# Covelli v. Avamere Home Health Care, LLC

> District Court, D. Oregon · March 25, 2021

URL: https://www.frixlaw.com/law-library/cases/10393058

## Case

- **Court:** District Court, D. Oregon
- **Decided:** March 25, 2021
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10393058

## How later opinions describe it (automated extraction)

- 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
- explaining that “magistrate judges may hear and determine nondispositive matters, but not dispositive matters”

## Opinion text

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

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10393058. Public record. Not legal advice.