# Opposition Brief — Hayden v. La-Z-Boy Chair Co.

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386002_1193%3A2

## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1994
- **Citation:** 511 U.S. 1004

## Text

Supreme Court, U.S,
'
PELE}

i?

No. 93-1256

In The

Supreme Court of the United States
October Term, 1993

a +

J. WILLIAM HAYDEN,
Petitioner,

LA-Z-BOY CHAIR CO.,
Respondent.

— +

On Petition For A Writ Of Certiorari
To The United States Court Of Appeals
For The Seventh Circuit

—— *

RESPONDENT'S BRIEF IN OPPOSITION

— ¢

LarrRY J. SAYLOR

(Counsel of Record)

Rocgue E. Lirrorp

RICHARD J. SERYAK

MILLer, CANFIELD, PADDOocK
AND STONE

150 W. Jefferson, Suite 2500

Detroit, Michigan 48226

(313) 963-6420

Attorneys for Respondent

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964
OR CALL COLLECT (402) 342-2831

QUESTION PRESENTED

Did the Court of Appeals correctly hold that petitioner,
who was the sole stockholder and full-time employee of
his own corporation, which in turn was an independent
contractor to respondent La-Z-Boy Chair Company, was
not covered by the Age Discrimination in Employment
Act, 29 U.S.C. § 621 et seq. (“ADEA”)?

TABLE OF

QUESTION PRESENTED
TABLE OF AUTHORITIES
OPINIONS BELOW
STATUTE...
STATEMENT OF THE CASI
A. Facts.
B. Proceedings Below

ARGUMENT .

CONCLUSION

CONTENTS

TABLE OF AUTHORITIES
Page(s)

C ASI

Amarnare v. Merrill Lynch, Pierce Fenner & Smith,
AT 611 I Supp 344 (S.D.NLY. 1984) 10

Beverly v. Douglas, 591 F. Supp. 1321 (S.D.N_Y
1984) 12

Carney v. Dexter Shoe Co., 701 F. Supp. 1093 (D.N.]
19RR) K

Dake v. Mutual of Omaha Ins. Co., 600 I Supp. 63
(N.D. Ohio 1984) os

Doe v. St. Joseph's Hospital of Fort Wayne, 788 F.2d
411 (7th Cir. 1986) 5, 10

E.E.O.C. v. Zippo Manufacturing Co., 713 F.2d 32
(3rd Cir. 1983) 7, I)

Eyerman v. Mary Kay Cosmetics, 967 F.2d 213 (6th

Cir. 1992) 2
Fountain v. Metcalf, Zimak ( P.A., 925 F.2d 1398
(llth Cir. 1991) 8 1)

Frishberg v. Esprit De Corp., 778 F. Supp. 793
(S.D.N.Y. 1991), aff'd mem., 969 F.2d 1942 (2d
Cir. 1992) g 11

Garrett v. Phillips Mills, Inc., 721 F.2d 979 (4th Cir
1983)

Gomez v. Alexian Brothers Hospital of San Jose, 698
F.2d 1019 (9th Cir. 1983) 9, 10

Hickey v. Arkla Industries, Inc., 699 F.2d 748 (5th
Cir. 1983) — Be: ee

TABLE OF AUTHORITIES — Continued
Paye(s)

Hickey v. Arkla Industries, Inc., 688 F.2d 1009 (5th
Cir. 1982), vacated, 699 F.2d 748 (5th Cir. 1983) fa

Hishon v. King & Spaulding, 467 U.S. 69 (1984) 10)

Levine v. Fairleigh Dickinson University, 646 F.2d
825 (3d Cir. 1981) 7

Mitchell v. Frank R. Howard Memorial Hospital, 853

F.2d 762 (9th Cir. 1988), cert. denied, 489 U.S

1O13 (1989)... . 6, 9, 10, 12
Mitchell v. Tenney, 650 F. Supp. 703 (N.D. IIL. 1986) 12

Ovcestman v. National Farmers Union Insurance Co.,
958 F.2d 303 (10th Cir. 1992). a

Pardazi v. Cullman Medical Center, 838 F.2d 1155
(lith Cir. 1988)..... LEN RA re 10

Sibley Memorial Hospital v. Wilson, 488 F.2d 1338

ee Cr Sh 6s sees ba ewds Penn Sas 5, 10
Wheeler v. Main Hurdman, 825 F.2d 257 (10th Cir.),

cert. denied, 484 U.S. 986 (1987) . 10, 11
STATUTES
29 U.S.C. § 621 et seq. ..... % - ip er .
Bk eae Sy | a ne ee 5
Ohio Rev. Code § 4112.02..... ca aos an wie eee aa a

SECONDARY SOURCES

ScHLEI & GROSSMAN, EMPLOYMENT DISCRIMINATION
Law 387 & n.52 (2d ed. Supp., ABA Sect. of
SO Ge GS, SU, TO ac ce cvccvctvvsedenensess 10

—— ee

No. 93-1256
*
In The

Supreme Court of the United States

October Term, 1993
.

J). WILLIAM HAYDEN,

Petitioner,

LA-Z-BOY CHAIR CO.,,

Respondent
*
On Petition For A Writ Of Certiorari
To The United States Court Of Appeals
For The Seventh Circuit
w

RESPONDENT'S BRIEF IN OPPOSITION
*

OPINIONS BELOW

[he opinion of the United States Court of Appeals for
the Seventh Circuit (Pet. App. Al-A12Z) is reported at 9
F.3d 617. The opinion of the United States District Court
for the Northern District of Indiana (id. at B1-B11) is

unreported

STATUTE

[The Age Discrimination in Employment Act
(“ADEA”), 29 U.S.C. § 621 et seq., provides

It shall be unlawful for an employer to fail or
refuse to hire or to discharge any individual or
otherwise discriminate against any individual with
respect to his compensation, terms, conditions, or
privileges of employment, because of such individ
ual’s aee

29 ULS.C. & 623(a)(1) (emphasis added.)

STATEMENT OF THE CASE
A. Facts

Although petitioner J. William Hayden (“Hayden”)
asserts that “an artificial label — independent contractor
... has been attached to him,” Petition at 11, the record
shows that he unequivocally conceded his independent
contractor status below. Indeed, for many years, he took
advantage of this status to reduce his tax liability, and
even interposed his own wholly-owned corporation
between himself and respondent La-Z-Boy Chair Com-

pany (“La-Z-Boy”).!

Hayden became a commissioned “independent sales
representative” for La-Z-Boy, a furniture manufacturer, in
1968. Starting in the 1970s, Hayden and La-Z-Boy entered
into a series of written one-year “Independent Sales Rep-
resentative Agreements.” Each Agreement provided that
the representative was “not an employee or agent” of La-

! La-Z-Boy Chair Company is a Michigan corporation with
no parent companies, subsidiaries or affiliates except wholly-
owned subsidiaries.

7-Boy, and that either party could terminate the relation

ship upon 30 days’ notice, with or without cause

La-Z-Boy had no requirement about the form Hay
den’s business as an independent sales representative
should take. In December 1984, Hayden incorporated “J
William Hayden, Inc.”, an Indiana corporation in which
he was the sole stockholder, and asked La-Z-Boy to con
tract with that corporation. La-Z-Boy complied, and in
1985 through 1990, the parties executed written Indepen
dent Sales Representative Agreements identifying the

parties as l.a-7-Boy and |. William Hayden, Inc

La-Z-Boy paid Hayden a straight commission, and
from 1985 forward, paid all commissions to J. William
Hayden, Inc. La-Z-Boy did not provide Hayden with ar
office, reismburse him or his corporation for any business
expenses, or provide Hayden with any benefits. La-Z-Boy
did not withhold any taxes or social security payments on
the commission payments it made to Hayden or his cor
poration. Nor did La-Z-Boy tell Hayden when to call on
customers, require him to submit call reports, or other

- - | _
wise manage the day-to-day operation of his business

Hayden testified in deposition that nis purpose for

+

incorporating J. William Hayden, Inc. was to reduce

L.
i

tax liability. After its creation, the corporation received al!

commission payments from La-Z-Bov and paid Hayden

, 4 a - + 1. i .
wages : Hayden Was the yporation s oniyv full-time
5 r
Hayden filed tax returns as a self-employed person from

the time he became a La-Z-Boy representative until the time he
ineorporated. From 1985 through 1990, he filed both a corporate
tax return and an individual tax return showing himself to be an

employee, although it occasionally hired a part-time sec-
retary and bookkeeper and in one or two years paid Mrs.
Hayden for unspecified services. J. William Hayden, Inc.
funded Hayden’s retirement plan, paid for his insurance,
retained and paid accountants and attorneys, and paid all
of Hayden’s telephone, travel, and entertainment

expenses.

La-Z-Boy placed Hayden on six-month periods of
probation in 1980, 1986, and 1990. In December 1990, it
decided not to renew the Independent Sales Representa-
tive Agreement because of long-term concerns over Hay-
den’s slow sales growth, poor dealer relations, poor
results in sleeper, sofa and recliner sofa sales, and missed
opportunities for developing additional business with his
accounts. See Pet. App. at A3 n.1. ‘

Hayden then applied for unemployment compensa-
tion benefits from the State of Indiana, certifying that he
was an employee of J. William Hayden, Inc. He received
the requested benefits for twenty-six weeks. Hayden
never made any unemployment compensation claim
asserting that he was an employee of La-Z-Boy Chair
Company.

B. Proceedings Below

In his complaint, petitioner, an individual, alleged
that La-Z-Boy violated ADEA when it decided not to

officer and employee of J. William Hayden,Inc. Hayden's per-
sonal tax returns reflect that his “wages” were paid by his
corporation. Hayden has never filed a tax return showing him-
self to be an employee of La-Z-Boy Chair Company.

renew the Independent Sales Representative Agreement

between La-Z-Boy and J. William Hayden, Inc.

Following the completion of discovery, the district
court granted summary judgment dismissing Hayden's
ADEA claim on two grounds. First, the district court
concluded that Hayden, who conceded that he was not an
“employee” of La-Z-Boy, was not covered by ADEA. Pet.
App. at B7. Second, the district court held that “Hayden’s
proffered evidence of age discrimination fails to create a

genuine issue of material fact.” Pet. App. at B7-Bs.*

The Court of Appeals affirmed. Hayden acknowl-
edged, and the Court of Appeals noted, the line of cases
holding that ADEA applies only to employees and appli-
cants for employment, and does not apply to independent
contractors. See Pet. App. at A4-A6. Hayden sought to
distinguish these cases, relying on cases applying ‘Title
VII of the Civil Rights Act of 1964, 42 U.S.C.
§ 2000e-2(a)(1), “where an employer ‘discriminatorily
interferes with an individual’s employment opportunities
with another employer.’ ” Pet. App. at A6, quoting Doe v.
St. Joseph's Hospital of Fort Wayne, 765 F.2d 411, 423 (7th
Cir. 1986), and Sibley Memorial Hospital v. Wilson, 488 F.2d
1338, 1341 (D.C. Cir. 1973) (emphasis added). The only

“employment” Hayden identified, however, was with his

3 In addition to the ADEA claim, Hayden also alleged pen-
dent state law claims of tortious interference with business
relations, tortious interference with prospective advantage, and
intentional infliction of mental and emotional suffering. After
dismissing Hayden’s ADEA cfaim, the district court declined to
exercise pendent jurisdiction.

own corporation, of which he was the sole stockholder
and sole full-time employee. See Pet. App. at A4-A6, B7.

The Court of Appeals found it unnecessary to decide
whether ADEA would apply if a defendant “employer”
discriminatorily interfered with a plaintiff's employment
with a third party. Instead, it agreed with the district
court and the Ninth Circuit in Mitchell v. Frank R. Howard
Memorial Hospital, 853 F.2d 762 (9th Cir. 1988), cert. denied,
489 U.S. 1013 (1989), that a defendant's alleged interfer-
ence with plaintiff's “employment” by his own wholly-
owned corporation is not protected by either ADEA or
Title VII. Pet. App. at A5-A9.

Finally, the Court of Appeals held that Hayden had
failed to preserve any argument that he had “indirect
employment” relationships with either La-Z-Boy or the
furniture dealers on whom he called — indeed he “speci-
fically disavowed making any arguments to the district
court on the basis of [any] alleged ‘indirect employment’
relationships,” Pet. App. at A9-A10. The court further
concluded, however, that even if these arguments had
been preserved, they were without merit. Id. at A9-A12.4

¢

ARGUMENT

Petitioner asks this Court to grant review in order to
hold that ADEA applies whenever a statutory

4 The Court of Appeals did not reach the district court's
alternative holding that Hayden had failed to create a genuine
issue of material fact on the issue of age discrimination. Pet.
App. at A3.

“employer” takes an action which has an impact on the
“compensation” of any “individual,” regardless of
whether that individual has an “employment” relation-
ship with anyone. This argument was not preserved
below. Rather, petitioner argued that he was covered by
ADEA because La-Z-Boy’s nonrenewal of the Indepen-
dent Sales Representative Agreement allegedly interfered
with his “employment” by his own wholly-owned corpo-
ration.

Even if petitioner’s argument had been preserved,
however, it could be adopted only by ignoring legislative
history and overruling an unbroken line of decisions.
Directly in point, in E.E.O.C. v. Zippo Manufacturing Co.,
713 F.2d 32 (3rd Cir. 1983), the Third Circuit held that
Zippo’s district sales managers, some of whom were
incorporated and some of whom were not, were indepen-
dent contractors and therefore excluded from the scope of
ADEA. The court reasoned:

[T]he legislative history.of [ADEA], 1967 U.S.
Code Cong. & Ad. News 2214-27, evinces the
clear intent to prohibit “age discrimination by
employers against employees and applicants for
employment.” Levine v. Fairleigh Dickinson Uni-
versity, 646 F.2d 825, 828 (3d Cir. 1981). There-
fore, if appellants were not Zippo employees, ADEA
is not applicable to their cause and their allegation ~-
that Zippo violated ADEA in terminating them
because they reached the age of 65 must be
rejected.

713 F.2d at 35 (emphasis added).

In Garrett v. Phillips Mills, Inc., 721 F.2d 979 (4th Cir.
1983), the Fourth Circuit rejected an ADEA claim asserted

by an independent sales representative because “[a] plain
reading of the ADEA indicates that an ‘individual’ only
has a cause of action under this provision if he is an
‘employee’ at the time of his termination.” 721 F.2d at
980.

In Hickey v. Arkla Industries, Inc., 699 F.2d 748 (5th Cir.
1983), the plaintiff established a corporation, “Perry
Hickey Enterprises” as the vehicle for his sales of Arkla
products.° The Fifth Circuit concluded that he was not
covered by ADEA:

There is no legislative history to support
Hickey’s contention that employee status is not
required for coverage under the ADEA. More-
over, his argument defies a plain reading of the
statute. Whether it would be desirable to
include independent contractors within ADEA
coverage is clearly a matter for Congress, and
emphatically not for the courts, to decide.

699 F.2d at 753 (emphasis added). In accord are Oestman
v. National Farmers Union Insurance Co., 958 F.2d 303 (10th
Cir. 1992) (insurance agent was independent contractor
not covered by ADEA); Frishberg v. Esprit De Corp., 778 F.
Supp. 793 (S.D.N.Y. 1991), aff'd mem., 969 F.2d 1942 (2d
Cir. 1992) (self-incorporated sales representative was an
independent contractor and not an employee protected
under ADEA); Carney v. Dexter Shoe Co., 701 F. Supp. 1093
(D.N.J. 1988) (sales representative); Dake v. Mutual of
Omaha Ins. Co., 600 F. Supp. 63 (N.D. Ohio 1984) (insur-
ance agent). Also see Fountain v. Metcalf, Zimak Co., P.A.,

> See Hickey v. Arkla Industries, Inc., 688 F.2d 1009 (5th Cir.
1982), vacated, 699 F.2d 748 (5th Cir. 1983).

925 F.2d 1398 (11th Cir. 1991) (partner in accounting firm
not covered by ADEA).

Hayden conceded below that an ADEA plaintiff must
have some relevant “employment” relationship, but
relied on Title VII cases holding that an “employer” may
be liable for discriminatorily interfering with the plain-
tiff’s “employment” -with a third party. The Court of
Appeals did not resolve this issue. Assuming without
deciding that an “employer” could be liable under ADEA
for interfering with the plaintiff's employment with a
third party, the Court of Appeals correctly held that the
relationship between an individual and his wholly-
owned corporation is not “employment” protected by
either statute. Pet. App. at A6-A10. Mitchell v. Frank R
Howard Memorial Hospital, 853 F.2d 762 (9th Cir. 1988),
cert. denied, 489 U.S. 1013 (1989), is squarely on point. In
Mitchell, a radiologist asserted a Title VII claim against a
hospital which terminated an exclusive contract with his
professional corporation. The Ninth Circuit held:

Dr. Mitchell argues that the Hospital interfered
with his employment relationship with the pro-
fessional corporation of which he is the sole
shareholder. We reject this argument because we
believe that the relationship between an individ-
ual and his wholly owned professional corpora-
tion is not an employment relationship that
Congress intended to protect under Title VII.

853 F.2d at 762, quoted in Pet. App. at A8-A9.

The Ninth Circuit in Mitchell distinguished one of its
own earlier decisions, Gomez v. Alexian Brothers Hospital of

——S—eeeaaa 2... ee

10

San Jose, 698 F.2d 1019 (9th Cir. 1983), upon which Hay-
den strongly relies. The distinction is directly relevant to
this case:

Gomez . .. , upon which Dr. Mitchell relies, is
clearly distinguishable. Gomez involved a corpo-
ration that employed a number of doctors who
rendered medical services as part of the corpo-
ration’s group medical practice. Id. at 1020. In
contrast, Dr. Mitchell is both the sole share-
holder and the sole employee of his professional
corporation.

Mitchell, 853 F.2d at 762.

~ As the Court of Appeals concluded, the other Title
VII cases on which Hayden relies are distinguishable on
the same basis. See, e.g., Pardazi v. Cullman Medical Center,
838 F.2d 1155 (11th Cir. 1988) (interference with plaintiff's
prospective employment by a professional corporation in
which another physician was the principal); Amarnare v.
Merrill Lynch, Pierce Fenner & Smith, Inc., 611 F. Supp. 344
(S.D.N.Y. 1984) (interference with plaintiff's employment
with a third party). The patients by which the plaintiff
private-duty nurse in Sibley and physician in Doe were

© The majority of the courts that have considered the issue,
unlike Gomez, hold that Title VII has no application to individ-
uals who are not employees of the “employer.” Cases are col-
lected in Scuer & GrossMAN, EMpLOYMENT DiscRIMINATION Law 387
& n.52 (2d ed. Supp., ABA Sect. of Labor & Empl. Law, 1989).
Also see Hishon v. King & Spaulding, 467 U.S. 69 (1984) (Powell,
J., concurring) (relationship between law partners not an
employment relationship within meaning of Title VII); Wheeler
v. Main Hurdman, 825 F.2d 257 (10th Cir.), cert. denied, 484 U.S.
986 (1987) (partner in accounting firm not an employee and not
covered by Title VII, the Equal Pay Act, or ADEA).

11

allegedly employed were likewise third parties, not cor-
porations owned by the plaintiffs.

As the Court of Appeals correctly held:

We agree with the Ninth Circuit that Title
VII does not protect an individual’s “employ-
ment relationship” with his wholly owned cor-
poration. To hold otherwise would mean that an
independent contractor with no relevant
employment relationships with the defendant
(or anyone else) could bring himself within the
protection of the ADEA simply by incorporat-

ing.

Pet. App. at A9. Like Mitchell, the other cases directly on
point, Zippo, Hickey, and Frishberg, hold that a plaintiff
cannot bring himself within ADEA simply by incorporat-
ing. Also see Fountain, 925 F.2d 1398 (partner in account-
ing firm, as part owner, not covered by ADEA); Wheeler v.
Main Hurdman, 825 F.2d 257 (10th Cir.), cert. denied, 484
U.S. 986 (1987) (partner in accounting firm not covered by
ADEA, Title VII, or Equal Pay Act).

Finally, Hayden again attempts to resurrect the argu-
ment that he had an “indirect employment” relationship
with either La-Z-Boy or the furniture dealers on which he
called. Petition at 11. The Court of Appeals correctly held
that Hayden failed to preserve any “indirect employ-
ment” argument, Pet. App. at A9-A10, and that in any
event this argument is without merit. Jd. at A10-A12. For
example, the facts in Zippo bear a striking resemblance to
the facts of this case. 713 F.2d at 35. The Zippo court,
applying the “hybrid ‘right to control /economic realities’

test applied in Title VII cases,” held that the district

12

managers were independent contractors as a matter of
law. 713 F.2d at 37. In accord are Eyerman v. Mary Kay
Cosmetics, 967 F.2d 213, 218 (6th Cir. 1992) (dismissing a
handicap discrimination claim’ because commissioned
national sales director was an independent contractor);
Hickey, 699 F.2d at 748 (self-incorporated sales representa-
tive was independent contractor).®

Nor (even if it had been preserved) would Hayden's
theory that La-Z-Boy interfered with his relationship with
furniture dealers bring him within ADEA. The “interfer-
ence” is simply refusal to allow Hayden to sell La-Z-Boy
products. As the Court of Appeals noted, “Hayden con-
ceded in his deposition that he had no actual or prospec-
tive contractual relationship with these furniture dealers
and that he remains free to sell these same dealers any
(non-La-Z-Boy) furniture or other products.” Pet. App. at
Al2. In Mitchell, the Ninth Circuit rejected a Title VII
plaintiff's virtually identical claim, holding that the “tra-
ditional physician/patient relationship is not one of
employer/employee.” 853 F.2d at 767. In accord is Beverly
v. Douglas, 591 F. Supp. 1321, 1328 (S.D.N.Y. 1984). The

7 Eyerman’s claim was brought under Ohio Rev. Code
§ 4112.02, which contains language similar to Title VII. See 967
F.2d at 217.

8 Mitchell v. Tenney, 650 F. Supp. 703 (N.D. Ill. 1986), cited
by Hayden, is readily distinguishable from the present case
because the defendant, among other things, provided the plain-
tiff with medical insurance and a place of business and closely
regulated his working hours. See Pet. App. at A11-A12.

13

Court of Appeals correctly rejected Hayden’s argument,
and its ruling need not be further reviewed.

*

CONCLUSION

For the foregoing reasons, the Petition for a Writ of
Certiorari should be denied.

Respectfully submitted,

LARRY |. SAYLOR

(Counsel of Record)

Rocgurt E. Lirrorp

RICHARD |. SERYAK

Miter, CANFIELD, PADDOCK
AND STONI

150 W. Jefferson, Suite 2500

Detroit, Michigan 48226

(313) 963-6420

Attorneys for Respondent

Dated: March 1, 1994

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386002_1193%3A2. Public record. Not legal advice.