Gil Jr et al v. De Laune Drilling Service, Ltd et al

Filing 81

ORDER ON EMPLOYER STATUS; denying 64 Motion for Summary Judgment; granting in part and denying in part 67 Motion for Partial Summary Judgment. The Court ORDERS that Deft Mark De Laune is a FLSA employer of Pltffs. The Court further ORDERS that Pltffs have not demonstrated as a matter of law that De Laune Drilling Service Management Co., LLC is a FLSA employer. (Signed by Judge Nelva Gonzales Ramos) Parties notified.(lcayce, 2)

United States District Court
Southern District of Texas

ENTERED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
CORPUS CHRISTI DIVISION

September 27, 2016
David J. Bradley, Clerk

RICARDO GIL JR., et al,

§
§
Plaintiffs,
§
VS.
§ CIVIL ACTION NO. 2:16-CV-71
§
DE LAUNE DRILLING SERVICE, LTD, §
et al,
§
§
Defendants.
§
ORDER ON EMPLOYER STATUS
Plaintiff filed this action pursuant to the Fair Labor Standards Act (FLSA) against
four Defendants: (1) De Laune Drilling Service, Ltd. (DLDS Partnership); De Laune
Drilling Service Management Co., LLC (DLDSM General Partner); Bernie De Laune
(Bernie); and Mark De Laune (Mark).

Before the Court are Bernie’s motion for

summary judgment (D.E. 64), contending that he is not a FLSA employer as a matter of
law and Plaintiffs’ motion for partial summary judgment (D.E. 67) that DLDSM General
Manager and Mark are FLSA employers as a matter of law.
DISCUSSION
The parties do not disagree regarding the method by which employer status is
determined under FLSA.
An “ ‘[e]mployer’ includes 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 evaluate whether there is an
employer/employee relationship. . . . To determine whether
an individual or entity is an employer, the court considers
whether the alleged employer: “(1) possessed the power to
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hire and fire the employees, (2) supervised and controlled
employee work schedules or conditions of employment, (3)
determined the rate and method of payment, and (4)
maintained employment records.” In cases where there may
be more than one employer, this 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.”
Gray v. Powers, 673 F.3d 352, 354–55 (5th Cir. 2012) (citations omitted). Each element
need not be present in every case. Id. at 357.
Mark De Laune. Defendants have conceded that Mark is a FLSA employer
under this test. D.E. 72. Therefore, the Court GRANTS IN PART Plaintiffs’ motion for
partial summary judgment (D.E. 67) and concludes that Mark is a FLSA employer of
Plaintiffs.
DLDSM General Partner. Plaintiffs argue that DLDSM General Partner is a
FLSA employer as a matter of law, based on Texas Business Organizations Code
§ 153.152(a)(2). D.E. 67, p. 2. That provision states “[A] general partner of a limited
partnership: . . . has the liabilities of a partner in a partnership without limited partners to
the partnership and to the other partners.” (emphasis added). The general partner’s
liability to the limited partners or partnership is not helpful to Plaintiffs.
However, the next provision reads, “a general partner of a limited partnership has
the liabilities of a partner in a partnership without limited partners to a person other than
the partnership and the other partners.” Tex. Bus. Org. Code § 153.152(b) (emphasis
added). Thus, “in a limited partnership, the general partner is always liable for the debts
and obligations of the partnership.” Asshauer v. Wells Fargo Foothill, 263 S.W.3d 468,
474 (Tex. App.—Dallas 2008, pet. denied).
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Having the liabilities of the partnership is not equivalent to sharing the status of
employer such that there are two employers against which to assess damages. While
DLDSM General Partner may have engaged in functions that satisfy the economic
realities test, Plaintiffs have not placed any such evidence in the summary judgment
record. So while they may join DLDSM General Partner as a Defendant pursuant to its
statutory vicarious liability, Plaintiffs are not entitled to summary judgment that it acted
as a FLSA employer on this record. Therefore, the Court DENIES IN PART Plaintiffs’
motion for partial summary judgment (D.E. 67) as to DLDSM General Partner’s status as
one of Plaintiffs’ FLSA employers.
Bernie De Laune. Bernie founded DLDS Partnership in 1963. D.E. 64-1, p. 3.
In the mid-1980s, he began to gradually step away from the operation. Id. However, at
his deposition, Mark testified that Bernie still comes into the office several days a week,
stays for a few hours, and goes to lunch with Mark. Id., p. 4. There are differing
accounts as to whether Bernie currently takes any active role in the operations. Some
deposition testimony says that he just keeps to himself when he is on the premises. One
employee says Bernie told him to wear his safety glasses when he was working and did
not have them on. And Mark conceded that Bernie may have told him to wear a hard hat
in recent years, testifying that it was “very possible” that Bernie would concern himself
with such issues.
This action was filed on March 2, 2016. D.E. 1. The complaint alleges willful
conduct, which places in issue the hours worked and wages paid to Plaintiffs for three
years prior to the filing. E.g., McLaughlin v. Richland Shoe Co., 486 U.S. 128, 132
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(1988). Thus the Court is concerned with conduct dating back to March 2, 2013. At that
time, it is undisputed that Bernie owned at least some of the partnership units for DLDS
Partnership, Plaintiffs’ ostensible employer, and was compensated as an officer or agent
of DLDS Partnership.

D.E. 64-3 (Agreement documenting Bernie’s transfer of his

partnership interest to Mark as of September 30, 2013); D.E. 64-7, pp. 6-7. There is also
some evidence that the company formulated its methods of paying employees such as
Plaintiffs in 2002 and 2009-10, before Bernie divested himself of his financial interest in
the operation and at a time when his ceding of control is not quantified. See D.E. 65-1,
p. 2.
In Bernie’s reply (D.E. 76), he argues that these facts are not enough to defeat his
claim that he was not a FLSA employer as a matter of law, citing Williams v. Henagan,
595 F.3d 610, 620 (5th Cir. 2010). Williams is a case addressing the FLSA employeremployee relationship in the context of prison labor. Bernie does not explain how that
decision is relevant here, other than that it states the economic realities test, which is the
undisputed rubric for the Court’s decision.
Bernie also draws upon the decision in Gray v. Powers, supra. While the Court
agrees with the holding in Gray that having an ownership interest in the company is
insufficient, by itself, to incur FLSA employer liability, the cases are distinguishable. In
Gray, the individual was an investor in the club who went there “rarely,” and only in a
social capacity.

His discussions with bartenders about their tips was described as

“casual.” And while he signed checks, they were always several pages of pre-printed

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checks and he did so only because he was a signatory on the account, not because he was
reviewing or approving expenditures.
In contrast, Bernie had once asserted complete operational control over DLDS
Partnership and the Court cannot assume that, in the course of turning the business over
to his son, he had lost all practical influence at any particular time, especially when he
still held a financial interest during the time in question. Bernie’s visits to the business
are routine rather than rare. The evidence of his control, while sparse, involves important
issues of employee workplace safety. And the evidence of his relationship with the
current owner, his son, permits inferences that his influence over at least some aspects of
the employer-employee relationship continues.
Supervising employees and determining the rate and method of payment are two
indicators of employer status under the economic realities test. Construing all doubts in
favor of the non-movants as required by the summary judgment standard of review, the
Court holds that there is a disputed issue of material fact as to whether Bernie was a
FLSA employer during the relevant time period. Consequently Bernie’s motion for
summary judgment (D.E. 64) is DENIED.
CONCLUSION
For the reasons set out above, Plaintiffs’ motion for partial summary judgment
(D.E. 67) is GRANTED IN PART and DENIED IN PART. The Court ORDERS that
Defendant Mark De Laune is a FLSA employer of Plaintiffs.

The Court further

ORDERS that Plaintiffs have not demonstrated as a matter of law that De Laune Drilling
Service Management Co., LLC is a FLSA employer.
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In addition, Bernie De Laune’s motion for summary judgment (D.E. 64) is
DENIED.
ORDERED this 27th day of September, 2016.
___________________________________
NELVA GONZALES RAMOS
UNITED STATES DISTRICT JUDGE

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