GERALD E. ROSEN, Chief Judge.
Plaintiffs Donna Porter, Kimberly Dean, Diann Wood, Julie Frame, Yvonne Preuitt, Doris McClelland, and Barbara Simpson commenced this suit in this Court on September 10, 2013, asserting claims under the federal Family and Medical Leave Act ("FMLA"), 29 U.S.C. § 2601 et seq., and state-law breach of contract claims against Defendants Five Star Quality Care-MI, LLC ("Five Star") and Farmington Nursing, LLC ("White Pine").
Through the present pair of motions, Defendant Five Star seeks an award of summary judgment in its favor on Plaintiffs' claims against it, as well as an award of summary judgment in its favor on a crossclaim brought by Five Star against co-Defendant White Pine. In support of the first of these motions, Five Star argues that Plaintiffs cannot show that Five Star discharged them in retaliation for their exercise of rights under the FMLA, where Five Star terminated the entire workforce at the Farmington facility, and not just Plaintiffs, in connection with its sale of the facility to Defendant White Pine. Five Star further contends that none of the Plaintiffs has pled a viable breach of contract claim. In support of its second motion, Five Star asserts that White Pine owes a duty under the purchase agreement for the Farmington facility to defend and indemnify Five Star against any liability or expense arising out of any cause of action that accrued after the sale of the facility, and it contends that White Pine has breached this duty by failing to assume Five Star's defense of this case or reimburse Five Star for the attorney fees and costs it has incurred to date.
Each of Five Star's motions has been fully briefed by the parties. Having reviewed the parties' briefs in support of and opposition to these motions, as well as the
In October of 2012, Defendant Five Star entered into a "Purchase and Sale and Operations Transfer Agreement" (the "Purchase Agreement") with co-Defendant White Pine,
Two provisions of the Purchase Agreement are especially pertinent to the issues presented in Five Star's two pending motions. First, the Purchase Agreement called for Five Star to "terminate ... the employment of each of the employees at its [Farmington] facility immediately prior to the Closing," and provided that White Pine would then "offer substantially all such employees the opportunity to continue his/her employment in a similarly situated position, with compensation and benefits comparable to those provided to such employees by [Five Star] immediately prior to the Closing." (R. 36, Purchase Agreement at ¶ 8.5.)
(Id. at ¶ 11.4.)
According to the complaint, Plaintiffs and the other Five Star employees who worked at the Farmington facility were
All but one of the Plaintiffs were hired by White Pine for a day or two after White Pine assumed control of the Farmington facility on May 1, 2013, but each of these Plaintiffs was then "advised that [her] employment by White Pine was terminated." (Id. at ¶ 12.) The remaining Plaintiff, Julie Frame, was on medical leave at the time that Five Star transferred the operation of the Farmington facility to White Pine, and she, unlike the other Plaintiffs, was never hired by White Pine to continue working at the facility. (See id. at ¶¶ 9, 12.)
This lawsuit followed on September 10, 2013, with Plaintiffs asserting federal FMLA claims and state-law breach of contract claims against both Five Star and White Pine. In support of their FMLA claims, Plaintiffs allege that White Pine terminated their employment shortly after its purchase of the Farmington facility — or, in the case of Plaintiff Frame, elected not to extend an offer of employment — on the impermissible ground that Plaintiffs had exercised their FMLA rights while employed by Five Star by taking medical leaves of absence. (See id. at ¶¶ 9, 16-17.) Plaintiffs further allege that Five Star and White Pine "acted in concert" to retaliate against Plaintiffs' exercise of their rights under the FMLA, with Five Star having provided the records through which White Pine determined that each of the Plaintiffs had previously taken FMLA leave. (Id. at ¶¶ 18-19.)
Through its pair of pending motions, Defendant Five Star seeks (i) the dismissal of Plaintiffs' claims against it or, alternatively, an award of summary judgment in its favor as to these claims, and (ii) an award of summary judgment in its favor as to its crossclaim against co-Defendant White Pine. To the extent that Five Star moves for the dismissal of Plaintiffs' claims under Fed.R.Civ.P. 12(c), the standards governing the Court's review are the same as those that apply to a motion brought under Fed.R.Civ.P. 12(b)(6). See Roger Miller Music, Inc. v. Sony/ATV Publishing, LLC, 477 F.3d 383, 389 (6th Cir.2007). In particular, the Court must construe the complaint in a light most favorable to Plaintiffs and accept all of the complaint's well-pleaded factual allegations as true. League of United Latin American Citizens
To the extent that Five Star seeks an award of summary judgment in its favor, whether as to Plaintiffs' claims against it or as to its crossclaim against Defendant White Pine, the applicable Federal Rule provides that summary judgment is proper "if the movant shows that there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). As the Supreme Court has explained, "the plain language of Rule 56[] mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). In addition, where a moving party seeks an award of summary judgment in its favor on a claim or issue as to which it bears the burden of proof at trial — as here, where Five Star requests summary judgment in its favor on its crossclaim against co-Defendant White Pine — the movant's "showing must be sufficient for the court to hold that no reasonable trier of fact could find other than for the moving party." Calderone v. United States, 799 F.2d 254, 259 (6th Cir. 1986) (internal quotation marks, citation, and emphasis omitted).
In deciding a motion brought under Rule 56, the Court must view the evidence in a light most favorable to the nonmoving party. Pack v. Damon Corp., 434 F.3d 810, 813 (6th Cir.2006). Yet, the nonmoving party may not rely on bare allegations or denials, but instead must support a claim of disputed facts by "citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations ..., admissions, interrogatory answers, or other materials." Fed.R.Civ.P. 56(c)(1)(A). Moreover, any supporting or opposing affidavits "must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated." Fed.R.Civ.P. 56(c)(4). Further, "the mere existence of a scintilla of evidence that supports the nonmoving party's claims is insufficient to defeat summary judgment," Pack, 434 F.3d at 814 (alteration, internal quotation marks, and citation omitted), and the nonmoving party must "do more than show that there is some metaphysical doubt as to the material facts" in order to withstand a properly supported summary judgment motion, Petroleum Enhancer, LLC v. Woodward, 690 F.3d 757, 772 (6th Cir.2012) (internal quotation marks and citation omitted).
It is important to note that Five Star brought its present motions fairly early in
As the first issue raised in its motion directed at Plaintiffs' claims, Defendant Five Star argues that Plaintiffs cannot hope to establish a factual basis for their FMLA claims against Five Star because this company terminated
The Sixth Circuit "recognizes two distinct theories of wrongdoing under the FMLA," the "`entitlement' or `interference' theory" and the "`retaliation' or `discrimination' theory." Bryson v. Regis Corp., 498 F.3d 561, 570 (6th Cir.2007). Plaintiffs here are pursuing the latter theory, alleging that Defendants "Five Star and White Pine acted in concert to retaliate against the Plaintiffs for their exercise of FMLA rights." (First Amended Complaint at ¶ 17.) In the absence of "direct evidence of unlawful conduct," Plaintiffs' FMLA claims of retaliation "are evaluated according to the tripartite burden-shifting framework announced in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973)." Bryson, 498 F.3d at 570.
Five Star does not dispute, for present purposes, that Plaintiffs engaged in protected activity by taking FMLA leave, and that the termination of their employment at the Farmington facility qualifies as an adverse employment action. Five Star contends, however, that Plaintiffs cannot establish the causal connection element of their prima facie case of retaliatory discharge because Five Star terminated all of its employees at the Farmington facility, and not just those who took FMLA leave or otherwise engaged in protected activity. Since Plaintiffs would have suffered the same fate whether or not they had taken FMLA leave, Five Star asserts that its across-the-board termination of all employees at the Farmington facility defeats any claim of a causal link between Plaintiffs' FMLA leave and Five Star's termination of their employment.
Five Star's challenge to Plaintiffs' FMLA claims, however, rests on a mistaken characterization of the adverse employment action giving rise to these claims. In particular, these claims are not based solely on the termination of Plaintiffs' employment by Five Star in connection with its sale of the Farmington facility to White Pine, but rather on a
Unfortunately, the parties' discussion of this question in their briefs is not especially illuminating or on point. Five Star begins by citing an unpublished out-of-circuit district court decision holding that under Kansas law, "an FMLA violation does not constitute an actionable underlying tort upon which a civil conspiracy claim may rest." White v. Graceland College Center for Professional Development & Lifelong Learning, Inc., No. 07-2319, 2008 WL 4148602, at *2-*3 (D.Kan. Sept. 4, 2008). Plaintiffs counter by pointing to an unpublished ruling from within this District that, in their view, implicitly recognizes the possibility that a "concerted effort between [two] defendants in violation of the FMLA" could form the basis for a civil conspiracy claim under Michigan law. Demyanovich v. Cadon Plating & Coatings, LLC, No. 10-15119, 2011 WL 3027901, at *6-*7 (E.D.Mich. July 25, 2011). The Court views these cases as immaterial to the present inquiry, as they address the availability of a
Next, Five Star points to provisions in the FMLA and its implementing regulations that contemplate the imposition of liability on an employer's successor in interest, while making no reference to any possibility of predecessor liability. See, e.g., 29 U.S.C. § 2611(4)(A)(ii)(II) (defining an "employer" as including "any successor in interest of an employer"); 29 C.F.R. § 825.104(a) (likewise providing that "[e]mployers covered by the FMLA ... include ... any successor in interest of a covered employer"). Yet, as Plaintiffs correctly observe in response, their FMLA-based theory of recovery against Five Star
Thus left by the parties to its own devices, the Court has identified two FMLAbased theories through which the allegations made by Plaintiffs in this case, if proven, might suffice to permit a recovery against Five Star under this federal statute. First, the FMLA and its implementing regulations recognize the concept of "joint employment," under which two "separate legal entities" choose "to handle certain aspects of their employer-employee relationships jointly." Grace v. USCAR, 521 F.3d 655, 665 (6th Cir.2008) (internal quotation marks and citations omitted). This notion of joint employers rests in part on the FMLA's definition of an "employer," which encompasses "any person who acts, directly or indirectly, in the interest of an employer to any of the employees of such employer." 29 U.S.C. § 2611(4)(A)(ii)(I); see also 29 C.F.R. § 825.104(d) ("An employer includes any person who acts directly or indirectly in the interest of an employer to any of the employer's employees.").
In Grace, 521 F.3d at 666-67, the Sixth Circuit found that a joint employment arrangement existed where each of the two defendant organizations "exercised significant control over" the plaintiff employee, Rosalyn Grace. In particular, one of the defendants was a staffing agency that "manage[d] [Grace's] payroll and benefits," while the other defendant "supervis[ed] her day-to-day work and determin[ed] her salary and hours." 521 F.3d at 667. Other courts have recognized under similar facts that a temporary employment agency and the company with which the agency places an employee may qualify as joint employers under the FMLA. See, e.g., Cuellar v. Keppel Amfels, L.L.C., 731 F.3d 342, 345-47 (5th Cir.2013); Moldenhauer v. Tazewell-Pekin Consolidated Communications Center, 536 F.3d 640, 643-45 (7th Cir.2008). More generally, in determining whether a joint employment arrangement exists, the courts have asked whether "each alleged employer ... exercise[s] control over the working conditions of the employee," and have considered such factors as (1) the "power to hire and fire employees," (2) the exercise of "supervis[ion] and control[] [over] employee work schedules or conditions of payment," (3) the authority to "determine[] the rate and method of payment," and (4) the "maintain[ance] of employment records."
Returning to the present case, the facts alleged by Plaintiffs do not give rise to the same sort of joint employment relationship addressed in Grace and the other above-cited cases, where the plaintiff employee was assigned by a staffing agency to work at another firm. Nonetheless, Plaintiffs' allegations may potentially be read as indicating that even after Five Star terminated the employees at the Farmington nursing home in connection with the sale of this facility to White Pine, Five Star continued to exercise some degree of control over these employees by participating in or somehow influencing White Pine's decisions as to which of these employees to rehire and how long to retain those who were rehired. Although Plaintiffs' complaint is somewhat vague as to the means by which Five Star might have continued to exercise control over Plaintiffs' employment after their termination in connection with the sale of the facility, and as to the precise role Five Star might have played in White Pine's subsequent rehiring and firing decisions, Plaintiffs have not yet had a full opportunity to explore these questions in discovery by identifying and deposing the Five Star and White Pine officials who were involved in the challenged decisions to discontinue Plaintiffs' employment.
Next, the FMLA's definition of an "employee" provides a second possible avenue through which Plaintiffs may seek to impose FMLA-based liability upon Five Star. In Robinson v. Shell Oil Co., 519 U.S. 337, 346, 117 S.Ct. 843, 849, 136 L.Ed.2d 808 (1997), the Supreme Court held that the term "employee" as used in Title VII of the Civil Rights Act of 1964 encompasses former employees. In light of this ruling, the plaintiff employee in that case was permitted to go forward with his Title VII claim that his former employer unlawfully disparaged him to a prospective employer in retaliation for his having filed a charge of race discrimination against his former employer with the Equal Employment Opportunity Commission. See Robinson, 519 U.S. at 339-40, 346, 117 S.Ct. at 845, 849. The holding in Robinson has been carried over to the FMLA, with the courts observing that the Title VII and FMLA definitions of an "employee" are identical. See, e.g., Smith v. BellSouth Telecommunications, Inc., 273 F.3d 1303, 1307-13 (11th Cir.2001); Duckworth v. Pratt & Whitney, Inc., 152 F.3d 1, 4-11 (1st Cir.1998); Khami v. Ortho-McNeil-Janssen Pharmaceutical, Inc., No. 09-11464, 2012 WL 414812, at *15 (E.D.Mich. Feb. 8, 2012); see also Dunlop v. Carriage Carpet Co., 548 F.2d 139, 142-47 (6th Cir.1977) (finding that a former employee is protected against retaliation by his former employer under the Fair Labor Standards Act, the statute from which the FMLA borrows its definition of an "employee").
The Court recognizes that Plaintiffs have not expressly pled either of the FMLA-based theories of discovery addressed above. Moreover, the limited record before the Court does not permit any conclusions as to whether Plaintiffs will be able to marshal sufficient evidence in support of either of these theories, and the Court expresses no view as to the prospects for Plaintiffs' success under either theory. Nonetheless, the Court likewise cannot say at the present juncture that a potential FMLA-based recovery against Five Star is precluded as a matter of law, or that Plaintiffs' allegations are flatly inconsistent with any viable theory of recovery recognized under the FMLA. Rather, the Court concludes only that Plaintiffs' complaint is consistent with one or more such recognized theories of recovery, and that Plaintiffs should be permitted to pursue evidentiary support for these FMLA claims in the remainder of the discovery period.
In Count II of their first amended complaint, Plaintiffs assert breach of contract claims against both Five Star and White Pine, alleging that Plaintiffs were not paid all of the compensation due to them under the terms of their employment relationships with the two Defendant firms. Through its present motion, Five Star seeks an award of summary judgment in its favor on the breach of contract claims asserted against it, arguing that the record establishes as a matter of law that Five Star paid each Plaintiff all of the
The Court acknowledges that under the present record, Plaintiffs cannot establish that Five Star has failed to pay any compensation owed to them as a result of their employment with this firm. In particular, Five Star points to the affidavit of its vice president of human resources, Janet Mercier, stating that Plaintiffs were paid all outstanding compensation owed to them and were reimbursed for all unused paid time off ("PTO") hours upon Five Star's termination of their employment, (see Five Star's Motion, Ex. 1, Mercier Decl. at ¶¶ 16-21), and Plaintiffs have not produced any evidence that would cast doubt upon Ms. Mercier's assertions on these points.
In the second of its two pending motions, Defendant Five Star seeks an award of summary judgment in its favor on its crossclaim against co-Defendant White Pine, arguing that the record establishes as a matter of law that White Pine has breached a duty of indemnification owed to Five Star under the Purchase Agreement entered into by the parties. Although the arguments advanced by Five Star and White Pine with respect to this motion seem to evolve with each successive submission, and although the parties have displayed a frustrating tendency to alter or disregard the language of the Purchase Agreement as it suits their ever-shifting positions, the Court finds that the plain language of the Purchase Agreement itself dictates a judgment largely (though not entirely) in Five Star's favor on its crossclaim against White Pine.
As both Five Star and White Pine agree, an indemnification agreement "is to be construed in the same fashion as other contracts." Zahn v. Kroger Co., 483 Mich. 34, 764 N.W.2d 207, 210 (2009).
(Purchase Agreement at ¶ 11.4.) In its present motion, Five Star focuses on clause (c) of this provision, arguing that the claims asserted against it by Plaintiffs in this case accrued "from and after the Closing Date" of April 30, 2013
As to Plaintiffs' FMLA claims, the Court readily agrees. As discussed earlier, these claims rest upon the allegations (i) that Five Star and White Pine acted in concert to terminate Plaintiffs' employment within, at most, a few days after White Pine assumed control of the Farmington facility,
White Pine's efforts to avoid this result are unpersuasive, and are largely defeated by the plain language of the Purchase
Next, White Pine attempts to shift the focus of the Court's inquiry to the dates upon which Five Star took "actions" or engaged in "conduct" giving rise to Plaintiffs' claims, (see White Pine's Sur-Reply Br. at 1-3), and it points to allegations in Plaintiffs' complaint indicating that some of the conduct in question occurred on or before April 30, 2013 — i.e., while Five Star still owned and operated the Farmington facility. Again, however, the plain language of clause (c) of the Purchase Agreement's indemnification provision lacks any mention of the "conduct" or "action" giving rise to a claim, but instead refers to the "accru[al]" of a cause of action as the event that triggers White Pine's duty of indemnification.
Finally, White Pine argues that its duty of indemnification extends only to claims that "arise from White Pine's operation of the [Farmington] facility," (White Pine's Response Br. at 1), and it views Plaintiffs' FMLA claims against Five Star as resting upon actions taken by Five Star while it was still the owner and operator of the facility. Yet, while clause (e) of the indemnification provision references "third party claims ... arising from the operation [of the facility]
It remains only to inquire whether White Pine's duty of indemnification extends to Plaintiffs' breach of contract claims. The briefs filed by Five Star and White Pine scarcely touch upon these claims, and are utterly silent as to when these claims might have accrued. In addition, the Court observed earlier in this opinion that the precise basis for and scope of Plaintiffs' breach of contract claims remains somewhat unclear at the present juncture, and that these claims remain subject to further development through discovery. Against this uncertain backdrop, the Court declines to rule on White Pine's duty of indemnification as to Plaintiffs' breach of contract claims against Five Star, but instead reserves this question for further consideration following the development of a more complete evidentiary record bearing upon these claims.
For the reasons set forth above,
NOW, THEREFORE, IT IS HEREBY ORDERED that Defendant Five Star's January 16, 2014 motion for summary judgment on Plaintiffs' claims (docket #37) is DENIED. Next, IT IS FURTHER ORDERED that Defendant Five Star's January 16, 2014 motion for summary judgment on its crossclaim against co-Defendant White Pine (docket # 35) is GRANTED IN PART, to the extent that Five Star seeks indemnification for liability and costs incurred with respect to Plaintiffs' claims under the FMLA, and is otherwise DENIED WITHOUT PREJUDICE. Finally, IT IS FURTHER ORDERED that Plaintiffs' March 14, 2014 motion to amend complaint (docket # 55) is DENIED, but without prejudice to Plaintiffs' opportunity to again seek leave to amend their complaint in accordance with the standards of Fed.R.Civ.P. 15(a) and the rulings in the present opinion and order.