Armbruster v. Quinn

• Citation: 711 F.2d 1332
• Decision Date: 19 August 1983
• Docket Number: No. 80-1739,80-1739
• Parties: 32 Fair Empl.Prac.Cas. (BNA) 369, 72 A.L.R.Fed. 504, 32 Empl. Prac. Dec. P 33,702 Lynn ARMBRUSTER, et al., Plaintiffs-Appellants, v. Terry QUINN, et al., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

Page 1332

711 F.2d 1332

32 Fair Empl.Prac.Cas. (BNA) 369, 72 A.L.R.Fed. 504,

32 Empl. Prac. Dec. P 33,702

Lynn ARMBRUSTER, et al., Plaintiffs-Appellants, v. Terry QUINN, et al., Defendants-Appellees.

No. 80-1739.

United States Court of Appeals, Sixth Circuit.

Argued Dec. 14, 1981.

Decided July 7, 1983.

Rehearing Denied Aug. 19, 1983.

Eric W. Zimostrad (argued), Bay City, Mich., for plaintiffs-appellants.

William C. Potter, Jr. (argued), Detroit, Mich., for defendants-appellees.

Justine Lisser (argued), EEOC, Washington, D.C., amicus curiae.

Before LIVELY and JONES, Circuit Judges, and SILER, District Judge. ^*

NATHANIEL R. JONES, Circuit Judge.

The appellants appeal the district court's dismissal of their sex discrimination claims brought under Title VII of the 1964 Civil Rights Act, as amended, 42 U.S.C. § 2000e, et seq., for lack of subject matter jurisdiction. For the reasons set forth below, we reverse the judgment of the district court, in part, and remand for further proceedings.

Lynn Armbruster and Margaret Mayes, former secretaries to T.J. Quinn, the former President of Syntax Corporation (Syntax), sued Quinn, Syntax, Pure Industries, Inc. and The Stackpole Corporation (Stackpole). The district court's dismissal was based upon its interpretation of our decision in Hassell v. Harmon Foods, Inc., 454 F.2d 199 (6th Cir.1972) (per curiam) and its finding that manufacturer's representatives of Syntax are not employees under Title VII of the 1964 Civil Rights Act. ¹ In evaluating the district court's holding, we shall embark upon an explanation of our prior precedent and detail the proper legal standard for defining employees under the Act.

I. FACTS AND PROCEEDINGS BELOW

In 1979, Mayes and Armbruster each were hired and later fired from the position of secretary to T.J. Quinn. The appellants, former employees, allege that each was fired for her unwillingness to submit to or tolerate verbal and physical sexual harassment by T.J. Quinn.

T.J. Quinn was the President of the now-defunct Syntax Corporation. Syntax was a wholly owned subsidiary of Pure Industries, Inc.; Pure is wholly owned by Stackpole. It is not disputed that Syntax alone employed less than fifteen individuals, excluding the manufacturer's representatives, during the twenty calendar weeks preceding this action. Likewise, the parties do not dispute that if Pure is considered to be the employer of Mayes and Armbruster, then the jurisdictional requirement of fifteen employees is satisfied. See 42 U.S.C. § 2000e(b).

Plaintiffs presented affidavits tending to show that the operations of Syntax were closely related with those of Pure. Defendants also submitted affidavits which tended to establish the separate existence and operations of these two corporations. The district court held, however, that "on the facts of this case, the Court is not willing to disregard Syntax Corporation as a 'sham' entity in order to consolidate it with its parent corporations to satisfy the Title VII prerequisite of fifteen employees." 498 F.Supp. at 862. The court reasoned that under Hassell v. Harmon Foods, Inc., supra, the formal corporate relations between Syntax and its parent were regular and unexceptional, and thus the separate corporate entities would be respected. Upon finding that the parent corporation had nothing more than a possible "awareness" of the identity, positions, and salaries of Syntax employees, the district court opined that there was no "centralized control of labor relations" as required under the four-part test articulated in Baker v. Stuart Broadcasting Co., 560 F.2d 389 (8th Cir.1977).

As to the manufacturer's representatives, the district court adopted the general common law rule for purposes of determining whether an individual is an employee. Under this standard, the court examined the purported control over the means, manner and details of the work performed. The lower court found that evidence of commission payments for accomplished results was an insufficient basis upon which to determine whether an employment relationship existed between Syntax and its manufacturer's representatives under the common law test. The court concluded that the manufacturer's representatives were more akin to independent contractors, than to employees. Thus, upon considering the total number of part-time and full-time persons employed by Syntax, the court determined that the minimum jurisdictional requirement of fifteen employees had not been met; therefore, this claim was dismissed for lack of subject matter jurisdiction.

The district court also dismissed plaintiffs' Fourteenth Amendment claim since no state action was alleged. No assignment of error is premised upon this basis of dismissal; accordingly, this portion of the lower court's judgment is AFFIRMED. We also affirm the lower court's dismissal of Stackpole since it was not charged in the administrative action before the EEOC. Accord Alexander v. Gardner-Denver Co., 415 U.S. 36, 47, 94 S.Ct. 1011, 1019, 39 L.Ed.2d 147 (1974); McDonnell-Douglas Corp. v. Green, 411 U.S. 792, 798, 93 S.Ct. 1817, 1822, 36 L.Ed.2d 668 (1973).

II. STANDARD OF REVIEW

The lower court's jurisdictional ruling was based upon written submissions by the parties. In Welsh v. Gibbs, 631 F.2d 436 (6th Cir.1980), cert. denied, 450 U.S. 981, 101 S.Ct. 1517, 67 L.Ed.2d 816 (1981), this Court addressed the standard of proof required for pretrial determinations of subject matter jurisdiction as provided in Rule 12(d) of the Federal Rules of Civil Procedure. Judge Lively's discussion is fully applicable here:

The burden of establishing jurisdiction is on the plaintiff. However, if the district court determines to decide the issue solely on the basis of written materials, the plaintiff should be required only to make a prima facie case of jurisdiction, that is, he need only "demonstrate facts which support a finding of jurisdiction in order to avoid a motion to dismiss." The district court apparently conclude[s] that the written materials present[s] no disputed questions of fact on jurisdiction and no issues of credibility, ..., the burden of the plaintiff is relatively slight and the district court must consider the pleadings and affidavits in the light most favorable to the plaintiff.

Id. at 438-39 (citations omitted); accord, First National Bank of Louisville v. J.W. Brewer Tire Co., 680 F.2d 1123, 1125 (6th Cir.1982).

The plaintiff must ultimately prove jurisdiction by a preponderance of the evidence. See McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 785, 80 L.Ed. 1135 (1936). In the present case, the jurisdictional question was decided upon briefs supported by affidavits and certain other discovery materials. Since such questions are determined in the same manner as summary judgment issues, Weller v. Cromwell Oil Co., 504 F.2d 927, 929-30 (6th Cir.1974), the court is required to review the record for facts supporting the initial showing of jurisdiction in order to satisfy itself that the evidence in the record raises no genuine issue as to the existence of jurisdiction. See Smith v. Hudson, 600 F.2d 60, 63-65 (6th Cir.), cert. dismissed, 444 U.S. 986, 100 S.Ct. 495, 62 L.Ed.2d 415 (1979).

III. DISCUSSION

The essential question in this case is whether the plaintiffs' are barred from bringing their claim in federal court by the Title VII jurisdictional requirement of fifteen employees. In reviewing the district court's holding that they have not met the jurisdictional requirement, we must consider two issues. First, we must assess whether Syntax and Pure should be construed as having such substantial identity that they should be deemed a single employer for jurisdictional purposes. If so, then it is uncontested that the fifteen employee requirement will be met. Second, we must analyze the alternative route to a finding that there are fifteen employees. The appellants' claim that, irrespective of the relationship between Pure and Syntax, the manufacturer's representatives of Syntax fall within the meaning of the term "employee" for the jurisdictional requirement.

We do not now resolve any issues of liability. Rather, we merely define the scope of jurisdiction under Title VII to determine whether the district court's dismissal of the appellants' complaint on jurisdictional grounds was proper.

A. SINGLE v. JOINT EMPLOYER

In Hassell, this Court considered whether a parent corporation and its subsidiary should be treated as a single employer for jurisdictional purposes under Title VII. ² The Hassell court upheld the district court's conclusion that the relationship between the parent corporation and the subsidiary was a normal one, and that the subsidiary corporation could in no way be called a "sham" Id. at 200. The separate identities of these corporations was evidenced by the fact that the parent would not be liable for the debts of the subsidiary and the subsidiary's recognized independence for tax purposes. Since the corporate entities in Hassell maintained a normal separate existence, the parent and subsidiary were considered as separate entities for Title VII jurisdictional purposes. Id.

Hassell does not set forth an inflexible test. ³ The instant case requires us to refine and apply Hassell to a more complex relationship. In formulating a method to assess the propriety of treating a parent and subsidiary as a single employer under Title VII, we look to the purpose of the statute, congressional intent, and the legislative history.

The primary purpose of the Civil Rights Act, and Title VII in particular, is remedial. Its aim is to eliminate employment discrimination by creating a federal cause of action to promote and effectuate its goals. See, e.g., Alexander v. Gardner-Denver Co., 415 U.S. 36, 44-45, 94 S.Ct. 1011, 1017-1018, 39 L.Ed.2d 147 (1974); Tipler v. E.I. duPont de Nemours and Co., 443 F.2d 125, 131 (6th Cir.1971). To effectuate its purpose of eradicating the evils of...