177 F. Supp. 3d 778
E.D.N.Y2016Background
- Kology worked at My Space NYC from May 2009 to Aug. 15, 2014 as an agent/manager; Hochman (My Space president) hired her, set her schedule, supervised and controlled how she performed duties, and eventually fired her.
- In 2011 Kology formed Atlantis 94 Corp., sole shareholder/employee, and My Space thereafter paid Atlantis for Kology’s services; Atlantis’s only purpose was to receive Kology’s compensation.
- Kology signed employment-related contracts (salary/commissions, non-compete) and was later given a Senior VP title at My Space; Hochman continued to exercise direct control over her work.
- Kology sued under Title VII, the NYSHRL, and the NYCHRL for discriminatory acts occurring July 2013–Aug. 2014; defendants moved to dismiss under Rule 12(b)(1) arguing My Space was not her employer because it paid her corporation.
- Court held employer status is a substantive element (not jurisdictional), converted the motion to one for summary judgment because parties submitted affidavits, and denied defendants’ motion, finding My Space was Kology’s (joint) employer.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether My Space was Kology’s employer for Title VII/state-law purposes | My Space exercised control over her duties, schedule, supervision, and discipline; Atlantis’s formation did not change the functional employment relationship | My Space paid Atlantis (not Kology) and therefore was not Kology’s employer | My Space was Kology’s employer (constructive/joint employer); corporate form alone does not defeat employer status |
| Proper procedural vehicle for dispute over employer status | Treat employer status as element of claim | Moved to dismiss for lack of subject-matter jurisdiction under Rule 12(b)(1) | Employer status is nonjurisdictional; motion construed as Rule 12(b)(6) then converted to summary judgment under Rule 12(d) |
| Use of affidavits outside the pleadings on a 12(b) motion | Court may consider affidavits when parties submitted them and had opportunity to respond | Objected to use absent tax returns showing non-employee designation | Court converted to summary judgment because both parties relied on and submitted affidavits and were on notice |
| Relevance of tax/formal corporate arrangements to employer determination | Formal tax treatment or payment to a corporation does not control; focus is on control over work | Payment to Atlantis shows Kology was not an employee of My Space | Tax or corporate form is not determinative; courts focus on control over manner and means of work |
Key Cases Cited
- Arbaugh v. Y & H Corp., 546 U.S. 500 (Title VII numeric requirements are substantive, not jurisdictional)
- Frankel v. Bally, Inc., 987 F.2d 86 (corporate form does not preclude employee status)
- Eisenberg v. Advance Relocation & Storage, Inc., 237 F.3d 111 (focus on hiring party's control over manner and means)
- Arculeo v. On-Site Sales & Mktg., LLC, 425 F.3d 193 (constructive/joint employer doctrine)
- N.L.R.B. v. Solid Waste Servs., Inc., 38 F.3d 93 (joint employer where another entity exercises immediate control)
- Rohn Padmore, Inc. v. LC Play Inc., 679 F. Supp. 2d 454 (extent of hiring party's control is key)
- Kaiser v. Trofholz Techs., Inc., 935 F. Supp. 2d 1286 (employee status is nonjurisdictional element)
- Tate v. Rocketball, Ltd., 45 F. Supp. 3d 268 (joint employer analysis and control of conditions of employment)