March v . Technical Employment, et a l . CV-98-636-M 03/03/00 UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
Christine March, Plaintiff
v. Civil N o . 98-636-M Opinion N o . 2000 DNH 055 Technical Employment Services, Inc. and Daniel Duncanson, Defendants
O R D E R
Christine March brings this Title VII action against her
former employer, Technical Employment Services, Inc. (“TESI”),
and her former supervisor, Daniel Duncanson. See 42 U.S.C.
§ 2000e et seq. She also brings a state common law claim for
assault and battery, over which she asks the court to exercise
supplemental jurisdiction. See 28 U.S.C. § 1376. Defendants
move to dismiss the complaint for lack of subject matter
jurisdiction over the claims against TESI and failure to state a
cognizable claim against Duncanson. See Fed. R. Civ. P. 12(b)(1)
and ( 6 ) . Standard of Review
A. Rule 12(b)(6) - Defendant Duncanson’s Motion to Dismiss.
A motion to dismiss under Fed. R. Civ. P. 12(b)(6) is one of
limited inquiry, focusing not on “whether a plaintiff will
ultimately prevail but whether the claimant is entitled to offer
evidence to support the claims.” Scheuer v . Rhodes, 416 U.S.
232, 236 (1974). In considering a motion to dismiss, “the
material facts alleged in the complaint are to be construed in
the light most favorable to the plaintiff and taken as admitted,
with dismissal to be ordered only if the plaintiff is not
entitled to relief under any set of facts he could prove.”
Chasan v . Village District of Eastman, 572 F.Supp. 5 7 8 , 579
(D.N.H. 1983), aff’d without opinion, 745 F.2d 43 (1st Cir. 1984)
(citations omitted).
B. Rule 12(b)(1) - Defendant TESI’s Motion to Dismiss.
There is some disagreement as to whether Title VII’s “15
employee” requirement is jurisdictional or simply an element of
the cause of action. See generally E.E.O.C. v . S t . Francis
2 Xavier Parochial School, 117 F.3d 621, 623-24 (D.C. Cir. 1997)
(discussing the split in the circuits). The majority declares
the requirement to be jurisdictional. See, e.g., Lyes v . City of
Riviera Beach, Florida, 166 F.3d 1332, 1340 (11th Cir. 1999)
(“Because we have treated the question of whether a defendant
meets the statutory definition of ‘employer’ as a threshold
jurisdictional matter under Title V I I , a plaintiff must show that
her ‘employer’ had fifteen or more employees for the requisite
period under the statute before her claims can be reached.”)
(citations omitted). This court has joined that majority. See
Hoar v . Prescott Park Arts Festival, Inc., 39 F.Supp.2d 109, 110
(D.N.H. 1997).
When subject matter jurisdiction is challenged, the party
invoking federal jurisdiction must establish that it exists. See
Murphy v . United States, 45 F.3d 520, 522 (1st Cir. 1995). Here,
plaintiff bears that burden of proof. S o , before the court may
exercise jurisdiction over her Title VII claims, she must
establish that TESI employed the statutorily prescribed minimum
3 number of employees for the requisite period of time. See
Prescott Park Arts Festival, Inc., 39 F.Supp.2d at 110 (D.N.H.
1997) (“Thus, the jurisdictional question presented by
defendant’s motion to dismiss is whether plaintiff can show that
defendant had the statutorily required number of employees in the
pertinent years.”). To establish subject matter jurisdiction in
this case, plaintiff must show that TESI employed at least
fifteen employees for a minimum of twenty weeks in either 1995 or
1996. See 42 U.S.C.A. § 2000e(b); see also Walters v .
Metropolitan Educ. Enterprises, 519 U.S. 202, 205 (1997).
When determining subject matter jurisdiction, the well-
pleaded facts in the complaint are taken as true and inferences
are resolved in favor of the nonmoving party. The court may,
however, also consider evidence outside of the pleadings
submitted to support or challenge jurisdictional allegations.
See Fed. R. Civ. P. 12(b)(1); Aversa v . United States, 99 F.3d
1200, 1209-10 (1st Cir. 1996). Consequently, although plaintiff
argues that TESI’s motion should be construed as one for summary
4 judgment (because it is supported by an affidavit), TESI has
properly presented it as a motion to dismiss under Rule 12(b)(1).
Background
Technical Employment Services employs and places temporary
workers with various corporate clients. During the period
relevant to this case, TESI concedes that it employed four
permanent workers, including both plaintiff, who was employed
from approximately October of 1992 through January of 1996, and
Duncanson, who was TESI’s president and chief executive officer.
Duncanson was also a stockholder of TESI and acted as its
corporate treasurer.
During both 1995 and 1996, TESI submitted documentation to
the New Hampshire Department of Employment Security showing that
it employed more than fifteen individuals (i.e., the four
permanent employees, as well as temporary workers it placed with
its clients) for more than the 20 week minimum prescribed by
Title VII. See Exhibit B to plaintiff’s objection (document n o .
5 13). With regard to those temporary employees, TESI admits that:
“(1) the relationship between TESI and its temporary workers is
capable of spanning months or possibly years; (2) TESI pays the
temporary workers directly; and (3) TESI withholds federal,
social security, and FICA taxes from the temporary workers.”
Defendants’ memorandum (document n o . 9 ) at 5 . The record also
reveals that TESI paid workers’ compensation premiums for those
workers, paid them for holidays during their assignments with
TESI’s clients, and maintained the right to terminate their
employment should they violate certain conditions of that
employment. Finally, TESI distributed a publication to all its
temporary workers that provided, among other things:
We Are Your Employer. Always remember that regardless of where you are assigned, Technical Employment Services is your employer. We pay you and are responsible for your payroll and withholding taxes, worker’s compensation, etc. Therefore, if there are any problems reporting to work, missing scheduled work time, or any job related problems, do not talk to the client company before reporting the problem to u s . Remember, we are your employer and responsible for your work at the assigned job.
6 Employee pamphlet entitled, “Welcome to Technical Employment
Services, Inc.,” Exhibit A to plaintiff’s memorandum.
Notwithstanding the foregoing, TESI denies that it employed
(at least for Title VII purposes) the temporary workers whom it
placed with various client organizations, and thus claims that it
does not employ the statutory minimum number of workers (i.e., 15
for at least 20 weeks) and is not an “employer” under Title VII.
In support of that position, TESI says that: (1) it did not
provide the tools or instrumentalities for the jobs performed by
the temporary workers; (2) although it paid the temporary
workers, it did not determine the rate at which they were
compensated; (3) the temporary workers performed their jobs on
the clients’ premises; (4) the clients had control over when and
how long the temporary employees worked; and (5) the jobs
performed by the temporary workers were “not a part of the
regular business of TESI.” Defendants’ memorandum at 6.
Discussion
7 I. Title VII Claims Against Duncanson.
Duncanson asserts that he cannot be held personally liable
under Title VII for any alleged acts of discrimination. Although
the Court of Appeals for the First Circuit has declined to
address the issue, see, e.g., Morrison v . Carleton Woolen Mills,
Inc., 108 F.3d 429, 444 (1st Cir. 1997), this court previously
aligned itself with the majority of courts that have considered
the question, concluding that there is no individual liability
under Title VII. See Preyer v . Dartmouth College, 968 F.Supp.
2 0 , 25 (D.N.H. 1997) (“[I]t is well-settled law in this district
that there is no individual liability under Title VII.”). See
also Douglas v . Coca-Cola, N o . 94-97-M, slip op. at 18-19 (D.N.H.
Nov. 6, 1995) (collecting cases). Accordingly, as to defendant
Duncanson, counts one and two of plaintiff’s complaint are
dismissed.1
1 Parenthetically, the court notes that even if it were possible, under certain circumstances, to pierce the corporate veil and impose “alter-ego” liability on a principal of a corporation for alleged violations of Title VII, plaintiff has failed to demonstrate that this case warrants such action. She has failed to identify any of the factors traditionally present when the corporate form is disregarded and alter-ego liability is
8 II. Subject Matter Jurisdiction Over Plaintiff’s Title VII Claims Against TESI.
There is no doubt that TESI employed plaintiff. The issue
presented by TESI’s motion to dismiss is whether it also employed
the temporary workers it placed with its various corporate
clients. The answer to that question is potentially dispositive
of plaintiff’s Title VII claims against TESI because, if those
workers are not deemed employees of TESI, it did not employ the
statutory minimum number of employees and this court would lack
subject matter jurisdiction over plaintiff’s claims.
As noted above, TESI argues that, for Title VII purposes, it
employs only the four permanent workers, and not the temporary
workers. Consequently, it says it does not meet Title VII’s
definition of “employer.” The court disagrees.
imposed on a principal (e.g., disregarding of corporate formalities, under-capitalization, use of the corporation for personal purposes, e t c . ) . And, she has failed to provide any legal support for her assertion that Duncanson can be held personally liable under Title VII as the “agent” of an “employment agency.” See 42 U.S.C. § 2000e(c). See generally Greenlees v . Eidenmuller Enterprises, Inc., 32 F.3d 197, 198-99 (5th Cir. 1994).
9 A. TESI Employs the Temporary Workers.
Relying largely upon an opinion of the United States
District Court for the District of Delaware, TESI suggests that
common law agency principles should determine whether TESI had an
employer-employee relationship with those workers. See Kellam v .
Snelling Personnel Services, 866 F.Supp. 812 (D. Del. 1994). If
common law agency principles are applied to the facts of this
case, says TESI, the court will necessarily conclude that TESI
does not “employ” the temporary workers.
The relevant factors identified by the Kellam court include:
(1) who pays the employees and withholds state and federal taxes
from their salary; (2) who, from a tax standpoint, is treated as
the employees’ employer; (3) who retains the right to fire the
employees; (4) who provides the tools or instrumentalities with
which the employees perform their assigned tasks; (5) where the
employees actually perform those tasks; (6) the duration of the
relationship between the employees and the employment agency and
the agency’s client; (7) who controls the manner or means of the
10 employees’ job performance. See id., at 815 (citing Nationwide
Mut. Ins. C o . v . Darden, 112 S.Ct. 1344, 1348-49 (1992)).
Of the factors identified above, the first, second, third,
and sixth weigh in favor of the conclusion that TESI employs the
temporary workers. The court is persuaded that TESI in fact
exercises sufficient control over substantial aspects of the
temporary workers’ terms and conditions of employment to warrant
the conclusion that it “employs” those workers for purposes of
Title VII. Among other things, TESI collects those workers’ time
slips and pays their wages, withholds federal taxes on their
behalf, pays workers’ compensation premiums on their behalf,
establishes certain conditions of their employment, and retains
the right to discharge them. It also appears that those workers
are, for tax purposes, treated as employees of TESI. TESI also
retains the authority to determine which temporary employees are
assigned to specific clients. Finally, while not dispositive, it
is certainly relevant that TESI itself advises each temporary
worker, in writing, that “regardless of where you are assigned,
11 Technical Employment Services is your employer.” Exhibit A to
plaintiff’s memorandum.
On balance, the foregoing factors decidedly support the
conclusion that TESI (rather than the clients with whom the
temporary workers are placed) actually employs those workers.
Therefore, plaintiff has carried her burden and demonstrated that
TESI employed “fifteen or more employees for each working day in
each of twenty or more calendar weeks” in 1995 or 1996.
Accordingly, the court has subject matter jurisdiction over her
Title VII claims against TESI. See 42 U.S.C. § 2000e(b).
B. The “Joint Employer” Doctrine.
Even if TESI is not the sole employer of the temporary
workers, it i s , at a minimum, a “joint employer.” That is to
say, at least for Title VII purposes, TESI and the clients with
whom it places the temporary workers share the legal status of
“employer.”
12 1. Legal Standard - The “Joint Employer” Doctrine.
In certain cases (like this one) in which the employer-
employee relationship between parties is less than clear, “courts
have suggested that the term ‘employer’ under Title VII should be
construed in a functional sense to encompass persons who are not
employers in conventional terms, but who nevertheless control
some aspect of an individual’s compensation, terms, conditions,
or privileges of employment.” Astrowsky v . First Portland
Mortgage Corp., Inc., 887 F.Supp. 3 3 2 , 336 (D. M e . 1995)
(citation and internal quotation marks omitted). In this area of
labor relations, there are two related but distinct concepts that
may apply when a court is presented with the task of determining
whether a defendant employs the jurisdictionally mandated minimum
number of employees: the “single employer” doctrine and the
“joint employer” doctrine.
As the Court of Appeals for the First Circuit has observed,
“[t]he courts, in the Title VII context, have inappropriately
used the terms ‘single employer’ and ‘joint employer’
13 interchangeably, which in fact refer to two distinct concepts.”
Rivas v . Federacion de Asociaciones Pecuarias de Puerto Rico, 929
F.2d 814, 820 n . 16 (1st Cir. 1991). The Court of Appeals for
the Second Circuit explained the distinction as follows:
A “single employer” situation exists where two nominally separate entities are actually part of a single integrated enterprise so that, for all purposes, there is in fact only a “single employer.” The single employer standard is relevant when separate corporations are not what they appear to be, that in truth they are but divisions or departments of a “single enterprise.” In contrast, in a “joint employer” relationship, there is no single integrated enterprise. A conclusion that employers are “joint” assumes that they are separate legal entities, but that they have merely chosen to handle certain aspects of their employer-employee relationships jointly.
Clinton’s Ditch Co-op. Co., Inc. v . NLRB, 778 F.2d 132, 137 (2d
Cir. 1985) (citations and internal quotation marks omitted). See
also NLRB v . Western Temporary Services, Inc., 821 F.2d 1256,
1266 (7th Cir. 1986) (“The joint employer concept [as
distinguished from the “single employer” doctrine], is not based
on the integration of two companies but instead looks to the
control two separate companies exert over the same employees.”);
14 NLRB v . Browning-Ferris Indus. of Pennsylvania, Inc., 691 F.2d
1117, 1122-23 (3rd Cir. 1982) (“The basis of the finding [of
joint employer status] is simply that one employer while
contracting in good faith with an otherwise independent company,
has retained for itself sufficient control of the terms and
conditions of employment of the employees who are employed by the
other employer. Thus, the ‘joint employer’ concept recognizes
that the business entities involved are in fact separate but that
they share or co-determine those conditions of employment.”).
The court of appeals for this circuit has echoed the
holdings of other federal courts, observing that, “A joint
employer relationship exists where two or more employers exert
significant control over the same employees and share or co-
determine those matters governing essential terms and conditions
of employment.” Holyoke Visiting Nurses Ass’n v . NLRB, 11 F.3d
302, 306 (1st Cir. 1993). See also Rivas, 929 F.2d at 820 (“The
joint employer inquiry is a matter of determining which of two,
or whether both, respondents control, in the capacity of employer
15 the labor relations of a given group of workers.”) (citation and
internal quotation marks omitted). See generally Boire v .
Greyhound Corp., 376 U.S. 473, 480-81 (1964). Relevant factors
in this inquiry include:
supervision of the employees’ day-to-day activities; authority to hire, fire, or discipline employees; authority to promulgate work rules; conditions of employment, and work assignments; participation in the collective bargaining process; ultimate power over changes in employer compensation, benefits, and overtime; and authority over the number of employees.
Rivera-Vega v . ConAgra, Inc., 70 F.3d 153, 163 (1st Cir. 1995).
See also Clinton’s Ditch Co-op Co., Inc., 778 F.2d at 138-39
(focusing o n : authority to hire and fire; discipline; pay,
insurance, and maintenance of employee records; supervision of
employees; and participation in collective bargaining).
2. TESI is a Joint Employer of the Temporary Workers.
Here, TESI has at least shared authority to act in nearly
all of the areas identified above. As noted previously, TESI
collects the temporary workers’ weekly time slips and issues
16 their paychecks; withholds federal taxes from their paychecks;
pays their workers’ compensation premiums; retains the right to
hire, fire, and discipline them for various rules infractions;
treats those individuals, at least for tax purposes, as its
employees; and specifically declares to those workers that TESI,
and not the client with whom they are placed, is their employer.
See, e.g., Exhibit A to plaintiff’s memorandum (demonstrating
that TESI expressly retains control over several essential terms
and conditions of the temporary workers’ employment, including
(in addition to those factors listed above): imposing limitations
on their personal use of temporary employer’s phones; requiring
temporary employees to notify TESI if they are unable to attend
work on a given day; requiring employees to report any job-
related problems to TESI before disclosing them to the temporary
employer; imposing certain dress standards; e t c . ) .
In light of those facts, even if TESI is not the “sole”
employer of the temporary workers, it has retained authority to
exercise “significant control over [those] employees and [to]
17 share or co-determine those matters governing essential terms and
conditions of employment.” Rivera-Vega, 70 F.3d at 163 (quoting
Holyoke Visiting Nurses, 11 F.3d at 3 0 6 ) . As a result, TESI i s ,
along with the clients with whom the temporary workers are
placed, their “joint” employer. S o , for Title VII purpose, TESI
must be viewed as having employed the jurisdictionally minimum
number of workers during the period of time relevant to this
case. See Exhibit B to plaintiff’s memorandum.
Conclusion
Defendants’ motion to dismiss (document no. 9 ) is granted in
part and denied in part. There being no individual liability
under Title VII, plaintiff has failed to state a viable federal
claim against defendant Duncanson. Accordingly, counts one and
two of plaintiff’s complaint are, with regard to Duncanson,
dismissed.
As to defendant TESI, however, plaintiff has satisfied her
burden of demonstrating that TESI, whether individually, or
18 jointly with the client corporations it serves, employed at least
15 employees for a minimum of 20 weeks during 1995 or 1996.
Defendants’ motion to dismiss counts one and two against TESI i s ,
therefore, denied.
Finally, to the extent that defendants move the court to
decline to exercise supplemental jurisdiction over plaintiff’s
state law claim, that motion is denied. See 28 U.S.C. § 1367(a).
SO ORDERED.
Steven J. McAuliffe United States District Judge
March 3 , 2000
cc: Nancy Richards-Stower, Esq. Linda S . Johnson, Esq.