Hickey v. Arkla Industries, Inc., 81-2506

• Decision Date: 12 October 1982
• Docket Number: No. 81-2506,81-2506
• Citation: 688 F.2d 1009
• Parties: 29 Fair Empl.Prac.Cas. 1719, 30 Empl. Prac. Dec. P 33,101 Perry HICKEY, Plaintiff-Appellant, v. ARKLA INDUSTRIES, INC., and Arkansas Louisiana Gas Company, Defendants-Appellees. Summary Calendar.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1009

688 F.2d 1009

29 Fair Empl.Prac.Cas. 1719,

30 Empl. Prac. Dec. P 33,101

Perry HICKEY, Plaintiff-Appellant, v. ARKLA INDUSTRIES, INC., and Arkansas Louisiana Gas Company,

Defendants-Appellees.

No. 81-2506

Summary Calendar.

United States Court of Appeals, Fifth Circuit.

Oct. 12, 1982.

Joel J. Reinfeld, Houston, Tex., for plaintiff-appellant.

Arthur Val Perkins, Houston, Tex., for defendants-appellees.

Appeal from the United States District Court for the Southern District of Texas.

Before BROWN, GEE and JOLLY, Circuit Judges.

JOLLY, Circuit Judge:

Perry Hickey brought suit against Arkla Industries, Inc., and its parent company, Arkansas Louisiana Gas Company, under the Age Discrimination in Employment Act of 1967 (ADEA), 29 U.S.C. §§ 621-634, alleging that the two companies had jointly discriminated against him on the basis of his age by discharging him as a Manufacturer's Sales Representative. ¹ Following the presentation of Hickey's evidence, the two companies moved the district court for a directed verdict. Finding that there was no evidence which would enable the jury to properly find that Hickey was an employee under the ADEA, the district court granted the two companies' motion for directed verdict and entered judgment in their favor. We affirm.

In 1961, Hickey began his employment with Arkla Industries, Inc. (Arkla), as a service representative. Shortly thereafter, he became a District Sales Representative, but left Arkla's employ in the mid-1960's. However, he returned to Arkla in 1966 as a District Sales Representative.

As a District Sales Representative, Hickey was paid a salary plus a 3% commission on all his sales of Arkla Products. Like all other District Sales Representatives, he received certain insurance benefits, an automobile allowance, and expenses and travel reimbursements. He was also allowed to participate in Arkla's retirement plan.

While a District Sales Representative, Hickey could only sell Arkla products. Furthermore, he was required to submit numerous daily and weekly reports concerning customer calls he either had made or planned to make.

On March 1, 1980, Hickey voluntarily chose to become one of Arkla's Manufacturer's Sales Representatives. As such, he received no salary or wages. His only compensation from Arkla came from an 8% commission on sales of gas grills and gas lights in an exclusive sales territory. He was also not eligible for any of the allowances, reimbursements or benefits which he had received as a District Sales Representative. In addition, he specifically withdrew from Arkla's Employee Retirement Fund and received his termination payment from that fund.

The Manufacturer's Sales Representative Agreement which Hickey signed designated him as an independent contractor. It also provided that the agreement, which was for an indeterminate period of time, could be cancelled by either party upon thirty days notice. In addition, the agreement contained clauses concerning the sale of competing products, the prices at which Arkla products were to be sold, the manner in which compensation was to be paid, the ineligibility for expense reimbursements, and the non-assignment of the agreement.

After Hickey became a Manufacturer's Sales Representative, Arkla did not make any withholding from his commissions for social security or income tax purposes. Hickey filed his tax return on the forms for self-employed individuals. He personally established a Keogh Retirement plan which, by its very terms, is limited to self-employed individuals.

As a Manufacturer's Sales Representative, Hickey was allowed to sell products of other companies, including those of Arkla's competitors, as long as such products were not directly competitive with Arkla products he sold. Hickey established Perry Hickey Enterprises as the corporate vehicle for his sales of Arkla products. With another individual, he also established a partnership, Southern States Sales. Hickey sold Arkla products to Southern States Sales and collected his commission. Sixty to sixty-five percent of his sales of Arkla products were made to that company. Southern States Sales then sold the products to its customers. It also sold the products of other companies, such as gas ranges and freezers.

Arkla did not exercise any control over which customers Hickey could call upon in his territory. Furthermore, it did not exercise any control over the manner of marketing, distribution or the advertising of his marketing of its products. However, Arkla did set the prices at which Hickey could sell its products and did place credit limits on customers.

While Hickey did not have to report to Arkla about his daily activities, he was required to attend Arkla sales meetings. He was also subject to performance evaluations by Arkla and was given a sales quota. Without any charge, Arkla provided Hickey with office space and secretarial services. Arkla did, however, require him to pay the costs of remodeling and redecorating the office space.

In 1976, as a result of the recommendation of a nationally recognized management consulting firm, Arkla decided to change to a different marketing structure. In the new structure, the functions of the Manufacturer's Sales Representatives were absorbed by Zone Managers, undisputedly employees of Arkla. In November, 1976, as a result of the restructuring, Arkla cancelled Hickey's contract, and it is upon this act that Hickey, who was then 49 years of age, bases his claim of employment discrimination on the basis of age.

In our determination of whether he was an employee of Arkla or its parent company, Hickey asks this Court to apply the approach used under the Fair Labor Standards Act (FLSA) in such cases as Mednick v. Albert Enterprises, Inc., 508 F.2d 297 (5th Cir. 1975); Usery v. Pilgrim Equipment Co., Inc., 527 F.2d 1308 (5th Cir. 1976); and Weisel v. Singapore Joint Venture, Inc., 602 F.2d 1185 (5th Cir. 1979). In these cases, this Court applied an "economic realities" test under which persons are considered employees if they, "as a matter of economic reality, are dependent upon the business to which they render service." Mednick, supra, quoting Bartels v. Birmingham, 332 U.S. 126, 130, 67 S.Ct. 1547, 1550, 91 L.Ed. 1947 (1947).

Hickey asks that this approach be used instead of the considerably different approaches which are found in various cases arising under Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e-2000e-17. In these cases, courts have either applied the traditional common law test of employee status or a hybrid approach which looks at the economic realities of the situation but focuses on the employer's right to control the employee as the most important factor in determining employee status. Cobb v. Sun Papers, Inc., 673 F.2d 337 (11th Cir. 1982); Lutcher v. Musicians Union Local 47, 633 F.2d 880 (9th Cir. 1980); Spirides v. Reinhardt, 613 F.2d 826 (D.C. Cir. 1979).

Finding for the following reasons that Hickey would not be an employee under the more liberal "economic realities" test used in FLSA cases, we express no opinion on whether it or one of the tests used in Title VII cases should ultimately be used to determine employee status in ADEA cases.

As noted above, the economic realities test is used to determine...