LARGIE v. TCBA WATSON RICE, LLP et al

Filing 24

OPINION. Signed by Judge Dennis M. Cavanaugh on 8/20/13. (DD, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

PATRICK L. LARGIE,

:

Hon. Dennis M. Cavanaugh

Plaintiff,

OPINION
Civil Action No. l0-cv-05533 (DMC) (MF)

V.

TCBA WATSON RICE, LLP, TONDAH
CONSUL I ING GROUP INC
I HOMPSON COBB BAZILIO AND
ASSOCIATES, P.C., BENNIE
HADNOTT & CPA P.C., BENNIE
HADNOTT 7 CO., P.C., BENNIE
HADNOTT (individually), GLENDA
HADNOTT (individually) and
MARCEVIR BERNARDO (individually),:
Defendant.

DENNIS M. CAVANAUGH, U.S.D.J.:

This matter comes before the Court upon TCBA Watson Rice’s (“Defendant”) Motion to
Dismiss Patrick L. Largie’s (“Plaintiff’) Complaint, or in the alternative, for Partial Summary
Judgment. (Feb. 18, 2011, ECF No. 10). Pursuant to FED. R. Civ. P 78, no oral argument was
heard. Based on the following and for the reasons expressed herein, Defendant’s Motion is
granted.
I.

BACKGROUND’

TCBA Watson Rice is a certified public accounting and consulting firm. Thirty protessionals

The facts set-forth in this Opinion are taken from the parties’ statements in their respective
moving papers.
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and a staff of one hundred work at Watson Rice. Bennie Hadnott (“Hadnott”) is the Managing
Partner of the firm. In December 1997, Watson Rice hired Plaintiff as a tax specialist for its New
York office. Plaintiff was subsequently promoted to Director of Tax for the firm and charged
with running the firm’s tax practice out of its New York office. In April 2001, Plaintiff was
elected to a partnership position in Watson Rice. He became one of four equity partners of
Watson Rice and thus he owned a 10.5% partnership interest in the firm. The equity breakdown
is as follows:
Bennie Hadnott, CPA, PC

38%

Marcevir Bernado

41 .5%

Patrick Largie

10.5%

Thompson, Cobb, Bazilio and 10%
Associates, P.C.:
Following his promotion, Plaintiff began to actively participate and vote at monthly and annual

partnership meetings.
As a partner in the firm, Plaintiff began to consult and advise the partnership on how
partners should be compensated. In practice, there were no individual employment agreements
for the partners, as they received no salaries. Instead, compensation was agreed to be based on
future, partner draws.
Furthermore, as the partner in charge of the firms tax practice. Plaintiff oversaw the
entire tax operation of the firm. Plaintiff supervised and managed tax accountants and staff who
worked under him and who answered to him.
Defendant alleges that Plaintiff, as a partner, set his own schedule and appointments.
Furthermore. Defendant alleges Plaintiff set his own hours and arrived and left work whenever
he pleased. Defendant also alleges that Plaintiff repeatedly failed to come into work on Fridays,

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Defendants did not discipline Plaintiff for his behavior because of his elevated status within the
firm. On October 8, 2010, Hadnott sent Plaintiff a letter terminating him for cause on the basis

that Plaintiff was attributing money from the firm’s clients to another firm. Plaintiff argues that
he was fired for failing to participate in fraudulent accounting activities at the request of other
partners hence why Plaintiff is attempting to bring his claim under Conscientious Employee
Protection Act (“CEPA”).
IL

STANDARD OF REVIEW

In deciding a motion under FED. R. CIV. P. 12(b)(6), the District Court is “required to
accept as true all factual allegations in the complaint and draw all inferences in the facts alleged
in the light most favorable to the {plaintiffj.” Phillips v. Cnty. Of Allegheny, 515 F.3d 224, 228
(3d Cir. 2008). “[A] complaint attacked by a Rule 12(b)(6) motion to dismiss does not need
detailed factual allegations.” Bell Ati. Corp. v. Twombly, 550 U.s. 544, 555 (2007). However,
the plaintiff’s “obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more
than labels and conclusions and a formulaic recitation of the elements of a cause of action will
not do.” Id. On a motion to dismiss, courts are “not bound to accept as true a legal conclusion
couched as a factual allegation.” Papasan v. Allain, 478 U.S. 265, 286 (1986). Plaintiff’s
complaint is subject to the heightened pleading standard set forth in Ashcroft v. Igbal:
To survive a motion dismiss, a complaint must contain sufficient factual matter,
accepted as true, “to state a claim to relief that is plausible on its face.” A claim
has facial plausibility when the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is liable for the
misconduct alleged. .Determining whether a complaint states a plausible claim
for relief will.. .be a context-specific task that requires the reviewing court to draw
on its judicial experience and common sense. But where the well pleaded facts do
not permit the court to infer more than the mere possibility of misconduct, the
complaint has alleged-but it has not “show[n]”-”that the pleader is entitled to
relief,” Ashcroft v. Igbal, 556 U.S. 662, 678-679 (2009) (quoting Twombly, 550
U.S. at 557, 750).
.

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111.

I)ISCUSSION
Plaintiff claims that at the time of his termination from Defendant, he was an employee

and entitled to protection under CEPA. Defendant argues that Plaintiff was in lhct not an
employee for CEPA purposes, and thus the first count of Plaintiffs Amended Complaint must he
dismissed for failure to state a claim. In the First Count of the Amended Complaint, Plaintiff
asserts a CEPA claim against Watson Rice, alleging that he was ‘an employee of Watson Rice
and performed services for an under the control and direction of Watson Rice for wages or other
remuneration.” (Am. Compl.

¶ 47).

In relevant part, CEPA provides that:
Employee retaliatory action; protected employee actions
An employee shall not take any retaliatory action against an employee because the
employee does any of the following:
a. Discloses or threatens or discloses to a supervisor or to a public body an
activity, policy or practice of the employer or another employer, with whom
there is a business relationship, that the employee reasonably believes is in
violation of law, or a rule or regulation promulgated pursuant to law, or, in
the case of an employee who is a licensed or certified health care professional,
reasonably believes constitutes improper quality of patient care.
b. Provides information to, or testifies before. any public body conducting an
investigation, hearing or inquiry into any violation of law, or a rule or
regulation promulgated pursuant to law, by the employer, or another
employer, with whom there is a business relationship, including any violation
involving deception ot or misrepresentation to, any shareholder, investor.
client, patient, customer, employee, former employee, retiree or pensioner of
the employer or any governmental entity, or, in the case of an employee who
is a licensed or certified health care professional, provides information to, or
testifies before, any public body conducting an investigation, hearing or
inquiry into the quality of patient care; or
c. Objects to, or refuses to participate in any activity, policy or practice which
the employee reasonably believes
(1) is in violation of a law, or a rule or regulation promulgated
pul’suant to law, including any violation involving deception ci. or
misrepresentation to. any shareholder. investor, ci ient, patient.
customer. employee. lbrrner employee, retiree or pensioner ol’ the
employer or any governmental entity, or, if the employee is a licensed
or certified health care prolessional. constitutes improper quality of

patient care;
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(2) is fiaudu1ent or criminal. inc1udin any activity, policy or practice
:)t deception or nisrepresentation which the enpIovee reasonably
believes I-nay defraud any shareholder. investor. client, patient,
customer, employee, thrrner employee, retiree or pensioner of the
employer or any governmental entity : or
( 3 ) is inconpatible with a clear mandate of PIbl ic pol icy concern inL
the public health. saft’tv or wel fare or protection o F the environment.
NJ. Stat. Am.

39: 1 9—3

.

CEPA provides protection for employees ftom retal iition from

employers. Defendant argues that CEPA does not provide protection br the class ol people in
which Plaintiff is situated, because Plaintiff himself possessed the influence and power to save
himself from the behaviors and actions that CEPA seeks to deter. The Court agrees that (‘EPA
does not afford Plaintiff any protection.
A. THE CLACKMAS TEST IS THE APPROPRIATE STANDARD TO DETERMINE
IF PLAINTIFF WAS AN EMPLOYEE FOR THE PURPOSES OF CEPA
In Clackamas_Gastroenterology Assocs.v, Wells. 538 U.S. 400 (2003), the Supreme Court,
in deciding the who constituted an employee under the Americans with Disabilities Act. put forth
a nonexhaustive six factor test:

2.
3.
4.
5.
6.

Whether the organization can hire or fire the individual or set the rules and
regulations of the individual’s work:
Whether and, if so, to what extent the organization supervises the individual’s work;
Whether the individual reports to someone higher in the organization:
Whether and, if SO. to what extent the individual is able to in iluenee the oruanizinion:
Whether the parties intended that the individual be an employee, as expressed in
wri Hen agreements or contracts;
Whether the individual shares in the profits, losses, and liabilities of the organization.

The Supreme Court of New Jersey adopted the Ciackamas six factor test and applied the ihetors
to determine whether an individual is an employee for the purpose of CEPA in Feldman v.
Hunterdon Radiolottical Associates, 901. A.2d. 322. 33 1 (N.J. 2006). Furthermore, the Feldman
court held that the fourth factor of the Clackamas test should guide a court’s analysis as to
determining whether an individual is an employee for the purposes of CEPA. Id. at 247.

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B. PlRSUANT TO TilE CLACKAiVIAS TEST, PLAINTIFF
EMPLOYEE FOR THE PURPOSES OF TFIE CEPA

IS

NOT

AN

The application of the Clackamas test in this present situation turns upon the fourth factor of
test where this Court must decide the extent to which Plaintiff was able to influence the dealings
ol Watson Rice. Applying the facts of the relationship between Plainti IT and \\atson Rice. ii is
apparent that Plaintiff possessed the ability to influence the dealings and activities of \\aison
Rice. First, as an equity partner, Plainti IT enjoyed the ability to actively participate in helping
structure the compensation packages for partners of Watson Rice. Furthermore, Plaintiff was the
sole head of the tax department of Watson Rice where Plaintiff oversaw the activities of
accountants

and other staff members without having to directly report to a supervisor. Finall,

Plaintilis behavior, specifically in
enjoyed by
not an

an

individual who is

employee

a

setting

his own schedule,

is

indicative of the privileges

partner. Taken in the aggregate, it is apparent that Plaintiff was

[br the purposes of the C EPA. in fact, Plaintiff’s position as a partner of Watson

Rice demonstrates that he is part of the class of people that CEPi\ attempts to deter from
unlawfully firing actual employees. Since PlaintifT is not an employee, the first count of his
Complaint must be dismissed. Therefore, Delendant’s motion to dismiss must he granted.
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CONCLUSION
For the foregoing reasons, Defendant’s motion to dismiss is granted. An appropriate

Order accompanies this opinion.

D41augh,U,S,J
Date:
Original:
cc:

August
2013
Clerk’s Office
Hon. Joseph A. Dickson, U.S.M.J.
All Counsel of Record
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