Simpson v. Ernst & Young

850 F. Supp. 648 (1994)

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Nature of the Case

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Facts

P, a Certified Public Accountant (CPA), was born on September 27, 1943. D is a large accounting firm created in 1989 by the merger of Ernst & Whinney and Arthur Young accounting firms. P was the Managing Partner for Arthur Young's Cincinnati, Ohio office. The merged firm organized itself into two entities: Ernst & Young and Ernst & Young U.S. P was named a partner in the merged firm. P contributed $84,000 in capital. D arranged for the loan and D also paid the interest on the loan. But D did not guarantee the loan. P also earned interest on his 'capital contributions.' P was required to reduce the balance of his account ten percent per year beginning the third year after the merger. P was jointly and individually liable for the losses of D. P paid D an annual salary. D reported his salary on a Schedule K-1 as a distribution of partnership earnings. For the 1990 tax year, P represented in his federal tax return that D was a partnership and that he was a partner. The Partnership Agreement stated that D's profits and losses, if any, were allocated as the Management Committee in its sole discretion determined. P had the right to vote on proposed major firm combinations, and to vote on the dissolution of D. P also had the right to vote on any amendment to the Partnership Agreement. P did not have the right to examine the books, records, or accounts of D. P had no right of access to legal opinions issued by D's general counsel. Simpson was unable to sign promissory notes binding D. P could not assign, pledge, or otherwise transfer his interest. P's performance reviewed annually by his supervisor. P was not entitled to know other partners' compensation. P was named Director of Entrepreneurial Services for Cincinnati, a lesser position. P could not transfer, hire, or fire Entrepreneurial Services personnel. To put it bluntly to get everyone to agree to the merger the management lied about the net results. When it was 'discovered' that the retirement benefit plans showed that the accumulated benefit obligations were $290,000,000 higher than the funding then available, management decided to ax a number of partners. D refused to consider a hiring freeze or across the board reductions for everyone. P was given six months written notice. P was denied access to D's books regarding its attorney’s opinion about his firing. P sued D under the Age Discrimination in Employment Act and the Employee Retirement Income Security Act. Both parties moved for summary judgment after a mistrial. D moved on grounds that P was a partner and not an employee.