Hishon v. King & Spalding, 80-9021

Citation678 F.2d 1022
Decision Date17 June 1982
Docket NumberNo. 80-9021,80-9021
Parties29 Fair Empl.Prac.Cas. 51, 29 Empl. Prac. Dec. P 32,840 Elizabeth Anderson HISHON, Plaintiff-Appellant, v. KING & SPALDING, a Partnership, Defendant-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (11th Circuit)

Emmet J. Bondurant, II, Atlanta, Ga., for plaintiff-appellant.

Judy Trent Ellis, E. E. O. C., Washington, D. C., for amicus curiae.

Lokey & Bowden, Hamilton Lokey, Gerald F. Handley, Atlanta, Ga., for defendant-appellee.

Appeal from the United States District Court for the Northern District of Georgia.

Before TJOFLAT and FAY, Circuit Judges, and YOUNG *, District Judge.

FAY, Circuit Judge:

A voluntary association of two or more persons established for the purpose of engaging in a common enterprise has traditionally been known as a partnership. It is from within this framework this Court now confronts a novel question of jurisdiction under Title VII. Elizabeth Anderson Hishon filed a Title VII action against King & Spalding, a law firm, alleging that it discriminated against her on the basis of sex in its refusal to invite her into its partnership. After considering lengthy and detailed memoranda, Judge Newell Edenfield of the Northern District of Georgia, held Title VII inapplicable to partnership decisions, leaving the District Court without subject matter jurisdiction of the claim. Judge Edenfield dismissed the case under Fed.R.Civ.P. 12(b)(1). 1 The plaintiff appeals the District Court's ruling and provides us with a myriad of creative reasons why the particular partnership in issue here should be subject to the protection afforded "employees" by Title VII. While the arguments are appealing and discrimination in any form must not be tolerated, we cannot overlook the essence of a partnership-voluntary association. We are therefore compelled to reject the corporate characterizations of King & Spalding set forth by the plaintiff, and hold that Title VII does not apply to decisions regarding partnership. We affirm the District Court's dismissal.

In 1972, Elizabeth Hishon accepted a position as an associate with King & Spalding. King & Spalding is a large Atlanta law firm which operates as a general partnership. The partnership consists of approximately fifty active lawyers and employs approximately fifty additional lawyers as associates. At the time the plaintiff became an associate with the firm, consideration for partnership occurred at the end of an associate's sixth year. The firm also maintained an "up or out" policy. Under this policy, if the partnership did not invite an associate to become a partner after the requisite time, the associate was allowed to remain with the firm only for such reasonable period as necessary to secure other employment.

In May, 1978, the partnership considered Ms. Hishon, along with other associates hired at the same time, and decided not to invite her to join the partnership. 2 She was promptly notified, and was extended the normal period of time to secure other employment. Eight months later, Ms. Hishon requested reconsideration for partnership. At the conclusion of the May, 1979, partnership meeting, the result was the same-Ms. Hishon was not invited into the partnership. 3 Again the partnership notified her of the outcome. Ms. Hishon left the firm on December 31, 1979.

Prior to her departure from the firm, Ms. Hishon filed a sex discrimination claim with the Equal Employment Opportunity Commission. Within ten days the Commission issued a Notice of Right to Sue, and Ms. Hishon filed her complaint in District Court within the statutory 90-day period.

The complaint contained three counts. The first count, the only one considered by the District Court, alleged sex discrimination in the firm's decision not to make her a partner. 4 Count two alleged a violation of the Equal Pay Act, and count three alleged breach of contract. 5

Due to the particularly sensitive nature of the discovery (the contents of the firm's partnership agreement) and the unique legal issue presented in count one, the parties and the District Court mutually agreed to limit initial discovery to information needed to determine the jurisdictional issue of Title VII. King & Spalding supplied an edited version of its partnership agreement in compliance with discovery requests as well as answers and objections to numerous interrogatories. All of this information and the briefs for this appeal were placed under seal to avoid any unnecessary disclosure. 6 In ruling on King & Spalding's motion to dismiss, the District Court also ruled against the plaintiff's request for additional discovery. Amidst the three-count complaint, sensitive discovery, the unique legal issue posed, and the professional courtesy extended by all involved, this Court is confronted with but a single narrow issue: whether Title VII applies to a law firm's decisions regarding its partners?

A dismissal under Fed.R.Civ.P. 12(b)(1) is proper only when "it appears beyond doubt that the plaintiff can prove no set of facts in support of (her) claim, which would entitle (her) to relief." McLain v. Real Estate Board of New Orleans, Inc., 444 U.S. 232, 246, 100 S.Ct. 502, 511, 62 L.Ed.2d 441 (1980) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957). Appellant suggests that Title VII must be given the "broadest possible interpretation" in order to effectuate its purpose-to remedy acts of discrimination within the employment context. Rogers v. EEOC, 454 F.2d 234, 238 (5th Cir. 1971), cert. denied, 406 U.S. 957, 92 S.Ct. 2058, 32 L.Ed.2d 343 (1972). Under such a broad reading and in conjunction with her altered characterizations of King & Spalding, she hopes to persuade us of Title VII's application to partnership decisions. Even under the most liberal reading we cannot find the requisite congressional intent to permit Title VII's intervention into matters of voluntary association. We can conceive no set of facts which would entitle her to relief under Title VII with respect to partnership decisions. This renders the dismissal of her claim proper.

Appellant proposes three bases upon which to find jurisdiction under Title VII: (1) partners at King & Spalding are equivalent to "employees" of a corporation thereby establishing the employment context for Title VII's application; (2) elevation to partnership is an "employment opportunity" or a "term, condition or privilege of employment" protected by Title VII; and (3) termination of employment as a result of failure to make partner falls within the ambit of an unlawful discharge prohibited by Title VII. Despite the alluring quality of her arguments, we are unpersuaded. An examination of her attempts to recharacterize the law firm partnership as a corporation reveals their transparent nature.

Partnership or Corporation?

The appellant argues the size and complexion of King & Spalding's partnership is more akin to a corporation possessing a separate and distinct identity and that its partners are more like employees than owners. 7 We are well aware that large law partnerships possess many attributes common to corporate forms of business. As appellant correctly points out, the United States Supreme Court has held that partnerships have "an established institutional identity independent of its individual partners." Bellis v. United States, 417 U.S. 85, 95, 94 S.Ct. 2179, 2187, 40 L.Ed.2d 678 (1974) (individual partner's fifth amendment privilege held inapplicable to prevent production of partnership records). For many purposes, such as the fifth amendment's protection, this "separate identity" will yield results similar to those for corporations, but not for Title VII purposes.

Next the appellant contends that because King & Spalding has a written partnership agreement, the firm has expressly altered its existence from a traditional common law partnership to the skeletal structure of a corporation. This argument is another attempt to equate partners of a large firm with employees of a corporation. We have reviewed the appellant's list of alleged alterations and find they do nothing more than clarify the internal structure of the firm. Under Georgia law "(a) partnership may be created either by written or parol contract." Ga.Code Ann. § 75-101 (1981). King & Spalding has reduced its partnership structure to writing; there is no merit to the contention that in doing so, it has unbeknownst to itself incorporated its partnership.

Additionally, the appellant points out that the United States Supreme Court and the former Fifth Circuit 8 have held that part ownership of a business does not preclude a person's classification as an employee subject to federal employment legislation. Goldberg v. Whitaker House Cooperative, Inc., 366 U.S. 28, 81 S.Ct. 933, 6 L.Ed.2d 100 (1961); Pettway v. American Cast Iron Pipe Co., 494 F.2d 211 (5th Cir.), rehearing en banc denied, 494 F.2d 1296 (5th Cir. 1974). It would be unrealistic to assume a person cannot maintain a proprietary interest and simultaneously work in the business. Mutual exclusivity neither exists nor is required in a law firm in order for the firm to maintain its desired partnership structure. This lack of exclusivity, however, does not render the term "partner" equivalent to the term "employee" for purposes of Title VII.

Partner or Employee?

The status of "an employee under Title VII is a question of federal ... law; it is to be ascertained through consideration of the statutory language of the Act, its legislative history, existing federal case law, and the particular circumstances of the case at hand." Calderon v. Martin County, 639 F.2d 271, 272-73 (5th Cir. 1981). Neither the statutory language nor the legislative history of Title VII greatly illuminate this otherwise gray area. First, Title VII merely defines an employee as "an individual employed by an employer." 42 U.S.C. § 2000e(f) (1976). Second, the legislative history reveals but a single...

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