January 09, 2026|Franchise Frontlines
January 9, 2026 | U.S. District Court, M.D. Tennessee, Nashville Division | Slip Copy — Not Yet Reported (2026 WL 75831)
Executive Summary
In a slip-copy decision not yet released for publication, Judge Aleta A. Trauger of the United States District Court for the Middle District of Tennessee, Nashville Division, granted summary judgment dismissing an indirect corporate parent from an employment suit and largely—though not entirely—resolved the claims against the operating employer. Plaintiff Katrina Hay, a registered nurse, sued both her direct employer, Access Center Services, LLC (“ACS”), and Community Health Systems, Inc. (“CHSI”), a publicly traded holding company with no employees that the record described as sitting three entities removed from direct ownership of ACS, asserting pregnancy-, leave-, and discrimination-related claims under Title VII and the Pregnancy Discrimination Act, the Family and Medical Leave Act (“FMLA”), and Tennessee law. CHSI argued that it was not Hay’s employer under any recognized theory because it had no employees and did not control ACS’s personnel decisions; Hay countered that common ownership, shared officers, an affiliated entity’s provision of human-resources services, and a system-wide code of conduct made CHSI a joint or single employer. The court held that CHSI was not Hay’s employer under the single-employer, joint-employer, or agency theories and granted its motion in full, and it separately granted ACS summary judgment on most of Hay’s claims—dismissing her Tennessee statutory claims as time-barred and her Title VII, Pregnancy Discrimination Act, failure-to-accommodate, and Title VII retaliation claims—while allowing a single FMLA retaliation claim to proceed to trial.
Relevant Background
Hay began working for ACS in January 2021 as a full-time registered nurse transfer coordinator, a role responsible for coordinating patient transfers among affiliated hospitals. ACS was her employer, and it conceded as much. CHSI, by contrast, was described in the record as a Delaware holding company with no employees whose only direct holding was another no-employee holding company, and which stood—in the words of a corporate declaration in the record—three entities removed from direct ownership of ACS. According to that record, CHSI did not operate, manage, or direct the day-to-day operations of ACS, did not direct ACS’s employees, maintained separate banking and accounting, and shared some, but not all, of its board members with ACS.
A separate affiliate figured prominently in the dispute. ACS had no human-resources department of its own; instead, human-resources services were provided by CHSPSC, LLC, an indirect subsidiary of CHSI, under a professional-services agreement. Several of the individuals who handled the employment decisions affecting Hay were employed by CHSPSC but, according to their testimony, acted as agents or representatives of ACS in doing so, and the remaining decision-makers were ACS employees. The same corporate family also licensed the “CHS” and “Community Health Systems” names—which the record characterized as trade names rather than legal entities—for ACS’s use.
Hay’s claims arose from the handling of her pregnancy, her leave, and her attempted return to work. She took twelve weeks of FMLA leave and was offered reinstatement to her prior full-time position; a dispute followed over whether she could return on a part-time or “PRN” basis and over whether her subsequent separation was a resignation or a termination. Hay sued both ACS and CHSI, alleging that they operated as joint employers or an integrated enterprise. Both defendants moved for summary judgment—CHSI on the ground that it never employed Hay, and ACS on the ground that her claims failed on the merits or were untimely—and the matter came before the court on those cross-motions.
Decision
The court analyzed whether CHSI could be treated as Hay’s employer under three theories—single employer (integrated enterprise), joint employer, and agency—each of which can, in principle, reach an entity that does not formally employ a plaintiff. Under the single-employer or integrated enterprise doctrine, courts ask whether two entities are “so interrelated that they constitute a single employer,” weighing common ownership, common management, centralized control of labor relations, and interrelation of operations, with “control over labor relations” the central concern; the analysis, in the court’s words, “ultimately focuses upon whether the parent corporation was the final decision-maker with regard to the employment issue underlying the litigation.” The court accepted that Hay had shown some common ownership and some shared officers, but found it “determinative” that CHSI had no employees and that ACS’s personnel decisions were made by ACS employees, “assisted by HR personnel employed by CHSPSC but acting as agents for ACS.” On that record, the court held that ACS and CHSI “did not act as a single employer.”
The court reached the same conclusion under the joint-employer and agency theories. A joint-employer inquiry looks holistically at factors such as supervision of day-to-day activities and authority over hiring, firing, discipline, and pay, and the court found that Hay “has not shown that CHSI and ACS operated as” her joint employer. On agency, the court noted that ordinary agency principles can support liability against an entity that did not employ the plaintiff, but the record established that ACS “has never been designated as an agent of, or authorized to act on behalf of, CHSI.” The court accordingly declined to treat the shared “CHS” trade name, a system-wide code of conduct, and the affiliate-provided HR function as evidence of employer status, observing that a publicly traded company and its subsidiaries are required to maintain such a compliance program and that each affiliated entity adopts the code through its own board. CHSI was dismissed from the case in full.
Turning to ACS, the court dismissed Hay’s Tennessee statutory claims as time-barred and granted summary judgment on her Title VII and Pregnancy Discrimination Act claims, her failure-to-accommodate claim, and her Title VII retaliation claim. It also dismissed her FMLA interference claim, noting that she had received her twelve weeks of leave and been offered reinstatement. The court denied summary judgment, however, on Hay’s FMLA retaliation claim. It found a triable dispute over whether Hay had resigned or been terminated—evidence suggested she was told she could return only to full-time, twelve-hour shifts despite earlier assurances that a part-time or PRN role would be available—and observed that even a resignation could, on these facts, amount to a constructive discharge. On causation, the court pointed to the close timing between the end of Hay’s leave eligibility and her separation, to internal HR communications indicating that management “did not want” Hay, and to evidence that other employees had been permitted to move from full-time to part-time or PRN status while Hay was told that option was unavailable. Notably, the court reached only the first step of the governing burden-shifting framework: because ACS, in the court’s words, “does not discuss the next steps”—that is, it did not argue that its reasons were non-retaliatory or that Hay could not show pretext—the court “decline[d] to address an argument the defendant did not make” and allowed the claim to proceed.
Looking Forward
For franchisors, brand licensors, and holding companies organized in multiple tiers, Hay offers a useful, if fact-bound, illustration of how corporate distance may defeat an effort to pull a remote upstream entity into employment litigation. The decision turned on the specific record before the court: a parent with no employees, no role in the operating entity’s day-to-day operations, and no part in the personnel decisions at issue. Although the court applied the integrated-enterprise, joint-employer, and agency doctrines in the employment-discrimination context rather than the franchise context—and those doctrines are related to, but not identical with, the control-based tests that govern franchisor joint-employer questions—the court’s reasoning may inform how courts approach analogous arguments against branded systems built on layered corporate structures. The practical point is a familiar one: a plaintiff generally cannot convert ownership or affiliation, standing alone, into employer liability without evidence that the upstream entity actually controlled the terms and conditions of employment.
The more transferable lesson may lie in the court’s treatment of the shared-services affiliate. Many multi-unit and branded systems centralize human resources, payroll, compliance, and similar functions in a management or services entity rather than in each operating unit—an arrangement that plaintiffs sometimes invoke as evidence of joint employment. Here, the operating employer had no HR department of its own and relied on an affiliate’s personnel to carry out employment decisions, yet the court did not treat that arrangement as creating employer status in either the affiliate’s parent or the broader corporate family, because those personnel acted “as agents for” the operating employer. On this record, the court likewise gave no dispositive weight to a shared trade name or a system-wide code of conduct, noting that such compliance programs are a routine feature of public-company structures. Systems that centralize functions in a shared-services or management entity may wish to keep in view the features the court found significant here—that the operating entity remained the decision-maker, that shared-services personnel functioned as its agents, and that brand and compliance materials were maintained at, and adopted by, the appropriate entity level.
The surviving FMLA retaliation claim supplies a cautionary counterpoint at the operating-employer level. Even where a defendant prevails on most claims and secures dismissal of a remote affiliate, a single retaliation theory may reach a jury on circumstantial evidence—here, the close timing between the end of leave eligibility and separation, internal statements that management “did not want” the employee, and inconsistent treatment of comparable employees on the availability of part-time or PRN work. Two defense-side lessons follow. First, managers would be well advised that candid internal remarks about not wanting to retain an employee who has taken protected leave, paired with uneven application of scheduling or status policies across similar employees, are the kind of evidence that can defeat summary judgment; contemporaneous documentation of the legitimate, non-retaliatory basis for any adverse action remains the best protection. Second, and equally important for the defense, the claim survived in part because the employer briefed only the threshold element and did not address the remaining steps of the burden-shifting analysis, and the court expressly declined to supply the missing argument. The lesson is procedural but consequential: a summary-judgment motion should address every step on which the movant bears a burden, because a court may decline to make the argument the movant left out.
Thomas O’Connell is a Partner at Buchalter LLP and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case. It was drafted with the assistance of an artificial intelligence system. AI systems can make mistakes, including in describing legal authority. Readers should independently confirm any legal authority before relying on it.
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