IN THE UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT _________________________ Nos. 02-1433/02-1443 _________________________ Tricia Lerohl, Plaintiff-Appellant, v. Friends of the Minnesota Sinfonia, et al., Defendants-Appellees. ___________________________________________ Shelley Hanson, Plaintiff-Appellant, v. Friends of the Minnesota Sinfonia, et al., Defendants-Appellees. ________________________________________________________ Appeal from the United States District Court for the District of Minnesota _________________________________________________________ BRIEF OF THE U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION AS AMICUS CURIAE IN SUPPORT OF APPELLANTS' PETITION FOR REHEARING AND SUGGESTION FOR REHEARING EN BANC _________________________________________________________ NICHOLAS M. INZEO Acting Deputy General Counsel PHILIP B. SKLOVER Associate General Counsel EQUAL EMPLOYMENT OPPORTUNITY LORRAINE C. DAVIS COMMISSION Assistant General Counsel 1801 L Street, N.W. Washington, D.C. 20507 SUSAN R. OXFORD (202) 663-4719 Attorney TABLE OF CONTENTS TABLE OF CONTENTS. . . . . . . . . . . . . . . . . . . . . . . .i TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . ii RULE 35(b) STATEMENT . . . . . . . . . . . . . . . . . . . . . .1 STATEMENT OF THE ISSUES . . . . . . . . . . . . . . . . . . . . 2 BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . .3 PANEL OPINION. . . . . . . . . . . . . . . . . . . . . . . . . .5 ARGUMENT IN DETERMINING WHETHER PLAINTIFFS ARE "EMPLOYEES" COVERED UNDER FEDERAL EMPLOYMENT DISCRIMINATION LAWS OR INDEPENDENT CONTRACTORS WHO ARE NOT COVERED, THE PANEL APPLIED THE "CONTROL" FACTOR IMPROPERLY AND PLACED UNDUE EMPHASIS ON THE SINFONIA'S FAILURE TO WITHHOLD TAXES. . . . . . . . . . . . . . . . . . . . . . . 7 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . 15 CERTIFICATE OF SERVICE ADDENDUM: PANEL OPINION TABLE OF AUTHORITIES Cases Cilecek v. Inova Health Sys. Serv., 115 F.3d 256 (4th Cir. 1997) . . . . . . . . . . . . . . 10 Community for Creative Non-Violence v. Reid, 490 U.S. 730 (1989) . . . . . . . . . . . . . . 5, 6, 8, 10 Daggitt v. United Food & Comm'l Wkrs. Int'l Union, 245 F.3d 981 (8th Cir. 2001) . . . . . . . . . . . . . . 10 Eisenberg v. Advance Relocation & Storage, Inc., 237 F.3d 111 (2d Cir. 2000) . . . . . . . . . . . . 10, 14 Hunt v. State of Missouri, 297 F.3d 735 (8th Cir.), reh'g and reh'g en banc denied (8th Cir. 2002) . . . 1, 8, 10, 13 Jenkins v. Southern Farm Bur. Cas., 307 F.3d 741 (8th Cir. 2002) . . . . . . . . . . . . . 1, 13 Lambertsen v. Utah Dep't of Corrections, 79 F.3d 1024 (10th Cir. 1996) . . . . . . . . . . . . . . 10 Lilley v. BTM Corp., 958 F.2d 746 (6th Cir. 1992) . . . . . . . 1 Nationwide Mutual Ins. Co. v. Darden, 503 U.S. 318 (1992) . . . . . . . . . . . . . . 5, 6, 7, 8 Schwieger v. Farm Bur. Ins. Co., 207 F.3d 480 (8th Cir. 2000) . . . . . . . . . 8, 9, 10, 15 Statutes 42 U.S.C. §§ 2000e, et seq. . . . . . . . . . . . . . . . . . 2 42 U.S.C. §§ 12101, et seq. . . . . . . . . . . . . . . . . . 2 Miscellaneous Restatement (2d) of Agency § 220 . . . . . . . . . . . . . 8, 9 RULE 35(b) STATEMENT This case presents a question of exceptional importance. Even though the Sinfonia completely controls the manner and means by which Sinfonia players accomplish the end product (orchestral concerts), the panel decision held that "control" should not be accorded any special weight and that the plaintiffs were not "employees" entitled to Title VII and ADA protections primarily because Sinfonia players retained the discretion to decline some Sinfonia performances and to play for other musical organizations or perform solo. The panel's decision not only misconstrues the "control" factor, but is inconsistent, in this respect, with Hunt v. State of Missouri, 297 F.3d 735 (8th Cir.), reh'g and reh'g en banc denied (8th Cir. 2002), in which another panel of this Court stated that although "no single factor is decisive," "the right to control the manner and means by which tasks are accomplished is a primary consideration." Id. at 741. The panel's decision is also inconsistent with another recent decision of this Court, Jenkins v. Southern Farm Bur. Cas., 307 F.3d 741 (8th Cir. 2002). There the Court recognized that although normally a judge will be able to determine employment status as a matter of law, "where there is a genuine issue of fact or conflicting inferences can be drawn from the undisputed facts, ... the question is to be resolved by the finder of fact ...." See id. at 743 (quoting as "instructive" Lilley v. BTM Corp., 958 F.2d 746, 750 n.1 (6th Cir. 1992) (emphasis added)). In the present case, the panel, like the district courts below, improperly resolved disputed questions of material fact against the plaintiffs, drew inferences against the plaintiffs from undisputed facts where conflicting inferences could be drawn, and ignored entirely other facts that the plaintiffs presented in the record below. The approach adopted by the panel, if allowed to stand, would significantly undermine the protections of federal employment discrimination laws by excluding workers that Congress intended to be protected under these laws. Panel rehearing or en banc consideration is necessary to secure uniformity of this Court's decisions, as well as to address an issue of exceptional importance. STATEMENT OF THE ISSUES 1. Whether a court should give primary consideration to the employer's control over the manner and means by which the work is accomplished in determining who is an "employee" for purposes of coverage under Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e, et seq. ("Title VII"), the Americans with Disabilities Act, 42 U.S.C. §§ 12101, et seq. ("ADA"), and other federal laws that protect employees from discrimination in the workplace. 2. Whether the panel in this case improperly resolved disputed questions of fact and improperly drew inferences from undisputed facts where more than one inference could be drawn, instead of reserving those questions for the trier of fact. BACKGROUND The Minnesota Sinfonia is an orchestra that performs seventy or so free classical music concerts per year in public schools and other locations accessible to families with young children and persons of limited means. Lerohl v. Friends of Minnesota Sinfonia, slip op. at 3. Several times each year the Sinfonia's executive director and conductor, Jay Fishman, would schedule a series of concerts and then mail the schedule to the Sinfonia's "regular" or "first call" musicians, i.e., those twenty-five to thirty professional musicians identified in the Sinfonia's public website as comprising the Sinfonia. Appellants Appendix ("Apx") 50, 58-61. These "regular" players were expected to attend the rehearsals and perform in the concerts listed in the schedule unless they notified the Sinfonia that they were unavailable. See, e.g., Apx65-66.<1> Sinfonia musicians could opt out of concerts they had agreed to play as long as they gave two weeks notice and arranged for an eligible substitute player (i.e., someone selected or approved by the Sinfonia). To remain a "regular" member of the Sinfonia, however, players had to accept the "vast majority of the [Sinfonia] work." Slip op. at 3. Fishman also required "regular" players to attend organizational meetings and to participate in fundraising events and public awareness activities on behalf of the Sinfonia, without any additional pay, and prescribed a behavior standard that "regular" Sinfonia musicians had to follow at all times. Apx34, 46, 64, 68-69. Plaintiffs Tricia Lerohl and Shelley Hanson were "regular" Sinfonia players (playing French horn and clarinet, respectively) from 1990 until 1999, when Fishman terminated them. Slip op. at 4. Before their termination, Lerohl and Hanson, like the other Sinfonia players, were paid weekly based on both the number and duration of the Sinfonia rehearsals and concerts they played the prior week. Apx69. The Sinfonia also made regular, union-scale payments to the musicians union pension fund on behalf of all Sinfonia players, including Lerohl and Hanson. Slip op. at 3. Although not noted in the panel's opinion, the union pension fund specified that contributions could be accepted only on behalf of "employees." The record includes Fishman's written certification to the pension fund administrator certifying that Sinfonia players are "employees" of the Sinfonia. Apx104-05. PANEL DECISION The panel held that Lerohl and Hanson were not "employees" of either the Sinfonia or Jay Fishman and on that basis affirmed the district courts' grant of summary judgment below. In reaching this conclusion, the panel emphasized that "Lerohl, Hanson, and the other ‘regular' Sinfonia musicians retained the discretion to perform elsewhere and to accept or reject playing in a particular concert series" and even "to back out of specific performances after agreeing to perform in a series if they arranged for suitable substitutes." Slip op. at 9. The panel attached minimal significance to the fact that Fishman considered Lerohl and Hanson to be "regular" Sinfonia players, characterizing "regular" status as simply an "inducement" offered to "preferred performers" which did not change the fact that "the musicians retained control over the extent to which they committed their available professional time to the Sinfonia." Id. Applying the multi-factor common-law agency test for determining "employee" versus "independent contractor" status, EEOC had argued that although all of the factors must be taken into account, the primary consideration is the "hiring party's right to control the manner and means by which the product is accomplished." See, e.g., Community for Creative Non-Violence v. Reid, 490 U.S. 730, 751-52 (1989); Nationwide Mutual Ins. Co. v. Darden, 503 U.S. 318, 323-24 (1992). EEOC further argued that the "control" factor weighed heavily in favor of finding Sinfonia players to be "employees" of the Sinfonia because Fishman exercised total control over the manner and means by which Sinfonia players accomplished the end product (Sinfonia concerts). The panel rejected this approach, characterizing it as "contrary to the Supreme Court's repeated admonition that no factor is determinative and all aspects of the parties' relationship must be considered." Slip op. at 5 (citing Darden, 503 U.S. at 325-26, and Reid, 490 U.S. at 750-51). The panel further suggested that in the context of an orchestra, "control" should not be analyzed based on the control exerted by a conductor during individual rehearsals and concerts because "[w]ork by independent contractors is often, if not typically, performed to the exacting specifications of the hiring party." Slip op. at 6. Instead, the panel held, the relevant "control" issue is the amount of discretion Sinfonia musicians retained "to decline particular Sinfonia concerts and play elsewhere," which the panel referred to as the "freedom-of- choice principle." Id. at 8. The panel also found it "highly significant" that the Sinfonia did not withhold taxes or provide any employee benefits other than pension contributions, stating that Sinfonia musicians "accepted payments structured in a manner that confirmed their independent contractor status." Id. at 9. ARGUMENT IN DETERMINING WHETHER PLAINTIFFS ARE "EMPLOYEES" COVERED UNDER FEDERAL EMPLOYMENT DISCRIMINATION LAWS OR INDEPENDENT CONTRACTORS WHO ARE NOT COVERED, THE PANEL APPLIED THE "CONTROL" FACTOR IMPROPERLY AND PLACED UNDUE EMPHASIS ON THE SINFONIA'S FAILURE TO WITHHOLD TAXES. In determining a person's employment status, this Circuit and several other circuits have recognized that a primary consideration is the extent to which the hiring party controls the manner and means by which the hired party accomplishes the end result. The panel erred, first, in rejecting this general principle and, second, in misapplying the "control" factor to these facts. a. First, giving "control" primary consideration under the common law test is not "contrary to the Supreme Court's repeated admonition that no factor is determinative and all aspects of the parties' relationship must be considered," as the panel believed.<2> EEOC does not contend that "control" always trumps all other factors; the common law agency test plainly requires that all of the applicable factors be taken into account. See Reid, 490 U.S. at 752; Darden, 503 U.S. at 324; Hunt, 297 F.3d at 741; Schwieger v. Farm Bur. Ins. Co., 207 F.3d 480, 483-84 (8th Cir. 2000). Nevertheless, the statements in Reid and Darden that "all of the common law factors must be considered" and "no one factor is determinative" are in no way inconsistent with the notion that "control" has special significance. See Hunt, 297 F.3d at 741 (while noting that "no single factor is decisive," recognizing that "the right to control the manner and means by which tasks are accomplished is a primary consideration"). The Supreme Court identified the "control" factor first, and separated it from the long list of additional factors that follow. See Reid, 490 U.S. 751 ("In determining whether a hired party is an employee under the general common law of agency, we consider the hiring party's right to control the manner and means by which the product is accomplished. Among the other factors relevant to this inquiry are ....")(citing, in footnote, Restatement (2d) of Agency, §220(1); other citations omitted; emphasis added); Darden, 503 U.S. at 323 (same). Moreover, the Supreme Court's Reid/Darden test for determining employment status is based on the Restatement (2d) of Agency § 220, which also highlights the special significance of a hiring party's control over the manner and means by which the product is accomplished. The Restatement states, in § 220(1): "A servant is a person employed to perform services in the affairs of another and who with respect to the physical conduct in the performance of the services is subject to the other's control or right to control.")(emphasis added). In § 220(2), the Restatement goes on to list ten additional factors, many of which are reflected in Reid and Darden. In comment (d), the Restatement indicates that "control or right to control the physical conduct of the person giving service . . . in many situations is determinative." Thus, as in Reid and Darden, the Restatement of Agency's special emphasis on the hiring party's control over how the hired party actually performs the job strongly implies the overarching significance of "control" in determining employment status. Indeed, the panel's own decision recognized that some factors are inevitably more significant than others. As the panel noted in its decision, a court's inquiry "requires more than simply tallying factors on each side and selecting the winner on the basis of a point score." Slip op. at 5 (citing Schwieger, 207 F.3d at 487). If application of the common law agency test is not simply a tallying process, then some factors must necessarily be given more weight than others. The Reid and Darden decisions, the Restatement of Agency, and prior decisions of this Court<3> as well as other circuits<4> all support the conclusion that the control factor is properly given particular consideration in determining "employee" versus "independent contractor" status. The "control" that warrants this heightened consideration is not, however, the hiring party's control over the end product to be produced, a notion the Supreme Court expressly rejected in Reid. See 490 U.S. at 748 ("The hiring party's right to control the product simply is not determinative."); see generally 490 U.S. at 741-50. As the panel noted, "[w]ork by independent contractors is often, if not typically, performed to the exacting specifications of the hiring party." See slip op. at 6. What the Supreme Court highlighted, instead, and what the Reid Court found lacking between the Community for Creative Non-Violence and the sculptor hired to produce a statue, was the hiring party's control over "the manner and means by which the product is accomplished." The following hypothetical illustrates the difference in the present context. Instead of arranging various concert series throughout the year, the Sinfonia could have simply distributed grants to individual musicians or groups of musicians and specified that the money was to be used to fund chamber music concerts in public schools in Minneapolis. If, in awarding a particular grant, the Sinfonia specified the general timeframe (say, the months of October and November) and the types of music to be played (for instance, a sampling of baroque, French romantic and American contemporary), but not the specific pieces to be played, the specific dates and times of the concerts, or the dates on which rehearsals were to be conducted, one could conclude that the Sinfonia had exerted control over the end product (by providing detailed specifications for the general timeframe and type of music to be played), but not over the manner and means by which the product was accomplished, leaving that up to the grantees to arrange. In that situation, musicians hired by the grantees to play in these chamber music concerts would most likely not be employees of the Sinfonia. Thus, there can be situations where musicians performing in a conducted band or orchestra are not necessarily "employees." This case is different, however. Plaintiffs Lerohl and Hanson claim they were employees of the Sinfonia because during the nine years they played for the Sinfonia on a regular basis, the Sinfonia controlled not just what they produced (live orchestral music) but every detail concerning the manner and means by which this music was produced, including what they played and how they played it, where and when they rehearsed and performed, what they wore to performances, and how they conducted themselves not only at Sinfonia rehearsals and concerts, but between times, as well. The panel erred as a matter of law in concluding, on these facts, that plaintiffs were independent contractors of the Sinfonia. b. At the very least, this case presents disputed questions of fact as well as undisputed facts from which differing inferences can be drawn, both of which require determination by a trier of fact, not a court reviewing a summary judgment motion. For example, in concluding that Sinfonia players are independent contractors, the panel relied heavily on the undisputed fact that Sinfonia players have some discretion to decline a particular Sinfonia concert and perform in another engagement (as long as they don't do it too often).<5> It is not uncommon, however, for workers, especially those in lower income ranges, to work for more than one employer, a fact that does not preclude finding the worker to be an "employee" of either hiring party (or both). Cf. Hunt, 297 F.3d at 742 ("nothing in the law precludes the possibility that a person may have two or more employers for the same work."). Likewise, it is common for employers who utilize workers on a non-fixed work schedule (like many restaurants that utilize part-time workers with schedules that vary from week to week) to permit their staff the flexibility to find a substitute for an assigned shift because of an unexpected scheduling conflict. This fact, however, does not turn the waitress, busboy or hamburger-flipper into an independent contractor. Thus, rather than supporting a finding that Lerohl and Hanson were independent contractors as a matter of law, the fact that Lerohl and Hanson retained some discretion to decline a particular Sinfonia concert in order to play another engagement is an example of an undisputed fact from which differing inferences can be drawn and which should, therefore, have been left to the trier of fact to determine. See Jenkins, 307 F.3d at 743. Finally, the panel placed undue reliance on the Sinfonia's failure to offer any benefits beyond payments into the musicians union pension fund; failure to withhold income or FICA taxes for Sinfonia players; and payment with IRS Form 1099 instead of a W-2. Admittedly, these are factors to be taken into account. The Sinfonia's tax treatment of its players does not, however, warrant the weight the panel accorded it, because it is too easy for an employer to manipulate tax treatment in order to achieve a desired result which may, in fact, be inconsistent with Congress's intended coverage under federal employment discrimination laws. See Eisenberg v. Advance Reloc. & Storage, 237 F.3d 111, 117 (2d Cir. 2000)(because emphasis on "benefits" and "tax treatment" factors would allow employers "to use individual employment contracts to opt out of the anti-discrimination statutes. ... courts should not ordinarily place extra weight on [these factors] and should instead place special weight on the extent to which the hiring party controls the ‘manner and means' by which the worker completes her assigned tasks.")(emphasis in original).<6> Just as an employer "may not avoid Title VII by affixing a label to a person that does not capture the substance of the employment relationship," Schwieger, 207 F.3d at 483 (internal quotation omitted), so, too, an employer may not avoid Title VII and the ADA simply by imposing a tax treatment that does not reflect the actual employment relationship between the parties. CONCLUSION For the foregoing reasons, Amicus Curiae EEOC urges this Court to grant rehearing by the panel or, if necessary, to grant en banc review of the panel decision in order to correct these mistakes. Respectfully submitted, NICHOLAS M. INZEO Acting Deputy General Counsel PHILIP B. SKLOVER Associate General Counsel LORRAINE C. DAVIS Assistant General Counsel ___________________________________ SUSAN R. OXFORD Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION 1801 L Street, N.W. DATED: March 31, 2003 Washington, D.C. 20507 (202) 663-4791 CERTIFICATE OF SERVICE I hereby certify that two copies of the foregoing brief have been served via overnight mailed by Federal Express to: Jill Clark, Esq. Jill Clark, P.A. 2005 Aquila Avenue North Golden Valley, MN 55427-3236 Fred Finch, Esq. Bassford, Lockhart, Truesdell & Biggs, P.A. 33 South Sixth Street, Suite 3550 Minneapolis, MN 55440 ____________________________ DATED: Susan R. Oxford Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION 1801 L Street, N.W. Washington, D.C. 20507 (202) 663-4791 *********************************************************************** <> <1> Although the panel decision states that the players “advise the Sinfonia whether they agree to play that series” after they receive the schedule, see slip op. at 3, the record suggests Fishman assumed the “regular” players were available unless they notified the Sinfonia to the contrary. Apx45-46. <2> Nor has the Supreme Court rejected this position, as the panel erroneously states. See slip op. at 5 (citing Darden). In Darden, the United States as amicus curiae argued for a modified common-law definition of “employee” that would advance ERISA’s underlying remedial purposes. See 503 U.S. at 325-26 (citing Brief for United States as Amicus Curiae 15-21). In other words, the government had argued that the test for determining “employee” status should be individually tailored for each federal statute, depending on the statute’s underlying purpose. The Supreme Court disagreed and ruled, instead, that where Congress defines the term “employee” as “an individual employed by an employer,” as it has done here, Congress intends to incorporate traditional, common-law principles of agency, and does not intend for the meaning to vary from one statute to another depending on the underlying purposes of the particular legislation in question. 503 U.S. at 323-26. <3> See, e.g., Daggitt v. United Food & Comm’l Wkrs. Int’l Union, 245 F.3d 981, 988 (8th Cir. 2001)(“We consider first the nature of the working relationship between the parties, particularly the union’s right to control the manner and means by which the stewards accomplish their tasks.”); Schwieger, 207 F.3d at 484 (control is “a primary consideration”); Hunt, 297 F.3d at 741 (same). <4> See, e.g., Eisenberg v. Advance Relocation & Storage, Inc., 237 F.3d 111, 114 (2d Cir. 2000)(“greatest emphasis” should be placed on control); Cilecek v. Inova Health Sys. Serv., 115 F.3d 256, 260 (4th Cir. 1997)(common law distinction between employee and independent contractor rests, “at root,” on degree of control exercised by hiring party); Lambertsen v. Utah Dep’t of Corrections, 79 F.3d 1024, 1028 (10th Cir. 1996)(control is “main” or “primary” focus of court’s inquiry). <5> Although Sinfonia players undisputedly had this discretion, plaintiffs presented evidence that the option to decline Sinfonia work was not unlimited. For this reason, this case differs from the “freedom-of-choice” decisions the panel cites. See slip op. at 8-9. <6> The panel said Eisenberg is “readily distinguishable because it involved an hourly full-time warehouse worker, not a consultant or free-lance professional.” Slip op. at 9. But the fact that the worker in Eisenberg was full-time and Sinfonia players are part-time cannot be significant, since Title VII and the ADA plainly extend to part-time, as well as full-time, workers. Nor can it be significant that the worker in Eisenberg was a laborer rather than a professional worker, since the panel acknowledges that many professionals, including musicians, work as employees rather than as independent contractors. The only asserted factual distinction left is the fact that the worker in Eisenberg was paid by the hour, and the panel states that Sinfonia musicians are paid on a per-concert basis. Id. at 3. This, however, is a disputed fact, since plaintiffs assert they were paid weekly an amount that varied depending on both the number and duration of rehearsals and performances that week, in what amounted to an hourly rate. Apx69. If the panel’s erroneous belief that Sinfonia musicians are payed by the job was the panel’s basis for distinguishing Eisenberg, then the panel erred in stating that “the disputed facts, viewed most favorably to Lerohl and Hanson, do not affect” the panel’s conclusion. Id.