Ellis v. Viking Enters., Inc.

ZACHARY ELLIS, INDIVIDUALLYAND ON BEHALF OF ALL OTHERS SIMILARLY-SITUATED;GREGORY WESTOVER, INDIVIDUALLY AND ONBEHALF OF ALL OTHERS SIMILARLY-SITUATED;AND MEGAN CAMDEN, INDIVIDUALLY AND ONBEHALF OF ALL OTHERS SIMILARLY-SITUATED; Plaintiffs, v. VIKING ENTERPRISES, INC., MOHAMAD MASSOUD, Defendants.

SA-18-CV-00772-ESC

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION

November 22, 2019

FINDINGS OF FACT AND CONCLUSIONS OF LAW

Before the Court is the above-styled cause of action, in which the parties consented to the jurisdiction of a United States Magistrate Judge [#12, #15]. On October 21, 2019, the parties appeared before the Court through counsel for a bench trial on all remaining issues in this case.¹ After considering the evidence presented at trial, the arguments of counsel, and the parties' post-trial briefs [#37, #38], the Court issues the following findings of fact and conclusions of law.

I. Background

This case arises under the Fair Labor Standards Act, 29 U.S.C. § 201, et seq., and this Court has subject matter jurisdiction over this action based on federal question jurisdiction. 28 U.S.C. § 1331. Plaintiffs Zachary Ellis, Gregory Westover, and Megan Camden filed thislawsuit seeking unpaid overtime compensation from Defendants Viking Enterprises, Inc. d/b/a City Ambulance Services ("City Ambulance"), a company operating an ambulance service in San Antonio, Houston, and Dallas, Texas, and its owner and operator Mohamad Massoud. Plaintiffs, former paramedics/emergency medical technicians ("EMTs") working for City Ambulance, contend that they were misclassified as independent contractors during their employment and denied the overtime compensation they are due. Plaintiffs originally filed their Complaint as a collective action but never moved for conditional certification of a class, and the lawsuit proceeded based solely on the individual claims of the named Plaintiffs. Prior to trial, Plaintiff Megan Camden resolved her dispute with Defendants [#34]. Plaintiffs Zachary Ellis and Gregory Westover proceeded to trial.

The parties stipulated to a significant number of undisputed facts and legal conclusions prior to trial. It is undisputed that Ellis and Westover worked for City Ambulance as paramedics/EMTs during the years 2017 and 2018. Their job duties included transporting patients, responding to emergency calls, cleaning and washing the ambulance, performing paperwork, and waiting to be dispatched, among other duties. The parties agree that City Ambulance is a covered employer under the FLSA and was an employer of Ellis and Westover for purposes of the FLSA during the relevant time period. See 29 U.S.C. §§ 203(d) (defining "employer" for purposes of FLSA), (s)(1)(A)(ii) (defining FLSA enterprise coverage as "an enterprise whose annual gross volume of sales made or business done is not less than $500,000").

The parties agree that Ellis began his employment on July 31, 2017 as an employee but was reclassified as an independent contractor on August 30, 2017. On February 2, 2018, Ellis was converted back to employee status then resigned his employment on April 2, 2018.Westover, in contrast, was classified as an independent contractor throughout his employment from July 19, 2017 to March 21, 2018. Plaintiffs typically worked several 24-hour shifts each workweek, and sometimes their shifts lasted longer than 24 hours. Plaintiffs often worked in excess of 40 hours in a given workweek. When classified as contractors, Ellis and Westover were paid a day rate with no overtime compensation.

Defendants admit that Ellis and Westover were misclassified as independent contractors and were in fact non-exempt employees of City Ambulance entitled to overtime compensation. The parties agree that Ellis is owed overtime compensation for the period in which he was classified as an independent contractor from August 30, 2017 to February 2, 2018. The parties agree that Westover is owed overtime compensation for the period from July 19, 2017 to March 21, 2018. In addition to unpaid overtime compensation, Plaintiffs seeks an award of liquidated damages, attorney's fees, and costs of court.

Having stipulated to liability, the parties proceeded to trial on the following three legal issues: (1) whether Defendant Massoud was an employer within the meaning of the FLSA; (2) whether Defendants may deduct sleep time from Plaintiffs' hours worked pursuant to 29 C.F.R. § 785.22; and (3) whether Defendants acted in good faith in failing to pay overtime compensation, such that Plaintiffs are not entitled to liquidated damages. The parties also ask the Court to determine whether Defendants kept accurate records of the hours worked by Plaintiffs and to determine the actual number of hours worked based on the evidence presented at trial, including witness testimony, invoices, and other records.

The general statute of limitations for FLSA claims is two years. 29 U.S.C. § 255(a). The statute of limitations for willful violations of the FLSA is three years. Id. This case was filed on July 26, 2018. The relevant period of employment in this case (beginning in July and August2017) falls within the two-year statute of limitations and therefore willfulness was not alleged by Plaintiffs or at issue at trial.

II. Findings and Conclusions

After considering all of the evidence presented at trial and the parties' post-trial briefing, the Court makes the following findings and conclusions:

A. Massoud is an employer under the FLSA.

Plaintiffs contend that Defendant Massoud and City Ambulance were both Plaintiffs' "employer" during the relevant time period because Massoud owns and operates City Ambulance, set the company's employment policies, made decisions as to hiring and firing, and established the wage and hour practices challenged in this lawsuit. Accordingly, Plaintiffs ask the Court to hold Massoud jointly and severally liable with City Ambulance for the overtime compensation they are due. Defendants contend Massoud was not Plaintiffs' employer as defined by the FLSA.

The FLSA provides that "no employer shall employ any of his employees . . . for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed." 29 U.S.C. § 207(a)(1). Thus, any employer who fails to pay its employee overtime for hours the employee worked in excess of forty in any workweek is liable under the FLSA (unless that employee is exempt from the FLSA's overtime requirements). Martin v. Spring Break '83 Prods., L.L.C., 688 F.3d 247, 250 n.3 (5th Cir. 2012) (citing 29 U.S.C. § 216(b)). As stated earlier, Defendants do not dispute that during the relevant periods, Plaintiffs worked in excess of 40 hours per week for City Ambulance but were not paidovertime. Thus, Defendants concede City Ambulance is liable but contend Massoud is not an "employer" for purposes of the FLSA.

An employee bringing an action for unpaid overtime compensation must prove by a preponderance of the evidence that there existed an employer-employee relationship during the unpaid overtime periods claimed. Johnson v. Heckmann Water Res. (CVR), Inc., 758 F.3d 627, 630 (5th Cir. 2014). The FLSA defines "employer" to include "any person acting directly or indirectly in the interest of an employer in relation to an employee . . . ." 29 U.S.C. § 203(d). The Supreme Court has construed "employer" expansively. Falk v. Brennan, 414 U.S. 190, 195 (1973). To determine whether an individual or entity is an employer under the FLSA, courts examine the totality of the employment relationship in light of economic realities. Williams v. Henagan, 595 F.3d 610, 620 (5th Cir. 2010); Wirtz v. Lone Star Steel Co., 405 F.2d 668, 669 (5th Cir. 1968). The "economic reality" test embraced by the Fifth Circuit requires courts to inquire into whether the alleged employer: "(1) possessed the power to hire and fire employees, (2) supervised and controlled employee work schedules or conditions of employment, (3) determined the rate and method of payment, and (4) maintained employment records." Williams, 595 F.3d at 620. No single factor is dispositive, and "a party need not establish each element in every case." Orozco v. Plackis, 757 F.3d 445, 448 (5th Cir. 2014).

Plaintiffs have established by a preponderance of the evidence that Massoud was their employer and is therefore jointly liable with City Ambulance for Plaintiffs' unpaid overtime. Massoud testified at trial that he is the sole founder, owner, and CEO of City Ambulance. Massoud's live testimony establishes that he exercises operational control over City Ambulance; exercises the authority to hire and fire employees; and is responsible for the ultimate decision how to classify and pay his employees. Randy Ream, former Regional Operations Manager forCity Ambulance, testified by deposition that Massoud provided him with the employment contracts used with employees, including Plaintiffs. He also testified that Massoud made the ultimate decisions regarding employees' pay, hiring, and firing. Massoud largely conceded this, and to the extent he attempted to minimize his role in the company's operations, that testimony was not credible when considered against the consistent testimony of the other witnesses. Alex Quinones, Assistant Operations Manager, testified by deposition that Massoud actively managed the business of City Ambulance and that "everything" with respect to the company "went through" him. (Quinones Dep. at 16:21.)

"The overwhelming weight of authority is that a corporate officer with operational control of a corporation's covered enterprise is an employer along with the corporation, jointly and severally liable under the FLSA for unpaid wages." Donovan v. Grim Hotel Co., 747 F.2d 966, 972 (5th Cir. 1984) (quoting Donovan v. Agnew, 712 F.2d 1509, 1511 (1st Cir. 1983)). Defendants'...