Opinion
3:01-CV-1888-H
August 8, 2002
REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
Pursuant to the District Court's Order of Reference filed on May 10, 2002, and the provisions of 28 U.S.C. § 636(b)(1)(B) and (C) came on to be considered Defendant Liberto Manufacturing Company, Inc.'s Motion for Summary Judgment filed on March 25, 2002; Plaintiff Mary H. Torres' responsive brief filed on April 15, 2002; and Defendant's reply thereto filed on April 30, 2002. The findings, conclusions, and recommendations of the magistrate judge, as evidenced by his signature thereto, are as follows:
FINDINGS AND CONCLUSIONS:
I. Factual and Procedural Background
Plaintiff Mary H. Torres ("Plaintiff" or "Torres") became an employee of Defendant Liberto Manufacturing Company, Inc. ("Defendant" or "Liberto Manufacturing") in 1987. Pl.'s App. at 2 (Plaintiff's Affidavit). Plaintiff was a member of Defendant's production department where her chief responsibility involved packaging popcorn. Id On October 26, 2000, Plaintiff sustained an on-the-job injury to her left wrist. Pl's Original Compl. at 4, ¶ 9. Following surgery for carpel tunnel syndrome and at least a dozen physical therapy sessions, Plaintiff faxed a letter from her doctor to Ms. Debbie Newman, Human Resources manager for Liberto Management, Inc., a sister subsidiary of Defendant, which indicated that Plaintiff would be returning to work on June 4, 2001. Pl.'s App. at 4, 1648. On May 15, 2001, Plaintiff received a letter from Ms. Newman informing Plaintiff that she was terminated as of that date, pursuant to Defendant's "Leave of Absence" policy but that she could reapply at anytime. Pl.'s App. at 19-20.
The policy provides, in pertinent part:
An employee requiring a leave of absence for illness . . . or Workers Compensation, may be approved by management and granted up to a maximum of 90 days . . . Employees who remain away from work for more than the authorized period will be considered as having voluntarily terminated their employment, effective the day following the last day of the leave of absence.
Pl's App. at 20.
On June 4, 2001, Plaintiff went to Defendant's place of business where she was confronted by Mr. Melesio Herrera, her former supervisor. Id. at 8. Mr. Herrera informed Plaintiff that "there was not enough work" and refused to give Plaintiff an application for employment. Id. At Plaintiffs insistence Mr. Herrera called Ms. Newman and left a message requesting a return phone call. Id. When Ms. Newman returned the call, she informed Plaintiff that, "[w]e do not have a job for you," that "we [are] not hiring," that "it was slow," and that "the girls were only working one and two days a week." Id.
In her Original Complaint, Plaintiff asserts that Defendant denied her an opportunity to apply for employment on the basis of her ethnicity in violation of Title VII of the Civil Rights Act of 1964 ("Title VII"), 42 U.S.C. § 2000e, et seq. and, further, that Defendant's subsequent hiring of a younger employee to succeed her violated the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621, et seq.
Defendant Liberto Manufacturing moves for summary judgment on the basis that Plaintiff cannot prevail on either her Title VII or ADEA claim because Defendant is not an "employer" as defined by these statutes. Therefore, Defendant asserts that the court lacks subject matter jurisdiction over Plaintiff's claims.
By an order dated January 2, 2002, the District Court bifurcated discovery in this case into two parts: jurisdictional and non-jurisdictional issues. Consequently, Defendant's instant motion relates solely to the existence of jurisdictional grounds.
II. Standard of Review
To prevail on a motion for summary judgment, the moving party has the initial burden of showing that there is no genuine issue of any material fact and that judgment should be entered as a matter of law. FED. R CIV. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2509-10 (1986). The materiality of facts is determined by substantive law. Anderson, 477 U.S. at 248, 106 S.Ct. at 2510. Once the moving party has made an initial showing, the party opposing the motion for summary judgment must come forward with competent evidentiary materials to establish genuine issues of fact. Id at 256-257, 106 S.Ct. at 2514; see Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 585-87, 106 S.Ct. 1348, 1355-56 (1986). The court must resolve any factual controversies in favor of the non-moving party. Richter v. Merchants Fast MotorLines, Inc., 83 F.3d 96, 98 (5th Cir. 1996). Thus, in reviewing all of the evidence, the court must consider it in a light most favorable to Torres, drawing all factual inferences therefrom and making all credibility determinations related therefrom in her favor.III. Applicable Law
A. Title VII
Title VII makes it unlawful for "employers," "employment agencies," or "labor organizations" to discriminate against an individual because of race, color, religion, sex, or national origin. 42 U.S.C. § 2000e-2(a). The term "employer" is defined as a person engaged in an industry affecting commerce who has fifteen or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year, and any agent of such a person. . . . 42 U.S.C. § 2000e(b) (emphasis added).
B. The ADEA
Under the ADEA, it is 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, terms, conditions, or privileges of employment, because of such individual's age." 29 U.S.C. § 623(a)(1). Further, the ADEA defines an employer as "a person engaged in an industry affecting commerce who has twenty or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year [and] any agent of such a person." 29 U.S.C. § 630(b) (emphasis added).
C. "Employer" status
Determining whether a defendant is an "employer" under Title VII or the ADEA involves a two-step process. First, the defendant must fall within the statutory definition. Deal v. State Farm County Mut. Ins. Co. of Texas, S F.3d 117, 118 (5th Cir. 1993) (citing Fields v. Hallsville Indep. Sch. Dist., 906 F.2d 1017, 1019 (5thCir. 1990), cert. denied, 498 U.S. 1026, 111 S.Ct. 676, 112 L.Ed.2d 668 (1991)). Second, there must be an employment relationship between the plaintiff and the defendant. Id
If a plaintiff fails to establish that a defendant is an "employer" as defined by these statutes then the court lacks subject matter jurisdiction over the plaintiff's claims. See Womble v. Bhangu, 864 F.2d 1212, 1213 (5th Cir. 1989) (citation omitted).
Courts have adopted a broad definition of the term "employer" such that it may include superficially distinct entities that are sufficiently interrelated so as to constitute a single, integrated enterprise. Lusk v. Foxmeyer Health Corp., 129 F.3d 773, 777 (5th Cir. 1997) (citing Schweitzer v. Advanced Telemarketing Corp., 104 F.3d 761, 764 (5th Cir. 1997).
IV The Parties' Contentions
A. Defendant's Contention
According to Defendant, it employed no more than 6 persons at any time during the calendar year preceding its alleged violation — 2000 — or the current calendar year (i.e., the year the alleged violation occurred)— 2001. See Def.'s Br. at 3. To substantiate this claim, Defendant has proffered its "Employer's Quarterly Reports" submitted to the Texas Workforce Commission as proof of the number of persons it employed during a given quarter. See Def.'s App. at 001-007. According to the reports Defendant has provided, the company employed 6 persons during the first quarter of 2000; 4 employees during the second and third quarters of 2000; and 5 persons for the fourth quarter of 2000 as well as for the first, third, and fourth quarters of 2001. See id. Moreover, according to Defendant's "Wage and Tax Register" the company employed 6 persons during the second quarter of 2001. See id. at 008.
B. Plaintiffs Contention
Plaintiff has not proffered any controverting evidence to rebut Defendant's contentions with respect to the number of persons employed by Defendant during the years 2000 and 2001. However, Plaintiff contends that due to the interrelatedness of Defendant and Liberto Speciality Company, Inc. ("Liberto Specialty"), its parent corporation, these corporations should be treated as a single business enterprise, pursuant to the "single employer doctrine." As such, the employees of all of Liberto Specialty's subsidiary companies should be counted against Defendant for the purposes of Title VII and the ADRA. Therefore, when all of the employees within Liberto Specialty's corporate structure are combined, Defendant would more than satisfy the respective "employer" definitions under Title VII and the ADEA.
Plaintiff contends that she was wrongfully denied the opportunity to depose both Ms. Debbie Newman and Mr. Ronald E. Mulholland, a corporate officer of both Defendant and Liberto Specialty Company, Inc., Defendant's parent company. See Pl.'s Br. at 5-6, 12. According to an order of the District Court, dated March 22, 2002, the court denied Plaintiffs Motion to Extend the Discovery Period beyond March 18, due, in part, to her counsel's dilatory scheduling of these depositions on the final business day of the allotted two month discovery period.
To the extent that Plaintiffs assertions may create liability on the part of Liberto Specialty or Liberto Management, Defendant notes that Plaintiff failed to name either as a defendant in this action or in her complaint to the EEOC. As such, Defendant contends that Plaintiff is expressly prohibited from seeking any recovery from Liberto Specialty or Liberto Management. See Def's Reply Br. at 3, n. 2.
Although the "single employer doctrine" is a recognized principle of law, Plaintiff has presented the court with no competent evidence that the Defendant and its related companies together employ at least 15 or more employees, particularly Liberto Specialty and Liberto Management. Plaintiff suggests that the number "192," which appears at the top of one of her earnings statements, constitutes the total number of persons employed by Liberto Specialty and its subsidiary corporations. See Pl.'s Br. at 7. Plaintiffs speculation is clearly not competent summary judgment evidence. Additionally, it is undisputed that the number "192" represents Torres' paycheck number. See Def.'s Reply App. at 001 (Affidavit of Debbie Newman). Moreover, the undisputed evidence presented by Defendant establishes that Liberto Specialty is merely a holding company with no employees. See id.
V. Analysis
In order to ascertain whether the interrelatedness between Defendant and Liberto Specialty, two distinct entities, renders the two a single, integrated enterprise — i.e., a "single employer" Plaintiff suggests that the court should employ the hybrid economic realities/common law control test ("hybrid test") to determine whether Liberto Specialty was, in fact, Plaintiffs employer, pursuant to Hatheock v. Acme Truck Lines, Inc., 262 F.3d 522, 526 (5th Cir. 2001). However, in Hatheock, the court addressed the issue of whether an employee-employer relationship existed — i.e., independent contractor vs. employee — between the parties, not whether the "single employer doctrine" applied. See id. In addressing the former issue, the court specifically noted that the hybrid test was commonly used to determine whether such an employment relationship existed within the meaning of Title VII and the ADEA. Id (citing Deal v. State Farm County Mut. Ins. Co. of Texas, 5 F.3d at 118). Whether Plaintiff was an "employee" is not an issue raised in Defendant's motion.As alluded to in Defendant's brief and can be seen from the above cited case law, the purpose of the hybrid test is to determine when a plaintiff can be considered an employee of a particular business entity, not whether different entities are so integrated as to constitute a single "employer," as defined by Title VII and the ADEA. See Schweitzer v. Advanced Telemarketing Corp., 104 F.3d at 764. However, when it is necessary to determine whether a parent corporation should be considered the employer of a subsidiary's employee the four part test established in Trevino v. Celanese Corp., 701 F.2d 397, 404 (5th Cir. 1983) should be employed. See Schweitzer, 104 F.3d at 763. Despite some similarity between the two tests the Fifth Circuit has cautioned against employing them interchangeably, stating:
The hybrid test should be used as an initial inquiry to resolve, if need be, whether a plaintiff is an employee of the defendant . . . for the purposes of Title VII. If the plaintiff is found to be an employee of . . . the defendant under the hybrid test, but questions remain [as to] whether [another entity] . . . is sufficiently connected to the employer-defendant so as to be considered a single employer, a Trevino analysis should be conducted. The Trevino analysis will establish if the [other entity] is also an employer of the plaintiff
Id (emphasis added).
A. The Trevino "single employer" test
In Trevino, the court stated,
The rule has emerged that superficially distinct entities may be exposed to liability upon a finding that they represent a single, integrated enterprise: a single employer. The factors considered in determining whether distinct entities constitute an integrated enterprise are (1) interrelation of operations; (2) centralized control of labor relations; (3) common management; and (4) common ownership or financial control.
Trevino, 701 F.2d at 404.
"Traditionally, the second of these four factors has been considered the most important, such that courts have focused almost exclusively on one question: which entity made the final decisions regarding employment matters related to the person claiming discrimination." See Skidmore v. Precision Printing and Packaging, Inc., 188 F.3d 606, 617 (5th Cir. 1999); See also Vance v. Union Planters Corp., 279 F.3d 295, 301 (5th Cir. 2002) (quoting Trevino, 701 F.3d at 404 (citations omitted)).
1. Interrelation of Operations
With respect to the interrelation of the operations between Defendant and Liberto Specialty, the first factor in the Trevino analysis, a court must consider whether a parent corporation has excessively influenced or interfered with the business operations of its subsidiary. See Lusk v. Foxmeyer Health Corp., supra, 129 F.3d at 778. However, the influence and interference exercised by the parent corporation must amount to an "actual exercis[e].. of control beyond that found in a typical parent-subsidiary relationship," Lusk, 129 F.3d at 778 (citing Johnson v. Flowers Indus., Inc., 814 F.2d 978, 981-82 (4th Cir. 1987), such that it overcomes the strong presumption that a parent corporation is not the employer of its subsidiary's employees. Id. (citing Frank v. US. West, Inc., 3 F.3d 1357, 1362 (10 Cir. 1993).
The Fifth Circuit has noted that the existence of any of the following factors, representing conduct of a parent corporation, suggests more than minimal interrelation of operations between the parent and its subsidiary: (1) direct involvement in the subsidiary's daily decisions relating to production, distribution, marketing, and advertising; (2) sharing employees, services, records, and equipment with the subsidiary; (3) commingling of bank accounts, accounts receivable, inventories, and credit lines; (4) maintaining the subsidiary's books; (5) issuing the subsidiary's paychecks; or (6) preparing and filing the subsidiary's tax returns. Lusk, 129 F.3d at 778 (citing Cook v. Arrowsmith Shelburne, Inc., 69 F.3d 1235, 1241 (2nd Cir. 1995)).
With respect to the first Lusk factor noted above, Plaintiff cites the fact that Liberto Specialty published Defendant's "Employee Handbook," (see Pl.'s App. at Ex. 6), which included, among other provisions, the "Leave of Absence Policy" under which Torres was terminated. It is not clear from Plaintiff's summary judgment materials when she received the Employee Handbook. The fact that Liberto Specialty may have created a single employee handbook to be utilized by each of its subsidiaries does not evince the kind of extreme control by a parent corporation over the operations of its subsidiaries so as to render it and its subsidiary a single employer. See Bell v. UPS, No. 3:98-CV-1235-D, 2000 U.S. Dist. LEXIS 3296, * 17-19 (N.D. Tex. Mar. 10, 2000) (wherein the court, applying the "hybrid test," found that where evidence demonstrates that a parent company publishes the employee handbooks for its defendant-subsidiary, absent evidence that the parent exercises control over the employment of its subsidiary's employee, the parent company may not be considered plaintiff's "employer" under Title VII).
However, dispositive of this factor is the undisputed fact that Plaintiff was terminated, not by Liberto Specialty or by Liberto Management, but by her supervisor at Liberto Manufacturing, Mr. Herrera, due to her extended absence from work. When Torres confronted Mr. Herrera on June 4, 2001, at Defendant's place of business, it was Herrera who told her that there was not enough work, that he wished the available work to be done by two other Hispanic female employees, and, further, it was he who refused to give her a job application. See Pl.'s App. at 8. Being dissatisfied with his response, Plaintiff was given the opportunity to speak with Ms. Newman. In the course of her conversation with Plaintiff, Ms. Newman informed her that "We don't have a job for you" and that "[they] were not hiring." Id. Ms. Newman's comments constitute nothing more than an affirmation of Herrera's statements to Plaintiff, that is, that Defendant was not hiring new employees due to a contraction of available work.
Plaintiffs termination, effective May 15, 2001, was not asserted in her EEOC complaint. However, she asserts — apparently to show a course of conduct — that it was Ms. Newman who in fact terminated her. However, the uncontroverted affidavit of Mr. Herrerra (See Def.'s Reply App. at 003 (Herrera's Affidavit)), reflects that it was his decision to terminate Plaintiff and that he requested Ms. Newman to notify Plaintiff of her termination. Additionally, according to the uncontroverted affidavit of Ms. Newman, she lacked the authority to make any employment decisions such as when a person should be hired or fired. See Def.'s Reply App. at 001.
To the extent that Plaintiff may seek to draw some inference of Ms. Newman's involvement in the employment decisions made with respect to Plaintiff, based upon the plural pronouns used by Ms. Newman in the statements attributed to her by Torres, the same are too ambiguous to raise a genuine issue of fact. Cf Deal v. State Farm, supra, 5 F.3d at 119 (wherein an appellant contended that the word "we" appearing in an employee handbook referred to both her employer, an independent insurance agency which sold State Farm insurance, and the State Farm Insurance Company, itself, making State Farm her "employer" under Title VII and the ADEA, the court held that the same was insufficient to establish an employment relationship between the two).
Plaintiff also claims that she learned of three other similarly situated employees who were terminated for violating Defendant's "Leave of Absence Policy" and were, thereafter, rehired without submitting a formal re-application. See Pl.'s App. at 10. However, it is unclear from where Plaintiff acquired this knowledge and, as such, lacks sufficient indicia of reliability absent the sworn attestations of these three employees.
With respect to the second factor noted in Lusk, Plaintiff claims, inter alia, that she was unaware for whom she worked. She also claims that her supervisor and the warehouse manager worked for both Defendant and Ricos Products Co., Inc., a sister subsidiary.
Plaintiff asserts that Mr. Herrera, her immediate supervisor at Liberto Manufacturing, was also an employee of Ricos Products Co., Inc. ("Ricos"). See Pl.'s Br. at 6. Further, Plaintiff asserts that Mr. George Sanders, the warehouse manager of Liberto of Dallas, Inc ("Liberto of Dallas") another of Liberto Specialty's subsidiaries, was likewise affiliated with Ricos. Id.
However, the court finds that Plaintiff's claimed puzzlement as to the identity of her employer is particularly disingenuous, considering that the only pay stubs before the court, for the relevant time period, show her employer to be Defendant and in light of the fact that it was Defendant — not Ricos or Liberto Specialty — which she named as her employer in her EEOC complaint. Further, the sole support for Torres' claim that Mr. Herrera and Mr. Sanders worked for Ricos are their respective business cards. Despite the fact that "Ricos" appears on both, Mr. Herrera's business card clearly identifies him as the plant manager for Defendant, while Mr. Sanders' card identifies him as the warehouse manager for a sister subsidiary, Liberto of Dallas, Inc. See Pl.'s App. at Ex. 1 and 2.
Plaintiff points to the facts that Liberto of Dallas and Defendant shared the same physical address and telephone number as indicia of their interrelatedness. However, this fact, without more, has previously been found not to be dispositive on the issue of single employer status. See Whitaker v. Professional Investors Ins. Group, No. 91-5125, 1992 U.S. App. LEXIS 25792, * 5 (10th Cir. 1992).
The third of the Lusk factors closely parallels the criteria for determining alter ego liability. See US. v. Jon-T Chemicals, Inc., 768 F.2d 686, 691-92 (5th Cir. 1985), cert. denied, 475 U.S. 1014, 106 S.Ct. 1194 (1986). Plaintiff has proffered no evidence that Defendant does not observe the basic corporate formalities, such as maintaining separate books and records, nor does she show any commingling of finances, including operating funds, accounts receivable, and credit lines, of Liberto Specialty and Defendant.
Plaintiff also points to the fact that Liberto Specialty provided medical and life insurance plans to employees of Defendant as well as to employees of its other subsidiary companies. See, e.g., Pl.'s App. at 7-s et. seq. (supplemental materials attached to Plaintiff's appendix). Given the concededly small number of persons employed by Defendant itself, it is difficult to perceive that Defendant could have obtained economical benefit plans on its own. Further, these benefits, available to all persons employed under the aegis of Liberto Specialty, do not bespeak an extreme degree of control beyond that found in a typical parent-subsidiary relationship. See Lusk, supra, 129 F.3d at 778.
Similarly, the fact that an Employee Stock ownership plan ("ESOP") was funded by Liberto Specialty and made available to all employees of its subsidiaries does not create a genuine issue of fact as to whether Liberto Specialty engaged in an overweening control over Defendant's operations. See id. at 42-s et. seq. The magistrate judge agrees with the findings of the court in Harris v. Palmetto Tile, Inc., 835 F. Supp. 263, 267 (D.S.Car. 1993), wherein the court stated,
The practice of pooling the assets of several small employers into a fund for the purposes of insurance and pensions is not uncommon, and ERISA expressly allows for such "multiemployer pension plans." See 29 U.S.C. § 1001a, 1002 (37). Hence the mere fact that [two employers] pooled their resources in the administration of their insurance and profit sharing plans does not indicate that the participating employees are employees of both entities.
Id.
With respect to the fourth of the Lusk factors, the only payroll documents before the court appear to have been generated by a third party, Automatic Data Processing, Inc. ("ADP"). See Pl.'s App. at Ex. 3 and 10. Further, the court notes that Plaintiff has presented no summary judgment evidence relating to the last three factors of the Lusk "interrelation of operations" test.
In her uncontroverted affidavit signed on April 29, 2002 (see Def.' s Reply App. at 001), Debbie Newman states that Liberto Management, Inc., provides, inter alia, accounting support to Defendant and its sister subsidiaries. Id However, Plaintiff has never claimed to by an employee of Liberto Management.
After fully considering the "interrelation of operations" test, the magistrate judge is of the opinion that Plaintiff has failed to demonstrate a genuine issue of fact from which a reasonable factfinder could conclude that Liberto Specialty exercised a degree of control over the operations of Defendant beyond that found in the typical parent-subsidiary relationship.
2. Centralized control of labor relations and common management
Based upon the foregoing findings, the magistrate judge is also of the opinion that Plaintiff has failed to establish genuine issues of fact with respect to the second and third factors enumerated in Trevino, to wit: centralized control of labor relations and common management.
3. Common ownership
In an effort to satisfy the final Trevino factor, Torres has marshalled evidence reflecting that Liberto Specialty and Liberto Management have the following corporate officers: Mr. Frank G. Liberto — president and director, Mr. Ronald E. Mulholland — vice president, and Ms. Patricia Liberto secretary. See Pl.'s App. at 78, 80. Further, these records indicate that Mr. Ronald E. Mulholland is also the treasurer of Liberto of Dallas. See id. at 82.
Defendant contends that common ownership and management are ordinary incidents of a parent-subsidiary relationship and that in order to treat Liberto Specialty and Defendant as a single employer under either Title VII or the ADEA "some nexus [between Liberto Specialty] and [Defendant's] daily employment decisions must be shown," pursuant to Lusk, 129 F.3d at 778. Additionally, Defendant points out that notwithstanding the fact that the Liberto Specialty and Liberto Management have the same corporate officers and Liberto Specialty and Liberto of Dallas share one common officer, Plaintiff has failed to proffer evidence suggesting that Defendant has any or all of these same officers.
Torres has not presented any evidence of a nexus between the common corporate officers of Liberto Specialty, Liberto Management, and Liberto of Dallas and Defendant's daily employment decisions. Schweitzer v. Advanced Telemarketing Corp., 104 F.3d 761, 765 (5th Cir. 1997).
VI. Conclusion
After reviewing the above evidence in the light most favorable to Plaintiff, the court is of the opinion that Plaintiff has failed to create any genuine issues of material fact with respect to whether Defendant, by virtue of the "single employer doctrine," is a statutory "employer" within the meaning of Title VII and the ADEA. As such, the court concludes that Defendant is entitled to summary judgment in its favor.
VII. Recommendation
For the foregoing reasons, it is recommended that the District Court enter its order finding that there are no genuine issues of fact with respect to the number of persons employed by Defendant Liberto Manufacturing Co. and that it further order that summary judgment be GRANTED in Defendant's favor.