Axness v. Aqreva, LLC et al
Filing
72
MEMORANDUM OPINION AND ORDER denying 38 Motion for Summary Judgment; denying 27 Motion for Partial Summary Judgment; denying 32 Motion for Summary Judgment. Signed by U.S. District Judge Lawrence L. Piersol on 7/27/15. (DJP)
FILED
JUL 2 7 2015
UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
SOUTHERN DIVISION
~~
*****************************************************************************
JULIE AXNESS,
Plaintiff,
vs.
AQREVA LLC, CARLA CAMPBELL, in her
capacity as an employee of Aqreva, CHILD &
ADOLESCENT NEUROLOGY, and DR.
JORGE SANCHEZ, as owner of Child &
Adolescent N euro logy
Defendants.
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
CIV 14-4078
MEMORANDUM OPINION AND
ORDER DENYING PLAINTIFF'S
AND DEFENDANTS' MOTIONS·
FOR SUMMARY JUDGMENT
******************************************************************************
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 oflaw, 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.
BACKGROUND
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 ofEide Bailly LLP. In August 2010, Dr. Sanchez
consented to an assignment of the Agreement to Aqreva. It is undisputed that the Agreement
1
identified Aqreva as an independent contractor. Under the Agreement, Aqreva is paid a
percentage ofbills 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 fulltime 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 ofI: 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.
2
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.
3
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 C-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 proposa~ 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. 1
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
1
Years prior to Axness's employment, CAN employed DV (initials are being used to protect the former employee's
anonymity). In February 2010, DV had injured her ankle and informed Dr. Sanchez. As a result of the injury, DV
could not perform her job functions for a sustained period. She was informed that her employment with CAN was
terminated due to her inability to perform her job functions. DV was sent a release form similar in fashion to
Axness. The primary distinction from the instant case, however, is that DV was terminated after exercising fourweeks ofleave.
4
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. 2 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.
DISCUSSION
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 oflaw." 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
2
Any preclusive effect of the state court disposition has not been raised by the parties and, thus, will not be
addressed by the Court in this memorandwn opinion. The preclusive effect of decisions is not a jurisdictional issue.
See Krull v. Jones, 46 F. Supp. 2d 997, 1002 (D.S.D. 1999) (citing U.S. v. Metropolitan St. Louis Sewer Dist., 952
F.2d 1040, 1043 (8th Cir. 1992)). Rather, claims of preclusion are affirmative defenses and are generally waived by
the party entitled to assert them if not pled. See id.; Bechtold v. City ofRosemont, 104 F .3d 1062, 1068 (8th Cir.
1997).
5
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 oflaw. Fed. R. Civ. P. 56(a); Anderson v. Liberty
Lobby, Inc., 477 U.S. 242 (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 Pharm., 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 tum.
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 individua~ 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)(l). 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
6
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 defendantemployer in question, ifthe 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.
02, 1999) (citing Devine v. Stone, Leyton & Gershman, P.C., 100 F.3d 78, 79 (8th Cir.1996)).
See Deal v. State Fann 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. Littlefuse Inc.,
No. 12 CV 6845, 2013 WL 1828926, at *3 (N.D. Ill April 29, 2013) (quoting Knight v. United
Fann 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: 3 "(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 ofKandiyohi, l 5 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
3
The Moland court, without explanation, ceased framing the question as whether the defendant was plaintiff's
employer and, instead, analyzed the question as whether plaintiff was an "employee." See Moland, 994 F. Supp. at
1068. Presumably, the court meant to ascertain if plaintiff was an "employee" of the defendant-employer. In any
event, the two frameworks appear to be interchangeable.
7
"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 is essential, and no one factor is determinative.
Nevertheless, the extent of the employer's right to control the "means and
manner" of the worker's performance is the most important factor to review here,
as it is at common law .... If an employer has the right to control and direct the
work of an individual, not only as to the result to be achieved, but also as to the
details by which that result is achieved, an employer/employee relationship is
likely to exist.
Id. at 1069-70 (quoting Spirides v. Reinhardt, 613 F.2d 826, 831-32 (D.C. Cir. 1979)) (alteration
in original). 4
With the foregoing in mind, Axness has not adequately borne her burden of proof as to her
motion for summary judgment on the issue of"direct employment." Although the record does
contain evidence that Aqreva was her "employer," so that direct employer claim can be
submitted to the jury. The application for employment Axness completed for the position at
CAN referenced Aqreva as the employer. Moreover, deposition testimony suggests that
Campbell and Aqreva supervised, trained, and reprimanded employees of CAN. The facts giving
rise to this cause of action are disputed and Aqreva correctly points out that Axness, in her
deposition, seemed to understand Dr. Sanchez as her supervisor and wielded ultimate authority.
Thus, while, as a matter oflaw, Aqreva is an employer within the meaning of Title VII, a
genuine issue of material fact remains whether it is Axness's employer. The finder of fact will
make that determination after being instructed on Title VII and Eighth Circuit law. See Bryson v.
Middlefield Volunteer Fire Department, Inc., 656 F.3d 348, 352 (6th Cir. 2011) (quoting
4
The D.C. Circuit Court of Appeals in Spirides listed 11 other factors for consideration:
( 1) the kind of occupation, with reference to whether the work usually is done under the direction
of a supervisor or is done by a specialist without supervision; (2) the skill required in the particular
occupation; (3) whether the "employer" or the individual in question furnishes the equipment used
and the place of work; (4) the length of time during which the individual has worked; (5) the
method of payment, whether by time or by the job; (6) the manner in which the work relationship
is terminated; i.e., by one or both parties, with or without notice and explanation; (7) whether
annual leave is afforded; (8) whether the work is an integral part of the business of the
"employer"; (9) whether the worker accumulates retirement benefits; (10) whether the "employer"
pays social security taxes; and (11) the intention of the parties.
Spirides, 613 F.2d at 832.
8
Simpson v. Ernst & Young, 100 F.3d 436, 439 (6th Cir. 1996), cert. denied, 520 U.S. 1248.)
("Whether the Department is an 'employer' for purposes of Title VII, '[i]n the absence of a
conflict of material fact, ... is appropriate for the court to resolve ... as a matter oflaw"')
(emphasis added)). See also Lilley v. BTM Corp., 958 F.2d 746, 750 n. 1(6th Cir. 1992) (''The
determination of employment status is a mixed question of law and fact. Normally, a judge will
be able to make this determination as a matter oflaw. However, where there is a genuine issue of
fact or conflicting inferences can be drawn from the undisputed facts ... the question is to be
resolved by the finder of fact in accordance with the appropriate rules oflaw.").
Notwithstanding the determination of Aqreva's "direct employment" status, supra, Axness also
argues, in the alternative, that Aqreva may be held liable based on an "indirect employment"
theory ofliability. Specifically, Axness asserts that doctrine developed by the D.C. Circuit in
Sibley Memorial Hospital v. Wilson, 488 F.2d 1338 (D.C.Cir.1973), has application here. The
Sibley court articulated that a defendant may be held liable as a Title VII employer ifthe
defendant wields a sufficient amount of control over a plaintiffs job market access, "i.e.,
sufficient control over plaintiffs employment opportunities." Moland, 994 F. Supp. at 1071.
Like the instant case, the defendant in Sibley argued that it could not be held liable under Title
VII as it was not the plaintiffs "employer" within the Act's meaning. Sibley, 488 F.2d at 1340.
In ruling against the defendant on its motion for summary judgment, the Sibley court held that
Control over access to the job market may reside, depending upon the
circumstances of the case, in a labor organization, an employment agency, or an
employer as defined in Title VII; and it would appear that Congress has
determined to prohibit each of these from exerting any power it may have to
foreclose, on invidious grounds, access by any individual to employment
opportunities otherwise available to him. To permit a covered employer to exploit
circumstances peculiarly affording it the capability of discriminatorily interfering
with an individual's employment opportunities with another employer, while it
could not do so with respect to employment in its own service, would be to
condone continued use of the very criteria for employment that Congress has
prohibited.
Id. at 1341 (emphasis added). Accordingly, a party falling outside the "direct employer"
relationship with an employee-plaintiff may still be liable for employment discrimination as an
"indirect employer." The Eighth Circuit has not ruled on the applicability of the Sibley doctrine.
Thus, it is appropriate to again tum to Moland for guidance. There, the Iowa District Court noted
9
that the Eighth Circuit had not yet considered the indirect employer issue. The Moland court
found persuasive that many courts across the country have adopted the Sibley doctrine. See
Moland, 994 F. Supp. at 1072 (citing Zaklama v. Mt. Sinai Medical Ctr., 842 F.2d 291, 294 (11th
Cir.1988) ("[O]ther federal courts have held that, based on the language of§ 2000e--2( a)(l ),
Congress clearly intended that Title VII would extend beyond the immediate employer-employee
relationship under certain circumstances."); King v. Chrysler Corp., 812 F.Supp. 151, 153 (E.D.
Mo.1993). Finding in favor of Sibley's applicability, the Moland court found that a classic
context for Sibley application results when a defendant controls access to employment
opportunities of a third-party's employee and obstructs such employment based on
impermissible criteria. Moland, 994 F. Supp at 1073. Ultimately, the Moland court ruled that "42
U.S.C. § 2000e--2 applies where an employer controls an individual's access to employment
opportunities and denies that access based on unlawful criteria even though the individual is not
an employee of that employer." Id.
Here, Axness has pled facts sufficient enough to bring a Sibley cause of action in addition to a
direct employer claim. Viewing the undisputed facts most favorable to Aqreva, however,
genuine issues of material fact remain as to whether Aqreva maintained a sufficient degree of
control over Axness's employment at CAN. As explained, supra, regarding "direct
employment," deposition testimony from Axness indicates that she understood Dr. Sanchez to be
her supervisor and the one making ultimate decision as to her employment status. Whether
Aqreva, by way ofCampbelL retained sufficient control over Axness's employment is a question
of fact to be decided by the factfinder. Accordingly, Axness's motion for partial summary
judgment is denied. 5
5
There remains a third avenue through which Axness could conceivably hold Aqreva liable as her employer, but
one not pied by Axness. The Eleventh and Seventh Circuits, and various lower courts, have recognized a "joint
employer" doctrine. To so find two entities intertwined as joint employers, they must "'contract with each other for
the performance of some task, and one company retains sufficient control over the terms and conditions of
employment of the other company's employees[.]'" Wilborn v. Southern Union State Community College, 720 F.
Supp. 2d 1274, 1294 (D. Ala. 2010) (quoting Lyes v. City ofRiviera Beach, 166 F.3d 1332, 1341 (I Ith Cir. 2010)).
See Shah, 2013 WL 1828926, at *3 ("The Seventh Circuit has recognized joint employer status between a temporary
services agency and its client in the labor law context where two employers exert significant control over the same
employees.") (internal quotations omitted).
10
B. WHETHER AQREVA AND CAMPBELL ARE ENTITLED TO SUMMARY JUDGMENT
AGAINST AXNESS?
Aqreva moves for summary judgment as to each of Axness's claims. This section will be
confined to the Title VII claims and the claims based on South Dakota law will be discussed in
Part.II., infra.
1. Aqreva moves to dismiss Axness's 42 U.S.C. § 2000e-2(a)(l) discrimination claim, arguing
that it is not her Title VII "employer."
Aqreva's motion for summary judgment as to Axness's § 2000e-2(a)(l) claim, which operates as
a cross-motion to Axness's motion for partial summary judgment, seeks for this Court to hold
that Aqreva was not Axness's employer as a matter oflaw. Rather than restating the foregoing,
the discussion supra applies here and will be incorporated. Taking the undisputed facts now in
light most favorable to Axness, genuine issues of material fact remain and Aqreva's motion
based on§ 2000e-2(a)(l) is denied. As discussed above, the record is replete with disputes.
Moreover, inferences drawn from the undisputed facts are susceptible of favoring either side. For
example, the application for employment, discussed supra, references Aqreva as Axness's
employer; deposition testimony of Dr. Sanchez suggests that mechanisms ofCAN's business
were controlled by Campbell; and deposition testimony of Kelly indicates her understanding that
Campbell controlled the Human Resources component of CAN. Thus, much of the case turns on
the credibility of evidence and witnesses. Such an assessment is within the province of the
fact finder.
Finding that genuine issues of material fact exist as to whether Aqreva was Axness's employer,
the Court need then tum to the merits. When Congress enacted the Pregnancy Discrimination
Act (PDA) in 1978, it amended the definitional provisions of Title VII to clarify that
discrimination "on the basis of pregnancy, childbirth, or related medical conditions" is sex
discrimination under Title VII. The PDA states that pregnant women must ''be treated the same
for all employment-related purposes ... as other persons not so affected but similar in their
ability or inability to work." See 42 U.S.C. § 2000e(k).
A Title VII sex discrimination plaintiff who seeks to withstand a defendant's motion for
summary judgment must meet the burden shifting framework of McDonnell Douglas Corp. v.
11
Green, 411 U.S. 792, 802-04 (1973). See E.E.O.C. v. Trans States Airlines, Inc., 462 F.3d 987,
991-992 (8th Cir. 2006). Axness, however, also brings a claim against Aqreva and Campbell
under S.D.C.L. § 20-13-10, which is South Dakota's 42 U.S.C. § 2000e-2(a)(l) analogue. These
same state law claims are also raised against Dr. Sanchez and CAN. South Dakota courts
examine claims under SDCL § 20-13-10 under a standard identical to that applied to Title VII
claims. See Huck v. McCain Foods, 479 N.W.2d 167, 169 (S.D. 1991). Thus, because the Title
VII and South Dakota)aw claims hinge on the same factual allegations, rather than duplicating
recitation of the law and its application, the two will be combined and discussed in Part.II.A.,
infra.
2. Aqreva moves to dismiss Axness's 42 U.S.C. § 2000e-2(b) discrimination claim, arguing it is
not a Title VII "employment agency."
Axness also seeks to hold Aqreva liable as an "employment agency" under 42 U.S.C. §
2000e2(b). That section reads,
It shall be an unlawful employment practice for an employment agency to fail or
refuse to refer for employment, or otherwise to discriminate against, any
individual because of his race, color, religion, sex, or national origin, or to classify
or refer for employment any individual on the basis of his race, color, religion,
sex, or national origin.
42 U.S.C. § 2000e2(b). 42 U.S.C. 2000e(c) defines "employment agency" as "any person
regularly undertaking with or without compensation to procure employees for an employer or to
procure for employees opportunities to work for an employer and includes an agent of such a
person." Thus, akin to Title VII employers, employment agencies may not discriminate against
employees based on unlawful criteria. Axness, however, does not allege that Aqreva refused to
refer her for employment based on discriminatory animus. Instead, she relies on the "or
otherwise to discriminate clause" for purposes of this discrimination claim. As a threshold
matter, it must be determined if Aqreva meets the definition of a Title VII "employment
agency."
12
The contours of what constitutes "employment agencies" are unclear and few courts have
confronted the issue as this section of Title VII is not often litigated. 6 When confronted with the
issue, however, a California District Court noted that Congress's usage of the word "regularly"
suggested that "Congress had in mind to include only those engaged to a significant degree in
that kind of activity as their profession or business." Brush v. San Francisco Newspaper Printing
Co., 315 F. Supp. 577, 580 (D.C.A. 1970). "Brush's approach is not particularly complex,
essentially requiring a close reading of the statute. Its interpretation ... underlines that Congress
intended Title VII to apply only to those that act regularly as employment agencies, not those
that might occasionally refer a potential employee to someone else." Scaglione v. Chappaqua
Central School Dist., 209 F. Supp. 2d 311, 316 (D.N.Y. 2002).
An Alabama District Court also dealt with the definition of"employment agency" in Wilborn v.
Southern Union State Community College, 720 F. Supp. 2d 1274 (M.D. Ala. 2010). There, the
plaintiff was involved in a truck driver vocational program. She was the lone female participant
in 2007. The program was meant to train participants as truck drivers and place them with an
employer upon the training's completion. During her time in the program, the plaintiff was
subjected to a host of sexual advances and discriminatory conduct. As a result, she unenrolled in
the program and brought suit. The defendants contended that the Title VII cause of action was
not maintainable as they were neither the plaintiff's "employer" nor an "employment agency"
with respect to the plaintiff. In response, the plaintiff asserted that the defendants were not her
employer in a traditional sense, "but rather that in relation to her they acted as an 'employment
agency' under Title VII." Wilborn, 720 F. Supp. at 1290. The Wilborn court noted first that, as
explained above, to fall under the protection of§ 2000e-2(b), the entity in question must qualify
as an employment agency. Id. at 1291 ("[T]he court agrees that an entity would not be an
employment agency within the meaning of Title VII if it never, rarely, or even occasionally
sought to secure employees for an employer.") (internal quotations omitted). In finding that the
defendants qualified as an employment agency, the Wilborn court observed that "the program
billed itself as a 'highly intensive occupational training program with the end result being
6
What is required of an employment agency when issuing referrals for employment was an issue of first impression
for the Eighth Circuit in E.E. 0. C v. Kelly Services, Inc., 598 F .3d 1022 (8th Cir. 2010). There, the Eight Circuit
examined§ 2000(e)-2(b) as it related to a Muslim adherer's religious beliefs. Offering little instruction for purposes
of the instant case, the court was confronted squarely with§ 2000(e)-2(b)'s "fail or refuse to refer" clause and
offered no illumination for the subsequent "or otherwise to discriminate" clause.
13
employment in the field."' Id. The court went on to note that the defendant-program "actively
assist[ ed] participants in the job search process." Id.
Similar to what was found in Wilborn, Axness has presented evidence sufficient to raise a
genuine issue of material fact that Aqreva operated as an employment agency. Comparable to the
case at bar, in Wilborn, the defendants there aided their participants in finding employment and
placing them with employers. Here, evidence exists showing Aqreva, through Campbell,
regularly sought temporary employment to be placed at CAN when requested by Dr. Sanchez or
Axness. To emphasize the point, Axness argues that Campbell assisted Dr. Sanchez and CAN in
"staying staffed." (Amended Complaint at 11). While not placing Axness directly, Aqreva still
sought and placed employees with another employer, i.e., CAN.
Thus, viewing the undisputed facts most favorable to Axness, she has satisfied the threshold
definitional requirement. Similar to the definitional determination a jury may be asked to make
as to an "employer," whether an entity acts with sufficient regularity as an "employment agency"
for purposes of Title VII is also a proper question for the jury. Therefore, like what was found in
Wilborn, "Presented with the evidence[], a reasonable jury could conclude that [Aqreva]
'regularly under[took] ... to procure for employees opportunities to work' for [CAN]." Wilborn,
720 F. Supp. at 1292 (third alteration in original). The record shows that Campbell placed
advertisements with KELO-LAND television, sought employees directly from other agencies for
placement at CAN, and aided employees in completing CAN's employment paperwork. Axness
has submitted sufficient evidence demonstrating that Aqreva may qualify as a Title VII
employment agency and the Court will now tum to the merits of the claim.
Having found that Aqreva qualifies, for the purposes of this summary judgment motion, as a
Title VII employment agency, some courts would hold that Axness must demonstrate that the
alleged discrimination relates to Aqreva's capacity as an employment agency. "The few courts
that have addressed the liability of employment agencies under Title VII have held that 'the
scope of prohibited practices is limited' in comparison to discrimination cases involving actual
employers." Shah, 2013 WL 1828926, at *7 (quoting E.E.O.C. v. Kelly Services, Inc., 598 F.3d
1022, 1030 (8th Cir. 2010)). See Koger v. Allegheny Intermediate Unit, No. Civ. A. 10-1466,
2012 WL 603565, at *12 (W.D.P.A. Feb. 24, 2012) (finding that employment agencies can be
held liable insofar as the discrimination is rooted in employment "referrals, failure to refer, or
14
other discriminatory practices relating to referrals."); Kellam v. Snelling Personnel Services, 866
F. Supp. 812, 817 (D. Del. 1994) ("This Court understands the language 'or otherwise to
discriminate' to modify the phrase 'to fail or refuse to refer for employment' and thereby
encompass prohibited discrimination with respect to referrals that fall short of failure or refusal
to refer.").
To refute Ke/lam's and other courts' narrow interpretations of the "or otherwise to discriminate"
clause, Axness relies exclusively on Wilborn. In Wilborn, the court rejected the Kellam holding
that the "or otherwise to discriminate" clause should be read so narrowly. Noting that Congress,
by enacting 42 U.S.C. § 2000e-2(a), clearly intended that employees not suffer discriminatory
conduct from the employer, the Alabama District Court refused to "assume that Congress
nonetheless intended to allow that the same gauntlet be run in return for the privilege of being
referred for employment." Wilborn, 720 F. Supp. at 1293. Here, the evidence does support the
argument that Aqreva was acting as an employment agency. The Wilborn court noted explicitly
its contention that those seeking employment through an employment agency should not be
subjected to employment discrimination as a prerequisite for aid in securing employment
elsewhere. That reasoning applies here, as explained below.
Aqreva, contrary to what the Wilborn court found, urges that the "or otherwise to discriminate
clause" of 42 U.S.C. § 2000e2(b) should apply only when an employment agency discriminates
in its capacity as such, that is, in its operations of referring employees for employment.
Specifically, Aqreva argues that this Court should apply the reasoning articulated in Kellam and
not ''uncouple" the "or otherwise to discriminate" clause from the failure to refer language of§
2000e2(b). The Court does not agree. While the record contains no evidence that Aqreva referred
Axness herself for employment, a jury may still find Aqreva to be a Title VII employment
agency in that it placed other employees with CAN in an effort to unlawfully discriminate
against Axness. Axness, moreover, argues that the relevant referral was Axness's request that
Campbell secure temporary employment during Axness's maternity leave. In any event, the
Court adopts the Wilborn statement:
[T]he court finds it unreasonable to assume that Congress intended that a
prospective employee must endure a sexually "hostile environment" in order to
obtain employment, when the same conditions would give rise to a cause of action
in a place of employment. The Eleventh Circuit Court of Appeals has cautioned
15
against "a requirement that a man or woman run a gauntlet of sexual abuse in
return for the privilege of being allowed to work and make a living." Henson v.
City of Dundee, 682 F.2d 897, 902 (11th Cir.1982). This court will not assume
that Congress nonetheless intended to allow that the same gauntlet be run in
return for the privilege of being referred to employment.
Wilborn, 720 F. Supp. at 1293. As the Sibley court held when pronouncing its "indirect
employer" theory of liability, "Control over access to the job market may reside, depending upon
the circumstances of the case, in a labor organization, an employment agency, or an employer as
defined in Title VII[.]" Sibley, 488 F.2d at 1341. Thus, just as the Court adopts Sibley's indirect
theory ofliability as it pertains to "employers," it likewise lengthens that endorsement to
"employment agencies." Accordingly, the Court finds that the "or otherwise to discriminate
clause" of 42 U.S.C. § 2000e2(b) may form the basis of Axness's claim for relief As such, the
finder of fact would be required to determine if Aqreva, as an employment agency, controlled
Axness's access to employment at CAN to such a degree to be liable for sexual discrimination
based on, what will be termed, an "indirect employment agency" theory ofliability.
The next question is whether Axness has sufficiently shown that Aqreva discriminated against
her, in its capacity as an employment agency, in violation of Title VII and the PDA. Akin to an
employer's alleged discrimination, whether or not a nonmoving party can withstand a defendantemployment agency's motion for summary judgment must be analyzed under McDonnell-
Douglas. Thus, that analysis will be combined with Part I.B.1., supra, and discussed in a single
section in Part II.A., infra.
3. Aqreva moves to dismiss Axness's 42 U.S.C. § 2000e-3(a) retaliation claims, arguing that it is
not a Title VII "employment agency."
Deciding, supra, that Axness has carried her burden and that the question of Aqreva's status as a
Title VII "employment agency" rests with the factfinder, the Court will tum to the merits of
Axness's "employment agency" retaliation claim. Similar to the discrimination claims discussed
in Parts I.B.1-2., supra, once the threshold definitional question has been parsed, the familiar
McDonnell Douglas framework is applied to the merits of the retaliation claim. Because Axness
also brings state law retaliation claims, which are analyzed under the same rubric as Title VII,
this section will be combined with the state law claims and discussed, infra, in Part 11.C.
16
4. Aqreva moves to dismiss Axness's 42 U.S.C. § 2000e-3(a) retaliation claim, arguing that it is
neither a Title VII "employment agency" nor Axness's Title VII "employer."
42 U.S.C § 2000e-3(a) makes it
unlawful employment practice for an employer to discriminate against any of his
employees or applicants for employment, for an employment agency, or joint
labor-management committee controlling apprenticeship or other training or
retraining, including on-the-job training programs, to discriminate against any
individua~ or for a labor organization to discriminate against any member thereof
or applicant for membership, because he has opposed any practice made an
unlawful employment practice by this subchapter, or because he has made a
charge, testified, assisted, or participated in any manner in an investigation,
proceeding, or hearing under this subchapter.
42 U.S.C. § 2000e-3(a) (emphasis added). Genuine issues of material fact remain, as discussed in
Part I.B.1.-3., supra, relative to whether Aqreva is Axness's "employer" and/or "employment
agency" for purposes of Title VII. Thus, for purposes of Aqreva's motion for summary
judgment, the merits of the claim will be turned to. As discussed, Axness brings retaliation
claims under both Title VII and South Dakota law. Under either statutory scheme, the
McDonnell Douglas burden-shifting framework applies. See Wilborn, 720 F. Supp. at 1301.
Thus, both will be combined and discussed together with the state law retaliation claims in Part
II. C., infra.
5. Arqreva moves to dismiss Axness's claim for punitive damages under 42 U.S.C. § 1981a.
In a Title VII action, punitive damages are available if a plaintiff shows that her employer
engaged in intentional discrimination ''with malice or with reckless indifference to the federally
protected rights" of the victim of discrimination. 42 U.S.C. § 1981a(b)(l). The Supreme Court
has explained that '"malice' or 'reckless indifference' pertain to the employer's knowledge that it
may be acting in violation of federal law, not its awareness that it is engaging in
discrimination."' Kolstad v. American Dental Ass'n, 527 U.S. 526, 535 (1999). For an employer
to be liable for punitive damages, "an employer must at least discriminate in the face of a
perceived risk that its actions will violate federal law." Id. at 536. The employee need not show
that the employer engaged "in conduct with some independent, 'egregious' quality." Id. at 538.
If a plaintiff-employee shows that another employee of the company acted with the requisite
malice or reckless indifference, the plaintiff must then show that this employee's mental state can
17
be imputed to the employer. Id. at 539. The malice or reckless indifference of employees serving
in a managerial capacity and acting within the scope of their employment may be imputed to the
employer. Id. at 543. An employer may avoid liability for punitive damages, however, if it
shows that the employee's actions "are contrary to the employer's good-faith efforts to comply
with Title VII." Id. at 545; E.E. 0. C. v. Sioux/and Oral Maxillofacial Surgery Associates, L.L.P .,
578 F.3d 921, 925 (8th Cir. 2009). If an employer discriminates in contravention of its own
policies, however, the existence of those policies does not allow the employer to escape punitive
damages. MacGregor v. Mallinckrodt, Inc., 373 F.3d 923, 931 (8th Cir. 2004).
Instructive on the issue of punitive damages is Sioux/and Oral. There, the EEOC brought charges
on behalf of two plaintiffs who were fired and not hired, respectively, based on the two women
being pregnant at the time. A jury found that Siouxland Oral had impermissibly discriminated
against the women in violation of Title VII and the PDA. As a result, the plaintiffs were awarded
separate amounts representing back-pay and were awarded attorney fees. The District Court
ruled as a matter oflaw, however, that punitive damages were not warranted. The EEOC
appealed to the Eighth Circuit, which reversed the District Court's ruling as to punitive damages.
In so holding, the Eighth Circuit found that the evidence submitted ''was sufficient for a jury to
find that Siouxland acted in the face of a perceived risk that it was violating [Plaintiffs'] Title VII
rights. With respect to [Plaintiff-]Dooley, the EEOC presented evidence that [the Defendant],
who ordered Dooley's termination, knew that pregnancy discrimination was illegal."
At the outset, Aqreva argues that it cannot be found liable for punitive damages as it is not
Axness's employer. As was discussed in Part I., supra, however, genuine issues of material fact
remain as to Aqreva's status as Axness's Title VII employer and summary judgment on that
point alone is denied. Moreover, it has been properly alleged by Axness that Campbell was
acting within the scope of her employment with Aqreva making any malice imputable to Aqreva.
Lastly, as pointed out in Axness's brief in opposition, Campbell has been working as a human
resources officer for 18 years and stated in her deposition that the pregnancy of a prospective
employee should not be considered in the context of employment. Knowing that much to be true,
the evidence in the record shows that Axness was terminated two-weeks into her four-week
maternity leave and replaced by a woman who was not pregnant and not yet certified as a CNA
18
(see Tamara Kelly Depo ). Thus, the question of punitive damages becomes one ripe for jury
consideration and not as a matter of law. Aqreva's motion for summary judgment is denied.
II. SOUTH DAKOTA LAW CAUSES OF ACTION
Along with the various Title VII claims brought against Aqreva and Campbell, Axness brings
several South Dakota state law claims against Aqreva, Campbell, Sanchez, and CAN.
A. WHETHER DEFENDANTS ARE ENTITLED TO SUMMARY JUDGMENT AGAINST
AXNESS ON HER CAUSE OF ACTION FOR SEX DISCRIMINATION UNDER SDCL § 2013-10 AND TITLE VII?
SDCL § 20-13-10 provides:
It is an unfair or discriminatory practice for any person, because of race, color,
creed, religion, sex, ancestry, disability, or national origin, to fail or refuse to hire,
to discharge an employee, or to accord adverse or unequal treatment to any person
or employee with respect to application, hiring, training, apprenticeship, tenure,
promotion, upgrading, compensation, layoff, or any term or condition of
employment.
As mentioned in Parts I.B.1.-2., supra, South Dakota courts examine claims under SDCL § 2013-10 under a standard identical to that applied to Titled VII claims, so that law will be applied
here. See Huck v. McCain Foods, 479 N.W.2d 167, 169 (S.D. 1991).
A plaintiff who claims employment discrimination may survive a motion for summary judgment
either by offering "direct evidence" of discrimination, or by creating the requisite inference of
unlawful discrimination through the burden-shifting framework described in McDonnell Douglas
Corp. v. Green, 411 U.S. 792, 802-04 (1973). See E.E.O.C. v. Trans States Airlines, Inc., 462
F.3d 987, 991-992 (8th Cir. 2006). '"[D]irect evidence is evidence showing a specific link
between the alleged discriminatory animus and the challenged decision, sufficient to support a
finding by a reasonable fact finder that an illegitimate criterion actually motivated the adverse
employment action."' Quick v. Wal-Mart Stores, Inc., 441 F.3d 606, 609 (8th Cir. 2006)
(quoting Griffith v. City of Des Moines, 387 F.3d 733, 736 (8th Cir. 2004)). Direct evidence in
employment discrimination cases must be distinguished from stray remarks in the workplace,
statements by nondecisionmakers, or statements by decisionmakers unrelated to the decisional
process. Quick v. Wal-Mart Stores, Inc., 441 F.3d at 609. Instead, direct evidence is '"evidence
19
of conduct or statements by persons involved in the decisionmaking process that may be viewed
as directly reflecting the alleged discriminatory attitude ... sufficient to permit the fact finder to
infer that attitude was more likely than not a motivating factor in the employer's decision."'
Radabaugh v. Zip Feed Mills, Inc., 997 F.2d 444, 449 (8th Cir. 1993) (quoting Ostrowski v.
Atlantic Mut. Ins. Cos., 968 F.2d 171, 182 (2d Cir. 1992)).
If a plaintiff presents direct evidence of sex discrimination, the burden rests with the employer to
show that it more likely than not would have made the same decision without consideration of
the illegitimate factor. Price Waterhouse v. Hopkins, 490 U.S. 228, 258 (1989). Evidence of the
employer's motives for the action, and whether the presence of mixed motives defeats the
plaintiffs claim, is a trial issue, and not one intended for summary judgment. At the summary
judgment stage the issue is simply whether the plaintiff has presented sufficient evidence that
unlawful discrimination was a motivating factor in the adverse employment action. Griffith v.
City ofDes Moines, 387 F.3d 733, 735 (8th Cir. 2004). If a plaintiff presents direct evidence of
discrimination, the primafacie case stage of the McDonnell Douglas test may be avoided
because there is no need for the plaintiff to create an inference of discrimination See Adams v.
Nolan, 962 F.2d 791, 795 n.6 (8th Cir. 1992). See also Camey v. Martin Luther Home, Inc., 824
F.2d 643, 648 (8th Cir. 1987).
Here, Axness's "direct" evidence is not enough to raise a genuine issue of fact about the
existence of intentional discrimination. Her claim that the sole reason she had to be off work and
thus, according to Campbell and Sanchez, had to be replaced, was due to her pregnancy and
childbirth. This does not directly allege, and thus cannot directly prove, discriminatory intent.
As is often the case, Axness must rely instead on circumstantial evidence.
The Court must then consider Axness's claims under the burden-shifting method of proof
established by McDonnell Douglas. To establish aprimafacie case of sex discrimination under
the McDonnell Douglas framework, a plaintiff must prove that she (1) is within the protected
class, (2) was qualified to perform her job, (3) suffered an adverse employment action, and (4)
presents facts that give rise to an inference of sex discrimination. Holland v. Sam's Club, 487
F.3d 641, 644 (8th Cir. 2007). Defendants concede the first two factors. As to the third factor,
Defendants argue that Axness ''voluntarily quit" her job to show that she was not subject to an
adverse employment action by reason of pregnancy. But both the terms under which she left and
20
her expectations, taken in the light most favorable to Axness, show that she thought she was
taking a leave. Other testimony also contradicts Defendants' claim that Axness quit. Kelly
testified that they were looking for someone to fill in for maternity leave, and Campbell testified
that the plan was to have Axness share a full time schedule with another employee. Defendants'
paperwork also indicates that Axness was "terminated" and that her separation was
"involuntary." At the very least, there is a question of fact whether Axness suffered an adverse
employment action and it is for the jury to decide.
The last requirement of aprimafacie case is showing that the facts give rise to an inference of
sex discrimination. Here, taking the factual allegations as true, Axness has adequately alleged
facts to raise an inference of discrimination. Her Amended Complaint, deposition, and other
testimony clearly show a close temporal proximity between her pregnancy and her termination.
She kept in close touch with Sanchez and Campbell and tried to work with them on scheduling
and accommodations to allow her to continue working. Instead, she was terminated. Taking her
allegations as true and drawing all reasonable inferences in Axness's favor, she has met her
burden of alleging sufficient facts to raise an inference of discrimination.
By establishing her prima facie case, Plaintiff raises a rebuttable presumption that Defendants
unlawfully discriminated against her. See St. Mary's Honor Ctr. v. Hicks, 509 U.S. 502, 506-07
(1993). The burden of production then shifts to Defendants, who must articulate a legitimate,
nondiscriminatory reason for the adverse employment action suffered by Plaintiff. See
McDonnell Douglas, 411 U.S. at 802. Defendants' burden at this stage is one of production, not
persuasion. See Texas Dept. of Community Affairs v. Burdine, 450 U.S. 248, 254-56 (1981 ). If a
defendant is able to articulate a facially nondiscriminatory reason for the adverse employment
action, the plaintiff can avoid summary judgment only if she can show that her pregnancy was a
determinative factor in the defendant's employment decision, or show the defendant's
explanation for its action was merely pretext. Adams v. Nolan, 962 F.2d 791, 975 (8th Cir. 1992).
Thus, although the burden of production shifts from Plaintiff to Defendants and back to Plaintiff
under the McDonnell Douglas framework, the ultimate burden of proving intentional
discrimination is borne by Plaintiff. See Hicks, 509 U.S. at 507.
In the second step of the McDonell Douglas analysis, Defendants proffer a number of facially
nondiscriminatory reasons for Axness' termination: ( 1) Axness quit; (2) they are disinclined to
21
hire temporary workers; (3) Axness was replaced only after indicating she would not be able to
work part-time; and (4) Axness was replaced only after she said she would have to bring her
baby with her to work. Because the burden at this step is only one of production and not of
persuasion, the burden switches back to Axness under the McDonnell Douglas framework to
show that her pregnancy was a determinative factor and the Defendants' explanations are a
pretext for discrimination.
Axness may succeed in this third step of the McDonnell Douglas analysis "by showing that the
employer's proffered explanation is unworthy of credence." Adams v. Nolan, 962 F.2d at 795.
"Substantial changes over time in the employer's proffered reason for its employment decision
support a finding of pretext." Kobrin v. Univ. ofMinn., 34 F.3d 698, 703 (8th Cir. 1994).
"[R]ejection of the defendant's proffered reasons ... will permit the trier of fact to infer the
ultimate fact of intentional discrimination, and ... upon such rejection, no additional proof of
discrimination is required." Id. "The factfinder's disbelief of the reasons put forward by the
defendant (particularly if disbelief is accompanied by a suspicion of mendacity) may, together
with the elements of the primafacie case, suffice to show intentional discrimination." St. Mary's
Honor Center v. Hicks, 509 U.S. 502, 511 (1993) (emphasis added).
Axness has presented evidence that Sanchez's position has changed a number of times. He
claimed that Axness voluntarily quit for the first time when the motion for summary judgment
was filed. When his deposition was taken, Dr. Sanchez testified that Axness's alleged insistence
on bringing her baby to work with her ''was 99 percent of the reason" why she was terminated.
(Sanchez depo at 69-70.) Axness has also shown that she agreed to come back to work part
time; Dr. Sanchez testified to that. (Sanchez depo at 71.) The record also shows that Dr. Sanchez
had used temporary workers on many occasions, before and after Axness gave birth. (Ex.P at
125-26; Ex. Q at 398; Ex.Wat 23; Ex.Tat 333, 334, 326; Ex.Wat 23.) The jury could
conclude from this evidence that Dr. Sanchez's and Campbell's proffered reasons are pretextual
and that the real reason behind the termination was to unlawfully discriminate based on Axness' s
pregnancy. Thus, summary judgment is denied under the McDonnell Douglas burden-shifting
framework as to both the Title VII and state law discrimination claims.
22
B. WHETHER DEFENDANTS ARE ENTITLED TO SUMMARY JUDGMENT AGAINST
AXNESS ON HER CLAIMS {OTHER THAN HER RETALIATION CLAIM) UNDER SDCL
§ 20-13-26?
In addition to her state law retaliation claim, Plaintiff brings the following claims against Dr.
Sanchez and the other defendants under SDCL § 20-13-26:
(1) The four Defendants, "aid[ed]," "abet[ted]," and "induce[d]" one other
throughout their treatment of Axness;
(2) The four Defendants "engage[d]" and "threaten[ ed] to engage in any reprisal,
economic or otherwise," against Axness by withholding Axness's entire payroll
check, including her unused PTO and severance pay, unless she signed a release;
(3) The four Defendants, attempted to "conceal" their discriminatory actions
against Axness by withholding Axness' s entire payroll check, including her
unused PTO and severance pay, until she signed a release;
(4) The May 29, 2013, letter, including Campbell's note and the release,
constitutes a "trick" or "device" in violation ofSDCL 20-13-26.
(Doc. 49 at 25.) Axness admits there is no case law pertaining specifically to SDCL § 20-13-26,
but she argues that the legislature obviously intended to protect individuals "from more than just
the unlawful discrimination prohibited in SDCL § 20-13-10. Stated differently, South Dakota
also protects its workers from the pressures and deceptive acts that might be used by others to get
away with unlawful discrimination. (Doc. 49 at 32.) As Axness points out, defendants are
subject to punitive damages for violating SDCL § 20-13-26, but not for violating§ 20-13-10, so
the former statute is directed against people who do more than discriminate. It is meant for
defendants like those in this case who work collectively to fire an employee due to pregnancy
and then attempt to conceal their actions by deceiving the employee into signing a release in
exchange for payment she was already entitled to receive, i.e., two weeks' severance pay. Even
though there is no case law pertaining to SDCL § 20-13-26, this Judge was in the South Dakota
legislature in 1972 and wrote and was the principle sponsor of the bill that became SDCL 20-13.
The Legislative Research Council did not write the bill, the legislator did the writing. Plaintiff's
interpretation is correct and the Court would so find even if it had not personally drafted the
legislation.
Dr. Sanchez asserts that he simply received help from Aqreva running his business, nothing more
and nothing less. He argues that payment of two weeks' severance pay to Axness was
23
conditioned on her signing a Release of all claims against him and Aqreva, and argues that is not
illegal. Dr. Sanchez also argues that sending her the release was in no way a trick or device to
facilitate discrimination.
It is not for the Court to determine whether Axness can prove that Defendants engaged in what
will be termed, for ease of reference, conspiracy to discriminate and conceal said discrimination,
or whether they were simply engaging in what they thought were appropriate business decisions.
Axness has at least raised a material issue of fact sufficient to defeat summary judgment in favor
of Defendants.
C. WHETHER DEFENDANTS ARE ENTITLED TO SUMMARY JUDGMENT AGAINST
AXNESS ON HER TITLE VII AND STATE LAW RETALIATION CLAIMS?
The parties agree that the last portion ofSDCL § 20-13-26 protects against retaliation.
Moreover, it is agreed that 42 U.S.C § 2000e-3(a) "makes it unlawful for employers to retaliate
against an employee or applicant for employment because she 'made a charge, testified, assisted,
or participated in any manner in an investigation, proceeding, or hearing under this subchapter. "'
Brower v. Runyon, 178 F.3d 1002, 1005 (8th Cir. 1999) (quoting 42 U.S.C. § 2000e-3(a)).
To make out a case ofretaliation, a plaintiff must show: "(1) she engaged in activity protected by
Title VII; (2) an adverse employment action occurred; and (3) a causal connection existed
between participation in the protected activity and the adverse employment action." Buettner v.
Arch Coal Sales Co., 216 F.3d 707, 713-14 (8th Cir. 2000). Upon establishing aprimafacie
case, the burden shifts to the defendant-employer to produce some legitimate, non-discriminatory
reason for the action. See id. at 714; Stevens v. St. Louis University Med. Ctr., 97 F.3d 268, 27072 (8th Cir. 1996) (the burden-shifting analysis of McDonnell Douglas applies to Title VII
retaliation claims.) If the employer satisfies this burden, the plaintiff must show that the
proffered reason for the adverse action is pretext. Id.
Regarding the first prong of the primafacie case for retaliation, protected activity, Axness claims
that her refusal to sign the Release and bringing a discrimination claim against Defendants
constituted protected activity. The Court agrees. Regarding the second prong, adverse
employment action, the Court also agrees that withholding her unused paid time off and her
severance pay amounts to adverse action. Regarding the third prong, causal link, there is a
24
question of fact whether the severance pay and whether the paid time off were withheld in
retaliation for Axness' refusal to sign the Release ofher sex discrimination claims. Defendants
maintain that the Court should grant summary judgment in their favor because the fact that
Axness did not receive her accrued 1.53 hours of PTO was an oversight, and the offer of
severance pay was contingent on signing the Release, which Axness declined to do. But there is
sufficient evidence to find aprimafacie showing of a causal connection between withholding of
the severance pay and Axness' protected activity.
Aqreva argues that Axness cannot, as a matter of law, make out aprimafacie case of retaliation
under Title VII due to the protected activity arising after the alleged retaliatory conduct. Aqreva
cites to Runyon for this argument. In Runyon, the plaintiff, a former USPS employee, believed
she had been discriminated against by USPS and sought the opinion of an Equal Employment
Opportunity (EEO) counselor. Maintaining that her engagement of the EEO counselor caused
USPS to retaliate, the plaintiff brought a Title VII claim. Thus, the issue before the Eighth
Circuit dealt with the contours of"protected activity." Finding that the plaintiff had not
technically engaged in a protected activity, the Runyon court held,
Not all discussions with individuals who are part of the Title VII grievance
process or all informal complaints will amount to participation in a Title VII
proceeding[]. At a minimum there would have to be factual allegations of
discrimination against a member of a protected group and the beginning of a
proceeding or investigation under Title VII.
Runyon, 178 F .3d at 1006. Contrary to Runyon, however, the instant case includes the filing of
an EEOC charge, which is indisputably a protected activity. Aqreva argues that Runyon stands
for the proposition that retaliation claims must adhere to strict chronology, i.e., a protected
activity followed by retaliatory conduct plus a causal link. Such a strict view of Runyon distorts
its instruction. The timing, or chronology, of events in Runyon was crucial due to the timing
being the Runyon plaintiff's only causal link. As the Runyon court noted, "An inference of
retaliatory motive may be supported by evidence that the defendant was aware of protected
activity and that the date of the adverse employment action closely followed such activity." Id.
(emphasis added). Accordingly, timing can be circumstantial evidence to show a temporal
relationship and the circumstantial evidence of retaliatory conduct. It appears that Axness herself
agrees that the alleged retaliation antedated the protected activity. With regard to timing of
25
events affecting a retaliation claim, see Stewart v. Rise, Inc., Slip Op., No. 13-3579 (8th Cir. June
30,2015) and Danny Fischer v. Minneapolis Public Schools, Slip Op., No. 14-2245 (8th Cir. July
8, 2015). Timing can also be relevant to show a lack of causal connection between participation
in the protected activity and the adverse employment action.
In an Order from this Court, dated July 9, 2015, the parties were instructed to further argue the
chronology issue in light Fischer and Rise. In both cases, the Eighth Circuit indicated that timing
can be circumstantial evidence of retaliatory conduct. Fischer and Stewart also appear to instruct
that timing can be relevant to show the existence of or the lack of causal connection between
participation in the protected activity and the adverse employment action. As noted above in the
Runyon discussion, however, in both of these Eighth Circuit decisions timing was crucial due to
it being the only causal connection the plaintiffs offered in their respective retaliation claims.
Axness, however, has at least made out a colorable claim that Aqreva, Campbell, and Dr.
Sanchez anticipated Axness would file a claim with the South Dakota Department of Labor. As
argued in her brief, deposition testimony from Dr. Sanchez indicates that he intended to provide
Axness with severance pay along with her remaining payroll. Subsequently, Dr. Sanchez
changed course and decided Axness would be paid severance provided she sign the Release.
(Sanchez Depo. at 91) (''No, I said, you know, we should probably help somehow, ... , and then
after that [Campbell] said, this is the way that things usually work, ... , the word severance, ... ,
check, so - and I play along .. .");Id. at 93 (Sanchez indicating that the two-week severance pay
was his idea; he ''wanted to help"); Id. (Sanchez stating that he did not instruct his attorney to
draft the severance paperwork, but that he "play[ed] along."); Id. at 95 (Sanchez stating that it
was recommended he not simply provide severance pay to Axness, that a release form should be
sent); Id. at 98 (Sanchez stating that he told Campbell he 'just wanted to offer [Axness] two
week of severance pay" with no conditions).
Offering further instruction on the issue of chronology is the Tenth Circuit case Sauers v. Salt
Lake County, 1F.3d1122 (10th Cir. 1993). In Sauers, the plaintiff was a secretary at the Salt
Lake County Attorney's Office in Utah. During her time there, the plaintiff alleged that she was
subjected to sexual harassment by Ted Cannon, the county attorney and the plaintiffs highest
level supervisor. The relevant incident involved Cannon allegedly "rub[ing] his groin against
[the plaintiff's] shoulder." Sauers, 1 F.3d at 1126. At trial, evidence was introduced that the
26
plaintiff was reassigned to a separate branch of the office two days after the incident with
Cannon. Evidence was further introduced suggesting that the reassignment was due to Cannon's
anticipation of the plaintiff filing a complaint against him. Id. at 1128. Subsequently, the plaintiff
brought charges including, inter alia, retaliation.
The trial court found that the plaintiffs claim did not "match the usual pattern present in
retaliation cases" and dismissed the claim. Id. The Tenth Circuit, however, held the trial court to
be clearly erroneous. A tape recorded conversation was introduced at trial supporting the
proposition that Cannon reassigned the plaintiff out of fear ofa sexual harassment claim.
Notably, the recorded conversation occurred prior to the plaintiffs actual filing. In finding that
such a sequence of events can support a claim of retaliation, the Sauers court held, "Action taken
against an individual in anticipation of that person engaging in protected opposition to
discrimination is no less retaliatory than action taken after the fact; consequently we hold that
this form of preemptive retaliation falls within the scope of 42 U.S.C. § 2000e-3(a)." Id. See
U.S.E.E.O.C. v. Bojangles Restaurants, Inc., 284 F. Supp. 2d 320, 328 (M.D.N.C. 2003) ("An
employer may not discriminate against an employee who it fears will later file a charge, testify,
assist, or participate in an investigation or hearing."). See also Robinson v. Shell Oil Co., 519
U.S. 337, 346 (1997) (interpretation ofTitle VII should not "provide a perverse incentive for
employers to fire employees who might bring Title VII claims.").
The Court finds Sauers persuasive. Similar to Sauers, the record here supports Axness's
assertion that Dr. Sanchez, at the suggestion of Campbel~ changed course from giving severance
pay outright to giving severance pay on condition that Axness sign the Release. As the cited
deposition testimony above shows, Dr. Sanchez wanted simply to provide severance pay to
Axness, but, instead, attached a condition. The Court finds that a reasonable jury could conclude
that such action was in anticipation of Axness filing a charge against Dr. Sanchez and Aqreva.
The Court notes Aqreva's reliance on Herron v. DaimlerChrysler Corp, 388 F.3d 293, 302 (7th
2004) ("It is axiomatic that a plaintiff engage in a statutorily protected activity before an
employer can retaliate against her for engaging in statutorily protected activity."), but finds
Sauers more persuasive. Were the Court not to allow an "anticipatory retaliation" claim, it feels
that an abusive loophole would be left open. Sauers is convincing on this point because were the
court there to affirm the dismissal of the plaintiffs retaliation claim, the defendant would have,
27
in effect, successfully anticipated and unlawfully retaliated against an action it perceived the
plaintiff could and would lawfully undertake. Thus, the Court finds that to dismiss Axness's
retaliation claim would "provide a perverse incentive for employers to fire employees who might
bring Title VII claims." Robinson, 519 U.S. at 346.
Finally, during a pretrial conference held on July 13, 2015, counsel for Aqreva provided the
Court with three cases discussing the effect of"minor annoyances" on the viability ofretaliation
claims. See Herron, 388 F.3d at 301; Mayers v. Campbell, 87 Fed. Appx. 467, 471 (6th Cir.
2003); Matthews v. Donahoe, 493 Fed. Appx. 796, 800 (7th Cir. 2012). These cases hold that
"minor annoyances" or "de minimis employment actions" are not actionable retaliation claims.
Most akin to the case at bar, Donahoe instructs that a "mere two-month delay in [a plaintiffs]
continuation of pay, though an annoyance, ha[s] no effect on the terms of her employment."
Donahoe, 493 Fed. Appx. at 800. Aqreva's contention would be persuasive if payroll was all that
was allegedly being withheld. Rather, here the withholding of 1.53 hours' worth of payroll is not
the only adverse action charged against Defendants. As discussed, two-weeks of severance pay
that Axness argues she was entitled to was conditionally withheld upon the signing of the
Release. The withholding of two-weeks' worth of pay from an employee certainly rises above
the "mere annoyance" threshold. Moreover, in each of the above cited cases, the plaintiffs were
eventually given the withheld pay. Here, Axness has not been provided the severance pay she
alleges she is owed. Whether she is owed that pay is a question to be presented to a jury.
Defendants' motions for summary judgment as to Axness's Title VII and state law retaliation
claims are denied.
D. WHETHER AQREVA IS ENTILTED TO SUMMARY JUDGMENT AGAINST AXNESS
ON HER S.D.C.L. § 20-13-11 CLAIM?
S.D.C.L. § 20-13-11 reads in full,
It is an unfair or discriminatory practice for any employment agency, because of
race, color, creed, religion, sex, ancestry, disability, or national origin, to accord
adverse or unequal treatment to any person in connection with any application for
employment, any referral, or any request for assistance in procurement of
employees, or to accept any listing of employment on such a basis.
28
S.D.C.L. § 20-13-11 (emphasis added). Thus, the requirement exists that Aqreva operate as an
"employment agency," which is defined as,
any person regularly undertaking, with or without compensation, to procure
employees for an employer or to procure for employees opportunities to work for
an employer and includes any agent of such a person[.]
S.D.C.L. § 20-13-1. For the reasons stated in Part l.B.2., Axness has demonstrated that a
reasonable jury could conclude that Aqreva operates as an "employment agency" and is,
therefore, prohibited from discriminating in that capacity.
The meaning ofSDCL § 20-13-11 has not been litigated, but comparatively, is 42 U.S.C. §
2000e2(b)'s state analogue. Unlike 42 U.S.C. § 2000e2(b), however, S.D.C.L. § 20-13-11 lacks
language similar to 42 U.S.C. § 2000e2(b)'s proscription found in the "or otherwise to
discriminate" clause. Instead, the South Dakota law confines itself to the discrete processes of
employment referral. Pertinent to Axness, however, is the statute's "or any request for assistance
in procurement of employees" clause. Based on a plain reading of that clause, an employment
agency violates South Dakota law when it accords unequal treatment to a person's request for aid
in securing employees for a business. Axness has adequately supported such an allegation.
Axness claims that she requested Campbell secure for Axness temporary employment during
Axness's leave. The record supports that, in response to the request, Axness was told locating
temporary employment as requested was "cost prohibitive" and could not be granted. The record
further supports that temporary employees were used prior and subsequent to Axness's request.
Thus, sufficient evidence exists to maintain the S.D.C.L. § 20-13-11 claim. Ultimately, the
reasoning stated in Part II.A., supra, applies.
Because of the absence of instructional case law, the Court will analyze the state claim under the
McDonnell Douglas rubric: (1) Axness is within a protected class in that she was pregnant at the
time of the request, (2) it is undisputed that she was qualified to perform her job, (3) the relevant
adverse employment action rests with being denied her request to secure temporary employment,
and (4) temporary replacements had been used before, most relevant being DV when she injured
her ankle in 2010.
Thus, the burden of production shifts to Aqreva and Campbell to produce a nondiscriminatory
reason for the denied request. To that end, Aqreva asserts that it denied Axness's request for two
29
principal reasons: (1) the use of temporary workers is "cost prohibitive" and (2) temporary
workers are inadequate for the position.
Having adduced nondiscriminatory purposes, the burden shifts again back to Axness and she
must show that the proffered nondiscriminatory explanations are pretextual. For her part, Axness
emphasizes that temporary workers had been used in the past, both to cover her own previous
absences and the absences of others. The record shows that a temporary worker has been used in
Kelly's place since Axness's departure from CAN. Moreover, the relevant Axness request, as
distinct from all other requests from Axness herself and others, was incidental to Axness seeking
maternity leave. Accordingly, Axness has withstood the McDonnell Douglas analysis and
Aqreva's motion for summary judgment is denied.
E. WHETHER DEFENDANTS ARE ENTITLED TO SUMMARY JUDGMENT AGAINST
AXNESS ON HER CLAIM FOR PUNITIVE DAMAGES?
Finally, Dr. Sanchez and CAN claim they are entitled to summary judgment on the issue of
punitive damages both because Axness's theory ofliability is deficient and because she has
failed to establish the required intent on the part of Defendants. It is important to separate the
Title VII punitive damage standards under 42 U.S.C. § 1981a(b)(l) and the standard that is
applicable to Plaintiffs state law claims under SDCL 20-13-26. 7 Discussed, supra, under Title
VII, Axness must show that a defendant has engaged in discriminatory conduct ''with malice or
with reckless indifference to [her] federally protected rights ... ") 8 Under South Dakota law,
before a punitive damages claim can be submitted to the jury, SDCL § 21-1-4.1 requires the
Court to determine whether there exists clear and convincing evidence providing "a reasonable
basis to believe· that there has been willfui wanton or malicious conduct on the part of the party
claimed against." Id. "Willful and wanton misconduct demonstrates an affrrmative, reckless state
of mind or deliberate recklessness on the part of the defendant." Flockhart v. Wyant, 467 N.W.2d
473, 478 (S.D. 1991 ). Malice can be either actual or presumed. Kjerstad v. Ralellette
Publications, Inc., 517 N.W.2d 419 (S.D. 1994). "Actual malice is a positive state of mind,
7
Pursuant to SDCL 20-13-35.1, punitive damages maybe awarded under SDCL 21-3-2 for a violation ofSDCL 2013-26.
8
'"[M]alice' or 'reckless indifference' pertains to the employer's knowledge that it may be acting in violation of
federal law, not its awareness that it is engaging in discrimination."' Kolstad v. American Dental Ass'n, 527 U.S.
526, 535 (1999).
30
evidenced by the positive desire and intention to injure another, actuated by hatred or ill-will
towards that person." Dahl v. Sittner, 474 N.W.2d 897, 900 (S.D. 1991). Presumed malice
implies that the "act complained of was conceived in the spirit of mischief or criminal
indifference to civil obligations." Id. A claim for presumed malice requires a showing of
disregard for the rights of others. See Flockhart, 467 N.W.2d at 475.
Accordingly, South Dakota's punitive damages standard is stricter than 42 U.S.C. § 198la(b)(l).
Sufficient evidence exists, however, that a jury could reasonably conclude amounts to
recklessness on the part of CAN and Dr. Sanchez. Viewing the facts most favorable to Plaintiff,
the record shows that Axness became pregnant and underwent an unscheduled C-section several
weeks in advance of her due date. In the face of that knowledge, Dr. Sanchez terminated
Axness's employment two-weeks into a four-week maternity leave. While, independently, those
events may not rise to a level ofrecklessness, the record shows that DV, Axness's predecessor,
was granted four-weeks ofleave due to an ankle injury. Moreover, Dr. Sanchez's deposition
contains admissions that he was ''playing along" with recommendations from Campbell and
Aqreva as to Axness's employment. Thus, circumstantially, a reasonable jury could conclude
that Dr. Sanchez was reckless in his actions. Summary judgment as to South Dakota punitive
damages, therefore, is denied. These are questions for the jury. Accordingly,
IT IS ORDERED (1) that Plaintiff's motion for partial summary judgment is denied; (2) that
Defendant-Aqreva's and Defendant-Campbell's joint motion for summary judgment is denied;
and (3) that Defendant-Child & Adolescent Neurology's and Defendant-Dr. Sanchez's joint
motion for summary judgment is denied.
Dated this 27th day of July, 2015.
BY THE COURT:
&='t~~SOI._
United States District Judge
ATTEST:
JOSEPH HAAS,
BY:
CrfRK
rur~
DEPUTY
31
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?