EEOC v. Financial Assur., Inc.

• Decision Date: 24 September 1985
• Docket Number: No. 83-1303-CV-W-O.,83-1303-CV-W-O.
• Citation: 624 F. Supp. 686
• Parties: EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff, and Taloyre E. Butler, Plaintiff-Intervenor, v. FINANCIAL ASSURANCE, INC., et al., Defendants.
• Court: U.S. District Court — Western District of Missouri

624 F. Supp. 686

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff and Taloyre E. Butler, Plaintiff-Intervenor, v. FINANCIAL ASSURANCE, INC., et al., Defendants.

No. 83-1303-CV-W-O.

United States District Court, W.D. Missouri, W.D.

September 24, 1985.

COPYRIGHT MATERIAL OMITTED

Robert G. Johnson, St. Louis, Mo., for E.E.O.C.

Susan Goering, Benson & McKay, Kansas City, Mo., for plaintiff-intervenor Taloyre E. Butler.

Donald H. Loudon, Morris, Larson, King, Stamper & Bold, and John J. Yates, Gage & Tucker, Kansas City, Mo., for defendants.

MEMORANDUM OPINION AND ORDERS

ROSS T. ROBERTS, District Judge.

Plaintiff (the Equal Employment Opportunity Commission) and plaintiff-intervenor (Taloyre E. Butler, hereinafter "Butler") claim that Butler was discharged from her employment as an executive secretary because of her pregnancy, in violation of Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §§ 2000e, et seq. Butler seeks "make whole" relief; the EEOC, at least in its complaint, seeks more general injunctive and affirmative action relief.

I. IDENTIFICATION OF BUTLER'S EMPLOYER

Although an argument to the contrary can and has been made, the evidence convinces me that Butler was in fact employed by a series of limited partnership entities — defendants Avenue Partners Limited, 2nd Avenue Partners Limited and 3rd Avenue Partners Limited — rather than directly by defendant Financial Assurance, Inc. No matter how the interrelationship between those partnership entities and Financial Assurance might impact the alternative suggestion that all should be treated as a single employer entity for present purposes, see Baker v. Stuart Broadcasting Co., 560 F.2d 389, 392 (8th Cir.1977), a preponderance of the evidence demonstrates that Butler was in fact hired as an employee of the first of those partnership entities, rendered the majority of her services to that and to the succeeding partnership entities, was ultimately paid by those entities, and in most respects was controlled in her work by the general partner of those entities.

This finding in turn creates a threshold question with regard to the court's subject matter jurisdiction under Title VII, since it is clear that none of the partnership entities — whether taken individually or collectively — ever employed, during any relevant time, more than four employees. The problem arises because Section 2000e(b), in its definition of "employer," limits Title VII's application to those who have

fifteen or more employees for each working day in each of the twenty or more calendar weeks in the current or preceding year, and any agent of such a person (emphasis added).

See Massey v. Emergency Assistance, Inc., 580 F.Supp. 937, 938 (W.D.Mo.1983), aff'd. 724 F.2d 690 (8th Cir.1984); Bonomo v. National Duckpin Bowling Congress, Inc., 469 F.Supp. 467, 470 (D.Md.1979).

Plaintiffs seek to overcome the problem by an argument that the relationship between the partnership entities and defendant Financial Assurance (which is conceded to have had more than fifteen employees at all relevant times) was such that those various entities should be considered as one for purposes of Section 2000e(b). The analysis to be applied in that connection involves the four part test outlined in Baker v. Stuart Broadcasting Co., supra, requiring a review of the following factors: (1) the degree of interrelation between the operations of the entities in question; (2) the degree to which those entities shared common management; (3) the degree of centralized control of labor relations as between those entities; and (4), the degree of common ownership or financial control of the entities. As pointed out in Baker, all four factors must be considered; no one alone is controlling.

In applying that analysis here, I find as follows:

(1) Interrelationship of Operations. Externally, there was little or no relationship between the operation of the limited partnerships — which were engaged solely in oil and gas investment — and the operations of Financial Assurance, which was a life insurance company. Internally, however, there was a significant degree of interrelationship, particularly as concerns Butler's job as executive secretary for Michael Merriman (the general partner of the partnership entities). The evidence demonstrates, in that connection, the occasional direct sharing of Butler's services with Financial Assurance (e.g., when Betty Caton, the executive secretary for the president of Financial Services, was absent for several weeks, Butler took over at least some of her duties); Butler's work, while acting as Michael Merriman's secretary, on Financial Assurance matters;¹ a sharing of Financial Assurance employee services with the partnership entities (e.g., at least occasional work by Betty Caton for the original partnership; employee solicitation and initial interviewing performed by Ken Meineka); the sharing of an IBM word processor and a telex machine; and the occasional transfer of employees (W.E. Rexroot and Nancy Stiles) between the partnerships and Financial Assurance. In addition, at least the original partnership (Avenue Partners Limited) utilized the Financial Assurance payroll and the Financial Assurance insurance programs. Finally, as may have become obvious from the above, the partnership entities shared office space — in a somewhat undifferentiated fashion — with Financial Assurance, utilized the the Financial Assurance switchboard, and used the same utilities as Financial Assurance, although Financial Assurance was paid rent, and reimbursed for utility useage, on a rather loose basis. After the year 1981, when Avenue Partners took over its own payroll and insurance functions, this internal working relationship became less pronounced but remained significant nonetheless.

(2) Common Management. Financial Assurance was in all practical respects managed at its highest level by Joe Jack Merriman, its president (and defendant Michael Merriman's father). Michael Merriman was one of the three directors of Financial Assurance — although not an officer, during the time of Butler's employment — whose actual position with Financial Assurance can perhaps best be described as that of an "heir apparent" who in fact had less than complete interest in the insurance business despite his father's efforts to cultivate that interest. Michael Merriman did, however, involve himself in some aspects of the Financial Assurance business, and did in fact perform certain work in that connection which went considerably beyond the work ordinarily expected of an "outside" director,² although he in no real sense "managed," at any level, the affairs of the company. At the same time, while Michael Merriman in fact managed the partnership entities, as the general partner of each, he and his father consulted frequently, and in depth, in connection with that business. It also bears noting that Joe Jack Merriman supplied both advice and personal contacts for the solicitation of some of the limited partnership investors, and was authorized to sign partnership checks.

(3) Centralized Control of Labor Relations. The evidence with respect to any "centralized" (i.e., single source) control of labor relations is somewhat limited. In a few instances Michael Merriman undertook to issue or recommend policy directives which covered Financial Assurance employees. He also participated, with his father, in interviewing several higher level Financial Assurance prospective employees, and occasionally did salary reviews on Financial Assurance employees. Further, Butler's hours of work were originally assigned by a Financial Assurance employee (Meineka); she (and presumably all other partnership employees) were required to sign in and sign out on the same sheet used by Financial Assurance employees; and until Avenue Partners took over its own payroll functions in 1982, her personnel file was maintained by a Financial Assurance employee. In general, however, the duties, pay and other work related matters of Avenue Partners' employees (including Butler) were established and controlled by Michael Merriman, without interference or direction from Financial Assurance personnel; while the counterpart work related matters of Financial Assurance employees were controlled by Financial Assurance officers and employees. Butler was in fact discharged by Michael Merriman.

(4) Common Ownership or Financial Control. Joe Jack Merriman held, at all relevant times, a 65% stock ownership in Financial Assurance. The remaining 35% of the Financial Assurance stock was divided as follows: 10% to each of Merriman's three sons, including Michael,³ and 5% to Merriman's wife. Both Joe Jack Merriman and Michael Merriman were investors in Avenue Partners (along with 27 other persons); the former held the second largest investment interest at 7.4%, while the latter held a 3.3% interest. Neither Financial Assurance nor any of the Avenue Partners entities held any direct investment in the other.

* * * * * *

As noted, in applying the Baker test all four of the above factors must be considered together; no one alone is controlling. Here, although the question is difficult and the answer elusive, I conclude that the composite picture which emerges is such as to warrant treating Financial Assurance and the three Avenue Partner entities as a single employer entity for present purposes. The problem is admittedly unusual in that the situation which existed actually resulted, in considerable part, not from the business practices and considerations ordinarily encountered with this sort of question, but instead from the fact that Mr. Merriman simply attempted — as many fathers in his situation might do — to interest his son in the family insurance business and to help him in business otherwise. That cannot, however, serve to obscure the fact that there was a significant degree of interrelationship of internal operations, a fairly significant degree of...