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NORMAN v. LEVY

July 2, 1991

PATRICIA NORMAN, Plaintiff,
v.
DR. DONALD LEVY, TYRA COSMETICS, INC., and LYNN JAHNCKE, Defendants


James B. Moran, Chief United States District Judge.


The opinion of the court was delivered by: MORAN

JAMES B. MORAN, CHIEF UNITED STATES DISTRICT JUDGE

 Patricia Norman (Norman) filed suit against Dr. Donald Levy, Tyra Cosmetics, Inc., and Lynn Jahncke (collectively, Tyra), claiming, inter alia, that she was the victim of sex discrimination in violation of Title VII, 42 U.S.C. § 2000e, et seq. Tyra moved to dismiss Norman's Title VII claim for lack of subject matter jurisdiction, on the ground that Tyra had never employed fifteen or more employees for twenty or more weeks of the calendar years relevant to Norman's allegations, and that motion has prompted a lengthy personnel audit. Inasmuch as neither side to the dispute had properly framed the relevant issue or presented evidence from which this court could make its own jurisdictional count, we continued Tyra's motion and ordered the parties to submit further evidence in accordance with our memorandum opinion. Norman v. Levy, 756 F. Supp. 1060 (N.D. Ill. 1990). Norman and Tyra have submitted their supplemental briefs and additional evidence. Upon due consideration, and for the reasons set forth herein, this court now dismisses Norman's Title VII and pendent state claims for lack of subject matter jurisdiction. After months of counting, we cannot count to fifteen.

 DISCUSSION

 As the plaintiff in this case, Norman bears the burden of proving that this court has subject matter jurisdiction over her claim. Grafon Corp. v. Hausermann, 602 F.2d 781, 203 U.S.P.Q. (BNA) 166 (7th Cir. 1979). We are not precluded from considering conflicting evidence in making our determination as to whether she has carried that burden:

 
"Because at issue in a factual 12(b)(1) motion is the trial court's jurisdiction -- its very power to hear the case -- there is substantial authority that the trial court is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case. In short, no presumptive truthfulness attaches to plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims."

 Western Transport. Co. v. Couzens Warehouse & Distributors, Inc., 695 F.2d 1033 (7th Cir. 1982) (quoting Mortensen v. First Federal Savings and Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977)); see Rennie v. Garrett, 896 F.2d 1057, 1057-58 (7th Cir. 1990); Grafon, 602 F.2d at 783.

 A. Omitted Employees

 An employer is not subject to Title VII unless it is "a person engaged in an industry affecting commerce who has fifteen or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year . . . ." 42 U.S.C. § 2000e(b). As noted in this court's prior opinion, prerequisite to a counting of employees to determine whether Tyra is a statutory "employer" within the meaning of § 2000e(b) must be a determination that the names of all "employees" have been assembled. Norman, 756 F. Supp. at 1062-63. That issue has arisen once again in this supplemental round of briefing. Tyra moves for reconsideration of this court's earlier ruling that William Soma, Lynn Jahncke, and Michael Hamilton were salaried employees of Tyra during some part of 1988 and/or 1989. Norman seeks to add three more names to Tyra's proposed jurisdictional count.

 1. Proper Standard Under Title VII

 Before we can determine whether the persons alleged by Norman to be employees hold that status in fact, we first must determine which standard to apply to the evidence presented. As other courts have observed, Title VII itself is of little help in this endeavor, defining the term "employee" as one "employed by an employer." 42 U.S.C. § 2000e(f). In our recent opinion in Vakharia v. Swedish Covenant Hospital, 765 F. Supp. 461 (N.D. Ill. 1991), we were concerned with which standard is appropriate for determining a plaintiff's standing to sue under the antidiscrimination provisions of Title VII, which prohibit employers from engaging in unlawful employment practices against "any individual." 42 U.S.C. §§ 2000e-2(a)(1), (a)(2). In Vakharia, we held that, although a Title VII plaintiff alleging interference with employment opportunities need not have been employed by the defendant, he or she must at least have been engaged in an employment relationship with a third party. As we observed, federal courts have articulated three alternative standards for assessing an alleged employment relationship under Title VII: the common law "right to control" test, see Smith v. Dutra Trucking Co., 410 F. Supp. 513, 516 (N.D. Cal. 1976), aff'd, 580 F.2d 1054 (9th Cir. 1978), the hybrid economic realities-common law control test articulated in Spirides v. Reinhardt, 198 App. D.C. 93, 613 F.2d 826 (1979), and the economic realities test set forth in Armbruster v. Quinn, 711 F.2d 1332 (6th Cir. 1983).

 Noting that the Seventh Circuit disfavors the pure common law approach, Vakharia, slip op. at 10, we then discussed the relative merits of the other two standards. The hybrid economic realities-common law control standard requires courts to weigh the "economic realities" of the relationship, with the primary emphasis placed upon the degree of control exercised over the alleged employee. Spirides, 613 F.2d at 831-32. Additional factors to be considered, no one of which is determinative, include:

 
(1) the kind of occupation, with reference to whether the work usually is done under the direction of a supervisor or is done by a specialist without supervision; (2) the skill required in the particular operation; (3) whether the "employer" or the individual in question furnishes the equipment used and the place of work; (4) the length of time during which the individual has worked; (5) the method of payment, whether by time or by the job; (6) the manner in which the work relationship is terminated; i.e., by one or both parties, with or without notice and explanation; (7) whether annual leave is afforded; (8) whether the work is an integral part of the business of the "employer"; (9) whether the worker accumulates retirement benefits; (10) whether the "employer" pays social security taxes; and (11) the intention of the parties.

 Id. at 832. In contrast, the "economic realities" standard articulated in Armbruster is far broader, requiring courts to assess "the economic realities underlying the relationship between the individual and the so-called principal in an effort to determine whether that individual is likely to be susceptible to the discriminatory practices which the act was designed to eliminate." Armbruster, 711 F.2d at 1340.

 As we observed in Vakharia, some confusion has existed as to which approach the Seventh Circuit has adopted. In Unger v. Consolidated Foods Corp., 657 F.2d 909, 915 n. 8 (7th Cir. 1981), vacated on other grounds, 456 U.S. 1002, 73 L. Ed. 2d 1297, 102 S. Ct. 2288 (1982), the Seventh Circuit seemed to adopt the Spirides approach to determine whether a Title VII plaintiff was an employee or an independent contractor. Three years later, however, in E.E.O.C. v. Dowd & Dowd, Ltd., 736 F.2d 1177 (7th Cir. 1984), the Seventh Circuit applied the economic realities approach of Armbruster, stating that a person's status as an employer rather than an employee must be informed by "strong consideration of the economic realities of the employment relationship." Dowd & Dowd, 736 F.2d at 1178. We concluded that Dowd & Dowd required us to apply the economic realities approach because it was the later precedent. Vakharia, slip op. at 12.

 Our decision was equally informed by the rationales underlying the two approaches. We noted that the District of Columbia Circuit had been asked in Spirides to address the employment relationship issue in the context of 1972 amendments to Title VII that had extended the benefits of that statute to "employees or applicants for employment" with the federal government. 42 U.S.C. § 2000e-16(a). Emphasizing Congress' intent to limit the scope of coverage to federal "employees" ...


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