United Airlines Regional Providers Were Joint Employers Under FMLA, 7th Cir. Says

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By Jay-Anne Casuga

Sept. 22 — Two air carriers that provided regional air services to United Airlines at O'Hare International Airport in Chicago were joint employers for the purpose of allowing a fired manager to be covered under the Family and Medical Leave Act, the U.S. Court of Appeals for the Seventh Circuit ruled Sept. 19.

The Seventh Circuit affirmed summary judgment on the joint employer issue to Darren Cuff, who was terminated for taking leave after his FMLA request was denied. The court found an arrangement between Trans States Airlines and GoJet Airlines to share Cuff's services, as well as evidence that the companies acted in each other's interest in relation to Cuff.

For example, although Cuff was a regional manager of Trans States Airlines, he was hired to provide services to and handle operational issues for both companies, the court said. Trans States and GoJet are both owned by Trans States Holdings Inc.

Additionally, the appeals court upheld a $43,200 compensatory damages and front pay award to Cuff, as well as a $325,000 attorneys' fees award.

Judge Frank H. Easterbrook wrote the opinion, joined by Judges Kenneth F. Ripple and Ann Claire Williams.

Manager Was Jointly Employed, Court Says

The Seventh Circuit explained that the FMLA applies to employers with at least 50 employees within 75 miles of a given employee's location.

It added that Labor Department regulations implementing the law allow FMLA coverage of a worker jointly employed by multiple companies that collectively have 50 or more workers. The regulations also list a number of factors for determining whether a joint employment relationship exists.

The “two lead factors” most relevant to the present case focus on whether Trans States and GoJet shared Cuff's services and whether the two companies acted in each other's interests with respect to Cuff.

The appeals court answered both questions in the affirmative, pointing to evidence that Cuff represented Trans States, GoJet and Trans States Holdings in their dealings with United and O'Hare, that the logos of all three companies appeared on his business card and that internal directories and a supervisor identified Cuff as the contact person for operations questions regarding Trans States and GoJet.

Although Cuff was on the payroll of only Trans States Airlines, which had 33 employees at O'Hare, the court affirmed that Cuff still was covered by the FMLA because Trans States' employee totals could be combined with GoJet's. Together, both companies had more than 375 workers at that airport.

Court Upholds Damage, Fee Awards

In addition, the Seventh Circuit rejected Trans States' argument that after-acquired evidence of alleged misconduct by Cuff—including lying during an internal investigation about a sexual relationship he had with a subordinate and failing to report an arrest for driving while intoxicated—should limit his damages.

The court said the “two lead factors” for determining joint employment in the present case focused on whether the companies shared the employee's services and whether they acted in each other's interests with respect to that worker.

Although the court agreed that such evidence is permissible to limit awards, it pointed out that the company failed to make an offer of proof, as required by the Federal Rules of Evidence, in order to raise the issue on appeal.

The court also disagreed with Trans States that the $325,000 attorneys' fee award was unreasonable in relation to Cuff's significantly lower recovery. It observed that the companies' defense “was conducted in a blunderbuss fashion,” with counsel “inject[ing] new issues and arguments into the case,” some of which amounted to “nothing but hot air” but nevertheless required “extensive discovery and a trial.”

“That's why … hyperaggresive defendants who drive up the expense of litigation must pay the full costs, even if legal fees seem excessive in retrospect,” the court said.

Caffarelli & Siegel represented Cuff. Trans State Airlines counsel represented the companies.

To contact the reporter on this story: Jay-Anne B. Casuga in Washington at jcasuga@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

Text of the opinion is available at http://www.bloomberglaw.com/public/document/Cuff_v_Trans_States_Holdings_Inc_No_131241_2014_BL_260712_7th_Cir.