Hughes et al v. Gulf Interstate Field Services, Inc.

Filing 110

ORDER finding as moot 90 Motion to Certify Class ; granting 91 Motion for Summary Judgment. Signed by Chief Judge Edmund A. Sargus on 8/3/16. (lvw)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
TOM HUGHES & DESMOND

MCDONALD, on Behalf of Themselves

and Others Similarly Situated,
Plaintiffs,

Case No. 2:14-cv-000432

V.

CHIEF JUDGE EDMUND A. SARGUS, JR.

Magistrate Judge Elizabeth Preston Deavers
GULF INTERSTATE FIELD

SERVICES, INC.,
Defendant.
OPINION AND ORDER

This matter is before the Court for consideration of Defendant's Motion for Summary

Judgment (ECFNo. 91). For the following reasons, Defendant's Motion is GRANTED.
I. BACKGROUND

Defendant Gulf Interstate Field Services, Inc. ("Gulf Interstate" or "Defendant") provides

construction management, pipeline and facility inspection, materials management, and other

services for energy transportation projects. (Doc. No. 42, PAGEID 249.) In this capacity. Gulf
Interstate contracts with third-party clients to staff employees paid by Gulf Interstate on client

projects. Pursuant to contracts between Gulf Interstate and its clients, the clients pay Gulf
Interstate a markup on the wages paid by Gulf Interstate to its employees. {Id. at PAGEID 250.)

In the course of its business. Gulf Interstate provided these staffing services on a project for
MarkWest in Ohio ("MarkWest Ohio Project").

Plaintiffs, Tom Hughes ("Hughes") and

Desmond McDonald ("McDonald") (collectively, "Plaintiffs"), were staffed on the MarkWest

Ohio Project and brought action on behalf of themselves and others similarly situated for state

and federal statutory violations in connection with a failure to pay overtime compensation. {Id.
at PAGEID 251; ECF No. 1 ("Compl.") H 1.)

Plaintiffs were each staffed on the MarkWest Ohio Project for a period of time beginning

in 2011. Plaintiffs contend they were paid under a day rate system. "Underthis system, workers
receive a flat amount for eachday worked but do not receive any premium pay for hours worked
in excess of forty hours a week." (Compl. H1.) Plaintiffs alleged that Gulf Interstate's day rate

payment practice violates the overtime requirements of the Fair Labor Standards Act ("FLSA"),
29 U.S.C. § 201, et. seq., and the Ohio Minimum Fair Wage Standards Act ("OMFWSA"), Ohio
Rev. Code Arm. §§ 4111.01, 4111.03 and 4111.10. On May 9, 2014, Plaintiffs initiated this
action, seeking to recover the unpaid wages and other damages owed to workers compensated
under the alleged day rate payment system. {Id.)
Plaintiffs subsequently moved to conditionally certify a collective action under the FLSA

and certify a class action under Federal Rule of Civil Procedure 23 for their OMFWSA claims
(ECF Nos. 30-31). In support of their motions. Plaintiffs submit affidavits from Hughes (ECF
No. 31-1), McDonald (ECF No. 31-2), and three proposed plaintiffs (ECF Nos. 31-3, 31-4, 31-

5). Attached to three of the four affidavits were formal letters on Gulf Interstate letterhead,

describing the terms and conditions of the affiants' employment (the "Offer Letters"). (ECF
Nos. 31-1, 31-2, 31-3, 31-5.) The letters are nearly identical and each lists that the employee's

compensation consists of salary, per diem, computer and mileage payments. {Id.) The base

compensation is listed as a "salary," but the amount specified is per "Day Worked." {Id.)
Plaintiffs contend that they were paid on a day rate basis, rather than on a salary basis, within the

meanings of the FLSA and the OMFSWA, and therefore. Gulf Interstate was obligated to pay
them overtime — in other words, for hours worked in excess of forty per week — pursuant to 29

C.F.R. § 778.112, and Ohio Rev. Code Ann. § 4111.03, respectively. (ECF No. 31, PAGEID
134; Compl. 132.)

Gulf Interstate opposed both conditional certification, pursuant to the FLSA, and
OMFSWA class certification, pursuant to Rule 23. OnJuly 7, 2015, the Court granted Plaintiffs'
Motion for Conditional Certification under the FLSA and denied Plaintiffs' Motion for Class

Certification of their OMFSWA claims (ECF No. 59).

Gulf Interstate now brings this Motion for Summary Judgment (ECF No. 91). In support
of its motion. Gulf Interstate has filed uncontroverted time sheets for both Hughes and

McDonald. (ECF Nos. 90-2; 42-13.) Hughes was employed as a Welding Inspector on the
MarkWest Ohio project at $500 per day, beginning on January 3, 2013. {Id.\ ECF No. 31-1.)
McDonald was employed as a Welding Inspectoron the MarkWest Ohio project at $525 per day,
beginning on April 15,2013. {Id.', ECF No. 32-2.)
XL STANDARD

Summary judgment is appropriate "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." Fed. R. Civ. P.
56(a). The movant has the burden of establishing that there are no genuine issues of material

fact, which may be accomplished by demonstrating that the nonmoving party lacks evidence to
support an essential element of its case. Celotex Corp. v. Catrett, All U.S. 317, 322-23 (1986);
Barnhart v. Pickrel, Schaeffer & Ebeling Co., 12 F.3d 1382, 1388-89 (6th Cir. 1993). To avoid

summary judgment, the nonmovant "must do more than simply show that there is some
metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 586 (1986); accord Moore v. Philip Morris Cos., 8 F.3d 335, 340 (6th Cir. 1993).

"[Sjummary judgment will not lie if the dispute about a material fact is 'genuine,' that is, if the

evidence is such that a reasonable jury could return a verdict for the nonmoving party."
Anderson v. LibertyLobby, Inc., 477 U.S. 242,248 (1986).

In evaluating a motion for summary judgment, the evidence must be viewed in the light
most favorable to the nonmoving party. Adlckes v. S.H. Kress & Co., 398 U.S. 144, 158-59

(1970); see Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000) (stating that
the court must draw all reasonable inferences in favor of the nonmoving party and must refrain

from making credibility determinations or weighing evidence). Furthermore, the existence of a
mere scintilla of evidence in support of the nonmoving party's position will not be sufficient;
there must be evidence on which the jury reasonably could find for the nonmoving party.

Anderson, All U.S. at 2S\\see Copeland v. Machulis, 51 F.3d 476, 479 (6th Cir. 1995); .yee also
Matsushita, 475 U.S. at 587-88 (finding reliance upon mere allegations, conjecture, or
implausible inferences to be insufficient to survive summaryjudgment).
III. ANALYSIS

Gulf Interstate argues that two separate exemptions from the FLSA overtime
compensation provisions apply to the proposed class members; (1) Administrative; and (2)
Highly Compensated. Claims for exemptions to the FLSA are to be "narrowly construed against
the employers seeking to assert" them. Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392 (1960).
"The employer bears the burden of proving that the exemption applies to the employee in
question." Douglas v. Argo-Tech Corp., 113 F.3d 67,70 (6th Cir. 1997).
In order for either exemption to apply. Plaintiffs must be paid on a salary-basis. Orton v.

Johnny's Lunch Franchise, LLC, 668 F.3d 843, 846 (6th Cir. 2012); 29 C.F.R. § 541.602(a); 29
C.F.R. § 541.601(b)(1). The salary-basis test is satisfied if the "employee regularly receives

each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or

part of the employee's compensation, which amount is not subject to reduction because of
variations in the quality or quantity of the work performed." 29 C.F.R. § 541.602(a)
The other factors of each exemption are as follows:
(1) Administrative Exemption

"To qualify for the administrative exemption, an employee's primary duty must be the
performance of work directly related to the management or general business operations of the
employer or the employer's customers." 29 C.F.R. § 541.201(a). Additionally, "an employee's
primary duty must include the exercise of discretion and independent Judgment with respect to
matters of significance." 29 C.F.R. § 541.202(a).

(2) Highly Compensation Exemption

The highly compensated employee exemption applies where an employee makes at least
$100,000 annually, including at least $455 per week on a salary basis, and the employee's
"primary duty includes performing office or non-manual work." 29 C.F.R. § 541.601(d).
Plaintiffs do not contest that the other requisites for the highly compensation exemption
are satisfied. Thus, the question at issue here is whether Gulf Interstate has satisfied the salary-

basis test contained within 29 C.F.R. § 541.602(a). Plaintiffs contend that they were paid not on

a salary-basis but on a day rate basis. It is well settled that an employee's earnings may be
computedon a daily basis without violating the salary-basis requirement, but only if: (1) the

employment arrangement includesa guarantee of the minimum weeklyamount of $455 paid
irrespective of the number of days worked; and (2) "a reasonable relationship exists between the

guaranteed amount and the amount actuallyearned." 29 C.F.R. § 541.604(b). Additionally, the
focus is on '"pay received,' rather than the terms of the employment agreement, but the

regulation still requires that a defendant show that the plaintiffwas paid: '(1) a predetermined

amount, which (2)was not subject to reduction (3) based on quality or quantity of work

performed.'" Orton v. Johnny's Lunch Franchise, LLC, 668 F.3d 843, 847-48 (6th Cir. 2012)
(quoting Baden-Winterwood, et al. v. Life Time Fitness, Inc., 566 F.3d 618, 627 (6th Cir. 2009)).
GulfInterstate submits through time sheets, and Plaintiffs do not dispute, that Plaintiffs

were, infact, paid the requisite minimum amount per week, equal to six times the day rate, less
lawful deductions. {See ECF No. 90-2.) However, Plaintiffs argue thatthe Offer Letters, as well
as two emails between Gulf Interstate and MarkWest employees, describing pay plans for

Inspectors as day or days worked only, rather than aminimum number ofdays,' demonstrate that
Plaintiffs werenot "guaranteed" the weekly minimum amount, within the meaning of 29 C.F.R.
§ 541.604(b).

Fatal to Plaintiffs' argument is the fact that the Sixth Circuithas squarely held that

"employment agreements are no longer the relevant starting point for whether an employee is
paid ona salary basis. Thequestion is therefore not what [a plaintiff) wasowed under his
employment agreement; rather, the question is what compensation [the plaintiff] actually
received." Orton, 668 F.3d at 848 (internal citation omitted) (citing Baden-Winterwood, 566

F.3d at 627). The same logic which applies to employment agreements also applies to company
emails. It is not writtendescriptors of the payment policies that are relevantto the salary-basis

testinquiry, but rather the actual payment practice. Here, there is no dispute thatPlaintiffs were
actually paidthe requisite amount to satisfy the FLSA's salary-basis requirement. As a result,

theFLSA highly compensated exemption applies and summary judgment is GRANTED in favor
' On May 17,2012, Cathie Kramer, Head of GulfInterstate's payroll department sentan email to GulfInterstate
Chief Inspector Steve Lane, who was inquiring about pay schedules for MarkWest Inspectors. Kramer responded
byattaching a copy of Mr. Lane's contract letter, and stated that the letter "explains salaty as day worked." (ECF
No. 93-3, Ex. 6.) OnMay 25,2011,John Urbania of MarkWest wrote an email to theformer Director of Gulf
Interstate, Blair Miller, in which he stated that inspectors were "[p]aid for days worked only." However, in thesame
paragraph ofthe email, Urbania says the "projects are based on a 6 day work week @ 10 hours a day (salaried
position)." {Id. at Ex. 7.)

of Defendant. Defendant's Motion to Decertify (ECF No. 90), and Plaintiff's Renewed Motion
to Certify Class (ECF No. 93) are DENIED as MOOT.

IT IS SO ORDERED.

DATE

EDMUND^SARGUS, JR.

UNITED WaTES DISTRICT CfflEF JUDGE