Opinion ID: 3012788
Heading Depth: 2
Heading Rank: 1

Heading: Is the Number of Employees a Jurisdictional

Text: Requirement? We first address whether Title VII’s fifteen-employee threshold is a jurisdictional prerequisite — as the District Court believed it was in dismissing Nesbit’s complaint pursuant to Rule 12(b)(1) — or whether it is a substantive element of a Title VII claim. Whether an aspect of a claim concerns subject matter jurisdiction or the merits has at least three implications. First, because subject matter jurisdiction is non-waivable, courts have an independent obligation to satisfy themselves of jurisdiction if it is in doubt. See Mt. Healthy City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S. 274, 278 (1977). A necessary corollary is that the court can raise sua sponte subject-matter jurisdiction concerns. Second, if the fifteen-employee requirement is not jurisdictional, a Title VII claim for which the number of employees is in doubt nonetheless will support supplemental jurisdiction under 28 U.S.C. § 1367 over state claims. Da Silva v. Kinsho Int’l Corp., 229 F.3d 358, 362 & 365 (2d Cir. 2000); 13B Wright, Miller & Cooper, Federal Practice and Procedure § 3564, at 73-5 (2d ed. 1984). Third, 6 in most contexts the question will be important to the plaintiff ’s burden of proof. If an aspect of a claim concerns jurisdiction, and when jurisdiction turns on whether a particular fact is true as here (as opposed to whether the complaint sufficiently alleges jurisdiction on its face), a court may inquire into the jurisdictional facts without viewing the evidence in a light favorable to either party. See Mortensen v. First Fed. Sav. & Loan Ass’n, 549 F.2d 884, 891 (3d Cir. 1977). By contrast, if an aspect of a claim concerns the merits, on a Rule 12(b)(6) motion to dismiss for failure to state a claim a court must accept the complaint’s allegations as true, United States Express Lines Ltd. v. Higgins, 281 F.3d 383, 388 (3d Cir. 2002); on a Rule 56 motion for summary judgment it must view the evidence in the light most favorable to the non-moving party and, if there are disputes over genuine issues of material fact, they are for the jury to resolve, Huang v. BP Amoco Corp., 271 F.3d 560, 564 (3d Cir. 2001).
The question whether Title VII’s fifteen-employee threshold is a jurisdictional prerequisite when a plaintiff brings a colorable Title VII claim has divided the courts of appeals.3 The Second and Seventh Circuits conclude that it is a substantive element that the plaintiff must prove unless the claim that there are fifteen employees is so obviously unfounded that it fails to raise a genuine federal controversy. Da Silva, 229 F.3d at 364-65 (2d Cir.); 3. In Walters v. Metropolitan Educational Enterprises, Inc., 519 U.S. 202 (1997), the Supreme Court granted certiorari to decide whether the Seventh Circuit erred in dismissing a Title VII suit for lack of subject matter jurisdiction because the defendant company lacked fifteen employees during the relevant period. The Court reversed and remanded, concluding that the Seventh Circuit had erred in determining the number of employees, but did not address whether the fifteen-employee requirement is jurisdictional or an element of the merits. Id. at 212. Moreover, in Hishon v. King & Spalding, 467 U.S. 69 (1984), the Supreme Court found it “unnecessary to consider the District Court’s invocation of Rule 12(b)(1) [lack of subject matter jurisdiction], as opposed to Rule 12(b)(6) [failure to state a claim]” on a similar issue — whether “Title VII [is applicable] to the selection of partners by a partnership.” Id. at 72-73 & n.2. 7 Johnson v. Apna Ghar, Inc., 330 F.3d 999, 1001-02 (7th Cir. 2003), petition for cert. filed, 72 U.S.L.W. 3021 (U.S. Sept. 2, 2003) (No. 03-354); Papa v. Katy Indus., Inc., 166 F.3d 937, 943 (7th Cir. 1999); Sharpe v. Jefferson Distrib. Co., 148 F.3d 676, 677-678 (7th Cir. 1998). Moreover, the D.C. Circuit has held the Americans with Disabilities Act’s (“ADA”) fifteen-employee threshold an element of the merits. EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 623-25 (D.C. Cir. 1997). In this context, the ADA’s fifteenemployee requirement is in all relevant respects indistinguishable from Title VII’s. By contrast, the Fifth, Sixth, Ninth, Tenth, and Eleventh Circuits have said that the fifteen-employee threshold is jurisdictional. Greenless v. Eidenmuller Enters., Inc., 32 F.3d 197, 198 (5th Cir. 1994); Armbuster v. Quinn, 711 F.2d 1332, 1335 (6th Cir. 1983); Childs v. Local 18, IBEW, 719 F.2d 1379, 1382 (9th Cir. 1983); Owens v. Rush, 636 F.2d 283, 287 (10th Cir. 1980);4 Scarfo v. Ginsberg, 175 F.3d 957, 960 (11th Cir. 1999). Moreover, in Thurber v. Jack Reilly’s, Inc., 717 F.2d 633 (1st Cir. 1983), the First Circuit upheld a district court’s dismissal of a Title VII case for lack of subject matter jurisdiction (although the basis for the District Court’s dismissal in Thurber — lack of jurisdiction or the merits — was uncontested; at issue was the number of employees the employer had). The Fourth Circuit also held that the number of employees is jurisdictional in a case brought under the Family and Medical Leave Act (“FMLA”), a holding that suggests it would deem the number of employees jurisdictional in the Title VII context as well. See Hukill v. Auto Care, Inc., 192 F.3d 437, 441 (4th Cir. 1999) (“A district court lacks subject matter jurisdiction over an FMLA claim if the defendant is not an employer as that term is defined in the FMLA [which defines an employer as “any person . . . who employs 50 or more employees.]”). The division is deeper than merely inter-circuit. Even 4. Likewise, in Trainor v. Apollo Metal Specialties, 318 F.3d 976, 978 n.2 (10th Cir. 2003), the Tenth Circuit held that whether an employer employs fifteen people is a jurisdictional question in a case brought under the ADA. 8 within certain circuits that have held Title VII’s fifteenemployee threshold jurisdictional, there is conflict. While in Owens the Tenth Circuit assumed (without analysis) that the requirement is jurisdictional, in Wheeler v. Hurdman, 825 F.2d 257 (10th Cir. 1987), that Court held that the fifteen-employee threshold is both jurisdictional and “intertwined with the merits of the case,” and therefore should have been resolved as if on the merits. Id. at 259. The Eleventh Circuit is similarly conflicted. In Garcia v. Copenhaver, Bell & Associates, M.D.’s, P.A., 104 F.3d 1256 (11th Cir. 1997), the Court opined that the Age Discrimination in Employment Act’s twenty-employee threshold “goes to the merits of an ADEA case.” Id. at 1258. It reasoned that “the section of the ADEA that provides the substantive relief ” — the section forbidding an employer from discriminating — “is intertwined and dependent on the section of the ADEA that defines the scope of the act” — the section defining “employer” as one who employs more than twenty employees. Id. at 1263. However, in a later case, Scarfo, 175 F.3d 957, the Eleventh Circuit dismissed a plaintiff ’s Title VII claim for lack of subject matter jurisdiction when the defendant fell short of fifteen employees. A third case, Morrison v. Amway Corp., 323 F.3d 920 (11th Cir. 2003), recognized this intra-circuit conflict and essentially joined both camps. It stated that, in the FMLA context, a fifty-employee threshold “implicate[s] both jurisdiction and the underlying merits.” Id. at 929 (emphasis added). However, it held that Garcia correctly disposed of the issue as a matter of procedure: “the district court was required to find that jurisdiction exists and deal with the objection as a direct attack on the merits of plaintiff ’s case” because of the degree to which the jurisdictional and merits inquiries were intertwined. Id. at 929-30 (internal quotation marks omitted).5 5. Moreover, all the circuits that have held the fifteen-employee threshold jurisdictional have also stated — in the same case or in other cases — that “where the jurisdictional facts are intertwined with the facts central to the merits of the dispute[,] [i]t is the better view that . . . the entire factual dispute is appropriately resolved only by a proceeding on the merits.” Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982); see Clark v. Tarrant County, Texas, 798 F.2d 736, 741-42 (5th Cir. 1986); Gould, 9 2. Title VII’s Fifteen-Employee Requirement is an Element of the Merits With this conflict in mind, we begin our determination by noting that subject matter jurisdiction is the “courts’ statutory or constitutional power to adjudicate” particular cases. Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 89 (1998) (emphasis in original). Steel Co. requires that courts normally should not conflate subject matter jurisdiction with elements of an action’s merits. The Supreme Court held that the elements of another federal statute — the Emergency Planning and Community RightTo-Know Act of 1986 (“EPCRA”), 42 U.S.C. § 11046(a)(1) — are not jurisdictional prerequisites. Steel Co., 523 U.S. at 90-93. In relevant part, EPCRA requires users of specified hazardous chemicals to file annual reports detailing their chemical inventories, waste-disposal methods, and recent releases of chemicals from their facilities into the environment, and provides that the “district courts shall have jurisdiction in actions brought under subsection (a) of this section against an owner or operator of a facility to enforce the requirement concerned and to impose any civil penalty provided for violation of that requirement.” 42 U.S.C. § 11046(c). The Steel Co. plaintiff, a group to protect environmental rights, sued a Chicago manufacturer and asserted past violations of EPCRA. After being notified that it was in arrears on its filings, the manufacturer filed all the overdue reports. The plaintiff nonetheless continued its suit, seeking relief for past reporting violations. The District Court concluded that EPCRA does not support suits for past violations and therefore dismissed the plaintiff ’s complaint under both Rules 12(b)(1) and 12(b)(6). The Court of Appeals for the Fourth Circuit reversed, holding that EPCRA permits such suits. The Supreme Court determined that the case raised (1) whether Inc. v. Pechiney Ugine Kuhlmann, 853 F.2d 445, 451 (6th Cir. 1988); Timberlane v. Bank of Am., 749 F.2d 1378, 1381 (9th Cir. 1984), overruled on other grounds by Hartford Fire Ins. Co. v. California, 509 U.S. 764 (1993); Wheeler v. Hurdman, 825 F.2d at 259; Morrison v. Amway Corp., 323 F.3d at 929. These cases highlight the unsettled nature of the merits/jurisdictional question. 10 the plaintiff had constitutional standing and (2) whether allegations of past violations state a cause of action under EPCRA, Steel Co., 523 U.S. at 88. As to the latter, the Court decided that the past violations question was on the merits and not a jurisdictional requirement. Id. at 110. In so doing, Steel Co. rejected attempts to portray the requirement to prove all elements of a cause of action as relevant to federal courts’ jurisdiction to hear a suit. The Court reasoned that “[i]t is firmly established in our cases that absence of a valid (as opposed to arguable) cause of action does not implicate subject matter jurisdiction.” Id. at 89. On the contrary, ‘[j]urisdiction . . . is not defeated . . . by the possibility that the averments might fail to state a cause of action on which petitioners could actually recover.’ Rather, the district court has jurisdiction if ‘the right of the petitioners to recover under their complaint will be sustained if the Constitution and laws of the United States are given one construction and will be defeated if they are given another . . . .’ Id. at 89 (quoting Bell v. Hood, 327 U.S. 678, 685 (1946)). The Court also criticized the implications of treating the validity of a cause of action as jurisdictional. Id. at 92-93. Under that approach, each element of every cause of action would have a legitimate claim to being a jurisdictional requirement — essentially eviscerating the distinction between the jurisdictional and merits inquiry (and requiring a court to dismiss a claim for lack of jurisdiction whenever the plaintiff does not prevail). The Court made plain, however, that subject matter jurisdiction is lacking if the alleged basis for jurisdiction “clearly appears to be immaterial and made solely for the purpose of obtaining jurisdiction or where such a claim is wholly insubstantial or frivolous.” Id. at 89. We presaged Steel Co. in a case decided five years earlier. In Growth Horizons, Inc. v. Delaware County, 983 F.2d 1277, 1280-81 (3d Cir. 1993), the District Court dismissed a claim under the Fair Housing Act for lack of subject matter jurisdiction. The Fair Housing Act makes it unlawful, inter alia, “[t]o discriminate in the sale or rental, 11 or to otherwise make unavailable or deny, a dwelling to any buyer or renter because of a handicap.” 42 U.S.C. § 3604(f)(1). The District Court concluded that the defendant did not “make unavailable or deny” housing to the plaintiff and that the Fair Housing Act was therefore not implicated. We reversed, holding that “[a] district court has federal question jurisdiction in any case where a plaintiff with standing makes a non-frivolous allegation that he or she is entitled to relief because the defendant’s conduct violated a federal statute.” Growth Horizons, 983 F.2d at 1281. We further explained that “[d]ismissal for lack of jurisdiction is not appropriate merely because the legal theory alleged is probably false, but only because the right claimed is ‘so insubstantial, implausible, foreclosed by prior decisions of this Court, or otherwise completely devoid of merit as not to involve a federal controversy.’ ” Id. at 128081 (citing Kulick v. Pocono Downs Racing Ass’n, 816 F.2d 895, 899 (3d Cir. 1987) (quoting Oneida Indian Nation v. County of Oneida, 414 U.S. 661, 666 (1974))); see also 2 Moore’s Federal Practice § 12.30[1], at 12-36 (3d ed. 2000) (“Subject matter jurisdiction in federal-question cases is sometimes erroneously conflated with a plaintiff ’s need and ability to prove the defendant bound by the federal law asserted as a predicate for relief — a merits-related determination.”).6 6. The Restatement (Second) of Judgments: Subject Matter Jurisdiction § 11 (1982) also addresses the question whether an issue affects subject matter jurisdiction or the merits, ultimately concluding that there is no principled way to distinguish between the two. It notes that “[t]here is a strong tendency in procedural law to treat various kinds of serious procedural errors as defects in subject matter jurisdiction . . . because characterizing a court’s departure in exercising authority as ‘jurisdictional’ permits an objection to the departure to be taken belatedly.” Restatement (Second) of Judgments: Subject Matter Jurisdiction § 11 cmt. e. Relevant to the question here, it goes on to note that [t]he difficult problems are encountered when the issues on which the court’s subject matter jurisdiction depends are not so clearcut. [For example,] if the court has jurisdiction of actions of more than a specified amount, there can be uncertainty in whether a particular claim exceeds that amount. The problem can be particularly difficult 12 Turning to Title VII, we note that those courts that have held the fifteen-employee requirement jurisdictional have provided no reasons for their holding; rather, they have assumed it so or stated the conclusion without meaningful analysis. Moreover, in reading 42 U.S.C. § 2000e(b) we perceive no congressional intent to make the requirement jurisdictional. Indeed, Title VII contains an explicit jurisdictional section, § 2000e-5(f)(3), which provides that “[e]ach United States district court and each United States court of a place subject to the jurisdiction of the United States shall have jurisdiction of actions brought under this subchapter.” By contrast, § 2000e(b) — in which the fifteenemployee requirement appears — is a definitional section, defining “employer.” We doubt that Congress intended this definitional section to have subject matter jurisdictional import. If Congress had so intended, we believe its intention would be clearer. Notably, § 2000e(b) does not even contain the word “jurisdiction.” Compare 28 U.S.C. § 1331 (“The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.”); id. § 1332 (explicitly making diverse citizenship and a $75,000 amount-in-controversy jurisdictional prerequisites). Moreover, congressional debate (albeit postdating the requirement that an “employer” have more than fifteen employees) reveals that at least some legislators regard the fifteen-employee minimum not as jurisdictional but as an element of the cause of action. See 137 Cong. Rec. H9505-01 (Daily ed. Nov. 7, 1991) (statement of Rep. Brooks) (“[W]hen a company has less than 15 employees, there are no damages available whatsoever because there is no cause of action under our current antidiscrimination statutes.”). when the issue determining subject matter jurisdiction parallels an issue going to the merits. Id. In those cases the Restatement concludes that “the matter in question can plausibly be characterized either as going to subject matter jurisdiction or as being one of merits or procedure.” Id. 13 3. Most Plausible Arguments for Making Fifteen- Employee Requirement Jurisdictional
Perhaps the most plausible reason for finding that the fifteen-employee requirement is jurisdictional is that it concerns a “dispute[ ] as to the existence of a fact that is essential to a constitutional exercise of Congress’s power to regulate.” Da Silva, 229 F.3d at 363 (suggesting this as a situation “[l]ess clearly placed on one side of the jurisdiction/merits line”). As discussed, Title VII applies to “employers” and defines an “employer” (in relevant part) as “a person engaged in an industry affecting commerce who has fifteen or more employees.” 42 U.S.C. § 2000e(b). Because Congress enacted Title VII under its Commerce Clause power, EEOC v. Ratliff, 906 F.2d 1314, 1315-16 (9th Cir. 1990), the requirement that an employer be “in an industry affecting commerce” is the statute’s constitutional basis. And because the requirements that the employer be “in an industry affecting commerce” and that the employer have “fifteen or more employees” appear side by side in the statute, it is arguably reasonable to read § 2000e(b)’s “fifteen employee” minimum as relevant to Title VII’s Commerce Clause basis as well. That is, one might read the fifteen-employee threshold as reflecting Congress’s determination that only those companies with fifteen or more employees have the requisite substantial effect on interstate commerce to permit Congress to enact the statute. See Legislative History of Titles VII and XI of Civil Rights Act of 1964, at 2108 (1964) (“The bill proceeds upon a theory . . . that the quantum of employees is a rational yardstick by which the interstate commerce concept can be measured.”) (separate minority views of Reps. Poff and Cramer, Members, House Comm. on the Judiciary); cf. Willis v. Dean Witter Reynolds, Inc., 948 F.2d 305, 311 (6th Cir. 1991) (noting “Congress’s determination in Title VII that any employer with 15 or more employees necessarily implicates interstate commerce”); Ratliff, 906 F.2d at 1317 (“[I]t is difficult to imagine any activity, business or industry employing 15 or more employees that would not in some degree affect commerce among the states.”) (quoting A. 14 Larson & L.K. Larson, Employment Discrimination § 5.31, at 2-40 (1987)). This argument, while well-made, nonetheless is unconvincing. First, the very wording of 42 U.S.C. § 2000e(b) suggests that the requirements that an employer be “in an industry affecting commerce” and have “fifteen or more employees” are separate and independent, and that it is a mistake to conflate the two. Even if a putative employer has twenty employees, it is not covered by Title VII if not in an industry affecting commerce. Second, while the preceding Commerce Clause-based justification for Title VII’s fifteen-employee requirement makes intuitive sense, it finds little support in the legislative history. We note that the 1972 amendments to Title VII lowered the minimum number of employees from twenty-five to fifteen. Patricia Davidson, Comment, The Definition of “Employee” Under Title VII: Distinguishing Between Employees and Independent Contractors, 53 U. Cin. L. Rev. 203, 206 (1984) (noting this change). It lacks logic that, pre-1972, Congress believed that it took twenty-five employees for a substantial effect on interstate commerce but changed its mind in 1972. Furthermore, as initially proposed, the 1972 amendment to Title VII contained an eight-employee threshold. See Armbruster, 711 F.2d at 1337 n.4. The threshold was ultimately raised to fifteen employees as the result of a political compromise, see id., in order (among other reasons) “to protect ethnic businesses and small businesses.” Davidson, supra, at 206 & n.23. Thus, the fifteen-employee threshold appears motivated by policy — to spare small companies the expense of complying with Title VII — rather than Commerce Clause considerations. Even assuming that Congress lacks authority to enact a statute does not mean that a federal court lacks jurisdiction to review actions brought under that statute. When disposing of a claim brought under an unconstitutional statute, courts ordinarily deny the claim on the merits, on the ground that the statute under which relief is sought is unconstitutional, rather than for lack of subject matter jurisdiction. Martin v. United Way of Erie County, 829 F.2d 445, 447 (3d Cir. 1987); Kulick v. Pocono Downs Racing Ass’n, Inc., 816 F.2d 895 (3d Cir. 1987) 15 (noting the difference between congressional jurisdiction and federal courts’ Article III jurisdiction, and concluding that “[e]lements of a claim that are called jurisdictional because they relate to Congress’s jurisdiction remain questions of the merits”); see also Plaut v. Spendthrift Farm, Inc., 789 F. Supp. 231 (E.D. Ky. 1992), aff ’d, 1 F.3d 1487 (6th Cir. 1993), aff ’d, 514 U.S. 211 (1995). b. Jurisdictional Statements in Other Supreme Court Cases EEOC v. Arabian American Oil Co., 499 U.S. 244 (1991), can be read to suggest that the fifteen-employee requirement is jurisdictional. In that case, the Supreme Court decided whether Title VII “applies extraterritorially to regulate the employment practices of United States employers who employ United States citizens abroad.” Id. at 246. The Court addressed the question not as whether Title VII granted plaintiffs a cause of action for extraterritorial violations, but rather whether Title VII granted extraterritorial jurisdiction, see id. at 250, and affirmed the dismissal of the complaint for lack of jurisdiction. Id. at 259. In Arabian American Oil Co., however, a policy consideration — namely, the significant effect extraterritorial application of U.S. law might have on international relations — favored viewing the extraterritoriality question as one of jurisdiction. That is, even if parties did not raise the question of Title VII’s extraterritorial application, Congress would likely have intended courts to raise the issue sua sponte in the interest of harmonious international relations. Such concerns of international comity are not present here. By analogy, some may find EEOC v. Commercial Office Products Co., 486 U.S. 107 (1988), to counsel for finding jurisdictional the fifteen-employee requirement. In that case, the Supreme Court stated that “Title VII does not give the EEOC jurisdiction to enforce the Act against employers of fewer that 15 employees.” Id. at 119 n.5. But this does not address the question before us. Title VII grants the EEOC power “to prevent any person from engaging in any unlawful employment practice.” 42 U.S.C. § 2000e-5(a). Thus, if an entity (a “person” under the statute) employs 16 fewer than fifteen employees, by § 2000e-5(a)’s terms, the EEOC lacks power (jurisdiction). By contrast, Title VII’s jurisdictional grant to the federal courts is broader. See id. § 2000e-5(f)(3) (“Each United States district court and each United States court of a place subject to the jurisdiction of the United States shall have jurisdiction of actions brought under this subchapter.”). 4. Judicial Administration Reasons for Fifteen-Employee Requirement Being an Element of a Title VII Claim rather than a Jurisdictional Requirement As a policy matter — which is ultimately the gut of our inquiry — it also makes little sense to regard the fifteenemployee threshold as jurisdictional. Such a holding would require a federal court to determine whether a company had fifteen employees during the relevant period, even if the parties so stipulated. To require a federal court to engage in such a fact-intensive inquiry sua sponte — which might in some cases require a federal appellate court to dig through an extensive record, including pay stubs and time sheets — appears to be a waste of scarce judicial resources, and we doubt that Congress intended such a result. See Da Silva, 229 F.3d at 365 (“[I]nstitutional requirements of a judicial system weigh in favor of narrowing the number of facts or circumstances that determine subject matter jurisdiction.”); Sharpe, 148 F.3d at 678 (“Surely the number of employees is not the sort of question a court (including appellate court) must raise on its own . . . .”). To hold the requirement jurisdictional also implies that a court would need to decide whether an entity employed more than fifteen individuals before reaching a Title VII action’s merits — even if the merits were more easily resolved than the “jurisdictional” question. Steel Co., 523 U.S. at 94-95. This result too is undesirable.