The Seventh Circuit recently held that although an employee’s employer was too small to be covered by the FMLA (less than 50 employees), because the employee also provided services to a second company and together the two companies were large enough to be covered by the FMLA, the employee was eligible for FMLA leave. The case is instructive in both the Court’s analysis of the joint employer test as well as the award of attorney’s fees.
In Cuff v. Trans States Holdings, Inc., 2014 WL 4653010 (7th Cir. Sept. 19, 2014), two regional airlines companies– Trans States Airlines and GoJet Airlines– were operating out of Chicago’s O’Hare International Airport, where they each provided services for United Airlines. Trans States and GoJet are wholly owned subsidiaries of Trans States Holdings, Inc.
Trans States employed Darren Cuff as a Regional Manager. In that role, Cuff handled operational issues at O’Hare for both Trans States and GoJet in their relationship with United Airlines.
Trans States denied Cuff’s request for FMLA leave on the grounds that it only had 33 employees who worked at O’Hare and, therefore, fell below the FMLA threshold requirement of at least 50 employees who work within 75 miles of a worksite. When Cuff took the requested leave time anyway, Trans States terminated him.
Cuff sued Trans States, GoJet and Trans States Holdings, alleging that all three companies together were a joint employer that collectively employed nearly 400 employees at O’Hare and, therefore, he was eligible for the FMLA leave he had requested and the companies violated the FMLA by firing him for taking that leave. The lower court agreed with Cuff and granted his motion for summary judgment on liability. The matter then proceeded to trial on damages, where a jury awarded Cuff $28,800 in compensatory damages (to which the Judge added $14,400 as front pay in lieu of reinstatement), as well as $325,000 in attorney’s fees.
The companies appealed, but the Seventh Circuit affirmed the lower court’s decision. The Seventh Circuit observed that under 29 CFR 825.106, the joint employer inquiry is employee specific and focuses on whether (1) the companies shared the employee’s services or (2) one company acted directly or indirectly in the interest of the other company in relation to the employee.
Considering these two factors, the court found that Trans States and GoJet jointly employed Cuff. The court relied on facts showing that Cuff represented Trans States, GoJet and Trans States Holdings in their dealings with United Airlines at O’Hare, that the logos of all three companies appeared on Cuff’s business cards and that one of Cuff’s supervisors had identified Cuff as the contact person for both Trans States and GoJet. Based on this joint employer determination, the court concluded that Cuff was eligible for FMLA leave and had been unlawfully terminated for exercising his rights under the FMLA.
The court also upheld the jury’s award of attorney’s fees, despite the fact that they were more than seven times greater than the jury’s award of compensatory damages. The court reasoned that the FMLA provides for the award of reasonable attorney’s fees to the prevailing party and that the companies’ defense strategy had led to increased attorneys’ fees for both parties. In affirming this issue on appeal, the court bluntly observed, “that’s why… hyper-aggressive defendants who drive up the expense of litigation must pay the full costs, even if legal fees seem excessive in retrospect.”
The Cuff case is significant because it shows that an individual who may not be eligible for FMLA leave through his direct employer, nonetheless may be eligible for such leave if (a) he also provides services to another company (as shown in part by business cards that identify him as a representative of the both companies) and (b) the two companies collectively have at least 50 employees who work within 75 miles of each other. This case also serves as a cautionary tale regarding defense tactics insofar as they may lead to the award of substantial attorneys’ fees, even where the damages verdict is relatively low.