Lee et al v. S&E Flag Cars, LLC et al

Filing 174

MEMORANDUM OPINION & ORDER: Accordingly, it is ORDERED that Plaintiffs' Motion for Partial Summary Judgment, (Doc. 161 ), be, and is hereby, GRANTED. A separate order setting this case for trial and scheduling a pretrial conference will be filed concurrently herewith. Signed by Judge William O. Bertelsman on 1/5/2022.(ECO)cc: COR

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1896

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
NORTHERN DIVISION AT COVINGTON
CIVIL ACTION NO. 2:14-CV-176 (WOB)
GREG LEE, ET AL.
PLAINTIFFS
VS.

MEMORANDUM OPINION AND ORDER

S&E FLAG CARS, LLC, ET AL.
Plaintiffs

Greg

Lee,

DEFENDANTS
Chris

Ward,

and

Randy

Essary

(collectively “Plaintiffs”) brought this action under the Fair
Labor Standards Act (FLSA), 29 U.S.C. § 216(b), and Kentucky
Revised Statutes Chapter 337 against defendants S & E Flag Cars
(“S & E”), Flag Cars R Us (“FCRU”), I & B Flag Cars, Inc. (“I & B”),
and Ellen Ishmael (collectively “Defendants”), seeking recovery of
unpaid overtime compensation and the costs of this litigation.
Plaintiffs have moved for partial summary judgment as to the issue
of whether Defendant I & B was their “employer” at the relevant
times under the above statutes. (Doc. 161).

Having reviewed the

parties’ pleadings, the Court now issues the following Memorandum
Opinion and Order.
I.

BACKGROUND
After its stipulated dismissal without prejudice, (Doc. 60),

Defendant I & B, one of the three corporate defendants, was again
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rejoined to the case in December 2020 because of I & B’s business
connections to the other three defendants.

Plaintiffs claim I & B

was their “employer” for purposes of FLSA liability, in that I & B
and the other defendants constitute a single employer for purposes
of this suit.
The four defendants, S & E, FCRU, I & B, and Ellen Ishmael
are or were in the business of providing escort services to semitrucks hauling large, heavy equipment, typically equipment used in
fracking operations. (Doc. 151, Answer to Second Am. Compl. at
⁋ 3).

The three plaintiffs worked for S & E and FCRU as flag-car

drivers starting at various times in 2011 until October 2014. (Id.
at ⁋⁋ 30–31).

Plaintiffs claim they worked for Defendants in

excess of 40 hours per week but have not received the one and onehalf (1.5) rate over their regular wage as required under the FLSA.
(See Doc. 147, Second Am. Compl. at ⁋⁋ 53–59).
To

avoid

duplicative

statements

of

the

same

facts,

the

relevant details of the parties’ relationship are described and
cited at greater length in the analysis below.

Suffice it to say

at this point the defendant-businesses, I & B, S & E, and FCRU,
share strong operational similarities and connections.
the

most

significant

connection

is

the

common,

Perhaps

simultaneous

management of the companies by the fourth defendant, Ellen Ishmael,
who

ran

the

defendants,

day-to-day

providing

operations

service

in
2

the

of

all

same

three

line

of

businessbusiness.

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(Doc. 151 at ⁋ 4, admitted). There exist some distinctions between
the business entities, namely that I & B is an Ohio corporation
owned not by Ellen Ishmael herself but by her daughter, (Id. at ⁋⁋
8, 11, admitted), while S & E and FCRU are Kentucky LLCs whose
sole member is Ellen. (Id. at ⁋⁋ 5–6, admitted).

Still, the

companies have very similar business models, similar or common
clients, common operational headquarters out of the same office in
Brooksville, Kentucky, and operate under the common direction of
Ellen Ishmael.
In their response to the motion, Defendants maintain that the
plaintiffs were not “employees” at all under the FLSA, that they
were instead independent contractors not entitled to bring this
suit.

Additionally, and more pertinent to the immediate issue,

Defendants argue that I & B is not coextensive as a single
“employer” with the other defendants.

To be sure, this opinion

does not resolve the former issue of whether there exists an
employment relationship between any of the adverse parties.1

The

Court is now only deciding the latter issue, whether I & B has a
common identity with the other defendants as a putative employer
for purposes of shared liability under the FLSA.

The Court declines for now to find facts in dispute which bear on the
employee-or-contractor issue, having left those issues for resolution by a
jury should this case proceed to trial. The Court is aware that the issue
remains outstanding.
1

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I.

ANALYSIS

As just alluded to, a more doctrinally accurate way to describe
the immediate issue as whether Defendant I & B Flag Cars, Inc.,
constituted a “joint employer” or “integrated enterprise” with the
other defendants per Swallows v. Barnes & Noble Book Stores, Inc.,
128 F.3d 990 (6th Cir. 1997), thus imputing to I & B employer
liability

for

Plaintiffs’

unpaid

overtime

compensation.

Plaintiffs moved for partial summary judgment to resolve the
employer identity issue as to I & B.
A. Standard of Law
Summary judgment is proper where the pleadings, depositions,
answers to interrogatories, and admissions on file, together with
the affidavits, if any, show that there is no genuine issue as to
any material fact and the movant is entitled to judgment or
resolution of an issue as a matter of law. FED. R. CIV. P. 56.

“In

determining whether there exists a genuine issue of material fact,
the court must resolve all ambiguities and draw all factual
inferences in favor of the non-moving party.” Swallows, 128 F.3d
at 992 (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255
(1986)).

Summary judgment is inappropriate if the evidence would

permit a reasonable jury to return a verdict for the non-moving
party. Id. at 992.
Here, only if the undisputed facts or the evidence viewed in
the light most favorable to Defendants fail to establish a shared
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employer identity may the Court find for the Movant-Plaintiffs.
Cf. Lanman v. Hinson, 529 F.3d 673, 679 (6th Cir. 2008) (quoting
Berryman v. Rieger, 150 F.3d 561, 563 (6th Cir. 1998)).

In this

case, many material facts bearing on the issues were conclusively
settled by clear judicial admission in the Defendants’ Answer to
the

Second

Amended

Interrogatories.

Complaint

(See

and

generally

by

Doc.

I

&

151;

B’s

Response

161-2).

See

to
also

MacDonald v. Gen. Motors Corp., 110 F.3d 337, 341 (6th Cir. 1997)
(recognizing

the

conclusive

effect

of

judicial

admissions

in

pleadings as to purely factual matters); 32 C.J.S. Evidence § 532
(2021) (judicial admissions are proper evidence of pure matters of
fact as long as they are deliberate, clear, and unequivocal).
For Plaintiffs to recover unpaid overtime compensation from
I & B under the FLSA and KRS Chapter 337 they must demonstrate
they were “employees” of I & B at the relevant time. See Swallows,
at 993.

But because Plaintiffs never worked for I & B directly,

they raise two doctrines to assign employer liability to it. Those
theories are the “joint employer” and “integrated enterprise”
(a.k.a.,

“single

employer”)

doctrines

of

employer

identity,

theories of recovery discussed in Swallows. Under either doctrine,
a

defendant

may

be

liable

for

overtime

compensation

if

the

plaintiff can prove a certain indirect employment relationship,
notwithstanding the employee worked for another entity at the time
in question, an entity legally or operationally distinct from the
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putative employer. See Swallows, 128 F.3d at 996 n.4 (citing
N.L.R.B. v. Browning-Ferris Indus. of Pennsylvania, Inc., 691 F.2d
1117, 1122-23 (3d Cir. 1982)).

While both doctrines involve

analyses with similar elements, they are analytically distinct.
Id.
As an introductory overview, the “joint employer” theory
applies where the terms and conditions of a plaintiff-employee’s
work are controlled simultaneously, “jointly,” by two different
employers in sufficiently significant ways.

“Thus, the ‘joint

employer’ concept recognizes that the business entities involved
are in fact separate but that they share or co-determine those
matters

governing

the

essential

terms

and

conditions

of

employment,” warranting similar treatment in liability to a shared
employee. Id. (quoting Browning-Ferris, 691 F.2d at 1123).

The

“integrated enterprise” theory, although having the same purpose
and effect in liability, works in situations where “two nominally
or legally independent entities are so interrelated that they
actually constitute a single integrated enterprise.” Id.

The

requirements of both doctrines are elaborated and analyzed in turn
below.
A. I & B was not a “joint employer” of Plaintiffs’.
Under Department of Labor regulations, “joint employment”
exists

under

two

circumstances:

(1)

where

one

employer

more

directly employs the plaintiff while another benefits from the
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employee’s work at the same time, or (2) where one employer enjoys
the services of an employee for one set of hours per week, while
another employer employs the same worker for other set hours per
week. 29 C.F.R. § 791.2(a)(1) and (e)(1).

As the name and nature

of the doctrine inherently suggest, there must be joint control
over the employee at the same time or simultaneous benefit to two
employers.
Applying the “joint employer” doctrine is quite simple here,
though ordinarily it might involve a four-factor test should either
of the two circumstances just mentioned apply to the case.

Here,

we may forego the four-factor test because the assertion fails on
separate grounds.

This doctrine inherently requires a plaintiff-

employee’s

be

work

controlled

by

both

putative

employers

simultaneously, or at least that both employers simultaneously
benefit from the employees’ labor, hence the term “joint employer.”
Thus, where only one of the two employers ever controlled the
terms, hours, or direction of the employee’s labor, the “joint
employer” theory will tend to be inapplicable.
At no point during Plaintiffs’ work relationship with S & E
from 2011 to 2014 did I & B ever hire or direct Plaintiffs’ work
in any capacity, not even by Ellen Ishmael on I & B’s behalf.
is

there

a

suggestion

Plaintiff’s work.

that

I

&

B

directly

benefited

These facts would appear undisputed.

Nor
from

Although

S & E and I & B evidently shared the same terms and policies
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concerning the flag drivers’ work and Ellen Ishmael at least
managed them both, Plaintiffs’ labor was never devoted to any I & B
work or assignment, nor did their labor seem even indirectly to
benefit I & B.

Thus, Plaintiffs are not entitled to a finding

that I & B was a “joint employer” with S & E or FCRU.
B. Defendants constitute an “integrated enterprise.”
Because they have failed to prove I & B employed them as a
“joint employer” with any of the other defendants, Plaintiffs’
motion may be granted only if they prove I & B employed them
indirectly, as if through another defendant, as an “integrated
enterprise” with said defendant, namely S & E and Ellen Ishmael.
Because the facts support the application of this doctrine,
the Court will use the four Swallows factors in its analysis.
determining

whether

to

treat

two

entities

as

“In
a

single[, “integrated”] employer, courts examine the following four
factors: (1) interrelation of operations, i.e., common offices,
common

record

(2) common

keeping,

shared

management,

bank

common

accounts
directors

and
and

equipment;
boards;

(3) centralized control of labor relations and personnel; and
(4) common ownership and financial control.” Swallows, 128 F.3d at
993–94 (citing York v. Tennessee Crushed Stone Ass’n, 684 F.2d
360, 362 (6th Cir. 1982)).

The third factor, control over labor

relations, is a central concern. Id. at 994.

After considering

and weighing these factors, the Court finds Defendants were an
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integrated enterprise with S & E and Ellen Ishmael, that I & B was
as much an “employer” of the plaintiffs as any of the others, if
they are to be found employers at all.
The

interrelation

of

operations

is

the

first

factor.

Interrelation of operations may be indicated, for instance, by
common offices, common record keeping, and shared bank accounts
and assets. Id.
were

not

only

Here, I & B’s and S & E’s business operations
virtually

identical,

the

two

were

certainly

interrelated counterparts to one another. This first factor favors
the plaintiff-movants.

To begin with, the defendants all engaged

in the same business of providing vehicle escort services in the
same manner, often to the same clients, typically oil and gas
companies engaged in fracking. (Doc. 147 at ⁋ 9; Doc. 151 at ⁋ 9,
admitted).

Indeed, I & B was formed in May 2014 to provide

additional vehicles and escort drivers to the same companies and
trucking assignments handled by S & E and FCRU. (Doc. 147 at ⁋ 10;
Doc. 151 at ⁋ 10, admitted).
evidently

coordinated

the

S & E’s and I & B’s management
companies’

employees

with

the

counterpart company in mind so fundamentally that these flag-car
drivers, central to each business, were governed by the same “Terms
and Conditions” of employment. (See Doc. 161-2, Ex. 1 at ⁋ 14).
Understanding those “Terms and Conditions” were common to S & E
and I & B, and so given to the employees of both companies when

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hired, the document states outright: “I & B Flag Car drivers[,]
your work and instructions come from Brooksville, Ky.

S & E Flag

Cars is where your work comes from. Listen to Ellen’s instructions
and tell Ellen your problems.

Megan [Braden] and Ray [Braden] do

not solve everyday issues.”

(Id.) (emphasis added).

As this

document plainly states, I & B drivers were instructed to receive
their work assignments from S & E, or more directly from the same
manager Ellen Ishmael, from the same office location from which
S & E operated, the office in Brooksville, Kentucky. (Id.).
In other ways, the management and administration of I & B,
S & E, and FCRU were interrelated or coordinated with respect to
one another.

As discussed in greater detail below, Ellen Ishmael

was and continues to be the manager of all three companies to the
extent any of them remain operational. (See Doc. 147 at ⁋⁋ 5–6,
13; Doc. 151 at ⁋⁋ 5–6, 13, admitted).

The aforementioned “Terms

and Conditions” also required the drivers of S & E and I & B to
send receipts for cost reimbursement and payroll to the same
individual, Morgan Ishmael, who handled both companies’ payroll
out of the same Brooksville office, and who ensured employees were
paid weekly on consecutive days, Wednesday for S & E and Thursday
for I & B. (Doc. 161-2, Ex. 1 at ⁋ 1–2). Although Defendants claim
their assets and bank accounts were kept separate, and that may be
true, all three companies’ bookkeeping was concededly performed by

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Morgan Ishmael, Ellen’s daughter. (Doc. 147 at ⁋ 17; Doc. 151 at
⁋ 17, admitted).

Drivers for S & E and I & B were to report

vehicle issues and repairs, central to both businesses, to the
same manager, Ellen Ishmael. (See Doc. 161-2, Ex. 1 at ⁋ 9).
The only circumstances favorable to the defendants under the
interrelation prong is that these plaintiffs received no work
directly from I & B, that they worked officially for S & E, and
that assets and equipment were owned and used separately by each
company.

But this first factor, like the test overall, looks more

to the functional relation that the putative employer-defendants
have to one other rather than the plaintiffs’ relationship with
each individual defendant.

Quite strongly, the plaintiffs have

satisfied this first prong pertaining to business interrelation.
Common management is the second factor.
favors the plaintiffs, as well.

This factor firmly

While the companies shared no

common directors or boards, they were entirely managed by Ellen
Ishmael as the functional head of all three. (Doc. 147 at ⁋⁋ 4,
13; Doc. 151 at ⁋⁋ 4, 13, admitted).

The legal owners of I & B

did not control the daily operations, it was Ellen Ishmael who ran
I & B and the other two businesses.

(Doc. 147 at ⁋ 4; Doc. 151 at

⁋ 4; Doc. 161-2, Interrog. of I & B, at ⁋⁋ 1-2).

I & B responded

outright to Plaintiffs’ interrogatories that “I & B delegates all
such

dealings

[of

actually

providing
11

escort

services

to

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customers/trucking companies] to Ellen Ishmael.” (Doc. 161-2,
Interrogatories, at ⁋ 2).

And again, drivers for both I & B and

S & E were to “report all vehicle troubles to Ellen immediately.”
(Doc. 161-2, Ex. 1 at ⁋ 9).

The Plaintiffs have clearly proven

common management between the defendants.
Centralized control over labor relations is the third factor.
Again, this factor carries the greatest weight under the test,
Swallows, at 994, and it, too, favors Plaintiffs. The main inquiry
is

whether

employees,

I & B
while

controlled
also

the

considering

hiring
the

and

terms,

firing

of

S & E

conditions,

and

policies under which employees worked, and perhaps how the nature
and number of assignments were determined for employees. See id.
at 995.
In this case the companies clearly have a common centralized
authority in such matters:
Doc. 151 at ⁋ 4, admitted).

Ellen Ishmael. (Doc. 147 at ⁋ 4;
By judicial admission Defendants

unreservedly conceded as to all defendants that “Ellen Ishmael .
. . has been in charge of . . . hiring, firing, managing, and
supervising the business[-defendants’] escort drivers including
the plaintiffs.” (Doc. 147 at ⁋ 4).

And of course, as mentioned,

the very Terms and Conditions of employment were the same for
drivers of S & E and I & B, evincing centralization of authority
over such matters, indistinguishable between drivers of S & E and

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those employed more directly by I & B.
⁋⁋ 1, 14).

(See Doc. 161-2, Ex. 1 at

The only reasonable inference to draw from this is a

shared centralized point of control for labor relations: Ellen
Ishmael.
Common ownership and financial control constitute the fourth
and final factor.

This factor favors the defendants in this case

because I & B had different legal ownership than S & E and FCRU.
Yet, this circumstance is not strong enough to overcome the weight
of the other three factors.

Ellen Ishmael was clearly the sole

member, registered agent, and manager of S & E and FCRU. (Doc. 147
at ⁋⁋ 5-6; Doc. 151 at ⁋⁋ 5–6, admitted).

But Ellen held no legal

ownership interest in I & B, notwithstanding her sole management
authority in the company. The true owners, Madison Ishmael (again,
Ellen’s daughter) and Megan Braden, were not as involved in I & B’s
operations at all, and, in fact, could not even identify the
customers or trucking companies I & B contracted with. (See Doc.
161-2, Ex. 1, ⁋ 1–4).

Still, they were the true owners and

presumably would legally have the most financial control over
I & B.
Considering and weighing the four factors in this case, I & B
must

be

treated

as

an

integrated

enterprise

with

defendants, at least with S & E and Ellen Ishmael.

the

other

The evidence

very strongly supports the finding that I & B was a mere alterego of Ellen Ishmael and the other business defendants, its
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distinction
business

based

primarily

structure,

while

on

legal

business

formalities

operations

and

and

formal

employment

conditions were not just identical but entirely shared between the
defendants.

The

supporting

facts

having

been

proven

almost

entirely by judicial admissions and responses to interrogatories,
summary judgment in Plaintiffs’ favor is appropriate.

I & B may

be treated as an “employer” of the plaintiffs under the FLSA and
the

Kentucky

labor

law,

contingent

on

a

later

finding

that

Plaintiffs were in an employment relationship with S & E, FCRU, or
Ellen Ishmael.
III.

CONCLUSION

Having reviewed this matter, and the Court being advised,
Plaintiffs have shown there to be no reasonable dispute of material
fact that I & B is an integrated enterprise with S & E and Ellen
Ishmael.

Accordingly, it is ORDERED that Plaintiffs’ Motion for

Partial Summary Judgment, (Doc. 161), be, and is hereby, GRANTED.
A separate order setting this case for trial and scheduling a
pretrial conference will be filed concurrently herewith.
This 5th day of January 2022.

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