Francisca Sandoval v. American Building, etc. ( 2009 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 08-2271
___________
Francisca Sandoval; Ines Hernandez; *
Miriam Pacheco; Eva Reyes; Arminda *
Gomez; Nidia Guerrero; Lucila *
Marquez; Maria Perez; Azucena *
Garcia; Estela Laureano; Marlene *
Giron, *
*
Plaintiffs - Appellants, *
*
v. *
*
American Building Maintenance *
Industries, Inc., also known as ABM * Appeal from the United States
Industries, Incorporated, doing * District Court for the District of
business as ABM Janitorial Services; * Minnesota.
American Building Maintenance Co. *
of Kentucky, *
*
Defendants - Appellees. *
*
___________________ *
*
Equal Employment Opportunity *
Commission; National Employment *
Lawyers Association, *
*
Amici on behalf of *
Appellants. *
___________
Submitted: February 11, 2009
Filed: August 26, 2009
___________
Before BYE, JOHN R. GIBSON, and GRUENDER, Circuit Judges.
___________
BYE, Circuit Judge.
Francisca Sandoval, Ines Hernandez, Miriam Pacheco, Eva Reyes, Arminda
Gomez, Nidia Guerrero, Lucila Marquez, Maria Perez, Azucena Garcia, Estela
Laureano, and Marlene Giron (collectively "Appellants" or "Plaintiffs"), brought suit
against American Building Maintenance Industries, Inc. (ABMI), d/b/a ABM
Janitorial Services, and American Building Maintenance of Kentucky (ABMK)1 under
Title VII of the Civil Rights Act, 42 U.S.C. §§ 2000e to 2000e-17, and the Minnesota
Human Rights Act (MHRA), Minn. Stat. Ann. §§ 363A.01 to 363A.41, alleging
sexual harassment, hostile workplace, and other employment-related claims. The
district court dismissed the claims brought by eight of the appellants (Sandoval,
Hernandez, Pachecho, Reyes, Gomez, Guerrero, Marquez, Perez (collectively
"Original Plaintiffs")) against ABMK, holding the claims were brought more than
ninety days after the Equal Employment Opportunity Commission (EEOC) issued
right-to-sue letters.2 Thereafter, ABMI moved for summary judgment, arguing it was
not the appellants' employer, and ABMK moved for summary judgment, arguing the
claims brought against it by the timely plaintiffs should be dismissed on the merits.
1
ABMI is the parent corporation of ABM Janitorial Services, which is a wholly
owned subsidiary of ABMI. ABM Janitorial Services, in turn, is the parent
corporation of ABMK, which is a wholly owned subsidiary of ABM Janitorial
Services.
2
There is no dispute three of the appellants (Garcia, Laureano, Giron
(collectively "Timely Plaintiffs")) filed timely complaints against ABMK.
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The district court granted ABMI's motion, holding it was not appellants' employer.
Additionally, the district court granted summary judgment to ABMK, holding the
timely plaintiffs failed to allege actionable claims for sexual harassment, hostile
workplace or other employment-related claims under Title VII or the MHRA. On
appeal, appellants argue the district court erred in 1) finding the amended complaint
was untimely or did not relate back to the original complaint, 2) finding ABMI was
not the appellants' employer by acting as an integrated enterprise with ABMK, and 3)
dismissing the timely plaintiffs' claims of sexual harassment, hostile workplace, and
other employment-related claims on the merits. We reverse in part and remand.
I
On May 2, 2006, the original plaintiffs, who had filed EEOC claims of
discrimination against ABMI, requested right-to-sue letters from the EEOC. By May
11, 2006, the EEOC had issued the letters and informed the original plaintiffs any
action must be filed within ninety days of receiving the letters. On May 15, 2006, the
original plaintiffs filed suit against ABMI, a/k/a ABM Industries Incorporated, d/b/a
ABM Janitorial Services. The complaint did not name ABMK. On June 28, 2006,
defense counsel called the appellants' attorney and informed him ABMK was the
appellants' employer, not ABMI. Appellants' counsel requested verification of the
information and researched ABMK's status as an employer in Minnesota. On June 29,
2006, defense counsel wrote appellants' counsel verifying that ABMK was the
appellants' employer and offered a stipulation allowing appellants to amend the
complaint to add ABMK. Appellants' counsel requested further verification and
declined the stipulation.
On July 28, 2006, appellants' counsel sent a proposed stipulation to defense
counsel regarding amending the complaint to add ABMK as a defendant. Defense
counsel agreed to the stipulation in principle but requested additional language
indicating the amendment did not relate back to the date of the original complaint. On
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August 9, 2006, appellants' counsel agreed to the additional language but the
stipulation was not signed. On August 11, 2006, appellants' counsel informed defense
counsel he intended to add three additional plaintiffs and would wait until they
received right-to-sue letters from the EEOC before amending the complaint. Defense
counsel indicated the amendment naming ABMK should be made immediately.
Appellants' counsel refused, preferring instead to make both amendments at the same
time. On September 15, 2006, more than one month after the ninety-day time limit
had passed as to the original plaintiffs, the amended complaint adding ABMK and the
three timely plaintiffs was filed.
ABMK moved for dismissal, arguing the amendment was untimely. The
original plaintiffs resisted, arguing equitable tolling or the relation back doctrine saved
the untimely amendment. The district court disagreed, finding the original plaintiffs
had not acted reasonably or in good faith in failing to amend the complaint sooner.
In particular, the court found appellants' counsel was informed early on of the identity
of the appellants' employer and was offered multiple opportunities to amend the
complaint. Despite this information, counsel unreasonably delayed in filing the
amendment. Similarly, the district court concluded the relation back doctrine did not
apply because the failure to name ABMK was not the result of a mistake as to its
identity. Instead, the district court concluded appellants' counsel was informed
ABMK was the proper party nearly two months before the statute of limitations
expired and failed to make a timely motion to amend.
Thereafter, ABMI and ABMK moved for summary judgment on the
discrimination, hostile workplace, and other employment-related claims. ABMI
argued it was not the appellants' employer and the claims against it should be
dismissed. ABMK argued the claims filed by the timely plaintiffs should be
dismissed because there was no evidence of sexual harassment, hostile workplace or
other employment-related misconduct. The district court concluded there was
insufficient evidence to show ABMI exercised sufficient control over ABMK to make
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it the appellants' employer. The court further found there was insufficient evidence
to support the timely filed sexual harassment, hostile workplace and other
employment-related claims. Accordingly, the district court granted summary
judgment and dismissed all the claims.
On appeal, the appellants argue the district court erred in finding the amended
complaint untimely under either equitable tolling or the relation back doctrine.
Additionally, the appellants argue the court erred in finding ABMI was not their
employer, and that the sexual harassment, hostile workplace, and other employment-
related claims lacked merit.
II
We review the district court's grant of summary judgment de novo, viewing the
evidence and drawing all reasonable inferences in the light most favorable to the
appellants, the nonmoving parties. Holland v. Sam's Club, 487 F.3d 641, 643 (8th Cir.
2007). We will affirm if no genuine issue of material fact exists and the defendants
are entitled to judgment as a matter of law. Id. But "[o]nly disputes over facts that
might affect the outcome of the suit under the governing law will properly preclude
the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986).
A
The original plaintiffs first argue the district court erred in concluding neither
equitable tolling or the relation back doctrine saved the untimely filed amendment.
Equitable tolling requires, among other elements, a finding the original plaintiffs acted
reasonably and in good faith. Pecoraro v. Diocese of Rapid City, 435 F.3d 870, 875
(8th Cir. 2006). The failure to bring a timely claim is reasonable if "despite all due
diligence, [the original plaintiffs were] unable to obtain vital information bearing on
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the existence of [the] claim." Dring v. McDonnell Douglas Corp., 58 F.3d 1323, 1328
(8th Cir. 1995) (citations omitted). Here the original plaintiffs did not act with due
diligence. Defense counsel informed appellants' counsel he needed to amend the
complaint to include ABMK, and offered multiple opportunities to amend.
Nevertheless, counsel waited nearly three months until the ninety-day time limit was
past to file the amendment. We conclude the delay was not reasonable.
Similarly, under the relation back doctrine, the original plaintiffs must show the
failure to name ABMK was the result of a mistake concerning the identity of the
proper party. Shea v. Evensten, 208 F.3d 712, 720 (8th Cir. 2000). The original
plaintiffs argue ABMK was on notice it should have been named in the complaint and
was not prejudiced by the delay. It is true ABMK was on notice. Further, ABMK
does not argue it was prejudiced. The original plaintiffs, however, offer no
explanation for waiting until after the statute of limitations expired before filing the
amended complaint. Inasmuch as the original plaintiffs were aware of ABMK's
identity for nearly two months before the statute expired, it cannot be argued a mistake
caused the failure to file a timely complaint against ABMK. Rather, the complaint
was not filed because counsel preferred to wait and file the amendment adding ABMK
at the same time he sought to add the timely plaintiffs. Therefore, we affirm the
district court's order holding the amendment adding ABMK was untimely.
B
Appellants next argue the district court erred in concluding ABMI was not their
employer. "Title VII of the Civil Rights act of 1964 is to be accorded a liberal
construction in order to carry out the purposes of Congress to eliminate the
inconvenience, unfairness and humiliation of . . . discrimination." Baker v. Stuart
Broad. Co., 560 F.2d 389, 391 (8th Cir. 1977) (quotation marks and citations omitted).
In particular, "[s]uch liberal construction is also to be given to the definition of
'employer.'" Id. (citation omitted). The legal standard in this circuit for determining
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a parent corporation's liability for a subsidiary's commission of practices prohibited
by Title VII was first set forth more than thirty years ago in Baker. Id. at 392. The
court adopted a four-part test treating related but distinct entities as an integrated
enterprise based on 1) interrelation of operations, 2) common management, 3)
centralized control of labor relations, and 4) common ownership or financial control.
Id. In Baker, the court found "sufficient facts to hold as a matter of law" two affiliated
broadcasting corporations – Stuart and Grand Island – "share management and
ownership," and "a sufficient interrelation of operations between the two companies."
Id. Specifically, the court noted Stuart "provides management services for Grand
Island . . . includ[ing] . . . check writing and completion of the necessary forms for
broadcast license renewals . . . [and] issues policy manuals which Grand Island . . . is
to follow." Id. Further, "[w]hile evidence as to control of labor relations [was] less
clearly developed in the record . . . the record support[ed] a conclusion that Stuart
Broadcasting and Grand Island Broadcasting should be consolidated . . . ." Id. Our
reliance upon, and the continued viability of, Baker's four-part test is supported by
EEOC guidance and Congressional intent.
Under the EEOC's interpretation of Title VII, "[t]he separate entities that form
an integrated enterprise are treated as a single employer for purposes of both coverage
and liability," and "relief can be obtained from any of the entities that form part of the
integrated enterprise." EEOC Compliance Manual, Section 2: Threshold Issues, No.
915.003, at 44. "The factors to be considered in determining whether separate entities
should be treated as an integrated enterprise" mirror those set forth in Baker, and
include the degree of interrelation between the operations, the degree to which the
entities share common management, centralized control of labor relations, and the
degree of common ownership or financial control. Id. at 44-45. When evaluating the
degree of interrelation, the EEOC considers sharing services such as check writing,
preparation of mutual policy manuals, contract negotiations, completion of business
licenses, sharing payroll and insurance programs, sharing services of managers and
personnel, sharing office space, equipment, and storage, and operating the entities as
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a single unit. Id. The degree to which the entities share common management
includes whether the same individuals manage or supervise the different entities or
whether the entities have common officers and boards of directors. Id. The EEOC
also considers the extent to which there is a centralized source of authority for
development of personnel policy, maintenance of personal records, human resources,
and employment decisions. Id. Finally, the degree of common ownership or financial
control asks whether one company owns the majority or all shares of the other and if
the entities share common officers or directors. Id.
Similarly, Congress has demonstrated its support for the Baker four-factor test
by codifying the standard in a 1984 amendment to the Age Discrimination in
Employment Act (ADEA), and in a provision of the 1991 Civil Rights Act amending
Title VII and the Americans with Disabilities Act (ADA). See 29 U.S.C. § 623(h)
(ADEA); 42 U.S.C. § 2000e-1(c) (Title VII); 42 U.S.C. § 12112(c)(2) (ADA). In
EEOC v. Arabian American Oil Co., 499 U.S. 244, 246 (1991), the Supreme Court
held Title VII did not apply "extraterritorially to regulate the employment practices
of United States employers who employ United States citizens abroad." In reaching
its decision, the Supreme Court noted Congress had previously acted to extend the
reach of, among other statutes, the ADEA to cover U.S. citizens employed abroad by
U.S. corporations or their foreign subsidiaries.
[A]fter several courts had held that the ADEA did not apply overseas,
Congress amended [the ADEA] to provide: "The term 'employee'
includes any individual who is a citizen of the United States employed
by an employer in a workplace in a foreign country." 29 U.S.C. § 630(f).
Congress also amended § 4(g)(1), which states: "If an employer controls
a corporation whose place of incorporation is in a foreign country, any
practice by such corporation prohibited under this section shall be
presumed to be such practice by such employer." 29 U.S.C. § 623(h)(1).
The expressed purpose of these changes was to "mak[e] provisions of the
Act apply to citizens of the United States employed in foreign countries
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by U.S. corporations or their subsidiaries." S. Rep. No. 98-467, p.2
(1984), U.S. Code Cong. & Admin. News 1984 pp. 2974, 2975.
Id. at 258-59.
In extending the reach of the ADEA, Congress codified the four-factor
integrated enterprise test as the standard to determine "whether an employer controls
a corporation" overseas, and is thereby "presumed" liable for unlawful discrimination
against the U.S. citizen employees of the foreign subsidiary. 29 U.S.C. § 623(h).
"The purpose behind the amendment [was] to ensure that the citizens of the United
States who are employed in a foreign workplace by U.S. corporations or their
subsidiaries enjoy the protections of the [ADEA]." In Arabian American, the
Supreme Court suggested "Congress, should it wish to do so, may similarly amend
Title VII." 499 U.S. at 259. Congress immediately acted by adding a provision to the
1991 Civil Rights Act to include functionally identical language in Title VII and the
ADA. As amended, Title VII now protects U.S. citizens employed "in a foreign
country," 42 U.S.C. § 2000e(f), under the following circumstances:
(c)(1) If an employer controls a corporation whose place of incorporation
is a foreign country, any practice prohibited by section 2000e-2 or
2000e-3 of this title engaged in by such corporation shall be presumed
to be engaged in by such employer.
(2) Sections 2000e-2 and 2000e-3 of this title shall not apply with
respect to the foreign operations of an employer that is a foreign person
not controlled by an American employer.
(3) For purposes of this subsection the determination of whether an
employer controls a corporation shall be based on –
(A) the interrelation of operations;
(B) the common management;
(C) the centralized control of labor relations; and
(D) the common ownership or financial control, of the employer and the
corporation.
42 U.S.C. § 2000e-1(c) (emphasis added); see also 42 U.S.C. § 12112(c)(2) (ADA).
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Congress' express purpose was to "extend the protections of Title VII and the
[ADA] to American citizens working overseas for American employers," by enacting
a provision that "parallels a 1984 amendment to the [ADEA]." 137 Cong. Rec.
S15235-02 (Sen. Kennedy) (Oct. 25, 1991); see also 137 Cong. Rec. S15477-01 (Sen.
Dole) (Oct. 30, 1991) (same). In doing so, Congress again approved the four-factor
integrated enterprise test to determine when an employer will be presumed liable for
the unlawful employment practices of a subsidiary or corporate affiliate. "A foreign
entity will be found to be controlled only if it is, in effect, an integrated enterprise with
an American employer." EEOC Enforcement Guidance: Application of Title VII and
the [ADA] to Conduct Overseas and to Foreign Employers Discriminating in the
United States, No. N-915.002 at 4, 18 n.6 (Oct. 20, 1993) ("The factors identified . .
. are the same as those relied upon by the Commission for determining when two or
more entities (whether foreign or domestic) may be treated as an integrated enterprise
or a single employer."). The intent of these amendments was to extend to U.S.
citizens employed abroad by American employers, or by foreign affiliates controlled
by such employers, the same protections from discrimination they would enjoy at
home. Therefore, Congress plainly intended the term "employer" be interpreted in
accord with the four-factor integrated enterprise test.
The Fourth Circuit, in deciding whether a parent corporation is liable for
unlawful discrimination against a subsidiary's employees, has emphasized "the
doctrine of limited liability" derived from corporate law and applies "a strong
presumption" that "when a subsidiary hires employees . . . the subsidiary, not the
parent company, is the employer." Johnson v. Flowers Indus., Inc., 814 F.2d 978, 980
(4th Cir. 1987). "In an employment context," the court held, the parent company can
be the employer of a subsidiary's workers if it exercises excessive control in one of
two ways. The parent could control the employment practices and decisions of the
subsidiary or the parent might so dominate the subsidiary’s operations that the parent
and the subsidiary are one entity and thus one employer. Id. at 981. The Fourth
Circuit acknowledged the four-factor test applied by this and other courts to assess the
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degree of control exercised by a parent corporation over a subsidiary, but saw no
"need [to] adopt such a mechanical test in every instance; the factors all point to the
ultimate inquiry of parent domination" and "simply express relevant evidentiary
inquiries whose importance will vary with the individual case." Id. at 981 n*. The
Tenth Circuit has adopted Johnson, reasoning a "strong presumption that a parent
company is not the employer of its subsidiary’s employees" will be overcome "only
in extraordinary circumstances." Frank v. U.S. West, Inc., 3 F.3d 1357, 1362 (10th
Cir. 1993) (citing Johnson, 814 F.2d at 980-81).
Recently, our court in Brown v. Fred’s, Inc., 494 F.3d 736, 739 (8th Cir. 2007),
applied "a strong presumption that a parent company is not the employer of its
subsidiary's employees," id. (quoting Frank and citing Johnson), and held a Title VII
plaintiff to the standard announced in Johnson: "A parent company may employ its
subsidiary's employees if (a) the parent company so dominates the subsidiary's
operations that the two are one entity and therefore one employer, . . . or (b) the parent
company is linked to the alleged discriminatory action because it controls individual
employment decisions." Id. (internal quotation marks omitted). Without citing Baker
or the four-factor test, or EEOC and Congressional support for the test, the Brown
court affirmed summary judgment for the parent corporation, finding "nothing" to
suggest the parent and subsidiary "were a single entity," and insufficient evidence the
parent "actually controlled individual employment decisions regarding [plaintiff]."
Id. at 739-40.
As demonstrated below, the evidence of common ownership and management
of ABMI and ABMK; ABMI's involvement, pursuant to the Service Agreement, in
several areas of ABMK's operations; and ABMI's public representations of centralized
corporate control of labor and human resources, demonstrate ABMI is the appellants'
employer for purposes of the integrated enterprise test. The district court concluded
otherwise based on the above-cited language in Brown, and held a parent corporation
can only be considered the employer of its subsidiary's employees if the parent
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dominates the subsidiary's operations, or was directly involved in the alleged unlawful
action. 494 F.3d at 739. Additionally, the district court applied a "strong
presumption" against holding a parent liable for the unlawful employment practices
of its subsidiary. Id. We conclude, however, Brown should not be read as
establishing a new integrated enterprise test in our circuit. Rather, it may be
harmonized with Baker by noting the traditional four-factor standard is the means by
which plaintiffs demonstrate corporate dominance over a subsidiary's operations and
establish affiliate liability. In other words, applying the Baker test is how to prove the
"parental domination" standard set forth in Brown. Furthermore, assuming the
presumption articulated in Brown informs the analysis set forth in Baker, it is
overcome in this case by evidence of ABMI's and ABMK's 1) interrelation of
operations, 2) common management, 3) centralized control of labor relations, and 4)
common ownership or financial control.
The district court concluded ABMI's involvement in the operations of ABMK
was insufficient to find ABMI was involved in the actual functioning of ABMK. It
based its conclusion primarily on a finding as to the day-to-day operations of ABMK
being handled by ABMK employees, without the involvement or oversight of ABMI
personnel. Substantial evidence, however, including ABMI's and ABMK's corporate
documents, and publications disseminated on ABMI's website contradict the district
court's conclusion.
ABMI and ABMK share the same Chief Executive Officer, Chief Financial
Officer, Treasurer, Secretary, and Vice President of Finance. Additionally, the Chief
Executive Officer and Chief Financial Officer for ABMI approved the appointments
of the Executive Vice President, Vice President of Finance, Secretary, and the Board
of Directors for ABMK. In addition and importantly, ABMI owns and thereby
controls all of ABMK's issued and outstanding shares of common stock.
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Significantly, ABMI and ABMK entered into a Service Agreement whereby
ABMI agreed to provide certain services to ABMK, including accounting services,
administrative services, electronic services, employee benefits, human resources,
insurance, legal services, safety advice, and treasury services. Through its human
resources department, ABMI agreed to provide ABMK with the following services:
a) Assist in the development of human resource policies applicable to
Subsidiary;
b) Assist on the development and distribution of employee handbooks
and employment-related forms for use by Subsidiary;
c) Assist Subsidiary with employment-related workplace posting
requirements;
d) Provide employee relations personnel to assist Subsidiary with
employment-related problems;
e) Provide employment related legal advice and guidance;
f) Manage all employment-related lawsuits, claims and liability;
g) Preparation of Annual Affirmative Action Plan(s);
h) Provide support for Subsidiary in cases of governmental audits;
i) Manage human resources information services;
j) Develop and present employment-related division training programs.
The accounting services included providing financial policies and procedures,
payroll tax, depositing, independent audits, and preparing and filing federal and state
income tax returns and other necessary reports. The administrative services included
negotiating and managing national accounts, management of uniform company logos
and signage, and purchasing business cards and stationary. Electronic services related
to computer telecommunications systems and included purchasing equipment,
development of software, and technical support. Employment benefits services
included administration of employee benefits programs. The insurance services
included negotiating insurance coverage for workers and managing worker
compensation insurance and claims. As for legal services, ABMI's legal department
agreed to negotiate and draft service and procurement agreements on behalf of
ABMK. ABMI further agreed to provide ABMK with advice necessary to enable
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ABMK to comply with laws dealing with employee safety, to develop and distribute
safety-related training and education materials, and to publish and distribute
appropriate safety manuals. Finally, treasury services included establishing and
maintaining banking relationships. In exchange for these services, ABMK agreed to
pay ABMI one percent of its gross operating revenue and to "follow policies and
guidelines developed pursuant to the Service Agreement, as well as such corporate
guidelines as may be developed and promulgated from time to time." In a subsequent
Service Agreement, ABMI agreed to also provide real estate and marketing services,
and ABMK agreed to pay ABMI separate amounts for electronic services, employee
benefits services, insurance services, and safety services.
In addition, ABMI purchased ABMK's workers' compensation insurance,
obtained licenses for sexual harassment videos, submitted motor vehicle record checks
to a single provider, and drafted certain forms such as performance evaluations.
ABMI also negotiated the contract for a harassment hotline, which ABMK employees
could access to report sexual harassment, discrimination, retaliation, theft, or safety
concerns in the workplace. ABMI would forward any reports to ABMK's human
resources department and ABMK would conduct an investigation. ABMI employees,
however, were available to provide assistance and direction in such investigations, and
the results were forwarded to ABMI to ensure the complaints were resolved.
ABMK's human resources director also had access to ABMI's human resources
online manual, which was used to clarify the operation policies and procedures
ABMK was required to follow, and contacted ABMI when questions arose regarding
information contained in the manual. Further, ABMK relied on ABMI's Complaint
Resolution Summary form (which listed ABMI's human resource department's contact
information) and ABMI's procedures for processing employee complaints.
ABMI also dictated mandatory sexual harassment and diversity training and
provided the training to ABMK's human resources and safety professionals. ABMI
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further directed ABMK to include the following attachments in each employees
paycheck: 1) unlawful harassment policy; 2) sexual harassment policy; and 3) a
reminder of the harassment hotline. ABMI's human resources department also
published and distributed a memorandum on how to recognize and deal with sexual
harassment to all ABMI subsidiaries. In 2004, ABMI notified its subsidiaries' human
resources managers about mandatory unlawful harassment training. The notice
indicated training was mandatory on an annual basis for all supervisory personnel,
persons conducting the training were required to first complete at least Level 1 of
ABMI's Human Resource Certification Program, and exceptions from the requirement
could only be approved by ABMI's human resources department. In April 2005,
ABMI issued a similar notice to its subsidiaries' human resources directors outlining
changes in the 2005-2006 mandatory harassment training and reiterating that
exceptions could only be approved by ABMI.
The ABM Janitorial Services Employee Handbook, provided by ABMK to all
employees, includes a preamble from ABMI's President and Chief Executive Officer,
advising employees the handbook is a useful reference for employment guidelines,
procedures, policies, and details what is expected of employees. ABMI has also
promulgated a Code of Business Conduct and Ethics, applicable to the employees of
its subsidiaries, which addresses conflicts of interests; corporate opportunities and the
duty of loyalty; gifts made to government and union personnel, customers and
suppliers; fraud and theft; bribes; insider trading; compliance with laws, regulations
and rules, including civil rights laws concerning harassment and job discrimination;
protection of company assets; political contributions; confidentiality; accounting and
employment safety as it relates to using alcohol or drugs, threats made against other
employees and possessing weapons.
According to these documents, ABMI exercises significant control, through
"the involvement or oversight of ABMI personnel," over its janitorial subsidiaries,
particularly in areas affecting labor and human resources. In its 2007 Annual Report
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to Stockholders, ABMI reported that its subsidiary, ABM Janitorial, had a "work force
of 47,000 employees operating out of 111 branch offices." According to the report:
ABM Janitorial Service's vast market coverage, corporate oversight and
local operational expertise allow our branches to deliver quality service
to our clients, regardless of their size or location. Our corporate
professionals have developed comprehensive standards for all
procedures and protocols in the areas of human resources, safety and
training. These programs are distributed subsidiary-wide, providing our
employees with the latest in cleaning methods, technology and safety
guidelines. Experienced management and supervision, along with a
well-trained, dedicated work force, are the keys to providing the superior
service upon which our customers rely.
In the 2006 Fall/Winter Issue of its "Alliance Magazine,"ABMI described in
detail the "comprehensive standards for all procedures and protocols in the areas of
human resources, safety and training," and noted ABMI's centralized "corporate
professionals" provide assistance "subsidiary-wide" to managers, supervisors, and
employees. In particular, the magazine explained "how ABMI's dynamic corporate
Human Resources Department trains and inspires a field of 50-plus [HR] generalists
who serve ABMI's subsidiary companies with 73,000 employees nationwide." Erin
Andre, Senior Vice President of Human Resources for ABMI, explained her
department's "corporate objective is to partner" with subsidiaries "to ensure that we
hire and retain the best mix of talent to meet customer and business needs while
maintaining 'Best in Class' HR practices." To accomplish those goals, ABMI's
centralized human resources department directly responds, on a daily basis, to a wide
range of inquiries from employees, supervisors, and human resource managers
throughout the company's subsidiaries, and instructs subsidiaries on the application
of federal labor laws to the company's entire workforce.
Additionally, the centralized employee benefits office "administers a wealth of
employee benefit packages" "includ[ing] health and life insurance, short- and
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long-term disability coverage, and a personal accident plan," offered to employees of
ABMI subsidiaries nationwide. Corporate human resources also trains and monitors
the human relations personnel and practices of ABMI subsidiaries. In addition to a
library of video-based and written materials, the human resources department
produces annual programs on unlawful harassment and supervisory development.
This training is supplemented by ongoing assistance provided by human resources
representatives of ABMI's subsidiary companies. To ensure the reliability of this
assistance, human resources representatives must become certified by successfully
completing ABMI's [human resources] certification program.
As structured by ABMI, "[f]our corporate [human resources] directors support
51 HR field directors who provide service to ABMI's subsidiary companies," and
"assist [HR] field directors and their management teams in effective workforce
management by providing timely and accurate advice." To ensure subsidiaries follow
the policies, practices, and procedures established in ABMI corporate headquarters,
"ABM's [human resources] Department has developed and officially rolled out the HR
Audit Protocol, which is designed to measure the Company's compliance with a
number of performance standards regarding employee records and HR practices."
There are audits to ensure all locations are adhering to proper procedures regarding
new hires, such as conducting background checks and reviewing appropriate
documentation, and audits in connection with wage and hour laws, as well as equal
employment and Family Medical Leave Act notifications required by the government.
Human resources directors perform field audits, creating a partnership between
corporate staff and field directors to make sure the branches are in compliance with
comprehensive standards. "The data gathered" enables "the Company to look for
patterns – strengths or gaps – and to adjust corporate policies or training accordingly."
ABMI personnel also establish and monitor compliance with policies and
procedures governing job performance and employee safety for all subsidiaries.
ABMI's "corporate [human resources] and safety departments deliver far-reaching
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programs" to all subsidiaries in the area of employee training. In particular, ABMI
has implemented a comprehensive "proprietary" training program "developed to
standardize the way ABM cleaned and to enable supervisors to quickly and
confidently train new employees." The centralized department of safety services
"manages occupational and environmental safety programs that benefit and safeguard
the field," including "programs that support all ABM subsidiaries;" "programs that
have broad application, but which are tailored to address specific service needs by
individual subsidiaries;" and "special or site-specific programs." "There are some 25
safety directors or coordinators Company-wide . . . and no subsidiary or branch has
been left out of the 'mix.'" ABMI ensures "[e]ach [subsidiary] has someone who is
assigned responsibility for ensuring that an effective safety management process is in
place." "Every year, all of the Company's safety directors and coordinators gather for
an extensive training session, which [in 2006] was divided into two 50-hour
segments." "Corporate safety staff also visit local safety directors across the country
to provide counsel and assistance with programs and procedures." While ABMI's
Director of Safety Services announced plans to "'roll out a new set of comprehensive
safety policies addressing anything and everything we do in the field,'" the Assistant
Director focused "most of [her] time on ensuring that ABM has an effective safety
program and that every ABM subsidiary provides its employees with a safe work
environment." To achieve the "main objective . . . to see every ABM employee go
home safely at the end of every work shift," the Assistant Director developed "a solid
understanding of what our employees encounter on a day-to-day basis" and "can apply
technical knowledge to assist the field in integrating safety management into the
operations."
These descriptions of ABMI's involvement in the operations of its subsidiaries,
and in particular ABMK's, are sufficient to create a genuine issue of material fact with
respect to whether ABMI and ABMK are an integrated enterprise. Accordingly, we
reverse the district court's grant of summary judgment on this issue. See Frank v. U.S.
West, Inc., 3 F.3d 1357, 1364 (10th Cir. 1993) (applying the four-factor test to
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determine whether a genuine issue of material fact precluded summary judgment on
the issue of integrated enterprise).
C
We next consider the district court's grant of summary judgment against the
timely plaintiffs on their Title VII and MHRA claims, which are governed by the same
standards. See Wittenburg v. Am. Exp. Fin. Advisors, Inc., 464 F.3d 831, 842 n.16
(8th Cir. 2006).
Garcia, Laureano, and Giron asserted timely claims against ABMK for quid pro
quo sexual harassment, arguing their on-site supervisors subjected them to unwanted
sexual advances and other sexual conduct, and when rebuffed, denied them job
benefits or took adverse actions against them resulting in tangible job detriment. They
also alleged the supervisors' sexual harassment was severe and pervasive, affected a
term, condition or privilege of employment, and ABMK had actual or constructive
notice of the harassment. Finally, they each alleged claims for retaliation and sexual
discrimination.
The district court concluded the on-site supervisors had no authority to take
adverse employment actions against the timely plaintiffs. In other words, they did not
have the authority to hire, fire, demote, etcetera, and therefore the claims of quid pro
quo harassment against ABMK necessarily failed. Additionally, the court concluded,
with respect to Garcia's hostile workplace claim, the actions of her supervisor, while
repugnant, were insufficient to show the workplace was permeated with
discriminatory intimidation, ridicule, and insult. The district court dismissed
Laureano's and Giron's hostile workplace claims, finding ABMK had no notice of the
harassment until it was reported to management, and thereafter it took timely and
effective remedial action. The district court also dismissed the retaliation claims,
concluding 1) Garcia failed to allege a materially adverse employment action, 2)
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Laureano only alleged retaliation by a co-worker, not her employer, and she conceded
ABMK had a legitimate nondiscriminatory reason for her termination, and 3) Giron
failed to establish a causal connection between her reports of harassment and the
alleged retaliatory acts. Finally, the district court dismissed the sex discrimination
claims, finding, among other things, the timely plaintiffs failed to present any
evidence tending to show the alleged discriminatory actions were taken because of
gender.
For the reasons stated in the district court's order, we affirm its dismissal of the
timely plaintiffs' retaliation, sex discrimination, and quid pro quo sexual harassment
claims, and its dismissal of Garcia's hostile workplace claim. See 8th Cir. R. 47B.
For the reasons stated below, we reverse and remand the district court's dismissal of
Laureano's and Giron's hostile workplace claims, with instructions to determine
whether evidence of widespread sexual harassment was sufficient to put ABMK on
constructive notice.
Title VII prohibits employment discrimination based on sex and covers a broad
spectrum of disparate treatment. 42 U.S.C. § 2000e-2; Harris v. Forklift Sys., Inc.,
510 U.S. 17, 21 (1993). A plaintiff may prevail in a discrimination claim by showing
the inappropriate conduct creates a "hostile work environment." See 29 C.F.R.
§ 1604.11(a)(3). Laureano's and Giron's hostile work environment claims require
proof 1) they are members of a protected group, 2) they were subjected to unwelcome
sexual harassment, 3) the harassment was based on sex, and 4) the harassment affected
a term, condition or privilege of their employment. Duncan v. Gen. Motors Corp.,
300 F.3d 928, 933 (8th Cir. 2002). To establish a prima facie case of hostile work
environment sexual harassment by non-supervisory co-workers, they must also
establish ABMK knew or should have known of the harassment and failed to take
prompt remedial action. Meriwether v. Caraustar Packaging Co., 326 F.3d 990, 993
(8th Cir. 2003) (quotation marks omitted). The fourth element involves both objective
and subjective components. Id. at 934. The harassment must be "severe or pervasive
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enough to create an objectively hostile or abusive work environment" and the victim
must subjectively believe her working conditions have been altered. Harris, 510 U.S.
at 21-22. "There is no bright line between sexual harassment and merely unpleasant
conduct . . . ." Hathaway v. Runyon, 132 F.3d 1214, 1221 (8th Cir. 1997).
Accordingly, we view the "totality of the circumstances" in determining whether there
is a hostile work environment. Klein v. McGowen, 198 F.3d 705, 709 (8th Cir. 1999).
The factors we look to include the frequency of the behavior, its severity, whether
physical threats are involved, and whether the behavior interferes with a plaintiff's
performance on the job. Duncan, 300 F.3d at 934.
With respect to Laureano's and Giron's hostile workplace claims, the district
court determined the on-site supervisors were co-employees, and ABMK took prompt
remedial action when the harassment was reported. We agree the district court
properly concluded the timely plaintiffs' supervisors were not authorized to take
adverse employment actions against them, and thus ABMK was not liable under a
theory of quid pro quo harassment. Additionally, we agree the plaintiffs' complaints
to their supervisors were insufficient to put ABMK on notice of the harassment,
especially in light of the extensive anti-harassment policy and procedures it had
established, which, when accessed, ended the harassment. Nonetheless, the district
court refused to consider evidence offered to show ABMK knew or should have
known sexual harassment was rampant throughout the company, thereby giving it
constructive notice.
Title VII adopts ordinary tort principles of negligence in evaluating employer
liability for sexual harassment, Engel v. Rapid City School District, 506 F.3d 1118,
1123 (8th Cir. 2007), and an employer may be negligent although it did not have
actual notice if it reasonably should have anticipated the harassment, i.e., if it had
constructive notice. Here, ABMK exercised reasonable care to prevent sexually
harassing behavior by establishing an anti-harassment policy and reporting
procedures, Burlington Industries, Inc. v. Ellerth, 524 U.S. 742 (1998) and Faragher
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v. City of Boca Raton, 524 U.S. 775 (1998) (setting forth the Ellerth/Faragher
affirmative defense), but plaintiffs allege it was aware of nearly one hundred similar
complaints made during the time plaintiffs were employed. Thus, they argue ABMK
had constructive notice of rampant sexual harassment by on-site supervisors.
An employer has actual notice of harassment when sufficient information either
comes to the attention of someone who has the power to terminate the harassment, or
it comes to someone who can reasonably be expected to report or refer a complaint to
someone who can put an end to it. Young v. Bayer Corp., 123 F.3d 672, 674 (7th Cir.
1999). "[A]ctual notice is such notice as is positively proved to have been given to
a party directly and personally, or such as he is presumed to have received personally
because the evidence within his knowledge was sufficient to put him upon inquiry."
Black's Law Dictionary 1061-62 (6th ed. 1990) (emphasis added). In the context of
sexual harassment claims, "[a]ctual notice is established by proof that management
knew of the harassment." Watson v. Blue Circle, Inc., 324 F.3d 1252, 1259 (11th Cir.
2003) (emphasis added). Whereas, constructive notice "is established when the
harassment was so severe and pervasive that management reasonably should have
known of it." Id. (emphasis added); see also Martin v. Wal-Mart Stores, Inc., 183
F.3d 770, 772 (8th Cir. 1999) (noting an employer is deemed to have actual notice of
a dangerous condition if an employee created or was aware of the hazard).
"Constructive notice . . . is established when the harassment was so severe and
pervasive that management reasonably should have known of it." Watson, 324 F.3d
at 1259. "[A]n employer may be charged with constructive knowledge of previous
sexual harassment . . . if the harassment was so broad in scope, and so permeated the
workplace, that it must have come to the attention of someone authorized to do
something about it." Fall v. Ind. Univ. Bd. of Tr., 12 F. Supp. 2d 870, 882 (N.D. Ind.
1998) (emphasis added) (citations omitted).
[T]here can be constructive notice in two situations: where an employee
provides management level personnel with enough information to raise
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a probability of sexual harassment in the mind of a reasonable employer,
or where the harassment is so pervasive and open that a reasonable
employer would have had to be aware of it.
...
[T]hese standards strike the correct balance between protecting the rights
of the employee and the employer by faulting the employer for turning
a blind eye to overt signs of harassment but not requiring it to attain a
level of omniscience, in the absence of actual notice . . . .
Kunin v. Sears Roebuck and Co., 175 F.3d 289, 294 (3d Cir. 1999).
Here, the district court refused to consider evidence of other sexual harassment
claims, concluding it was barred by Eighth Circuit precedent limiting a plaintiff's
evidence in sexual harassment/hostile workplace cases to instances of harassment of
which a plaintiff is aware. A plaintiff, however, is not limited to offering such
evidence only to prove the subjective component of a sexual harassment claim.
Irrespective of whether a plaintiff was aware of the other incidents, the evidence is
highly probative of the type of workplace environment she was subjected to, and
whether a reasonable employer should have discovered the sexual harassment.
When judging the severity and pervasiveness of workplace sexual harassment,
this court has long held harassment directed towards other female employees is
relevant and must be considered. See Hall v. Gus Constr. Co., 842 F.2d 1010, 1014-
15 (8th Cir. 1988) ("We also reject appellants' contention that the district court
erroneously considered all of the women's claims together in determining that the
harassment was sufficiently pervasive and severe . . . ."). In Williams v. Conagra
Poultry Co., 378 F.3d 790, 793-94 (8th Cir. 2004), the court discussed the distinction
between evidence offered to prove the substance of a plaintiff's hostile work
environment claim versus evidence offered to prove the severity and pervasiveness
of harassment in the workplace. In Williams, the plaintiff (Williams) offered the
testimony of several co-workers detailing a host of racially motivated harassment that
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occurred during his employment at Conagra's plant. Id. at 793. Conagra objected
because Williams conceded he was unaware of the incidents, and according to
Conagra, the evidence could not be used to prove Williams found the workplace
subjectively hostile. Id. at 794. This court, recognizing the evidence was irrelevant
to Williams's subjective perceptions of his workplace, nonetheless found the evidence
highly relevant to prove, among other things, the type of workplace environment to
which Williams was subjected. Id.
Accordingly, we conclude the district court erred in disregarding the evidence
of widespread sexual harassment. Though the evidence cannot be used to prove the
timely plaintiffs found their workplace subjectively hostile, it is highly relevant to
prove the sexual harassment was severe and pervasive and that ABMK had
constructive notice.
III
To summarize: We affirm the district court's holding as to the motion to amend
the complaint to add ABMK was untimely. We also affirm the district court's
dismissal of the timely plaintiffs' retaliation, sex discrimination, and quid pro quo
sexual harassment claims, and its dismissal of Garcia's hostile workplace claim. We
reverse the district court's holding as to there being no genuine issue of material fact
as to whether ABMI and ABMK acted as an integrated enterprise and remand for
further proceedings consistent with this opinion. Finally, we reverse and remand the
district court's dismissal of Laureano's and Giron's hostile workplace claims, with
instructions to consider the appellants' evidence of widespread sexual harassment.
GRUENDER, Circuit Judge, concurring in part and dissenting in part.
Because I would affirm the district court’s grant of summary judgment to
ABMK in all respects, I concur in part and dissent in part. I concur in Parts I and II.A
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of the Court’s opinion. I also agree with the Court’s determination in Part II.B that
under the four-factor test set out in Baker v. Stuart Broadcasting Co., 560 F.2d 389,
392 (8th Cir. 1977), there is a material question of fact with respect to whether ABMI
and ABMK are an integrated enterprise.3 I also concur in the Court’s holding in Part
II.C that the district court properly granted summary judgment dismissing Garcia’s,
Laureano’s, and Giron’s retaliation, sex discrimination, and quid pro quo sexual
harassment claims and Garcia’s hostile work environment claim. No matter what job
title the alleged harassers may have claimed, no reasonable factfinder could find that
they were in fact supervisors because they had no authority to take tangible
employment actions against the victims. See Joens v. John Morrell & Co., 354 F.3d
938, 940 (8th Cir. 2004) (noting that the majority of circuits that have addressed the
question have found that a supervisor is one with power “to take tangible employment
action against the victim, such as the authority to hire, fire, promote, or reassign to
significantly different duties”); Noviello v. City of Boston, 398 F.3d 76, 95 (1st Cir.
2005) (“[C]ourts must distinguish employees who are supervisors merely as a function
of nomenclature from those who are entrusted with actual supervisory powers.”
(internal quotation omitted)).
3
While I would find that Brown v. Fred’s Inc., 494 F.3d 736, 739 (8th Cir.
2007), creates a “strong presumption” against finding that a parent company is the
employer of its subsidiary’s employees and a distinct standard for determining
integrated enterprise status, I note that when faced with two divergent lines of cases
within a circuit, we may choose which line to follow, see Kostelec v. State Farm Fire
& Cas. Co., 64 F.3d 1220, 1228 n.8 (8th Cir. 1995). Accordingly, for the purposes
of this dissent I will assume that the Court may choose to follow Baker. Nevertheless,
I am not convinced by the Court’s discussion of Congress’s decision to incorporate
the four-factor test for United States citizens employed in a foreign country. See ante
at 8-10. If Congress had wished to incorporate this test for companies operating
within the United States, it could have done so. In fact, we may presume that
Congress did not intend this test to apply to companies operating within the United
States. See BFP v. Resolution Trust Corp., 511 U.S. 531, 537 (1994) (“[I]t is
generally presumed that Congress acts intentionally and purposely when it includes
particular language in one section of a statute but omits it in another.”).
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While I agree with the Court that “the plaintiffs’ complaints to their supervisors
were insufficient to put ABMK on notice of the harassment,” ante at 21, I respectfully
dissent from the Court’s decision to reverse and remand the district court’s dismissal
of Laureano’s and Giron’s hostile work environment claims. As the Court notes, “[t]o
establish a prima facie case of hostile work environment sexual harassment by non-
supervisory co-workers, [Laureano and Giron] must . . . establish that ABMK knew
or should have known of the harassment and failed to take prompt remedial action.”
Ante at 20-21 (citing Meriwether v. Caraustar Packaging Co., 326 F.3d 990, 993 (8th
Cir. 2003)). I would hold that Laureano and Giron have failed to establish that
ABMK had actual or constructive notice of the harassment.
The Court holds that it was error for the district court to disregard the evidence
of “nearly one hundred similar complaints during the time plaintiffs were employed,”
concluding that ABMK should have known of the “rampant sexual harassment by on-
site supervisors.” Ante at 22. The Court does not find that this evidence created a
material question of fact with respect to whether ABMK had constructive notice of
the harassment, only that the district court erred by disregarding this evidence.
However, the Court ignores the fact that Laureano and Giron’s proffered evidence in
this regard involved numerous sexual harassment complaints concerning different
victims and different employees at different locations. ABMK has approximately 400
locations at which it provides janitorial services in Minnesota, including office
buildings throughout Minneapolis and St. Paul. In their opening brief, the appellants
state that during the period of harassment at least 85 other employees reported similar
treatment by the appellants’ alleged harassers “or other first-line supervisors” and list
numerous citations to the record that purportedly support this claim. However, a
thorough review of these citations reveals only one instance in which a coworker
alleged that she was harassed by Laureano’s or Giron’s alleged harassers, and even
that instance does not support their claim that ABMK knew of the harassment. In an
affidavit, Marlene Jiron states that she was harassed by Giron’s alleged harasser.
However, in that affidavit, Jiron also explicitly states that she did “not report[] the
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supervisor to the manager.” Thus, there is nothing in the record to suggest that
ABMK had notice of harassment committed by Laureano’s or Giron’s alleged
harassers. Moreover, there is nothing in the record supporting a claim that ABMK
had any notice of harassment occurring at the locations where Laureano and Giron
worked.
The Court cites no authority for the proposition that an employer may have
constructive notice of harassment by employees at one location based on harassment
of other victims by different employees at a different location. While we have
previously acknowledged that a court may consider evidence of harassment of which
the plaintiff was not aware, see Williams v. ConAgra Poultry Co., 378 F.3d 790, 793-
94 (8th Cir. 2004), the evidence in Williams was admitted in furtherance of the
plaintiff’s claims that the harassment was severe or pervasive, not to demonstrate that
the employer had constructive notice of harassment suffered by one employee based
on harassment suffered by a different employee at a different location, id. at 794.
Here, the Court endorses Laureano and Giron’s effort to use evidence of harassment
at other locations committed by other employees against other victims to establish that
ABMK had constructive notice of the harassment they suffered. Such a holding
undermines the whole notion of constructive notice. For example, under the Court’s
theory, an employer could be held to have constructive notice of sexual harassment
in a warehouse in Missouri based on complaints of sexual harassment in its
headquarters in Florida. Under this theory, the employer that had notice of harassment
at its headquarters “should have anticipated” harassment at its warehouse. See ante
at 22.
Because I do not agree that an employer should be held to have constructive
notice based on harassment committed by different employees and occurring at
different locations, I respectfully dissent on this point. I would find instead that the
district court did not err when it refused to consider the proffered evidence of
harassment at different locations involving different employees with respect to
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constructive notice. In the absence of any other evidence that ABMK knew or should
have known of the harassment alleged by Laureano and Giron and failed to take
prompt remedial action, I would affirm the district court’s grant of summary judgment
to ABMK on Laureano’s and Giron’s hostile work environment claim as well.
Accordingly, because I agree with Parts I and II.A of the Court’s opinion, and
because I would find that summary judgment was appropriate for Garcia’s,
Laureano’s, and Giron’s claims of retaliation, sex discrimination, quid pro quo sexual
harassment, and hostile work environment, I would affirm the district court’s grant of
summary judgment to ABMK in all respects.
______________________________
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