By Gerald L. Maatman, Jr. and Christian J. Palacios
Duane Morris Takeaways: In EEOC v. Princess Martha, LLC, et al., Case No. 8:22-CV-2182, 2023 U.S. Dist. LEXIS 219651 (M.D. Fla. Dec. 11, 2023), Judge Charlene Honeywell of the U.S. District Court for the Middle District of Florida ruled that a real estate acquisition firm could not avoid a disability discrimination suit filed by the EEOC, despite the fact that the real estate firm was not named in the original charge of discrimination. The EEOC initially only sent two of the three defendants the operative charge of discrimination, but throughout the course of the investigation the Commission discovered that the real estate acquisition firm was a joint employer, and subsequently sent the real estate firm notice and amended its complaint accordingly. This case illustrates the dangers of joint employer liability for highly integrated corporate entities, and the judicial latitude the EEOC is often afforded to amend its complaints after charging a named party.
Background
In August of 2021, a woman was offered a job at Princess Martha, a Florida retirement community, but her job offer was rescinded after she failed a drug test on account of the medications she took to treat her Post Traumatic Stress Disorder. She promptly filed a charge of discrimination with the EEOC alleging Princess Martha’s hiring practices violated the Americans with Disabilities Act of 1990.
The EEOC sent Princess Martha notice of the charge on November 23, 2021. During the course of its investigation the Commission determined that Princess Martha had a joint employer relationship with TJM Properties, whom it sent notice to on May 26, 2022. After determining that TJM Properties and Princess Martha violated the ADA, and after an unsuccessful conciliation attempt, the EEOC filed a lawsuit against both TJM Properties and Princess Martha on September 21, 2022. The Commission subsequently amended its complaint by adding TJM Property Management to the suit, alleging TJM Property Management received proper notice of the lawsuit because of its interrelated relationship as a single or integrated enterprise and/or joint employer status with the other defendants.
TJM Properties and TJM Property Management moved to dismiss the lawsuit on two grounds: First they argued that the EEOC had failed to exhaust its administrative remedies, including adequately putting the TJM entities on notice and giving them the opportunity to conciliate. Second, they argued that the EEOC’s complaint failed to establish a single/integrated enterprise or joint employer relationship existed between the TJM entities and Princess Martha.
The Court’s Ruling
In ruling in favor of the EEOC, the Court made short work of the defendants’ first argument. TJM Properties participated in the conciliation process and was explicitly notified by the Commission that it was a joint employer to Princess Martha. TJM Property Management similarly received notice due to its interrelated nature with the other defendants, and the TJM entities shared a principal place of business and the same mailing address. Furthermore, the Court pointed to an agreement existed between the defendants that required TJM Property Management to assist in coordinating legal matters with Princess Martha.
With respect to the defendants’ second argument, the Court noted that typically only parties named in EEOC charges could be charged in suits, but courts used a five-factor test to determine whether a non-named party could be sued. Applying the factors to the case, the Court determined that all three defendants were “highly integrated.” Id. at * 8. All three entities shared a mailing address, and the managing members of Princess Martha were also active in the management of TJM. Additionally, the human resources director for Princess Martha was a TJM Properties employee, and all three entities shared a common owner. Because of this, the Court concluded that despite the fact that the EEOC had not named TJM Property Management in the original suit, the highly integrated nature of the defendants made the Commission’s amended complaint appropriate.
Implications For Employers
As the ruling in EEOC v. Princess Martha, LLC illustrates, many courts are reluctant to strictly interpret an EEOC complaint, and the Commission can likely amend its lawsuit if, during the course of its investigation, it discovers that named defendants have highly integrated relationships with non-named entities. Therefore, companies with closely adjacent corporate affiliates should take extra care if they receive a charge of discrimination from the EEOC, as the Commission may later amend its complaint to include a non-named corporate entity.