Nelson v. Sabre Cos.

KIRK NELSON and JOHN EVANS,individually and on behalf of all other persons similarly situated, Plaintiffs, v. SABRE COMPANIES LLCand SABRE ENERGY SERVICES LLC, Defendants.

1:15-cv-00314 (BKS/TWD)

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF NEW YORK

July 23, 2018

APPEARANCES:

For Plaintiffs:

Elmer R. Keach III

Maria K. Dyson

Law Offices of Elmer Robert Keach, III, P.C.

One Pine West Plaza, Suite 109

Albany, NY 12205

Gary E. Mason

Danielle L. Perry

Whitfield Bryson & Mason LLP

5101 Wisconsin Avenue NW, Suite 305

Washington, DC 20016

Nicholas A. Migliaccio

Jason S. Rathod

Migliaccio & Rathod LLP

412 H Street NE, Suite 302

Washington, DC 20002

D. Aaron Rihn

Robert Peirce & Associates, P.C.

2500 Gulf Tower

707 Grant Street, Suite 2500

Pittsburgh, PA 15219

For Defendants:

Shauna Johnson Clark

Joseph C. Dole

Kimberly F. Cheeseman

Andrew Yeh

Norton Rose Fulbright US LLP

1301 McKinney Street, Suite 5100

Houston, TX 77010

Matthew D. Stockwell

Andrew C. Smith

John F. Scalia

Pillsbury Winthrop Shaw Pittman LLP

1540 Broadway

New York, NY 10036 Hon. Brenda K. Sannes, United States District Judge:

MEMORANDUM-DECISION AND ORDER

I. INTRODUCTION

Kirk Nelson and John Evans, along with individuals who have opted in to this collective action ("Opt-in Plaintiffs," and together with Mr. Nelson and Mr. Evans, "Plaintiffs"), bring this action against Sabre Companies LLC and Sabre Energy Services LLC (collectively, "Defendants" or "Sabre"), asserting claims under the Fair Labor Standards Act, 29 U.S.C. §§ 201-219 (the "FLSA"), and Arkansas wage and hour laws for Defendants' alleged failure to pay overtime compensation. (Dkt. No. 46, ¶¶ 55-66). In addition to declaratory and injunctive relief, Plaintiffs seek to recover unpaid wages, overtime compensation, liquidated or punitive damages, and damages representing the employer's share of payroll taxes.¹ (Id. at 12-13). Plaintiffs have moved for partial summary judgment, (1) seeking to dismiss Defendants' exemption defenses under the FLSA, and (2) asking the Court to set a formula for calculating damages. (Dkt. No. 127). Defendants have also moved for partial summary judgment but only with respect to the formula for calculating damages. (Dkt. No. 126). For the reasons set forth below, the Court denies both parties' motions.

II. FACTS²

A. Sabre's Business

Sabre is a water treatment company that employs a patented "DiKlor" technology to decontaminate the water that oil and gas companies use in hydraulic fracturing ("fracking" or "frac") operations. (Dkt. No. 126-3, ¶ 1, Dkt. No. 149-4, ¶ 1). Sabre transports its mobile decontamination units by truck to its clients' sites; there, its employees use the units to add chlorine dioxide to treat surface and subsurface water. (Dkt. No. 126-3, ¶ 1; Dkt. No. 149-4, ¶ 2). Sabre's field workers are known as "operators." (Dkt. No. 126-3, ¶ 2). There are three categories of operators, Operators 1, 2, and 3; category placement depends on an employee's experience, skill level, and the types of jobs the employee is capable of performing. (Dkt. No. 149-4, ¶ 4; Dkt. No. 138, ¶ 4).

Before they become Operators 1, new Sabre employees must complete a training period, typically lasting approximately 90 days, during which time they are referred to as "helpers," "assistants," or "trainees." (Dkt. No. 126-3, ¶¶ 2, 3; Dkt. No. 149-4, ¶ 4). During their training, trainees work on the same shifts as operators and perform such tasks as hooking up, disconnecting, and breaking down hoses as part of the setup and takedown, as well as taking water samples. (Dkt. No. 138, ¶ 5). After their training, and unless Sabre discharges them, trainees become Operators 1 if they are capable of running the Sabre operation at the frac site alone. (Dkt. No. 126-3, ¶ 2).

B. Duties of Operators

Plaintiffs assert that "their primary duty was performing manual labor to treat water." (Dkt. No. 149-4, ¶ 14). Defendants respond that this is "a gross oversimplification of the complexities of the Operator job" and note that Plaintiffs had several job duties, including driving the decontamination units to the frac sites, operating the units, measuring chemicals, inputting data, performing tests, completing job safety analyses at the end of shifts, completing frac logs, interacting with oil company and third-party representatives to coordinate day-to-day activities, and monitoring the radio inside the unit to determine what the frac crew was doing. (Dkt. No. 138, ¶ 14; see Dkt. No. 129-7, at 24 (William Bierhaus, former president and chief operating officer ("COO") of Sabre Energy Services, explaining that treating water is "the functional description of the service we provide to the client" but not the operators' "job on location," and that operators were responsible, among other things, for "representing the company on location," "interfacing with the client on location," "supervising third parties on location," and "coordinating equipment and materials in preparation for the next series of work")).

Physical labor, such as taking samples, carrying hoses, and setting up and taking down equipment, was a component of operators' jobs. (See, e.g., Dkt. No. 128-6, at 43-45). However, Defendants assert that operators "spent the majority of their time in a comfortable, climate controlled [decontamination] unit," (Dkt. No. 138, ¶ 20; Dkt. No. 137-1, ¶¶ 2, 3; Dkt. No. 128-11, at 107), and engaged in nonmanual activities, such as customer relations and coordination of on-site activities, (see, e.g., Dkt. No. 129-6, at 69-71; Dkt. No. 129-8, at 93-94).³

The majority of Sabre's decontamination units had a laptop. (Dkt. No. 137-1, ¶ 3; Dkt. No. 129-10, at 56-57). The laptops ran Sabre's Frac-Log program, which is an "administrative, reporting and management tool for communication to [Sabre's] administrative staff, [Sabre's] technical staff and management staff." (Dkt. No. 129-10, at 57). Operators, or the trainees they supervised, were responsible for inputting data into the program, which could provide updates about operations in real time. (See id. at 57-60, 64; Dkt. No. 129-7, at 63 (Mr. Bierhaus defining the Frac-Log program as "a system developed internally to monitor ongoing operations in a real-time mode of location")). At his deposition, Albert Massey, a Sabre manager, explained that the program also gave operators a starting point for calculating the amount of chemicals needed to treat water. (Dkt. No. 129-11, at 89-90). The frac logs were viewable by management and Sabre's "administration," such as "billing, inventories, costing." (Dkt. No. 129-10, at 62, 64; see also Dkt. No. 130-3, at 25-29). John Mason, Defendants' chairman and chief technology officer ("CTO"), testified that he monitored frac logs.⁴ (Id. at 57; see also id. at 58 ("[I]f I am notified that we have an operator that may be questionable, we may trade off amongst the people that know how to do operations in keeping an eye on that person.")). John Simone, who was a regional operations manager, agreed that it was fair to say that "frac logs were used as a tool to monitor operators" and "make sure that operators performed their duties in line with the company's expectations." (Dkt. No. 130-3, at 29).

Sabre had standard operating procedures ('SOPs") covering a variety of issues, "from how to transfer chemical, to how to park your truck, to how to recognize interference in titrations." (Dkt. No. 129-10, at 69). The SOPs were "a safe and quality assurance way to run the operation." (Dkt. No. 129-7, at 67). According to Defendants, however, many operators did notuse the SOPs, and those that did considered those as guidelines on how to do their job, complementing the judgment and experience they gained on the job. (Dkt. No. 138, ¶ 27; Dkt. No. 128-11, at 37 (James Gann testifying that he was not aware of "any written guidelines" about how often to take samples and titrate); Dkt. No. 128-12, at 90-91 (Opt-in Plaintiff Terry Gore testifying that "[t]here may have been" written guidelines in the unit but he "never used them"); Dkt. No. 128-6, at 58-60 (Opt-in Plaintiff Fred Bean testifying that the "manual" indicated the ratio for titration, but agreeing that it was fair to say that he used "some knowledge and experience" to make adjustments)). According to Mr. Mason, Sabre's "SOPs are not step by step instructions on how to be an operator" and "do not cover every step that needs to be done on a job." (Dkt. No. 137-1, ¶ 7). In some circumstances, operators could deviate from the SOPs.⁵ (Dkt. No. 129-10, at 25 (Mr. Mason testifying that "the more senior guys will understand which [SOPs] are ironclad and which ones aren't")).

At some point, Sabre distributed a smartphone application to assist operators with calculations. (Dkt. No. 129-10, at 55 (Mr. Mason stating that the application was "basically an advanced calculator")). Opt-in Plaintiff Steve Tondre explained how the application worked:

It was pretty simple. Of course, you click on the app, and then you would just put in the volume of water that you wanted to treat. And then you would put it in - the demand of the water in there, and you'd put the residual and you'd hit go and it would tell you how much of the three chemicals you should be using.

(Dkt. No. 129-5, at 176).

Sabre billed its customers based on a price per barrel, which was set by Sabre management, not operators. (Dkt. No. 129-9, at 43). And Sabre management, not operators,would decide which pieces of equipment to use on a well site. (See id. at 79). Defendants, however, point out that operators would be in charge of billing, (Dkt. No. 138-1, ¶ 8), and reporting to the customer the total number of barrels treated, (Dkt. No. 128-14, at 148-49).

At his deposition, Opt-in Plaintiff Kirt Hasselmeier, who managed Sabre operations, agreed that it was fair to say that the customer's "company man" was in charge of the well site and "everything that's going on on the pad." (Dkt. No. 129-9, at 72). He also acknowledged that Sabre employees had "to listen to the company...