Daugherty et al v. Encana Oil & Gas (USA), Inc.
ORDER on Pending Motion. Denying as moot 13 Motion to Certify Class. Accepted in Part and Rejected in Part re 92 Report and Recommendations. Granting in part and denying in part 65 Second Motion to Amend Complaint. Granting 88 Third Moti on to Amended Complaint, except that the Court has requested a Fourth Amended Complaint instead of the tendered Third Amended Complaint. Denying 98 Plaintiffs Motion for Leave to File Reply. The Court conditionally certifies a class re: Plainti ff David Gastons 68 Amended Motion for Conditional Collective Action Certification. The Court orders that counsel meet and confer no later than 1/16/2012. The Court orders that the running of the statute of limitations is equitably tolled as to David Gaston, David Smith and any members of the putative class, by Judge R. Brooke Jackson on 12/20/11.(lsw, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Honorable R. Brooke Jackson
Civil Action No. 10-cv-2272-RBJ-KLM
GUILLERMO GRADO, and
on their behalf and on behalf of all those similarly situated,
ENCANA OIL & GAS (USA), INC.,
a Delaware corporation,
ORDER ON PENDING MOTIONS
This order resolves all motions pending in this case as of the present date.
Plaintiffs allege that they are “pumpers” who were hired by the defendant corporation, or
in the case of David Gaston by a staffing company for the defendant, at various times during the
years 2005 through 2008, to service and maintain the defendant’s gas wells in the Piceance Basin
of Colorado or in Texas. They complain that the defendant violated the Fair Labor Standards
Act, 29 U.S.C. § 201 et seq. by refusing to pay overtime and terminating their employment in
retaliation for engaging in protected activities.
On July 15, 2011 the Court issued an order compelling all defendants other than David
Gaston to submit their claims to arbitration as required by an Independent Contractor Agreement
(“ICA”) that each of them had signed. The Court did, however, strike terms in the arbitration
agreements or incorporated rules that permitted the assessment of costs of the arbitration or
attorney’s fees against the plaintiffs, finding that they were unenforceable. Finally, the Court
ordered that the claims of the plaintiffs other than David Gaston would be stayed pending
completion of arbitration.
With that background, the Court addresses the pending motions.
Plaintiffs’ Motion for Conditional Collection Action Certification, HoffmanLaRoche Notice, Equitable Tolling and an Order Enjoining Retaliation by
Defendant [docket #13]
This motion is DENIED AS MOOT in light of the amended motion, docket #68,
Second Motion to Amend Complaint [docket #65]
Third Motion to Amend Complaint [docket #88]
Order and Recommendation of United States Magistrate Judge [docket #92]
Motion for Leave to File Reply in Support of Objection to the Recommendation
of Magistrate Judge Mix Concerning Plaintiff’s Second and Third Motions to
Amend [docket #98]
These motions all address the same issues and are therefore considered together. In the
Second Motion to Amend plaintiffs seek leave to (1) add David Smith, who like plaintiff David
Gaston did not sign an ICA, as a party plaintiff; (2) add Kevin Smith and Brett Crab, who like
the rest of the original plaintiffs did sign an ICA, as party plaintiffs; and (3) amend the caption to
be “David Gaston, David Smith, et al., on their behalf and on behalf of all those similarly
situated v. Encana Oil & Gas (USA), Inc.” In the Third Motion to Amend Complaint plaintiffs
seek leave to add Cody Tague, who did sign an ICA, as a party plaintiff.
Defendant did not oppose the portions of the Second Motion to Amend Complaint that
concerned the addition of David Smith as a named plaintiff and the amendment to the caption of
the case. Defendant did, however, oppose the portion of the Second Motion to Amend
Complaint that concerned adding Kevin Smith and Brett Crab as named plaintiffs and the Third
Motion to Amend Complaint, arguing that these proposed amendments would be futile.
In an order issued on October 21, 2011 a magistrate judge recommended that this Court
grant the unopposed portions but deny the opposed portion of the Second Motion to Amend
Complaint and deny the Third Motion to Amend Complaint. She reasoned that because the
district court had determined that the ICA’s arbitration provision was enforceable, with specified
exceptions, the Court lacks jurisdiction to consider the claims of proposed plaintiffs Kevin
Smith, Brett Crab and Cody Tague. Therefore, it would be futile to add those individuals as
plaintiffs only to force the defendant to move for and presumably to obtain an order dismissing
or staying those claims. Plaintiff Gaston objects to the magistrate judge’s recommendation. He
argues that it is necessary to add the three additional plaintiffs in order to prevent the statute of
limitations from continuing to run and to seek the same protection from unenforceable terms in
their ICA’s that was provided to the original plaintiffs in the Court’s July 15, 2011 order.
When the Court granted the defendant’s motion to compel arbitration of the claims of the
plaintiffs who signed an ICA, it did not dismiss their claims in this case. Rather, citing a
provision of the Federal Arbitration Act, 9 U.S.C. § 3, which states that the court “shall on
application of one of the parties stay the trial of the action until such arbitration has been had in
accordance with the terms of the agreement,” Judge Martinez stayed the claims of those
plaintiffs “pending completion of arbitration.” July 15, 2011 Order [docket #63] at 6, 24. While
the Court’s remaining role with respect to these plaintiffs will likely be very limited after
arbitration is completed, they remain parties to the case. Therefore, I certainly understand, but in
the end do not agree with, the futility argument. Instead, pursuant to the liberal standard of Fed.
R. Civ. P. 15(a)(2), leave to amend to add the three new ICA plaintiffs is granted. In order to
avoid further unnecessary litigation, I deem the Court’s order of July 15, 2011 to apply equally to
their claims, which are hereby stayed pending arbitration.
I agree that the unopposed motion to add David Smith as a named plaintiff should be
granted. The modification of the caption is fine, assuming of course that the new ICA plaintiffs
are added. I suggest that plaintiffs file a Fourth Amended Complaint listing all plaintiffs.
Thereafter the “et al.” form can be used.
Accordingly, the recommendation of the magistrate judge [#92] is ACCEPTED IN PART
AND REJECTED IN PART. The Second Motion to Amend Complaint [#65] is GRANTED IN
PART AND DENIED IN PART. It is granted with respect to the addition of Kevin Smith, Brett
Crab and David Smith as named plaintiffs and modification of the caption. The Third Motion to
Amended Complaint [#88] is GRANTED, except that the Court has requested a Fourth Amended
Complaint instead of the tendered Third Amended Complaint. Plaintiff’s Motion for Leave to
File Reply . . .” [#98] is DENIED.
Plaintiff David Gaston’s Amended Motion for Conditional Collective Action
Certification, Hoffman-La Roche Notice, Equitable Tolling and an Order Enjoining
Retaliation by Defendant [docket #68]
Mr. Gaston asks the Court conditionally to certify the case as a collective action pursuant
to section 216(b) of the Fair Labor Standards Act, which provides in pertinent part
Any employer who violates the provisions of . . . section 7 of this act shall be
liable to the employee or employees affected in the amount of . . . their unpaid
overtime compensation, and in an additional equal amount as liquidated damages.
. . . An action to recover the liability prescribed in [section 7] may be maintained
against any employer . . . in any Federal . . . court of competent jurisdiction by
any one or more employees for and in behalf of himself or themselves and other
employees similarly situated.
28 U.S.C. § 216(b) (emphasis added).
David Gaston claims that he was not paid overtime compensation to which he was
entitled in violation of section 7, i.e., 28 U.S.C. § 207(a). In his affidavit signed on October 15,
2010 and submitted in support of this motion, he states that he was hired by Mesa Field Services
on May 15, 2008. David Gaston Aff. [#68-1] ¶2. Mesa had a master services agreement with
Encana Oil & Gas (USA), Inc., and, he alleges, served as a conduit through which Encana
transferred his wages to him. Ibid. He states that he did the same work as pumpers who worked
directly for Encana. Id. at ¶13. He claims that in substance he was an employee of Encana. Id.
at ¶¶4-12. However, although he regularly worked more than 40 hours per work week, neither
Encana nor Mesa ever paid him overtime. Id. at ¶14.
Mr. Gaston seeks to represent a class consisting of “all current and former Pumpers
referred to by Defendant as ‘pumpers’ or ‘lease operators’ who were not paid overtime
compensation for hours worked in excess of forty hours during any workweek in the three years
leading up to Plaintiff’s original Complaint, September 16, 2010.” This would include “pumpers
who worked directly for Encana, or jointly for an Encana contractor such as Mesa,” but would
exclude pumpers “who signed Independent Contractor Agreements containing an arbitration
provision.” Motion at 2-3. In his affidavit, Mr. Gaston states, “I believe that Encana employs
several hundred Pumpers in the United States and many of these have been improperly
designated as independent contractors.” Aff. ¶20.
Defendant opposes the motion, primarily on grounds that Mr. Gaston has not made any
showing that he is similarly situated to pumpers who do not work for Mesa and do not work in
the Piceance Basin. Defendant employee Teresa Rice, who is responsible for securing the
services of pumpers or “Lease Operators,” describes the process in her affidavit submitted as
Attachment 1 to defendant’s opposition brief [#83-1]. She states that since the fall of 2007
Encana has contracted with more than 40 outsides staffing companies to provide services across
approximately four different states under “Master Services Agreements” or “MSA’s.” Rice Aff.,
#83-1, at ¶5. Although general terms of the MSA’s are similar, pricing terms are worked out
between Encana and the staffing company. Id. at ¶6-7. Mesa provides pumpers on a flat hourly
rate. Id. at ¶8. Other staffing companies have different arrangements with respect to pumpers,
i.e., Avalanche Production Services, Inc. (Wyoming, flat day rate plus overtime at a specified
hourly rate); C&D Production Specialists (Louisiana, hourly plus overtime); High Country Oil
Field Services, Inc. (Wyoming, hourly plus time and a half for over 11 hours per day and on
weekends and holidays); Frear Consulting (Wyoming, flat day rate); Producers Assistance
Corporation (Texas, hourly plus overtime); PLO’s Oil & Gas Services, LLP (hourly rate for
“crews” of one to four persons plus truck and crew). Id. ¶¶9-14.
Ms. Rice states that Encana does not know what portion of the staffing companies’
charges are paid to staffing companies’ workers, how they classify their workers such as
employees or independent contractors, and whether, for example, they pay the workers overtime
pay. Id. at ¶16-17. However, defendant provides a copy of an Independent Contractor
Agreement between David Gaston and Mesa Field Services, Inc. Attachment 83-10. It is
somewhat similar to the ICA’s between Encana and pumpers, although it does not have an
In reply, plaintiff emphasizes “as most relevant here, [Encana uses] third-party ‘staffing
companies’ to create an additional and artificial separation between itself and its employees.”
Reply at 2.
In Thiessen v. General Electric Capital Corp., 267 F.3d 1095, 1105 (10th Cir. 2001), the
court held that the district court’s use of a two-step case by case or “ad hoc” process for
determining whether to certify a class under the Age Discrimination in Employment Act was not
error. The court noted that the class action provisions of the ADEA borrowed the opt-in class
mechanism of the Fair Labor Standards Act. Id. at 1002. The two-step approach has since been
applied to FLSA actions such as the present case. E.g., Baldozier v. American Family Mut. Ins.
Co., 375 F. Supp. 2d 1089, 1092 (D. Colo. 2005).
The first step is a “notice stage,” where the court determines whether there are others
similarly situated. Plaintiff is required to provide “‘nothing more than substantial allegations that
the putative class members were together the victims of a single decision, policy or plan.’”
Thiessen, 267 F.3d at 1102. The plaintiff must establish a “reasonable basis” for his claim that
there are other similarly situated employees. See Morgan v. Family Dollar Stores, 551 F.3d
1233, 1260 (11th Cir. 2008). This is a “lenient standard,” Baldozier, 375 F. Supp. 2d at 1092,
“which typically results in conditional certification of a representative class.” Renfro v. Spartan
Computer Services, Inc., 243 F.R.D. 431, 432 (D. Kan. 2007).
In the second stage, which comes at the conclusion of discovery and often in the context
of a defense motion to decertify the class, the court applies a stricter standard of “similarly
situated,” including application of at least four factors, to determine whether the case can
proceed as a class action. Thiessen, 267 F.3d at 1102-03.
The thrust of Mr. Gaston’s allegations is that the “economic reality” of his arrangement
with Encana is that he was jointly employed by Mesa and Encana to work for Encana as a
pumper or lease operator, but that Encana had a policy or plan of using the fact that he was hired
through Mesa and the guise of considering him to be an independent contractor to deprive him of
overtime compensation to which he was entitled under the Act. He alleges that there are other
individuals who were similarly deprived of overtime compensation either by Encana’s direct
hiring or by its use of staffing companies.
As indicated above, Mr. Gaston states that he believes that there are many pumpers
employed by Encana in the United States “who have been improperly designated as independent
contractors.” Gaston Aff. ¶20. Mr. Gaston is not qualified to opine whether a person is an
“independent contractor” as a matter of law. However, Mr. Gaston can describe the work he did,
the supervision he received, and the obligations that were imposed upon him as a pumper
working for Encana/Mesa. The Court earlier concluded that he had “alleged facts upon which a
trier of fact could conclude that he was employed jointly by Mesa and Encana.” Order, April 8,
2011 [docket #51] at 3.
Mr. Gaston is qualified to indicate, at least for present purposes, that there were others
who did similar work for Encana and who, to his knowledge, did not receiver overtime
compensation for hours worked in excess of 40 hours per week. He has identified one such
person, David Smith. In an affidavit signed August 15, 2011 [#68-2], Mr. Smith shares the
belief that Encana follows the same practices in at least Colorado and Texas. Id. at ¶8.
In addition, the Court notes the allegations of the named plaintiffs in this case who did
sign ICA’s with arbitration provisions. Their claims have been stayed pending arbitration.
However, their situations, as alleged, and their ICA’s lend some support to the assertion that it is
Encana’s practice not to provide overtime compensation to pumpers who in substance were
The Court finds that the allegations in the First Amended Complaint, supported by the
affidavits of David Gaston and David Smith, collectively are sufficient under the lenient standard
of the notice step to warrant the conditional certification of a class or “collective” action.
“Generally, where putative class members are employed in similar positions, the allegation that
defendants engaged in a pattern or practice of not paying overtime is sufficient to allege that
plaintiffs were together the victims of a single decision, policy or plan.” Renfro, 243 F.R.D. at
433-34. The Court makes this finding without expressing any opinion as to whether discovery
will identify any others who are similarly situated, whether plaintiff would be able to make a
sufficient showing to avoid decertification of the conditional class, or whether plaintiff’s claims
in this case have merit.
The Court conditionally certifies a class consisting of all persons who served as pumpers
or lease operators for Encana Oil and Gas (USA), Inc. from and after September 16, 2007,
whether hired directly by Encana or through a staffing company, who were not paid overtime of
at least one and one-half times the regular rate at which the individual was compensated for
hours worked in excess of 40 hours during any workweek, and who did not sign an Independent
Contractor Agreement containing an arbitration provision.
Ms. Rice’s affidavit states that some staffing companies did pay pumpers overtime. If a
senior management officer of a staffing company can provide an affidavit, under oath, based
upon personal knowledge, that his or her company did pay all pumpers and lease operators
staffed for Encana during the relevant time period overtime of at least one and one-half times the
regular rate for hours worked in excess of 40 hours in all workweeks, then no discovery with
respect to that company will permitted absent further court order. Absent such an affidavit,
plaintiff is authorized to take one Rule 30(b)(6) deposition of that company. If it then appears
that further discovery is warranted, and the parties and the third party cannot agree on the nature
and extent of the further discovery, then the parties should set a hearing.
The Court’s intent is not to authorize a fishing expedition or discovery that is unduly
burdensome. The Court’s intent is to permit the plaintiff to conduct reasonable discovery to
determine whether there is anyone other than Mr. Gaston and Mr. Smith who is, in fact, similarly
situated. The Court orders that plaintiff bear, in the first instance, the reasonable costs of
obtaining such discovery, subject to further court order. The Court notes that Encana and its
contractors can likely save themselves a great deal of time and expense if they cooperate and are
forthcoming in providing information. If there truly are no individuals who are similarly situated
to Mr. Gaston and Mr. Smith, it should not be difficult to show that. Likewise, plaintiff and
plaintiff’s counsel can save themselves a great deal of time and expense if they proceed
reasonably and let a realistic assessment of the facts prevail over emotional attachment to the
belief that widespread wrongdoing is occurring.
The Court notes the defendant’s argument that some of the staffing companies operate in
different states or basins. However, defendant did not explain the logic behind excluding
putative class members on that basis. The issue is not where the individuals live or work.
Rather, the issue is whether individuals whom Encana has “employed” as pumpers or lease
operators, directly or through a staffing company, have worked in excess of 40 hours per week
without overtime compensation in violation of the Act. Put another way, the issue is whether
Encana has willfully but improperly used the “independent contractor” label or the device of
recruiting through staffing companies to avoid wage and hours laws.
The Court orders that counsel meet and confer no later than January 16, 2012 for the
purpose of (1) framing a discovery plan limited to identification of putative class members; (2)
crafting a Hoffman-La Roche notice consistent with this order; and (3) determining the timing of
the provision of notice to the putative class. If after conferring you are unable to agree, please
set a hearing.
The Court orders that the running of the statute of limitations is equitably tolled as to
David Gaston, David Smith and any members of the putative class effective September 16, 2010.
The Court declines to order Encana to refrain from “intimidating, harassing or otherwise
discriminating against potential opt-in plaintiffs.” I have no reason at this point to believe that
Encana will do this or will respond to this order in other than a reasonable and professional
DATED this 20th day of December, 2011.
BY THE COURT:
R. Brooke Jackson
United States District Judge
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