United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 09-2365
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Angela Prince, *
*
Plaintiff-Appellant, * Appeal from the United States
* District Court for the
v. * District of Nebraska.
*
Kids Ark Learning Center, * [PUBLISHED]
LLC; Life Changers Academy, *
LLC, *
Defendants-Appellees. *
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Submitted: June 17, 2010
Filed: September 29, 2010
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Before LOKEN, BRIGHT, and GRUENDER, Circuit Judges.
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PER CURIAM.
Angela Prince appeals from judgment as a matter of law entered in favor of
Kids Ark Learning Center, LLC (Kids Ark). Under Title VII of the Civil Rights Act
of 1964, in some circumstances a “successor employer” may be held liable for the
discriminatory employment practices of its predecessor. EEOC v. MacMillan Bloedel
Containers, Inc., 503 F.2d 1086, 1090-91 (6th Cir. 1974) (MacMillan). A jury found
that Prince suffered sexual harassment in violation of Title VII, and Prince sought to
impose successor liability on Kids Ark because the violator, Johnson’s Christian
Daycare (JCD), was defunct. The district court concluded that imposition of
successor liability would be inappropriate and entered judgment for Kids Ark. We
affirm, concluding the district court did not abuse its discretion.
I. Background
Frances Johnson owned JCD, a daycare business that began operating in the
early 1990s and by 1996 had moved into a building purchased by Frances. Prince
worked at JCD from 1996 until Frances terminated her employment in 2001. While
employed by JCD, Prince was sexually harassed by Gary Johnson, the son of Frances.
In February 2003, Prince filed a charge against JCD with the EEOC. During
this same period, several events occurred relevant to this lawsuit. Frances stopped
running JCD because she was experiencing health problems which required surgery
and she could not work. The state began investigating JCD, and Frances’ daycare
license was placed on probation because of drug charges against Gary and because a
child had been left unattended. Frances asked her daughter, Gale Henderson, who
owned and operated a different daycare center, if she wanted to expand her daycare
operations into the JCD location.
Over the next several months, Henderson contacted the appropriate authorities
and sought a new daycare license under the name Kids Ark Learning Center. Gale
testified she sought a new license because she did not want the problems at Kids Ark
affecting her other daycare operation. Gale entered into a lease with Frances of
$5,000 per month for use of JCD’s building, furniture, toys, and some vehicles.
Daycare operations at JCD continued to operate during this period and never ceased
at the JCD location because Kids Ark simply took over. Kids Ark hired five of JCD’s
employees, who initially comprised the only employees of Kids Ark, and JCD’s office
manager took the same position within Kids Ark.
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In 2005 Prince filed suit against JCD in federal court for violations of Title VII.1
Prince later amended her complaint, adding Kids Ark as a defendant on a theory of
successor liability. At the close of Prince’s case-in-chief, Kids Ark moved for
judgment as a matter of law. The district court denied the motion.
The jury returned a verdict in favor of Prince, finding JCD violated Title VII.
The jury did not consider the issue of successor liability. The district court then
granted Kids Ark’s renewed motion for judgment as a matter of law. Within ten days
of entry of judgment, Prince moved for reconsideration under Federal Rules of Civil
Procedure 59(e) and 60(b). The district court denied Prince relief, and Prince timely
appealed.2
II. Discussion
A preliminary issue is the standard of review. Prince correctly contends that
appeal from the denial of a Rule 59(e) motion allows challenge of the underlying
ruling that produced the judgment – in this case, judgment as a matter of law. See
Sanders v. Clemco Indus., 862 F.2d 161, 165 n.3 (8th Cir. 1988) (stating that an
appeal from a Rule 59(e) motion permits the appellant “to challenge . . . all rulings
that produced the judgment,” but the denial of the Rule 59(e) motion itself is reviewed
1
Prince also brought suit against Caring Hearts (a daycare business owned and
operated by Gary Johnson), as well as Gary and Frances individually. Prince later
moved to dismiss the individual defendants and Caring Hearts.
2
Although Prince filed a notice of appeal well past the thirty days allotted by
Fed. R. App. P. 4, she filed her Rule 59(e) Motion to Alter or Amend a Judgment
within ten days of the December 2008 entry of judgment, thereby tolling the thirty-day
period, see Fed. R. App. P. 4(a)(4)(A)(iv), until entry of the March 30, 2009, order
denying her Rule 59(e) motion. See also Sanders v. Clemco Indus., 862 F.2d 161, 168
(8th Cir. 1988) (discussing tolling). Prince timely appealed the March 2009 order.
We have jurisdiction under 28 U.S.C. § 1291.
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for abuse of discretion); Anderson v. Family Dollar Stores of Ark., Inc., 579 F.3d 858,
861-62 (8th Cir. 2009) (reviewing underlying summary judgment de novo but
reviewing Rule 59(e) motion for abuse of discretion).3 Prince next correctly asserts
that we generally review judgment as a matter of law de novo. See Roberson v. AFC
Enters., Inc., 602 F.3d 931, 933 (8th Cir. 2010). Prince thus argues that we review the
successorship issue de novo because the district court granted judgment as a matter
of law on this issue. We disagree.
Successor liability is an equitable determination. Cobb v. Contract Transp.,
Inc., 452 F.3d 543, 553-54 (6th Cir. 2006) (citing MacMillan, 503 F.2d at 1089-91).
“We review for an abuse of discretion the district court’s grant or denial of equitable
relief under Title VII.” Wedow v. City of Kansas City, Mo., 442 F.3d 661, 676 (8th
Cir. 2006) (reviewing the denial of an injunction) (citing Gumbhir v. Curators of the
Univ. of Mo., 157 F.3d 1141, 1144 (8th Cir. 1998)); see also Franks v. Bowman
Transp. Co., 424 U.S. 747, 764 (1976) (noting that federal courts have wide discretion
“to fashion the most complete relief possible” because Title VII is intended to make
whole the victims of discrimination). Here, the jury did not decide the issue of
successor liability, and we conclude that, as an equitable determination, we review a
district court’s determination of successor liability under Title VII for abuse of
discretion.4
3
Prince’s appeal from the denial of a Rule 60(b) motion, on the other hand,
“does not raise the underlying judgment for review; it presents the appellate court only
with the question of whether the trial court abused its discretion in ruling on the
motion.” Sanders, 862 F.2d at 169. Thus, insofar as Prince appeals the denial of her
Rule 60(b) motion, this court may only consider whether the district court abused its
discretion in denying that motion. But this distinction is immaterial in this case
because our review of the court’s successorship determination answers the Rule 60(b)
question.
4
Although a previous Eighth Circuit decision suggests that we review
successorship for clear error, see Dominguez v. Local #64, 674 F.2d 732, 733 (8th Cir.
1982) (holding the district court’s successorship determination was not clearly
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The premise of successor liability is that “[f]ailure to hold a successor employer
liable for the discriminatory practices of its predecessor could emasculate the relief
provisions of Title VII by leaving the discriminatee without a remedy or with an
incomplete remedy.” MacMillan, 503 F.2d at 1091. The leading approach to
resolving questions of successor liability remains the Sixth Circuit’s decision in
MacMillan, where the court set forth a nine-factor test to be applied on a case-by-case
basis. 503 F.2d at 1094. These considerations include: (1) whether the successor
company had notice of the charge; (2) the ability of the predecessor to provide relief;
(3) whether there has been a substantial continuation of business operations; (4)
whether the new employer uses the same plant; (5) whether the new employer uses the
same or substantially the same work force; (6) whether the new employer uses the
same or substantially the same supervisory personnel; (7) whether the same jobs exist
under substantially the same working conditions; (8) whether the new employer uses
the same machinery, equipment, and methods of production; and (9) whether the new
employer produces the same product. Id.
Here, several factors support the imposition of successor liability. The record
indicates that Kids Ark had notice of the discrimination charge against JCD. The
district court acknowledged that JCD was unable to provide relief. Kids Ark operates
in the same location as JCD. The district court found that Kids Ark only had “a few”
of the employees that previously worked at JCD. But Mildred Maclin, a supervisor
at JCD, testified that JCD had ten employees when it ceased operating, five of whom
went over to Kids Ark and constituted the entire initial staff of Kids Ark. Both
businesses provided daycare and therefore the jobs existed under substantially the
erroneous), the standard of review was not at issue in Dominguez, and therefore that
case does not control. See Brecht v. Abrahamson, 507 U.S. 619, 630-31 (1993)
(holding that stare decisis does not bind future courts on issues not squarely
addressed); Sakamoto v. Duty Free Shoppers, Ltd., 764 F.2d 1285, 1288 (9th Cir.
1985) (“[U]nstated assumptions on non-litigated issues are not precedential holdings
binding future decisions.”).
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same working conditions. Maclin also testified that Kids Ark used the same
playground equipment as JCD and some of the same vehicles used by JCD.
Although several of these factors favor the imposition of liability, we cannot
conclude the district court abused its discretion. As the Sixth Circuit recently
explained, the factors listed in MacMillan “are not in themselves the test for successor
liability. . . . The ultimate inquiry always remains whether the imposition of the
particular legal obligation at issue would be equitable and in keeping with federal
policy.” Cobb, 452 F.3d at 554. Here, the district court found that JCD could not
continue operations because its owner (Frances Johnson) had poor health; JCD was
on probation with the state due to mismanagement; and JCD was losing its license
notwithstanding the discriminatory conduct. The district court also found that Kids
Ark had new management (Frances’ daughter, Gale) and new financing. The court
found no connection between the formation of Kids Ark and Prince’s claim of
discrimination. Thus the court determined that imposing successor liability would be
“inappropriate.”
In light of our standard of review, we affirm.
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