Casanova et al v. Gold's Texas Holdings Group, Inc.
Filing
79
ORDER DENYING 73 Motion to Certify an Interlocutory Appeal. Signed by Judge David A. Ezra. (rf)
Case 5:13-cv-01161-DAE Document 79 Filed 04/11/16 Page 1 of 9
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
DANIEL CASANOVA and TIFFANY §
SAUL, individually and on behalf of all §
§
others similarly situated,
§
§
Plaintiffs,
§
§
vs.
§
§
GOLD’S TEXAS HOLDINGS
§
GROUP, INC.,
§
§
Defendant.
DAE
ORDER DENYING DEFENDANT’S MOTION TO CERTIFY AN
INTERLOCUTORY APPEAL
Before the Court is a Motion to Certify an Interlocutory Appeal of the
Court’s March 23, 2016 Order and to Stay Pending Resolution of Appeal (Dkt.
# 73) filed by Gold’s Texas Holdings Group, Inc. (“Defendant” or “Gold’s Gym”).
Pursuant to Local Rule 7(h), the Court finds this matter suitable for disposition
without a hearing. After careful consideration of the motion and memoranda filed
in support and in opposition, the Court, for the reasons that follow, DENIES
Defendant’s Motion to Certify an Interlocutory Appeal.
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BACKGROUND
Daniel Casanova and Tiffany Saul, individually and on behalf of all
others similarly situated (collectively “Plaintiffs”), filed this lawsuit alleging
Defendant violated the Fair Labor Standards Act (“FLSA”) by not paying them
time and a half for overtime. On March 23, 2016, the Court issued an Order
granting Plaintiffs’ motion for partial summary judgment and denying Defendant’s
motion for summary judgment. (Dkt. # 72.) In that Order, the Court determined as
a matter of law that Defendant’s method of compensation for Plaintiffs did not
constitute a bona fide commission. As a result, Defendant could not rely upon 29
U.S.C. § 207(i), a statutory exception that exempted retail establishments from
having to pay overtime to employees who were compensated by a bona fide
commission.
On March 31, 2016, Defendant filed the instant motion seeking a
certification for interlocutory appeal. (Dkt. # 73.) On April 5, 2016, Plaintiffs
filed a response. (Dkt. # 75.)
LEGAL STANDARD
A district court may certify an interlocutory appeal from an order if
the judge is “of the opinion that such order involves a controlling question of law
as to which there is substantial ground for difference of opinion and that an
immediate appeal from the order may materially advance the ultimate termination
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of the litigation.” 28 U.S.C. § 1292(b). “Interlocutory appeals are generally
disfavored, and statutes permitting them must be strictly construed.” Mae v. Hurst,
613 Fed. App’x 314, 318 (5th Cir. 2015) (quoting Allen v. Okam Holdings, Inc.,
116 F.3d 153, 154 (5th Cir. 1997)). The decision to permit such an appeal is
within the district court’s sound discretion. See Swint v. Chambers Cnty.
Comm’n, 514 U.S. 35, 47 (1995).
DISCUSSION
I.
Controlling Question of Law
“[A] question of law is ‘controlling’ within the meaning of Section
1292(b) only if [the] resolution of that issue could have an immediate impact on
the course of the litigation.” Oasis Research, LLC v. EMC Corp., Nos. 4:10-CV435, 4:12-CV-526, 2015 WL 5318119, at * 4 (E.D. Tex. Sept. 11, 2015) (internal
citation omitted); Ryan v. Flowserve Corp., 444 F. Supp. 2d 718, 723 (N.D. Tex.
2006) (“[C]ourts have found the issue of whether an interlocutory appeal involves
a controlling question of law to be ‘closely tied’ to the requirement that the appeal
will materially advance the ultimate termination of the litigation.”)
Here, Defendant asks the Court to certify for interlocutory appeal the
question whether “personal trainers [are] paid a bona fide commission if they earn
a percentage of the price of each training session charged to the customer for every
training session they service.” (Dkt. # 73 at 1.) While this is a question of pure
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law, it is not controlling because the resolution of whether the compensation
scheme is a bona fide commission would not have an immediate impact on the
course of the litigation. This is so because the determination of whether Gold’s
Gym’s compensation system is a bona fide commission is only one of many
necessary elements for it to invoke the overtime pay exemption found at 29 U.S.C.
§ 207(i). Consider the statute: this exception exempts an employer from paying
overtime to an employee if:
(1) The employer is a retail or service establishment; and
(2) The regular rate of pay of such employee is in excess of one and
one-half times the minimum hourly rate applicable to him; and
(3) More than half of his compensation for a representative period (not
less than one month) represents commissions on goods or services.
29 U.S.C. § 207(i). The statute further provides “all earnings resulting from the
application of a bona fide commission rate shall be deemed commissions on goods
or services.” Id.
Even if the Fifth Circuit were to hold that that the compensation
scheme at issue was a bona fide commission, that holding would not automatically
allow Defendant to invoke the § 207(i) exemption as a defense. Instead, such a
holding would only make it possible that the § 207(i) exemption might be
applicable. Defendant would still need to prove that “the regular rate of pay of
such employee is in excess of one and one-half times the minimum hourly rate
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applicable to him,” and that “more than half of [an employee’s] compensation for a
representative period (not less than one month) represents commissions on goods
or services.” See id. In other words, to invoke the exemption, Defendant would
still need to prove the applicability of the § 207(i) exemption for each class
member over each relevant pay period, by individualized or common proof, even if
the Fifth Circuit ruled in its favor. Indeed, most federal courts recognize that the
§ 207(i) is a highly individualized defense. See Johnson v. TGF Precision
Haircutters, Inc., No. Civ.A. H-03-3641, 2005 WL 1994286, at *6 (S.D. Tex. Aug.
17, 2005) (noting that § 207(i) “is in fact a highly individualized defense because
its application requires week-by-week and other periodic calculations”);
Beauperthuy v. 24 Hour Fitness USA, Inc., 772 F. Supp. 2d 1111, 1126 (N.D. Cal.
2011) (finding that the § 207(i) is a highly individualized defense because “[t]he
FLSA takes a single workweek as its standard in determining the applicability of
the [207(i)] exemption”); Falcon v. Starbucks Corp., 580 F. Supp. 2d 528, 540
(S.D. Tex. 2008) (allowing an FLSA lawsuit to proceed as a collective action
despite the existence of individualized defenses); Gordon v. TBC Retail Group,
Inc., No. 2:14-CV-03365-DCN, 2015 WL 5770521, at *7 (D. S.C. Sept. 30, 2015)
(“[I]t may be that the central issue is . . . whether . . . the actual application of the §
[20]7(i) commission exception to particular individuals violated the FLSA.”).
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Accordingly, the question presented for interlocutory certification is
not controlling because a Fifth Circuit holding in favor of Defendant’s position
would not have an immediate impact on, or result in the ultimate termination of,
this litigation.
II.
Substantial Ground for Difference
“Degrees of legal doubt escape precise quantification.” Flowserve
Corp., 444 F. Supp. 2d at 723 (internal citation omitted). However, courts have
found substantial ground for difference of opinion where:
a trial court rules in a manner which appears contrary to the rulings of
all Courts of Appeals which have reached the issue, if the circuits are
in dispute on the question and the Court of Appeals of the circuit has
not spoken on the point, if complicated questions arise under foreign
law, or if novel and difficult questions of first impression are
presented.
Id.
128 (2005)). However,
simply because a court is the first to rule on a question or counsel disagrees on
applicable precedent does not qualify the issue as one over which there is
substantial disagreement.” Id. at 724 (quoting Wausau Bus. Ins. Co. v. Turner
Constr. Co., 151 F. Supp. 2d 488, 491 (S.D.N.Y. 2001)).
This Court’s Order addressed a question of first impression in the
Fifth Circuit by construing rules and factors from a limited set of circuit opinions
across the country. It cannot be argued that this Court’s construed factors were in
conflict with the rules established by the Third, Seventh, and Eleventh Circuits. To
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the contrary, the Court construed factors nearly verbatim from these circuit
opinions. While it may be argued that the circuits, including the Fifth Circuit, have
not settled on a legal definition of a bona fide commission, it cannot be argued in
good faith that the circuits are in dispute. For example, both the Third and Seventh
Circuits have held that a hallmark characteristic of a bona fide commission is that
it is decoupled from time. See Parker v. NurtiSystem, Inc., 620 F.3d 274, 284 (3d
Cir. 2010); Yi v. Sterling Collission Ctrs, 480 F.3d 505, 509 (7th Cir. 2007).
While the Fifth Circuit has not ruled on this particular exemption, it is not an
independently sufficient basis to find a substantial ground for difference of opinion
and to certify an interlocutory appeal. Nor is the fact that this Court was the first to
rule on a bona fide commission in this circuit a sufficient ground to find a
substantial ground for difference of opinion.
Defendant contends that “[t]here is a Department of Labor November
14, 2005 Opinion Letter which implies that a compensation structure similar to
Gold’s Gym would qualify under § 207(i).” (Dkt. # 73 at 5 (citing Dep’t Labor
Op. Ltr., 2005 WL 3308624 at *2 (Nov. 14, 2005)). An “implication” by a nonbinding agency letter does not indicate to the Court that a “substantial” ground for
difference of opinion exists on whether Defendant’s compensation structure is a
bona fide commission. See Flowserve, 444 F. Supp. 2d at 724 (“In the end,
‘substantial’
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Accordingly, the Court does not find that a substantial difference in
opinion exists about whether Gold’s Gym’s compensation system is a bona fide
commission.
III.
Materially Advance the Ultimate Termination of the Litigation
In evaluating this statutory requirement, “a district court is to examine
whether an immediate appeal would (1) eliminate the need for trial, (2) eliminate
complex issues so as to simplify the trial, or (3) eliminate issues to make discovery
easier and less costly.” Coates v. Brazoria Cnty Tex., 919 F. Supp. 2d 863, 867
(S.D. Tex. 2013) (internal citation omitted).
As explained in subsection I of this order, an immediate appeal would
not materially advance the ultimate termination of the litigation. Even if the Fifth
Circuit were to reverse this Court’s Order and hold that Gold’s Gym’s
compensation system was a bona fide commission, Defendant would still need to
prove the other elements of the § 207(i) exemption for it to apply. Such a holding
would not eliminate the need for trial because the other elements of the § 207(i)
exemption are questions of fact. Accordingly, certification of interlocutory appeal
would not materially advance the ultimate termination of this litigation.
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CONCLUSION
For the aforementioned reasons, the Court DENIES Defendant’s
Motion to Certify an Interlocutory Appeal of the Court’s March 23, 2016 Order.
The Court DENIES all other relief herein requested.
IT IS SO ORDERED.
DATE: San Antonio, Texas, April 11, 2016.
_____________________________________
DAVID ALAN EZRA
UNITED STATES DISTRICT JUDGE
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