Lusk v. Foxmeyer Health Corporation

United States Court of Appeals for the Fifth Circuit · 1997 · Corporations

129 F.3d 773 (1997)

Updated August 22, 2026

CorporationsADEAParent-subsidiary liabilitySingle employeremployersingle integrated enterpriseparent corporationsubsidiary

Facts

The plaintiffs were sales consultants employed by FoxMeyer Drug and were terminated under a reduction-in-force plan developed after discussions about FoxMeyer Drug's financial performance and efficiency. FoxMeyer Drug was wholly owned by FoxMeyer Corporation, which was wholly owned by National Intergroup, Inc. (Nil), and the companies shared some officers, directors, headquarters space, and a main phone number. The RIF plan was formed by FoxMeyer Drug and FoxMeyer Corporation executives and approved by Estrin, Butler, and Anderson, who held positions in all three corporations. Nil was a holding company with about fifteen employees whose only employees serviced, maintained, and flew Nil's corporate airplane, and the record showed no involvement by Nil in the daily wholesale drug operations or labor relations of the subsidiaries.

Issue

Whether the summary judgment evidence would permit a finding that Nil and its FoxMeyer subsidiaries constituted a single employer under the ADEA, such that Nil could be held liable for the terminations. More specifically, the question was whether Nil was a final decision-maker in the employment matters underlying the litigation.

Rule

A parent corporation may be treated as a single employer with its subsidiary under the ADEA only when superficially distinct entities are sufficiently interrelated to constitute a single integrated enterprise. The court applies the four-factor Trevino test: (1) interrelation of operations, (2) centralized control of labor or employment decisions, (3) common management, and (4) common ownership or financial control. The analysis ultimately focuses on whether the parent was a final decision-maker in the employment matter at issue, and there is a strong presumption, grounded in limited liability, that a parent is not the employer of its subsidiary's employees; common management and ownership alone are insufficient, and the plaintiff must show control beyond the ordinary parent-subsidiary relationship.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Crescent Packaging, Inc., a manufacturing subsidiary in Baton Rouge, is wholly owned by Pelican Holdings Group, a parent holding company in Dallas. The two corporations share several directors, two top executives hold titles in both entities, and both list the same headquarters address and main switchboard number; however, Crescent alone handles payroll, local HR, and the layoff decision challenged by former employees.

If the former employees sue the parent as a single employer with the subsidiary, which result is most likely?

Explanation. The majority held that there is a strong presumption, grounded in limited liability, that a parent is not the employer of its subsidiary's employees. Common ownership, common management, and even shared headquarters and a phone number are not enough by themselves. The ultimate inquiry is whether the parent was the final decision-maker in the employment matter at issue, and these facts do not show that.