Swallows v. Barnes & Noble Book Stores, Inc.

• Decision Date: 04 November 1997
• Docket Number: No. 96-6088,96-6088
• Citation: 128 F.3d 990
• Parties: 75 Fair Empl.Prac.Cas. (BNA) 346, 72 Empl. Prac. Dec. P 45,086, 122 Ed. Law Rep. 41, 7 A.D. Cases 806, 11 NDLR P 85 Charles SWALLOWS, Teresia Walker, and Vickie Heidel, Plaintiffs-Appellants, v. BARNES & NOBLE BOOK STORES, INC., Defendant, State of Tennessee, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 990

128 F.3d 990

75 Fair Empl.Prac.Cas. (BNA) 346,

72 Empl. Prac. Dec. P 45,086, 122 Ed. Law Rep. 41,

7 A.D. Cases 806, 11 NDLR P 85

Charles SWALLOWS, Teresia Walker, and Vickie Heidel, Plaintiffs-Appellants, v. BARNES & NOBLE BOOK STORES, INC., Defendant, State of Tennessee, Defendant-Appellee.

No. 96-6088.

United States Court of Appeals,

Sixth Circuit.

Submitted July 28, 1997.

Decided Nov. 4, 1997.

Bob Lynch, Jr. (briefed), Nashville, Tennessee, for Plaintiffs-Appellants.

S. Elizabeth Martin (briefed), Office of the Attorney General, Nashville, Tennessee, for Defendant-Appellee.

Before: NORRIS and BATCHELDER, Circuit Judges, ALDRICH, District Judge. ^*

OPINION

ALDRICH, District Judge.

Plaintiffs Charles Swallows, Teresia Walker and Vickie Heidel brought this action, pursuant to the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. §§ 621-34, and the Americans with Disabilities Act ("ADA"), 42 U.S.C. § 12111-12117, against Barnes & Noble Book Stores and the State of Tennessee, claiming that they were discharged from their jobs because of their age or disability. The district court granted the State of Tennessee's motion to dismiss and denied plaintiffs' motion for summary judgment.

After settling their claims against Barnes & Noble, plaintiffs filed the instant appeal of the district court's dismissal of their claims against the State of Tennessee.

For the reasons stated below, we affirm.

I.

The facts of this case are undisputed. Tennessee Technological University ("TTU") is a state university located in Cookeville, Tennessee. Prior to June 15, 1994, Charles Swallows, Teresia Walker and Vickie Heidel were employed by TTU in its bookstore, "The University Store." On or about June 15, 1994, TTU entered into an agreement ("the Agreement") with Barnes & Noble, whereby Barnes & Noble was to act as an independent contractor responsible for the operation and management of the bookstore for a period of at least three years.

Pursuant to the Agreement, Barnes & Noble worked directly with TTU academic departments in order to meet textbook requirements. It was required to sell used books and books requested by the TTU faculty, and was required to give certain discounts to faculty and students. TTU reserved the right to remove any product from the bookstore which it found to be objectionable. The store retained the pre-contract name "The University Store," and Barnes & Noble was not permitted to change the name without written approval from TTU.

TTU owned the building housing the bookstore, as well as the equipment used by Barnes & Noble. Barnes & Noble paid TTU a guarantee or a percentage of sales each year, and was also responsible for utility and telephone costs and all normal operating expenses. TTU employees provided external security, custodial services and snow removal for the building. TTU also provided Barnes & Noble with access to University bulletin boards.

Pursuant to the Agreement, plaintiffs became employees of Barnes & Noble. With respect to former TTU employees, the Agreement provided:

The Contractor shall employ, on a six (6) month probationary period, all current Bookstore employees ... at no less than such employee's total current salary and benefits (including longevity), or if the Contractor does not employ such Bookstore employees six (6) months, the Contractor shall pay each terminated employee three (3) months salary at the employee's current rate of pay, unless the employee(s) agree [sic] to a transfer with the Contractor's organization, resigns or the termination is due to gross misconduct as per the University's definition of gross misconduct.

At the end of the probationary period, the Contractor may terminate employees upon ten (10) calendar days written notice for clerical and support, or thirty (30) calendar days written notice for exempt employees.

J.A. at 119. On August 8, 1994, Barnes & Noble discharged plaintiffs and granted them severance pay.

Plaintiffs subsequently filed suit against Barnes & Noble and the State of Tennessee, claiming that their discharge violated the ADEA and the ADA. The State of Tennessee filed a motion to dismiss, arguing that because TTU was not plaintiffs' employer at the time of termination, it could not be held liable under those statutes. On July 10, 1995, plaintiffs filed a motion to amend their complaint to assert that TTU and Barnes & Noble constituted an "integrated employer" for purposes of the ADEA and ADA, and/or that TTU and Barnes & Noble had a principal-agent relationship, as well as a motion for summary judgment on the issue of whether TTU could be held liable for the acts of Barnes & Noble under either of those theories.

On October 19, 1995, the district court entered an order granting the state's motion to dismiss and denying plaintiffs' motion for summary judgment. ¹ Without any analysis or discussion, the court held that "[b]ased on the entire record," TTU and Barnes & Noble could not be considered an "integrated employer," nor could Barnes & Noble be considered an agent of TTU.

Plaintiffs filed this timely appeal.

II.

We review de novo a district court's grant of summary judgment, using the same standard applied by the district court. Wathen v. General Elec. Co., 115 F.3d 400, 403 (6th Cir.1997). Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, along with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). In determining whether there exists a genuine issue of material fact, the court must resolve all ambiguities and draw all factual inferences in favor of the non-moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 2513, 91 L.Ed.2d 202 (1986). Summary judgment is inappropriate if the evidence would permit a reasonable jury to return a verdict for the non-moving party. Id. at 248, 106 S.Ct. at 2510.

III.

In order to hold TTU liable under the ADEA and/or the ADA, plaintiffs must show that TTU was their "employer" within the meaning of those statutes. ² It is undisputed that Barnes & Noble, not TTU, was plaintiffs' direct employer. Although a direct employment relationship provides the usual basis for liability under the ADEA or ADA, courts have fashioned various doctrines by which a defendant that does not directly employ a plaintiff may still be considered an "employer" under those statutes. In one approach, courts examine whether two entities are so interrelated that they may be considered a "single employer" or an "integrated enterprise." See, e.g., York v. Tennessee Crushed Stone Ass'n, 684 F.2d 360 (6th Cir.1982). In another approach, courts consider whether one defendant has control over another company's employees sufficient to show that the two companies are acting as a "joint employer" of those employees. See, e.g., Carrier Corp. v. NLRB, 768 F.2d 778 (6th Cir.1985); Rivas v. Federacion de Asociaciones Pecuarias de Puerto Rico, 929 F.2d 814 (1st Cir.1991). ³ A third approach examines whether the person or entity that took the allegedly illegal employment action was acting as the agent of another company, which may then be held liable as the plaintiffs' employer. See, e.g., Deal v. State Farm County Mut. Ins. Co. of Texas, 5 F.3d 117 (5th Cir.1993); Fike v. Gold Kist, Inc., 514 F.Supp. 722 (N.D.Ala.), aff'd, 664 F.2d 295 (11th Cir.1981).

Here, plaintiffs seek to hold TTU liable for the actions of Barnes & Noble under two of these theories. First, they argue that TTU and Barnes & Noble should be considered a "single employer." ⁴ Alternatively, they contend that TTU should be held liable for the conduct of Barnes & Noble under agency principles.

A. Single Employer

Under the "single employer" or "integrated enterprise" doctrine, two companies may be considered so interrelated that they constitute a single employer subject to liability under the ADEA and/or the ADA. See Armbruster, 711 F.2d at 1337-38 (Title VII); York, 684 F.2d at 362 (ADEA). In determining whether to treat two entities as a single employer, courts examine the following four factors: (1) interrelation of operations, i.e., common offices, common record keeping, shared bank accounts and equipment; (2) common management, common directors and boards; (3) centralized control of labor relations and personnel; and (4) common ownership and financial control. York, 684 F.2d at 362.

None of these factors is conclusive, and all four need not be met in every case. Armbruster, 711 F.2d at 1337-38. Nevertheless, control over labor relations is a central concern. Id. at 1337; Murray v. Miner, 74 F.3d 402, 404 (2d Cir.1996); Frank v. U.S. West, Inc., 3 F.3d 1357, 1363 (10th Cir.1993); Rogers v. Sugar Tree Prod., Inc., 7 F.3d 577, 582 (7th Cir.1993); Trevino v. Celanese Corp., 701 F.2d 397, 404 (5th Cir.1983).

Examining the four factors in the context of this case, it is clear that TTU and Barnes & Noble cannot be treated as an integrated enterprise. First, there is insufficient evidence of interrelation of operations. TTU and Barnes & Noble each kept their own records, and maintained separate bank accounts and offices. See York, 684 F.2d at 362. There is simply no evidence of the type of interrelation found in cases treating two entities as a single employer. See, e.g., Armbruster, 711 F.2d at 1338 (finding interrelation of operations where parent company "handled" subsidiary's accounts receivable and its payroll and cash accounting, provided it with administrative backup, monitored its sales shipments, allowed subsidiary's managerial employees to use its company credit cards, and housed subsidiary's bank accounts at its headquarters); McKenzie v. Davenport-Harris Funeral Home, 834 F.2d 930, 933-34 (11th Cir.1987) (parent and subsidiary companies were marketed as "twins in service," and parent kept subsidiary's books and...