Evans v. McDonald's Corp.

• Decision Date: 09 April 1991
• Docket Number: No. 90-5013,90-5013
• Citation: 936 F.2d 1087
• Parties: 56 Fair Empl.Prac.Cas. 123 Johnnie L. EVANS, Plaintiff-Appellant, v. McDONALD'S CORPORATION, a Delaware corporation; McDonald's of Claremore, a defunct Oklahoma corporation; David McMahan, Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1087

936 F.2d 1087

56 Fair Empl.Prac.Cas. 123

Johnnie L. EVANS, Plaintiff-Appellant, v. McDONALD'S CORPORATION, a Delaware corporation; McDonald's of Claremore, a defunct Oklahoma corporation David McMahan, Defendants-Appellees.

No. 90-5013.

United States Court of Appeals Tenth Circuit.

April 9, 1991.

Steven M. Dickson, of Dickson & Pope, P.A., Topeka, Kan., and Leslie Shelton, Tulsa, Okl., for plaintiff-appellant.

Patrick M. Ryan and Charles E. Geister III, of Ryan, Corbyn & Geister, Oklahoma City, Okl., for defendant-appellee McDonald's Corp.

Benjamin J. Butts (Short, Barnes, Wiggins, Margo & Adler, of counsel), Oklahoma City, Okl., for Defendant-Appellee David McMahan.

Before LOGAN, MOORE and BALDOCK, Circuit Judges.

LOGAN, Circuit Judge.

Plaintiff Johnnie L. Evans appeals from a district court order granting summary judgment to defendants David McMahan and McDonald's Corporation on her Title VII claims and dismissing her pendent state claims. ¹ Evans managed two McDonald's restaurants. She managed the first, located in Wellston, Oklahoma, until December 1986, when she was transferred to the second, located in Claremore, Oklahoma. Both restaurants were owned and operated by Everett Allen, a McDonald's franchisee. Evans alleged that she was sexually harassed by David McMahan, beginning while she was employed at the Wellston restaurant and continuing into her employment at the Claremore restaurant. McMahan was employed at the time by McDonald's Corporation as a consultant.

Evans filed a complaint with the EEOC and the Oklahoma Human Rights Commission (OHRC). The following month, Allen sold his McDonald's franchises to McDonald's Corporation. McDonald's did not retain Evans, although almost all other Claremore location employees were retained. Evans subsequently amended her EEOC/OHRC complaint to allege retaliatory discharge. She received a Notice of Right to Sue from the EEOC.

Evans filed this lawsuit against McDonald's Corporation, David McMahan, and McDonald's of Claremore ² as defendants. Her amended complaint alleged sexual harassment in violation of 42 U.S.C. Secs. 2000e through 2000e-17 (Title VII of the Civil Rights Act of 1964). She also asserted several pendent state law claims. On motion by remaining defendants McDonald's and McMahan the district court granted summary judgment to defendants on Evans' sexual harassment claims, based on its conclusion that defendants were not Evans' employers. The district court dismissed Evans' pendent state claims.

On appeal, Evans argues that summary judgment is inappropriate because the determination whether defendants were her employers is a question of fact. She also contends the district court erred in failing to consider her claim for retaliatory failure to hire and her claim that McDonald's acquired liability for this suit by purchasing Everett Allen's franchises. She does not appeal the district court's dismissal of her pendent state law claims.

We review de novo the district court's grant of summary judgment. Wheeler v. Hurdman, 825 F.2d 257, 260 (10th Cir.), cert. denied, 484 U.S. 986, 108 S.Ct. 503, 98 L.Ed.2d 501 (1987). We construe the alleged facts in the light most favorable to the non-moving party. See id.

We hold that under no plausible legal theory are defendants Evans' employers. Evans essentially concedes that, under either common law or the "economic realities" test, defendants are not her immediate employers. Appellant's Brief at 2-3. See Wheeler, 825 F.2d at 268-71 (discussing elements to be considered under common law and "economic realities" test in determining whether employer/employee relationship exists for Title VII purposes); Broussard v. L.H. Bossier, Inc., 789 F.2d 1158, 1160 (5th Cir.1986); Garrett v. Phillips Mills, Inc., 721 F.2d 979, 981-82 (4th Cir.1983); see also Kennedy v. McDonald's Corp., 610 F.Supp. 203, 204-05 (S.D.W.Va.1985) (same, in franchise setting).

Evans, however, urges us to consider a line of cases in which courts have found that two entities' "activities, operations, ownership and management are sufficiently interrelated to be perceived as a single employer for purposes of Title VII." McKenzie v. Davenport-Harris Funeral Home, 834 F.2d 930, 933 (11th Cir.1987); see, e.g., EEOC v. Wooster Brush Co. Employees Relief Ass'n, 727 F.2d 566, 572 (6th Cir.1984); Armbruster v. Quinn, 711 F.2d 1332, 1337-38 (6th Cir.1983); Baker v. Stuart Broadcasting Co., 560 F.2d 389, 391-92 (8th Cir.1977); Carter v. Shop Rite Foods, Inc., 470 F.Supp. 1150, 1160 (N.D.Tex.1979). In these and other cases, courts struggling with the definition of "employer" under Title VII have turned for guidance to a test promulgated by the National Labor Relations Board. McKenzie, 834 F.2d at 933. Under this test, the factors to be considered are (1) interrelation of operations, (2) centralized control of labor relations, (3) common management, and (4) common ownership or financial control. Id.

We need not decide whether to adopt the reasoning of McKenzie and like cases, because Evans cannot sustain a cause of action even under the theory she advances. ³ Evans contends that, when these factors are considered, the ultimate issue--whether defendants are Evans' employers--is a question of fact precluding summary judgment. Appellant's Brief at 3. On the contrary, the essential facts underlying determination of this issue are undisputed. Even were we to assume the existence of an interrelation of operations, given the common goals and interaction of McDonald's and its independent franchises, the record before us indicates no common management, no centralized control of labor relations, and no common ownership or financial control. Evans does not controvert the facts contained in the record before us regarding the independent ownership, labor relations, and financial control of McDonald's franchises. Considering the NLRB factors in light of the record before us, we conclude that defendants cannot be consolidated with Everett Allen's franchises as one employer for Title VII purposes.

Evans contends that control is the key issue in determining an employer/employee relationship, and alleges that McDonald's exerted "monumental control" over the operations of Everett Allen's franchises. Control is, we agree, an important factor in any determination of this issue. See Wheeler, 825 F.2d at 270 (control over details and results of worker's performance is the most important factor in determining employer/employee relationship). In this case McDonald's did not exert the type of control that would make it liable as an employer under Title VII. McDonald's may have stringently controlled the manner of its franchisee's operations, conducted frequent inspections, and provided training for franchise employees. The record also indicates, however, that McDonald's did not have control over Everett Allen's labor relations with his franchise employees. See Armbruster, 711 F.2d at 1337-38 (control over elements of labor relations is a central concern); Carter, 470 F.Supp. at 1161 (without control over labor relations, stringent control over details of independent operators did not make defendant an employer of operator's employees). McDonald's did not have financial control over Everett Allen's franchises. Outside of the necessary control over conformity to standard operational details inherent in many franchise settings, McDonald's only real control over Everett Allen was its power to terminate his franchises. Thus, on the record before us, we hold, as a matter of law, that McDonald's did not have the control over Everett Allen's franchises necessary to make it liable as an employer of Everett Allen's employees under Title VII.

Evans further argues that she raised a claim of retaliatory failure to hire as a separate issue from her retaliatory discharge claim. ⁴ She contends that the issue was not disposed of by the court's summary judgment ruling and that the court's failure to address it was error. McDonald's asserts that the retaliatory failure to hire claim was not properly before the district court because it was not raised in Evans' amended complaint.

In her amended complaint, Evans contended that McDonald's failed to retain her in retaliation for bringing a Title VII action. She characterized the failure to retain as a retaliatory discharge, a characterization consistent with her theory that McDonald's was her employer. It was not until her response brief to McDonald's summary judgment motion that Evans characterized her retaliation claim as one for failure to hire.

As a general rule, a plaintiff should not be prevented from pursuing a valid claim just because she did not set forth in the complaint a theory on which she could recover, "provided always that a late shift in the thrust of the case will not prejudice the other party in maintaining his defense upon the merits." 5 C. Wright & A. Miller, Federal Practice & Procedure Sec. 1219 at 194 (1990); see, e.g., Hanson v. Hoffmann, 628 F.2d 42, 53 n. 11 (D.C.Cir.1980). The purpose of "fact pleading," as provided by Fed.R.Civ.P. 8(a)(2), is to give the defendant fair notice of the claims against him without requiring the plaintiff to have every legal theory or fact developed in detail before the complaint is filed and the parties have opportunity for discovery. See Wright & Miller, Secs. 1215, 1219, at 136-147, 188-194.

We do not believe, however, that the liberalized pleading rules permit plaintiffs to wait until the last minute to ascertain and refine the...