Serving two masters under Title VII

The old saying is that you can't serve two masters. But you can. Under Title VII, you can sue your immediate employer as well as another entity that also controls your employment. They are both on the hook for an unlawful employment practice if the entities are a "single integrated enterprise."

The case is Brown v. Daiken America, decided on June 27. Brown worked for Daiken America, which makes chemical products and is headquartered in Rockland County. Daiken is a wholly-owned subsidiary of Daiken Industries (DIL), a Japanese corporation. Claiming that defendants fired him because he is a white American, plaintiff sues both entities under Title VII. The district court said plaintiff cannot do this because the complaint does not sufficiently allege that the Japanese entity exercised sufficient control over the Rockland County workplace. The Court of Appeals (Carney, Lohier and Lynch) disagrees.

Here's the law on this: "[a] parent and subsidiary cannot be found to represent a single, integrated enterprise in the absence of evidence of (1) interrelation of operations, (2) centralized control of labor relations, (3) common management, and (4) common ownership or financial control. Although no one factor is determinative . . . control of labor relations is the central concern." "The central question is what entity made the final decisions regarding employment matters related to the person claiming discrimination?"

Brown can sue the Japanese entity along with the Rockland County one because the Complaint adequately alleges centralized control over labor relations. The Court reasons:\

Here, Brown alleged that DIL "closely directed the operations of its wholly owned subsidiary, Daikin America" and that DIL’s approval‚ was required as to all significant actions by Daikin America." Compl. ¶ 5. Brown charged that DIL"immuniz[ed]" Japanese rotational employees from discharge by directing Daikin America to discharge only employees who were not Japanese, id. ¶ 39, and by prohibiting Daikin America from reassigning or discharging Japanese rotational employees, id. ¶ 25. Taken together, these allegations sufficiently suggest that DIL exercised centralized control over Daikin America’s decisions about which employees to terminate in the course of the workforce reduction, and that DIL, by protecting Japanese employees from discharge, effectively ensured that employees of other races or national origins, like Brown, would be terminated.

While Brown does not allege that DIL  participated in the decision to hire him or expressly directed that plaintiff be fired, and while he does not allege common management between the two entities, "at this early stage in the litigation, the control that Brown alleged DIL to have exercised over Daikin America's employment actions ... is adequate to sustain the action against DIL."