MYERS v. SONIC DRIVE-IN, (E.D.Tenn. 2001)

R. ALLAN EDGAR, Chief United States District Judge

Plaintiffs Deana Myers and Tera Ogden bring the present action against all above-named defendants, alleging sex discrimination under Title VII of the Civil Rights Act of 1964, as amended ("Title VII"), 42 U.S.C. § 2000e-2000e-17, and the Tennessee Human Rights Act ("THRA"), TENN. CODE ANN. §§ 4-21-101-903. Presently before the Court is defendants' motion for summary judgment. (Court File No. 26). For the following reasons, this motion shall be DENIED.

Plaintiffs voluntarily dismissed former defendants Sonic Corporation and Sonic Industries, Inc. (Court File No. 22).

I. Standard of Review

FED. R. CIV. P. 56(c) provides that summary judgment will be rendered if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. The burden is on the moving party to conclusively show that no genuine issue of material fact exists, and the Court must view the facts and all inferences to be drawn therefrom in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 475, 587 (1986); Morris v. Crete Carrier Corp., 105 F.3d 279, 280-81 (6th Cir. 1997); White v. Turfway Park Racing Ass'n, Inc., 909 F.2d 941, 943 (6th Cir. 1990); 60 Ivy Street Corp. v. Alexander, 822 F.2d 1432, 1435 (6th Cir. 1987).

Once the moving party presents evidence sufficient to support a motion under Rule 56, the nonmoving party is not entitled to a trial merely on the basis of allegations. The nonmoving party is required to come forward with some significant probative evidence which makes it necessary to resolve the factual dispute at trial. Celotex Corp. v. Catrett, 477 U.S. 317 (1986); White, 909 F.2d at 943-44; 60 Ivy Street, 822 F.2d at 1435. The moving party is entitled to summary judgment if the nonmoving party fails to make a sufficient showing on an essential element of the nonmoving party's case with respect to which the nonmoving party has the burden of proof. Celotex, 477 U.S. at 323; Collyer v. Darling, 98 F.3d 211, 220 (6th Cir. 1996).

The judge's function at the point of summary judgment is limited to determining whether sufficient evidence has been presented to make the issue of fact a proper jury question, and not to weigh the evidence, judge the credibility of witnesses, and determine the truth of the matter. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986); 60 Ivy Street, 822 F.2d at 1435-36. The standard for summary judgment mirrors the standard for directed verdict. The Court must determine "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson, 477 U.S. at 251-52; see also Lapeer County, Mich. v. Montgomery County, Ohio, 108 F.3d 74, 78 (6th Cir. 1997). There must be some probative evidence from which the jury could reasonably find for the nonmoving party. Anderson, 477 U.S. at 252; Bailey v. Floyd County Bd. of Educ., 106 F.3d 135, 140 (6th Cir. 1997). If the Court concludes that a fair-minded jury could not return a verdict in favor of the nonmoving party based on the evidence presented, it may enter a summary judgment. Anderson, 477 U.S. at 251-52; University of Cincinnati v. Arkwright Mut. Ins. Co., 51 F.3d 1277, 1280 (6th Cir. 1995); LaPointe v. UAW, Local 600, 8 F.3d 376, 378 (6th Cir. 1993).

II. Facts

The following facts, taken from the record, are viewed in the light most favorable to plaintiffs, the non-moving parties. All factual findings are made for the sole purpose of ruling on the motion presently before the Court. Additional factual findings shall be discussed at relevant points in the Court's analysis below.

A. Sonic-McMinnville

Sonic Drive-In (McMinnville), L.P., ("Sonic-McMinnville") is a limited partnership that owns a franchise to operate a Sonic Restaurant. The partnership is comprised of three general partners — Johnny Young (20% ownership interest), Stacy Solomon (5%), and Billy John Inzer (25%) — and two limited partners — Ronald O. McAfee (25%) and David W. Cooper, Inc. (25%). Inzer has responsibility for the day-to-day operation of the business. He reports to Young. Solomon is the former store manager at the Sonic restaurant in Winchester, Tennessee, where Inzer previously worked as an assistant manager. Cooper, the individual, and McAfee have little involvement in the daily operations of the restaurant. Other store employees include four assistant managers, who report to the store manager; crew leaders; cooks; carhops; fountain workers; and preps.

David O. Cooper, as an individual, is not a named partner to Sonic-McMinnville.

B. Deana Myers

Plaintiff Myers commenced employment with Sonic Corporation in 1983. By 1986, Myers was fully qualified to manage a Sonic restaurant. She professed interest in such a position to Sonic-McMinnville management. At some point, Myers and her husband, Bruce Thurman, bought into the Sonic-McMinnville partnership. During that time, they owned twenty-five percent (25%) of the business. Thurman served as the store manager, and Myers served as the assistant manager. They each reported to Young, who served as store supervisor. Although named the assistant manager, Myers had extensive involvement in running the restaurant. By her own testimony, she helped raise the "volume of that store from near the bottom of the partnership to the top of the chain." (Court File No. 29, Myers depo. p. 43). She helped with store openings, trained employees, managed the checkbooks, performed payroll tasks, completed bank deposits, hired employees, and scheduled work shifts.

In her complaint, Myers alleges that Sonic-McMinnville encouraged this union by informing Myers that if she married Thurman, he could become manager of the Sonic McMinnville store, while she became the assistant manager. At any rate, Myers and Thurman married in their Sonic uniforms.

In the spring of 1996, Young approached Myers to express concern about Thurman's alcohol problem. At that time, Myers felt it was necessary for her to leave the store. She began training plaintiff Ogden, who was already an assistant store manager, to replace her. In the fall of 1996, Myers left the employment of Sonic-McMinnville.

Myers filed for divorce from her husband in January 1997. Two months later, in March, Young contacted her again to inform her that Thurman was being required to attend a treatment facility. Because of her previous experience with the Sonic-McMinnville restaurant, Myers assumed the manager position at the Sonic-McMinnville restaurant during Thurman's absence. She performed her duties well. After three weeks, Thurman returned to the store, and Myers' employment with Sonic-McMinnville terminated.

Thurman continued to struggle with substance abuse. Beginning in May 1998, Young restricted Thurman's management duties and responsibilities. Young took over many of those responsibilities himself. During this time, Young became aware of problems with other employees, including their repeatedly not showing up for work, unprofessional appearances and attitudes, and reports that one employee had purchased drugs for Thurman. Ogden and Myers were aware of these problems.

In October 1998, Young telephoned Myers and informed her that Thurman's employment as store manager was being terminated. Myers told Young that she "still wanted the store," meaning that she wished to replace Thurman as the store manager. Myers had previously expressed this desire to Young on several occasions. Young informed Myers that he had not yet decided what to do. However, within the next three days, Young appointed Inzer as Thurman's replacement. In a subsequent conversation, Young informed Myers that he believed "that there were drug abuse problems at the store that he felt would be too much for" Myers.

Inzer had previously worked as an assistant manager for the Sonic restaurant in Winchester, Tennessee. He had been an assistant manager for approximately nine months. He had a college degree and had previously owned his own business.

On March 4, 1999, Myers filed a charge of discrimination with the Equal Employment Opportunity Commission ("EEOC"). After exhausting her administrative remedies, she brought this lawsuit. Myers claims that defendants discriminated against her by failing to hire her to manage the Sonic-McMinnville restaurant.

C. Tera Ogden

Plaintiff Ogden was hired as a carhop at Sonic-McMinnville in October 1994. Within a year, Ogden was promoted through various other positions including fountain worker, crew leader, and finally assistant manager. Within her first year of employment with Sonic-McMinnville, Ogden was placed in charge of more employees and positions than any other assistant manager.

As assistant manager, Ogden was paid an hourly wage and a monthly bonus. During all relevant times, no specified formula for determining assistant managers' bonuses existed. The amount of the bonus fell within the discretion of the management team.

In May 1998, when Young began assuming some of Thurman's duties, he took over Sonic-McMinnville's financial affairs. Young became responsible for awarding assistant managers' bonuses. At that time, Young ranked all of the assistant managers on the basis of their seniority. He developed a percentage formula, based upon that ranking, for the awarding of bonuses. After this ranking, Ogden's bonuses were lower that those awarded to Phillip Lance, who was the most senior assistant manager over Ogden. The effect of Young's change in the bonus structure was to reward Lance, who had been with the company for ten years but never assumed the level of responsibility held by Ogden, while reducing the amount of bonuses received by Ogden. The third level assistant manager, a female, and the fourth level assistant manager, a male, received equal bonuses. Ogden asserts that this demonstrates that Young did not implement a straight seniority system for bonuses.

During October 1999, there Ogden heard "talk" of an opening for the store manager position at the Woodbury Sonic restaurant. Ogden professed interest in the position. When she asked Inzer why she was not being considered for the position, Inzer replied that the reason he did not consider her was because of her "lack of a husband, and her dedication to her daughter." He further qualified that it was not because she was a woman or because she lacked qualifications.

The manager of the Woodbury Sonic, Joe Maro, was not discharged from employment until sometime after Ogden filed her EEOC charge in March 1999. The person who ultimately replaced Maro was Gary Smith, who is Myers' brother. He did not receive the job until January 2000.

III. Analysis

A. Myers' Discrimination Claims

Myers contends that defendants discriminated against her by refusing to hire her as the store manager for the Sonic-McMinnville store because of her sex. As an initial step in avoiding summary judgment, a Title VII plaintiff must present proof showing or raising an inference that the defendant acted with the intent or motive to discriminate against her on the basis of sex when taking a challenged adverse employment action. Texas Dep't of Community Affairs v. Burdine, 450 U.S. 248, 252-53 (1981); McDonnell-Douglas Corp. v. Green, 411 U.S. 792, 802 (1973); Kline v. Tennessee Valley Authority, 128 F.3d 337, 342 (6th Cir. 1997); Talley v. Bravo Pittino Restaurant, Ltd., 61 F.3d 1241, 1246 (6th Cir. 1995). Defendants concede that Myers has established a prima facie case of discrimination.

The parties apparently agree that analysis of plaintiffs' claims under the THRA parallel analysis of plaintiffs' Title VII claims.

Defendants contend, however, that Myers cannot carry her ultimate burden of establishing a genuine issue of material fact with respect to her discrimination claims. After establishing a prima facie case of sex discrimination, the burden of production shifts to the defendant to articulate a legitimate, non-discriminatory reason for the adverse employment action taken against the plaintiff. Texas Dep't of Community Affairs v. Burdine, 450 U.S. 248, 252-53 (1981); Williams v. Nashville Network, 132 F.3d 1123, 1131 (6th Cir. 1997); E.E.O.C. v. Avery-Dennison Corp., 104 F.3d 858, 862 (6th Cir. 1997). After such an assertion, the plaintiff then assumes the burden of demonstrating that the defendant's proffered reason is a mere pretext for discrimination. Burdine, 450 U.S. at 252-53; Williams, 132 F.3d at 1131; Avery-Dennison, 104 F.3d at 862.

In the present case, defendants assert a legitimate, non-discriminatory reason for the decision to hire Inzer as the Sonic-McMinnville store manager instead of Myers. Specifically, in explaining his decision to hire Inzer, defendant Young testified that Inzer had owned his own business in the past, had a college degree, had a good personality, and was mature. Additionally, defendants assert that Inzer had a past history of dealing with substance abuse problems, both his own problems and those of others.

However, the Court finds that Myers has raised a genuine issue of material fact with respect to the issue of whether defendants' proffered reason is a mere pretext for discrimination. Myers provides sufficient proof that her fourteen years of training with Sonic-McMinnville and prior effective performance made her far more experienced and qualified than Inzer. Further, she casts doubt upon defendants' proffered reasons for choosing Inzer over Myers. Specifically, she demonstrates that Inzer had no formal training to deal with substance abuse problems other than his own former substance abuse. Although Young suggested that Inzer's college degree was important, Myers points out that virtually all other store managers and individuals defendants considered likely candidates for store manager positions lacked such degrees. Additionally, Myers presents proof that she was discouraged from becoming a store manager and encouraged to work as an assistant manager under her husband. As such, Myers' Title VII and THRA claims survive summary judgment and shall proceed to trial.

Defendants correctly point out that Myers subjective belief that she was more qualified for the position of store manager is insufficient to rebut pretext. However, the Court notes that the proof of qualifications submitted by Myers are not merely subjective. In fact, most of the proof of her competence comes from named defendants and their agents. The Court finds this probative proof from which a reasonable factfinder, combined with additional, supportive facts, could determine that defendants' reasons for not hiring Myers are pretextual.

B. Ogden's Discrimination Claims

Defendants claim that Ogden cannot establish a prima facie case with respect to either her claim that she was discriminated against in the receipt of bonuses or that she was discriminated against by not been hired for a store manager position. Under the traditional Title VII analysis, a plaintiff can establish a prima facie case, by demonstrating that (1) she belongs to a protected class; (2) she was qualified for the position in question; (3) an adverse employment action was taken against her; and (4) a similarly situated individual outside the protected class was treated more favorably than the plaintiff. McDonnell-Douglas, 411 U.S. at 802-03; see also Ensley-Gaines v. Runyon, 100 F.3d 1220, 1224 (6th Cir. 1996); Harrison v. Metro Gov't of Nashville, 80 F.3d 1107, 1115 (6th Cir. 1996).

The Court finds that Ogden can raise a genuine issue of material fact with respect to her prima facie case of discrimination regarding the receipt of bonuses. With respect to this claim, Ogden has presented the following proof: (1) she is female; (2) she was effectively performing the position of assistant manager and had assumed more responsibility than any other store manager; (3) the bonus structure was changed so that she received substantially lower bonuses than previously; and (4) a male employee with more seniority but less responsibility was paid more than she was. The Court finds this sufficient to establish her prima facie case of discrimination.

Ogden can also sustain her claim of discrimination with respect to the issue of being placed in the Woodbury store manager position. Defendants argue that Ogden fails to present proof that the store manager position was open. She explains only that she heard "talk" of a potential opening. However, the Sixth Circuit had enunciated an exception to the typical prima facie case of discrimination that is applicable in the present case.

In her first response brief, Ogden asserts that she was qualified for the position of store manager at the Sonic-McMinnville store upon which plaintiff Myers bases her discrimination claim. However, Ogden never professed any interest in that position. Further, she did not raise a claim based upon those circumstances in her EEOC charge or in her complaint. Thus, she cannot now raise them before this Court.

Specifically, "in failure to promote cases, a plaintiff does not have to establish that [s]he applied for and was considered for the promotion when the employer does not notify its employees of an available promotion or does not provide a formal mechanism for expressing interest in the promotion." Dews v. A.B. Dick Co., 231 F.3d 1016, 1022 (6th Cir. 2000). In carving out this rule, the Sixth Circuit noted that in many cases involving true discriminatory animus, an employer could refrain from advertising available positions in order to limit the applicant pool. Id. Thus, in cases where position vacancies are not announced or where employees are not given a means of professing interest, an employer is "held to a duty to consider all those who might reasonably be interested in a promotion were its availability made generally known." Id. at 1022.

The Court finds that this "exception" applies to the present case. Defendants had no formal means of announcing job vacancies or soliciting interest therein. Ogden has presented proof that she heard "talk" of a position that was or would be open. She specifically professed interest in acquiring that position. However, Inzer told her that he did not believe she was suited to the position, since she was a single mother. In light of these facts, the Court finds that Ogden has sustained her burden of proof in raising an inference of discriminatory intent.

Defendants next argue that Ogden cannot raise a genuine issue of material fact regarding the issue of pretext with respect to her bonus claim. Defendants assert that the bonus system was based solely on seniority. However, Ogden has presented some proof suggesting that defendants may have actually acted with discriminatory motive. It is undisputed that Lance, a male assistant manager, was paid significantly more than Ogden under the new bonus system. It is also undisputed that Lance was a more senior assistant manager than Ogden. However, the third- and fourth-ranked assistant managers did not have such a disparity in their bonuses. The third-ranked assistant manager, a female, did not generally received larger bonuses than the fourth-ranked assistant manager, a male. Moreover, the record demonstrates that Ogden had more responsibility that Lance, although the latter had more seniority. The Court finds this raises a genuine issue of material fact with respect to pretext.

C. Proper Party Defendants

Defendants contend that plaintiffs have included defendants who are not proper parties to this action. Consequently, defendants seek to have all defendants dismissed with the exception of Sonic-McMinnville. The Court will deny this request.

Under Title VII, an "employer" is "a person engaged in an industry affecting commerce who has fifteen or more employees . . . and any agent of such person." 42 U.S.C. § 2000e(b). An "agent" has been interpreted as "an individual who serves in a supervisory position and exercises significant control over the plaintiff's hiring, firing, and conditions of employment." Wathen v. General Elec. Co., 115 F.3d 400, 405 (6th Cir. 1997) (quoting Pierce v. Commonwealth Life Ins. Co., 40 F.3d 796, 803 (6th Cir. 1994) (quotation omitted)). Individuals or agents of employers who do not independently meet the statutory definition of "employer" are not individually liable for violations of Title VII. Wathen, 115 F.3d at 406 (6th Cir. 1997).

Similarly, under the THRA, supervisors may not be held independently liable for violations of that statute. Carr v. United Postal Serv., 955 S.W.2d 832, 834 (Tenn. 1997), overruled on other grounds, Parker v. Warren County Utility Dist., 2 S.W.3d 170 (Tenn. 1999). However, the THRA is broader than Title VII in terms of who may be liable for violations thereof. TENN. CODE ANN. § 42-21-301-(2) renders it a discriminatory practice for a person to aid, abet, incite, or compel a discriminatory practice. Any individual can be a "person" under the statute. § 4-21-102(14). "Accordingly, any individual who aids, abets, incites, compels, or commands an employer to engage in employment-related discrimination has violated the THRA." Carr, 955 S.W.2d at 836.

The Court finds that plaintiffs have raised a genuine issue of material fact with respect to the propriety of naming Johnny R. Young; J.R. Young Enterprises, Inc.; David W. Cooper; David W. Cooper, Inc.; and Ronald O. McAfee as defendants under Title VII and the THRA. First, Johnny R. Young, Ronald O. McAfee, and David W. Cooper, Inc., are all substantial partners in the Sonic-McMinnville partnership and exert significant control over the management of the Sonic-McMinnville restaurant. Additionally, the undisputed factual proof shows that the individuals Young, Cooper, and McAfee — individually or as the incorporated entities J.R. Young Enterprises, Inc., and David. W. Cooper, Inc. — collectively own twenty-two Sonic restaurants in Middle and Eastern Tennessee. The record indicates that these defendants run these 22 restaurants in common ways. Personnel, including managers and assistant managers, are transferred among these stores. Plaintiffs allege that these five defendants operate, in practicality, to run twenty-two Sonics as branches of a single business.

Not all five named parties are owners of each of the twenty-two restaurants. However, these three individuals collectively own all of those Sonic restaurants and are responsible for the running of, and policymaking for those restaurants.

Additionally, for purposes of analysis under the THRA, plaintiffs have raised a genuine issue of material fact that defendant Young acted to aid, abet, compel, or command Sonic-McMinnville managers and supervisors to engage in discriminatory practices. As the factual record above demonstrates, defendant Young was intimately involved in the alleged discrimination that occurred against both plaintiffs. In fact, Young overtook many management responsibilities of the Sonic-McMinnville store during Thurman's downfall and implemented the allegedly discriminatory bonus policy. In undertaking these actions, Young was acting as an agent for himself, McAfee, and David W. Cooper, Inc., all partners of Sonic-McMinnville, and thus employers under the discrimination statutes.

Additionally, the Court finds that plaintiffs have raised a genuine issue of material fact as to whether defendants Young; Cooper; McAfee; J.R. Young Enterprises, Inc.; and David W. Cooper, Inc., can be treated as a "single employer" or "integrated enterprise" under Title VII. Under the "single employer" or "integrated enterprise" doctrine, two individuals or companies "may be so interrelated that they constitute a single employer subject to liability" under Title VII. Swallows v. Barnes Noble Book Stores, Inc., 128 F.3d 900, 993 (6th Cir. 1997); see Armbruster v. Quinn, 711 F.2d 1332, 1337-38 (6th Cir. 1983). To determine whether several entities fall within this doctrine, courts must examine four factors: "(1) interrelation of operations, i.e., common offices, common record keeping, shared bank accounts and equipment; (2) common management, common directors and boards; (3) centralized control of labor relations and personnel; and (4) common ownership and financial control." Swallows, 128 F.3d at 993-94. Although none of these factors is conclusive, control over labor relations is extremely important in determining whether the single employer doctrine should apply. Id. at 994.

In the present case, plaintiffs have made a showing that several of these factors exist. Specifically, the record shows that the five aforementioned defendants commonly control, operate, manage, and set policy for twenty-two Sonic restaurants in Tennessee. Allegedly, there exists centralized control of labor relations and personnel, particularly as plaintiffs assert that defendants move personnel between restaurants and hire from their network of male friends. Although the record is devoid of information concerning bank accounts and equipment, the Court finds it proper for all five individual and corporate defendants to remain in this lawsuit.

A difficult issue is the question of whether defendant Cooper, McAfee Young can remain as a defendant in this action. Plaintiffs concede that this defendant is not an expressly named legal entity. However, plaintiffs have raised a genuine issue regarding whether Cooper, McAfee Young is an implied partnership.

Under Tennessee law, a partnership is "an association of two or more persons to carry on as co-owners a business for profit." Martin v. Coleman, 19 S.W.3d 757, 760 (Tenn. 2000); Bass v. Bass, 814 S.W.2d 38, 41 (Tenn. 1991). "The existence of a partnership may be implied when it appears that the parties have entered into a business relationship for profit, combining their property, labor, skill, experience, or money." Martin, 19 S.W.3d at 761 (citations omitted). The parties need not understand or intend for their actions to result in the creation of a legal partnership. They must only have intended the actions which result in such an arrangement. Bass, 814 S.W.2d at 41.

In the present case, plaintiffs have provided proof that Cooper, McAfee, and Young engaged in the type of relationship and interactions that created a partnership. As previously mentioned several times, they collectively — in various combinations — owned many Sonic restaurants. These restaurants were operated in such a manner that Cooper, McAfee, and Young combined their skill, experience, resources, and expertise to manage and control all of those restaurants. Thus, the entity, Cooper, McAfee Young shall remain in this case for trial.

SO ORDERED.