Chicago Business Litigation Lawyer Blog
A collection of car dealerships operated through independent LLCs but received management services from the same company. The management services company was owned by the same person who owned the majority interest in each of the dealership LLCs. Each dealership had fewer than fifteen employees individually. A salesman with one of the dealership was fired, and later sued the dealership for racial discrimination. The salesman claimed that the dealerships were subject to Title VII because, in aggregate, they employed more than 15 people. The salesman argued that the corporate veil should be pierced because the dealerships were not actually independent entities. The district court rejected these arguments, and the appellate court affirmed. The appellate court found that the management company and the dealerships observed proper corporate formalities and did not demonstrate the degree of integration that would justify piercing the corporate veil for employee aggregation purposes.
Shannon Prince worked as a salesman with Applecars, LLC for several months in 2017 until he was fired. Applecars claimed that Prince was fired for performance issues, while Prince maintained that the defendants discriminated against him because of his race.
Applecars operated a used car dealership in Appleton, Wisconsin. The dealership was affiliated with four other dealerships throughout Wisconsin: in Wausau, Antigo, Green Bay, and La Crosse. Each of the dealerships was independently owned by a separate Wisconsin limited liability company. Robert McCormick owned a majority or outright share in each of the LLCs. Each of the dealerships also received management services from Capital M, Inc., which McCormick also owned. Applecars had fewer than fifteen employees, but in aggregate the dealerships employed more.
The overlap between the dealerships was substantial, as Capital M provided many services to each dealership, and also tracked dealership inventory, held personal employee records, and issued identical employee handbooks for each dealership. Capital M’s operations manager hired, fired, and promoted each dealership’s general manager. The employees for each dealership gathered as one for events and parties several times per year. Each dealership and LLC, however, properly maintained corporate formalities and records. Capital M billed each dealership separately and each paid Capital M individually for services and for the use of the single website and its associated trademark. Each dealership also filed and paid their own taxes, paid their own employees, and entered into their own contracts for business purposes. Continue reading ›