Taylor et al v. Amspec LLC
MEMORANDUM AND OPINION entered: DENYING 37 MOTION for Summary Judgment A. Scheduling and Status Conference set for 6/21/2017 at 09:00 AM in Courtroom 11B before Chief Judge Lee H Rosenthal. (Signed by Chief Judge Lee H Rosenthal) Parties notified.(leddins, 4)
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United States District Court
Southern District of Texas
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
WELL TAYLOR, et al.,
AMSPEC, L.L.C., formerly known as
AMSPEC SERVICES, L.L.C.,
June 07, 2017
David J. Bradley, Clerk
CIVIL ACTION NO. H-14-1730
MEMORANDUM AND OPINION
Six former employees sued AmSpec for overtime pay under the Fair Labor Standards Act
(FLSA), 29 U.S.C. §207. The plaintiffs contend that AmSpec improperly calculated the regular rate
of pay used to determine their overtime wages by excluding payments for work done on scheduled
days off. AmSpec moved for summary judgment that it properly calculated and paid overtime,
because the payments reimbursed the plaintiffs for mileage and other work expenses that were
properly excluded from the regular rate and overtime calculations. The employees responded, and
AmSpec replied. (Docket Entry Nos. 37, 38, 40). Based on the parties’ motions and responses, the
record, and the applicable law, AmSpec’s motion for summary judgment is denied. A hearing is set
for June 21, 2017, at 9:00 a.m. to set a trial date.
The reasons for the ruling are explained below.
AmSpec is a limited liability company that inspects and analyzes petroleum-based products,
storage tanks, and shipping devices. The six plaintiffs—Well Taylor, Joseph Cavallini, Sadrick
Terrell, Bruce Marks, Eric Galindo, and Robert Narvaez—were employed as inspectors with AmSpec
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between September 2012 and November 2014.1 Their job duties included sampling and measuring
fuel shipments. These duties required the plaintiffs to drive their personal vehicles from one work
location to another during the workday. Mr. Narvaez was based at AmSpec’s Seabrook branch
office. The other five employees were based at the Houston branch office.
The plaintiffs worked hours that varied from week to week, depending on when cargo ships
came and went. AmSpec paid using the fluctuating workweek method under 29 C.F.R. §778.114.
The parties agree that Hanson v. Camin Cargo Control, Inc., No. CIV. A. H-13-0027, 2015 WL
1737394 (S.D. Tex. Apr. 16, 2015) sets out the proper way to calculate the regular rate of pay under
the fluctuating workweek method. (See Docket Entry No. 38 at 2). “The regular hourly rate of pay
of an employee is determined by dividing his total remuneration for employment (except statutory
exclusions) in any workweek by the total number of hours actually worked by him in that workweek
for which such compensation was paid.” 29 C.F.R. §778.109. If the plaintiffs received some
overtime payment that was erroneously calculated, that amount is deducted from the half-time
premium owed in order to determine the final amount of unpaid overtime due. Hanson, 2015 WL
1737394, at *8.
The parties agree that the plaintiffs except Mr. Narvaez worked on days that were scheduled
as days off. The plaintiffs received payments for this work in amounts varying from $100 to $200,
usually in checks separate from their regular paychecks. The parties disagree as to whether AmSpec
properly excluded these payments from the plaintiffs’ regular hourly rate in calculating overtime
under the fluctuating workweek method. AmSpec contends that the payments were reimbursements
for mileage and other work-related expenses, and were properly excluded from the regular rate
Seven other plaintiffs have settled or defaulted. (See Docket Entry Nos. 31, 34).
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calculation under 29 U.S.C. §207(e)(2) and 29 C.F.R. §778.217(a). AmSpec moves for summary
judgment on the ground that it properly excluded the payments from the regular rate calculation.
Alternatively, AmSpec argues that if some part of the payments was compensation for working on
scheduled days off, the remaining parts were reasonable approximations for mileage-expense
reimbursements and were properly excluded from the calculation. The plaintiffs contend that ample
record evidence shows that the payments were for work and had to be included in the regular rate of
pay. Because it was not, the plaintiffs contend that summary judgment dismissing the overtime claim
The Summary Judgment Standard
“Summary judgment is required when ‘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.’” Trent v. Wade, 776
F.3d 368, 376 (5th Cir. 2015) (quoting Fed. R. Civ. P. 56(a)). “A genuine dispute of material fact
exists when the ‘evidence is such that a reasonable jury could return a verdict for the nonmoving
party.’” Nola Spice Designs, LLC v. Haydel Enters., Inc., 783 F.3d 527, 536 (5th Cir. 2015) (quoting
Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986)). “The moving party ‘bears the initial
responsibility of informing the district court of the basis for its motion, and identifying those portions
of [the record] which it believes demonstrate the absence of a genuine issue of material fact.’” Id.
(quoting EEOC v. LHC Grp., Inc., 773 F.3d 688, 694 (5th Cir. 2014)); see also Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986).
“Where the non-movant bears the burden of proof at trial, the movant may merely point to
the absence of evidence and thereby shift to the non-movant the burden of demonstrating by
competent summary judgment proof that there is an issue of material fact warranting trial.” Id.
(quotation marks omitted); see also Celotex, 477 U.S. at 325. Although the party moving for
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summary judgment must demonstrate the absence of a genuine issue of material fact, it does not need
to negate the elements of the nonmovant's case. Boudreaux v. Swift Transp. Co., 402 F.3d 536, 540
(5th Cir. 2005). “A fact is ‘material’ if its resolution in favor of one party might affect the outcome
of the lawsuit under governing law.” Sossamon v. Lone Star State of Texas, 560 F.3d 316, 326 (5th
Cir. 2009) (quotation omitted). “If the moving party fails to meet [its] initial burden, the motion [for
summary judgment] must be denied, regardless of the nonmovant’s response.” United States v.
$92,203.00 in U.S. Currency, 537 F.3d 504, 507 (5th Cir. 2008) (quoting Little v. Liquid Air Corp.,
37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (per curiam)).
“Once the moving party [meets its initial burden], the nonmoving party must ‘go beyond the
pleadings and by her own affidavits, or by the depositions, answers to interrogatories, and admissions
on file, designate specific facts showing that there is a genuine issue for trial.’” Nola Spice, 783 F.3d
at 536 (quoting LHC Grp., 773 F.3d at 694). The nonmovant must identify specific evidence in the
record and articulate how that evidence supports that party’s claim. Baranowski v. Hart, 486 F.3d
112, 119 (5th Cir. 2007). “This burden will not be satisfied by ‘some metaphysical doubt as to the
material facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of
evidence.’” Boudreaux, 402 F.3d at 540 (quoting Little, 37 F.3d at 1075). In deciding a summary
judgment motion, the court draws all reasonable inferences in the light most favorable to the
nonmoving party. Connors v. Graves, 538 F.3d 373, 376 (5th Cir. 2008); see also Nola Spice, 783
F.3d at 536.
The Summary Judgment Evidence
The plaintiffs rely on their deposition transcripts as well as on text messages between Mr.
Galindo and AmSpec supervisor Richard Hanson. The plaintiffs contend that the documents show
that they were asked to work on scheduled days off and received checks for this work as “day-off
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pay” separate from, and in addition to, their ordinary paychecks. AmSpec itself uses the term
“day-off pay” in its briefs to refer to these payments. But AmSpec contends that the term does not
mean what it says: it does not reflect the true nature of the payments as expense reimbursements, not
wages. (Docket Entry No. 40 at 5).
In his deposition, Mr. Galindo testified that Mr. Hanson, his supervisor, had from time to time
offered him day-off pay for working on a scheduled day off, and that he received day-off pay of $175
to $200 per day. (Docket Entry No. 38-1 at 4). Mr. Galindo also testified that his day-off payments
varied depending on the number of tanks he inspected on those days or on “how bad[ly AmSpec]
needed help.” (Id. at 3-4). He testified that he understood that the payments were meant to be “under
the table.” (Id. at 3) Mr. Hanson had told him to claim mileage that he had not driven so that
AmSpec could give him the agreed-upon dollar amount for the day-off pay in an expense check. (Id.
Mr. Galindo submitted text messages between him and Mr. Hanson, including the following
Hanson: Could use your help tonight if you want to make some extra money
Galindo: How much and how long
Hanson: 150 3 to 5 hours
Hanson: Would you be able to help us out and gauge a couple of tanks?
Hanson: Yes sir. They’re ready
Galindo: Ok for 150 right
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Hanson: Need your help tonight if you’re still willing
Galindo: Ok I’ll be there at about 930 10 because I have to change my brakes
Hanson: He has a tank that needs to be opened around 2200ish. If you’re able
Hanson: For just one tank?
Hanson: Maybe 2 or 3
Hanson: For that much
Galindo: O I thought I was gonna be there for a couple of tanks but I can do one tank
Hanson: I’ll go 200 for a couple of tanks this once
Galindo: Nah I’m ok with one tank tonight lol
Hanson: Again tonight?
Galindo: Can’t do tonight
Hanson: Please make sure your expenses are accurate and on time. Do NOT put day off pays
or day off mileage on there. I’ll add it on there after. Jack Smith and
Hanson: ina will be reviewing expenses
Galindo: Ok will do
(Docket Entry No. 38-2 at 2, 7, 9, 10, 12).
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Mr. Marks testified in his deposition that Mr. Hanson had offered him $100 to $200 to work
on days off “if the company needed [him] bad enough.” (Docket Entry No. 38-3 at 3). The day-off
pay was by check. (Id.). Mr. Taylor similarly testified that Mr. Hanson and other managers told him
that he would be paid extra money for working during scheduled days off. (Docket Entry No. 38-4
at 3). Mr. Narvaez testified to receiving checks from his supervisor, separate from his normal payroll
checks, that included day-off pay as well as mileage reimbursement. (Docket Entry No. 38-5 at 3-4).
Mr. Cavallini testified that his supervisor instructed him to include on his timesheet a specific amount
of mileage, around 420 miles, beyond what he actually drove, so he could receive the agreed-upon
$135 for day-off pay. (Docket Entry No. 38-6 at 3). Mr. Terrell also testified to receiving day-off
pay in the amount of $150 to $200 from Mr. Hanson or from another supervisor in the same check
as mileage reimbursements. (Docket Entry No. 38-7 at 3).
AmSpec highlights the undisputed fact that it made the payments at issue on “expense
checks.” (Docket Entry No. 40 at 5). AmSpec also cites the declaration of its Houston Branch
Manager, Markus Carmeans, stating that each of the Houston-based plaintiffs drove an average of
133 to 167 miles per day, excluding commuting miles, compensated at $0.30 per mile. (Docket Entry
No. 37 at 18). AmSpec contends that, because of the number of miles the plaintiffs drove each day,
additional payments for work done on scheduled days off were reasonable as reimbursements for
miles driven throughout the workweek. (Docket Entry No. 37 at 21-22). Mr. Carmeans stated in a
second declaration that the “expense checks” included reimbursements for other work-related
expenses, including cell phone and hotspot service, out-of-town trips, rubber boots, power inverters,
printer ink, foldable wagons, dollies, and tool boxes. (Docket Entry No. 40-2 at 2). As to Mr.
Narvaez, AmSpec cites the declaration of Walter Whitfield, the Seabrook Branch Manager. (Docket
Entry No. 40 at 10). Mr. Whitfield stated that Mr. Narvaez was never asked to work on a scheduled
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day off and was never offered payment for day-off work. (Id.) This statement contradicts Mr.
Narvaez’s own deposition testimony.
The employee has the burden of proving an employer’s noncompliance with the fluctuating
workweek method requirements and application. Samson v. Apollo Res., Inc., 242 F.3d 629, 636 (5th
Cir. 2001). If the employer properly characterizes payments as reasonable reimbursements for
expenses, they are properly excluded from the plaintiffs’ regular rate of pay in calculating overtime.
If the payments are for work performed on scheduled days off, they must be included in the regular
rate of pay. If the payments are disproportionately large in relation to the expenses, the excess
amount must be included in the regular rate of pay. “The ‘regular rate’ at which an employee is
employed . . . shall not be deemed to 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 to an employee which are not made as
compensation for his hours of employment.” 29 U.S.C. §207(e)(2). “Payments made by the
employer to cover such expenses [under 29 U.S.C. §207(e)(2)] are not included in the employee’s
regular rate (if the amount of the reimbursement reasonably approximates the expenses incurred).”
C.F.R. §778.217(a). “[O]nly the actual or reasonably approximate amount of the expense is
excludable from the regular rate. If the amount paid as ‘reimbursement’ is disproportionately large,
the excess amount will be included in the regular rate.” Id. at §778.217(c). The court in Hanson held
that reimbursement for mileage beyond a reasonable approximation of actual expenses must be
included in the inspectors’ regular rate of pay. Hanson, 2015 WL 1737394, at *4.
The fact that the employer characterizes payments as expenses is not dispositive. See Gagnon
v. United Technisource, Inc., 607 F.3d 1036, 1041 (5th Cir. 2010) (when the amount of “per diem”
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varies with the amount of hours worked, the per diem payments are part of the regular rate). Expenses
such as mileage reimbursement need not be tied to an employee’s actual expenses in order to be a
reasonable approximation. Berry v. Excel Group, Inc., 288 F.3d 252, 254 (5th Cir. 2002) (a fixed per
diem payment could be a reasonable approximation of travel expenses); see also Brennan v. Padre
Drilling Co., 359 F. Supp. 462, 466 (S.D. Tex. 1973). The United States Department of Labor Field
Operation Handbook (2000), §30c15(b) states that “[t]he IRS standard business mileage rate may be
used in lieu of actual costs for FLSA purposes whether or not the employee will be able to take a
deduction on his or her tax return for the business use of the employee’s car.” See also Fast v.
Applebee’s Int’l, Inc., 638 F.3d 872, 878 (8th Cir. 2011) (DOL Handbook interpretations of DOL
regulations are given deference). The IRS standard business-mileage rate during the applicable
period was $0.55 to $0.56 per mile.
AmSpec reimbursed its inspectors at a rate of $0.30 during normal workdays, before
switching to a fixed $36 per diem rate. (Docket Entry No. 37 at 17). AmSpec contends that because
this rate was far lower than the IRS standard business mileage rate, the additional amounts—that
managers and employees called “day-off pay”—were reasonable travel reimbursements added to the
travel reimbursement paid for regular workdays. (Id.).
AmSpec’s motion for summary judgment is properly granted only if undisputed evidence
shows that, as a matter of law, it made the payments as a reasonable approximation of work-related
expenses, including mileage, and not as payment for the plaintiffs working on their scheduled days
off. The plaintiffs’ testimony, if believed, shows that AmSpec offered them between $100 and $200
for working on their days off, and that the amounts varied depending on the length of time they
worked or the number of tanks they inspected. The text messages Mr. Galindo submitted corroborate
this account. The testimony and messages support finding AmSpec made the payments for work
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done on scheduled days off, rather than for mileage or other expense reimbursements. The evidence
is disputed. And it does not show that, as a matter of law, the amounts paid reasonably approximated
actual expenses. Mr. Whitfield’s testimony that Mr. Narvaez did not receive any day-off payments
is contradicted by Mr. Narvaez’s testimony. These factual disputes and the inconsistent inferences
that could reasonably be drawn from the evidence preclude summary judgment.
AmSpec seeks in the alternative to have the part of the reimbursement payments the plaintiffs
received that reasonably approximates the expenses they incurred excluded from the regular-rate
calculation. The payments at issue, if determined to be pay for day-off work, could include some
portion that reasonably approximated expenses, particularly in light of the fact that the plaintiffs
received travel reimbursement for normal workdays. But the parties dispute the amounts that are
properly characterized as expenses. This factual dispute precludes summary judgment as to even a
part of the payments at issue.
AmSpec’s motion for summary judgment, (Docket Entry No. 37), is denied. A status and
scheduling conference is set for June 21, 2017, at 9:00 a.m. to discuss any remaining pretrial work
and to set a trial date.
SIGNED on June 7, 2017, at Houston, Texas.
Lee H. Rosenthal
Chief United States District Judge
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