Opinion ID: 2362920
Heading Depth: 2
Heading Rank: 1

Heading: Integrated Enterprise Theory

Text: [¶ 6] Denny's contends that the court erred when it instructed the jury as to the integrated enterprise theory. [3] The court gave the following instruction to the jury regarding the theory: The plaintiff alleges that the defendants are an integrated enterprise, which means that they would be treated as a single employer. The plaintiff bears the burden of proving this allegation by a preponderance of the evidence. In determining whether the defendants are an integrated enterprise, you should consider the relationship among the defendants, including the extent to which there is, number one, the interrelation of operations, including such things as shared employees, services, records, office space and equipment, [commingled] finances, and common handling of tasks such as payroll, books, and tax returns. Number two, common management, such as where an individual or group of individuals controls all the businesses and serves as an officer or director for each of them. Number three, centralized control of labor relations such as where a single entity maintains personnel records for each of the companies, where the companies have a shared personnel department, or where the same persons make employment decisions for all entities, and the entities share a universal personnel handbook, and number four, common ownership. You should consider these factors in determining whether the plaintiff has proven that the defendants are an integrated enterprise. Of these factors, however, the most important consideration is whether the businesses have centralized control of labor relations. We review the trial court's jury instructions for prejudicial error to determine whether the court correctly and fairly informed the jury as to all necessary aspects of the applicable law. Lee v. Scotia Prince Cruises Ltd., 2003 ME 78, ¶ 15, 828 A.2d 210, 214. [¶ 7] The court's jury instruction on an integrated enterprise was based on the theory as set forth in Romano v. U-Haul Int'l, 233 F.3d 655 (1st Cir.2000). In Romano, the United States Court of Appeals for the First Circuit set out the four-factor integrated enterprise test, originally developed pursuant to the National Labor Relations Act, 29 U.S.C.S. § 164 (LexisNexis 1993 & Supp. 2006), and which is used to determine if interrelated companies should be treated as one entity. Romano, 233 F.3d at 662. The test involves an analysis of four factors: (1) interrelation of operations; (2) common management; (3) centralized control of labor relations; and (4) common ownership. Id. Among these factors, control of employment decisions is a primary consideration in evaluating employer status, but only to the extent that the parent exerts an amount of participation [that] is sufficient and necessary to the total employment process, even absent total control or ultimate authority over hiring decisions. Id. at 666 (quotation marks omitted) (alteration in original). [¶ 8] The integrated enterprise theory has been adopted and/or applied by a number of other jurisdictions, including the majority of the federal circuits. See, e.g., Knowlton v. Teltrust Phones, Inc., 189 F.3d 1177, 1184 (10th Cir.1999); Swallows v. Barnes & Noble Book Stores, Inc., 128 F.3d 990, 993-94 (6th Cir.1997); Cook v. Arrowsmith Shelburne, Inc., 69 F.3d 1235, 1240-41 (2d Cir.1995); McKenzie v. Davenport-Harris Funeral Home, 834 F.2d 930, 933 (11th Cir.1987); Childs v. Local 18, Int'l Bhd. of Elec. Workers, 719 F.2d 1379, 1382 (9th Cir.1983); Trevino v. Celanese Corp., 701 F.2d 397, 403-04 (5th Cir. 1983). It has never, however, been adopted as the law of Maine. [¶ 9] Denny's does not dispute that Maine should adopt an integrated enterprise theory; rather, it challenges: (1) the application of the integrated enterprise theory to this case as a matter of law, (2) the four-factor test used by the court in applying the theory, and (3) the application of the theory to this case as a matter of fact. It also contends that the court's jury instruction is not harmless error because the excessive number of defendants held to be liable had an influence on the size of the jury's award of damages. [¶ 10] Denny's, however, failed to make the argument before the trial court that it now makes on appeal, that the integrated enterprise theory should be used only as a jurisdictional test not applicable to these particular defendants. Denny's now contends that the test of the integrated enterprise theory should have been based on Papa v. Katy Indus., Inc., 166 F.3d 937 (7th Cir.1999), [4] rather than on Romano. The purpose of objections to instructions is to assist the trial court in developing the most accurate and concise statement of the law possible for instructing the jury. . . . Clewley v. Whitney, 2002 ME 61, ¶ 10, 794 A.2d 87, 90. Thus, [i]n order to properly preserve a challenge to a jury instruction, a party must not only object but must state distinctly the ground for the objection. Morey v. Stratton, 2000 ME 147, ¶ 9, 756 A.2d 496, 499 (quotation marks omitted). Further, [a] failure to direct the court's attention to the challenged language of a jury instruction or to offer a more acceptable version may render the objection inadequate to preserve the issue for appeal. Id. (quotation marks omitted). [¶ 11] Because Denny's' arguments are not preserved, we review the integrated enterprise instruction only for obvious error. See Estate of Bragdon, 2005 ME 85, ¶ 4, 875 A.2d 697, 699; Morey, 2000 ME 147, ¶ 10, 756 A.2d at 499. We do not now decide whether to adopt the integrated enterprise theory in Maine, nor do we decide what formulation of the theory is preferable. We conclude only that, given the obvious error standard of review we must apply, we cannot say that the court's instruction on an integrated enterprise theory, adopted by numerous jurisdictions and used in matters similar to the present case, amounts to obvious error. [5] Accordingly, we do not disturb the court's judgment awarding compensatory damages.