Rugo et al v. Hardwick et al
Filing
40
ORDER Denying 12 Defendant's Motion for Partial Summary Judgment. Signed by Judge Salvador Mendoza, Jr. (PL, Case Administrator)
1
FILED IN THE
U.S. DISTRICT COURT
EASTERN DISTRICT OF WASHINGTON
2
Jun 13, 2017
SEAN F. MCAVOY, CLERK
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WASHINGTON
3
4
5
SHANNA RUGO and BELINDA
DUNN,
Plaintiffs,
6
7
8
9
10
11
12
v.
No. 2:16-CV-0444-SMJ
ORDER DENYING
DEFENDANT’S MOTION FOR
PARTIAL SUMMARY
JUDGMENT
ROB HARDWICK DDS, a sole
proprietorship; ROBERT W.
HARDWICK, JR., DDS, a sole
proprietorship; ROBERT W.
HARDWICK, JR. and MICHELLE
HARDWICK, and their marital
community comprised thereof,
Defendants.
13
I.
INTRODUCTION
14
Before the Court, without oral argument, is Defendants Rob Hardwick
15
DDS, Robert W. Hardwick, Jr., DDS, Robert W. Hardwick, Jr., and Michelle
16
Hardwick’s (collectively “Defendants”) Motion for Partial Summary Judgment,
17
ECF No. 12. Through this motion, Defendants ask this Court to grant partial
18
summary judgment dismissing the retaliation claims asserted by Plaintiffs Shanna
19
Rugo and Belinda Dunn (collectively “Plaintiffs”) under Title VII of the Civil
20
Rights Act of 1964. ECF No. 12 at 1. For their part, Plaintiffs resist this motion
ORDER DENYING PARTIAL
SUMMARY JUDGMENT- 1
1
and ask the Court to deny the motion. See generally ECF No. 17. Plaintiffs argue
2
that because Defendants’ two dental office locations are sole proprietorships, they
3
cannot be separate businesses for Title VII purposes. ECF No. 17 at 2. In the
4
alternative, Plaintiffs argue that issues of material fact exist regarding whether the
5
two offices in question are an integrated business for Title VII purposes, thus
6
precluding summary judgment. As explained below, because issues of material
7
fact remain regarding whether Defendants’ offices are separate businesses or an
8
integrated enterprise for Title VII purposes, the Court denies Defendants’ motion.
9
II.
BACKGROUND
10
Plaintiffs Shanna Rugo and Belinda Dunn are former employees of
11
Defendants’ dental practice. ECF No. 1 at 3. Dr. Robert Hardwick, one of the
12
defendants in this lawsuit, owns and operates as sole proprietor two dental offices
13
in northeast Washington. ECF No. 25 at 1. Ms. Rugo began working for
14
Defendants in 1985, serving as office manager of the Hardwick Dental Clinic in
15
Republic, Washington since 1989. ECF No. 1 at 3. Ms. Dunn began working as
16
office manager in the Colville, Washington office in the fall of 1986. Id. Plaintiffs
17
had similar authority and responsibilities as office managers for their respective
18
offices. ECF No. 25 at 2. Plaintiffs set employees’ work schedules, set employees’
19
vacation schedules, and identified candidates to hire. Id. In their complaint,
20
Plaintiffs allege that prior to their terminations they were involved in a state
ORDER DENYING PARTIAL
SUMMARY JUDGMENT- 2
1
investigation and subsequent internal investigation of alleged sexual misconduct
2
by Dr. Hardwick against female employees. ECF No. 1 at 5. It is undisputed that
3
in August 2014, Dr. Hardwick, who personally supervised both Ms. Rugo and Ms.
4
Dunn, terminated Plaintiffs’ employment. ECF No. 25 at 2.
5
In April 2015, Plaintiffs submitted charges of discrimination to the Equal
6
Employment Opportunity Commission (EEOC), which was followed by the
7
EEOC’s issuance of right to sue letters to Plaintiffs in November 2016. ECF No. 1
8
at 6. Plaintiffs then filed this lawsuit on December 22, 2016. See ECF No. 1.
9
Pertinent to the present motion is how the two dental practice locations—
10
one in Colville and the other in Republic—operated, were managed, and relate to
11
one another. The following undisputed facts are gathered from the parties’ Joint
12
Statement of Uncontroverted Facts Regarding Defendants’ Motion for Partial
13
Summary Judgment, ECF No. 25, and the declarations submitted in support and
14
opposition to the present motion.
15
Combined, both offices employed between 18 and 26 employees each
16
month from August 2013 through August 2014. ECF No. 25 at 4. Dr. Hardwick
17
owns and operates both offices as sole proprietor. ECF No. 25 at 1. Throughout
18
calendar years 2013 and 2014, the Colville office employed slightly more
19
employees than the Republic office. Id. at 2–3 (charts indicating that during this
20
time period, the number of employees in the Colville office fluctuated between 11
ORDER DENYING PARTIAL
SUMMARY JUDGMENT- 3
1
and 14 per month while the Republic office employed between 7 and 12 people).
2
Though Defendants’ certified public accountant (CPA) Stephen H. Oswin, ECF
3
No. 15 at 1, produced profit and loss statements for each office and also for the
4
combined offices, ECF No. 25 at 5, discretionary employee bonuses were paid at
5
Dr. Hardwick’s sole discretion and the combined performance of the Colville and
6
Republic offices was a factor in setting bonus amounts, ECF No. 25 at 4. These
7
profit and loss statements were made under the general heading “Rob Hardwick
8
DDS.” Id. at 5. Mr. Oswin also maintained a separate payroll account for the
9
benefit of both offices. Id.
10
Staff meetings were held in each office and also jointly at one office during
11
combined employee meetings. Id. at 5. Dr. Hardwick referred to the two offices as
12
one dental practice, Id. (citing ECF No. 19, Ex. 1). Both offices use the same
13
Uniform Business Identification Number, and an insurance policy document from
14
2014–15 lists the Colville office as the “primary” location and the Republic office
15
as the “secondary” location. Id. (citing ECF No. 21, Exs. 2 & 3).
16
17
18
19
20
ORDER DENYING PARTIAL
SUMMARY JUDGMENT- 4
1
III.
SUMMARY JUDGMENT STANDARD
2
Summary judgment is appropriate if the “movant shows that there is no
3
genuine dispute as to any material fact and the movant is entitled to judgment as a
4
matter of law.” Fed. R. Civ. P. 56(a). Once a party has moved for summary
5
judgment, the opposing party must point to specific facts establishing that there is
6
a genuine dispute for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). If
7
the nonmoving party fails to make such a showing for any of the elements
8
essential to its case for which it bears the burden of proof, the trial court should
9
grant the summary judgment motion. Id. at 322. “When the moving party has
10
carried its burden under Rule [56(a)], its opponent must do more than simply
11
show that there is some metaphysical doubt as to the material facts. . . . [T]he
12
nonmoving party must come forward with ‘specific facts showing that there is a
13
genuine issue for trial.’” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475
14
U.S. 574, 586-87 (1986) (internal citation omitted). When considering a motion
15
for summary judgment, the Court does not weigh the evidence or assess
16
credibility; instead, “the evidence of the non-movant is to be believed, and all
17
justifiable inferences are to be drawn in his favor.” Anderson v. Liberty Lobby,
18
Inc., 477 U.S. 242, 255 (1986).
19
20
ORDER DENYING PARTIAL
SUMMARY JUDGMENT- 5
1
2
IV.
ANALYSIS
As an initial matter, the Court clarifies that the issue addressed here—
3
whether Defendants’ dental practice employed 15 or more employees for twenty
4
or more calendar weeks in 2014, the year Plaintiffs were terminated, or 2013, and
5
therefore is an employer for Title VII purposes—is an element of Plaintiffs’
6
claims and not a jurisdictional requirement. See Arbaugh v. Y&H. Corp., 546 U.S.
7
500, 515 (2006) (“[W]e hold that the threshold number of employees for
8
application of Title VII is an element of a plaintiff’s claim for relief, not a
9
jurisdictional issue.”); 42 U.S.C. § 2000e(b). To the extent the Court and the
10
parties previously addressed it as a jurisdictional issue that was incorrect. ECF No.
11
10; ECF No. 12 at 6 n. 1; ECF No. 17 at 3.
12
Second, though Plaintiffs ask this Court to rule that Dr. Hardwick’s status
13
as a sole proprietor precludes him from arguing that the Colville and Republic
14
locations are separate for Title VII purposes, the Court declines the invitation to
15
do so. As Plaintiffs concede, courts have not held that sole proprietorships are
16
categorically barred from arguing that different locations, in this case clinical
17
offices, are separate businesses for Title VII purposes. This Court has not found
18
authority to support creating such a categorical rule here. However, Plaintiffs’
19
apparently novel argument positing that sole proprietorships and their owners are
20
legally indistinguishable and therefore cannot be separate enterprises for Title VII
ORDER DENYING PARTIAL
SUMMARY JUDGMENT- 6
1
purposes, carries some purchase. Nevertheless, the Court declines to rule
2
categorically on the matter and turns to address whether this particular dental
3
practice, operating out of two offices and owned as a sole proprietorship, is an
4
employer for Title VII purposes.
5
A.
Questions of material fact remain, making summary judgment
inappropriate.
6
In the Ninth Circuit, courts apply a four-part test to determine whether
7
separate entities are an integrated enterprise for purposes of meeting the
8
15-employee threshold under Title VII. Kang v. U. Lim America, Inc., 296 F.3d
9
810, 815 (9th Cir. 2001). Courts consider the following four factors: (1)
10
interrelation of operations; (2) common management; (3) centralized control of
11
labor relations; and (4) common ownership or financial control. Id. (citation and
12
quotation marks omitted).
13
When determining whether business operations are sufficiently interrelated
14
under the integrated enterprise test, courts consider, among other things, whether
15
the businesses: share management services, share payroll and insurance programs,
16
prepare mutual policy manuals, use employees on one payroll for the benefit of
17
another entity, share office space, file separate tax returns, hold separate director
18
and shareholder meetings, conduct banking separately, and purchase goods
19
20
ORDER DENYING PARTIAL
SUMMARY JUDGMENT- 7
1
separately. Kang, 296 F.3d at 815 (citation omitted); Lynam v. Foot First Podiatry
2
Ctrs., P.C., 919 F. Supp. 1141, 1146 (N.D. Ill. March 12, 1996)1.
3
Here, Defendants assert that the dental practice’s two offices maintain
4
separate accounting records, separate bank accounts, separate accounts receivable,
5
separate financial reporting, and separate income tax reporting. ECF No. 12 at 9.
6
In opposition, Plaintiffs submit declarations asserting that Ms. Rugo and Ms.
7
Dunn actively worked together to jointly operate the practice through both offices.
8
For example, Ms. Rugo states, “Belinda and I checked in with each other
9
constantly to see which account had the funds to cover any bill and we did
10
frequent interoffice transfers to make sure everything was covered.” ECF No. 19
11
at 3. However, on this and other key points related to how the two offices
12
operated, Defendants counter Plaintiffs version of the facts. “Interoffice loans
13
were always accounted for and separated out by Mr. Oswin. All transfer amounts
14
and allocations to various accounts were always proportionally separated by Mr.
15
Oswin each and every month between the two offices.” ECF No. 23 at 2.
16
Accordingly, an issue of material fact remains as to this element.
17
1
18
19
20
Although Lynam was decided before Arbaugh v. Y&H. Corp., and the Lynam
court treated the 15-employee requirement as a jurisdictional question, its analysis
regarding the “integrated enterprise” test remains persuasive. The question of
whether the podiatry clinics in Lynam were an integrated business was analyzed
under the same framework and test used in the Ninth Circuit. That analysis was
not impacted by the ruling in Arbaugh. Accordingly, it remains relevant and
helpful to this Court’s integrated enterprise analysis.
ORDER DENYING PARTIAL
SUMMARY JUDGMENT- 8
1
Similarly, with respect to factors two and three of the integrated enterprise
2
test issues of material fact remain. The parties contest the degree of common
3
management and the degree to which labor relations were controlled by Dr.
4
Hardwick or Plaintiffs. See ECF Nos. 14, 19, 20, 21 and 23. This question of
5
control over labor relations is a key concern for the Court’s analysis and disputed
6
by the parties. See, e.g., Lynam, 919 F. Supp. at 1147 (stating that the third factor
7
is “perhaps [the] most critical factor of the single employer doctrine.”)
8
As to factor four, common ownership and financial control, the record
9
indicates that Dr. Hardwick maintained considerable control of the practice and
10
was undisputedly the sole proprietor. See, e.g., ECF No. 19, Ex. 1 (email signed
11
by Dr. Hardwick, though apparently sent from his wife’s email account, stating
12
that he is the owner and detailing policy for the entire practice). Accordingly, this
13
factor is militates in favor of finding an integrated enterprise.
14
Nevertheless, issues of material fact remain as to whether the Defendants’
15
dental practice is an integrated enterprise for Title VII purposes, rendering
16
summary judgment in Defendants’ favor inappropriate.
V.
17
CONCLUSION
18
For the reasons discussed, IT IS HEREBY ORDERED:
19
1.
20
Defendant’s Motion for Partial Summary Judgment, ECF No. 12, is
DENIED.
ORDER DENYING PARTIAL
SUMMARY JUDGMENT- 9
1
2
3
IT IS SO ORDERED. The Clerk’s Office is directed to enter this Order
and provide copies to all counsel.
DATED this 13th day of June 2017.
4
5
__________________________
SALVADOR MENDOZA, JR.
United States District Judge
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
ORDER DENYING PARTIAL
SUMMARY JUDGMENT- 10
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?