Covelli v. Avamere Home Health Care, LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

CASEY COVELLI, Case No. 3:19-cv-486-JR

Plaintiff, OPINION AND ORDER

v.

AVAMERE HOME HEALTH CARE

LLC, et al.,

Defendants.

David A. Schuck and Leslie E. Baze, SCHUCK LAW, LLC, 208 E 25th Street, Vancouver, WA

98663. Of Attorneys for Plaintiff.

William E. Gaar and Jillian Pollock, Buckley Law, P.C., 5300 Meadows Road, Suite 200, Lake

Oswego, OR 97035. Of Attorneys for Defendants.

Michael H. Simon, District Judge.

This Court previously granted in part what the Court construed as Plaintiff’s motion for

reconsideration and clarified the standard to apply for an “integrated employer” under the Family

Medical Leave Act (FMLA). Covelli v. Avamere Home Health Care LLC, 2020 WL 6395448

(D. Or. Nov. 2, 2020) (also referred to as the “Reconsideration Order”). The Court left analysis

of Defendants’ motion to dismiss under the clarified standard for Magistrate Judge Jolie A.

Russo.

Judge Russo issued Findings and Recommendation on November 20, 2020. Judge Russo

concluded that the clarified standard did not change her previous findings and recommendation

from June 22, 2020, and under the clarified standard Plaintiff’s Third Amended Complaint

(TAC) still failed to allege that the alleged parent companies1 were integrated employers with

Plaintiff’s alleged direct employer. Thus, Judge Russo maintained her original recommendation

that the Court grant Defendants’ motion to dismiss Plaintiff’s claims against all named

Defendants except Plaintiff’s adequately alleged direct employer Northwest Hospital LLC

(NWH) and its joint or integrated employer Avamere Home Health Care LLC. Judge Russo

recommended, however, that the Court give Plaintiff one final opportunity to allege claims

against the parent companies under the clarified standard. This would mean dismissing

Plaintiff’s claims with prejudice against: (1) Defendant Avamere Family of Companies (an

unregistered entity that, to the extent that it is a proper defendant, has already been properly

named through other named Defendants); and (2) NP2U LLC, Signature Coastal LLC, and

Signature Corvallis LLC (alleged sibling entities who are not potential joint employers); and

dismissing Plaintiff’s claims without prejudice against: (1) Defendants Avamere Group LLC

(Avamere Group), Avamere Health Services LLC (AHS), and Avamere Skilled Advisors LLC

(ASA) (the alleged parent entities); and (2) Avamere Bethany Operations LLC, Avamere Lake

Oswego Investors LLC, Avamere Sherwood Operations LLC, Avamere Stafford Operations

LLC, Avamere St. Helens Operations LLC, Beaverton Rehab & Specialty Care LLC, Clackamas

Rehabilitation LLC, Crestview Operations LLC, Genesis Newberg Operations LLC, Keizer

Campus Operations LLC, Keizer River Operations LLC, King City Rehab LLC, Laurelhurst

1 Judge Russo did not interpret the Court’s Reconsideration Order to relate to the alleged

“sibling” entities, but only to relate to the alleged “parent” entities.

Operations LLC, Mountain View Rehab LLC, and Sunnyside Operations LLC (alleged sibling

entities who are possible additional joint employers or integrated employers).

Plaintiff objects to the Findings and Recommendation. Plaintiff objects to Judge Russo

only considering whether the parent entities were integrated employers under the clarified

standard instead of all Defendants. Plaintiff also objects to the findings and recommendation that

the TAC does not allege sufficient facts showing integrated employers under the clarified

standard. The Court, therefore, reviews the issue de novo.

In the Reconsideration Order, the Court also ordered limited discovery against

Defendants. Plaintiff filed a motion to enforce the Court’s discovery order. On January 5, 2021,

Judge Russo granted Plaintiff’s motion to enforce in part and ordered limited discovery under the

Court’s Reconsideration Order. Plaintiff then filed a second motion to enforce. On February 2,

2021, Judge Russo issued a discovery order denying Plaintiff’s second motion. Plaintiff objects

to Judge Russo’s nondispositive discovery order. The Court, therefore, reviews whether the order

is either clearly erroneous or contrary to law. Fed. R. Civ. P. 72(a).

STANDARD OF REVIEW

A. Review of Magistrate Judge’s Decision

The Federal Magistrates Act grants district courts the authority to delegate certain matters

to magistrate judges. See 28 U.S.C. § 636(b)(1). In civil actions, a district court may designate a

magistrate judge to determine any pretrial matter, except motions for injunctive relief, for

judgment on the pleadings, for summary judgment, to permit or deny maintenance of a class

action, to dismiss for failure to state a claim, and to involuntarily dismiss an action. 28 U.S.C.

§ 636(b)(1)(A). For any of these excluded motions, a district judge may designate a magistrate

judge to conduct hearings and submit proposed findings of fact and recommendations for

disposition. 28 U.S.C. § 636(b)(1)(B).

Rule 72 of the Federal Rules of Civil procedure implements the authority provided by the

Federal Magistrates Act. Under Rule 72(a), a magistrate judge may “hear and decide” all referred

pretrial matters that are “not dispositive of a party’s claim or defense.” Fed. R. Civ. P. 72(a); see

also Mitchell v. Valenzuela, 791 F.3d 1166, 1168 (9th Cir. 2015) (explaining that “magistrate

judges may hear and determine nondispositive matters, but not dispositive matters”). For pretrial

matters referred to a magistrate judge that are dispositive of a claim or defense, without consent

by all parties, Rule 72(b) allows the magistrate judge only to “enter a recommended disposition,

including, if appropriate, proposed findings of fact.” Fed. R. Civ. P. 72(b)(1).

The distinction between a dispositive motion and a nondispositive matter is significant

for the standard of review. When a party timely objects to a magistrate judge’s findings and

recommendations concerning a dispositive motion, the district judge must make a de novo

determination of those portions of the magistrate judge’s proposed findings and

recommendations to which an objection has been made. 28 U.S.C. § 636(b)(1)(C); Fed. R. Civ.

P. 72(b)(3). When a party timely objects to a magistrate judge’s determination of a

nondispositive matter, however, the district judge may reject that determination only when it has

been shown that the magistrate judge’s order is either clearly erroneous or contrary to law. 28

U.S.C. § 636(b)(1)(A); Fed. R. Civ. P. 72(a). This means the Court “will evaluate the Magistrate

Judge’s factual findings to determine if any are clearly erroneous” and “will evaluate the

Magistrate Judge’s legal conclusions to determine if any are contrary to law, which involves a de

novo review of those issues.” Quatama Park Townhomes Owners Ass’n v. RBC Real Est. Fin.,

Inc., 365 F. Supp. 3d 1129, 1133 (D. Or. 2019); see also id. at 1141-42.

B. Motion to Dismiss

A motion to dismiss for failure to state a claim may be granted only when there is no

cognizable legal theory to support the claim or when the complaint lacks sufficient factual

allegations to state a facially plausible claim for relief. Shroyer v. New Cingular Wireless Servs.,

Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). In evaluating the sufficiency of a complaint’s factual

allegations, the Court must accept as true all well-pleaded material facts alleged in the complaint

and construe them in the light most favorable to the non-moving party. Wilson v. Hewlett-

Packard Co., 668 F.3d 1136, 1140 (9th Cir. 2012); Daniels-Hall v. Nat’l Educ. Ass’n, 629

F.3d 992, 998 (9th Cir. 2010). To be entitled to a presumption of truth, allegations in a complaint

“may not simply recite the elements of a cause of action, but must contain sufficient allegations

of underlying facts to give fair notice and to enable the opposing party to defend itself

effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). The court must draw all

reasonable inferences from the factual allegations in favor of the plaintiff. Newcal Indus. v. Ikon

Office Sol., 513 F.3d 1038, 1043 n.2 (9th Cir. 2008). The Court need not, however, credit the

plaintiff’s legal conclusions that are couched as factual allegations. Ashcroft v. Iqbal, 556

U.S. 662, 678-79 (2009).

A complaint must contain sufficient factual allegations to “plausibly suggest an

entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the

expense of discovery and continued litigation.” Starr, 652 F.3d at 1216. “A claim has facial

plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable

inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)). “The plausibility standard is not akin to a

probability requirement, but it asks for more than a sheer possibility that a defendant has acted

unlawfully.” Mashiri v. Epstein Grinnell & Howell, 845 F.3d 984, 988 (9th Cir. 2017) (quotation

marks omitted).

DISCUSSION

A. Motion to Dismiss—Integrated Employer

The only issue remaining on Defendants’ motion to dismiss is their alleged status as

integrated employers. The Court previously concluded that Plaintiff sufficiently stated a claim

against his direct employer NWH and alleged sibling entity Avamere Home Health Care, LLC,

as a joint or integrated employer. Plaintiff argues that under the FMLA all the alleged parent and

additional sibling entities of NWH were integrated employers with NWH under the standard the

Court identified in the Reconsideration Order.

1. Allegations Relating to The Avamere Family of Companies

First, the Court addresses consideration of the allegations in the TAC relating to The

Avamere Family of Companies. Plaintiff alleges that this is an unregistered entity with corporate

officers and managers, that it maintains offices, that it maintains a website, that it submits

reports, and that it performs other corporate functions. Plaintiff then alleges many more facts

relating to The Avamere Family of Companies.

Assuming for purposes of this motion that Plaintiff’s allegations that The Avamere

Family of Companies is a valid entity are true, the Court previously held that The Avamere

Family of Companies, as an unregistered entity, was not properly a named defendant under

Oregon or federal law because the “real and true name” of this unregistered entity had been

named in the TAC. Specifically, the Court identified Plaintiff’s allegation that Avamere Group is

the “the ultimate operator and management of The Avamere Family of Companies.” The Court

also notes that Plaintiff alleges that the Avamere Group “may be identical or substantially

identical to The Avamere Family of Companies.” Thus, taking Plaintiff’s allegations as true for

purposes of this motion, the Court construes Plaintiff’s allegations relating to The Avamere

Family of Companies as applying to the Avamere Group.

2. Allegations on Information and Belief

The TAC is 249 pages and contains 690 numbered paragraphs and hundreds more

subparagraphs (many paragraphs of which are duplicative and repetitive, some almost word-for-

word). Plaintiff cites public websites, publicly filed information, and other publicly available

information about Defendants to support Plaintiff’s allegations about the integrated nature of

Defendants’ relationship. Plaintiff also alleges many facts on information and belief.

“The Twombly plausibility standard, which applies to all civil actions, does not prevent a

plaintiff from pleading facts alleged upon information and belief where the facts are peculiarly

within the possession and control of the defendant, or where the belief is based on factual

information that makes the inference of culpability plausible.” Arista Records, LLC v. Doe 3, 604

F.3d 110, 120 (2d Cir. 2010) (simplified); see also GCIU-Emp’r Ret. Fund v. Quad/Graphics,

Inc., 2016 WL 3027336, at *3 (C.D. Cal. May 26, 2016) (“Even after Iqbal and Twombly,

numerous courts have held that facts may be pleaded on information and belief—especially

where, as here, the underlying evidence is peculiarly within the defendant’s possession.”

(collecting cases)). Recognition of this type of pleading is based in part on Rules 11 and 8(b)(5)

of the Federal Rules of Civil Procedure. 5 Charles H. Wright, Arthur Miller, Mary K. Kane & A.

Benjamin Spencer, Fed. Prac. & Proc. Civ. § 1224 (3d ed. October 2020 update) (hereinafter

Wright & Miller). Rule 11 authorizes a pro se party or the attorney of a represented party to

certify that he or she has prepared the pleading based on “the best of the person’s knowledge,

information, and belief,” which supports that an allegation may be based on information and

belief, along with knowledge. Fed. R. Civ. P. 11. Rule 8(b)(5) permits a pleader to state that he

or she “lacks knowledge or information sufficient to form a belief about the truth of an

allegation,” which supports the converse—a right to allege something based on information or

belief.

Allowing allegations on information and belief also is “a practical necessity,” because it

“is a desirable and essential expedient when matters that are necessary to complete the statement

of a claim are not within the knowledge of the plaintiff but he has sufficient data to justify

interposing an allegation on the subject.” Wright & Miller, § 1224. Factual allegations on

information and belief that are not peculiarly within the possession and control of the defendant

and are merely conclusory or are “‘naked assertions devoid of further factual enhancement’

contribute nothing to the sufficiency of the complaint,” however, and the Court need not accept

them as true. 16630 Southfield Ltd. P’ship v. Flagstar Bank, F.S.B., 727 F.3d 502, 506 (6th

Cir. 2013) (quoting Iqbal, 556 U.S. at 678).

3. Standards for Evaluating Integrated Employers

The integrated employer test requires considering the totality of the circumstances, with

consideration of at least four factors: (1) common management; (2) interrelation between

operations; (3) centralized control of labor relations; and (4) degree of common ownership and

financial control. 29 C.F.R. § 825.104(c)(2). No single factor is dispositive and all need not be

present to find integrated employment. Demyanovich v. Cadon Plating & Coatings, L.L.C., 747

F.3d 419, 428 (6th Cir. 2014). The Ninth Circuit has not determined whether in the FMLA

context a court should weigh any single factor more heavily than another. The First and Sixth

Circuits weigh all factors equally in FMLA cases, even though in employment discrimination

cases courts give control of labor relations more weight. See, e.g., id.; Engelhardt v. S.P.

Richards Co., 472 F.3d 1, 5 (1st Cir. 2006).

The Court notes that Plaintiff focuses his allegations on linking an entire “network” of

entities as if that would suffice to assert a claim against each Defendant, including each

subsidiary (or sibling) entity. Many of Plaintiff’s allegations involve all the entities combined.

Each entity against whom Plaintiff intends to state a claim, however, must independently meet

the test for integrated employer status. Enough factors between NWH and each sibling entity

must support suing that specific sibling entity—not between the sibling entity and a parent entity

and then between that parent entity and NWH. In other words, Plaintiff cannot rely on the

connection between NWH and the alleged parent company or companies, and then the

connection between the parent company or companies and a different sibling company, to

connect NWH to that sibling company. The Court considers each Defendant’s connection to

NWH separately to see if Plaintiff sufficiently alleges that entity is an integrated employer with

NWH. If Plaintiff’s allegations collectively are insufficient, however, the Court does not

consider the allegations as to each separate Defendant. With this in mind, the Court reviews the

factors for integrated employment.

4. Common Management

Under the common management factor, the Court considers “whether the entities have

common officers, directors, and managers.” EEOC v. Con-Way, Inc., 2007 WL 2610367, at *5

(D. Or. Sept. 4, 2007). Merely having officers and directors in common, however, is not

sufficient. Id. As the Supreme Court has noted, “officers holding positions with a parent and its

subsidiary can and do ‘change hats’ to represent the two corporations separately, despite their

common ownership.” United States v. Bestfoods, 524 U.S. 51, 69 (1998) (quoting Lusk v.

Foxmeyer Health Corp., 129 F.3d 773, 779 (5th Cir. 1997)). Thus, under this factor, a court

looks to whether “the common officers or managers ‘wore the two companies’ hats

interchangeably’ during their dual service.” Con-Way, 2007 WL 2610367, at *5 (quoting

Herman v. Blockbuster Ent. Grp., 18 F. Supp. 2d 304, 313 (S.D.N.Y. 1998)); see also Taylor v.

Shippers Transp. Exp., Inc., 2014 WL 7499046, at *19 (C.D. Cal. Sept. 30, 2014). This entails

evaluating “whether the common officers or managers exert regular control, i.e. day-to-day, over

the operations of both entities.” Con-Way, 2007 WL 2610367, at *5.

Plaintiff recites many purported facts about ownership and the alleged job titles of

persons affiliated with Defendants. Plaintiff alleges information from public websites, Linked-In,

and a company organization chart found in a publicly-available corporate filing. Plaintiff alleges

that Defendants share many managers, officers, and directors. For example, Plaintiff alleges that

Richard Dillon, Ronald Odermott, Gary Wart, Matthew Hilty, and Lawrence Lopardo hold

officer or managerial roles with several Defendants (e.g., Mr. Lopardo is the Executive Vice

President of AHS, the Chief Legal Officer of AHS, the sole LLC Manager of Avamere Lake

Oswego Operations LLC, and the sole LLC Manager of Crestview Operations LLC). Plaintiff

also alleges, based on their job titles from the organization chart and some job descriptions in

their Linked-In profiles, that Mike Billings, Donna Meuller, Nicolette Merino, Carl Tabor, Rich,

Jolly, Mike Woodrow, Sonia Rai, Dale Fruehauf, Mary Kofstad, Jolynn Monro, Sarah Silva, and

Brad Little are common managers between entities.

The volume of alleged interrelated directors, officers, and managers supports a finding of

common management. The job descriptions alleged from Linked-In, however, are general and at

such a high level, they do not show day-to-day management of separate corporate entities. They

include descriptions such as

[r]esponsible for providing strategic leadership within the Avamere

Family of Companies by overseeing all ancillaries, including

Infinity Rehab and Signature companies . . . with oversight

responsibilities for Infinity Rehab, Signature Healthcare at Home,

and human resources and the People/Culture initiative across the

Avamere Family of Companies.

ECF 76 at 118 (TAC ¶ 160) (alterations in original). Indeed, having oversight responsibility over

multiple companies is not day-to-day management and typically is part of parent company’s

relationship with a subsidiary. As explained by the Southern District of California, discussing

control in the agency context,

The parent’s general executive control over the subsidiary is not

enough; rather there must be a strong showing beyond simply facts

evidencing the broad oversight typically indicated by the common

ownership and common directorship present in a normal parent-

subsidiary relationship. As a practical matter, the parent must be

shown to have moved beyond the establishment of general policy

and direction for the subsidiary and in effect taken over

performance of the subsidiary’s day-to-day operations in carrying

out that policy.

In re Packaged Seafood Prod. Antitrust Litig., 242 F. Supp. 3d 1033, 1063-64 (S.D. Cal. 2017)

(simplified)). Considering all of Plaintiff’s allegations, this factor only provides little support of

integration.

5. Interrelation Between Operations

Evidence of this factor may include “interrelated operations, such as combined

accounting records, bank accounts, lines of credit, payroll preparation, telephone lines, or offices,

and interchange of employees.” Taylor, 2014 WL 7499046, at *18 (quotation marks omitted);

see also Con-Way, 2007 WL 2610367, at *3 (“Evidence of interrelated operations can include

common offices, long distance shipping, bank accounts, payroll preparation, and shared

facilities.”); Saalim v. Dycom Indus., Inc., 2008 WL 2966312, at *5 (D.N.J. July 31, 2008)

(“[T]his Court finds that an integration of operations is better demonstrated by factors such as

‘the commingling of funds and assets, the use of the same work force and business offices for

both corporations, the severe undercapitalization of the subsidiary’ and the ‘failure to observe

such basic corporate formalities as keeping separate books and holding separate shareholder and

board meetings.’” (quoting Marzano v. Comput. Sci. Corp., 91 F.3d 497, 513 (3d Cir. 1996)

(simplified)). Shared offices and administrative services, however, are typical in parent-

subsidiary relationships and generally are not found to support integrated employment unless

there is greater intertwinement between the two entities. See Engelhardt, 472 F.3d at 7-8; Con-

Way, 2007 WL 2610367, at *4-5 (citing cases); see also Hukill v. Auto Care, Inc., 192 F.3d 437,

443-44 (4th Cir. 1999) (explaining that a parent’s practice of providing administrative services to

its subsidiaries “is not unusual in today’s business climate and is of no consequence” and that

“‘[f]irms too tiny to achieve the realizable economies of scale or scope in their industry will go

under unless they can integrate some of their operations with those of other companies, whether

by contract or by ownership’” (quoting Papa v. Katy Indus., Inc., 166 F.3d 937, 942 (7th Cir.

1999))) abrogated on other grounds by Arbaugh v. Y & H Corp., 546 U.S. 500 (2006).

Plaintiff alleges that the parent companies provide many administrative, financial,

technical, and legal services to the subsidiaries and use a centralized campus in Wilsonville,

Oregon for those purposes. Plaintiff also alleges that NWH’s principal place of business is at the

Wilsonville, Oregon campus, although it also has a Tigard, Oregon facility. Plaintiff further

alleges that the parent companies are responsible for, among other things, advertising for open

positions, conducting job interviews, conducting and evaluating pre-hire drug tests, maintaining

employee records, processing employee payroll, maintaining and managing all company

(including NWH) email, website, and other communications infrastructure, producing and

maintaining all company policies, sharing certain employees, operating the employee concern

hotline, overseeing all entities’ (including NWH) compliance with legal and regulatory

requirements, and providing employee training and orientation. The Court accepts these

allegations as true at this stage of the litigation. These allegations support significant interrelation

between the parent and subsidiaries, beyond simple use of forms or use of some administrative

services.

As a contrasting example, the Court provides the Eighth Circuit’s discussion in

Engelhardt of why in that case the parent and the subsidiary who used the parent’s forms and

administrative services, were not interrelated:

Moreover, there is little, if any, evidence to suggest any

interrelation between operations of the two companies, the

integrated employer test’s second factor. SPR [the subsidiary] has

a separate headquarters, human resource department, records and

record keeping, and separate worksites which fulfilled wholly

distinct functions. The nature of their businesses is also distinct—

GPC [the parent] is in the auto-parts retailing business whereas

SPR is in the office-supply wholesaling business. Thus, SPR is not

a GPC “division” whereby upper echelons of control are

centralized and efficiencies are realized through consolidation of

redundant administrative, human resource, and management

functions.

Engelhardt, 472 F.3d at 6-7.

Plaintiff alleges most of the factors supporting integration that the Eighth Circuit held

were absent in Engelhardt. Plaintiff alleges that NWH has the same principal place of business

as the parent companies. Plaintiff alleges that NWH does not have its own human resources

department, but instead Avamere Group and AHS performs that function. Plaintiff also alleges

that NWH does not maintain its own records, but instead the parent companies maintain various

records of NWH. Although the entities have different worksites (NWH’s worksite is in Tigard

and the parent companies’ are in Wilsonville), they share a principal place of business and the

overall alleged structure of NWH and its parent companies is one in which the “upper echelons

of control are centralized and efficiencies are realized through consolidation of redundant

administrative, human resource, and management functions.” Id. at 7.

Further, Plaintiff alleges commingled financial accounting. Plaintiff alleges that upon

information and belief, the balance sheets of Avamere Group show the “assets, profits, expenses,

and losses, of each and every defendant herein, and all ‘Avamere’ and ‘Signature’ facilities and

entities, as being the assets, profits, expenses, and losses of Avamere Group LLC itself.” ECF 76

at 90 (TAC ¶ 82). Plaintiff also alleges upon information and belief that the wages paid to every

single employee of every Avamere and Signature entity are accounted-for as wages paid by

Avamere Group. Id. (TAC ¶ 83). This information is peculiarly within the possession and control

of Defendants, and therefore, in a Rule 12(b)(6) motion the Court accepts these allegations as

true. Based on these allegations, Avamere Group is commingling finances and accounting with

NWH and is not maintaining a separate financial corporate structure and books from NWH. This

strongly supports a finding of integration. See, e.g., Marzano, 91 F.3d at 513 (stating that a

parent may be considered the employer of a subsidiary’s employee when there is “the

commingling of funds and assets” or the parent “fail[s] to observe such basic corporate

formalities as keeping separate books” (quoting Johnson v. Flowers Indus., Inc., 814 F.2d 978,

981 (4th Cir. 1987)); Saalim, 2008 WL 2966312, at *5 (same); see also Lichwick v. Verizon,

2009 WL 10740048, at *4 (S.D.N.Y. July 7, 2009) (finding that the allegation that the parent

“reports the profits and losses of all of its subsidiaries in combined fashion” supports

integration).

Plaintiff also alleges that Avamere Group reports all “8.8K” employees as its own. These

employees are spread throughout 315 locations. This allegation also supports that Avamere

Group is an integrated employer. See, e.g., Saalim, 2008 WL 2966312, at *5 (noting that

evidence of shared employees supports integration): Lichwick, 2009 WL 10740048, at *4

(finding an allegation that the parent listed in its Form 10-K statement the employees of the

subsidiaries as its own employees to be evidence of integration).

Plaintiff’s allegations plausibly show at this stage of the litigation that the parent entities

were interrelated employers with NWH. See, e.g., Lichwick, 2009 WL 10740048, at *4 (finding

allegations that the parent and subsidiaries have a single human resources division, the parent

reported the subsidiaries’ employees as its own, the parent reported the subsidiaries’ profits and

losses combined showed that the companies were interrelated). The Court next considers

whether Plaintiff alleges that the sibling entities were interrelated with NWH.

Plaintiff alleges that employees were transferred among various sibling Defendants.

These allegations have no detail about which Defendants and thus provide insufficient support to

show that any particular sibling Defendant is interrelated with NWH.

Plaintiff alleges, however, that he was “routinely and frequently” transferred to work at

the location of several specific sibling entities. His allegations about these transfers were the

subject of a previous Court order and he has been granted the opportunity to make them more

definite regarding information that would support that that those entities were joint employers.

The allegations do, however, provide some support that those sibling entities are an integrated

employer with NWH because they share employees. Plaintiff’s remaining non-conclusory,

factual allegations do not, however, support that these sibling entities are otherwise operationally

interrelated with NWH. Plaintiff’s allegations focus on the sibling entities’ connections with the

parent entities.

In sum, this factor supports that the parent entities were integrated employers with NWH.

It does not support that the sibling entities to which Plaintiff was not transferred to work were

integrated employers with NWH. The sharing of employees alone is not enough to support that

the entities to which Plaintiff was transferred to work were integrated with NWH.

6. Centralized Control of Labor Relations

For the control of labor relations factor of the integrated employer test, the focus is on

whether “employment relations, as a whole, are interrelated.” Grace v. USCAR, 521 F.3d 655,

665 (6th Cir. 2008) (emphasis in original). “The fundamental inquiry is whether there exists

overall control of critical matters at the policy level, not whether there is control over day-to-day

labor decisions.” Alcoa, Inc. v. NLRB, 849 F.3d 250, 258 (5th Cir. 2017) (quotation marks

omitted). Thus, control of labor relations is different from day-to-day control over employees.2

See Turley v. ISG Lackawanna, Inc., 774 F.3d 140, 156 (2d Cir. 2014) (“And the plaintiff need

not demonstrate that the parent company exercises ‘day-to-day control’ over labor relations.”);

accord Torres-Negron v. Merck & Co., Inc., 488 F.3d 34, 43 (1st Cir. 2007) (affirming that the

plaintiff raised issues of fact on the employer status of a direct employer subsidiary who engaged

in the day-to-day supervision of the employee and the integrated employer status of the parent

and one other subsidiary because the parent company “established company-wide human

resources and personnel policies applicable to all its subsidiaries,” and the other subsidiary paid

the employee, provided her benefits, and retained the power to terminate her).

Considering the sibling entities, the Court previously concluded that Plaintiff sufficiently

stated a claim against alleged sibling entity Avamere Home Health Care, LLC. Plaintiff’s

allegations do not plausibly suggest that the remaining sibling entities control the labor relations

of NWH. Plaintiff alleges that the sibling entities are controlled, owned, and managed by some

of the same people and parent entities that allegedly control, own, and manage NWH. Those

allegations do not show that the subsidiaries themselves have control of critical labor policies of

NWH. Indeed, they support just the opposite. Plaintiff alleges that it is the parent entities that

control the subsidiaries, including NWH.

Plaintiff alleges that employees of certain subsidiary entities sometimes supervised

Plaintiff. Those allegations, however, relate to whether those entities are a joint employer, not

whether those entities had control of labor relations. Some day-to-day supervision of Plaintiff

2 Some cases, particularly in the Title VII context, had included such a requirement. See,

e.g., Frank v. U.S. W., Inc., 3 F.3d 1357, 1363 (10th Cir. 1993) (“To satisfy the control prong, a

parent must control the day-to-day employment decisions of the subsidiary.”). The weight of

authority, however, particularly recent authority, does not apply the requirement of day-to-day

supervision to the integrated employer test, as discussed in the Reconsideration Order.

does not plausibly suggest that a sibling entity had control of critical labor relations and labor

policy as a whole of NWH. Accord Grace, 521 F.3d at 665; Alcoa, 849 F.3d at 258.

Additionally, the Court considers the sharing of employees between sibling entities in the

interrelated operations factor above.

The Court next considers Plaintiff’s allegations relevant to this factor against the parent

entities to see whether Plaintiff adequately alleges control over labor relations of NWH. For

purposes of the pending motion, the Court accepts Plaintiff’s well-pleaded allegations as true.

The first alleged parent entity is Avamere Group. Plaintiff alleges that Avamere Group: (1)

advertises for open job positions for subsidiaries; (2) acts, along with AHS, as the human

resources department for all Defendants, among other central support functions; (3) is the

majority owner of NWH; (4) received the tax benefit when Plaintiff was directed to fill out the

federal Work Opportunity Tax Credit form online, which identified Plaintiff as submitting

information on behalf of his employer “Avamere” and not NWH; (5) has its Chief Operations

Officer, Bob Thomas, who also is the 15% owner of NWH, as the first recipient on the group

email announcing Plaintiff’s hiring; (6) employed Plaintiff’s direct supervisor Regina Piland,

who performed Plaintiff’s job performance evaluations; (7) is the signatory on Plaintiff’s

paychecks because the direct deposit states, “Avamere Group Payroll”; (8) is ultimately

responsible for paying Plaintiff’s wages; (9) paid the employer portion of Plaintiff’s 401(k)

contribution; (10) owned the Avamere company website, through which Plaintiff accessed

benefits and other company information; and (11) owned the single centralized computer

network through which Plaintiff performed his job functions from all of the various subsidiaries

at which Plaintiff worked.

The next alleged parent entity is AHS. Plaintiff alleges that AHS: (1) serves as the payroll

processor for all Defendants, including determining when employees receive their payment and

directing that employees choose between direct deposit or a pay card (refusing to allow paper

checks); (2) acts, along with Avamere Group, as the human resources department for all

Defendants, among other central support functions; (3) provides all employees with copies of

uniform written policies relating to all aspects of employment, which are identified with

“Avamere” and “Signature” branding and not NWH, of which several direct employees to

discuss issues with Avamere Group and other parent company managers and officers instead of

direct employer subsidiary personnel; (4) operates the employee concern hotline; (5) required

Plaintiff to take a drug test before he was hired; (6) evaluated Plaintiff’s drug test; (6) advertised

for and conducted the hiring process for senior level positions at NWH and other facilities;

(7) reviews and processes all final payment records and authorizes the final paycheck for all

employees; (8) provided Plaintiff’s 401(k) plan; (9) is the only entity identified on Plaintiff’s

401(k) forms (10) provided, paid for, and managed Plaintiff’s other employment benefits; and

(11) trained Plaintiff on the shared patient recordkeeping charting and computer system.

The third alleged parent entity is ASA. Plaintiff alleges that ASA: (1) provides oversight

on compliance with the required standards for medical care and nursing; (2) maintains records on

each facilities’ and employee’s compliance with applicable laws and regulations; (3) provides

new hire training and orientation, including for nurses; (4) provided Plaintiff’s training or trained

the persons who conducted Plaintiff’s training; (5) maintained records on Plaintiff’s hire,

training, and orientation; and (6) is the legal employer of senior level officials at NWH and other

facilities.

Plaintiff alleges that all Defendants share the same insurance plans, 401k plan, and

employee expense reimbursement plans, which Plaintiff alleges are provided and managed by

ASH. Plaintiff also alleges that all Defendants share the same liability insurance policy, of which

the parent companies are the insureds and the remaining companies are additional insureds.

Plaintiff also generally alleges that all the “Signature” and “Avamere” entities share

websites and leadership academies. Plaintiff alleges that in 2019 the brands “announced a new

organization structure that will bring together our previously siloed companies. These changes

have been made to support our new priorities and form a more integrated network of senior

housing and healthcare services.” ECF 76 at 137-38 (TAC ¶ 228). The changes provided the

opportunity to “collaborate more, share best practices with each other, increase job satisfaction,

and make our companies and communities better places for our guests and employees.” Id. The

structural changes were “breaking down the silos that previously divided our companies,

bringing us together into a fully integrated network of care. Functioning as a cooperative

network of post-acute and senior living providers” and that “Cross-company and department

communications help achieve widespread adoption of best practices and cross-functional teams

are offering innovative solutions to meet the changing landscape of today’s modern workforce.”

Id. at 138 (TAC ¶ 229). Plaintiff also alleges that his job application identified that he was

applying for a position with the “Avamere Group of Companies.”

Plaintiff alleges that during his hiring process, he was directed to address questions to

Jody Carter, the “Director of Human Organizational Development.” Plaintiff does not allege

what entity employs Ms. Carter. Instead, Plaintiff alleges that she self-identified on Linked-In as

having held human resources positions at “Signature Healthcare at Home” and “Signature

Hospice, Home Health, Home Care.” Plaintiff alleges these entities are assumed business names

registered to NWH, NP2U LLC, Signature Coastal LLC, Signature Corvallis LLC, and Avamere

Home Health Care LLC. Plaintiff thus concludes that Ms. Carter was employed by all of those

entities. The Court does not accept as true this allegation relating to Ms. Carter’s employer,

which is both a legal conclusion and not based on sufficient alleged facts.

Plaintiff also alleges that the recruiter who was involved in Plaintiff’s hiring, Samantha

Bennett, self-identified on Linked-In as the recruiter for “Signature Healthcare at Home.”

Plaintiff asserts that because Signature Healthcare at Home is an assumed business name for five

subsidiaries, Ms. Bennett is an employee of all five. For the same reasons the Court did not

accept this allegation for Ms. Carter, the Court does not accept this allegation for Ms. Bennett.

Additionally, job recruiters can recruit for several entities and that does not make them an

employee of each entity.

Plaintiff makes similar allegations about other employees—that they performed some

role in relation to Plaintiff, that they self-identified on Linked-In as having a role with a company

with an assumed business name registered to more than one Avamere or Signature entity, and

thus that the person was legally employed by all entities associated with the assumed business

name. The Court does not accept Plaintiff’s allegations about those employees’ legal employer as

true.

Although the Court does not accept as true some of Plaintiff’s allegations regarding the

legal employer of certain supervisory employees, as set forth above Plaintiff alleges many other

facts relating to the alleged structure and management of the parent entities that the Court does

accept as true in a Rule 12(b)(6) motion. Based on these allegations, Plaintiff alleges a higher

degree of control by the parent entities than merely providing paid centralized support services.

For example, Plaintiff’s allegations plausibly show that the parent entities have control

over “how many employees [NWH] needs, and whether, when and whom to hire and fire to meet

those needs, . . . . hiring, . . . [and] compensation decisions.” Engelhardt, 472 F.3d at 7 (citation

omitted). Further, Plaintiff’s allegations support a plausible inference that NWH had to adopt the

parent companies’ policies and was not allowed to adopt its own, different, company policies. Id.

Thus, the use of the parent company policies supports an inference of centralized control of labor

relations. Id.; see also Torres-Negron, 488 F.3d at 43. Additionally, Plaintiff alleges that job

applications went through the parent companies and major hiring decisions were made by a

parent company. This also supports centralized control of labor relations. See Cook v.

Arrowsmith Shelburne, Inc., 69 F.3d 1235, 1241 (2d Cir. 1995) (“Moreover, KDT clearly

maintained control of labor relations at ASI. For example, applications for employment with ASI

went through KDT; all personnel status reports were approved by KDT; and ASI cleared all

major employment decisions with KDT.”).

Further, Plaintiff alleges that the parent companies are the ones that paid Plaintiff and

provided benefits. This also supports centralized control. See Torres-Negron, 488 F.3d at 43

(holding that where the parent provided a companywide policy and “paid Torres, provided her

benefits and retained the power to terminate her,” there was “centralized, top-down control over

employment decisions”). Considering all of Plaintiff’s well-pleaded allegations, including those

on information and belief, as true for purposes of the pending motion, Plaintiff has sufficiently

alleged centralized control of labor relations between NWH and the parent entities at this early

stage of the litigation. The allegation may not survive a motion for summary judgment, but that

is not today’s question.

7. Common Ownership and Financial Control

The TAC contains many paragraphs taken from public records alleging facts, often on

information and belief, relating to the common ownership and financial control of all

Defendants. As for NWH, Plaintiff alleges that Avamere Group owns 85% and Mr. Bob Thomas

owns 15%. Plaintiff alleges that Avamere Group also owns AHS, ASA, Avamere Home Health

Care LLC, NP2U LLC, and Signature Coastal LLC. Plaintiff alleges that the same three or four

people ultimately own all of Defendants. Accepting the allegations as true in a motion to dismiss,

the Court finds that Plaintiff sufficiently alleges in the TAC a degree of common ownership and

financial control between NWH and the other Defendants.

8. Other Factors

The four factors are non-exclusive. Both the First Circuit and the Seventh Circuit have

specifically discussed concerns with companies breaking into smaller segments to avoid

statutory obligations as a significant concern. See Engelhardt, 472 F.3d at 5-6; Papa, 166 F.3d

at 941. Indeed, in Papa, the Seventh Circuit explained:

Each subsidiary might be adequately funded and comply with all

requisite formalities for separate corporate status, and the group

might make clear to all employees and all creditors that they could

look only to the particular corporation with which they had dealt

for the enforcement of their contractual entitlements. But if the

purpose of this splintered incorporation were to elude liability

under the antidiscrimination laws, the corporations should be

aggregated to determine how many employees each corporation

had. The privilege of separate incorporation is not intended to

allow enterprises to duck their statutory duties.

166 F.3d at 941; see also Engelhardt, 472 F.3d at 6 (“This is because the 50-employee exception

is an economic one rooted in protecting small businesses, and the purpose of the ‘integrated

employer’ test is to ensure that a defendant has not structured itself to avoid labor laws.”).

Plaintiff alleges many purported facts about interconnected people and job titles and

services the parents perform for the subsidiaries. Plaintiff does not, however, allege facts from

which the Court can plausibly infer that the owners created all of the separate corporate entities

to avoid statutory duties, or, for example, to avoid the 50-employee threshold of the FMLA.

Each subsidiary is tied to a separate primary physical location from which they provide services

to the consuming public.3 The “centralized” Wilsonville location is the location from which the

parent companies allegedly provide administrative, financial, legal, and other support services.

Thus, that may be the principal place of business and contact address for certain things (such as

legal or technology services) for the subsidiaries, but the actual services by the subsidiaries are

performed at their different physical locations. Plaintiff’s allegations do not show that the

subsidiaries were created with no valid basis other than to avoid statutory obligations.

Plaintiff alleges that while he worked for NWH, a Director of Nursing and a field nurse

were transferred between Avamere facilities and Plaintiff’s supervisor told him not tell anyone

about the transfers because Defendants (no specific Defendant is identified) did not want people

to know that they transferred employees between entities. The supervisor allegedly stated that the

reason Defendants did not want people to know is because it would increase the potential legal

liability of all Defendants. This allegation, however, is insufficient plausibly to show that the

subsidiaries were created to avoid statutory liability.

9. Conclusion

Considering the totality of the circumstances, the Court finds that Plaintiff has

sufficiently alleged that the parent entities were integrated employers with NWH. See Lichwick,

3 Plaintiff alleges that all subsidiaries have the same principal place of business and

mailing address at the Wilsonville campus. They each, however, have a different location at

which they provide services.

2009 WL 10740048, at *4 (“From these averments, one can reasonably infer that ‘Verizon

Services Corp.’ is an entity that provides labor, legal, and management support to all VCI

subsidiaries, including Verizon North. . . . [T]his is a strong factor cutting in favor of treating

VCI and Verizon North as a single entity, at this early stage of the litigation. Consequently, the

Court denies Verizon’s motion to dismiss.” (footnote omitted)); accord Schubert v. Bethesda

Health Grp., Inc., 319 F. Supp. 2d 963 (E.D. Mo. 2004) (finding an issue of fact on integrated

employment where the alleged integrated employer conducted a post-termination investigation,

was listed on employment forms, was listed in the employee handbook, and was listed on the

employee’s W-2 form). Thus, Plaintiff states a claim against Avamere Group, AHS, and ASA,

along with NWH and Avamere Home Health Care LLC as previously found by the Court.

The Court finds that Plaintiff has not sufficiently stated a claim against the remaining

sibling entities. The Court declines to allow Plaintiff to amend his complaint at this time to assert

a claim against NP2U LLC, Signature Coastal LLC, and Signature Corvallis LLC, although this

dismissal is without prejudice if Plaintiff finds information during discovery that Plaintiff

believes supports a claim against these entities. Plaintiff may then move for leave to file an

amended complaint. This potential future leave to amend is narrowly-tailored, meaning that

Plaintiff may move to amend if he finds information supporting integration or joint employer

status such as commingled funds, hiring and firing authority, direct supervision, and the like.

The Court previously allowed Plaintiff leave to amend his complaint to describe his

claims against Avamere Bethany Operations LLC, Avamere Lake Oswego Investors LLC,

Avamere Sherwood Operations LLC, Avamere Stafford Operations LLC, Avamere St. Helens

Operations LLC, Beaverton Rehab & Specialty Care LLC, Clackamas Rehabilitation LLC,

Crestview Operations LLC, Genesis Newberg Operations LLC, Keizer Campus Operations LLC,

Keizer River Operations LLC, King City Rehab LLC, Laurelhurst Operations LLC, Mountain

View Rehab LLC, and Sunnyside Operations LLC relating to when Plaintiff worked at these

entities. Plaintiff’s leave to amend on this ground is narrowly-tailored and focused on allegations

relating to Plaintiff’s purported employment at or with these entities.

B. Discovery Order

In the Reconsideration Order the Court granted “limited discovery” and ordered

Defendants to produce to Plaintiff within 30 days “enough records from Plaintiff’s employment

file, to the extent such records are in the possession, custody, or control of Defendants, to show

at which entities Plaintiff worked and when, throughout the duration of Plaintiff’s employment.”

Covelli, 2020 WL 6395448, at *4. In response, Defendants created a single page document,

which distills information from Defendants’ employment records on Plaintiff. This document

listed by date and location when Plaintiff treated patients “in the field” other than Plaintiff’s

NWH Tigard location. The field locations include other Avamere and Signature facilities, as well

as private homes and non-Avamere and Signature nursing home facilities. Defendants previously

had produced to Plaintiff other records, including a payroll register detailing Plaintiff’s wage

payments and reimbursements.

Counsel for Plaintiff, dissatisfied that the one-page document complied with the

production ordered in the Reconsideration Order, conferred with counsel for Defendants.

Defendants then produced Plaintiff’s time records from the two electronic time keeping

programs used by Defendants during the time Plaintiff was employed. In total, as relevant to this

motion, Plaintiff received from Defendants Plaintiff’s payroll records, time records, and a one-

page summary Defendants contend show the field locations at which Plaintiff worked.

Plaintiff remained dissatisfied with Defendants’ production. On December 28, 2020,

Plaintiff moved to enforce the Reconsideration Order. On January 5, 2021, Judge Russo accepted

that Defendants had produced the entire scope of Plaintiff’s timekeeping records, but found that

Defendants’ production focused on his work at NWH and was “silent as to any full or partial

ordinary shifts that plaintiff may have worked at the 15 other named facilities.” ECF 106. Thus,

Judge Russo ordered Defendants “to produce by January 15, 2021 enough records related to

plaintiff’s employment to show where he worked and when through February 2019—whether

those records are kept with Northwest Hospice and/or the 15 other entities wherein plaintiff

allegedly performed regular shifts.” Id.

After Judge Russo’s January 5th Order, Defendants stated that after a reasonable search

they had not located documents showing regular shifts worked by Plaintiff at any of the fifteen

nursing facilities named as Defendants. In response, Plaintiff filed the second motion to enforce,

the subject of the pending objections. Plaintiff argued that after reviewing the documents

produced by Defendants, there are times that Plaintiff was in the field, meaning not working at

the NWH Tigard location, and yet the documents produced do not show where Plaintiff worked.

Plaintiff asserted that there are many such “gaps” in the records produced, and offered by way of

example 14 instances. Plaintiff also submitted a declaration describing more times that Plaintiff

recalled being offsite that were not included in the produced documents. Defendants responded,

explaining how the produced documents showed where Plaintiff was located for 13 of the 14

examples. Judge Russo accepted Defendants’ position that 13 of the 14 examples were described

in the produced documents. Judge Russo found that “it is clear from the documents produced by

defendants where and when plaintiff was working. . . . and that requiring defendants to perform

additional searches into the handwritten and electronic records that plaintiff vaguely references

in his declaration would not be proportional to the needs of this case.” ECF 112 at 2. Judge

Russo concluded that Plaintiff could allege in his amended complaint any additional times that

he recalled being offsite.

Plaintiff objects to Judge Russo focusing on the 14 examples, because Plaintiff asserts

those were only a small subset of the times shown in Plaintiff’s payroll records where he was

offsite but the documents do not disclose his work location. Plaintiff also argues that Defendants

misled Judge Russo in their explanation describing how the documents disclose Plaintiff’s

location for 13 of the 14 examples, and also argues that it requires speculation to reach that

conclusion because the documents do not make the link Defendants assert.

Plaintiff appears to be arguing that Judge Russo’s finding that it is clear from the

produced documents where Plaintiff worked and when is clearly erroneous. Plaintiff cites a few

discrepancies in the documents, which Plaintiff interprets as evidence of additional offsite work

not shown in the one page summary document. Defendants respond with arguments why those

discrepancies do not necessarily mean that Plaintiff had additional offsite work. The evidence

cited by Plaintiff does not show that Judge Russo’s factual finding that the documents adequately

show Plaintiff’s offsite work location for the 13 examples was clearly erroneous. Nor was it

erroneous for Judge Russo to implicitly extrapolate that if the produced documents adequately

disclosed Plaintiff’s location for 13 of the 14 examples, the documents would similarly disclose

location information for the remaining “gaps” purportedly in Plaintiff’s records.

Plaintiff also does not show that Judge Russo made any erroneous legal conclusion. “A

decision is contrary to law if it applies the wrong legal standard or neglects to consider all

elements of the applicable standard.” Nationstar Mortg., LLC v. Decker, 2015 WL 519884, at *1

(D. Or. Feb. 9, 2015) (quoting Pac. Radiation Oncology, LLC v. Queen’s Med. Ctr., 2015 WL

419654, at *3 (D. Haw. Jan. 30, 2015)). Judge Russo applied the correct legal standard.

The Court emphasizes that the purpose of requiring limited discovery at this time was to

provide Plaintiff additional information so that he can allege with more detail his joint employer

claim against the sibling entities. The Court needs more than “routine and frequent” as a blanket

assertion for all sibling entities. There is a difference, for example, between working two hours

in total at an entity and working two hours per week. The Court previously ordered, however,

that “Plaintiff need only outline the ‘approximate duration and frequency of his temporary

shift(s) with each named facility’ such that the Court can distinguish among those facilities at

which Plaintiff spent the most cumulative time working and those at which he worked only once

or twice.” ECF 90 at 4. Thus, Plaintiff need not allege his precise dates and hours worked at each

separate entity.

CONCLUSION

The Court ADOPTS IN PART the Findings and Recommendation, ECF 98. The Court

GRANTS IN PART Defendants’ Motion to Dismiss, ECF 79, as discussed herein. Plaintiff may

file a Fourth Amended Complaint with new allegations relating to the potential joint employer

sibling entities within 30 days of the date of this Opinion. The Court OVERRULES Plaintiff’s

objections and AFFIRMS Judge Russo’s nondispositive Order (ECF 112).

IT IS SO ORDERED.

DATED this 25th day of March, 2021.

/s/ Michael H. Simon

Michael H. Simon

United States District Judge