Grace v. Uscar

• Decision Date: 26 March 2008
• Docket Number: No. 06-2509.,06-2509.
• Citation: 521 F.3d 655
• Parties: Rosalyn GRACE, Plaintiff-Appellant, v. USCAR and Bartech Technical Services, LLC, Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

521 F.3d 655

Rosalyn GRACE, Plaintiff-Appellant, v. USCAR and Bartech Technical Services, LLC, Defendants-Appellees.

No. 06-2509.

United States Court of Appeals, Sixth Circuit.

Argued: January 31, 2008.

Decided and Filed: March 26, 2008.

ARGUED: Darcie R. Brault, Dib, Fagan and Brault, P.C., Royal Oak, Michigan, for Appellant. Thomas G. Kienbaum,

Kienbaum, Opperwall, Hardy & Pelton, Birmingham, Michigan, Melanie T. LaFave, Jaffe, Raitt, Heuer & Weiss, P.C., Southfield, Michigan, for Appellees. ON BRIEF: Darcie R. Brault, Dib, Fagan and Brault, P.C., Royal Oak, Michigan, for Appellant. Jay C. Boger, Kienbaum, Opperwall, Hardy & Pelton, Birmingham, Michigan, Melanie T. LaFave, Jaffe, Raitt, Heuer & Weiss, P.C., Southfield, Michigan, for Appellees. Gary A. Reeve, Kennedy, Reeve & Knoll, Columbus, Ohio, for Amicus Curiae.

Before: MERRITT, GILMAN, and COOK, Circuit Judges.

OPINION

MERRITT, Circuit Judge.

I.

The plaintiff, Rosalyn Grace, appeals the district court's order of summary judgment resulting in the dismissal of her Family Medical Leave Act (FMLA) and federal and state gender discrimination claims against defendants USCAR and Bartech Technical Services, LLC (Bartech). First, she argues that Bartech and USCAR are joint employers and thus both liable for violations of her rights under the FMLA. In support of this argument, she contends that the district court misinterpreted existing case law regarding successor-in-interest liability under the FMLA and that she was eligible for unpaid medical leave. Second, she contends that the district court erred by granting the defendants' motion for summary judgment on her Title VII gender discrimination claim. Specifically, Grace argues that Bartech had sufficient notice of USCAR's violations to be held liable as a joint employer. And finally, the plaintiff argues that her related state-law claims should have been dismissed without prejudice, instead of with prejudice.

We hold that Bartech and USCAR are joint employers for FMLA purposes and that Grace was eligible for unpaid leave. Grace has raised a genuine issue of material fact as to whether the defendants Violated her rights under the FMLA; consequently, the district court's grant of summary judgment is reversed as to the plaintiffs FMLA claims. We agree, however, with the district court that the defendants are entitled to summary judgment on the merits of her gender discrimination claims under Title VII. Finally, the plaintiff is mistaken in stating that her state-law gender discrimination claim was dismissed with prejudice; it was not.

II.

The plaintiff, Rosalyn Grace, held several information technology ("IT") positions for defendant USCAR for eight years, beginning in 1996. USCAR is a general partnership formed between Ford Motor Company, DaimlerChrysler Corporation and General Motors Corporation, which was created to facilitate research and development ("R & D") programs that benefit the U.S. automotive industry.¹ All of USCAR's employees are either contractors, like Grace, who are hired from staffing agencies² or full-time employees of one of the partner companies on loan to USCAR.

At all times during her service to USCAR, Grace was a contract employee employed by agencies providing workers for USCAR. During the course of her employment, USCAR used various contracting houses, but most importantly DGE and Bartech.³ In December 2003, DGE filed for bankruptcy reorganization, at which time USCAR interviewed four companies about assuming the DGE contracts for USCAR's administrative employees, including Grace. Bartech was selected and began to service the USCAR account in January 2004. The plaintiff was employed continuously since 1996 and her duties stayed the same throughout her move from one placement agency to another. Joint Appendix ("JA") 674.

During the time period in question, USCAR's Executive Director was Patricia Flaherty. Grace reported directly to Flaherty and to USCAR's Director of Operations, Michael Martin. Jennifer Shimon, with whom Grace communicated frequently, was the Bartech Account Manager for the USCAR account. Grace developed a respiratory disability (asthma) during the fall of 2004 that eventually resulted in her hospitalization from November 17-26, 2004. As a result, she was unable to continue her IT work at USCAR, and took leave from her position, with an expected return date of January 3, 2005. Grace contacted Bartech with regard to her request for FMLA leave. JA 171. On December 30, 2004, Bartech informed Grace that USCAR had decided to outsource its IT duties and that, as a result, her position was terminated. The plaintiffs recovery took longer than initially expected, and upon notifying the defendants that she was cleared to return to work in February 2005, the defendants again told Grace that her position had been eliminated and that no position remained for her.

The defendants assert that USCAR management decided in the fall of 2004 to restructure its IT division. As part of this process, USCAR's management team considered switching from using full-time contractors from agencies such as Bartech to contracting directly with individual providers of services on an as-needed basis. JA 90. One such position allegedly targeted for change was the IT Manager position held by Grace. On December 13, 2004, Flaherty recommended, and USCAR approved, the elimination of the plaintiffs full-time position in favor of hiring an ostensibly part-time consultant. JA 93-94. Also in December 2004, USCAR decided to use the services of another Bartech contractor, Brian Spolarifh, to handle the regular IT maintenance issues due to Grace's absence. JA 93. In May 2005, Martin decided to contract directly with Spolarich — for a 20 hour per week job — to permanently fill the new IT position at USCAR. JA 733-35.⁴

The plaintiff contends that the reorganization was merely a pretext for USCAR's unlawful behavior towards her. The plaintiff also asserts that Spolarich was working an additional ten to fifteen hours per week developing a database application for an affiliate of USCAR. Furthermore, USCAR was paying Spolarich either $62 or $75 per hour, while the billing rate USCAR paid to Bartech for the plaintiffs services was $58.66. JA 685. Grace argues that when the additional hours and the higher rates paid to Spolarich are included, the defendants would not be saving money compared to her full-time position; according to the plaintiff, therefore, the two positions should be considered as equivalent.

The plaintiff brought suit in federal district court, alleging: (1) violations of the FMLA for failing to return the plaintiff to her pre-leave (or comparable) position and for retaliation,⁵ (2) unlawful gender discrimination under Title VII of the Civil Rights Act for replacing her with a lesser qualified male employee and for creating a hostile work environment, and (3) unlawful gender discrimination under Michigan's Elliot-Larsen Civil Rights Act (ELCRA) for the same reasons. The gender discrimination claims were rooted in a joint employment theory, which would make Bartech liable for the actions of the co-employer, USCAR.

Both defendants filed motions for summary judgment on June 1, 2006, which the district court granted. Grace argues that the district court made four mistakes: (1) that it misinterpreted this Court's holding in Cobb v. Contract Transport, Inc., 452 F.3d 543 (6th Cir.2006) when it found that Bartech was not a successor in interest to DGE; (2) that it mistakenly determined that USCAR was not an "employer" under FMLA or Title VII; (3) that the district court erred by requiring the plaintiff to point to specific language putting Bartech on notice of the gender discrimination; and (4) that, in declining to exercise supplemental jurisdiction, the district court should have dismissed Grace's state law claim without prejudice. The effect of the district court's decision is to deny FMLA coverage to an individual who worked as a loaned employee for the same employer (USCAR) for eight years.

III.

This Court reviews de novo a district court's grant of summary judgment for a party. Nat'l Solid Wastes Mgm't Ass'n v. Daviess County, 434 F.3d 898, 902 (6th Cir.2006). Summary judgment is appropriate where the pleadings and evidence show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. FED.R.CIV.P. 56(C). In evaluating the motion, we view all facts and inferences in the light most favorable to the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

IV.

The FMLA was enacted, in part, "to balance the demands of the workplace with the needs of families ... in a manner that accommodates the legitimate interests of employers...." 29 U.S.C. § 2601(b). An "eligible" employee may take up to 12 weeks of unpaid leave for certain situations, including a serious medical condition such as asthma. See 29 U.S.C. § 2612(a)(1). In order to qualify as an eligible employee, an individual must have worked for at least 12 months — and at least 1,250 hours during the previous 12-month period — for a covered employer. 29 U.S.C. § 2611(2). A covered "employer," in turn, comprises "any person engaged in commerce or in any industry or activity affecting commerce who employs 50 or more employees [within 75 miles of the worksite] for each working day during each of 20 or more calendar workweeks in the current or preceding calendar year." 29 U.S.C. § 2611(4).⁶ The term "employer" also includes "any successor in interest of an employer." 29 U.S.C. § 2611(2)(A)(ii)(II) (emphasis added). The act forbids a covered employer from interfering with the exercise of the right to unpaid leave and furthermore provides that, upon return from leave, an employee must be restored to the same or similar position unless the employer offers sufficient economic justification for the elimination of the position....