Opinion
MO:20-CV-00122-DC
2023-01-14
Dean KEATING, Individually and on Behalf of All Those Similarly Situated, Plaintiff, v. FLOWCO PRODUCTION SOLUTIONS, LLC, Defendant
Chris R. Miltenberger, Law Office of Chris R. Miltenberger, PLLC, Southlake, TX, for Plaintiff. Amber Lea Karns, Baker & Hostetler LLP, Houston, TX, Daniel D. Pipitone, Kelly R. Koster, Sameer S. Karim, Munsch Hardt Kopf & Harr, P.C., Houston, TX, for Defendant.
Chris R. Miltenberger, Law Office of Chris R. Miltenberger, PLLC, Southlake, TX, for Plaintiff. Amber Lea Karns, Baker & Hostetler LLP, Houston, TX, Daniel D. Pipitone, Kelly R. Koster, Sameer S. Karim, Munsch Hardt Kopf & Harr, P.C., Houston, TX, for Defendant. ORDER DAVID COUNTS, UNITED STATES DISTRICT JUDGE
This case appears to have a lot of disputed facts at a stage where resolution depends on the absence of disputed facts.
BACKGROUND
Defendant Flowco Production Solutions is an oil field services provider that optimizes well production by delivering liquids and gases into the wells through special pipes, packers, and gas lift valves. Defendant employed Plaintiffs—in Defendant's words—as "Sales and Service Representatives." Plaintiffs, on the other hand, say they were "Gas Lift Technicians." Plaintiffs' claim their job involved mostly manual labor like loading the required equipment into trucks at Defendant's shop before driving to the job site to physically install it. Defendant paints another picture, depicting the job as more administrative, like calculating and creating installation schematics on a laptop from the comfort of a truck.
Defendant paid Plaintiffs a set salary plus, what Defendant calls, "commission." Plaintiffs, however, characterize their compensation differently, calling it salary plus "day bonuses." The Court will refer to the extra payments as shift bonuses. But no matter what they were called, the shift bonuses worked as follows:
• Defendant charged customers a service charge for every 12-hour shift installing equipment at the customer's well site. If the installation job took between 1 to 12 hours, Defendant would charge for one 12-hour shift. If a job took between 13 to 24 hours, Defendant would charge for two 12-hour shifts. In other words, if an installation was completed inside one of the 12-hour shifts Defendant would still bill the customer for that full 12-hour shift. For instance, if an installation took 16 hours, the customer would be charged two, 12-hour service charges.
• For every 12-hour shift Plaintiffs worked at the job site, they received a percentage of the service charge billed to the customers as a shift bonus. So, for example, if Plaintiffs worked 16 hours, they would receive two shift bonuses—one for each of the two, 12-hour shifts.
• These shift bonuses, however, did have some discretionary elements. Indeed, Defendant could withhold paying a shift bonus if it felt it was appropriate to do so.
Plaintiffs sued in May 2020, alleging unpaid overtime claims under the Fair Labor Standards Act ("FLSA") and the New Mexico Minimum Wage Act ("NMMWA"). Both parties moved for summary judgment with most arguments overlapping. Defendant contends the Acts' overtime requirements, respectively, are not applicable because Plaintiffs should be classified as exempt employees. Plaintiffs disagrees, also moving for partial summary judgment on travel time.
LEGAL STANDARD
The purpose of summary judgment is to isolate and dispose of factually unsupported claims or defenses. Summary judgment is proper under Rule 56(a) of the Federal Rules of Civil Procedure "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." A dispute about a material fact is genuine when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Substantive law identifies which facts are material. The trial court "must resolve all reasonable doubts in favor of the party opposing the motion for summary judgment."
Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
Anderson v. Liberty Lobby Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
Id.
Casey Enters., Inc. v. Am. Hardware Mut. Ins. Co., 655 F.2d 598, 602 (5th Cir. 1981).
The party seeking summary judgment bears the initial burden of informing the court of its motion and identifying "depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials" that establish the absence of a genuine issue of material fact. While the nonmovant bears the burden of proof, the movant may discharge the burden by showing that no evidence supports the nonmovant's case. Once the movant has carried its burden, the nonmovant must "respond to the motion for summary judgment by setting forth particular facts indicating there is a genuine issue for trial." A nonmovant must present affirmative evidence to defeat a properly supported motion for summary judgment. Mere denials of material facts, unsworn allegations, or arguments and assertions in briefs or legal memoranda will not suffice to carry this burden. Rather, the Court requires "significant probative evidence" from the nonmovant to dismiss a request for summary judgment. The Court must consider all the evidence but "refrain from making any credibility determinations or weighing the evidence."
Fed. R. Civ. P. 56(c)(1)(A); Celotex, 477 U.S. at 323, 106 S.Ct. 2548.
Celotex, 477 U.S. at 325, 106 S.Ct. 2548; Byers v. Dall. Morning News, Inc., 209 F.3d 419, 424 (5th Cir. 2000).
Byers, 209 F.3d at 424 (citing Anderson, 477 U.S. at 248-49, 106 S.Ct. 2505).
Anderson, 477 U.S. at 257, 106 S.Ct. 2505.
In re Mun. Bond Reporting Antitrust Litig., 672 F.2d 436, 440 (5th Cir. 1982) (quoting Ferguson v. Nat'l Broad. Co., 584 F.2d 111, 114 (5th Cir. 1978)).
Turner v. Baylor Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir. 2007).
DISCUSSION
I. Overlapping summary judgment arguments.
The FLSA and the NWMWA require that employers pay any covered employee, who works more than 40 hours in a workweek, "at a rate not less than one and one-half times the [employee's] regular rate . . . ." Both statutes, however, exclude certain employees from the overtime requirements. For example, employees working "in a bona fide executive, administrative, or professional capacity . . . ." are exempted.
§ 213(a)(1); § 50-4-21(C)(1).
Although Plaintiffs' claims under the FLSA and NWMWA are separate, the Court will analyze them together because both acts share similar language. Indeed, courts "may look to interpretations of the FLSA in order to interpret the [NM]MWA." So unless noted otherwise, the Court's analysis of Plaintiffs' FLSA claims also encompasses the NWMWA.
Rivera v. McCoy Corp., 240 F. Supp. 3d 1150 (D.N.M. 2017); see also, Valentine v. Bank of Albuquerque, 1985-NMSC-033, 102 N.M. 489, 697 P.2d 489, 490 (using FLSA regulations to interpret the NMMWA's administrative employee exemption).
A. Administrative employees exemption.
Defendant's first summary judgment argument is that Plaintiffs were "administrative employees" and thus fall under the FLSA's administrative exemption. Under the FLSA, an employee "employed in a bona fide administrative capacity" is one whose:
Doc. 126 at 6.
(1) compensation is on a salary or fee basis at a rate of not less than $684 per week,
(2) primary duty is the performance of office or non-manual work directly related to the management or general
business operations of the employer or the employer's customers, and
(3) primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
i. Compensation on a salary basis.
Plaintiffs argue they were not paid on a salary basis because of the added shift bonuses and therefore don't meet the administrative exemption's first factor. Under the Department of Labor ("DOL") regulations, an employee is paid on a "salary basis" if they receive (1) a predetermined amount, (2) on a weekly, or less frequent basis, (3) which amount is not reduced by the quality or quantity of work performed. Plaintiffs' base compensation was predetermined, and there's no evidence that such compensation could be reduced based on the quality or quantity of their work. There's also no evidence that Plaintiffs were paid more often than weekly. Plaintiffs' argument then, is that paying the shift bonuses violates the salary basis requirement.
Doc. 115 at 13-17.
§ 541.602.
But paying additional compensation does not violate the salary basis requirement. Indeed, 29 C.F.R. § 542.604(a) allows an employer to provide an exempt employee with additional compensation—without losing the exemption—if the employee receives at least $684 per week on a "salary basis." As noted above, Plaintiffs were paid on a salary basis. And it's undisputed it was more than $684 per week.
Plaintiffs, however, argue this Court should instead apply § 542.604(b), which outlines the way employees can be paid on an hourly, daily, or shift basis without violating the salary basis. Yet that provision is not applicable to these facts. And as Defendant points out, the cases Plaintiffs cite relate to employees paid more often than weekly. For instance, in the Fifth Circuit's Hewitt v. Helix Energy Solutions Group, the employee was paid daily. Thus, a straightforward application of the DOL regulations' plain text establishes the administrative exemption's first factor.
Doc. 115 at 14.
15 F.4th 289, 291 (5th Cir. 2021), cert. granted, — U.S. —, 142 S. Ct. 2674, 212 L. Ed. 2d 762 (2022) ("The company admits, however, that Hewitt's pay is 'computed on a daily basis,' rather than on a weekly, monthly, or annual basis.").
ii. The remaining two factors require a jury.
Disputes over what were Plaintiffs' "primary duties," or how the work directly related to certain parts of the employer's business, or whether that duty involves some discretion and independence, all "require a fact-finder." And those disputes exist here. So even though the first factor is met, the second and third require a jury. Thus, Defendant's summary judgment on the administrative exemption should be denied.
Dewan v. M-I, L.L.C., 858 F.3d 331, 334 (5th Cir. 2017).
B. Highly compensated employees exemption.
Defendant also relies on the FLSA's highly compensated employees exemption, which exempts an employee (1) whose total annual compensation, including bonuses, is $107,432 or more; (2) "whose primary duties include performance of office or nonmanual work," and (3) who customarily performs at least one of the duties of an executive, administrative, or professional employee. Here, Plaintiffs' base compensation alone does not exceed the $107,432 threshold. But if the shift bonuses are included, as Defendant argues, Plaintiffs' total compensation would surpass the required amount.
Doc. 115 at 5.
Doc. 126 at 12.
i. Total annual compensation.
For the highly compensated employees exemption, 29 C.F.R. § 541.601(b)(1) allows an employer to include "commissions, nondiscretionary bonuses and other nondiscretionary compensation" paid to the employee when calculating that employee's "total annual compensation." Defendant argues that the shift bonuses were "commissions" and therefore should be included when calculating Plaintiffs' total annual compensation. Plaintiffs counter that the shift bonuses were merely discretionary bonuses, which cannot be included.
Although analyzing a different FLSA exemption, the Fifth Circuit's recent decision in Taylor v. HD and Associates, L.L.C described commission as having "distinct features":
(1) whether the commission is a "percentage or proportion of the ultimate price passed on to the consumer";
(2) whether the commission is "decoupled from actual time worked, so that there is an incentive for the employee to work more efficiently and effectively";
(3) the type of work is such that its "peculiar nature" does not lend itself to a standard eight-hour workday; and
(4) whether the commission system "offend[s] the purposes of the FLSA."
45 F.4th 833, 839 (5th Cir. 2022).
Or put another way by the Taylor court, "if by working harder, rather than longer, one earns more, the payment is a commission." What's more, the bonus's "name" doesn't matter because this is a "question of law that relies on how a payment works in practice, rather than what it is called." And in practice, the shift bonuses operated as discretionary bonuses for two reasons.
Id. at 840.
Id. at 839.
First, the parties agree that the shift bonuses' purpose was to "bring [Plainitffs'] level of compensation to one that is normal in the oil field" because "[t]he salary alone is not sufficient to pay [Plaintiffs] appropriate compensation." So the shift bonuses' purpose was not to "incentivize[ ] faster work."
Doc. 115 at 6.
Id. at 840.
Second, based on deposition testimony, the shift bonuses also had discretionary elements—Defendant's management could deny the entire shift bonus if they thought it "appropriate." But commission cannot also be discretionary; that's nonsensical. Commission is extra compensation for each extra "unit" sold or "service" completed by the employee. It's no incentive to work "more efficiently and effectively" if the payment of sums earned through extra work could also be left to an employer's discretion. Thus, Plaintiffs' summary judgment motion that the shift bonuses were not commission should be granted.
Doc. 115 at 8.
The regulations allow only for commission or nondiscretionary compensation to be included when calculating an employee's "total annual compensation." And the Court sees no reasons to abandon the longstanding canon of statutory interpretation that the expression of one thing in context (nondiscretionary compensation) implies the exclusion of others (discretionary compensation). Accordingly, Defendant's summary judgment on this exemption should be denied.
Antonin Sealia & Bryan Garner, Reading Law: The Interpretation of Legal Texts 107 (2012) (Negative-Implication Canon).
C. Retail or service employees exemption.
Defendant also moves that Plaintiffs meet the requirements of the retail or service employees exemption, which exempts employees if (1) their regular rate of pay is at least one and one-half the applicable minimum wage rate and (2) commissions earned constitute more than 50% of their compensation. But as the Court analyzed above, the shift bonuses are discretionary bonuses, not commission. Thus, the second factor of the retail or service employees exemption cannot be met. So Defendant's summary judgment on this exemption should also be denied.
D. Time-and-a-half versus the FWW multiplier.
The Court cannot foresee what the pertinent evidence will be at trial and is not convinced that this issue should be decided now. Thus, the Court denies Plaintiffs' and Defendant's summary judgment motions on this issue.
E. Willfulness.
When an employer "willfully" violates the FLSA—the employer "knew or showed reckless disregard for the matter of whether its conduct was prohibited by the statute"— the limitations period extends to three years. But for there to be a willful violation of the FLSA, there must first be an FLSA violation. And a violation has not yet been proven here. So the Court finds the question of willfulness to be premature and thus denies Defendant's summary judgment motion on willfulness.
§ 255(a); McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133, 108 S.Ct. 1677, 100 L.Ed.2d 115 (1988).
II. Plaintiffs' partial summary judgment motion on travel time.
Plaintiffs' summary judgment motion included one issue that doesn't overlap with Defendant's motion. Plaintiffs ask this Court to find "that travel time back and forth between the [Defendant's] Shop and the wellsite location is compensable time."
Doc. 115 at 25.
Generally, an employee's normal commute is not compensable work time. But DOL regulations do state that if an employer requires an employee to pick up or carry tools from a designated place, and then travel from the designated place to the worksite, those hours are compensable. And if the employee is required to return to the designated place before heading home, the travel time back to the designated place is also compensable travel time.
Id.
Plaintiffs provide evidence that Defendant required Plaintiffs to pick up the tools and equipment necessary for the job from the workshop. Plaintiffs also establish that they had to return the tools and equipment to the workshop for reconditioning at the end of the workday.
Doc. 115 at 26.
Id. at 27.
Defendant does not refute that Plaintiffs had to pick up or drop off tools and equipment Defendant's shop. Rather, Defendant argues Plaintiffs did not pick up or return the equipment every day; some of Plaintiffs planned ahead to avoid daily trips to the workshop.
Doc. 128 at 30-31.
How often Plaintiffs' travel time would have been compensable then, remains a disputed fact issue. But the Court finds it uncontroversial that travel time falling under DOL regulations would compensable. The Court does caution that travel time from home to worksite or worksite back home—without the required stops at Defendant's shop—is another matter. In any event, the Court grants partial summary judgment on Plaintiffs' claim that travel time required by Defendant from the shop to wellsite locations, and wellsite locations back to the shop, to pick up/drop off equipment is compensable time.
CONCLUSION
Although some issues require a fact finder and thus cannot be decided at this point in the litigation, the Court seeks to focus the issues for trial.
It is therefore ORDERED that Defendant's Motion for Summary Judgment be DENIED. (Docs. 126, 127)
It is also ORDERED that Plaintiffs' Motion for Summary Judgment be GRANTED in part and DENIED in part. (Doc. 115).
It is so ORDERED.