Labor & Employment Law Daily Wrap Up, TORT CLAIMS—E.D. Mich.: Employee fired five days after seeking FMLA leave advances civil-conspiracy claim, (Jan 22, 2025)

By Marjorie Johnson, J.D.

While two corporate entities that jointly employ a plaintiff might be considered the same entity for purposes of the intracorporate conspiracy doctrine, such a conclusion could not be made at the pleadings stage.

A former employee for a component-part supplier that was acquired by an investment firm who alleged she was fired five days after seeking FMLA leave survived a motion to dismiss her civil-conspiracy claim alleging the supplier and its CEO engaged in an illegal scheme with the firm and its VP to discriminate against her, interfere with her statutory rights, and retaliate against her. Rejecting the defendants’ contention that the intracorporate conspiracy doctrine necessarily barred her claim since she alleged they were her joint employer, a federal judge found that the issue required factual development. The court also avoided addressing whether Michigan’s Persons with Disabilities Civil Rights Act (PDCRA) barred individual liability by declining to exercise supplemental jurisdiction over those claims against the supervisors (Brown v. Avon Machining, LLC, No. 2:24-cv-11294-SKD-EAS (E.D. Mich. Jan. 17, 2025)).

In 2018, Avon Machining, LLC hired the employee to be its HR manager. At some point after she was hired, she disclosed that she had been diagnosed with ADHD and anxiety. In 2020, she was promoted to director of operations, which was an executive position that provided a raise and a company car. In this role, she continued to supervise the HR department but also took on additional responsibilities related to the company’s strategic operations.

Joint supervisors after acquisition. In April 2023, Auxo Investment Partners purchased Avon and hired an interim CEO to oversee Avon’s operations. The employee claimed that Avon’s new CEO and an Auxo VP became her joint supervisors. She also claimed that at a subsequent evening meeting, she told the CEO that “her medications were wearing off and she was having difficulty focusing” because of her ADHD. In response, he allegedly laughed at her and said, “What, you?” in a mocking tone.

Fired five days after FMLA request. In November 2023, the employee’s symptoms related to her ADHD and anxiety began worsening. On November 16, she submitted a request for intermittent FMLA leave to Avon’s CEO, along with a certification from her doctor. He acknowledged receipt of her request but did not formally approve it, so she continued working. Five days later, the defendants allegedly advised her in an email that her position was being eliminated “effective immediately” and terminated her. She claimed they did not actually eliminate her position but simply renamed it.

She sued, alleging a myriad of claims under federal and state law against both companies and her two supervisors. At issue was the defendants’ motion to dismiss her claims under Michigan’s Persons with Disabilities Civil Rights Act (PDCRA) against the individual defendants and her civil conspiracy claim against all defendants.

PDCRA claims against supervisors. The defendants argued that the PDCRA bars individual liability while the employee claimed that Michigan caselaw suggested that individuals may be liable under the statute. The debate revolved around a 2005 decision by the Michigan Supreme Court, Elezovic v. Ford Motor Co., which held that supervisors can be held individually liable under Michigan’s Elliot-Larson Civil Rights Act, explained the district court. Though Elezovic did not involve or even mention the PDCRA, plaintiffs have often argued that the decision should be interpreted to permit individual liability under the PDCRA since its definition of an employer is “essentially the same” as the ELCRA’s definition.

Michigan state courts have not weighed in on the issue and federal courts have reached different conclusions. “This is because Michigan courts have consistently recognized that the ELCRA is not completely analogous to its federal counterpart, Title VII, which prohibits individual liability,” explained the court. “In contrast, Michigan courts have noted that the PDCRA does mirror its federal counterpart, the ADA, which prohibits individual liability.” Declining to undertake “a leap in interpretation” of either the Michigan Supreme Court’s caselaw or of the PDCRA, the court declined to exercise supplemental jurisdiction over the state-law claims against the individual defendants and dismissed them without prejudice.

Civil-conspiracy claim survives. The defendants also moved to dismiss the employee’s civil-conspiracy claim, in which she claimed that all four of them “illegally, maliciously, and wrongfully conspired with one another” to discriminate against her, interfere with her rights under the FMLA, ADA, and PDCRA, and retaliate against her for exercising such rights. They argued that her common law claim must be dismissed under the intracorporate conspiracy doctrine, which dictates that “if all defendants are members of the same collective entity, there are not two separate ‘people’ to form a conspiracy.”

Specifically, the defendants argued that the intracorporate conspiracy doctrine applied and thus barred the employee’s civil-conspiracy claim since she alleged that Avon and Auxo acted as her joint employer, and two corporations that jointly employ someone become the “same entity.” The employee responds that although she alleged the companies acted as her joint employers, they remained separate legal entities, and the fact that they had different legal counsel supported this conclusion.

Under Michigan law, it is well settled that “‘separate corporate entities will be respected... absent some abuse of corporate form,’” explained the court, and here, the employee did not allege that Avon and Auxo abused their corporate forms such that they should be considered the same entity. While two corporate entities that jointly employ a plaintiff might be considered the same entity, such a factual conclusion requires is not proper on a motion to dismiss.

The case is No. 2:24-cv-11294-SKD-EAS.

Judge: DeClercq, S.

Attorneys: Christopher Chesney (Cronkhite Counsel) for Melissa Brown. Courtney L. Nichols (Plunkett Cooney) for Avon Machining, LLC. Bryant Osikowicz (Miller Johnson) for Auxo Investment Partners, LLC.

Companies: Avon Machining, LLC; Auxo Investment Partners, LLC

Cases: DisabilityDiscrimination Discrimination EmployeeLeave CoverageLiability StateLawClaims TortClaims MichiganNews