KATHLEEN M. TAFOYA, Magistrate Judge.
This matter is before the court on Defendants' "Motion for Summary Judgment." (Doc. No. 86 ["Mot."].) Plaintiffs filed a Response (Doc. No. 93 ["Resp."]), to which Defendants replied. (Doc. No. 100.)
Defendant Emcon Associates, Inc. ("Emcon") is a New Jersey corporation. (Doc. No. 24 at 2; Doc. No. 58 at 2.) Defendant Michael Cocuzza is a co-founder and CEO of Emcon. (Doc. No. 24 at 3; Doc. No. 58 at 3.) Defendant Michael Michowski is a co-founder and Chief Administrative Officer of Emcon. (Doc. No. 24 at 3; Doc. No. 58 at 3.)
Former Defendant FMNow LLC ("FMNow") was a Colorado limited liability company formed on June 13, 2012. (Doc. No. 93-1.) FMNow's initial Operating Agreement indicates that Defendants Cocuzza and Michowski each contributed $12,500.00 of capital and each held 16.667% (one-sixth) ownership interest. (Doc. No. 86-3; Doc. No. 93-1 at 40.)
FMNow and Plaintiff Powers executed an Employment Agreement ("EA") on October 15, 2012. (Doc. No. 86-2.) Plaintiff Powers also completed a 1099 Form for 2013. (Doc. No. 86-6.) Throughout the EA, Plaintiff Powers is referred to as an "employee" and is designated as "Director and Business Analyst, Industrial Sector, a management position." (Id. at 1.) The EA contains the following provisions:
(Id. at 1, 2, 5, 6, 9.) (emphasis in original.) Additionally, the EA also includes a non-compete agreement prohibiting Plaintiff Powers from working for a competing business located within the United States for a period of two years following the termination of his employment. (Id. at 4-5.)
FMNow filed a Statement of Dissolution with the Colorado Secretary of State on September 2, 2015. (Doc. No. 86-1) Initially, Plaintiffs also named as Defendants in this action FMNow, Jon Mattei, President of FMNow, and Patricia Moscarelli, former President of FMNow. (Doc. No. 24.) Prior to the dissolution of FMNow, Plaintiffs reached a settlement with Defendants FMNow and Mattei. (Doc. Nos. 40, 42; Doc. No. 86-12 at 3.)
Summary judgment is appropriate 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 initial burden of showing an absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). "Once the moving party meets this burden, the burden shifts to the nonmoving party to demonstrate a genuine issue for trial on a material matter." Concrete Works, Inc. v. City & County of Denver, 36 F.3d 1513, 1518 (10th Cir. 1994) (citing Celotex, 477 U.S. at 325). The nonmoving party may not rest solely on the allegations in the pleadings, but must instead designate "specific facts showing that there is a genuine issue for trial." Celotex, 477 U.S. at 324; see also Fed. R. Civ. P. 56(c). A disputed fact is "material" if "under the substantive law it is essential to the proper disposition of the claim." Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir.1998) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A dispute is "genuine" if the evidence is such that it might lead a reasonable jury to return a verdict for the nonmoving party. Thomas v. Metropolitan Life Ins. Co., 631 F.3d 1153, 1160 (10th Cir. 2011) (citing Anderson, 477 U.S. at 248).
When ruling on a motion for summary judgment, a court may consider only admissible evidence. See Johnson v. Weld County, Colo., 594 F.3d 1202, 1209-10 (10th Cir. 2010). The factual record and reasonable inferences therefrom are viewed in the light most favorable to the party opposing summary judgment. Concrete Works, 36 F.3d at 1517. Moreover, because Plaintiff is proceeding pro se, the court, "review[s] his pleadings and other papers liberally and hold[s] them to a less stringent standard than those drafted by attorneys." Trackwell v. United States, 472 F.3d 1242, 1243 (10th Cir. 2007) (citations omitted); see also Haines v. Kerner, 404 U.S. 519, 520-21 (1972) (holding allegations of a pro se complaint "to less stringent standards than formal pleadings drafted by lawyers"). At the summary judgment stage of litigation, a plaintiff's version of the facts must find support in the record. Thomson v. Salt Lake Cnty., 584 F.3d 1304, 1312 (10th Cir. 2009). "When opposing parties tell two different stories, one of which is blatantly contradicted by the record, so that no reasonable jury could believe it, a court should not adopt that version of the facts for purposes of ruling on a motion for summary judgment." Scott v. Harris, 550 U.S. 372, 380 (2007); Thomson, 584 F.3d at 1312.
Though not a model of clarity, Emcon's first basis for summary judgment appears to be an argument that Plaintiffs' Amended Complaint based their alter ego theory of liability solely on the allegation that Emcon was FMNow's parent corporation. (Mot. at 9.) Emcon states that "a lack of ownership of a controlling interest generally precludes application of the veil piercing doctrine." (Id. at 9.) Thus, according to Emcon, if it can show FMNow does not hold a controlling interest in FMNow, Plaintiffs' alter ego theory fails. (Id. at 9-10.) Emcon makes a similar argument related to sister corporations who share common ownership. According to Emcon, it does not share common ownership with FMNow but presuming it did, status as sister corporations is not sufficient to pierce the corporate veil. (Id. at 10.)
In asserting these arguments, Emcon ignores the well-established law related to determining whether one corporation is an alter ego of another. Determining whether a corporation is an alter ego is not limited to the status of parent-subsidiary or sister corporations. Instead, the trier of fact must consider the following factors:
U.S. v. Van Diviner, 822 F.2d 960, 965 (10th Cir. 1987). Further, no one factor is determinative in this analysis. Newport Steel Corp. v. Thompson, 757 F.Supp. 1152, 1157 (D. Colo. 1990) ("[A] variety of considerations are used to determine whether the corporate form should be disregarded.").
Emcon does not discuss the plethora of evidence in the record relevant to a consideration of these factors and thus, it is unnecessary for the court to do so here. Instead, Emcon limits its argument to its contention that Plaintiffs based their "theory of recovery [on] allegations that Emcon was FMNow's parent company." (Mot. at 10.) The court disagrees.
Plaintiffs have never limited their theory of recovery on establishing such a parent-subsidiary relationship. In Plaintiffs' Amended Complaint, they repeatedly allege FMNow is the alter ego of Emcon and/or assert an alter ego theory of liability and do not premise those allegations solely on establishing Emcon is the parent corporation of FMNow. (Doc. No. 24 at 14, 21, 22, 23.) Additionally, in correspondence dated August 5, 2016, Plaintiffs' counsel responded to assertions by Emcon's counsel that there is no documentation showing that Emcon holds a controlling interest in FMNow, stating:
(Doc. No. 86-11 at 1.) Moreover, in light of the previous briefing related to and Order ruling on Defendants' Motion to Dismiss, in which Plaintiffs' alter ego theory and the factors relevant to the same were addressed at length, see Doc. No. 54 at 15-18, it is unclear why Emcon now argues Plaintiffs' claims rely on establishing a parent-subsidiary relationship. In any event, Emcon's argument is without merit.
As noted, Emcon fails to dispute or even address the majority of the evidence Plaintiffs have presented relevant to the alter ego determination. Instead, as its next basis for summary judgment, it simply argues Plaintiffs cannot establish their alter ego theory because they did not depose former-Defendant Mattei and Plaintiffs are not offering expert testimony. Notably, Emcon does not cite to any case law supporting their assertion that expert testimony is required to establish an alter ego theory, nor is the court aware of any such requirement. Further, while Mr. Mattei and an expert witness may have offered testimony relevant to Plaintiffs' alter ego theory, Plaintiffs have produced a significant amount of evidence relevant to the determining factors.
Defendants argue Plaintiffs' claims against them are precluded based upon Plaintiffs' release of FMNow/Mattei. (Mot. at 12-14.) "A release is the relinquishment of a vested right or claim to the person against whom the claim is enforceable." Truong v. Smith, 28 F.Supp.2d 626, 630 (D. Colo. 1998) (citing Neves v. Potter, 769 P.2d 1047, 1049 (Colo. 1989); Restatement (Second) of Contracts § 284 (1981)). Agreements exculpating one contracting party from liability have been held enforceable. Id. (citing Heil Valley Ranch, Inc. v. Simkin, 784 P.2d 781, 784 (Colo. 1989) (considering contract provision exculpating party from liability for negligence)). Further, a release is an agreement to which general contractual rules of interpretation and construction apply. Id. (citing Rocky Mountain Ass'n of Credit Mgmt. v. Hessler Mfg. Co., 553 P.2d 840, 842 (Colo. 1976)).
Plaintiffs' settlement agreement included a full and final release of claims against former Defendants FMNow and Mattei. (Doc. No. 95.) However, the agreement also included a reservation of rights preserving Plaintiffs' claims against the remaining Defendants. (Id. at 3.) Defendants reason that presuming FMNow is the alter ego of Emcon, as Plaintiffs contend, then just as the alter ego doctrine treats corporations as one for purposes of imposing liability, a release of FMNow from liability also releases Emcon from the same. (Id.) In support of this contention, Defendants rely on various cases that cite to this basic principal of corporate law, however, none of those cases indicate that in releasing one corporation the plaintiff therein reserved its rights against the other. See M/V Am. Queen v. San Diego Marine Constr. Corp., 708 F.2d 1483, 1489-90 (9th Cir. 1983); Morris v. Penn Mut. Life Ins. Co., No. CIV. A. No. 87-7063, 1989 WL 14063, at *2 n.2 (E.D. Penn. Feb. 21, 1989); Hydro Air of Conn., Inc. v. Versa Tech., Inc., 99 F.R.D. 111, 113 (D. Conn. 1983); Fuls v. Shastina Props., Inc., 448 F.Supp. 983, 989 (N.D. Cal. 1978).
Defendants are critical of Plaintiffs' reliance on Meyer v. Stern, 599 F.Supp. 295 (D. Colo. 1984), in which this court applied state law to find "a release with express provisions reserving the right to sue other tort-feasors will be given the effect intended by the parties." Id. at 297. The court explained, "`[W]hen from the very nature of the transaction the intent to preserve the right to sue other tort-feasors is apparent, the intent of such agreement will be given the same effect as if it were a pure covenant not to sue.'" Id. at 297-98 (quoting Farmers Elevator Co. of Sterling v. Morgan, 474 P.2d 617, 618 (Colo. 1970)).
Defendants distinguish Meyer because it was based upon state law, see id. at 297 ("Both parties agree that Colorado law should be applied in determining liability"), and involved actions in tort, rather than contract and statute. (Reply at 8-9.) Although the underlying reasoning is sound, the court recognizes the distinguishing characteristics of Meyer.
In the present case, the settlement with FMNow and Mattei did not provide Plaintiffs with the full damages they seek for their claims. (Resp. at 11 n.8.) As Emcon concedes, under Plaintiffs' alter ego theory, Emcon would be equally liable for those damages. In the Settlement Agreement, Plaintiffs specifically and unambiguously reserved their right to continue with their claims against the remaining Defendants. Emcon has not presented any case law indicating that a reservation of rights contained within a release of claims does not apply to an alter ego just as it does to other parties. See, cf., Kennedy v. Ford Motor Co., 80 F. App'x 100, 103-04 (10th Cir. 2003) (noting the plaintiff could have preserved her fraud claims by including a reservation of rights provision in her settlement agreement); Advantage Props., Inc. v. Commerce Bank, N.A., No. 00-3014, 2000 WL 1694071, at *3 (10th Cir. Nov. 13, 2000) (finding that the plaintiff-corporation's president and sole stockholder who, though not a party to the lawsuit, participated in the negotiation of a settlement agreement was barred from asserting individual claims because he could have preserved such claims in the agreement); Schroeder v. Allstate Ins. Co., No. 09-cv-00671-JLK-MJW, 2009 WL 1387090, at *1 (D. Colo. May 18, 2009) (noting the plaintiff could have included a reservation of rights in release to preserve claims); Truong, 28 F. Supp. 2d at 631 (denying individual defendant's motion to dismiss Title VII claims; the defendant relied on a release contained within the plaintiff's settlement agreement with Defendant HealthFirst P.C. but the court found the agreement included a reservation of rights to pursue claims against the defendant in his individual capacity). Accordingly, Defendants' request for summary judgment based on Plaintiffs' previous settlement and release of claims against FMNow and Mattei is denied.
Emcon contends Plaintiff Powers was an independent contractor for FMNow and therefore, he cannot recover under the Colorado Wage Act ("CWA") or the Fair Labor Standards Act ("FLSA"). (Mot. at 14-15.) The CWA defines an employee as "any person . . . performing labor or services for the benefit of an employer in which the employer may command when, where, and how much labor or services shall be performed." Colo. Rev. Stat. § 8-4-101(5). Under the FLSA, an employee is "any individual employed by an employer." 29 U.S.C. § 203(e)(1). "Employ" means to "suffer or permit to work." 29 U.S.C. § 203(g). To determine whether an individual is an employee for purposes of the FLSA, the court must apply the economic realities test, which focuses on "whether the individual is economically dependent on the business to which he renders service." Doty v. Elias, 733 F.2d 720, 722-23 (10th Cir. 1984).
The Tenth Circuit has set out six factors for courts to consider in performing this test:
Baker v. Flint Engineering & Const. Co., 137 F.3d 1436, 1440 (10th Cir. 1998).
Once findings of fact are made regarding the factors above, the court must decide, as a matter of law, whether the individual is an "employee" under the FLSA. Baker, 137 F.3d at 1440. No single factor is dispositive; instead the Court must use a totality-of-the-circumstances approach. Id. at 1441.
In asserting Plaintiff Powers was an independent contractor, Emcon relies on the fact Plaintiff Powers executed a 1099 rather than a W-2 Form, he described his status on a mortgage financing document as a "1099 employee," and FMNow issued payments to Plaintiff Powers' limited liability companies, rather than to him directly. (Mot. at 14-15.) However, this evidence is of little relevance in determining Plaintiffs' employment status.
Hugler v. Foreclosure Connection, Inc., No. 2:15-cv-00653-DAK, 2017 WL 2168202, at *11 (D. Utah May 8, 2017).
The law is clear that in determining an individual's employment status, the inquiry is focused on the parties' relationship. Id. However, the court notes that the EA repeatedly refers to Plaintiff Powers as an "employee" and never refers to him as an "independent contractor." (Doc. No. 86-2.) "Though an employer's self-serving label of workers as independent contractors is not controlling, an employer's admission that his workers are employees covered by the FLSA is highly probative." Brock v. Superior Care, Inc., 840 F.2d 1054, 1059 (2d Cir. 1988); see also Hugler, 2017 WL 2168202, at *11.
Further, applying the factors relevant to the economic realities test does not support a finding that Plaintiff Powers was an independent contractor. FMNow exhibited a significant amount of control over Plaintiff Powers' employment. The EA set forth seven general areas of responsibility and FMNow possessed sole discretion to assign additional responsibilities. (Doc. No. 86-2 at 1.) Additionally, the EA contained a non-compete agreement applicable for two years following the termination of his employment and prohibited Plaintiff Powers from pursuing a competitive business while still employed by FMNow. (Id. at 5-6.) During his employment and one year thereafter, Plaintiff Powers was prohibited from soliciting, inducing, recruiting or causing another FMNow employee to terminate their employment for the purpose of becoming associated with a competitor. (Id. at 6.) Finally, Plaintiff Powers was required to abide by all FMNow policies. (Id. at 1.)
With regard to Plaintiff Powers' opportunity for profit or loss, he was eligible to participate in the "Employee Stock Option Program" and the 401k program when established. (Id. at 2.) Plaintiff Powers also retained said options upon leaving FMNow's employment if it occurred two years after the contract was executed. (Id.) Further, if FMNow terminated Plaintiff Powers without cause, it was required to provide him 12 months' compensation. (Id. at 6.) As to the permanence of the working relationship, Plaintiff Powers was an at-will employee and the Employment Agreement did not place a time limit on his employment. (Id. at 2.)
In considering the degree of skill required, the court notes the EA specifically states that FMNow was hiring Plaintiff Powers for "a management position" and that the EA sets forth the "basic legal and ethical responsibilities that Employee is expected to observe as an Executive or Managerial Employee." (Id. at 1, 9.) The EA also notes that his position "requires considerable responsibility and trust." (Id. at 2.)
The record also indicates Plaintiff Powers did not perform work for any other companies while working for FMNow and/or Emcon. (Doc. No. 93-9 at 2-3.) Additionally, it appears Plaintiff Powers was dependent upon his employment with FMNow for his livelihood as his termination was the result of requesting a loan from Mr. Cocuzza due to his unpaid compensation and expense reimbursement from FMNow. (Doc. No. 93-9 at 3.)
A trier of fact could make findings as to several of the factors of the economic realities test that would support the legal conclusion Plaintiff Powers acted as an employee of FMNow. Thus, Defendants are not entitled to summary judgment against Plaintiffs' claims under the FLSA and the CWA. See Rojas v. Westco Farmers, LLC, No. 15-cv-0168-WJM-KLM, 2016 WL 8540843, at *3 (D. Colo. June 14, 2016); see also Herr v. Heiman, 75 F.3d 1509, 1513 (10th Cir. 1996) ("Under the [FLSA], even though the question of whether a worker is an independent contractor or an employee is a question of law, the existence and degree of each factor is a question of fact." (internal quotations omitted)).
Therefore, it is
