Blair et al v. Transam Trucking, Inc.

Filing 77

MEMORANDUM AND ORDER denying 63 Motion for Summary Judgment; denying 64 Motion for Partial Summary Judgment. Signed by District Judge Eric F. Melgren on 11/13/2013. (cm)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS

LARRY BLAIR and
CHARLIE DAVIS,
On behalf of themselves and
all other persons similarly situated,
Plaintiffs,

vs.

Case No. 09-2443-EFM/KGG

TRANSAM TRUCKING, INC.,
Defendant.

MEMORANDUM AND ORDER
Plaintiffs Larry Blair and Charlie Davis, on behalf of themselves and all other persons
similarly situated, brought suit under the Fair Labor Standards Act (“FLSA”), the Kansas Wage
Payment Act (“KWPA”), and the Kansas Minimum Wage and Maximum Hours Law
(“KMWMHL”). Plaintiffs contend that Defendant TransAm Trucking, Inc. misclassified them
as “independent contractors” when they were in reality “employees” of TransAm Trucking.
Because of this alleged misclassification, Plaintiffs assert that Defendant failed to pay them
minimum wages in violation of the FLSA, KWPA, and KMWMHL. Both parties move for
summary judgment on the issue of whether Plaintiffs should be considered employees or

independent contractors. Because the material facts are in dispute, the Court denies both parties’
motions for summary judgment.
I.

Factual and Procedural Background

Defendant TransAm Trucking, Inc. (“TransAm” or “Defendant”) is an interstate and
intrastate for-hire motor carrier with facilities in Olathe, Kansas, and Rockwell, Texas. TransAm
requires qualified drivers to haul tractor-trailer loads on its behalf. TransAm has two types of
drivers, either “Company Drivers” or “Owner Operators.”1
TransAm enters into a written contract, designated an Independent Contractor Agreement
(“ICA”), with Owner Operators. The ICA is a lease in which an Owner Operator agrees to lease
to TransAm the use of a tractor for the hauling of freight to TransAm’s customers. Every Owner
Operator signs a separate ICA for each tractor he leases to TransAm. The ICA is a one-year
term that automatically renews unless cancelled by either party with 14 days notice.
One way in which an Owner Operator may lease a tractor to TransAm is by leasing a tractor
from TransAm Leasing, Inc., a wholly-owned subsidiary of TransAm.2

The trucks leased

through TransAm Leasing are part of the fleet of trucks that are owned and being depreciated by
TransAm. Owner Operators who choose to lease a tractor from TransAm Leasing may select
their own tractors, with varying lease terms and lease costs available depending on the age and
miles on the tractor chosen. The lease period for any individual truck leased by TransAm

1

Plaintiff objects to Defendant’s use of the term “Owner Operator” arguing that it implies that these drivers
are not employees of Defendant. Plaintiff uses the term “Leased Drivers,” to which Defendant objects and argues
that it implies that drivers are employees of Defendant. The dispute in this case is over whether these drivers,
whether they are called “Owner Operators” or “Leased Drivers,” are in fact employees of Defendant or whether they
are independent contractors. For the sake of simplicity, the Court will use the term “Owner Operator” in this
opinion.
2

TransAm Leasing, Inc. is not a Defendant in this case.

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Leasing cannot be longer than the remaining depreciation period assigned to that truck by
TransAm. Owner Operators who choose to lease a tractor through TransAm Leasing have the
option to purchase their tractor at the end of the lease with a balloon buy-out payment. The
Owner Operator enters into an Equipment Lease Agreement with TransAm Leasing. As part of
the ICA, the truck leased to the Owner Operator (through the Equipment Lease Agreement) and
then leased back to TransAm, can only be used to haul loads for TransAm. The Federal Motor
Carrier Safety Act (“FMCSA”) requires that a driver lease his tractor to only one motor carrier
and operate a unit only under one motor carrier number at a time.
Plaintiff Larry Blair was a Company Driver for TransAm from December 2002 until May
2004 when Blair voluntarily resigned. In March 2007, Blair elected to return to TransAm. He
had the option of being either a “Company Driver” or “Owner Operator,” and Blair chose to be
an Owner Operator. Blair signed his first ICA on March 23, 2007. Plaintiff Charlie Davis
became an “Owner Operator” for TransAm in December 2005 and signed his first ICA on
December 9, 2005. Both Blair and Davis entered into four ICA’s and leased four different
tractors from TransAm Leasing, and then leased those tractors to TransAm.
In August, 2009, Blair and Davis filed a Complaint against TransAm. They filed an
Amended Complaint on January 28, 2010, on behalf of themselves and all other persons
similarly situated,3 alleging violations of the Fair Labor Standards Act (“FLSA”), the Kansas
Wage Payment Act (“KWPA”), and Kansas Minimum Wage and Maximum Hours Law
(“KMWMHL”).

Plaintiffs contend that Defendant misclassified them as “independent

3

The Court has not certified a class as the parties chose to proceed in two phases. The first phase requires
a determination of whether Plaintiffs should be considered employees or independent contractors. Indeed, this
determination is what the parties seek with their motions for summary judgment.

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contractors” when they were in reality “employees” of TransAm Trucking. Because of this
alleged misclassification, Plaintiffs assert that Defendants failed to pay them minimum wages in
violation of the FLSA, KWPA, and KMWMHL.
Defendant filed a Motion for Summary Judgment (Doc. 63) asserting that it properly
classified Plaintiffs as independent contractors and thus did not violate the FLSA or KWPA.
Plaintiffs also filed a Motion for Partial Summary Judgment (Doc. 64) stating that Plaintiffs were
improperly classified as independent contractors and should be considered employees under the
FLSA.
II.

Summary Judgment Motions

Summary judgment is appropriate if the moving party demonstrates that there is no
genuine issue as to any material fact, and the movant is entitled to judgment as a matter of law.4
A fact is “material” when it is essential to the claim, and issues of fact are “genuine” if the
proffered evidence permits a reasonable jury to decide the issue in either party’s favor.5 The
movant bears the initial burden of proof, and must show the lack of evidence on an essential
element of the claim.6 The nonmovant must then bring forth specific facts showing a genuine
issue for trial.7 These facts must be clearly identified through affidavits, deposition transcripts,
or incorporated exhibits—conclusory allegations alone cannot survive a motion for summary

4

Fed. R. Civ. P. 56(a).

5

Haynes v. Level 3 Commc’ns, LLC, 456 F.3d 1215, 1219 (10th Cir. 2006).

6

Thom v. Bristol-Myers Squibb Co., 353 F.3d 848, 851 (10th Cir. 2003) (citing Celotex Corp. v. Catrett,
477 U.S. 317, 322-23 (1986)).
7

Garrison v. Gambro, Inc., 428 F.3d 933, 935 (10th Cir. 2005).

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judgment.8 The Court views all evidence and reasonable inferences in the light most favorable to
the party opposing summary judgment.9
Though the parties in this case have filed cross-motions for summary judgment, the legal
standard remains the same.10 Each party retains the burden of establishing the lack of a genuine
issue of material fact and entitlement to judgment as a matter of law.11 Each motion will be
considered separately.12 “To the extent the cross-motions overlap, however, the court may
address the legal arguments together.”13
III.

Discussion

The FLSA defines an “employee” as “any individual employed by an employer.”14 “[I]n
determining whether an individual is covered by the FLSA, our inquiry is not limited by any
contractual terminology or traditional common law concepts of employee or independent
contractor.”15

Courts employ an economic realities test which focuses on “whether the

individual is economically dependent on the business to which he renders service, or is, as a

8

Mitchell v. City of Moore, Okla., 218 F.3d 1190, 1197 (10th Cir. 2000) (citing Adler v. Wal-Mart Stores,
Inc., 144 F.3d 664, 670 (10th Cir. 1998)).
9

LifeWise Master Funding v. Telebank, 374 F.3d 917, 927 (10th Cir. 2004).

10

City of Shawnee v. Argonaut Ins. Co., 546 F. Supp. 2d 1163, 1172 (D. Kan. 2008).

11

United Wats, Inc. v. Cincinnati Ins. Co., 971 F. Supp. 1375, 1381-82 (D. Kan. 1997) (citing Houghton v.
Foremost Fin. Servs. Corp., 724 F.2d 112, 114 (10th Cir.1983)).
12

Atl. Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138, 1148 (10th Cir. 2000).

13

Berges v. Standard Ins. Co., 704 F. Supp. 2d 1149, 1155 (D. Kan. 2010).

14

29 U.S.C. § 203(e)(1).

15

Baker v. Flint Eng’g & Constr. Co., 137 F.3d 1436, 1440 (10th Cir. 1998) (quotation marks and citations

omitted).

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matter of economic fact, in business for himself.”16 In the Tenth Circuit, there are six factors
under this test. These include:
(1) the degree of control exerted by the alleged employer over the worker; (2) the
worker’s opportunity for profit or loss; (3) the worker’s investment in the
business; (4) the permanence of the working relationship; (5) the degree of skill
required to perform the work; and (6) the extent to which the work is an integral
part of the alleged employer’s business.17
No one factor is dispositive, but rather the Court must consider the totality of the
circumstances.18 The Court must first make factual findings as to the individual’s work and then
apply those facts to the six factors of the economic realities test.19 The ultimate question as to
whether an individual acted as an employee or independent contractor is a matter of law.20
Under the KWPA, there is “no absolute rule for determining whether an individual is an
independent contractor or an employee. It is the facts and circumstances in each case that
determine whether one is an employee or an independent contractor.”21 “The primary test used
by the courts in determining whether the employer-employee relationship exists is whether the
employer has the right of control and supervision over the work of the alleged employee, and the
right to direct the manner in which the work is to be performed, as well as the result which is to
be accomplished.”22 This right, however, is only one factor, and numerous other factors may be

16

Doty v. Elias, 733 F.2d 720, 722-23 (10th Cir. 1984) (citation omitted).

17

Baker, 137 F.3d at 1440.

18

Id. at 1441.

19

Id. at 1440-41.

20

Id.

21

Wallis v. Sec’y of Kan. Dep’t of Human Res., 236 Kan. 97, 102, 689 P.2d 787, 792 (1984).

22

Id. at 102-03, 689 P.3d at 792.

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relevant in determining whether an individual should be considered an employee or independent
contractor under the KWPA.23
Defendant contends that the facts demonstrate that TransAm exerts little control over its
Owner Operators, and they are properly classified as independent contractors under both the
FLSA and KWPA. Defendant primarily relies upon the contractual language contained in the
ICA to support this contention. This contractual language, however, is not dispositive to the
issue as to which party exercised control over Plaintiffs’ work activities.24 Plaintiff presents
evidence that Defendant may have exercised control over Plaintiffs’ work, including such work
activities as the right to hire or fire employees, the routes in which Plaintiffs must drive, and
Plaintiffs’ ability to dictate their profit and loss. Defendant disputes Plaintiffs’ characterization
of the facts. These disputed facts relate to several issues under the economic realities test and to
factors under the KWPA. Because of these disputed issues of fact, the Court must deny both
Defendant’s and Plaintiffs’ motions for summary judgment.25

23

See Crawford v. Dep’t of Human Res., 17 Kan. App. 2d 707, 710-11, 845 P.2d 703, 706 (1989)
(considering twenty factors when determining whether individuals were employees or independent contractors).
24

Baker, 137 F.3d at 1440 (stating that the inquiry of whether an individual is an employee under the FLSA
is not limited to contractual language).
25

As noted above, summary judgment is appropriate when the material facts are not in dispute. In this
case, Defendant asserts 151 facts in support of its motion for summary judgment. Plaintiffs attempt to controvert the
majority of these facts or “objects” to those facts. Plaintiffs assert 38 facts in support for their motion for summary
judgment, and Defendant “objects” or attempts to controvert the majority of Plaintiffs’ facts. In addition, Defendant
asserts an additional 101 facts in its response, and Plaintiffs then object and controvert the majority of those facts.
Cases that involve unnecessarily long statements of “uncontroverted facts” are not amenable to summary judgment
disposition.

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IT IS ACCORDINGLY ORDERED this 13th day of November, 2013, that
Defendant’s Motion for Summary Judgment (Doc. 63) is DENIED.
IT IS FURTHER ORDERED that Plaintiffs’ Motion for Partial Summary Judgment
(Doc. 64) is DENIED.
IT IS SO ORDERED.

ERIC F. MELGREN
UNITED STATES DISTRICT JUDGE

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