Opinion
1-22-CV-00144-DAE
02-22-2024
HERMAN BANDY, Plaintiff v. TRC SOLUTIONS, INC., TRC ENGINEERS, INC., TRC FIELD SERVICES - TRC ENGINEERS, INC., Defendants
TO: THE HONORABLE DAVID A. EZRA, UNITED STATES DISTRICT JUDGE
REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
DUSTIN M. HOWELL, UNITED STATES MAGISTRATE JUDGE
Before the Court is Plaintiff Herman Bandy's Motion for Equitable Tolling, Dkt. 24; Motion to Certify a Collective Action and To Issue Notice, Dkt. 48; and all related briefing. On January 24, 2024, this Court held a hearing to discuss the merits of Bandy's request for certification. Having considered the parties' arguments, the record, and the applicable law, the undersigned recommends granting Bandy's Motion to Certify, Dkt. 48, with some modification to the proposed class and notice. Further, the Court denies Bandy's Motion for Equitable Tolling, Dkt. 24.
I. BACKGROUND
This is a Fair Labor Standards Act (“FLSA”) case arising out of Bandy's employment from approximately January 1, 2019, to July 7, 2020, with TRC, a consulting, engineering, and construction management firm. Dkt. 45-1, at 2. Bandy worked as a Lead Right-of-Way Agent/Landman Supervisor, a position in which he “made phone calls and personal visits to land and mineral rights owners, prepar[ed] land leases and easements, submit[ted] documents to his supervisors, review[ed] titles and pipeline construction related matters, and attend[ed] regular meetings.” Id. at 7. Bandy's role was a “full time, exempt, day rate position” for which he was paid a “daily rate of $235 per day,” plus a $100 per day toolkit allowance, and $144 per diem. Dkt. 48-5, at 2. Bandy alleges that he often worked “more than 12 hours per day, for five or more days for weeks at a time” without “overtime premium compensation for hours worked in excess of 40 hours in a workweek” in violation of the FLSA. Dkt. 45-1, at 2-3.
Bandy claims there were other land acquisition personnel like him who “work[ed] on [TRC's] behalf including other landmen, right-of-way agents, title agents, and supervisors, who provide[d] land leasing services, obtain[ed] easements from property owners, research[ed] land titles, and [performed] other related work for Defendants' oil and gas customers.” Id. Bandy states these other TRC employees “are similarly situated to [him] in all relevant respects” in that they were also “paid a day rate for each day worked, regardless of hours worked” and were allegedly “wrongly denied overtime premium compensation for hours worked in excess of 40-hours in any workweek.” Dkt. 45-1, at 10.
Based on these claims, Bandy requests certification of a collective action of a class consisting of:
All current and former employees, employed by, or working on behalf of, TRC Companies, Inc., TRC Solutions, Inc., and/or TRC Field Services,
who worked in excess of 40 hours in any workweek, and who were paid a day rate which failed to include overtime compensation at any time during the three (3) years preceding the filing of Plaintiff's Complaint (the “Putative Collective Action Members”).Dkts. 45-1, at 5; 48, at 5.
TRC opposes class certification, arguing that the putative class includes employees from disparate factual and employment settings, including employees with different duties, job site locations, and supervisor-status. Dkt. 60, at 4. TRC argues that the putative class members are thus not similarly situated for the purposes of class certification. Id.
The issue before the Court is whether Bandy has met his burden to demonstrate that “all current and former employees” of TRC and its subsidiaries who were paid a day rate are similarly situated.
II. LEGAL STANDARD
An FLSA case may be brought “by any one or more employees for and on behalf of himself or themselves and other employees similarly situated.” 29 U.S.C. § 216(b). “A collective action allows [FLSA] plaintiffs the advantage of lower individual costs to vindicate rights by the pooling of resources.” Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165, 170 (1989). The Fifth Circuit recently clarified the standard for evaluating whether notice should issue to a class of similarly situated employees under the FLSA in Swales v. KLLM Transportation Services, LLC, 985 F.3d 430 (5th Cir. 2021). In Swales, the Fifth Circuit rejected the two-step Lusardi method of “conditional certification” and “decertification” previously employed by the majority of district courts in favor of a more rigorous inquiry into whether a group of employees is in fact similarly situated. Loy v. Rehab Synergies, 71 F.4th 329, 336-37 (5th Cir. 2023); Swales, 985 F.3d at 434.
See Lusardi v. Xerox Corp., 118 F.R.D. 351 (D.N.J. 1987).
The Swales standard requires a district court to “identify, at the outset of the case, what facts and legal considerations will be material to determining whether a group of ‘employees' is ‘similarly situated' and to “authorize preliminary discovery accordingly.” Loy, 71 F.4th at 336 (quoting Swales, 985 F.3d at 441). The focus of the district court in evaluating whether to issue notice should be on “whether merits questions can be answered collectively.” Swales, 985 F.3d at 442. However, in doing so, district courts must be careful not to “signal approval of the merits or otherwise stir up litigation.” Id. at 434. “If answering the merits questions ‘requires a highly individualized inquiry into each potential opt-in's circumstances,' then the employees are likely not similarly situated,” and notice should not be issued. Loy, 71 F.4th at 336 (quoting Swales, 985 F.3d at 442).
Although Swales rejected the two-step Lusardi standard, the Fifth Circuit has approved the continued consideration of the Lusardi factors by district courts faced with a motion for FLSA notice. Loy, 71 F.4th at 336-37. These factors include (1) the disparate factual and employment settings of the individual plaintiffs; (2) the various defenses available to the defendant which appear to be individual to each plaintiff; and (3) fairness and procedural considerations. Id. Ultimately, district courts continue to have “broad, litigation-management discretion” in evaluating whether to issue notice, “cabined by the FLSA's ‘similarly situated' requirement.” Id. at 337 (quoting Swales, 985 F.3d at 443). Under the governing standard, Plaintiffs continue bear the burden of demonstrating they are similarly situated. Swales, 985 F.3d at 443. After identifying the material facts and legal considerations at issue, the Court may decide (1) collective action is not appropriate; (2) additional discovery is needed to make a determination; or (3) a certain category of employees is similarly situated and should be given notice. Id.
III. DISCUSSION
Bandy contends that the proposed class of day rate employees is similarly situated insofar as they “were all paid based on the same pay scheme and were thus all denied overtime compensation in violation of the FLSA.” Dkt. 48, at 21. Defendants argue that Bandy fails to “consider the intricacies of the factual employment settings of all [the] individuals” in the proposed class that results from the multifaceted nature of Defendant's business. Dkt. 60, at 11. Specifically, employees have “different objectives, in a different location, with different teams that maintain different skillsets in different trades and hold an array of job titles and duties, receive different training and practices, and are subject to different client-imposed practices and requirements, and different project/client contracts.” Id. Defendants state that even within Bandy's team, “senior land/right of way agents might spend the entire workday meeting landowners discussing offers, while a title agent would likely spend their day researching, and a land supervisor communicating with and guiding all of the above individuals.” Id.
Defendants' arguments concerning disparate factual employment settings within the putative class only matter when those differences are material to the merits of the case. See Adams v. Absolute Consulting, Inc., No. 620CV01099ADADTG, 2023 WL 3995072, at *3 (W.D. Tex. June 12, 2023) (“The distinctions identified by Defendant [concerning job duties] are the type of differences that do not go to the merits [of an overtime case] and are not properly considered.”). Also, courts have found that even where putative class members hold different job titles, work in different locations, and have different duties, they can still be similarly situated if subjected to the same pay practice. Young v. Energy Drilling Co., 534 F.Supp.3d 720, 724-25 (S.D. Tex. 2021) (finding rig managers, drillers, and toolpushers were similarly situated because they were all subjected to the same pay policy); Alvarez v. NES Glob. LLC, No. 4:20-CV-1933, 2021 WL 3571223, at *2-5 (S.D. Tex. Aug. 11, 2021) (finding employees of a staffing agency who worked in different positions for different clients in the oil and gas industry in different cities were similarly situated because they were paid a day rate, did not receive overtime, and did not receive guaranteed compensation).
Because the determination of whether the putative class is similarly situated turns primarily on whether the putative class members were paid pursuant to the same pay policy and the factual and legal determination of whether they were exempt workers under the FLSA, the undersigned will now turn to FLSA overtime requirements and available exemptions. See, e.g., Young, 534 F.Supp.3d at 724-25 (finding that “[w]hether employees are similarly situated for purposes of the claims in this case turns on whether [certain] bonuses are “non-discretionary” and required to be included in employees' regular rate of pay for purposes of calculating overtime pay”).
A. Overtime Requirements and Exemptions
The FLSA requires employers to pay 50 percent overtime for any time worked over 40 hours per week. See 29. U.S.C. § 207(a). To be exempt from that requirement, three conditions must be met: first, the employee must meet certain criteria concerning the performance of executive, administrative, and professional duties; second, the employee must meet certain minimum income thresholds; finally, the employee must be paid on a “salary basis.” See 29 U.S.C. § 213(a)(1); 29 C.F.R. §§ 541.601, 541.100, 541.200, 541.300. Although the duties criteria and income thresholds vary from exemption to exemption, the regulations apply the same salarybasis requirement to all four overtime exemptions. See 29 C.F.R. § 541.100(a)(1) (applying the salary-basis test to executive employees); id. § 541.200(a)(1) (administrative employees); id. § 541.300(a)(1) (professional employees); id. § 541.601(b)(1) (highly compensated employees). Day rate employees meet the salary basis test (and are therefore exempt from overtime) if the employee is paid a guaranteed minimum weekly amount regardless of the number of hours, days, or shifts worked, and if there is reasonable relationship between the guaranteed weekly minimum and the amount actually earned. Id. § 541.604(b); Hewitt v. Helix Energy Sols. Grp., Inc., 15 F.4th 289, 293-94 (5th Cir. 2021), aff'd, 598 U.S. 39, 143 S.Ct. 677 (2023).
Here, the regulations demonstrate that Defendants will need to overcome the salary-basis test to show that Bandy and putative class members were exempt and, therefore, not entitled to overtime.Accordingly, the undersigned concludes that the merits of the salary basis requirement can be decided collectively and that the members of the proposed class are similarly situated for this purpose within the meaning of the FLSA. See Alvarez, 2021 WL 3571223, at *5 (“Because the salary basis test component of [Defendant's ‘highly compensated employee' defense can be decided collectively, the Court finds that the members of Plaintiff's proposed collective are ‘similarly situated' within the meaning of FLSA, and the collective is hereby certified.”).
Here, Defendants argue they have raised defenses against Bandy's claims and “can only assume that they will raise additional defenses if and when this purported collective is certified.” Dkt. 60, at 12. Defendants contend they will need to “evaluate the factual employment settings of hundreds of employees, including dozens of contracts, project speculations, a multitude of client procedures and policies unique to trades and projects, client training, duties as assigned under the projects, project objectives and all plaintiff personnel files before it can determine its available defenses.” Id. While Defendants' answer has raised a statute of limitations defense and states that Defendants acted in good faith and with reasonable grounds to believe their actions did not violate the FLSA, Defendants have not raised any of the FLSA overtime exemptions as to Bandy, or any of the putative class members. Dkt. 6, at 8. Further, Defendants do not elaborate on how potential defenses and the disparate employment backgrounds underlying those defenses bar class certification under Swales.
B. The Proposed Class
Though Bandy has met his burden to show there is a category of similarly situated employees who should receive notice of this action pursuant to 29 U.S.C. § 216(b), the putative class should be limited to specific positions identified in the record as having been subjected to the same pay scheme as Bandy. Bandy proposes certifying a class consisting of “all current and former employees who were paid a day rate which failed to include overtime compensation.” Dkt. 45-1, at 5. However, the pay policy Bandy was subject to entailed more than just the day rate. In addition to a day rate, Bandy also received a per diem and a daily tool kit allowance. Dkt. 485, at 2.
Even Bandy's counsel acknowledges that a per diem is part of the compensation package. See Dkt. 48-3, at 3 (Deposition of Andrew Johnson at 29:19-21, Bandy's counsel asks: “[Y]ou understand that the per diem is part of the compensation package we are discussing here today, correct?”); see also, id. at 5 (Deposition of Andrew Johnson at 43:15 “Q: When is the per diem paid? A: ...it's included in the paycheck. Q: And what about the tool kit allowance, when is that paid? A: Same answer.”).
The record, however, does not demonstrate that all TRC day rate employees received a per diem and tool kit allowance. Rather, the deposition testimony of corporate representatives Andrew Johnson and Lee Ferguson indicates that only a subgroup of day rate employees, land acquisition personnel like Bandy, received a per diem and tool kit allowance. See Dkt. 48-3, at 4 (Deposition of Andrew Johnson at 41:15-25, establishing that there is a group of day rate employees: “Q. As you sit here today, it's your position that only the land acquisition and right of way personnel are paid a day rate, nobody else in TRC Company or its subsidiaries are paid a day rate; is that your position? A. No ... I believe there's other staff in the TRC field service operation that receives day-rate wages.”); id. at 3 (Deposition testimony of Andrew Johnson at 29:8-11, establishing that there is a subgroup of land acquisition personnel that receive a day rate: “Q: Are you aware of any time when land acquisition personnel employed by TRC were not paid a day rate? A: No.”); id. (Deposition testimony of Andrew Johnson at 29:12-18, establishing that there is a subgroup of land acquisition personnel that receive a per diem: “Q: To your knowledge have they-have land acquisition personnel employed by TRC always received a per diem? A...Yes I believe so.”); id. at 5 (Deposition testimony of Andrew Johnson at 43:16-23, establishing that there is a further subgroup of land acquisition employees “like Mr. Bandy” who receive a tool kit allowance: “Q. Who gets a tool kit allowance? A: Employees like Mr. Bandy.”).
On the basis of this testimony, the undersigned proposes limiting the class to other land acquisition personnel (e.g., landmen, right-of-way agents, title agents, and supervisors, who provide land leasing services, obtain easements from property owners, research land titles, and other related work) who, like Bandy, received a day rate, a per diem, and a tool kit allowance, rather than the possibly broader group of all day rate employees. These employees, the record shows, were under the same pay policy as Bandy.
IV. ORDER ON MOTION FOR EQUITABLE TOLLING
In addition to certifying the collective, Bandy requests that the Court equitably toll the statute of limitations based on the February 16, 2022, filing date. Dkt. 24, at 7. Bandy argues that Defendant's dilatory discovery tactics resulted in a ten-month delay between the original filing date of this suit and the filing of his Amended Complaint in which he named his actual employer. Id. at 2. Bandy also states other discovery delays have prevented him from acquiring “the necessary information for Plaintiff to seek the Court's consent to proceed with the lawsuit as a collective action as allowed under the FLSA.” Id.
The FLSA provides for a two-year statute of limitations and is extended an extra year for willful violations. 29 U.S.C. § 255(a). The limitations period for a plaintiff in a collective action under the FLSA runs until a plaintiff or putative class member opts-in by filing a Notice of Consent or files suit. 29 U.S.C. § 256. Equitable tolling of the statute of limitations can apply in FLSA cases. See Holmberg v. Armbrecht, 327 U.S. 392, 397 (1946) (“This equitable doctrine is read into every federal statute of limitations.”). The decision to allow equitable tolling of the statute of limitations rests in the discretion of the district court. See Granger v. Aaron's, Inc., 636 F.3d 708, 712 (5th Cir. 2011); Teemac v. Henderson, 298 F.3d 452, 456 (5th Cir. 2002); Felder v. Johnson, 204 F.3d 168, 175 (5th Cir. 2000).
However, the Fifth Circuit strictly construes the FLSA's limitations provision, allowing equitable tolling only if it is shown that a plaintiff “acted diligently and the delay concerns extraordinary circumstances.” Shidler v. Alarm Sec. Grp., LLC, 919 F.Supp.2d 827, 830 (S.D. Tex. 2012) (citing Caldwell v. Dretke, 429 F.3d 521, 530 n.23 (5th Cir. 2005)); Teemac, 298 F.3d at 457. The doctrine applies in “rare and exceptional circumstances.” Teemac, 298 F.3d at 457 (quoting Davis v. Johnson, 158 F.3d 806, 810 (5th Cir. 1998)); see also Caldwell, 429 F.3d at 530 n.23. “Equitable tolling applies principally where the plaintiff is actively misled by the defendant about the cause of action or is prevented in some extraordinary way from asserting his rights.” Rashidi v. Am. President Lines, 96 F.3d 124, 128 (5th Cir. 1996); Sandoz v. Cingular Wireless, LLC, 769 F.Supp.2d 1047, 1063 (W.D. La. 2010). “Courts may also grant equitable tolling when, ‘despite all due diligence, a plaintiff is unable to discover essential information bearing on the existence of his claim.'” Orozco v. Anamia's Tex-Mex Inc, 3:15-CV-2800-L-BK, 2016 WL 6311237, at *1 (N.D. Tex. Oct. 6, 2016) (quoting Pacheco v. Rice, 966 F.2d 904, 906-07 (5th Cir. 1992)). “The party who invokes equitable tolling bears the burden of proof.” Teemac, 298 F.3d at 457.
As to the first equitable tolling element, Plaintiff's diligence, Bandy argues he has pursued his rights with due diligence on behalf of himself and all others similarly situated “because, from the date of first filing, Defendants have been on notice that Bandy intended to bring his suit as a collective action and [Bandy] has continuously and diligently sought discovery related to the collective nature of this action. Dkt. 24, at 4. As to the extraordinary circumstances element, Bandy argues that the “stringent requirements of Swales will inherently cause delays [which] for obvious reasons, will negatively impact the cases of unsuspecting putative collective action members who likely are not even aware that their damages are dwindling as the statute of limitations runs against them.” Id. at 4.
Aside from delays in developing the necessary record to certify this suit as a collective action, Bandy offers no other extraordinary circumstances or “external obstacle to timely filing” to justify his request to equitably toll the FLSA's statute of limitations. As relevant here, “[d]elays in granting a collective do not present extraordinary circumstances justifying equitable tolling.” Roberts v. Baptist Healthcare Sys., LLC, No. 1:20-CV-00092-MAC, 2022 WL 4493733, at *3 (E.D. Tex. Sept. 20, 2022), report and recommendation adopted, No. 1:20-CV-92, 2022 WL 4491070 (E.D. Tex. Sept. 26, 2022); see also Robinson v. RWLS, LLC, No. SA-16-CA-00201-OLG, 2017 WL 1535072, at *1 (W.D. Tex. Mar. 14, 2017) (“Protracted litigation and opposition to certification and notice do not constitute external obstacles that ‘effectively delayed notice of the [FLSA] violations and of the right [to] join this action to potential claimants,' preventing timely filing. Routine litigation is not an extraordinary circumstance.”); Mejia v. Brothers Petroleum, LLC, No. 12-2842, 2014 WL 3853580, at *2 (E.D. La. Aug. 4, 2014) (finding the procedural posture of the case and the delay in certification did not warrant equitable tolling of the untimely claims); McKnight v. D. Houston, Inc., 756 F.Supp.2d 794, 808-09 (S.D. Tex. 2010) (“Congress did not provide for tolling while a court considers whether to certify a case as a collective action.”). Therefore, the undersigned finds that Bandy has not met his burden of showing that extraordinary circumstances prevented other potential opt-ins from joining in this action or filing individual suits. See Floyd v. Stryker Corp., No. 3:22-CV-1131-B, 2024 WL 24341, at *6 (N.D. Tex. Jan. 2, 2024) (denying motion for equitable tolling where Plaintiff cited certification requirements of Swales as creating timing obstacles warranting equitable tolling).
The Court notes that courts in the Fifth Circuit have tolled statute of limitations for putative opt-in plaintiffs when the parties waited a lengthy period for the court to rule on a motion for conditional certification. Compare Hernandez v. Caviness Packing Co., No. 2:07-CV-142-J, 2008 WL 11183755, at *2 (N.D. Tex. June 2, 2008) (tolling the statute of limitations “due to the delay in ruling on the Plaintiff's motion for class action” which was pending for nine months despite not finding “extraordinary circumstances”), and Davis v. Flare Ignitors & Rentals, Inc., SA-11-CA-00450-OLG, 2012 WL 12539328, at *2 (W.D. Tex. Mar. 19, 2012) (holding that because the motion was pending for eight months, “the Court finds it equitable-and therefore orders-that the statute of limitations as it applies to any additional opt-in plaintiffs is tolled from the date on which this motion was filed, July 19, 2011”), with Mejia v. Brothers Petroleum, LLC, No. 12-2842, 2014 WL 3853580, at *2 (E.D. La. Aug. 4, 2014) (rejecting equitable tolling where court took five months to decide a motion for conditional certification), and McKnight v. D. Houston, Inc., 756 F.Supp.2d 794, 808-09 (S.D. Tex. 2010) (rejecting equitable tolling of FLSA claims when the motion for conditional certification was pending for six months).
However, here, Bandy filed his Motion to Certify on November 3, 2023. See Dkt. 48. A hearing was originally scheduled for January 10, 2024, but was ultimately postponed at the parties' request to January 24, 2024. The undersigned's Report and Recommendation on Bandy's class certification motion will issue and be reviewed by the District Court within 4 months of Plaintiff's motion. This delay does warrant equitable tolling of the statute of limitations. Compare Ferguson v. Tex. Farm Bureau, 307 F.Supp.3d 577, 582 (W.D. Tex. 2018) (equitable tolling of the statute of limitations to the date the Court granted the motion for class certification where the parties waited ten and a half months for a ruling).
Bandy's motion for equitable tolling of the statute of limitations, Dkt. 24, is DENIED. Therefore, the undersigned will recommend that notice be issued to TRC personnel whose claims fall into the standard three-year statute of limitations for willful violations under the FLSA.
The FLSA generally provides a two-year statute of limitations, except willful violations are subject to a three-year statute of limitations. 29 U.S.C. § 255(a). “A willful violation occurs when ‘the employer either knew or showed reckless disregard for the matter of whether its conduct was prohibited.'” Dacar v. Saybolt, L.P., 914 F.3d 917, 926 (5th Cir. 2018) (quoting McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133 (1988)). Bandy alleges that Defendants willfully violated the FLSA, which, if true, would mean the relevant land acquisition personnel's FLSA claims are subject to a statute of limitations of three years. Dkt. 45-1, at 9, 10, 12, 15; see 29 U.S.C. § 255(a).
V. RECOMMENDATION
In accordance with the forgoing, the undersigned RECOMMENDS that Bandy's Motion for Class Certification be GRANTED and Bandy should be authorized to send the proposed notice and consent forms to the following potential members of the collective action:
All current and former land acquisition personnel, employed by, or working on behalf of TRC Companies, TRC Solutions, Inc., and/or TRC Field Services during the 3 years preceding class certification who were paid a day rate, received a toolkit allowance, and per diem, and who worked in excess of 40 hours in any workweek without being paid overtime compensation.
The undersigned FURTHER RECOMMENDS that the District Judge order the parties to confer on the specifics of the notice within 21 days of the date of adoption of this report and recommendation. Defendants should disclose to Bandy the potential class members' names, addresses, e-mail addresses, telephone numbers, and dates of employment in a useable electronic format.
VI. WARNINGS
The parties may file objections to this Report and Recommendation. A party filing objections must specifically identify those findings or recommendations to which objections are being made. The District Court need not consider frivolous, conclusive, or general objections. See Battle v. United States Parole Comm'n, 834 F.2d 419, 421 (5th Cir. 1987). A party's failure to file written objections to the proposed findings and recommendations contained in this Report within fourteen days after the party is served with a copy of the Report shall bar that party from de novo review by the District Court of the proposed findings and recommendations in the Report and, except upon grounds of plain error, shall bar the party from appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the District Court. See 28 U.S.C. § 636(b)(1)(C); Thomas v. Arn, 474 U.S. 140, 150-53 (1985); Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc).