Daily Labor Report® is the objective resource the nation’s foremost labor and employment professionals read and rely on, providing reliable, analytical coverage of top labor and employment...
Sept. 20 — A former employee of an Ohio car dealership that is a subsidiary of Penske Automotive Group Inc. can’t pursue discrimination claims against Penske, a federal district court decided ( Divney v. Penske Auto. Grp., Inc. , 2016 BL 308206, N.D. Ohio, No. 15-2358, 9/19/16 ).
The decision reaffirms that a parent company isn’t automatically the “employer” of those working for its subsidiaries.
The parent can’t be sued over employment disputes unless it controls the subsidiary’s labor relations, they share common management and the maintenance of separate corporate entities is a “sham.”
The court Sept. 19 dismissed the age and disability bias claims of Eugene Divney, who worked as a service manager for Stoddard Imported Cars Inc., which Penske purchased in 2011.
Divney named Penske as the sole defendant in his lawsuit under the Age Discrimination in Employment Act and Ohio state law.
But the court said Penske and the dealership, now operated as Audi Mentor by a company called PAG Mentor A1, can’t be deemed a “single employer” under the relevant legal test.
A parent company generally isn’t liable for its subsidiary’s acts, even if it wholly owns the subsidiary, Judge Patricia A. Gaughan wrote.
Courts in “extraordinary cases” will “pierce the corporate veil” and treat the parent and subsidiary as one entity for legal purposes, the court said.
But Divney doesn’t present evidence that would support piercing the corporate veil, the court said.
A four-part test for deciding if two related entities are a single employer considers: the interrelation of operations; shared management, such as common directors and boards; centralized control of labor relations and personnel; and common ownership and financial control.
Divney’s evidence that Penske maintained the payroll records for its various Cleveland subsidiary dealerships doesn’t show interrelated daily operations, the court said.
Rather, an employee handbook makes clear that each Penske-owned subsidiary managed its own shop, the court said.
Divney contended there was a “significant overlap of management,” but he produced no evidence that Penske and PAG Mentor A1 shared officers or board members, the court said.
A parent company must exert “actual and active control” of a subsidiary’s “day-to-day labor practices” to satisfy the single-employer test, the court said.
Penske argued it played no role in Divney’s alleged demotion or termination. Again, the employee handbook makes clear the Penske-owned dealerships are “managed and operated locally” on a daily basis by the respective subsidiaries, the court said.
Divney argued he satisfied the common ownership and financial control factor because PAG Mentor A1 is a wholly owned Penske subsidiary.
But deeming two related companies a single employer requires proof that “one of the entities is a sham,” the court said.
Divney offered no evidence that such an arrangement is the case, so his single-employer argument fails, the court said.
Joseph A. Dubyak and Paul V. Wolf in Cleveland represented Divney. Haber Polk Kabat represented Penske Automotive Group.
To contact the reporter on this story: Kevin McGowan in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Susan J. McGolrick at email@example.com
The opinion is available at http://www.bloomberglaw.com/public/document/Divney_v_Penske_Auto_Grp_Inc_No_115_CV_2358_2016_BL_308206_ND_Ohi.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)