and AOS to plaintiff's employment. Particularly unclear is the relationship among Tessa, Stassi, Spine/Oregon, Spine/America, and AOS during the period from May 1998 until June 30, 2000. For example, the May 1998 employment agreement between plaintiff and Spine/Oregon has an initial term of three years and a prohibition against termination without cause. The agreement contains no prohibition against assignment by Spine/Oregon, and the agreement is expressly made binding on successors and assigns. The record contains no evidence as to whether this agreement was ever terminated, or whether it was assigned to successors of Spine/Oregon. Further, although plaintiff claims to have had multiple employers between May 1998 and June 30, 2000, the employment agreement lists only Spine/Oregon. Plaintiff does assert that the employment agreement between her and Spine/Oregon was actually on behalf of three entities: Tessa, Spine/America, and Spine/Oregon. However, there is no evidence in the record to support or explain this assertion other than plaintiff's statement that Tessa (which was not a party to the employment agreement) used AOS to administer its employment program and used Spine/America and Spine/Oregon to engage employees and administer Tessa's holdings and employees in the State of Oregon. Plaintiff submits Tessa's SEC form 10QSB, which characterizes AOS as doing employee leasing and payroll processing services for Tessa from 1998 until July 2000.
This form does not explain the nature of the employee leasing arrangement, including how much control and authority the entities had over the employees or whether the arrangement involved Tessa or Spine/Oregon or AOS having the legal or contractual employment relationship with the leased employees.
Although plaintiff is correct that for FSLA purposes she can have more than one employer, on the record before the court the facts and circumstances as to the relationships among the defendants, and as to their relationships with plaintiff, are disputed. It is therefore not possible to determine which of the entities should be included within the definition.
The parties also dispute whether plaintiff worked overtime and, if she did, whether the overtime was authorized by her employer or supervisor. Of course, the issue of wilfulness argued by plaintiff does not arise until a determination is made regarding the liability of defendants for the overtime compensation and, as discussed above, that determination cannot be made on the record in this case.
Plaintiff points to certain statements in Stassi's deposition that she contends are admissions about who her employers were. I disagree that these statements are binding admissions of legal status; rather, they appear to be a layperson's description of relationships using common terms that have legal meanings and significance that would not necessarily be within the contemplation of a layperson.
This court cannot assume that Stassi, a non-lawyer, would understand or intend his descriptions to constitute admissions of legal relationships.
In summary, plaintiff's FSLA and Oregon liability and penalty issues raised in her first through fourth claims are not appropriate for summary judgment. The determination of who her employer or employers might have been is dependent on a resolution of the facts and circumstances surrounding her employment. Thus, I recommend that her motion for summary judgment as to liability on her first through fourth claims be denied; it follows then that her motion for summary judgment on the amount of penalties under her third and fourth claims should also be denied.
B. Applicability of FMLA and OFLA.
A major issue raised by plaintiff's seventh and eighth claims is whether defendant Tessa had the requisite number of employees during the applicable time period to qualify plaintiff for FMLA and OFLA protection. It is undisputed that defendant Stassi did not have the requisite number of employees. Plaintiff and defendant Tessa cross-move for summary judgment on the issue of liability on her seventh and eighth claims.
1. Coverage of FMLA and OFLA.
Under the FMLA, an "eligible employee" does not include:
any employee of an employer who is employed at a worksite at which such employer employs less than 50 employees if the total number of employees employed by that employer within 75 miles of that worksite is less than 50.29 U.S.C. § 2611(2)(B).
Under Oregon law, the provisions of the OFLA apply only to
employers who employ 25 or more persons in the State of Oregon for each working day during each of 20 or more calendar workweeks in the year in which the leave is to be taken or in the year immediately preceding the year in which the leave is to be taken.
2. Defendants' Arguments.
Defendant Tessa argues that plaintiff's employer (no matter who that may have been) did not have a sufficient number of employees within a 75-mile radius of plaintiff's workplace in 1999 and 2000 to give plaintiff protection under the FMLA or OFLA. In support of this argument, defendant relies on Dr. Regan's affidavit which states that Tessa did not have more than 25 workers in the State of Oregon in either 1999 or 2000, nor did it have more than 50 employees whose work sites were within 75 miles of plaintiff's worksite. Regan Aff. ¶ 6. Dr. Regan concludes by saying that he is informed and believes that this statement applies to AOS as well. Id. That being so, defendant Tessa argues that it should be granted summary judgment on plaintiff's seventh and eighth claims premised on the FMLA and OFLA.
Defendant Tessa argues that even if the court should find it is covered by the FMLA or OFLA, there is a genuine issue of material fact as to whether plaintiff was terminated for exercising her right to family medical leave. Defendant Stassi states in his affidavit that plaintiff's employment ended because she refused to return to a full-time position. Stassi Aff. ¶ 13.
3. Plaintiff's Arguments.
Plaintiff argues that defendants have failed to offer substantial proof to refute her contention that they all (except defendant Stassi) have the requisite number of employees to qualify plaintiff for protection under the FMLA and OFLA. Plaintiff argues that she has supported her motion in this regard by setting forth in her affidavit the individual offices of the defendants within a 75-mile radius of the clinic where she worked. Pl. Aff. ¶ 16. She cites approximately seven clinics in the Portland metropolitan area, and then includes defendants' offices in Salem, Woodburn, and Vancouver, Washington, to arrive at a figure in excess of the number of employees both the state and federal law requires. Plaintiff argues that Dr. Regan's affidavit on this point is inadequate because it is conclusory and without substance, and fails to provide any detail to support his assertions.
4. Discussion.
Summary judgment on this issue is inappropriate. First, there is a fact issue, as discussed above, about which entity or person was plaintiff's employer during the relevant time period. Second, there is also a fact issue as to whether Tessa or any of the other defendants except Stassi had the requisite number of employees during the applicable time period to qualify plaintiff for protection under the FMLA and OFLA. Further, the facts surrounding the ending of plaintiff's employment are disputed. Thus, I recommend that the cross-motions of plaintiff and defendants on plaintiff's seventh and eighth claims be denied.
C. Circumstances Surrounding Plaintiff's Termination.
1. Defendants' Arguments.
Stassi asserts that plaintiff wanted her employer to create a part-time position for her and that when her request was refused, she chose not to return to the full-time position that was available. Stassi Aff. ¶ 13. Plaintiff disputes this assertion. As such, defendant argues that there is a genuine issue of material fact that cannot be resolved on summary judgment.
2. Plaintiff's Arguments.
Plaintiff argues that defendants' articulated reason for the end of plaintiff's employment is unsupported by the record and is in contradiction of Stassi's deposition testimony. Plaintiff disputes Stassi's attempts to paint her inquiries about part-time work as a refusal to return to work full-time. Plaintiff asserts that, while she considered and inquired about part-time work, she decided that it was not economically feasible. She says she properly advised Stassi of her intended return to work and that the mere fact that she discussed part-time options cannot be used as a pretext for her termination. Plaintiff argues that Stassi testified that he terminated plaintiff's employment because he filled plaintiff's former position with another employee — his wife.
Further, according to plaintiff, her employment contract specified that defendants were permitted to terminate her employment only for cause, and Stassi's decision to terminate her was not based on cause.
3. Discussion.
This issue is inappropriate for summary judgment. First, the parties dispute the facts and circumstances surrounding the ending of plaintiff's employment. Second, the record indicates that only plaintiff and Spine/Oregon were named parties on the contract under which plaintiff sues, and the record does not explain how or whether the May 1998 employment agreement was still in effect on the date plaintiff's employment ended. Thus, I recommend that plaintiff's motion for summary judgment as to liability and/or penalties and damages as to her sixth claim be denied.
D. Registered Business Name.
Plaintiff seeks summary judgment on her claim that Stassi violated Oregon law by failing to register his assumed business name with the state.
1. Plaintiff's Arguments.
Plaintiff argues that Stassi is liable for statutory penalties for violation of Oregon's registered business name statute, together with attorney fees and costs, because he did business as "Fairview Spine Rehabilitation Center" and failed to register the name with the state as an assumed business name. Plaintiff bases this claim on Stassi's admission in his answer that he did business as "Fairview Spine Rehabilitation Center."
2. Defendant Stassi's Argument.
Stassi submits that his admission in his answer that he failed to register "Fairview Spine Rehabilitation Center" as a business name was a mistake that occurred because his prior lawyers misunderstood the question. He states that during the entire time at issue in this case, he was an employee and never owned the clinic, nor did he operate it under any assumed business name.
3. Discussion.
Stassi has filed pro se a letter, which I construe as a motion (doc. 57), to alter/amend/correct paragraph 12 of his original answer to deny that he did business under the name of Fairview Spine and Rehabilitation Centers of Oregon. I recommend that Stassi's motion be granted, and he be given leave to amend his answer.
Thus, an issue of fact remains as to whether Stassi did or did not do business under a business name that he did not register. I recommend that plaintiff's motion for summary judgment as to liability and penalties be denied as to plaintiff's fifth claim.
CONCLUSION
I recommend that Stassi's pro se motion (doc. 57) to alter/amend/correct paragraph 12 of his original answer to deny that he did business under the name of Fairview Spine and Rehabilitation Centers of Oregon be GRANTED, and that he be given leave to file an amended answer.
I recommend that plaintiff's motion for partial summary judgment (doc. 23) and defendant Tessa's motion for partial summary judgment (doc. 53) be DENIED because genuine issues of material fact preclude summary judgment on all of the claims. I note that this recommendation is not dependent on arguments as to discovery failures made in plaintiff's motion to compel that was filed the same day as her opposition to defendants' cross-motion.