Segovia v. Fuelco Energy LLC

JUAN SEGOVIA andVICTOR FLORES, on behalf of themselves and all others similarly situated, Plaintiffs, v. FUELCO ENERGY LLC, Defendant.

Case No. SA-17-CV-1246-JKP

C/w Case No. SA-19-CV-1129-JKP

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION

May 28, 2021

MEMORANDUM OPINION AND ORDER

Before the Court is Defendant Fuelco's Motion for Decertification of Collective Action (ECF No. 120). Defendant Fuelco Energy LLC ("Fuelco") seeks to decertify this case as a collective action. With the filing of Plaintiffs' response (ECF No. 124) and Defendant's reply brief (ECF No. 126), the motion is ripe and ready for ruling. After considering the motion, other briefing, pleadings, all presented evidence, and the applicable law, the Court denies the motion.

I. BACKGROUND¹

As a fuel supplier for gas production companies, Defendant employs individuals to provide fuel for customers at their gas hydraulic fracturing sites ("job site").² On a typical job site, Defendant assigns two fuel trucks (known as "bobtails"), each with a two-person crew - a driver and an operator or technician. Defendant would thus have a four-member crew for both shifts (night andday). Therefore, there is typically a crew of eight for each job site. Each bobtail remains on site for the duration of the job. Crew members work together to provide fuel to equipment at the site.

Given the nature of the job sites - often located in remote areas - and the lengthy nature of each job project, Defendant lodges its crews at the nearest hotel or at a "man-camp" (collectively referred to as "hotel") for the duration of the project. Defendant would provide a van or truck (collectively referred to as "van") to transport crews between the hotel and job sites. Usually, both shifts would use the same van with one shift using it to travel to the job site and the departing shift using it to return to the hotel. Sometimes, a member of the working crew would drive to the hotel from the work site, pick up the next shift, and return to the job site. And sometimes each shift had a company van for their transportation.

At times, Defendant would place its drivers/technicians on call and pay them their regular rate of pay for time spent on call at the hotel. It would also pay them their regular rate of pay for their commute time to the job site. According to Defendant, it did not include either on call time (also known as "standby time") or commuting time (also known as "drive time") in its overtime pay calculations, but it would include some on call time in its overtime calculations if the employee was on "standby" at the job site or working in Defendant's "yard performing various tasks."

Plaintiffs Juan Segovia and Victor Flores commenced this action by filing an Original Complaint - Collective Action (ECF No. 1) with consents to join (ECF Nos. 1-2 and 1-3) in December 2017. They later moved for conditional certification under 29 U.S.C. § 216(b) and relied on a two-step approach utilized in Lusardi v. Xerox, Corp., 118 F.R.D. 351 (D. N.J. 1987). See ECF No. 44. They sought conditional certification of "All Drivers and/or Frack Fuel Technicians since December 8, 2014." See id. at 2. On December 10, 2018, the assigned Magistrate Judge granted Plaintiffs leave to file a second amended complaint, partially granted the motion for conditional class certification, and conditionally certified the following class in this case: "All FrackFuel Technicians employed by Defendant since December 8, 2014." See Order (ECF No. 54). The next day, Plaintiffs filed the currently operative complaint. See Second Am. & Substituted Compl. - Collective Action (ECF No. 55). As set out in the operative complaint, Plaintiffs bring this collective action under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201, et seq. See id. ¶ 2.

Plaintiffs claim that Defendant distinguished between four time-categories for each Plaintiff or putative plaintiff - "Regular," "Overtime," "Standby," and "Drive Time" - and that Defendant only paid regular hourly rate for the latter two types. Id. at 4-5. They allege that the policy of paying the regular rate for "Standby" or "Drive Time" violates the FLSA, either because the time was working time that could qualify for overtime under the FLSA or because the time qualified as non-discretionary bonuses that should have been included when calculating overtime pay. See id. at 9-10. Specifically, they assert three claims: (1) individual overtime pay based on § 207 for "drive time" and "standby time" claims (¶¶ 50-55); (2) individual overtime pay based on § 207 for regular rate claims (¶¶ 56-61); and (3) overtime claims as a collective action claim (¶¶ 62-70).

Defendant previously moved for summary judgment on all claims. See ECF No. 58. The Magistrate Judge issued a Report and Recommendation, which the District Court accepted without objection. See ECF Nos. 65 and 67. The Magistrate Judge identified the Plaintiffs as "Frac Fuel Technicians" or "Operators" and noted that four such employees would staff a fracking wellsite. ECF No. 65 at 2. As framed by the Magistrate Judge, "[t]he question presented by Fuelco's summary judgment motion is whether [§ 207(a)(1)] should be applied to hours listed on Plaintiffs' earning statements under the categories 'Drive Time' and 'Standby' Time." Id. at 4.

The Magistrate Judge found genuine disputes of material fact as to whether the hours designated under those categories qualify as work time eligible for overtime payment under the FLSA. Id. at 6. For standby time, the primary dispute concerned whether the time was spent at the hotel or the job site, but there was also some dispute as to the freedom employees enjoyed at the hotel.Id. at 9-10 & n.2. For drive time, the Magistrate Judge found summary judgment inappropriate because (1) the parties disagreed about pre-trip inspections and (2) Defendant did not contest that Plaintiffs took turns driving and that an applicable regulation (29 C.F.R. § 785.41) arguably supports counting the time driving as work time. Id. at 11.

With respect to Plaintiffs' regular-rate claim, the Magistrate Judge found a genuine dispute of material fact regarding "Drive Time," but not "Standby" time. Id. at 6. The Magistrate Judge found no dispute as to Standby time because if the time occurred at the job site it is compensable through Plaintiffs' first claim and if the time occurred at the hotel then it is exempted under 29 U.S.C. § 207(e)(2). Id. at 13. Although Defendant invoked § 207(e)(1), (2), and (3) regarding Plaintiffs' claim that drive time should be included as non-discretionary bonuses and thus included in calculating their regular rate of pay used for overtime calculations, reliance on (e)(1) "clearly fails," the payments received "cannot be viewed as exempted travel-expense reimbursement under § 207(e)(2)" or otherwise fit within that provision, and there is a genuine dispute of material fact as to whether the drive time payments were discretionary under (e)(3). Id. at 12-14.

For the reasons stated by the Magistrate Judge, the Court granted summary judgment to Defendant regarding whether "standby" time payments are or should be included in determining the "regular rate" of pay, but otherwise denied summary judgment without prejudice to renewal of the motion after further discovery. ECF Nos. 65 and 67. On April 5, 2019, the Magistrate Judge partially granted a motion for approval and distribution of notice. See Order (ECF No. 69). At that point, three additional employees had filed consents to opt in. See ECF Nos. 5, 17, 64. Thereafter, numerous individuals filed consents to join this collective action as Opt-in Plaintiffs, see ECF Nos. 70-71, 73-91, 94-96, the Magistrate Judge issued a Phase II Scheduling Order (ECF No. 100) used in these types of collective actions, and the case has proceeded in accordance with such scheduling order as periodically amended.

In August 2019, the case was reassigned to the undersigned who continued the reference of all pretrial matters to the Magistrate Judge. See ECF Nos. 101-02. On April 15, 2020, the Magistrate Judge granted an unopposed motion to consolidate by Fuelco and thus consolidated this case with Case No. SA-19-CV-1129-JKP for all pretrial purposes, "but such consolidation is without prejudice to the right of any party to request a separate trial of any issue, claim, or counterclaim in the case." See Order Consolidating Cases (ECF No. 106). Thereafter, six consents were subsequently withdrawn. See ECF Nos. 109-12.

On October 26, 2020, the Magistrate Judge issued an Amended Phase II Scheduling Order (ECF No. 116) to set various deadlines, including one for filing a motion for decertification (December 4, 2020) and one for motions for summary judgment (forty-five days after ruling on motion for decertification). The next month, the Magistrate Judge set a briefing schedule and extended the deadline for a decertification motion to December 18, 2020. See ECF No. 119.

On December 18, 2020, Defendant timely filed its motion for decertification ECF No. 120) with a separate appendix (ECF No. 121). Plaintiffs filed their response (ECF No. 124) with delayed exhibits (ECF No. 125). After Defendant filed a reply brief (ECF No. 126) with a separate appendix (ECF No. 127), the Magistrate Judge returned the case to the undersigned because all pretrial matters were complete. See ECF No. 128.

II. FLSA SUMMARY

"The FLSA ordinarily requires employers to pay overtime to employees who work in excess of forty hours per week." White v. U.S. Corr., LLC, 996 F.3d 302, ___, No. 19-51074, 2021 WL 1732132, at *3 (5th Cir. May 3, 2021) (citing 29 U.S.C. § 207(a)(1)). Violating the overtime provisions subjects the employer to liability for "unpaid overtime compensation" and "liquidated damages." Parrish v. Premier Directional Drilling, L.P., 917 F.3d 369, 379 (5th Cir. 2019) (quoting 29 U.S.C. § 216(b)). Furthermore, the FLSA defines "regular rate" as including "all...