Solon v. Kaplan

• Decision Date: 15 February 2005
• Docket Number: No. 04-2113.,04-2113.
• Citation: 398 F.3d 629
• Parties: James D. SOLON, Plaintiff-Appellant, v. Larry S. KAPLAN, individually and as partner in the firm of Kaplan, Begy & von Ohlen; Robert C. von Ohlen, individually and as partner in the firm of Kaplan, Begy & von Ohlen; Fred C. Begy, III, individually and as partner in the firm of Kaplan, Begy & von Ohlen; et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

398 F.3d 629

James D. SOLON, Plaintiff-Appellant, v. Larry S. KAPLAN, individually and as partner in the firm of Kaplan, Begy & von Ohlen; Robert C. von Ohlen, individually and as partner in the firm of Kaplan, Begy & von Ohlen; Fred C. Begy, III, individually and as partner in the firm of Kaplan, Begy & von Ohlen; et al., Defendants-Appellees.

No. 04-2113.

United States Court of Appeals, Seventh Circuit.

Argued December 9, 2004.

Decided February 15, 2005.

As Amended February 23, 2005.

Michael J. Hamblet, Hamblet, Oremus & Little, Chicago, IL, Terry L. Mann (argued), Martin, Pringle, Oliver, Wallace & Bauer, Wichita, KS, for Plaintiff-Appellant.

Joel W. Rice (argued), Jane M. McFetridge, Fisher & Phillips, Donald Hubert, Hubert, Fowler, & Quinn, Stephen J. Bisgeier, Miller, Shakman & Hamilton, Chicago, IL, for Defendants-Appellees.

Before FLAUM, Chief Judge, and BAUER and WILLIAMS, Circuit Judges.

FLAUM, Chief Judge.

James Solon filed this suit under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., alleging that his former law partners Larry Kaplan, Robert von Ohlen, and Fred Begy terminated his interest in their firm in retaliation for his opposition to sexual harassment. The district court granted summary judgment in favor of defendants, concluding inter alia that Solon was not an "employee" as defined by 42 U.S.C. § 2000e-3(a) and therefore not protected by Title VII. For the reasons stated herein, we affirm.

I. Background

On September 1, 1989, Solon joined the law firm of Adler, Kaplan & Begy as a partner. The partnership agreement, as amended January 1, 1993, named Solon as one of eight general partners. It provided that each general partner would fund an equal share of the firm's capital interest, be liable for an equal proportion of the firm's debts, and have an equal voice in the management of the firm and the conduct of its business. The allocation of income among the general partners, the need for additional capital contributions, and financial commitments in excess of $5,000 would be decided by a majority vote of the general partners, with each entitled to cast one vote. A two-thirds vote would be required for amendments to the partnership agreement, dissolution of the firm, or the involuntary termination of any general partner. New general or special partners could be brought into the firm only by unanimous vote. Special partners would have no equity interest or voting rights, and could be terminated by a simple majority vote of the general partners.

As a general partner, Solon paid a total of $50,000 in capital contributions to the firm over the course of his tenure. He received an allocated share of its income, attended compensation meetings with the other general partners, and was privy to daily cash reports and other sensitive financial information. None of the special partners or associates received these benefits.

On December 31, 1994, three general partners voluntarily left the firm. Solon drafted a separation agreement specifying that he and four others would continue as general partners under the terms of the 1993 partnership agreement. The next day, the firm changed its name to Kaplan & Begy, and plaintiff was named managing partner. In 1996, another general partner departed, leaving Solon, Larry Kaplan, Fred Begy, and Robert von Ohlen as the remaining general partners. In 1997, von Ohlen was added as a named partner and the firm became Kaplan, Begy & von Ohlen ("KBV"). As of January 1, 1998, a total of twenty-one lawyers, including general partners, special partners, and associates, worked at the firm.

As managing partner, Solon was the only general partner authorized to draw on all of the firm's bank accounts. He signed checks in that capacity to pay rent and distribute profits. He had extensive knowledge of KBV's financial condition, handled its relationship with LaSalle Bank and applied for and signed financing agreements as managing partner. He also served as the point of contact with the firm's landlord and acted as trustee of the firm's 401(k) account. On January 18, 1998, Solon stepped down as managing partner, but continued to direct some administrative matters, signing a revolving letter of credit with LaSalle Bank, and looking for new office space when the firm's lease expired.

In August 1998, Kaplan and von Ohlen approached Begy about their desire to terminate Solon's interest as a general partner. Over lunch one afternoon, the three agreed to remove plaintiff as a general partner, but considered allowing Solon to stay on as a salaried administrator or to work for Begy as an independent contractor. In October, Begy advised Solon of the partners' decision to terminate his interest as of December 31, 1998. Begy presented Solon with the options of working as an administrator or an independent contractor. Solon rejected these alternatives and left the firm in January 1999.

Solon contends that von Ohlen pressed for his ouster because he had spoken out against von Ohlen's alleged sexual harassment of two of the firm's secretaries. Kaplan and von Ohlen assert that they wanted to remove Solon from the partnership because they had lost confidence in his legal, rainmaking, and administrative skills. They state that von Ohlen never sexually harassed either secretary, and that Solon could not have reasonably believed to the contrary. Begy asks us to affirm on the ground that Title VII does not protect Solon, and takes no position regarding whether von Ohlen harbored retaliatory motives.

Plaintiff filed this suit against the firm and von Ohlen, Kaplan, and Begy individually. His amended complaint alleges violations of Title VII, the Age Discrimination in Employment Act of 1967 ("ADEA"), 29 U.S.C. § 621 et seq., and supplemental state-law claims. Begy, who was pushed out of the partnership after Solon was removed, filed cross-claims against von Ohlen, Kaplan, and the firm for indemnification, partner indemnification, and a declaratory judgment.

The district court granted summary judgment in favor of defendants on the Title VII and ADEA claims. It concluded that: (i) Solon was an employer, not an employee, and therefore was not protected by Title VII or the ADEA; and (ii) plaintiff failed to establish a prima facie case under either statute. The district court declined to exercise supplemental jurisdiction over Solon's state-law claims or Begy's cross-claims, and dismissed them without prejudice. Solon appeals the grant of summary judgment as to his Title VII claim only.

II. Discussion

Summary judgment is appropriate where the evidence demonstrates that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). We review a district court's grant of summary judgment de novo, construing all facts and reasonable inferences in favor of the non-moving party. Luckie v. Ameritech Corp., 389 F.3d 708, 713 (7th Cir.2004).

Section 704(a) of Title VII provides in relevant part that "it shall be an unlawful employment practice for an employer to discriminate against any of his employees ... because he has opposed any practice made an unlawful employment practice by this subchapter." 42 U.S.C. § 2000e-3(a). The parties agree, and we assume without deciding, that Title VII does not protect employers against retaliation. See EEOC v. Severn Trent Servs., Inc., 358 F.3d 438 445 (7th Cir.2004) (stating in dicta that Title VII does not prohibit retaliation against employers). Cf. Schmidt v. Ottawa Med. Ctr., 322 F.3d 461, 468 (7th Cir.2003) (ADEA does not protect employers); EEOC v. Sidley Austin Brown & Wood, 315 F.3d 696, 698 (7th Cir.2002) (same). Solon argues that the district court erred in granting summary judgment, however, because there are genuine factual disputes regarding whether he is an employee rather than an employer, and whether he established a prima facie case of retaliation. We agree with the district court that Solon is an employer as a matter of law, and do not reach the latter issue.

Title VII defines "employee," subject to exceptions not relevant here, as "an individual employed by an employer." 42 U.S.C. § 2000e(f). Recent Supreme Court precedent sheds light on this circular definition. See Clackamas Gastroenterology Assocs. v. Wells, 538 U.S. 440, 123 S.Ct. 1673, 155 L.Ed.2d 615 (2003). In Clackamas, the Court addressed whether shareholder-directors of a professional corporation counted as "employees" towards the fifteen-employee threshold for covered employers under the Americans with Disabilities Act of 1990 ("ADA"). Id. at 442, 123 S.Ct. 1673; 42 U.S.C. § 12111(5). Because it found the ADA's definition of "employee" circular, the Court looked to the common-law definition of the master-servant relationship, focusing on the element of control. Clackamas, 538 U.S. at 448, 123 S.Ct. 1673. It highlighted six non-exhaustive factors as relevant to whether the shareholder-directors were employees:

Whether the organization can hire or fire the individual or set the rules and regulations of the individual's work

Whether and, if so, to what extent the organization supervises the individual's work

Whether the individual reports to someone higher in the organization

Whether and, if so, to what extent the individual is able to influence the organization

Whether the parties intended that the individual be an employee, as expressed in written agreements or contracts

Whether the individual shares in the profits, losses, and liabilities of the organization.

Id. at 449-50, 123 S.Ct. 1673 (quoting 2 Equal Employment Opportunity Commission Compliance Manual § 605:0009 (2000)). "[W]hether a shareholder-director is an employee depends on `all of the incidents of the relationship ... with no one factor being decisive.'" Id. at 451, 123 S.Ct. 1673 (quoting Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 324, 112 S.Ct. 1344, 117 L.Ed.2d 581 (1992)).

The factor test...