Rogers v. Sugar Tree Products, Inc.

• Decision Date: 14 January 1994
• Docket Number: No. 92-2990,92-2990
• Citation: 7 F.3d 577
• Parties: 63 Fair Empl.Prac.Cas. (BNA) 60, 62 Empl. Prac. Dec. P 42,568 Mary Jane ROGERS, Plaintiff-Appellant, v. SUGAR TREE PRODUCTS, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 577

7 F.3d 577

63 Fair Empl.Prac.Cas. (BNA) 60, 62 Empl.

Prac. Dec. P 42,568

Mary Jane ROGERS, Plaintiff-Appellant, v. SUGAR TREE PRODUCTS, INC., Defendant-Appellee.

No. 92-2990.

United States Court of Appeals,

Seventh Circuit.

Argued April 12, 1993.

Decided Oct. 5, 1993.

Rehearing and Suggestion for

Rehearing En Banc Denied

Jan. 14, 1994.

Lawrence Schlam (argued), DeKalb, IL, Warren H. Larson, Larson & Larson, Rockford, IL, for plaintiff-appellant.

Jerome J. Duff (argued), Thomas R. McDonnell, St. Louis, MO, for defendant-appellee.

Before BAUER, CUDAHY and KANNE, Circuit Judges.

KANNE, Circuit Judge.

After Sugar Tree Products (STP) fired Mary Jane Rogers on October 16, 1989, she filed a complaint alleging STP violated the Age Discrimination in Employment Act (ADEA), 29 U.S.C. §§ 621-634. The district court granted STP's motion to dismiss for lack of subject matter jurisdiction, holding that STP was not an employer subject to the ADEA, 824 F.Supp. 755 (1992). We affirm.

I. Background

The mandates of the ADEA only apply to businesses that employ twenty or more individuals. 29 U.S.C. § 630(b). For federal subject matter jurisdiction to exist, the defendant must meet the definition of an employer as Congress set forth in § 630(b). See Zimmerman v. North Am. Signal Co., 704 F.2d 347 (7th Cir.1983).

Rogers presented to the district court two theories under which STP met the Congressional definition of an employer. Under the first theory, Rogers argued STP, standing alone, had twenty employees during the relevant time period. In relation to Rogers' alternative theory, STP's owner and president, Fred Brown, was the owner and president of a second corporation, International Distributing Corporation (IDC). Rogers argued that STP and IDC were interrelated to such an extent that they constituted a single employer with twenty employees during the relevant time period. In deciding whether STP was an employer under either approach, the district court considered testimony given at an evidentiary hearing on the issue, depositions of various individuals associated with STP, and the parties' joint stipulations.

In addressing Rogers' argument that STP, standing alone, employed twenty individuals, the district court began by accepting the parties stipulation that STP had at least seventeen employees. The district court found that two individuals who each worked for a portion of the year in which Rogers was fired, when considered together, made up an eighteenth employee. Rogers contended that the following individuals who performed work for both STP and IDC also should be considered employees of STP: William Schmalz, Paul Burckhart, Judy Larson, and Jim Sullivan. ¹

In addition to his duties as Chief Financial Officer of IDC, Schmalz prepared STP's tax returns and spent about one hour a month reviewing its financial records. Burckhart worked as an accounts payable clerk at IDC, but would spend some of his time keeping financial records for STP. While Burckhart did not send out invoices for STP, he spent one-third of his time keeping its financial records. Finally, Larson worked as a transportation dispatcher for IDC and also performed a similar function for STP. For their services, all three individuals received a lump-sum bonus from STP.

Although Sullivan was a full-time employee of IDC, the testimony conflicted on the extent of his involvement with STP's operations. A former plant manager of STP testified that Sullivan gave him a set of specific performance objectives and expected reports on all facets of the plant's operations. The succeeding plant manager testified that Sullivan acted more like a consultant to STP providing input on certain decisions such as those involving major capital expenditures. In 1988 and 1989, Sullivan made several trips to STP's plant in Belvidere, Illinois to perform management services. He was involved in the hiring of Jones as plant manager as well as the hiring of Rogers' replacement. In responding to Rogers' discrimination claim filed with the Equal Employment Opportunity Commission, he signed a letter on STP stationary as the "Agricultural VP." STP paid Sullivan a bonus based on its profits.

The district court held that, with regard to the status of these individuals, only Sullivan was an employee of STP, thus bringing the total to nineteen. Falling one short of the requirement of twenty, Rogers' theory that STP, standing alone, was an employer subject to the ADEA was rejected by the court.

Turning to her second theory, in addition to the shared individuals discussed above and Brown's ownership of both corporations, Rogers introduced the following evidence of the relationship between STP and IDC. In its plant in Belvidere, Illinois, STP processed nonedible food refuse into components for animal feed, that, in turn, were sold to third parties. STP purchased the food refuse from a substantial number of sources, one of which was IDC, whose operations are located in St. Louis, Missouri. In some instances, STP merely processed material for IDC in exchange for a milling charge. Sales to IDC generated approximately 40% of STP's revenues. Also, STP charged IDC for the storage of certain materials at an STP facility, and IDC scheduled the shipping of some of STP's product through a common carrier. However, an STP plant manager characterized these transactions as "arm's length" because he priced them without any input from IDC employees. Because STP did not have twenty-five employees as required for an independent pension plan, Brown combined the STP employees' plan with that of IDC, although each corporation made separate contributions to the plan for its own employees.

The district court held that, although Brown owned both corporations, the every day operations of STP and IDC were not sufficiently interrelated to constitute a single employer under ADEA. Accordingly, the district court dismissed the suit for lack of subject matter jurisdiction, and Rogers appeals.

II. The Relevant Time Period Under § 630(b)

Before examining the merits of Rogers' appeal, we address a preliminary matter that was not raised by the parties. Section 630(b) defines an employer subject to the ADEA as "a person engaged in an industry affecting commerce who has twenty or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year." 29 U.S.C. § 630(b). The district court mistakenly accepted the parties' stipulation that the relevant time frame was the twenty-four months immediately preceding Rogers' discharge, or October 17, 1987 through October 16, 1989.

Under § 630(b), the term "calendar year" means the period between January and December, rather than any period of twelve consecutive months. McGraw v. Warren County Oil Co., 707 F.2d 990, 991 (8th Cir.1983) (per curiam). The current year is the year in which the alleged violation occurred, and the applicable period does not cease on the date of the violation, but rather continues until the end of the calendar year. See Slack v. Havens, 522 F.2d 1091, 1093 (9th Cir.1975) (interpreting similar language in 42 U.S.C. § 2000e(b)). Because Ms. Rogers was fired in October of 1989, the 1988 and 1989 calendar years comprise the relevant time period under § 630(b).

The parties may not alter the § 630(b) requirements for subject matter jurisdiction. In other words, the parties cannot subvert the jurisdictional provisions of the ADEA by agreeing to determine whether the defendant has the requisite number of employees under a time frame different from that enacted by Congress. In the case before us, the stipulated time frame accepted by the district court begins and ends too early; it improperly includes the period between October 17, 1987 and December 31, 1987, but does not consider the period between October 17, 1989 and December 31, 1989.

Although the district court should not have accepted the parties' stipulated time period which improperly included three months in 1987, our review of the record reveals that, in making its decision, it only considered evidence related to 1988 or 1989, the proper time period under § 630(b). The parties specifically stipulated that STP employed at least seventeen individuals from January 1, 1989 until October 16, 1989, a period of over twenty calendar weeks within the applicable time frame under § 630(b). Furthermore, in compiling other evidence on the jurisdictional issue at the evidentiary hearing and during depositions, the parties' attorneys directed their questions to the state of STP's operations in 1988 or 1989.

As a result of the stipulation, it is possible that the parties neglected to introduce relevant jurisdictional evidence related to the time period of October 17, 1989 through December 31, 1989. However, as the party asserting jurisdiction, Rogers bears the burden of submitting evidence that STP meets the definition of an employer under § 630(b). See Bowyer v. United States Dept. of Air Force, 875 F.2d 632, 635 (7th Cir.1989), cert. denied, 493 U.S. 1046, 110 S.Ct. 846, 107 L.Ed.2d 840 (1990). To the extent she failed to produce all the relevant evidence available relating to the number of employees under § 630(b), she simply has failed to meet that burden. Because the acceptance of the parties' stipulated relevant time frame did not impact the factual basis for the district court's decision, we turn to the merits of Rogers' appeal.

III. STP Standing Alone

The ADEA defines an "employee" as "an individual employed by any employer." 29 U.S.C. § 630(f). In the context of a Title VII claim, we have stated that " '[i]n determining whether a business relationship is one of employee-employer, courts look to the "economic realities of the relationship and the degree of control the employer exercises over the alleged employee." ' " Knight v. United Farm Bureau Mutual Ins. Co., 950 F.2d 377, 380 (7th Cir.1991) (citations omitted). This standard applies...