Crockett v. Am Net Servs.

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MICHAEL CROCKETT, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED; AND PATRICK IVLOW-PAQUETTE, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED; Plaintiffs, v. AM NET SERVICES, INC., CROSSLINK WIRELESS, L.L.C., Defendants.

No. 4:20-00417-CV-RK

United States District Court, W.D. Missouri, Western Division

December 20, 2022

ORDER

ROSEANN A. KETCHMARK, JUDGE

Before the Court, in this action under the Fair Labor Standards Act (“FLSA”), is Plaintiffs' motion for summary judgment against all Defendants. (Doc. 80.) For the reasons below, Plaintiffs' motion for summary judgment is GRANTED.

I. Background

A. Factual Background

Defendant AmNet Services, Inc. (“AmNet”) and Defendant Crosslink Wireless, L.L.C. (“Crosslink”) (collectively, “Defendants”) were operationally related companies owned by a common parent company called Crosswing Holdings, LLC (“Crosswing”).^[1](Doc. 81 at ¶ 1.) In addition to being owned by the same parent company, Defendants also shared the same headquarters in Fairfield, New Jersey, and were run by a common leadership team, all ultimately reporting to a single decisionmaker who held the title of either President or CEO of both companies. (Id. at ¶ 2.) Defendants' parent company, Crosswing, was formed as a limited liability company under the laws of the state of Delaware in April 2016. (Id. at ¶ 3.)

Both Defendants ceased business operations on September 30, 2020. (Id. at ¶ 4.) While they were still operational, Defendants contracted with large telecommunications companies, such as Nokia, to provide radio frequency (“RF”) design and optimization, RF engineering, drive testing, telecom, microwave, traffic engineering, switching, and other related services. (Id. at ¶ 5.) Crosslink typically performed services involving the physical work of “changing out antennas and other hardware,” while AmNet “tested the work that was performed by Crosslink, but mostly by others.” Both companies also performed other RF testing services. (Id. at ¶ 6.)

On August 31, 2017, Defendants' parent corporation Crosswing, was acquired by Superior Crosslink Investments, LP (“Superior”). Superior was a limited partnership associated with a private equity group called Superior Capital Partners, L.P. (“Capital Partners”), which acquired companies “in some form of duress” at the time of acquisition, then attempted to “fix,” grow, and ultimately sell those companies. (Id. at ¶ 7.) Prior to its acquisition by Superior, Crosswing had been owned by Rajeev Sharma and Asheesh Mahajan, who were also the founders of AmNet. (Id. at ¶ 8.) After Superior acquired Crosswing, Mark Carroll, an individual associated with Capital Partners, ultimately became the Interim President for both Defendants. Mr. Carroll held this position from early 2018 until September 2020 when the companies ceased operations. As the Interim President for Defendants, Mr. Carroll described his role as “keep[ing] the lights on cash management because we were under duress the entire time”; “making “decisions to keep the company afloat”; “approv[ing] new business”'; “manag[ing] head count in terms of how many people were hired and fired”; “track[ing] profitability of jobs”; and “guid[ing] sales” and operations. (Id. at ¶ 9.)

Prior to the August 2017 acquisition of Defendants by Superior, Defendants generally classified RF Engineers and Drive Testers as independent contractors rather than employees. After the acquisition, Mr. Carroll testified that Defendants continued to classify RF Engineers and Drive Testers as independent contractors and acknowledged that they continued to use the same Independent Contractor Agreement (“IC Agreement”) forms as used by Defendants prior to Superior's acquisition. (Id. at ¶ 11.) Mr. Carroll testified that he does not know whether he personally reviewed (or signed on behalf of Defendants) any of Defendants' Independent Contractor Agreements with RF Engineers or Drive Testers; however, he also testified it was his understanding that even after the August 2017 acquisition, Defendants continued to use the same Independent Contractor Agreement forms that the companies had used under the prior ownership.

(Id. at ¶ 12.) Although he recalled attending a post-acquisition managers' meeting for Crosswing Holdings in mid-October 2017, Mr. Carroll did not specifically recall having any discussions among Defendants' leadership team at that time, or at any later time, regarding the propriety of the classification of the individuals in these positions as independent contractors. Rather, he testified he did not remember it being a “big issue” or recall it being “brought to the attention of, hey, this is a big deal and we need to address it, ever.” (Id. at ¶ 13.) After the acquisition in August 2017, and during his time as Defendants' Interim President, Mr. Carroll also did not recall seeking any legal advice or opinions regarding the propriety of classifying the companies' RF Engineers and Drive Testers as independent contractors. (Id. at ¶ 14.)

Although Plaintiffs were each classified as independent contractors while they held RF Engineer or Drive Tester positions with Defendants, the companies classified some of their RF Engineers or Drive Testers as full-time employees rather than as independent contractors. (Id. at ¶ 15.) Mr. Carroll testified that he believes the distinction was largely based on whether the individual holding the RF Engineer or Drive Tester position was physically located in either New Jersey or New York, as the companies' business needs were most consistent in that geographic area. However, he admitted there may have been RF Engineers or Drive Testers in other parts of the country whom Defendants classified as full-time employees. (Id.) Other than their geographic location, Mr. Carroll testified he did not know what other factors the companies considered when determining whether to classify RF Engineers or Drive Testers as employees versus independent contractors. (Id. at ¶ 16.)

Defendants required Plaintiffs to sign written IC Agreements upon their hire and at other times throughout their employment with Defendants. (Id. at ¶ 17.) These IC Agreements purported to set forth the terms and conditions under which Plaintiffs would perform Drive Tester or RF Engineer services for Defendants, including the type or scope of work they would perform as well as the method and rates of compensation they would receive from Defendants for performing that work. (Id. at ¶ 18.) These IC Agreements included language that purportedly reflects an agreement that each RF Engineer or Drive Tester was an independent contractor and not an employee of either of the Defendants, and that he or she would be solely responsible for the withholding and payment of income and payroll taxes associated with services performed for Defendants. The IC Agreements also explicitly stated that RF Engineers and Drive Testers “must at all reasonable times be available to provide Services” to Defendants, and that they must provide 30 days' notice to Defendants to cancel the agreement. Plaintiffs' IC Agreements typically specified that RF Engineers would be paid a flat rate amount of somewhere between $250 and $300 per each assigned dataset they completed, and that Drive Testers would be paid between $15 and $16 for each hour of work they performed on assigned jobs as reported on their time/expense sheets.

Defendants dictated Plaintiffs' daily work assignments, hours, job site locations, and the order in which Plaintiffs performed the duties for each assigned job. For instance, Defendants specifically instructed Plaintiffs as to what work they should perform and how and when they should perform it, including the times to start traveling, when they should arrive and begin work at each location, and when they were permitted to leave each work location. Defendants also required Plaintiffs to get approval for time off, threatened to terminate their relationship if they attempted to decline a job assignment or leave a site location before Defendants informed them they could leave, and prohibited them from taking meal or restroom breaks or stopping long jobs to sleep until Plaintiffs had completed their work. (Id. at ¶¶ 21, 24.) Plaintiffs did not make their own schedules and had to obtain Defendants' “approval” before taking a day off or ending their shift. Defendants required Plaintiffs to submit weekly time/expense sheets for Defendants' approval, requiring Plaintiffs to list the specific hours they worked on each assigned job site or dataset, including their start and stop times for each day, their total time worked each workday, and the specific amounts of time they spent traveling to, from, and between their assigned job site locations. Plaintiffs were also expected to record on their time/expense sheets any reimbursable work-related costs they incurred during that workweek, such as mileage, parking, and toll expenses.

According to the terms of the IC Agreements, Plaintiffs were required to give at least 30 days' notice to Defendants before terminating the “agreement,” yet when Plaintiff Michael Crockett tried to do so, Defendants refused to let him out of his contract. Based on the language of the IC Agreements, Plaintiffs understood that they needed to be “at all reasonable times available to provide [their] services” to Defendants and they were restricted in their ability to even attempt to perform these same type of Drive Tester or RF Engineer services directly for any of Defendants' current or past telecommunications clients or indirectly through any of Defendants' competitors. (Id. at ¶ 28.) Defendants regularly waited to notify Plaintiffs of their specific job assignments until the same day they were expected to go to them, effectively preventing Plainti...