# Reuter v. XTO Energy, Inc.

> District Court, S.D. Texas · March 15, 2022

URL: https://www.frixlaw.com/law-library/cases/10675213

## Case

- **Court:** District Court, S.D. Texas
- **Decided:** March 15, 2022
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

UNITED STATES DISTRICT COURT March 15, 2022
SOUTHERN DISTRICT OF TEXAS Nathan Ochsner, Clerk
HOUSTON DIVISION

KYLE W REUTER, §
§
Plaintiff. §
§
VS. § CIVIL ACTION NO. 4:20-cv-01474
§
XTO ENERGY, INC. ET AL., §
§
Defendants. §

MEMORANDUM AND RECOMMENDATION
Pending before me is Defendants XTO Energy Inc. and Exxon Mobil
Corporation’s Motion for Summary Judgment. See Dkt. 41. Having reviewed the
briefing, the record, and the applicable law, I recommend that the motion be
GRANTED, and this case be dismissed.
BACKGROUND
XTO Energy Inc. (“XTO”) is an energy company that specializes in oil and gas
production throughout the United States. In 2010, ExxonMobil Corporation
(“ExxonMobil”) acquired XTO, making XTO a wholly-owned subsidiary of
ExxonMobil.
In 2012, XTO hired Plaintiff Kyle Reuter (“Reuter”) as an Associate Landman.
As an Associate Landman, Reuter helped secure the rights to drill or operate on land
owned by individuals, business entities, and the government. Reuter worked out of
XTO’s Fort Worth, Texas office.
On March 22, 2019, Reuter had a confrontation with his supervisor. A Human
Resources inquiry determined that Reuter—who allegedly had a history of poor
performance—had hurled profanities at his supervisor in a raised voice. As a result of
this incident, XTO terminated Reuter on March 27, 2019.
Approximately nine months after his termination, Reuter filed a Charge of
Discrimination with the Equal Employment Opportunity Commission (“EEOC”)
against ExxonMobil, alleging disability discrimination. Importantly, Reuter did not
file a Charge of Discrimination against XTO. Reuter also did not provide XTO with
notice of the Charge of Discrimination leveled against ExxonMobil or allow XTO to
participate in the EEOC conciliation process.
After receiving a Right to Sue Notice from the EEOC, Reuter brought the instant
lawsuit against ExxonMobil and XTO. Reuter alleges two causes of action: (1)
disability discrimination under the Americans with Disabilities Act (“ADA”); and (2)
retaliation under the ADA.
ExxonMobil and XTO have moved for summary judgment, raising a cacophony
of reasons why this case should be dismissed as a matter of law. I only need to address
two arguments: (1) ExxonMobil’s claim that it is an improper defendant; and (2)
XTO’s contention that Reuter failed to exhaust his administrative remedies with XTO.1
SUMMARY JUDGMENT STANDARD
Summary judgment is appropriate if no genuine issue of material fact exists and
the moving party is entitled to judgment as a matter of law. See FED. R. CIV. P. 56(a).
“A fact is material if it might affect the outcome of the suit, and a factual dispute is
genuine if the evidence is such that a reasonable jury could return a verdict for the
nonmoving party.” Estate of Miranda v. Navistar, Inc., 23 F.4th 500, 503 (5th Cir.
2022). “Summary judgment procedure is properly regarded not as a disfavored
procedural shortcut, but rather as an integral part of the Federal Rules as a whole,
which are designed ‘to secure the just, speedy and inexpensive determination of every
action.’” Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986) (quoting FED. R. CIV. P. 1).
At the summary judgment stage, a district court must resolve all factual controversies
in favor of the non-moving party. See Squyres v. Heico Cos., L.L.C., 782 F.3d 224, 230
(5th Cir. 2015).

1 Defendants have also filed a Motion to Strike Portions of Plaintiff’s Summary Judgment
Evidence. See Dkt. 52. Because the evidence at issue does not affect the disposition of the
summary judgment motion, I deny the motion to strike as moot.
2
ANALYSIS
A. EXXONMOBIL IS NOT A PROPER DEFENDANT
It is well-settled that a defendant cannot be held liable for discrimination or
retaliation under the ADA unless it qualifies as an “employer” under the statute. See
Bloom v. Bexar Cnty., Tex., 130 F.3d 722, 724 (5th Cir. 1997); Jurek v. Williams WPC-
I, Inc., No. CIV.A. H-08-01451, 2009 WL 1748732, at *5 (S.D. Tex. June 17, 2009).
The ADA defines an employer as “a person engaged in an industry affecting commerce
who has 15 or more employees for each working day in each of 20 or more calendar
weeks in the current or preceding calendar year, and any agent of such person.” 42
U.S.C. § 12111(5)(A). This statutory definition provides little, if any, assistance in
resolving the issue of whether a parent corporation is a de facto employer. See Lusk v.
Foxmeyer Health Corp., 129 F.3d 773, 777 (5th Cir. 1997). In an effort to provide some
clarity to the situation, the Fifth Circuit has “construed the term ‘employer’ broadly to
include superficially distinct entities that are sufficiently interrelated to constitute a
single, integrated enterprise.” Id. See also Tipton v. Northrup Grumman Corp., 242
F. App’x. 187, 190 (5th Cir. 2007) (“[S]uperficially distinct enterprises may be exposed
to liability [in employment-discrimination matters] upon a finding that they represent
a single, integrated enterprise: a single employer.” (quotation omitted)). Nonetheless,
“[t]he doctrine of limited liability creates a strong presumption that a parent
corporation is not the employer of its subsidiary’s employees.” Lusk, 129 F.3d at 778.
To determine whether a parent corporation and its subsidiary are a “single
employer,” the Fifth Circuit looks at four factors: (1) interrelation of operations; (2)
centralized control of labor relations; (3) common management; and (4) common
ownership or financial control. See id. at 777. “This analysis ultimately focuses on . . .
whether the parent corporation was a final decision-maker in connection with the
employment matters underlying the litigation.” Id. I will briefly discuss each factor.
1. Interrelation of Operations
“The interrelation of operations element of the single employer test ultimately
focuses on whether the parent corporation excessively influenced or interfered with
the business operations of its subsidiary.” Id. at 778. Put another way, the issue is
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“whether the parent actually exercised a degree of control beyond that found in the
typical parent-subsidiary relationship.” Id.
Relevant factors indicating the existence of interrelated operations include
evidence that the parent:
(1) was involved directly in the subsidiary’s daily decisions relating to
production, distribution, marketing, and advertising; (2) shared
employees, services, records, and equipment with the subsidiary; (3)
commingled bank accounts, accounts receivable, inventories, and credit
lines; (4) maintained the subsidiary’s books; (5) issued the subsidiary’s
paychecks; or (6) prepared and filed the subsidiary’s tax returns.
Id.
In this case, Reuter has failed to show that the relationship between XTO and
ExxonMobil was anything more than a normal parent-subsidiary relationship. The
summary judgment evidence is clear and unequivocal. XTO and ExxonMobil do not
have common officers or directors. XTO and ExxonMobil have separate payrolls,
financial books, and tax employer identification numbers. XTO and ExxonMobil do
not have commingled bank accounts or account receivables. There is simply no
evidence that ExxonMobil was directly involved in XTO’s daily decision-making
process.
Reuter argues that operations between XTO and ExxonMobil are interrelated
because ExxonMobil “conducted payroll and issued paychecks to” Reuter. Dkt. 49 at
19. But there is not a shred of evidentiary support for these naked assertions. To the
contrary, the summary judgment record establishes, beyond a shadow of a doubt, that:
(1) XTO and ExxonMobil had separate payrolls; and (2) XTO, not ExxonMobil, issued
Reuter his paychecks. The actual paychecks are attached as exhibits to the Motion for
Summary Judgment and clearly list XTO, not ExxonMobil, as the issuing party.
Reuter also asserts that an ExxonMobil employee named Sabrina Powell
(“Powell”) was involved in Reuter’s termination, thus trying to create a factual dispute
as to whether XTO and ExxonMobil had interrelated operations. However, Reuter
conveniently fails “to identify specific evidence in the record and to articulate the
precise manner in which that evidence supports his . . . claim.” Ragas v. Tenn. Gas
Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998). “Needless to say, unsubstantiated
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assertions are not competent summary judgment evidence.” Id. Tellingly, the only
summary judgment evidence discussing Powell indicates that she was an XTO
employee, not an ExxonMobil employee. To top it off, the undisputed evidence
presented by ExxonMobil establishes that “ExxonMobil did not recommend or make
the decision to discharge Reuter.” Dkt. 41-23 at 2.
Overall, Reuter has failed to provide any evidence demonstrating that
ExxonMobil influenced, controlled, or interfered with the business operations of XTO.
The first factor strongly weighs against Reuter and suggests that liability should not
be imputed to ExxonMobil simply because it is XTO’s parent corporation.
2. Centralized Control of Labor Relations
The second factor—centralized control of labor relations—“has been refined
into an inquiry about what entity made the final decisions regarding employment
matters related to the person claiming discrimination?” Johnson v. Crown Enters.,
Inc., 398 F.3d 339, 343 (5th Cir. 2005) (quotation omitted). The Fifth Circuit has
referred to the second factor as the “most important” one. Tipton, 242 F. App’x at 190.
Here, Reuter presents no facts that remotely suggest that ExxonMobil held
centralized control over XTO’s labor relations. It is Reuter’s burden to offer evidence
creating a genuine issue of material fact on the centralized control of labor relations
factor. The mere fact that ExxonMobil was XTO’s parent corporation is insufficient.
Even though I am required to examine the record in the light most favorable to Reuter,
the uncontroverted summary judgment evidence establishes that “XTO and
ExxonMobil had separate Human Resources departments. During the relevant time
period, the decisions regarding hiring, firing, promotion, and discipline for XTO
employees were handled by the employee’s supervisor at XTO in connection with XTO
Human Resources for that employee’s business unit.” Dkt. 41-1 at 2. With no evidence
that ExxonMobil made the final employment decisions for XTO, the second factor
weighs heavily against application of the single employer theory of liability.
3. Common Management
The third factor asks whether the two business entities have common
management. Reuter has provided no evidence of common management.
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Accordingly, this factor also militates in favor of not holding ExxonMobil responsible
for the actions of XTO.
4. Common Ownership or Financial Control
The fourth and final factor requires me to determine whether there is common
ownership or financial control. Common ownership is an “ordinary aspect[] of a
parent-subsidiary relationship.” Lusk, 129 F.3d at 778. The mere existence of common
ownership, however, is “not sufficient to justify treating a parent corporation and its
subsidiary as a single employer.” Id. “A parent corporation’s possession of a
controlling interest in its subsidiary entitles the parent to the normal incidents of stock
ownership, such as the right to select directors and set general policies, without
forfeiting the protection of limited liability.” Id. “Only evidence of control suggesting
a significant departure from the ordinary relationship between a parent and its
subsidiary . . . is sufficient to . . . permit an inference that the parent corporation was
a final decision-maker in its subsidiary’s employment decisions.” Id.
***
Based on the record before me, there is nothing outside the ordinary aspects of
the parent-subsidiary relationship that warrants finding ExxonMobil as a proper
defendant in this case. See Reilly v. TXU Corp., No. 3:05-CV-0081-M, 2009 WL
857598, at *2 (N.D. Tex. Mar. 31, 2009) (“In the Fifth Circuit, there is a strong
presumption that a parent corporation is not the legal employer of its subsidiary’s
employees and thus, a parent company is ordinarily not liable for the discriminatory
acts of its subsidiary.”). Stated simply, there is no genuine issue of material fact.
ExxonMobil did not serve as a final decision-maker in connection with Reuter’s
termination. Thus, ExxonMobil and XTO should not be considered a single employer.
Settled law requires that ExxonMobil be dismissed from this case.
B. REUTER FAILED TO EXHAUST HIS ADMINISTRATIVE REMEDIES AS TO XTO
In employment discrimination and retaliation cases brought under federal
employment statutes, a plaintiff must exhaust all administrative remedies in front of
the EEOC before pursuing his claims in federal court. See Dao v. Auchan
Hypermarket, 96 F.3d 787, 789 (5th Cir. 1996) (“[A]n employee must comply with the
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ADA’s administrative prerequisites prior to commencing an action in federal court
against her employer for violation of the ADA.”). It follows, as a general rule, that “a
party not named in an EEOC charge may not be sued under [the ADA].” EEOC v.
Simbaki, Ltd., 767 F.3d 475, 481 (5th Cir. 2014) (quotation omitted).
The purpose of requiring a plaintiff to identify each party who allegedly engaged
in discrimination or retaliation in a charge before the EEOC is two-fold. First, it serves
to notify the charged party of the alleged violation. Second, it gives the EEOC an
opportunity for conciliation, which effectuates the ADA’s primary goal of securing
voluntary compliance with its mandates. See Alexander v. Gardner–Denver Co., 415
U.S. 36, 44 (1974).
In this case, it is undisputed that XTO is not named as a respondent in the
EEOC charge. In fact, XTO’s name is not mentioned anywhere in the two-page charge.
The EEOC charge identifies ExxonMobil, and no other entity, as the employer that
allegedly discriminated against Reuter.
The Fifth Circuit has recognized two limited exceptions to the naming
requirement. First, a failure to name a party in an EEOC charge may be excused if the
party had actual notice of the EEOC charge and an opportunity to participate in
conciliation. See Simbaki, 767 F.3d at 483–84. Second, entities not named in an EEOC
charge may still face suit if they share an “identity-of-interest” with an entity named
in the EEOC charge. See id. at 484. Neither exception helps Reuter salvage his ADA
claims against XTO.
Here, the actual notice exception is inapplicable because the summary
judgment record conclusively establishes that XTO did not have actual notice of the
EEOC charge nor an opportunity to participate in the conciliation process. Reuter
does not bother to contest this point.
Turning to the “identity-of-interest” exception, the Fifth Circuit has adopted a
four-part test “to determine whether there [is] sufficient identity-of-interest between
the named and the unnamed party so that the unnamed party could be sued in court
despite not being named in the charge.” Simbaki, 767 F.3d at 482. Those four factors
are:
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1) whether the role of the unnamed party could through reasonable effort
by the complainant be ascertained at the time of the filing of the EEOC
complaint;

2) whether, under the circumstances, the interests of a named are so
similar as the unnamed party’s that for the purpose of obtaining
voluntary conciliation and compliance it would be unnecessary to
include the unnamed party in the EEOC proceedings;

3) whether its absence from the EEOC proceedings resulted in actual
prejudice to the interests of the unnamed party;

4) whether the unnamed party has in some way represented to the
complainant that its relationship with the complainant is to be through
the named party.

Id. at 482–83 (quoting Glus v. G.C. Murphy Co., 562 F.2d 880, 888 (3d Cir. 1977)).
As to the first “identity-of-interest” factor, Reuter expressly admits that he
knew XTO’s role as his employer. See Dkt. 49 at 24 (“XTO’s name was ascertained by
Mr. Reuter at the time of his EEOC filing.”). On the second factor, there is no evidence
that XTO’s and ExxonMobil’s interests are so similar that, for the purpose of obtaining
voluntary conciliation and compliance, it would be unnecessary to include XTO in the
EEOC proceedings. As noted above, XTO and ExxonMobil are distinct legal entities
that had separate Human Resources departments, payrolls, and financial books. The
two companies also do not share officers or directors. The mere existence of a parent-
subsidiary relationship between ExxonMobil and XTO is simply not enough, as a
matter of law, to impute knowledge of the EEOC charge to XTO as the unnamed party.
Moving to the third factor, XTO’s absence from the EEOC proceedings undoubtedly
resulted in actual prejudice to XTO. XTO did not have the opportunity to present a
position statement in response to Reuter’s charge or privately explore settlement
through conciliation before being named in a federal court lawsuit. Finally, as to the
fourth “identity-of-interest” factor, there is a complete dearth of evidence XTO
represented that its employment relationship with Reuter be handled through
ExxonMobil. All told, after carefully evaluating the four “identity-of-interest” factors,
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the inescapable conclusion is that there is no clear identity of interests between XTO
and ExxonMobil. The “identity-of-interest” exception is inapplicable here.
With his back against the wall, Reuter argues that his failure to name XTO in
the EEOC charge should be excused because (1) he was not represented by legal
counsel at the time he filed the EEOC charge; and (2) although he told an EEOC
investigator to include XTO as a named party, the EEOC investigator left XTO out of
the charge. These arguments are unavailing.
Although it is certainly true that “courts liberally construe [the ADA’s] naming
requirement so as to not frustrate claimants with needless procedural roadblocks,”
Simbaki, 767 F.3d at 481, neither Reuter’s “unfamiliarity with the legal process nor
his lack of representation during the applicable filing period” make him immune from
the administrative prerequisites of bringing suit in federal court. Barrow v. New
Orleans S.S. Ass’n, 932 F.2d 473, 478 (5th Cir. 1991). The EEOC charge specifically
asked Reuter to identify “the Employer, Labor Organization, Employment Agency,
Apprenticeship Committee, or State or Local Government Agency” he believed
discriminated against him. Dkt. 41-24 at 2. Importantly, the charge provided space for
Reuter to identify two separate entities who discriminated against him and invited
him to list additional parties who discriminated against him in the body of the charge.
Reuter listed ExxonMobil as the sole entity. Then, Reuter signed the EEOC charge
under oath, attesting to the truthfulness of the statements contained in the charge. He
cannot now shift blame to the EEOC investigator for his own failure to include XTO
as a named party. As Defendants correctly observe: “Reuter is asking this Court to
create an exception that would allow any plaintiff to cure Charge deficiencies by
blaming the EEOC and claiming the agency messed up. This is an absurd result at
best.” Dkt. 53 at 7. I agree, and I decline to create such an exception here.
Given the record before me, I conclude that Reuter should have named XTO in
the EEOC charge. His failure to do so means that he has failed to exhaust his
administrative remedies with respect to XTO. As a result, XTO should be dismissed
from this case.
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CONCLUSION
For the reasons set forth above, I recommend that Defendants XTO Energy Inc.
and Exxon Mobil Corporation’s Motion for Summary Judgment (Dkt. 41) be
GRANTED.
The Clerk shall provide copies of this Memorandum and Recommendation to
the respective parties who have 14 days from receipt to file written objections under
Federal Rule of Civil Procedure 72(b) and General Order 2002–13. Failure to file
written objections within the time period mentioned shall bar an aggrieved party from
attacking the factual findings and legal conclusions on appeal.

SIGNED this 15th day of March 2022.

______________________________
ANDREW M. EDISON
UNITED STATES MAGISTRATE JUDGE

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10675213. Public record. Not legal advice.