Schulman v. Herbert E. Nass & Assocs. SEP IRA Plan
| Decision Date | 11 September 2013 |
| Docket Number | No. 10 Civ. 9613 (RA),10 Civ. 9613 (RA) |
| Parties | TODD SCHULMAN, Plaintiff, v. HERBERT E. NASS & ASSOCIATES SEP IRA PLAN and HERBERT E. NASS, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Plaintiff Todd Schulman brings this action pursuant to the Employee Retirement and Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. against Defendants Herbert E. Nass & Associates SEP IRA Plan, Herbert E. Nass and Herbert E. Nass d/b/a Herbert E. Nass & Associates (collectively, "Defendants"). Schulman alleges, inter alia, that Defendants misclassified him as an independent contractor from October 24, 2003 through July 8, 2004 and denied him employee benefits on that basis. Before the Court are the parties' cross-motions for summary judgment. For the reasons set forth below, Schulman's motion is denied and Defendants' motion is granted in part and denied in part.
Todd Schulman, an attorney, is suing his former employer, Herbert E. Nass & Associates ("HENA"), and its principal, Herbert E. Nass. (Nass Aff. ¶ 1.) Schulman contends that fromOctober 24, 2003 to July 8, 2004 (the "Relevant Period"),2 HENA misclassified him as an independent contractor when he was in fact a common law employee entitled to participate in HENA's Simplified Employee Pension Individual Retirement Account ("SEP IRA" or "the Plan"). Nass is the administrator of the Plan, which was instituted in 1991 and amended in 2004. (Nass Aff. ¶¶ 1, 39.)3 The Plan "set[s] forth that for a person to be eligible to participate, he or she must be an [e]mployee for at least three (3) of the immediately preceding five calendar years." Additionally, "the participants are only entitled to contributions if they are employed for the full calendar year on December 31st of each year." (Id. ¶ 40.) These provisions make the date Schulman became an employee of HENA critical to determining when he became eligible to participate in the Plan.
Schulman began working at HENA on October 24, 2003, while he was awaiting admission to the New York Bar Association. (Pl. 56.1 ¶ 1; Defs. Ex. I.)4 According to Defendants, because Schulman was not yet admitted to practice as an attorney in New York, he was hired as an independent contractor and paid on an hourly basis. (Nass Aff. ¶¶ 9-10.) During the Relevant Period, Schulman submitted billing memoranda to the firm which detailed the hours he worked each day and was not entitled to sick pay, vacation days or health benefits. (Pl. Ex. 14; Nass Aff. ¶ 17.) Defendants also provided Schulman with IRS Form 1099s, which are usedto report earnings of independent contractors, (Pl. Ex. 7), instead of W-2s, which employees would have received.
The parties disagree about Schulman's role at the firm and the degree of Defendants' control over him during the Relevant Period. Schulman testified that his tasks were to "dr[aw] wills, trust agreements, probably petitions for Surrogate's Court, perhaps receipt and release; estate related work, estate planning and estate administration related work." (Pl. Ex. 18 at 47:11-18.) According to Schulman, he "us[ed] the resources of [the] firm" to complete his work including HENA's desk, computer, telephones and notepads. (Id. at 97:17-24.) Schulman further testified that although Nass "was not sitting watching over [his] shoulder," (id. at 104:22-105:2), he actively supervised Schulman's work. He described Nass' supervisory role as follows:
[Finished work] went to [Nass'] desk for review by him. He would then mark it up, call me in and discuss it with me and tell me about any changes that he wanted to have made. In those earlier times, especially, but continuing even through the later years, he would educate me on things that he thought I could use an education on. Especially at the very beginning I didn't know anything about drafting a will or a trust agreement, and I would make further changes, leave it for him to review again, and that process would continue until he deemed it satisfactory.
(Id. at 104:2-17.)
Defendants, on the other hand, describe Schulman's role during the Relevant Period as "limited in scope." (Nass Aff. ¶ 11.) According to Defendants, because Schulman was not yet an admitted attorney and could not sign documents on his own, his tasks were limited to typing and drafting letters. (Id.) Nass asserts that he exercised no control over how Schulman completed his tasks during that time, but rather that Schulman was given "full autonomy concerning how he wished to complete [his] tasks." (Id. ¶¶ 12, 15.) For instance, Nass maintains that Schulman set his own hours, determined whether he wanted to work from theHENA office or elsewhere, and chose his own materials. (Id.) After Schulman completed an assignment, he would submit the work to Nass who would review the document and return it to Schulman for completion. (Id. ¶ 14.)
By July 8, 2004, Schulman had become an admitted attorney and HENA made him an associate of the firm, and thereby a salaried employee. (Id. ¶ 31.) At this point, he began receiving employee benefits such as sick pay, health benefits and vacation time. HENA began furnishing him with IRS Form W-2s, which are used to report employee earnings. (Pl. 56.1 ¶ 30.) Defendants claim that it was at this time—when Schulman became an associate of the firm—that Nass first began to exercise control over Schulman's work. (Nass Aff. ¶ 31.) Schulman was terminated in August 2008 but continued to work at HENA in some capacity until November 14, 2008. (Pl. 56.1 ¶ 4; Nass Aff. ¶ 35.)
On June 26, 2009, Schulman sent a letter to Nass requesting documents pertaining to HENA's SEP IRA Plan. The letter provided, "I was employed by Herbert E. Nass, d/b/a Herbert E. Nass & Associates, from 10/24/2003 through 11/14/2008, and am thus a participant, within the meaning of 29 U.S.C. § 1002(7), in the firm's SEP IRA." (Pl. Ex. 6.) Nass did not provide Schulman with the requested Plan documents, believing that Schulman, as a terminated employee, was not entitled to them. (Nass Aff. ¶ 48.) Schulman then filed a complaint with the Department of Labor. In September and November 2009, Nass formally responded to Schulman's complaint and included a copy of the Plan in that response. (Id. ¶ 49.)
Two years later, on December 29, 2010, Schulman filed the Complaint in the instant matter. The Complaint alleges that Defendants misclassified him as an independent contractor during the Relevant Period and that he was thus improperly denied eligibility to participate in the Plan. Defendants filed counterclaims against Schulman for fraud and attorney's fees and costs.Schulman and Defendants have each moved for summary judgment. For the following reasons, Schulman's motion is denied and Defendants' motion is granted in part and denied in part.
"The court shall 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). "The moving party bears the burden of establishing the absence of any genuine issue of material fact." Zaleski v. City of Bridgeport Police Dep't, 613 F.3d 336, 340 (2d Cir. 2010) (citing Celotex Corp v. Catrett, 477 U.S. 317, 322 (1986)). "All ambiguities must be resolved in favor of the non-moving party and all permissible inferences from the factual record must be drawn in that party's favor." Id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)). "The standard to be applied when deciding cross-motions for summary judgment is the same as that for individual motions for summary judgment and the court must consider each motion independent of the other." Schultz v. Stoner, 308 F. Supp. 2d 289, 298 (S.D.N.Y. 2004) (internal quotation marks omitted).
The gravamen of Schulman's Complaint is that he was misclassified as an independent contractor during the Relevant Period and thus improperly denied benefits enjoyed by HENA employees who had been employed for the necessary time period under the Plan. (See Pl. Mem. at 3 ().) Schulman seeks damages pursuant to Section 502(a)(1)(B) of ERISA for such allegedly wrongfully denied benefits. The Complaint also alleges that Defendants' conduct "constitutes a knowing violation of ERISA and a breach offiduciary duty of behalf of [D]efendants." (Compl. ¶ 44.) This claim is presumably brought under Section 502(a)(3) of ERISA, which provides a cause of action for a breach of fiduciary duty. Lastly, Schulman alleges that "Defendants refused and failed to provide any documents and information to plaintiff, which constituted a knowing violation of ERISA." (Id. ¶ 51.)5 Schulman moves for summary judgment on these claims and Defendants' cross-motion seeks their dismissal. Defendants argue that the claims are barred by the statute of limitations and are, in any event, meritless. The Court need not delve into the merits of Schulman's claims because the applicable statutes of limitations bar Schulman's benefits claims.
Section 502(a)(1)(B) "creates a cause of action for, inter alia, a participant in a pension plan covered by ERISA 'to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.'" Carey v. Int'l Bhd. of Electrical Workers Local 363 Pension Plan, 201 F.3d 44, 46 n.2 (2d Cir. 1999) (quoting 29 U.S.C. § 1132(a)(1)(B)). "[A]lthough ERISA does not prescribe a statute of limitations for violations of Section 502(a)(1)(B), our Circuit holds that the appropriate statute of limitations under analogous New York law is the six year...
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