Peden v. Providence Title Co.

1

DANYA PEDEN, individually, and FALON CARPENTER, individually and on behalf of all others similarly situated, Plaintiffs, v. PROVIDENCE TITLE COMPANY and DANIEL A. FOSTER, Defendants.

Civil Action No. 3:21-CV-02286-E

United States District Court, N.D. Texas, Dallas Division

February 29, 2024

MEMORANDUM OPINION AND ORDER

ADA E BROWN UNITED STATES DISTRICT JUDGE

Before the Court is Defendants Providence Title Company's and Daniel A. Foster's (collectively “Providence”) Amended Motion for Partial Summary Judgment. (ECF No. 60). Providence seeks dismissal of Plaintiff Falon Carpenter (“Carpenter”) and the class of 18 similarly situated Non-Exempt Plaintiffs' (the “Non-Exempt Plaintiffs”)^[1]FLSA claim. Also before the Court is Providence's Motion to Bifurcate seeking bifurcation of: (i) Plaintiff Danya Peden's (“Peden”) claim from the Non-Exempt Plaintiffs' claims, and (ii) the Non-Exempt Plaintiffs' trial into liability and damages. (ECF No 72). After careful consideration of the Parties' briefing; appendices; and applicable law, for reasons enumerated hereunder, the Court GRANTS Providence's Amended Motion for Partial Summary Judgment. Thus, the Court DENIES AS MOOT Providence's Motion to Bifurcate.

I. Background

A. Factual Background

This case involves a dispute concerning the Fair Labor Standards Act (“FLSA”). Providence is a title company-a type of insurance company that warrants the sales of homes against claims others might make against a property. (ECF No. 11 at 6). The Non-Exempt Plaintiffs and Peden (all collectively “Plaintiffs”) were employed by Providence and frequently worked over 40 hours a week. (ECF No. 11 at 7). All Plaintiffs were paid a mixture of salary and commissions, but only non-exempt employees were entitled to overtime premium pay. (ECF No. 11 at 7).

It is undisputed that Providence classified Peden as an exempt employee, however, Plaintiffs allege this was a misclassification. (ECF No. 11 at 7). Thus, as an exempt employee, Peden was not entitled to overtime premium pay when she worked over 40 hours. (ECF No. 11 at 8). Providence classified escrow officers-including Carpenter-and escrow assistants as nonexempt under the FLSA, which allowed them the opportunity to receive overtime premium pay when they worked over 40 hours in a seven-day workweek. (ECF No. 11 at 7). As alleged, whenever an escrow officer or escrow assistant-non-exempt employees-earned a commission, Providence deducted that commission from overtime pay earned instead of including it in the regular rate of pay when paying overtime. (ECF No. 11 at 7). The Non-Exempt Plaintiffs allege this practice is a violation of the FLSA. (ECF No. 11 at 9).

B. Calculation of Compensation and Overtime Payments

Providence laid out the computations used in generating the Non-Exempt Plaintiffs' compensation in explicit detail in its motion for summary judgment. (See ECF No. 61 at 13-20). Although the Non-Exempt Plaintiffs obviously dispute whether they are receiving the payment they believe they are entitled to, the Non-Exempt Plaintiffs do not dispute that Providence calculated compensation using the methods set forth below. Providence calculated each of the 19 Non-Exempt Plaintiffs' semi-monthly compensation using the following formula:^[2]

Compensation = Salary Pay + Base OT + Net Commission + Net Commission OT

Salary Pay refers to the Non-Exempt Plaintiffs' base salary paid out semi-monthly, and it is calculated by dividing the annual salary by 24. (ECF No. 61 at 12). Base OT refers to all hours worked over 40 in a workweek, which is calculated by 1.5 times the employee's regular rate of pay times all hours worked over 40 in a workweek. (ECF No. 61 at 13). Providence calculated the Non-Exempt Plaintiffs' regular rate of pay by dividing their annual base salary by 2080 hours, which is based off a standard 40-hour workweek.^[3](ECF No. 61 at 13). Providence calculated gross commission for the Non-Exempt Plaintiffs on a monthly basis using a specific percentage of gross revenue generated by the employee. (ECF No. 61 at 13-14). The gross revenue generated by the employee varied depending on the number and type of title files attributable to that employee in a month, as well as various expenses incurred by Providence in obtaining such revenue. (ECF No. 61 at 14). This number-the Adjusted Production-was then reduced by a set revenue threshold and multiplied by some percentage to obtain the Gross Commission. (ECF No. 61 at 14). After calculating an employee's Gross Commission, which occurs after the Non-Exempt Plaintiff's regular pay day has passed, Providence subtracted another business expense in its calculation: the values equivalent to the employee's current earned Base OT and Base OT paid in previous pay period-Prior Period OT. (ECF No. 61 at 15). Providence then used this amount as a variable in calculating a non-exempt employee's Net Commission. (ECF No. 61 at 15). Providence paid the Non-Exempt Plaintiffs their Net Commissions on the 15th of each month-thus classifying it as deferred Net Commission. (ECF No. 61 at 15). For this deferred Net Commission calculation, Providence used a standard 173.33 hours per month-derived from 2080 hours divided by 12 months.^[4] (ECF No. 61 at 16).

The formula for calculating the deferred Net Commission is summarized as follows:

Net Commission =

(Gross Commission - Base OT - Prior Period OT) (173.33 Hours + Total Monthly OT H

(173.33 Hours + Total Monthly OT Hours) + (0.5 *Total Monthly OT Hours')

Additionally, for all hours worked over 40 during a workweek, Providence paid the NonExempt Plaintiffs an additional overtime compensation payment in the amount of 0.5 times the employee's regular rate of pay for the Net Commissions. (ECF No. 61 at 16). This was called the Net Commission OT. (ECF No. 61 at 16). For this calculation, Providence again used a standard 173.33 hours per month.^[5](ECF No. 61 at 16). Providence alleged that they used 0.5 as the multiple in the Net Commission OT formula because the FLSA regulations only require that the regular rate increase for deferred commission payments be multiplied by one-half-the commission allocation itself represents the straight-time payment and adding the two together results in the FLSA-required payment of one and one-half. (ECF No. 61 at 17). Thus, Net Commission OT was calculated as:

Net Commission =

OT

Net Commission

(0.5)(Total Monthly OT Hours Commission

                                                  173.33 Hours +
                                                  Total Monthly OT
                                                  Hours/
                                                

C. Procedural Framework

On September 24, 2021, Peden, individually, and Carpenter, individually and on behalf of the 18 other Non-Exempt Plaintiffs, filed their Original Complaint, asserting violations of the FLSA. (ECF No. 1). On October 22, 2021, Plaintiffs filed their Amended Complaint (the “Complaint”), which is the operative complaint on which Plaintiffs proceed. (ECF No. 11). In the Complaint, Plaintiffs allege the following causes of action under the FLSA: (i) misclassification as exempt employee and failure to pay overtime premium pay under 29 U.S.C. § 207(a)(1) as to Peden; and (ii) failure to include all remuneration in the regular rate of pay under 29 U.S.C. § 207(e) as to Carpenter and the Non-Exempt Plaintiffs (hereinafter “overtime miscalculation claim”).

On August 7, 2023, Providence filed its amended motion for partial summary judgment, (ECF No. 60), along with its brief in support, (ECF No. 61), and appendix in support, (ECF No. 62). Plaintiffs responded on September 11, 2023, (ECF No. 68), along with their brief in support, (ECF No. 69), and appendix in support, (ECF No. 70). Providence replied on September 25, 2023. (ECF No. 71). Providence seeks dismissal of only Plaintiffs' second cause of action-the overtime miscalculation claim as to the 19 Non-Exempt Plaintiffs-so only this claim will be analyzed by the Court.

Further, on October 12, 2023, Providence filed a motion to bifurcate, seeking to bifurcate: (i) Peden's claim from the Non-Exempt Plaintiffs' claims; and (ii) the Non-Exempt Plaintiffs' trial into liability and damages. (ECF No. 72). Plaintiffs responded on November 2, 2023, (ECF No. 75), and Providence subsequently replied on November 16, 2023. (ECF No. 76).

Thus, both motions have been fully briefed and are ripe for consideration.

II. Legal Standard

A. Summary Judgment

Summary judgment is appropriate when the pleadings and evidence on file show “there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). A genuine dispute of material fact exists “if the evidence is such that a reasonable jury could return a verdict for the non-moving party.” Anderson 477 U.S. at 248. A court must view all evidence and draw all reasonable inferences in the light most favorable to a party opposing a summary judgment motion. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000). A court “may not make credibility determinations or weigh the evidence” in ruling on the motion. Reeves, 530 U.S. at 150; Anderson, 477 U.S. at 254-55. Moreover, the evidence the non-movant provides must raise “more than . . . some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 586 (1986). The evidence must be such that a jury could reasonably find in the non-movant's favor. Anderson, 477 U.S. at 248. If the non-movant is unable to make such a showing, the court must grant summary judgment. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 ...