Opinion
Case No. 04-1018-WEB.
November 23, 2004
MEMORANDUM AND ORDER
Now before the Court is defendant's motion to dismiss. A court may convert a Rule 12(b)(6) motion to dismiss into a summary judgment to consider matters outside of the plaintiff's complaint. Brown v. Zavaras, 63 F.3d 967, 969 (10th Cir. 1995). Here both plaintiff and defendant submitted materials outside of the pleadings and noted in their briefs that they were aware that the Court might convert the motion to one for summary judgment. Therefore, because the Court will consider these materials, it treats defendant's motion as a Rule 56 motion for summary judgment. Fed.R.Civ.P 12(b); Fed.R.Civ.P. 56.
I. STANDARD
Summary judgment is proper if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits show there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). A principal objective of the summary judgment rule is to isolate and dispose of factually unsupported claims. Celotex Corp. v. Catrett, 477 U.S. 317, 323-324 (1986).
A fact is "material" if under the substantive law it is essential to the proper disposition of the claim." Wright ex rel. Trust Co. of Kansas v. Abbott Laboratories, Inc., 259 F.3d 1226, 1234-1232 (10th Cir. 2001) quoting Adler v. Wal-Mart Stores, 144 F.3d 664, 670 (10th Cir. 1998). "An issue is genuine if there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way." Adler, 144 F.3d at 670.
"The movant bears the initial burden of making a prima facie demonstration of the absence of a genuine issue of material fact and entitlement to judgment as a matter of law." Adler, 144 F.3d at 670; See Celotex, 477 U.S. at 323. The movant can do this by demonstrating a lack of evidence or an essential element of the nonmovant's claim. Adler, 144 F.3d at 670; See Celotex, 477 U.S. at 323. "If the movant carries this initial burden, the nonmovant that would bear the burden of persuasion at trial may not simply rest upon pleadings; the burden shifts to the nonmovant to go beyond the pleadings and `set forth specific facts' that would be admissible in evidence in the event of trial from which a rational trier of fact could find for the nonmovant." Thom v. Bristol-Myers Squibb Co., 353 F.3d 848, 851 (10th Cir. 2003) quoting Fed.R.Civ.P 56.
"[A]s previously noted in this district, `the particular forms of evidence mentioned in [Rule 56] are not the exclusive means of presenting evidence on a [summary judgment] motion. The court may consider any material that would be admissible or usable at trial.'" Arceo v. City of Junction City, 182 F.Supp.2d 1062, 1080 (D.Kan. 2002) quoting Wright v. Wyandotte County Sheriff's Dept., 963 F.Supp. 1029, 1035 (D.Kan. 1997).
II. Tomkins and Ruskin as Separate Entities.
Defendants allege that Tomkins, while the parent company for Ruskin, is not plaintiff's employer; therefore, the claim against it should be dismissed. Proving that the defendant Tomkins is the plaintiff's employer is required to prove a prima facie case under Title VII. Lockard v. Pizza Hut, 162 F.3d 1062, 1069 (10th Cir. 1998); 42 U.S.C. § 2000e-2. Defendant has met his burden by showing a lack of evidence to support this element of plaintiff's claim. Defendant asserts that:
a). Plaintiff admits that Ruskin is a subsidiary of Tomkins.
b). Plaintiff admits that Ruskin is his employer.
c). Ruskin and Tomkins have separate senior management and share no corporate officers.
In response, plaintiff has provided evidence to support its position that Tomkins and Ruskin are a single employer. This evidence must overcome the strong presumption that a parent company is not the employer of its subsidiary's employees. See Frank v. U.S. West, Inc., 3 F.3d 1357, 1362 (10th Cir. 1993). These facts are not disputed by Defendants.
a). Ruskin is one of the member companies of the air systems component group of companies within the Tomkins group.
b). Tomkins establishes goals for Ruskin and reviews its financial plan.
c). Tomkins has issued corporate wide policies (Health Safety and Environment, Code of Conduct and Ethics, and Human Rights)
d). Tomkins is the sole shareholder of Ruskin.
e). Tomkins has a bonus system for the group's managers, including those of Ruskin.
"The Tenth Circuit has not yet adopted a test for determining when a parent company is liable under Title VII for its subsidiary's discriminatory conduct." Knowlton v. Teltrust Phones, Inc., 189 F.3d 1177, 1184 (10th Cir. 1999). Both parties argued their positions using the single-employer or the integrated-enterprise test. The Tenth Circuit has frequently used this test; therefore, the Court will also apply the integrated-enterprise test here. See Lockard v. Pizza Hut, Inc. 162 F.3d 1062, 1070 (10th Cir. 1998); See also Frank, 3 F.3d at 1362 ("We today apply the integrated enterprise test because [both parties] concede that this test best applies to the facts of this case").
The integrated-enterprise test has four factors: (1) interrelation of operations; (2) centralized control over labor relations; (3) common management; and (4) common ownership or financial control. Frank, 3 F.3d at 1362.
1. Interrelation of Operations
Tomkins offers bonuses to 80 managers out of approximately 40,000 employees. Plaintiff's exhibit at 6, 8. Tomkins also reviews Ruskin's financial plan. Id. at 28. These two taken together are not enough to satisfy this factor. Frank, 3 F.3d at 1363 (no interrelated operations if one of the parent's employees is an occasional consultant on a project). Plaintiff has failed to provide other evidence that would show an interrelation of operations. Cf. Knowlton, 189 F.3d at n7 1184 (Interrelation of operations exists because the parent subsidiaries shared a building, phone system, reception area, office equipment, accounting department, personnel manager, personnel handbook, and payroll accounts).
2. Centralized Control over Labor Relations
This factor is a pivotal inquiry as it relates to the fundamental question of "what entity made the final decisions regarding employment matters related to the person claiming discrimination?" Frank, 3 F.3d at 1363 quoting Trevino v. Celanese Corp., 701 F.2d 397, 404 (5th Cir. 1983). The facts do not show that Tomkins was involved in any meaningful way with Ruskin's labor relations. Ruskin has its own Director of Human resources and separate managers at each of its plants. Kmentt Declaration. These human resource managers are not required to report to Tomkins and are not supervised by human resource managers from Tomkins. Id. Ruskin is responsible for its own human resources, labor relations and other employment functions and Ruskin maintains a human resources and labor relations team distinct from Tomkins. Dhone Declaration.
"A parent's broad general policy statements regarding employment matters are not enough to satisfy this prong." Frank, 3 F.3d at 1363. Accordingly, the Court will attribute little weight to Tomkins general policy statements on ethics, human relations and health and safety. Plaintiff offers no other evidence in support of this important factor. Cf. Knowlton, 189 F.3d at n7 1184 (Factor met where companies shared single employment manual and human resources manager and where CEO of parent corporation investigated plaintiff's harassment allegation, removed harasser from position in one subsidiary and hired him back with another subsidiary).
3. Common Management
Defendants provide two declarations stating that Ruskin has its own corporate officers that are responsible for the day-to-day operations and these officers do not fill any comparable positions with Tomkins. Kmentt declaration. Furthermore, each Ruskin plant has its own human resource manager and these managers report to Ruskin's Director of Quality and Human Resources. Id. Neither the plant human resource managers nor the Director of Quality and Human Resources are required to report to Tomkins. Id. Plaintiff fails to present any evidence or argue that Tompkins and Ruskin have common managers or corporate officers.
4. Common Ownership or Financial Control
Plaintiff argues that there is financial control because Ruskin must submit a financial report to Tomkins and Tomkins establishes goals for Ruskin; however, this is not beyond the normal requirements of a parent/subsidiary association. Cf. Spaulding v. NW Hospitality Inv. Co., 209 F.Supp. 2d 1149, 1155 (D.Kan. 2002) (Audits and financial reports are simply part of the operational details inherent in many franchise settings(quotations omitted)). Plaintiff asserts that Tomkins is the sole owner/shareholder of Ruskin. While this is true, it is not enough to satisfy this prong as "the mere existence of a parent-subsidiary relationship is not enough to impose liability on the parent." Frank, 3 F.3d at 1364 quoting Wood v. Southern Bell Tel. Tel. Co., 725 F.Supp. 1244, 1249 (N.D. Ga. 1989).
Plaintiff has failed to meet his burden of presenting sufficient evidence from which a reasonable jury could find that Tomkins was his employer; therefore, summary judgment in favor of Tomkins is appropriate for both of plaintiff's claims under 42 U.S.C. § 2000 et seq and 42 U.S.C. § 1981. See Thomas v. Denny's, Inc., 111 F.3d 1506, 1509 (10th Cir. 1997); Kendrick v. Penske Transp. Servs., 220 F.3d 1220, 1225 (10th Cir. 2000) (To recover under § 1981, plaintiff is required to prove the same elements as under Title VII).
III. Claim Splitting
Neither party disputes that plaintiff maintains a claim before the Kansas Human Rights Commission (KHRC) and did not include it in the present action. Defendant argues that the Court should dismiss this action because plaintiff has engaged in claim splitting by failing to bring all of his claims in one forum.
The Tenth Circuit has addressed the standards for claim splitting and preclusion stating:
"Kansas law is explicit and harsh in invoking claim preclusion to bar splitting a cause of action:
`It is a general rule of law, indeed an elementary one in this jurisdiction, that in a lawsuit between litigants in their ordinary capacity, so far as relates to a subsequent action on the same claim, not only is everything adjudicated between them which the parties may properly choose to litigate, but also everything incidental thereto which could have been litigated under the facts which gave rise to the cause of action.
. . .
`Plaintiff had no legal impediment to asserting her entire cause of action in the first proceeding. The fact plaintiff did not foresee the legal consequence of splitting her cause of action has no bearing on the issues or the result herein.'" Carter v. Emporia, 815 F.2d 617, 622 (10th Cir. 1987) quoting Pretz v. Lamont, 6 Kan. App. 2d 31 (1981).
Plaintiffs situation does not warrant dismissal under the claim splitting doctrine because plaintiff could not have included his state law claim in the present action because it is still pending before the KHRC. The requirement of exhaustion of administrative remedies serves as a legal impediment preventing plaintiff from raising his state law claim until it is properly adjudicated. See Laughinghouse v. Risser, 754 F.Supp. 836, 842 (D.Kan. 1990) (It is beyond dispute that an employee must completely exhaust his administrative remedies under the Kansas Act Against Discrimination (KAAD) before that employee can seek judicial relief) citing Van Scoyk v. St. Mary's Assumption Parochial School, 580 P.2d 1315, 1317 (1978); K.S.A. § 44-1005(i); K.S.A. § 44-1011. Indeed, federal courts regularly dismiss related discrimination claims under state law when the plaintiff has failed to first exhaust his state administrative remedies. Butler v. Capitol Federal Savings, 904 F.Supp. 1230, 1234 (D.Kan. 1995); Ratts v. Board of County Commissioners, 141 F.Supp.2d 1289, 1298 (D.Kan. 2001)
Because including a state law claim still before the KHRC into an action before the Court will inevitably lead to its dismissal, plaintiff's remaining option is to initially file the federal action without the pending state claim. This is the option that defendant wishes us to eliminate in the name of claim splitting.
We will not place plaintiff in such a position. We hold that maintaining a federal discrimination action, while the state discrimination claim is being properly adjudicated by the KHRC, is not claim splitting. Therefore, as a matter of law, defendant is not entitled to a summary judgment.
Therefore it is ORDERED that Defendant's Motion to Dismiss (Doc. 17), construed as a motion for Summary Judgment, be GRANTED as to part II of this opinion, thereby DISMISSING Defendant Tomkins from this action and be DENIED as to part III of this opinion.
SO ORDERED.