December 13, 2011 7:27 PM
New York Judge Rules Law Partner Not an Employee, Can't Sue for Age Discrimination
Posted by Sara Randazzo
A favorable decision for Holland & Knight in a long-running dispute over its termination of a former partner could make it harder for other law firm partners to sue over allegedly unfair treatment, at least in the Empire State.
John Weir has been battling his former firm since 2002, when he was expelled from the partnership at age 55 over what the firm claims was a disagreement about the direction of its labor and employment practice, according to court papers. Weir, who became a so-called New Class B Capital Partner at Holland & Knight after the firm merged with Haight Gardner Poor & Havens in 1997, at one point led the firm's labor and employment group in New York.
Weir initially sued Holland & Knight in 2005 in Manhattan federal district court, claiming the firm let him go because of his age and because it didn't want to pay the retirement benefits he says he was entiteld to under its ERISA plan. After the judge hearing the case dismissed his claims in 2007 on statute-of-limitations grounds, Weir modified his complaint and sued Holland & Knight in New York state court.
New York Supreme Court Justice Marcy Friedman ruled on summary judgment (PDF) December 9, dismissing Weir's entire complaint, which included claims of age discrimination and retaliation, breach of fiduciary duties, breach of contract, and fraudulent inducement.
In tossing Weir's discrimination claims, Friedman relied in part on a six-part test established in a U.S. Supreme Court case, Clackamas Gastroenterology Associates v. Wells, that was first used to determine whether a shareholder in a professional corporation can be considered an employee under the Americans with Disabilities Act. The decision has since been applied by courts outside the context of the ADA.
Weir, Friedman said, did not pass the Clackamas test, nor did he "submit any evidence to show that he was not a bona fide partner" with some degree of control over the firm.
As law firms grow to include what in some instances are hundreds of partners, the line between partner and employee has grown increasingly blurry, says Robert Hillman, a professor at the University of California, Davis School of Law and an expert on partnership law.
"This case reminds us that there's an issue here, and it affects a lot of law firms," Hillman says, adding that the facts related to an individual dispute often determine how influential a given partner is within his or her firm.
Friedman's ruling departs from one issued by the U.S. Court of Appeals for the Seventh Circuit in connection with a case brought by the Equal Employment Opportunity Commission against Sidley Austin.
In that case, the EEOC alleged that the firm had stripped 32 former partners of their equity stakes because of their age. The case settled in 2007, with Sidley Austin agreeing to pay a total of $27.5 million to the former partners, but not before a three-judge Seventh Circuit panel ruled that the EEOC appeared to have enough facts to show the Sidley partners qualified as employees and were therefore protected by antidiscrimination laws.
The Weir decision appears to be the first involving a large law firm in which a New York judge has ruled on the question of whether a law firm partner qualifies as an employee, according to Holland & Knight's attorney, Orrick, Herrington & Sutcliffe partner and employment practice chair Mike Delikat. Delikat, who called Friedman's decision "a big win" for his client, says judges in two previous cases found in favor of smaller firms.
Friedman was also unpersuaded by Weir's breach of contract claim, which alleges that Holland & Knight owes him $300,000 in benefits pay for terminating him from the partnership, as well as damages for lost compensation because he was not allowed to work until retirement at age 62.
In fact, Friedman ruled, Weir violated a term of the partnership agreement that requires partners who are departing, either by choice or at the firm's direction, to make reasonable efforts to bill and collect for all outstanding work.
Instead, according to Friedman's decision, Weir refused to submit time sheets from March 2002 until his November 2002 termination, and collected money from clients after leaving the firm. Because of the alleged partnership-agreement violations, Friedman ordered a complete accounting of the money Weir owes the firm, to be ruled on by a special referee.
Weir, who has been representing himself in the litigation, did not immediately return a call seeking comment Tuesday afternoon.Make a comment