Sherrie Ann Adcock vs. Chrysler Corporation and Chrysler Credit Corp. – 166 F.3d 1290 (9th Cir. 1999)

Published Opinions   ·   January 22, 2009

U.S. 9th Circuit Court of Appeals
Adcock vs. Chrysler
9755607

SHERRIE ANN ADCOCK,
on behalf of herself and
all others similarly situated,
Plaintiff-Appellant,
No. 97-55607
vs.
D.C. No.
CHRYSLER CORPORATION,
CV-95-01046-GLT
Defendant-Appellee,
OPINION and
CHRYSLER CREDIT CORPORATION,
Defendant.

Appeal from the United States District Court
for the Central District of California
Gary L. Taylor, District Judge, Presiding

Argued and Submitted
December 9, 1998–Pasadena, California

Filed February 8, 1999

Before: Robert R. Beezer, A. Wallace Tashima, and
Kim M. Wardlaw, Circuit Judges.

Opinion by Judge Wardlaw

_________________________________________________________________

COUNSEL

Jeffrey S. Benice, The Benice Group, Irvine, California, for
the plaintiff-appellant.

Susan J. Boyle, Littler Mendelson, San Diego, California, for
the defendant-appellee.

_________________________________________________________________

OPINION

WARDLAW, Circuit Judge:

This appeal presents the question whether the contemplated
car dealer franchise agreement at issue created an employ-
ment relationship so as to trigger the protections of Title VII
of the Civil Rights Act of 1964, 42 U.S.C. S 2000e-2 (1994)
(“Title VII”). The district court granted summary judgment in
favor of Appellee Chrysler Corporation (“Chrysler”), ruling
that it did not. We have jurisdiction pursuant to 28 U.S.C.
S 1291, and we affirm.

Appellant Sherrie Ann Adcock (“Adcock”) brought suit
against Chrysler under Title VII, alleging that Chrysler’s
refusal to award her a dealership in Taft, California, was the
result of sex discrimination.2 The district court granted sum-
mary judgment for Chrysler, concluding that Title VII protec-
tions did not apply to this case because the contemplated
dealer franchise agreement would have constituted a
“continuing contract, not an employment relationship” subject
to the statute. We review a grant of summary judgment de
novo. See Margolis v. Ryan, 140 F.3d 850, 852 (9th Cir.
1998). Our review is governed by the same standard used by
the trial court under Federal Rule of Civil Procedure 56(c).
See Ghotra v. Bandila Shipping, Inc., 113 F.3d 1050, 1054
(9th Cir. 1997), cert. denied, 118 S. Ct. 1034 (1998).

We must determine, viewing the evidence in the light most favorable to the nonmoving party, whether there are any genuine issues of material fact and whether the district court correctly applied the substantive law. See id.

[1] Title VII provides, in pertinent part, that “[i]t shall be
an unlawful employment practice for an employer to fail or
refuse to hire . . . any individual . . . because of such individual- al’s race, color, religion, sex, or national origin. ” 42 U.S.C. S 2000e-2(a) (1994). One of Congress’ objectives in enacting Title VII was “to achieve equality of employment opportunities . . . .” Griggs v. Duke Power Co., 401 U.S. 424, 429 (1971). “Consequently, there must be some connection with an employment relationship for Title VII protections to
apply.” Lutcher v. Musicians Union Local 47 , 633 F.2d 880,
883 (9th Cir. 1980); see also Baker v. McNeil Island Correc-
tions Ctr., 859 F.2d 124, 127 (9th Cir. 1988). Title VII pro-
tects employees, but does not protect independent contractors. See Lutcher, 633 F.2d at 883; Mitchell v. Frank R. Howard Mem’l Hosp., 853 F.2d 762, 766 (9th Cir. 1988).

[2] Determining whether a relationship is one of employ-
ment or independent contractual affiliation requires a “fact-
specific inquiry which `depends on the economic realities of
the situation.’ ” Id. (quoting Lutcher, 633 F.2d at 883).3 The
primary factor is the extent of the employer’s right to control
the means and manner of the worker’s performance. See
Lutcher, 633 F.2d at 883. Other factors relevant to the inquiry
include, but are not limited to: the kind of occupation, with
reference to whether the work usually is done under the direc-
tion of a supervisor or by a specialist without supervision;
whether the employer furnishes the equipment used and the
place of work; the method of payment; whether the employer
pays social security taxes; the manner in which the work rela-
tionship is terminated; and the intention of the parties. See id.
at n.5.

The parties agree that Chrysler’s “Sales and Service
Agreement” and “Additional Terms and Provisions” (collec-
tively, the “Agreement”) would have governed their relation-
ship had Chrysler awarded Adcock a dealership. The
Agreement is the only relevant evidence in the record regard-
ing whether the relationship contemplated by the parties was
an employment relationship subject to Title VII.

[3] The overwhelming majority of the Lutcher factors sup-
port the district court’s holding that Chrysler and Adcock con-
templated an independent contractual affiliation rather than an
employment relationship. Under the Agreement, the dealer,
not Chrysler, controls the dealership and the day-to-day
vehicle-selling operations. The Agreement does not specify
that the dealer must utilize any particular means or manner to
sell Chrysler’s vehicles, but states only that the dealer is to
use its “best efforts to promote energetically and sell aggres-
sively and effectively.” The dealer maintains discretion over
dealership employment decisions, and over the means and
manner of advertising. Further, even though the Agreement
requires the dealer to conduct its operations “at least during
the hours usual in the trade” of the dealer’s sales locality, the
actual hours of the dealership are left to the dealer’s discre-
tion. See Barnhart v. New York Life Ins. Co., 141 F.3d 1310,
1313 (9th Cir. 1998) (appellant’s “free[dom ] to operate his
business as he saw fit without day-to-day instructions”
weighed in favor of independent contractor status).

[4] Under the Agreement, the dealer, not Chrysler, owns
the dealership, premises, equipment and vehicles sold by the
dealership. This weighs strongly in favor of finding an inde-
pendent contractual affiliation. Cf. Loomis Cabinet, 20 F.3d at
942 (“most significant[ ]” factor in support of finding employ-
ment relationship was that employer owned work site and
provided all equipment, and employees provided only labor);
Mitchell, 853 F.2d at 766 (provision by radiologist of services
at hospital, partially with equipment provided by the hospital,
supported finding that radiologist was hospital employee, not
independent contractor).

[5] Chrysler does not pay the dealer a salary or wage.
Rather, the dealer generates income by selling vehicles it
owns to consumers. In fact, the dealer receives no compensa-
tion from Chrysler. Chrysler does not pay social security taxes
for the dealer, nor does it provide retirement, health care,
worker’s compensation or vacation benefits to the dealer or
the dealer’s employees, all of which are usually associated
with employment. See Barnhart, 141 F.3d at 1314.

[6] That both parties are entitled to terminate the relation-
ship upon written notice, and certain conditions must exist for
Chrysler to terminate, demonstrate that Chrysler does not
have exclusive control over the manner in which the agree-
ment may be terminated, and thus that the relationship would
not have been one of employment. See Lutcher, 633 F.2d at
883 n.5.

[7] Finally, the intention of the parties supports the finding
that the relationship was to be one of independent contractual
affiliation. The Agreement explicitly provides,”[t]his Agree-
ment does not create the relationship of principal and agent
between [Chrysler] and [the dealer], and under no circum-
stances is either party to be considered the agent of the other.” This clear language, though not dispositive, reflects the parties’ intention that Adcock would have been an independent
contractor, not an employee. See Barnhart, 141 F.3d at 1313
(independent contractor status supported where, inter alia,
appellant signed contract containing clear language that he
would be considered an independent contractor, not an
employee); accord Mangram v. General Motors Corp., 108
F.3d 61, 63 (4th Cir. 1997) (Memorandum of Understanding
that “specifically provided that [claimant ] was not an
employee” signed by claimant contributed to finding of inde-
pendent contractor status).

Adcock asserts that certain aspects of the Agreement dem-
onstrate ways in which Chrysler would “control ” the “manner
and means” by which the dealer performs. For instance,
Chrysler determines which products the dealer may purchase
and sets minimum sales requirements. Chrysler also retains
the right to approve the appearance of the dealership and may
specify the dealership location. The dealership must meet cer-
tain financial standards including net working capital, net
worth, wholesale credit and retail financing. Further, the
dealer must engage in advertising and sales promotion pro-
grams, and Chrysler must be allowed easy access to and use
of the dealer’s accounting and other information.

[8] Although a few terms of the Agreement weigh in favor
of an employment relationship, all of the factors must be con-
sidered as a whole in determining employment/independent
contractor status. See Barnhart, 141 F.3d at 1313. On balance, because the overwhelming majority of factors weigh in favor of independent contractor status, we conclude that the Agreement contemplated by Chrysler and Adcock would not have created an employment relationship. Our analysis is bolstered by the Fourth Circuit’s decision in Mangram, 108 F.3d at 63-64, in which our sister circuit held that a prospective automobile dealer, had he been granted a dealership, would not have been considered an employee of the automobile manufacturer because of the substantial independence enjoyed by dealers.

4 Therefore, the district court correctly held that Title VII does
not apply to Adcock’s claims.

We conclude that the district court did not err in granting
summary judgment for Chrysler on Adcock’s Title VII claim.
We do not reach the merits of Adcock’s discrimination claim
because we affirm on the ground that the contemplated
Agreement would not have created an employment relation-
ship subject to Title VII. The judgment appealed from is affirmed.

AFFIRMED.
_______________________________________________________________

FOOTNOTES

1. Adcock brought suit against Chrysler and Chrysler Credit Corporation,
but voluntarily filed a notice of dismissal as to Chrysler Credit Corp. on
January 31, 1996 in the district court.

2. Adcock also claims that Chrysler’s later refusal to award her a dealer-
ship in San Juan Capistrano, California, violated Title VII’s prohibition
against sex discrimination. Although this Court need not reach the ques-
tion whether the district court correctly found that that claim was not
administratively exhausted, the discussion that follows would bar that
claim as well.

3. In Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318 (1992), the
Supreme Court held that whether an individual was an “employee” for
purposes of an ERISA benefits claim was subject to an analysis of com-
mon law agency principles. The Court’s holding applies to statutes that
contain the term “employee” and do not otherwise define the term. See id.
at 321; Loomis Cabinet Co. v. Occupational Safety & Health Review
Comm’n, 20 F.3d 938, 941 (9th Cir. 1994) (applying Darden analysis to
definition of “employee” in OSHA claim). Title VII defines “employee”
exactly as does ERISA. Compare Lutcher, 633 F.2d at 883, with Darden,
503 U.S. at 323-24. The common law agency approach is essentially indis-
tinguishable from the approach previously used by this Circuit in analyz-
ing “employment relationship” for Title VII purposes. See Loomis
Cabinet, 20 F.3d at 941-42.

However, because the precise question before
this Court turns on whether the parties’ agreement would have constituted
an employment relationship, and not on the definition of employee, we
rely on Lutcher, which specifically distinguished employment from inde-
pendent contractual affiliation, id. at 833, and was not abrogated by the
common law approach to defining “employee” of Darden.

4. Although Mangram and Barnhard involved claims under the ADEA,
complementary sections of the ADEA and Title VII are construed consis-
tently. See Romain v. Shear, 799 F.2d 1416, 1418 (9th Cir. 1986) (citing
Oscar Mayer & Co. v. Evans, 441 U.S. 750, 756 (1979)). the end