Author: Christian Palacios

By Gerald L. Maatman, Jr., Emilee N. Crowther, and Christian J. Palacios

Duane Morris Takeaways: In EEOC v. 1901 South Lamar, LLC, No. 1:23-CV-539, 2024 WL 41202, at *1 (W.D. Tex. Jan. 3, 2024), U.S. District Judge Robert Pitman adopted U.S. Magistrate Judge Susan Hightower’s recommendation to deny Defendants’ three Motions to Dismiss an EEOC pregnancy discrimination lawsuit. As Magistrate Judge Hightower’s recommendation illustrates, even smaller entities that would ordinarily not satisfy Title VII’s numerosity requirement cannot escape the EEOC’s grasp if they collectively operate as a single, integrated enterprise. 

Case Background

Defendants 1901 South Lamar, LLC d/b/a Corner Bar (“Corner Bar”), Revelry Kitchen & Bar, LLC (“RK&B”), and Revelry on the Boulevard, LLC (“ROTB”) (collectively, “Defendants”) hired Kellie Connolly (“Connolly”) in September 2020 to work at the Corner Bar in Austin, Texas.  Id. at *1. On January 31, 2021, Connolly informed the Defendants she was pregnant.  Id.  Two months later, after Connolly became visibly pregnant, the Defendants allegedly reduced her work hours.  Id.  On June 25, 2021, Connolly’s manager terminated her employment, stating that “she was becoming ‘too much of a liability’” and that they would part ways “until after the baby.”  Id.

The EEOC filed suit against the Defendants alleging they discriminated against Connolly on the basis of her pregnancy in violation of Title VII.  Id. In seeking to dismiss the lawsuit, the Defendants argued: (i) Corner Bar was not an “employer” under Title VII because it employed fewer than 15 employees during the relevant time period, and (ii) the Defendants were not an integrated single employer enterprise under Title VII.  Id. at *2.

The Court’s Decision

Magistrate Judge Hightower was unpersuaded by the Defendant’s arguments. As a preliminary matter, Magistrate Judge Hightower held that Title VII’s numerosity requirement was not jurisdictional, and could therefore not serve to support Defendant’s Motion to Dismiss for lack of subject- matter jurisdiction.

The Magistrate Judge then applied a four-factor test to determine whether these separate entities were a “single, integrated enterprise” under Title VII and concluded that the factors weighed in favor of the EEOC.  In particular, the Court found the following facts supported the EEOC’s “integrated business enterprise” allegations: (i) Defendants all shared bartending staff and inventory, (ii) utilized a single Director of Operations to handle all human-resources related services, (iii) jointly marketed their businesses, and (iv) utilized a disciplinary form that bore the logo of each of the Defendants.  Id. at *3.  Accordingly, the Magistrate Judge found that these facts could support a finding of centralized control of labor relations and recommended the District Court deny Defendants’ Motion to Dismiss. Id. at *4.

The Defendants challenged the order by way of Rule 72 objections. On January 3, 2024, District Court Judge Robert Pitman rejected the Rule 72 objections, and accepted and adopted the Magistrate Judge’s report and recommendation.

Implications For Companies

As the ruling in EEOC v. 1901 South Lamar, LLC, illustrates, even employers with fewer than 15 employees that would ordinarily be exempt from Title VII’s requirements may be sued by the EEOC, provided they have sufficiently integrated affiliates that would collectively put them over Title VII’s numerosity threshold.

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.