Opinion
CASE NO. 4:02CV3203
August 28, 2003
MEMORANDUM AND ORDER
This matter is before the Court on the following motions filed by the Defendants Houlton Enterprises and Kearney Cash, d/b/a Cash N' Go: Motion for Summary Judgment (Filing No. 39); and Motion to Dismiss and for Separate Determination by the Court of Subject Matter Jurisdiction Before the Empaneling of a Jury (Filing No. 65). The Court has considered the briefs (Filing Nos. 40, 44) and evidence (Filing Nos. 41, 45) filed in support of and in response to the motion for summary judgment. Certain portions of the evidence filed by the Plaintiff, Jamy Shafer, a/k/a Jamy Shafer Tablazon ("Shafer"), have been stricken pursuant to an order granting the Defendants' motions to strike. (Filing No. 73.)
PROCEDURAL BACKGROUND
Shafer filed this action alleging that the Defendants, Houlton Enterprises, Inc. ("Houlton Enterprises"), and Kearney Cash, d/b/a Cash N' Go ("Kearney Cash"), violated her rights under the Americans with Disabilities Act ("ADA"), 42 U.S.C. § 12101-12213. Shafer was employed by Kearney Cash at the Hastings Cash N' Go from March 20, 2001, until terminated on June 23, 2001. She was not employed by Houlton during this time. (Lisa Houlton Aff., ¶ 28; Mark Houlton Aff., ¶ 27; Andrews Aff., ¶ 19; Filing No. 41, John Quandahl Aff., ¶ 27.) A controverted issue is whether the Defendants, separately or together, satisfy the definition of "employer" under the ADA, 42 U.S.C. § 12111(5)(A). Shafer appears to allege in her Complaint that the two Defendants together may be considered as a single or joint employer and therefore satisfy the requirement of § 1211(5)(A). (Filing No. 1.)
In their separate Answers, the Defendants deny that they are "employers" under the ADA. The Defendants also deny that together they qualify as a "single" or "joint" employer under the ADA. The Defendants therefore allege that, because the "employer" definition is not met, this Court lacks subject matter jurisdiction over this suit. (Filing Nos. 16, 17.) The Defendants raise the same issue in their joint motion for summary judgment. The inquiry before the Court is whether the two Defendant companies are a joint employer or separate entities. This matter is important for jurisdictional purposes because, if the Defendants, either separately or together as a "joint" employer, meet the numerosity requirement of § 12111(5)(A), subject matter jurisdiction exists for Shafer's ADA claim. The Defendants also filed a motion to dismiss based on the identical argument raised in the summary judgment motion.
FACTUAL BACKGROUND
Lisa Houlton is the President and one of two shareholders of Kearney Cash. (Filing No. 41, Lisa Houlton Aff., ¶¶ 1-2.) Lisa Houlton was the sole shareholder and sole officer and director of Kearney Cash from its incorporation on March 6, 1998, until December 31, 2000, when she transferred fifty percent of her stock to Steven D. Andrews. ( Id., ¶ 2.) Andrews worked for Kearney Cash as a joint manager from June 1998 until December 31, 2000. (Filing No. 41, Steven Andrews Affidavit, ¶ 1.) As of October 10, 2001, Lisa Houlton and Andrews have been the sole members of the Kearney Cash board of directors, and Houlton and Andrews were elected President and Vice President/Secretary/Treasurer, respectively. (Lisa Houlton Aff., ¶¶ 3-4; Andrews Aff., ¶¶ 3-4.)
Since June 24, 1998, Kearney Cash has had three business locations, including a Cash `N Go in Hastings, Nebraska. (Lisa Houlton Aff., ¶ 5.) Kearney Cash is involved in the business of check cashing and lending money by cashing post-dated checks. (Lisa Houlton Aff., ¶ 6.)
Since 1994, Lisa Houlton has been married to Mark Houlton, sole shareholder and chief executive officer of Houlton Enterprises. (Lisa Houlton Aff., ¶ 7.) The nature of Houlton's business is similar to that of Kearney Cash — check cashing and lending money by cashing post-dated checks. In addition, Houlton Enterprises also is involved in two separate business enterprises: EZ Phone, a/k/a Guaranteed Phone; and a computer software business. EZ Phone assists persons, who are unable to obtain telephone service due to financial circumstances, to obtain prepaid telephone service. (Lisa Houlton Aff., ¶¶ 7-8; Filing No. 41, Mark Houlton Aff., ¶¶ 5-6.)
Since February 2000, Kearney Cash has: sold Guaranteed Phone service contracts on behalf of Houlton as an independent contractor and sales agent; collected money for payments on such contracts; remitted the money earned to Houlton; and received a commission on each payment. Houlton Enterprises does not supervise Kearney Cash employees. Houlton Enterprises also provides computer software and services to Kearney Cash, for which Houlton Enterprises is paid full market value. (Lisa Houlton Aff., ¶ 10 Ex. A; Andrews Aff., ¶ 8, Ex. A; Mark Houlton Aff., ¶ 7 Ex. A; Quandahl Aff., ¶ 7 Ex. A.)
In October 1998, Kearney Cash opened a checking account. Mark Houlton was included on the account upon the advice of bank employees who suggested this arrangement in the event of Lisa Houlton's death or incapacitation. (Lisa Houlton Aff., ¶ 12; Mark Houlton Aff., ¶ 10.) Mark Houlton has not executed or endorsed any checks on behalf of Kearney Cash, handled or managed any Kearney Cash funds, or withdrawn funds from any Kearney Cash accounts. (Lisa Houlton Aff., ¶ 13; Mark Houlton Aff., ¶ 11.)
Mark Houlton has served and been identified as a consultant to Kearney Cash. His advice has concerned prospective business locations, construction of facilities, and marketing and advertising philosophy. He interviewed applicants for Kearney Cash on one occasion in lieu of Lisa Houlton. Mark Houlton has not managed or supervised Kearney Cash employees. He has visited Kearney Cash locations in conjunction with computer services sold by Houlton to Kearney Cash. Mark Houlton has not made daily business decisions for Kearney Cash. (Lisa Houlton Aff., ¶¶ 14-16; Mark Houlton Aff., ¶¶ 12-14.)
Kearney Cash has not transferred any customer accounts to any location or business owned by Houlton Enterprises. (Lisa Houlton Aff., ¶ 17; Mark Houlton Aff., ¶¶ 15-16; Andrews Aff., ¶ 9; Quandahl Aff., ¶¶ 9-10.) None of Kearney Cash's customers, according to its customer list, is in areas served by Houlton Enterprises, and vice versa. (Lisa Houlton Aff., ¶ 18; Mark Houlton Aff., ¶ 17; Andrews Aff., ¶ 10; Quandahl Aff., ¶ 11.)
From 1993 through 2001, Lisa Houlton provided bookkeeping services to Houlton Enterprises, gradually turning this task over to John Quandahl, now Chief Operating Officer of Houlton Enterprises, between 1999 and 2001. Because the bookkeeping services provided by Lisa Houlton included paying bills and debts, including payroll checks, Lisa Houlton's name was on Houlton Enterprises's checking accounts. Lisa Houlton did not receive direct compensation from Houlton Enterprises, but rather she participated in a "simple" Individual Retirement Account ("IRA"). Lisa Houlton did not perform managerial duties for Houlton Enterprises, and she did all her work at her home. While she occasionally visited Houlton Enterprises facilities, she never maintained a work area at any Houlton Enterprises facility. (Lisa Houlton Aff., ¶ 20; Mark Houlton Aff., ¶ 19.) Kearney Cash and Houlton Enterprises manage collections on their accounts separately. (Lisa Houlton Aff., ¶ 21; Mark Houlton Aff., ¶ 20; Quandahl Aff., ¶ 21.)
Lisa Houlton and Andrews have requested Kearney Cash employees to communicate with Houlton Enterprises employees as well as employees of other similar businesses to, for example, check or cross-reference potential customers who might be involved in passing fraudulent checks or in connection with the computer services bought by Kearney Cash from Houlton Enterprises. (Lisa Houlton Aff., ¶ 22; Mark Houlton Aff., ¶ 21; Andrews Aff., ¶ 12.) Lisa Houlton or Andrews have not, separately or together with Mark Houlton, controlled employment and personnel policies of Houlton Enterprises. (Lisa Houlton Aff., 23; Mark Houlton Aff., ¶ 22; Andrews Aff., ¶ 13; Quandahl Aff., ¶ 23.) And at no time has Mark Houlton, separately or together with Lisa Houlton or Andrews, controlled employment and personnel policies of Kearney Cash. (Lisa Houlton Aff., ¶ 24; Mark Houlton Aff., ¶ 22; Andrews Aff., ¶ 13; Quandahl Aff., ¶ 23.)
Kearney Cash maintains occasional computer communication with Houlton Enterprises's EZ Phone business locations with regard to contractual responsibilities. (Lisa Houlton Aff., ¶ 26; Mark Houlton Aff., ¶ 26; Andrews Aff., ¶ 17; Quandahl Aff., ¶ 25.) Offices have not been shared between the two companies. (Lisa Houlton A, ¶ 27; Mark Houlton Aff., ¶ 27; Andrews Aff., ¶ 18; Quandahl Aff., ¶ 26.)
At no time has there been common operations, offices, record keeping, shared bank accounts or equipment except as necessary pursuant to the contractual agency relationship reflected in Exhibit A and the computer software sales agreement reflected in Exhibit B to the Affidavits of Lisa Houlton, Mark Houlton, Andrews and Quandahl. (Filing No. 41.) The Defendants' affiants state that at no time has there been the following between Kearney Cash and Houlton Enterprises: common ownership; financial control; common management, directors or boards; or centralized labor control or employment decisions. (Lisa Houlton Aff., ¶¶ 30-32; Mark Houlton Aff., ¶¶ 29-32; Andrews Aff., ¶¶ 20-23; Quandahl Aff., ¶¶ 29-31.) The Hastings Cash `N Go used an account collection form between March and July 2001 prepared by Cynthia Nordby, a former employee of Kearney Cash, that identified Kearney Cash with Houlton Enterprises. A copy of this form is attached to Lisa Houlton's Affidavit as Exhibit D. (Filing No. 41.) Neither this form, nor any other document identifying Kearney Cash with Houlton Enterprises was authorized or approved by Lisa Houlton, Andrews, or Mark Houlton. (Lisa Houlton Aff., ¶ 33; Andrews Aff., ¶¶ 24-25; Filing No. 41, Tina Hogan Aff., ¶ 17; Mark Houlton Aff., ¶ 33.) Between approximately March and July 2001, the Hastings Cash `N Go used identification cards that identified Kearney Cash as a division of Houlton Enterprises. Neither Lisa Houlton nor Andrews knew about the use of these cards or authorized them. (Lisa Houlton Aff., ¶ 35; Andrews Aff., ¶ 25; Hogan Aff., ¶¶ 17-21; Mark Houlton Aff., ¶ 33; Quandahl Aff., ¶ 32.)
Kearney Cash has never had fifteen or more employees. (Lisa Houlton Aff., ¶ 36; Andrews Aff., ¶ 7.) Between January 1, 2000, and December 31, 2000, Kearney Cash had no more than nine employees. (Lisa Houlton Aff., ¶ 37; Andrews Aff., ¶ 26.) Finally, between January 1, 2001, and December 31, 2001, Kearney Cash had no more than eight employees. (Lisa Houlton Aff., ¶ 38; Andrews Aff., ¶ 29.)
DISCUSSION
SUMMARY JUDGMENT STANDARD
With respect to summary judgment, the Court must examine the record in the light most favorable to the nonmoving party. U.S. ex rel. Quirk v. Madonna Towers, Inc., 278 F.3d 765, 767 (8th Cir. 2002). However, summary judgment is "properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed `to secure the just, speedy and inexpensive determination of every action.'" Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986).
The proponent of a motion for summary judgment "bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of `the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Id. at 323 (quoting Fed.R.Civ.P. 56(c)). The proponent need not, however, negate the opponent's claims or defenses. Id. at 324-25.
In response to the proponent's showing, the opponent's burden is to "come forward with `specific facts showing that there is a genuine issue for trial.'" Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986) (quoting Fed.R.Civ.P. 56(e)). A "genuine" issue of material fact is more than "some metaphysical doubt as to the material facts." Id.
The Court's function is not to weigh the credibility and persuasiveness of evidence in the context of a motion for summary judgment. Kampouris v. St. Louis Symphony Soc'y, 210 F.3d 845, 847 (8th Cir. 2000). Nevertheless, if testimony has been irrefutably contradicted by documentary evidence, or the testimony is otherwise inherently incredible, it need not be credited even for purposes of a motion for summary judgment. Walker v. Peters, 863 F. Supp. 671, 672-73 (N.D. Ill. 1994).
APPLICATION OF STANDARD
In determining whether the two Defendant companies are a joint employer and therefore meet the numerosity requirement for subject matter jurisdictional purposes under the ADA, the following factors must be considered: 1) interrelation of operations; 2) common management; 3) centralized control of labor relations; and 4) common ownership or financial control. Artis v. Francis Howell N. Band Booster Ass'n, 161 F.3d 1178, 1184 (8th Cir. 1998); Webb v. Amer. Red Cross, 652 F. Supp. 917, 919 (D. Neb. 1986). Each factor is discussed below.
Interrelation of Operations
Important in assessing the degree of interrelation of operations is the degree to which the employees of one entity are involved in the daily functioning of the other entity. Webb, 652 F. Supp. at 919 (quoting Massey v. Emergency Assistance, Inc., 580 F. Supp. 937, 942 (W.D. Mo. 1983)). After making a careful assessment of the pertinent factors, the Court finds that those factors do not weigh in favor of a finding of an interrelationship of operations.
For example, Shafer points to Lisa Houlton's simultaneous dual roles with Kearney Cash and Houlton Enterprises, using as an example the nightly faxing of paperwork from Kearney Cash to Lisa Houlton. The evidence, however, shows that the paperwork was faxed to Lisa Houlton in her role with Kearney Cash, apparently at her home, as opposed to any physical location intimately and solely associated with the business operation of Houlton Enterprises. Moreover, the evidence showed no interrelationship of Lisa Houlton's two positions, and that Lisa Houlton did not draw a salary from Houlton Enterprises but rather entitlement to participate in an IRA. Shafer also argues that the two companies were linked because Mark Houlton simultaneously served as sole shareholder and chief executive officer of Houlton while serving at times as a consultant for Kearney Cash. However, the evidence clarifies that Mark Houlton served as a consultant with regard to discrete issues not pertinent to both companies and in relation to computer services sold by Houlton Enterprises to Kearney Cash. Shafer argued that Kearney Cash's customer collection letters and identification cards of Shafer and Tina Hogan referred to Kearney Cash being associated with Houlton Enterprises. However, the evidence is clear that Lisa Houlton, Andrews or Mark Houlton did not approve or even know of those letters or cards.
The only potentially troubling piece of evidence indicating overlapping operations on a daily basis is the maintenance of a telephone list with telephone numbers of both Kearney Cash and Houlton Enterprises together with the testimony of Cynthia Nordby, a former employee of Kearney Cash, that she was told that she could call employees on the list with questions. However, as further explained by Lisa Houlton in her deposition, she told Nordby that she compiled the list in response to Nordby's difficulties encountered with the computer system. Lisa Houlton testified that she told Nordby that since both Kearney Cash and Houlton Enterprises used the same computer system the persons on the list would all be familiar with the system and could assist her. (Filing No. 45, 115:14-116:10)
The evidence weighs heavily against a finding of interrelated operations.
Common Management
In assessing the weight of this factor, important is evidence not only of "interlocking" officers' and directors' control but also of control by one entity over the other entity's officers or directors. Id. at 920-21 (quoting Massey, 580 F. Supp. at 940). In this case the evidence reflects not common officers and directors, but rather persons who occupy an official role in one entity and perform some consultative or employment function in the other entity. The Court finds no evidence of common management between Kearney Cash and Houlton Enterprises. Centralized Control of Labor Relations
The existence of control is important in assessing this factor. Such control may not be merely "potential," but rather "actual and active control of the day-to-day labor practices." Id. at 921 (citing Fike v. Gold Kist, Inc., 514 F. Supp. 722 (N.D. Ala. 1981)).
In this case, the only evidence regarding labor relations is that Mark Houlton interviewed a few applicants for Kearney Cash positions in lieu of Lisa Houlton on one occasion. This was a result of child care issues at home at a time when Mark Houlton was in the central Nebraska area. The evidence is conflicting as to whether Mark Houlton or Lisa Houlton hired Cynthia Nordby. Beyond this minimal evidence, however, absent is any additional indication of any shared labor relations or control over labor or personnel issues. The companies maintained separate personnel policies. Therefore, the Court concludes that the evidence does not weigh in favor of a finding of centralized control of labor. Common Ownership or Financial Control
At all times pertinent to the issues before the Court, Lisa Houlton and Mark Houlton resided in Papillion, Nebraska.
The marriage of Lisa Houlton and Mark Houlton, and the resulting circumstances, i.e., common use of a home/office, DSL line, computer and cell phone, do not show a common ownership of the two companies. Houlton Enterprises does not pay Kearney Cash employees. There is no evidence of common financial records. In short, there is no evidence to support a finding of common ownership or financial control.
CONCLUSION
After considering all the factors under the particular circumstances in the evidence, excluding the stricken portions, the Court finds that Kearney Cash and Houlton Enterprises are two separate entities for purposes of the "single" or "joint" employer ADA issue. During the time in question, Kearney Cash did not have the required number of employees under the ADA. No evidence was presented regarding the number of Houlton Enterprises employees during the relevant time and, in any event, Shafer never worked for Houlton Enterprises. Therefore, within the meaning of § 12111 of the ADA, neither Kearney Cash nor Houlton Enterprises, together or separately, could be considered as Shafer's "employer," and this Court lacks subject matter jurisdiction in this suit. Cf. Webb, 652 F. Supp. at 922 (finding two distinct entities where an agency relationship existed between the two, no "employer" status, and the absence of subject matter jurisdiction over the Title VII suit). The Defendants' motion for summary judgment will be granted, and the motion to dismiss will be denied as moot.
IT IS ORDERED:
1. The Defendants' Motion for Summary Judgment (Filing No. 39) is granted;
2. The Defendants' Motion to Dismiss and for Separate Determination by the Court of Subject Matter Jurisdiction Before the Empaneling of a Jury (Filing No. 65) is denied as moot; and
3. A separate Judgment will be issued.