United States District Court, W.D. Pennsylvania
JOY FLOWERS CONTI, Chief District Judge.
Darrell E. Williams ("plaintiff" or "Williams"), an attorney, filed the above - captioned case against The Webb Law Firm, P.C. ("defendant" or "Webb Firm") for breach of fiduciary duties owed Williams under the Employee Retirement Income Securities Act ("ERISA"), 29 U.S.C. § 1132(a)(3). Williams alleges the Webb Firm breach its duties by misclassifying him as an independent contractor. (ECF No. 1) Presently before this court are cross-motions for summary judgment filed by Williams and the Webb Firm. (ECF No. 34 and 49.) After considering all the submissions, this court concludes, with respect to the applicable statute of limitations, that there is no material fact in dispute. There is no dispute that in May 2007, Williams knew that he was not receiving benefits from the Webb Firm and that he was performing similar, or the same, occupational tasks under the independent contractor agreements ("ICAs") after January 1, 2006, entered into by Williams and the Webb Firm, as he previously performed as an employee of the Webb Firm. (ECF No. 51-2 ¶¶ 15-20.) At that time, Williams would have understood his harm or at the least the harmful consequences of defendant's breach of their fiduciary duty, i.e., not providing him employee benefits, and had actual knowledge of his injury. Under the circumstances, Williams' three-year window to file his claim started, at the latest, in May 2007. Williams did not file his claim until November 8, 2012. The statute of limitations under 29 U.S.C. § 1113(2) bars Williams' claim. The court will GRANT the Webb Firm's motion for summary judgment, and DENY Williams' motion for summary judgment. Judgment in favor of the Webb Firm will be entered as a matter of law. FED. R. CIV. P. 56(a); Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248-50 (1986).
I. FACTUAL BACKGROUND
The factual background is derived from the undisputed evidence of record and the disputed evidence of record viewed in the light most favorable to the nonmoving party. See Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 255 (1986). Other undisputed facts may be discussed in the context of the legal claims where appropriate. Bielich v. Johnson & Johnson, Inc., No. 11-1635, 2014 WL 1117939, at *1 (W.D. Pa. March 20, 2014).
A. First ICA
In January 2001, Williams began working for defendant under an independent contractor agreement (the "First ICA") as a patent attorney. (ECF No. 58 ¶¶ 1, 3.) On July 1, 2001, Williams began working for the Webb Firm as an associate attorney. (Id. ¶ 4.) As an associate attorney, Williams was paid a salary and was eligible for benefits provided by the Webb Firm, including medical insurance, 401K (matching up to 1% of salary), profit sharing (up to 3% of salary), life insurance, long-term disability, travel insurance, vacation time, and various association dues, and training expenses. (Id. ¶¶ 24, 25.)
B. Second ICA
On November 10, 2005, Williams approached Russell D. Orkin ("Orkin"), then President of the Board of Directors of the Webb Firm, to discuss the possibility of reverting back to working under an independent contractor agreement. (Id. ¶¶ 27, 28.) Orkin memorialized his discussion with Williams in a memorandum sent by Orkin to the other directors of the Webb Firm on November 10, 2005. (ECF No. 55-1 at 9.) In the memorandum, Orkin reported that Williams "told me that he recognizes that he would lose the firm's benefits, including healthcare, but he was prepared to take that risk. We discussed the possibility of Darrell going back to an independent contractor [and] doing work for [the Webb Firm] on a contract basis." (Id.) Williams disputes that he made the statement attributed to him by Orkin. (ECF No. 52 ¶¶ 10-21.)
On November 30, 2005, the Webb Firm sent Williams an independent contractor agreement (the "Second ICA") offer letter. (ECF No. 55-1 at 10-11.) The offer letter provided: "The purpose of this letter is to confirm that you have resigned from your present employment with [the Webb Firm] as of December 31, 2005.... You also indicated that you understood you would lose all current and future benefits of [the Webb Firm] and you indicated you would make other healthcare arrangements." (Id.) On January 1, 2006, plaintiff began working with the Webb Firm under the terms of the Second ICA. Williams stated in his affidavit that his work duties or activities under the ICAs did not change from his work duties or activities he performed as an associate attorney for the Webb Firm. (ECF No. 51-2 ¶¶ 14-19.)
C. Third ICA
On January 10, 2007, Williams signed another independent contractor agreement (the "Third ICA") with the Webb Firm. (ECF No. 58 ¶ 6.) In May 2007, Williams approached Orkin to discuss a change in his relationship with Webb. (Id. ¶ 41.) During the conversation, Williams and Orkin discussed Williams' personal medical coverage. (ECF No. 58 ¶¶ 41-43); (ECF No. 55-1 ¶ 26-28.) Williams stated in his affidavit that he "approached [Orkin] to discuss the possibility of becoming an associate attorney of the [Webb Firm] again because of the fact that Plaintiff's wife would begin working part-time and may not be eligible for medical insurance." (ECF No. 51-2 ¶ 7.) On May 16, 2007, following the discussion, an addendum was added to the Third ICA. (ECF No. 58 ¶ 7.) In the addendum, the Webb Firm agreed to make an additional monthly payment to Williams, if Williams billed 111 hours or more. (Id. ¶ 42.) The addendum detailed a scaled payment plan based upon Williams' total monthly billable hours. The Webb Firm agreed to pay the applicable percentage of Williams' total monthly medical costs based on the hours billed in the following manner:
20% if hours billed are between 111 to 120 hours in a month 40% if hours billed are between 121 to 130 hours in a month 60% if hours billed are between 131 to 140 hours in a month 80% if hours billed are between 141 to 150 hours in a month 100% if hours billed are 151 hours or greater in a month.
(ECF No. 58 ¶ 42.)
Williams continued working for the Webb Firm under the Third ICA and the addendum until November 15, 2009, when Williams' relationship with the Webb Firm was terminated. (ECF No. 58 ¶ 8.) Within two weeks of being terminated, plaintiff filed an application with the Pennsylvania Department of Labor and Industry ("PDLI") for unemployment benefits. (ECF No. 1 Ex. H. at 2-7); (ECF No. 58 ¶ 9.) Plaintiff was required to submit additional information to the PDLI and, following a review of his filing, started to receive unemployment benefits sometime in May 2010, which included retroactive payments dating back to the time of his initial filing. (ECF No. 1 Ex. G. at 2-4); (ECF No. 58 ¶ 9.)
D. IRS Determination Letters
On April 4, 2013, in response to a request for a determination on Williams' employment status with the Webb Firm the Internal Revenue Service ("IRS") issued "Form SS-8, Determination of Worker Status for Purpose of Federal Employment Taxes and Income Tax Withholding" ("Form SS-8"). (ECF No. 55-1 at 2.) Williams' Form SS-8 provided:
[y]ou were classified as an employee. The miscellaneous income paid by your employer is considered wages for federal tax purposes. Accordingly, you are liable for federal income tax and your share of Federal Insurance Contributions Act (FICA) tax on the income in question.
(Id.) On April 4, 2013, the IRS issued the Webb Firm a Form SS-8 determination letter. (ECF No. 51-1 at 3-5.) The Webb Firm's IRS Form SS-8 provided:
The contract specifically states the worker could not be in direct competition with the firm, nor could he perform services for another attorney or law firm without permission of the firm, which indicates the worker was not an independent contractor free to practice as he chose. All clients remained the property of the firm, all services were still performed under the firm's business name, on the firm's premises, under the firm's insurance, clients continued to be billed and collected though the firm. Any payment made directly to the worker, were to be endorsed and turned over to the firm. As previously stated, the issuance of Form W-2 and/or the withholding of taxes on income for an individual would be considered treatment of the individual as an employee, and would apply in this case. Therefore, your statement that the worker was an independent contractor pursuant to an agreement is without merit. For federal employment tax purposes, it is the actual working relationship that is controlling and not the terms of the contract (oral or written) between the parties.
(ECF No. 51-1 at 3-4.)
E. Procedural Background
On November 8, 2012, Williams initiated this action by filing a complaint against the Webb Firm alleging the Webb Firm breached its fiduciary duties owed to him under § 502(a)(3) of ERISA by misclassifying him as an independent contractor. (ECF No. 1.) On February 11, 2013, the Webb Firm filed a motion to dismiss plaintiff's complaint. (ECF No. 9.) On March 11, 2013, Williams filed his response. (ECF No. 13.) On April 19, 2013, the court denied the motion to dismiss without prejudice. On May 3, 2013, the Webb Firm filed its answer to Williams' complaint. (ECF No. 20.) Discovery in this matter proceeded with multiple extension requests being granted by the court. (ECF No. 33, 39.) On January 6, 2014, the Webb Firm filed a motion for summary judgment and a brief in support of its motion for summary judgment, (ECF No. 34 and 35), and a concise statement of material facts. (ECF No. 36.) Williams filed a motion in response to the Webb Firm's motion for summary judgment and a brief, which included a cross-motion for summary judgment, in a single submission, (ECF No. 40 and 41), with a response to the Webb Firm's concise statement of material facts. (ECF No. 42.) On March 7, 2014, the Webb Firm filed a motion to strike Williams cross-motion for summary judgment with an accompanying brief in support. (ECF No. 43 and 44.) Williams filed a response and a brief in opposition to the Webb ...