Longstreth v. Copple, C97-4100 MWB.

• Decision Date: 26 June 2000
• Docket Number: No. C97-4100 MWB.,C97-4100 MWB.
• Citation: 101 F.Supp.2d 776
• Parties: Mary Ann LONGSTRETH, Plaintiff, v. Tom COPPLE and MCI Telecommunications Corporation, a Delaware Corporation, Defendants.
• Court: U.S. District Court — Northern District of Iowa

101 F.Supp.2d 776

Mary Ann LONGSTRETH, Plaintiff, v. Tom COPPLE and MCI Telecommunications Corporation, a Delaware Corporation, Defendants.

No. C97-4100 MWB.

United States District Court, N.D. Iowa, Western Division.

June 26, 2000.

Dawn E. Mastalir, Berenstein, Moore, Berenstein, Heffernan & Moeller, L.L.P., Sioux City, IA, for plaintiff.

Sarah J. Kuehl, Heidman, Redmond, Fredregill, Patterson, Plaza & Dykstra, L.L.P., Sioux City, IA, for defendants.

MEMORANDUM OPINION AND ORDER REGARDING PLAINTIFF'S MOTION FOR ORDER COMPELLING PAYMENT IN FULL OF JUDGMENT

BENNETT, Chief Judge.

In this case, the court is called upon to determine whether defendants, MCI Worldcom ("MCI"), formerly known as MCI Telecommunications Corporation, and Tom Copple ("Copple"), properly withheld statutory deductions from an Offer of Judgment, pursuant to Rule 68 of the Federal Rules of Civil Procedure, accepted by plaintiff, Mary Ann Longstreth ("Longstreth").

Initially, Longstreth filed suit against MCI and Copple pursuant to the Family and Medical Leave Act ("FMLA"), 29 U.S.C. § 2601, seeking damages for alleged violations of the Act. On November 23, 1999, defendants served an Offer of Judgment to allow judgment to be taken against them in the amount of $40,000.00, together with costs accrued to date, but not including any attorney fees accrued to date. Longstreth timely accepted this offer, and entry of this Offer of Judgment was filed on January 3, 2000.

On May 22, 2000, counsel for Longstreth received two checks from the defendants. One in the amount of $1,759.06 for costs, and another in the amount of $23,340.00 intended to represent payment of the $40,000.00 judgment less the following statutory deductions: $2,480.00 for Social Security taxes; $580.00 for Medicare taxes; $11,200.00 for federal income taxes and; $2,400.00 for state income taxes. Longstreth has returned both of these checks to the defendants, and on May 24, 2000, Longstreth filed a Motion for Order Compelling Payment in Full of Judgment, which the defendants resisted. Specifically, Longstreth is seeking an order from the court requiring the defendants to remit $1,759.06 to Longstreth for payment of costs, and the full $40,000.00, without any statutory deductions, plus post-judgment interest to Longstreth for satisfaction of the judgment.

On June 15, 2000, the court heard oral arguments on plaintiff's motion. Longstreth was represented by Dawn E. Mastalir of Berenstein, Moore, Berenstein, Heffernan & Moeller, Sioux City, Iowa. Defendants MCI and Copple were represented by Sarah J. Kuehl of Heidman, Redmond, Fredregill, Patterson, Plaza & Dykstra, L.L.P., Sioux City, Iowa.

Longstreth sets forth three reasons in support of her argument that she is entitled to the full amount of the Offer of Judgment, or $40,000.00, without any statutory wages deducted. First, Longstreth argues that if the defendants had wanted the Offer of Judgment to be for $40,000.00 less statutory wage deductions, the defendants should have included such language in the terms of the offer. Because the defendants failed to include such language, Longstreth argues that they should not now be able to state that statutory wages were supposed to be deducted. Second, Longstreth argues that even if the defendants have an obligation to withhold taxes on wages, there remains a question as to the amount of the award, if any, that constitutes taxable wages. Longstreth asserts that the offer does not allocate the lump sum of the $40,000.00: that is, the defendants do not indicate whether the amount constitutes lost past income and benefits, lost future income and benefits, actual and compensatory damages, or liquidated damages. Third, Longstreth argues that the Offer of Judgment was made by defendants MCI and Tom Copple. Thus, Longstreth argues because the offer was made by defendants, it is possible that the offer represents damages payable by Tom Copple, and individually, Copple would have no obligation to withhold any amount for employment taxes. Accordingly, Longstreth argues because the defendants' Offer of Judgment does not say that any taxes due will be deducted from the $40,000.00, and likewise does not say that the judgment will be paid independently by MCI, the offer should be construed against the defendants, and Longstreth should receive payment of the $40,000.00 judgment, plus post-judgment interest.

In contrast, defendants argue that the $40,000.00 judgment payable to Longstreth represents taxable wages and compensation payable to Longstreth by the defendants. Specifically, defendants assert that MCI is required by federal and state law to withhold from wages paid to its employees, amounts owed by the employees for Social Security, Medicare, federal income tax, and state income tax. Further, defendants argue because Longstreth cannot recover damages for personal physical injury or sickness under the FMLA, which Longstreth would otherwise be able to exclude from her gross income pursuant to 26 U.S.C. § 104(a)(2), the $40,000.00 represents wages that are taxable.

The court agrees with the defendants' statement that MCI is required by federal and state law to withhold from wages paid to its employees amounts owed by the employees for statutory wage deductions. This point was squarely addressed by the Eighth Circuit Court of Appeals in Newhouse v. McCormick & Co., Inc., 157 F.3d 582 (8th Cir.1998). The Newhouse court stated that the key question in determining whether a defendant is required to withhold statutory deductions from an award is whether the plaintiff's award constitutes "wages." In its analysis, the Newhouse court considered, inter alia, the following relevant portions of the Internal Revenue Code:

The Internal Revenue Code provides that "every employer making payment of wages shall deduct and withhold upon such wages a tax determined in accordance with tables or computational procedures prescribed by the Secretary." 26 U.S.C. § 3402(a)(1). The Code defines wages broadly as "all remuneration for employment," unless specifically excepted. 26 U.S.C. § 3121(a); 26 C.F.R. § 31.3121(a)-1 (1998). "Remuneration for employment" constitutes wages regardless of the name by which it is designated and even though the employer and employee relationship no longer exists at the time the remuneration is paid. 26 C.F.R. § 3121(a)-1(c), (i). Employment "means any service, of whatever nature, performed ... by an employee for the person employing him." 26 U.S.C. § 3121(b).

Newhouse, 157 F.3d at 584-85. The Newhouse court pointed out that in making this determination, it is important to demonstrate an employer-employee relationship in order to label an award as wages for purposes of triggering the withholding requirement. Ultimately, the Newhouse court concluded that the plaintiff's back pay award did not represent wages because at the time of the judgment, plaintiff was never hired by the defendant, and because there was never any previous employment relationship between them. Id. at 587; see also Mayberry v. United States, 151 F.3d 855, 860 (8th Cir.1998) (stating that crucial to the determination that the award constituted wages was that the plaintiff's employment relationship had been factored into the award). Here, because there was a previous employment relationship between Longstreth and MCI, the court notes that had MCI included language in the Offer of Judgment indicating that the $40,000 made payable to Longstreth represented payment on behalf of both MCI and Tom Copple, MCI's withholding of statutory deductions would have been proper. But see Churchill v. Star Enters., 3 F.Supp.2d 622, 624-25 (E.D.Pa. 1998) (stating, following verdict for plaintiff in action against employer brought under the FMLA, that "the jury's award does not and cannot represent wages for services performed since [the plaintiff] performed none during the relevant time frame," and, therefore, "no withholding is mandated under federal or state law"). However, because MCI failed to include such language in the Offer of Judgment, the court is not persuaded that the judgment of $40,000.00 was made payable solely by MCI to Longstreth, thus triggering the withholding requirements discussed in Newhouse. It must be remembered that Longstreth sued not only MCI, but also Tom Copple, for violations of the FMLA, and that it was the defendants, collectively, who made the Rule 68 Offer of Judgment to Longstreth. Longstreth points this out, arguing that because the Offer of Judgment was made by defendants, it is possible that the $40,000.00 represents damages payable by Copple who has no obligation to withhold statutory deductions. The court agrees.

In reviewing the plain language of the FMLA, and the existing case law, the court finds that individual liability exists under the FMLA. The FMLA defines an "employer" as, inter alia, "any person who acts directly or indirectly in the interest of an employer to any of the employees of such employer." 29 U.S.C. § 2611(4)(A)(ii)(1). Based on the plain language of the FMLA, the court finds that the FMLA expresses an intent to provide for individual liability. Kilvitis v. County of Luzerne, 52 F.Supp.2d 403, 412 (M.D.Pa.1999) (stating that the plain language of the statute evinces an intent to provide for individual liability); accord Meara v. Bennett, 27 F.Supp.2d 288, 291 (D.Mass.1998) ("This language clearly suggests that individuals are contemplated as defendants under [the FMLA]"). Moreover, a majority of the courts that have interpreted the FMLA as allowing for individual liability have noted that the definition of employer in the FMLA closely resembles the definition of employer as contained in the statutory language of the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201, et seq., which defines an "employer" as including "any person acting directly or indirectly in the interest of an employer in relation to an employee...." 29 U.S.C. § 203(d). See Wascura v. Carver, 169 F.3d...