United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued March 19, 2001 Decided June 22, 2001
No. 00-7150
Cynthia Miranda Morrison,
Appellant
v.
International Programs Consortium, Inc. and
Kathleen M. Hanlon,
Appellees
Appeal from the United States District Court
for the District of Columbia
(No. 97cv01837)
Jerry R. Goldstein argued the cause for the appellant.
Ernest C. Baynard, III argued the cause for the appellees.
Before: Edwards, Chief Judge, Williams and Henderson,
Circuit Judges.
Opinion for the court filed by Circuit Judge Henderson.
Karen LeCraft Henderson, Circuit Judge: Appellant Cyn-
thia Miranda Morrison appeals the district court's denial of
her motion for partial summary judgment and its grant of the
appellees' motion for judgment as a matter of law. She also
challenges the court's evidentiary ruling excluding documen-
tation of an IRS assessment and levy. For the reasons that
follow, we affirm the district court's denial of summary judg-
ment and its evidentiary ruling but reverse the court's grant
of judgment as a matter of law.
I. Background
In June 1994 appellee Katie Hanlon, president of appellee
International Programs Consortium, Inc. (IPC), hired Morri-
son as a consultant to perform recruiting and management
tasks pursuant to a series of written contracts. After the
contracts expired in late 1994 Morrison continued to perform
consulting work for IPC and also began to perform various
office tasks and was required to prepare daily activity sheets
for Hanlon. Morrison, however, continued to consider herself
an independent contractor and submitted invoices to IPC on
"C. Miranda Morrison Consulting" letterhead.
On July 5, 1995 Morrison wrote Hanlon to notify her that
as of August 1, 1995 she "will no longer be offering [her]
services as a consultant to IPC." Letter from C. Miranda
Morrison to Kathleen M. Hanlon (July 5, 1995), reprinted at
JA 319. She continued to work for IPC during July, concen-
trating primarily on a U.S. Agency for International Develop-
ment (USAID) delivery order (the Moldova project). On July
28, 1995 Hanlon terminated Morrison for failing to take
direction as well as for taking days off from work without
permission. Morrison subsequently submitted her July 1995
time and expense statements which reflected $4061.64 for
hours worked (22 days at $184.62 per day) and $228.26 for
expenses she paid on behalf of IPC. Neither Hanlon nor IPC
paid Morrison for her time or expenses.
On January 8, 1996 Morrison filed with the IRS District
Director a request for "Determination of Employee Work
Status for Purposes of Federal Employment Taxes and In-
come Tax Withholding" on IRS Form SS-8. IPC responded
to the IRS's subsequent request for further information
through its certified public accountant, explaining why it
believed Morrison to be an independent contractor while she
worked for IPC. The IRS District Director then determined
that under 26 U.S.C. s 3121(d)(2) Morrison was an employee
rather than an independent contractor. The determination
noted, however, that "[a]s we are not in a position to person-
ally judge the validity of the facts provided, our determination
is based on the information presented." Letter from Michael
M. Greenspan, IRS District Director, to Kathleen M. Hanlon
(July 1, 1996), reprinted at JA 356. It explained that "[w]e
have submitted an Information Report to the IRS District
Office having examination jurisdiction for your area. It may
be necessary to initiate an examination of your Federal
employment taxes in this matter." Id. The IRS ultimately
assessed taxes and penalties totaling $3530.64 against IPC on
the ground that Morrison had been an IPC employee during
the entire time she worked for IPC in 1995. The IRS
subsequently levied on IPC's bank account to satisfy the
assessment. Neither Hanlon nor IPC appealed the IRS
assessment or levy.
On August 14, 1997 Morrison brought suit in the district
court against the appellees,1 alleging that she had been an
IPC employee in 1995 and that the appellees had violated (a)
the Fair Labor Standards Act (FLSA), 29 U.S.C. s 216, by
failing to pay her minimum wages and overtime for weeks in
which she worked more than 40 hours in July 1995 (Count I),
(b) the D.C. Payment and Collection of Wages Law, D.C.
Code ss 36-101 et seq., by failing to pay her for July wages
and expenses advanced on behalf of IPC (Count II), (c) the
D.C. Minimum Wage Act, D.C. Code ss 36-220 et seq., by
failing to pay her minimum wages and overtime (Count III)
and (d) its contractual obligation to reimburse her for $228.26
__________
1 Morrison sued Hanlon as well as IPC because IPC's corporate
charter had been revoked by the District of Columbia for nonpay-
ment of the annual fee. The charter was not restored by the time
of trial.
in expenses that she incurred on behalf of IPC (Count IV).
Before trial Morrison sought partial summary judgment on
counts I, II and III, maintaining that the IRS determination
had preclusive effect on the question of her status as an
employee under the FLSA and D.C. labor laws. At the time
she moved for summary judgment, she relied solely on the
IRS determination letter; she did not submit documents
relating to the assessment and levy because the appellees had
failed to produce them. The trial court denied the motion for
partial summary judgment because (1) Morrison failed to
produce evidence that the IRS ever investigated the matter
beyond its initial determination or that IPC paid any assessed
taxes and penalties; (2) the IRS did not act in a judicial
capacity when it issued the determination letter; and (3)
according to the definition of "employee" under IRS regula-
tions Morrison was not entitled to any "employee" rights
under the FLSA, the D.C. Wages Law or the D.C. Minimum
Wage Act. See Morrison v. International Programs Consortium,
Inc., No. 97-1837, slip op. at 5-8 (D.D.C. filed Feb. 4, 2000).
Morrison appeals this ruling.
The case was then tried before a jury. At trial the
magistrate judge refused to admit documents detailing the
IRS assessment and levy because "the court finds that they
are not relevant to any issue which would be before the jury."
JA 267. This is the second ruling Morrison appeals. At the
conclusion of Morrison's case the judge provided Hanlon, who
was representing herself, a copy of Fed. R. Civ. P. 50 and
granted Hanlon's subsequent motion for judgment as a mat-
ter of law on all four counts, concluding that Morrison
presented no evidence to support her contention that she was
an employee of IPC. JA 299-303. This is the final ruling
Morrison appeals.
II. Analysis
We review de novo the trial court's ruling on Morrison's
motion for summary judgment, see Crawford v. Signet Bank,
179 F.3d 926, 928 (D.C. Cir. 1999), as well as its grant of
judgment as a matter of law to the appellees. Richardson v.
Richardson-Merrell, Inc., 857 F.2d 823, 827-28 (D.C. Cir.
1988); McNeal v. Hi-Lo Powered Scaffolding, Inc., 836 F.2d
637, 640-41 (D.C. Cir.1988). We review findings of fact for
clear error, Fed. R. Civ. P. 52(a); Brock v. Mr. W Fireworks,
Inc., 814 F.2d 1042, 1045 (5th Cir. 1987), but review de novo
questions of law, including the question of employee status.
See Mr. W Fireworks, 814 F.2d at 1045; see also United
States v. Bridges, 175 F.3d 1062, 1065 (D.C. Cir. 1999).
Finally, our review of the trial court's evidentiary ruling is for
abuse of discretion. See FRE 103(a); see also United States v.
Clarke, 24 F.3d 257, 265-67 (D.C. Cir. 1994).
A. Summary Judgment
Morrison moved for summary judgment on counts I, II and
III of her complaint on the ground that the IRS had preclu-
sively decided whether Morrison was an IPC employee under
federal and D.C. labor law. The district court denied the
motion. We affirm.
The United States Supreme Court has "long favored appli-
cation of the common-law doctrines of collateral estoppel (as
to issues) and res judicata (as to claims) to those determina-
tions of administrative bodies that have attained finality."
Astoria Fed. Savings & Loan Ass'n v. Solimino, 501 U.S.
104, 107 (1991). "When an administrative agency is acting in
a judicial capacity and resolves disputed issues of fact proper-
ly before it which the parties have had an adequate opportu-
nity to litigate, the courts have not hesitated to apply res
judicata to enforce repose." United States v. Utah Constr. &
Mining Co., 384 U.S. 394, 422 (1966). Acting in a judicial
capacity includes utilizing "procedure that seems an adequate
substitute for judicial procedure." 18 Wright, Miller & Coo-
per, Federal Practice and Procedure s 4475, at 764-65
(1981). There is no evidence that the issue of Morrison's
employment status was "actually and necessarily litigated and
decided in a prior final judgment." See Nasem v. Brown, 595
F.2d 801, 805 (D.C. Cir. 1979). The IRS was careful not to
decide the accuracy of the information Hanlon presented to it.
See Letter from Michael M. Greenspan, IRS District to
Kathleen M. Hanlon (July 1, 1996), reprinted in JA 356. We
do not accept Morrison's assertion that Hanlon's right of
appeal from the ruling converted the IRS determination into
an adjudication of Morrison's employment status under the
FLSA or D.C. labor laws.2 Accordingly, the IRS determina-
tion is not entitled to preclusive effect on the issue of Morri-
son's employment status and the district court properly de-
nied Morrison's motion for summary judgment on counts I, II
and III.
B. Evidentiary Ruling
The district court excluded as irrelevant IPC's submissions
to the IRS as well as documents relating to the IRS assess-
ment and levy on IPC's bank account. JA 268. Morrison
argues that the evidence was relevant to the issue of the
preclusive effect of the IRS action. She does not argue that
the evidence was relevant to any other issue, including wheth-
er she was an employee under the economic reality test.
Because the IRS action had no preclusive effect on whether
Morrison was an employee under the FLSA and D.C. labor
laws, its exclusion was proper; the evidence was not relevant
to any issue before the court. Fed. R. Evid. 402.
C. Judgment as a Matter of Law
Rule 50(a) provides that "[i]f during a trial by jury a party
has been fully heard on an issue and there is no legally
__________
2 Morrison's reliance on the order in Alten v. Ellin & Tucker,
Chartered, 854 F. Supp. 283 (D. Del. 1994), does not carry the day
for her. In Alten the district court gave preclusive effect to an IRS
assessment based on the taxpayer's wilful failure to meet his tax
obligations. When the taxpayer sought indemnification from his
accountants, the district court granted the defendants' motion for
summary judgment on the ground that one who "wilfully" violates
the law is not entitled, as a matter of law, to indemnification. Id. at
292. In giving the IRS assessment preclusive effect, the court
explained that the IRS had acted in a judicial capacity and that the
taxpayer, by choosing to sue for indemnification instead of appeal-
ing the IRS assessment, attempted to bypass the prescribed appeal
procedures of the agency. Id. The order, however, does not
address the question whether an IRS assessment is entitled to
collateral estoppel effect on the issue Morrison presents.
sufficient evidentiary basis for a reasonable jury to find for
that party on that issue, the court may determine the issue
against that party and may grant a motion for judgment as a
matter of law against the party with respect to a claim or
defense that cannot under the controlling law be maintained
or defeated without a favorable finding on that issue." Fed.
R. Civ. P. 50(a). At the close of Morrison's case, the magis-
trate judge, after furnishing Hanlon a copy of Rule 50,
entertained a motion for judgment as a matter of law. The
judge then ruled from the bench that "there is no legally
sufficient evidentiary basis for a reasonable jury to find for
the plaintiff." JA 299. The court explained that during July
1995 Morrison was not an employee under the economic
reality test set forth by the Second Circuit in Brock v.
Superior Care, Inc., 840 F.2d 1054 (2d Cir. 1988). In so
doing the court emphasized, inter alia, the following facts:3
(1) Morrison submitted her invoices on her own letterhead,
(2) she believed that she was an independent contractor, (3)
IPC filed 1099 tax forms, rather than W-2 tax forms, for her,
(4) she received only minimal direction from Hanlon, (5) there
was no evidence that Hanlon was present in the office on the
days in which Morrison worked, (6) there was no evidence
that Hanlon required Morrison to report on a daily basis, (7)
Morrison worked at home on "some occasions," (8) there was
no evidence that Morrison's work was an integral part of
IPC's business and (9) she had only one task for July 1995,
which was of limited scope and duration.
The FLSA defines "employee" as "any individual employed
by an employer." To "employ" includes "to suffer or permit
to work." 29 U.S.C. ss 203(e)(1), 203(g). "The definition is
necessarily a broad one in accordance with the remedial
purpose of the Act." Superior Care, 840 F.2d at 1058. The
statutory definition, however, provides no specific guidance.
__________
3 Whether an individual is an "employee" within the meaning of
the FLSA is a legal question. See Herman v. RSR Sec. Servs. Ltd.,
172 F.3d 132, 139 (2d Cir. 1999); Castillo v. Givens, 704 F.2d 181,
185 (5th Cir. 1983). Nevertheless, "[a]ny subsidiary factual issues
leading to this conclusion are, of course, questions of fact for the
jury." Castillo, 704 F.2d at 185 n.9.
In Goldberg v. Whitaker House Coop., Inc., 366 U.S. 28, 33
(1961), the Supreme Court directed courts to look at "econom-
ic reality" rather than "technical concepts" to determine
employment status under the FLSA. The "test considers the
extent to which typical employer prerogatives govern the
relationship between the putative employer and employee."
Henthorn v. Department of Navy, 29 F.3d 682, 684 (D.C. Cir.
1994). In Henthorn we explained that we ask "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." Id. (citation omitted). In Superior Care, the Sec-
ond Circuit case relied upon by the magistrate judge, the
court set forth a different, although similar, set of factors.
These include: (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. Superior Care, 840
F.2d at 1058-59. No one factor standing alone is dispositive
and courts are directed to look at the totality of the circum-
stances and consider any relevant evidence. See Herman,
172 F.3d at 139; Superior Care, 840 F.2d at 1059; see also
Usery v. Pilgrim Equip. Co., 527 F.2d 1308, 1311-12 (5th Cir.
1976) ("It is dependence that indicates employee status.
Each test must be applied with that ultimate notion in mind.
More importantly, the final and determinative question must
be whether the total of the testing establishes the personnel
are so dependent upon the business with which they are
connected that they come within the protection of the FLSA
or are sufficiently independent to lie outside its ambit."
(emphasis original)).
Under Rule 50 the court was required to view the facts in
the light most favorable to Morrison. So viewing the facts
manifests that IPC "had the power to hire and fire" her,
"supervised and controlled [her] work schedules or conditions
of employment" and "determined the rate and method of
payment." Henthorn, 29 F.3d at 684. The evidence also
showed that Hanlon and IPC exercised a considerable "de-
gree of control" over Morrison and that she had little "oppor-
tunity for profit or loss" and made no "investment in the
business." Superior Care, 840 F.2d at 1058.
The district court stressed Morrison's description of herself
as a consultant. "[F]acile labels and subjective factors[,
however,] are only relevant to the extent that they mirror
'economic reality.' " Mr. W Fireworks, 814 F.2d at 1044; cf.
Superior Care, 840 F.2d at 1059 (employer's admission that
individual was employee is "highly probative"). And Morri-
son's self description may not reflect economic reality. For
example, Morrison presented evidence that she did "every-
thing from recruiting, planning meetings, going to the bank,
going to the post office, doing administrative things, [and]
watering the plants." JA 63. She also testified that she was
required to prepare daily activity sheets as well as weekly "to
do lists" and summaries of her weekly activities. See JA 66-
70, 314, 317, 318. Although the trial court found that Hanlon
exercised infrequent supervision, Morrison's testimony, the
"to do lists" (Plaintiff's Exhibit 7) and Hanlon's request for a
weekly plan of activities (Plaintiff's Exhibit 11) indicate that
Hanlon exercised more than minimal supervision. See JA
314, 318. Supervision need not be frequent under the eco-
nomic reality test. See Superior Care, 840 F.2d at 1060.
Morrison introduced evidence, including requests for time off,
that tended to show that Hanlon regulated Morrion's hours.
JA 67-68, 315, 316. In fact, Morrison was ultimately fired, in
part, for taking "Monday and Tuesday" off. See JA 323.
The fact that Morrison sometimes worked irregular hours or
that she worked at home does not preclude a finding that she
was an employee under the economic reality test. Likewise,
Hanlon's absence from the office during the time Morrison
performed her work is largely irrelevant in view of the
restrictions Hanlon otherwise imposed on Morrison's work
schedule. Hanlon paid Morrison on a daily or hourly basis,
including overtime pay on occasion. See JA 77, 325-26.
Finally, although Morrison was assigned a specific task for
July 1995 (the Moldova project), she testified that she contin-
ued to perform her "regular duties" and kept working for
IPC after the tour ended on July 21st. See JA 71-72, 116-17,
328-29, 335. Based on our review of the record, we conclude
that the district court erroneously granted the appellees'
motion for judgment as a matter of law on all counts of
Morrison's complaint.4
III. Conclusion
We affirm the trial court's denial of Morrison's motion for
partial summary judgment as well as the court's evidentiary
ruling. We reverse, however, its grant of judgment as a
matter of law to the appellees and remand for further pro-
ceedings.
So ordered.
__________
4 Moreover, the district court erroneously dismissed count IV of
Morrison's complaint, which sought reimbursement for expendi-
tures she made during the Moldova project. Reimbursement for her
expenses did not depend on her work status at IPC.