Moldenhauer v. Tazewell-Pekin Consol. Comm.

• Citation: 536 F.3d 640
• Decision Date: 31 July 2008
• Docket Number: No. 07-1118.,07-1118.
• Parties: Denise N. MOLDENHAUER, Plaintiff-Appellant, v. TAZEWELL-PEKIN CONSOLIDATED COMMUNICATIONS CENTER, et al., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

536 F.3d 640

Denise N. MOLDENHAUER, Plaintiff-Appellant, v. TAZEWELL-PEKIN CONSOLIDATED COMMUNICATIONS CENTER, et al., Defendants-Appellees.

No. 07-1118.

United States Court of Appeals, Seventh Circuit.

Argued November 6, 2007.

Decided July 31, 2008.

John A. Slevin (argued), Vonachen, Lawless, Trager & Slevin, Peoria, IL, for Plaintiff-Appellant.

Patrick Murphey (argued), Miller, Hall & Triggs, Peoria, IL, Karen L. Kendall, Craig L. Unrath (argued), Heyl, Royster, Voelker & Allen, Peoria, IL, for Defendants-Appellees.

Before FLAUM, KANNE, and ROVNER, Circuit Judges.

ROVNER, Circuit Judge.

We are asked to consider one issue in this appeal: what qualifies as a joint-employment relationship under the Family Medical Leave Act (FMLA)? Denise Moldenhauer worked as a dispatcher for the Tazewell-Pekin Consolidated Communications Center (Tazcom), a non-profit entity providing emergency 911 communications, until she was terminated for excessive absenteeism resulting from her chronic pancreatitis. She brought suit, claiming Tazcom, the City of Pekin, and Tazewell County were joint employers that together retaliated against her for attempting to exercise her rights under the FMLA. See 29 U.S.C. § 2612(a)(1). The district court granted defendants' motion for summary judgment, concluding that Tazcom, Pekin, and Tazewell were not joint employers and that Tazcom alone was too small to qualify as an employer under the FMLA. We decline to extend joint-employer liability in this case because (1) there is no evidence that Pekin and Tazewell exhibited control over the work or working conditions of Moldenhauer, (2) Tazcom was not formed to evade the requirements of the FMLA, and (3) the policies of the small-employer exception are furthered by limiting employer liability in this case. Therefore, we affirm.

I. Background

The facts are construed in the light most favorable to Moldenhauer. See Darst v. Interstate Brands Corp., 512 F.3d 903, 907 (7th Cir.2008). Moldenhauer began working at Tazcom in August 1983 as a dispatch telecommunicator. In 1991 she was diagnosed with chronic pancreatitis causing acute flare-ups that required pain medication, bed rest, and a restricted diet. Initially, these flare-ups caused her to miss only a limited amount of work, but as her illness progressed so did the amount of work she was forced to miss. The Tazcom Executive Director, Steve Thompson, first voiced concern regarding Moldenhauer's absenteeism in 1998. One year later he wrote a letter informing her that she was eligible for up to twelve weeks of leave under the FMLA if her health problems persisted.

Moldenhauer's chronic pancreatitis continued to cause her to miss work, and in May of 2002 she notified Thompson in writing that she wished to invoke her rights under the FMLA. Tazcom disputes whether Thompson ever received this notification. But, in any event, Moldenhauer claims that Thompson denied her request for FMLA leave, and she then filed a complaint with the U.S. Department of Labor (U.S. DOL). An investigation culminated in a preliminary letter from the U.S. DOL labeling Tazcom, Pekin, and Tazewell joint employers under the FMLA.

In January 2003 Thompson suspended Moldenhauer for twenty days due to her absenteeism, her third suspension for missing work. After returning from her suspension, she again missed work, and Thompson fired her in April 2003 after notifying the Tazcom Executive Board of his decision.

Moldenhauer brought suit in district court, alleging many different causes of action. As is relevant here, she claimed that Tazcom, Pekin, and Tazewell retaliated against her for trying to exercise her rights under the FMLA. The district court granted summary judgment in favor of the defendants, reasoning that Pekin and Tazewell did not have control over Tazcom employees and therefore were not joint employers of Moldenhauer. Summary judgment was appropriate in favor of Tazcom, the court reasoned, because it had fewer than fifty employees and was therefore exempt from the FMLA.

Because the court's decision turned on the amount of control Pekin and Tazewell exercised over Moldenhauer, it is important to understand the relationship between Pekin, Tazewell, and Tazcom. Pekin and Tazewell created Tazcom in 1976 as a non-profit corporation in Illinois to provide emergency 911 communications at a more affordable rate. Tazcom serves thirty-eight public and private entities.

Tazcom was established as a independent entity, but, as its name suggests, it does a great deal of business with Pekin and Tazewell. All of Tazcom's clients pay for their emergency services. But the bulk of Tazcom's operating budget is derived from Pekin and Tazewell, who are the largest users of Tazcom's services. Tazcom also rents office space from Pekin, and in order to enter the building, Tazcom's employees were issued Pekin identification badges. It is unclear from the record whether Tazcom paid rent prior to 2001, but the parties agree that Tazcom regularly paid Pekin rent since 2001.

Tazcom also contracted with Pekin for the provision of various services. This contract was embodied in the "Letter of Understanding," dated May 1, 1996, which explained, "Employees of the Tazewell/Pekin Consolidated Communications Center shall be considered employees of the City of Pekin for the purposes of providing Payroll, Health Care Insurance, Workers Compensation Insurance, and Illinois Municipal Retirement." Tazcom paid Pekin $4,974 per year in exchange for payroll services. According to Pekin, technological limitations required that all Tazcom employees be labeled as Pekin employees to provide payroll services. Pekin was also listed as Moldenhauer's employer on many of her employment forms, including her W-2s, wage garnishment form, and direct deposit form. Additionally, as detailed in the Letter of Understanding, when Moldenhauer participated in the Illinois Municipal Retirement Fund she did so as an employee of Pekin, and the Tazcom sexual harassment policy listed a Pekin city employee as the reporting official for potential claims. Finally, prior to 2002, Tazcom contracted with Pekin for health and life insurance providers, although it has since procured its own providers.

As for the day-to-day operations of Tazcom, the parties dispute what level of control Pekin and Tazewell exercised over Tazcom. The Tazcom bylaws stipulate that a board of directors be appointed consisting of four individuals: the Sheriff of Tazewell, the Chairperson of the Tazewell Board of Supervisors, the Mayor of Pekin, and the Pekin Chief of Police, all of whom have the choice of serving personally or designating an alternate to serve in their place. But the board appoints a separate Executive Director to manage the day-to-day operations, including the hiring and firing of employees and creation of a preliminary budget. During all periods relevant to this litigation, Steven Thompson served as the Executive Director. Thompson is not affiliated with Pekin or Tazewell in any way and is only employed by Tazcom.

Based on these facts, Moldenhauer appeals the district court's grant of summary judgment, arguing that Pekin, Tazewell, and Tazcom are joint employers and therefore liable under the FMLA.

II. Analysis

We review a grant of summary judgment de novo, construing all facts and inferences in favor of the nonmoving party. See Lewis v. Sch. Dist. # 70, 523 F.3d 730, 740 (7th Cir.2008). Summary judgment is appropriate where there is no genuine issue of material fact. See Breneisen v. Motorola, Inc., 512 F.3d 972, 977 (7th Cir. 2008). The majority of the facts in this case are undisputed, and therefore the key issue turns on whether, under these facts, Tazcom, Pekin, and Tazewell were joint employers under the FMLA.

The FMLA provides eligible employees up to twelve weeks of unpaid leave in any twelve-month period for personal medical conditions or to attend to familial obligations, such as caring for a loved one who has a serious health condition. 29 U.S.C. §§ 2612, 2615. The Act makes it "unlawful for any employer to interfere with, restrain, or deny the exercise of or the attempt to exercise, any right provided under [the FMLA]," 29 U.S.C. § 2615, and the Act provides for a private right of enforcement, 29 U.S.C. § 2617(a). The primary aim of the FMLA is "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)(1) & (3). To effectuate this aim, Congress exempted "small employers," defined as employers with fewer than fifty employees. 29 U.S.C. § 2611(4)(A).

The Act itself does not address situations where joint-employer liability will be imposed. See, e.g., Moreau v. Air France, 343 F.3d 1179, 1182 (9th Cir.2003). But Congress has instructed the U.S. DOL to "prescribe such regulations as are necessary to carry out" the purpose of the FMLA. 29 U.S.C. § 2654; see also Chevron v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984) (holding that deference is due an agency's reasonable interpretation of a silent or ambiguous statute). In turn, the U.S. DOL promulgated regulations explaining circumstances where a joint-employment relationship may exist:

(a) Where two or more businesses exercise some control over the work or working conditions of the employee, the businesses may be joint employers under FMLA. Joint employers may be separate and distinct entities with separate owners, managers and facilities. Where the employee performs work which simultaneously benefits two or more employers, or works for two or more employers at different times during the workweek, a joint employment relationship generally will be considered to exist in situations such as:

(1) Where there is an arrangement between employers to share an employee's services or to interchange employees;

(2) Where one employer acts directly or indirectly in the interest of the...