Arbaugh v. Y&H Corp.

• Decision Date: 02 August 2004
• Docket Number: No. 03-30365.,03-30365.
• Parties: Jenifer ARBAUGH, Plaintiff-Appellant, v. Y&H CORPORATION, doing business as The Moonlight Cafe; and Yalcin Hatipoglu, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

380 F.3d 219

Jenifer ARBAUGH, Plaintiff-Appellant, v. Y&H CORPORATION, doing business as The Moonlight Cafe; and Yalcin Hatipoglu, Defendants-Appellees.

No. 03-30365.

United States Court of Appeals, Fifth Circuit.

August 2, 2004.

COPYRIGHT MATERIAL OMITTED

Jeffrey A. Schwartz (argued), Audrey N. Browne, Watkins, Ludlam, Winter & Stennis, New Orleans, LA, for Plaintiff-Appellant.

Brett John Prendergast (argued), New Orleans, LA, for Defendants-Appellees.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before EMILIO M. GARZA, DeMOSS and CLEMENT, Circuit Judges.^*

DeMOSS, Circuit Judge:

Jenifer Arbaugh filed suit against Y&H Corporation ("Y&H") and Yalcin Hatipoglu (collectively, "Defendants"), in November 2001, asserting claims under both Title VII of the Civil Rights Act of 1964 and Louisiana state tort law. After a two-day jury trial in October 2002, a verdict was returned in favor of Arbaugh. In November 2002, Defendants filed a motion to dismiss, contending that Y&H did not qualify as an "employer" under 42 U.S.C. § 2000e(b) because it did not employ 15 or more employees for 20 or more calendar weeks during the relevant time period. The district court ordered both parties to conduct post-trial discovery on the issue. In March 2003, the district court converted the motion to dismiss to a motion for summary judgment. Thereafter, in April 2003, the district court entered an order vacating and reversing Arbaugh's jury verdict and judgment based upon the determination that the court did not have subject matter jurisdiction. Arbaugh filed a timely notice of appeal.

BACKGROUND AND PROCEDURAL HISTORY

Jenifer Arbaugh was employed as a bartender and waitress at the Moonlight Cafe, a New Orleans restaurant, from May 2000 until February 2001. During this time, Arbaugh alleges that Hatipoglu, one of Y&H's owners, continually subjected her to a sexually hostile environment. On November 8, 2001, Arbaugh filed suit in federal district court, in Louisiana, asserting claims against Y&H (the operator of the Moonlight Cafe) and Hatipoglu. Arbaugh alleged sexual harassment in violation of Title VII in addition to state tort law claims. Arbaugh asserted in her complaint that the court had subject matter jurisdiction over her Title VII claim pursuant to 28 U.S.C. § 1331, which confers federal question jurisdiction.¹ Arbaugh further stated in her complaint that she had satisfied the Title VII prerequisite for filing a charge with the Equal Employment Opportunity Commission ("EEOC") and received a "Right to Sue" notice less than 90 days prior to filing her suit in district court.

The parties consented to have the matter heard before a magistrate judge pursuant to 28 U.S.C. § 636(c).² Over the course of two days in October 2002, the parties presented evidence to a jury. The jury returned a verdict in favor of Arbaugh, awarding her $5000 in back-pay, $5000 in compensatory damages, and $30,000 in punitive damages. The district court entered final judgment for Arbaugh on November 5, 2002. On November 19, 2002, Defendants filed a motion pursuant to Fed.R.Civ.P. 12(h)(3), in which they sought to dismiss the case for lack of subject matter jurisdiction. Specifically, Defendants argued that during the relevant years Arbaugh was employed there, the Moonlight Cafe did not employ 15 or more employees for 20 calendar weeks, thus exempting it from Title VII coverage. In March 2003, the district court converted Defendants' motion to dismiss to a motion for summary judgment and ordered both parties to conduct additional post-trial discovery and submit supplemental memoranda to support their respective positions.

On April 4, 2003, the district court granted Defendants' motion and vacated and reversed Arbaugh's jury verdict and judgment. In its order and reasons, the district court determined that Defendants did not employ the requisite 15 or more persons during the relevant time periods, explaining that this calculation was exclusive of Y&H's delivery drivers, the two owners of Y&H, and their wives. The district court noted in its order that had the delivery drivers, the two owners, or their wives counted as employees, Defendants would have been subject to the statutory framework of Title VII. Arbaugh timely filed the instant appeal.

STANDARD OF REVIEW

We review dismissals for lack of subject matter jurisdiction de novo, using the same standards as those employed by the lower court. Beall v. United States, 336 F.3d 419, 421 (5th Cir.2003); McAllister v. FDIC, 87 F.3d 762, 765 (5th Cir.1996). We must take as true all of the complaint's uncontroverted factual allegations. John Corp. v. City of Houston, 214 F.3d 573, 576 (5th Cir.2000). Likewise, this court reviews grants of summary judgment de novo, applying the same standard as the district court. Tango Transp. v. Healthcare Fin. Servs. LLC, 322 F.3d 888, 890 (5th Cir.2003). Summary judgment is appropriate if no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The court views the evidence in a light most favorable to the non-movant. Coleman v. Houston Indep. Sch. Dist., 113 F.3d 528, 533 (5th Cir.1997). The non-movant must go beyond the pleadings and come forward with specific facts indicating a genuine issue for trial to avoid summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A genuine issue of material fact exists when the evidence is such that a reasonable jury could return a verdict for the non-movant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Summary judgment is appropriate, however, if the non-movant "fails to make a showing sufficient to establish the existence of an element essential to that party's case." Celotex, 477 U.S. at 322, 106 S.Ct. 2548.

DISCUSSION

I. Whether the district court erred in ruling that the number of Defendants' employees determined subject matter jurisdiction rather than an issue going to the merits.

Arbaugh argues that the threshold issue is not whether Y&H employed 15 or more employees during the relevant time period, but rather whether the employee census finding is relevant to subject matter jurisdiction or whether that determination goes to the merits of the case. Arbaugh argues that while the Fifth Circuit has concluded this issue determines subject matter jurisdiction, this court's rulings do not provide an explanation supporting its conclusion.

Noting a circuit split on this issue, Arbaugh cites the Second Circuit for its observation that:

Whether a disputed matter concerns jurisdiction or the merits (or occasionally both) is sometimes a close question. Court decisions often obscure the issue by stating that the court is dismissing "for lack of jurisdiction" when some threshold fact has not been established, without explicitly considering whether the dismissal should be for lack of subject matter jurisdiction or for failure to state a claim.

Da Silva v. Kinsho Int'l Corp., 229 F.3d 358, 361 (2d Cir.2000).

Arbaugh relies also on the Seventh Circuit's determination that a plaintiff who files a non-frivolous suit in federal court without more imparts the court with subject matter jurisdiction. Sharpe v. Jefferson Distrib. Co., 148 F.3d 676, 677 (7th Cir.1998), abrogated on other grounds, Papa v. Katy Indus., Inc., 166 F.3d 937, 939-40 (7th Cir.1999). Finding that "[a] plaintiff's inability to demonstrate that the defendant has 15 or more employees is just like any other failure to meet a statutory requirement," the Seventh Circuit opined: "Surely the number of employees is not the sort of question a court (including [an] appellate court) must raise on its own, which a `jurisdictional' characterization would entail." Sharpe, 148 F.3d at 677-78. Arbaugh contends that because she presented to the district court a non-frivolous claim based in part on federal law, without demonstrating anything more, this court is vested with subject matter jurisdiction.³ Arbaugh suggests that because this court has not examined the census/jurisdiction issue sufficiently, we should adopt the well-reasoned approach that the Second, Seventh, and Federal Circuits have followed, and likewise conclude that the census issue goes to the merits of an employment discrimination case.

Defendants, on the other hand, simply argue that we must adhere to our Circuit precedent, established in Dumas v. Town of Mt. Vernon, 612 F.2d 974, 980 (5th Cir.1980), and followed by Womble v. Bhangu, 864 F.2d 1212, 1213 (5th Cir.1989), and Greenlees v. Eidenmuller Enters., Inc., 32 F.3d 197, 198 (5th Cir.1994), that a failure to qualify as an "employer" under Title VII deprives a district court of subject matter jurisdiction. Defendants contend that while the Second, Seventh, and Federal Circuits view the statutory definition of an employer as an issue which goes to the merits of the case, the Fifth Circuit is joined by five other circuits in concluding otherwise. Specifically, the Fourth, Hukill v. Auto Care, Inc., 192 F.3d 437, 441-42 (4th Cir.1999), the Sixth, Armbruster v. Quinn, 711 F.2d 1332, 1335 (6th Cir.1983), the Ninth, Childs v. Local 18, Int'l Bhd. of Elec. Workers, 719 F.2d 1379, 1382 (9th Cir.1983), the Tenth, Owens v. Rush, 636 F.2d 283, 287 (10th Cir.1980), and the Eleventh Circuit, Scarfo v. Ginsberg, 175 F.3d 957, 960 (11th Cir.1999), have all concluded that the "employer" definition creates a jurisdictional requirement.

In an attempt to circumvent the Dumas/Womble/Greenlees line of cases, Arbaugh cites Clark v. Tarrant County, Texas, 798 F.2d 736, 741-42 (5th Cir.1986), in which this court held that where questions concerning subject matter jurisdiction are intertwined with the merits, a Title VII claim should not be dismissed for lack of subject matter jurisdiction unless the claim is frivolous or clearly excluded by prior law. In Clark, the district court grant...