Fifth Circuit Allows Title VII Suit Against Franchisor to Proceed Even Though It Was Not Named in EEOC Charge
- October 03, 2014
In order to sue under Title VII, plaintiffs must first file an administrative charge of discrimination against their employer with the Equal Employment Opportunity Commission. In many cases, the charge misnames the actual corporate employer. The EEOC and federal courts allow such suits to proceed if the actual employer had adequate notice of the charge and an opportunity to defend itself before the EEOC.
What happens, however, when the plaintiff sues an alleged co-employer not named in the EEOC charge? Earlier this month, the Fifth Circuit Court of Appeals agreed that a franchisor not named in the charge could be sued by the plaintiff if it had adequate notice of the EEOC charge. EEOC v. Simbaki, Ltd. involved sexual harassment claims made by several female bartenders against the franchised restaurant where they worked. The EEOC charge listed the name of the restaurant and its street address as the employer. The EEOC later sued the franchisee that employed the plaintiffs. The plaintiffs then moved to intervene in the lawsuit, naming the franchisor as an additional defendant.
The franchisor moved to dismiss the claim against it on the basis that it was never named in the EEOC charge. The Fifth Circuit reversed the district court decision dismissing the franchisor, remanding the matter for further proceedings. The franchisor contended that because the plaintiffs were represented by counsel at the time the EEOC charge was filed, they should not be excused from failing to comply with Title VII’s administrative exhaustion requirements. The Fifth Circuit disagreed, refusing to draw any distinction between plaintiffs represented and not represented by legal counsel.
Instead, the court looked at the question of actual notice. The EEOC mailed the original charge to the franchisor, even though it was not a named party. Instead of requiring plaintiffs to understand the often complex corporate organization structure, the Fifth Circuit said that the question of administrative exhaustion depends on the party’s actual notice of the proceedings, and its opportunity to defend itself before the EEOC, either separately or in concert with the named employer.
The Fifth Circuit rejected the plaintiff’s claim that as long as the EEOC charge uses the business’ trade name, it fulfills the filing requirement for any affiliated corporations. Even if the district court concludes that the franchisor had notice of the claim, this does not mean that it is liable for its franchisee’s actions. In order to assert liability, the plaintiffs will need to prove that the franchisor has control over the franchisee’s actions to the extent that it can be considered a co-employer under Title VII.