One more on this before I turn to something else.
I wrote extensively, last year, on the objections that the IBM parties (IBM USA and IBM Japan) made in the case. It is basically a “kitchen sink” or “scattershot” set of objections. Most of them go to easily understood yes-or-no questions:
1. Are enough facts, taken as true, included in the complaint to make out a cause of action?
2. Was the service good?
3. Is the forum convenient?
4. Is there “plausibility”, this new Iqbal standard from 2009?
I feel that the U.S. District Judge already indicated which of these held weight. Particularly, it was #1—the judge wanted more pleading on the facts behind the discrimination complaint; and, also, a tightening of the jurisdiction argument: why New York has it over IBM Japan.
What IBM USA is doing now is to introduce parts of their general 12(b)(6) objection that you would think the judge has already indicated don’t have much merit (because they would have been part of the pre-motion conference discussion). Just as they delayed the EEOC in late 2008, all of 2009, and most of 2010, they want to make 2012 a year like last year, where the calendar fills up with a bunch of preliminary hearings and conferences.
So one red herring that was introduced last week was to pick at the “single employer doctrine”, which is part of the analysis you use to determine whether a foreign affiliate of an American corporation is “controlled” by that the corporation. In short, that they are a common employer, regardless of being separate corporate entities.
The four elements of the rule are these:
(A) the interrelation of operations;
(B) the common management;
(C) the centralized control of labor relations; and
(D) the common ownership or financial control,
per the U.S. Code on the Cornell LII site.
All four of these elements need not be present in order for there to be a single employer. Circuit courts have generally focused on “c”, centralized control of labor relations, because the single employer doctrine comes out of American labor law. It originated with the National Labor Relations Board, in fact.
IBM USA relies heavily on Cook v. Arrowsmith Shelbourne, and particularly this dicta:
The National Labor Relations Board originally developed this test as a means for ascertaining whether two entities constituted a single employer in the context of labor disputes, and that test was subsequently approved by the Supreme Court in Radio & Television Broadcast Technicians Local Union 1264 v. Broadcast Service of Mobile, Inc., 380 U.S. 255, 85 S.Ct. 876, 13 L.Ed.2d 789 (1965) (per curiam). However, “[c]ourts applying this four-part standard in Title VII and related cases have focused on the second factor: centralized control of labor relations.” Trevino v. Celanese Corp., 701 F.2d 397, 404 (5th Cir.1983). The Fifth Circuit has held that “this criterion has been further refined to the point that the critical question to be answered then is: What entity made the final decisions regarding employment matters related to the person claiming discrimination?” Id. (citations and internal quotations omitted); see also Frank v. U.S. West, Inc., 3 1241*1241 F.3d 1357, 1362 (10th Cir.1993) (whether parent controls labor relations is an important factor in the four-part integrated test); Frishberg v. Esprit de Corps, 778 F.Supp. 793, 800 (S.D.N.Y.1991) (single employer doctrine “focuses on the degree of control by the parent or related company over the direct employing company”), aff’d without opinion, 969 F.2d 1042 (2d Cir.1992).
They confuse the analysis in Cook with the strategy that many permanent residents use when they suffer discrimination while assigned abroad: try to tie the discriminatory decision back to the home office. (I believe this was the strategy Torrico used in Torrico v. IBM, with IBM arguing that since Torrico was not an American, the anti-discrimination law shouldn’t apply. “Heads we win, tails, uh, we win tails, too.”)
So on a few occasions, I’ve seen this dicta repeated word-for-word:
What entity made the final decisions regarding employment matters related to the person claiming discrimination?
The EEOC rejected this sort of analysis back when they had the administrative charge. Because what IBM is saying (which they didn’t say in Torrico), was that unless an employment decision was made in the United States, Title VII doesn’t apply to Americans working for them overseas.
What that does is rewrite the single employer doctrine. The way they put it, the “centralized control of labor relations” can ONLY mean “what entity made the final decisions” AND it is a “must” as part of any single employer doctrine analysis.
However, in the context of Americans working abroad for large multinationals, it’s highly unlikely that the home office is going to be involved in the employment decisions of its worldwide subsidiaries beyond the fact that the managements of those companies are bound by global corporate policies. So IBM basically wants a rewrite of the single employer doctrine.
Having read Cook quite a bit in the past three years, though, I can’t help but wonder why IBM chooses to ignore the dicta that came right after what I quoted above:
Therefore, as the Sixth Circuit has held, the four-factor test may be satisfied “by a showing that there is an amount of participation [that] is sufficient and necessary to the total employment process, even absent total control or ultimate authority over hiring decisions.” Armbruster, 711 F.2d at 1338 (citation and internal quotations omitted).
The Cook court digressed and talked about other cases in other Circuits, but it wrapped up with a Sixth Circuit quote that shows that all four of the elements to single employer come into the analysis, and that there is no requirement for “total control” or “ultimate authority over hiring decisions.”
So, in fact, IBM is inviting the court to retread old ground. This was all done in 2009. IBM’s reading of the single employer rule would basically gut the statute. A California company that didn’t want to hire minorities could set up in Tijuana, Mexico, and totally avoid Title VII. Or a Buffalo, New York company could shift its operations to Canada. As long as the hiring and firing decisions weren’t made in the United States, those companies are home free from any Title VII liability, according to IBM. Nevermind that Congress specifically put the extraterritorial application of Title VII back in the law in 1991.
[Update 1/22/12: Is this all, really, just a question for the jury? Arbaugh v. Y & H Holdings, a 2006 Supreme Court case, says “yes”. And it’s very likely why the District Court judge did not bring up the point in the July 2011 premotion conference.]