Payne v. Freeman Transit, LLC

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MARK PAYNE PLAINTIFF v. FREEMAN TRANSIT, LLC and CHRISTOPHER FREEMAN DEFENDANTS

No. 2:22-cv-2113

United States District Court, W.D. Arkansas, Fort Smith Division

February 9, 2024

OPINION AND ORDER

P.K HOLMES, III U.S. DISTRICT JUDGE

This matter came before the Court on November 7, 2023 for a one-day bench trial on Plaintiff Mark Payne's complaint (Doc. 2) against Defendants Freeman Transit, LLC and Christopher Freeman. The trial only concerned Mr. Payne's claims against Mr. Freeman individually, as the case is stayed against Freeman Transit, LLC because of an ongoing bankruptcy case. (Doc. 36). Mr. Payne seeks damages under the Fair Labor Standards Act (“FLSA”) for unpaid overtime compensation.0F^[1]

At trial, the parties stipulated to certain exhibits which were received into evidence. See Doc. 41-1. The Court also heard live testimony from five witnesses: Mark Payne Christopher Freeman, Freeman Transit employee Jack Turner Freeman Transit employee Mike Norman, and Freeman Transit Vice President Heath Wood. At the conclusion of the trial, the Court took the case under submission.

Following a bench trial, “the court must find the facts specially and state its conclusions of law separately. The findings and conclusions . . . may appear in an opinion or a memorandum of decision filed by the court.” Fed.R.Civ.P. 52(a)(1). However, “[t]he trial court need not make specific findings on all facts and evidentiary matters brought before it, but need find only the ultimate facts necessary to reach a decision in the case.” U.S. ex rel. R. W.Vaught Co. v. F.D. Rich Co., 439 F.2d 895, 899 (8th Cir. 1971). Findings are adequate so long as they “afford a reviewing court a clear understanding of the basis of the trial court's decision.” Allied Van Lines, Inc. v. Small Bus. Admin., 667 F.2d 751, 753 (8th Cir. 1982) (internal quotation marks omitted). Accordingly, having considered the testimony of the witnesses and the exhibits received into evidence, and having made credibility determinations on the evidence, the Court makes the following findings of fact and conclusions of law.

I. Liability

A. Findings of Fact

This case arises out of a claim for unpaid overtime wages. Plaintiff Mark Payne worked at Freeman Transit from April 17, 2017 until March 1, 2022. Freeman Transit is a trucking company that uses non-refrigerated 53-foot box trucks to haul dry goods, such as paper products and cleaning supplies. 25 to 30 people work at Freeman Transit, of which about 16 to 17 are drivers. Of those workers, only two are independent contractors. Defendant Christopher Freeman is the President of Freeman Transit. Heath Wood is the Vice President.

Mr. Payne received his first job at Freeman Transit from Mr. Freeman. Mr. Freeman and Mr. Payne previously worked together at Dancor Transit. When Mr. Freeman started Freeman Transit in 2017, he approached Mr. Payne about being one of the new company's first drivers. There was no formal interview. Instead, the two men discussed the position in the parking lot of their previous employer. Mr. Freeman offered Mr. Payne the driving position, and Mr. Payne accepted.

In 2018, Mr. Payne had an accident that affected his vision, so he was no longer able to drive outside his home state of Kentucky. To keep him at the company, Mr. Freeman asked Mr. Payne if he would like to transition to a new role in the company. This role did not exist before Mr. Payne filled it. Mr. Freeman envisioned the new role would include Mr. Payne fielding calls from drivers when they had breakdowns on the road. On those calls, Mr. Payne would help the driver assess what was needed to get the truck back on the road. Mr. Payne would correspond with repair shops, manage invoices, and pay those invoices. Mr. Freeman considered Mr. Payne an excellent fit for this role because of his extensive driving experience. Mr. Payne was expected to answer these breakdown calls at any time, even after hours and on weekends. On top of handling the breakdown calls, Mr. Payne would also help with recruiting. The role did not have an official title, but Mr. Payne dubbed himself the Director of Maintenance. Mr. Payne accepted this job, and he began in August 2018.

When discussing the job, Mr. Freeman and Mr. Payne briefly discussed both pay and whether Mr. Payne would be an independent contractor or an employee. Regarding pay, Mr. Freeman asked Mr. Payne how much he wanted to earn. Mr. Payne said he did not know as he had never done a job like this before, so he left it up to Mr. Freeman. Mr. Freeman decided to pay Mr. Payne $750 a week as a flat rate, and Mr. Payne agreed that was a fair rate. Mr. Payne's rate later increased to $850 and then $950 a week. (Pl. Ex. 9, Bates no. -097 to -101). Regarding employment status, Mr. Freeman and Mr. Payne briefly discussed how to classify Mr. Payne. As a driver, Mr. Payne was an independent contractor. Text messages show that Mr. Payne said if he did Department of Transportation audits, he would need to be an employee, but if he did not do audits, he could be a contractor. (Pl. Ex. 1, Bates no. -066). According to Mr. Freeman, Mr. Payne preferred staying an independent contractor because he did not need health insurance and could save money on taxes as an independent contractor. In the end, the decision was left to Mr. Freeman. Mr. Freeman classified Mr. Payne as an independent contractor.

Once in the role, Mr. Payne's job duties changed over time. For clarity, the Court will divide Mr. Payne's job duties into four categories: (1) breakdown calls, (2) scheduled maintenance, (3) recruitment, and (4) e-log training. In addition to breakdown calls and recruitment discussed above, Mr. Payne also managed scheduled maintenance. This scheduled maintenance is periodic maintenance on the trucks, similar to a 5,000 mile suggested oil change on a car. The e-log training occurred with new drivers. E-logs, or electronic logging systems, are systems plugged into trucks that measure driving and on-time hours to ensure compliance with regulations. As a previous driver, Mr. Payne was a good resource for new drivers and helped the new drivers set up their elog systems in orientation.

Mr. Payne's duties changed, however, as he progressed in his role. Even though Mr. Freeman envisioned Mr. Payne doing recruiting, that responsibility was taken off Mr. Payne's plate early on in his new role. Mr. Freeman explained he felt Mr. Payne was not actually recruiting. Mr. Freeman felt Mr. Payne was merely texting his friends to come drive for Freeman Transit and calling it recruiting. Mr. Freeman explained no drivers came to Freeman Transit because of Mr. Payne's efforts. So Mr. Freeman took away the recruiting responsibility.

Mr. Freeman also took an active role in managing Mr. Payne. As Freeman Transit increased the number of trucks it had on the road, Mr. Payne complained about his workload. After Mr. Payne complained about his hours, Mr. Freeman flew Mr. Payne to Freeman Transit's Arkansas location to observe him. During that observation, Mr. Freeman watched how Mr. Payne worked. Mr. Payne took about three phone calls a day during the three-day observation. Mr. Payne was able to do his work solely from his laptop and cell phone. After the observation, Mr. Freeman decided to take more duties off Mr. Payne's plate.

Mr. Freeman and Heath Wood, Freeman Transit's VP, worked with Mr. Payne whenever he complained about his work hours. They allowed Mr. Payne to take one weekend off a month, with other employees covering the breakdown calls. Mr. Payne also had one week's paid vacation every year. Mr. Freeman had to cover for Mr. Payne when he was out. Mr. Freeman testified that in a two-week period while he covered for Mr. Payne, he only received twelve breakdown calls total. Eventually, in early 2022, Freeman Transit, Mr. Freeman, and Mr. Wood took the scheduled maintenance off Mr. Payne's plate. Of the four categories listed above, Mr. Payne was only fielding breakdown calls by the end of his time with Freeman transit.

Mr. Payne says his duties never changed, but that is not credible. Other Freeman Transit employees testified that they covered some weekends for breakdown calls, one saying he had covered since September 2021, seven months before Mr. Payne was fired. Also, Freeman Transit transitioned their scheduled maintenance into an in-house shop starting in 2022, which meant Mr. Payne would no longer do scheduled maintenance. The Court finds that Mr. Freeman reduced Mr. Payne's duties over time. Eventually, Mr. Freeman decided to terminate Mr. Payne's employment because of Mr. Payne's poor performance.

B. Conclusions of Law

This case involves two questions of law related to liability. First, is Mr. Freeman an employer under the FLSA? Second, is Mr. Payne an employee or an independent contractor? If the answer to both questions is yes, then the Court can move on to damages issues. As explained below, the Court answers the questions as follows: Mr. Freeman is an employer, and Mr. Payne is an employee.

1. Mr. Freeman is an employer under the FLSA.

The first question to answer is whether Mr. Freeman is an employer under the FLSA. The FLSA defines “employer,” as relevant here, as any “person acting directly or indirectly in the interest of an employer in relation to an employee....” 29 U.S.C. § 203(d). A “person” can be an individual. Id. § 203(a). The Court cannot find an Eighth Circuit case that discusses a test for determining if an individual is an employer. The closest the Court can find is a discussion of what is necessary to plead that a defendant is an employer. See Ash v. Anderson Merchandisers, LLC, 799 F.3d 957, 961 (8th Cir. 2015). In that case, the Eighth Circuit affirmed dismissal of a plaintiff's complaint because...