Armbruster v. Quinn, Civ. A. No. 80-10070.

• Decision Date: 09 October 1980
• Docket Number: Civ. A. No. 80-10070.
• Citation: 498 F. Supp. 858
• Parties: Lynn ARMBRUSTER and Margaret Mayes, Plaintiffs, v. Terry QUINN, Syntax Corporation, Pure Industries, Inc., and the Stackpole Corporation, Defendants.
• Court: U.S. District Court — Western District of Michigan

498 F. Supp. 858

Lynn ARMBRUSTER and Margaret Mayes, Plaintiffs, v. Terry QUINN, Syntax Corporation, Pure Industries, Inc., and the Stackpole Corporation, Defendants.

Civ. A. No. 80-10070.

United States District Court, E. D. Michigan, N. D.

October 9, 1980.

Eric W. Zimostrad, Zimostrad, Wenzloff, Allsopp & Zimostrad, Bay City, Mich., for plaintiffs.

William C. Potter, Jr., Fischer, Franklin, Ford, Simon & Hogg, Detroit, Mich., for defendants.

MEMORANDUM OPINION AND ORDER

JAMES HARVEY, District Judge.

Plaintiffs, Lynn Armbruster and Margaret Mayes, bring this action for unlawful sexual harassment and discrimination under the fourteenth amendment of the Constitution and Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. Defendants are plaintiffs' former employer—Syntax Corporation, a Michigan corporation, its past president—Terry J. Quinn, and two parent corporations of Syntax—Pure Industries, Inc. and The Stackpole Corporation both Pennsylvania corporations. The matter is before the Court on motions to dismiss filed by all of the defendants.

The complaint alleges that during the time period from March 5, 1979 to September 17, 1979, while working as secretaries for Syntax Corporation of Bay City, Michigan, plaintiffs were sexually harassed by the company president, Terry J. Quinn. They claim that Mr. Quinn engaged in a pattern of verbal and physical harassment, and that on at least one occasion he took indecent liberties with Lynn Armbruster, against her will and without her consent, thereby constituting an assault and battery. Plaintiffs' cause of action under Title VII is that they were unlawfully terminated as employees of Syntax Corporation because they resisted Mr. Quinn's sexual advances.

In addition to filing suit against Terry Quinn and Syntax Corporation, plaintiffs have also named two parent corporations of Syntax, Pure Industries and Stackpole, as defendants. Plaintiffs claim that the parent corporations had knowledge that Mr. Quinn was sexually harassing employees of Syntax, and were therefore negligent in not taking steps to stop him. As alleged by defendants, Syntax employs less than fifteen persons and is not an "employer" for purposes of Title VII. 42 U.S.C. § 2000e(b). The question becomes therefore, whether the Court should consider the three corporate defendants as a joint enterprise in order to satisfy the fifteen employee jurisdictional prerequisite of Title VII.

All of the defendants have moved to dismiss the complaint asserting a lack of subject matter jurisdiction. In ruling on defendants' motions, two narrow questions are presented to the Court:

I. Whether, absent any allegations of "state action," this Court has jurisdiction over plaintiffs' claims under the fourteenth amendment; and

II. Whether defendant Syntax alone, or the three related corporations together, constitute an "employer" for purposes of jurisdiction under Title VII.

I. Fourteenth Amendment

Where a claim involves the invasion of individual rights, jurisdiction under Section 1 of the fourteenth amendment requires a showing of "state action" or state involvement. Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 92 S.Ct. 1965, 32 L.Ed.2d 627 (1971). Plaintiffs have not alleged any facts which demonstrate that "state action" is present in this case.

It is well settled that the burden to allege jurisdictional facts rests upon the plaintiff. If the defendant challenges these allegations in any appropriate manner, as has been done here, the plaintiff must support them by competent proof. McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 56 S.Ct. 780, 80 L.Ed. 1135 (1936). Since such support is lacking in this case, the Court finds that the fourteenth amendment does not provide it with jurisdiction over plaintiffs' claims of discrimination.

II. Title VII

Section 701(b) of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e(b) provides that:

"(b) The term `employer' means a person engaged in an industry affecting commerce who has fifteen or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year, and any agent of such a person, ..."

Establishing that an employer has fifteen or more employees is a prerequisite which must be satisfied before jurisdiction under Title VII is proper. Hassell v. Harmon Foods, Inc., 454 F.2d 199 (CA 6, 1972); see also Burke v. Friedman, 556 F.2d 867 (CA 7, 1977).

By affidavit and other documents, defendants have asserted that Syntax Corporation did not employ fifteen persons during the time period involved in this action. Plaintiffs have responded with the assertion that when commissioned salespeople are counted, Syntax did employ at least fifteen persons. In addition, plaintiffs argue that defendants Pure Industries and Stackpole are engaged in a joint enterprise with their subsidiary Syntax, and that together these corporations should be considered a single "employer" for purposes of Title VII.

On the factual question of whether Syntax employed fifteen persons, plaintiffs have responded to defendants' jurisdictional challenge only with the affidavit of William J. Clare, a past president of Syntax. Plaintiffs rely on Mr. Clare's affidavit to support the proposition that when "commissioned salespeople" are counted, Syntax employed more than fifteen persons. Neither the law, nor Mr. Clare's affidavit, however, support plaintiffs' contention.

The traditional common law test for distinguishing between employees and independent contractors is the "right to control" reserved by the person for whom the work is being done, not only as to the result accomplished by the work, but also as to the details and means by which the result is accomplished. Smith v. Dutra Trucking Co, 410 F.Supp. 513, 516 (N.D.Cal.1976). This test is controlling under Michigan law. See MLP Employment § 2.

The affidavit of William Clare does not state that Syntax employed "salespeople," rather it states that the company merely paid a commission to "manufacturer's representatives." The Court believes the difference is significant. Syntax does not exercise control over the details of work performed by representatives which help to market its products, it simply pays them a commission on accomplished results. This is not sufficient to consider such persons "employees" under Title VII and the Court believes that such representatives must be considered independent contractors. Jenkins v. Travelers Insurance Co., 436 F.Supp. 950 (D.Or.1977). Therefore, even when reading the complaint and other documents in a light most favorable to the plaintiffs, and including part-time employees of Syntax in counting the total number of persons it employed, Pedreyra v. Cornell Prescription Pharmacies, Inc., 465 F.Supp. 936, 941 (D.Colo.1979), the Court finds that Syntax Corporation, standing by itself, did not employ at least fifteen persons.

We next turn to plaintiffs' contention that the Court should look not only to Syntax Corporation but also to Pure Industries and Stackpole as their "employer" for purposes of Title VII. We begin our inquiry with the recognition that Title VII of the Civil Rights Act is to be accorded a liberal construction in order to carry out the purposes of Congress to eliminate inconvenience, unfairness, and the humiliation of discrimination. Baker v. Stuart Broadcasting Co., 560 F.2d 389 (CA 8, 1977). At the same time, however, we recognize the legislative history of Title VII indicates that the term "employer" is "intended to have its common dictionary meaning, except as expressly qualified by the act." 110 Cong. Rec. 7216 (April 8, 1964); Burke v. Friedman, 556 F.2d 867, 870 (CA 7, 1977).

The Court believes that when one speaks of his or her "employer", as that term is commonly used, they are not generally referring to the parent corporations of the immediate business which pays their salary. This is especially true when the parent corporations exist under different names and carry on business in a different state than the familiar subsidiary company. Given common usage, most employees are likely to consider their "employer" as the company which owns and operates the physical plant or place in which they work, and which manages the people and products of which they have personal knowledge.

The very same issue facing the Court herein was presented to the Court in Hassell v. Harmon Foods Inc., 336 F.Supp. 432 (W.D.Tenn.1971), affirmed, 454 F.2d 199 (CA 6, 1972). In dismissing plaintiff's Title VII action, District Judge, now Circuit Judge, Bailey Brown found that:

It appears that the relation between the parent corporation and the subsidiary is a normal one and that the subsidiary corporation could in no way be called a "sham." The control exercised by the parent by virtue of its stock holding is exercised in the usual way by the election of the subsidiary's board and officers. The affairs of the two are generally handled separately. It is clear beyond dispute, and we do not understand plaintiff to contend otherwise, that the subsidiary corporation is in legal contemplation a separate one in that, for example, the parent would not be liable for the debts of a subsidiary and that the subsidiary would be recognized as a separate one for tax purposes.

Thus the question sharply presented is whether, in an ordinary parent-subsidiary situation, can the fact that there are two corporations be ignored for present purposes and the

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