United States District Court, D. South Dakota, Southern Division
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For Julie A. Axness, Plaintiff: Eric T. Preheim, LEAD ATTORNEY, Fuller & Williamson, LLP, Sioux Falls, SD.
For Aqreva, LLC, Carla Campbell, Defendants: Alex M. Hagen, LEAD ATTORNEY, Cadwell, Sanford, Deibert & Garry, LLP, Sioux Falls, SD.
For Child & Adolescent Neurology, LLC, Dr. Jorge Sanchez, Defendants: Laura K. Hensley, Lisa Hansen Marso, Thomas J. Welk, LEAD ATTORNEYS, Meghann M. Joyce, Boyce Law Firm, Sioux Falls, SD.
MEMORANDUM OPINION AND ORDER DENYING PLAINTIFF'S AND DEFENDANTS' MOTIONS FOR SUMMARY JUDGMENT
Lawrence L. Piersol, United States District Judge.
Plaintiff and Defendants each bring motions for summary judgment in this Title VII employment discrimination action. Plaintiff moves for partial summary judgment as it relates to the definition of " employer" under Title VII of the 1964 Civil Rights Act. Specifically, Plaintiff moves the Court to, as a matter of law, preclude Defendants Aqreva LLC and Carla Campbell from availing themselves of the defense that they are not Plaintiffs Title VII " employer." Defendants, in turn, each move for summary judgment in their respective favors as to the entirety of the action. For the reasons herein, each motion is denied in full.
The facts of this case are disputed. What is clear from the undisputed facts, however, is that Child & Adolescent Neurology (" CAN" ) is a clinic operated by its principal and sole practitioner, Defendant-Dr. Jorge Sanchez (" Sanchez" ). In October 2009, CAN entered into a " Client Services Agreement" (the " Agreement" ) with Aqreva's predecessor-in-interest, the Medical Practice Management Division of Eide Bailly LLP. In August 2010, Dr. Sanchez consented to an assignment of the Agreement to Aqreva. It is undisputed that the Agreement identified Aqreva as an independent contractor. Under the Agreement, Aqreva is paid a percentage of bills collected on CAN's behalf.
Julie Axness (" Plaintiff" or " Axness" ) was a medical assistant at CAN. It is undisputed that she was hired by Dr. Sanchez and was qualified for the position. During the application process, Defendant-Carla Campbell (" Campbell" ), a regional supervisor employed by Aqreva, received Axness's application materials and relayed them to Dr. Sanchez. It is disputed to what degree Campbell assisted prospective employees in filling out employment documents for CAN, but it is undisputed that she was authorized as a representative of CAN when filling out these forms. Subsequently, Dr. Sanchez interviewed Axness and offered her the job as an at-will employee. Campbell was not present for the interview. During her time at CAN, Axness was the only full-time employee. Axness's beginning wage was $12 per hour. The wage was raised to $12.36 in October 2012, but it is disputed whether the raise was solely within the discretion of Dr. Sanchez's. One of the undisputed duties provided by Aqreva to CAN, however, was processing payroll checks by calculating the wages based on hours worked and subtracting the appropriate withholdings.
As part of her employ, Axness worked alongside and answered to Dr. Sanchez. Axness's duties at CAN ranged from answering the telephone, contacting or visiting with patients, and handling medications for patients. It is disputed, however, the frequency with which Axness interacted with Campbell in-person or the degree of interaction, generally. The degree of supervision wielded by Campbell over Axness is also contested. The record does, however, contain various emails from Axness to Campbell related to time-off requests, temporary replacements for these various times off, and the like.
While employed at CAN, Axness became pregnant in September 2012. On September 24, 2012, Axness emailed Campbell seeking information relative to CAN's leave policy, the amount of leave CAN would grant, and the potential of hiring a temporary replacement for Axness. Campbell informed Axness that usage of employment agencies in order to fulfill coverage for absences was " cost prohibitive." It is disputed how frequent CAN used employment agencies, but it is not disputed that CAN had used them prior to and subsequent to Axness's employment. Axness also had a conversation with Dr. Sanchez about maternity leave, pay, coverage for Axness in her absence, and the amount of time off available for leave. Campbell was not present for this conversation and it is disputed how involved she was with the maternity leave decision. Sanchez made the initial determination as to Axness's leave and informed Axness that she was entitled to four weeks of maternity leave. It is undisputed, however, that Dr. Sanchez never used the word " guarantee" in relation to maternity leave entitlement. It was also during this time period that Axness was told by Campbell that usage of a temporary employee from an employment agency was " cost prohibitive." Whether Campbell made such a determination independently or through consultation with Dr. Sanchez is one of the primary points of dispute.
During pregnancy, Axness occasionally fell ill or was otherwise unable to work at CAN. When such occasion arose, Axness would contact Dr. Sanchez to inform him and request permission to arrive at work late or not at all. The degree of Campbell's involvement in such requests is disputed. Axness was also hospitalized during her pregnancy. Consequently, she missed several days of work. After receiving approval from Dr. Sanchez, an employment agency was used to temporarily replace Axness during that time.
In order to cover Axness during her maternity leave, Dr. Sanchez requested she secure a replacement for the relevant time period by contacting her previous classmates. When such attempts failed, Dr. Sanchez asked Aqreva to locate a qualified individual. To that end, Campbell placed employment advertisements on a website maintained by KELO-LAND television, a regional news station in Sioux Falls, South Dakota, and sent emails to several of her contacts. During this initial search, a qualified applicant was located who was to cover for Axness during her leave and as necessary prior to Axness's departure. This applicant was offered the job, she accepted, but subsequently reneged. Prior to the potential employee's cancellation, however, Axness was aware of the proposal. She even met the potential replacement and inquired whether the temporary employee would be at CAN in time sufficient for Axness to train her on necessary job duties.
In April 2013, Dr. Sanchez and Campbell explained to Axness that Dr. Sanchez sought to shift from a single full-time employee to two part-time employees. At this time, while it undisputed that Axness vocalized her objection to being reduced to strictly part-time hours, it is disputed whether that objection constituted Axness voluntarily terminating her employment with CAN.
On April 19, 2013, Campbell again placed an employment advertisement seeking a certified medical assistant on KELO-LAND's website. On April 22, 2013, Campbell received an application for employment from Tamara Kelly (a/k/a Tami Stenzel) (" Kelly" ). On May 6, 2013, Kelly was hired to work for CAN in Axness's stead as a full-time employee. Kelly admits in her deposition that, at the time, she
had allowed her certification as a CNA to lapse and when her employment at CAN commenced she had not yet renewed her certification.
On May 6, 2013, Axness underwent a ?-section, which was approximately three weeks ahead of her scheduled due date. Several days later, Axness contacted Dr. Sanchez regarding her desire to return to CAN. The undisputed facts are unclear on this point, but the parties seem to agree that Axness requested to bring her newborn with her into CAN's office for the first several weeks of her return. Dr. Sanchez subsequently informed Campbell of Axness's proposal, which was ultimately declined.
On May 23, 2013, Axness received a phone call from Campbell and Dr. Sanchez, both of whom were in CAN's office. The facts surrounding what followed are contested by the parties, but it was during this phone call that Axness's return-to-work proposal was formally declined. Following the phone call, Axness received a release agreement from Campbell, which required she sign the release as a condition of obtaining severance pay from CAN. By signing the agreement, Axness would have agreed not to pursue any employment related charges. It is disputed whether more than severance was withheld as a condition of signing the release. Attached to the release agreement was a note from Campbell requesting that Axness sign the release form before she be sent her final " payroll" check. Axness declined to sign the release agreement.
At the time of Axness's receipt of the separation agreement, she had accrued an additional 1.53 hours of paid time off (PTO). The undisputed facts make clear that at least one person handling Axness's payroll and PTO entitlements was Leann Vaughan (" Vaughan" ), an Aqreva employee. Although they had never met in-person, Axness was aware that Vaughan handled payroll for CAN and the two had communicated prior about a separate PTO related issue. On May 14, 2013, Vaughan calculated Axness's wages for April 28 to May 11, 2013. The 1.53 hours of PTO were the result of hours worked by Axness during that period. On May 14, 2013, Vaughan had not been aware that it was Axness's last pay period and did not include the 1.53 hours of PTO in the relevant pay check. On May 28, 2013, Vaughan was told that Axness's employment at CAN had concluded and that Axness was eligible for severance if she signed and returned a release agreement. It is disputed whether oversight caused Vaughan to exclude the PTO from Axness's final check or whether she was instructed to by Campbell pending Axness's signing of the release agreement. The PTO was not paid to Axness until she began a South Dakota administrative proceeding.
Axness subsequently filed a claim with the South Dakota Department of Labor, Division of Human Rights, which found no probable cause for the alleged discrimination claims. Axness appealed to South Dakota's Sixth Circuit Court in Pierre, South Dakota wherein Judge Barnett reversed the DHR. Specifically, Judge Barnett found that, contrary to Aqreva's contentions, submitted evidence supported the allegation that Aqreva operated as Axness's
employer and could therefore be found liable for the alleged discrimination. Subsequently, Axness filed Title VII claims in this Court against Aqreva and Campbell. Additionally, South Dakota state law claims have been filed in this Court against Aqreva, Campbell, Dr. Sanchez and CAN. All Defendants have moved for summary judgment on all relevant claims. Additionally, Axness has moved for partial summary judgment as to Aqreva's defense that it was not Axness's Title VII employer.
Summary judgment shall be entered if " 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). In ruling on a motion for summary judgment, the Court is required to view the facts in the light most favorable to the non-moving party and must give that party the benefit of all reasonable inferences to be drawn from the underlying facts. AgriStor Leasing v. Farrow, 826 F.2d 732, 734 (8th Cir. 1987). The moving party bears the burden of showing both the absence of a genuine issue of material fact and its entitlement to judgment as a matter of law. Fed.R.Civ.P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In employment discrimination cases, summary judgment should seldom be granted because intent is often the central issue and claims are often based on inference. Wheeler v. Aventis Pharms., 360 F.3d 853, 857 (8th Cir. 2004). Still, employment discrimination cases are not immune from summary judgment, and there is no separate summary judgment standard that applies to these cases. See Fercello v. County of Ramsey, 612 F.3d 1069, 1077 (8th Cir. 2010).
I. TITLE VII CAUSES OF ACTION
Before the Court are three separate motions for summary judgment: (1) Plaintiffs motion for partial summary judgment against Defendant-Aqreva and Defendant-Campbell; (2) Aqreva's and Campbell's joint motion for summary judgment; and (3) Dr. Sanchez's and CAN's motion for summary judgment. Each will be analyzed in turn.
A. WHETHER AXNESS IS ENTITLED TO PARTIAL SUMMARY JUDGMENT AGAINST AQREVA?
Axness moves to, in effect, deprive Aqreva of the defense that it was not Axness's employer within the meaning of Title VII. 42 U.S.C. § 2000e-2(a) reads in relevant part,
It shall be an unlawful employment practice for an employer
(1) to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin[.]
42 U.S.C. § 2000e-2(a)(1). Further, an employer is " a person engaged in an industry affecting commerce who has fifteen or more employees for each working day in each of twenty or more calendar weeks in
the current or preceding calendar year[.] 42 U.S.C. § 2000e.
It is undisputed that Aqreva is an " employer" within the meaning of Title VII. What is disputed, however, is whether Aqreva is Axness's employer for purposes of this action. In an attempt to circumvent the point, Axness highlights that § 2000e-2(a) prohibits an employer from discriminating against " any individual." In essence, Axness maintains that any employer may be liable for discriminating against any employee, even one not employed by the defendant-employer in question, if the discrimination impacts the privileges of the employee's occupation. Such an expansive scope is not supported by other courts' interpretations.
" [I]n order to prevail on [a] Title VII claim, [a plaintiff] must demonstrate that defendants were her 'employer.'" Moland v. Bil-Mar Foods, 994 F.Supp. 1061, 1068 (N.D. Iowa dismissed Aug. 2, 1999) (citing Devine v. Stone, Leyton & Gershman, P.C., 100 F.3d 78, 79 (8th Cir. 1996)). See Deal v. State Farm County Mut. Ins. Co. of Tex., 5 F.3d 117, 118 (5th Cir. 1993) (affirming district court's order dismissing plaintiffs' Title VII and ADEA claims for lack of jurisdiction where plaintiff failed to establish that defendants were her employers); Shah v. Littelfuse Inc., No. 12 CV 6845, 2013 WL 1828926, at *3 (N.D.Ill. April 29, 2013) (quoting Knight v. United Farm Bureau Mut. Ins. Co., 950 F.2d 377, 380 (7th Cir. 1991)) (" To maintain a cause of action for discriminatory discharge under Title VII, a plaintiff must allege the existence of an employment relationship" ). In Moland, the plaintiff " concede[d] that she cannot prevail against defendants on her discrimination claims unless she can demonstrate the existence of an employer-employee relationship with defendants." Moland, 994 F.Supp. at 1068. Notwithstanding, the plaintiff there averred " that the extent and nature of the control asserted by defendants over the work and workplace establishe[d] an employer-employee relationship between her and defendants for Title VII purposes." Id. To that end, the Moland court noted that whether a person qualifies as an " employee" under Title VII turns on federal law. Id.
In drawing its conclusions, the Moland court noted that three tests have been developed for determining whether a person may be defined as an employee: " (1) the common law agency test . . .; (2) the economic realities test . . .; and (3) the hybrid test, a combination of the common law agency and economic realities tests[.]" Id. The Moland court noted that the Eighth Circuit had expressly rejected the economic realities test in Wilde v. County of Kandiyohi, 15 F.3d 103, 106 (8th Cir. 1994). Instead, the Eighth Circuit applies the hybrid test, which bears no significant distinction from the common law agency test. Applying the hybrid test, the definition of " employee" is interpreted against the backdrop of common law precepts. Moland, 994 F.Supp. at 1069 (quoting Wilde, 15 F.3d at 105). The test accounts for numerous factors related to the employment relationship; no one, however, is dispositive.
This [hybrid] test calls for application of general principles of the law of agency to undisputed or established facts. Consideration of all of the circumstances surrounding the work relationship ...