Sebren v. Harrison

552 F.Supp.3d 249

Sarah SEBREN, Plaintiff

v.Casby HARRISON, III, Defendant

No. 1:18-cv-00667-MSM-PAS

United States District Court, D. Rhode Island.

Signed August 5, 2021

Caroline R. Thibeault, Matthew H. Parker, Robert Clark Corrente, Whelan Corrente & Flanders LLP, Providence, RI, for Plaintiff.

Casby Harrison, III, Harrison Law Associates, Gerard M. DeCelles, Providence, RI, for Defendant.

MEMORANDUM AND ORDER

Mary S. McElroy, United States District Judge.

I. INTRODUCTION

This wage dispute is before the Court on the plaintiff's Motion for Partial Summary Judgment (ECF No. 62) and the defendant's Objection to it (ECF No. 70). At one time, Casby Harrison's law firm employed Sarah Sebren, first as a secretary/assistant, then as an attorney. She sued under the Fair Labor Standards Act ("FLSA") (Count I), 29 U.S.C. § 216(b), the Rhode Island Minimum Wage Act ("RIMWA"), R.I.G.L. § 28-12-1 et seq. and the Rhode Island Payment of Wages Act ("RIPWA") R.I.G.L. § 28-14-19.2(b) (Count II)¹ . She complains that Mr. Harrison misclassified her as an independent contractor when she was, instead, an employee, and, as such, failed to pay her at least minimum wage for all the hours she worked and failed to pay her an overtime premium for hours worked more than 40 in any one week.² Mr. Harrison filed counterclaims, charging that Ms. Sebren stole a file related to a personal injury client ("client") and that she breached her contract with him (among other wrongs)³ by appropriating that client to her own law practice after leaving his office. (ECF No. 14). Before the Court now is Ms. Sebren's motion for partial judgment on Counts I and II, and for summary judgment on Mr. Harrison's counterclaims against her. Count III of the Amended Complaint, alleging unjust enrichment, was previously dismissed (ECF No. 46) as were class allegations (see Text Orders of April 30, 2019, and July 22, 2019).

Jurisdiction lies pursuant to both 28 U.S.C. §§ 1331 and 1332, as the parties are diverse: Ms. Sebren is a citizen of Massachusetts, Mr. Harrison is a citizen of Rhode Island, and the damages claimed are in excess of the $75,000 required threshold. The case also arises under federal law, thus presenting a federal question.

For the reasons below, the Court GRANTS Ms. Sebren's Motion for Partial Summary Judgment with respect to liability on Counts I and II but DENIES summary judgment on all issues related to damages. As for state penalties for the misclassification violation, the Court imposes a penalty of three thousand ($3,000.00) Dollars upon Mr. Harrison. As to Mr. Harrison's counterclaims, the Court GRANTS summary judgment to the plaintiff on that portion of counterclaim I that alleges theft of the file and settlement of the case without his permission, and on counterclaims II through VI. The Court DENIES summary judgment on that portion of counterclaim I in which Mr. Harrison seeks a portion of the contingency fee.

II. BACKGROUND

The facts that follow are undisputed unless otherwise indicated.⁴ Ms. Sebren was first employed by Mr. Harrison in July 2008 as "an administrative assistant or paralegal." (ECF No. 7 ¶ 23). She helped answer the phone, maintained files, photocopied, assisted with bookkeeping, maintained office machines, and carried out similar tasks. While the tasks she did were traditional, the terms of her employment about payment were not. Both parties agree that while Ms. Sebren's hourly wage at that time was $30.00, she was to be paid only for hours that Mr. Harrison could bill to clients, known as "billable time." Outside those hours passed on to a particular client, they agreed she would work for no pay. Mr. Harrison maintains that the $30/hour rate was "far in excess of the customary hourly rates for secretaries, clerks, administrative assistants and the like [,]" to compensate her for hours spent on non-billable cases for which she was not paid directly. (ECF No. 71, ¶ 87).

In about July 2017, working life changed for Ms. Sebren and so did the relationship. She was admitted to the Rhode Island Bar and became an associate attorney in Mr. Harrison's law office. Her rate of pay changed by agreement to $50.00 per hour, but again only for hours that could be billed to a client. Hours that were not "billable" to a client would not be paid at all.

The parties agree that Ms. Sebren was not paid a salary and was never paid a premium rate for overtime, holiday, or Sunday work. From time to time, Ms. Sebren submitted time records to Mr. Harrison for work that could be billed to a client, and he paid her for those hours at either the $30 or $50 per hour rate. Mr. Harrison did not keep any records of Mr. Sebren's work time, nor did she keep a record of time for which she was not paid. He maintained nothing resembling regular paydays nor did he provide her with earnings statements. Because he classified her as an independent contractor, he deducted nothing from her pay, transmitted no taxes on her behalf, and made no contributions as an employer to any government compensation schemes. (ECF No. 14, ¶¶ 9, 24.) He filed Internal Revenue Service Form 1099s for tax years 2015, 2016 and 2017,⁵ treating her as an independent contractor. (ECF Nos. 63-27, 63-28, 63-29.) The sum of those 1099s was $61,081.

At some point in July 2017, a prospective client contacted Harrison Law Associates ("HLA"). He had been involved in a serious automobile accident. Ms. Sebren answered that first call and, from that time until she left HLA, she was the only one from the practice who had any meaningful contact with the client. She interviewed him in the hospital and later at a nursing home, she obtained medical records, and she performed other case preparation functions. Ms. Sebren described her contact with the client as very frequent: she ran his errands, performed personal tasks for him, spoke to him constantly, and was at his "beck and call."⁶ Mr. Harrison agrees that his only contact with the client was taking a telephone message for Ms. Sebren on one or two occasions. He never met the client.

On December 29, 2017, Ms. Sebren left the Harrison law practice. At that time, she had in her possession the client's file, which she had been keeping at home while providing legal services as a law associate at HLA. She has submitted evidence that she worked on the case at home sometimes, and Mr. Harrison, while maintaining that the bulk of her work was done at the office, does not dispute that she at first possessed the file appropriately. At some point very soon after, the client called Ms. Sebren and she informed him she had left the Harrison practice. He chose to follow her and the two executed a written retainer agreement which covered, among other things, her contingency fee of one-third the recovery. (ECF No. 63-31.) Ms. Sebren ultimately settled the case for $1 Million, the coverage limit. She has disbursed the settlement payment to the client and retained the contingency fee. Among his other claims, Harrison has counterclaimed for a portion of that fee.

III. STANDARD OF REVIEW

Motions for summary judgment brought under Fed. R. Civ. P. 56 require a claim-by-claim review to determine whether there exists, relative to each claim, a genuine dispute of material fact. "A dispute is genuine if the evidence about the fact is such that a reasonable jury could resolve the point in the favor of the non-moving party. A fact is material if it carries with it the potential to affect the outcome of the suit under the applicable law." Santiago–Ramos v. Centennial P.R. Wireless Corp. , 217 F.3d 46, 52 (1st Cir. 2000). If there are genuine disputes of material fact summary judgment must be denied and the opponent of summary judgment is entitled to present the case to a jury on that claim.

IV. ANALYSIS

A. Plaintiff's Wage Claims

1. Liability

The initial inquiry in a wage case claiming FLSA violations is whether the person claiming its benefits was an "employee" or an "independent contractor." The FLSA presumes that everyone employed is an "employee," and it defines a "covered employee" as "any individual employed by an employer," with certain limited exceptions. 29 U.S.C. § 203(e)(1). Moreau v. Medicus HealthCare Solutions, LLC , Civil No. 20-cv-1107-JD, 2021 WL 919869, at *1 (D.N.H. March 10, 2021). An entity is said to "employ" a person under the FLSA if it "suffers or permits" the person to work. 29 U.S.C. § 203(g). While the determination is fact-intensive, it is ultimately a question of law. McFeeley v. Jackson St. Entm't , LLC, 825 F.3d 235, 240 (4th Cir. 2016) ; Brock v. Superior Care, Inc. , 840 F.2d 1054, 1059 (2d Cir. 1988) ; Pizzarelli v. Cadillac Lounge, L.L.C. , C.A. No. 15-254 WES, 2018 WL 2971114, at *2–3 (D.R.I. Apr. 13, 2018).

Rhode Island's test to determine whether a person is an employee under the RIPWA is broader than that under the FLSA. Rather than look to actual control, it focuses on "the employer's right or power to exercise control over the method and means of performing the work[.]" Cayer v. Cox Rhode Island Telecom, LLC, 85 A.3d 1140, 1144 (R.I. 2014). Accord , Pizzarelli at *6 (look to "whether [the employer] had the right to [control].").

Mr. Harrison does not contest that Ms. Sebren was an employee of HLA until she left his employ in December 2017, and she meets the definition of "employee" under both state and federal law. Further, he agrees that she was misclassified as an independent contractor before her admission to the bar. As for liability under the FSLA and the RIPWA, the parties have entered a stipulation agreeing that Ms. Sebren was paid as an independent contractor even though she qualified as an employee, and Mr. Harrison has admitted that he never paid her as an employee (ECF No. 14, ¶ 24). Thus, until she passed the bar, liability is clear for violating both the FLSA and the RIPWA for misclassifying her.

Once she passed the bar examination and was admitted to the practice of law, the situation changed in a way that affects liability. Mr....