                                                              FILED
                                                          DECEMBER 7, 2017
                                                      In the Office of the Clerk of Court
                                                     WA State Court of Appeals, Division III




             IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
                                DIVISION THREE

    JULIE MIKOLAJCZAK, an individual,
                                    )                       No. 34824-5-111
                                    )
                    Respondent,     )
                                    )
           v.                       )
                                    )                       PUBLISHED OPINION
I
    BALBIR MANN d/b/a COLE'S CORNER )



I
1
    MARKET, a Washington Sole
    Proprietorship,

                    Petitioner.
                                    )
                                    )
                                    )
                                    )

          PENNELL, J. -The Washington Law Against Discrimination (WLAD),

    chapter 49.60 RCW, provides a civil cause of action for workplace discrimination so long

    as an employer has eight or more employees. An agency rule applicable to the WLAD

    specifies that the employees of commonly managed corporations and other artificial

    persons can be combined to reach the eight employee threshold. We are asked whether

    this rule also allows employees of a sole proprietorship to be combined with those of a

    commonly managed corporation or artificial person. Our answer is no.




l
No. 34824-5-111
Mikolajczak v. Mann


       A sole proprietorship is neither a corporation nor an artificial person. An

individual doing business as a sole proprietor only can face WLAD liability if he or she is

personally responsible for eight or more qualifying employees. The employees of a

corporation or other artificial entity cannot be added to the sole proprietor's employees to

meet this criterion. The trial court's ruling to the contrary is reversed.

                                           FACTS

       Balbir Mann is a sole proprietor doing business as Cole's Comer Market in Chelan

County, Washington. Mr. Mann employs a manager to oversee the day-to-day operations

of Cole's Comer, but he is also personally involved in administrative functions ~uch as

payroll. Records indicate that at all times relevant to this litigation, Cole's Comer Market

employed no more than seven persons.

       Mr. Mann also owns 90 percent of the Mann Group LLC, with the remaining

10 percent owned by his son. This limited liability company does business as Sultan

Chevron, a franchised gas station. Mr. Mann is solely responsible for managing the

operations of the company.

       Julie Zufall (f/k/a Julie Mikolajczak) worked for Cole's Comer Market in 2013.

During Ms. Zufall's term of employment, she sustained a shoulder injury and her doctor

placed her on physical restrictions. Her work at Cole's Comer ended shortly thereafter.


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No. 34824-5-111
Mikolajczak v. Mann


According to Ms. Zufall, her employment was terminated. Mr. Mann claims Ms. Zufall

left voluntarily.

       Ms. Zufall sued Mr. Mann alleging that, in addition to several other claims, he

failed to provide a reasonable accommodation for her shoulder injury in violation of the

WLAD. The parties filed cross motions for summary judgment. During the motions

process, the parties took issue over whether Mr. Mann qualified as an employer under the

WLAD, RCW 49.60.040(11), given the evidence that Cole's Comer Market never

employed at least eight persons. Ms. Zufall argued Mr. Mann did qualify as an employer

because the Cole's Comer employees could be combined with the employees of the Mann

Group LLC under WAC 162-16-220(6) to reach the statutory requirement of eight

employees.

       The trial court ultimately issued a summary judgment order finding Mr. Mann

qualified as an employer under the WLAD. No transcript exists of the summary judgment

proceeding and the parties dispute the exact grounds for the trial court's ruling. What is

clear is the trial court ruled as a matter of law that Mr. Mann had sufficient employees to

qualify as an employer under RCW 49.60.040(11). Ms. Zufall's WLAD claim thus

survived summary judgment. The trial court dismissed Ms. Zufall's other claims, but the

parties agree that the trial court intended those claims be reinstated if her WLAD claim



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No. 34824-5-111
Mikolajczak v. Mann


failed.

          Mr. Mann obtained discretionary review of the trial court's order and the matter

was submitted to a panel of this court after oral argument.

                                         ANALYSIS

          We review an order on summary judgment de novo. Lyons v. US. Bank Nat'/

Ass 'n, 181 Wn.2d 775, 783, 336 P.3d 1142 (2014). Under this standard, we engage in the

same inquiry as the trial court, viewing the facts and all reasonable inferences in the light

most favorable to the nonmoving party. Id.

          The WLAD prohibits an employer from firing an employee on the basis of

disability. RCW 49.60.180(2). An "employer" is defined as "any person" who employs

eight or more people. RCW 49.60.040(11). The WLAD's definition of "person" is broad

and includes "individuals, partnerships, associations, organizations, corporations" among

others. RCW 49.60.040(19). If an employer does not have eight or more employees, then

that employer is exempt from the provisions of the WLAD. See Griffin v. Eller,

130 Wn.2d 58, 61, 63-64, 922 P.2d 788 (1996).

          The legislature has authorized the Washington State Human Rights Commission

(HRC) to promulgate rules for implementing the WLAD. RCW 49.60.120(3). One of the

objectives of the HRC's rules is "[t]o give effect to the purposes of the exemption of



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No. 34824-5-111
Mikolajczak v. Mann


employers of less than eight from public enforcement of the law against discrimination, as

identified in RCW 49.60.040." WAC 162-16-200(2)(c). Further, the HRC seeks to adopt

rules that are "certain" and "easy to understand and apply." This occasionally requires the

HRC to "simply draw a line, although reasonable persons could differ as to where the line

should be drawn." WAC 162-16-200(2)(d).

       Consistent with its purposes, the HRC has developed a rule to assist in the

counting of employees. WAC 162-16-220(1 ). A person is typically considered an

employee if the person appears on the employer's payroll documents during the time

period in which the alleged discrimination occurred. WAC 162-16-220(2); see also

Anaya v. Graham, 89 Wn. App. 588, 591-93, 950 P.2d 16 (1998) (referring to this as the

"payroll method"). In addition to the payroll method, other subsections of WAC 162-16-

220 may also be used for counting the number of employees. One of these other

subsections is the primary issue in this appeal and provides:

              Corporations and other artificial persons that are in common
      ownership or are in a parent-subsidiary relationship will be treated as
      separate employers unless the entities are managed in common in the area
      of employment policy and personnel management. In determining whether
      there is management in common we will consider whether the same
      individual or individuals do the managing, whether employees are
      transferred from one entity to another, whether hiring is done centrally for
      all corporations, and similar evidence of common or separate management.

WAC 162-16-220(6) (emphasis added).

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No. 34824-5-III
Mikolajczak v. Mann


       Ms. Zufall argued, and the trial court agreed, that this counting standard allows the

combination of employees at Cole's Comer Market and the Mann Group LLC in order to

reach the threshold number of eight employees. 1 Although Cole's Comer Market is a sole

proprietorship, the trial court did not consider this a bar to application of WAC 162-16-

220( 6). Because Mr. Mann managed both Cole's Comer Market and the Mann Group

LLC, the court determined the two entities should be treated as one employer for purposes

of WLAD liability. We disagree with this analysis.

       As is true of statutes, we interpret agency rules according to their plain meaning.

Hegwine v. Longview Fibre Co., 162 Wn.2d 340, 349, 172 P.3d 688 (2007). Each word

in an agency rule must be given "its common and ordinary meaning, unless the word is

ambiguous or defined in the regulation." Grays Harbor Energy, LLC. v. Grays Harbor

County, 175 Wn. App. 578, 584, 307 P.3d 754 (2013). We liberally construe the terms of

the HRC's rules to protect against discrimination. Phillips v. City of Seattle, 111 Wn.2d

903, 908, 766 P.2d 1099 (1989). However, we cannot engage in statutory or regulatory

redrafting. Hegwine, 162 Wn.2d at 352. If a particular discrimination claim is plainly left

uncovered by both the WLAD and the HRC's implementing rules, it will not merit relief.




       1
         Because the trial court reached the merits of this issue, we need not address Ms.
Zufall's arguments that this issue has not been preserved for review.

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No. 34824-5-111
Mikolajczak v. Mann


       Neither the WLAD nor the HRC's implementing rules define what is meant by a

"corporation" or "artificial person." However, the meaning of these terms is readily

discerned. "A corporation is an artificial being, invisible, intangible, and existing only in

contemplation oflaw." Trs. ofDartmouth Coll. v. Woodward, 17 U.S. (4 Wheat.) 518,

636, 4 L. Ed. 629 (1819); see also Diaz v. Wash. State Migrant Council, 165 Wn. App.

59, 76, 265 P.3d 956 (2011). An "artificial person" is "[a]n entity, such as a corporation,

created by law and given certain legal rights and duties of a human being." BLACK' s

LAW DICTIONARY 1325 (10th ed. 2014).

       No matter how broadly one construes the term "corporation," the concept does not

cover a sole proprietorship. A sole proprietorship is legally indistinguishable from its

owner. Bankston v. Pierce County, 174 Wn. App. 932, 937, 301 P.3d 495 (2013). In

other words, when it comes to this case, Cole's Corner Market and Balbir Mann are one

and the same. Mr. Mann is personally responsible for the employees of Cole's Corner

Market, just as he would be had he employed the same persons under his own name. This

is fundamentally distinct from a corporation. An individual is not personally responsible

for a corporation's employees even if the corporation is closely held. Patten v. Ackerman,

68 Wn. App. 831, 834-35, 846 P.2d 567 (1993).




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No. 34824-5-111
Mikolajczak v. Mann


       Nor can a sole proprietorship qualify as an "artificial person." To the contrary, the

two terms are mutually exclusive. Because a sole proprietorship is indistinguishable from

a natural person, it cannot also be an artificial person. There is simply no manner of

interpreting an artificial person to cover a sole proprietorship. Ms. Zufall fails to cite any

authority stating otherwise.

       Because a sole proprietorship is neither a corporation nor an artificial person,

WAC 162-16-220(6) plainly does not apply to Ms. Zufall's employer, Cole's Comer

Market. While there is evidence in the record that Mr. Mann managed both Cole's

Comer Market and the Mann Group LLC, that evidence is irrelevant because the plain

language of WAC 162-16-220(6) does not allow combining the employees of a sole

proprietorship with those of other entities. Absent a determination to disregard the

corporate form of the Mann Group LLC (and thereby attribute its employees directly to

Mr. Mann), Cole's Comer Market only can qualify as an employer under the WLAD if it

employs eight or more persons, or if the eight-person threshold can be achieved by

combining the employees of Cole's Comer with other qualifying employees of Mr. Mann.

       The trial court's order denying Mr. Mann's motion for summary judgment under

the WLAD is reversed. Given the interlocutory nature of this appeal, no further relief is

applicable. The parties shall direct all remaining matters to the trial court.



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No. 34824-5-111
Mikolajczak v. Mann


                                     CONCLUSION

       The trial court's summary judgment order, ruling Mr. Mann is an employer for

purposes of the WLAD, is reversed. This matter is remanded for any further proceedings

that may be applicable, consistent with this decision.




                                          Pennell, J.
WE CONCUR:




                                             9
