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Swallows v. Barnes & Noble Book Stores, Inc.
(6th Cir. (Tenn.) Nov. 4, 1997)
The Plaintiffs in this case were employed by the Tennessee Technological University
bookstore. Barnes & Noble entered into an agreement with TTU to manage the
bookstore. Pursuant to the agreement the University had with Barnes & Noble,
Barnes & Noble had to continue to employ the employees that TTU had in place
at the bookstore, before the signing of the agreement, for at least sixth months.
If Barnes & Noble chose to terminate an employee before the six months were
up, then it would have to pay that employee three months severance pay unless
the employee transferred to another position with Barnes & Noble, the employee
resigned, or the termination was due to gross misconduct.
Shortly after it began to manage the business, Barnes
& Noble fired the Plaintiffs and granted them severance pay. The Plaintiffs
sued Barnes & Noble and Tennessee claiming that their discharge violated the
ADEA. The State filed a motion to dismiss, arguing that, because TTU was not the
Plaintiff’s employer at the time of the termination, it could not be held
liable under the ADEA. The Plaintiffs contended that Barnes & Noble and TTU
were an integrated employer for purposes of the ADEA and that Barnes & Noble
and TTU had a principal-agent relationship. The district court, with no discussion,
granted the State’s motion to dismiss. The Plaintiffs appealed.
The Sixth Circuit said that under the integrated enterprise
doctrine two companies may be considered so interrelated that they may be a single
employer for purposes of the ADEA. In determining whether to treat two entities
as one, the courts examine the following four factors : (1) interrelation of operations,
(2) common management and directors, (3) centralized control of labor, and (4)
common ownership and financial control. The Court of Appeals held that control
of labor was the most important of all the factors.
Examining the case, the Court of Appeals held that Barnes
& Noble and TTU could not be treated as an integrated enterprise. There was
no interrelation of operations because the two kept their own records and maintained
separate bank accounts and offices. The Court of Appeals held that the facts that
Barnes & Noble paid TTU for the use of its buildings and utilities and received
maintenance services from TTU, were not enough to show interrelation of operations.
There was no evidence of common management, offices, or board members. There was
no evidence that TTU controlled the labor relations at Barnes & Noble. Only
Barnes & Noble had the power to hire and fire employees. Finally, there was
no evidence of common ownership or financial control.
Examining the four factors together, it was clear to the
Court of Appeals that TTU and Barnes & Noble could not be considered a single
employer under the ADEA. Thus, the Court of Appeals held that the district court
was correct in its finding that TTU and Barnes & Noble were not a single employer
nor an integrated enterprise.
The Plaintiff argued in the alternative that TTU was liable
for the actions of Barnes & Noble because Barnes & Noble was TTU’s
agent. The Court of Appeals noted that an agent is one who consents to act on
behalf of another subject to the other’s control. Furthermore, an agent within
the context of the ADEA must be an agent with respect to employment practices.
The Court of Appeals found that TTU did not delegate to Barnes & Noble the
authority to make employment decisions on its behalf, nor did it exercise the
requisite control over Barnes & Noble’s employment decisions. Therefore,
the Court of Appeals held that TTU could not be considered the Plaintiff’s
employer under the ADEA.
For these reasons, the Court of Appeals affirmed the judgment
of the district court.
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