McKinney v. Carlton Manor Nursing & Rehabilitation Center, Inc.McKinney v. Carlton Manor Nursing & Rehabilitation Center, Inc.
Further, no Plaintiff has alleged any actual injury arising from the FBAR other than Lois Kuettel. Lois has alleged that she would like to have a college-savings account placed in her name that her father is currently holding for her benefit in his own name, but that her father does not want to transfer the account to her for fear that it will trigger an FBAR requirement for Lois. This injury, however, is traceable to Daniel Kuettel‘s personal choice not to transfer the account, and not to the FBAR.
In sum, none of the plaintiffs have standing to sue, and the district court was correct to dismiss their suit.
III
The District Court Properly Denied Leave to Amend
We generally review a district court‘s decision to deny leave to file an amended complaint, other than amendments as a matter of course under
CONCLUSION
FATCA imposes far-reaching reporting obligations on individuals and financial institutions, which, like many government regulations, undoubtedly exact monetary and other costs of compliance. The IGAs, to be sure, are part of an unprecedented scheme of international tax enforcement. And the FBAR Willfulness Penalty, if it were to be imposed, is admittedly steep: it could theoretically bring a $100,000 fine for failure to report a foreign account with a balance of $10,000.01.
None of these considerations, however, help these Plaintiffs at this time to clear the initial jurisdictional hurdle of standing.
Accordingly, we AFFIRM the judgment of the district court, and we DENY as moot Defendants’ motion to strike.
ARGUED: Samuel Heldman, THE GARDNER FIRM, Washington, D.C., for Appellant. ON BRIEF: Samuel Heldman, THE GARDNER FIRM, Washington, D.C., for Appellant. Mary E. Olsen, M. Vance McCrary, THE GARDNER FIRM, Mobile, Alabama, Kenneth R. Cookson, KEGLER BROWN HILL & RITTER, Columbus, Ohio, for Appellant.
Before: SILER, SUTTON, and WHITE, Circuit Judges.
OPINION
SUTTON, Circuit Judge.
After the Ohio Department of Health cited Carlton Manor Nursing & Rehabilitation Center for health and safety violations, the nursing home hired Sovran Management Company to help turn things around. When that did not work, the nursing home closed its doors for good. Debi McKinney, a former worker at the nursing home, claims that Sovran owes the nursing home‘s employees back pay under the Worker Adjustment and Retraining Notification Act, which requires “employer[s]” to give their employees 60 days’ notice before they “order” the closing of a company.
Most nursing homes seek reimbursement from Medicare or Medicaid for their services. In return, they must comply with federal health and safety regulations. Both programs represent a form of cooperative federalism, as they are funded by federal
By January 2014, the nursing home had resolved 26 of the deficiencies. Yet the 27th, the physical structure of the building, proved more difficult to fix. In consultation with Sovran, the nursing home presented the Department with a 12-month plan to repair the building. That was not enough. In mid-January, the Department rejected the plan and began the process of revoking the nursing home‘s operating license. The nursing home closed soon after.
Carlton Manor gave little notice to its employees about the closure. In response, McKinney filed this putative class action against the nursing home and Sovran under the Worker Adjustment and Retraining Notification Act, called WARN by those who like acronyms. The Act requires employers to give employees 60 days’ notice before they close a plant.
This case begins and largely ends with the words of the Act. Section 2102 says: “An employer shall not order a plant closing or mass layoff until the end of a 60-day period after the employer serves written notice of such an order” on its employees.
Only “employer[s]” that “order” a plant closing face regulation by the Act or liability under it. That makes considerable sense. The purpose of the Act is to encourage employers to give their employees notice before closing a company. The entity in the best position to warn employees about a closing is the employer, who runs the company and who decides to close it. And the entity from whom the employees will most acutely appreciate any warning about a closing is the employer. There‘s no dispute that Carlton Manor, not Sovran, employed these individuals, and Carlton Manor, not Sovran, made the final decision to close the nursing home. That means Sovran does not fit naturally within the terms of the Act. See Administaff Cos. v. Tow, 337 F.3d 454, 456 (5th Cir. 2003).
Even so, McKinney maintains, the Act‘s regulations offer two other paths for imposing liability on Sovran—either because Sovran and Carlton Manor were in reality a “single employer” of McKinney or were “separate employers” of McKinney. Appellant‘s Br. 11, 15. The Act‘s regulations appear to contemplate each theory of liability, and no one challenges their validity here. “Under existing legal rules,” they say, “independent contractors and subsid-iaries[,]
Single employer. These considerations do not show that Sovran and Carlton Manor were in truth one entity, as opposed to two. Four of the factors do not remotely show that we should treat Sovran and Carlton Manor as a single employer. There was no common ownership between the two. The management consultant and the nursing home did not share any directors or officers. The two companies kept their payrolls separate and did not share any personnel policies. And no one disputes that Carlton Manor and Sovran operated two distinct businesses that were not dependent on each other. See In re APA Transp. Corp. Consol. Litig., 541 F.3d 233, 245 (3d Cir. 2008) (finding no “dependency of operations” where one company continued to operate without incident after the other folded).
One might argue that the management consultant as a practical matter exercised some “control” over the company in view of the dire straits facing the nursing home. According to one witness, for example, Sovran had authority to fire employees of the nursing home. But it‘s not clear that this is what “de facto control” means or that it is the kind of thing that would show that the consultant and nursing home amounted to one employer. See Childress v. Darby Lumber, Inc., 357 F.3d 1000, 1006 (9th Cir. 2004) (finding “de facto exercise of control” where management of one company “would ultimately answer to higher management” of the controlling company). The client in this independent contractor relationship remained the nursing home, and Sovran remained the consultant. Either way, the outcome remains the same because the other factors confirm that the two entities remained independent.
But don‘t rush to judgment, warns McKinney. Even a 0 for 5 tally, or at best a 1 for 5 tally, does not tell the whole story. No one factor listed in the regulation is controlling, she points out, and the statute‘s remedial purpose should incline us to adopt a “flexible application to specific circumstances as they arise.” Appellant‘s Br. 17-18. To that end, the “overriding” issue in her view is the “level of control” used by the independent contractor (here Sovran) in helping the employer (here Carlton Manor). Id. at 21.
Overriding indeed. It may be true that no one factor in the regulations is dispositive. But that does not help McKinney because she cannot meet any of the listed factors or at best partially meets one of them. It may be true that the itemization of five factors does not prevent us from considering other factors that could show that the two employers were one. But that option still requires an articulation of distinct considerations, and she has not identified anything beyond the listed factors. The abstract possibility of identifying other approaches to this question by itself does not permit us to override the concrete approaches already mentioned.
Separate employers. The regulations refer not just to the possibility of treating two nominally distinct entities as one entity but also to the possibility of treating each entity as a distinct employer of the affected individual with independent duties under the Act. There is plenty of overlap
But this potential path to liability does not help McKinney either. As just shown, the regulations’ five factors, whether examined singly or taken together, do not show that Sovran was a separate employer of McKinney. The one factor that might operate differently in this setting—“de facto control“—does not change things. There is no evidence that Sovran hired McKinney, fired McKinney, or otherwise treated her as one of its employees. All of the extant evidence shows that Carlton Manor hired McKinney and ultimately fired her when the nursing home closed. And no evidence shows that Sovran “ordered” the closing of the nursing home, as required by the language of the statute.
Trying to avoid this conclusion, McKinney invokes cases in which employees of debt-laden corporations sued their employers’ lenders under the Act. See Coppola v. Bear Stearns & Co., 499 F.3d 144 (2d Cir. 2007); Pearson v. Component Tech. Corp., 247 F.3d 471 (3d Cir. 2001); Chauffeurs, Sales Drivers, Warehousemen & Helpers Union Local 572 v. Weslock Corp., 66 F.3d 241 (9th Cir. 1995). In those cases, McKinney points out, the courts focused on “the amount of ‘control’ that the lender exercised over the ‘ordinary operations’ of its borrower to determine whether the lender should be liable to the borrower‘s employees. Appellant‘s Br. 19. But those cases use the word “control” in the same sense that the regulations use the words “de facto control” here—as a proxy for lack of independence.
Comparison is the thief of happiness, it‘s sometimes said. But comparisons between cases are all we have in law and are at the heart of most legal disputes. McKinney‘s comparison hurts rather than helps her cause. A lender-borrower relationship, in which the loan agreement allows the lender to take control of a borrower who cannot repay a loan, offers a poor analogy to a consultant-consultee relationship that is arm‘s length from beginning to end. Sovran offered management advice to Carlton Manor at the nursing home‘s behest and did not become the owner of the nursing home in the process. The consulting arrangement allowed the nursing home to ask Sovran to leave at any time. And it allowed the management consultant to leave as well, which is just what it did after helping Carlton Manor make the necessary arrangements to shut down the nursing home.
For these reasons, we affirm.