United States District Court, N.D. Illinois, Eastern Division
August 20, 2005.
JAY E. LABOUVE, Plaintiff,
THE BOEING COMPANY, Defendant.
The opinion of the court was delivered by: MILTON SHADUR, Senior District Judge
MEMORANDUM OPINION AND ORDER
Jay LaBouve ("LaBouve") has sued The Boeing Company ("Boeing"),
charging that Boeing violated the Americans with Disabilities Act
("ADA," 42 U.S.C. §§ 12111-12117)*fn1 and the Rehabilities
Act of 1973 ("Rehabilitation Act," 29 U.S.C. §§ 793, 794(a)) when
it terminated his employment. Boeing has moved for summary
judgment under Fed.R.Civ.P. ("Rule") 56. For the reasons
stated in this memorandum opinion and order, Boeing's motion is
granted and this action is dismissed.
Summary Judgment Standards
Familiar Rule 56 principles impose on movant Boeing the burden
of establishing a lack of a genuine issue of material fact
(Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.C.t
2548, 91 L.Ed.2d 265 (1986)). For that purpose courts consider
the evidentiary record in the light most favorable to nonmovants
and draw all reasonable inferences in their favor (Lesch v.
Crown Cork & Seal Co., 282 F.3d 467, 471 (7th Cir. 2002)). But to
avoid summary judgment a nonmovant "must produce more than a
scintilla of evidence to support his position" that a genuine
issue of material fact exists (Pugh v. City of Attica,
259 F.3d 619, 625 (7th Cir. 2001)) and "must set forth specific facts that
demonstrate a genuine issue of triable fact" (id.). Ultimately
summary judgment is appropriate only if a reasonable jury could
not return a verdict for the nonmovant (Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202
This District Court has implemented Rule 56 through its LR
56.1, which requires both sides to submit factual statements
supported by record evidence. In particular, LR 56.1(b) (3)
requires any nonmovant (such as LaBouve) who seeks to avoid
summary judgment to file "a response to each numbered paragraph
in the moving party's statement, including, in the case of any
disagreement, specific references to the affidavits, parts of the
record, and other supporting materials relied upon." In addition
the nonmovant is required to submit a "statement, consisting of
short numbered paragraphs, of any additional facts [not set forth
in the movant's papers] that require the denial of summary
judgment . . ." (id.).
LaBouve and his counsel have failed to comply with LR 56.1.
They did not file the required response to Boeing's LR 56.1 (a)
(3) statement, nor did they file a statement of additional facts.
Instead they merely provided what was characterized as a "summary
of facts and circumstances," with some attached exhibits in the
memorandum of law opposing Boeing's Rule 56 motion. Most of the
"evidence" included in that memorandum comprises inadmissible
hearsay, unsupported assertions or citations to evidence that is
not properly in the record.
As such, LaBouve's response to Boeing's 56.1(a) statement is
wholly inadequate: It does not comport with the express language
of LR 56.1(b)(3) or with its intended purpose. LR 56.1's
enforcement provision states that "[a]ll material facts set forth
in the statement required of the moving party will be deemed
admitted unless controverted by the statement of the opposing
party." And our Court of Appeals has "consistently held that
failure to respond by the nonmovant as mandated by the local
rules results in an admission" (Smith v. Lamz, 321 F.3d 680,
683 (7th Cir. 2003)).
While this Court would thus be well justified in treating all
facts in Boeing's LR 56.1(a)(3) statement as admitted and in
refusing to consider any of the "facts" submitted by LaBouve in
his memorandum of law (Cichon v. Exelon Generation Co.,
401 F.3d 803, 809-10 (7th Cir. 2005)), such an evidentiary death
sentence is unnecessary. Even when LaBouve's claims are
considered in light of all admissible evidence tendered by LaBouve,*fn2
LaBouve has not submitted facts sufficient to survive Boeing's
In the late 1970s and early 1980s, the Royal Saudi Air Force
("Air Force") sought to purchase F-15 Eagle fighter aircraft and
maintenance services for those aircraft (B. St. ¶¶ 1, 3). Because
the F-15 aircraft are military aircraft and because the Kingdom
of Saudi Arabia ("Kingdom") is a foreign government, United
States law required that the Kingdom negotiate and contract first
with our government. Once there was government approval for the
Kingdom contracts, the United States Department of Defense
("Department") contracted with McDonnell Douglas Corporation
("McDonnell") for the procurement of the fighter aircraft and with McDonnell Douglas Services ("McDonnell Services"), a wholly
owned subsidiary of McDonnell, for aircraft maintenance (id. ¶¶
2, 4). These contracts were called the "Peace Sun Program"
contracts (id. ¶ 5).
As part of its contract to provide aircraft maintenance to the
Kingdom and Air Force, McDonnell Services was required to
subcontract out a significant portion (65%) of the maintenance
work to Alsalam Aircraft Company ("Alsalam") (id. ¶¶ 10-12).
Alsalam is a Saudi Arabian limited liability company established
in 1982 as part of the Economic Offset Program of the Kingdom's
Ministry of Defense and Aviation (id. ¶ 61-62). Specifically,
Alsalam was created to help the Kingdom become self-sufficient in
the aerospace industry (id. ¶ 63). Under the Alsalam-McDonnell
Services subcontract, McDonnell Services was to provide certain
services to Alsalam, including recruiting,
mobilization-demobilization (e.g., clearances, travel, passports,
etc.) and medical care (id. ¶ 14). Alsalam, however, had its
own human resource department and retained complete authority
over all other human resource and personnel matters, including
the hiring and firing of employees (id. ¶¶ 15-17,
88-92).*fn5 Boeing is a corporation organized under the laws of Delaware
(id. ¶ 58). It was never a direct party to the Peace Sun
Program contracts, although on August 1, 1997 Boeing acquired
McDonnell (id. ¶¶ 7, 9). In addition, at the beginning of 2001,
when the events at issue in this case occurred, Boeing, through
its intermediary companies and limited liability partnerships,
owned approximately 25% of the interest in Alsalam (id. ¶ 75).
LaBouve was hired by McDonnell Services in July 1995 as a
Technician Airplane General to provide maintenance service on
F-15 aircraft in the Kingdom (id. ¶¶ 21-22). In 1997, after
being directed by the Kingdom and Air Force to shift more
maintenance work to Alsalam, McDonnell Services told LaBouve and
a number of other McDonnell Services employees that they would be
laid off in January 1998 (id. ¶¶ 25-28). LaBouve and the other
employees who were to be laid off were given the option of
working for Alsalam in essentially the same capacity and on the
same terms as they had been under their McDonnell Services
contracts (id. ¶ 29-30). LaBouve elected to stay in the Kingdom
and work for Alsalam (id. ¶ 31). On January 12, 1998 LaBouve
signed an employment contract with Alsalam (id. ¶ 33; L. Ex.
F). Two and one-half years later, in July 2000, LaBouve sustained a
work-related injury to his neck and back while working in the
engine shop at Alsalam (id. ¶ 34). Initially he was treated in
the Kingdom, but he was dissatisfied with the quality of care
that he was receiving (id. ¶¶ 35, 37). LaBouve therefore
returned to the United States in October 2000 for medical care
and, after receiving additional physical therapy, had surgery on
January 8, 2001 (id. ¶¶ 38-39). Due to his injury LaBouve was
absent from work from October 2000 through January 2001 (id. ¶
Air Force became dissatisfied with LaBouve because of his
absence from work, and in January 2001 it requested that LaBouve
be terminated from his position under the Peace Sun Program
contracts (B. St. ¶ 42; L. Mem. 5-6; L. Ex. II). Air Force sent a
letter to that effect to Department at Warner Robbins Air Force
Base, and Department then forwarded Air Force's letter to
McDonnell Services (B. St. ¶ 43). Upon receipt of the letter
McDonnell Services notified Alsalam of Air Force's request that
LaBouve be terminated (id. ¶ 44). Abdullah Al-Akbary, Alsalam's
Human Resources Supervisor, notified LaBouve that effective March
27, 2001 he was terminated from the Peace Sun Program contracts
and would not return to the Kingdom for further employment with Alsalam.*fn6
On August 8, 2001 LaBouve filled out an intake questionnaire
with the federal Equal Employment Opportunity Commission ("EEOC")
(id. ¶ 55; L. Ex. M). Six months later, on February 20, 2002,
LaBouve filed a formal Charge of Discrimination with EEOC (L. Ex.
M). On September 11, 2002 EEOC issued LaBouve a right-to-sue
LaBouve makes two ADA-based claims. First, he raises a claim
for disparate treatment, asserting that Boeing terminated him
because of his disability. Second, he asserts that Boeing
discriminated against him by failing to make reasonable
accommodation of his disability. Because LaBouve has not
demonstrated a genuine issue of material fact in support of the
proposition that Boeing was LaBouve's employer, Boeing is
entitled to summary judgment on those ADA claims.
As a threshold matter, the ADA applies only to "covered
entities." Under Section 12111 a "covered entity" includes "an employer, employment agency, labor organization or joint labor
management committee." Additionally the ADA applies to employment
actions taken outside of the United States by foreign
corporations only when the foreign employer is "controlled" by an
American employer (Section 12112(c) (2)).
Because both the earlier and later discussion show that the
decisionmaking authority was unquestionably lodged in and
exercised by Alsalam, LaBouve's notion of Boeing's direct
liability is demonstrably empty. Hence this opinion will focus
primarily on the concept of vicarious responsibility whether
Alsalam's actions can be placed on Boeing's corporate doorstep.
In that respect some confusion is reflected by the parties'
submissions as to the appropriate test for determining whether
Boeing can thus be held liable for the allegedly discriminatory
acts of Alsalam. Section 12112(c) (2) (C) prescribes a
four-factor test for determining when a domestic parent
corporation "controls" a foreign affiliate: (1) the interrelation
of operations, (2) the common management, (3) the centralized
control of labor relations and (4) the common ownership or
financial control. By contrast, Papa v. Katy Indus., Inc.,
166 F.3d 937 (7th Cir. 1999) set out a separate test to use when
evaluating whether a domestic corporation should be held liable
for discriminatory acts of its domestic affiliate.
Before Papa courts applied a four-factor test identical to that in Section 12112(c) (2) (C) in employment discrimination
cases to determine whether two domestic corporations could be
considered to be a "single employer" or "integrated enterprise,"
such that liability could be imposed even where one corporation
did not directly employ the complaining party. Papa abrogated
the "single employer" test, finding it to be too "vague" to be
applied consistently (166 F.3d at 942). Instead Papa offered
three situations in which a parent could be held liable for the
acts of its affiliates: (1) where the circumstances were present
for piercing the corporate veil, (2) where the corporation was
splintered into affiliates in an effort to avoid liability under
the anti-discrimination laws or (3) where the parent directed the
discriminatory act or policy at issue (id. at 941). While
Papa specifically addressed the application of the "tiny"
employer exception for employer liability under Title VII (id.
at 940), it stated that its principles of affiliate liability
would apply broadly unless, as is true under Section 12112(c) (2)
(C), a "statute, or the particular policy that animates that
statute, ordains a particular test" (id. at 941). Since Papa
it has been unclear what precedential value the "single employer"
line of cases may have for cases that fall outside of Papa's
LaBouve seeks to hold Boeing liable under two theories. First,
he urges that Boeing is vicariously directly liable on a direct-line basis for the assertedly discriminatory acts of
Alsalam. Second, LaBouve advances a two-step approach, arguing
that McDonnell Services is responsible for Alsalam's actions and
Boeing is responsible for McDonnell Services's actions.
As to LaBouve's first theory, because Alsalam is a foreign
corporation and because its actions took place in the Kingdom,
Section 12112(c) (2) (C) and its attendant four-factor analysis
applies. Section 12112(c) (2) (C) provides no guidance on the
comparative weight of the four factors, and there is no published
caselaw on Section 12112(c) (2) (C) offering such instruction.
Notably, however, both Papa and the "single employer" line of
cases focus on the labor relations between the two corporate
entities and, in particular, on which entity caused the
discriminatory act in question.*fn7 Because Papa, the
"single employer" cases and Section 12112(c) (2) (C) all address
the liability of a parent or affiliate for acts of its subsidiary
or other affiliate, it seems equally appropriate to look at labor
relations in an analysis under Section 12112(c) (2) (C).
As for control over labor relations generally, there is no
evidence to suggest that Boeing has a direct role in the labor relations and operations of Alsalam. Instead it is undisputed
that Alsalam has its own human resources department and that
Alsalam creates its own personnel policies and practices, many of
which address the labor requirements of the Kingdom (B. St. ¶¶
Additionally, there is no evidence to suggest that Boeing
directed Alsalam to fire LaBouve. It is uncontroverted that the
initial decision to terminate LaBouve from the Peace Sun Program
contracts originated with Air Force, the client (B. St. ¶ 42; L.
Mem. 5-6; L. Ex. H). Air Force was dissatisfied with LaBouve
because of his absence from work from October 2000 to January
2001 (id.). Although McDonnell Services helped communicate Air
Force's request to Alsalam, there is no evidence that Boeing (or
McDonnell Services) employees were involved in the decision to
Brief examination of the other three factors interrelation of
operations, common management and common ownership/financial
control further reveals that Boeing cannot be considered
LaBouve's employer. Indeed, the last of those factors is alone
fatal to LaBouve's claim. Through its partial ownership of Boeing
Industrial Technology Group ("Boeing Technology") at the
beginning of 2001 (when the events in dispute occurred), Boeing
had a 25% equity interest in Alsalam (id. ¶ 75). Nothing in the
record supports the notion that its minority ownership calls for attribution of the acts of such an affiliated
(not a subsidiary) corporation to Boeing. Any such approach would
do violence to basic principles of corporate integrity absent,
of course, any showing of alter ego or piercing the corporate
veil, of which (as discussed later) the record contains not a
And that conclusion is further buttressed by a look at the two
remaining factors. As for interrelation of operations, Boeing
offered uncontroverted evidence that no Being employees are
involved in the day-to-day operations of Alsalam (B. St. ¶ 86).
Alsalam is a separate and distinct legal entity from Boeing,
observing all of the requirements of a Kingdom limited liability
company (id. ¶ 66). In addition, Boeing provided undisputed
evidence that Alsalam is managed separately from Boeing. Neither
Alsalam's President/CEO nor its Chairman, both Saudi Arabian
citizens, is a Boeing employee (id. ¶ 85). Alsalam's General
Manager, elected by Alsalam's Board, is also a Saudi citizen and
not a Boeing employee (id. ¶ 96). Lastly as to common
management, Boeing Technology partly owned by Boeing is a 50%
equity owner of Alsalam that has the power to appoint four of the
twelve directors of Alsalam's Board (id. ¶ 97). Again that
points well away from, rather than toward, control by Boeing
In sum, to hold Boeing liable as LaBouve's employer based on those factors, attenuated as they are here, would essentially
require companies to erect an impenetrable barricade between
affiliates to assure limited liability (see, e.g., Papa,
166 F.3d at 943). Section 12112 does not require as much.
Finally, LaBouve's two-step approach contends that Boeing
should be liable for Alsalam's conduct because Boeing is liable
for McDonnell Services' actions and McDonnell Services is liable
for Alsalam's actions. Under that theory LaBouve must first show
that McDonnell Services "controlled" Alsalam pursuant to Section
12112(c)(2)(C) and must then demonstrate that Boeing should be
held liable for the acts of McDonnell Services under Papa. But
LaBouve does not present enough to demonstrate a genuine issue of
material fact as to either of those steps.
As already said, Alsalam has its own human resource department
and creates its own personnel policies separate from McDonnell
Services. In addition, while it is uncontroverted that under the
subcontract with Alsalam it was McDonnell Services that provided
recruiting, mobilization-demobilization and medical care for
Alsalam, those things are separate from what is at issue here
Alsalam's making of its own decisions as to the discipline and
discharge of its employees (B. St. ¶¶ 13-14, 90, 92).
As to the entity responsible for LaBouve's termination, LaBouve
argues that McDonnell Services directed Alsalam to fire him
because of his disability. True enough, McDonnell Services was involved in relaying Air Force's decision to Alsalam -- but
that communication was only "ministerial" (B.R. Mem. 10), simply
relaying the result of the independant decisionmaker's election.
Moreover, B. Mem. 9-10 highlights that McDonnell Services was
involved only in communicating to Alsalam Air Force's request
that LaBouve be removed from the Peace Sun Programs. No record
evidence even suggests that McDonnell Services was involved in the
decision to terminate LaBouve as an Alsalam employee.
LaBouve seeks to contradict Boeing's position by introducing
a number of email exchanges both in the body of his memorandum
and as exhibits that LaBouve argues show McDonnell Services's
participation in the decision to terminate his employment. Much
of that evidence does not warrant consideration under LR 56.1 *fn8
And, quite apart from that problem, those e-mails speak only to
McDonnell Service's role as an administrative pass-through. That
McDonnell Services played such a role is unsurprising. Because of the
nature of the contracts, Alsalam did not have a direct relationship with
either Air Force or Department. Air Force contracted directly only with
Department, which in turn then subcontracted the maintenance work to McDonnell Services,
which later subcontracted that work to Alsalam.
Evaluating the other three factors also confirms that McDonnell
Services did not "control" Alsalam. Apart from the purely
administrative services provided under the subcontract, no
evidence suggests that McDonnell Services's and Alsalam's
operations were entwined. And once again the only suggestion that
Alsalam and McDonnell Services had common management comes from
LaBouve's unsupported assertions that both are run by Boeing.
So LaBouve has failed at the first step of showing a material
factual issue as to McDonnell Services "controlling" Alsalam
under the Section 12112(c)(2)(C) test. But even were that not the
case, no record evidence calls for a second-step finding that it
would be appropriate to hold Boeing liable for McDonnell
Services' actions. Under Papa, 166 F.3d at 940) Boeing can be
liable where the circumstances call for piercing the corporate
veil, as where the affiliate was created solely to avoid
anti-discrimination liability or where the parent corporation
directed the discriminatory act. No such circumstances are
present in this case.
To pierce the corporate veil LaBouve must show (1) a unity of
interest and ownership between Boeing and McDonnell Services such
that the two entities no longer have separate corporate personalities and (2) "circumstances . . . such that adherence to
the fiction of separate corporate existence would sanction a
fraud or promote injustice" (Worth v. Tyer, 276 F.3d 249, 260
(7th Cir. 2001)). There is no hint that McDonnell Services
ignored corporate formalities or that adhering to the
separateness of Boeing and McDonnell Services would work an
injustice on LaBouve. Rather Boeing presented uncontroverted
evidence that McDonnell Services remained a separate and distinct
legal entity after Boeing's acquisition of McDonnell Services (B.
St. ¶ 6).
Nor does any evidence support the notion that McDonnell
Services was created to avoid the anti-discrimination laws.
Indeed, McDonnell Services' corporate existence began before
Boeing's acquisition of McDonnell Services and continued
thereafter. Finally, this opinion has already considered and
dismissed the possibility, given the facts presented, that either
Boeing or McDonnell Services directed Alsalam to terminate
In short, LaBouve has failed in every respect to demonstrate a
genuine issue of material fact as to whether Boeing should be
considered his employer for purposes of the ADA. Hence LaBouve's
ADA claims fail.
As stated at the outset of this opinion, LaBouve also raises two claims under the Rehabilitation Act. In that regard he
charges that Boeing has violated Rehabilitation Act § 793 by
failing to apply affirmative action policies to LaBouve. In
addition LaBouve claims that Boeing violated Rehabilitation Act §
794 when it refused to accommodate his disability. Boeing seeks
summary judgment on both claims.
As to the first of those contentions, Boeing correctly responds
that there is no private right of action under § 793 (D'Amato v.
Wis. Gas Co., 760 F.2d 1474, 1478 (7th Cir. 1985)). LaBouve
attempts an end run around that "well-settled rule" (id.) by
arguing that LaBouve is a third party beneficiary to the contract
between Boeing/McDonnell Services*fn9 and the United States
government pursuant to that contract's § 52-222-36 (L. Ex. H). As
dubious as that assertion may be, D'Amato, (id. at 1484)
teaches that "Congress intended that the administrative scheme be
the sole avenue of redress for the handicapped" under
Rehabilitation Act § 793. LaBouve's § 793 claim fails on that
To prevail on his claim under Rehabilitation Act § 794 (a),
LaBouve must set out four elements: "(1) that [he] is a
`handicapped individual' under the Act, (2) that [he] is `otherwise qualified' for the [benefit] sought, (3) that [he] was
[discriminated against] solely by reason of [his] handicap, and
(4) that the program or activity in question receives federal
financial assistance" (Grzan v. Charter Hosp. of N.W. Ind.,
104 F.3d 116, 119 (7th Cir. 1997)). Boeing is entitled to summary
judgment on that claim because LaBouve has failed to offer any
evidence that LaBouve was working on a program "receiv[ing]
federal financial assistance."
"Federal financial assistance" is not defined in the
Rehabilitation Act itself. Federal regulations issued by the
Department of Health, Education and Welfare ("HEW"), the agency
charged with establishing regulations to implement that statute
define "Federal financial assistance" as (45 C.F.R. § 84.3(h)
any grant, loan, contract (other than a procurement
contract or a contract of insurance or guaranty), or
any other arrangement by which the Department
provides or otherwise makes available assistance in
the form of:
(2) Services of Federal personnel; or
(3) Real and personal property or any interest in or
use of such property. . . .
Under HEW's regulations a party receives "federal financial
assistance" only when it benefits in its dealings with the
government to a greater extent than it would if it were dealing
with another party (see DeVargas v. Mason & Hanger-Silas Mason Co., 911 F.2d 1377
, 1382 (10th Cir. 1990)).
No evidence suggests that Boeing or McDonnell Services received
"federal financial assistance" as required under the
Rehabilitation Act. L. Mem. 14 argues that LeBouve "was working
on a federally funded program," but he offers no evidence to
support that assertion. And Boeing's submissions indicates
otherwise that the Peace Sun Program contracts were merely
procurement contracts not covered under the statute. Hence
LaBouve's final claim succumbs as well.
LaBouve has failed to demonstrate a genuine issue of material
fact as to whether Boeing should be considered his employer, a
threshold requirement necessary for LaBouve to pursue his ADA
claims against Boeing. Nor has LaBouve established a genuine
issue as to whether Boeing received "federal financial
assistance," as is required for recovery under the Rehabilitation
Act. In sum, Boeing is entitled to a judgment as a matter of law.
Its motion for summary judgment is granted, and this action is
dismissed with prejudice.
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