# Gilliland v. Sanico Clanton, LLC (CONSENT)

> District Court, M.D. Alabama · November 4, 2019

URL: https://www.frixlaw.com/law-library/cases/9986924

## Case

- **Court:** District Court, M.D. Alabama
- **Decided:** November 4, 2019
- **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/9986924

## How later opinions describe it (automated extraction)

- finding that companies using each other’s logos/letterheads was one factor favoring interrelation
- holding that the nonmoving party is required to go beyond the pleadings and, by her own affidavits or by the record on file, designate specific facts showing there is a genuine issue

## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
NORTHERN DIVISION

HEATHER GILLILAND, )
)
Plaintiff, )
)
v. ) CASE NO. 2:18-CV-952-SMD
)
SANICO CLANTON, LLC, et al., )
)
Defendants. )

MEMORANDUM OPINION AND ORDER

Before the Court is Plaintiff’s Supplemental Memorandum of Law on the Court’s
Jurisdiction to Hear Plaintiff’s Title VII Claims (Doc. 22) and Defendant’s Response to
Plaintiff’s Supplemental Memorandum of Law on the Court’s Jurisdiction to Hear
Plaintiff’s Title VII Claims (Doc. 23). Previously, the Defendant moved for dismissal.
(Doc. 7). This Court converted the motion to one for summary judgment and denied it,
finding that the pleadings did not clearly establish this Court’s subject-matter jurisdiction,
and ordered the parties to report back after conducting limited jurisdictional discovery.
(Doc. 21). After review, the undersigned construes the Defendant’s Response as a renewed
motion for partial summary judgment on Plaintiff’s Title VII claims, and finds that the
motion is due to be granted.1
I. BACKGROUND

1 The issues addressed in this memorandum opinion do not affect Plaintiff’s claims brought under 42 U.S.C.A. §
1981, and those claims are unaffected by this partial summary judgment order.
On November 8, 2018, Plaintiff filed a Complaint (Doc. 1) against Defendants
alleging three counts of retaliation and discrimination under Title VII of the Civil Rights
Act of 1964, as amended, 42 U.S.C. § 2000e et seq., and two counts of retaliation and

discrimination under 42 U.S.C. § 1981. Id. at 1. Plaintiff’s claims arise from events that
occurred while Plaintiff was employed as a garment folder at Defendant Sanico Clanton,
LLC’s (“Sanico”) facility. Id. at 6. Plaintiff alleges Defendants, in aggregate, constitute a
single “employer” under the “integrated enterprise” test and, hence, are subject to Title VII
and its 15-employee threshold. See Lyes v. City of Riviera Beach, Fla., 166 F.3d 1332,

1341 (11th Cir. 1999) (en banc) (adopting the NLRB’s “single-employer” factor test for
purposes of determining when to aggregate multiple entities for purposes of counting
employees, which includes analysis of (1) the interrelation of operations, (2) centralized
control of labor relations, (3) common management, and (4) common ownership or
financial control). On December 6, 2018, Defendants filed a Motion to Dismiss Plaintiff’s

Complaint pursuant to Rule 12(b)(1), arguing that the Court lacks subject matter
jurisdiction over Plaintiff’s claims because Defendants are three separate entities—not an
integrated enterprise—and the one company Plaintiff worked for, Sanico, does not meet
the statutory definition of “employer” under Title VII. (Doc. 7) at 5-11; see also Fed. R.
Civ. P. 12(b)(1); 42 U.S.C. § 2000e(b).

On January 2, 2019, Plaintiff filed a Brief in Opposition (Doc. 16) to Defendants’
Motion to Dismiss, arguing that Defendants’ Motion was improperly brought under Rule
12(b)(1) because “the threshold number of employees for application of Title VII is an
element of a plaintiff’s claim for relief, not a jurisdictional issue.” (Doc. 16) at 5 (quoting
Arbaugh v. Y&H Corp., 456 U.S. 500, 516 (2006)). On January 9, 2019, Defendants filed
a Motion to Convert (Doc. 17) their Motion to Dismiss into a Motion for Summary
Judgment, conceding that “the question of whether [Sanico] is an ‘employer’ for purposes

of Title VII is a question related to the merits of Plaintiff’s claims.” (Doc. 17) at 2.
Defendants reiterated their argument that the Defendant entities do not meet the definition
of a single “employer” under the “integrated enterprise” test. Id. at 9-13 (citing Lyes, 166
F.3d at 1341).
On January 21, 2019, Plaintiff filed a Response (Doc. 20) to Defendants’ Motion to

Convert (Doc. 17) arguing that, because the evidentiary record is undeveloped, it “cannot
present facts essential to justify its opposition” to Defendants’ motion if converted to a
motion for summary judgment. (Doc. 20) at 4 (quoting Fed. R. Civ. P. 56(d)). Plaintiff
asked the Court to deny without prejudice Defendants’ Motion and to allow discovery to
proceed. Id. at 5.

On August 5, 2019, this Court issued an order finding that Defendants were indeed
making a factual challenge to this Court’s jurisdiction that required further development.
However, the undersigned found that determination of this Court’s subject-matter
jurisdiction “will, at the same time, effectively decide the merits of Plaintiff’s claims.”
(Doc. 21) at 5. Additionally, the undersigned found: “Where the jurisdictional issues are

intertwined with the substantive merits, ‘the jurisdictional issues should be referred to the
merits, for it is impossible to decide one without the other.’” Id. Accordingly, this Court
denied Defendants’ Motion for Summary Judgment without prejudice and ordered the
parties to conduct limited discovery. Id.
The undersigned directed the parties to conduct limited discovery to enable analysis
of the four criteria that dictate whether the business should be viewed as an integrated
enterprise under the Lyes analysis. The parties have done so and have included relevant

findings in their memoranda. The undersigned will construe the Defendants’ filing (Doc.
23) as a renewed motion for summary judgment and the Plaintiff’s filing as the opposition
thereto (Doc. 22). After review, and with the benefit of discovery, the Defendant’s
summary judgment motion is due to be granted with respect to Plaintiff’s Title VII claims.
II. MOTION FOR SUMMARY JUDGMENT

A. Standard of Review
Rule 56 requires that summary judgment be granted “if the movant shows that there
is no genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a). “The moving party bears ‘the initial responsibility
of informing the . . . court of the basis for its motion, and identifying those portions of the

pleadings, depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any, which it believes demonstrate the absence of a genuine issue of material
fact.’” Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256, 1259 (11th Cir. 2004) (quoting
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (internal quotations omitted)). Where
the moving party makes such a showing, the burden shifts to the non-movant, who must

go beyond the pleadings and present affirmative evidence to show that a genuine issue of
material fact does exist. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257 (1986). The
applicable substantive law identifies which facts are material. Id. at 248. A fact is not
material if a dispute over that fact will not affect the outcome of the suit under the
governing law. Id. An issue is genuine when the evidence is such that a reasonable jury
could return a verdict for the non-moving party. Id. at 249-50.
In resolving a motion for summary judgment, the Court must view all evidence and

draw all reasonable inferences in the light most favorable to the non-moving party. Patton
v. Triad Guar. Ins. Corp., 277 F.3d 1294, 1296 (11th Cir. 2002). But, the Court is bound
only to draw those inferences that are reasonable. “Where the record taken as a whole
could not lead a rational trier of fact to find for the non-moving party, there is no genuine
issue for trial.” Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir. 1997) (quoting

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). The
nonmovant must establish, with appropriate evidence beyond the pleadings, that a genuine
dispute material to his case exists. Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th
Cir.1991); Celotex, 477 U.S. at 324 (holding that the nonmoving party is required to go
beyond the pleadings and, by her own affidavits or by the record on file, designate specific

facts showing there is a genuine issue).
B. Discussion
After conducting their limited discovery, the parties seem to have little dispute over
the facts governing this dispute. From both memoranda and respective exhibits, the
undersigned can deduce the following about Sancio’s business structure: Sanico is a small

chain of businesses that rents various types of industrial cleaning supplies. (Doc. 23-1) at
3. Sanico has three locations in Gulfport, Mississippi; Lake, Mississippi; and Clanton,
Alabama. Id. The three entities are incorporated separately, but are owned by the same
individual, John Sandras. Id. at 2-4. The locations are managed separately and maintain
separate bank accounts, employees, customers, managers, and insurance carriers. Id. The
managers at each branch make the bulk of the business decisions, such as hiring/firing,
hours, and compensation (although Sandras retains ultimate firing authority by virtue of

ownership). Id. The branches do not share inventory or expenses, nor do they transfer their
assets and debts between each other. Id. at 5. However, they utilize the same employment
policies. Id. at 4. In addition to their common ownership by Sandras, the companies share
a common website. Id. at 5.
Since deciding Lyes en banc, the Eleventh Circuit has decided few other cases that

undertake the four-factor analysis in appreciable detail, and the parties instead rely on a
series of fact-specific orders by the district courts. Therefore, the undersigned will address
the Lyes factors as articulated.
First, the Court considers the interrelation of Defendants’ operation. Weighing in
favor of interrelation are the facts that the stores utilize the same employment practices and

share a common website and branding. See, e.g., E.E.O.C. v. Dolphin Cruise Line, Inc.,
945 F. Supp. 1550, 1553-54 (S.D. Fla. 1996) (finding that companies using each other’s
logos/letterheads was one factor favoring interrelation). Weighing against interrelation,
however, is the fact that the stores do not share inventory, employees, customers, bank
accounts, or financial obligations. (Docs. 7-1, 23-1). Plaintiff cites Teague v. Beauty &

More, Inc. to suggest that a finding of interrelation is appropriate here. 2019 WL 361151
(M.D. Ala. January 10, 2019), adopted by Teague v. Beauty & More, Inc., 2019 WL 361289
(M.D. Ala. January 29, 2019) (Watkins, J.). Teague, however, is distinguishable. In that
case, several stores, located in nearby geographic proximity, shared contractors, payrolls,
accounting companies, and employees. See also Thornton v. Mercantile Stores Co., Inc.,
13 F. Supp. 2d 1282, 1291 (M.D. Ala. 1998) (relied upon by Teague and undertaking a
detailed factual analysis to find interrelation when a parent and a subsidiary extensively

shared resources and duties such as risk management, payroll, insurance services, and
employees). Although the Sanico branches do share some operational aspects, the degree
of interrelation falls far short of that found in Teague and Thornton, and accordingly, the
first factor of the Lyes test weighs against a finding of an integrated enterprise. See also
Anderson v. Surgery Ctr. of Cullman, Inc., 2017 WL 6596611 at *4 (N.D. Ala. 2017)

(“There is no evidence in the record of any of the seven indicia of interrelatedness:
combined (1) accounting records; (2) bank accounts; (3) lines of credit; (4) payroll
preparation; (5) switchboards; (6) telephone numbers; and (7) offices.”)
Second, the Court considers centralized control of labor relations. Some courts
accord this factor greater weight than others. Thornton at 1291 (“The second factor –

whether there is centralized control of labor relations – is usually accorded greater weight
than others.”). As to this factor, Teague is similar, but not dispositive. Here, evidence
demonstrates that, although Sanico’s personnel decisions are normally made at the local
level by its branch managers, decisions are ultimately subject to the control of owner John
Sandras. (Doc. 23-1) at 3-4. This is partially akin to the scenario in Teague, where the

shareholders frequently visited branches of the company and controlled the hiring of store
managers, leading that court to find that labor relations were subject to centralized control.
Teague at *2.
However, the Teague rationale is less straightforward than meets the eye. In Cruz-
Lovo v. Ryder Sys., Inc., the Southern District of Florida found that the labor relations prong
weighed in favor of the defendant when there was no evidence of any centralized control

of labor relations. 298 F. Supp. 2d 1248, 1254 (S.D. Fla. 2003). That court also noted: “‘To
satisfy the control prong, a parent must control the day-to-day employment decisions of
the subsidiary.’” Id. (citing Frank v. U.S. West, Inc., 3 F.3d 1357, 1363 (10th Cir. 1993)).
Likewise, in analyzing labor relations, the Anderson Court noted: “‘The control required
to meet the test of centralized control of labor relations is not potential control, but rather

actual and active control of day-to-day labor practices.’” Anderson, 2017 WL 6596611 at
*5 (N.D. Ala. 2017) (citing Fike v. Gold Kist, Inc., 514 F. Supp. 722, 727 (N.D. Ala. 1981)).
These facts fall somewhere between the extremes of Teague and Cruz-
Lovo/Anderson. Sandras appears to exercise less control than that of the Teague
shareholders, but his control is also not entirely nonexistent as contemplated in Cruz-Lovo.

Both Cruz-Lovo and Anderson, however, make clear that centralized control of labor is
more than a pro forma requirement; instead, the employer must demonstrate some exercise
of actual control. Because the bulk of Sanico’s personnel decisions are made locally, but
are subject to a minimal degree of ultimate oversight by Sandras, the undersigned finds
that the second factor – centralized control of labor relations – does not clearly break for

or against a finding of an integrated enterprise.
Third, the Court considers common management. “This factor looks to whether the
various entities share common officers and common directors. However, ‘[w]hat is more
important is whether any common officers translates into common management of the day-
to-day activities of each entity.’” Anderson, at *4 (N.D. Ala. 2017) (internal citations
omitted).
Previous courts have also been willing to find common management when senior

officials in one company hold senior management positions within the other. See, e.g.,
Thornton v. Mercantile Stores Co., Inc., 13 F. Supp. 2d 1282, 1294 (N.D. Ala. 1998). In
contrast, separate boards of directors and officers with little or no overlap will counsel
against finding common management. Fike v. Gold Kist, Inc., 514 F. Supp. 722, 727 (N.D.
Ala. 1981). See also Frank v. U.S. West, Inc., 3 F.3d 1357, 1364 (10th Cir. 1993)

(“Defendant and Northwestern Bell have no common officers and have only one common
manager, an officer of Defendant who manages the marketing operations for all three
subsidiaries. . . . One common manager is insufficient to establish a disputed material fact
under this prong of the integrated enterprise test.”).
Here, common management is minimal. Unrebutted evidence by Sandras indicates

that branch managers control the day-to-day activities of the branches. As Sandras attested,
he has authority over each branch manager, but he does not oversee daily operations,
compensation matters, or routine hiring/firing decisions. (Doc. 23-1). Instead, those
decisions are made by branch managers who operate independently of each other. Thus,
the undersigned finds that this factor weighs against a finding of an integrated enterprise.

Finally, the Court considers common ownership or financial control. This factor is
much easier to analyze: Sandras admits to being a common owner of all three Sanico
branches, and therefore, this factor weighs in favor of finding an integrated enterprise.
(Doc. 7-1).
In the aggregate, the Lyes factor analysis counsels against finding an integrated
enterprise for purposes of aggregation under Title VII. The first factor, interrelatedness of
operations, breaks in Sanico’s favor. The second factor, centrality of labor relations, which

could be weighed more heavily than the others, does not weigh in either side’s favor. The
third factor, common management, also breaks in Sancio’s favor. The fourth and final
factor, common ownership, is the only one of the four to break in Plaintiff’s favor.
Accordingly, the Court concludes that Sanico does not qualify as an integrated
enterprise, and therefore, aggregating them for purposes of qualifying as an “employer”

under Title VII is inappropriate. Because of this, Plaintiff’s Title VII claims necessarily
fail.
III. CONCLUSION
For the foregoing reasons, it is
ORDERED that Defendants’ Response to Plaintiff’s Supplemental Memorandum

of Law on the Court’s Jurisdiction to Hear Plaintiff’s Title VII Claims (Doc. 23), which
the Court construes as a Renewed Motion for Partial Summary Judgement, is GRANTED.
Plaintiff’s claims arising under Title VII of the Civil Rights Act are dismissed with
prejudice.
Done this 4th day of November, 2019.

/s/ Stephen M. Doyle
UNITED STATES MAGISTRATE JUDGE

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9986924. Public record. Not legal advice.