Rule et al v. Southern Industrial Mechanical Maintenance Co L L C
MEMORANDUM RULING granting in part and denying in part 154 Motion for Summary Judgment; denying 163 Motion for Discovery; and denying 167 Motion for Summary Judgment. The motion 154 is GRANTED as to the applicable statute of limitations and DENIED as to FLSA liability and liquidated damages. Signed by Judge Elizabeth E Foote on 3/6/2020. (crt,Keifer, K)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
SHANNON RULE, ET AL.
CIVIL ACTION NO: 16-CV-01408
JUDGE ELIZABETH E. FOOTE
SOUTHERN INDUSTRIAL MECHANICAL
MAINTENANCE CO., L.L.C., ET AL.
MAGISTRATE JUDGE HAYES
This case arises out of a dispute between employees and their employer, Southern
Industrial Mechanical Maintenance Company, LLC (“SIMMCO”), about whether payments
SIMMCO made to its traveling employees were properly excluded from their regular rate of pay
under the Fair Labor Standards Act (the “FLSA”), 29 U.S.C. §§ 201, et seq. Now pending before
the Court are three motions: a Motion for Discovery Pursuant to Rule 56(d) filed by Plaintiffs
[Record Document 163], a Motion for Summary Judgment filed by Defendants David and Ginger
Blurton (“the Blurtons”), the owners of SIMMCO, [Record Document 154], and a Motion for
Summary Judgment as to FLSA Liability filed by Plaintiffs [Record Document 167]. For the
reasons discussed below, Plaintiffs’ Motion for Discovery Pursuant to Rule 56(d) [Record
Document 163] is DENIED. The Blurtons’ Motion for Summary Judgment [Record Document
154] is GRANTED in part and DENIED in part. The motion is GRANTED as to the applicable
statute of limitations and DENIED as to FLSA liability and liquidated damages. Plaintiffs’ Motion
for Summary Judgment as to FLSA liability [Record Document 167] is DENIED.
On October 7, 2016, Plaintiffs Shannon Rule and Karina Esquivel (“Plaintiffs”) filed the
instant collective action under the FLSA on behalf of themselves and all other similarly-situated
current and former employees of SIMMCO, seeking unpaid overtime pay, liquidated damages,
prejudgment interest, attorneys’ fees, and costs. Record Document 1, ¶s 1 & 22. Plaintiffs allege
that they were hourly, non-exempt employees who were entitled to overtime pay under the FLSA.
Id. at ¶ 9. Plaintiffs claim that SIMMCO paid them per diems for travel expenses and then failed
to include those per diems in their regular rate of pay when calculating their overtime pay, in
violation of the FLSA. Id. at ¶s 11–12. Plaintiffs argue that the per diems should have been
included in their regular rate of pay because SIMMCO’s policy tied the amount of the per diems
to the number of hours an employee worked. Id. at ¶s 10–11 (citing Newman v. Advanced Tech.
Innovation Corp., 749 F.3d 33, 38 (1st Cir. 2014)).
This case was conditionally certified as a collective action pursuant to 29 U.S.C. § 216(b)
on April 24, 2017. Record Document 45. In addition to the two named Plaintiffs, over 170
additional Plaintiffs have opted-in to this litigation. On June 14, 2017, Plaintiffs amended their
complaint to include David and Ginger Blurton as individual defendants. Record Document 85.
On February 12, 2018, this case was stayed as to SIMMCO pursuant to 11 U.S.C. § 362(a), after
SIMMCO filed a Suggestion of Bankruptcy into the record. Record Document 108. Plaintiffs
amended their complaint again on July 10, 2019, to include David Payne, Randy Sawdey, Southern
Industrial Mechanical Maintenance Company II, L.L.C. (“SIMMCO II”), and The Blurton Group,
L.L.C. as Defendants. Record Document 148.
The Blurtons filed a motion for summary judgment arguing that they are entitled to a
dismissal of Plaintiffs’ claims because the facts show that SIMMCO’s per diem policy did not
violate the FLSA as a matter of law. Record Document 154, p. 2. In the alternative, they argue that
if they are found liable for an FLSA violation, the Court should also find (1) that the FLSA’s
standard two-year statute of limitations should apply in this case rather than the three-year statute
of limitations for willful violations and (2) that Plaintiffs are not entitled to recover liquidated
damages under the FLSA. Id. Plaintiffs subsequently filed a motion for discovery pursuant to
Federal Rule of Civil Procedure 56(d), requesting further discovery on the issue of whether
Defendants willfully violated the FLSA. Record Document 163, p. 1. Finally, Plaintiffs filed their
own motion for summary judgment on the issue of FLSA liability. Record Document 167.
PLAINTIFFS’ RULE 56(d) MOTION FOR DISCOVERY
Plaintiffs have filed a Motion for Discovery pursuant to Federal Rule of Civil Procedure
56(d), requesting additional time for discovery on the issue of willfulness. Record Document 163.
Plaintiffs also request the costs and attorneys’ fees incurred in the filing of this motion and request
that the Court enter an order regarding Defendants’ failure to comply with discovery obligations.
Id. 1 Plaintiffs state that, although they have been diligent in conducting discovery, they have been
unable to locate or depose Vanessa Carrasco (“Carrasco”) or David Payne (“Payne”), two of the
witnesses SIMMCO named in discovery, or Randy Sawdey (“Sawdey”), a recently added
Defendant. Record Document 163-1, pp. 2–3. Plaintiffs also claim that David and Ginger Blurton
have not been fully deposed because they have not been questioned about 7,000 pages of personnel
files that Plaintiffs received after the Blurtons had already been deposed. Id. at 3–4.
Rule 56(d) provides that “[i]f a nonmovant shows by affidavit or declaration that, for
specified reasons, it cannot present facts essential to justify its opposition [to summary judgment],
the court may:
(1) defer considering the motion or deny it;
(2) allow time to obtain affidavits or declarations or to take discovery; or
Plaintiffs make these two requests in their motion [Record Document 163], but they are not
addressed in the Memorandum in Support of that motion [Record Document 163-1].
(3) issue any other appropriate order.”
Fed. R. Civ. P. 56(d). Rule 56(d) discovery motions are intended to “safeguard non-moving parties
from summary judgment motions that they cannot adequately oppose” and are therefore “broadly
favored and should be liberally granted.” Culwell v. City of Fort Worth, 468 F.3d 868, 871 (5th
Cir. 2006). However, a nonmovant may not “simply rely on vague assertions that additional
discovery will produce needed, but unspecified, facts.” SEC v. Spence & Green Chem. Co., 612
F.2d 896, 901 (5th Cir. 1980). This is especially true where “ample time and opportunities for
discovery have already lapsed.” Id.
A nonmovant must present “specific facts explaining the inability to make a substantive
response as required by Rule 56(e)” and specifically demonstrate “‘how postponement of a ruling
on the motion will enable him, by discovery or other means, to rebut the movant’s showing of the
absence of a genuine issue of fact.’” Id. (quoting Willmar Poultry Co. v. Morton-Norwich Prods.,
Inc., 520 F.2d 289, 297 (8th Cir. 1975), cert. denied, 424 U.S. 915 (1976)). A plaintiff’s entitlement
to discovery prior to a ruling on a motion for summary judgment may be cut off “when the record
shows that the requested discovery is not likely to produce the facts needed by the plaintiff to
withstand a motion for summary judgment.” Washington v. Allstate Ins. Co., 901 F.2d 1281, 1285
(5th Cir. 1990). Furthermore, a Rule 56(d) motion may be denied if a party had the opportunity to
conduct discovery but did not diligently pursue it. Int'l Shortstop, Inc. v. Rally's Inc., 939 F.2d
1257, 1267 (5th Cir.1991).
The Court begins by analyzing the facts that Plaintiffs claim they will uncover through
further discovery. 2 Plaintiffs state that Carrasco, SIMMCO’s former Human Resources Manager,
The Court notes that Plaintiffs’ motion contains complaints about Defendants’ behavior during
the discovery process that are unrelated to the issue of willfulness. Plaintiffs allege that Defendants
have been dilatory during discovery. Record Document 163-1, p. 2. As evidence of this
authored and received several emails regarding the per diem policy and likely had “substantial
responsibility” over SIMMCO’s FLSA compliance. Record Document 163-1, p. 3. As to Payne,
Plaintiffs state that he also authored and received emails regarding the per diem policy and was
one of the highest management-level employees working for SIMMCO in Shreveport. Id.
Plaintiffs do not provide the Court with any specific reasons why it is relevant to the issue of
willfulness that they depose Sawdey or re-depose David and Ginger Blurton.
The record already contains several facts relevant to the issue of willfulness. The Blurtons
have represented that they created SIMMCO’s per diem policy. Record Document 154-3, p. 3,
Ginger Blurton’s Responses to Interrogatories. In her declaration, Ginger Blurton stated that she
was not aware of any employees complaining that the per diem policy violated the FLSA, nor had
SIMMCO ever been sued for an FLSA violation regarding its calculation of the regular rate of
pay. Record Document 154-2, p. 3. Plaintiffs have not identified any facts they hope to find through
further discovery or facts indicating that Carrasco, Payne, or Sawdey would be able to provide
additional information as to willfulness. The closest Plaintiffs come to explaining the need for
additional discovery is stating that Carrasco was likely responsible for SIMMCO’s FLSA
compliance. However, this reasoning is still vague. Plaintiffs do not state what facts might be
adduced from Carrasco, or any other witness, that would influence the pending motion for
summary judgment on the issue of willfulness. C.B. Trucking, Inc. v. Waste Mgmt., Inc., 137 F.3d
dilatoriness, Plaintiffs point to David Blurton’s July 2019 deposition wherein he states that he did
not know he was a defendant in this suit, did not review the discovery responses submitted in his
name, and did not search for any documents that were responsive to Plaintiffs’ discovery requests.
Id.; see Record Document 162-2, pp. 28–37. The Court finds these revelations troubling. However,
Plaintiffs have not explained why David Blurton’s statements are relevant to the instant motion for
an extension of discovery or the issue of whether the Blurtons willfully violated the FLSA. A Rule
56(d) motion serves a narrow purpose and is not the proper vehicle for a plaintiff to air all of its
discovery-related grievances against a defendant. Fed. R. Civ. P. 56(d).
41, 44 (1st Cir. 1998) (quoting Resolution Trust Corp. v. N. Bridge Assocs., 22 F.3d 1198, 1203
(1st Cir. 1994)). Because Plaintiffs have failed to demonstrate how further discovery will create a
genuine issue of material fact as to willfulness, the Court may grant the Blurtons’ motion for
summary judgment over Plaintiffs’ request for an extension of discovery. Access Telecom, Inc. v.
MCI Telecomm. Corp., 197 F.3d 694, 720 (5th Cir. 1999).
Even if Plaintiffs had outlined specific facts that they hoped to find through further
discovery, the Rule 56(d) motion would still fail because Plaintiffs cannot establish that they have
diligently pursued the requested discovery. Int'l Shortstop, Inc., 939 F.2d at 1267. Plaintiffs have
known that the applicable statute of limitations and willfulness were going to be contested in this
case since SIMMCO filed its answer on November 16, 2016. Record Document 8, p. 9.
Furthermore, SIMMCO’s discovery responses from January 9, 2017, 3 identified Carrasco and
Payne, along with David and Ginger Blurton, as individuals who had “information related to any
portion of the matters alleged in the Complaint” and identified Sawdey as an individual that
supervised Plaintiffs during the time they worked for SIMMCO. Record Document 21-2, pp. 2 &
5. Thus, Plaintiffs have known that Carrasco, Payne, and Sawdey were relevant witnesses in this
litigation for more than three years.
This litigation is nearing four years old. Discovery in this case has been open since
September 6, 2017, when the first scheduling order was entered. Record Document 104. After
SIMMCO notified the Court that it had filed for Chapter 11 Bankruptcy [Record Document 108],
which stayed the case as to SIMMCO only, 4 no party took any action in this case for nearly a year
The discovery responses state that they were submitted on January 9, 2016. Record Document
21-2, p. 29. Because this lawsuit was not filed until October of 2016, the Court presumes that the
date contains a typographical error and that the discovery responses were actually submitted on
January 9, 2017.
See 11 U.S.C. § 362(a)(1).
until the Court convened a status conference to discuss the upcoming trial and pretrial conference.
Record Document 109. As the Magistrate Judge noted, SIMMCO’s bankruptcy caused both parties
to be “less than diligent in prosecuting this case to conclusion.” Record Document 129, p. 4.
Furthermore, the Court is unpersuaded by Plaintiffs’ assertions that they have not had sufficient
time to conduct discovery as to the newly added Defendants. The pending summary judgment
motion [Record Document 154] was filed by the Blurtons and, as such, the Court’s analysis of the
applicable statute of limitations applies only to the Blurtons. Plaintiffs are free to continue to
conduct discovery regarding willfulness as to all other Defendants.
The Court finds that “ample time and opportunities for discovery have already lapsed” and
that Plaintiffs have not identified the specific facts that they hope to produce through additional
discovery but have merely asserted that additional discovery will produce “needed, but
unspecified, facts.” Spence & Green Chem. Co., 612 F.2d at 901. Therefore, Plaintiffs’ Rule 56(d)
motion [Record Document 163] is DENIED. The Court also DENIES Plaintiffs’ request for the
costs and attorneys’ fees incurred in filing this motion and declines to enter any order regarding
Defendants’ alleged failure to comply with discovery obligations. See Record Document 163.
CROSS MOTIONS FOR SUMMARY JUDGMENT
Federal Rule of Civil Procedure 56(a) directs a court to “grant summary judgment if the
movant shows that there is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Summary judgment is appropriate when the pleadings, answers to
interrogatories, admissions, depositions, and affidavits on file indicate that there is no genuine
issue of 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). When the burden at trial will rest on the non-moving
party, the moving party need not produce evidence to negate the elements of the non-moving
party’s case; rather, it need only point out the absence of supporting evidence. See id. at 322–23.
However, “if the movant bears the burden of proof on an issue, . . . he must establish beyond
peradventure all of the essential elements of the claim or defense to warrant judgment in his favor.”
Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986).
If the movant satisfies its initial burden of showing that there is no genuine dispute of
material fact, the nonmovant must demonstrate that there is, in fact, a genuine issue for trial by
going “beyond the pleadings” and “designat[ing] specific facts” for support. Little v. Liquid Air
Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (citing Celotex, 477 U.S. at 325). “This burden is not
satisfied with some metaphysical doubt as to the material facts,” by conclusory or unsubstantiated
allegations, or by a mere “scintilla of evidence.” Id. (internal quotation marks and citations
omitted). However, “[t]he evidence of the non-movant is to be believed, and all justifiable
inferences are to be drawn in his favor.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)
(citing Adickes v. S. H. Kress & Co., 398 U.S. 144, 158–59 (1970)). While not weighing the
evidence or evaluating the credibility of witnesses, courts should grant summary judgment where
the critical evidence in support of the nonmovant is so “weak or tenuous” that it could not support
a judgment in the nonmovant’s favor. Armstrong v. City of Dall., 997 F.2d 62, 67 (5th Cir. 1993).
Additionally, Local Rule 56.1 requires the movant to file a statement of material facts as
to which it “contends there is no genuine issue to be tried.” The opposing party must then set forth
a “short and concise statement of the material facts as to which there exists a genuine issue to be
tried.” W.D. La. R. 56.2. All material facts set forth in the movant’s statement “will be deemed
admitted, for purposes of the motion, unless controverted as required by this rule.” Id.
The Blurtons’ Motion for Summary Judgment
Congress enacted the FLSA so that each employee covered by the Act would receive “[a]
fair day’s pay for a fair day’s work and would be protected from the evil of overwork as well as
underpay.” Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 739 (1981) (internal
quotation marks and citations omitted). Under the FLSA, a non-exempt employee who works more
than 40 hours in one week must be paid overtime at a rate of no less than one and one-half times
his “regular rate” of pay. 29 U.S.C. § 207(a)(1). Thus, the rate of overtime pay an employee
receives is dependent upon his regular rate.
Section 207(e) of the FLSA requires that “all remuneration for employment paid to, or on
behalf of, the employee” be included in an employee’s regular rate of pay. 29 U.S.C. § 207(e).
Section 207(e) also provides seven exceptions to this general rule. Id. Any remuneration that does
not fall within one of those seven statutory exceptions must be included in the calculation of an
employee’s regular rate. 29 C.F.R. § 778.200(c). The exception relevant to this case states that the
regular rate does not include “reasonable payments for traveling expenses, or other expenses,
incurred by an employee in the furtherance of his employer’s interests and properly reimbursable
by the employer; and other similar payments which are not made as compensation for his hours of
employment.” 29 U.S.C. § 207(e)(2). There is a statutory presumption that remuneration in any
form is included in the regular rate calculation. Madison v. Res. for Human Dev., Inc., 233 F.3d
175, 187 (3d Cir. 2000). Furthermore, an employer has the burden of establishing that a payment
to an employee falls under one of the exceptions in § 207(e) and should not be included in an
employee’s regular rate. Id. Payments such as those described in § 207(e)(2) are sometimes called
The regulations interpreting this subsection of the FLSA provide further guidance
regarding an employer’s reimbursement of an employee’s work-related expenses. Section
778.217(a) provides that payments made to cover an employee’s travel costs are “not included in
the employee's regular rate (if the amount of the reimbursement reasonably approximates the
expense incurred).” 29 C.F.R. § 778.217(a). The Department of Labor’s Wage and Hour Field
Operations Handbook (“the Handbook”) also discusses an employer’s reimbursement of an
employee’s work-related travel expenses:
If the amount of per diem or other subsistence payment is based upon and thus
varies with the number of hours worked per day or week, such payments are a part
of the regular rate in their entirety. However, this does not preclude an employer
from making proportionate payments for that part of a day that the employee is
required to be away from home on the employer’s business. For example, if an
employee returns to his/her home or employer’s place of business at noon, the
payment of only one-half the established per diem rate for that particular day would
not thereby be considered as payment for hours worked and could thus be excluded
from the regular rate.
Wage & Hour Div., Dep't of Labor, Field Operations Handbook § 32d05a(c) (2016). The Court is
not bound by the Handbook but may consider its persuasive effect. Gagnon v. United
Technisource, Inc., 607 F.3d 1036, 1041 n.6 (5th Cir. 2010) (citing Skidmore v. Swift & Co., 323
U.S. 134, 140 (1944)).
In the instant case, SIMMCO’s employees were often required to travel for work and work
away from home. Record Document 154-1, p. 8. Accordingly, SIMMCO paid its employees per
diems as reimbursements for the cost of lodging, evening meals, and incidental travel expenses.
Id. Traveling employees received an hourly wage plus a flat rate per diem for each day they
worked. Id. at 9. During the times relevant to this case, SIMMCO’s per diem policy stated:
1. You Must Work 80% of the scheduled work day in order to receive Per Diem for
that day. No Per Diem will be paid if you do not work at least 80% of your
EXAMPLE: If the scheduled hours are 10 for that day you must work a minimum
of 8 hours to receive Per Diem for that day.
2. You will be docked for any hours short of a full day.
EXAMPLE: You are scheduled for a 10-hour day and you arrive one (1) hour late
for a total of 9 hours worked. Your Per Diem Will be docked 1 hour.
3. You can request advances on your Per Diem, $100.00 per day limit on all
Record Document 154-4, p. 50 (emphasis in original). Under this policy, traveling employees
could receive (1) a full per diem for working all of or more than their scheduled shift for that day;
(2) no per diem for working less than 80% of the hours in their scheduled shift; or (3) a pro-rated
per diem for working less than 100% but more than 80% of their scheduled shift. Record Document
154-1, pp. 18–19. Neither Plaintiffs nor the Blurtons dispute the content of SIMMCO’s per diem
policy or how it functioned. The question before the Court is a legal one. To prevail on summary
judgment, the Blurtons must demonstrate that the payments at issue in this case fall into the
FLSA’s exception for the reimbursement of travel expenses in § 207(e)(2).
The Court finds that the Blurtons have failed to carry their burden for several reasons. First,
SIMMCO’s policy varied the per diem amounts by the number of hours worked and therefore the
per diems did not “reasonably approximate the expenses incurred.” See 29 C.F.R. § 778.217(a).
Second, the proportionate reduction that SIMMCO made to the per diem amounts was not
sanctioned by the Handbook. Finally, the per diem policy was intended to encourage regular work
attendance rather than to reimburse employees for their travel expenses. The Court will analyze
each of these reasons in turn.
The per diems varied with the hours worked and therefore were not reasonable
estimates of travel expenses
Multiple circuit courts have recognized that a per diem that varies in amount based on the
number of hours worked must be included in an employee’s regular rate. Baouch v. Werner
Enters., Inc., 908 F.3d 1107, 1116 (8th Cir. 2018); Sharp v. CGG Land (U.S.) Inc., 840 F.3d 1211,
1215–16 (10th Cir. 2016); Newman, 749 F.3d at 39; Gagnon, 607 F.3d at 1041. The Fifth Circuit
explicitly acknowledged this rule in Gagnon, 607 F.3d at 1041 (citing Handbook, § 32d05a(c)). In
Newman, the First Circuit held that the per diems should have been included in the plaintiffemployees’ regular rate of pay because the number of hours an employee worked was the only
number that varied in the formula for calculating per diem amounts. 749 F.3d at 38. Thus, an
employee who worked seven hours a day and an employee who worked 12 hours a day would earn
different amounts of per diem under the defendant-employer’s formula but would earn identical
amounts of per diem if the formula was based upon the number of days an employee worked. Id.
Despite some differences between the per diem policy in the instant case and the one in
Newman, the Court finds that same result should apply here. SIMMCO’s policy did not assign per
diems a set hourly value, nor were employees able to increase the amount of their per diems by
working a greater number of hours. Record Document 154-4, p. 50. Indeed, the per diems were
not reduced for every hour worked, but they were reduced or eliminated based upon the amount of
hours an employee worked of his scheduled shift. Id. Therefore, to say that the per diems did not
vary based on the number of hours worked is factually false.
Furthermore, under SIMMCO’s policy, employees who worked up to 79% of their
scheduled shift would receive no per diem at all even though they incurred the same travel
expenses as if they had worked 80% or more of their scheduled shift. Id.; Record Document 15412
4, pp. 14–15. Like in Newman, if SIMMCO’s policy was based on the days worked instead of
hours, an employee who worked 79% of her scheduled shift would receive the same amount of per
diem as an employee who worked 80% of her scheduled shift. 749 F.3d at 39. The Court finds that
these per diems cannot qualify as “reasonable payments for traveling expenses” because they were
reduced or eliminated based on the number of hours worked rather than by any changes in travel
expenses. See 29 U.S.C. § 207(e)(2).
The only case that the Blurtons have cited in support of their argument that SIMMCO’s
per diem policy did not violate the FLSA is Clarke v. AMN Services, LLC, CV:16-4132DSF(KSx), 2018 WL 3357467, at *2 (C.D. Cal. June 26, 2018). In Clarke, a federal district court
rejected the First Circuit’s approach in Newman and its reading of the Handbook’s provisions. Id.
The court interpreted the Handbook to mean that a per diem only varies by the hours worked when
“the expense reimbursement is purely calculated based on hours, not on any estimate of actual
expenses.” Id. The court concluded that the per diems were properly excludable from the regular
rate because the amount of the per diems started at a reasonable reimbursement level and were
then reduced for time that the employer deemed “not to have been used for [its] benefit.” Id.
Aside from the obvious disparity in precedential weight between an unpublished district
court opinion and a published circuit court opinion, the Court finds the Newman court’s reasoning
to be more persuasive because it adheres to the purpose of the exception provided in § 207(e)(2),
which is to reimburse an employee for travel-related or other expenses incurred on behalf of his
employer. 29 U.S.C. § 207(e)(2). Additionally, several district court decisions issued since Clarke
have eschewed its holding. First, in Junkersfield v. Per Diem Staffing Systems, Inc., the court
explicitly rejected Clarke and found that reducing per diem amounts based on the number of shifts
worked “inextricably tie[d] the payments to the hours worked, rendering them part of the
employee’s regular rate.” 4:18-cv-07795-KAW, 2019 WL 2247768, at *3 (N.D. Cal. May 24,
2019). Next, in Howell v. Advantage RN, LLC, the court found that the employer-defendant should
not have excluded per diems from its employees’ regular rate in part because “that the per diem is
paid weekly and adjusted based on hours or shifts worked makes the per diem function more as
remuneration for hours worked than as reimbursement for expenses incurred on behalf of
Defendant.” 401 F. Supp. 3d 1078, 1090 (S.D. Cal. Aug. 16, 2019). Finally, the court in Dittman
v. Medical Solution, L.L.C. found the reasoning in Junkersfield to be more persuasive than the
reasoning in Clarke based on the fact that traveling employees are away from home for their entire
assignment, even if they do not work all of their scheduled shifts. 2:17-cv-01851-MCE-CKD, 2019
WL 4302752, at *2 (Sept. 11, 2019). Based on these cases and the previously cited circuit court
decisions, Clarke appears to be an outlier in the jurisprudence surrounding per diems and the Court
declines to follow its holding.
SIMMCO’s proportionate reductions are not sanctioned by the Handbook
The Blurtons argue that SIMMCO’s per diem policy is valid because the Handbook
explicitly authorizes a proportionate reduction of an employee’s per diems. Record Document 1541, pp. 15–16. After stating that per diems that are “based upon and thus var[y] with the number of
hours worked per day or week” are part of the regular rate, the Handbook goes on to say that an
employer is not precluded from “making proportionate payments for that part of a day that the
employee is required to be away from home on the employer’s business.” Handbook, § 32d05a(c).
The Handbook provides an example of an employee returning to his home or his employer’s place
of business at noon. Id. In this scenario, according to the Handbook, that employee could be paid
only one-half of the established per diem rate for that particular day and that payment would not
be considered payment for hours worked. Id.
The court in Newman found that these two provisions created “some tension” in the
Handbook’s guidance because, in a typical eight-hour work day, “paying an employee for half of
a day’s per diem yields the same result as paying for four hours’ worth of per diem.” 749 F.3d at
37–38. Based on this tension, the court reasoned that the Handbook is not concerned about the end
result of paying a half day’s per diem but is instead concerned about the method of calculation and
prescribes that days rather than hours are the correct unit of measurement. Id. at 38. The court
concluded that “[i]f the per diem method makes reductions from [the] maximum on an hourly
basis—such that it would reduce the total per diem by a mere hour’s worth—it runs afoul of the
Handbook’s guidance.” Id. The Court agrees with the Newman court’s analysis on this point as
well. In this case, SIMMCO’s error was not in the fact that it proportionately reduced the per diems
but that its formula for doing so was based on hours rather than days.
The charts contained in Ginger Blurton’s declaration show the times that the named
Plaintiffs had their per diems reduced or eliminated under SIMMCO’s policy. Record Document
154-2, pp. 2–3. These charts demonstrate that SIMMCO reduced per diems by the hour and
sometimes even by the half hour. Id. These reductions were not based on whether the employee
was at home or traveling for part of the day, as sanctioned by the Handbook, but were based on
the hours worked. Therefore, although SIMMCO is correct that the Handbook approves of
proportionate reductions, the type of proportionate reduction sanctioned by the Handbook is not
present in this case.
The per diem policy was designed to encourage work attendance
Setting aside the way that SIMMCO’s per diem policy functioned, it is clear that the policy
was intended to encourage regular work attendance. In their “Statement of Uncontested Material
Facts,” the Blurtons state that the per diem policy was implemented sometime around 2007 in
order to prevent employees from collecting a full day’s per diem after performing less than a halfday of work. Record Document 154-5, p. 3. In her deposition, Ginger Blurton stated that the per
diem policy was intended to be an incentive to keep SIMMCO’s employees working as scheduled.
Record Document 154-4, pp. 15–16. She stated that SIMMCO “wanted [the employees] to show
up for work so that they would be there and be accountable for the hours that they were scheduled
to work.” Id. at 16. David Blurton stated that he put the per diem policy in place so that “people
would come in and start working their schedule.” Record Document 162-2, p. 26. He also stated
that after the per diem policy was put in place, “they all started coming into work and doing right.”
Id. at 25. Also revealing is the copy of the per diem policy that the Blurtons have provided. Record
Document 154-4, p. 50. On the first half of the page is the per diem policy. On the second half of
the page is SIMMCO’s attendance policy, reiterating that employees must work their scheduled
Plaintiffs argue that the payments made under the per diem policy actually functioned as
attendance bonuses and should have been included in their regular rate. Record Document 162,
pp. 13–14 (citing Bibb Mfg. Co. v. Walling, 164 F.2d 179, 180 (5th Cir. 1947)). The FLSA’s
implementing regulations state that “[b]onuses which are announced to employees to induce them
to work more steadily . . . are regarded as part of the regular rate of pay. Most attendance bonuses
. . . are in this category.” 29 C.F.R. § 778.211(c). The Blurtons respond that the per diems were
not attendance bonuses because (1) Ginger Blurton denied that they were “attendance incentives”
in her deposition; (2) Plaintiffs introduced no evidence showing that SIMMCO “announced a
bonus;” and (3) the per diems were not intended for employees to work more steadily but the
policy was intended to prevent employees from taking advantage of SIMMCO by collecting a
day’s worth of per diem after performing only a small amount of work. Record Document 171, pp.
None of the Blurtons’ arguments are persuasive on this point. First, Ginger Blurton’s
assertion that the per diems were not attendance incentives is irrelevant because an employee’s
regular rate of pay is not determined by the labels given to certain payments by the parties but
must be drawn from what happens under the employment contract. 29 C.F.R. § 778.108 (citing
Bay Ridge Operating Co. v. Aaron, 344 U.S. 446, 461 (1948)). Second, SIMMCO may not have
formally announced the per diem policy as a bonus, but every traveling employee was subject to
the per diem policy and thus knew about it. Record Document 154-5, p. 2; see also Record
Document 154-4, p. 50 (copy of SIMMCO’s per diem policy signed by Shannon Rule). Third, the
evidence shows that the per diems were being used to encourage SIMMCO’s employees who
traveled away from home to work more steadily, that is, to work their scheduled shift. Record
Document 154-4, pp. 15–16.
Even if the Court agreed with the Blurtons that the per diems do not qualify as “attendance
bonuses” under 29 C.F.R. § 778.211(c), they have failed to demonstrate that the per diems fall into
one of the seven categories of payments that can be excluded from an employee’s regular rate
pursuant to 29 U.S.C. 207(e)(2). Therefore, they cannot prevail on their motion for summary
The Fifth Circuit has stated that each case should be judged by its own facts when
evaluating whether a per diem paid under the FLSA is reasonable and therefore properly excluded
from the regular rate of pay. Berry v. Excel Grp., Inc., 288 F.3d 252, 254 (5th Cir. 2002). The
Blurtons contend that if the Court finds SIMMCO’s per diem policy to be impermissible under the
FLSA, the Court would be rejecting the Fifth Circuit’s case-by-case approach and “effectively
ban[ning] all proportionate payments of per diem.” Record Document 154-1, p. 12. To the
contrary, by finding that the per diems should have been included in SIMMCO’s employees’
regular rate of pay, the Court announces no such categorical ban. Instead, the Court finds that,
based on the facts and circumstances unique to this case, what SIMMCO labeled as per diems were
not “reasonable payments for traveling expenses” that could be excluded from the regular rate of
pay pursuant to 29 U.S.C. § 207(e)(7). The Court holds that the FLSA does not permit employers
to combine a per diem and an attendance incentive into one payment as SIMMCO has done in this
case. Because the Court finds that SIMMCO’s policy violated the FLSA, the Blurtons’ motion for
summary judgment is hereby DENIED [Record Document 154] as to FLSA liability.
Applicable Statute of Limitations
Now that the Court has found that an FLSA violation occurred in this case, the Court must
determine the applicable statute of limitations. The normal statute of limitations for an FLSA
violation is two years. 29 U.S.C. § 255(a). This time period is extended to three years when the
cause of action arises out of an employer’s willful violation. Id. The Blurtons assert that the Court
should grant partial summary judgment on the issue of willfulness and apply the two-year statute
of limitations to Plaintiffs’ claims. Record Document 154-1, p. 26.
Arguments of the parties
The Blurtons argue that Plaintiffs cannot demonstrate that SIMMCO willfully violated the
FLSA. Record Document 154-1, p. 27. In support, they point to Ginger Blurton’s testimony that,
prior to the instant lawsuit, she was unaware of any employee complaining that SIMMCO’s per
diem policy violated the FLSA as it related to overtime calculation. Id. She also stated that
SIMMCO had never been sued for improperly calculating its employees’ regular rate of pay and
that SIMMCO’s management had never heard of the Newman or Gagnon cases. Id.; see also
Record Document 154-2, p. 3. The Blurtons argue that, at most, Plaintiffs can show that SIMMCO
did not consult with an attorney regarding the FLSA or have an “express basis” upon which to
conclude that its pay practices were legal under the FLSA, which the Fifth Circuit has repeatedly
held to be insufficient to demonstrate willfulness. Record Document 154-1, p. 27.
In response, Plaintiffs claim that the three-year statute of limitations may apply when the
employer “simply disregarded the possibility that it might be violating the FLSA.” Record
Document 162-1, p. 28. Plaintiffs state the Blurtons “knowingly disregard[ed] the many questions
and concerns expressed by employees about the SIMMCO Per Diem Policy and its compliance
with the FLSA,” despite knowing that the policy did not reasonably approximate travel expenses
and that it varied with hours worked. Record Document 162-1, p. 29. Accordingly, Plaintiffs claim
that there is a factual dispute as to whether the Blurtons willfully violated the FLSA that prevents
summary judgment on this issue. Id.
In McLaughlin v. Richland Shoe Co., the Supreme Court considered “the meaning of the
word ‘willful’ as used in the statute of limitations applicable to civil actions to enforce the
[FLSA].” 486 U.S. 128, 129 (1988). The Court stated that by establishing two different statutes of
limitation, one for willful and one for ordinary violations, “Congress intended to draw a significant
distinction between ordinary violations and willful violations.” Id. at 132. The Court also observed
that the word “willful” is generally used to refer to conduct that is more than negligent. Id. at 133.
Therefore, the Court concluded that the three-year statute of limitations for willful violations could
only apply when the employer “either knew or showed reckless disregard for the matter of whether
its conduct was prohibited by the statute.” Id. This willfulness standard has been adopted by the
Fifth Circuit. See Steele v. Leasing Enter., Ltd., 826 F.3d 237, 248 (5th Cir. 2016). Under the
FLSA, a plaintiff has the burden of demonstrating willfulness on the part of a defendant. Id.
The Court begins by rejecting Plaintiffs’ argument that the Blurtons’ willfulness can be
demonstrated by the email inquiries SIMMCO received from its employees regarding its per diem
policy. See Record Document 162, p. 29. None of these emails reference the FLSA or FLSA
compliance. Record Document 162-8. In one email, a SIMMCO supervisor questioned the fairness
of denying an employee any per diem when that employee had worked a significant portion of his
shift. Id. at 5. Although this email complained about a consequence of the per diem policy, it did
not concern the central issue of this lawsuit: whether the per diems should have been included in
the regular rate. Id. Contrary to Plaintiffs’ arguments, the fact that the Blurtons knew the per diem
policy varied with the number of hours an employee worked and did not reasonably approximate
employee travel expenses does not establish a willful FLSA violation outside of the context of the
statute. See Record Document 162, p. 29.
The record does show that the Blurtons took no actions to ensure that SIMMCO’s per diem
policy complied with the FLSA. During her deposition, Ginger Blurton identified several
documents as the “type of documents that [she] studied to learn about the rules for per diem.”
Record Document 154-4, p. 29. These documents included an IRS publication providing guidance
for “Travel, Entertainment, Gift, and Car Expenses” intended to be used for preparing 2010 tax
returns and a blog post from 2007 about the amount of per diems that the IRS would exclude from
income tax and payroll tax withholding Id. at 52–55 & 63. Nothing in either of those documents
addressed the FLSA. Id. She also could not remember whether she had sought the advice of her
attorney before enacting the per diem policy. Id. at 33. Most significantly, Ginger Blurton stated
that she never reviewed the policy for compliance with the FLSA because she “did not know to
look for that” and thought that compliance with IRS guidelines would be sufficient for compliance
with all of the federal government’s requirements. Id. at 30–31.
In David Blurton’s deposition, he stated that he had never seen a copy of SIMMCO’s per
diem policy before. Document 162-2, p. 6. He confirmed that he did not review the FLSA and that
he had done nothing to ensure that the per diem policy complied with it. Id. at 10–11. He also
stated that he was unaware of anyone other than Ginger Blurton taking any action to ensure FLSA
compliance. Id. at 12. Thus, it is clear that the Blurtons took no measures to ensure that SIMMCO’s
per diem policy complied with the FLSA, specifically § 207(e)(2).
The Blurtons do not attempt to contradict the above evidence but claim that any FLSA
violation they might have committed was not willful. Record Document 154-1, p. 27. In support
of their position, the Blurtons cite Zannikos v. Oil Inspections (U.S.A.), Inc., 605 F. App’x 349,
360 (5th Cir. 2015) (per curiam). Id. In Zannikos, the court stated that mere knowledge of the
FLSA and its potential applicability does not suffice to establish willfulness, nor does conduct that
is merely negligent or unreasonable. Id. The court also cited McLaughlin for the principle that
“[a]n employer who ‘act[s] without a reasonable basis for believing that it was complying with the
[FLSA]’” or fails to seek legal advice regarding its payment practices is merely negligent. Id.
(quoting McLaughlin, 486 U.S. at 134–35). Finally, the court stated that willfulness has been found
where the evidence demonstrated that an employer knew it was violating the FLSA or ignored
complaints that were brought to its attention. Id.
In response, Plaintiffs cite Ramos v. Al-Bataineh, 599 F. App’x 548, 551 (5th Cir. 2015)
(per curiam), for the proposition that “[t]he three-year statute of limitations . . . may apply when
[the employer] simply disregarded the possibility that it might be violating the FLSA.” Record
Document 162, p. 28. This quote appears to conflict with the court’s statements of law regarding
willfulness in Zannikos. 5 605 F. App’x at 360. However, this quote is not directly from the Ramos
court but is a quote from an Eleventh Circuit case, Allen v. Board of Public Education for Bibb
County, 495 F.3d 1306, 1324 (11th Cir. 2007), that the Ramos court referenced in a “see also” cite.
Ramos, 599 F. App’x at 551. Furthermore, the Fifth Circuit decisions released since 2015 reflect
the Zannikos court’s approach. In Steele v. Leasing Enterprises, Limited, the Fifth Circuit stated
that “[a] negligent violation is not a willful violation, and an unreasonable violation does not
‘necessarily constitute a willful violation.’” 826 F.3d at 248 (quoting Mireles v. Frio Foods, Inc.,
899 F.2d 1407, 1416 (5th Cir. 1990)). In Dacar v. Saybolt, L.P., the court stated that “[e]vidence
that a defendant was merely negligent regarding FLSA requirements is insufficient to show
willfulness.” 914 F.3d 917, 926 (5th Cir. 2018).
Based on the Fifth Circuit’s jurisprudence surrounding willfulness under the FLSA, the
Court finds that Plaintiffs have failed to carry their burden of establishing that the Blurtons
committed a willful FLSA violation. The Court finds that the Blurtons were negligent regarding
the FLSA’s requirements because they did not review SIMMCO’s per diem policy for FLSA
compliance. However, according to the Fifth Circuit, negligence as to the FLSA’s requirements is
insufficient to show willfulness. Id. Accordingly, the Blurtons’ motion for summary judgment
[Record Document 154] is GRANTED as to the issue of willfulness, and the ordinary two-year
Coincidentally, these opinions were released just three days apart, Zannikos on March 27, 2015,
and Ramos on March 30, 2015. See Zannikos, 605 F. App’x at 360 and Ramos, 599 F. App’x at
551. In Mohammadi v. Nwabuisi, issued on March 25, 2015, the Fifth Circuit’s statement of law
aligned more with closely Zannikos, stating that an employer is merely negligent when it fails to
seek legal advice regarding its payment practices without prior knowledge of an alleged violation.
605 F. App’x 329, 332 (5th Cir. 2015) (per curiam).
statute of limitations for FLSA actions shall apply to Plaintiffs’ claims against the Blurtons. See
29 U.S.C. § 255(a).
The Blurtons move for summary judgment on the issue of liquidated damages. Record
Document 154-1, p. 28. The FLSA mandates liquidated damages, meaning damages equal to the
amount of unpaid minimum wages or unpaid overtime compensation awarded, when an employer
is found liable for an FLSA violation. 29 U.S.C. § 216(b). However, the FLSA contains an
exception to the liquidated damages rule:
[I]f the employer shows to the satisfaction of the court that the act or omission
giving rise to such action was in good faith and that he had reasonable grounds for
believing that his act or omission was not a violation of the [FLSA], as amended,
the court may, in its sound discretion, award no liquidated damages or award any
amount thereof not to exceed the amount specified in section 216 of this title.
29 U.S.C. § 260.
If an employer is found liable under 29 U.S.C. § 207, it has the “substantial burden of
proving to the satisfaction of the trial court that its acts giving rise to the suit are both in good faith
and reasonable.” Steele, 826 F.3d at 246 (quoting Mireles, 899 F.2d at 1415) (internal quotations
omitted). Good faith vests employers with a duty to investigate potential liability under the FLSA.
Id. (quoting Barcellona v. Tiffany English Pub, Inc., 597 F.2d 464, 469 (5th Cir. 1979)). An
employer cannot rely on ignorance alone as reasonable grounds for believing its actions to be
compliant with the FLSA. Barcellona, 597 F.2d at 468. Significant to this case, a finding that an
employer did not willfully violate the FLSA does not preclude an award of liquidated damages.
LeCompte v. Chrysler Credit Corp., 780 F.2d 1260, 1262–63 (5th Cir. 1986).
In this case, the same evidence showing that the Blurtons were negligent rather than willful
regarding FLSA compliance also establishes that the Blurtons did not act reasonably or in good
faith. Both Ginger and David Blurton admitted to never reviewing SIMMCO’s policy for FLSA
compliance. Record Documents 154-4, pp. 30–31; 162-2, pp. 10–11. Thus, they are prevented
from being able to claim good faith, which requires an employer to investigate potential FLSA
liability, or reasonableness, which cannot be based on ignorance alone. Barcellona, 597 F.2d at
Because the Blurtons have not demonstrated that they acted in good faith and had
reasonable grounds for believing that their actions did not violate the FLSA, the Court declines to
exercise its discretion to shield them from liability for the liquidated damages prescribed by the
FLSA. See 29 U.S.C. § 260. Thus, the Blurtons’ motion for summary judgment is DENIED as to
Plaintiffs’ claims for liquidated damages.
Plaintiffs’ Motion for Summary Judgment
Plaintiffs have filed a cross-motion for summary judgment on the issue of FLSA liability.
Record Document 167. The Court has already denied the Blurtons’ motion for summary judgment
as to FLSA liability, but this holding does not automatically entitle Plaintiffs to summary
judgment. See supra, Section II.A. The Court denied the Blurtons’ motion because it found that
SIMMCO’s per diem policy constituted a violation of the FLSA. However, this denial does not
automatically impose any liability on the Blurtons but merely reflects that they were not entitled
to a judgment in their favor as a matter of law. See Fed. R. Civ. P. 56(a). Conversely, if the Court
were to grant Plaintiffs’ motion for summary judgment, it would be holding that Defendants are
liable to Plaintiffs under the FLSA as a matter of law. Record Document 167.
In response to Plaintiffs’ motion, the Blurtons, SIMMCO II, and The Blurton Group,
L.L.C. filed an opposition in which they argue that Plaintiffs have failed to introduce evidence to
support a finding that Defendants are employers subject to liability under the FLSA. Record
Document 181, p. 9. Defendants claim that only an employer can be held liable under the FLSA
and that this absence of proof as to their employer status means that Plaintiffs are not entitled to a
judgment of liability against them as a matter of law. Id. In response, Plaintiffs argue that they do
not seek summary judgment on the employer status of any particular Defendant, but instead ask
the Court to hold that the payments made pursuant to the SIMMCO’s per diem policy should have
been included in their regular rate. Record Document 184, p. 2. The Court notes that it has already
reached this conclusion in its resolution of the Blurtons’ motion for summary judgment. See supra,
Defendants are correct that “[t]o be bound by the requirements of the [FLSA], one must be
an ‘employer.’” Donovan v. Grim Hotel Co., 747 F.2d 966, 971 (5th Cir. 1984) (citing 29 U.S.C.
§§ 206–07); see also Gray v. Powers, 673 F.3d 352, 357 (5th Cir. 2012) (affirming the district
court’s granting of summary judgment in favor of defendant on the grounds that he was not an
employer under the FLSA). The FLSA defines an employer as “any person acting directly or
indirectly in the interest of an employer in relation to an employee.” 29 U.S.C. § 203(d). The Fifth
Circuit uses the “economic reality” test to assess whether there is an employer/employee
relationship. Gray, 673 F.3d at 354. In cases involving more than one potential employer, the court
“must apply the economic realities test to each individual or entity alleged to be an employer and
each must satisfy the four part test.” Id. at 355.
Plaintiffs have not attempted to argue that any Defendants are employers under the FLSA,
nor have they identified evidence in the record that could support such a finding. Based on the
portions of the record the Court has reviewed, the Court suspects that it may contain evidence
showing that at least the Blurtons could be considered employers for FLSA purposes. However,
the Court declines to sift through the record in search of such evidence or to make a legal argument
on behalf of Plaintiffs that they have explicitly declined to assert for themselves. See Record
Document 184, p. 2. By filing this motion, Plaintiffs have sought judgment as a matter of law as
to Defendants’ liability under the FLSA, which they are not entitled to without producing any
evidence that Defendants are employers under the FLSA. Accordingly, Plaintiffs’ motion for
summary judgment as to FLSA liability [Record Document 167] is DENIED.
For the reasons discussed above,
Plaintiffs’ Motion for Discovery Pursuant to Rule 56(d) [Record Document 163] is hereby
The Blurtons’ Motion for Summary Judgment [Record Document 154] is hereby
GRANTED in part and DENIED in part. The motion is GRANTED as to the applicable statute
of limitations and DENIED as to FLSA liability and liquidated damages.
Plaintiffs’ Motion for Summary Judgment as to FLSA liability [Record Document 167] is
THUS DONE AND SIGNED in Shreveport, Louisiana on this _________ day of March,
ELIZABETH E. FOOTE
UNITED STATES DISTRICT JUDGE
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?