The opinion of the court was delivered by: Judge Sylvia H. Rambo
Before the court are cross motions for summary judgment (Docs. 64 and 67). By order dated July 14, 2008, the court directed the parties to engage in discovery on the issue of whether Plaintiffs Gloria Lytle and Roger Morrison were employees or independent contractors of Defendant Capital Area Intermediate Unit ("CAIU"). This distinction is essential to the outcome of the case because Plaintiffs' sole federal claim is under the anti-retaliation provision of the False Claims Act, 31 U.S.C. § 3130(h), which allows only employees to bring retaliation claims. If Lytle and Morrison were not employees of the CAIU, then they do not have standing to bring a False Claims Act case. Furthermore, since all of the other claims brought by Plaintiffs are for alleged violations of state law, this court would dismiss those claims for lack of supplemental jurisdiction. The court has reviewed the cross-motions for summary judgments, the response and replies thereto, and for the reasons that follow finds as a matter of law that neither Morrison nor Lytle were employees of the CAIU.
The following facts are undisputed, except where noted.
The CAIU is a non-profit organization providing, among other things, educational and transportation services to children who have been identified as requiring special education or early intervention services. (Pls.' Stat. Mat. Facts ¶¶ 7-8.) The CAIU provided this transportation either through employee drivers or through written contracts with transportation contractors such as Lytle and Morrison. (Defs.' Ex. C to Stat. of Mat. Facts, Glenn Zehner Dep. 18.)
Plaintiff Roger Morrison provided transportation services to the CAIU from 1985 though 2000 as a sole proprietor, (Defs.' Ex. A to Stat. of Mat. Facts, Roger Morrison Dep. 25), and from 2000 through 2004 as the owner of Morrison and Sons Transportation Services. (Id. at 6-7.) In late 2004, Morrison and Morrison and Sons Transportation filed bankruptcy, went out of business, and ceased providing transportation services for the CAIU. (Id. at 27.) After going out of business, Morrison went to work for Gloria Lytle as the business manager for Lytle Transportation, Inc. (Defs.' Ex. B to Stat. of Mat. Facts, Gloria Lytle Dep. 30-31.) Plaintiff Gloria Lytle provided transportation services for the CAIU from 1974 through 1995 as a sole proprietor, (Id. 38), and from 1995 though 2006 as the owner of Lytle Transportation, Inc. (Id. at 9.) In 2006, Lytle Transportation went out of business. (Id. at 27.)
All transportation contractors were required to enter into contacts in order to receive work, perform, or be paid. (Id. at 46-47.) Lytle and Morrison were at all times transportation contractors with written contracts to provide transportation services to the CAIU. (Defs.' Ex. to Stat. Mat. Facts, Exhibits H through N, Contracts ¶ 20.)
Each of the contracts that Morrison and Lytle executed with the CAIU from 1997 through 2005 were standard contracts for all transportation contractors, and each contained the following language:
It is understood and agreed to by both parties hereto that the CONTRACTOR, while engaged in carrying out and complying with any of the terms and conditions of this contact, is for all purposes an INDEPENDENT CONTRACTOR and is not and shall not be deemed to be an officer, agent or employe [sic] of the BOARD, and neither party shall contend that CONTRACTOR is an officer, agent or employe [sic] of the BOARD. (Id. at ¶ 20.)
Each year before the contracts with transportation contractors were signed, the CAIU held meetings for the transportation contractors to ask questions about the contract. (Lytle Dep. 46-48.) Both Morrison and Lytle read each contract before they signed it, and knew that it contained the above quoted language. (Morrison Dep. 39; Lytle Dep. 46-47). Neither Lytle nor Morrison had an obligation to sign a particular contract from one year to the next, and they were not guaranteed that they would have a contract from one contract period to the next. (Defs.' Ex. D to Stat. of Mat. Facts, Scott Downey Dep. 94-95.) Lytle and Morrison were not prohibited from contracting with others for work in addition to the work that they performed for the CAIU, (Morrison Dep. 25-26; Lytle Dep. 11-12, 22-23), and both Morrison and Lytle worked as independent contractors for others during the time in question. (Morrison Dep. 25-26; Lytle Dep. 11-13.)
3. Vehicles/Transportation of Students
Both Lytle and Morrison owned the vehicles that they used to perform the CAIU contracts. (Downey Dep. 113.) However, the CAIU exercised some control over the type, size, and condition of the vehicles used by Lytle and Morrison. For instance, in the year 2000, in order to continue as a CAIU transportation contractor, all contractors were required to begin purchasing wheelchair accessible vehicles, as well as vehicles that could transport at least nine passengers. (Pls.' Ex. Q in Supp. of Mot. for Sum. J.) By 2004, the CAIU required that all transportation contractors, including Lytle and Morrison, not use vehicles with more than 300,000 miles or older than 10 years for transporting CAIU students, except that such vehicles could be used as a spare. (Defs.' Ex. M to Stat. of Mat. Facts, Contract for 2004-2006 at ¶ 5.)
The CAIU required each vehicle owned by a transportation contractor to have a "vehicle number" that was provided by the CAIU. (Lytle Dep. 102.) This requirement was part of a state mandate. (Downey Dep. 63.) However, both Lytle's and Morrison's vehicles were visibly marked on the exterior with the names of their respective companies. (Lytle Dep. 34; Morrison Dep. 33.) All transportation contractors were required to provide for their own vehicle maintenance, as well as provide the CAIU with proof of liability insurance. (Morrison Dep. 32.) The CAIU carried insurance, including workers compensation, automobile, and excess liability/umbrella insurance to cover all CAIU employee transportation drivers. (Defs. Ex. F to Stat. of Mat. Facts, Shawn Farr Aff. ¶ 3.) The parties dispute whether the general liability, automobile, and workers' compensation insurances also covered Plaintiffs*fn1 (Id.; Doc. 100-2, Certificate of Insurance.) Each vehicle driven by transportation contractors was required by the CAIU and the state to have fire extinguishers, first aid kits, flares or reflectors, body fluid kits, and a seat belt cutter, and after 2000, a school student sign. (Downey Dep. 33-34.) These items were available for purchase through the CAIU, but Lytle and Morrison were not required to purchase them through the CAIU. (Id.) The CAIU required transportation contractors to use children's car seats and children's harnesses owned by the CAIU. (Id. at 35.)
The CAIU, in the 1990s, provided two-way radios to the transportation contractors for use in their vehicles without cost. (Id. at 34.) In addition, the CAIU required bus drivers to wear name tags with the CAIU logo on them; some of the name tags also contained the names of the transportation contractor if the driver worked for a contractor. (Pls.' Ex. V to Stat. of Mat. Facts.) Beginning in 2005, the CAIU formalized a dress code for transportation contractors and their drivers. (Downey Dep. 76; Pls.' Ex. Y to Stat. of Mat. Facts.)
4. Scheduling and Servicing of Routes
The parties dispute whether the CAIU scheduled the routes to be driven by the transportation contractors or whether the contractors themselves did so. However, it is undisputed that the CAIU received a list of students from each of the school districts that it contracted with, and that both the CAIU and the transportation contractors had some role in determining the timing and running of the routes. (Defs.' Ex. G to Stat. of Mat. Facts, Deanna Rose Dep. 62-63; Downey Dep. 40-41.) Transportation drivers always had the right to reject a route; of course, this also meant that they would not get paid for it. (Lytle Dep. 49; Farr Aff. ¶ 6.) It is also undisputed that CAIU employee drivers were not given any say in which routes they drove. (Farr Aff. ¶ 6.) Lytle and Morrison had the right to choose which of their drivers would drive a particular route that was assigned to the transportation contractor, and they could substitute drivers at their discretion. (Morrison Dep. 22-23; 28-29.) Once a route was established, Lytle and Morrison could not deviate from the route even if a child was absent. (Lytle Dep. 115; Downey Dep. 48.) If a route was serviced by a CAIU employee driver, and the vehicle servicing that route broke down, one of the transportation drivers would be asked to cover the route, but none of the transportation contractors was obligated to cover the route. (Downey Dep. 126, 133.)
The CAIU distributed new work by use of a seniority list. (Downey Dep. 50-53.) This list was used in order to ensure that new work obtained by the CAIU was distributed fairly. (Id.) The seniority list was created, in part, based on the suggestion of Gloria Lytle. (Morrison Dep. 83.) Morrison objected to the use of the list because it did not take into consideration the size and scope of his business, and seemed to him that it was inconsistent with his being an independent contractor. (Id. at 83-85.)
5. Ability to Control Their Own Businesses
Both Lytle and Morrison exercised substantial control over the way that their businesses-Lytle Transportation, Inc. and Morrison & Sons Transportation, Inc.-were run. Nothing in the contract with the CAIU prevented the transportation contractors from contracting with others or directly competing for work with the CAIU. (Downey Dep. 69.) In fact, both Morrison and Lytle provided transportation services to other entities, although their main revenue was from their work with the CAIU. (Lytle Dep. 11-12; Morrison Dep. 30.) The arrangements with these other entities were not as formal as with the CAIU.
Neither Lytle nor Morrison served primarily as drivers for the CAIU. Instead, both had employees who drove for them under the CAIU contracts. At the time that Morrison went out of business, he had at least 42 employee drivers who worked for him. (Morrison Dep. 27.) During the height of her business, Lytle had 17 employees working for her. (Defs.' Ex. O to Stat. of Mat. Facts, Tr. of Proceedings, at 9 (Aug. 15, 2005).) Lytle and Morrison had the right to hire their own drivers, but those drivers had to be approved by the CAIU before they could begin work under the CAIU contracts. (Lytle Dep. 16; Morrison Dep. 44.) The CAIU did not participate in the search process for any of Lytle's or Morrison's employees, and played no role in setting the terms of employment for those drivers.
(Morrison Dep. 44; Lytle Dep. 62-63.) The CAIU had the right to refuse to permit a driver to be used on a CAIU run. (Rose Dep. 73-74; Downey Dep. 27-28.)
The CAIU held mandatory meetings for transportation contractors, but they were limited to driver safety concerns or, in certain circumstances, to reviewing the proposed contracts between the CAIU and the transportation contractors. (Downey Dep. 22.) Lytle viewed these meetings as training, and did not conduct other training for her drivers; however, Morrison chose to train his own drivers on certain aspects of the job like wheelchair transportation. (Morrison Dep. 72-73.)
In certain ways, the CAIU treated its employees drivers similar to the transportation contractors. For instance, the CAIU required both its employee drivers and the transportation contractors' drivers to follow manuals*fn2 that outlined the safe treatment of children; however, these manuals contained different job descriptions of CAIU employee drivers and contract drivers. (Defs.' Exs. Y & Z to Stat. of Mat. Facts.) Additionally, for a period of time, the CAIU offered transportation contractors an opportunity to purchase gasoline for their vehicles through the CAIU, an opportunity that had previously only been available to CAIU owned vehicles. (Morrison Dep. 87-89). The benefit of this was that transportation contractors were able to purchase gasoline without paying the taxes on the gas, since the CAIU, as a school program, was permitted to purchase gasoline tax free. (Pls.' Ex. CC to Stat. of Mat. Facts.)
6. Method of Payment and Tax Treatment
Lytle and Morrison's companies were paid every two weeks based upon a formula developed by the Pennsylvania Department of Education. (Rose Dep. 56-58; Morrison Dep. 37.) Morrison and Lytle paid their drivers directly, and none were paid by the CAIU. (Morrison Dep. 37.) Morrison and Lytle withheld taxes for each of their drivers. (Id.) Moreover, the CAIU did not pay payroll or Social Security taxes for the transportation contractors, including Lytle and Morrison. (Downey Dep. 87-89.) The CAIU did not issue W-2s to Lytle or Morrison, or any of their drivers; instead, transportation contractors received 1099s, unless they were incorporated, in which case they did not receive any tax statements from the CAIU. (Id.; Morrison Dep. 31.) Lytle, Morrison and their drivers did not receive health insurance, retirement benefits, unemployment insurance, workers compensation insurance, sick, or vacation time ...