ELIZABETH S. CHESTNEY, Magistrate Judge.
This Report and Recommendation concerns the Motion for Partial Summary Judgment [#17] filed by Plaintiffs Greg Hines and Michael Headrick (collectively, "Plaintiffs"). All pretrial matters in this case have been referred to the undersigned for disposition pursuant to Western District of Texas Local Rule CV-72 and Appendix C [#28]. The undersigned has authority to enter this recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). The Court federal question jurisdiction over this case filed pursuant to the Fair Labor Standards Act ("FLSA"). See 28 U.S.C. §1331.
After considering Plaintiffs' Motion [#17], the Response filed by Defendant Key Energy Services, LLC ("Key Energy") [#27]
This is a wage and hour case by oil-services workers against their former employer, Key Energy, a company that provides on-site well production services in various states including in Texas, Oklahoma, and New Mexico. (See Hines Decl. [#17-1] ¶¶ 2-3; Headrick Decl. [#17-2] ¶¶ 2-3.) Plaintiffs Hines and Headrick worked for Key Energy. Hines was employed as a Service Supervisor in Key Energy's pressure-pumping division in Marshall, Texas from approximately April 2009 until August of 2013. (See Hines Decl. ¶ 2, 4; Russell Decl. [#26-1] ¶ 2; Exs. C-1 & C-2 to Resp.) Key Energy terminated Hines for allegedly violating the Company's Drug-Free Workplace policy. (See Ex. C-2 to Resp.) Headrick was employed as a Service Supervisor in Key Energy's coil-tubing services division in Oklahoma from 2014 through early 2015.
There is no dispute about how Plaintiffs were paid: Key Energy paid Plaintiffs salary plus bonuses for their work as Service Supervisors. (See Hines Decl. ¶ 5; Headrick Decl. ¶ 5; Russell Decl. ¶ 3; Davis Decl. ¶ 4.) Plaintiffs' duties, on the other hand, are vigorously contested. Plaintiffs claim that they were required to travel to customers' jobsites to perform well-pressurepumping work, which they argue consists almost entirely of manual labor. (See Hines Decl. ¶¶ 6-8, 11-21; Headrick Decl. ¶¶ 6-8, 11-21.) Key Energy, on the other hand, argues that Plaintiffs were primarily responsible for training and supervising crew members in the performance of such duties. (See Russell Decl. ¶¶ 4-7; Davis Decl. ¶¶ 5-8.)
Plaintiffs initiated this litigation on October 20, 2015, alleging that Key Energy improperly classified them as exempt employees and failed to pay them overtime wages in violation of the FLSA [#1]. On October 17, 2016, Plaintiffs filed this Motion for Partial Summary Judgment, arguing that Key Energy cannot raise a genuine issue of material fact from which a reasonable jury could conclude that Plaintiffs were exempt employees under the FLSA.
Summary judgment is appropriate under Rule 56 of the Federal Rules of Civil Procedure only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); see also FED. R. CIV. P. 56(c). A dispute is genuine only if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The party moving for summary judgment bears the initial burden of "informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact." Catrett, 477 U.S. at 323. Once the movant carries its burden, the burden shifts to the nonmoving party to establish the existence of a genuine issue for trial. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Wise v. E.I. Dupont de Nemours & Co., 58 F.3d 193, 195 (5th Cir. 1995). The non-movant must respond to the motion by setting forth particular facts indicating that there is a genuine issue for trial. Miss. River Basin Alliance v. Westphal, 230 F.3d 170, 174 (5th Cir. 2000). The parties may satisfy their respective burdens by tendering depositions, affidavits, and other competent evidence. Topalian v. Ehrman, 954 F.2d 1125, 1131 (5th Cir. 1992). The Court will view the summary judgment evidence in the light most favorable to the non-movant. Rosado v. Deters, 5 F.3d 119, 123 (5th Cir. 1993).
"After the non-movant has been given the opportunity to raise a genuine factual issue, if no reasonable juror could find for the non-movant, summary judgment will be granted." Westphal, 230 F.3d at 174. However, if the party moving for summary judgment fails to satisfy its initial burden of demonstrating the absence of a genuine issue of material fact, the motion must be denied, regardless of the nonmovant's response. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (en banc).
This case involves a somewhat uncommon posture. First, it is Plaintiffs, not the Defendant, who are moving for summary judgment. Second, Plaintiffs are moving for summary judgment on Defendant's affirmative defenses. Because Plaintiffs do not bear the burden of proof at trial, Plaintiffs are entitled to summary judgment if they can point to an absence of evidence to support an essential element on a particular affirmative defense. See Celotex, 477 U.S. at 322-23; Fed. Debt Mgmt., Inc. v. Herbst Res., Inc., 15 F.3d 179 (5th Cir. 1994). Plaintiffs are also entitled to summary judgment if they produce sufficient evidence negating an essential element of Defendant's affirmative defense. Celotex, 477 U.S. at 323.
Plaintiffs contend they are entitled to summary judgment on the affirmative defenses pled by Key Energy—in particular, the five overtime exemptions asserted by Key Energy in its answer. The FLSA "requires an employer to pay overtime compensation to any employee working more than forty hours in a workweek." Allen v. Coil Tubing Servs, L.L.C., 755 F.3d 279, 282 (5th Cir. 2014) (citing 29 U.S.C. § 207(a)(1)). This requirement, however, does not apply to "any employee employed in a bona fide executive, administrative, or professional capacity." 29 U.S.C. § 213(a)(1). "Exemptions under the FLSA are construed narrowly against the employer, and the employer bears the burden to establish a claimed exemption." Songer v. Dillon Res., Inc., 618 F.3d 467, 471 (5th Cir. 2010).
To prove the applicability of one of the FLSA's white-collar exemptions, an employer must show that the employee meets both the salary and duties tests for the exemption that purportedly applies. Cowart v. Ingalls Shipbldg., Inc., 213 F.3d 261, 262-63 (5th Cir. 2000). "The decision whether an employee is exempt from the FLSA's overtime compensation provisions under 29 U.S.C. § 213(a)(1), is primarily a question of fact[;] . . . [h]owever, the ultimate decision whether the employee is exempt from the FLSA's overtime compensation provisions is a question of law." Lott v. Howard Wilson Chrysler-Plymouth, Inc., 203 F.3d 326, 330-31 (5th Cir. 2000).
In this case, the record establishes that the executive exemption is inapplicable to Plaintiff Hines as a matter of law because Key Energy failed to introduce any evidence to support an essential element of this affirmative defense—that Hines's suggestions or recommendations were afforded particular weight. However, material fact disputes preclude the award of summary judgment on the issue of the executive exemption's applicability to Plaintiff Headrick and on the issue of the HCE's applicability to both Plaintiffs. Key Energy has abandoned its MCA exemption defense and has waived its defense under the combination and administrative exemptions.
To qualify for the executive exemption an employee must: (1) be compensated on a salary basis of a rate not less than $455 per week
To be entitled to summary judgment that the executive exemption
A genuine issue of material fact exists regarding whether Key Energy can establish that the Plaintiffs' primary duty was the management of the enterprise, as opposed to manual labor.
The Code of Federal Regulations defines an employee's "primary duty" as "the principal, main, major or most important duty that the employee performs." 29 C.F.R. § 541.700(a). Factors to consider when determining an employee's "primary duty" include, but are not limited to the following: "the relative importance of the exempt duties as compared with other types of duties; the amount of time spent performing exempt work; the employee's relative freedom from direct supervision; and the relationship between the employee's salary and the wages paid to other employees for the kind of nonexempt work performed by the employee." Id. "Determination of an employee's primary duty must be based on all the facts in a particular case, with the major emphasis on the character of the employee's job as a whole. 29 C.F.R. § 541.700(a)." In making this assessment, courts look to the job responsibilities that are "of principal value to the employer, not the collateral tasks that [the employee] may also perform, even if they consume more than half [the employee's] time." Dalheim v. KDFW-TV, 918 F.2d 1220, 1227 (5th Cir. 1990).
Key Energy claims Plaintiffs were primarily engaged in management of the enterprise, while Plaintiffs contended they were manual laborers. "Management of the enterprise" typically includes any of the following activities:
29 C.F.R. § 541.102. In contrast, "manual laborers and other blue collar workers who perform work involving repetitive operations with their hands, physical skill, and energy are not eligible for the executive exemption as a matter of law." Goulas v. LaGreca, No. CIV.A. 12-898, 2013 WL 2477030, at *9 (E.D. La. June 7, 2013), aff'd sub nom., 557 Fed. App'x 337 (5th Cir. 2014) (quoting 29 C.F.R. § 541.3(a)) (internal quotations omitted)); see also McPherson v. LEAM Drilling Sys., LLC, No. 4:14-CV-02361, 2015 WL 1470554, at *11 (S.D. Tex. Mar. 30, 2015). This is because "blue collar" workers "gain the skills and knowledge required for performance of their routine manual and physical work through apprenticeships and on-the-job training, not through the prolonged course of specialized intellectual instruction required for exempt learned professional employees." Goulas, 2013 WL 2477030, at *9.
Notwithstanding the foregoing, an employee may qualify for the executive exemption despite his performance of manual labor where there is sufficient evidence that the employee's primary duty is managerial. See id. (noting that there was sufficient evidence to support a conclusion that plaintiff's "primary duty" was managerial, despite trial testimony indicating that plaintiff "spent a significant amount of his time performing `blue collar' work on a day-to-day basis"); see also Carranza v. Red River Oilfield Servs., LLC, No. H-15-3631, 2017 WL 387196, at *5 (S.D. Tex. Jan. 25, 2017) (finding that plaintiff's primary duty was managing and supervising the oilfield inspection crew, and agreeing with defendant that to the extent plaintiff performed any manual work similar to that of his crew members, "it would necessarily have been in connection with and [in] support of his management duties"); Allen v. Coil Tubing Servs., LLC, 846 F. Supp. 2d. 678, 707 n. 56 (S.D. Tex. 2012), aff'd, 755 F.3d 279 (5th Cir. 2014) (evidence established that plaintiff's field oversight duties as a Service Supervisor were crucial to defendant's business and thus, the fact that plaintiff performed manual labor along-side the Service Technicians he supervised in the field did not destroy plaintiff's exempt status). The determination of whether various types of oil field operators or inspectors are manual laborers so as to render them non-exempt generally "turns largely on the facts of each case." Guyton v. Legacy Pressure Control, No. 5:15-cv-1074-RCL, 2017 WL 244868, at *3 (W.D. Tex. Jan. 18, 2017) (collecting cases).
Plaintiffs both submitted declarations swearing that "nearly all of [their time]" working as Service Supervisors for Key Energy consisted of "physically demanding" manual labor such as loading and transporting equipment, "rigging up" equipment, overseeing the well-pumping process, operating the pumping equipment and conducting repairs where necessary, and "rigging down" the equipment upon completion of their work. (See Hines Decl. ¶¶ 7-8; 12-21; Headrick Decl. ¶¶ 7-8; 12-21.) Accordingly, Plaintiffs argue that as "blue collar" workers, they are ineligible for the executive exemption.
Key Energy, on the other hand, submitted declarations from Plaintiffs' former District Managers indicating that Hines's and Headrick's primary duties, respectively, related to the management of Key Energy's pressure-pumping services and coil-tubing services lines of business. (See Russell Decl. ¶¶ 4-7; Davis Decl. ¶¶ 4-7.) Specifically, Key Energy's District Managers attest that Hines and Headrick were expected to perform the following management-type tasks: ensuring that necessary personnel were assigned to and prepared for pressure-pumping and/or coil-tubing projects, leading pre-shift crew meetings, meeting with customers to define the scope of work and ensure customer satisfaction, defining the scope of work for crew members based upon the customer's preferences, providing instructions and overseeing crew members, reviewing and approving daily work plans, preparing and approving daily work tickets summarizing work performed, and reviewing and approving time cards and daily bonus forms for crew members. (See Russell Decl. ¶¶ 4-7; Davis Decl. ¶¶ 4-7.) Plaintiffs' job descriptions support these contentions. (See Exs. C-9 & C-12 to Resp.)
Key Energy also disputes the amount of time Plaintiffs spent performing manual labor. While Key Energy concedes that pressure-pumping Service Supervisors such as Hines were required to perform manual labor, Hines's District Manager declares that Hines would not have spent the majority of his time performing manual labor, nor was manual labor Hines's "primary duty." (See Russell Decl. ¶ 7.) Key Energy further contends that coil-tubing Service Supervisors such as Headrick were not required to perform any manual labor as part of their duties. (See Davis Decl. ¶ 8.) "Instead, Key Energy empowered Service Supervisors to delegate duties and assignments, and it expected them to oversee and report Operators' work. If Mr. Headrick performed any manual labor, he did so at his own direction." (Id.)
Key Energy's evidence creates a genuine issue of material fact regarding whether Plaintiffs' primary duties consisted of management of Key Energy's enterprise rather than the performance of manual labor. See, e.g., Guyton, 2017 WL 244868, at *4 (finding genuine issue of material fact existed as to whether plaintiffs were manual laborers where both parties introduced evidence on summary judgment disputing the nature of plaintiffs' primary duties and the amount of time spent performing manual labor).
A genuine issue of material fact exists regarding whether Key Energy can establish that the Plaintiffs customarily and regularly directed the work of two or more employees.
For purposes of the FLSA, the term "customarily and regularly" means "a frequency that must be greater than occasional but which, of course, may be less than constant. Tasks or work performed "customarily and regularly" includes work normally and recurrently performed every workweek; it does not include isolated or one-time tasks." 29 C.F.R. § 541.70. Plaintiffs argue in their Motion that Key Energy "cannot produce evidence that Plaintiffs customarily or regularly directed the work of two or more employees." (See Motion at 7.) However, Key Energy, through declarations of its District Managers and Plaintiffs' job descriptions, has introduced sufficient evidence to raise a fact issue concerning whether Plaintiffs were required to customarily and regularly direct the work of a three-to-four-man crew. (See Russell Decl. ¶¶ 4-7; Davis Decl. ¶¶ 4-7; Exs. C-9 & C-12 to Resp.) Specifically, Key Energy's evidence indicates that Plaintiffs were regularly required to define the scope of work to be performed, delegate assignments, provide instruction and training to crew members, and oversee performance of two or more employees. (See Russell Decl. ¶¶ 4-7; Davis Decl. ¶¶ 4-7; Exs. C-9 & C-12 to Resp.)
Plaintiffs have met their burden to prove that there is an absence of evidence in the record to suggest that Key Energy gave Plaintiff Hines's suggestions and recommendations particular weight and therefore that the executive exemption is inapplicable to him as a matter of law; they have not met this burden with regard to Plaintiff Headrick.
The fourth element an employer must prove to be entitled to claim the executive exemption with regard to an employee is that the employee had "the authority to hire or fire other employees" or the employee's "suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight." 29 C.F.R. § 541.100(a)(4). Key Energy does not dispute that Plaintiffs did not have the authority to hire or fire other employees. Instead, Key Energy argues that it "expected its Service Supervisors to assist the Service Manager with selecting, hiring, motivating, coaching, training, and evaluating employees." (Resp. at 11.) Key Energy further asserts that it "gave particular weight to Service Supervisors' suggestions and recommendations as to the discipline of other employees." (Id.)
In determining whether an employee's suggestions and recommendations are given "particular weight," the following non-exhaustive list of factors are relevant: (1) "whether it is part of the employee's job duties to make such suggestions and recommendations"; (2) "the frequency with which such suggestions and recommendations are made or requested"; and (3) "the frequency with which the employee's suggestions and recommendations are relied upon." 29 C.F.R. § 541.105. A "suggestion or recommendation . . . given particular weight" is one that concern workers regularly and customarily directed by the employee, not other workers who they do not direct. Id. The governing regulation cautions that "occasional suggestion[s]" regarding the status of a co-worker do not meet the threshold to be considered suggestions given particular weight. Id. An employee's recommendations can have "particular weight" even if they can be overridden by higher-level managers or if the employee does not have ultimate decision-making authority. Id.
Plaintiffs maintain that the evidentiary record establishes as a matter of law that Key Energy cannot prove this element because they never gave suggestions about employees who reported to them. They submitted declarations attesting that Key Energy never asked them for their input regarding the hiring, firing, performance, promotion, or discipline of other employees and that they never provided such input. (See Hines Decl. ¶¶ 29-32; Headrick Decl. ¶¶ 29-32.) In attempting to rebut this evidence, Hines's District Manager attests that Key Energy required Service Supervisors (including presumably Hines) to "assist the Service Supervisor with coaching and training Operators." (See Russell Decl. ¶ 7.) However, Key Energy failed to submit any evidence that Hines made
Key Energy, however, has introduced sufficient evidence to generate a fact issue on the fourth element with regard to Defendant Headrick. Headrick's District Manager attests that Key Energy "expected its Service Supervisors [such as Headrick] to assist the Service Manager with selecting, hiring, motivating, coaching, training, and evaluating employees." (See Davis Decl. ¶ 7.) And, Headrick's job description bolsters this testimony. (See Ex. C-12 to Resp.) (explaining that Service Supervisors are expected to "[a]ssist [the] Service Manager with selecting, hiring, motivating, coaching, training, and evaluating employee performance.") Key Energy concedes Headrick did not yet perform these responsibilities but argues that was because that it was forced to terminate Headrick just nine weeks into his role due to his theft of company property. (See Davis Decl. ¶ 7.) According to Key Energy, Headrick's suggestions and recommendations would have been afforded particular weight had he remained in his position longer.
Key Energy may ultimately fail to prove this element at trial with regard to Headrick. See, e.g, Madden v. Lumber One Home Ctr., Inc., 745 F.3d 899, 906 (8th Cir. 2014) (affirming district court's grant of plaintiffs' motion for judgment as a matter of law where owner testified that he would have involved the plaintiffs in hiring decisions if he had hired more employees because such testimony "requires the jury to impermissibly speculate and to rely on intended rather than actual job functions.") (citing 5 C.F.R. § 551.202(e)) ("While established position descriptions and titles may assist in making initial FLSA exemption determinations, the designation of an employee as FLSA exempt or nonexempt must ultimately rest on the duties actually performed by the employee.")). But summary judgment on this disputed record would be improper.
In summary, the executive exemption is inapplicable to Plaintiff Hines as a matter of law, but whether it applies to Plaintiff Headrick must be determined after a fact-finder resolves disputed issues of material fact.
Material issues of fact also preclude awarding Plaintiffs summary judgment on the issue of whether the HCE exemption applies to them; Plaintiffs have failed to meet their burden to demonstrate an absence of evidence to support an essential element of this exemption.
An employer can claim the HCE exemption if it proves the following three elements with regard to an employee: (1) the employee earns total annual compensation of $100,000
The record does not conclusively establish whether Plaintiffs actually earned (or in Headrick's case, was "on track" to earn)
Key Energy explicitly withdrew its MCA exemption defense. (See Resp. at 1, n. 1.) Thus Plaintiffs' motion for summary judgment on this exemption should be granted as unopposed.
Plaintiffs are also entitled to summary judgment on the administrative and combination exemptions. In their Motion, Plaintiffs argued that both the administrative and the combination exemptions are inapplicable to them as matter of law for a variety of reasons including, that Plaintiffs lacked the ability to independently exercise discretion and control. (See Motion at 8-10.) Although Key Energy pleaded these exemptions in its answer, it has not presented any evidence to support the applicability of either exemption to Plaintiffs. In fact, Key Energy's only mention of these defenses in its Response is a single footnote:
(See Resp. at 13 n. 4.) That is the entirety of the briefing by Key Energy on the issue of these two exemptions; Key Energy does not identify any evidence in the record that supports its position that either exemption applies.
Accordingly, Key Energy has waived the right to assert these exemptions. See Lopez v. River Oaks Imaging & Diagnostic Grp., Inc., 542 F.Supp.2d 653, 659 n. 9 (S.D. Tex. 2008) ("The Fifth Circuit consistently holds that when a party does not address an issue in his brief to the district court, that failure constitutes a waiver on appeal. By analogy, failure to brief an argument in the district court waives that argument in that court.") (internal citations omitted)); Bollschweiler v. El Paso Elec. Co., 166 F.Supp.3d 808, 815-16 (W.D. Tex. 2016) (holding that an FLSA exemption applied to three employees where employer moved for summary judgment on that basis and employees did not contest the exemption's applicability in their response); see also Local Rule CV-7(e) (setting forth requirements for a response and permitting the Court to grant a motion as unopposed if a compliant response is not timely filed). Plaintiffs are entitled to summary judgment that the administrative and combination exemptions do not apply to them.
For the reasons discussed above, the undersigned recommends that the District Court
Plaintiffs' Motion for Partial Summary Judgment regarding the inapplicability of the executive exemption to Plaintiff Hines should be granted. Additionally, Plaintiffs' Motion for Partial Summary Judgment as to the inapplicability of the MCA, administrative, and combination exemptions as to both Plaintiffs should be granted. The remainder of the relief requested by Plaintiffs in their Motion for Partial Summary Judgment should be denied.
As the dispositive motions deadline expired on October 17, 2016, subject to any order of re-referral and consistent with the practices of the Court about the scope of referral for pretrial management, this case is
The United States District Clerk shall serve a copy of this report and recommendation on all parties by either (1) electronic transmittal to all parties represented by attorneys registered as a "filing user" with the clerk of court, or (2) by mailing a copy to those not registered by certified mail, return receipt requested. Written objections to this report and recommendation must be filed
