Lead Opinion
Circuit Judge.
The appellants appeal the district court’s dismissal of their sex discrimination claims brought under Title VII of the 1964 Civil Rights Act, as amended, 42 U.S.C. § 2000e, et seq., for lack of subject matter jurisdiction. For the reasons set forth below, we reverse the judgment of the district court, in part, and remand for further proceedings.
Lynn Armbruster and Margaret Mayes, former secretaries to T.J. Quinn, the former President of Syntax Corporation (Syntax), sued Quinn, Syntax, Pure Industries, Inc.
I. FACTS AND PROCEEDINGS BELOW
In 1979, Mayes and Armbruster each were hired and later fired from the position of secretary to T.J. Quinn. The appellants, former employees, allege that each was fired for her unwillingness to submit to or tolerate verbal and physical sexual harassment by T.J. Quinn.
T.J. Quinn was the President of the now-defunct Syntax Corporation. Syntax was a wholly owned subsidiary of Pure Industries, Inc.; Pure is wholly owned by Stackpole. It is not disputed that Syntax alone employed less than fifteen individuals, excluding the manufacturer’s representatives, during the twenty calendar weeks preceding this action. Likewise, the parties do not dispute that if Pure is considered to be the employer of Mayes and Armbruster, then the jurisdictional requirement of fifteen employees is satisfied. See 42 U.S.C. § 2000e(b).
Plaintiffs presented affidavits tending to show that the operations of Syntax were closely related with those of Pure. Defendants also submitted affidavits which tended to establish the separate existence and operations of these two corporations. The district court held, however, that “on the facts of this case, the Court is not willing to disregard Syntax Corporation as a ‘sham’ entity in order to consolidate it with its parent corporations to satisfy the Title VII prerequisite of fifteen employees.”
As to the manufacturer’s representatives, the district court adopted the general common law rule for purposes of determining whether an individual is an employee. Under this standard, the court examined the purported control over the means, manner and details of the work performed. The lower court found that evidence of commission payments for accomplished results was an insufficient basis upon which to determine whether an employment relationship existed between Syntax and its manufacturer’s representatives under the common law test. The court concluded that the manufacturer’s representatives were more akin to independent contractors, than to employees. Thus, upon considering the total number of part-time and full-time persons employed by Syntax, the court determined that the minimum jurisdictional requirement of fifteen employees had not been met; therefore, this claim was dismissed for lack of subject matter jurisdiction.
The district court also dismissed plaintiffs’ Fourteenth Amendment claim since no state action was alleged. No assignment of error is premised upon this basis of dismissal; accordingly, this portion of the lower court’s judgment is AFFIRMED. We also affirm the lower court’s dismissal of Stackpole since it was not charged in the administrative action before the EEOC. Accord Alexander v. Gardner-Denver Co.,
The lower court’s jurisdictional ruling was based upon written submissions by the parties. In Welsh v. Gibbs,
The burden of establishing jurisdiction is on the plaintiff. However, if the district court determines to decide the issue solely on the basis of written materials, the plaintiff should be required only to make a prima facie case of jurisdiction, that is, he need only “demonstrate facts which support a finding of jurisdiction in order to avoid a motion to dismiss.” The district court apparently conclude[s] that the written materials presents] no disputed questions of fact on jurisdiction and no issues of credibility, . .., the burden of the plaintiff is relatively slight and the district court must consider the pleadings and affidavits in the light most favorable to the plaintiff.
Id. at 438-39 (citations omitted); accord, First National Bank of Louisville v. J.W. Brewer Tire Co.,
The plaintiff must ultimately prove jurisdiction by a preponderance of the evidence. See McNutt v. General Motors Acceptance Corp.,
III. DISCUSSION
The essential question in this case is whether the plaintiffs’ are barred from bringing their claim in federal court by the Title VII jurisdictional requirement of fifteen employees. In reviewing the district court’s holding that they have not met the jurisdictional requirement, we must consider two issues. First, we must assess whether Syntax and Pure should be construed as having such substantial identity that they should be deemed a single employer for jurisdictional purposes. If so, then it is uncontested that the fifteen employee requirement will be met. Second, we must analyze the alternative route to a finding that there are fifteen employees. The appellants’ claim that, irrespective of the relationship between Pure and Syntax, the manufacturer’s representatives of Syntax fall within the meaning of the term “employee” for the jurisdictional requirement.
We do not now resolve any issues of liability. Rather, we merely define the scope of jurisdiction under Title VII to determine whether the district court’s dismissal of the appellants’ complaint on jurisdictional grounds was proper.
A. SINGLE v. JOINT EMPLOYER
In Hassell, this Court considered whether a parent corporation and its subsidiary should be treated as a single employer for jurisdictional purposes under Title VII.
Hassell does not set forth an inflexible test.
The primary purpose of the Civil Rights Act, and Title VII in particular, is remedial. Its aim is to eliminate employment discrimination by creating a federal cause of action to promote and effectuate its goals. See, e.g., Alexander v. Gardner-Denver Co.,
The statute defines “employer” with substantial breadth and generality. An “employer” is “a person [or any agent of such person] engaged in any industry affecting commerce who has fifteen or more employees.... ” 42 U.S.C. § 2000e(b). A person “includes one or more individuals [or] corporations.” 42 U.S.C. § 2000e(a). Very similar definitions of these terms are found in the National Labor Relations Act (NLRA). See 29 U.S.C. § 152(1) and 152(2). Since it is clear that the framers of Title VII used the NLRA as its model, see, e.g., 42 U.S.C. § 2000e (referring to the NLRA), Zipes v. Trans World Airlines, Inc.,
A second source of aid in interpreting the provisions defining an employer was not available when Hassell was decided, but arose when Congress amended Title VII to include the Equal Employment Opportunity Act of 1972. The 1972 Amendment to Section 701(b) of the Civil Rights Act of 1964 served to broaden its reach by subjecting more employers to the Act as a result of the reduction in the statutory minimum number of employees from twenty-five to fif
When exploring the limits of Title VII jurisdiction, corporate law doctrines may be helpful in our assessment of whether we should treat the defendants as separate corporate entities. However, the most important requirement is that there be sufficient indicia of an interrelationship between the immediate corporate employer and the affiliated corporation to justify the belief on the part of an aggrieved employee that the affiliated corporation is jointly responsible for the acts of the immediate employer. When such a degree of interrelatedness is present, we consider the departure from the “normal” separate existence between entities an adequate reason to view the subsidiary’s conduct as that of both. See Hassell v. Harmon Foods, Inc.,
For guidance in testing the degree of interrelationship, we look to the four-part test formulated by the NLRB and approved by the Supreme Court in Radio Union v. Broadcast Service,
The showing required to warrant a finding of single-employer status has been described as “highly integrated with respect to ownership and operations.” Fike v. Gold Kist, Inc., 514'F.Supp. 722, 726 (N.D.Ala. 1981), aff’d,
From the reasoning of the courts in the above-discussed cases and from our examination of the apparent Congressional intent, we adopt a “facts and circumstances” test which pays heed to the factors found relevant to the question of single-employer status in the National Labor Relations Act context. This test seeks to effectuate the broad and remedial purposes of the Act reaffirmed in the comprehensive Equal Employment Opportunity Act of 1972. The appropriate standard is whether, upon review of the circumstances of the intercorporate relationship, Pure exercises a degree of control that exceeds the control normally exercised by a parent corporation which is separate and distinct from the subsidiary corporate entity. When sufficient control is found, the two corporate entities may be given single employer status such that their combined number of employees will be determinative of whether they are subject to Title VII requirements. Having described the degree of control that is necessary, we proceed to evaluate the intercorporate relationship between Pure and Syntax in the light most favorable to the plaintiff. Welsh v. Gibbs,
Pure is the sole owner of Syntax; therefore, common ownership has been demonstrated. Armbruster and Mayes presented evidence that J. David Quinn was the President of Pure and a director and officer of Syntax. By practice and, allegedly by policy of Pure, J. David Quinn had to authorize all purchases by Syntax which exceeded two hundred dollars. In addition, Pure “handled” Syntax’s accounts receivable, provided Syntax with administrative backup, handled Syntax’s payroll and cash accounting, and monitored all sales shipments. Moreover, Syntax’s bank accounts were located at Pure’s headquarters in St. Marys, Pennsylvania, although Syntax’s corporate headquarters was in Bay City, Michigan.
Pure received periodic financial reports from Syntax. Syntax’s managerial employees used Pure credit cards and aircraft owned by Stackpole. None of the affidavits, however, addressed the method of payment for the charges incurred for such expenses. Pure’s personnel also negotiated and “closed” the purchase of Syntax’s office building and approved all office remodeling. These facts evidence the close interrelation of operations between Pure and Syntax.
On the subject of centralized control of labor, several factors indicate substantial interrelation. J. David Quinn, President of Pure, hired T.J. Quinn as President of Syntax. Syntax’s plant manager was hired by “personel employed at [Pure].” Several Syntax employees were transferred from Pure to or from other Pure subsidiaries. Syntax participated in the Pure ERISA plan but paid for its employees’ allocated expenses. On review of the record below, we note that Syntax sent a requisition form to Pure for approval to hire Armbruster as
The evidence on the extent of common management is somewhat more sketchy. Apart from the evidence previously discussed, J. David Quinn was the president of both Pure and Syntax for the first seven years that Syntax was owned by Pure. Thereafter, he remained at Syntax’s helm as its chairman of the board of directors. At the time of Pure’s acquisition of Syntax, a Syntax board member released all deci-sionmaking powers to Pure. Finally, Syntax’s former President and sales manager attested that T.J. Quinn “professed the unity” between Pure and Syntax “indicating that whenever necessary [Syntax] would have the complete cooperation and assistance from [Pure and Stackpole].”
Upon reviewing the evidence before the district court, we find that Armbruster and Mayes met their burden of establishing a prima facie ease of single employer status to meet the statutory minimum of fifteen employees and vest subject matter jurisdiction with the court. Therefore, we remand with instructions that the court analyze this prima facie showing with whatever rebuttal evidence the appellants may appropriately advance and make a determination of the merits of this claim. In the alternative, the court should analyze the appellant’s claim regarding the manufacturer’s representatives in accordance with this Court’s reasoning on the application of the economic-realities test as follows.
B. MANUFACTURER’S REPRESENTATIVES
Appellants also challenge the district court’s determination that the manufacturer’s representatives are independent contractors and are, thus, not employees for Title VII purposes. Defendants-appellees presented the affidavit of T.J. Quinn which stated that the manufacturer’s representatives did not work out of the corporate office, they sold other product lines besides those of Syntax, and they were paid no salary apart from commissions received for goods sold. Moreover, neither their work hours, their timing of sales calls, nor the customers they called upon were controlled by Syntax. Furthermore, Syntax did not withhold income or other taxes from the salary of the manufacturer’s representatives. It was these factors which led the district court to conclude that there was no jurisdiction under Title VII.
To begin our analysis, we note that the determination as to whether one is an employee under Title VII is a question of federal law and is to be ascertained through consideration of the statutory language and legislative history of the Act.
This principle not only applies to the coverage of the antidiscrimination provision of Title VII imposing liability on an employer and protection for the employee, but it necessarily must apply for the jurisdictional scope of the Act. To conclude that one is an employee for the purposes of the antidis-crimination provision and yet to find that he/she is not to be considered as an employee for the purpose of meeting the fifteen employee jurisdictional requirement would frustrate the very purpose of the Act.
First, the term employee is clearly to be given a broad construction under all provisions of the Act. In Dunlop v. Carriage Carpet Co.,
The Supreme Court has explained the broad interpretation the term employee should have in NLRB v. Hearst Publications,
is not treated by Congress as a word of art having a definite meaning .... Rather it takes color from its surroundings .. . [in] the statute where it appears, and derives meaning from the context of that statute, which must be read in the light of the mischief to be corrected and the end to be attained.
Accordingly, we hold that the term employee in Title VII “must be read in light of the mischief to be corrected and the end to be attained.” Dunlop v. Carriage Carpet Co.,
By analogy, we must construe the term employee as it is used in the Equal Employment Opportunity Act at least as broadly as it has been construed in the anti-discrimination provisions of other statutes. E.g., Dunlop v. Carriage Carpet Co., supra. Since this statute has been univer
Second, with due respect, we cannot agree that Congress meant to inject a limited meaning into the statute by use of the term “employee,” “employed,” or “employer.” We find no tacit dichotomy between employees and “independent contractors” enshrined in Title VII. As noted, the framers of Title VII specifically used the NLRA as their model. In reaction to prior Supreme Court decisions which had mandated the use of an economic realities test for determining whether an independent contractor was an employee for NLRA purposes, see e.g., NLRB v. Hearst Publications,
VII was formulated and yet Congress incorporated no similar provision into Title VII. In that Congress was specifically aware of the judicial construction accorded the term “employee” absent an explicit limitation, we now refuse to imply such a restriction into the otherwise broad terms of Title VII.
Accordingly, we hold that the manufacturer’s representatives of Syntax are not to be excluded when considering the Title VII jurisdictional requirement of fifteen employees merely because they are manufacturer’s representatives. Instead, being mindful of the broad remedial purposes of the Act, consideration must be given to the
We note that the resolution of this issue is by no means an easy task on the present record and that it may be appropriate for the district court to hold additional hearings on this issue. Similarly, we note that we do not now suggest that the plaintiffs will ultimately prevail on the jurisdictional issues. Rather, we merely have set out the applicable legal principles needed to assess whether the plaintiffs have met the jurisdictional requirement of the Act. Since the district court had not originally employed this analysis, the judgment below is REVERSED and the case remanded for additional proceedings not inconsistent with this opinion.
The judgment below is REVERSED and REMANDED for further proceedings not inconsistent with this opinion.
Notes
. The district court opinion is reported at
. At the time Hassell v. Harmon Foods, Inc.,
. Following our decision in Hassell, several courts articulated formulations to determine when a parent-subsidiary relationship is not a “normal one” in assessing whether the two will be considered as a single employer for Title VII purposes. Among these cases is Baker v. Stuart Broadcasting Co.,
The court in Baker noted our decision as being in conflict with courts that have embraced the NLRB formulation. See also EEOC v. Cuzzens of Georgia, Inc., 15 FEP Cases 1807 (N.D.Ga.1977); EEOC v. Upjohn Corp.,
. The determination that an employer who employed fifteen employees should be subject to the requirements of 42 U.S.C. § 2000e was a compromise between the proponents and opponents of the original bill that was introduced in the House and Senate. As originally proposed, both the House and Senate version of the bill set the minimum number of employees at eight. See H.R. 1746, 1st Sess. 117 Cong.Rec. 212, Reprinted in Subcommittee on Labor-Senate Committee on Labor and Public Welfare Legislative History of the Equal Employment Opportunity Act of 1972 (Comm. Print 1972) (hereinafter Legislative History) at 1; S. 2515 Section 2(b) introduced September 14, 1971, 92d Cong., 1st Sess. 117 Cong.Rec. 31702, Reprinted in Legislative History at 158.
The Senators who spoke against the eight-employee provision echoed Senator Williams’s concerns as to the antidiscrimination principle. See Remarks of Senator Allen, 118 Cong.Rec. 2386 (1972), Legislative History at 1269; Remarks of Senator Fannin, 118 Cong.Rec. 2409 (1972), Legislative History at 1297; see also Remarks of Senator Cotton, 118 Cong.Rec. 2391 (1972), Legislative History at 1282. However, the opponents would have drawn the balance on the side of the small business, under twenty-five employees. These businesses, often family run, would likely hire the friends and relatives or those of the same ethnicity of the owner. See Remarks of Senator Fannin, 118 Cong.Rec. 2409-10 (1972), Legislative History at 1298-1300, Remarks of Senator Ervin, 118 Cong.Rec. 3171 (1972), Legislative History at 1375. It was argued that small rural businesses were unable to cope with centralized regulation by a bureaucracy such as the EEOC. Remarks of Senator Allen, 118 Cong.Rec. 2389-90 (1972), Legislative History at 1277-81.
. The district courts that have adopted the four-part test have increased substantially. See, e.g., Hague v. The Spencer Turbine Co., 28 FEP Cases 450 (M.D.N.C.1982); Odriozola v. Superior Cosmetics Distributors, Inc.,
. For this purpose, the source material collecting Michigan state court authorities, cited by the district court is not pertinent upon this issue of federal law.
. Spirides v. Reinhardt,
. The court in Cobb v. Sun Papers, Inc.,
. Without being exhaustive, relevant evidence on the question could include hiring and termination processes and history of the manufacturer’s representatives as well as evidence as to payment of these individuals, company-paid benefits or advances. Likewise, evidence of advancement or the opportunity therefore by any manufacturer’s representative to a position at Pure or Syntax would be relevant as would evidence of whether the other products sold by the manufacturer’s representatives were those of Syntax’s parent corporations.
Concurrence Opinion
District Judge, concurring.
I concur with the ultimate result of this decision, but I respectfully dissent from the part discussing manufacturer’s representatives.
I agree with the majority opinion that the plaintiff made out a prima facie case of subject matter jurisdiction sufficient to preclude dismissal before trial. See First National Bank of Louisville v. J.W. Brewer Tire Co.,
On the question of determining whether a parent corporation and its subsidiary should be a single employer under Title VII of the Civil Rights Act of 1964, as amended, the district court followed the correct law. Admittedly, for this circuit, it only had the benefit of the decision in Hassell v. Harmon Foods, Inc.,
However, the district court’s determination that the manufacturer’s representatives are not to be considered employees should not be disturbed. I agree with the majority opinion that the determination of whether one is an employee under Title VII is a question of federal, not state, law. Nevertheless, even though the district court mentioned that under Michigan law the test would be same as under common law, it followed federal law as articulated in Smith v. Dutra Trucking Co.,
In taking this approach, the district court had before it sufficient facts set out in the affidavits to determine whether these manufacturer’s representatives were employees. It found that they were independent contractors who worked only on a commission basis and were not controlled by Syntax. By affidavit, Syntax listed its employees for the dates in question. This was not refuted by affidavits by the plaintiff; she only countered it by an affidavit from William Clare who said that the company paid commissions to manufacturer’s representatives. He did not say that these representatives were employees.
Finally, although I disagree with the broader definition of “employee” as adopted by the majority opinion, the distinction between the “economic realities” and the “common law” tests will not be a factor in most Title VII cases.
. According to Hishon v. King & Spalding,
