Opinion
Case No. 1:21-cv-37
02-27-2023
James HAYS, Plaintiff, v. CHATTANOOGA TANK WASH, LLC, and O.J. Food Grade Tank Wash, Inc., Defendants.
Douglas S. Hamill, Mikel & Hamill PLLC, Chattanooga, TN, for Plaintiff. Daniel G. Austin, Pro Hac Vice, Austin Law Group LLC, Chicago, IL, Mark Litchford, Litchford, Pearce & Associates, Chattanooga, TN, for Defendants.
Douglas S. Hamill, Mikel & Hamill PLLC, Chattanooga, TN, for Plaintiff. Daniel G. Austin, Pro Hac Vice, Austin Law Group LLC, Chicago, IL, Mark Litchford, Litchford, Pearce & Associates, Chattanooga, TN, for Defendants. ORDER CHARLES E. ATCHLEY, JR., UNITED STATES DISTRICT JUDGE
Before the Court is the Motion for Partial Summary Judgment [Doc. 56] of Plaintiff James Hays. Plaintiff seeks a determination as a matter of law that Defendant O.J. Food Grade Tank Wash, Inc. ("OJ") is his employer under the integrated enterprise doctrine for the purposes of this case in addition to Defendant Chattanooga Tank Wash, LLC ("CTW"). For the reasons below, Plaintiff's Motion for Partial Summary Judgment [Doc. 56] is GRANTED.
I. FACTUAL BACKGROUND
This lawsuit arises out of the allegedly retaliatory termination of Plaintiff James Hays from his employment with CTW in response to his whistleblowing activity in 2020. CTW is a tanker truck washing facility located at 900 Pineville Road in Chattanooga, Tennessee. [Doc. 56-1 at 3]. OJ is a tanker truck cleaning company with locations in 5 states. [Doc. 56-2 at 1]. CTW is one of OJ's facilities. [Id. at 4].
Jon Ruiter has been a 50% owner of CTW since 2008. [Doc. 56-4 at 2-3]. OJ has been a 50% owner of CTW since 2011. [Doc. 56-3 at 1]. Jay Brady is the president of OJ [Doc. 56-3 at 2] and the business partner of Jon Ruiter with respect to CTW. [Doc. 56-4 at 2-3]. Jay Brady is also the owner of OJ. [Doc. 56-4 at 3].
Karen Cutola is the Business Manager for OJ. [Doc. 56-3 at 1]. She handles a variety of administrative items for CTW including payroll, payables, receivables, the payment of insurance premiums, and some recordkeeping for CTW personnel documents. [Doc. 56-4 at 7-10]. CTW pays OJ $1,000 per week for administrative services [Doc. 56-4 at 10] and has performed these services since 2011. [Doc. 56-3 at 2].
Rusty Parker is the "Terminal Manager" of CTW. [Doc. 56-2 at 4]. He is listed on OJ's website as "Staff". [Id.]. Mr. Parker reports to Jon Ruiter and Jay Brady. [Doc. 56-1 at 5]. Mr. Parker interacts with Mr. Brady on a weekly basis and receives business advice regarding CTW's operations from Mr. Brady. [Doc. 56-1 at 6-8]. Mr. Parker discusses daily business activities with Karen Cutola on most days. [Id. at 11]. Mr. Parker also submits daily reports about CTW operations to OJ employee Josue Aguilar. [Id. at 12-13].
With regards to personnel management, according to Mr. Parker, he interviews potential new hires, but ultimately Ms. Cutola must give the final approval. [Doc. 56-1 at 14-15]. Mr. Parker asserts that OJ maintains copies of CTW personnel files. [Id. at 15-16]. According to Mr. Parker, Mr. Brady also has the authority to hire, fire, or discipline CTW personnel. [Docs. 56-1 at 8 and 56-4 at 11]. OJ disputes Mr. Parker's claim on this issue, pointing to Mr. Ruiter's claim that no one other than himself had the authority to fire or hire CTW employees, outside of Mr. Parker if Mr. Parker first discussed these decisions with Mr. Ruiter. [Doc. 69-3 at 14-15]. However, Mr. Ruiter admits that Mr. Brady has the authority to hire, fire, or discipline CTW employees. [Doc. 56-4 at 11].
The Court notes that in Defendant OJ's response in opposition to the Motion for Partial Summary Judgement [Doc. 60], Defendant OJ cites this fact as "MSJ Ex 4, Pg. 17, In. 6 - Pg. 22, In. 1". At the time of filing Doc. 60 (April 28, 2022), the only MSJ Ex 4 that existed was Plaintiff's Exhibit 4, which were excerpts from Mr. Ruiter's deposition. The specified pages by Defendant OJ were not present in the record at this stage, and the excerpts filed by Plaintiff do not include pages 17-22 of Mr. Ruiter's deposition. However, this Court found a more complete version of the Ruiter deposition filed by CTW with their Motion for Summary Judgement on October 21, 2022, that the Court believes includes the cited-to statement from Mr. Ruiter regarding hiring and firing capabilities.
Additionally, OJ claims that neither OJ nor any officers or business managers had any role in hiring or firing CTW employees during 2020, but were generally informed of important employment decisions by CTW. [Doc. 56-3 at 3]. OJ also denies Mr. Parker's admissions that Ms. Cutola handled human resource matters for CTW, was sent employee applications by Mr. Parker in 2020, and had approval authority for CTW hires in 2020. [Doc. 60-1 at 3].
Mr. Ruiter attests that OJ receives a weekly payment of $1,000 from CTW to handle administrative functions such as payroll, accounting, payment of insurance premiums, and recordkeeping for CTW personnel. [Doc. 56-4 at 8-10]. OJ also handles various banking functions for CTW. [Doc. 56-3 at 2]. Mr. Ruiter claims that while he is the only CTW employee who can transfer money in or out of CTW bank accounts, at least one OJ member (Mr. Brady) is authorized to transfer money in or out of CTW bank accounts. [Doc. 56-4 at 5].
One or two days prior to Mr. Hays' firing, Mr. Parker relayed to both Mr. Ruiter and Mr. Brady that Mr. Hays had engaged in whistleblowing. [Doc. 56-1 at 22-23]. Both men agreed with Mr. Parker that Mr. Hays should be fired. [Id.].
II. STANDARD OF REVIEW
Federal Rule of Civil Procedure 56 instructs the Court to grant summary judgment "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A party asserting the presence or absence of genuine issues of material fact must support its position either by "citing to particular parts of materials in the record," including depositions, documents, affidavits or declarations, stipulations, or other materials, or by "showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." Fed. R. Civ. P. 56 (c)(1). When ruling on a motion for summary judgment, the Court must view the facts contained in the record and all inferences that can be drawn from those facts in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Nat'l Satellite Sports, Inc. v. Eliadis Inc., 253 F.3d 900, 907 (6th Cir. 2001). The Court cannot weigh the evidence, judge the credibility of witnesses, or determine the truth of any matter in dispute. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
The moving party bears the initial burden of demonstrating that no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The moving party may discharge this burden either by producing evidence that demonstrates the absence of a genuine issue of material fact or simply "by 'showing' - that is, pointing out to the district court - that there is an absence of evidence to support the nonmoving party's case." Id. at 325, 106 S.Ct. 2548. Where the movant has satisfied this burden, the nonmoving party cannot "rest upon its . . . pleadings, but rather must set forth specific facts showing that there is a genuine issue for trial." Moldowan v. City of Warren, 578 F.3d 351, 374 (6th Cir. 2009) (citing Matsushita, 475 U.S. at 586, 106 S.Ct. 1348; Fed. R. Civ. P. 56). The nonmoving party must present sufficient probative evidence supporting its claim that disputes over material facts remain and must be resolved by a judge or jury at trial. Anderson, 477 U.S. at 248-49, 106 S.Ct. 2505 (citing First Nat'l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968)); see also White v. Wyndham Vacation Ownership, Inc., 617 F.3d 472, 475-76 (6th Cir. 2010). A mere scintilla of evidence is not enough; there must be evidence from which a jury could reasonably find in favor of the nonmoving party. Anderson, 477 U.S. at 252, 106 S.Ct. 2505; Moldowan, 578 F.3d at 374. If the nonmoving party fails to make a sufficient showing on an essential element of its case with respect to which it has the burden of proof, the moving party is entitled to summary judgment. Celotex, 477 U.S. at 323, 106 S.Ct. 2548.
III. ANALYSIS
1. Single Employer/Integrated Enterprise Doctrine
Plaintiff argues that OJ is his employer alongside CTW under the "single employer" or "integrated enterprise" doctrine commonly applied in federal anti-discrimination cases. See EEOC v. Care Centers Mgmt. Consulting, Inc., 942 F. Supp. 2d 771, 778 (E.D. Tenn. 2013) (applying doctrine in ADA case). While the instant case stems from the Tennessee Public Protection Act ("TPPA") rather than federal law, Plaintiff asserts that a vacated 2019 Tennessee Court of Appeals opinion supports the application of the single employer test to TPPA claims. [Doc. 57 at 6]. See Whitney v. First Call Ambulance Serv., 2019 WL 1594929 (Tenn. Ct. App. Apr. 15, 2019), opinion vacated on rehearing on other grounds, 2019 WL 2053526 (Tenn. Ct. App. May 6, 2019). In that opinion, the Court of Appeals found that no prior Tennessee state cases addressed how to establish a single employer relationship between two separate entities in the context of a TPPA claim with no federal claim attached. The court accepted a district court's reasoning from the Middle District of Tennessee applying the federal single employer test to a plaintiff's Title VII, THRA, and TPPA claims. Id. Defendant argues that other than the vacated opinion, there is no persuasive Tennessee authority on this issue. [Doc. 60 at 3]. Instead, Defendant argues the state legislature's historical stance of protecting employers from joint liability absent specific circumstances removes any authority for applying the integrated enterprise doctrine to TPPA claims [Id.].
The Court notes that this Tennessee Court of Appeals opinion was vacated on other grounds after a rehearing in which the appellant withdrew his request to utilize the joint employment doctrine against appellees. Vacating this opinion did not extinguish the district court case upon which that opinion rested. See Passmore v. Mapco Express, Inc., 447 F.Supp.3d 654 (M.D. Tenn. 2017) (where the court saw the single employer doctrine as an appropriate lens through which to analyze a TPPA claim).
A vacated state court opinion is not binding on this Court, but the Court does find the Whitney opinion instructive. Combined with the decision in Passmore that analyzed a TPPA claim through the federal single employer analysis, and the notable lack of any other on-point precedent, the Court will apply the single employer/integrated enterprise analysis in the instant case.
In their reply [Doc. 61], Plaintiff references another Tennessee Court of Appeals case that applies the "joint employment" or "loaned servant" doctrine to a TPPA claim and asserts that this is analogous to applying the single employer/integrated enterprise doctrine. The Court declines to comment on whether the instant issue is analogous.
Courts in the Sixth Circuit apply the Armbruster test to determine whether two entities will be treated as a single employer. Armbruster v. Quinn, 711 F.2d 1332 (6th Cir. 1983). The test turns on four factors: 1) interrelation of operations, i.e., common offices, common record keeping, and shared bank accounts and equipment; 2) common management, common directors and boards; 3) centralized control of labor relations and personnel; and 4) common ownership and financial control. EEOC v. Care Centers Mgmt. Consulting, Inc., 942 F. Supp. 2d 771, 778 (E.D. Tenn. 2013) (citing Swallows v. Barnes & Noble Book Stores, Inc., 128 F. 3d 990, 993 (6th Cir. 1997)). While none of the four factors is determinative on its own, the control over labor relations is most important. Id. Ultimately, the goal is to determine if one entity in an intercorporate relationship exercises a degree of control over the other that exceeds that which would be normally exercised by a separate and distinct corporation.
2. Application of the Armbruster factors
When analyzing a motion for summary judgment, a court may not act as the arbiter of truth, making determinations on the credibility of witnesses or resolving disputed issues. However, courts are not obligated to treat factual disputes created solely by one party contradicting their own witnesses or affidavits as genuine issues of material fact on a motion for summary judgment. See OmniSource Corp. v. NCM Americas, Inc., 313 F. Supp. 2d 880, 890 n. 13 (N.D. Ind. 2004) (a party cannot create a genuine issue of material fact by contradicting its own witnesses' testimony or affidavits); Davis v. Diversified Consultants, Inc., 36 F. Supp. 3d 217, 222 (D. Mass. 2014) (same).
a. Interrelation of Operations
Plaintiff asserts that the operations of CTW and OJ are clearly interrelated. Many of Plaintiff's contentions are disputed by OJ, but there exist enough undisputed facts to demonstrate interrelation between the two entities. Mr. Parker, CTW's Terminal Manager, is identified as "Staff" on OJ's website. [Doc. 56-2 at 4]. Mr. Parker submits daily business reports to OJ personnel [Doc. 56-1 at 12-13] and regularly interacts with OJ's president to receive business advice. [Doc. 56-1 at 6-8]. OJ maintains personnel records of CTW employees. [Doc. 56-1 at 15-16]. While OJ and CTW do not share bank accounts, Mr. Brady is authorized to transfer money in or out of the CTW account. [Doc. 56-4 at 5]. It is difficult to see the operations of CTW and OJ as anything other than interrelated when CTW relies on OJ to perform a variety of vital business functions.
b. Common Management
Plaintiff asserts that OJ and CTW also share common management. Defendant does not agree. CTW's "Terminal Manager," Rusty Parker, testified in his deposition that OJ maintains control over CTW as CTW runs "everything" through OJ, including billing, timecards, invoices, and washout tickets. [Doc. 56-1 at 9]. While OJ disputes that OJ employees officially hold officer or managerial roles at CTW, in their response they do not dispute the assertion that OJ performs practical managerial functions over CTW operations. [Doc. 60 at 6]. Mr. Parker also testified that he reports to OJ President Jay Brady in addition to reporting to Mr. Ruiter. [Doc. 56-1 at 5]. In response, OJ admits that Mr. Parker was second in command at CTW and directly reported to CTW president Mr. Ruiter, but they decline to comment on Mr. Parker's claim of reporting regularly to OJ President Brady. [Doc. 60 at 6]. Taken as a whole, the Court finds there is undisputed evidence that OJ and CTW share common management practically, even if the companies do not officially "share" managers.
c. Centralized Control of Labor Relations
It is unsurprising that the most important Armbruster factor, the centralized control of labor relations factor, is the most contested. Plaintiff points to Mr. Parker's admission that while he interviews potential new hires, OJ Business Manager Karen Cutola must give final approval for new hires. [Doc. 56-1 at 14-15]. Additionally, Mr. Parker claims that OJ President Jay Brady has the authority to hire, fire, or discipline CTW personnel. [Docs. 56-1 at 8 and 56-4 at 11]. Defendant denies this, pointing to deposition testimony from Mr. Ruiter that no one had the authority to hire or fire CTW employees other than Mr. Parker, provided he first discussed it with Mr. Ruiter. [Doc. 69-3 at 14-15]. However, Mr. Ruiter later admitted that Mr. Brady has held the authority to hire, fire, or discipline employees for at least five years. [Doc. 56-4 at 11].
As noted in footnote 1, this information was actually not present in the record until October 2022, many months after the response brief citing it was entered on the docket.
In response to interrogatories, Defendant asserts that while OJ was generally informed of employment decisions by CTW, neither OJ nor any officers or business managers had any role in hiring or firing CTW employees during 2020. [Doc. 56-3 at 3]. Defendant curiously does not comment on whether any OJ personnel had this authority. As stated previously, district courts are not obligated to treat factual disputes created solely by one party as genuine issues of material fact in summary judgment considerations. Accordingly, this Court is not obligated to resolve OJ's denial of Mr. Ruiter and Mr. Parker's admissions in favor of Defendant.
Plaintiff additionally points to Mr. Parker's admission that he consulted with and received agreement as to Mr. Hays's termination from both Mr. Ruiter and Mr. Brady. [Doc. 56-1 at 22-23]. Taken in totality, this Court sees a centralized control of labor relations between CTW and OJ.
d. Common Ownership and Financial Control
Perhaps the most straight forward factor - it is undisputed that OJ is owned by Mr. Brady. [Doc. 56-4 at 3]. CTW is 50% owned by OJ, and 50% owned by Mr. Ruiter. [Docs. 56-3 at 1 and 56-4 at 2-3]. Plaintiff asserts that OJ's handling of various banking and accounting functions for CTW amount to financial control, and that OJ's 50% ownership in CTW amounts to common ownership of the two companies. The Court disagrees. While Mr. Brady owns OJ, he is not a direct owner of CTW. Further, Mr. Ruiter is not a co-owner of OJ, merely owning 50% of CTW. There exists distinct ownership of the two companies.
e. Summary
Summarizing the Armbruster factors, Plaintiff has successfully shown an interrelation of operations between OJ and CTW, satisfying the first factor. Second, while no officially-titled managers are shared between OJ and CTW, the Court finds undisputed evidence in the record that they share common management practically. Third, Plaintiff has demonstrated, and Defendant has not successfully refuted, that there is a centralized control of labor relations between OJ and CTW. Finally, it is undisputed in the record that OJ, being owned fully by Mr. Brady, has distinct ownership from CTW, being owned 50% by OJ and 50% by Mr. Ruiter. Taken together, with the control of labor relations factor weighing the heaviest, as a matter of law, OJ and CTW constitute an integrated enterprise for the purposes of this case.
IV. CONCLUSION
Accordingly, it is hereby ORDERED: 1) The Motion for Partial Summary Judgment by Plaintiff James Hayes is GRANTED. 2) As a matter of law, Plaintiff was employed by O.J. Food Grade Tank Wash, Inc. as well as Chattanooga Tank Wash, LLC, under the integrated enterprise doctrine for the purposes of this case.
SO ORDERED.