Kang v. U. Lim America, Inc.

Citation296 F.3d 810
Decision Date15 July 2002
Docket NumberNo. 00-55583.,00-55583.
PartiesSoo Cheol KANG, Plaintiff-Appellant, v. U. LIM AMERICA, INC., Tae Jin Yoon, Does 1-100, Defendant-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

Richard E. Grey, Law Office of Richard E. Grey, San Diego, CA, for the plaintiff-appellant.

John S. Battenfeld and Melissa M. Mulkey, Morgan, Lewis & Bockius LLP, Los Angeles, CA, for the defendants-appellees.

Appeal from the United States District Court for the Southern District of California; Jeffrey T. Miller, District Judge, Presiding. D.C. No. 99-0659 JM(RBB).

Before: BROWNING, FERNANDEZ, and FISHER, Circuit Judges.

Opinion by Judge JAMES R. BROWNING; Dissent by Judge FERNANDEZ.

JAMES R. BROWNING, Circuit Judge.

Soo Cheol Kang (Kang) appeals summary judgment in favor of his employer on Title VII and state law tort claims. We reverse and remand for further proceedings.

I Background

Kang is a United States citizen of Korean national origin. In April 1994, he began working for a California corporation called U. Lim America, Inc. All of U. Lim America's employees shared Korean heritage. Tae Jin Yoon (Yoon) was Kang's supervisor. Yoon subjected Kang and other Korean workers to verbal and physical abuse and discriminatorily long work hours. The verbal abuse consisted of Yoon screaming at Kang for up to three hours a day and calling him "stupid," "cripple," "jerk," "son of a bitch," and "asshole." The physical abuse consisted of striking Kang in the head with a metal ruler on approximately 20 occasions, kicking him in the shins, pulling his ears, throwing metal ashtrays, calculators, water bottles, and files at him, and forcing him to do "jumping jacks."1 Kang began to cut back on the required overtime in order to spend time with his pregnant wife; Yoon fired him.2

U. Lim America had six or fewer employees. However, the U.S.-based company owned and operated U. Lim de Mexico, an electronics manufacturing company in Tijuana, Mexico. All of U. Lim America's employees worked at the Tijuana factory. U. Lim de Mexico employed between 50-150 workers — all citizens of Mexico.3

U. Lim de Mexico was organized under the laws of Mexico and existed for the sole purpose of assembling parts for televisions and computer monitors for sale to U. Lim America at cost plus a one percent surcharge. U. Lim America was U. Lim de Mexico's only customer. Yoon was the Vice-President of U. Lim America and the President of U. Lim de Mexico. His father, Ki Hwa Yoon, owned both U. Lim America and U. Lim de Mexico. He was Chief Executive Officer of both companies and President of U. Lim America.

II Proceedings Below

Kang filed suit in California state court against U. Lim America and Yoon for national origin discrimination and harassment in violation of Title VII and the California Fair Employment and Housing Act. Kang also brought state law claims for wrongful termination in violation of public policy and breach of contract. Defendants removed the case to the United States District Court for the Southern District of California. The district court granted summary judgment to U. Lim America and Yoon on all Kang's causes of action.

Kang's appeal focused on four issues: (1) the applicability of Title VII, (2) national origin harassment, (3) national origin discrimination, and (4) equitable tolling.

We consider the district court's summary judgment decision de novo. Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir.1995).

III Application of Title VII

At the threshold, we must determine whether Title VII applies to U. Lim America. U. Lim America argued it was not covered by Title VII because it employed fewer than fifteen people.4 We hold that Title VII applies because U. Lim America and U. Lim de Mexico were an integrated enterprise which employed a combined total of more than fifteen employees.

This circuit applies a four-part test to determine whether two entities are an integrated enterprise for purposes of Title VII coverage. Childs v. Local 18, Int'l Bhd. of Elec. Workers, 719 F.2d 1379, 1382 (9th Cir.1983). The four factors are: "(1) interrelation of operations; (2) common management; (3) centralized control of labor relations; and (4) common ownership or financial control." Id.5 Considering these factors we conclude that U. Lim de Mexico and U. Lim America were an integrated enterprise employing more than the necessary fifteen employees.

1. Interrelation of Operations

The first factor, interrelation of operations, weighs in favor of finding the two companies to be an integrated enterprise. U. Lim America and U. Lim de Mexico shared a facility in Mexico; neither had a facility in the United States. All of U. Lim America's employees worked in the Tijuana factory, commuting across the border each day. U. Lim America kept U. Lim de Mexico's accounts, issued its paychecks and paid its bills. See Hukill v. Auto Care, Inc., 192 F.3d 437, 443 (4th Cir.1999) (examining such factors as whether the companies operated at separate locations, filed separate tax returns, held separate director and shareholder meetings, conducted separate banking, purchased goods separately, entered into lease agreements separately, and were separately managed).

2. Common Management

The second factor, common management, also favors finding the two companies to be integrated for Title VII purposes. Yoon was the Vice-President of U. Lim America and President of U. Lim de Mexico. U. Lim de Mexico supervisors reported directly to U. Lim America's managers. See Cook v. Arrowsmith Shelburne, Inc., 69 F.3d 1235, 1241 (2d Cir.1995) (finding common management where the two companies had a "common management structure" and the President of the subsidiary operated out of the parent's office).

3. Centralized Control of Labor Relations

The third factor, centralized control of labor relations, is the "most critical." Hukill, 192 F.3d at 442; Cook, 69 F.3d at 1240; see also Childs, 719 F.2d at 1382 (holding that since the local branch of the union conducted its own labor relations the two entities were not an integrated enterprise). This factor too favors finding the two companies to be an integrated enterprise.

U. Lim America had the authority to hire and fire U. Lim de Mexico employees. The Mexican supervisors reported to U. Lim America management. U. Lim America had essentially complete control over U. Lim de Mexico's labor relations.

4. Common Ownership or Financial Control

The fourth factor also weighs in favor of finding the two companies to be an integrated enterprise. U. Lim America and U. Lim de Mexico were owned and controlled by the same person, Yoon's father Ki Hwa Yoon. Furthermore, U. Lim de Mexico essentially made no profit and transferred all its funds to U. Lim America. See Cook, 69 F.3d at 1241(finding the common ownership requirement met where one company was a wholly owned subsidiary of the other).

U. Lim America argued that the definition of employee in Title VII prohibits counting foreign employees of U.S. controlled corporations for purposes of Title VII coverage. The statutory definition is inclusive rather than restrictive. The term "employee" is defined to include U.S. citizens employed by U.S. companies in foreign countries rather than to prohibit counting non-U.S. citizens. See 42 U.S.C. § 2000e(f). The definition arose out of Congress's amendments to Title VII in the 1991 Civil Rights Act to legislatively overturn the result in EEOC v. Arabian American Oil Co., 499 U.S. 244, 259, 111 S.Ct. 1227, 113 L.Ed.2d 274 (1991) (holding that U.S. citizens working for U.S. companies abroad were not covered by Title VII).

Morelli v. Cedel, 141 F.3d 39, 42 (2d Cir.1998), interpreted similar definitional language in a related statute, the Age Discrimination in Employment Act (ADEA). The Morelli court explained that Congress amended the ADEA to specify that the term employee included U.S. citizens working for U.S. companies outside the U.S., not to exclude counting foreign employees. Id. at 42-44.

The purpose of the Civil Rights Act of 1991, which amended the definition of employee, was to restore civil rights protections that had been limited by the Supreme Court and to strengthen the protection and remedies of Federal civil rights laws. H. Rep. No. 102-40(I), at 4 (1991), U.S. Code Cong. & Admin. News 549, 549. Since we broadly interpret ambiguous language in civil rights statutes to effectuate the remedial purpose of the legislation, see Griffin v. Breckenridge, 403 U.S. 88, 97, 91 S.Ct. 1790, 29 L.Ed.2d 338 (1971); see also H. Rep. No. 102-40(I), at 88, U.S. Code Cong. & Admin. News at 626 (stating that "remedial statutes, such as civil rights law[s], are to be broadly construed"), we hold that Title VII's definition of "employee" does not prohibit counting the foreign employees of U.S.-controlled corporations for determining coverage.

The fact that some of the employees of the integrated enterprise are not themselves covered by federal antidiscrimination law does not preclude counting them as employees for the purposes of determining Title VII coverage. See Morelli, 141 F.3d at 44-45. "The nose count of employees relates to the scale of the employer rather than to the extent of protection." Id. at 45. The Morelli court so concluded due, in part, to the policies behind limiting Title VII coverage to employers with fifteen or more workers including "the burdens of compliance and potential litigation costs, `the protection of intimate and personal relations existing in small businesses, potential effects on competition and the economy, and the constitutionality of Title VII under the Commerce Clause.'" Id. at 45 (citation omitted). U. Lim America combined with its large Mexican operation is not a small business of the type Congress intended to protect with the minimum employee limitation.6

IV National Origin Harassment

We reverse...

To continue reading

Request your trial
283 cases
  • Moore v. Cal. Dep't of Corr. & Rehab.
    • United States
    • U.S. District Court — Eastern District of California
    • October 23, 2012
    ...and create an abusive work environment.'" Manatt v. Bank of America, NA, 339 F.3d 792, 798 (9th Cir. 2003) (quoting Kang v. U. Lim Am., Inc., 296 F.3d 810, 817 (9th Cir.2002)).Severe And Pervasive Harassment Not all workplace conduct which may be described as harassment affects a term, cond......
  • Zhao v. State University of N.Y.
    • United States
    • U.S. District Court — Eastern District of New York
    • January 9, 2007
    ...his Korean heritage. The Ninth Circuit reversed the district court's decision to grant summary judgment on a disparate treatment claim. Id. at 819. Specifically, the court found that there were sufficient facts from which a jury could find that his former employer's reasons for firing him w......
  • Barot v. Embassy of the Republic of the Zam., Civil Action No. 13–0451 (ABJ)
    • United States
    • U.S. District Court — District of Columbia
    • March 8, 2018
    ...The nose count of employees relates to the scale of the employer rather than to the extent of the protection."); Kang v. U. Lim Am., Inc. , 296 F.3d 810, 816 (9th Cir. 2002) (holding that Title VII's definition of "employee" does not prohibit counting foreign employees); see also Sinclair v......
  • Juell v. Forest Pharmaceuticals, Inc.
    • United States
    • U.S. District Court — Eastern District of California
    • September 12, 2006
    ...create an abusive working environment." Manatt v. Bank of America, NA, 339 F.3d 792, 798 (9th Cir.2003) (quoting Kang v. U. Lim Am., Inc., 296 F.3d 810, 817 (9th Cir.2002). Like Title VII, FEHA is not a general civility code. Id. (citing Faragher v. City of Boca Raton, 524 U.S. 775, 788, 11......
  • Request a trial to view additional results
17 books & journal articles
  • Employment Discrimination Law?Overview & History
    • United States
    • James Publishing Practical Law Books Archive Texas Employment Law. Volume 1 - 2014 Part V. Discrimination in employment
    • August 16, 2014
    ...both full time and part time workers. Walters, 519 U.S. at 211. Courts also count employees working overseas. Kang v. U. Lim. Am., Inc. 296 F.3d 810, 815-16 (9th Cir. 2002) (foreign employees count for purposes of determining Title VII’s 15-employee minimum); Morelli v. Cedel, 141 F.3d 390,......
  • Employment Relationship Defined
    • United States
    • James Publishing Practical Law Books Archive Texas Employment Law. Volume 1 - 2014 Part I. The Employment Relationship
    • August 16, 2014
    ...employment statutes, the plaintiff should include all employees, including those working in foreign countries. Kang v. U. Lim. Am., Inc. , 296 F.3d 810, 815-16 (9th Cir. 2002) (foreign employees count for purposes of 1-131 employmenT relaTionship DeFineD §1:3 determining Title VII’s 15-empl......
  • Discrimination Based on National Origin, Religion, and Other Grounds
    • United States
    • James Publishing Practical Law Books Archive Texas Employment Law. Volume 2 - 2016 Part V. Discrimination In Employment
    • July 27, 2016
    ...district court denied the employer’s motion for summary judgment on the national origin discrimination claim. Kang v. U. Lim Am., Inc. , 296 F.3d 810 (9th Cir. 2002), is an illustrative national origin case from another circuit. In Kang , the Ninth U.S. Circuit Court of Appeals reversed the......
  • Employment discrimination law-overview & history
    • United States
    • James Publishing Practical Law Books Texas Employment Law. Volume 1 Part V. Discrimination in employment
    • May 5, 2018
    ...both full time and part time workers. Walters, 519 U.S. at 211. Courts also count employees working overseas. Kang v. U. Lim. Am., Inc. 296 F.3d 810, 815-16 (9th Cir. 2002) (foreign employees count for purposes of determining Title VII’s 15-employee minimum); Morelli v. Cedel, 141 F.3d 390,......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT