Mischler v. Novagraaf Grp. BV
| Decision Date | 28 February 2022 |
| Docket Number | Civil Action 18-2002 (TJK) |
| Parties | JOSEPH MISCHLER, Plaintiff, v. NOVAGRAAF GROUP BV et al., Defendants. |
| Court | U.S. District Court — District of Columbia |
Joseph Mischler sued Novagraaf Group BV, an international patent and trademark consultancy, for alleged violations of District of Columbia labor laws and common law breach of contract stemming from Novagraaf s termination of his purported employment. From the start of the case, Mischler has argued that he was an employee of Novagraaf s, so he can recover lost wages and certain other benefits protected by statute. Novagraaf, in contrast, has sought to characterize Mischler as an independent contractor, so he cannot. The parties have cross-moved for summary judgment. The Court will grant Novagraaf s motion and deny Mischler's on the statutory claims because it concludes that Mischler was an independent contractor, and it will deny both motions as to the contract claim.
Novagraaf Group BV provides intellectual property advisory services. The company is based in the Netherlands, but this dispute stems from its interest in expanding its reach into the United States. In May 2016, Novagraaf and Joseph Mischler agreed that Mischler would serve as Novagraaf s Vice President and Managing Director of Novagraaf Americas. The final terms were memorialized in a Management Services Agreement (“MSA”), which specified, among other things, Mischler's responsibilities, compensation structure, and the circumstances of his departure. See ECF No. 145-7 at 2. Mischler's principal responsibility was to sell Novagraaf's services in the United States, including by identifying potential new clients. The arrangement enabled Mischler to acquire equity in Novagraaf under a separate Participation and Shareholders' Agreement (“PSA”). ECF 145-5 at 31.
But a few years in, the relationship soured. Novagraaf felt that Mischler was not performing at the level it had hoped, and it ended their arrangement in July 2018. ECF No. 145-6 ¶¶ 49- 50. Not long after, Mischler sued Novagraaf in District of Columbia Superior Court asserting claims for lost wages under the D.C. Wage Payment Collection Law (“DCWPCL”), breach of contract under D.C. common law, and failure to provide paid sick leave under the D.C. Sick Leave Act (“Sick Leave Act”). Novagraaf removed this case to this Court.
Novagraaf then invoked a “Bad Leaver” provision of the PSA and effectively reclaimed Novagraaf's shares that Mischler had acquired. Novagraaf claimed that Mischler had violated his confidentiality obligations under the MSA when he sued, thus making him a “Bad Leaver.” In response, Mischler amended his complaint to include a retaliation claim under the DCWPCL. ECF No. 7-1 ¶¶ 38-44. The Court also granted Mischler leave to file his Second Amended Complaint and name Novagraaf CEO Lutgarde Liezenberg as a defendant. ECF No. 51. Novagraaf then asserted a counterclaim that Mischler had engaged in fraud over his reported sales commissions. ECF No. 53 at 8-9. After discovery, the parties cross-moved for summary judgment on all counts of the Second Amended Complaint, ECF Nos. 89, 99, and for summary judgment on Novagraaf's fraud claims, ECF No. 90, 100. Around the same time, Liezenberg filed several motions for summary judgment of her own. The Court granted summary judgment to Mischler on Novagraaf's fraud claim and denied Liezenberg's motions. ECF No. 160. Remaining are Novagraaf's and Mischler's cross-motions for summary judgment.[1] As noted above, the statutory claims turn on whether Mischler was Novagraaf s employee or an independent contractor.
Under Federal Rule of Civil Procedure 56, a court must grant summary judgment “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “Summary judgment is appropriately granted when, viewing the evidence in the light most favorable to the non-movants and drawing all reasonable inferences accordingly, no reasonable jury could reach a verdict in their favor.” Lopez v. Council on Am.-Islamic Relations Action Network, Inc., 826 F.3d 492, 496 (D.C. Cir. 2016). To survive summary judgment, a plaintiff must “go beyond the pleadings and by her own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986) (internal quotation omitted). Courts “are not to make credibility determinations or weigh the evidence.” Lopez, 826 F.3d at 496 (quoting Holcomb v. Powell, 433 F.3d 889, 895 (D.C. Cir. 2006)). But the “mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Id. (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986)). If the evidence “is merely colorable, or is not significantly probative, summary judgment may be granted.” Anderson, 477 U.S. at 249-50 (citations omitted).
Mischler argues that upon his termination, Novagraaf should have paid him certain commissions and equity (Count I) and that Novagraaf failed to pay him with the required frequency during his alleged employment there (Count II). Mischler also alleges that Novagraaf retaliated against him after he questioned whether he was receiving all his compensation (Count III). And finally, Mischler claims that he is entitled to certain sick leave he never received (Count V). Novagraaf argues that it is entitled to summary judgment on these counts because Mischler was an independent contractor who cannot recover under the relevant laws.
The Court agrees with the parties that the threshold question governing Mischler's ability to recover on these counts is whether he was Novagraaf s employee. The relevant statutory protections extend only to employees, not to independent contractors.[2] See Medina v. Kevorkian Cleaning Co., 444 F.Supp.3d 204, 211-12 (D.D.C. 2020). The DCWPCL, the Sick Leave Act, and the Fair Labor Standards Act (“FLSA”) include almost identical definitions of an employee and are “construed consistently” in this regard.[3] Id. And “determinations of employer or employee status under the FLSA apply equally under District of Columbia wage laws.” Thompson v. Linda And A., Inc., 779 F.Supp.2d 139, 146 (D.D.C. 2011).
Whether a worker is an employee or an independent contractor under these statutes is a question of law that can be resolved at summary judgment, although it is dependent on subsidiary factual questions that may present genuine disputes of material fact. Thompson, 779 F.Supp.2d at 147. Courts look to the “economic reality” of the relationship between the parties to resolve this question. Goldberg v. Whitaker House Coop., Inc., 366 U.S. 28, 33 (1961). And the D.C. Circuit has articulated four factors to aid courts in this analysis: “whether the alleged employer (1) had the power to hire and fire the employees, (2) supervised and controlled employee work schedules or conditions of employment, (3) determined the rate and method of payment, and (4) maintained employment records.” Morrison v. Int'l Programs Consortium, Inc., 253 F.3d 5, 11 (D.C. Cir. 2001). At the same time, the Circuit has also cited with approval five “different, although similar” factors, including: “(1) the degree of control exercised by the employer over the workers, (2) the workers' opportunity for profit or loss and their investment in the business, (3) the degree of skill and independent initiative required to perform the work, (4) the permanence or duration of the working relationship and (5) the extent to which the work is an integral part of the employer's business.” Id. Either way, “there is no shorthand formula or magic phrase that can be applied to find the answer, but all the incidents of the relationship must be assessed and weighed with no one factor being decisive.” FedEx Home Delivery v. NLRB, 563 F.3d 492, 496 (D.C. Cir. 2009) (quoting NLRB v. United Ins. Co. of Am., 390 U.S. 254, 258, (1968)).
After thorough consideration of the record, the Court holds that Mischler was an independent contractor. Thus, Novagraaf is entitled to summary judgment on Counts I, II, III, and V of Mischler's Second Amended Complaint.
Mischler argues that Novagraaf exercised a significant control over his work, and he points specifically to his frequent contact with Novagraaf and its control over his compensation.
ECF No. 99-1 at 11-12. Novagraaf argues, to the contrary, that Mischler was free to conduct his duties any way he saw fit. A close review of the record reveals that the parties do not dispute most of the key facts relevant to this factor.[4]
To begin with, the record makes clear that Novagraaf did not control Mischler's schedule or day-to-day work. Mischler conceded that sort of control was “impossible” given the nature of what he was doing. ECF No. 89-6 at 15. Mischler did not need to work a certain number of hours per week, and Novagraaf did not monitor his sick days or where he was working. In like manner, Mischler did not need approval to travel domestically or incur business-related expenses, and No-vagraaf did not direct Mischler to pursue specific clients. On this record, Mischler possessed significant autonomy to perform his core responsibility-pursuing sales opportunities-without Novagraaf's control.
Another important point: Mischler was free to pursue other employment opportunities while...
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