825 F.2d 257 (10th Cir. 1987), 85-2601, Wheeler v. Hurdman

Docket Nº:85-2601.
Citation:825 F.2d 257
Party Name:28 Wage & Hour Cas. (BN 280, 28 Wage & Hour Cas. (BN 336, , 8 Fed.R.Serv.3d 683 Marilyn WHEELER, Plaintiff-Appellee, v. Main HURDMAN, Defendant-Appellant.
Case Date:July 27, 1987
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit

Page 257

825 F.2d 257 (10th Cir. 1987)

28 Wage & Hour Cas. (BN 280,

28 Wage & Hour Cas. (BN 336,

, 8 Fed.R.Serv.3d 683

Marilyn WHEELER, Plaintiff-Appellee,


Main HURDMAN, Defendant-Appellant.

No. 85-2601.

United States Court of Appeals, Tenth Circuit

July 27, 1987

Page 258

Tim Correll (Mark P. Field, with him, on brief), The Correll Law Offices, P.C., Denver, Colo., for plaintiff-appellee.

Jacques M. Wood, Berkman Ruslander Pohl Lieber & Engel (Jim Clark, Baker & Hostetler, George W. Mueller, Burns, Wall, Smith & Mueller, with him, on briefs), Denver, Colo., for defendant-appellant.

Vella M. Fink (Johnny J. Butler and Gwendolyn Young Reams, with her on briefs), Washington, D.C., for amicus curiae E.E.O.C.

Before BARRETT, LOGAN and ANDERSON, Circuit Judges.


This appeal pursuant to 28 U.S.C. Sec. 1292(b) presents a single substantive issue: whether federal antidiscrimination laws protecting employees applied to the plaintiff, Marilyn Wheeler, during the time she was a general partner of the accounting firm of Main Hurdman, a general partnership.

Marilyn Wheeler, a certified public accountant, was employed as an accountant by Main Hurdman, in progressively responsible positions, for nine years, following which she was made a partner in the firm. Seventeen months later, at age forty-seven, she was expelled from the firm. She sued Main Hurdman alleging that the partnership discriminated against her in compensation and work assignments, and expelled her because of her age or sex, in violation of: Title VII of the Civil Rights Act of 1964, ("Title VII") 42 U.S.C. Secs. 2000e to 2000e-17; the Age Discrimination in Employment Act of 1967 ("ADEA"), 29 U.S.C. Secs. 621-634; and the Equal Pay Act of 1963, 29 U.S.C. Secs. 206(d), a subpart of the Fair Labor Standards Act of 1938 ("FLSA"), 29 U.S.C. Secs. 201-219. 1

Main Hurdman moved to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b) and 12(h)(3), for want of subject matter jurisdiction. It alleged that Wheeler's complaint did not state a claim under Title VII, the ADEA, or the Equal Pay Act "because as a partner of the Firm she was not an employee" within the definitions of those Acts. The motion was treated as one for summary judgment by the district court because affidavits were submitted, and was denied. In its order denying the motion the district court concluded that although a partner, Wheeler was also an employee for purposes of each of the Acts. It stated that it was bound by Goldberg v. Whitaker House Coop., 366 U.S. 28, 81 S.Ct. 933, 6 L.Ed.2d 100 (1961), to apply an "economic realities" test which, in turn, dictated the conclusion reached. The court then certified the question of coverage of the Acts for immediate appeal pursuant to 28 U.S.C. Sec. 1292(b), as a controlling question of law as to which there is substantial ground for difference of opinion. 2 We reverse.


As a preliminary matter, this court must decide whether it was appropriate for the district court to "convert" the defendant's motion to dismiss into a motion for summary judgment. 3 Main Hurdman asserts that its motion was a Fed.R.Civ.P. 12(b)(1) motion to dismiss for lack of subject matter jurisdiction and that it was inappropriate

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to convert it into a motion for summary judgment absent notice to the parties.

The appellant's motion does appear to be a 12(b)(1) motion to dismiss for lack of subject matter jurisdiction. 4 As a general rule, a 12(b)(1) motion cannot be converted into a motion for summary judgment under Rule 56. Nichols v. United States, 796 F.2d 361, 366 (10th Cir.1986) (quoting 5 C. Wright, A. Miller & M. Kane, Federal Practice and Procedure Sec. 1366 (Supp.1986)). See also Crawford v. United States, 796 F.2d 924 (7th Cir.1986); Stanley v. CIA, 639 F.2d 1146, 1157-58 (5th Cir. Unit B Mar. 1981). 5 There is, however, a widely recognized exception to this rule. If the jurisdictional question is intertwined with the merits of the case, the issue should be resolved under 12(b)(6) or Rule 56. Timberlane v. Bank of America, 749 F.2d 1378 (9th Cir.1984) ("Timberlane II "); Sun Valley Gas, 711 F.2d at 139; Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir.1982); Eaton v. Dorchester Development, Inc., 692 F.2d 727, 733 (11th Cir.1982); Black v. Payne, 591 F.2d 83, 86 n. 1 (9th Cir.1979); see also J. Moore & J. Lucas, Moore's Federal Practice p 12.07[2.-1] at 12-51 (1986).

When subject matter jurisdiction is dependent upon the same statute which provides the substantive claim in the case, the jurisdictional claim and the merits are considered to be intertwined. Clark v. Tarrant County, 798 F.2d 736, 742 (5th Cir.1986) (Title VII) (determination of whether defendant was an "employer"); Timberlane II, 749 F.2d at 1381-82; Sun Valley Gas, 711 F.2d at 139; Timberlane I, 549 F.2d at 602; McConnell v. Frank Howard Allen & Co., 574 F.Supp. 781, 783-84 (N.D.Cal.1983). Courts have invoked this rule when subject matter jurisdiction has turned on whether a particular investment was a "security" under the federal securities statutes. Odom v. Slavik, 703 F.2d 212, 215-16 (6th Cir.1983); Mason v. Unkeless, 618 F.2d 597, 598 (9th Cir.1980); Smith v. Gross, 604 F.2d 639, 641 (9th Cir.1979); Black v. Payne, 591 F.2d 83 (9th Cir.1979); Roark v. Belvedere, Ltd., 633 F.Supp. 765, 770 (S.D.Ohio 1985); McConnell, 574 F.Supp. at 783-84.

We find that the determination of whether Wheeler qualifies as an employee under the federal discrimination statutes is both a jurisdictional question and an aspect of the substantive claim in her discrimination action. Since both parties have submitted additional evidence beyond the pleadings, and since the district court relied on this information, the motion was appropriately characterized as a motion for summary judgment.

Main Hurdman argues that it was not given the notice to which it was entitled prior to the court converting and ruling on the motion as a motion for summary judgment. The Tenth Circuit does require notice under such circumstances to prevent "unfair surprise." Nichols, 796 F.2d at

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364. In this case, however, there is no unfair surprise. Both parties submitted material beyond the pleadings. We have previously held that when a party submits material beyond the pleadings in support of or opposing a motion to dismiss, the prior action on the part of the parties puts them on notice that the judge may treat the motion as a Rule 56 motion. Id. The fact that Main Hurdman characterizes its motion as a Rule 12(b)(1) motion does not change our analysis. Main Hurdman identified its motion only as a 12(b) motion without specifying a particular subsection. Although the motion was made on the ground that there was a lack of subject matter jurisdiction, it was also based on the ground that Wheeler "does not and cannot state a claim" upon which relief could be granted. Main Hurdman's Motion to Dismiss at paragraphs 8, 10, 12. Under these circumstances, it was appropriate for the court to consider the motion as a motion in the alternative under 12(b)(1) and 12(b)(6) and to convert the motion to a Rule 56 motion when extraneous evidence was submitted in the form of affidavits by both parties. We find that it was not error for the district court to convert the motion and we will review it as a motion for summary judgment.


In reviewing a district court's grant or denial of summary judgment, we apply a de novo standard of review to legal determinations. See Carey v. United States Postal Serv., 812 F.2d 621, 623 (10th Cir.1987); see also Hydro Conduit Corp. v. American-First Title & Trust Co., 808 F.2d 712, 714 (10th Cir.1986) ("When a district court has granted summary judgment, the court of appeals applies a de novo standard of review."); Baker v. Penn Mutual Life Ins. Co., 788 F.2d 650, 653 (10th Cir.1986); Morgan v. Mobil Oil Corp., 726 F.2d 1474, 1477 (10th Cir.1984). As for allegations of fact by the parties, the general rule is that our view of the facts must indulge all reasonable inferences in favor of the party opposing a motion for summary judgment. Franks v. Nimmo, 796 F.2d 1230, 1235 (10th Cir.1986); Baker, 788 F.2d at 653; Lindley v. Amoco Prod. Co., 639 F.2d 671, 672 (10th Cir.1981). In this case, the essential facts governing our disposition on appeal (as opposed to how those facts are characterized or legal conclusions argued from them by the parties) are uncontested.


Wheeler's credentials, including professional activities and affiliations, are substantial. Her employment experience with Main Hurdman was characterized by steady advancement as an employee-accountant. She was made a partner of Main Hurdman in April 1982. At that time approximately 14%, or 502 of Main Hurdman's 3570 personnel were partners.

Partnership consisted at least of the following: election to the partnership and execution of the Firm's partnership agreement; 6 change in compensation from salary to a share of the Firm's profits, paid by draw and an allocation of profits based on points; a contribution to capital; establishment of a capital account; unlimited personal liability for the debts and obligations of the partnership; rights under the partnership agreement to vote on such matters as amendments of the partnership agreement, approval of mergers with other accounting firms of a certain size, admission of new partners, termination of a partner's interest, approval of draws, shares of net profits, special distributions, and any other income to be allocated to any partners, and dissolution of the firm. In addition, Wheeler became eligible for certain rights and privileges which were enjoyed only by partners of the firm, such as the right to sign audit reports and...

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