United States District Court, N.D. Illinois
March 31, 2004.
JAMES D. SOLON, Plaintiff, LARRY S. KAPLAN, FRED C. BEGY, III, ROBERT C, von OHLEN, individuals, and KAPLAN, BEGY & von OHLEN, a partnership, Defendants, FRED C. BEGY, III, Cross-Claimant,
LARRY S. KAPLAN, ROBERT C, von OHLEN, JR., individuals, and KAPLAN, BEGY & von OHLEN, a partnership, Cross-Defendants
The opinion of the court was delivered by: SAMUEL DER-YEGHIAYAN, District Judge
This matter is before the court on defendants Larry S. Kaplan and
Robert von Ohlen, Jr., individually, and the law firm partnership of
Kaplan, Begy & von Ohlen's (hereinafter collectively "Defendants")
motion for summary judgment as to Plaintiff
James Solon's ("Solon") Second Amended Complaint, Additionally,
before this court is cross-claim defendants' Larry S. Kaplan and Robert
C, von Ohlen, Jr., individually, and the law firm partnership of Kaplan,
Begy, & von Ohlen's (hereinafter collectively "Cross-Claim
Defendants") motion for summary judgment as to Defendant/Cross-Claimant
Fred C, Begy's Second Amended Cross-Claim and a motion to strike
Defendant/Cross-Claimant Fred C. Begy's response in opposition to motion
for summary judgment.
For the reasons below, we grant Defendants' motion for summary judgment
on Counts 1 and IT of Solon's Second Amended Complaint and dismiss
without prejudice Counts IV, V, VI for lack of jurisdiction.
Additionally, this court also dismisses without prejudice Counts I, II,
and HI of Defendant/Cross-Claimant Fred C. Begy's Second Amended
Cross-Claim for lack of jurisdiction. As such, the court strikes as moot
Cross-Claim Defendants' motion for summary judgment and motion to strike.
On September 1, 1989, Solon became an equity partner in the law firm of
Adler, Kaplan, & Begy ("AKB"). On or about January 29, 1993, Solon
signed an Amendment and Restatement of the AKB Partnership Agreement
(hereinafter "Partnership Agreement") in his capacity as an equity
partner of the AKB firm. The Partnership Agreement identified James
Solon, John W. Adler, Fred C. Begy III, Larry S. Kaplan, James F. Murphy,
Michael G. McQuillen, Terrill E. Pierce and
Robert von Ohlen as equity partners in the AKB firm. Solon
contributed $50,000 as a capital contribution to the AKB firm.
In 1994, three of the AKB equity partners John W. Alder,
Michael G. McQuillen, and James F. Murphy left the AKB law firm.
Thereafter, Solon drafted a Separation Agreement which manifested the
withdrawal of the three equity partners from the firm effective December
31, 1994. The Separation Agreement stated the remaining equity partners
of the AKB law firm Fred C. Begy III, Larry S. Kaplan, Terrill E.
Pierce, Robert von Ohlen, and James Solon would continue the AKB
partnership under the name Kaplan & Begy and would exist in
accordance with the previously drafted Partnership Agreement. The
Separation Agreement was then signed by all equity partners of the
pre-existing AKB law firm, including Solon.
As an equity partner in the Firm, Solon received semi-monthly draws, an
allocated share of firm income, and copies of the firm's Daily Cash
Reports. Solon also attended compensation meetings with the other
partners and signed income distribution forms acknowledging his allocated
share of the Firm's profits.
In addition to being an equity partner, Solon also became Kaplan &
Begy's managing partner. As Kaplan and Begy's managing partner, Solon
signed documents over the title managing partner. In addition, Solon
signed letters of credit with LaSalle Bank, held the title of trustee for
the Firm's 401(k) plan, signed checks containing partnership income
distribution; and prepared financial statements describing the Firm's
In 1997, Robert von Ohlen was added as a named partner to the
firm, changing the firm name to Kaplan, Begy & von Ohlen
(hereinafter "Firm"). Solon continued in his role as managing partner of
the Firm through and until January 18, 1998,
On October 15, 1998, partner Fred C. Begy informed Solon that the
partners had decided that his partnership interest in the Firm would be
terminated effective December 31, 1998.
Solon contends that, Larry S. Kaplan ("Kaplan"), Fred C. Begy 111
("Begy"), Robert von Ohlen ("von Ohlen") and the Firm forced him out of
the Finn in violation of the Partnership Agreement based on his age and
because of his investigation of two sexual harassment incidents. In
addition, Solon asserts that Kaplan, Begy, and von Ohlen refused to give
him fee-generating files and assigned him administrative matters so he
could not accumulate billable hours and further develop his law practice.
Finally, Solon claims that his compensation was inadequate and that he is
entitled to the return of his initial $50,000 investment in the Finn.
In his six count Second Amended Complaint, Solon claims that the
Defendants violated federal claims under Title VII of the Civil Rights
Act of 1964, 42 U.S.C. § 2000e, et seq., as amended by the
Civil Rights Act of 1964 (Count I) and the Age Discrimination in
Employment Act, 29 U.S.C. § 621 et seq. (Count II). In
addition, Solon brought the following claims under the supplemental
of the court, pursuant to 28 U.S.C. § 1367, which include
alleged violations of the Illinois Human Rights Act, 775 ILCS
5/1-101,et. seq., (Count III), including sections 5/1-102 and
5/6-101, claims for breach of the Partnership Agreement and the covenant
of good faith and fair dealing (Count TV), and breach of the fiduciary
duty of good faith and fair dealing of partners and joint ventures (Count
V). Alternatively, Solon seeks an accounting and an order dissolving the
partnership and distributing its assets under the Illinois Uniform
Partnership Act, 205 ILCS § 205/1 et. seq. (Count VI).
On February 9, 2001, in an Order addressing Defendants' Motion to
Dismiss Scion's Second Amended Complaint, Judge Blanche Manning dismissed
with prejudice the individual capacity claims alleged in Count I and
Count II. In addition, Judge Manning dismissed in whole Count III for
failure to exhaust administrative remedies. On August 8, 2003,
Defendant/Cross-Claimant Begy filed a Second Amended Cross-Claim for
Indemnification (Count I), Declaratory judgment (Count II), and Partner
Indemnification (Count III). Begy brought the Second Amended Cross-Claim
under the supplemental jurisdiction of the court pursuant to
28 U.S.C. § 1367,
Summary judgment is appropriate when the record reveals that there is
no genuine issue as to any material fact and the moving party is entitled
to judgment as
a matter of law. Fed.R.Civ.P. 56(c). In seeking a grant of
summary judgment the moving party must identify "those portions of `the
pleadings, depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any,' which it believes
demonstrate the absence of a genuine issue of material fact." Celotex
Corp. v. Catrett, 477 U.S. 317
, 323 (1986) (quoting Fed, R. Civ. P.
56(c)). This initial burden may be satisfied by presenting specific
evidence on a particular issue or by pointing out "an absence of evidence
to support the non-moving party's case." Id. at 325. Once the movant has
met this burden, the non-moving party cannot simply rest on the
allegations in the pleadings, but, "by affidavits or as otherwise
provided for in [Rule 56], must set forth specific facts showing that
there is a genuine issue for trial." Fed.R.Civ.P. 56(e), A "genuine
issue" in the context of a motion for summary judgment is not simply a
"metaphysical doubt as to the material facts." Matsushita Elec,
Indus. Co., ltd, v. Zenith Radio Corp., 475 U.S. 574
, 586 (1986).
Rather, a genuine issue of material fact exists when "the evidence is
such that a reasonable jury could return a verdict for the nonmoving
party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242
(1986); Insolia v. Philip Morris, Inc., 216 F.3d 596
, 599 (7th
Cir. 2000). The court must consider the record as a whole, in a light
most favorable to the non-moving party, and draw all reasonable
inferences that favor the non-moving party. Anderson, 477 U.S.
at 255; Bay v. Cassens Transport Co., 212 F.3d 969
, 972 (7th
Partnership status under the ADEA and Title VII
Before this court may examine the merits of Solon's allegations, this
court must first determine whether Solon was an employee under the ADEA
and Title VII,
The ADEA protects employees but not employers. 29 U.S.C.A. §§
623(a)(2), (a)(3); see also EEOC v. Sidley Austin Brown &
Wood 315 F.3d 696, 698 (7th Cir. 2002)(stating that the EEOC would
have to show that thirty-two partners of the firm were employees before
their demotion to establish that the firm had violated The ADEA).
Similarly, Title VII protects employees but not employers. 42 U.S.C.A.
§§ 2000e-2(a)(1), (a)(2); see also E.E.O.C. v. Severn Trent
Services, Inc., 358 F.3d 438, 445 (7th Cir. 2004)(stating that Title
VTT is applicable to an employer only when the participant he is
retaliating against is an employee). Thus, a partner in a firm must first
establish that he is an employee in order to seek protection under the
ADEA or Title VII. Severn, 358 F.3d. at 445.
In addressing whether partners of a partnership should be treated as
employers or employees, the Seventh Circuit observed that all
partnerships are not created equal, and because of this, all partners may
not always be employers for purposes of the federal-discrimination
statutes. See Schmidt v. Ottawa Medical Center, P.C.,
322 F.3d 461, 464 (7th Cir. 2003)(citing Sidley, 315 F.3d at 702);
see also Burke v. Friedmen, 556 F.2d 867, 869 (7th Cir.
1977)(finding only bona fide partners exempt from the
federal-discrimination statutes). Employee status for Title
VII and cognate laws protecting employees are determined by the
principals of agency law rather than by labels. Severn, 358 F.3d
at 445(citing Clackamas Gastroenterology Associates, P.C. v,
Wells, 53% U.S. 440, 123 S.Ct, 1673, 155 L.Ed.2d 615 (2003); see
also Sidley, 315 F.3d at 705.) The principals of agency law, as
stated by the Supreme Court in Clackamas, set forth the
following factors to consider when a court determines employee status for
purposes of the federal-discrimination statutes: (1) whether the
organization can hire or fire the individual or set the rules and
regulations of the individual's work; (2) whether and, if so, to what
extent the organization supervises the individual's work; (3) whether the
individual reports to someone higher in the organization; (4) whether
and, if so, to what extent the individual is able to influence the
organization; (5) whether the parties intended that the individual be an
employee, as expressed in written agreements or contracts; and (6)
whether the individual shares in the profits, losses, and liabilities of
the organization. Clackamas Gastroenterology Associates, P.C. v.
Wells, 538 U.S. 440, 123 S.Ct 1673, 1680 155 L.Ed.2d 615 (2003).
Solon's Status in the KBV Law Firm
To determine whether Solon was an employer or an employee in the Firm
this court now considers those factors set forth by the Supreme Court in
On December 31, 1994, Solon identified the equity partners of the
Begy Firm as Begy, Kaplan, Pierce, von Ohlen, and Solon. Pl.'s
Rule 56,1 ¶ 11, After Pierce left the Firm sometime in 1996, Solon admits
that he, Begy, Kaplan, and von Ohlen were the only remaining equity
partners in the Firm through December 31, 1998. Def.'s Ex. F, p, 87,
The Partnership Agreement, § IX, ¶ G states "a decision by a
two-thirds vote of the general partners is required for involuntary
withdrawal when the best interests of the Firm require such partner to
withdraw," Pl's Exh. 2, p. 19. In August of 1998, Kaplan, Begy, and von
Ohlen, in accordance with the Partnership Agreement, decided by a
two-thirds vote of the equity partners, that Solon would no longer remain
an equity partner in the Firm. Def.'s Rule 56.1 ¶ 47; Def.'s Exh, F
#16, This court finds that the unanimous decision by three of the four
equity partners of the Finn satisfied the two-thirds vote necessary to
withdraw Solon as a partner from the Firm.
Solon's contention that there was never a unanimous decision to
withdraw him as a partner and that even if there was he should have been
present at the time the decision was made is without merit. Pl.'s Mem.
Opp'n to Summ. J. In a January 13, 1999 Memorandum ("Memo") prepared by
Solon entitled "Termination of Partnership Interest", Solon went to great
detail to explain his position on the termination of his partnership
interest with the Firm. Def.'s Exh. F, #16. In the Memo, Solon states
that on October 15, 1998, Begy informed him that the partners chose to
terminate his equity interest. Solon further explains that the partners
offered him a proposal in which he was "invited to continue in an
administrative capacity as an employee of the firm at a reduced salary,
essentially performing the job functions formerly performed by Ray
Heniff. . . ." Id. Solon explained that he considered the
decision of the partners and their proposal, but stated that at that time
he felt that "it would be in all of our best interests to wind up my
involvement with the firm as expeditiously as possible," Id,
Now Solon alleges that the partners never agreed to terminate him and
that he wanted to cast a vote in such a decision. Pl.'s Mem, Opp'n to
Summ, J, The court finds Solon's allegations inconsistent and untimely,
in that the Memo itself admits Solon's partnership interest and equally
acknowledges Solon's acceptance that the partners chose to terminate his
interest. Def.'s Exh. F, #16, Notwithstanding, Solon presents no evidence
that he ever protested or demanded a vote at the time he learned that the
partners decided to withdraw him from the Finn or anytime thereafter.
Instead, the record reflects that Solon reflected on the partners
decision, accepted their decision, and then rejected their offer to stay
on with the Firm in a different capacity, that of an employee. Def.'s
Exh. F, #16; Pl's Ex. F, p, 505, lines 7-11.
With respect to Solon's involvement in the Firm, Solon maintains he was
a partner in name only who remained under the control and direction of
Begy and the other partners in an administrative position. Pl's Rule 56.1
¶ 13, 18. Yet, after Solon was notified his partnership interest was
withdrawn, he refused to continue in
the Firm "in an administrative capacity as an employee of the firm
at a reduced salary . . .". Def.'s Exh. F, #16. Solon also maintains that
he was not allowed lo be an active participant in the partner
compensation meetings or discussions concerning his income. However,
Solon admits that he attended compensation meetings with the other
partners and signed income distribution forms acknowledging his allocated
share of the Firm's profits. Def.'s Exh, M p. 4-6, In addition, as an
equity partner in the Firm, Solon received semi-monthly draws and an
allocated share of Firm income. Pl.'s Rule 56,1 ¶ 6, Solon also
admits that unlike employees of the Finn, he received copies of the
Firm's Daily Cash Reports. Pl's Rule 56,1 ¶ 16.
Furthermore, between January 1, 1995 and January 18, 1998, Solon admits
that he was the managing partner of the Firm. Pl.'s "Rule 56.1 ¶ 13.
As managing partner, Solon had a pulse on almost every aspect of the
partnership including its financial position. For instance, Solon signed
off on letters of credit with LaSallle Bank; held the title of trustee
for the Firm's 401(k) plan; signed checks containing the partnership
income distribution; and prepared statements describing the Firm's
financial condition, Pl.'s Rule 56.1 ¶ 13,14.
A telling example of Solon's participation in the Firm occurred on May
31, 1998, when Solon signed a revolving credit agreement with LaSalle
National Bank as a guarantor of payment on the agreement, Def.'s Ex. F,
#8; Pl.'s Rule 56.1 ¶ 16. Solon, along with Kaplan, Begy, and von
Ohlen, each individually signed the credit agreement document over the
title of partner. Id.
This court rejects Solon's contention that he was under the control and
direction of Begy and the other partners in an administrative position.
Instead, this court finds that Solon was a full and active participating
partner in the Finn,
Finally, Solon's status as a partner as expressed in the Firm's written
agreements is not disputed. Solon admits that the Partnership Agreement,
which he drafted, explicitly names him as an equity partner in the Firm.
Pl's Rule 56.1 ¶ 4. Furthermore, as explained above, Solon held
himself out as an equity partner on numerous occasions in documented
financial statements, Def.'s Ex. F, # 8; Pl."s Rule 56.1 ¶ 16. The
facts above also undisputedly show that Solon shared in both the profits
and losses of the Firm, and was liable for the Firm's debts. Moreover,
Solon individually contributed $50,000 as capital to the Finn. Pl's
Rule 56.1 ¶ See Schmidt, 322 F.3d at 464(citing Sidley,
315 F.3d at 703)(explaining that qualities indicative of partners include
evidence that the partners' income included a share of firm profits; that
the partners made capital contributions to the firm; that the partners
were liable for firm debts; and that the partners had some administrative
or managerial responsibilities); Pl.'s Rule 56.1 ¶'s 5,6,7, 16;
Def.'s Exh. M. p. 4-16.
During Solon's tenure with the Firm, he was identified as a partner,
treated as a partner, participated as a partner, and was eventually
removed as a partner by his fellow partners. Solon's status as a
partner/employer of the Firm and not an employee of the Finn precludes
him from protection under both Title VII and the ADEA. Severn,
358 F.3d at 445.
This court finds no genuine issue as to any material fact that Solon
was a partner in the Firm. This court also finds that no reasonable jury
could find that Solon was an employee of the Finn,
Even if Solon was able to establish that he was indeed an employee and
not a partner, which he has failed to do, summary judgement would still
be appropriate in that Solon has failed to set forth a sufficient prima
facie case under either the ADEA or Title VII claim. See Sledd v.
Lindsay, 102 F.3d 282, 288-289 (7th Cir. 1996)(stating that once the
parties have been able to develop a record suitable for summary judgment
motions, the district court will be in a far better position to sec if
the Plaintiff can back up his allegations with anything that entitles him
to a trial. With respect to the ADEA claim, the court notes that Solon in
his response to Defendant's motion for summary judgment admits that
discovery has failed to produce direct evidence of age discrimination.
Pl's Resp. Summ, J, p. 2. Moreover, Solon has offered this court no
indirect evidence that he could establish all of the elements of a prima
facie case of Age Discrimination under the accepted McDowwell
Douglas test. See Baron v. City of Highland Park,
195 F.3d 333, 338 (7th Cir. 1999) (citing McDonnell Douglas Corp. v.
Green 411 U.S. 792, 802-03, (1973)(stating if an ADEA plaintiff is
unable to proffer direct evidence to prove the discrimination claim, he
may attempt to establish his case with circumstantial evidence and rely
on the familiar McDonnell Douglas burden-shifting model). With
regard to Solon's Title VII claim, this court finds that Solon has not
addressed the prima facie elements of Title VII, instead choosing
to proceed piecemeal by asking this court to jump to a pretext analysis.
Pl.'s Resp. Summ. J. p, 2.
Therefore, we grant the Defendant's motion for summary judgment on both
Counts I and II of Solon's Second Amended Complaint,
Solon's Remaining Counts
In granting summary judgment as to Counts I and II of Solon's Second
Amended Complaint, this court notes that the remaining Counts
Counts TV, V, and VI are all state claims that were brought into
the action under the supplemental jurisdiction of the court, pursuant to
28 U.S.C. § 1367.
The Seventh Circuit has stated that where a court dismissed a federal
claim and the sole basis for invoking federal jurisdiction is now
nonexistent, that court should not exercise supplemental jurisdiction
over remaining state law claims. See Williams v. Aztar Indiana Gaming
Corp., 351 F.3d 294, 300 (7th Cir. 2003); see e.g. Wright v.
Associated Ins. Cos. Inc., 29 F.3d 1244, 1251 (7th Cir. 1994)("[T]he
general rule is that once all federal claims are dismissed before trial,
the district court should relinquish jurisdiction over pendent state-law
claims rather than resolv[e] them on the merits.") (citing United
Mine Workers of Am. v. Gibbs, 383 U.S. 715, 726, 86S.Ct. 1130,
16 L.Ed.2d 218 (1966)).
Following Aztar, this court relinquishes jurisdiction over
state law claims and as such dismisses Counts IV, V, and VI without
prejudice. 351 F.3d at 300.
Defendant/Cross-Claimant Fred C. Begy's Second Amended
Defendant/Cross-Claimant Fred C. Begy's Second Amended Cross-Claim
contains a total of three claims which include relief for Indemnification
(Count I), Declaratory Judgment (Count IT), and Partner Indemnification
(Count III). No Count in the Cross-Claim is a Federal Claim. Instead, as
stated in the Second Amended Cross-Claim ¶ 3, all of the claims were
brought into the action under the supplemental jurisdiction of the court,
pursuant to 28 U.S.C. § 1367,
For the same reasons stated above, this court now relinquishes
jurisdiction over Defendant/Cross-Claimant Fred C. Begy's Second Amended
Cross-Claim and as such dismisses Counts I, II, and III without
prejudice. See Aztar, 351 F.3d at 300.
Cross-Claim Defendant's Motion for Summary Judgement and
Motion to Strike.
With respect to the court's dismissal without prejudice of Counts I,
II, and III of Defendant/Cross-Claimant Fred C, Begy's Second Amended
Cross-Claim, the court strikes as moot Cross-Claim Defendant's motion for
summary judgment and motion to strike.
Based on the foregoing analysis, this court grants Defendants' motion
summary judgment on Counts I and II of Solon's Second Amended
Complaint and dismisses without prejudice Counts IV, V, VI for lack of
jurisdiction. Additionally, this court also dismisses without prejudice
Count I, II, and III of Defendant/Cross-Claimant Fred C. Begy's Second
Amended Cross-Claim for lack of jurisdiction. As such, the court strikes
as moot Cross-Claim Defendant's motion for summary judgment and motion to
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