Eeoc v. Global Horizons, Inc

FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

U.S. EQUAL EMPLOYMENT No. 16-35528
OPPORTUNITY COMMISSION,
Plaintiff-Appellant, D.C. No.
2:11-cv-03045-
v. EFS

GLOBAL HORIZONS, INC., DBA
Global Horizons Manpower, Inc.; OPINION
GREEN ACRE FARMS, INC.; VALLEY
FRUIT ORCHARDS, LLC; DOES, 1–10
Inclusive,
Defendants-Appellees.

Appeal from the United States District Court
for the Eastern District of Washington
Edward F. Shea, Senior District Judge, Presiding

Argued and Submitted June 13, 2018
Seattle, Washington

Filed February 6, 2019

Before: Ronald M. Gould and Paul J. Watford, Circuit
Judges, and Barbara Jacobs Rothstein,* District Judge.

Opinion by Judge Watford

*
The Honorable Barbara Jacobs Rothstein, United States District
Judge for the Western District of Washington, sitting by designation.
2 EEOC V. GLOBAL HORIZONS

SUMMARY **

Equal Employment Opportunity Commission

The panel reversed the district court’s orders in an
enforcement action brought by the Equal Employment
Opportunity Commission (“EEOC”) under Title VII of the
Civil Rights Act of 1964 on behalf of Thai workers alleging
discrimination charges against Green Acre Farms and Valley
Fruit Orchards (the “Growers”).

The Growers retained Global Horizons, Inc., a labor
contractor, to obtain temporary workers for their orchards.
Global Horizons recruited workers from Thailand and
brought them to the United States under the H-2A guest
worker program. The district court entered a default
judgment against Global Horizons after it discontinued its
defense in the action; this case focuses solely on the liability
of the Growers.

The district court granted in part the Growers’ Fed. R.
Civ. P. 12(b)(6) motions to dismiss. The district court drew
a distinction between orchard-related matters (managing,
supervising, and disciplining the Thai workers at the
orchards) and non-orchard-related matters (housing,
feeding, transporting, and paying the workers).

The panel held that the district court erred in holding that
the Growers could not be held liable under Title VII for non-
orchard-related matters.

**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
 EEOC V. GLOBAL HORIZONS 3

Deciding in the first instance what test to employ for
determining whether an entity is a joint employer under Title
VII, the panel held that the common-law agency test should
be applied. Under the common-law test, the principle
guidepost is the element of control. The panel rejected the
chief alternative for analyzing employment relationships in
the Title VII context: the economic-reality test. The panel
held that the district court correctly determined that the
EEOC’s allegations were sufficient to establish that the
Growers and Global Horizons were joint employers as to
orchard-related matters. Applying the common-law agency
test, the panel concluded that the EEOC adequately alleged
that the Growers’ employment relationship with the Thai
workers also subsumed non-orchard-related matters.

The panel held that the EEOC plausibly alleged Green
Acre’s liability as a joint employer for the discriminatory
conduct of Global Horizons. The panel further held that the
EEOC plausibly alleged Green Acre’s liability under Title
VII for discrimination relating to non-orchard-related
matters. The panel also held that the EEOC’s allegations
were thinner as they related to the liability of Valley Fruit.
The panel reversed the district court’s dismissal of the
EEOC’s allegations against Valley Fruit with respect to non-
orchard-related matters; and directed on remand that the
EEOC be permitted to amend its complaint as to Valley
Fruit’s liability for non-orchard-related matters. The panel
further directed that the district court should then reconsider
the disparate treatment claim (and the related pattern-or-
practice claim) in light of the EEOC’s allegations regarding
both orchard-related and non-orchard-related matters.

The panel reversed the district court’s order denying the
EEOC’s motions to compel discovery regarding the
Growers’ liability with respect to non-orchard-related
4 EEOC V. GLOBAL HORIZONS

matters. The panel also reversed the district court’s order
granting the Growers’ motion for summary judgment.
Finally, the panel reversed the district court’s order granting
the Growers’ motions for attorneys’ fees because the
Growers were no longer prevailing parties.

COUNSEL

Gail S. Coleman (argued), Elizabeth E. Theran, and Jeremy
D. Horowitz, Attorneys; Lorraine C. Davis, Assistant
General Counsel; Jennifer S. Goldstein, Associate General
Counsel; James L. Lee, Deputy General Counsel; Equal
Employment Opportunity Commission, Office of General
Counsel, Washington, D.C.; for Plaintiff-Appellant.

Justo G. Gonzalez (argued), Lance A. Pelletier, and Brendan
V. Monahan, Stokes Lawrence, P.S., Seattle, Washington,
for Defendants-Appellees.

OPINION

WATFORD, Circuit Judge:

Green Acre Farms and Valley Fruit Orchards (the
Growers) are fruit growers in the State of Washington. In
2003, the Growers experienced labor shortages and entered
into agreements with Global Horizons, Inc., a labor
contractor, to obtain temporary workers for their orchards.
With the Growers’ approval, Global Horizons recruited
workers from Thailand and brought them to the United
States under the H-2A guest worker program, which allows
agricultural employers to hire foreign workers for temporary
and seasonal work.
 EEOC V. GLOBAL HORIZONS 5

In 2006, two of the Thai workers filed discrimination
charges against the Growers and Global Horizons with the
Equal Employment Opportunity Commission (EEOC).
After an investigation, the EEOC brought this action under
Title VII of the Civil Rights Act of 1964. The EEOC
alleged, among other things, that the Growers and Global
Horizons subjected the Thai workers to poor working
conditions, substandard living conditions, and unsafe
transportation on the basis of their race and national origin.
The district court entered a default judgment against Global
Horizons after it discontinued its defense in the action;
Global Horizons was financially insolvent by the time the
EEOC brought suit. This case thus focuses solely on the
liability of the Growers.

Title VII imposes liability for discrimination on
“employer[s].” 42 U.S.C. § 2000e-2(a). The threshold
question raised in this appeal is whether the Growers and
Global Horizons were joint employers of the Thai workers
for Title VII purposes.

At the motion to dismiss stage, the district court divided
the EEOC’s allegations into those involving “orchard-
related matters” (referring to working conditions at the
orchards) and those involving “non-orchard-related matters”
(referring to housing, meals, transportation, and payment of
wages). The district court then held that the EEOC had
plausibly alleged the Growers were joint employers of the
Thai workers as to orchard-related matters, but not as to non-
orchard-related matters. The court accordingly dismissed all
allegations against the Growers relating to non-orchard-
related matters.

Following that decision, the district court (1) granted in
part the Growers’ motions to dismiss; (2) denied in part the
EEOC’s motions to compel discovery; (3) granted the
6 EEOC V. GLOBAL HORIZONS

Growers’ motion for summary judgment; and (4) granted the
Growers’ motions for attorney’s fees on the ground that the
EEOC’s claims were frivolous and without foundation from
the outset. The EEOC challenges each of these orders on
appeal.

We reverse the district court’s dismissal of the EEOC’s
allegations regarding non-orchard-related matters, which in
turn affects each of the other decisions under review. All
parties agree that the Growers and Global Horizons were
joint employers of the Thai workers with respect to orchard-
related matters. Thus, the salient question before us is
whether the EEOC plausibly alleged that the Growers were
also joint employers with respect to non-orchard-related
matters. We conclude that the EEOC has so alleged. We
also conclude that the EEOC’s allegations state a plausible
basis for holding Green Acre liable for discrimination
relating to non-orchard-related matters, and that the district
court should have granted the EEOC leave to amend its
complaint regarding Valley Fruit’s liability with respect to
such matters. Those conclusions require us to reverse each
of the four rulings the EEOC challenges.

I

In 2003, Green Acre and Valley Fruit began to
experience labor shortages and contracted with Global
Horizons to obtain temporary workers for their orchards.
Each Grower separately entered into labor agreements with
Global Horizons covering the periods February–November
2004 and January–November 2005. Pursuant to the
contracts, Global Horizons agreed to recruit foreign workers
for the Growers through the H-2A guest worker program.

The H-2A program, which is administered by the
Department of Labor, allows employers to hire foreign
 EEOC V. GLOBAL HORIZONS 7

workers for agricultural labor on a temporary or seasonal
basis. See 8 U.S.C. § 1101(a)(15)(H)(ii)(a). Congress
designed the program to “balance two competing interests:
to assure employers an adequate labor force on the one hand
and to protect the jobs of citizens on the other.” Orengo
Caraballo v. Reich, 11 F.3d 186, 190 (D.C. Cir. 1993)
(alteration and internal quotation marks omitted).

The H-2A program imposes a number of requirements
on employers reflecting these competing interests. For
example, in order to participate in the program, an employer
must first obtain a labor certification from the Secretary of
Labor by showing:

(A) there are not sufficient workers who are
able, willing, and qualified, and who will be
available at the time and place needed, to
perform the labor or services involved in the
petition, and

(B) the employment of the alien in such labor
or services will not adversely affect the
wages and working conditions of workers in
the United States similarly employed.

8 U.S.C. § 1188(a)(1). In its certification application, the
employer must specify the number of foreign workers that it
needs to offset the shortage of American agricultural
workers. 20 C.F.R. § 655.101(b)(1) (2004). 1 The employer

1
Throughout this opinion, we refer to the version of the Department
of Labor’s regulations in effect in 2004 and 2005, when the Growers
contracted with Global Horizons to hire Thai workers through the H-2A
program. The regulations have been amended and renumbered several
times since then.
8 EEOC V. GLOBAL HORIZONS

must also include a copy of its job offer in the application.
Id. The purpose of requiring the job offer is to ensure that
the employer is offering sufficient pay and benefits to H-2A
guest workers so that the employment of foreign workers
does not adversely affect domestic workers. § 655.102(b).

An employer is required to provide H-2A workers with
certain non-wage benefits as part of the job offer, most
notably housing, meals, and transportation. The Department
of Labor’s regulations spell out in some detail the nature of
these benefits. For instance, the employer must provide H-
2A workers with housing and transportation to and from the
worksite, free of charge. § 655.102(b)(1), (b)(5)(iii). The
employer must also ensure that the workers’ housing and
transportation satisfy all applicable health and safety
regulations. Id. In addition, the regulations require the
employer to provide H-2A workers with three meals a day at
nominal cost or access to free cooking facilities that the
workers can use to prepare their own meals.
§ 655.102(b)(4). Furthermore, the regulations require the
employer to pay H-2A workers at least twice per month at a
specific wage rate set by the Department of Labor.
§ 655.102(b)(9)–(10).

Under their labor contracts, the Growers and Global
Horizons agreed to share responsibility for managing the
Thai workers and for fulfilling the various H-2A
requirements. At the orchards, the Growers agreed to
provide general management and oversight, which included
determining the number of workers needed for each task,
setting quotas for work output, and inspecting the quality of
the work. Global Horizons likewise agreed to provide day-
to-day supervision over the workers. As to the H-2A
requirements, Global Horizons agreed to provide the Thai
workers with housing and transportation and to pay them the
 EEOC V. GLOBAL HORIZONS 9

appropriate wages. The contracts were silent as to which
party bore responsibility for providing the workers with
meals or access to cooking facilities, but Global Horizons
agreed to provide the workers with any legally required
“ancillary support, equipment, supplies, transportation and
facilities,” which encompassed meals or cooking facilities.
In exchange, the Growers agreed to compensate Global
Horizons for the Thai workers’ wages and benefits and to
pay Global Horizons an additional fee for its services.

According to the allegations in the EEOC’s complaint,
the Growers and Global Horizons engaged in a
discriminatory and exploitative scheme to recruit the H-2A
workers. They allegedly targeted impoverished Thai
nationals to work at the orchards in the belief that such
workers would be more compliant and less likely to abscond
than workers of other nationalities. Global Horizons sent
recruiters to Thailand to lure potential workers with false
promises of high wages and steady employment. Global
Horizons also charged the workers exorbitant recruitment
fees for the opportunity to work in the United States. To pay
the fees, many of the Thai workers were forced to mortgage
their homes and land, sometimes along with the homes and
land of their relatives, and to incur other substantial debts.

With respect to orchard-related matters, the Growers and
Global Horizons allegedly subjected the Thai workers to
poor working conditions at the orchards. The Thai workers
were mostly assigned to pick fruit and trim trees, and the
Growers set strict quotas for the amount of fruit to be picked.
According to the EEOC, supervisors pressured the Thai
workers to meet the quotas by verbally harassing them,
calling them degrading names, and threatening them with
pay cuts, termination, and deportation. Moreover, Global
Horizons did not provide the Thai workers with the high
10 EEOC V. GLOBAL HORIZONS

wages or steady employment that it had promised. Global
Horizons often delayed paying the workers or paid them too
little, and there were weeks during which the workers had no
work at all. The Growers and Global Horizons allegedly
discriminated against the Thai workers and treated them
differently from the Mexican workers who also worked at
the orchards. According to the EEOC, the Growers and
Global Horizons assigned the Thai workers more demanding
work, gave them fewer breaks, forced them to work in
extreme heat and in the rain, and gave priority to Mexican
workers when there was a shortage of work.

With respect to non-orchard-related matters, Global
Horizons allegedly subjected the Thai workers to
discriminatory treatment. According to the EEOC’s
complaint, Global Horizons provided the workers with
overcrowded and nearly uninhabitable housing. The
housing lacked adequate kitchen, bathroom, and laundry
facilities, and sometimes lacked even running water or
electricity. Some units were infested with mice, flies, and
cockroaches. These conditions forced the Thai workers to
take desperate measures. Some urinated and defecated
outside because there were not enough bathrooms. Some
slept on the floor because there were not enough beds.
Others dug through the trash to look for beds, mattresses,
and kitchen equipment. Rather than provide meals for the
workers, Global Horizons chose to provide them with access
to cooking facilities, at which the workers were expected to
prepare their own meals. But the Thai workers often did not
have enough to eat because the kitchen facilities and
equipment were inadequate, and Global Horizons’
employees did not take the workers to the grocery store
frequently enough. As a consequence, some workers
resorted to hunting rabbits or birds for food. Global
Horizons also exposed the workers to unsafe conditions
 EEOC V. GLOBAL HORIZONS 11

when transporting them between their housing and the
orchards. The buses were so crowded that some of the
workers had to sit in the middle aisle of the bus, on water
coolers, or on each other’s laps. According to the EEOC, the
Growers and Global Horizons did not subject Mexican
workers to similarly appalling conditions.

Global Horizons allegedly took various measures to
ensure that the Thai workers did not escape from (or
complain about) their dire circumstances. Global Horizons
exercised control over the workers in part by taking
advantage of their crippling debts. Many of the workers had
borrowed heavily to pay Global Horizons’ recruitment fees,
and their only opportunity to pay off those debts was to work
in the United States. Exploiting that vulnerability, Global
Horizons threatened to send the workers back to Thailand if
they ever complained about their poor working and living
conditions. As added pressure, Global Horizons confiscated
the workers’ passports and employed guards to monitor the
workers so that they could not physically escape from the
orchards.

In 2006, two of the Thai workers filed charges of
discrimination with the EEOC. They claimed that the
Growers and Global Horizons engaged in ongoing
discrimination, harassment, and retaliation on the basis of
national origin. The EEOC conducted an investigation from
2006 to 2010 and found reasonable cause to believe that the
charges were true. After unsuccessful conciliation efforts,
the EEOC filed the present action on behalf of the Thai
workers. In the operative First Amended Complaint, the
EEOC asserts four claims for relief under Title VII of the
Civil Rights Act of 1964: (1) disparate treatment based on
race or national origin; (2) hostile work environment and
constructive discharge; (3) retaliation; and (4) related
12 EEOC V. GLOBAL HORIZONS

pattern-or-practice claims. 42 U.S.C. §§ 2000e-2(a), 2000e-
3(a).

The district court granted in part the Growers’ motions
to dismiss the action under Federal Rule of Civil Procedure
12(b)(6). In the district court’s view, the EEOC had not
plausibly alleged that the Growers were joint employers of
the Thai workers as to all employment matters. The court
drew a distinction between orchard-related matters
(managing, supervising, and disciplining the Thai workers at
the orchards) and non-orchard-related matters (housing,
feeding, transporting, and paying the workers). The court
concluded that the Growers had outsourced the non-orchard-
related matters to Global Horizons, and that the Growers’
employment relationship with the Thai workers therefore
extended only to orchard-related matters. Based on that
conclusion, the court dismissed all allegations against the
Growers relating to non-orchard-related matters. The court
then decided that the remaining allegations were insufficient
to sustain the disparate treatment claim, the retaliation claim
against Valley Fruit, and the related pattern-or-practice
claims. Later, in accordance with its earlier rulings, the court
denied the EEOC’s motions to compel discovery to the
extent that those motions sought information related to non-
orchard-related matters.

After discovery concluded, the district court granted
summary judgment in favor of the Growers on the EEOC’s
remaining Title VII claims: the hostile work environment
and constructive discharge claim, the retaliation claim
against Green Acre, and related pattern-or-practice claims.
Having barred discovery for non-orchard-related matters,
the court reviewed the claims only in light of evidence
regarding orchard-related matters. Based on that limited
review, the court concluded that no reasonable trier of fact
 EEOC V. GLOBAL HORIZONS 13

could find that the Growers had discriminated against the
Thai workers in violation of Title VII.

The district court then granted the Growers’ motions for
attorney’s fees. The court held that the EEOC had not
conducted an adequate investigation before filing suit and
had pursued frivolous claims and remedies as a result. In
particular, the court faulted the EEOC for predicating its
claims on the theory that the Growers could be held liable as
joint employers as to non-orchard-related matters.

After entry of final judgment, the EEOC filed this timely
appeal.

II

Our analysis begins and largely ends with the district
court’s holding that the Growers could not be held liable
under Title VII for non-orchard-related matters. That
holding, which we conclude below was erroneous, provided
the foundation for each of the orders the EEOC challenges
on appeal.

A

Under Title VII, an entity can be held liable for
discrimination if it is an “employer” of the plaintiff.
42 U.S.C. § 2000e-2(a). It is now well-settled that an
individual can have more than one employer for Title VII
purposes. See, e.g., Frey v. Hotel Coleman, 903 F.3d 671,
676–77 (7th Cir. 2018); Al-Saffy v. Vilsack, 827 F.3d 85, 96
(D.C. Cir. 2016); Faush v. Tuesday Morning, Inc., 808 F.3d
208, 215 (3d Cir. 2015); Butler v. Drive Automotive
Industries of America, Inc., 793 F.3d 404, 408–10 (4th Cir.
2015). The law recognizes that two entities may
simultaneously share control over the terms and conditions
14 EEOC V. GLOBAL HORIZONS

of employment, such that both should be liable for
discrimination relating to those terms and conditions. See
Butler, 793 F.3d at 408–10. The two entities in such
circumstances are deemed to be joint employers of the
employees in question.

Our court has not yet adopted a test for determining when
an entity may be held liable as a joint employer under Title
VII. The EEOC correctly points out that we addressed this
issue once before in EEOC v. Pacific Maritime Association,
351 F.3d 1270 (9th Cir. 2003), but the panel opinion in that
case was vacated upon the grant of rehearing en banc.
367 F.3d 1167 (9th Cir. 2004). The parties voluntarily
dismissed the case before rehearing occurred, so our court
never issued an opinion sitting en banc.

We are therefore required to decide in the first instance
what test to adopt for determining whether an entity is a joint
employer. Title VII itself does not shed much light on the
answer. Under the statute, the term “employer” is defined
(subject to exclusions not relevant here) as “a person
engaged in an industry affecting commerce who has fifteen
or more employees . . . and any agent of such a person.”
42 U.S.C. § 2000e(b). The term “employee” is defined
(again subject to exclusions not relevant here) as “an
individual employed by an employer.” § 2000e(f).

The Supreme Court has held that, when confronted with
“completely circular” definitions like these, courts should
use common-law agency principles to analyze the existence
of an employer-employee relationship. Nationwide Mutual
Insurance Co. v. Darden, 503 U.S. 318, 323 (1992). As the
Court has noted, a lack of congressional guidance “often
reflects an expectation that courts will look to the common
law to fill gaps in statutory text, particularly when an
undefined term has a settled meaning at common law.”
 EEOC V. GLOBAL HORIZONS 15

Clackamas Gastroenterology Associates, P.C. v. Wells,
538 U.S. 440, 447 (2003). The Court has relied on common-
law agency principles to flesh out the meaning of
“employer” and “employee” when construing other statutes
that contain the same circular definitions as those found in
Title VII. See id. at 444–45 (Americans with Disabilities
Act); Darden, 503 U.S. at 322–23 (Employee Retirement
Income Security Act). We conclude that the common-law
agency test should be applied in the Title VII context as well.

Under the common-law test, “the principal guidepost” is
the element of control—that is, “the extent of control that
one may exercise over the details of the work of the other.”
Clackamas, 538 U.S. at 448 (internal quotation marks
omitted). The Court has provided a non-exhaustive list of
factors to consider when analyzing whether the requisite
control exists:

the skill required; the source of the
instrumentalities and tools; the location of the
work; the duration of the relationship
between the parties; whether the hiring party
has the right to assign additional projects to
the hired party; the extent of the hired party’s
discretion over when and how long to work;
the method of payment; the hired party’s role
in hiring and paying assistants; whether the
work is part of the regular business of the
hiring party; whether the hiring party is in
business; the provision of employee benefits;
and the tax treatment of the hired party.

Darden, 503 U.S. at 323–24 (internal quotation marks
omitted). There is “no shorthand formula” for determining
whether an employment relationship exists, so “all of the
16 EEOC V. GLOBAL HORIZONS

incidents of the relationship must be assessed and weighed
with no one factor being decisive.” Id. at 324 (internal
quotation marks omitted).

We reject the chief alternative for analyzing employment
relationships in the Title VII context: the economic-reality
test. That test focuses on whether workers are economically
dependent on the alleged joint employer. Torres-Lopez v.
May, 111 F.3d 633, 641 (9th Cir. 1997). Like the common-
law agency test, the economic-reality test provides a non-
exhaustive list of factors courts should consider. Id. at 639–
40. However, the economic-reality test was developed in the
context of the Fair Labor Standards Act (FLSA) and the
Migrant and Seasonal Agricultural Worker Protection Act
(AWPA), two statutes that differ from Title VII in material
respects. Unlike Title VII, both the FLSA and the AWPA
provide broad definitions of “employ” that expand the scope
of employment relationships beyond the common-law
understanding. 29 U.S.C. §§ 203(g), 1802(5); see also
Darden, 503 U.S. at 326. In addition, the Department of
Labor has promulgated regulations under the FLSA and the
AWPA to guide the analysis for joint employment. See
29 C.F.R. §§ 500.20(h)(5), 791.2. The economic-reality test
is based on the broad statutory definitions found in the FLSA
and the AWPA and the regulatory guidance described above.
See Torres-Lopez, 111 F.3d at 639–40; Bonnette v.
California Health and Welfare Agency, 704 F.2d 1465,
1469–70 (9th Cir. 1983). Because those features are not
present in the Title VII scheme, we see no basis for
supplanting the common-law test with the economic-reality
test.

We acknowledge that there may be little functional
difference among the common-law agency test, the
economic-reality test, and a third test that blends elements of
 EEOC V. GLOBAL HORIZONS 17

the first two (the so-called “hybrid” test). See Murray v.
Principal Financial Group, Inc., 613 F.3d 943, 945 (9th Cir.
2010). All three are fact-intensive tests that will usually
produce the same outcome in a joint-employment analysis.
But Supreme Court precedent dictates that the common-law
test governs when a statute does not meaningfully define
terms like “employer” and “employee.” See Clackamas,
538 U.S. at 444–45; Darden, 503 U.S. at 322–23. Thus, we
conclude that the common-law agency test is the most
appropriate one for Title VII purposes.

B

The district court correctly determined that the EEOC’s
allegations are sufficient to establish that the Growers and
Global Horizons were joint employers as to orchard-related
matters. The Growers do not contest that determination on
appeal. The only issue is whether the EEOC plausibly
alleged that the Growers’ employment relationship with the
Thai workers also subsumed non-orchard-related matters.
Applying the common-law agency test, we conclude that the
EEOC adequately alleged that element of its claims.

In a typical employment relationship, the employer does
not have control over non-workplace matters such as
housing, meals, and transportation. Employees are usually
expected to find their own housing, provide for their own
meals, and arrange for their own transportation to and from
work. Those matters ordinarily do not constitute terms and
conditions of employment, so if an employee experiences
discrimination in obtaining adequate housing, for example,
the employer would not be liable for failing to stop that
discrimination.

The H-2A program establishes a different relationship
between an employer and the foreign guest workers it
18 EEOC V. GLOBAL HORIZONS

employs. As explained above, the H-2A regulations place
on the shoulders of an “employer” (a defined term to which
we will return in a moment) the legal obligation to provide
foreign guest workers with housing, transportation, and
either low-priced meals or access to cooking facilities.
20 C.F.R. § 655.102(b)(1), (4), (5)(iii). Under the
regulations, these benefits constitute “material terms and
conditions of employment,” which must be stated in the job
offer provided to all potential H-2A workers. § 655.100(b).
The H-2A program thus expands the employment
relationship between an H-2A “employer” and its workers to
encompass housing, meals, and transportation, even though
those matters would ordinarily fall outside the realm of the
employer’s responsibility.

The Growers contend that they were not “employers” of
the Thai workers with respect to non-orchard-related
matters. In their view, only Global Horizons was the
employer because it was the entity that recruited the workers
from Thailand, brought them to the United States, and
contractually agreed to be responsible for paying their wages
and providing the benefits required under the H-2A program.

The plain language of the H-2A regulations, at least as
they stood in 2004–2005, compels us to reject the Growers’
argument. The regulations during that time period defined
the term “employer” as an entity “which suffers or permits a
person to work and (1) which has a location within the
United States to which U.S. workers may be referred for
employment, and which proposes to employ workers at a
place within the United States and (2) which has an employer
relationship with respect to employees under this subpart as
indicated by the fact that it may hire, pay, fire, supervise or
otherwise control the work of any such employee.”
§ 655.100(b). The regulations also state that the
 EEOC V. GLOBAL HORIZONS 19

“employers” who may utilize the H-2A program normally
share certain characteristics, first among them “[a] fixed-site
farm, ranch, or similar establishment.” § 655.93(a)(1).

Under these provisions, the Growers qualify as
“employers.” The Growers each own a fixed-site farm, and
they meet both prongs of the regulatory definition of
“employer.” Each has a location in the United States at
which it proposed to employ foreign guest workers, and
neither Grower disputes that it had an employment
relationship with those workers by virtue of its ability to
“supervise or otherwise control the work” of the Thai
workers. The Growers’ status as “employers” of the Thai
workers is further confirmed by the fact that, at the time
relevant here, foreign guest workers admitted under the H-
2A program could work only at the farm or other fixed-site
location designated in the certification order issued by the
Department of Labor. § 655.106(c)(1). The regulations
sensibly placed the obligation for providing housing, meals,
transportation, and wages on the owner of the farm
designated in the certification order, since the foreign
workers were admitted to the United States on a temporary
basis solely to render services for the owner’s benefit.

The terms of the contracts between the Growers and
Global Horizons do not change this analysis. The contracts,
it is true, delegated to Global Horizons responsibility for
providing housing, access to cooking facilities,
transportation, and wages for the Thai workers. But that
contractual delegation did not absolve the Growers of their
legal obligations as “employers” under the H-2A
regulations. Those obligations were imposed on the
Growers as a matter of law. The Growers were free to
contract with another entity to help discharge their legal
20 EEOC V. GLOBAL HORIZONS

obligations, but responsibility for compliance ultimately
rested on the Growers’ shoulders.

With this regulatory backdrop in mind, we must
determine whether the EEOC has plausibly alleged that the
Growers were joint employers under Title VII as to non-
orchard-related matters. Most of the factors we would
typically consider in applying the common-law agency test,
see Darden, 503 U.S. at 323–24, do not apply here because
we are not dealing with matters ordinarily encompassed
within an employment relationship. But the common law’s
“principal guidepost”—the element of control—is
determinative. Clackamas, 538 U.S. at 448. As just
discussed, pursuant to the 2004–2005 H-2A regulations, the
Growers were legally obligated to provide the Thai workers
with housing, meals, transportation, and wages. The
Growers possessed ultimate authority over those matters,
even though they delegated responsibility to Global
Horizons and agreed to compensate Global Horizons for its
services. If the Growers were dissatisfied with the quality of
Global Horizons’ services, they could have demanded
changes, withheld payment, or ended the contract with
Global Horizons altogether. The power to control the
manner in which housing, meals, transportation, and wages
were provided to the Thai workers, even if never exercised,
is sufficient to render the Growers joint employers as to non-
orchard-related matters. See Browning-Ferris Industries of
California, Inc. v. NLRB, __ F.3d __, 2018 WL 6816542, at
*10–11 (D.C. Cir. Dec. 28, 2018).

C

Although the EEOC has plausibly alleged that the
Growers were joint employers as to non-orchard-related
matters, that does not end our analysis. The EEOC alleged
that Global Horizons, rather than the Growers, was the entity
 EEOC V. GLOBAL HORIZONS 21

directly responsible for engaging in discriminatory conduct
as to non-orchard-related matters.

As our sister circuits have explained, even if a joint-
employment relationship exists, one joint employer is not
automatically liable for the actions of the other. See, e.g.,
Burton v. Freescale Semiconductor, Inc., 798 F.3d 222, 228–
29 (5th Cir. 2015); Whitaker v. Milwaukee County, 772 F.3d
802, 811–12 (7th Cir. 2014). Liability may be imposed for
a co-employer’s discriminatory conduct only if the
defendant employer knew or should have known about the
other employer’s conduct and “failed to undertake prompt
corrective measures within its control.” EEOC, Notice No.
915.002, Enforcement Guidance: Application of EEO Laws
to Contingent Workers Placed by Temporary Employment
Agencies and Other Staffing Firms, 1997 WL 33159161, at
*11 (Dec. 3, 1997). We have employed that same
negligence standard in an analogous setting, involving an
employer’s liability for the discriminatory conduct of third
parties in the workplace. See, e.g., Freitag v. Ayers, 468 F.3d
528, 538 (9th Cir. 2006) (subjecting Department of
Corrections to liability for prisoners’ sexual harassment of
female guards); Little v. Windermere Relocation, Inc.,
301 F.3d 958, 968 (9th Cir. 2002) (subjecting employer to
liability for client’s rape of employee). We agree with the
Fifth and Seventh Circuits that this standard should govern
in the joint-employment context as well. See Burton,
798 F.3d at 228–29; Whitaker, 772 F.3d at 811–12.

The EEOC has plausibly alleged Green Acre’s liability
as a joint employer for the discriminatory conduct of Global
Horizons. In its complaint, the EEOC alleged that some of
the Thai workers complained directly to Green Acre
personnel, including its co-owner, about their abysmal living
conditions, unsafe transportation, and missing or late wages.
22 EEOC V. GLOBAL HORIZONS

According to the EEOC, the Thai workers told Green Acre’s
employees that similarly situated Mexican workers were not
subject to the same substandard conditions. These
allegations give rise to the plausible inference that Green
Acre knew or should have known about Global Horizons’
discriminatory conduct relating to non-orchard-related
matters. As explained above, the EEOC’s allegations
establish that Green Acre had ultimate control over those
matters and thus could have taken corrective action to stop
the discrimination. According to the EEOC’s complaint,
Green Acre failed to take any such action. Accordingly, the
EEOC has plausibly alleged Green Acre’s liability under
Title VII for discrimination relating to non-orchard-related
matters.

The EEOC’s allegations are thinner as they relate to the
liability of Valley Fruit. As with Green Acre, the EEOC
plausibly alleged that Valley Fruit had ultimate control over
non-orchard-related matters and failed to take appropriate
corrective action to stop Global Horizons’ discriminatory
conduct. But the complaint does not adequately allege that
Valley Fruit knew or should have known about that conduct,
a necessary condition to trigger its obligation to take prompt
corrective action. The complaint alleges only that state and
federal authorities were investigating Global Horizons for
providing substandard housing and inadequate wages during
the time period in question here. The complaint does not
allege that Valley Fruit ever became aware of these
investigations, nor provide a plausible basis for inferring that
knowledge of the investigations would have alerted Valley
Fruit to the fact that Global Horizons was allegedly
discriminating against the Thai workers on the basis of race
or national origin.
 EEOC V. GLOBAL HORIZONS 23

Nevertheless, we cannot affirm the district court’s
dismissal of the EEOC’s allegations against Valley Fruit
with respect to non-orchard-related matters. The district
court did not predicate dismissal of those allegations on the
ground that they failed to raise a plausible inference that
Valley Fruit knew or should have known about Global
Horizons’ discriminatory conduct. It instead dismissed
those allegations on the ground that Valley Fruit could not
be found liable as a matter of law for non-orchard-related
matters. We have now reversed that ruling, and on remand
the EEOC should be permitted an opportunity to amend its
complaint with respect to Valley Fruit’s liability as to non-
orchard-related matters. From the record before us, it does
not appear as though amendment in that regard would be
futile. The record contains declarations from several Thai
workers stating that Valley Fruit personnel provided or
directly observed the workers’ substandard living
conditions, unsafe transportation, and inadequate wages.
These declarations suggest that, as with Green Acre, Valley
Fruit knew or should have known that the Thai workers were
being treated less favorably than the Mexican workers.

III

In light of the discussion above, we reverse each of the
orders challenged on appeal. First, we reverse the district
court’s order granting in part the Growers’ motions to
dismiss. The court erred by dismissing the EEOC’s
disparate treatment claim (and the related pattern-or-practice
claim) on the ground that the Growers were not joint
employers of the Thai workers as to non-orchard-related
matters. (The EEOC does not challenge the dismissal of its
retaliation claim or the related pattern-or-practice claim.)
On remand, the district court is instructed to grant the EEOC
leave to amend its complaint with respect to Valley Fruit’s
24 EEOC V. GLOBAL HORIZONS

liability as to non-orchard-related matters. The court should
then reconsider the disparate treatment claim (and the related
pattern-or-practice claim) in light of the EEOC’s allegations
regarding both orchard-related and non-orchard-related
matters.

Second, we reverse the district court’s order denying the
EEOC’s motions to compel discovery regarding the
Growers’ liability with respect to non-orchard-related
matters. The court’s order was predicated on the incorrect
premise that the Growers could not be held liable for non-
orchard-related matters as a matter of law.

Third, we reverse the district court’s order granting the
Growers’ motion for summary judgment. At that stage, the
court reviewed the EEOC’s remaining Title VII claims only
in light of the evidence regarding orchard-related matters,
after having cut off discovery for all non-orchard-related
matters. On remand, following appropriate discovery, the
court is instructed to reconsider the EEOC’s claims in light
of evidence regarding both orchard-related and non-orchard-
related matters.

Finally, we reverse the district court’s order granting the
Growers’ motions for attorney’s fees, as the Growers are no
longer prevailing parties. See 42 U.S.C. § 2000e-5(k).
Moreover, the EEOC’s litigation position was not frivolous,
unreasonable, or without foundation. See Christianburg
Garment Co. v. EEOC, 434 U.S. 412, 421 (1978).

REVERSED and REMANDED WITH
INSTRUCTIONS.

The Growers’ motion to supplement the record on
appeal, filed April 4, 2017, is DENIED.