Biggio et al v. H2O Hair Inc. et al

Filing 185

ORDER AND REASONS: IT IS ORDERED that Plaintiffs' 146 motion for partial summary judgment is DENIED. Signed by Judge Ivan L.R. Lemelle on 6/8/2017. (mmv)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
CARRIE BIGGIO, ET AL.

CIVIL ACTION

VERSUS

NO. 15-6034

H2O HAIR INC., ET AL.

SECTION "B"(2)
ORDER AND REASONS

Before the Court is “Plaintiffs’ Motion for Partial Summary
Judgment.” Rec. Doc. 146. Defendants timely filed an opposition
memorandum. Rec. Doc. 157. Plaintiffs then requested (Rec. Doc.
161), and were granted (Rec. Doc. 168), leave to file a reply
memorandum (Rec. Doc. 169). For the reasons discussed below,
IT IS ORDERED that Plaintiffs’ motion for partial summary
judgment (Rec. Doc. 146) is DENIED.
I.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY
As this Court has previously discussed, on November 18, 2015,

Plaintiffs

Carrie

Biggio

and

Chelsea

Luminais

(collectively

“Plaintiffs”), filed the present action under the Fair Labor
Standards Act (“FLSA”) against their former employer, asserting
claims individually and on behalf of all those similarly situated.
Rec. Doc. 1 at 1-2. Plaintiffs worked full-time at Defendant H2O
Hair, Inc. (“H2O”) under numerous job titles, including, but not
limited

to:

apprentice,

stylist,

masseuse,

blow-dry

bar

attendant, receptionist, assistant, and housekeeper. Id. at 2.
Named as Defendants in the action are H2O, Michael John Gaspard

1

(“Mr.

Gaspard”),1

Holli

M.

Gaspard

(“Ms.

Gaspard”),2

and

XYZ

Insurance Company.3 Id.; see also Rec. Doc. 45 at ¶¶ 5-7. Plaintiffs
asserted a number of claims against Defendants, including:

(1)

failure to pay minimum wage and overtime as mandated by the FLSA;
(2) retaliation against Plaintiffs and those similarly situated
who requested proper wages under the FLSA; (3) conversion and
misappropriation; (4) unjust enrichment; and (5) failure to pay
overdue wages following termination, as required by Louisiana law.
Rec. Doc. 1 at 3-6. Plaintiffs sought unpaid back wages, liquidated
damages, punitive damages, costs, and attorney’s fees, among other
forms of relief applicable under Louisiana and federal law. Id. at
6-7.
Soon after filing the complaint, Plaintiffs filed a motion to
conditionally certify the class. Rec. Doc. 27. On March 14, 2016,
the motion was granted in part to allow conditional certification.
Rec. Doc. 44 at 15. The class now consists of thirteen former
employees. Rec. Doc. 146-1 at 1.4

Mr. Gaspard served, at all relevant times, as H2O’s manager, secretary, and
treasurer. Rec. Doc. 1 at 2.
2 Ms. Gaspard served, at all relevant times, as H2O’s president. Rec. Doc. 1 at
2.
3 XYZ Insurance Company is, upon Plaintiffs’ information and belief, the unnamed
insurer providing coverage to Defendants for acts or omissions of officers and
directors. Rec. Doc. 1 at 2.
4 Plaintiffs include Biggio, Luminais, Kaitlin Dubroca, Erin Hawkins, Amanda
Henderson, Jeanette Kent, Heather Pham, Loan Tran, Diana Macera, Heather
Whittington, Kayla Alvarez, Ashley Brown, and Alison Kennedy.
1

2

II.

THE PARTIES’ CONTENTIONS

Plaintiffs argue that Defendants (1) violated Sections 6 and
7 of the FLSA by ordering Plaintiffs to work off the clock; (2)
circumvented

the

FLSA

by

paying

only

commissions

and/or

arbitrarily withholding commissions; (3) failed to create and
maintain records required by the FLSA; and (4) willfully violated
the FLSA. Rec. Doc. 146-1 at 11, 15, 18.
Defendants’ response memorandum focuses only on whether or
not Plaintiffs established that Defendants willfully violated the
FLSA.

Rec.

affidavit

Doc.
by

157.5

Cherie

However,

Callaghan,

Defendants
H2O’s

also

office

attached

manager,

an

that

addresses several of the factual allegations made by Plaintiffs.

Defendants also argue in their response memorandum that “Plaintiffs try to
resurrect their training agreement claims through this motion. However, this
court dismissed them. Anyway, the training agreement gripes are immaterial to
determining whether H2O engaged in willful FLSA violations for purposes of
applying the limitations periods of 29 U.S.C. § 255(a); because those
limitations periods apply only to claims for ‘unpaid minimum wages, unpaid
overtime compensation, or liquidated damages.’” Rec. Doc. 157 at 4. In their
first amended complaint, Plaintiffs asserted “claims under the Louisiana Unfair
Trade Practices Act (‘LUTPA’) related to Training Contracts and Non-Compete
Agreements entered into by the parties . . . .” See Rec. Doc. 54 at 1. By
motion, Defendants argued that the Court should dismiss Plaintiffs’ LUTPA claims
for lack of subject matter jurisdiction, because Plaintiffs did not allege an
“ascertainable loss of money or property,” and because Plaintiffs lacked
standing. Id. at 3. The Court dismissed the LUTPA claims based on the last
argument:
Louisiana Revised Statute § 51:1409(A) specifically prohibits
bringing such an action in a representative capacity. Id. at 5. Defendants are
therefore correct that, to the extent the training agreement claim is reasserted
by Plaintiffs under the LUTPA, this Court has already dismissed that claim.
However, the first amended complaint discussed the training contract and related
issues in its factual background section and incorporated that section into
each of its counts. Therefore, the Court will consider the training agreement
to the extent it is relevant to Plaintiffs’ remaining claims.
5

3

Rec. Doc. 157-2. Therefore, the Court will consider the affidavit
as part of Defendants’ response to Plaintiffs’ motion.6
III. LAW AND ANALYSIS
Under Federal Rule of Civil Procedure 56, summary judgment is
appropriate

only

interrogatories,

if
and

“the

pleadings,

admissions

on

depositions,
file,

together

answers

to

with

the

In their reply memorandum, Plaintiffs argue that “[t]he Fifth Circuit does
not allow a party to defeat summary judgment by using an affidavit that impeaches
sworn testimony.” Rec. Doc. 169 at 5 (citing S.W.S. Erectors, Inc. v. Infax,
Inc., 72 F.3d 489, 495 (5th Cir. 1996) (“It is well settled that this court
does not allow a party to defeat a motion for summary judgment using an affidavit
that impeaches, without explanation, sworn testimony”) (citations omitted);
Albertson v. T.J. Stevenson & Co., 749 F.2d 223, 228 (5th Cir. 1984) (same)
(citations omitted); Doe ex rel. Doe v. Dallas Indep. Sch. Dist., 220 F.3d 380,
386 (5th Cir. 2000) (same) (citations omitted)). However, it does not appear to
the Court that Ms. Callaghan’s affidavit directly contradicts her deposition
testimony. For example, Ms. Callaghan states in her affidavit that H2O employees
did not clock in for the "Friends and Family Day” event because they were to be
paid through commissions only. Rec. Doc. 157-2 at 5-6. Plaintiffs argue that
this statement is directly contradicted by her deposition testimony. Rec. Doc.
169 at 3 (citing Rec. Doc. 146-5 at 8). However, the cited testimony reveals
only that Ms. Callaghan stated that the plaintiffs were not allowed to clock in
on some unknown promotional day. If all parties agree that Plaintiffs were only
to be paid commissions on those days, these statements are not inconsistent.
Plus, Plaintiffs sometimes misconstrue Ms. Callaghan’s affidavit statements.
For example, they argue that Ms. Callaghan stated that “some of the plaintiffs
attended training sessions on Mondays and staff meetings on Fridays, during
regular work hours, but all clocked-in and were paid minimum wage.” Rec. Doc.
169 at 2. However, Ms. Callaghan actually stated that (1) those who attended
the voluntary Monday meetings were not required to attend off the clock and
were paid the federal minimum wage and (2) hourly wage and mixed
commission/hourly wage employees who attended Friday meetings clocked in for
those meetings, but commission-only employees did not clock in for those
meetings and some employees were not required to attend those meetings. Rec.
Doc. 157-2 at 4. Plaintiffs argue that these statements are contradicted by Ms.
Callaghan’s deposition testimony “that there are times where compensable hours
are simply not recorded, such as meetings, walk-in clients, setting up a work
station, etc.” Rec. Doc. 169 at 2. However, Ms. Callaghan actually testified in
her deposition that stylists do not clock in for Friday meetings. Rec. Doc.
146-5 at 11. This is consistent with her affidavit recognizing that those who
were paid on a commission-only basis do not clock in for those meetings. Ms.
Callaghan also stated that stylists may take clients who are not on the daily
schedules if, for example, their mother wants to come in after hours, but that
she did not think this happened often. Id. She also stated that stylists are
nevertheless supposed to put all of their clients on the daily schedules. Id.
6

4

affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to judgment as
a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986) (quoting FED. R. CIV. P. 56(c)). See also TIG Ins. Co. v.
Sedgwick James of Wash., 276 F.3d 754, 759 (5th Cir. 2002). A
genuine issue exists if the evidence would allow a reasonable jury
to return a verdict for the nonmoving party. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986). The movant must point to
“portions

of

interrogatories,

‘the
and

pleadings,
admissions

depositions,
on

file,

answers

together

with

to
the

affidavits, if any,’ which it believes demonstrate the absence of
a genuine issue of material fact.” Celotex, 477 U.S. at 323. If
and when the movant carries this burden, the non-movant must then
go beyond the pleadings and present other evidence to establish a
genuine issue. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio
Corp., 475 U.S. 574, 586 (1986).
However, “where the non-movant bears the burden of proof at
trial, the movant may merely point to an absence of evidence, thus
shifting to the non-movant the burden of demonstrating by competent
summary judgment proof that there is an issue of material fact
warranting trial.” Lindsey v. Sears Roebuck & Co., 16 F.3d 616,
618 (5th Cir. 1994). Conclusory rebuttals of the pleadings are
insufficient to avoid summary judgment. Travelers Ins. Co. v.
Liljeberg Enter., Inc., 7 F.3d 1203, 1207 (5th Cir. 1993).
5

A. DID DEFENDANTS VIOLATE THE FLSA BY REQUIRING PLAINTIFFS TO
WORK OFF THE CLOCK?
Section 6 of the FLSA requires certain employers to pay
minimum hourly wages to their employees. 29 U.S.C. § 206(a)(1).
Section 7 requires these employers to pay non-exempt employees who
work more than forty hours during a workweek one and one-half times
their regular rate of pay. 19 U.S.C. § 207(a)(1). The Portal to
Portal Act, which amended the FLSA, provides that an employer is
not liable for failing to pay minimum or overtime wages “on account
of . . . activities which are preliminary or postliminary to” the
“principal activity or activities” for which the employee is
“employed to perform” which occur prior or subsequent to the time
at which the employee commences or ceases such principal activity
or activities. 29 U.S.C. § 254(a); see also Griffin v. S & B Eng’rs
& Constructors, Ltd., 507 F. App’x 377, 380-81 (5th Cir. 2013); 29
C.F.R. § 790.8(a). “The legislative history further indicates that
Congress intended the words ‘principal activities’ to be construed
liberally . . . to include any work of consequence performed for
an employer, no matter when the work is performed.” § 790.8(a).
Further, “[t]he Supreme Court has held that any activity that is
‘integral and indispensable’ to a compensable ‘principal activity’
is itself a compensable ‘principal activity’ . . . .” Chambers v.
Sears Roebuck & Co., 428 F. App’x 400, 409 (5th Cir. 2011) (citing
IBP, Inc. v. Alvarez, 546 U.S. 21, 37 (2005); Steiner v. Mitchell,

6

350 U.S. 247, 252-53 (1956)). Thus, the Fifth Circuit previously
explained that
the excepting language . . . was intended to exclude
from
F.L.S.A.
coverage
only
those
activities
predominantly . . . spent in (the employees’) own
interests. No benefit may inure to the company. The
activities must be undertaken for (the employees’) own
convenience, not being required by the employer and not
being necessary for the performance of their duties for
the employer. The exemption was not intended to relieve
employers from liability for any work of consequence
performed for an employer, from which the company
derives significant benefit. Nor was the exemption to
apply to work performed . . . before or after the regular
. . . work shift . . . (as) an integral and indispensable
part of the principal activities for which covered
workmen are employed.
Dunlop v. City Elec., Inc., 527 F.2d 394, 398-99 (5th Cir. 1976)
(quotation marks and quotations omitted).
Further, training and similar activities are not considered
working time if
(a)
(b)
(c)
(d)

Attendance is outside of the employee’s regular
working hours;
Attendance is in fact voluntary;
The course, lecture, or meeting is not directly
related to the employee’s job; and
The employee does not perform any productive work
during such attendance.

29 C.F.R. § 785.27; see also 29 C.F.R. §§ 785.28-785.29. Thus,
“[j]ob-related training activities are generally compensable under
[the] FLSA . . . .” Moreau v. Klevenhagen, 956 F.2d 516, 521 (5th
Cir. 1992), aff’d, 508 U.S. 22 (1993) (emphasis added) (citing §
785.27).

7

Plaintiffs argue that Defendants violated Sections 6 and 7 in
several ways.7
First, they argue that Defendants required Plaintiffs to work
off the clock during mandatory training sessions. Rec. Doc. 146-1
at 12. Plaintiffs explain that they were forced to sign “Training
Contracts,” “which provided that H2O would employ Plaintiffs as
part of an ‘apprenticeship’ program . . . .” Rec. Doc. 146-1 at 4.
As part of the training program, Plaintiffs were allegedly required
to attend weekly training sessions during business hours, without
clocking in, and write book reports on personal time “on books
wholly unrelated to hair styling.” Id. at 5 (citations omitted).
To support these allegation, Plaintiffs cite to various documents
in the record, including affidavits, the deposition testimony of
Mr. Gaspard and Ms. Callaghan, and what appears to be a book report
assignment.
Specifically, Mr. Gaspard testified that the training program
“gives them more opportunity to touch more heads and build their
clientele” and, when asked “that – in building the clientele, it
benefits them and the salon at the same time . . . [i]t’s a mutual

The Court spent a significant amount of time consolidating and organizing
Plaintiffs’ arguments and supporting documentation. In fact, Plaintiffs
repeatedly cited to deposition testimony that was not included in the record
until after Defendants filed their response memorandum and attached the full
transcripts for Mr. and Ms. Gaspard, Ms. Callaghan, and Ms. Phillips. The Court
attempted to find the best evidence to support Plaintiffs’ allegations, which
often exaggerated and misconstrued deposition testimony. If, during the process,
the Court inadvertently overlooked better evidence, Plaintiffs will have an
opportunity to present it at trial.
7

8

exchange,” he answers “Absolutely . . . yes.” Rec. Doc. 146-11 at
3. He also testified that “we are known for being able to help you
build the clientele . . . but you can’t keep them if you don’t
have the skills. That’s why we train.” Id. at 4.
Mr. Gaspard’s testimony suggests that the training benefitted
H2O and therefore was not intended to be activity excluded by the
Portal to Portal Act. Thus, we must next consider whether or not
Plaintiffs were compensated for this time.
Shazia Wahaj, H2O’s assistant manager from 2014 to 2016,
testified that most of the plaintiffs were required to attend
Monday classes that lasted approximately three hours, but that it
was “her understanding” they were not allowed to clock in during
those classes. Rec. Doc. 146-6 at 1, ¶ 7.
Ms. Wahaj’s testimony is insufficient at this stage. Even
though it might have been “her understanding” that Plaintiffs were
not “allowed” to clock in, there is no evidence that Plaintiffs
did not regularly clock in during these sessions. Of course, some
Plaintiffs submitted declarations stating that they were required
to attend classes without pay. See, e.g., Rec. Doc. 146-14 at 2,
¶ 7; 7, ¶ 8; 23, ¶ 9. However, it is not clear whether or not these
Plaintiffs were paid hourly or by commission on the unknown dates
of these meetings; the declarations include the same standard
language that these Plaintiffs were employed as hourly employees,
but, the Court knows from Ms. Callaghan’s deposition and affidavit
9

that employees originally hired on an hourly basis often became
commission employees. Plus, Ms. Callaghan specifically stated that
Plaintiffs were paid an hourly wage for their attendance at Monday
training sessions. Rec. Doc. 157-2 at 6. Thus, there is a genuine
issue of material fact and therefore insufficient evidence to find,
as a matter of law, that Defendants required Plaintiffs to attend
training sessions without pay.
Plaintiffs also allege that they were required to complete
training

assignments,

including

book

reports.

When

asked

how

Plaintiffs would record their hours for this work, Ms. Callaghan
responded “They could have been reading. I don’t know.” Rec. Doc.
146-5 at 17. Plaintiffs’ counsel then asked “Is there a system by
which you keep track of the hours that they . . . spend doing this
work?” Id. Ms. Callaghan answered “There is no system.” Id. When
Plaintiffs’ counsel responded “So if there is no recorded hours
for . . . anyone . . . regarding work like this; they were not
paid for that; is that right,” Ms. Callaghan stated “Not that I’m
aware of.” Id. Plus, a document in the record titled “How to Win
Friends

and

Influence

People”

contains

various

questions

or

prompts, responses to which were to be “turn[ed] in during class
on January the 27th.” Rec. Doc. 146-7. The questions include “What
spoke to you the greatest in reading this book,” “Give 5 facts
that you read in the book about what people want most from others,”
“What did you learn from the book that will help you with your
10

skills in interaction with your guest,” and “Did you read the book
in its entirety as required?” Id. (emphasis added). Only one
Plaintiff

addressed

these

book

reports

in

her

declaration.

Plaintiff Whittington stated that she was required to “write
reports about . . . books that did not pertain to the trade of
dressing hair [and] was threatened to be let go if book reports
were not completed in addition to being sued . . . .” Rec. Doc.
146-14 at 22, ¶ 7.
It is unclear whether or not any time spent on book reports
would be excluded under 29 C.F.R. § 785.27. Plaintiffs specifically
state that these reports must be completed on personal time and
that the assigned books were not directly related to the job, both
suggesting that the time may be excluded. While Plaintiffs attached
a document suggesting that the reading was required, the document
is provided to the Court without any context. It could simply mean
that those employees who volunteered to participate in the reading
were required to read the book in its entirety in the same way
that a responsible book club attendee would be required to complete
the assigned reading. It is also unclear which Plaintiffs were
purportedly required to read the book and how much time these
Plaintiffs spent reading the book. Therefore, Plaintiffs are not
entitled to a summary judgment finding that Defendants required
Plaintiffs to complete work-related reading off the clock in
violation of Sections 6 and 7 of the FLSA.
11

Second, Plaintiffs argue that they were required to work off
the clock on certain promotional days. Rec. Doc. 146-1 at 12. In
support, Plaintiffs cite to a screenshot of a 2014 text message in
which Laura Phillips, H2O’s general manager, states “Cherie ask
that I remind the group about PDF&F. You should be clocked out and
receiving

commission

only.”

Rec.

Doc.

146-4

at

1.

In

her

deposition, Ms. Callaghan testified that clients brought in on
promotional

days

would

pay

for

their

services

but

that

the

plaintiffs would not be allowed to clock in “if they brought people
in to do.” Rec. Doc. 146-5 at 8. Finally, in a screenshot of a
September 15, 2014 text message, Ms. Wahaj states “Hey girls!
Cherie is asking that in order to make payroll easier you guys DO
NOT clock in on your family and friends day!” Rec. Doc. 146-6 at
2.
However, in the affidavit attached to Defendants’ response,
Ms.

Callaghan

stated

that

certain

Plaintiffs

voluntarily

participated in promotional days and that those who participated
were compensated on a commission-only basis. Rec. Doc. 157-2 at 56.8 This statement is corroborated by the portion of Ms. Phillips’
deposition testimony cited by Plaintiffs. When Plaintiffs’ counsel
asked “So some days these employees are restricted from clocking

She also stated that “Erin Smith worked on friends and family who did not pay
for services, so she did not receive a commission.” Rec. Doc. 157-2 at 6. “Erin
Smith” is not a party to this action. It is unclear if Ms. Callaghan intended
to refer to Plaintiff Erin “Hawkins.”
8

12

in and others they do clock in; is that right,” Ms. Phillips
responded “Not restricted. They’re paid hourly versus paid –
they’re paid commission versus hourly.” Rec. Doc. 146-8 at 6.
Plaintiffs’ counsel asked “So are they given the option to clock
in and get their commission?” Id. Ms. Phillips responded “I don’t
believe so. But no, I don’t know the answer to that. If I ask
someone to work and they’re not on the clock and not earning
commission, I say, hey, clock in and help me . . . Normally when
an employee – when they have moved up to the level of commission
they are looking to get rid of that hourly wage and grow as a
commissioned employee.” Id.
Thus, there is a genuine issue of material fact as to whether
or not Plaintiffs were properly compensated, through commissions,
on promotional days.
Third, Plaintiffs argue that they were required to work off
the clock during mandatory Friday and Sunday meetings. Rec. Doc.
146-1 at 12. Plaintiff Alvarez stated in her declaration that she
“attended all 7:00 AM meetings as required . . . [but] did not
clock in for most of these because [she] did not want to get into
trouble.” Rec. Doc. 146-14 at 1, ¶ 4. The declarations of some of
the remaining Plaintiffs, which all use substantially similar
language, also suggest that Plaintiffs were required to attend
meetings without clocking in. See id. at 7, ¶ 8; 12, ¶ 7; 14, ¶ 7;
20, ¶ 7; 23, ¶ 9.
13

In her affidavit, Ms. Callaghan testified that hourly wage
and mixed commission/hourly wage employees clocked in for Friday
meetings. Rec. Doc. 157-2 at 4. Further, while Ms. Wahaj testified
that Plaintiffs were required to attend such meetings (see Rec.
Doc. 146-6 at 1, ¶ 8), she did not state that Plaintiffs were not
allowed

to

clock

in.

Similarly,

in

a

December

29,

2014

communication, Mr. Gaspard stated that the company will be meeting
on Sunday, January 4, 2015 from 10:00 a.m. to 2:00 p.m. and that
“[f]or all those who wish to participate in receiving new guests
and advancement in their own personal growth and financial progress
with H2O Salon & Spa, we require your attendance.” Rec. Doc. 14610 at 3. Again, though, Mr. Gaspard did not state that Plaintiffs
were not allowed to clock in during this meeting. Ms. Callaghan
also stated that Plaintiffs Kennedy and Biggio did not clock in
for the Friday staff meetings, because they worked on a commissiononly basis, and that Plaintiffs Alvarez and Brown were not expected
to attend these meetings. Id. Nonetheless, Ms. Callaghan admitted
that certain Plaintiffs attended three Sunday events for which
they were not compensated. Rec. Doc. 157-2 at 4-5.
Ultimately, without additional information regarding their
commission salary, it is unclear whether or not commissioned
employees were properly compensated for attending meetings. It is
also unclear which Plaintiffs attended which meetings, for how
long, without clocking in. Plus, Plaintiffs completely fail to
14

address the distinction between hourly and commission employees.
Without better evidence, the Court cannot hold, as a matter of
law, that Defendants violated the FLSA by failing to properly
compensate employees for attendance at certain meetings.
The factual record is simply too convoluted and contradictory
for this Court to hold that Plaintiffs are entitled to a broad
summary judgment finding that Defendants violated various sections
of the FLSA by requiring Plaintiffs to work off the clock. For
judgment as a matter of law, the Court would need far more specific
details as to each Plaintiff, her hours, her pay, the basis for
her compensation, and her participation in various meetings and
activities.
B. DID DEFENDANTS PAY ONLY COMMISSIONS AND/OR ARBITRARILY
WITHHOLD COMMISSIONS?
The FLSA provides that an employer does not violate the
overtime provisions of Section 7
by employing any employee of a retail or service
establishment for a workweek in excess of the applicable
workweek . . . if (1) the regular rate of pay of such
employee is in excess of one and one-half times the
minimum hourly rate applicable to him . . . and (2) more
than half his compensation for a representative period
(not less than one month) represents commissions on
goods or services. In determining the proportion of
compensation representing commissions, all earnings
resulting from the application of a bona fide commission
rate shall be deemed commissions on goods or services
without regard to whether the computed commissions
exceed the draw or guarantee.

15

§ 207(i). If an employee is exempt under this section, the employer
“shall maintain . . . [a] copy of the agreement . . . under which
section 7(i) is utilized or, if such agreement is not in writing,
a

memorandum

summarizing

its

terms

including

the

basis

of

compensation, the applicable representative period and the date
the agreement was entered into and how long it remains in effect.”
29 C.F.R. § 516.16(b).
Plaintiffs argue that there is no evidence of an agreement or
“bona fide commission rate,” which is “required to determine
commissions” and “an absolute requirement when claiming 207(i)
exemptions.” Rec. Doc. 146-1 at 16. They use Plaintiff Tran as an
example of Defendants’ alleged misconduct. She apparently earned
a commission of $67.01 during the week of November 28, 2013 (see
Rec. Doc. 146-21), but she was never paid a commission during that
time period (see Rec. Doc. 146-22 at 4). In fact, Plaintiffs allege
that she was entitled to $1,999.29 in commissions, but was only
ever paid $111.06 in commissions. Rec. Doc. 146-1 at 18 (citing
Rec. Doc. 146-22 at 8 (showing only that Tran was paid $111.06 in
commissions)).9
Plaintiffs

also

argue

that

Defendants

would

reduce

Plaintiffs’ wages for failing to meet retail sales goals because
“it

9

keeps

them

focused.”

Rec.

Doc.

146-1

at

3.

Mr.

The source of the $1,999.29 figure remains unknown to the Court.

16

Gaspard

testified that if an employee failed to meet a certain standard,
she was penalized:

“So if they did a dollar . . . of service and

they only sold five cents . . . they didn’t meet the . . . ten
percent in product sold, then they, instead of getting 20 percent
commission, it would be reduced to 15 percent in commission.” Rec.
Doc. 146-11 at 6. Plaintiffs’ counsel then asked, “So, essentially,
there’d be a reduction in wages if there was not enough retail
product sold?” Id. Mr. Gaspard responded “Because we call it an
indicator. It indicates that they’re not having conversation with
the client about home care and using the product that we use to
get the same results . . . So it keeps them focused. That’s the
purpose of it.” Id.
In her affidavit, Ms. Callaghan acknowledges that “H2O did
not have any written agreements with any of the Plaintiffs.” Rec.
Doc. 157-2 at 6. However, she explains that each employee was given
a “daily Employee On Task Report that provided daily revenue
information from their respective sales and services that could be
used to verify their respective earned commissions.” Id. H2O also
“had available a memorandum that provided guidelines concerning
how to determine earned commissions.” Id.
If Plaintiffs are asking the Court to find, at the summary
judgment

stage,

commissions,”

they

that

Defendants

should

have

“arbitrarily

produced

better

withheld

evidence.

Ms.

Callaghan testified to the existence of a memorandum outlining
17

Defendants’ process for calculating commissions. If Plaintiffs
agreed

to

an

arrangement

in

which

Defendants

would

deduct

commissions for an employee’s failure to meet certain sales goals,
Plaintiffs have not presented any case law suggesting that such an
arrangement

necessarily

violates

the

FLSA.

There

is

simply

insufficient evidence for this Court to find, as a matter of law,
that Defendants arbitrarily withheld commissions.
C. DID DEFENDANTS FAIL TO CREATE AND MAINTAIN RECORDS REQUIRED
BY THE FLSA?
The FLSA requires every employer subject to its provisions to
make and preserve “records of the persons employed by him and of
the wages, hours, and other conditions and practices of employment
maintained by him . . . .” 29 U.S.C. § 211(c). More than half a
century ago, the Supreme Court explained that when an employer
fails to maintain accurate or adequate records,
we hold that an employee has carried out his burden if
he proves that he has in fact performed work for which
he was improperly compensated and if he produces
sufficient evidence to show the amount and extent of
that work as a matter of just and reasonable inference.
The burden then shifts to the employer to come forward
with evidence of the precise amount of work performed or
with evidence to negative the reasonableness of the
inference to be drawn from the employee’s evidence. If
the employer fails to produce such evidence, the court
may then award damages to the employee, even though the
result be only approximate.
Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 687-88 (1946)
superseded by statute on other grounds, 29 U.S.C. §§ 251-62, as

18

described in Integrity Staffing Sols., Inc. v. Busk, 135 S. Ct.
513, 516-17 (2014) (emphasis added).
Plaintiffs

point

to

the

following

exchange

during

Ms.

Callaghan’s deposition:
Q. Okay. And an agreement such as how you are paid your
commission, your straight time, your wages; that would
be mutually beneficial, or at least somewhat beneficial
to an employee, wouldn’t it?
A. Yes, sir.
Q. Okay. But there is no such written agreement; is
there?
A. No, sir.
Rec. Doc. 146-5 at 6. Plaintiffs further argue that Defendants
merely maintained client appointment schedules and did not track
compensable hours worked during various activities, including, for
example, meetings. Rec. Doc. 146-1 at 20-21. In support, Plaintiffs
cite to a section of Ms. Callaghan’s deposition testimony in which
Plaintiffs’ counsel asked “How do you keep track of stylist’s hours
if no one clocks in as a stylist?” Rec. Doc. 157-19 at 80. Ms.
Callaghan answered that for stylists paid on a commission-only
basis, hours are tracked with daily schedules. Id. at 81-82. To
support their argument that certain compensable hours were not
tracked at all, Plaintiffs cite to Ms. Callaghan’s testimony that
these stylists did not record hours for various meetings. Id. at
83-86.
It is undisputed that Defendants maintained some records,
including daily schedules, task reports, and similar documents.

19

Plus, Ms. Callaghan stated in her affidavit that “a memorandum
that

provided

guidelines

concerning

how

to

determine

earned

commissions” was available. Rec. Doc. 157-2 at 6. If these records
are inaccurate or inadequate, then Plaintiffs may be able to
satisfy their burden at trial by producing “sufficient evidence to
show the amount and extent of [their] work as a matter of just and
reasonable inference.” Mt. Clemens Pottery, 328 U.S. at 687-88.
However, at the summary judgment stage, there is insufficient
evidence to show that, as a matter of law, Defendants consistently
failed to maintain adequate records of hours and wages in violation
of § 211(c).10
D. DID DEFENDANTS WILLFULLY VIOLATE THE FLSA?
Under the FLSA, any action for unpaid minimum wages or
overtime compensation must be commenced within two years after the
cause of action accrued, “except that a cause of action arising
out of a willful violation may be commenced within three years
after the cause of action accrued . . . .” 29 U.S.C. § 255(a)
(emphasis added). It is the plaintiff’s burden to demonstrate
willfulness. Steele v. Leasing Enters., Ltd., 826 F.3d 237, 248
(5th Cir. 2016) (citations omitted). “The standard for determining
willfulness is whether the employer either knew or showed reckless

If commissioned employees attended mandatory meetings and were not properly
compensated for that time, Defendants violated the FLSA. However, the basis for
H2O’s commission payments is not currently available to the Court. Thus, as
previously discussed, the Court will not grant summary judgment on this issue.
10

20

disregard for whether his conduct violated the FLSA.” Reich v.
Tiller Helicopter Servs., Inc., 8 F.3d 1018, 1036 (5th Cir. 1993)
(citing McLaughlin v. Richland Shoe Co., 486 U.S. 128 (1988)). The
Supreme

Court

employer’s

and

the

Fifth

“unreasonable”

Circuit

or

have

clarified

“negligent”

actions

that
are

an
not

necessarily “reckless.” McLaughlin, 486 U.S. at 135 n.13; Steele,
826 F.3d at 248 (citing Mireles v. Frio Foods, Inc., 899 F.2d 1407,
1416 (5th Cir. 1990)).
Plaintiffs

argue

that

Defendants

were

aware

of

their

obligations under the FLSA because they were investigated by the
United States Department of Labor in 2006 (see Rec. Doc. 146-12,
containing

the

2006

audit

materials)

and

received

repeated

complaints from their employees. Rec. Doc. 146-1 at 3, 22. In
support,

Plaintiffs

cite

to

various

communications

from

Mr.

Gaspard to H2O employees in which he suggests that the Affordable
Care Act imposed new burdens on the company. Rec. Doc. 146-10 at
1-2. For example, in a January 16, 2014 communication, Mr. and Ms.
Gaspard explain that “[i]t is State and now Federal law for every
employee to clock in and out. Due to Obamacare, the IRS is now
holding us accountable for every employee to do so. They now
require

exact

hours

worked

and

your

clock

in

and

clock

out

records.” Rec. Doc. 146-15. Plaintiffs also cite to Ms. Callaghan’s
testimony that

21

in 2006 when I spoke with the lady, and there was some
discrepancy with overtime at the time. When Michael John
and I had a meeting with her, she said – this is where
our confusion came in. That if they were receiving
commissions, we did not pay them overtime. They paid
straight time. We were not aware that it had to be 50
percent. So that is where our confusion happened. So
it’s not the same thing because if you go back and look
at the records for some of your plaintiffs that did not
receive commission they were receiving overtime. So it
wasn’t that we just weren’t blatantly paying overtime to
anyone because they were. It was when the commission was
involved that our error was.
Rec. Doc. 157-19 at 86-87.
Ms. Callaghan states in her affidavit that the Department of
Labor
informed me that hair stylists, nail techs, and
estheticians that are paid on commissions were exempt
from overtime. I misunderstood the proper application of
that overtime exemption to hair stylists who were
compensated on both an hourly wage basis and commission
basis. I was not aware that the commission employee
exemption only applied to a mixed commission/hourly wage
employee if the commission compensation is more than
one-half of the employee’s total compensation for a
period. As a result, I mistakenly applied the commission
employee exemption to mixed commission/hourly wage
compensated employees even if the commission component
of compensation was less than one-half of the employee’s
total compensation for a period. I did not become aware
of this error until this lawsuit was filed. I did not
knowingly or willfully misapply the overtime exemption
– it was simply an inadvertent error.
Rec. Doc. 157-2 at 3-4.11

Thus, Defendants admit to making an error as to overtime payments for
employees earning both an hourly wage and a commission. However, it is not clear
at this stage which Plaintiffs may have been affected by this error. Therefore,
summary judgment is inappropriate.
11

22

Based on both Ms. Callaghan’s deposition testimony, in which
she states that they were unaware of the applicable law, and
affidavit, there is a genuine issue of material fact as to whether
or not Defendants willfully violated the FLSA or simply acted
negligently or unreasonably. Because it may be the latter, summary
judgment is inappropriate.
IV.

CONCLUSION

Accordingly,
IT IS ORDERED that Plaintiffs’ motion for partial summary
judgment (Rec. Doc. 146) is DENIED.
New Orleans, Louisiana, this 8th day of June, 2017.

___________________________________
SENIOR UNITED STATES DISTRICT JUDGE

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