Jackson v. Leader's Inst., LLC

ROBERT C. JACKSON and COLETTE JOHNSTON, Plaintiffs, v. THE LEADER'S INSTITUTE, LLC, and DOUG STANEART, Defendants.

Case No. 1:14-cv-00193-TWP-DML

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF INDIANA INDIANAPOLIS DIVISION

November 24, 2015

ENTRY ON CROSS MOTIONS FOR SUMMARY JUDGMENT

The parties' cross motions for summary judgment are before the Court. Plaintiffs, Robert Jackson ("Jackson") and Colette Johnston (" Johnston") (collectively, the "Plaintiffs"), filed this action contending that Defendants were their employers and they are entitled to unpaid overtime pay under the Fair Labor Standards Act ("FLSA"). Defendants, Doug Staneart ("Staneart") and The Leader's Institute, LLC ("TLI") (collectively, the "Defendants"), deny that they were employers of either Plaintiff, and assert that Plaintiffs were independent contractors not subject to relief under the FLSA. Defendants filed a Motion for Summary Judgment or Alternatively for Partial Summary Judgment (Filing No. 61). Thereafter, Plaintiffs filed a Cross-Motion for Summary Judgment and Response in Opposition to Defendants' Motion for Summary Judgment (Filing No. 74). For the following reasons, both motions are DENIED.

I. BACKGROUND

The facts in this case are heavily disputed by the parties. The Background section of this Entry is limited to those facts which the Court identifies as uncontested. The contested facts, which far outweigh the uncontested facts, are presented in greater detail in the Discussion section of this Entry.

TLI is a business that specializes in team building events and corporate seminars that provide public speaking classes and leadership courses throughout the United States. Staneart is the owner, president, chief executive officer, and managing officer of TLI. During the relevant time period, Staneart worked from his home office in Arlington, Texas and TLI did not have a separate physical location.

Jackson worked for TLI from December 2006 to January 2009, and from November 2010 to July 2013. He worked for the seminar division of the business, making sales and presenting trainings and team building programs. When making sales, Jackson worked from his home in Indianapolis, Indiana. When presenting trainings, he travelled to meet the corporate clients and often presented in hotel conference rooms. Jackson was paid on a commission-only basis.

Johnston began providing services for TLI in 2008 when she lived in Nashville, Tennessee. She worked for the Defendants from January 2008 to July 2013. Johnston worked as both an inside salesperson and presenter/trainer of programs sold by TLI. When making sales, Johnston worked from her home office in Florida. She was paid on a commission-only basis.

The parties agree that the relevant time period for any FLSA damages sought is from February 10, 2011 to July 31, 2013. Both Jackson and Johnston allege that during that time period, they regularly worked over 40 hours per seven-day week but were never paid overtime by TLI. Jackson seeks $66,324.03 and Johnston seeks $61,884.49 in back overtime wages. Defendants maintain that Jackson and Johnston were independent contractors rather than employees, therefore, neither is entitled to overtime pay.

II. LEGAL STANDARD

Summary judgment is only appropriate by the terms of Rule 56 where there exists "no genuine issue as to any material facts and . . . the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56. This notion applies equally where, as here, opposing parties each move for summary judgment in their favor pursuant to Rule 56. I.A.E., Inc. v. Shaver, 74 F.3d 768, 774 (7th Cir. 1996). Indeed, the existence of cross-motions for summary judgment does not necessarily mean that there are no genuine issues of material fact. R.J. Corman Derailment Serv., Inc. v. Int'l Union of Operating Eng'rs, 335 F.3d 643, 647 (7th Cir. 2003). Rather, the process of taking the facts in the light most favorable to the non-movant, first for one side and then for the other, may reveal that neither side has enough to prevail without a trial. Id. at 648. "With cross-motions, [the court's] review of the record requires that [the court] construe all inferences in favor of the party against whom the motion under consideration is made." O'Regan v. Arbitration Forums, Ins., 246 F.3d 975, 983 (7th Cir. 2001) (quoting Hendricks-Robinson v. Excel Corp., 154 F.3d 685, 692 (7th Cir. 1998)).

A court is not permitted to conduct a paper trial on the merits of a claim and may not use summary judgment as a vehicle for resolving factual disputes. Ritchie v. Glidden Co., ICI Paints World-Grp., 242 F.3d 713, 723 (7th Cir. 2001); Waldridge v. Am. Hoechst Corp., 24 F.3d 918, 920 (7th Cir. 1994). Indeed, a court may not make credibility determinations, weigh the evidence, or decide which inferences to draw from the facts. Payne v. Pauley, 337 F.3d 767, 770 (7th Cir. 2003) ("these are jobs for a factfinder"); Hemsworth, 476 F.3d at 490. Instead, when ruling on a summary judgment motion, a court's responsibility is to decide, based on the evidence of record, whether there is any material dispute of fact that requires a trial. Id.

III. DISCUSSION

The issues before the Court are the following: first, the parties dispute whether Jackson and Johnston are properly characterized as employees or independent contractors. Second, the parties dispute whether Plaintiffs' employment is exempt from the FLSA under the Commissions exemption. Third, the parties dispute whether the Plaintiffs are entitled to liquidated damages and a three year statute of limitations.

A. The Fair Labor Standard Act

The FLSA establishes minimum wage, overtime pay, recordkeeping, and child labor standards affecting full-time and part-time workers in the private sector and in federal, state, and local governments. The FLSA defines an employee simply as "any individual employed by an employer." 29 U.S.C. § 203(e)(1). An "employer" is defined 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). To "[e]mploy includes to suffer or permit to work." 29 U.S.C. § 203(g). It is well recognized that under the FLSA the statutory definitions regarding employment are broad and comprehensive in order to accomplish the remedial purposes of the FLSA. See, e.g., United States v. Rosenwasser, 323 U.S. 360, 362-63, 65 S.Ct. 295, 296, 89 L.Ed. 301 (1945); Real v. Driscoll Strawberry Associates, Inc., 603 F.2d 748, 754 (9th Cir.1979). Courts, therefore, have not considered the common law concepts of "employee" and "independent contractor" to define the limits of the FLSA's coverage. We are seeking, instead, to determine "economic reality." Brock v. Mr. W Fireworks, Inc., 814 F.2d 1042, 1043 (5th Cir.1987); Karr v. Strong Detective Agency, Inc., 787 F.2d 1205, 1207 (7th Cir.1986).

B. Employees versus Independent Contactors

The issue of whether Jackson and Johnston are properly characterized as employees or independent contractors is hotly contested and presents numerous disputes of material fact and significant credibility questions that preclude summary judgment for either party.

Whether an individual is an employee or an independent contractor under the FLSA depends on the application of the economic realities test, which is intended to clarify whether employees are actually dependent upon the business to which they render service. Sec'y of Labor, U.S. Dep't of Labor v. Lauritzen, 835 F.2d 1529, 1534 (7th Cir. 1987); Scott v. NOW Courier, Inc., No. 1:10-cv-971-SEB, 2012 WL 1072751, at *7 (S.D. Ind. Mar. 29, 2012); Perez v. Super Maid, LLC, 55 F. Supp. 3d 1065, 1076 (N.D. Ill. 2014).

To assess the economic realities of a working relationship, courts consider the following six factors: (1) the nature and degree of the alleged employer's control as to the manner in which the work is to be performed; (2) the alleged employee's opportunity for profit or loss depending upon his managerial skill; (3) the alleged employee's investment in equipment or materials required for his task, or his employment of workers; (4) whether the service rendered requires a special skill; (5) the degree of permanency and duration of the working relationship; and (6) the extent to which the service rendered is an integral part of the alleged employer's business. Lauritzen, 835 F.2d at 1534-35; NOW Courier, Inc., 2012 WL 1072751, at *7.

These criteria are intended to assist in determining the true nature of the relationship, but no criterion is by itself, or by its absence, dispositive or controlling. Lauritzen, 835 F.2d at 1534; Perez, 55 F. Supp. 3d at 1076. Instead, courts are to consider all the circumstances of the work activity rather than a particular isolated factor. Lauritzen, 835 F.2d at 1534; see also Vanskike v.Peters, 974 F.2d 806, 808 (7th Cir. 1992) ("status as an 'employee' for purposes of the FLSA depends on the totality of the circumstances rather than on any technical label").

While the ultimate conclusion regarding whether an individual is an employee or an independent contractor is a question of law, the "historical findings of fact that underlie the findings" and "the findings as to the six factors" are questions of fact. Lauritzen, 835 F.2d at 1535 (citing Brock v. Mr. W. Fireworks, Inc., 814 F.2d 1042, 1044-45 (5th Cir. 1987) and Karr v. Strong Detective Agency, Inc., 787 F.2d 1205, 1206 (7th Cir. 1986)). But see Lauritzen, 835 F.2d at 1542 (Easterbrook, J., concurring) ("If we are to have multiple factors, we also should have a trial. A fact-bound approach calling for the balancing of incommensurables, an approach in which no ascertainable legal rule determines a unique outcome, is one in which the trier of fact plays the principal part"); Narayan v. EGL, Inc., 616 F.3d 895, 901 (9th Cir. 2010) (quoting Lauritzen concurring opinion) ("[t]he drawing of inferences from subordinate to 'ultimate' facts is a task for the trier of fact-if, under the governing legal...