Anne Elizabeth Ziegler, M.d.; Debra Ann Deangelo, D.o v. ANESTHESIA ASSOCIATES OF LANCASTER, LTD. Anne E. Ziegler, M.D.

*Judge Scirica succeeded to the position of Chief Judge on May 4, 2003.
NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 02-1899
ANNE ELIZABETH ZIEGLER, M.D.;
DEBRA ANN DEANGELO, D.O.
v.
ANESTHESIA ASSOCIATES OF LANCASTER, LTD.
Anne E. Ziegler, M.D. and
Debra A. DeAngelo, D.O.,
Appellants
__________
ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
D.C. Civil No. 00-cv-04803
District Judge: The Honorable Jay C. Waldman
__________
Submitted Under Third Circuit LAR 34.1(a)
January 14, 2003
__________
Before: SCIRICA,* BARRY, and SMITH, Circuit Judges
(Opinion Filed: August 29, 2003)
____________
OPINION
____________
BARRY, Circuit Judge

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1This Court has jurisdiction over this appeal pursuant to 28 U.S.C. § 1291. We exercise
plenary review where the District Court has dismissed for lack of subject matter
jurisdiction. Gould Electronics Inc. v. U.S., 220 F.3d 169, 176 (3d Cir. 2000).
2Plaintiffs also argue that because Dr. Robert Falk discarded his notes recording which
shareholders he contacted regarding Ziegler’s termination, they are entitled to the
inference that all of the shareholders were not equal, thereby rendering the lower-level
shareholders employees under Title VII. The District Court did not err in rejecting this
argument as there is no evidence that Dr. Falk discarded the notes with the intent to defraud.
2
The District Court dismissed the plaintiffs’ employment discrimination suit for
lack of subject matter jurisdiction, and they appeal.1 Plaintiffs, anesthesiologists Anne
Elizabeth Ziegler and Debra Ann DeAngelo, contend that the District Court erred when it
found that the defendant, Anesthesia Associates of Lancaster, Ltd. (“AAL”), had less than
15 employees, and was therefore not covered by Title VII of the Civil Rights Act of 1964.2
We deferred decision on this appeal pending the Supreme Court’s decision in Clackamas
Gastroenterology Assocs., P.C. v. Wells, 123 S. Ct. 1673 (2003), which was handed down
on April 22, 2003, and which clarified the analysis courts should use to determine whether
a shareholder in a professional corporation is an “employee” or an “employer.” Because
the District Court’s findings in this case establish that AAL’s shareholders were employers
and not employees under the test articulated in Clackamas, and because AAL, therefore, had
less than 15 employees, we will affirm.
Plaintiffs are anesthesiologists. Defendant, AAL, is a professional corporation
which provides anesthesia services and which consists of 19 shareholder-employees, all of
whom are anesthesiologists, and 13 non-shareholder-employees, consisting of both

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3 The Court noted that the result would be the same if the fifteen-employee requirement
were viewed as an essential element of the claim and defendant’s motion were treated as
one for summary judgment.
4 “[A] single individual in a single occupational setting cannot be both an employer and an
employee for purposes of Title VII.” Serapion v. Martinez, 119 F.3d 982, 985 (1st Cir.
1997)(citing cases).
3
doctors and other staff. Plaintiffs were staff physicians who aspired to be shareholders.
Plaintiff DeAngelo resigned and plaintiff Ziegler was fired, they claim because of sex
discrimination and retaliation. They sued AAL alleging violations of Title VII, the Equal
Pay Act, the Pennsylvania Human Relations Act and Pennsylvania common law.
On December 29, 2000, AAL filed a motion to dismiss in which it argued that the
District Court did not have jurisdiction because Title VII only applies to employers with 15
or more employees. See 42 U.S.C. § 2000e (b). The District Court denied the motion
without prejudice and permitted limited discovery on the issue of the number of employees
AAL had during the relevant time period. AAL thereafter filed a renewed motion to dismiss
and/or for summary judgment which the District Court granted, holding that it lacked
jurisdiction.3 The basis of the Court’s holding was its conclusion that AAL’s shareholder-
employees were employers for purposes of Title VII, and that AAL, therefore, lacked the
requisite fifteen employees.4 The parties agree that unless the shareholder-employees are
found to be employees, AAL would have less than the requisite 15 employees.
Title VII defines an employer as “a person engaged in an industry affecting
commerce who has fifteen or more employees for each working day in each of twenty or

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4
more calendar weeks in the current or preceding calendar year, and any agent of such a
person.” 42 U.S.C. 2000e (b). An employee is “an individual employed by an employer.”
42 U.S.C. 2000e (f). In Clackamas, the Supreme Court reiterated its conclusion that this
definition is “‘completely circular and explains nothing.’” Clackamas, 123 S. Ct. at 1678
(quoting Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 322 (1992)).
Prior to the Supreme Court’s decision in Clackamas, the circuit courts of appeals
were split on the best way to approach the question of whether shareholders in a
professional corporation were or could be employees for purposes of the anti-
discrimination statutes. The Eighth Circuit focused on the extent to which the shareholders
control and manage the corporation, as well as the extent to which they own it. See Devine
v. Stone, Leyton & Gershman, P.C., 100 F.3d 78, 81 (8th Cir. 1996). The Devine Court
held that one factor which goes towards the degree of control and management is the ability
to participate in setting corporate policy; factors going towards ownership include
contributions of capital, liability for debts, and compensation based on profits. Id. This
approach enabled the Devine Court to look beyond the fact that the shareholders in that
case were technically employees of the defendant professional corporation. Two other
courts of appeals have also held that shareholder-employees – like partners in a partnership
– may under certain circumstances be considered employers and not employees. See
Fountain v. Metcalf, Zima & Co., 925 F.2d 1398, 1400-1401 (11th Cir. 1991); E.E.O.C. v.
Dowd & Dowd, Ltd., 736 F.2d 1177, 1178 (7th Cir. 1984).
The Second and Ninth Circuits, on the other hand, have held that a shareholder-

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5 Courts on both sides of the circuit split had determined that the common law test for
whether an individual is an employee was not helpful in the context of the anti-
discrimination statutes, because the common law test arose in the context of cases dealing
with respondeat superior liability and relates to the distinction between an independent
contractor and an employee.
5
employee of a professional corporation is per se an “employee” for purposes of the anti-
discrimination statutes, because he or she is not a “partner.” See Wells v. Clackamas
Gastroenterology Assocs., P.C., 271 F.3d 903, 905 (9th Cir. 2001)(rev’d 123 S. Ct. 1673
(2003))(shareholders of a corporation were employees because (1) they were not partners,
(2) they actively participated in the management and operation of their medical practice,
and (3) they signed employment agreements); Hyland v. New Haven Radiology Assocs.,
P.C., 794 F.2d 793, 798 (2d Cir. 1986)(shareholder-employees are employees for
purposes of the statute because they are not partners).
At issue in Clackamas was whether four physicians actively engaged in medical
practice as shareholders and directors of a professional corporation were employees under
the Americans with Disabilities Act, which employs the same definition of employee as
Title VII and similarly limits its applicability to employers with more than 15 employees.
After acknowledging that there was no such thing as a “professional corporation” at
common law, the Supreme Court concluded that “the common law’s definition of the
master-servant relationship does provide helpful guidance.”5 Clackamas, 123 S. Ct. at
1679. The Court determined that “the common-law element of control is the principal
guidepost that should be followed[.]” Id.

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6
The Supreme Court held that each of the following six factors, drawn from the Equal
Employment Opportunity Commission Compliance Manual, is relevant :
"Whether the organization can hire or fire the individual or set the rules and
regulations of the individual's work
"Whether and, if so, to what extent the organization supervises the individual's
work
"Whether the individual reports to someone higher in the organization
"Whether and, if so, to what extent the individual is able to influence the
organization
"Whether the parties intended that the individual be an employee, as
expressed in written agreements or contracts
"Whether the individual shares in the profits, losses, and liabilities of the
organization."
Id. at 1680 (quoting 2 Equal Employment Opportunity Commission, Compliance Manual §
605:0009 (2000)). The Court then offered the following summary definition: “[A]n
employer is the person, or group of persons, who owns and manages the enterprise. The
employer can hire and fire employees, can assign tasks to employees and supervise their
performance, and can decide how the profits and losses of the business are to be
distributed.” Id. The Court made clear that the six-factor list is not exhaustive and that
courts should take into consideration all incidents of the employment relationship.
Moreover, no one factor, such as the individual’s title or the terms of any written contract,
is decisive.
In determining that AAL’s shareholder-employees were not employees for purposes
of Title VII, the District Court “considered all factors relevant to the pertinent relationship
and the ‘economic reality’ of the firm’s existence and operation.” The Court found the

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6 Even if the one shareholder who received a fixed salary were considered an employee
for that reason, AAL would still have had less than 15 employees.
7
following factors to be relevant and, on balance, to weigh in favor of a finding that the
shareholders were employers and not employees:
“Defendant’s shareholders share ownership and are accorded equal
voting rights in virtually all matters including hiring, termination, offers of
partnership and contracting with outside parties . . . Each shareholder makes a
capital contribution. The compensation of shareholders is not tied to their
performance and indeed no shareholder is evaluated or supervised by anyone.
Each shareholder but one receives compensation based on defendant’s
profits6 . . . Defendant’s shareholders are limited to licensed
anesthesiologists . . . Defendant’s shareholders are liable for their acts of
professional negligence and for those of persons acting under their
supervision . . . The shareholders executed ‘employment agreements’ but
were referred to as ‘partners’ amongst themselves, within the healthcare
community and by office personnel including plaintiffs . . . The ‘employment
agreements’ do not obviate the manner in which the shareholders actually
functioned . . . The shareholders also executed a shareholder agreement.
There also are different forms of ‘employment’ agreements. Those executed
by the shareholders contemplate ‘substantially full time’ engagement in the
practice of anesthesiology and provide for compensation as determined by a
board comprised of all shareholders. Those executed by others, including
plaintiffs, specify a 45-hour work week
and provide for a fixed specified annual salary.”
Ziegler v. Anesthesia Assocs. of Lancaster, Ltd., No. CIV.A. 00-4803, 2002 WL 387174,
at *4-5 (E.D. Pa. Mar. 12, 2002). The District Court rejected the argument that the
shareholders were employees for purposes of Title VII because taxes were withheld from
their paychecks. Id. at *5.
The Supreme Court in Clackamas remanded the case, noting that while some of the
District Court’s findings, when considered in light of the standard the Supreme Court

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endorsed, appeared to weigh in favor of a conclusion that the four director-shareholder
physicians in that case were not employees, there was other evidence in the record that
would contradict those findings or support a contrary conclusion. Clackamas, 123 S. Ct. at
1681. No remand is necessary in this case. The District Court employed an analysis which
closely tracks the analysis articulated by the Supreme Court in Clackamas and correctly
concluded that the 19 shareholder-physicians in this case owned and managed AAL and
were, therefore, employers and not employees for purposes of Title VII.
The District Court’s order of March 12, 2002 will be affirmed.
TO THE CLERK OF THE COURT:
Kindly file the foregoing Opinion.
/s/ Maryanne Trump Barry
Circuit Judge

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