Lee v. WWW.Urban, Inc

Filing 67

MEMORANDUM AND ORDER entered. The parties have presented evidence that raises a genuine issue of material fact on each theory asserted in their motions. As a result, summary judgment is inappropriate and it is hereby ORDERED that Plaintiffs Motion f or Partial Summary Judgment [Doc. # 52] and Defendants Motion for Summary Judgment [Doc. # 56] are DENIED. The case remains scheduled for docket call on October 17, 2017, unless settled prior to that date. (Signed by Judge Nancy F Atlas) Parties notified. (wbostic, 4)

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United States District Court
Southern District of Texas

ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
NYOK LEE, et al.,
Plaintiffs,
v.
WWW.URBAN, INC., et al.,
Defendants.

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August 23, 2017
David J. Bradley, Clerk

CIVIL ACTION NO. H-16-1841

MEMORANDUM AND ORDER
This Fair Labor Standards Act (“FLSA”) case is before the Court on the Motion
for Summary Judgment [Doc. # 52] filed by Plaintiffs Nyok Lee, Wei-Min Wang, Tim
Brown, Carlos Saavedra, Sunil Lalani, Shea Phillips, Rebecca Kelly, Hunter
Dickerson, and Derek Brown, to which Defendants WWW.URBAN, INC. (“Urban
Living”), George Silaski, and Vinod Kewalramani filed a Response [Doc. # 57].
Plaintiffs seek summary judgment on Defendants’ “liability under the [FLSA]” and
on Defendants’ affirmative defenses that Plaintiffs were independent contractors and
that the “outside sales” exemption applies.
Also pending is Defendants’ Motion for Summary Judgment [Doc. # 56], to
which Plaintiffs filed a Response [Doc. # 62]. Defendants seek summary judgment
on the applicability of the “outside sales” exemption. No replies were filed in support
of either motion.

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The Court has carefully reviewed the full record and the applicable legal
authorities. Based on this review, the Court denies both motions because there are
genuine issues of material fact precluding summary judgment.
I.

BACKGROUND
Urban Living is a real estate company. Kewalramani is President of Urban

Living, and Plaintiffs allege that he “actively manages” the company.1 See Second
Amended Complaint [Doc. # 24], ¶ 17. Silaski is “Urban Living’s licensed real estate
broker.” See id.
Plaintiffs are realtors who worked for Urban Living selling houses. Their title
at Urban Living was “Home Consultants.” Plaintiffs were paid on a commission
basis. They filed this lawsuit, alleging that Defendants violated the FLSA by failing
to pay Plaintiffs the minimum wage required by 28 U.S.C. § 206 and by failing to pay
overtime compensation as required by § 207. Plaintiffs moved for conditional

1

Plaintiffs object to the affidavits submitted by Vinod Kewalramani (a/k/a Vinod
Ramani) as (1) containing matters outside his personal knowledge, (2) offering expert
testimony without having been timely designated as an expert, and (3) not providing
the methodology to substantiate his expert testimony. The Court overrules Plaintiffs’
objections. Kewalramani states in his Affidavits that he has “personal knowledge of
the facts and information stated” therein, and his sworn statements are those that are
likely to be within the personal knowledge of a corporate President who “actively
manages” the company. Under Federal Rule of Evidence 701, a lay witness is
permitted to express an opinion that is rationally based on his own perception.
Kewalramani is offering such lay opinions, not opinions as an expert.

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certification of this case as a collective action, which was granted without opposition
by Order [Doc. # 19] entered November 3, 2016.
Defendants dispute that Plaintiffs worked more than 40 hours per week.
Additionally, Defendants argue that Plaintiffs are independent contractors and,
alternatively, that Plaintiffs are covered by the “outside sales” exemption. After an
adequate time to conduct discovery, Plaintiffs and Defendants filed their motions for
summary judgment. The pending motions are now ripe for decision.
II.

STANDARD FOR SUMMARY JUDGMENT
Summary judgment is proper only if the pleadings, depositions, answers to

interrogatories, and admissions in the record, together with any affidavits filed in
support of the motion, demonstrate 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. See FED. R.
CIV. P. 56(a); Bacharach v. Suntrust Mortg., Inc., 827 F.3d 432, 434 (5th Cir. 2016).
The moving party bears the burden of demonstrating that there is no evidence to
support the nonmoving party’s case. Celotex Corp. v. Catrett, 477 U.S. 317, 325
(1986); Cannata v. Catholic Diocese of Austin, 700 F.3d 169, 172 (5th Cir. 2012). If
the moving party meets this initial burden, the burden shifts to the nonmovant to set
forth specific facts showing the existence of a genuine issue for trial. See Brandon v.
Sage Corp., 808 F.3d 266, 270 (5th Cir. 2015) (citing Bayle v. Allstate Ins. Co., 615

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F.3d 350, 355 (5th Cir. 2010)). The Court construes all facts and considers all
evidence in the light most favorable to the nonmoving party. See Guar. Bank & Trust
Co. v. Agrex, Inc., 820 F.3d 790, 794 (5th Cir. 2016).
III.

FLSA LIABILITY
The FLSA provides that “no employer shall employ any of his employees . . .

for a workweek longer than forty hours unless such employee receives compensation
for his employment in excess of the hours above specified at a rate not less than one
and one-half times the regular rate at which he is employed.” 29 U.S.C. § 207(a)(1).
“An employee bringing an action for unpaid overtime compensation must first
demonstrate by a preponderance of the evidence: (1) that there existed an
employer-employee relationship during the unpaid overtime periods claimed; (2) that
the employee engaged in activities within the coverage of the FLSA; (3) that the
employer violated the FLSA’s overtime wage requirements; and (4) the amount of
overtime compensation due.” Johnson v. Heckmann Water Resources (CVR), Inc.,
758 F.3d 627, 630 (5th Cir. 2014).
A.

Employer-Employee Relationship

Plaintiffs assert that they were employees of Urban Living. To determine if a
worker qualifies as an employee for purposes of an FLSA claim, the focus is on
“whether, as a matter of economic reality, the worker is economically dependent upon

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the alleged employer or is instead in business for himself.” Hopkins v. Cornerstone
Am., 545 F.3d 338, 343 (5th Cir. 2008); see also Gray v. Powers, 673 F.3d 352, 35455 (5th Cir. 2012) (citing Williams v. Henagan, 595 F.3d 610, 620 (5th Cir. 2010);
Watson v. Graves, 909 F.2d 1549, 1553 (5th Cir. 1990)). There are five factors
relevant to this inquiry: “(1) the degree of control exercised by the alleged employer;
(2) the extent of the relative investments of the worker and the alleged employer;
(3) the degree to which the worker’s opportunity for profit or loss is determined by the
alleged employer; (4) the skill and initiative required in performing the job; and (5)
the permanency of the relationship.” Hopkins, 545 F.3d at 343. No single factor is
determinative, and the factors are a non-exhaustive list “used to gauge the economic
dependence of the alleged employee.” Id.
In this case, Plaintiffs have presented evidence that Urban Living exercised
substantial control over the manner in which they performed their work, and that the
Home Consultants invest only $350 per month as a “desk fee.” Defendants have
presented evidence that the Home Consultants make their own decisions regarding
which properties to show customers and that the Home Consultants can represent
customers who choose to purchase homes from a seller other than Urban Living. The
evidence presented by the parties raises a genuine issue of material fact regarding

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whether Plaintiffs were employees of Urban Living or, instead, worked for Urban
Living as independent contractors.
B.

Work in Excess of Forty Hours Per Week

Some Plaintiffs have presented evidence that they often worked more than forty
hours per week. Defendants, on the other hand, have challenged Plaintiffs’ evidence
and have presented their own evidence that Plaintiffs did not work in excess of forty
hours per week. For example, a Home Consultant, who is not a Plaintiff in this case,
testified that one Plaintiff worked approximately 40 hours per week, while two other
Plaintiffs worked less then 40 hours per week. The conflicting evidence in the record
raises a genuine issue of material fact that precludes summary judgment regarding any
liability Defendants may have under the FLSA.
IV.

AFFIRMATIVE DEFENSES
Plaintiffs argue in their Motion that Defendants waived any affirmative

defenses by failing to assert them in their answer. Since that time, however, the Court
has granted leave for Defendants to file an amended answer. See Order [Doc. # 54],
entered July 12, 2017. Defendants then filed their First Amended Answer [Doc. # 55],
asserting the affirmative defenses of independent contractor status and the “outside
sales” exemption.

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A.

Independent Contractor Status

As discussed above in connection with the employer-employee relationship
analysis, there are genuine issues of material fact regarding whether Plaintiffs were
Urban Living’s employees or were working for Urban Living as independent
contractors.
B.

“Outside Sales” Exemption

Under the FLSA, the outside sales exemption exempts “any employee
employed . . . in the capacity of outside salesman.” 29 U.S.C. § 213(a)(1); see Zapata
v. Flowers Foods Inc., 2016 WL 8739196, *5 (S.D. Tex. Dec. 20, 2016) (Ellison, J.).
The exemption covers any employee whose primary duty is making sales or obtaining
orders or contracts and who is customarily and regularly engaged away from the
employer’s place of business in performing such primary duty.

29 C.F.R.

§ 541.500(a). The exemption is based on the understanding that “an outside
salesman’s extra compensation comes in the form of commissions, not overtime, and
because most of the salesman’s work is performed away from the employer’s place
of business, the employer often has no way of knowing how many hours an outside
salesman works.” King v. Stevenson Beer Distrib. Co., 11 F. Supp. 3d 772, 785 (S.D.
Tex. 2014) (citing Meza v. Intelligent Mex. Marketing, Inc., 720 F.3d 577, 581 (5th
Cir. 2013)).

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Plaintiffs argue that their primary duty was to find customers for Urban Living,
and they have presented evidence that they performed that duty at their computers in
the Urban Living office. Defendants have presented evidence that Plaintiffs’ primary
duty was selling houses and that Plaintiffs performed that duty by showing houses to
customers, attending open houses, and inspecting properties that were for sale before
showing the houses to customers. This evidence raises a genuine issue of material fact
regarding whether Plaintiffs are covered by the outside sales exemption and, therefore,
summary judgment in favor of either party on this issue is denied.
V.

CONCLUSION AND ORDER
The parties have presented evidence that raises a genuine issue of material fact

on each theory asserted in their motions.

As a result, summary judgment is

inappropriate and it is hereby
ORDERED that Plaintiffs’ Motion for Partial Summary Judgment [Doc. # 52]
and Defendants’ Motion for Summary Judgment [Doc. # 56] are DENIED. The case
remains scheduled for docket call on October 17, 2017, unless settled prior to that
date.
SIGNED at Houston, Texas, this 23rd day of August, 2017.

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NAN Y F. ATLAS
SENIOR UNI
STATES DISTRICT JUDGE