Young v. Energy Drilling Co.

534 F.Supp.3d 720

Justin YOUNG, Individually and on Behalf of Others Similarly Situated, Plaintiffs,

v.ENERGY DRILLING COMPANY, Defendant.

Civil Action No.: 4:20-cv-1716

United States District Court, S.D. Texas, Houston Division.

Signed April 20, 2021

Andrew Wells Dunlap, Michael A. Josephson, Carl Andrew Fitz, Josephson Dunlap Law Firm, Houston, TX, for Plaintiffs.

Russell Daniel Cawyer, Hannah Penley Parks, Kelly Hart and Hallman LLP, Fort Worth, TX, for Defendant.

ORDER

SIM LAKE, SENIOR UNITED STATES DISTRICT JUDGE

The Magistrate Judge issued a Memorandum and Recommendation in this case on March 31, 2021. ECF 39. No party filed objections. Having reviewed the Memorandum and Recommendation the Court is of the opinion that its should be adopted by this Court.

It is therefore ORDERED that the Magistrate Judge's March 31, 2021 Memorandum and Recommendation is hereby ADOPTED by this Court.

MEMORANDUM AND RECOMMENDATION

Christina A. Bryan, United States Magistrate Judge

This Fair Labor Standards Act (FLSA) case is before the Court on Plaintiff's Motion for Conditional Certification.¹ ECF 23. In accordance with the Court's order the parties have submitted supplemental briefing addressing the Fifth Circuit's recent opinion in Swales v. KLLM Transp. Servs., L.L.C. , 985 F.3d 430 (5th Cir. 2021). ECF 32-34, 37-38. Having considered the parties' submissions and the law, the Court recommends that the Motion for Conditional Certification, which the Court now construes as a Motion for Notice pursuant to Swales , be GRANTED with modifications to the putative class members entitled to notice.

I. Background

Defendant Energy Drilling is a land drilling contractor that operates drilling rigs for the extraction of hydrocarbons in several states. Plaintiff Justin Young was an hourly employee of Defendant who worked as a driller and tool pusher at sites in Texas and Louisiana from approximately September 2017 until August 2019. Young alleges that Defendant paid him and other hourly oilfield employees non-discretionary job bonuses per day but did not include the bonuses in employees' regular rates of pay for purposes of calculating the time-and-a-half overtime rate. Young filed this suit asserting that Defendant's pay practices constitute a willful violation of the FLSA's overtime requirements. Young brings this action on his own behalf and filed a motion asking the Court for conditional certification pursuant to 29 U.S.C. § 216(b) of a collective action consisting of:

All non-exempt hourly oilfield personnel who worked for, or on behalf of, Energy Drilling in the United States who were paid a non-discretionary bonus in the past three (3) years.

ECF 23 at 6. Defendant objects to notice being sent to a putative class as proposed by Plaintiff. Defendant initially argued the ground that the proposed class is facially overbroad because it is not limited "as to the locations where these potential class members worked, their job titles, the specific types of bonus payments they allegedly received or whether these bonus payments were included in their regular rates of pay." ECF 30 at 7. In its supplemental briefing, Defendant argues that after the Fifth Circuit's opinion in Swales , conditional certification is no longer appropriate in an FLSA case, and that Plaintiff has failed to present sufficient evidence demonstrating the proposed class is similarly situated. ECF 33 at 6-7.

II. Legal Standards

The FLSA authorizes employees to maintain a suit against employers "for and in behalf of himself or themselves and other employees similarly situated." 29 U.S.C. § 216(b). Until very recently, district courts within this circuit followed a two-stage process when determining whether to allow a representative plaintiff to proceed with a FLSA collective action. This two-stage process was set forth in Lusardi v. Xerox, Corp. and consisted of a notice stage followed by a decertification stage. 118 F.R.D. 351 (D.N.J. 1987). See Jones v. Cretic Energy Servs., LLC. , 149 F. Supp. 3d 761, 766-68 (S.D. Tex. 2015) (describing and applying the two-step Lusardi procedure). District courts applying Lusardi required only "substantial allegations" that the putative class members were the victims of the same policy or plan, a fairly lenient standard. Id. at 767. In this case, the parties' initial briefing argued for (and against) conditional certification pursuant to Lusardi standards. ECF 23 at 11; ECF 30 at 8. Having given the parties notice and an opportunity to address Swales v. KLLM Transp. Servs., L.L.C. , 985 F.3d 430 (5th Cir. 2021) (ECF 32), the Court decides Plaintiff's motion according to new Fifth Circuit precedent.

In Swales , the Fifth Circuit expressly rejected the two-stage Lusardi approach. 985 F.3d at 434 (5th Cir. 2021) (" Lusardi has no anchor in the FLSA's text or in Supreme Court precedent interpreting it. Indeed, the word ‘certification,’ much less ‘conditional certification,’ appears nowhere in the FLSA. We therefore reject Lusardi's two-step certification rubric."). In doing so, the Fifth Circuit embraced "interpretative first principles: (1) the FLSA's text, specifically § 216(b), which declares (but does not define) that only those ‘similarly situated’ may proceed as a collective; and (2) the Supreme Court's admonition that while a district court may ‘facilitat[e] notice to potential plaintiffs’ for case-management purposes, it cannot signal approval of the merits or otherwise stir up litigation." Id. (citing Hoffmann-La Roche, Inc. v. Sperling, 493 U.S. 165, 169, 110 S.Ct. 482, 107 L.Ed.2d 480 (1989) ). Under Swales , a district court should "identify, at the outset of the case, what facts and legal considerations will be material to determining whether a group of ‘employees’ is ‘similarly situated.’ And then it should authorize preliminary discovery accordingly." Id. at 441. After identifying the material facts and legal considerations at issue, the Court may decide (i) collective action is not appropriate; (ii) additional discovery is needed to make a determination; or (iii) a certain category of employees is similarly situated and should be given notice. Id. at 443. "The bottom line is that the district court has broad, litigation-management discretion here." Id.

III. Analysis

The prospective plaintiffs in Swales were truck drivers who claimed "KLLM Transport Services misclassified them, and all other truck drivers, as independent contractors." Id. at 432. Whether a plaintiff is an employee or an independent contractor is a fact-dependent inquiry that requires analysis of the economic realities of each worker's situation. See Parrish v. Premier Directional Drilling, L.P. , 917 F.3d 369, 379 (5th Cir. 2019) (the independent contractor "diagnosis is not always easy to perform" and can be "very fact dependent"). Therefore, in Swales , significant discovery was needed to determine whether the economic realities test for determining employee status could be performed on a class wide basis and the district court was required to address that issue (which was also a liability or "merits" issue) before authorizing class notice. Id. at 442-43.

In this case, Young is bringing a "regular rate" miscalculation claim. Young alleges that Defendant paid non-discretionary bonuses to hourly employees and improperly failed to include the bonuses in employees' regular rate of pay for purposes of calculating their overtime rate. ECF 34 at 8. Young has presented evidence that he worked for Defendant as a driller and floorhand from approximately September 2017 to February 2020. ECF 23-1 ¶ 2. During that time, he was paid by the hour and received Safety Bonuses and Beat the Curve Bonuses, but the bonuses were never included in the formula used to calculate his overtime compensation. Id. ¶¶ 8, 13; ECF 23-6 (Young payroll summaries). Young states in his Declaration that like him, other hourly oilfield employees were paid Safety and Beat the Curve bonuses in a predetermined amount. ECF 23-1 ¶ 8-10. He also states that, based at least in part on his conversations with former coworkers, he believes all hourly oilfield employees were paid these non-discretionary bonuses regardless of job position, duties performed, or locations worked. ECF 23-1 ¶ 12. Young also submitted the Declaration of Christopher Istre who worked for Defendant as a floorhand and derrickhand from approximately October 2017 until March 2020 and experienced the same bonus and overtime pay practices as Young. ECF 23-2. Further evidence presented by Young shows that Defendant has a company-wide Safety Incentive Program under which rig managers, drillers, derrickmen, motormen, floormen, and toolpushers were eligible for Safety and Beat the Curve bonuses. ECF 23-3, 23-4, 23-5, 23-6.

In summary, Young has presented evidence that rig managers, drillers, derrickmen, motormen, floormen, and toolpushers all were paid what he alleges are non-discretionary Safety and Beat the Curve bonuses. Whether employees are similarly situated for purposes of the claims in this case turns on whether the Safety and Beat the Curve bonuses are "non-discretionary" and required to be included in employees' regular rate of pay for purposes of calculating overtime pay. See ECF 38 at 3. Based on the evidence presented by Young—including the company pay policy alleged to have been applied universally to the listed job positions—the non-discretionary nature of the bonuses does not vary among job title, duties, or location. Thus, whether the employees in the identified positions were subjected to the same pay practice as Young, and therefore are similarly situated, does not depend on the employees' specific job duties or where the employee worked. See Baucum v. Marathon Oil Corp. , Civil Action No. H-16-3278, 2017 WL 3017509, at *8 (S.D. Tex. July 14, 2017) (employees in different jobs and with different job titles can be subject to the same pay policy and therefore met the threshold for conditional certification under Lusardi ,); ...