Opinion ID: 707602
Heading Depth: 2
Heading Rank: 2

Heading: KDT's Liability

Text: 19 In Spirt v. Teachers Ins. & Annuity Ass'n, 691 F.2d 1054 (2d Cir.1982), vacated and remanded on other grounds, 463 U.S. 1223, 103 S.Ct. 3565, 3566, 77 L.Ed.2d 1406 (1983), we held with regard to Title VII that the term employer is sufficiently broad to encompass any party who significantly affects access of any individual to employment opportunities, regardless of whether the party may technically be described as an 'employer' ... at common law. Id. at 1063. However, Spirt involved the relationship between an employer and a third-party insurer, not, as here, a relationship between a corporate parent and a corporate subsidiary. See Spirt, 691 F.2d at 1063 (applying the test to hold that the defendants--independent companies that managed the retirement benefits programs for the staff and faculty at Long Island University--could be held liable as employers under Title VII for their alleged discrimination in the computation of benefits). Other circuits have applied Spirt to the independent contractor context. See Carparts Distrib. Ctr. v. Automotive Wholesalers Assoc. of New England, 37 F.3d 12, 17 (1st Cir.1994) (invoking the Spirt test to hold that trade association and trust could be held liable as an employer under the Americans with Disabilities Act for alleged discrimination against employees with AIDS-related conditions); Doe v. St. Joseph's Hosp., 788 F.2d 411, 424 (7th Cir.1986) (invoking the Spirt test in reversing dismissal of independent contractor physician's Title VII claim against hospital that revoked her staff privileges); see also Sibley Memorial Hosp. v. Wilson, 488 F.2d 1338, 1340-41 (D.C.Cir.1973) (reversing summary judgment for defendant hospital on claim brought by independent contractor/private nurse for hospital's refusal to refer patients to him on the ground that [c]ontrol over access to the job market and power ... to foreclose ... access by any individual to employment opportunities are the key criteria in determining potential Title VII liability of employers). 20 Courts of appeals that have addressed the question of parent-subsidiary liability have adopted a flexible four-part test aimed at determining the degree of interrelationship between the two entities. See, e.g., Armbruster v. Quinn, 711 F.2d 1332, 1337 (6th Cir.1983). Thus, the Fifth Circuit has held that 21 [A] parent and subsidiary cannot be found to represent a single, integrated enterprise in the absence of evidence of (1) interrelation of operations, (2) centralized control of labor relations, (3) common management, and (4) common ownership or financial control. 22 Garcia v. Elf Atochem North America, 28 F.3d 446, 450 (5th Cir.1994) (internal quotation marks omitted); see also Baker v. Stuart Broadcasting Co., 560 F.2d 389, 392 (8th Cir.1977) (applying the four-part test to consolidate two separate corporations as the plaintiff's employer under Title VII). 23 The National Labor Relations Board originally developed this test as a means for ascertaining whether two entities constituted a single employer in the context of labor disputes, and that test was subsequently approved by the Supreme Court in Radio & Television Broadcast Technicians Local Union 1264 v. Broadcast Service of Mobile, Inc., 380 U.S. 255, 85 S.Ct. 876, 13 L.Ed.2d 789 (1965) (per curiam). However, [c]ourts applying this four-part standard in Title VII and related cases have focused on the second factor: centralized control of labor relations. Trevino v. Celanese Corp., 701 F.2d 397, 404 (5th Cir.1983). The Fifth Circuit has held that this criterion has been further refined to the point that the critical question to be answered then is: What entity made the final decisions regarding employment matters related to the person claiming discrimination? Id. (citations and internal quotations omitted); see also Frank v. U.S. West, Inc., 3 F.3d 1357, 1362 (10th Cir.1993) (whether parent controls labor relations is an important factor in the four-part integrated test); Frishberg v. Esprit de Corps, 778 F.Supp. 793, 800 (S.D.N.Y.1991) (single employer doctrine focuses on the degree of control by the parent or related company over the direct employing company), aff'd without opinion, 969 F.2d 1042 (2d Cir.1992). 24 Therefore, as the Sixth Circuit has held, the four-factor test may be satisfied by a showing that there is an amount of participation [that] is sufficient and necessary to the total employment process, even absent total control or ultimate authority over hiring decisions. Armbruster, 711 F.2d at 1338 (citation and internal quotations omitted). 25 We believe that the appropriate test under Title VII for determining when parent companies may be considered employers of a subsidiary's employees is the four-part test adopted by the Fifth, Sixth, and Eighth circuits. We focus our inquiry, as those circuits do, on the second factor, centralized control of labor relations. Applying this test, we conclude that KDT is not entitled to summary judgment because all four factors weigh powerfully in favor of allowing the action against KDT to continue. ASI is a wholly owned subsidiary of KDT. In addition, there is substantial evidence of an interrelation of operations between KDT and ASI. KDT ran ASI in a direct, hands-on fashion, establishing the operating practices and management practices of ASI. Moreover, KDT clearly maintained control of labor relations at ASI. For example, applications for employment with ASI went through KDT; all personnel status reports were approved by KDT; and ASI cleared all major employment decisions with KDT. Indeed, Mary Cook was herself hired as an ASI purchaser by Scott Zinnecker, the vice president of Human Resources at KDT, and was fired at the direction of Lind, who was paid directly by KDT. Finally, KDT and ASI maintained a common management structure. The President of ASI, Gordon Graves, operated out of the Texas office of KDT. There is thus sufficient evidence in the record to preclude summary judgment for KDT. 2 26 KDT also argues that it is entitled to summary judgment because Cook did not name it in her EEOC complaint. However, because KDT falls within the identity of interests exception articulated in Johnson v. Palma, 931 F.2d 203 (2d Cir.1991), its omission from Cook's administrative filing does not warrant its dismissal. In Johnson, we held that in determining whether the unnamed parties have an identity of interests with the named parties, courts should consider: 27 1) whether the role of the unnamed party could through reasonable effort by the complainant be ascertained at the time of the filing of the EEOC complaint; 2) whether, under the circumstances, the interests of a named [party] are so similar as the unnamed party's that for the purpose of obtaining voluntary conciliation and compliance it would be unnecessary to include the unnamed party in the EEOC proceedings; 3) whether its absence in the EEOC proceedings resulted in actual prejudice to the interests of the unnamed party; and 4) whether the unnamed party has in some way represented to the complainant that its relationship with the complainant is to be through the named party. 28 Id. at 209-10 (quoting Glus v. G.C. Murphy Co., 562 F.2d 880, 888 (3d Cir.1977)). Although the first factor of the Johnson test weighs against Cook--it is arguable that she could easily have included KDT in the EEOC charge--factors two and three strongly favor allowing her to name KDT as a party defendant in the instant suit. As we noted above, the interests of KDT and ASI are identical. KDT approves all personnel decisions at ASI, and thus KDT and ASI have identical interests with respect to conciliation and compliance. Moreover, there were no EEOC proceedings in the instant case and KDT could not have been prejudiced in any way.