Court Opinion

ID: 6332160
Source: CourtListenerOpinion
Date Created: 2022-04-15 15:01:16.852448+00
Date Added: 2024-06-11T09:23:02.576564
License: Public Domain

UNITED STATES DISTRICT COURT
                              FOR THE DISTRICT OF COLUMBIA

 MARTIN DOHERTY,

                        Plaintiffs,

                        v.                             Case No. 1:20-cv-00134 (TNM)

 TURNER BROADCASTING SYSTEM,
 INC.,

                        Defendant.

                                  MEMORANDUM OPINION

       Proceeding pro se, Martin Doherty sued Turner Broadcasting System, his former

employer, for filing fraudulent W-2s on his behalf and violating multiple D.C. laws. The Court

previously dismissed Doherty’s D.C.-law claims. For his claim of fraudulent W-2s, Doherty

relies on a federal statute that penalizes willful filing of fraudulent tax forms. Because the

evidence shows no genuine dispute about the fraudulence of the W-2s or Turner’s willfulness,

the Court will grant Turner’s motion for summary judgment and deny Doherty’s. The Court will

also deny a motion to strike filed by Doherty after summary-judgment briefing.

                                                 I.

       As Americans are reminded this time of year, the Government collects an income tax on

a specified portion of a taxpayer’s “taxable income.” See 26 U.S.C. § 1. The Internal Revenue

Code defines taxable income as “gross income minus” various deductions allowed by the Code.

Id. § 63(a). Gross income is a catch-all, representing a taxpayer’s income “from whatever source

derived.” Id. § 61(a). But the Code carves out from gross income “amounts received under

workmen’s compensation acts as compensation for personal injuries or sickness.” Id.
§ 104(a)(1). In short, an employee who receives worker’s compensation payments will pay no

tax on those received amounts.

       For fraudulent returns, the Code includes a private right of action. Specifically, 26

U.S.C. § 7434 allows a person to sue anyone who “willfully files a fraudulent information return

with respect to payments purported to be made to” that person. 26 U.S.C. § 7434.

       Now to the facts here. Doherty worked at Turner as a photojournalist from 2013 to 2019.

See First Decl. of Lauren George ¶ 5, ECF No. 48-3 (First George Decl.). In 2012, he suffered a

neck injury. See Depo. of Martin Doherty at 14, ECF No. 58-2 (Depo.). 1 That injury caused him

to miss work during 2014 and 2015. See Def.’s Stmt of Material Facts ¶ 3, ECF No. 48-5. In

late 2015, Doherty suffered another injury which caused him to miss work for periods of 2016.

See Depo. at 24. During both absences, Doherty received compensation from Turner. See id. at

16–18, 24.

       How Turner paid that compensation matters to this case. Under company policy, injured

employees who missed more than seven straight days of work received money for that missed

time under a Short-Term Disability (STD) program. See Def.’s Mot. for Summ. J., Ex. B-1 at

12, ECF No. 48-3. For the first ten weeks of absence, Turner would pay 100% of the employee’s

usual earnings. See id. at 13. During weeks 11 through 16, the company paid 80%. See id. And

for weeks 17 to 26, the company paid 60%. See id. Beyond 26 weeks, the employee would

receive benefits through either the company’s Long Term Disability program or so-called

“Worker’s Compensation” program. See First George Decl. ¶ 10.

1
 All page numbers refer to the page numbers generated by the Court’s CM/ECF filing system.
All exhibit designations refer to those exhibits as denoted by the parties in their filings.

                                                2
       A note about the latter program: According to the record, it worked the same way as the

STD program. Turner would pay a qualified employee for up to 26 weeks at the same

percentages as in the STD program. See Pl.’s Cross-Mot. for Summ. J., Ex. 2 at 4, ECF No. 52-

2. And because the employee remains on the company’s payroll during that time, any non-salary

benefits continue as before. See id. After 26 weeks, however, Turner no longer makes the

payments. Instead, a third-party insurer calculates the amount due “according to the state’s

Worker’s Compensation laws” and then pays the employee that amount. Id.

       During his absences in 2014, 2015, and 2016, Doherty received compensation through

the STD program. See Depo. at 15–16, 18, 24. But for the latter half of 2016, Doherty received

payments through the “Worker’s Compensation” program. See First George Decl. ¶ 17, Pl.’s

Cross-Mot. for Summ. J. at 8 n.16, ECF No. 52-1 (Pl.’s MSJ). For the years 2014, 2015, and

2016, Turner issued W-2s to Doherty and reported those documents to the IRS. See First George

Decl. ¶ 11. Doherty admits that his 2016 W-2 did not include payments made under the

“Worker’s Compensation” program. See Pl.’s MSJ at 8 n.16.

       Beginning in 2016, Doherty told Turner that his W-2s were incorrect. He asserted that

the STD payments he received in 2015 were actually worker’s compensation and thus under 26

U.S.C. § 104 should not be subject to taxation. See Pl.’s MSJ, Ex. 16, ECF No. 52-3 at 13. He

made the same assertions about his 2014, see id. Ex. 18 at 18, and his 2016 STD payments, see

id. Ex. 17 at 15. In the meantime, he filed a substitute 2015 W-2 with the IRS, believing that his

STD payments were not taxable. See Pl.’s MSJ at 6. After Turner affirmed that the W-2 was

correct, the IRS adjusted Doherty’s 2015 gross income, filed a tax lien against him, and imposed

a penalty of just over $22,000. See id.; see also id., Exs. 9 and 10, ECF No. 52-2 at 24–27.

                                                3
          Doherty sued Turner, alleging violations of 26 U.S.C. § 7434 (Count I), the D.C. Human

Rights Act (Count II), and the D.C. Workers’ Compensation Act (Counts II and III). See Second

Am. Compl., ECF No. 24. The Court dismissed Counts II and III, leaving only Count I. See

Mem. Opn. & Order, ECF No. 35. After discovery, both parties moved for summary judgment.

See Def.’s Mot. for Summ. J., ECF No. 48-1 (Def.’s MSJ); Pl.’s MSJ. Those motions are now

ripe. 2

                                                 II.

          To succeed on a motion for summary judgment, a movant must show that “there is no

genuine dispute as to any material fact” and that it “is entitled to judgment as a matter of law.”

Fed. R. Civ. P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48 (1986). A

factual dispute is material if it could alter the outcome of the suit, and genuine “if the evidence is

such that a reasonable jury could return a verdict for the nonmoving party.” Id. at 248. The

“party seeking summary judgment always bears the initial responsibility of . . . identifying those

portions of” the record that “demonstrate the absence of a genuine issue of material fact.”

Celotex Corp v. Catrett, 477 U.S. 317, 323 (1986).

          Once this showing is made, the nonmoving party must provide “specific facts showing

that there is a genuine issue for trial.” Anderson, 477 U.S. at 250 (cleaned up). In ruling on a

summary judgment motion, the Court draws “all justifiable inferences” from the facts in the

record in favor of the nonmoving party. Id. at 255. But the nonmoving party must show that “a

rational trier of fact” could find in its favor. Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,

475 U.S. 574, 587 (1986).

2
    The Court has jurisdiction under 28 U.S.C. § 1331.

                                                  4
       Doherty proceeds pro se, so the Court generally subjects his pleadings to “less stringent

standards than formal pleadings drafted by lawyers.” Gray v. Poole, 275 F.3d 1113, 1115 (D.C.

Cir. 2002) (cleaned up). “Any leeway does not extend,” however, “to the evidence required at

summary judgment[.]” Penkoski v. Bowser, 548 F. Supp. 3d 12, 20 (D.D.C. 2021) (emphasis in

original). Courts hold pro se plaintiffs like Doherty to the same evidentiary burdens as

represented plaintiffs. See Prunte v. Univ’l Music Grp., Inc., 699 F. Supp. 2d 15, 21–22 (D.D.C.

2010), aff’d, 425 F. App’x 1 (D.C. Cir. 2011).

                                                 III.

       The evidence does not create a genuine dispute that Turner “willfully filed” W-2s that

were “fraudulent.” 26 U.S.C. § 7434.

                                                 A.

       Start with the purported fraudulence of the W-2s. Doherty admits that they reflected the

correct amount of money he received from Turner during 2014–2016. 3 See Pl.’s MSJ at 10;

Depo. at 54, 55, and 57. So the returns were not fraudulent in that they misstated what he

received.

       Instead, Doherty suggests a different theory of fraudulence. He argues that his STD

payments were for worker’s compensation and thus, under 26 U.S.C. § 104(a)(1), they never

should have comprised part of his gross income. By this logic, the W-2s were fraudulent

because they improperly included worker’s compensation payments as gross income. See Pl.’s

MSJ at 10.

3
  Doherty says that Turner committed the same alleged fraud in 2008 and 2009 but
acknowledges that those returns fall outside the six-year statute of limitations in 26 U.S.C.
§ 7434(c). See Pl.’s MSJ at 4, n.6.

                                                  5
       The Court disagrees because multiple aspects of Turner’s STD program operated

differently from a program under the District’s “workmen’s compensation act[ ].” 26 U.S.C.

§ 104(a)(1). First, the District’s Worker’s Compensation Act (WCA) requires an employer to

pay “66 2/3% of the employee’s average weekly wages.” D.C. Code § 32-1508(2). Turner’s

STD program—which paid Doherty during the relevant period, see Depo. at 15–16, 18, 24—paid

more than 66 2/3% of Doherty’s usual earnings for much of the time he received payments.

       To be sure, weeks 17–26 of STD paid 60 percent, below the WCA-required 66 2/3 %.

But that disparity is another distinction between a WCA program and Turner’s STD program.

More, the WCA includes a process for computation of an average weekly wage. See D.C. Code

§ 32-1511. Doherty admits that he “never got an average weekly wage determination from”

Turner. Depo. at 23; see also Pl.’s MSJ at 9. So by Doherty’s own admission, the STD program

did not include steps required by the WCA.

       Based on those three differences, no reasonable jury could conclude that Doherty

received payments “under [the District’s] workmen’s compensation act[ ].” 4 26 U.S.C. §

104(a)(1).

       Doherty responds that no matter how Turner paid him, it should have paid him according

to the WCA. He argues that the WCA is “the exclusive vehicle for obtaining compensation” for

workplace injuries. Pl.’s MSJ at 12. This response fails for two reasons.

4
  Buttressing this conclusion is evidence that Turner properly followed 26 U.S.C. § 104 when
paying Doherty under the company’s “Worker’s Compensation” program. Doherty admits that
Turner did not report those payments on his W-2. See Pl.’s MSJ at 8, n.16. And an email from
Turner’s risk manager to Doherty noted that STD would pay him “in lieu of WC”—meaning
worker’s compensation—“[ ] until WC has to pay income benefits (after 26 weeks).” Pl.’s MSJ,
Ex. 15, ECF 52-3 at 11. So Turner knew the distinction between STD and “Worker’s
Compensation” and paid Doherty according to the terms and tax consequences of each.

                                                6
       First, fraud requires a “false representation.” Saucier v. Countrywide Home Loans, 64

A.3d 428, 438 (D.C. 2013); see Pl.’s MSJ at 2 (same). The Court has already found that Turner

did not pay Doherty under a worker’s compensation program. Thus, no matter how Doherty

says he should have been paid, Turner’s representations on the W-2s were not false.

       Second, Doherty is wrong about the exclusivity of the WCA. Indeed, the WCA allows

reimbursement for “advance payments of compensation” made before an award of worker’s

compensation. D.C. Code § 32-1515(j). So the WCA contemplates that employers may use

multiple methods to compensate workplace injuries. STD payments can constitute those

advance payments. See Felder v. D.C. Dep’t of Emp’t Servs., 97 A.3d 86, 90 (D.C. 2014). Thus,

employers can rely on STD payments to compensate workplace injuries. 5

       In sum, no reasonable jury could conclude that the W-2s were fraudulent.

                                               B.

       Even if the evidence created a genuine dispute about fraudulence—which it does not—no

dispute arises over Turner’s willfulness. See 26 U.S.C. § 7434. In the tax context, willfulness

requires “a voluntary, intentional violation of a known legal duty.” Cheek v. United States, 498

U.S. 192, 201 (1991); see also Crespo v. Midland Credit Mgmt., Inc., 689 F. App’x 944, 946

5
  D.C. Code § 32-1504(b) also does not make the WCA the only way to pay an injured
employee. That provision says that compensation under the WCA is an employee’s “exclusive
remedy against the employer” for injuries covered by the statute. Doherty reads that phrase to
mandate the WCA’s exclusivity. Not so. Rather, the phrase means that an employee may not
sue an employer for workplace injuries except to obtain benefits spelled out in the WCA. See
Lockhart v. Coast. Int’l Sec., Inc., 905 F. Supp. 2d 105, 116–17 (D.D.C. 2012). The WCA is
exclusive as to employees’ remedies, not employers’ payments. Nothing in § 32-1504(b)
requires employers to rely only on WCA benefits to compensate for workplace injuries. The
provision, once properly understood, has no relevance here—Doherty sues to recover the taxes
he paid, not his compensation for a workplace injury. See Compl. at 11–12.

                                                7
(11th Cir. 2017) (requiring proof of “intentional wrongdoing” under § 7434 (cleaned up)).

Recall Doherty’s fraudulence-by-noncompliance theory. Then consider the willfulness standard,

which clarifies what Doherty must prove: For Turner’s conduct to be willful under his theory,

Turner must have filed the W-2s with knowledge that the STD program violated the WCA.

       No evidence creates a dispute about that knowledge. True, Doherty speculates that

Turner had various motives—such as lower premiums, lower deductibles, and a tax deduction—

to use STD instead of a WCA-compliant program. 6 See Pl.’s MSJ at 14–16. But despite months

of discovery and the opportunity to depose witnesses, he provides no evidence to suggest that

Turner knew that the STD program violated the law. In fact, Doherty can identify no Turner

employee who told him that the company “knew that the [STD] policy did not comply with the

[WCA][.]” See Depo. at 39. Without antecedent knowledge of a “violation,” Turner could not

have willfully filed W-2s that were fraudulent because of that violation. Cheek, 498 U.S. at 201.

       Doherty’s best evidence is an email from 2013 where an HR staffer told him that,

although he would receive regular pay while injured, Turner would “code[ ]” it “as WC pay.”

Pl.’s MSJ Ex. 21, ECF 52-4 at 2. But Turner sent the email in 2013, well before the W-2s at

issue. And the rest of it merely reiterates Turner’s policy: Doherty’s “normal deductions

[would] be taken out of [his] check.” Id. Turner thus told Doherty that STD would not operate

like a worker’s compensation payment, which is, as Doherty admits, not taxable at all. 7 Not

once does the email suggest that Turner knew its STD policy violated any law.

6
 Doherty is apparently correct that Turner received a tax deduction. See Pl.’s MSJ, Ex. 24, ECF
No. 52-4 at 9.
7
  Again, the evidence shows that Turner knew about this distinction because it never included on
the 2016 W-2 payments that Doherty received through the “Worker’s Compensation” program.

                                                8
       Without more, a reasonable jury could not conclude that Turner “willfully filed”

fraudulent W-2s.

                                            *    *    *

       Because the evidence shows no genuine dispute about Turner’s willfulness or the

fraudulence of the W-2s, the Court will grant Turner’s motion for summary judgment.

                                                IV.

       After summary-judgment briefing, Doherty moved under Federal Rule of Civil Procedure

37(c) to strike two declarations by Elizabeth George and an exhibit that included portions of

Doherty’s deposition. See Mot. to Strike, ECF No. 56 (Mot. to Strike). Rule 37(c) allows the

Court to penalize a party who “fails to provide information or identify a witness as required by

Rule 26(a) or (e),” Fed. R. Civ. P. 37(c)(1). The party can avoid sanctions when any mistake is

harmless. See Smith v. Dist. of Columbia, 319 F.R.D. 40, 47 (D.D.C. 2016).

       Doherty argues that Turner should have provided George’s sworn statements before

filing its various motions. See Mot. to Strike at 2. Yet the discovery rules require disclosure of

documents “already in existence.” Ascom Hasler Mailing Sys., Inc. v. USPS, 267 F.R.D. 1, 8

(D.D.C. 2010) (cleaned up). As Turner points out, the George declarations did not exist until

Turner filed its motions. See First George Decl.; Second Decl. of Lauren George, ECF No. 54-2

(dated on the same day as the filings to which turner attached the exhibits). That is enough to

deny Doherty’s motion.

       Doherty also wants to strike excerpts of his deposition that Turner filed as an exhibit. See

Def.’s MSJ, Ex. A. He says that Turner should have disclosed the deposition transcript before

relying on it and that Turner has “cherry-picked sections” of his testimony. Mot. to Strike at 2.

But Doherty had an equal chance to rely on the deposition and to file the portions he wanted.

                                                 9
Rule 30 requires a court reporter to furnish a deposition transcript “to any party or the deponent”

when they pay “reasonable charges.” Fed. R. Civ. P. 30(f)(3). Doherty could have paid for his

own copy of that transcript—nothing required Turner to provide it ahead of time. In any event,

Doherty has now filed the whole deposition. See Depo. The Court has reviewed it, so Doherty

experiences no hardship from any error by Turner.

        Lastly, Doherty asks the Court to strike Turner’s “first and second set” of discovery

responses because Turner gave them to Doherty after certain deadlines had passed. Mot. to

Strike at 2. The Court will deny that request—Turner convincingly shows that Doherty either

consented to those delays or caused them through his own unresponsiveness and clarifying

questions. See Opp’n to Mot. to Strike at 14–15, ECF No. 57. And even if Turner missed

deadlines, Doherty nowhere says that the delays impacted his ability to manage his case. Indeed,

that he filed documents with the Court after these alleged deadlines and never raised Turner’s

tardiness suggests the opposite. So Turner’s transgressions, if any, were harmless.

                                                V.

        For these reasons, the Court will grant Turner’s motion for summary judgment and deny

Doherty’s cross-motion. The Court will also deny Doherty’s motion to strike. A separate Order

will issue. 8
                                                                             2022.04.15
                                                                             10:25:35 -04'00'
Dated: April 15, 2022                                TREVOR N. McFADDEN, U.S.D.J.

8
 The Court has considered Doherty’s request for oral argument on his cross-motion, see Pl.’s
MSJ at 1, n.2, but finds oral argument unnecessary here. See LCvR 78.1.

                                                10