The facts of a recent case read like Cinderella. Batal-Sholler v. Batal, 2:21-cv-00376-NT (D. Me. Aug. 15, 2022). But the lessons in employment law still resonate.
Facts of the Case:
- Ed started an insurance agency in the 1960s. In 1983, he asked his daughter Nancy to move back to Maine and join his agency. He promised she could take over at the time of his retirement at age 62.
- By the early 1990s, Nancy was the largest producer in the agency. Ed was traveling extensively leaving her to run the business. However, Ed, was still involved in the finances, which he shielded from Nancy.
- In 2002, the year Ed turned 62, a letter was sent to clients announcing his retirement and that Nancy was taking over the business. Then Ed changed his mind. He told Nancy he would give her 40% of the company stock. He assured Nancy he would retire one day, but he needed the income. She stayed with him.
- In 2017, Nancy discovered she had been paid as an independent contractor rather than as an employee. As a result, she was denied participation in the company retirement plan.
- Her stepmother, Marilyn, who was not an employee of the agency, was allowed to participate in the retirement plan. Nancy also learned that Marilyn had influenced Ed to underpay Nancy the profit earnings and benefits she was due as a stockholder and employee. Nancy confronted Ed and Marilyn.
- By this time, Ed was 75 years old, and his physical and mental health was deteriorating. He stopped speaking to his daughter and relied on Marilyn to manage matters.
- Marilyn told Nancy that Ed was selling the business. Marilyn suggested that she buy it. Nancy asked the price, but none was given. Later, Marilyn told Nancy that Ed had changed his mind. Marilyn also told her that the agency could no longer afford Nancy's salary, so she needed to look for a new job. Nancy was terminated effective December 31, 2017.
- Unbeknownst to Nancy, a nearby insurance agency had agreed to purchase the agency over time from Ed and Marilyn. In early 2018, an attorney assisting with the transaction asked Nancy to sign a non-compete agreement to fast-track the sale of the agency. Nancy knew then that the agency had been sold. She had been misled by Marilyn, who deprived Nancy of the monies she was due, took control of her client list, and schemed to sell the business without Nancy's knowledge.
- Marilyn, fearing litigation, began transferring Ed's assets into a trust.
- Nancy sued her father in July 2018 and obtained an order to attach $500,000 in properties that Ed, Marilyn, and the agency had transferred to a trust.
- Ed died in 2019. Marilyn continued transferring Ed's assets into a trust. The attachment was ultimately lifted, and Marilyn quickly liquidated the assets.
- Nancy filed a federal lawsuit asserting 16 different claims, many of which were employment law claims. Marilyn and the estate were named defendants. They filed a motion to dismiss.
- The RICO claims were dismissed. The claims against Marilyn in her capacity as the representative of Ed's estate were dismissed as time-barred.
What claim survived?
The ERISA benefit interference claim survived because the plaintiff contended that she was fired only a few months after she challenged her classification as an independent contractor. An ERISA breach of fiduciary duty claim for treating the retirement plan as a personal asset of Ed and Marilyn also survived. The court allowed the claim for equitable relief because the above allegations were significant enough to warrant that relief if necessary.
Lessons learned? Successful claims are often like glass slippers. You don't know which will fit the fact pattern until you try them on. Sometimes it is the often unknown and unpled ERISA claim which fits. If the shoe fits… Do you have an ERISA claim and do not know it? We live and breathe ERISA. Let us help. We can wear it.