North Carolina Lawyers Weekly
Where a patent attorney who was a shareholding partner and equal owner of the firm, was compensated according to the firm’s profits and losses, enjoyed a high degree of independence and could only be terminated by a majority of the firm’s board, she was not an “employee” entitled to Title VII protection.
Background
Shawna Lemon practiced patent law at Myers Bigel, first as an associate and then as a shareholding partner and equal owner of the firm. Around 10 years after her elevation to MB’s partnership and its board of directors, Lemon applied for short-term leave. A vote of the full board, however, found Lemon did not qualify for the leave. Interpreting this denial, and certain events that followed, as driven by retaliatory and race-based motivations, Lemon resigned and filed suit.
Lemon’s Title VII claim failed, the district court held, because she had failed to allege sufficient facts to demonstrate that she was an employee of MB, and therefore within the scope of Title VII’s protections. The district court dismissed her § 1981 claim on the grounds that the facts she pled could not support a plausible inference that MB’s decisions were motivated by race.
Title VII
The threshold inquiry in any Title VII case is whether the plaintiff is an employee. As a partner and co-equal owner of MB, with an equal vote on all matters substantially impacting the firm, Shawna Lemon was not an employee. To hold otherwise would be to stretch the concept of “employee” well past its breaking point and needlessly upend understandings that have been central to the organization of firm partnerships for decades.
As a full member of the board with equal voting power, she had as much control over the “rules and regulations” governing the work at MB, and as much ability to “influence the organization” as any other partner. She was not salaried or paid a wage but was instead compensated according to a formula that varied with the “profits [and] losses” of the firm.
Furthermore, Lemon enjoyed a high degree of independence in discharging her duties as partner. She presents no factually grounded allegation that she reported to or received orders from any individual at the firm. Her work was subject to review by other partners, but only pursuant to a policy that applied equally to all shareholders. The purpose of this review was to assure quality control and provide feedback. And finally, no one at the firm possessed unilateral authority to terminate Lemon’s employment. She could only be fired by a majority vote of the full board, of which she was a voting member.
In the face of this evidence, Lemon points to the terms of the employment agreement she signed when she first joined MB as an associate, which subjected her, as an “employee,” to the general control of the firm and which the shareholder agreement did not formally supersede. But the board subsequently voted to amend the shareholder agreement, removing every reference to a signatory as an MB “employee.” This modification represents a clear, written expression of the intention that associates promoted to partners shed their employee status, not just neutralizing Lemon’s argument, but actually inverting it. In short, Lemon is a partner and equal owner of the firm, not an employee, and she is not within the scope of Title VII’s coverage.
Section 1981
Lemon also claimed that MB violated her rights under § 1981 when it denied her request for short-term leave. A prima facie case for discriminatory denial of employment benefits consists of four elements, including that the plaintiff was eligible to receive the benefit. In her complaint, however, Lemon declined to indicate, even in broad outline, the nature of the medical conditions or events that allegedly qualified her for leave.
Even if Lemon’s qualification for leave was assumed, however, she would still have failed to appropriately allege, as required by the Supreme Court’s recent holding in Comcast Corporation v. National Association of African American-Owned Media, 140 S.Ct. 1009 (2020), that her race was the but-for cause of the board’s denial of her leave application. In the end, the district court was left with a sparse set of pleadings, incapable of stating a plausible claim that Lemon’s short-term leave request would not have been denied but for her race.
Affirmed.
Lemon v. Myers Bigel PA (Lawyers Weekly No. 001-013-21, 14 pp.) (J. Harvie Wilkinson III, J.) Appeal No. 19-1380. Jan. 19, 2021. From E.D.N.C. (Louise W. Flanagan, J.) Steven Wayne Seymour and John Heydt Philbeck for Appellant. Kerry A. Shad and Isaac Augustin Linnartz for Appellees.
