Sebren v. Harrison

1

SARAH SEBREN, Plaintiff, v. CASBY HARRISON, Defendant.

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

United States District Court, D. Rhode Island

October 11, 2022

OPINION

Mary S. McElroy, United States District Judge.

This case involves a wage dispute, filed by Sarah Sebren, a former employee of the defendant, Casby Harrison, and his law office, Harrison Law Associates (“HLA”). Ms Sebren worked for Mr. Harrison for many years, first as a secretary/assistant, then as an attorney. She sued under the Fair Labor Standards Act (“FLSA”) (Count I), 29 U.S.C. §§ 206 and 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) (both Count II).^[1] The essence of the lawsuit is that Mr Harrison misclassified Ms. Sebren as an independent contractor during the entire period of her employment, that he failed to pay her minimum wage, and that he failed to pay her overtime even though, she contends, she worked significant overtime hours virtually every week that she was employed by him. In addition, Mr. Harrison seeks a portion of the contingency fee in a case begun by Ms. Sebren when she worked for his law practice but concluded by her with a settlement reached after she left his employ.

Rhode Island law provides a three-year statute of limitations. R.I.G.L. § 28-14-20(b). Ms. Sebren can recover for any wages unlawfully withheld from her for the period December 10, 2015,^[2] through the date she left Mr Harrison's employ on December 29, 2017.

BACKGROUND

The Court issued two previous substantive decisions before it conducted a bench trial in February and March 2022. The Court previously granted in part and denied in part Ms Sebren's Motion for Partial Summary Judgment. Based partly on a concession by Mr. Harrison, the Court found Mr. Harrison liable under the FLSA and RIPWA for misclassifying Ms. Sebren as an independent contractor instead of as an employee. Sebren v. Harrison, 552 F.Supp.3d 249, 257-58 (D.R.I. 2021) (“Sebren I”).^[3] That ruling entitled Ms. Sebren to minimum wage and overtime protections of both the federal and state statutes while she worked as a non-attorney, and to the same protection of the state statutes for her legal work after she passed the Bar in July 2017.^[4] In addition, the Court granted the Plaintiff's Motion for Summary Judgment on six counterclaims brought by Mr. Harrison, except that the Court denied summary judgment on that portion of Counterclaim I that claimed entitlement to a portion of a contingency fee received by Ms. Sebren for settling a case for a person who was previously a client of HLA. Sebren I at 63.

The Court did not address damages in connection with its summary judgment rulings. It did, however, assess a $3,000 penalty against Mr. Harrison for violating the RIPWA by misclassifying Ms. Sebren over a long period of years. Id. at 62.

The second substantive decision denied Mr. Harrison's post-trial Rule 52 Motion which raised for the first time a challenge to whether either Mr. Harrison's firm or Ms. Sebren herself engaged in “interstate commerce” to such an extent as to make the FLSA applicable. The other two issues concerned whether Ms. Sebren's evidence supported certain conclusions related to damages. Sebren v. Harrison, No. 18-cv-00667, 2022 WL 1063860, at *1 (D.R.I. April 8, 2022) (“Sebren II”. The Court denied the Motion, finding Ms. Sebren protected under the FLSA. The Court reserved on damages for the point when other damages issues would be decided. That time is now.

This Opinion addresses two separate issues that remain in the case:

1. Did Ms. Sebren breach a contract with Mr. Harrison concerning the distribution of a contingency fee received when she settled a personal injury case for a person who had initially been a client of Harrison Law Associates (“Client”)?

2. What are the damages for the violations of wage and hour statutes and, if Mr. Harrison is entitled to a portion of the contingency fee Ms. Sebren collected, to what amount is he entitled?

I. Breach of Contract and the Contingency Fee (Counterclaim I)

Mr. Harrison maintains that he is entitled to a share of the contingency fee Ms. Sebren received when she settled for Client an automobile accident case for $1 Million.

A. Evidence

The Client was initially represented by HLA, and the intake was performed by Ms. Sebren. She was the exclusive contact person for the Client while he was represented by HLA. Mr. Harrison never spoke to him except inconsequentially during one phone call; only Ms. Sebren worked on Client's case. Mr. Harrison testified that he supervised Ms. Sebren on the case which “is a lot of work,” but that he made only three notations of time he personally worked on the case, totaling 2.35 hours. (Tr. III, at 34-36.)^[5] He explained he was “less meticulous” about keeping time records in contingency fee cases. (Tr. III, at 34.)

Mr. Harrison testified that not long after the inception of Ms. Sebren's legal work on Client's case for HLA, the parties agreed that Ms. Sebren would receive no compensation for her legal work on the case except that she and Mr. Harrison would split 50/50 the contingency fee he expected to receive, and Ms. Sebren would wait for payment until the case settled.^[6] The agreement was never in writing. (Tr. III, at 38.) Ms. Sebren disputes any such agreement. (Tr. I, at 88-89.) Mr. Harrison testified that sometime around September 2017, Ms. Sebren said her financial circumstances would not allow her to continue to delay receiving any payment for the work she did on Client's case. He testified they modified the agreement so that Ms. Sebren would receive an hourly wage of $50/hour for half the hours she worked on that case, and that she would be paid “more” at a later date. Mr. Harrison testified that the “more” would be 50% of the contingency fee (presumably less what she had already been paid). (Tr. II, at 190). Ms. Sebren testified in contrast that she expected simply to be paid for the remaining hours at $50/hour once the cash was available from the contingency fee. (Tr. I, at 80, 83-84.)

When Ms. Sebren left Mr. Harrison's employment, on December 29, 2017, she retained the Client's file, which was in her possession with permission because she had been working on the case for HLA. She notified Client that she had left HLA's employment and no longer represented him. Client then retained her to continue to represent him. Sebren I at 262. Ms. Sebren subsequently settled Client's case and placed in escrow the contingency fee of approximately $333,333.

Ms. Sebren maintained that when she left HLA, there was no discussion or any agreement about any monies due her for previous work on Client's case or what the disposition might be were a contingency fee subsequently received by her. Mr. Harrison testified that he asked her directly if she was going to “honor” the contingency fee split and she replied that she believed she did not have to. According to him, she said she had read case law and decided that Mr. Harrison was entitled only to “quantum meruit to be reimbursed for the billable time that I billed when I was at your firm.” She did not deny that there had been such an agreement, according to Mr. Harrison. (Tr. III, at 18-19).

Mr. Harrison testified that as early as September 2017, he asked Ms. Sebren to send an “Asermely” letter to the insurance company in Client's case.^[7] (Tr. III, at 17.) Mr. Harrison testified that he asked her at least twice to send that letter, believing that the insurance company had either 30 or 60 days to respond to the demand. He referred to an email from Ms. Sebren in which she opined that the medicals, up to $150,000 at that point, were growing quickly and were sufficient by then to support a demand letter for the full policy limit. Ms. Sebren delayed sending the Asermely letter until February 9, 2018. (Tr. II, at 61; Tr. III, at 12.) Ms. Sebren testified she did not start collecting the medical bills until January 2018. (Tr. II, at 37:23-39:24.) Plaintiff's Exhibit 8, however, a record of time spent on the Client case by Ms. Sebren while at HLA, reflects time spent collecting medical records in October and November 2017. A specific note for December 4, 2017, indicates that she spent 3.15 hours following up on bills and records and cataloguing those received and still outstanding. (Exh. 8, page SS 39.) Mr. Harrison testified that at the end of December 2017, he saw that the file contained a lot of medical expense documents. (Tr. III, at 21.)

Some tabulation of Ms. Sebren's time spent on Client's case was recorded in the requests for payment she periodically submitted. She noted the number of hours she worked, but also that her compensation for those hours would be covered by the “50%” split of the contingency fee. See, e.g., Plaintiffs Exh. 2.^[8] There was no evidence introduced concerning any legal work performed after the Asermely letter was sent and before a settlement was reached in April. The proceeds were received in May 2018.

B. Factual Findings

The Court makes the following findings of fact pursuant to Rule 52 (a)(1) of the Federal Rules of Civil Procedure:

1. The Client was referred to Mr. Harrison by someone in his professional network. Ms. Sebren's involvement came about only because of her employment by Mr. Harrison.

2. Mr. Harrison offered to share the contingency fee 50/50 with Ms. Sebren in lieu of paying her $50 per hour for her legal work on the case. That agreement was thereafter modified such that she would be paid $50/hour for one-half her hours and delay any payment for the remaining hours until the contingency fee was received. The fair implication was that at that future time she would receive one-half the

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