[00:00:00] Speaker 00:
Case number 22, that's 7072 Martin a balance versus turner broadcasting systems.

[00:00:08] Speaker 00:
Mr. for the balance.

[00:00:10] Speaker 00:
Miss Kingham appointed for the balance.

[00:00:13] Speaker 08:
Miss for the.

[00:00:23] Speaker 05:
Good morning.

[00:00:25] Speaker 05:
May it please the court.

[00:00:26] Speaker 05:
I have a short, about a minute and a half, few elements I'd like to get out there unless you want to go straight to questions.

[00:00:34] Speaker 06:
You can go ahead with your presentation.

[00:00:35] Speaker 05:
Thank you, Your Honor.

[00:00:37] Speaker 05:
I'm requesting that this court reverse the grant of summary judgment and remand.

[00:00:44] Speaker 05:
The district court's decision does not flow rationally from the facts, record evidence, or the law.

[00:00:49] Speaker 05:
This case is not about the IRS or Turner short-term disability

[00:00:54] Speaker 05:
This case is about Turner willfully filing fraudulent information returns.

[00:01:01] Speaker 05:
This case is also not about how much accountants pay.

[00:01:04] Speaker 05:
It is about Turner's extraction of payroll taxes that they knew as an operation of law never should have been extracted, yet with willful blindness and recklessness, they did so.

[00:01:17] Speaker 05:
At the end of the day, no matter how you slice or dice it, IRS code 26104A1 states that gross income does not include amounts received under workers' compensation acts.

[00:01:30] Speaker 05:
Firstly, the district court decision asserts that how Turner paid that compensation matters in this case, and they are correct, except not for the reasons stated in the district court's decision.

[00:01:43] Speaker 05:
The doctrine of preemption should make Turner's arguments moot and the district court's decision unsupported.

[00:01:48] Speaker 05:
Preemption, as you well know, has federal law, state law, local law.

[00:01:53] Speaker 05:
Nowhere in there does it have Turner's corporate policy on workers' compensation or paying taxes to the IRS.

[00:02:02] Speaker 05:
Despite that, the district court misapplied the law and essentially would have, you believe, a reasonable jury would believe that Turner has no legal obligation

[00:02:11] Speaker 05:
to adhere to IRS code 26104A1 because Turner has in their own benevolent scheme to compensate their workers injured on the job through their own short-term disability program.

[00:02:25] Speaker 05:
In sum, Appellant relied on Turner's Workers' Compensation Agreement that Appellant signed.

[00:02:32] Speaker 05:
That's at JA-449.

[00:02:34] Speaker 05:
Also, his workers' comp wage loss benefits would be coded as workers' comp on his pay sub.

[00:02:41] Speaker 05:
That's JA-501.

[00:02:43] Speaker 05:
And that Turner follows all IRS code, JA-508.

[00:02:48] Speaker 05:
As a result, a pellet was assessed IRS under payment penalties of his 2015 taxes due to Turner's willful fraudulent filing of his 2015 W-2.

[00:03:02] Speaker 05:
The record evidence that the district court decision ignored calls for a reversal and remand.

[00:03:07] Speaker 05:
It is inconceivable that Turner did not know the consequences of their actions, and there exists numerous disputable facts and questions for a jury.

[00:03:16] Speaker 05:
Thank you.

[00:03:17] Speaker 06:
Thank you.

[00:03:26] Speaker 06:
He said, I just want to check one thing that you said.

[00:03:29] Speaker 06:
You said that Turner withheld payroll taxes for the income that it paid you.

[00:03:36] Speaker 06:
That's an issue here.

[00:03:38] Speaker 06:
Yes.

[00:03:40] Speaker 06:
Yeah.

[00:03:40] Speaker 06:
And it's your contention that that if they had properly considered this be workers compensation payments, they would not have withheld those tax.

[00:03:53] Speaker 05:
Right?

[00:03:53] Speaker 05:
Yeah.

[00:03:55] Speaker 06:
And so is it, I guess, the fact that you have, is it your argument then that you were kind of doubly injured then because they withheld some taxes that they shouldn't have and therefore that was money that you couldn't put in your pocket and this income shouldn't have been taxable federally

[00:04:24] Speaker 06:
and and obviously you've got the tax liens and and all of that and so um it's kind of a double way that there uh yes your honor thank you the other question yes do you think that turner was paying you workers compensation or do you think

[00:04:49] Speaker 04:
They were legally required to pay you workers compensation, but they broke the law and not.

[00:04:56] Speaker 05:
I believe both are true.

[00:04:59] Speaker 05:
When as soon as an injured worker files a claim in DC and it's the employer has 14 days to challenge it.

[00:05:08] Speaker 05:
They did not do that.

[00:05:09] Speaker 05:
So my claim becomes compensable whether or not I miss work right after the injury or not.

[00:05:19] Speaker 05:
I went out for three different times up until 2015 when I finally had the surgery.

[00:05:24] Speaker 05:
And each of those times, they're supposed to pay me what's called the average weekly wage in DC, and that's 66 and two thirds of your pay.

[00:05:34] Speaker 05:
Now, when they paid out of their short-term disability program, let's say my marginal tax rate ends up being 20%, that means I'm not getting 66 and two thirds, I'm getting 46.

[00:05:45] Speaker 05:
And it's a very easy remedy, and I've told them this, is that just where your 401k, your health insurance premium, it's pre-tax.

[00:05:54] Speaker 05:
They could have just put in their worker's comp, boom, and put it right there.

[00:05:58] Speaker 05:
I'm not making any money off of this.

[00:06:00] Speaker 05:
They're not spending any money off of this.

[00:06:02] Speaker 05:
They give me a corrected W-2 like I asked for, then it would have been my issue with the IRS.

[00:06:10] Speaker 05:
Because the IRS goes on with what they told them.

[00:06:12] Speaker 05:
They told them that my W-2 was correct.

[00:06:15] Speaker 05:
when in fact they knew it was.

[00:06:19] Speaker 06:
Thank you.

[00:06:20] Speaker 06:
We'll hear from the appointed amicus on your behalf.

[00:06:30] Speaker 02:
Thank you, your honor.

[00:06:31] Speaker 02:
Tiffany Yang, counsel for quote appointed amicus.

[00:06:34] Speaker 02:
With the court's permission, Victoria Kingham, a third year law student at Georgetown University Law Center, will present argument on behalf of the amicus.

[00:06:42] Speaker 06:
Thank you.

[00:06:49] Speaker 08:
Ms.

[00:06:49] Speaker 08:
Kingham.

[00:06:50] Speaker 08:
Good morning.

[00:07:01] Speaker 08:
Good morning.

[00:07:03] Speaker 01:
Please, the court.

[00:07:04] Speaker 01:
This court should reverse the district court's grant of summary judgment and remit.

[00:07:09] Speaker 03:
There is a genuine- I wonder if you could speak a little louder.

[00:07:12] Speaker 03:
I'm having a little difficulty hearing you.

[00:07:15] Speaker 01:
There is a genuine dispute of material fact that Turner willfully filed fraudulent information returns on Mr. Doherty's behalf.

[00:07:24] Speaker 01:
That is because in order to obtain a tax deduction, Turner falsely included Mr. Doherty's workers' compensation payments as part of his gross taxable income on his W-2s.

[00:07:36] Speaker 01:
Turner did this repeatedly over a period of three years, despite its knowledge that Mr. Doherty was entitled to tax-free workers' compensation.

[00:07:46] Speaker 01:
That knowledge is manifest in Turner's own employee's email to Mr. Doherty stating that they were quoting his payments as workers' compensation.

[00:07:54] Speaker 01:
In addition to Mr. Doherty's repeated emails to the company, notifying it that he was entitled to tax-free workers' compensation.

[00:08:02] Speaker 03:
The difficulty I have is the same one that this report expressed, that this statute is not directed as to what the defendant may have done wrong,

[00:08:14] Speaker 03:
at various times, but whether this particular tax documents are fraudulent.

[00:08:19] Speaker 03:
The district court says, what is the false statement in that it makes this fraud?

[00:08:24] Speaker 03:
What is the false statement of a fact that the defendant made in the tax documents makes this into a fraud?

[00:08:34] Speaker 01:
Here, the false statement was representing Mr. Doherty's workers' compensation payments as taxable.

[00:08:41] Speaker 01:
According to the IRS, workers' compensation is intended to be excluded from taxable income, and therefore, when Turner included it in Mr. Doherty's gross taxable income, that rendered his W-2s fraudulent.

[00:08:56] Speaker 06:
Were there cross motions for summary judgment file?

[00:08:59] Speaker 01:
There were.

[00:09:03] Speaker 06:
So,

[00:09:06] Speaker 06:
Well, I guess I would like for you to get to your argument about, we'll continue your argument, but particularly about state of mind and intent and what the standards

[00:09:23] Speaker 01:
Here, the words willfully and fraudulent are mutually reinforcing.

[00:09:27] Speaker 01:
The word fraudulent connotes a false representation with some level of scienter, and that scienter in the context of this statute is provided by the word willfully.

[00:09:37] Speaker 01:
As the Supreme Court held in Safeco, willfulness can be shown by a showing of recklessness within the context of a civil statute like this one.

[00:09:46] Speaker 01:
Therefore, a company has violated 7434A when they have filed information returns that falsely represent an employee's gross taxable income with at least reckless disregard as to the truth of those information returns.

[00:10:01] Speaker 01:
But even if this court were to hold that fraudulence requires a showing of knowledge and intent, as Turner suggests, there is ample record evidence to demonstrate Mr. To demonstrate Turner's liability under that standard as well.

[00:10:15] Speaker 04:
This kingdom, uh, it was I was asking Mr. Doherty version of this question.

[00:10:22] Speaker 04:
I just had I've had a hard time wrapping my head around around it.

[00:10:28] Speaker 04:
I could imagine that

[00:10:31] Speaker 04:
Turner was legally required to pay him workers.

[00:10:36] Speaker 04:
And they broke the law by not paying him and instead paying him short term disability.

[00:10:47] Speaker 04:
So the law has been broken.

[00:10:48] Speaker 04:
Then they tell the IRS we paid him short term disability.

[00:10:56] Speaker 04:
If that's the case,

[00:10:59] Speaker 04:
It seems like they didn't break the law when they told the IRS the truth.

[00:11:05] Speaker 04:
They broke the law before then when they didn't pay him the way they were supposed to pay him.

[00:11:13] Speaker 01:
Your Honor, in fact, Turner, despite what it now says about paying Mr. Doherty short-term disability benefits, was actually paying Mr. Doherty workers' compensation benefits from the outset.

[00:11:25] Speaker 01:
That is because Mr. Doherty complied with what the requirements of the DC Workers' Compensation Act are, which is that he reported the injury the night that it happened to his supervisor, he timely filed a claim application with the DC Office of Workers' Compensation, and his injury was incurred in the course of employment.

[00:11:42] Speaker 04:
Do you think that Turner knew they were paying him workers' comp?

[00:11:48] Speaker 01:
There is at least a genuine dispute of material fact that Turner did know this.

[00:11:52] Speaker 01:
For example, in 2013, a Turner employee sent an email to Mr. Dougherty notifying him that his payments would be coded as workers' compensation payments.

[00:12:03] Speaker 04:
I'm wondering if we did send this back and it did go to a jury, what would we be asking the jury

[00:12:12] Speaker 04:
to decide.

[00:12:14] Speaker 04:
I could imagine that the jury would need to decide, number one, did Turner know or really, really, really should have known that it was paying him workers comp?

[00:12:31] Speaker 04:
And if so, did they tell the IRS something different?

[00:12:37] Speaker 04:
Do you think that some version of that would be a pretty appropriate jury instruction?

[00:12:42] Speaker 01:
Yes, your honor.

[00:12:43] Speaker 01:
I believe the first part would certainly be a jury instruction that the jury would need to find that Turner either knew or should have known that they were paying Mr. Doherty tax free workers compensation.

[00:12:53] Speaker 01:
Additionally, the jury will need to determine that they did so willfully, which can be shown by a showing of reckless disregard.

[00:13:03] Speaker ?:
The

[00:13:04] Speaker 06:
Mr. Doherty and Turner went before the DC Office of Workers Compensation in 2014.

[00:13:11] Speaker 06:
Is that correct?

[00:13:15] Speaker 01:
Both 2014 and 2016.

[00:13:18] Speaker 06:
And the Office of Workers Compensation reached certain conclusions about this.

[00:13:26] Speaker 06:
What relevance do those have?

[00:13:29] Speaker 01:
Those findings are in fact central to the notion that Mr. Doherty was in fact receiving workers' compensation.

[00:13:36] Speaker 01:
For example, the mere fact that the office had jurisdiction to hear his claim reflects that the true nature of these payments was workers' compensation.

[00:13:44] Speaker 01:
Additional factors that occurred at the conference reinforced that conclusion.

[00:13:48] Speaker 01:
First, the office determined that Mr. Doherty needed to be compensated for the benefits that had dropped below 66 and two-thirds percent, and that is the amount that is mandated by state workers' compensation law.

[00:14:02] Speaker 01:
The OWC also found that Turner needed to reimburse Mr. Doherty for medical costs, which again is a benefit that is expressly provided for in workers' compensation law.

[00:14:13] Speaker 06:
Did Turner ever

[00:14:15] Speaker 06:
challenge or seek review of those findings?

[00:14:20] Speaker 01:
There's nothing in the record to indicate that.

[00:14:22] Speaker 01:
In fact, the findings indicate that they were accepted as an uncontroverted final order.

[00:14:28] Speaker 01:
Turner additionally was represented by council at those conferences and so almost cannot find ignorance about the outcome of those conferences given that they were represented and the orders were adopted uncontroverted.

[00:14:43] Speaker 06:
Set at 465, where is that?

[00:14:47] Speaker 01:
Yes, 463 to 68 is the findings of the conferences.

[00:14:54] Speaker 04:
Thank you.

[00:14:57] Speaker 04:
Can you address the following hypothetical?

[00:15:00] Speaker 04:
Imagine that an employer forms an illegal contract that violates child labor.

[00:15:10] Speaker 04:
And that contract is void of initiative.

[00:15:15] Speaker 04:
Nevertheless, the employee minor, the minor does the work and the employer pays.

[00:15:24] Speaker 04:
And then the employer creates a W two or 10 99 or whatever and tells the IRS, we paid this person this much.

[00:15:36] Speaker 04:
Clearly the employer has broken the law by, you know,

[00:15:39] Speaker 04:
engaging in employing child labor.

[00:15:43] Speaker 04:
Do you think that they have violated the statute that's at issue in this case?

[00:15:49] Speaker 01:
Because the most relevant statute to this case is 26 USC 7434A, which is concerned with the willful filing of fraudulent information returns.

[00:16:00] Speaker 01:
If those information returns

[00:16:05] Speaker 01:
penoted false representations made with at least reckless disregard for their veracity, that would constitute a violation of the statute.

[00:16:13] Speaker 04:
Yes, I'm wondering if you think that they would do that, in my opinion.

[00:16:22] Speaker 01:
If the representation of the children as the employees was false, then that would be a violation of the statute.

[00:16:29] Speaker 04:
It was false in the sense that it was illegal.

[00:16:32] Speaker 04:
It wasn't false.

[00:16:35] Speaker 04:
in the sense that the children actually did the work and the employer actually.

[00:16:43] Speaker 01:
In that case, that would still be a violation of the statute.

[00:16:46] Speaker 01:
OK.

[00:16:46] Speaker 04:
And then why is that?

[00:16:51] Speaker 05:
I don't know where that noise is coming from either.

[00:16:55] Speaker 01:
It would still be a violation of the statute because the underlying conduct was illegal.

[00:17:03] Speaker 01:
Thank you.

[00:17:04] Speaker 01:
I appreciate that answer.

[00:17:09] Speaker 01:
Because there is a genuine dispute as to Turner's willfulness, regardless of whether this court chooses to examine willfulness pursuant to an intent and knowledge framework or reckless disregard, a reasonable jury could conclude that Turner violated 26 USC 7434.

[00:17:22] Speaker 01:
Thank you.

[00:17:25] Speaker 08:
Thank you.

[00:17:36] Speaker 08:
Morning, Your Honors.

[00:17:38] Speaker 00:
May it please the court, my name is Denise Trujado, and I represent Turner Broadcasting System, the appellee in this matter.

[00:17:45] Speaker 00:
To be clear, Your Honors, to date, there has never been a finding by the IRS, any administrative agency, or any court, or the court below, that Turner made a false statement, or even a mistake, with respect to the W-2s filed on behalf of Mr. Doherty.

[00:18:02] Speaker 00:
To be sure, Your Honors, Mr. Doherty himself testified that his W-2s for 2014, 2015, and 2016 accurately reflected the income paid by Turner.

[00:18:14] Speaker 00:
And in 2016, the IRS validated after Mr. Doherty himself filed his own W-2 that Turner's W-2 was accurate.

[00:18:25] Speaker 00:
And that, the way in which Turner calculated Mr. Doherty's income for 2015 was the same way in the same manner that it calculated Mr. Doherty's income.

[00:18:34] Speaker 04:
For the money in question, was Turner paying him workers' comp?

[00:18:41] Speaker 00:
So what Mr. Doherty was paid is short-term disability, which is allowed on the DC Workers' Compensation Act as income replacement.

[00:18:48] Speaker 00:
So the first 10 weeks, he's actually paid instead of 66 and two-thirds, he's paid 100% of his staff.

[00:18:54] Speaker 04:
thereafter.

[00:18:55] Speaker 04:
I remember the percentages.

[00:18:58] Speaker 04:
Uh, if if we think that Turner was legally required, pay him workers comp.

[00:19:11] Speaker 04:
What do we do with that?

[00:19:14] Speaker 00:
That's not the issue.

[00:19:16] Speaker 00:
The issue before the court is not whether or not Turner should have legally paid Mr. Doherty's conversation.

[00:19:23] Speaker 00:
The issue is whether or not Turner willfully filed fraudulent information.

[00:19:28] Speaker 00:
Similar to the hypothetical that you posed earlier, Your Honor, even if the earlier conduct is unlawful, Turner did not have knowledge of that.

[00:19:37] Speaker 00:
They filed statements that they believed were accurate with the IRS.

[00:19:43] Speaker 00:
They did not willfully file fraudulent information.

[00:19:46] Speaker 06:
What was the whole purpose of going before the Office of Workers Compensation?

[00:19:50] Speaker 00:
So Mr. Doherty has several pending claims with the Office of Workers Compensation.

[00:19:55] Speaker 03:
Could you repeat that?

[00:19:56] Speaker 03:
I'm sorry.

[00:19:58] Speaker 03:
Repeat what you just said, please.

[00:20:00] Speaker 00:
Mr. Doherty has several claims for the Office of Workers Compensation, Your Honor.

[00:20:04] Speaker 00:
And these were some of them, and it was Mr. Doherty's appeal.

[00:20:08] Speaker 00:
The specific ones at issue did not address the taxability of those payments, just that he was entitled to workers compensation.

[00:20:16] Speaker 00:
I believe he had at that point maybe four or five claims.

[00:20:21] Speaker 00:
Importantly though, Your Honors, the decisions of the Office of Workers Compensation for D.C.

[00:20:27] Speaker 00:
came after the IRS validated Mr. Doherty's 2015 W-2 return.

[00:20:35] Speaker 06:
What do you mean they validated the return?

[00:20:38] Speaker 00:
So Turner filed W-2s for Mr. Doherty in 2014, 2015, and 2016.

[00:20:44] Speaker 00:
Mr. Doherty filed his own separate W-2 for 2015, appealing his W-2 that he believed to be incorrect.

[00:20:54] Speaker 00:
IRS asked Turner to validate it.

[00:20:57] Speaker 00:
They validated the IRS, agreed that it was correct.

[00:21:00] Speaker 06:
Are you claiming that that's some sort of legal preclusion of his claim?

[00:21:05] Speaker 00:
No, Your Honor, I'm not saying it's legal preclusion.

[00:21:07] Speaker 00:
I believe it's evidence to show that Turner did not engage in fraud, did not knowingly file a false statement with the IRS.

[00:21:17] Speaker 06:
Had the IRS said this is wrong, then... Isn't the evidence that the worker's compensation, the D.C.

[00:21:26] Speaker 06:
Office of Worker's Compensation was exercising jurisdiction over this

[00:21:35] Speaker 06:
and telling Turner what should be paid isn't that just as relevant then?

[00:21:40] Speaker 00:
No your honor I don't believe so because the office of workers compensation determinations did not go to the taxability of the compensation or what should it goes to what it is and what it is determines its taxability.

[00:21:53] Speaker 00:
Well under underlying yes the 66 and two-thirds Mr. Doherty was paid above the 66.

[00:21:57] Speaker 03:
What I'm wondering is this is a very unfair question I'm going to ask you anyway why is Turner avoiding

[00:22:05] Speaker 03:
paying Worker's Comp under the regular Worker's Comp program in the first place?

[00:22:09] Speaker 00:
They weren't avoiding it, Your Honor.

[00:22:10] Speaker 00:
The payments to employees is actually more beneficial to employees.

[00:22:15] Speaker 00:
So under the old, to be clear, Turner Broadcasting System does not actually exist anymore, but under this, when it was and Mr. Dougherty was employed, the short-term disability program paid to employees was above and beyond what was required of the Worker's Compensation Act.

[00:22:33] Speaker 00:
So it's above and beyond the 66 and two thirds that employees were to be paid under the DC Work Compensation Act.

[00:22:40] Speaker 04:
I could imagine that the employee is better off, although I know that's highly disputed, and that Turner is better off in terms of their tax liability, but that the reason they're both better off is because Turner's supposed to be paying

[00:22:59] Speaker 04:
taxes that it's not paying, which means even though Turner is better off and the employee is better off, the U.S.

[00:23:07] Speaker 04:
Treasury is worse off.

[00:23:10] Speaker 00:
So, Your Honor, I don't think that Turner is better off because they're paying more taxes.

[00:23:14] Speaker 00:
We do see it as a because part of the scheme is that they are paying more income replacement.

[00:23:21] Speaker 00:
And while there is some write-off on the back end, I thought it was disputed.

[00:23:26] Speaker 03:
They pay 100% for a period of time, but then in the back end, they're paying 60% instead of 66%.

[00:23:32] Speaker 00:
At the end, they do pay that additional 6%, Your Honor.

[00:23:36] Speaker 00:
And that's what the Office of Workers' Compensation stated with Mr. Dougherty.

[00:23:40] Speaker 00:
But I know that generally speaking, they do pay the 66.

[00:23:42] Speaker 03:
Is it common now that there are plans to proceed the Workers' Compensation Act with employers?

[00:23:51] Speaker 03:
Many decades ago in a different state,

[00:23:54] Speaker 03:
I knew a whole lot about workers' compensation.

[00:23:56] Speaker 03:
All the employers I ever knew either paid their workers' compensation or they faced the legal consequences of not having it.

[00:24:07] Speaker 03:
Is this a common thing to have some other plan that supersedes workers' comp?

[00:24:13] Speaker 00:
I'm not familiar with most employers' plans, Your Honor.

[00:24:15] Speaker 00:
I do know that Turner did pay more.

[00:24:17] Speaker 00:
I have seen other employers also pay more than what is given under workers' comp.

[00:24:22] Speaker 00:
And the reason is, I believe, in some cases, immediately upon being injured, Mr. Jordan went on a short-term disability.

[00:24:29] Speaker 00:
In some cases, it takes a long time to go through the appeals process.

[00:24:34] Speaker 00:
For example, in D.C., the Department of Employment Services to find that your injury is workplace related.

[00:24:40] Speaker 04:
I thought it was undisputed that Turner got tax benefit by structuring things the way that they are structured.

[00:24:46] Speaker 00:
That is undisputed in an interrogatory response.

[00:24:49] Speaker 00:
You stated that.

[00:24:49] Speaker 04:
Then it goes back to my question.

[00:24:51] Speaker 04:
If they were if they were

[00:24:53] Speaker 04:
legally required to be doing workers' comp.

[00:24:55] Speaker 04:
They didn't do what they were legally required to do.

[00:24:57] Speaker 04:
And as a result, they paid fewer taxes.

[00:25:02] Speaker 04:
Isn't the loser here the U.S.

[00:25:04] Speaker 04:
Treasury?

[00:25:06] Speaker 00:
No, Your Honor, I don't think so because I think that at the same token,

[00:25:12] Speaker 00:
Because I wouldn't know the figures of the U.S.

[00:25:13] Speaker 00:
Treasury, to be honest, to round it out to suggest that Turner was somehow had a motive to make the U.S.

[00:25:19] Speaker 00:
Treasury lose out.

[00:25:20] Speaker 00:
I don't think that's the case here.

[00:25:22] Speaker 00:
I think ultimately what this case boils down to is whether or not Turner had knowledge of that.

[00:25:28] Speaker 00:
They did not.

[00:25:29] Speaker 00:
If.

[00:25:31] Speaker 04:
If you lose this case.

[00:25:36] Speaker 04:
Well, could there be many, many more Mr. Doherty's who file suits like this or are you going to be on the hook for a long.

[00:25:45] Speaker 00:
Your honor, I don't believe so.

[00:25:47] Speaker 00:
The issue adhere the issue is a DC workers compensation act.

[00:25:50] Speaker 00:
I'm not familiar with how the Turner broadcasting short term disability.

[00:25:55] Speaker 00:
plan interacted, I do know that they believe that they were fully compliant with the DC Workers Compensation Act.

[00:26:02] Speaker 00:
And even if they weren't, Your Honors, the issue here is whether or not Turner willfully filed fraudulent information with the IRS.

[00:26:10] Speaker 06:
But willful can mean in this context, just knowing that the statement that you were making was false and making it for

[00:26:20] Speaker 06:
or making it despite in a reckless manner because you had ample reason to believe it's false, but yet making it anyway.

[00:26:31] Speaker 00:
Shuri Anderson, there's no evidence.

[00:26:32] Speaker 00:
There's zero evidence on the record that Turner knew.

[00:26:36] Speaker 04:
I mean, I think zero is still my win, but I think zero is a stretch.

[00:26:41] Speaker 04:
I think it's a stretch.

[00:26:42] Speaker 06:
They told him this is work.

[00:26:44] Speaker 06:
Go ahead.

[00:26:44] Speaker 06:
I think there's a decent argument you could grant summary judgment from the authority.

[00:26:50] Speaker 06:
I mean, if the statement is false, and you've been put on notice, ultimate time, you know, many times that these are workers compensation.

[00:27:09] Speaker 06:
But you instead code them that they're not.

[00:27:13] Speaker 06:
Why isn't that if we, it all stems on obviously the finding

[00:27:19] Speaker 06:
that they are workers compensation, but if they are, why isn't that reckless disregard for the truth of the matter?

[00:27:27] Speaker 00:
Sure.

[00:27:27] Speaker 00:
Your honors, let me first start with the emails.

[00:27:30] Speaker 00:
Those emails came from one individual in risk management.

[00:27:34] Speaker 00:
There's no evidence and I can tell you, your honors, Mr. Miller had no responsibility for compensation.

[00:27:40] Speaker 00:
In fact, in that same email, he said, let us discuss what the compensation benefit

[00:27:46] Speaker 00:
pay is going to work out.

[00:27:47] Speaker 00:
Mr. Miller's email in of itself does not show knowledge that Turner, as a larger company, knew that with respect to Mr. Dougherty, it was filing, willfully filing fraudulent information with the IRS.

[00:28:01] Speaker 04:
Is his email distort company policy or accurately reflected?

[00:28:07] Speaker 00:
It actually distorts company policy and the law.

[00:28:10] Speaker 00:
No disrespect to Mr. Miller, it was incorrect.

[00:28:13] Speaker 00:
And if you saw in the email, he actually said it will be coded workers' compensation, but then at the same time said that they would tax the income.

[00:28:20] Speaker 00:
So Mr. Miller, with no disrespect to him, did not really understand what he was speaking about.

[00:28:25] Speaker 00:
And he was just in risk management.

[00:28:28] Speaker 00:
Separately, Your Honors, with respect to

[00:28:31] Speaker 00:
the knowledge issue and stating that there was repeated emails from Mr. Doherty and he was raising his hand.

[00:28:38] Speaker 00:
Again, Mr. Doherty has admitted that his W-2s accurately reflected the income he received.

[00:28:45] Speaker 00:
The IRS has validated his 2015.

[00:28:48] Speaker 00:
Mr. Doherty did not further appeal.

[00:28:50] Speaker 00:
He did not appeal his 2014 W-2s.

[00:28:53] Speaker 00:
He did not appeal his 2016 W-2s.

[00:28:55] Speaker 00:
There is no evidence that Turner

[00:28:59] Speaker 00:
willfully filed fraudulent information with respect to whether or not knowledge relates to intent here.

[00:29:07] Speaker 00:
Even under a reckless disregard standard, the evidence doesn't rise to that level.

[00:29:14] Speaker 06:
I need to take a brief recess.

[00:29:18] Speaker 08:
Yes, Your Honor.

[00:29:21] Speaker 08:
This Honor report is again in session.

[00:29:26] Speaker 06:
My apologies, Mr. Aldo.

[00:29:27] Speaker 06:
You may continue.

[00:29:29] Speaker 00:
My apologies, Your Honor.

[00:29:30] Speaker 00:
I'm not quite sure where we were.

[00:29:32] Speaker 00:
So I'm going to go to another point that was raised by the amicus.

[00:29:37] Speaker 00:
And Judge Walker asked the question, if the underlying law is violated, does that equate to a violation of IRC 743 and is our position that it does not?

[00:29:51] Speaker 00:
Because a violation of an underlying law

[00:29:55] Speaker 00:
Does not equate to knowledge and to the intentional and willful filing of fraudulent information.

[00:30:04] Speaker 00:
Under with the IRS, so even if there is that underlying violation and for example, hypothetically, if you were defined.

[00:30:12] Speaker 00:
if a company were to violate the underlying law, did not know about violation, or perhaps knew, but did not intentionally file fraudulent information with the IRS, there would not be a violation of 743.

[00:30:25] Speaker 04:
I think what complicates it for me in my head is it's sort of the mislabeling that makes it illegal.

[00:30:34] Speaker 04:
And so then it's a little bit odd to say, well, the mislabeling that made it illegal for tax purposes

[00:30:41] Speaker 04:
is not fraudulent for tax purposes.

[00:30:46] Speaker 00:
Well, to be clear, there's never been any finding that Turner short-term disability program is fraudulent or illegal or violates the DC workers' compensation.

[00:30:56] Speaker 04:
But I'm exploring what might be a way for you to win, even if I disagree with you about that.

[00:31:01] Speaker 04:
Correct.

[00:31:01] Speaker 04:
But I'm not sure it's a way for you to win because I think there probably is a difference between my

[00:31:07] Speaker 04:
child labor law, um, hypothetical and this, because here the thing that makes the original law breaking happen is so interconnected with how it's, how it's reported on the, on the tax.

[00:31:23] Speaker 00:
It would be interconnected if there was not the reality here is an evidence before the lower court and before your honors.

[00:31:29] Speaker 04:
So do you think, I mean, maybe, do you think that, uh, the, the,

[00:31:36] Speaker 04:
district court should be reversed here to be sent back.

[00:31:40] Speaker 04:
If we find that there's a genuine dispute material fact regarding Turner's knowledge about whether it should have been paying him workers.

[00:31:59] Speaker 00:
No, your honors, because knowledge is only one piece of the froth, right?

[00:32:04] Speaker 00:
So if

[00:32:05] Speaker 00:
If you were to accept that Turner had knowledge, or if you were to accept that, you'd also just show that they was fraudulently filed with IRS, you'd also have to show an intent to deceive and a false misrepresentation.

[00:32:23] Speaker 00:
You don't get to that.

[00:32:26] Speaker 00:
if there's even an underlying violation.

[00:32:29] Speaker 00:
To be clear, to date, there has been no finding by anyone in DC, Department of Employment Services, Office of Workers Compensation, IRS, or the District Court that Turner's short-term disability program violated DC Workers Compensation Act.

[00:32:44] Speaker 00:
Indeed, the issue here, Your Honors, is whether or not Turner willfully filed fraudulent information with the IRS.

[00:32:52] Speaker 00:
And to date, there has been no finding by the IRS,

[00:32:56] Speaker 00:
the lower court, or any administrative agency.

[00:32:59] Speaker 06:
But I don't think that's required by the statute.

[00:33:03] Speaker 00:
Whether there was another finding?

[00:33:04] Speaker 06:
Yeah.

[00:33:06] Speaker 00:
It's not, Your Honor, it's just evidence to show that there is to date no evidence that they did.

[00:33:11] Speaker 00:
So, Your Honor, with respect to the filings that have been made, Mr. Doherty could have appealed them, and once respect he somewhat did by filing his own W-2 and Turner's was valid.

[00:33:24] Speaker 00:
There's been no finding

[00:33:26] Speaker 00:
any appeal, anything that Turner filed willfully filed fraudulent information and there's in our minds that's that's filing the lawsuit essentially was is that appeal were jury to make that well originally he could have also gone to the IRS and our point is is at this time we do not see any evidence on the record and there is no evidence.

[00:33:53] Speaker 03:
Where are you talking about no finding?

[00:33:56] Speaker 03:
The case before us here is a summary judgment case.

[00:34:00] Speaker 03:
There are never findings.

[00:34:03] Speaker 00:
Correct, Your Honor.

[00:34:03] Speaker 00:
I was talking about the Internal Revenue Service.

[00:34:08] Speaker 00:
There was no findings, but it was incorrect.

[00:34:10] Speaker 03:
What you're saying is that the statement was essentially factually correct and therefore there was no fraud.

[00:34:17] Speaker 04:
Correct, Your Honor.

[00:34:22] Speaker 04:
Assume you're right about maybe this is DC specific and Turner is not going to be facing worse problems than Mr. Doherty, we rule against you, but might've settled.

[00:34:40] Speaker 00:
Thank you, Your Honors.

[00:34:43] Speaker 06:
All right.

[00:34:44] Speaker 06:
If there's no further questions, we have your argument.

[00:34:48] Speaker 00:
May I briefly just say, Judge Santel, in 2006, you were a court judge for me with Justice Thomas and Judge Talman at Catholic University.

[00:34:55] Speaker 00:
So it's a privilege to argue with you today.

[00:34:58] Speaker 00:
Thank you.

[00:35:01] Speaker 06:
Thank you.

[00:35:02] Speaker 06:
Thank you, counsel.

[00:35:05] Speaker 06:
Did counsel for amicus have any time left?

[00:35:10] Speaker 06:
We'll give you three minutes for rebuttal.

[00:35:25] Speaker 01:
Thank you.

[00:35:27] Speaker 01:
First, to respond to it, Turner's counsel's argument that Mr. Doherty's W-2s were accurate because they reflected the total amounts that he was paid.

[00:35:35] Speaker 01:
In fact, that is the very basis of their inaccuracy because a W-2 asks for gross taxable income, not the total amount that an employee is paid.

[00:35:45] Speaker 01:
And so the fact that they accurately represented the total amounts is what constitutes their inaccuracy.

[00:35:52] Speaker 01:
Second, as for knowledge, as an initial matter, knowledge is an inquiry that is best suited for a jury on remand.

[00:35:59] Speaker 01:
All Mr. Dougherty must establish here is a genuine dispute of material fact that Turner had knowledge as to the fact that he was receiving non-taxable workers' compensation that was improperly being taxed.

[00:36:12] Speaker 01:
That knowledge is evident not only from the emails to Mr. Doherty, but also Mr. Doherty's repeated emails to the company notifying it to that effect.

[00:36:22] Speaker 01:
Additionally, Turner's own policies and procedures reflected that the true nature of these payments was workers' compensation.

[00:36:28] Speaker 01:
For example, it was only in Turner's workers' compensation policy, not its short-term disability policy, that an employee was entitled to medical costs reimbursements, which is what the Office of Workers' Compensation concluded that Mr. Doherty was entitled to, and there's nothing in the record to indicate that Mr. Doherty did not receive those reimbursements.

[00:36:51] Speaker 01:
Third, the DC Workers' Compensation Act requires at a minimum that Mr. Doherty receives 66 and two-thirds percent of his salary tax-free.

[00:37:02] Speaker 01:
And so the mere fact that regardless of whether Turner was paying at times 100% of his salary does not change the fact that he was entitled to 66 and two-thirds percent of that amount tax-free.

[00:37:19] Speaker 01:
And third, the IRS has not made a determination as to the correctness of Mr. Doherty's W-2s.

[00:37:27] Speaker 01:
The letter from the IRS to Turner was simply the IRS notifying Turner that Mr. Doherty had disputed his W-2s.

[00:37:35] Speaker 01:
It did not constitute any sort of certification.

[00:37:37] Speaker 01:
In fact,

[00:37:38] Speaker 01:
All it did was enable Turner to itself certify that it thought the W-2s were correct.

[00:37:44] Speaker 01:
It did not represent a determination from the IRS that Mr. Doherty's W-2s were incorrect.

[00:37:51] Speaker 01:
To conclude, this court should reverse and remand.

[00:37:55] Speaker 01:
Thank you.

[00:37:56] Speaker 06:
Thank you.

[00:37:58] Speaker 06:
Ms.

[00:37:58] Speaker 06:
Kingham, you were appointed by the court to

[00:38:04] Speaker 06:
represent the interests of in this case, and you played yourself quite well.

[00:38:09] Speaker 06:
Thank you.

[00:38:11] Speaker 06:
And the Georgetown.

[00:38:14] Speaker 06:
Thank you.

[00:38:14] Speaker 06:
We'll take the matter