Clay v. New Tech Global Ventures, LLC

MICHAEL D. CLAY, ET AL. v. NEW TECH GLOBAL VENTURES, LLC

CIVIL ACTION NO. 16-296-JWD-CBW

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF LOUISIANA

March 4, 2019

RULING AND ORDER

This matter comes before the Court on the following motions filed by Defendant New Tech Global Ventures, LLC ("New Tech"):

(1) Motion to Enforce Stipulated Class Definition by Striking and/or Severing Claims Asserted by Opt-In Plaintiff Holbrook (Doc. 71);

(2) Motion for Partial Summary Judgment (Doc. 89);

(3) Motion for Decertification and to Sever Named Plaintiffs' Claims (Doc. 90); and

(4) Motion for Summary Judgment as to Opt-In Plaintiff Gene Holbrook (Doc. 94).

Also before the Court is the Motion for Summary Judgment as to Employee Status, Liability/Backwages, and New Tech's Good Faith Defense (Doc. 91) filed by Plaintiffs Michael D. Clay, Larre Butler, Clayton Shamsie, Joshua Warren, Joseph Anderson, John Harvey, and Gene Holbrook (collectively, the "plaintiffs").

Many of the motions are interrelated and include overlapping factual and legal issues. Accordingly, the Court consolidates their disposition into this single Ruling and Order after hearing oral argument on February 6, 2019.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. Procedural Background

Plaintiffs Michael Clay, Larre Butler, and Clayton Shamsie (collectively, the "original plaintiffs" or "named plaintiffs") filed this lawsuit on March 3, 2016. (Doc. 1). They allege that New Tech improperly classified them as independent contractors and failed to pay them overtime as required by the Fair Labor Standards Act ("FLSA"). On September 28, 2016, the Magistrate Judge granted the parties' Stipulation and Agreed Motion for Conditional Certification and Court-Authorized Notice (Doc. 17), conditionally certifying a class of "[a]ll current and former workers of [New Tech] retained as 'Rig Clerks' during the period of March 3, 2013, to March 3, 2016." (Doc. 19 at 1). Eligible class members were given 60 days to opt in to the litigation. (Id. at 2). By December 20, 2016, six additional plaintiffs had opted in: Joshua William Warren, Joseph LaVelle Anderson, Albert Deckard, Gene Lee Holbrook, Brett Allen Baker,¹ and John Robertson Harvey (collectively, the "opt-in plaintiffs") (See Docs. 20-25). After New Tech answered the complaint, the case then proceeded to discovery.

On August 14, 2018, before the completion of discovery, the first of the case's several pending motions was filed. (See Doc. 68). Thereafter, the parties engaged in an extensive course of motions practice, culminating in the several motions for which the Court heard oral argument on February 6, 2019. On February 20, 2019, the Court granted New Tech's motion to dismiss Deckard's claims with prejudice (Doc. 68) during a telephonic status conference. (See Doc. 153).²

B. Facts

New Tech is a staffing company which provides project management and consultancy services to independent oil and gas companies operating drilling rigs. (Doc. 90-2 at 2). New Tech provides workers to these independent operators who have experience in the various differentdrilling practices in which the operators engage.³ (Id. at 1-2). The workers New Tech provides use their oil rig experience to help independent operators compete with larger competitors in the industry. (Id.). Due to these operators' size, they are unable to directly employ the number of employees with experience in different drilling practices they need to compete with larger producers. (Id. at 1). Thus, they contract with New Tech to acquire these workers. (Id.).

Clay, Butler, and Shamshie are "rig clerks"—workers who support logistical operations and "cost tracking" for both onshore and offshore drilling rigs. (Doc. 90-2 at 3; see also Doc. 90-11 at 16; Doc. 90-12 at 11-12 & 16; Doc. 90-13 at 6). Rig clerks perform a variety of duties, including: ensuring that a rig's staffing and equipment needs are met, keeping track of daily costs on the rig, coordinating onshore supplies and transportation, handling customs and border issues, creating manifests for supply boats and helicopters, and the preparation of daily reports. (Doc. 90-2 at 3). New Tech states that it classifies its rig clerks as independent contractors based on industry standards, the advice of legal counsel, and the results of an Internal Revenue Service ("IRS") audit. (Doc. 89-3 at 3-9). It maintains that it has no "role in day-to-day job duties or assignments for rig clerks that it matches with operators." (Id. at 3).

According to New Tech CEO Larry Cress, rig clerks work on a "project-to-project basis with no guarantee of future work." (Doc. 103-14 at 2). He asserts that rig clerks are "not supervised by any New Tech employees nor are they subject to discipline from New Tech employees." (Id.). He maintains that rig clerks are permitted to turn down job assignments from New Tech and that there is "no penalty to any rig clerk for turning down any job offered." (Id. at 3). New Tech pays rig clerks "only . . . when they are performing services through New Tech." (Id.). New Tech "does not pay a salary or any other form of regular compensation to rig clerks" because it considers themto be independent contractors. (Id.). Rig clerks are "free to contract directly with operators . . . pursuant to the terms of their consultant agreements." (Id.).

The plaintiffs maintain that they qualify as employees and should have been paid overtime by New Tech under the Fair Labor Standards Act. (See generally Doc. 91-1). They generally assert that New Tech had significant control over their job duties, and that it classified rig clerks as independent contractors to avoid its duty to comply with the requirements of the FLSA. (Id.).

II. DISCUSSION

A. New Tech's Motion to Sever (Doc. 71)

New Tech argues that opt-in Plaintiff Gene Holbrook's claim should be stricken and/or severed because he was not a rig clerk and does not fall within the defined scope of the collective. (See generally Doc. 71-1). The plaintiffs respond that under the FLSA, Holbrook needs only to be "similarly situated" to the members of the collective and that this requirement is more flexible than the requirements for joinder of parties under Federal Rule of Civil Procedure 20. (Doc. 77 at 2). They assert that because New Tech has purportedly misclassified employees as independent contractors, the fact that Holbrook was a gate guard instead of a rig clerk is not dispositive.⁴ (Id. at 2-3).

Section 216(b) of the FLSA permits a collective action against an employer for unpaid overtime compensation "by any one or more employees for and in behalf of himself or themselvesand other employees similarly situated." 29 U.S.C. § 216(b). No extensive analysis is warranted here, however, because the Magistrate Judge conditionally certified a class of "[a]ll current and former workers of Defendant retained as 'Rig Clerks' during the period of March 3, 2013, to March 3, 2016." (Doc. 19 at 1). This, of course, came in an order granting the parties' joint motion for conditional certification in which the parties "agreed and stipulate to conditional certification of" all current and former New Tech rig clerks employed from Mach 3, 2013, to March 3, 2016. (Doc. 17 at 2). The "effect of a conditional certification is that a court-approved written notice may then be sent to similarly situated putative class members." Nieddu v. Lifetime Fitness, Inc., 977 F. Supp. 2d 686, 690 (S.D. Tex. 2013).

The plaintiffs conceded that Holbrook is a gate guard, not a rig clerk, and it is clear from the record that there are objectively substantial differences between the two positions. Regardless of whether gate guards can be considered "similarly situated" for FLSA conditional certification purposes, the parties are expressly bound by their stipulation and the Court's September 28, 2016 Order (Doc. 19). Accordingly, New Tech's motion to sever Holbrook's claims (Doc. 71) is granted, and Holbrook's claims are dismissed without prejudice.⁵

B. New Tech's Motion for Partial Summary Judgment (Doc. 89)

Next, New Tech moves for partial summary judgment on the issues of liquidated damages and the statute-of-limitations period. (See generally Doc. 89-1). The plaintiffs oppose the motion primarily on the grounds that it is premature. (See generally Doc. 106).

1. Relevant Facts

New Tech CEO Larry Cress submitted a declaration in which he asserts that other third-party staffing companies in the oil and gas industry employed rig clerks as independent contractors and not full-time employees. (Doc. 89-3 at 3). Realizing the legal significance of the classification of individuals as independent contractors instead of employees, Cress also sought the advice of four attorneys: Roy Keezel, New Tech's in-house counsel from 2005 to 2011; Ken Boiarsky, outside tax counsel; Bruce Williams, personal injury attorney; and Charles Conrad, also a personal injury attorney. (Id. at 4). Cress believed Keezel was specifically knowledgeable about classification issues based on his legal experience counseling employers on classification of their workers. (Id.). Keezel had previously litigated for the IRS, which included investigating employers' classification decisions. (Id.). Keezel also had knowledge of the typical practices of other businesses in the oil industry. (Id.). On several occasions, Keezel advised Cress and New Tech's board that rig clerks were properly classified as independent contractors under federal law, Texas law, and workers' compensation exclusivity provisions, confirming that "this classification was consistent with the predominant and longstanding industry practice with which both Mr. Cress and Mr. Keezel were familiar." (Id. at 4-5).

Williams is a personal injury defense attorney. (Doc. 89-3 at 6). In April 2015, he provided New Tech with an analysis explaining his opinion that New Tech's workers were independent contractors and not employees. (Id.). Williams' analysis was based in part on personal injury lawsuits against New...