Lusk v. Foxmeyer Health Corp.

• Decision Date: 04 December 1997
• Docket Number: No. 96-11278,96-11278
• Citation: 129 F.3d 773
• Parties: 75 Fair Empl.Prac.Cas. (BNA) 1435 Roger W. LUSK, et al., Plaintiffs, Roger W. Lusk; Robert P. Griffith; Herbert Barton, Jr.; Joseph Sanderson; Clinton B. Maddox, II; Joe J. Wilkie; Darrell Schwonke; Michael J. Kearney, Plaintiffs-Appellants, v. FOXMEYER HEALTH CORPORATION, formerly known as National Intergroup, Inc., et al., Defendants, Foxmeyer Health Corporation, formerly known as National Intergroup, Inc., Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 773

129 F.3d 773

75 Fair Empl.Prac.Cas. (BNA) 1435

Roger W. LUSK, et al., Plaintiffs Roger W. Lusk; Robert P. Griffith; Herbert Barton, Jr. Joseph Sanderson; Clinton B. Maddox, II; Joe J Wilkie; Darrell Schwonke; Michael J Kearney, Plaintiffs-Appellants, v. FOXMEYER HEALTH CORPORATION, formerly known as National Intergroup, Inc., et al., Defendants, Foxmeyer Health Corporation, formerly known as National Intergroup, Inc., Defendant-Appellee.

No. 96-11278.

United States Court of Appeals, Fifth Circuit.

Dec. 4, 1997.

John L. Ross, James L. Sowder, Thompson, Coe, Cousins & Irons, Dallas, TX, for Plaintiffs-Appellants.

Jeffrey M. Travis, Steven J. Pawlowski, Jeffrey M. Travis & Assoc., P.C., Dallas, TX, for Defendant-Appellee.

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

Before JOLLY, SMITH and DENNIS, Circuit Judges.

E. GRADY JOLLY, Circuit Judge:

In this appeal, we are presented the question whether a parent corporation may be held liable for the allegedly discriminatory conduct of its subsidiary. Eight former employees of the FoxMeyer Drug Company ("FoxMeyer Drug") were terminated as a result of a reduction-in-force. They brought this action alleging age discrimination under the Age Discrimination in Employment Act of 1967 ("ADEA"), 29 U.S.C. §§ 621-34. They also sued FoxMeyer Drug's parent corporation, the FoxMeyer Corporation, and FoxMeyer Corporation's parent, National Intergroup, Inc. ("NII"). ¹ NII moved for summary judgment contending that it did not qualify as an "employer" in the matters relating to this case and, therefore, was not subject to suit under the ADEA. The district court granted NII's motion and dismissed the action against NII. On appeal, the plaintiffs-appellants argue that the district court erred in finding no genuine issue of material fact as to whether FoxMeyer Drug, FoxMeyer Corporation, and NII constituted a "single employer" under the ADEA. We affirm.

I

All of the appellants were employed as sales consultants in FoxMeyer Drug's various regional offices. FoxMeyer Drug purchases health care products directly from manufacturers. It then distributes health care products and services to retail establishments such as pharmacies and drug store chains, as well as to other health care providers such as hospitals and university medical centers. FoxMeyer Drug is a wholly-owned subsidiary of the FoxMeyer Corporation, a holding company with no employees, but which shares the same board of directors and same executive officers with FoxMeyer Drug.

The FoxMeyer Corporation is, in turn, a wholly-owned subsidiary of the appellee, NII. NII, also a holding company, employs approximately fifteen people and is affiliated as a parent or subsidiary with nearly forty other corporations. NII shares its corporate headquarters with FoxMeyer Drug and FoxMeyer Corporation (collectively, the "FoxMeyer subsidiaries") in Carrollton, Texas. During the period relevant to this lawsuit, two individuals--Melvyn Estrin and Abbey Butler--served as both Co-Chairmen and Co-CEOs of all three corporations. In addition, evidence indicated that a third individual, Thomas Anderson, held positions of President and Chief Operating Officer with all three corporations. ²

In October 1993, Mike Webster, Senior Vice President of Sales and Marketing of FoxMeyer Drug and FoxMeyer Corporation, had discussions with Estrin and Butler about FoxMeyer Drug's financial performance and its ability to serve its customers more efficiently and productively. As a result of these discussions, Webster ordered senior executive officers of FoxMeyer Drug and FoxMeyer Corporation to form a planning team (the "Planning Team") to reengineer FoxMeyer Drug's sales force and determine criteria for selecting employees for discharge. The Planning Team formed a reduction-in-force plan (the "RIF plan"), which was approved by Estrin, Butler, and Anderson, presented to retail sales supervisors for FoxMeyer Drug, and then executed at the local level in January 1994.

The appellants--all FoxMeyer Drug sales consultants terminated as a result of the RIF plan--filed suit on August 26, 1994, against FoxMeyer Drug, FoxMeyer Corporation, and NII. They alleged that the three corporations engaged in unlawful discrimination under the ADEA by directing lower level managers to consider age as a factor in determining which employees to discharge. On June 7, 1996, after extensive discovery, NII moved for summary judgment on the grounds that it did not directly employ the appellants and, therefore, did not qualify under the ADEA as a "single employer" with its FoxMeyer subsidiaries. Less than two months later, and six days before trial, FoxMeyer Drug and FoxMeyer Corporation filed for bankruptcy in Delaware. Consequently, the district court stayed further proceedings against those two defendants.

Thereafter, on September 9, 1996, the district court granted NII's motion for summary judgment. Examining the evidence in the light of the four-factor test enunciated in Trevino v. Celanese Corp., 701 F.2d 397 (5th Cir.1983), the court held that NII and its FoxMeyer subsidiaries did not constitute a single employer. In particular, the district court determined that, although the three corporations had common ownership and some common management, there was no evidence demonstrating NII's involvement in the daily operations or labor relations of its FoxMeyer subsidiaries. The court grounded this determination on the absence of evidence showing that Estrin, Butler, and Anderson had responsibility in planning and implementing the details of the RIF plan. Thus, the court concluded, the appellants failed to identify evidence sufficient to permit a finding that NII was a final decision-maker in their termination and, consequently, that NII and its FoxMeyer subsidiaries could be regarded as a single, integrated enterprise for purposes of this case.

This appeal presents the sole issue of whether the summary judgment evidence would permit a finding that NII and its FoxMeyer subsidiaries qualify as a single employer under the ADEA.

II

We review the district court's grant of summary judgment de novo. Exxon Corp. v. Baton Rouge Oil, 77 F.3d 850, 853 (5th Cir.1996). The court will not weigh the evidence or evaluate the credibility of witnesses; further, all justifiable inferences will be made in the nonmoving party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 2513-14, 91 L.Ed.2d 202 (1986). If, as here, the nonmoving party bears the burden of proof at trial, the moving party may demonstrate that it is entitled to summary judgment by submitting affidavits or other similar evidence negating the nonmoving party's claim, or by pointing out to the district court the absence of evidence necessary to support the nonmoving party's case. Lavespere v. Niagara Mach. & Tool Works, Inc., 910 F.2d 167, 178 (5th Cir.1990).

Once the moving party presents the district court with a properly supported summary judgment motion, the burden shifts to the nonmoving party to show that summary judgment is inappropriate. Id. In doing so, the nonmoving party may not rest upon the mere allegations or denials of its pleadings, and unsubstantiated or conclusory assertions that a fact issue exists will not suffice. Anderson, 477 U.S. at 256, 106 S.Ct. at 2514. Rather, the nonmoving party must set forth specific facts showing the existence of a "genuine" issue concerning every essential component of its case. Thomas v. Price, 975 F.2d 231, 235 (5th Cir.1992). That is, the nonmoving party must adduce evidence sufficient to support a jury verdict. Anderson, 477 U.S. at 248, 106 S.Ct. at 2510. With these standards in mind, we turn to the merits of this appeal.

III

Under the ADEA, a corporation like NII cannot be held liable for discriminatory employment actions unless it qualifies as an "employer" under the statute. See 29 U.S.C. § 623. The ADEA defines an employer only as "a person engaged in industry affecting commerce who has twenty or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year." 29 U.S.C. § 630(b). This statutory definition provides little assistance in resolving the question before us. It plainly contains no basis for disregarding the venerable corporate law principle of limited liability or for otherwise extending liability to a parent corporation for the discriminatory acts of its subsidiary. We, and other courts, however, have construed the term "employer" broadly to include superficially distinct entities that are sufficiently interrelated to constitute a single, integrated enterprise. See, e.g., Schweitzer v. Advanced Telemarketing Corp., 104 F.3d 761, 764 (5th Cir.1997); Rogers v. Sugar Tree Products, Inc., 7 F.3d 577, 582 (7th Cir.1993); Johnson v. Flowers Indus., Inc., 814 F.2d 978, 981 (4th Cir.1987); York v. Tennessee Crushed Stone Ass'n, 684 F.2d 360, 362 (6th Cir.1982).

To determine whether a parent corporation and its subsidiary may be regarded as a "single employer" under the ADEA, we apply the four-part analysis originally adopted by the Supreme Court in the context of labor disputes, see Radio Union v. Broadcast Serv., 380 U.S. 255, 257, 85 S.Ct. 876, 877, 13 L.Ed.2d 789 (1965), and extended to civil rights actions by this court in Trevino v. Celanese Corp., 701 F.2d 397 (5th Cir.1983). The four factors to consider include: (1) interrelation of operations, (2) centralized control of labor or employment decisions, (3) common management, and (4) common ownership or financial control. 701 F.2d at 404. This analysis ultimately focuses on the question whether the parent corporation was a final decision-maker in connection with the employment matters underlying the litigation, id.; Chaiffetz v. Robertson Research Holding, Ltd., 798 F.2d 731, 735 (5th Cir.1986), and all four factors are examined only as they bear on this precise issue, see Schweitze...