STEILBERG (LUCY CRAIG) VS. C2 FACILITY SOLUTIONS, LLC , ET AL.
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RENDERED: AUGUST 1, 2008; 2:00 P.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2007-CA-001500-MR
LUCY CRAIG STEILBERG
v.
APPELLANT
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE JAMES M. SHAKE, JUDGE
ACTION NO. 05-CI-008715
C2 FACILITY SOLUTIONS, LLC
AND DALE A. CAIN
APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE: COMBS, CHIEF JUDGE; KELLER, JUDGE; HENRY, SENIOR
JUDGE.
COMBS, CHIEF JUDGE: Lucy Craig Steilberg appeals from a summary
judgment and order of the Jefferson Circuit Court dismissing her claims against C2
Facility Solutions, LLC and Dale A. Cain, the President and Chief Executive
Officer of the corporation. Steilberg’s claims against C2 and Cain arise out of
alleged violations of Kentucky’s Civil Rights Act. Kentucky Revised Statutes
(KRS) Chapter 344. The trial court concluded that Steilberg was not an employee
of C2 and that, therefore, she could not invoke the Act to protect herself against
unlawful discrimination. The court ruled that C2 and Cain were entitled to
judgment as a matter of law. After our review of the oral and written arguments of
counsel, we affirm the conclusion of the trial court that the charges of unlawful
discrimination were not viable because Steilberg worked with the firm as an
independent contractor rather than as an employee.
In November 2004, C2 was a recently established, subscription-based,
software company offering an internet-assisted facility asset management and
maintenance service. As of that date, the corporation had only a dozen clients.
Management believed that the company could be stimulated to expand if an
effective marketing plan were implemented. Cain was acquainted with Steilberg
and was aware that she had experience both in marketing and in public relations.
An interview was scheduled, and Steilberg met with Cain and other C2 employees
over a two-day period in November 2004. In her deposition testimony, Steilberg
indicated that she and Cain quickly identified a shared vision for the company’s
future. Cain offered her an opportunity to “join the group” because “we [C2] need
marketing expertise.” C2 offered to pay Steilberg $5,000.00 per month for her
services, and she accepted. On December 1, 2004, Steilberg began working with
C2 to define its target customers and to develop an array of branding ideas.
Steilberg alleges that within two weeks, Cain began to harass her with
inappropriate and unwelcome sexual overtures. On December 17, 2004, Steilberg
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alleges that Cain made his final inappropriate sexual advance toward her. From
that point on, Steilberg contends that Cain began to retaliate against her.
In March 2005, Steilberg made a complaint to the company’s human
resource department about Cain’s sexual harassment and retaliatory behavior.
Because she felt that his hostility against her was increasing, Steilberg began to
perform more of her work away from C2’s offices. C2 terminated its association
with Steilberg in July 2005.
On October 7, 2005, Steilberg initiated this action against C2 and
Cain. In her complaint, she alleged that Cain had sexually harassed her; had
created a hostile work environment; and had retaliated against her after she refused
to submit to his inappropriate demands. She sought recovery for economic and
emotional damage along with attorneys’ fees, costs, and expenses. In their answer,
Cain and C2 denied Steilberg’s substantive allegations. Cain and C2 explained
that the association with Steilberg had been terminated because the company could
no longer afford to pay for her unproductive services. In addition, they denied that
Steilberg was entitled to pursue a civil rights action against them since she had
never been an employee of the company.
Following a period of extensive discovery, C2 and Cain filed a joint
motion for summary judgment in May 2007. In their memorandum in support of
their motion, C2 and Cain argued that they were entitled to judgment as a matter of
law because Steilberg had been affiliated with C2 only as an independent
contractor and not as an employee entitled to the protection of Kentucky’s Civil
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Rights Act. According to C2 and Cain, Steilberg had been paid in accordance with
monthly invoices that she submitted to the company; the company did not permit
her to participate in the employee benefits package offered to the company’s
employees; the company did not withhold any income taxes, Medicare, or Social
Security payments from her compensation; the company reported her
compensation to the Internal Revenue Service on a Form 1099; and Steilberg had
consistently held herself out to others as an independent contractor.
According to C2 and Cain, all of these facts defined the nature of the
relationship that existed between Steilberg and C2, indicating conclusively that
Steilberg was not an “employee” entitled to the protection offered by the
provisions of Kentucky’s Civil Rights Act. In addition, C2 and Cain argued that
Steilberg’s association with the company was severed solely because she was
never able to become proficient in demonstrating the company’s software service
or to understand its technical aspects. The company never realized a benefit from
her services.
After Steilberg’s memorandum in response was filed, the Jefferson
Circuit Court determined that the provisions of the Kentucky Civil Rights Act did
not apply to protect independent contractors from discrimination. Since Steilberg
had not been an employee of C2, the court held that C2 and Cain were entitled to
judgment as a matter of law. Judgment in their favor was entered on July 26, 2007,
and this appeal followed.
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On appeal, Steilberg argues that the Jefferson Circuit Court erred by
summarily dismissing her claims of unlawful discrimination against Cain and C2.
We disagree.
Kentucky Rules of Civil Procedure (CR) 56.03 provides that a
summary judgment should be granted if the pleadings and all relevant discovery
indicate that there is no genuine issue as to any material fact and that the movant is
entitled to judgment as a matter of law. Steelvest, Inc. v. Scansteel Service Center,
Inc., 807 S.W.2d 476 (Ky.1991). The trial court must grant a motion for summary
judgment only if it appears that it would be impossible for the respondent to
produce evidence indicating the possibility of a favorable judgment against the
movant. Paintsville Hosp. Co. v. Rose, 683 S.W.2d 255 (Ky.1985). Our standard
of review on appeal focuses on whether the trial court correctly concluded that the
moving party was entitled to judgment as a matter of law. Scifres v. Kraft, 916
S.W.2d 779 (Ky.App.1996).
The parties agree that the Kentucky Civil Rights Act protects an
employee against unlawful discrimination. They also agree that the correct
resolution of the motion for summary judgment turns upon whether Steilberg can
be regarded as C2’s employee. C2 and Cain argue that an independent contractor
is not an “employee” as that term is used in the Act and that, therefore, the Act
does not apply. Steilberg contends that the Act protects all individuals and that the
term employee ought to be construed so broadly as to include independent
contractors. In the alternative, Steilberg contends that she was not associated with
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C2 merely as an independent contractor but that she was indeed working for the
firm as an employee.
We have already noted that the Act’s definition of employee offers
little guidance in construing its meaning. Kearney v. City of Simpsonville, 209
S.W.3d 483 (Ky.App.2006). Under the Act, an employee is defined simply as “an
individual employed by an employer[.]” KRS 344.030(5). However, because the
Act is modeled after federal law, we may seek recourse to the federal courts’
construction of the term under similar circumstances. Howard Baer, Inc. v.
Schave, 127 S.W.3d 589 (Ky.2003). Since the language of the Kentucky Civil
Rights Act generally tracks the language of Title VII of the Civil Rights Act of
1964, 42. U.S.C. § 2000e(f), provisions of the Act “should be interpreted
consonant with federal interpretation.” Meyers v. Chapman Printing Co., Inc., 840
S.W.2d 814, 820 (Ky.1992).
The specific provisions of the federal legislation also fail to offer a
clear meaning since Title VII for the most part defines employee as “an individual
employed by an employer.” 42 U.S.C. § 2000e(f). The federal courts have
repeatedly considered the issue now before us. They have held that independent
contractors are not to be treated as employees under the federal provisions and that
the protections provided by the federal statute do not extend to independent
contractors. See Lemmings v. FedEx Ground Package System, Inc., 492 F.Supp.2d
880 (W.D.Tenn. 2007); Alexander v. Rush North Shore Medical Center, 101 F.3d
487 (7th Cir. 1996); Wortham v. American Family Ins. Group, 385 F.3d 1139 (8th
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Cir. 2004); Lambertsen v. Utah Dept. of Corrections, 79 F.3d 1024 (10th Cir.
1996).
In Shah v. Deaconess Hosp., 355 F.3d 496 (6th Cir. 2004), the federal
court considered whether a physician who had been denied hospital privileges was
entitled to the protections provided by Ohio state law and federal employment
discrimination laws. The court noted the generally accepted rule that federal
employment discrimination statutes protect employees – but not independent
contractors. Next, the court concluded that it would apply the common law agency
test to determine whether the disputed party working for the defendant was an
independent contractor or an employee. Referring to an analysis discussed in
Simpson v. Ernst & Young, 100 F.3d 436 (6th Cir.1996), the court reasoned that the
common law approach required the consideration of numerous factors, including
the following:
the hiring party’s right to control the manner and means
by which the product is accomplished; the skill required
by the hired party; the duration of the relationship
between the parties; the hiring party’s right to assign
additional projects; the hired party’s discretion over when
and how to work; the method of payment; the hired
party’s role in hiring and paying assistants; whether the
work is part of the hiring party’s regular business; the
hired party’s employee benefits; and tax treatment of the
hired party’s compensation.
100 F.3d at 443 (citing Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 32324, 112 S.Ct. 1344, 17 L.Ed.2d 581 (1992).
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This test requires a careful case-by-case consideration of the facts.
From our review of the record, there does not appear to be any genuine issue of
material fact that would prevent a determination of the issue as a matter of law.
The record supports the conclusion of the court that Steilberg’s association with C2
was that of an independent contractor rather than that of an employee pursuant to
the common law criteria.
Steilberg presented herself to C2 as a well-connected specialist in
marketing – not as an expert in computer software development, C2’s regular
business. She billed the firm monthly with an invoice for services rendered; she
paid self-employment tax on her earnings. She did not accumulate annual leave
time, nor did she participate in the insurance and retirement benefits offered by the
firm to its employees.
It does not appear from the record that C2 controlled the manner and
means by which Steilberg developed and implemented her marketing strategies.
She used her own vehicle and cell phone, and she was not reimbursed for any
costs. C2 did provide Steilberg with business cards that indicated that she was one
of the firm’s vice-presidents. However, the cards were a product of Steilberg’s
own design and were used merely to show or to advertise her formal affiliation
with the firm. Steilberg had access to shared office space in the firm’s suite as a
matter of convenience, and she attended committee and sales meetings at her own
request rather than by mandate of the company. She was provided the use of a
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company computer only because the hardware requirements of the software
demanded a sophisticated laptop.
The firm eventually began requesting that Steilberg show them some
quantifiable results of her efforts. However, this inquiry came near the end of their
association. Regardless of her status as an employee or independent contractor,
such a progress report would have been foreseeable and reasonable. Steilberg
controlled her own work hours, and her schedule was consistent with that of an
outside consultant rather than an employee. In short, nothing in the record
indicates that C2 in any fashion controlled the manner and means of Steilberg’s
performance as a marketing specialist.
Steilberg took time to familiarize herself with C2’s product and its
broader market goals, but it does not appear that C2 made an effort to train her in
its underlying business. Instead, Steilberg came to the firm ready to put her
education, experience, and contacts to work. There is no evidence to indicate that
C2 intended that Steilberg’s marketing expertise would be added as a permanent
part of the firm’s objectives or that her work was -- or was ever intended -- to
become indefinitely ongoing or integral to the firm’s business. Nor was C2 her
sole area of concentration. Steilberg was involved with the launch of another
business enterprise during the course of her representation of C2.
The trial court did not err in discounting evidence that C2 began to
monitor her performance and to measure the value of her work at a point midway
through their professional association. It was clear that by March 2005, tension
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had mounted at C2, and the firm had begun to reassess its association with
Steilberg. The changes in the climate of her working relationship with the firm
might have been attributable to numerous factors regardless of any characterization
of her status either as an employee or as an independent contractor. The firm’s
decision to undertake an internal investigation of Steilberg’s complaint is
essentially neutral as to whether she was working as an employee or independent
contractor.
Steilberg failed to present any genuine issue of material fact that
would preclude a determination of the legal issue before the trial court. The record
indicates that the trial court correctly concluded that the application of the common
law agency test weighed heavily in favor of defining Steilberg’s association with
C2 as that of an independent contractor rather than an employee. We are
persuaded that it would be impossible for the appellant to produce evidence
warranting a favorable judgment against C2 and/or Dale Cain under these
circumstances. Therefore, we hold that the trial court correctly ruled that C2 and
Cain were entitled to judgment as a matter of law.
The judgment of the Jefferson Circuit Court is affirmed.
ALL CONCUR.
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BRIEF FOR APPELLANT:
BRIEF FOR APPELLEES:
Glenn A. Cohen
Cynthia L. Effinger
Louisville, Kentucky
Kenneth S. Handmaker
Brian C. Corneilson
Louisville, Kentucky
ORAL ARGUMENT FOR
APPELLANT:
ORAL ARGUMENT FOR
APPELLEES:
Cynthia Effinger
Louisville, Kentucky
Brian Corneilson
Louisville, Kentucky
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