Ludington v. Sambo's Restaurants, Inc.

• Decision Date: 15 August 1979
• Docket Number: Civ. A. No. 78-C-351.
• Parties: Lori LUDINGTON and Michele Penkoff, Plaintiffs, v. SAMBO'S RESTAURANTS, INC., et al., Defendants.
• Court: U.S. District Court — Eastern District of Wisconsin

474 F. Supp. 480

Lori LUDINGTON and Michele Penkoff, Plaintiffs, v. SAMBO'S RESTAURANTS, INC., et al., Defendants.

Civ. A. No. 78-C-351.

United States District Court, E. D. Wisconsin.

August 15, 1979.

Robert E. Sutton, Milwaukee, Wis., for plaintiffs.

William J. Mulligan, Diana L. Waterman, Milwaukee, Wis., for defendants Sambo's Restaurants, Inc., John Zanotti, Steve Delpaz, Richard Carnes, and Vickie Bickert.

DECISION AND ORDER

REYNOLDS, Chief Judge.

This is an action for damages brought pursuant to Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq., and 15 U.S.C. §§ 1, 15, and 18. The plaintiffs Lori Ludington and Michele Penkoff are former waitresses at a restaurant owned by the defendant Sambo's Restaurants, Inc. ("Sambo's"). The individual defendants are employees of the defendant Sambo's who in the course of their employment acted in a supervisory capacity over the plaintiffs.

The plaintiffs allege that during the course of their employment they were required by certain of the defendants to report on their time sheets less than the actual amount of income in tips which they received; that from November 1977 through January 1978, they were subjected to sexual harassment by the manager of the restaurant where they worked;^* that they complained about the manager's conduct to the home office and were fired on January 23 and 24, 1978, by the defendant Zanotti in retaliation for their complaint; and that thereafter the plaintiffs applied for unemployment compensation benefits and the defendant Olsen, acting as an agent for the defendant Sambo's, filed objection to the payment of unemployment benefits to the plaintiffs, falsely alleging that the plaintiffs had been fired by the district manager for unsatisfactory conduct.

Five causes of action are set forth in the complaint: (1) that the defendants' actions in requiring plaintiffs to report less than their actual amount of tip income constitute an unlawful practice in restraint of trade and an unlawful attempt to suppress competition by control of the labor market, in violation of 15 U.S.C. § 1 et seq.; (2) that the defendants' actions as described in the paragraph above constitute discrimination against the plaintiffs on the basis of sex in violation of 42 U.S.C. § 2000e et seq.; (3) that the defendants' actions as described in the paragraph above constitute the tort of conspiracy under the Wisconsin common law; (4) that plaintiffs' termination from employment by the defendants constitutes the tort of wrongful termination from employment and retaliatory discharge under the Wisconsin common law; and (5) that the actions of defendants Olsen and Sambo's in opposing plaintiffs' application for unemployment compensation benefits constitute the tort of defamation, slander, and libel under Wisconsin common law.

The defendants Sambo's, John Zanotti, Steve Delpaz, Richard Carnes, and Vickie Bickert have filed a motion to dismiss the complaint for failure of the plaintiffs to state a claim as to causes of action one through five, for failure of the plaintiffs to set forth the necessary subject matter jurisdiction as to the second cause of action, and on the basis that the third, fourth, and fifth causes of action, being pendent claims, should be dismissed once the first and second causes of action are dismissed. The defendants' motion will be granted; however, the order of dismissal will also be stayed for a period of time sufficient to allow plaintiffs, if they choose, to file an amended complaint as to the second through fifth causes of action. The defendant E. R. Olsen was served after the motion to dismiss was filed, and while he has not formally joined in the motion, the Court will dismiss the action against him on the same terms as it dismisses with respect to the above-named defendants. As for the defendant Robert Gollnick, to date he has not been served, and therefore the Court will dismiss the action against him in its entirety but without prejudice.

The Antitrust Claim

The plaintiffs allege that as a condition of employment by the defendant Sambo's, they were required to report less than their actual tip income, that the purpose of this policy was the avoidance of federal and state tax laws, and that its effect was to allow the defendant Sambo's to suppress competition and to undersell competitors by control of the labor market. The plaintiffs also allege that the individual defendants:

"* * * at all times material were employees of the defendant, SAMBO's RESTAURANTS, INC. and * * * with respect to actions taken in regard to LORI LUDINGTON an sic MICHELE PENKOFF did act in the course of their employment and under the direction of and on behalf of the defendant, SAMBO's RESTAURANTS, INC." (Complaint, paragraph 5.)

The plaintiffs' allegations fail to state a claim under the antitrust laws.

First, the type of conspiracy proscribed by § 1 of the Sherman Act and § 4 of the Clayton Act is a "conspiracy in restraint of trade among competitors." Austin v. House of Vision, Inc., 404 F.2d 401, 403 (7th Cir. 1969) (emphasis in original); Van Dyke Ford, Inc. v. Ford Motor Company, 399 F.Supp. 277, 283 (E.D.Wis.1975). While there is a vague allegation in the complaint that defendant Sambo's alleged policy on tip reporting had a negative impact on competition, the plaintiffs themselves were not competitors of the defendant Sambo's, the defendants were not in competition with each other, "there is no charge of price fixing, division of markets, group boycotts or tying arrangements * * and there is no complaint by a business competitor that it was unable to hire * * employees as a result of any practice engaged in by defendant." Austin v. House of Vision, Inc., supra, at 403.

Second, a corporation cannot conspire with itself to violate the antitrust laws, and since the acts of agents or employees of a corporation are generally attributable to it, neither can it conspire with its own employees. Nelson Radio & Supply Co., Inc. v. Motorola, Inc., 200 F.2d 911, 914 (5th Cir. 1952); Mackey v. Sears, Roebuck & Co., 237 F.2d 869, 873 (7th Cir. 1956); Tamaron Distributing Corporation v. Weiner, 418 F.2d 137, 139 (7th Cir. 1969). Plaintiffs argue that the individual defendants were engaged in a conspiracy with each other, and that the defendant Sambo's is liable not because it conspired with them but because it is liable for the unauthorized acts of its agents or employees committed in the course of their employment. United States v. Hilton Hotels Corporation, 467 F.2d 1000, 1007 (9th Cir. 1972), cert. denied 409 U.S. 1125, 93 S.Ct. 938, 35 L.Ed.2d 256 (1973). The argument is circuitous. The individual defendants as individuals are not competitors in the restaurant business and, therefore, under Austin v. House of Vision, Inc., supra, cannot conspire to restrain trade. As employees of the defendant Sambo's, however, they cannot conspire with it in a legal sense to restrain trade because it is, as plaintiffs allege, responsible even for unauthorized actions taken by the individual defendants in the course of their employment. United States v. Hilton Hotels Corporation, supra; Nelson Radio & Supply Co., Inc. v. Motorola, Inc., supra. Therefore, plaintiffs have failed to state a claim under the applicable sections of the antitrust laws.

The Sex Discrimination Claim

The plaintiffs have also alleged in paragraphs 11 through 13 of the complaint:

"That commencing in approximately November, 1977 and continuing until January, 1978 the plaintiffs were subjected to sexual harassment, including obscene and vulgar suggestions and physical contact by the manager of the Sambo's Restaurants located at 1500 East Moreland Boulevard, Waukesha, Wisconsin where the plaintiffs were employed.

"That the plaintiffs did register objection to the conduct of the manager, to the home office of the defendant, SAMBO's RESTAURANTS, INC. and to the defendant, ZANOTTI, the district manager and further on or about January 8, 1978 did register a complaint with the Equal Employment Opportunity Division of the Department of Industry, Labor and Human Relations of the State of Wisconsin.

"That on January 23 and 24, 1978 plaintiffs were discharged from their employment by the defendant ZANOTTI acting in the course of his employment and as the duly authorized agent of the defendant, SAMBO's RESTAURANTS, INC. and at the time of the termination of their employment the plaintiffs were advised that the termination was in retaliation for the complaint which they had registered concerning the sexual advances and propositions by the store manager and that because of said complaints the plaintiffs were viewed by the defendant as `troublemakers.'"

The plaintiffs have not, however, alleged that the sexual harassment resulting in termination which occurred was in any manner approved by their employer, Sambo's, nor have they set forth the manner in which Sambo's reacted to their objection registered in the home office.

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