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listing three bases for reconsideration of order
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Case No. 99-2407-JWL.
June 15, 2001
MEMORANDUM AND ORDER
Presently before the court are three motions asking the court to revisit issues previously addressed and ruled upon in this case. The first motion was filed by plaintiffs (Doc. 217) and asks the court to review Magistrate Judge Waxse's order granting the Unified Government leave to supplement its Final Witness and Exhibit list. The two remaining motions were filed by the Unified Government (Doc. 235) and the Housing Authority (Doc. 255) and ask the court to reconsider its ruling in limine prohibiting defendants from introducing plaintiffs' income tax returns at trial (Doc. 235). As the court has previously addressed the issues raised in these motions and does not find its past rulings to be erroneous, the motions are denied.
Also pending before the court is the Unified Government's motion to strike plaintiffs' response to the Unified Government's motion for reconsideration because the response was untimely (Doc. 254). Plaintiffs admit that their response was filed out of time. Accordingly, the court grants the Unified Government's motion to strike and does not consider plaintiffs' response in ruling on the Unified Government's motion for reconsideration.
I. Plaintiffs' Motion to Review the Magistrate's Order
The first motion before the court is plaintiffs' motion for review of Magistrate Judge Waxse's April 25, 2001 Order (Doc. 200), which granted the Unified Government's motion for leave to supplement its witness and exhibit list. Pursuant to Fed.R.Civ.Pro. 72(a), the district court will set aside an order of the magistrate judge addressing a nondispositive matter only if the order is "clearly erroneous or contrary to law." Because the court is convinced that the magistrate's ruling was correct, plaintiffs' motion for review is denied.
As noted by the Unified Government, the court has already addressed plaintiffs' challenge to the magistrate's order. At the limine conference held on May 1, 2001, the court stated that it considered the Unified Government's supplemental witness and exhibit list to be "good for the purposes of this case" because plaintiffs had failed to file an objection to the Unified Government's motion for leave to supplement. See Trans. at 88. A review of the record indicates that the Unified Government filed its motion for leave to supplement on February 23, 2001 (Doc. 168). Pursuant to D. Kan. R. 6.1(e)(1), plaintiffs then had 11 days in which to respond to the motion. Plaintiffs did not "respond," however, until April 18, 2001, when their attorney submitted a letter to Magistrate Judge Waxse stating that "Plaintiffs do object to the additional witnesses listed by the Unified Government." Not only was this so-called response untimely, but it was in a form ( i.e., a letter) not recognized as a filing by the court. See D. Kan. R. 7.1(c) (requiring responses to be filed with the clerk of the court). Accordingly, the Unified Government's motion for leave to file a supplemental witness and exhibit list effectively was not responded to and could have been granted as an uncontested motion under D. Kan. R. 7.4. Thus, Magistrate Judge Waxse's order was not clearly erroneous or contrary to law, and plaintiffs' motion for its review is denied.
II. Unified Government's Motion for Reconsideration of Limine Ruling
The second motion before the court is the Unified Government's motion to reconsider the ruling made by the court at the May 1, 2001 limine conference prohibiting defendants from introducing plaintiffs' tax returns into evidence and from soliciting testimony or commenting to the jury that plaintiffs are in any way bound by the formal labeling of their status as independent contractors or employees on their tax returns. Whether to grant or deny a motion for reconsideration is committed to the court's discretion. See GFF Corp. v. Associated Wholesale Grocers, Inc., 130 F.3d 1381, 1386 (10th Cir. 1997); Phelps v. Hamilton, 122 F.3d 1309, 1324 (10th Cir. 1997). In exercising that discretion, courts in general have recognized three major grounds justifying reconsideration: (1) an intervening change in controlling law; (2) availability of new evidence; and (3) the need to correct clear error or prevent manifest injustice. See Marx v. Schnuck Markets, Inc., 869 F. Supp. 895, 897 (D.Kan. 1994) (citations omitted); Sithon Maritime Co. v. Holiday Mansion, 177 F.R.D. 504, 505 (D.Kan. 1998); D. Kan. R. 7.3(b) (listing three bases for reconsideration of order). The Unified Government does not suggest that the law in this area has changed or that new evidence has become available in this case. The court will therefore presume that the Unified Government brings its motion on the premise that the court committed clear error in not allowing defendants to introduce plaintiffs' tax returns at trial. The court has reviewed its limine ruling in light of the Unified Government's motion, but has found no indication that its ruling was erroneous. The motion is therefore denied.
The Unified Government's first argument is that plaintiffs' tax returns should be admissible because at the limine conference the court found them relevant to the issue of whether plaintiffs were independent contractors or employees under the Fair Labor Standards Act (FLSA). This argument is faulty, however, because the court actually made the express finding that "the tax returns are not relevant on the issue of independent contractor [status]." Trans. at 52 (emphasis added). Adopting a test which focuses on economic realities over the form of the relationship, the Tenth Circuit recognizes six factors as relevant to whether a worker is an independent contractor or an employee under the FLSA:
(1) the degree of control exerted by the alleged employer over the worker; (2) the worker's opportunity for profit or loss; (3) the worker's investment in the business; (4) the permanence of the working relationship; (5) the degree of skill required to perform the work; and (6) the extent to which the work is an integral part of the alleged employer's business.Baker v. Flint Engineering Const., Co., 137 F.3d 1436, 1440 (10th Cir. 1998) (citing Dole v. Snell, 875 F.2d 802, 805 (10th Cir. 1989)). All evidence relevant to these factors may be considered in determining whether, as a matter of economic fact, the worker is economically dependent on the business to which he or she renders service or, alternatively, is in business for him or her self. See Dole, 875 F.2d at 804-05 n. 2.
As explained at the limine conference, the court does not find plaintiffs' tax returns relevant to any of the six factors. While defendants directed the court to a Fifth Circuit case finding tax returns relevant to an analysis of the second factor-the worker's opportunity for profit or loss-the court noted that the Tenth Circuit had rejected the Fifth Circuit's approach. Trans. at 52-54. In Carrell v. Sunland Const., Inc, 998 F.2d 330 (5th Cir. 1993), the Fifth Circuit found the plaintiffs' tax returns, in which the plaintiffs classified themselves as self-employed and deducted costs attributable to their work for the defendant, relevant to the issue of the plaintiffs' ability to maximize profits by controlling costs. In Baker, however, the Tenth Circuit declined to follow the Fifth Circuit's approach, stating, "we also disagree with the finding in Carrell that [workers] have an opportunity to maximize their profits by controlling the costs of their supplies and by consistently finding work with other companies." 137 F.3d at 1444. The Tenth Circuit found that "this is not the type of `profit' typically associated with an independent contractor." Id. The Tenth Circuit then concluded that the opportunity of a worker to earn a profit depends on the worker's "ability to bid on projects . . . and to complete projects as it sees fit." Id. Guided by this clear directive from the Tenth Circuit, the court ruled at the limine conference that plaintiffs' tax returns shed no light on the economic reality of whether or not plaintiffs had the opportunity to control their profits. Thus, plaintiffs' tax returns were not relevant to this factor.
The court recognizes that the admissibility of tax returns was not at issue in Baker. This point, however, entirely misses the mark and does not contradict the crucial point that the Tenth Circuit, unlike the Fifth Circuit, does not look to a worker's opportunity to maximize profits by controlling costs-information that could be gleaned from tax returns-in weighing the second factor.
Defendants have also not shown how the tax returns would be relevant to any of the other five factors.
The Unified Government now argues that even if plaintiffs' representations on their tax returns do not speak to any of the six factors set out in Dole, the way in which plaintiffs labeled themselves on their tax returns is nonetheless itself a relevant factor to whether plaintiffs are independent contractors or employees under the FLSA. Citing three cases which it had not previously brought to the court's attention, the Unified Government argues that "tax treatment of individuals seeking protection under the FLSA have routinely been considered as evidence of whether these individuals were `independent contractors' or `employees.'" An examination of the cited cases reveals, however, that they stand for far less than what the Unified Government contends.
The main case relied upon by the Unified Government is Johns v. Stewart, 57 F.3d 1544 (10th Cir. 1995). The Johns court was asked to determine whether plaintiffs who received public assistance by participating in state-run work programs were "employees" of the state under the FLSA. In concluding that the "nature of the relationship between Plaintiffs and Defendants was assistance, not employment," the Tenth Circuit noted that taxes were not withheld from the plaintiffs' welfare benefits as they were from state employees' salaries. Johns is clearly distinguishable from the instant case. First and foremost, of course, the question of independent contractor status was not at issue in Johns. Moreover, because the tax treatment mentioned by the Circuit was how the alleged employer, not the alleged employee, treated the payments, there was no use of the tax returns as a sort of inferential admission by the tax payer such as defendants seeks to do here. Similarly, the remaining two cases which the Unified Government string-cites, Walling v. Rutherford Food Corp., 156 F.2d 513 (10th Cir. 1946) and Shultz v. Mistletoe Express Services, Inc., 434 F.2d 1267 (10th Cir. 1971), only mention the tax treatment by the alleged employer and not the alleged employee, and even then do not consider the tax documents in their analysis of independent contractor status.
While the court recognizes that there is an argument to be made that the label which a worker gives him or her self on his or her tax returns could theoretically be viewed as relevant to a determination of whether the worker is an employee or an independent contractor, particularly if the focus were on form rather than substance, the court is convinced that the Tenth Circuit would reject such a position. Instead, the Tenth Circuit's recent opinions indicate that, because we are to be looking to determine the economic realities of the relationship, the factors relevant to this determination are limited to the six discussed in Dole. Moreover, the Tenth Circuit's focus in Baker on whether or not the worker economically depends upon the alleged employer for the opportunity to render service and not on whether the worker can control costs (which would be reflected by deductions on tax returns) convinces the court that the Circuit would not consider tax treatment by a worker as an independent relevant factor in determining whether the worker is an employee or an independent contractor. The court thus reaffirms its ruling that plaintiffs' tax returns are not relevant to the issue of whether plaintiffs performing Housing Authority security work are "employees" to whom the FLSA applies, or, rather, whether plaintiffs are "independent contractors" not protected by the FLSA.
The Unified Government also relied upon Herr v. Heiman, 75 F.3d 1509 (10th Cir. 1996), in support of its argument that the Tenth Circuit "considered an alleged employee's tax returns as evidence relevant to the determination of whether the individual was an employee under the FLSA." As the court explained at the limine conference, however, the Herr court only examined the plaintiff's tax returns in determining whether he was an independent contractor pursuant to standards developed under the Employee Retirement Income Security Act (ERISA), and not under the FLSA. See Trans. at 54-55.
The final argument of the Unified Government is that "[e]ven if the tax returns and related documents are not relevant to the issue of whether plaintiffs were `independent contractors' or `employees,' these documents are still relevant to the issues of whether defendants are separate and independent employers . . . [and] whether defendants' conduct was willful." This argument was not asserted by either defendant in limine briefings or at the limine conference. A party may not use a motion to reconsider as a vehicle for raising arguments that should have been raised in the first instance or for rehashing arguments that have previously been rejected by the court. See United States v. O'Neal, 28 F. Supp.2d 1211, 1212 (D.Kan. 1998). Moreover, "[a] party's failure to present its strongest case in the first instance does not entitle it to a second chance in the form of a motion to reconsider." Sithon, 177 F.R.D. at 505; see also, Servants of the Paraclete v. Does, 204 F.3d 1005, 1012 (10th Cir. 2000) ("[A] motion for reconsideration . . . [is an] inappropriate vehicle to reargue an issue previously addressed by the court when the motion merely advances new arguments."). The Unified Government has identified no reason why it could not have presented these arguments at the limine conference. Accordingly, the court will not allow the Unified Government to take a second bite at the apple and attempt to raise new arguments at this late date. The Unified Government's motion for reconsideration is denied.
In any event, the court notes that even if it were to find plaintiffs' tax returns and related documents relevant to the issues of whether defendants are separate and independent employers and whether defendants' conduct was willful, it is likely that the evidence would nonetheless have been excluded as unfairly prejudicial, cumulative, and likely to confuse the jury and waste time by inviting a trial within the trial on the preparation of the tax returns. See Fed.R.Evid. 403.
III. Housing Authority's Motion for Reconsideration of Limine Ruling
The final motion before the court is the Housing Authority's "Second Motion in Limine for Admission of Evidence of Plaintiffs' Tax Returns and Related Information." While the Housing Authority labels this as a new motion in limine, it is substantively a motion for reconsideration of the court's previous limine ruling prohibiting defendants from introducing plaintiffs' tax returns and related documents into evidence. Like the Unified Government, the Housing Authority argues that the tax returns are relevant to a determination of whether defendants are separate and independent employers and whether defendants' alleged violation of the FLSA was willful. As discussed above, this argument should have been raised when the court addressed the admissibility of plaintiffs' tax returns at the limine conference. A motion for reconsideration is not an appropriate vehicle in which to advance new arguments on an issue previously addressed by the court. See Servants of the Paraclete, 204 F.3d at 1012. The Housing Authority's motion is therefore summarily denied.
The court notes that the deadline for filing motions in limine related to defendants' liability was April 20, 2001. See Pre. Tr. Order at 14 (Doc. 201). While the court has set a future deadline for the filing of motions in limine related to plaintiffs' alleged damages, see May 15, 2001 Order (Doc. 232), the Housing Authority's instant motion relates to liability, not damages. Thus, if it truly were a new motion, it would be denied as untimely.
IT IS THEREFORE ORDERED BY THE COURT THAT plaintiffs' motion to review Magistrate Judge Waxse's Order (Doc. 217) is denied. The Unified Government's motion to reconsider the limine order (Doc. 235) is denied. The Unified Government's motion to strike plaintiffs' response to the Unified Government's motion for reconsideration (Doc. 254) is granted. The Housing Authority's motion to reconsider the limine order (Doc. 255) is denied.
IT IS SO ORDERED.