Zimmerman v. North American Signal Co.

Decision Date31 March 1983
Docket NumberNo. 82-1415,82-1415
Citation704 F.2d 347
Parties31 Fair Empl.Prac.Cas. 634, 31 Empl. Prac. Dec. P 33,486 Sam ZIMMERMAN, Plaintiff-Appellant, v. NORTH AMERICAN SIGNAL COMPANY, Defendant-Appellee.
CourtU.S. Court of Appeals — Seventh Circuit

Loretta C. Douglas, Chicago, Ill., for plaintiff-appellant.

Jack J. Carriglio, Foran, Wiss & Schultz, Chicago, Ill., for defendant-appellee.

Before ESCHBACH and COFFEY, Circuit Judges, and WISDOM, Senior Circuit Judge. *

ESCHBACH, Circuit Judge.

The appellant, Sam Zimmerman, brought suit against the appellee, North American Signal Company ("North American"), alleging unlawful age discrimination under the Age Discrimination in Employment Act ("the Act"), 29 U.S.C. Secs. 621-634. The district court held that North American was not an "employer" as defined by Sec. 11(b) of the Act, 29 U.S.C. Sec. 630(b), and that the court therefore lacked subject matter jurisdiction. For the reasons below, we affirm.

I

North American Signal Company assembles and distributes emergency warning lights and sirens. Sam Zimmerman, Julius Neiman and William Wisbrod each own approximately one third of the corporation's stock. Zimmerman was employed by North American as vice president from 1963 until January 26, 1979, when his employment was terminated. Zimmerman alleges that, at the time of the termination, he was 67 years old and that North American discharged him solely because of his age. Zimmerman continued in his position as a director until April, 1979. His stock ownership apparently remains unaffected.

Zimmerman filed suit in district court on January 22, 1981. After several extensions of time, North American moved to dismiss on April 7, 1981, asserting, inter alia, that North American had too few employees to meet the Act's jurisdictional definition of "employer." Zimmerman and North American filed several memoranda and affidavits in the ensuing months. On September 8, 1981, a status hearing was held, at which both parties said that the Motion to Dismiss was fully briefed. The court granted North American's Motion to Dismiss on September 15, 1981, finding no genuine factual dispute on the jurisdictional issue, deciding that the method used by North American to compute the number of its employees was correct, and holding that North American was not an "employer" as defined by the Act.

On September 23, 1981 Zimmerman filed a Motion to Vacate the dismissal order of September 15, to reconsider North American's Motion to Dismiss, and to permit discovery on the jurisdictional issue. Again, both parties filed several memoranda and affidavits. On February 9, 1982 the court denied Zimmerman's motion.

II

Zimmerman raises several issues on appeal. First he contends that the district court erred in granting the defendant summary disposition on the jurisdictional matter when there were genuine issues of material fact. Next, he asserts that the district court used an incorrect method in counting the number of employees North American had during each week of the relevant period. Finally he claims that the district court erred in refusing to grant his Motion to Vacate the dismissal so he could conduct discovery on the jurisdictional issue and so he could present his theory that employees of an allegedly related corporation should also be included in the employee count.

III
A. The Propriety of Summary Disposition of the Jurisdictional Issue

North American moved to dismiss for lack of subject matter jurisdiction, asserting that it was not an "employer" as defined by Sec. 11(b) of the Act, 29 U.S.C. Sec. 630(b). North American presented the district court and Zimmerman with copies of its employment records for the relevant years, 1978 and 1979, submitted its analysis of the data, and concluded that it did not have the requisite number of employees for the requisite number of weeks to be considered an "employer" under the Act. 1 Zimmerman challenged North American's conclusion on four grounds, claiming that certain employees were missing from the employment records, that certain officers and directors should be counted as employees, that certain persons listed as employees on North American group medical plan should be counted as employees, and that the method used to calculate the number of employees for each week was incorrect.

The last three challenges present legal, not factual, questions. There is no substantial dispute that the persons Zimmerman claims to include in his count were, in fact directors, officers or listed on the medical plan. Only the legal issue of which, if any, of these are "employees" under the Act is presented.

Zimmerman's first basis for challenge, however, goes to the accuracy of North American's employment records. Zimmerman claims to have personal knowledge that certain employees were on vacation during certain weeks, that this was not reflected in North American's records, and he asserts that these employees should be counted as employees for each day of their vacation. North American attempts to refute Zimmerman's recollections. However, the resolution of this minor factual dispute would have no effect on the jurisdictional issue. For the reasons we discuss below, we resolve the legal issues presented in this case in favor of North American. Even if we were to assume that Zimmerman was correct in his recollections about vacationing employees, counting all these persons as "employees" for each day Zimmerman says they were on vacation would not raise the employee count to or above the jurisdictional threshold. 2 The issue of uncounted, vacationing employees is not material to the outcome of this case and does not preclude summary disposition of the jurisdictional issue.

Zimmerman additionally argues that summary disposition of the jurisdictional issue was improper because the jurisdictional issue is inextricably intermeshed with the merits. We fail to discern any such relationship between the issue of the number of North American's employees and the issue of whether Zimmerman was discharged because of his age. Summary disposition of the jurisdictional issue was proper.

B. Inclusion of Officers, Directors and Persons Listed on North American's Medical Plan

Zimmerman faults the method of counting employees used by North American and the district court because it fails to include several persons Zimmerman claims must be counted.

Zimmerman claims that the employee count should include Charlene Wisbrod and Gloria Neiman, wives of two of the major shareholders and officers of North American. In an affidavit, he alleges that they became vice presidents and directors of North American on April 20, 1979 and so remained for the balance of 1979. Affidavits of Julius Neiman and William Wisbrod state that their wives were vice presidents from April 20 through May 3, 1979, that Charlene Wisbrod became a director on May 3, 1979 and that Gloria Neiman became a director on April 20, 1979. At an April 20, 1979 meeting, the board of directors passed a resolution providing that directors would each receive $5,000.00 annually.

The calculations of North American and the district court include as employees for each working day of each week the paid officers of the corporation, including William Wisbrod, president, Julius Neiman, secretary-treasurer, and Zimmerman, vice president (until his dismissal on January 26, 1979). These persons were paid for their services as officers and actively worked for the corporation. It is substantially undisputed that Charlene Wisbrod and Gloria Neiman received no remuneration as vice presidents (whether their tenure ended on May 3, 1979 or continued throughout the year). Any payment they received was for their roles as directors. It is also substantially undisputed that they took no active role in the daily affairs of the corporation. 3

We cannot agree with Zimmerman that Charlene Wisbrod and Gloria Neiman should be considered employees of North American by virtue of their positions as directors or as unpaid, inactive officers. Zimmerman has failed to cite and we have found no case law, legislative history or any other indication that the term "employee" should be given this expansive meaning for the purpose of this Act. The legislative history of the nearly identical definitional provisions of Title VII of the Civil Rights Act of 1964, 42 U.S.C. Sec. 2000e(b), militates against distorting traditional concepts of employment relationships. "The term 'employer' is intended to have its common dictionary meaning, except as expressly qualified by the act." 110 Cong.Rec. 7216 (April 8, 1964). The term "employee" is "defined for the purpose of the title in the manner common for Federal statutes ...." H.R.Rep. No. 914, 88 Cong., 2d Sess., reprinted in 1964 U.S.Code Cong. & Ad.News 2355, 2402. We do not believe Congress intended the term "employee" to include persons who are no more than directors of a corporation or unpaid, inactive officers. 4 Cf. Burke v. Friedman, 556 F.2d 867, 870 (7th Cir.1977) (a partner is not an employee).

Zimmerman contends that the district court erred in failing to count as employees two persons, Sherwin Siegel and Phyllis Nathan, who were allegedly listed as employees on North American's group medical plan. Zimmerman at no time alleges that either of these persons worked for or were paid by North American. He relies solely on their classification as employees on the medical plan. However, the term used to describe a relationship is not dispositive of the nature of that relationship. See Williams v. Evangelical Retirement Homes, 454 F.Supp. 806, 807 (E.D.Mo.1978), rev'd on other grounds, 594 F.2d 701 (8th Cir.1979) (food service employee did not have Title VII claim against corporation when food service was an independent contractor, in spite of contract language referring to food service as "agent" of corporation). Moreover, Zimmerman referred to Siegel and Nathan as non-employees in a...

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