Deborah Anne Wells v. Clackamas Gastroenterology Associates, P.C., an Oregon Corporation

271 F.3d 903, 12 Am. Disabilities Cas. (BNA) 835, 2001 Cal. Daily Op. Serv. 9860, 2001 Daily Journal DAR 12345, 2001 U.S. App. LEXIS 25126, 2001 WL 1482701
CourtCourt of Appeals for the Ninth Circuit
DecidedNovember 26, 2001
Docket00-35545
StatusPublished
Cited by18 cases

This text of 271 F.3d 903 (Deborah Anne Wells v. Clackamas Gastroenterology Associates, P.C., an Oregon Corporation) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Deborah Anne Wells v. Clackamas Gastroenterology Associates, P.C., an Oregon Corporation, 271 F.3d 903, 12 Am. Disabilities Cas. (BNA) 835, 2001 Cal. Daily Op. Serv. 9860, 2001 Daily Journal DAR 12345, 2001 U.S. App. LEXIS 25126, 2001 WL 1482701 (9th Cir. 2001).

Opinions

Opinion by Judge TASHIMA; Dissent by Judge GRABER.

TASHIMA, Circuit Judge:

Plaintiff-Appellant Deborah Anne Wells appeals from the order of the district court granting summary judgment in favor of Defendant-Appellee Clackamas Gastroen-terology Associates, P.C. (Clackamas) on her claim under the Americans With Disabilities Act of 1990 (ADA). The district court held that Clackamas was not an “employer,” and therefore not a “covered entity,” within the meaning of the ADA because it did not have 15.or more employees during the relevant time periods. We must decide whether Clackamas’ physician-shareholders were “employees” within the meaning of the ADA. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we reverse.

I. BACKGROUND

Wells was an employee of Clackamas, an Oregon professional corporation, from 1986 until her termination in May 1997. During the relevant time period, four phy[904]*904sician-shareholders, all of whom participated in the management and operations of the medical practice, were the shareholders and directors of Clackamas. In addition to the physician-shareholders, 12-15 other persons were employed by Clacka-mas during this time period.

When Clackamas terminated Wells’ employment, she brought an action against Clackmas alleging unlawful discrimination on the basis of disability under Title I of the ADA, 42 U.S.C. §§ 12101-12117, and Or.Rev.Stat. §§ 659.436-659.449. She also brought a claim for common law wrongful discharge.

Clackamas moved for summary judgment against Wells’ ADA claim, arguing that it was not an “employer” and, consequently, not a “covered entity,” within the meaning of the ADA because it did not have 15 or more employees for the 20 weeks required by the statute. It is undisputed that if Clackamas’ physician-shareholders are not counted as “employees,” then it would have had too few employees to qualify as an “employer.” On the other hand, if the physician-shareholders are counted as “employees,” then the number of employees would have exceeded the number required to bring Clackamas under the coverage of the ADA. Relying on the “economic realities” test, Clackamas argued that its four physician-shareholders should be regarded as “partners” and not as “employees” within the meaning of 42 U.S.C. § 12111(4) & (5).

The magistrate judge accepted Clacka-mas’ argument and recommended that the court grant the motion for summary judgment on the ADA claim and decline to exercise supplemental jurisdiction over the remaining claims. The district court accepted the recommendations of the magistrate judge in their entirety and entered judgment dismissing the action. Wells timely appeals.

II. STANDARD OF REVIEW

We review a district court’s grant of summary judgment de novo and must determine whether, viewing the evidence in the light most favorable to the non-moving party, there are any genuine issues of material fact and whether the district court correctly applied the substantive law. Lopez v. Smith, 203 F.3d 1122, 1131 (9th Cir.2000) (en banc).

III. DISCUSSION

Whether shareholders of a professional corporation who are actively engaged in conducting the business of the corporation are “employees” under the ADA is an issue of first impression in this Circuit. Under the ADA, it is unlawful for a “covered entity” to discriminate against a qualified individual with a disability on the basis of that disability. 42 U.S.C. § 12112(a). The term “covered entity” includes an “employer.” Id. § 12111(2). An “employer” is defined as “a person engaged in an industry affecting commerce who has 15 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year.” Id. § 12111(5)(A). An “employee” is defined as “an individual employed by an employer.” Id. § 12111(4).

No circuit has interpreted these specific provisions of the ADA. There are, however, a number of cases that interpret nearly identical language in other federal employment discrimination statutes, including Title VII of the Civil Rights Act of 1964 and the Age Discrimination in Employment Act. These same cases also state that their interpretations should apply to all employment discrimination statutes. See e.g., Serapion v. Martinez, 119 F.3d 982, 985 (1st Cir.1997) (‘We regard Title VII, ADEA, ERISA, and FLSA as standing in [905]*905pari passu and endorse the practice of treating judicial precedents interpreting one such statute as instructive in decisions involving another.”); Hyland v. New Haven Radiology Assocs., P.C., 794 F.2d 793, 796 (2d Cir.1986) (holding that for the FLSA, Title VII, and the ADEA, “cases construing the definitional provisions of one are persuasive authority when interpreting the others”).

In EEOC v. Dowd & Dowd, Ltd., 736 F.2d 1177 (7th Cir.1984), the Seventh Circuit applied an “economic realities” test and concluded that “a shareholder in a professional corporation is far more analogous to a partner in a partnership than it is to the shareholder of a general corporation.” Id. at 1178. On this basis, the. court concluded that because they are “really” partners, shareholders in professional corporations are not to be counted as employees for purposes of federal employment discrimination law. Id.

This approach was rejected by the Second Circuit in Hyland. In Hyland, the court held that the use of the corporate form, including a professional corporation, “precludes any examination designed to determine whether the entity is in fact a partnership.” 794 F.2d at 798. The incor-porators of a professional corporation make a deliberate decision to adopt the corporate form for their business in order to avail themselves of important tax, employee benefit, and civil liability advantages. Id. Having freely made the choice to adopt this form of business organization “they should not now be heard” to say that their firm is “essentially a medical partnership,” and not a corporation. Id.

Given the broad purpose of the ADA, see 42 U.S.C. § 12101, we find Hyland’s reasoning to be considerably more persuasive than Doivd’s. Because the decision to incorporate is presumably a voluntary one, there is no reason to permit a professional corporation to secure the “best of both possible worlds” by allowing it both to assert its corporate status in order to reap the tax and civil liability advantages and to argue that it is like a partnership in order to avoid liability for unlawful employment discrimination.

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271 F.3d 903, 12 Am. Disabilities Cas. (BNA) 835, 2001 Cal. Daily Op. Serv. 9860, 2001 Daily Journal DAR 12345, 2001 U.S. App. LEXIS 25126, 2001 WL 1482701, Counsel Stack Legal Research, https://law.counselstack.com/opinion/deborah-anne-wells-v-clackamas-gastroenterology-associates-pc-an-ca9-2001.