Heinemeier, Geri v. Chemetco Inc ( 2001 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 00-1943
GERI HEINEMEIER, formerly
known as GERI CHAMPION,
Plaintiff-Appellant,
v.
CHEMETCO, INCORPORATED,
Defendant-Appellee.
Appeal from the United States District Court
for the Southern District of Illinois.
No. 96 C 534--David R. Herndon, Judge.
Argued NOVEMBER 1, 2000--Decided April 18,
2001
Before CUDAHY, COFFEY, and EASTERBROOK,
Circuit Judges.
COFFEY, Circuit Judge. On June 20, 1996,
Geri Heinemeier filed suit against
Chemetco, Inc. and Tri-Me Transportation,
Inc., in the Southern District of
Illinois claiming sexual harassment, age
discrimination, and retaliatory
discharge. After the conclusion of
discovery, Chemetco and Tri-Me filed
motions for summary judgment. The
district court granted the motion with
respect to Chemetco, concluding that the
company was not Heinemeier’s employer,
but denied the motion as to Tri-Me. A
bench trial was then conducted (Tri-Me
remained as a defendant) and the judge
awarded damages in the amount of
$411,310.00. This appeal involves the
sole question of whether summary judgment
was properly granted in favor of
Chemetco. We REVERSE and REMAND this case
for proceedings consistent with this
opinion.
I. BACKGROUND/1
A. The Companies
There are three relevant companies to
this case: Chemetco, Tri-Me, and Triangle
Metallurgical. All three companies were
owned by Bill Wegrzyn and John Suarez
during the relevant time frame. Not only
were the three companies owned by the
same two men, but also the operation of
each was closely tied together. For
example, Triangle Metallurgical sorts
scrap metal and then transports copper
scrap to Chemetco. Prior to 1986, the
transportation of metal between Triangle
Metallurgical and Chemetco was
accomplished by the use of third-party
contractors. In 1986, however, Wegrzyn
and Suarez formed Tri-Me to retrieve and
salvage scrap metal in East St. Louis,
Illinois, process the metal in Granite
City, Illinois, and thereafter transport
the copper to Chemetco. At the time Tri-
Me was formed, Juan Mena, its vice-
president, hired Carl Schenck to operate
Tri-Me as its manager of operations. Juan
Mena also interviewed and hired the
plaintiff who, on March 1, 1988,
commenced her employment with either
Chemetco, Tri-Me, or both companies./2
B. Tri-Me as Heinemeier’s employer
There are several known facts in this
case that support the contention that
Tri-Me alone employed Heinemeier.
Initially, all of Heinemeier’s paychecks
were printed on checks issued by Tri-Me
and signed by Schenck, a Tri-Me officer.
Similarly, Heinemeier’s W-2 forms for
wage and tax statements reflect that her
employer for the years 1992 through 1995
was Tri-Me; although she could not
produce her W-2 forms for 1988-1991,
Heinemeier conceded in her deposition
that she believed these documents also
stated that Tri-Me was her employer.
In addition to these documents, the
location and duties of her job support a
conclusion that Heinemeier was employed
at Tri-Me. Her primary employment
responsibility was to audit freight bills
Tri-Me generated when it transported
copper scrap to Chemetco. Although these
bills documented a transaction involving
both Chemetco and Tri-Me, Heinemeier
usually performed this work at a facility
owned by Tri-Me in Granite City,
Illinois. Furthermore, she reported
directly to Schenck and later, other Tri-
Me officers when she was transferred to
another Tri-Me facility in Hazelwood,
Illinois.
The record also contains evidence, in
the form of an apartment application,
that Heinemeier believed herself to be a
Tri-Me employee. When Heinemeier filled
out an apartment application on April 11,
1994, she listed her position as "Freight
Audit Manager" for Tri-Me and identified
Tri-Me Vice President Juan Mena as her
employer. Later in the application
process, Heinemeier submitted a "Request
for Verification of Employment" form that
was signed by Mena as "Vice-President for
Tri-Me" and contained no mention of
Chemetco.
C. Chemetco as Heinemeier’s employer
Not all of the facts in the record,
however, lead to the conclusion that
Heinemeier was solely a Tri-Me employee.
Heinemeier submitted the affidavit of
Carl Schenck in response to defendants’
motion for summary judgment. In his
affidavit, Schenck states:
3. I was employed at Tri-Me
Transportation, Inc., as its Manager of
Operations on March 1, 1988, at which
time Geri Champion (n/k/a Geri
Heinemeier) reported to work at the Tri-
Me Transportation, Inc. facility located
in Granite City.
* * * *
5. Geri Champion’s salary was paid to her
out of the Tri-Me Transportation, Inc.
payroll account, but because she was an
employee of Chemetco, Inc., Chemetco,
Inc. was required to reimburse Tri-Me
Transportation, Inc. for any amounts it
paid to Geri Champion.
6. Geri Champion had requested health
insurance from Tri-Me Transportation,
Inc., which I attempted to authorize and
obtain for her, but she was denied
coverage under the plan that covered all
of Tri-Me Transportation’s employees
based on the fact that she was not an
employee of Tri-Me Transportation, Inc.
7. Geri Champion requested a raise from me
but I was unable to authorize any such
raise as she was not an employee of Tri-
Me Transportation, Inc.
8. Geri Champion requested a raise from
Chemetco, Inc. after I informed her that
she was not an employee of Tri-Me
Transportation, Inc., but rather
Chemetco, Inc. and was subsequently
granted her request from Chemetco, Inc.
Therefore, according to this affidavit,
Chemetco actually paid for all work
performed by Heinemeier on its behalf
and, furthermore, only a Chemetco officer
had the authority to authorize a raise
for Heinemeier. Schenck’s affidavit also
states that after Heinemeier requested
health insurance, he tried to obtain
coverage for her from Tri-Me, but was
told that she was not a Tri-Me employee.
Importantly, Chemetco conceded at oral
argument that Heinemeier subsequently
obtained health insurance through a plan
offered by Chemetco.
As demonstrated above, both Chemetco and
Tri-Me exercised control over different
facets of Heinemeier’s job
responsibilities and benefits. This dual
control was not lost on plaintiff in that
she does not appear to have a clear
understanding of which defendant hired
and employed her during the relevant time
period. For example, at her deposition,
she testified:
Q: When were you first employed after
graduating from [school]?
A: That’s when--my job that I got after
[school] was with Tri-Me.
Q: When did you become employed with Tri-
Me?
A: It was March 1st of ’88 . . .
Q: And you continued your employment with
Tri-Me until 1994, is that correct?
A: Right.
Q: What were your duties while employed at
Tri-Me?
A: Well, I was hired at Chemetco to do an
audit of Chemetco’s freight bills, and
that was my job.
[Emphasis added].
Many of the documents that might help
shed further light on the disputed nature
of Heinemeier’s employment relationship
should be contained in her personnel
file. During the course of this
litigation, Heinemeier served discovery
requests on both Chemetco and Tri-Me (who
are represented by the same counsel)
seeking the production of her personnel
file. In response to plaintiff’s request
for her file, Tri-Me responded:
"Defendant, Tri-Me Transportation, Inc.
is unable to locate the personnel file of
Geri Heinemeier." Chemetco did not
respond to the plaintiff’s request to
produce her personnel file.
D. Procedural History
On September 9, 1994, plaintiff
initially filed charges against Chemetco
with the United States Equal Employment
Opportunity Commission (EEOC) and the
Illinois Department of Human Rights
(IDHR) asserting both sexual harassment
and age discrimination. In the charges,
Heinemeier alleged:
Dave Hoff, President of Chemetco, told me
I was discharged for poor work
performance [but] I believe I was
discriminated against because of my sex
[and] replaced by a younger employee . .
. in violation of the Age Discrimination
in Employment Act of 1967.
Heinemeier amended these charges on
February 12, 1996, and identified Tri-Me
as an additional employer/defendant. On
March 20, 1996, the EEOC issued a right-
to-sue letter. On June 20, 1996,
plaintiff filed suit against Chemetco,
Tri-Me, and United Freight Express, Inc.
(United Freight) in the United States
District Court for the Southern District
of Illinois. On September 23, 1996, the
trial court granted Heinemeier’s motion
to voluntarily dismiss the claims against
United Freight, leaving only Chemetco and
Tri-Me as defendants.
On April 30, 1998, Chemetco and Tri-Me
filed a motion for summary judgment. In
this motion, Chemetco contended that it
was not Heinemeier’s employer and that
the allegations contained in her
complaint were insufficient to establish
age discrimination, quid pro quo sexual
harassment, or a hostile work environment
claim. Judge Paul E. Riley granted the
motion on June 8, 1998, and wrote:
The record before this Court (including
Tri-Me’s payroll records, Heinemeier’s W-
2 forms, Hoff’s affidavit, the apartment
application, and much of Heinemeier’s own
deposition testimony) establishes that
Tri-Me (not Chemetco) employed
Heinemeier. Accordingly, Heinemeier
cannot prevail on her Title VII or ADEA
claims against Chemetco. No genuine issue
of material fact remains as to
Heinemeier’s claims against Chemetco, and
Chemetco is entitled to judgment as a
matter of law on those claims.
In the same order, Judge Riley denied
Tri-Me’s motion for summary judgment and
scheduled a trial to begin on July 6,
1998, on the Title VII retaliation charge
against Tri-Me. However, two weeks later,
Tri-Me filed for Chapter Seven Bankruptcy
protection thereby staying the impending
trial. On November 18, 1998, the
bankruptcy stay was lifted and, one week
later, this case was reassigned to Judge
David Herndon of the Southern District of
Illinois. On March 1, 1999, plaintiff
filed a motion requesting that
JudgeHerndon reconsider the summary
judgment previously entered in favor of
Chemetco by Judge Riley. On April 23,
1999, Judge Herndon issued an order
stating "that the order of June 8, 1998,
is not clearly erroneous and therefore
DENIES the plaintiff’s request for relief
from it."
The case then proceeded to a bench trial
before Judge Herndon on October 8, 1999,
wherein Tri-Me was neither present nor
represented by counsel. On March 10,
1999, Judge Herndon entered judgment
against Tri-Me in the total amount of
$411,310.00. Tri-Me does not appeal from
this judgment. Rather, there is only one
issue on appeal: did the district court
appropriately enter summary judgment for
Chemetco after determining that
Heinemeier was not employed by Chemetco?
II. DISCUSSION
Title VII prohibits an employer from
discharging or discriminating against an
individual’s employment relationship on
the basis of that individual’s sex. 42
U.S.C. sec. 2000e-2(a)(1); Alexander v.
Rush North Shore Medical Center, 101 F.3d
487, 491 (7th Cir. 1996). Similarly, the
ADEA prohibits an employer from
discriminating against an individual with
respect to the terms of her employment
based on the individual’s age. 29 U.S.C.
sec. 623(a); Mills v. First Federal
Savings & Loan Association of Belvidere,
83 F.3d 833, 840 (7th Cir. 1996). As
noted above, the trial judge dismissed
Chemetco as a defendant after finding
that Chemetco was not Heinemeier’s
"employer" for purposes of either Title
VII or the ADEA.
A. Standard of Review
We review the district court’s grant of
summary judgment de novo, viewing the
record and all reasonable inferences
drawn from the record in the light most
favorable to Heinemeier. Sample v. Aldi,
Inc., 61 F.3d 544, 546 (7th Cir. 1995).
Summary judgment is appropriate only when
"there is no genuine issue as to any
material fact and the moving party is
entitled to judgment as a matter of law."
Fed.R.Civ.P. 56(c). "This standard is
applied with added rigor in employment
discrimination cases where intent and
credibility are crucial issues." Sample,
61 F.3d at 547 (internal quotations and
citations omitted).
B. Economic Realities Test
When facing questions regarding the
employee-employer relationship under
Title VII or the ADEA, we "look to the
’economic realities’ of the relationship
and the degree of control the employer
exercises." Knight v. United Farm Bureau
Mut., 950 F.2d 377, 378-80 (7th Cir.
1991)./3 In this case, the record
reveals that Tri-Me and Chemetco shared
control over Heinemeier and that the
economic realities of her relationship
with these companies is mixed. For
example, Tri-Me’s payroll records,
Heinemeier’s W-2 forms, and Heinemeier’s
apartment application all support the
district court’s finding that Tri-Me was
Heinemeier’s employer.
On the other hand, there is also
material evidence supporting plaintiff’s
claim that she was employed by Chemetco.
Initially, Chemetco admits that the
plaintiff-appellant received health
insurance from a plan offered through
Chemetco. Although Heinemeier has failed
to introduce any documents detailing the
exact nature and scope of Chemetco’s
plan, it is common knowledge that most
employer-sponsored health insurance plans
limit participation to company employees
and their families./4 Thus, Heinemeier’s
participation in the health insurance
plan implies that she was a Chemetco
employee. Additionally, Schenk’s
affidavit states that at least one of the
"economic realities" of Heinemeier’s
employment, the responsibility for
determining her salary, was controlled by
Chemetco, not Tri-Me.
We are also of the opinion that
Chemetco’s and Tri-Me’s joint failure to
produce a copy of Heinemeier’s personnel
file is curious, and supports a
determination that Chemetco was her
employer./5 This is because, under
Illinois law, Chemetco’s failure to
supply a copy of the file or a
"reasonable excuse" for its non-
production entitles the plaintiff to a
jury instruction that allows the jury to
infer that the contents of the personnel
file would be adverse to Chemetco.
Illinois Pattern Jury Instruction 5.01. A
jury could reasonably conclude that the
missing personnel file, which should be
the key piece of evidence at a trial
where the identity of plaintiff’s
employer is the main issue, might very
well have been the "smoking gun" favoring
Heinemeier.
We are of the opinion that a jury should
have determined whether Chemetco was, in
fact, Heinemeier’s employer. Accordingly,
we REVERSE and REMAND this case for further
proceedings consistent with this opinion.
/1 Our recitation of the history of this matter is
limited to the facts regarding the identity of
Heinemeier’s employer, the only issue on appeal.
We do not discuss the nature of Heinemeier’s
charges in detail, but note for the record that
Heinemeier alleges that she was subjected to a
hostile work environment and forced to have non-
consensual sexual intercourse with her supervi-
sor, Juan Mena.
/2 The identity of Heinemeier’s employer is the only
issue in this case. As discussed in great detail
below, we do not express an opinion as to whether
she was employed by Chemetco, Tri-Me, or both
companies. Nothing in the recitation of facts
should be inferred as an indication that this
court holds Heinemeier to have been employed
exclusively by either Chemetco or Tri-Me.
/3 The five factors identified in Knight were:
(1) the extent of the employer’s control and
supervision over the worker, including directions
on scheduling and performance of work, (2) the
kind of occupation and nature of skill required,
including whether skills are obtained in the work
place, (3) responsibility for the costs of opera-
tion, such as equipment, supplies, fees, licens-
es, workplace, andmaintenance operations, (4)
method and form of payment and benefits, and (5)
length of job commitment and/or expectations.
Alexander, 101 F.3d at 492 (internal quotation
omitted).
/4 In fact, to do otherwise may be in violation of
ERISA.
/5 There are obviously a number of reasonable expla-
nations that might account for a corporation
losing business records that are relevant to
litigation, including Heinemeier’s file. However,
Chemetco has not proffered any such explanation
to date and its failure to do so is troubling
especially in light of: (1) the close ties be-
tween Chemetco and Tri-Me; and (2) Tri-Me’s
decision to file for bankruptcy on the heels of
having its motion for summary judgment in this
case denied by the district court.