House v. Cannon Mills Co.

• Decision Date: 23 February 1988
• Docket Number: Civ. No. C-86-28-S.
• Citation: 713 F. Supp. 159
• Court: U.S. District Court — Middle District of North Carolina
• Parties: William P. HOUSE, Plaintiff, v. CANNON MILLS COMPANY; Tracy E. Tindal, Senior Vice President; and Lynne Scarboro, Defendants.

713 F. Supp. 159

William P. HOUSE, Plaintiff, v. CANNON MILLS COMPANY; Tracy E. Tindal, Senior Vice President; and Lynne Scarboro, Defendants.

Civ. No. C-86-28-S.

United States District Court, M.D. North Carolina, Salisbury Division.

February 23, 1988.

Carole Carlton Brooke, China Grove, N.C., for plaintiff.

M. Ann Anderson, Charles F. Vance, Jr., Winston-Salem, N.C., Lovic A. Brooks, III, Columbia, S.C., Elizabeth F. Reveley, Atlanta, Ga., for defendants.

MEMORANDUM OPINION

BULLOCK, District Judge.

This matter is before the court on motion of Defendants Tindal and Scarboro for dismissal of the claims against them. In addition Defendant Cannon Mills moves for summary judgment on Plaintiff's state law claim that Cannon Mills breached his employment contract. The facts of this case remain as set out in this court's memorandum opinion of June 25, 1986, except that Tindal and Scarboro are no longer employed by Cannon Mills.

Motion to Dismiss the Individual Defendants

In making their motion to dismiss, Tindal and Scarboro rely on the court's statement in the June 25, 1986, opinion that liability of individuals under the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621 et seq., is limited to injunctive relief. Since neither Defendant is presently employed by Cannon Mills, if that statement of the law is accurate such relief would be without effect. However, upon further consideration of the law under the ADEA, it appears that a plaintiff may obtain monetary relief against individual defendants. Therefore, the motion of Defendants Tindal and Scarboro will be denied.

As defined under both the ADEA, 29 U.S.C. § 630(b), and Title VII, 42 U.S.C. § 2000e(b), the term "employer" can include one acting as an agent of the "person" engaged in interstate commerce. The liability provisions of both acts therefore permit suits against individual supervisory employees who are deemed "employers." (ADEA): Wasilchuk v. Harvey's Wagon Wheel, Inc., 610 F.Supp. 206, 208 (D.Nev. 1985); Barkley v. Carraux, 533 F.Supp. 242, 245 (S.D.Tex.1982); Goodman v. Bd. of Trustees of Community College Dist. 524, 498 F.Supp. 1329, 1336 (N.D.Ill.1980); Coffin v. South Carolina Dept. of Social Services, 562 F.Supp. 579, 587 (D.S.C.1983); (Title VII): Barger v. State of Kansas, 630 F.Supp. 88, 89 (D.Kan.1985); Padway v. Palches, 665 F.2d 965, 968 (9th Cir.1982).

In Title VII actions the issue has been whether the individual defendants are personally liable for back pay, or subject only to injunctive relief. The Ninth Circuit has clearly stated that "the individual defendants cannot be held liable for back pay." Padway, 665 F.2d at 968 (citing Clanton v. Orleans Parrish School Bd., 649 F.2d 1084, 1099 5th Cir. Unit A 1981 public officials are not personally liable for back pay under Title VII). See also Pree v. Stone & Webster Engineering Corp., 607 F.Supp. 945, 950 (D.Nev.1985); Seib v. Elko Motor Inn, Inc., 648 F.Supp. 272, 274 (D.Nev.1986).

On the other hand, without saying so explicitly, several district courts have acknowledged individual liability under Title VII. See Dague v. Riverdale Athletic Ass'n, 99 F.R.D. 325, 327 (N.D.Ga.1983) ("it is inconceivable that Congress could have intended to exclude from liability the very persons who have engaged in the employment practices which are the subject of the action."); Goodman, 498 F.Supp. at 1332 (if board of trustees is an employer and defendant is their agent then for litigation purposes he also is an employer and can be held accountable for any statutory violations); Barger, 630 F.Supp. at 89 (explicit language of Section 2000eb and the liability provision, Section 2000e-2a1 compels the conclusion that individual defendants may be liable under Title VII if they are agents of employer, but only in their official capacity).

Although the court believes the Ninth Circuit's position to be the better one, that does not resolve the issue here, because this case arises under the ADEA. While many provisions of the ADEA are similar to those of Title VII, the scope of relief is much broader. 29 U.S.C. § 626(b) allows the court to grant appropriate legal or equitable relief and provides liquidated damages for willful violations. In contrast, 42 U.S.C. § 2000e-5(g) permits reinstatement, back pay or other equitable relief. The availability of additional remedies, particularly one based on willfulness of conduct, argues against a construction of the ADEA that limits to injunctive relief the liability of the individual who acted willfully.

Another reason for not relying entirely on judicial interpretations of Title VII is that the ADEA incorporates the remedies and procedures of the Fair Labor Standards Act ("FLSA"), which differ from those under Title VII. Fiedler v. Indianhead Truck Line, Inc., 670 F.2d 806, 810 (8th Cir.1982) (citing Lorillard v. Pons, 434 U.S. 575, 582, 98 S.Ct. 866, 871, 55 L.Ed.2d 40 1978); see also Slatin v. Stanford Research Institute, 590 F.2d 1292, 1294 (4th Cir.1979). The specific and selective incorporation of the FLSA enforcement provisions evidences a congressional intent to adopt the existing interpretations of FLSA provisions. Slatin, 590 F.2d at 1296.

At the time the ADEA was first passed there were few existing interpretations under the FLSA as to whether an individual was personally liable as an "employer." The Eighth Circuit had ruled that a defendant who was president and manager of a corporate employer was himself an "employer" under 29 U.S.C. § 203(d), and subjecting him to injunctive relief was not an abuse of discretion.¹ Chambers Construc. Co. v. Mitchell, 233 F.2d 717 (8th Cir.1956). Much earlier a New York state court had held a building manager liable for unpaid overtime wages and liquidated damages under the FLSA, despite the fact that the owner of the building was known. Brennan v. Community Service Society of New York, 45 N.Y.S.2d 825, 181 Misc. 637 (1943).

However, by 1978 when Congress substantially amended the ADEA, the rule under the FLSA was much clearer. In Shultz v. Chalk-Fitzgerald Construc. Co., 309 F.Supp. 1255 (D.Mass.1970), the court held an individual liable under the FLSA despite the fact that he acted in a representative capacity as an officer and agent. The court said:

Congress has in effect provided that for the purposes of the Act any person who acts directly or indirectly in the interest of an employer in relation to an employee shall be subject to the same liability as the employer.... Liability is predicated not on the existence of the employer-employee relationship between him and the employee but on the acts he performs in relation to the employee.

309 F.Supp. at 1257. See also Hodgson v. Royal Crown Bottling Co., 324 F.Supp. 342, 347 (D.Miss.1970), aff'd, 465 F.2d 473 (5th Cir.1972); Brennan v. Whatley, 432 F.Supp. 465, 469 (E.D.Tex.1977); Usery v. Weiner Bros., Inc., 70 F.R.D. 615, 617 (D.Conn.1976).²

Most of these cases involved individual defendants who were officers exerting substantial managerial control over the corporation, and who possessed ownership interests. In contrast, Tindal and Scarboro were not high-ranking officers of, nor does the evidence indicate that they were substantial shareholders in, Cannon Mills. However, the court does not find this to be a sound basis for distinguishing the FLSA cases.

In the FLSA cases the courts did not predicate personal liability on defendant's identity with the corporation; they did not "pierce the corporate veil" in order to bypass standard principles of limited liability from interests in a corporation. Rather, the individuals were held accountable because an adverse employment action was taken in violation of the FLSA, which action was attributable to them due to their authority over employment decisions. The consideration of their position or ownership interest was only relevant to the question of their authority, i.e., whether they were acting at their own discretion or only at the direction of a superior. In short, the import of the FLSA cases is that a position as an officer or shareholder is not a condition for liability, but merely an indicia of authority and status as an "employer" with respect to the violative action.

Liability under the ADEA is also predicated on status as an "employer." The issue of one's authority is included in this determination because for an individual to be an "employer" he must be an "agent" of the corporate employer. See 29 U.S.C. § 630(b). Title VII uses a nearly identical definition and under Title VII the term "agent" has been construed as including supervisory or managerial employees to whom some employment decisions have been delegated. Barger, 630 F.Supp. at 90 (citing Owens v. Rush, 636 F.2d 283, 287 10th Cir.1980 elected county sheriff is an agent for all matters within his discretion, including the hiring and firing of employees). See also York v. Tennessee Crushed Stone Ass'n, 684 F.2d 360, 362 (6th Cir.1982).

In this case the evidence shows that Scarboro and perhaps Tindal had authority and discretion over Plaintiff's discharge for allegedly discriminatory reasons. With respect to that action they would be "agents" of Cannon Mills and would be "employers" within the express language of the statute. 29 U.S.C. § 623 makes discharge by an "employer" based on age a violation, for which 29 U.S.C. § 626(b) provides a remedy. Absent expression of congressional intent or authoritative precedent to the contrary,³ the clear import of the statutory language, including the incorporation of the FLSA provisions and their accompanying case law, is imposition of personal liability on all "employers." Plaintiffs can pursue the prescribed remedies against them. This comports with both the purpose of the ADEA to eliminate discrimination from the workplace, Coffin, 562 F.Supp. at 589, and the statement of Justice Blackmun in Oscar Mayer & Co. v. Evans, 441 U.S. 750, 765, 99 S.Ct. 2066, 2076, 60 L.Ed.2d 609 (1979) ...