this case under Title VII or under an “alter ego” theory. As a general rule, individual
supervisors, official and employees cannot be held personally liable for actions which subject the
employer to Title VII liability. See Silk v. City of Chicago 194 F.3d. 788. 797 n. 5 (7". Cir.
1999). In EEOC v, AIC Security, 55 F. 3d 1276, 1279-80 (7th Cir. 1995) (American with
Disabilities Act (“ADA”)) while not deciding the issue, the Seventh Circuit stated that it would
deny an ADA claim purporting individual liability of the owner and sole shareholder of a
company:

[W]e see no good reason why it should make any difference for our analysis

whether Vrdolyak [AIC’s owner and sole shareholder] was AIC’s alter ego. She

might be effectively liable if the corporate veil were pierced, and as sole

shareholder, she will necessarily absorb the pinch from AIC’s liability, but as to

her individual capacity liability, it does not matter even if she was AIC’s alter ego.

AIC Security, 55 F. 3d at 1282, n. 11.

Furthermore, in AIC Security, the Seventh Circuit found that arguments regarding
individual liability and the definition of “employer’ in ADA, Title VIL, and ADEA cases are
interchangeable. See Id. at 1279-80.

Moreover, other courts have determined that individuals cannot be “employers” under
Title VII. See Gastineau v. Fleet Mortgage Corp. 137 F. 3d 490, 493-94 (7th Cir. 1998) and
Sullivan v. Presstronics, Inc., 1997 WL 327126 (N.D. Ill. 1997)(Aspen)(citing Williams v.
Banning, 72 F. 3d 552 at 554-555)(dismissing Tile VII claim against an owner of a small, closely
held business because there is no owner exception to the rule that supervisors cannot be held
liable under Title VI).

Plaintiff, on the other argues that “[a]n individual qualifies an ‘employer’ under Title VII

is he or she serves in a supervisory position and exercises significant control over the plaintiff's


YW

protection of the Illinois Business Corporation Act because Lamm is the alter-ego of Magnum;
having the authority to higher and fighter employees and ultimate authority to make all business
decisions. The complaint further alleges that Lamm uses Magnum as a fiction for his personal
use, that he spends the funds from the employee profit-sharing fund and money from related and
subsidiary companies for his own personal uses.

DISCUSSION

In ruling on motion to dismiss pursuant to Fed.R.Civ. P. 12(b)(6), the court must assume
the truth of all alleged in the complaint, construing the allegations liberally and viewing them in
the light most favorable to the plaintiff. See. e.g., McMath v. City of Gary, 976 F.2d. 1026, 1031
(7". Cir. 1992). Gillman v. Burlington N. R.R. Co., 878 F.2d. 1020, 1022 (7". Cir. 1989).
Dismissal is properly granted only if it is clear that no set of facts which the plaintiff could prove
consistent with the pleadings would entitle the plaintiff to relief. Conley v. Gibson, 355 U.S.
41,45-46 (1957); Kinik v. Racine County, Wis. 946 F.2d. 1574, 1579 (7". Cir. 1991), Citing
Hishon y. King & Spalding, 467 U.S. 69, 73 (1984).

The court will accept all well-pled factual allegations in the complaint as true. Miree v.
DeKalb County, 433 U.S. 25, 27 n. 2 (1977). In addition, the court will construe the complaint
liberally and will view the allegations in the light most favorable to the non-moving party.
Craigs, Inc. v. General Electric Capital Corp.,12 F.3d. 686, 688 (7". Cir. 1993). However, the
court is neither bound by the plaintiff's legal characterization of the of the facts, nor required to
ignore facts set forth in the complaint that undermine the plaintiff's claims. Scott v. O’Grady,
975 F.2d. 366, 368 (7"". 1992).

Defendant Lamm first argues that he cannot be held liable individually as a defendant in


conditions of employment. In support of her argument plaintiff relies on Compton v. Chinn
Enterprises, Inc. 957 F. Supp. 139, 141 (N.D. Ill. 1997) and Curcio v. Chinn Enterprieses, Inc.
887 F. Supp. 190, 193 (N.D. Ill. 1995)(holding that individual, as president, controlling
shareholder, and head of managment with supervisory authority, can be held liable as an
“employer” under Title VII because he is the “alter ego” of the corporation). In Curcio, however,
the district court recognized that “[a]lthough the Seventh Cirucit’s recent holding [in AJC
Security]does not expressly address this type of “alter ego” argument, the court commented on
the validity of such an argument in a footnote, indicating that it would be inclined to reject
individual liablity founded on an alter ego theory.” Curcio, 887 F. Supp. at 193. Despite AJC
Security’s dict the Curcio court found the “alter ego” theory viable, Plaintiff also relies on
Montague v. James Pocrnick and Professional Bank, 224 F. 3d 1224 (10th Cir 2000).

Clearly, if the allegations in the complaint are proven true and defendant Lamm is using
the corporation as his alter ego, then ordinarily he would be personally liable for the
corporation’s sins. The question is, does the Seventh Circuit’s footnote in EEOC v. AIC Security
announce an intention to create an exception to this general rule regarding the piercing of the
corporate veil. Certainly the first sentence in the quote above ([ W]e see no good reason why it
should make any difference for our analysis whether Vrdolyak [AIC’s owner and sole
shareholder] was AIC’s alter ego.) would seem to so indicate. However, in EEOC v, AIC Security
plaintiff did not attempt to pierce the corporate veil. The issue their was strictly whether or not,
given a valid and viable corporation, there existed individual capacity liability as to AIC’s owner
and sole shareholder. Thus the court was not discussing a situation in which the alter ego theory

had actually been proven and the corporate veil pierced. The court’s next statement in the


‘Minute Order Form,(06/97)

United States District Court, Northern District of Illinois

Ni f Assigned Jud; Sitting Judge if Oth
ir Magistrate Judge Ronald A. Guzman than Asgned Sedge
CASE NUMBER 00 C 6658 DATE 7/26/2001
CASE LOREDANA SANCHEZ vs. MAGNUM INSURANCE AGENCY CO. INC. et
TITLE

[In the following box (a) indicate the Party filing the motion, e.g,, plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the

nature of the motion being presented.)

(11)

MOTION:

DOCKET ENTRY:

(1) o Filed motion of [ use listing in “Motion” box above.]

(2) Brief in support of motion due

(3) QO Answer brief to motion due___. Reply to answer brief. due.

(4) Q Ruling/Hearingon___setfor___—_at.

(5) o Status hearing[heid/continued to} [set for/re-set forlon____setfor__—_att

(6) im Pretrial conference[held/continued to] [set for/re-set for}on___setfor___—_at __

(7) QO Trial{set for/re-set for]on___—__at

(8) o [Bench/Jury trial] [Hearing] held/continued to __at

(9) a This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OFRCP4(m) OGeneralRule21 0 FRCP41(a)(1) © FRCP41(a)(2).

(0) «of [Other docket entry] | ENTER MEMORANDUM OPINION AND ORDER: Defendant Craig

Lamm’s motion to dismiss is denied [9-1].

a [For further detail see order attached to the original minute order.]

No notices required, advised in open court.

No notices required. numberof notices

Notices mailed by judge’s staff.

Notidcomd tytn JUL 2.0. 2861

Docketing to mail notices. @
Mail AO 450 form.

Copy to judge/magistrate judge. 3+!

0} JUL
courtroom
TBK deputy’s
initials

date mailed notice

Date/time received in -
central Clerk’s Office ‘mailing deputy initials



footnote (She might be effectively liable if the corporate veil were pierced...) would seem to
indicate that such an individual might very well be liable if the corporate veil were to be pierced.
In such a case the liability would not be based upon the individual defendant’s status as
employer, but solely on his status as the alter ego of the corporate employer. Such a
determination would not seem to violate any of the policy considerations which underlie
restricting liability to “employers” and would seem to be in keeping with all of the well-
established policy considerations for holding individuals responsible for the acts committed by
the corporations they control when the corporate formalities have been so abused that the
corporation is no longer entitled to legal recognition as a separate entity. Insofar as we can tell
this precise issue has not been ruled upon by the Seventh Circuit.

Absent a clear declaration that our Circuit Court intends to carve out a special exception
to the general rule which allows the piercing of the corporate veil were the facts so warrant , the
court finds that Lamm can be held liable if, as the complaint alleges, the corporate veil is pierced.
Thus, the court denies Lamm’s motion to dismiss.

CONCLUSION

For the reasons set forth above Lamm’s motion to dismiss is denied (#9-1).

SO ORDERED ENTERED: t/a 4/oT

Ahalh lL haan.

Nv
HON. RONALD A. cuzmad
United States Judge



IN THE UNITED STATES DISTRICT COURT DOCKETED

FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION JUL 3 0 2001

LOREDANA SANCHEZ )
)
)
Plaintiff, )

) No. 00 C 6658

v. y Judge Ronald A. Guzman

)
)
MAGNUM INSURANCE AGENCY )
CO., INC. and CRAIG LAMM, y
)
)
Defendants. )

MEMORANDUM OPINION AND ORDER

This action is brought under Title VII of the Civil Rights Act of 1964, 42 U.S.C.
§2000(e), et seg., as amended by the Civil Rights Act of 1991 (“Title VII”). In her First
Amended Complaint, Plaintiff, Ms. Sanchez, alleges, in essence, that Defendant Magnum
Insurance Agency Co., Inc. discriminated against her on the basis of her sex when she was
allegedly sexually harassed by Defendant Craig Lamm. Pending is Defendant Craig Lamm’s
motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6). For the reasons set forth below this
motion is granted.

BACKGROUND FACTS

The complaint alleges the following facts, which are taken as true for the purpose of this
motion to dismiss: Plaintiff was hired by Defendants in February, 2000 and was discharged on

or about March 7, 2000. On Plaintiff's second day of work, Plaintiff was instructed by her


supervisor to provide Defendant Craig Lamm (“Lamm”) nursing care in his home. Plaintiff was
told that Lamm was having outpatient surgery on one of his eyes and needed someone to assist
him in his private home during his recovery. The following day, at Plaintiff’s supervisor’s
direction, Plaintiff met Lamm at the clinic where he was having surgery. Among other things,
Lamm asked Plaintiff to give him a head massage to help him to relax prior to surgery. Lamm
asked Plaintiff to stay near him and hold his hand. After the surgery Plaintiff was told by her
supervisor to accompany Lamm back to his apartment. That same night, at Lamm’s apartment,
Lamm sexually harassed and sexually assaulted Plaintiff by engaging in the following:
a. Groping Plaintiffs body and breasts;
b. Undressing in front of Plaintiff and repeatedly exposing his penis to
Plaintiff in a sexual manner;
c. Removing his shirt and pants in front of Plaintiff in a sexual way and
asking Plaintiff to give him a massage;
d. Continually calling Plaintiff “love” and telling Plaintiff that she should be
his girlfriend.

e. Grabbing Plaintiff’s hands and forcing her hands to his chest to give him a

chest massage;

f. While he was naked, asking Plaintiff if she would accompany him to bed.

Plaintiff felt threatened, intimidated and scared by Lamm’s harassing conduct. Plaintiff
told Lamm to stop his offensive and sexually harassing conduct, but Lamm refused.

At approximately 2:30 a.m. that same night, Plaintiff telephoned her supervisor about
Lamm’s sexually harassing conduct and stated that she believed that she was being sexually
harassed. Despite her complaints, Defendants failed to adequately investigate, remedy and/or
take any corrective action regarding the sexual harassment she was subjected to.

The complaint also alleges that defendant Lamm was at all times relevant and officer of

and principal shareholder in the defendant corporation. That Lamm is not entitled to the