Engelhardt v. S.P. Richards Co., Inc.

Decision Date22 December 2006
Docket NumberNo. 06-1232.,06-1232.
PartiesLeanne ENGELHARDT, Plaintiff, Appellant, v. S.P. RICHARDS COMPANY, INC., Genuine Parts Company, Defendants, Appellees.
CourtU.S. Court of Appeals — First Circuit

James W.Donchess, with whom Donchess & Notinger, P.C., were on brief, for appellant.

Lisa M. Szanfranic, with whom Patricia E. Simon, Martenson, Hasbruck & Simon, LLP, Debra W. Ford, and Devine, Millimet & Branch, P.A., were on brief, for appellees.

Before TORRUELLA, Circuit Judge, SILER,* Senior Circuit Judge, and HOWARD, Circuit Judge.

SILER, Senior Circuit Judge.

Plaintiff Leanne Engelhardt appeals the dismissal of her claim for wrongful termination under the Family Medical Leave Act, 29 U.S.C. § 2601, et seq. (the "FMLA"). We AFFIRM because defendant S.P Richards Co. ("SPR") employed fewer than 50 people within 75 miles of its Nashua facility, and defendants Genuine Parts Co. ("GPC") and SPR (together, "Defendants") are not integrated entities under the FMLA. Thus, Engelhardt was not an eligible employee under 29 C.F.R. § 825.110(a)(3).

I.

SPR, a wholly-owned subsidiary of GPC, is an office supplies wholesaler headquartered in Smyrna, Georgia. GPC is a publicly-traded corporation, and operates an auto parts retailing business under the name Genuine Parts Co. d/b/a NAPA Auto Parts, based in Atlanta, Georgia.

SPR adopted GPC's personnel policies on attendance, sexual harassment, substance abuse, corporate conduct and network security. Many of SPR's handbooks, benefits brochures, information sheets, registration forms and paycheck stubs carry the GPC logo or letterhead instead of, or in addition to, SPR's logo. SPR's employees are eligible to participate in GPC-administered employee health insurance, life insurance, 401(k), and pension plans. GPC also issues SPR's payroll checks. SPR pays an administrative fee and reimburses GPC for all benefits and wages paid to SPR's employees.

SPR hired Engelhardt as a customer service representative at its Nashua distribution facility in February 2000 and terminated her on December 17, 2002. She had missed work the previous day and a half without authorization to care for her daughter who had attempted suicide. This was the third time that she had missed work for that reason.

Engelhardt filed this lawsuit in the district court claiming that her termination, among other things, was in violation of the FMLA. The district court granted summary judgment on the basis that, pursuant to 29 C.F.R. § 825.110(a)(3), Englehardt was ineligible for FMLA benefits because SPR did not employ the requisite number of people at its Nashua facility.1 See Engelhardt v. S.P. Richards Co., No. 04-CV-120-PB, 2005 WL 3578133, at *1-3, 2005 U.S. Dist. LEXIS 37118, at *5-9 (D.N.H. Dec.29, 2005). Engelhardt argued that GPC and SPR ought to be considered a single, integrated employer under 29 C.F.R. § 825.104(c)(2) because of the overlap in the substance and administration of their employment policies, and the implication suggested by SPR's documents that GPC controlled SPR's human resource and labor practices. The district court rejected the argument, which otherwise would have counted GPC's 50-plus Nashua employees toward FMLA eligibility. See id. Englehardt appeals this determination.

II.

The only issue before us is whether the district court erred in granting Defendants' summary judgment motion on the basis that SPR and GPC are not integrated employers within the meaning of 29 C.F.R. § 825.104(c)(2). We review the grant of summary judgment de novo. See Velez-Rivera v. Agosto-Alicea, 437 F.3d 145, 150 (1st Cir.2006). We will affirm the dismissal if, after construing all reasonable inferences in Engelhardt's favor, "there is no genuine issue as to any material fact and . . . [GPC and SPR are] entitled to judgment as a matter of law." Fed. R.Civ.P. 56(c). The parties agreed at oral argument there were no disputes of material fact. Thus, the question is strictly a legal one: whether, based upon the record, SPR and GPC are integrated entities.

A.

The FMLA provides eligible employees of covered employers up to twelve workweeks of unpaid leave in any twelve-month period in order to tend to certain familial obligations, such as caring for a loved one who has a serious health condition. See 29 U.S.C. §§ 2612, 2615(a)(2). It is "unlawful for any employer to interfere with, restrain, or deny the exercise of or the attempt to exercise, any right provided under [the FMLA]," 29 U.S.C. § 2615, and the act provides for a private right of enforcement, see 29 U.S.C. § 2617(a). The parties agree, at least arguendo, that Engelhardt's daughter's depression and suicide attempt amount to a serious enough condition to qualify for FMLA protection.

Pursuant to its authority under the FMLA, see 29 U.S.C. § 2654, the Department of Labor (the "DOL") has promulgated regulations which set forth the eligibility requirements for both employers and employees. 29 C.F.R. § 825.110(a) defines "eligible employees" and requires that the employee

(3) [be] employed at a worksite where 50 or more employees are employed by the employer within 75 miles of that worksite.

29 C.F.R. 825.104(a) defines "covered employers," i.e.,

any person engaged in commerce or in any industry or activity affecting commerce, who employs 50 or more employees for each working day during each of 20 or more calendar workweeks in the current or preceding calendar year.

"Normally the legal entity which employs the employee is the employer under FMLA. . . . [A] corporation is a single employer rather than its separate establishments or divisions." 29 C.F.R. § 825.104(c). However, a subsidiary is treated differently, as there is a "strong presumption that a parent corporation is not the employer of its subsidiary's employees." Lusk v. Foxmeyer Health Corp., 129 F.3d 773, 778 (5th Cir.1997) (citation omitted). Our task is to clarify how to distinguish between an entity that is a division of, and therefore part of a corporation, and one that is a subsidiary and therefore a separate entity. In Radio & Television Broadcast Technicians Local 1264 v. Broadcast Service of Mobile, Inc., 380 U.S. 255, 256, 85 S.Ct. 876, 13 L.Ed.2d 789 (1965) (per curiam), the Supreme Court articulated the "integrated employer" (also, the "single employer") test in the labor relations context to determine when an entity is sufficiently related to one's legal employer to subject it to liability. The DOL subsequently codified the above general rule and the exception in its FMLA regulations:

Where one corporation has an ownership interest in another corporation, it is a separate employer unless it meets the "joint employment" test discussed in § 825.106, or the "integrated employer" test contained in paragraph (c)(2) of this section.2

Separate entities will be deemed to be parts of a single employer for purposes of FMLA if they meet the "integrated employer" test. Where this test is met, the employees of all entities making up the integrated employer will be counted in determining employer coverage and employee eligibility. A determination of whether or not separate entities are an integrated employer is not determined by the application of any single criterion, but rather the entire relationship is to be reviewed in its totality. Factors considered in determining whether two or more entities are an integrated employer include:

(i) Common Management;

(ii) Interrelation between operations;

(iii) Centralized control of labor relations; and

(iv) Common Ownership.

29 C.F.R. § 825.104(c)(1) and (2) (footnote added).

Engelhardt contends that the integrated employer test is met because SPR admits having adopted some of GPC's employment policies and GPC administers SPR's employee benefits programs. She also points to documentary evidence which are purported to be GPC forms. It includes, for example, the separation notice she signed before her termination; the employee attendance policy forms; the code of corporate conduct form; the sexual harassment policy form; and the employee benefits packages, along with the accompanying brochures, information sheets, and election and acknowledgment forms.3 Many of these documents were on GPC letterhead or were stamped with the GPC logo and the cover letter for the benefits forms even addressed Engelhardt generically as "Dear GPC Employee." Moreover, Englehardt's paychecks were processed through GPC and bore GPC's and SPR's logos.

B.

In Romano v. U-Haul International, 233 F.3d 655, 666 (1st Cir.2000), a Title VII case, we determined that a "flexible approach" which considered all four "integrated employer" factors was appropriate, with special emphasis on whether "the parent exerts `an amount of participation [that] is sufficient and necessary to the total employment process, even absent total control or ultimate authority over hiring decisions.'" Id. (citing Armbruster v. Quinn, 711 F.2d 1332, 1338 (6th Cir.1983)).

While placing emphasis on the centrality of control over labor relations makes sense for imposing liability on affiliated entities in an employment discrimination case, cf. Romano, 233 F.3d at 666, we think that, here, the four factors merit equal consideration given the plain language of 29 C.F.R. § 825.104(c)(2). However, our analysis of the four factors should be informed by certain economic concerns. This is because the 50-employee exception is an economic one rooted in protecting small businesses, and the purpose of the "integrated employer" test is to ensure that a defendant has not structured itself to avoid labor laws. See Papa v. Katy Indus., 166 F.3d 937, 942 (7th Cir.1999).

While we do not doubt that GPC's relationship with SPR extends beyond mere absentee ownership, the issue is whether GPC controls enough facets of SPR's business and operations, such that it has not maintained its economic distinctness.

We find support for our framing of the issue in the FMLA....

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