Ashley C. Scott v. United States of America, Treasury Department, Internal Revenue Service

[DO NOT PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 21-13098
____________________
ASHLEY C. SCOTT,
Plaintiff- Counter Defendant Appellant,
versus
UNITED STATES OF AMERICA, TREASURY DEPARTMENT,
INTERNAL REVENUE SERVICE,
Defendant-Third Party Plaintiff – Counter
Claimant Appellee.
____________________
Appeal from the United States District Court
for the Middle District of Florida
D.C. Docket No. 3:12-cv-00494-BJD-MCR
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2 Opinion of the Court 20-13121
____________________
Before J ORDAN, R OSENBAUM , and NEWSOM , Circuit Judges.
PER CURIAM:
This case is on its third trip to our Court. In the most recent
round in the district court, the court held a jury trial on whether
Defendant-Appellant Ashley Scott had sufficient control over her
father’s company to have been able to avoid the company’s non-
payment of its payroll taxes. The jury found that she did. Because
we cannot conclude that no rational trier of fact could have reached
that same conclusion based on the evidence in the record, and be-
cause we cannot conclude that the district court abused its discre-
tion by denying Scott’s motion for a new trial, we affirm.
I.
Because we are reviewing the sufficiency of the evidence
supporting the jury’s verdict, we set forth the facts in the light most
favorable to the verdict.
See Mamani v. Sánchez Bustamante, 968
F.3d 1216, 1230 (11th Cir. 2020);
see also Insurance Co. of N. Am.
v. Valente, 933 F.2d 921, 923 (11th Cir. 1991) (“[W]hen a new trial
is sought on the basis that the verdict is against the weight of the
evidence, our review is particularly stringent to protect the liti-
gant’s right to a jury trial.”).
Scott’s father founded Scott Air in 1992. The company spe-
cialized in servicing and installing heating and air-conditioning
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20-13121 Opinion of the Court 3
units. Within a decade after the company’s founding, Scott had
assumed the role of corporate secretary.
Scott also had a hand in the company’s financial affairs, and
she described herself as the company’s “Accounting Manager” on
her 2004 tax return. Although Scott’s father was generally respon-
sible for paying major operating expenses, Scott sometimes
stepped in to pay creditors. Witnesses also described her as the
“point person” for the company’s outside accountant. And the
company’s sole bank account listed her as one of three signatories
(the other two were her father and brother).
Besides these responsibilities, Scott was in charge of the
company’s payroll. Between 2004 and 2007, she signed most, if not
all, the company’s payroll checks. And during that period, Scott
withheld amounts from employees’ wages as required and sent
checks both to (1) the Florida Department of Revenue, thus satis-
fying some employees’ child-support obligations, and (2) the Inter-
nal Revenue Service (“IRS”), thus satisfying a lien against another
employee’s wages.
But during that same period, the company stopped paying
its payroll taxes to the IRS. The IRS then invoked 26 U.S.C. § 6672,
under which a person responsible for paying a company’s payroll
taxes can be held personally liable when those taxes go unpaid, to
assess a penalty against Scott to the tune of $680,472.28. That
amount reflected the company’s unpaid payroll taxes for thirteen
quarters between 2004 and 2007. In response to that assessment,
Scott mailed the government a check for $300, covering the
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4 Opinion of the Court 20-13121
amount owed by one employee for one quarter, and requested that
the government abate the remainder of the assessment against her.
When the government failed to respond to Scott’s request
for an abatement of the penalty assessed against her, she sued. She
sought a refund of the $300 and a declaration that she was not liable
for the company’s unpaid payroll taxes.
In its answer, the government asserted a counterclaim
against Scott for the full amount of the assessment. The govern-
ment then moved for partial summary judgment, arguing that
Scott was a “responsible person” during all thirteen quarters be-
tween 2004 and 2007 and that she “willfully” failed to pay the com-
pany’s taxes during all four quarters in 2007.
The district court granted the government’s motion in full,
leaving the jury to decide only whether Scott “willfully” failed to
pay the company’s payroll taxes during the remaining nine quar-
ters (i.e., all quarters except for the four in 2007). After a three-day
trial, the jury found that Scott willfully failed to pay the company’s
taxes for six of the nine quarters at issue.
Scott then appealed, arguing that the district court erred by
granting summary judgment on both issues: (1) that Scott was a
responsible person for all thirteen quarters between 2004 and 2007
and (2) that she willfully failed to pay taxes for all four quarters in
2007.
See Scott v. United States, 825 F.3d 1275, 1277 (11th Cir.
2016). Although we affirmed the district court’s order granting
summary judgment on the willfulness issue, we reversed on the
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20-13121 Opinion of the Court 5
responsible-person issue. Whether Scott was a responsible person
during the thirteen quarters between 2004 and 2007, we held, was
“too close to be decided on summary judgment.”
Id. at 1281. Still,
we noted that “evidence in the record” would permit a jury to find
“that Scott was a responsible person” during the thirteen quarters
at issue.
Id.
On remand, the district court held a second jury trial to de-
termine whether Scott was a “responsible person” during the ten
quarters for which her willfulness had already been determined.
Although the jury concluded that Scott was not a responsible per-
son during seven of those quarters, it also found that she was a re-
sponsible person during the third quarter of 2005, the fourth quar-
ter of 2006, and the second quarter of 2007.
Scott appealed again, this time arguing that the district court
erred by refusing to give a jury instruction she proposed.
See Scott
v. United States, 776 F. App’x 612, 613 (11th Cir. 2019). Once again,
we agreed with Scott, holding that the district court’s failure to give
Scott’s proposed jury instruction constituted plain error.
Id.
On remand, the district court held a third jury trial. This
time, the jury considered whether Scott was a responsible person
during the third quarter of 2005, the fourth quarter of 2006, and the
second quarter of 2007. The jury returned a verdict in the govern-
ment’s favor for the third quarter of 2005 and the fourth quarter of
2006, finding that Scott was a responsible person during those quar-
ters. But the jury also returned a verdict in Scott’s favor for the
second quarter of 2007, finding that Scott was not a responsible
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6 Opinion of the Court 20-13121
person during that quarter. Scott then renewed her motion for
judgment as a matter of law under Federal Rule of Civil Procedure
50(b) and, in the alternative, moved for a new trial under Rule 59.
She argued that “there was insufficient evidence presented to the
jury upon which a reasonable or rational jury could determine that
Scott was a ‘responsible person.’” The district court denied both
motions. Scott now appeals, reiterating her claim that the “record
is devoid of any facts or indicia establishing responsibility.”
II.
We review de novo a district court’s ruling on a renewed
motion for judgment as a matter of law, applying the same stand-
ard as that court.
Mamani, 968 F.3d at 1230. In so doing, we review
the record in the light most favorable to the party that prevailed at
trial, drawing all inferences in its favor.
Id. We will overturn the
jury’s verdict only when “no rational trier of fact could have
reached the same conclusion based upon the evidence in the rec-
ord.”
Id. (quoting
Nat’l Fire Ins. Co. of Hartford v. Fortune Constr.
Co., 320 F.3d 1260, 1267 (11th Cir. 2003)).
When a losing party moves for a new trial, on the other
hand, we review the district court’s denial of that motion for abuse
of discretion.
McGinnis v. Am. Home Mortg. Servicing, Inc., 817
F.3d 1241, 1254–55 (11th Cir. 2016). “Deference to the district
court ‘is particularly appropriate where a new trial is denied and
the jury’s verdict is left undisturbed.’”
Id. (quoting
Middlebrooks
v. Hillcrest Foods, Inc., 256 F.3d 1241, 1247–48 (11th Cir. 2001)).
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III.
The Internal Revenue Code obliges employers to withhold
funds for federal Social Security and income taxes from employees’
paychecks.
See 26 U.S.C. §§ 3102, 3402. That money “shall be held
in a special fund in trust for the United States.”
Id. § 7501(a). When
an employer fails to pay those trust-fund taxes, the IRS may assess
a penalty against “(1) a responsible person (2) who has willfully
failed to perform a duty to collect, account for, or pay” those trust-
fund taxes.
Thosteson v. United States, 331 F.3d 1294, 1299 (11th
Cir. 2003) (citing 26 U.S.C. § 6672).
The second prong of that test is not at issue in this appeal.
See Scott, 825 F.3d at 1282 (affirming the district court’s order
granting summary judgment, which found that Scott acted will-
fully during all four quarters in 2007, and the jury’s verdict finding
that Scott acted willfully during six of the nine remaining quarters).
The only question we must answer is whether to disturb the jury’s
finding that Scott was a responsible person during the third quarter
of 2005 and the fourth quarter of 2006.
Whether Scott was a responsible person during those quar-
ters turns on whether she “had sufficient control over” Scott Air’s
“affairs to avoid non-payment of the employment taxes.”
Id. at
1279 (citation omitted). That test stems from our broad interpre-
tation of the Internal Revenue Code, which “defines” a responsible
person to include “an officer or employee of a corporation, or a
member or employee of a partnership, who as such officer, em-
ployee, or member is under a duty” to pay the trust-fund taxes.
Id.
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8 Opinion of the Court 20-13121
(quoting 26 U.S.C. § 6671(b)). From that language, we have dis-
cerned “that responsibility is ‘a matter of status, duty, and author-
ity.’”
Id. (quoting
Mazo v. United States, 591 F.2d 1151, 1156 (5th
Cir. 1979)).
This analysis is “necessarily fact-intensive.”
Id. For that rea-
son, we determine whether a person is a responsible person “on a
case-by-case basis.”
Neckles v. United States, 579 F.2d 938, 940 (5th
Cir. 1978).1 Factors that guide this inquiry “include the holding of
corporate office, control over financial affairs, the authority to dis-
burse corporate funds, stock ownership, and the ability to hire and
fire employees.”
Scott, 825 F.3d at 1279 (quoting
George v. United
States, 819 F.2d 1008, 1011 (11th Cir. 1987)). No one factor is dis-
positive, and we “have generally taken a broad view of who consti-
tutes a responsible person.”
Smith v. United States, 894 F.2d 1549,
1553 (11th Cir. 1990). And “more than one person may be a re-
sponsible officer of the corporation under § 6672.”
Thibodeau v.
United States, 828 F.2d 1499, 1503 (11th Cir. 1987).
IV.
Applying that analysis, we reject Scott’s arguments that no
rational trier of fact could find that Scott was a responsible person
and that the district court abused its discretion by denying her mo-
tion for a new trial. To begin with, the first factor—the holding of
1 In
Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc),
this Court adopted as binding precedent all the decisions of the former Fifth
Circuit handed down prior to the close of business on September 30, 1981.
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20-13121 Opinion of the Court 9
corporate office—supports the jury’s finding that Scott was a re-
sponsible person because Scott served as Scott Air’s corporate sec-
retary. And while Scott argues that she “had no idea” what it
meant to be a corporate secretary, Scott and her father were the
only contact persons for the company’s outside accountant. In-
deed, that accountant testified that he shared information with
Scott that he would not share with any other employee at Scott Air.
The accountant even notified Scott that the company owed payroll
taxes several times between 2005 and 2007. Because “responsibility
is ‘a matter of status, duty, and authority,’”
Scott, 825 F.3d at 1279
(quoting
Mazo, 591 F.2d at 1156), it’s irrelevant that Scott “had no
idea” what it meant to be a corporate secretary. All that matters is
that Scott’s status, duty, and authority at Scott Air made her re-
sponsible—a conclusion supported by the fact that the accountant
confided in her about company business.
The second and third factors—control over financial affairs
and authority to disburse corporate funds—also support the jury’s
finding that Scott was a responsible person. For starters, the record
shows that Scott had discretionary authority to pay for some of the
company’s operating expenses. Scott testified, for example, that
she could shop for business supplies without first asking for her fa-
ther’s permission. Those shopping runs cost anywhere from $200
to $1,000. The company’s general manager also testified about a
time when he brought his phone bill to Scott, who then “made a
determination” to pay that bill. Another employee told a similar
story about his own phone bill. That employee also remembered
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that Scott sometimes signed checks to pay the company’s vendors.
In fact, that employee remembered watching Scott and her father
call the IRS together to pay the company’s payroll taxes on at least
one occasion.
On that score, Scott was in charge of the company’s payroll.
In that role, she input new employees’ W-4 information—that is,
the information that enables an employer to “withhold the correct
federal income tax” from an employee’s paycheck2—into the com-
pany’s automated payroll system. But it was not just W-4 infor-
mation that Scott plugged into that system. She also caused the
system to account for, for example, employees’ child-support or-
ders, which the company received from the Florida Department of
Revenue. Using all that information, the system then generated a
report that stated the amounts to withhold from each employee’s
paycheck.
Sometimes, Scott paid that amount to the proper govern-
ment agency. For instance, she used those computer-generated re-
ports to withhold funds from employees’ paychecks to cover their
child-support obligations, before paying those funds to the Florida
Department of Revenue. As Scott explained at trial, “when the
payroll was done, I would write a check to [the Florida Department
2
About Form W-4, Employee’s Withholding Certificate, Internal Revenue
Serv., https://www.irs.gov/forms-pubs/about-form-w-4 (last visited Oct. 31,
2022).
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of Revenue] for the amount that that employee was due to pay in
child support for the week.”
The process for paying the company’s payroll taxes was no
different. Relying on the computer-generated reports and infor-
mation from the company’s accountant, Scott filled out and signed
the company’s payroll tax returns during the third quarter of 2005
and the fourth quarter of 2006. And on the same day that Scott
signed the payroll tax return for the fourth quarter of 2006, she
signed a check to the IRS to pay for the company’s unemployment
taxes. But Scott never signed a check to pay for the company’s
payroll taxes.
From that evidence, two facts emerge. First, Scott’s testi-
mony about writing checks to the Florida Department of Revenue
proves that she “would write a check” (or at least that she could
write a check) to the government when the computer-generated
report displayed that a balance was due. That fact finds further
support from Scott’s testimony about writing a check to the IRS to
satisfy the company’s unemployment-tax obligations. Second,
Scott signed the company’s payroll tax returns during the third
quarter of 2005 and the fourth quarter of 2006, proving that she
knew a balance was due for those quarters. So the bottom line is
the record contained evidence that Scott knew about the com-
pany’s unpaid payroll taxes and failed to pay them, even though
she wrote checks to satisfy similar obligations during the same time
frame. And this evidence supports the jury’s finding that Scott had
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12 Opinion of the Court 20-13121
“sufficient control over” Scott Air’s “affairs to avoid non-payment
of the employment taxes.”
Scott, 825 F.3d at 1281.
The fourth factor—stock ownership—neither supports nor
undermines the jury’s verdict. In many cases, a responsible person
owns stock in the company for which she is a responsible person.
See, e.g.,
Thosteson, 331 F.3d at 1298–99;
Williams v. United
States, 931 F.2d 805, 810 (11th Cir. 1991). Here, Scott’s father
owned all of Scott Air’s stock. Yet while Scott held no stock in Scott
Air, she did loan the company $20,000. And she also guaranteed a
line of credit that one of the company’s vendors extended. So while
Scott never owned stock in Scott Air, she did have skin in the game.
On balance, therefore, this factor is a wash.
The fifth factor is also a draw. A responsible person often
has authority to hire and fire employees on the company’s behalf.
See, e.g.,
Roth v. United States, 779 F.2d 1567, 1569 (11th Cir. 1986);
Thosteson, 331 F.3d at 1299. Here, Scott’s father testified that he
never authorized Scott to hire or fire employees. That said, an em-
ployee testified that some employees reported to Scott.
To summarize, then, the evidence bearing on the first three
factors—holding corporate office, controlling the company’s fi-
nances, and possessing authority to disburse the company’s
funds—supports the jury’s finding that Scott was a responsible per-
son during the third quarter of 2005 and the fourth quarter of 2006.
Even assuming that Scott’s lack of stock ownership and power to
hire and fire employees cut against the jury’s verdict, it does not
follow that no rational trier of fact could have concluded that Scott
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was a responsible person during the third quarter in 2005 and the
fourth quarter in 2006. Nor does it follow that the jury’s verdict
was “against the great—not merely the greater—weight of the ev-
idence.”
Chmielewski v. City of St. Pete Beach, 890 F.3d 942, 948–
49 (11th Cir. 2018) (quoting
Lipphardt v. Durango Steakhouse of
Brandon, Inc., 267 F.3d 1183, 1186 (11th Cir. 2001)). In short, the
district court neither erred by denying Scott’s renewed motion for
judgment as a matter of law nor abused its discretion by denying
her motion for a new trial.
V.
For these reasons, the district court’s judgment is affirmed.
AFFIRMED.
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