McLaurin v. Fusco, Civil Action No. 3:08CV762TSL-JCS.

629 F.Supp.2d 657

Sheri R. McLAURIN, Plaintiff v. Jon FUSCO, individually and d/b/a DMJ, Inc. and Jenny Craig, Defendants.

Civil Action No. 3:08CV762TSL-JCS.

United States District Court, S.D. Mississippi, Jackson Division.

June 1, 2009.

S. Malcolm O. Harrison, Harrison & Flowers, PLLC, Jackson, MS, for Plaintiff.

Ernest Russell Turner, Balch & Bingham, LLP, Jackson, MS, for Defendants.

MEMORANDUM OPINION AND ORDER

TOM S. LEE, District Judge.

This cause is before the court on the motion of defendant Jenny Craig, Inc. (Jenny Craig) for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Plaintiff Sheri R. McLaurin has responded in opposition to the motion, and the court, having considered the parties' memoranda and submissions, concludes that the motion should be granted.¹

Beginning in 2001, defendant Jon Fusco d/b/a DMJ, Inc. (DMJ) operated a Jenny Craig franchise in Ridgeland, Mississippi, known between the parties as Centre #8155 (the Centre). According to the complaint in this cause, plaintiff was hired by DMJ in January 2006 as a customer service coordinator and was subsequently promoted to a consultant position. After a white employee was named Director of the Centre in June 2007, plaintiff, who is black, complained to DMJ and to Jenny Craig that, as the employee with the most seniority and with exemplary work performance, she should have been selected as director but that she was not even given an opportunity to apply because DMJ, in direct violation of Jenny Craig corporate policy, did not post or advertise or otherwise seek applicants for the position. Plaintiff alleges that in August 2006, after it became apparent to her that defendants would not satisfactorily address her concerns, she resigned her position, following which she filed an EEOC charge complaining of race discrimination and retaliation. After receiving her notice of right to sue, plaintiff filed this action against DMJ and Jenny Craig alleging race discrimination and retaliation in violation of Title VII of the Civil Rights Act, 42 U.S.C. § 2000e et seq., and 42 U.S.C. § 1981 on the basis that she was not given notice of or an opportunity to apply for the director's position and was passed over in favor of a white employee with less seniority and less experience.

Jenny Craig moved to dismiss pursuant to Rule 12(b)(6) for failure to state a claim upon which relief can be granted, noting that it can only be liable under Title VII or § 1981 if it was plaintiff's "employer," see 42 U.S.C. § 2000e(a)(1) (prohibiting an "employer" from discriminating "against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's ... race"), and arguing that plaintiff has failed to allege facts to establish that Jenny Craig was her "employer." In support of the motion, Jenny Craig presented evidence which it maintains demonstrates that its franchisee, DMJ, was plaintiff's only "employer," and that consequently, Jenny Craig has no potential liability to plaintiff.

There is no dispute that DMJ was plaintiff's employer. The question is whether Jenny Craig was also plaintiff's employer. The Fifth Circuit has identified two approaches for use in potential multiple employer situations to determine employer status for purposes of Title VII, the "single employer" test, and the "hybrid-economic realities" test.

In Mares v. Marsh, 777 F.2d 1066 (5th Cir.1985), the Fifth Circuit identified and examined three possible tests that courts had devised for determining if a worker employed as an independent contractor should be considered the employee of an entity for the purposes of Title VII: the agency test, which was described as turning on the employer's right to control the employee; the "economic realities" test, which was said to turn on whether the employee, as a matter of economic reality, is dependent upon the business to which he renders service; and a "hybrid economic realities/control" test (also described as a "modified agency" test), which "steers a middle ground, focusing on `the extent of the employer's right to control the `means and manner' of the worker's performance.'" Nowlin v. Resolution Trust Corp., 33 F.3d 498, 505 (5th Cir.1994) (citing Mares, 777 F.2d at 1067). The Mares court expressly rejected the agency test, explaining that "[t]he strict common law `agency' test generally has not been applied to federal social welfare and antidiscrimination legislation, since it is considered inconsistent with the remedial purposes behind such legislation." Mares, 777 F.2d at 1067 n. 1; Nowlin, 33 F.3d at 506 n. 5 (noting Mares' rejection of agency test). The court opted for the "hybrid economic realities/control" test over the more expansive economic realities test.

The Fifth Circuit has since clarified that, in fact, there are two similar, but distinct tests that may be relevant in assessing "employer" status: the "hybrid-economic realities/common law control" test and the "single employer" test, first articulated by the Fifth Circuit in Trevino v. Celanese Corp., 701 F.2d 397, 404 (5th Cir.1983). See Schweitzer v. Advanced Telemarketing Corp., 104 F.3d 761, 763 (5th Cir.1997).

Regarding the hybrid test, the court has explained,

The right to control an employee's conduct is the most important component of this test. When examining the control component, we have focused on whether the alleged employer has the right to hire and fire the employee, the right to supervise the employee, and the right to set the employee's work schedule. The economic realities component of our test has focused on whether the alleged employer paid the employee's salary, withheld taxes, provided benefits, and set the terms and conditions of employment.

Deal v. State Farm County Mutual Ins. Co. of Texas, 5 F.3d 117, 118-19 (5th Cir. 1993) (citing Fields v. Hallsville Indep. Sch. Dist., 906 F.2d 1017, 1019 (1990), and Mares, 777 F.2d at 1068).

The single employer test was adopted in Trevino, in which the court recognized that in civil rights actions, "superficially distinct entities may be exposed to liability upon a finding they represent a single, integrated enterprise: a single employer." Trevino, 701 F.2d at 404. Under the Trevino single employer test, a four-part formula is used to determine whether a parent corporation should be considered the employer of a subsidiary's employee, e.g., Schweitzer, 104 F.3d 761, or a franchisor should be considered the employer of its franchisee's employee, e.g., Matthews v. International House of Pancakes, Inc., 597 F.Supp.2d 663, 671 (E.D.La.2009). This approach considers "(1) interrelation of operations; (2) centralized control of labor relations; (3) common management; and (4) common ownership or financial control," Schweitzer, 104 F.3d at 764 (citing Trevino, 701 F.2d at 404), but the focus is on the parent's or franchisor's actual control of the subsidiary's or franchisee's employees, id. "The second of these factors has traditionally been most important, with courts refining their analysis to the single question, `What entity made the final decisions regarding employment matters related to the person claiming discrimination?'" Id.

In Schweitzer, the court noted the similarity in the hybrid and single-employer tests, but made clear that they are distinct tests that are applicable to distinct inquiries, and are not to be used interchangeably:

Trevino and the hybrid test are very similar, since under the hybrid test, "the right to control an employee's conduct is the most important component...." Deal, 5 F.3d at 118. However, we hold that while the Trevino and hybrid tests are similar, and will frequently yield the same results, the tests should not be used interchangeably. Rather, the hybrid test should be used as an initial inquiry to resolve, if need be, whether a plaintiff is an employee of the defendant (or one of the defendants, in a multi defendant case) for the purposes of Title VII. If the plaintiff is found to be an employee of one of the defendants under the hybrid test, but questions remain whether a second (or additional) defendant is sufficiently connected to the employer-defendant so as to be considered a single employer, a Trevino analysis should be conducted. The Trevino analysis will establish if the second or additional defendant is also an employer of the plaintiff.

Schweitzer, 104 F.3d at 764; Nowlin, 33 F.3d at 506.

In the case at bar, there is no question but that plaintiff was an employee of DMJ, and was not, for example, and independent contractor. Thus, the Trevino analysis applies to determine whether Jenny Craig was also her employer; yet there is neither allegation nor sufficient proof to support finding Jenny Craig to be her employer under Trevino's "single employer" test.

In support of its motion, Jenny Craig argues that its evidence, and in particular the declaration of Dana Fiser, Vice President of Corporate Operations and Franchises xxx for Jenny Craig, conclusively establishes that there was no common ownership, management or financial control between Jenny Craig and DMJ, and that DMJ, not Jenny Craig, had the right to control and did in fact control the day-to-day activities of, and all employment decisions respecting all of the employees of DMJ's Ridgeland Centre. Indeed, in her declaration, Fiser attests that Jenny Craig and DMJ were separate entities. Jenny Craig, she states, did not share bank accounts, books, accounting records, payroll accounts, personnel records or tax identification numbers with DMJ and/or Fusco, and Jenny Craig and DMJ never shared any employees, officers, directors or space. She states, moreover, that Jenny Craig had no control over, and was not responsible for DMJ's employment practices; that Jenny Craig never had any day-to-day authority over the management or personnel at DMJ's Ridgeland store; that Jenny Craig did not employ McLaurin, who was instead employed...