Mukhtar v. Castleton Service Corp.

• Citation: 920 F. Supp. 934
• Decision Date: 26 February 1996
• Docket Number: No. IP 95-576-C.,IP 95-576-C.
• Parties: Fuad A. MUKHTAR, Plaintiff, v. CASTLETON SERVICE CORPORATION d/b/a Doctors Immediate Medcenter, Defendant.
• Court: U.S. District Court — Southern District of Indiana

920 F. Supp. 934

Fuad A. MUKHTAR, Plaintiff, v. CASTLETON SERVICE CORPORATION d/b/a Doctors Immediate Medcenter, Defendant.

No. IP 95-576-C.

United States District Court, S.D. Indiana, Indianapolis Division.

February 26, 1996.

COPYRIGHT MATERIAL OMITTED

Steven V. Shoup, Owen Shoup & Kinzie, Indianapolis, Indiana, for plaintiff.

P. Gregory Cross, Cross Marshall Shuck Deweese Cross & Feick, Muncie, Indiana, for defendant.

ENTRY ON DEFENDANT'S MOTION TO DISMISS

HAMILTON, District Judge.

Plaintiff Dr. Fuad A. Mukhtar worked as a physician for several years at a clinic owned by defendant Castleton Service Corporation ("CSC"). The clinic operated under the name "Doctors Immediate Medcenter." The parties' contractual relationship ended when CSC terminated it effective October 1, 1994. Dr. Mukhtar has sued CSC for violation of the Age Discrimination in Employment Act, 29 U.S.C. §§ 621, et seq. ("ADEA"). Defendant CSC contends that it is not an "employer" under the ADEA and that plaintiff was not an "employee" under the ADEA. CSC has therefore moved to dismiss this action for lack of subject matter jurisdiction. The Seventh Circuit treats the "employer" issue as an element of the court's subject matter jurisdiction under the ADEA, e.g., Rogers v. Sugar Tree Products, Inc., 7 F.3d 577, 579 (7th Cir.1993), and the logic of that holding extends to the question whether the plaintiff was an "employee" for purposes of the ADEA. Accordingly, the court is the finder of fact on these jurisdictional issues. E.g., LaSalle Nat'l Trust, N.A. v. ECM Motor Co., 76 F.3d 140, 143-44, (7th Cir.1996) (under Rule 12(b)(1), district court may find jurisdictional facts itself); Grafon Corp. v. Hausermann, 602 F.2d 781, 783 (7th Cir. 1979); Radulescu v. Moldowan, 845 F.Supp. 1260, 1262 (N.D.Ill.1994). Because the jurisdictional issues presented by defendant's motion to dismiss are completely distinct from the merits, there is no risk here that the jurisdictional inquiry will become a "doppelganger of the inquiry on the merits." Pratt Central Park Ltd. Partnership v. Dames & Moore, Inc., 60 F.3d 350, 351 (7th Cir.1995).

The defendant's motion to dismiss raises two independent grounds for finding a lack of subject matter jurisdiction. First, the ADEA applies only to discrimination in employment. Defendant claims that it had a landlord-tenant relationship with Dr. Mukhtar rather than an employment relationship. Dr. Mukhtar asserts that the economic realities of the relationship amount to employment. Second, defendant argues that even if Dr. Mukhtar was its employee, the ADEA defines "employer" 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). Defendant CSC did not itself have twenty or more employees during the relevant time period. Plaintiff asserts that CSC and two other clinics under common ownership amount to a single integrated enterprise all of whose employees may be counted to satisfy the twenty employee jurisdictional threshold. See Rogers v. Sugar Tree Products, 7 F.3d at 582. The court held a hearing on the defendant's motion on February 16, 1996. The evidentiary record consists of the amended affidavit of Fuad A. Mukhtar; the affidavits of R. Michael Beckwith, Eric M. Beckwith, Mario Perrino, and Joseph Gormley; all exhibits submitted by the parties with their briefs and the affidavits; and Defendant's Exhibit 20, admitted at the hearing. The court also heard brief testimony from Eric M. Beckwith and Dr. Mukhtar. In this entry, the court makes its findings of fact and conclusions of law, and denies defendant's motion to dismiss.

I. The Parties' Relationship

A. Facts: The contractual relationship between Dr. Mukhtar and CSC lasted from January 1, 1990, until October 1, 1994. The written contract was called a "Lease." It referred to CSC as "Landlord" and to Dr. Mukhtar as "Tenant." The contract recited that CSC owned certain premises that it had constructed and equipped for use as an "immediate care facility," that Dr. Mukhtar was a licensed physician, and that other physicians would also be practicing at the facility. The contract leased the premises to Dr. Mukhtar for his "nonexclusive use." Dr. Mukhtar agreed not to alter the facility and to use it only as an immediate care facility. The contract required CSC to provide and maintain the medical equipment and supplies at the premises and to provide and pay for all utilities. The contract also required CSC to staff the facility with nurses and other technical and clerical staff. The staff were employees of CSC, and CSC was responsible for hiring, paying, and terminating the clinic staff. However, the clinic staff members were "under the supervision of Tenant and other practicing physicians in regards all of their professional duties." CSC also indemnified Dr. Mukhtar for any payroll tax obligations for such employees.

The contract provisions concerning payment are especially important here. CSC was responsible for providing "all business management services," which included setting and collecting fees for Dr. Mukhtar's services. The "rent" that Dr. Mukhtar paid under this lease was calculated as follows:

Landlord shall receive as rent an amount equal to the gross annual charges to patients of the facility minus $87,500.00, prorated based on actual time Tenant leases facility, and minus 7 percent of the gross patient charges of the facility in excess of $60,000.00 per month based on actual days tenant leases facility. For convenience of the parties and as part of the services provided by Landlord to Tenant, Landlord shall collect all of Tenant's gross receipts from the facility and shall pay monthly to Tenant 1/12th of the $87,500.00 deduction. ...

CSC and Dr. Mukhtar treated the "rent" payments as "nonemployee compensation" for tax purposes, reported to the IRS on Form 1099 rather than W-2 forms. Mr. Perrino, the accountant for CSC, recounted that the IRS audited CSC's tax returns, specifically examined the "leasing" arrangement, and did not object to CSC's failure to withhold employee taxes from the payments.

The contract provided that Dr. Mukhtar would purchase professional liability insurance, but that CSC would pay up to $5,000 per year for that insurance. CSC granted to Dr. Mukhtar a license to use CSC's service mark for "Doctors Immediate Medcenter" for the duration of the relationship. The contract also required Dr. Mukhtar to execute a "noncompetition agreement" to the effect that, upon termination of the relationship for essentially any reason, Dr. Mukhtar could not practice medicine within ten miles of the CSC facility for a period of 12 months, with an exception for certain emergency services. Under the contract, Dr. Mukhtar also agreed that all medical records would be held at the facility in CSC's custody after termination of the relationship, but that CSC would provide records or copies upon request when authorized by the patient.

With respect to scheduling and services, the contract required Dr. Mukhtar to cooperate with other physicians practicing at the facility so as to keep the facility open and staffed by a physician at least 12 hours per day Monday through Saturday, and 7 hours on Sunday. The document further provided: "Except during unusual circumstances or with the permission of Landlord, Tenant shall be available an average of thirty nine (39) hours each week. Said daily hours shall be continuous and shall include the hours between 9:00 a.m. and 9:00 p.m. Monday through Saturday and 11 a.m. to 6 p.m. Sunday." The contract also required Dr. Mukhtar to "follow up by telephone with each patient, where appropriate, within forty eight (48) hours after the patient's visit." The contract implicitly acknowledged that Dr. Mukhtar could employ another physician to assist him, but required that such a person also be "mutually acceptable" to other physicians at the facility and to CSC.

Dr. Joseph Gormley provided additional information about scheduling and services. He testified in his affidavit that he also has practiced medicine at the same facility under a similar arrangement with CSC. Dr. Gormley stated that he and Dr. Mukhtar had difficulty working out a schedule of hours that would allow both to meet their obligations under their respective "lease" agreements. Dr. Gormley requested CSC to provide a suggested schedule allocating time between the two doctors, and CSC did so. He testified: "At no time was I ever directed by CSC to work certain hours. It was always my understanding that all scheduling of hours was left to the discretion of the physicians unless they chose otherwise." Dr. Mukhtar's affidavit states that his "work schedule was dictated" by CSC.

The original term of Dr. Mukhtar's contract was one year, ending December 31, 1990. The contract provided for "automatic" renewal for two one-year periods and gave each party the right to terminate on thirty days notice. The parties apparently took no action to renegotiate or modify their agreement after it expired by its terms on December 31, 1992. The parties continued their relationship until CSC gave Dr. Mukhtar written notice of cancellation on September 1, 1994, effective October 1, 1994.

Based on Dr. Mukhtar's testimony at the hearing, the court finds that CSC did not control or seek to control his professional judgment in the treatment of patients.

B. Conclusions of Law: Courts considering federal employment discrimination cases have often decided whether a particular relationship was employment or an independent contractor relationship. See, e.g., Knight v. United Farm Bureau Mut. Ins. Co., 950 F.2d 377, 380 (7th Cir.1991); Wilson v. United Farm Bureau Mut. Ins. Co., No. IP 93-1460-C H/G, 1995 WL 378521 (S.D.Ind. June 15, 1995). The parties have not cited, nor has the court found, any cases presenting a choice between...