Chaganti & Associates, P.C.
Appellant,
v.
Division of Employment Security,
Respondent
On Appeal from the Labor & Industrial Relations Commission
APPELLANT’S REPLY BRIEF
/s/ Randall C. Cahill
Randall C. Cahill (MBE # 35191)
The Cahill Partnership, LLC
906 Olive Street
St. Louis, MO 63101
(314) 231-1771
cahillpartnership@sbcglobal.net
Attorney for Appellant
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Case No. WD78968
MISSOURI COURT OF APPEALS, WESTERN DISTRICT
TABLE OF CONTENTS ..................................................................................................... i
TABLE OF AUTHORITIES ............................................................................................... ii
APPELLANT’S REPLY ..................................................................................................... 1
A. Impeached and Discredited testimony of Schroeder is not “substantial evidence” .. 1
B. A fact finder cannot ignore or reject unimpeached testimony .................................. 2
C. The agency and the LIRC erred in crediting Schroeder’s testimony ........................ 2
D. The agency is confused about the law ....................................................................... 3
E. Payment in Time-and-Material does not make an Employee ................................... 4
F. Full-time work does not make an employee ............................................................. 5
G. The Agency’s view of “training” stretches the rule beyond reason .......................... 5
H. Working on or off premises does not make an employee ......................................... 6
I.
Canceling a contract does not make an employee ..................................................... 6
J.
The most important determinant is meaningful control ............................................ 7
K. Schroeder was a freelancer who set her own hours and priorities ............................ 7
L. The Court should not restrict freedom of contracting or moonlighting .................... 7
Waiver of Oral Argument .................................................................................................... 8
Conclusion ........................................................................................................................... 8
Certificate of Compliance & Service .................................................................................. 9
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TABLE OF CONTENTS
Cases
Eidson v. Reproductive Health Service, 863 S.W.2d 621, 626 (Mo. App. 1993) ............... 2
Fritts v. Div. of Employ. Sec., 11 S.W.3d 721, 725 (Mo. App. W.D.1999) ........................ 7
Gateway Taxi Mgmt. v. Div. of Employ. Sec., 461 S.W.3d 830 (Mo. banc 2015) .............. 4
Hurlock v. Park Lane Medical Center, Inc., 709 S.W.2d 872, 880 (Mo.App.1985) .......... 1
K & D Auto Body v. Div. of Employ. Sec., 171 S.W.3d 100, 112 (Mo.App. W.D. 2005) .. 3
Koplar v. State Tax Commission, 321 S.W.2d 686 (Mo.1959) ........................................... 2
Oglesby v. Mo. Pac. Rly. Co., 177 Mo. 272, 296, 76 S. W. 623 (Mo. 1903) ...................... 1
Speaks v. Metropolitan St. Ry. Co. 166 S.W. 864, 867 (Mo. App. K.C. 1914) .................. 1
State v. D.W.N., 290 S.W.3d 814, 820 (Mo. App. W.D. 2009) ........................................... 2
United States v. Krizek, MD, 111 F.3d 934, 936-937 (D. C. Cir. 1997) ......................... 3, 4
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TABLE OF AUTHORITIES
A. Impeached and Discredited testimony of Schroeder is not “substantial
evidence”
It has long been the law that statements by a witness irreconcilable with the
remainder of her testimony cannot be taken as “substantial evidence” of the facts testified
to. See Speaks v. Metropolitan St. Ry. Co. 166 S.W. 864, 867 (Mo. App. K.C. 1914)
(citing Oglesby v. Mo. Pac. Rly. Co., 177 Mo. 272, 296, 76 S. W. 623 (Mo. 1903)(“Upon
the testimony of a witness to antagonistic and irreconcilable statements of a fact, … the
court should dispose of a case as if the witness had not spoken.”)) “Substantial evidence
is that which, if true, has probative force upon the issues, and from which the trier of facts
can reasonably decide a case.” Hurlock v. Park Lane Medical Center, Inc., 709 S.W.2d
872, 880 (Mo.App.1985).
The question of whether evidence in a case is substantial and
whether the inferences drawn are reasonable are questions of law. Id.
Despite this well-known principle, the agency only cites in its brief the direct
testimony of Schroeder, which is irreconcilable with the remainder of her testimony on
cross. On direct, in response to heavily coached leading questions, Schroeder stated that
she was “trained” and “instructed” by Dr. Chaganti and that she periodically “reported”
to him—all of which is, of course, orally and thus there is no other evidence of this
except for self-serving statements—almost on a daily or weekly basis, about mundane
things such as opening mail, etc.
This incredible testimony was thoroughly impeached on cross-examination. In the
face of such cross-examination that completely discredited her claim of “instructions,”
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APPELLANT’S REPLY
to her spare bedroom to select them for their medical billing skills, etc, the agency’s
response improperly relies on Schroeder’s direct examination. The LIRC as well as the
hearing official committed the same error.
B. A fact finder cannot ignore or reject unimpeached testimony
A fact finder also cannot reject uncontroverted testimony from the other witnesses,
e.g., from Blacksher, Yates and Murdick that they did not receive any training or
instructions or that they were not required to report their work other than providing
mandatory documents for the benefit of patient care.
See Koplar v. State Tax
Commission, 321 S.W.2d 686 (Mo.1959)(“The Commission could not arbitrarily
disregard and ignore the competent, substantial and undisputed testimony of the assessor,
who was not shown by the record to have been impeached or disbelieved by the
Commission and base its findings upon the personal opinions of its members unsupported
by any sufficient competent evidence in the record.”)
Yates, Blacksher and Murdick were summoned by the Agency to prove its case.
“A party is bound by the uncontradicted testimony of that party's own witnesses,
including that elicited on cross-examination.”
See Eidson v. Reproductive Health
Service, 863 S.W.2d 621, 626 (Mo. App. 1993).
C. The agency and the LIRC erred in crediting Schroeder’s testimony
A fact finder should not set aside common sense in evaluating facts. Cf. State v.
D.W.N., 290 S.W.3d 814, 820 (Mo. App. W.D. 2009) ("our country's system of justice
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“training”, “reports,” and that Dr. Chaganti hired her son and daughter-in-law by coming
experiences in fulfilling their role in a jury trial")
Schroeder’s testimony that she handled “thousands” of pieces of mail, or not
taking a single day of break (except for 10 days in 2010) for 13 years, despite her
weekends in Terra Du Loc vacation home on weekends, would have been summarily
rejected by a jury. The hearing official (and the LIRC) should have invoked the maxim
falsus in uno, falsus in omnibus, and disregard her entire testimony as utter falsehood due
to the intentional falsification of such critical aspect of the case.
In United States v. Krizek, MD, 111 F.3d 934, 936-937 (D. C. Cir. 1997), the
district court remarked, “While Dr. Krizek may have been a tireless worker, it is difficult
for the Court to comprehend how he could have spent more than even ten hours in a
single day serving patients.” The district court stated that these false statements were
neither mistakes nor merely negligent, but instead were made with reckless disregard for
the truth, and thus fraudulent. Ibid.
In this case, the LIRC and the hearing official appear to have set aside the
common sense that is expected of an unbiased fact finder.
D. The agency is confused about the law
The Agency attacks this Court’s decision K & D Auto Body v. Div. of Employ.
Sec., 171 S.W.3d 100, 112 (Mo.App. W.D. 2005) where this Court recognized two
additional factors, viz, the provision of employee benefits and the tax treatment of the
hired party to determine whether the worker is an independent contractor or an employee.
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does not discourage jurors from exercising common sense and drawing upon their life's
the IRS’ 20-factor test.
In Gateway Taxi Mgmt. v. Div. of Employ. Sec., 461 S.W.3d 830 (Mo. banc 2015),
while overruling this Court on other grounds, the Supreme Court did not rule that the two
additional factors were improper to consider. After the Supreme Court has spoken on the
issue, albeit sub silentio, the agency nevertheless asks for a rejection of the two factors in
this case. That effort should be rejected.
E. Payment in Time-and-Material does not make an Employee
The agency makes curious argument that paying for the time and material of a
worker makes the worker an employee. A business pays in time and material—such as to
a lawyer, plumber or some other service provider—simply because most businesses
cannot measure the quantum of labor required by any other means. Indeed, the federal
government pays physicians and other care providers by the time spent and amount of
materials furnished. E.g., United States v. Krizek, MD, 111 F.3d 934, 936 (D. C. Cir.
1997)(“For instance, the Manual notes that the CPT code "90844" is used to request
reimbursement for an individual medical psychotherapy session lasting approximately 45
to 50 minutes. The CPT code "90843" indicates individual medical psychotherapy for 20
to 30 minutes.”) Because the government pays physicians for time spent, it does not
become their “employer.”
That Schroeder and Yates were paid by the hour is of no import. Schroeder’s
work was not subject to measurement in anything other than time. An independent
contractor such as a lawyer can charge by the hour, day or month. Similarly, time and
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These two additional factors were based on federal court decisions, which supplemented
card to buy supplies should not make her an employee any more than a handyman’s use
of a homeowner’s credit card to buy lumber at a local lumber yard.
F. Full-time work does not make an employee
The agency argues that if a worker works “full time” for a single client, then the
worker is an employee. But a number of lawyers—as outside counsel—may work for a
single client but in their own sole practices. The Missouri government agencies hire such
outside counsel to defend themselves in administrative matters. A law firm may employ
an investigator or a process server and keep him sufficiently busy so that he does not look
for another client.
And many high net worth individuals retain the services of
accountants or money managers who work as independent contractors.
Such
arrangement does not make it an employee-employer relationship.
G. The Agency’s view of “training” stretches the rule beyond reason
The agency also distorts the concept of “training” an employee to the point of
absurdity. It also argues that Dr Chaganti trained Schroeder in some matters, citing
Schroeder’s direct testimony, which was thoroughly discredited on cross. See Resp. Br.
at 7. The fallacy of relying on thoroughly impeached testimony is discussed above.
Under the agency’s view, familiarizing a worker with office layout or where records or
kept is “training” sufficient to make them an employee.
The agency argues that
familiarizing Blacksher of how the practice does its business was “training.”
Such
reductio ad absurdum argument should be rejected lest the factor becomes meaningless.
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material contracts exist in the construction industry. Schroeder’s use of a business credit
workers to demonstrate how the instructions, discussed supra, must be followed." K & D
Auto Body, at 108. In this case, Appellant engaged in three kinds of workers: (a) nurse
practitioners who are already licensed and skilled, such as the tow truck drivers in K & D
Auto Body, (b) clerical worker Yates who did not need any further training is necessary,
and (c) Schroeder, who has a specialized skill in medical billing that is not known to
Appellant. As with K & D Auto Body, any instruction or training is de minimis or went to
the result, and was not evidence of Appellant’s right to control the manner and means of
providing these services. The LIRC and the hearing official erred.
H. Working on or off premises does not make an employee
Working on the company’s “premises” or hours set when the public appears for
the business’s services does not by itself make it an employee-employer relationship. A
number of shopping malls and airports have small food outlet stores who work under the
rules set by the shopping mall or airports. To say that each food franchise in an airport or
a shopping mall is an “employee” of the facility makes no sense.
I. Canceling a contract does not make an employee
Suppose a true independent contractor such as a plumber or a lawyer botches a
job; the hirer can cancel the contract without this being called an employment
relationship. A small business owner also has no practical means of preventing a worker
from quitting, short of taking that person to court. The agency argues that if one can quit
or can be fired, then it is an employee relationship. Under this theory, there is no such
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"The 'training' factor refers to an experienced worker giving guidance to new
with every worker for cause, and every worker can quit by not showing up for work.
J. The most important determinant is meaningful control
The most important determinant is whether the business can, as a practical matter,
control how the work is done. See Fritts v. Div. of Employ. Sec., 11 S.W.3d 721, 725
(Mo. App. W.D.1999)(the key is "right to control the manner and means of
performance"). Schroeder cannot be an employee because she worked out of her own
home and given the nature of her work—odd jobs and medical billing—coupled with the
fact that she never kept a time record detailing what she did when, it was impossible to
supervise how she did any of her work. Medical billing is a special skill she had that no
one else at Appellant had. Therefore supervising her as to the “manner and means” of
her work would have been impossible, and as she testified, that except for money being
deposited in the company’s bank account, no one knew how or when she did the work,
her self-serving statements notwithstanding.
K. Schroeder was a freelancer who set her own hours and priorities
Schroeder claimed to have opened “thousands” of pieces of mail daily. Assuming,
arguendo, it is true, her testimony was essentially that she was quite self-disciplined to
have worked uninterrupted between 6:30 am and 7:00 pm for 13 years straight at her own
spare bed room. That is the quintessence of how a freelancer works.
L. The Court should not restrict freedom of contracting or moonlighting
A moonlighting clerk (Yates) attempting to make a few dollars by working five or
six hours on an alternative Saturday, or a licensed nurse practitioner (Murdick or
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thing as an “independent contractor” because every payor can terminate a relationship
curtailed in their freedom of choice of how they work to earn a living.
All three of these workers insisted at the hearing that they were independent
contractors and that they asked for and received independent contractor status so that they
could write off unreimbursed expenses in taxes and have contractual freedom.
The government should not interfere in freedom of contracting by impairing tax
deductibility of family health care insurance premiums, or work-related expenses such as
continuing education, travel, vehicle and others.
Waiver of Oral Argument
Appellant hereby waives oral argument and elects to submit the case on briefs.
Conclusion
The LIRC should be reversed.
Respectfully submitted,
/s/ Randall C. Cahill
Randall C. Cahill (MBE # 35191)
The Cahill Partnership, LLC
906 Olive Street
St. Louis, MO 63101
(314) 231-1771
cahillpartnership@sbcglobal.net
Attorney for Appellant
1
Dr Sofia Grewal, MD also performed the same type of work as that of nurse
practitioners Blacksher and Murdick, seeing patients and sending a report. The agency
oddly did not construe Dr Grewal as an employee and did not explain why.
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Blacksher) who voluntarily enters into independent contractor1 agreement should not be
The undersigned counsel certifies that this brief complies with the limitations
contained in Rule 84.06(b).
The brief was developed using Microsoft Word software, 13-point Times New
Roman font, and there are 2096 words in the body of the brief as counted by the
Microsoft Word software program. An electronic copy filed with the court is virus-free
as determined by Microsoft antivirus program.
The undersigned counsel further certifies that on March 2, 2016 the foregoing
Brief was served on all interested parties via the Court’s Electronic Filing system.
/s/ Randall C. Cahill
Randall C. Cahill (MBE # 35191)
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Certificate of Compliance & Service