IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF TEXAS 

DALLAS DIVISION 

JOHN GREGORY REILLY, 

 Plaintiff, 

v. 

TXU CORPORATION, 

TXU BUSINESS SERVICES COMPANY, 

 Defendants. 

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No. 3:05-CV-0081-M 

 MEMORANDUM OPINION AND ORDER

Before the Court is a portion of Defendants TXU Business Services Company and TXU 

Corporation’s Motion for Summary Judgment [Docket Entry #51]. The issue before the Court is 

whether Plaintiff John Gregory Reilly, who was an employee of TXU Business Services 

Company (“TXU Business”), may bring claims against its parent, TXU Corporation. Because 

the now retired presiding judge granted summary judgment on another ground, a decision which 

was later reversed on appeal, this issue has not been reached previously. For the reasons below, 

the Court finds that because TXU Business and TXU Corporation were not a single enterprise / 

single employer, TXU Corporation is not liable for the acts of TXU Business, and is entitled to 

summary judgment on Plaintiff’s claims. 

Background 

 

During the relevant period, TXU Business performed for several other TXU Corporation 

subsidiaries services including human resources, procurement, and information technology. In 

1989, Plaintiff began working with the predecessor to TXU Business, and worked continuously 

for that company, or TXU Business, until May, 2004. In March 2002, Plaintiff applied for the 

 

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newly created position of Strategic Sourcing Manager, a position within TXU Business which 

involved working with other TXU Corporation subsidiaries to coordinate their procurement 

efforts and thereby reduce overhead costs. Plaintiff, a Caucasian male, was not selected for the 

position; instead, Ayanna Clunis, an African-American female who had not previously worked at 

TXU Business, was selected.1

On May 18, 2004, Plaintiff received a letter from “TXU” stating that TXU Corporation 

“along with its subsidiaries, ‘TXU’” was entering into “an exciting new joint venture” with 

Capgemini Energy LP, and as a result, some TXU Business employees, including Plaintiff, 

would instead be employed by Capgemini. Two TXU subsidiaries, TXU Energy Company, LLC 

(“TXU Energy”) and TXU Electric Delivery Company, entered into a contract with Capgemini 

by which TXU Business employees would be “outsourced” to Capgemini, performing the same 

job responsibilities for a new employer. 

Plaintiff was terminated by TXU, but his termination was accompanied by an 

unconditional offer of employment with Capgemini and an optional severance package from 

TXU, guaranteeing him TXU Severance Plan benefits if Plaintiff were terminated by Capgemini 

within the first eighteen months of his hiring by Capgemini.2

 To be eligible for the TXU 

severance package, Plaintiff was obligated to sign a release of claims against TXU Corporation 

and TXU Business, within forty-five days of receiving the offer for employment with 

Capgemini. He declined to sign the release. After forty-five days, Capgemini was informed by 

TXU Energy that Plaintiff had not signed the release.3

 

1

 Clunis’ selection forms the basis of Plaintiff’s § 1981 discrimination claim. Plaintiff asserts that he was more 

highly qualified for the position, but that Clunis was given the job to promote corporate diversity. 

2

 TXU Severance Plan benefits were unavailable if the transferred employee was fired at any time for cause. 3

 Defendants state that TXU Energy was obligated to inform Plaintiff’s subsequent employer that Plaintiff did not 

sign the release, because it affected the amount of severance benefits he would be entitled to if he were laid off from 

his job with Capgemini. See infra note 16. 

 

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On September 23, 2004, Capgemini announced staff reductions, expecting to eliminate 

two hundred positions beginning in October 2004, with more reductions planned for February, 

2005. On October 27, 2004, Reilly was informed that his position had been eliminated, but 

because he had not signed the release, he would not receive TXU Severance Plan benefits. 

Reilly brought suit against Defendants TXU Business and TXU Corporation under 42 

U.S.C. § 1981, claiming race discrimination and unlawful retaliation. Defendants moved for 

summary judgment on several grounds. The sole issue now before the Court is whether TXU 

Corporation and TXU Business acted as a single enterprise/single employer so as to make TXU 

Corporation liable for TXU Business’ decisions. 

Analysis 

In the Fifth Circuit, there is a strong presumption that a parent corporation is not the legal 

employer of its subsidiary’s employees and thus, a parent company is ordinarily not liable for the 

discriminatory acts of its subsidiary.4

 However, a plaintiff may overcome that presumption by 

proving that the parent company and its subsidiary are a single enterprise.5 In Johnson v. Crown 

Enterprises, Inc., the Fifth Circuit examined these factors to determine whether there was a 

single unit for the purposes of establishing liability under § 1981: (1) interrelation of operations, 

(2) centralized control of labor relations, (3) common management, and (4) common ownership 

or financial control.6

 The Fifth Circuit has held that the second factor, centralized control of 

labor relations, is “the most important” and that the “analysis ultimately focuses on the question 

 

4 Lusk v. Foxmeyer Health Corp., 129 F.3d 773, 778 (5th Cir. 1997). 5 See Johnson v. Crown Enterprises, Inc., 398 F.3d 339, 344 (5th Cir. 2005) (§1981 claim); Lusk, 129 F.3d 773, 776 

(ADEA claim, brought under 29 U.S.C. §§ 621-634); Trevino v. Celanese Corp., 701 F.2d 397, 403-04 (5th Cir. 

1983) (Title VII claim, brought under 42 U.S.C. § 2000e et seq.). Because the Fifth Circuit in Johnson uses the term 

single enterprise when analyzing a § 1981 claim, the Court uses the same terminology here. 6

 398 F.3d at 343 (citing Trevino v. Celanese Corp., 701 F.2d 397, 404 (5th Cir. 1983)). In Johnson, the Fifth 

Circuit assumed that the single enterprise test applied to § 1981 claims, and dismissed the plaintiff’s claim against 

the parent because it found the parent company did not form a single enterprise with its subsidiary. In the Title VII 

and ADEA contexts, the relevant test is the “single employer” test. The Court does not regard the single 

employer/single enterprise phrasings as materially different. 

 

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whether the parent corporation was a final decision-maker in connection with the employment 

matters underlying the litigation.”7 The emphasis on the second factor has led to a de-emphasis 

of the third and fourth factors, culminating in the Fifth Circuit’s holding that common 

management and common ownership are “ordinary aspects of a parent-subsidiary relationship” 

that, without more, cannot establish joint liability.8

 

To find a single enterprise, there must be some nexus between the parent company and 

the subsidiary’s daily employment decisions, to support an inference that the subsidiary and the 

parent were “functionally integrated.”9

 In Johnson, the Fifth Circuit found evidence of 

interrelated operations and common management, but because the parent company was 

uninvolved with the subsidiary’s personnel decisions, the two were held not to be a single 

enterprise.10 In Johnson, the parent and subsidiary companies operated from the same building, 

shared secretarial support and supplies, and did not separately account for time the subsidiary’s 

employees spent doing administrative work for the parent. Further, the personnel director of the 

parent corporation was the first to respond to the discrimination claim, which was brought by an 

employee of the subsidiary. The parent’s personnel director testified that any of the subsidiary’s 

contractors “could have gone to him with any complaints about the nonrenewal of a contract” 

with the subsidiary.11 The Johnson court found that without evidence that the parent company 

actually made its subsidiary’s labor decisions, the most important factor of the single enterprise 

test had not been proven and the parent corporation was entitled to summary judgment on the 

plaintiff’s claims. 

 

7 Lusk, 129 F.3d at 777 (citing Trevino, 701 F.2d at 404). 8 Id. at 778. Ordinary aspects include “[c]ommon management and ownership” and “possession of a controlling 

interest in [a] subsidiary, [which] entitles the parent to the normal incidents of stock ownership, such as the right to 

select directors and set general policies.” Id. 9 Id. at 778-79. 10 Johnson, 398 F.3d at 344. 11 Id. at 345. 

 

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In Lusk v. Foxmeyer Health Corporation, the parent company and its subsidiary had 

common corporate headquarters and shared a primary phone number. Some directors and 

officers held positions with both the parent and subsidiary, and those joint directors and officers 

designed and implemented the subsidiary’s reduction-in-force plan. The Fifth Circuit held that 

level of integration insufficient for the purposes of the single enterprise test.12 The Lusk court 

found that the parent did not “excessively influence or interfere with the business operations of 

its subsidiary,” which would be evidenced by “[a]ttention to detail,” as opposed to “general 

oversight.”13 In contrast, in Trevino v. Celanese Corporation, summary judgment was denied 

based on “the existence of over a hundred documents, signed by the parent’s managers, 

authorizing lay-offs, recalls, promotions, and transfers of the subsidiary’s employees” to the 

parent corporation. In Trevino, the relevant decision-makers were employees of the parent 

company and former employees of one entity testified they considered themselves de facto

employees of the other.14 

Defendant TXU Corporation argues that it is entitled to summary judgment because it 

“had no involvement whatsoever in the two acts that form the basis of Plaintiff’s claims in this 

case.”15 TXU Corporation claims that it had no involvement in the Strategic Sourcing Manager 

hiring decision or the decision to notify Capgemini that Plaintiff did not sign the Severance Plan 

release. TXU Corporation further argues that Plaintiff has offered no evidence showing that it 

and TXU Business shared anything more than an ordinary parent-subsidiary relationship, which 

does not give rise to liability against TXU Corporation. 

 

12 Lusk, 129 F.3d at 780. Lusk is an ADEA case applying the Trevino factors. 13 Id. at 778 (quoting Johnson v. Flowers Indus., Inc., 814 F.2d 978, 982 (4th Cir. 1987)). 14 Trevino, 701 F.2d at 399, 404. 15 Defendants’ Brief 34. 

 

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In response, Plaintiff alleges that TXU Corporation and TXU Business share “key aspects 

of Defendants’ businesses such as aspects of their labor, employment, and human resources” and 

that TXU Corporation oversees and controls “material aspects” of TXU Business. Plaintiff 

argues that the extent of TXU Corporation’s involvement is evidenced by: (1) the joint venture 

agreement controlling Plaintiff’s termination by TXU and offer of employment from Capgemini, 

(2) shared human resources policies and personnel, and (3) the fact that the May 18, 2004 letter 

referred to the joint venture as having been entered into by TXU Corporation “along with its 

subsidiaries,” thus allegedly proving that Reilly was in fact terminated by TXU Corporation. 

Though some of these facts indicate a degree of interrelated operations, the totality of the 

circumstances does not overcome the strong presumption of separate entity status. 

1. The Contract Between TXU Energy and Capgemini

It is uncontroverted that Plaintiff’s termination by TXU Business and subsequent hiring 

by Capgemini was affected by contracts between Capgemini and TXU Energy.16 Plaintiff has 

produced only the cover and a single page of the “Master Agreement” between TXU Energy and 

Capgemini, from which Plaintiff argues as follows: (1) Plaintiff’s termination was governed by 

contracts between Capgemini and two TXU subsidiaries that were not Plaintiff’s employer; (2) 

the only apparent connection between Plaintiff’s employer, TXU Business, and TXU Energy was 

that both are subsidiaries of TXU Corporation; and (3) therefore, TXU Corporation must be 

making the employment decisions at the heart of this suit. The bare inference Plaintiff draws is 

insufficient to support Plaintiff’s theory. It certainly does not constitute evidence of involvement 

by TXU Corporation which overcomes the presumption of separate entity status between TXU 

Corporation and TXU Business. TXU Business had previously performed services for TXU 

 

16 The Defendants state that TXU Electric Delivery Company was also a party, but the cover page of the contract 

submitted only refers to TXU Energy Company, LLC. See App. 12. 

 

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Energy, which TXU Energy was choosing to have performed instead by Capgemini. The TXU 

Business employees, including Plaintiff, would thus no longer be performing those services for 

TXU Business. Nothing the Plaintiff has produced implicates TXU Corporation in that action.17

2. Shared Corporate Resources

Plaintiff next argues that because TXU Corporation and TXU Business shared human 

resources policies and personnel, the required nexus between TXU Corporation and the daily 

employment decisions of TXU Business has been established. Viewing the evidence in the light 

most favorable to the Plaintiff, such resource pooling is of little significance to whether TXU 

Corporation actually made the personnel decisions that led to Plaintiff’s claims. Plaintiff has 

identified some shared human resources personnel who handled “issues among all of [TXU’s] 

affiliates,” yet the human resources representative who participated in Plaintiff’s initial interview 

for the Strategic Sourcing Manager position worked only for departments within TXU 

Business.18 Further, neither party disputes that Debbie Dennis, Vice President of TXU Business’ 

Procurement Department, made the final hiring decision for the Strategic Sourcing Manager 

position. There is no evidence that final decision-making authority for that placement rested 

with anyone other than management of TXU Business.19

Because the Strategic Sourcing Manager’s responsibilities included working with TXU 

Corporation and various TXU subsidiaries, Plaintiff suggests that TXU Corporation and its 

 

17 The Court notes an inconsistency with the evidence regarding who notified Capgemini about Reilly’s refusal to 

sign the release. Defendant states that TXU Energy notified Capgemini pursuant to a contractual obligation, and the 

affidavit of Deborah Dennis, Vice President of TXU Business, supports this account. However, in an affidavit, 

Molly Thompson, who identifies herself as an employee of “TXU Power” (an entity the Court could not find 

otherwise mentioned in the cited evidence), states that she notified Capgemini of Reilly’s refusal to sign the release. 

 The Court has no other evidence regarding what role, if any, “TXU Power” assumed in the events in question. 

There is no evidence that Thompson was ever employed by TXU Corporation. 18 Gano Deposition 12:12-17 (App. 024). Mary Gano stated in her deposition that she “worked within Business 

Services, which [she] thought was a part of TXU Corp.” and that “Corporate was the umbrella and Business 

Services was part of that umbrella.” Id. at 11: 2-11. That testimony does not prove the point Plaintiff argues. 

19 Johnson, 398 F.3d at 333. 

 

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subsidiaries were operating as a single enterprise. Actually, the fact that TXU Business created a 

position designed to interface with TXU Corporation and its subsidiaries tends to indicate a 

separation of the entities, rather than a single enterprise. 

3. Letter of Termination and Waiver of Liability

Finally, Plaintiff points to the termination letter coming from TXU “along with its 

subsidiaries” and the proffered release of claims against “TXU Corp and/or TXU Business 

Services Company” as evidence that TXU Corporation and TXU Business are a single business 

enterprise. These documents show no more than the general oversight approved of in Lusk or the 

common management found acceptable in Johnson, and do not show functionally integrated 

business operations like those in Trevino. 

Conclusion 

Plaintiff has not overcome the strong presumption against single enterprise liability. 

Though the entities shared some resources, there is no evidence that TXU Corporation was 

actively involved in the day to day management of TXU Business or was “the final decisionmaker in connection with the employment matters underlying the litigation.” Accordingly, TXU 

Corporation cannot be held liable for Plaintiff’s claims. TXU Corporation’s Motion for 

Summary Judgment is GRANTED. 

SO ORDERED. 

March 31, 2009. 

 

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