Flecha, Joshua et al v. Metal Systems, LLC
Filing
57
OPINION AND ORDER granting 55 Motion for Leave to File Sur-Reply Brief; granting in part and denying in part 30 Motion for Summary Judgment. Signed by District Judge Barbara B. Crabb on 10/16/2017. (kwf)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - JOSHUA FLECHA and LUIS ACEVEDO,
OPINION AND ORDER
Plaintiffs,
16-cv-800-bbc
v.
METAL SYSTEMS, LLC and
PIONEER ROOFING, LLC,
Defendants.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Plaintiffs Joshua Flecha and Luis Acevedo brought this putative class and collective
action on behalf of themselves and other similarly situated individuals and employees of
defendants Metal Systems, LLC and Pioneer Roofing, LLC.
According to plaintiffs,
defendants failed to compensate them for certain work, failed to compute their overtime pay
properly and failed to pay them prevailing wages in violation of the Fair Labor Standards
Act, 29 U.S.C. §§ 201-219, and Wisconsin state law.
Now before the court is defendant Pioneer Roofing, LLC’s motion for summary
judgment, dkt. #30, as well as plaintiffs’ motion for leave to file a sur-reply brief in
opposition, dkt. #55. Although sur-replies are disfavored as a general rule and some of the
contentions in plaintiffs’ motion are questionable, I will consider their additional brief, dkt.
#55-1, because plaintiffs are entitled to respond to some of the arguments that were not
raised until defendant filed its reply brief. Additionally, because defendant Pioneer Roofing,
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LLC, is the only defendant moving for summary judgment at this time, all further references
to “defendant” in this order will be to defendant Pioneer only.
I am granting defendant’s motion for summary judgment in part and denying it in
part. Because the undisputed facts demonstrate that defendant was not plaintiffs’ employer
within the meaning of applicable federal and state law, plaintiffs’ Fair Labor Standards Act
claims as well as their claims for Wisconsin overtime and straight time pay will be dismissed
as to defendant.
However, I am denying the motion with respect to the Wisconsin
prevailing wage claim and allowing plaintiffs to proceed on that claim against defendant as
a non-employer general contractor.
From the parties’ proposed findings of fact and the record, I find that the following
facts are not subject to genuine dispute, except as indicated otherwise.
UNDISPUTED FACTS
Between 2014 and December 2016 (the exact dates are unclear), plaintiffs Joshua
Flecha and Luis Acevedo were employed by defendant Metal Systems, LLC, to perform
hourly work installing sheet metal on roofs. During that time period, defendant Metal
Systems worked on more than 800 projects for approximately 50 different clients
throughout the state of Wisconsin.
Defendant is in the business of providing design, installation, repair and other
commercial and industrial roof services. It has engaged Metal Systems frequently as a
subcontractor for projects requiring the fabrication and installation of sheet metal roofing
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components. The companies have partially overlapping ownership and management: three
of Metal Systems’ five individual “members,” each of whom owns a 20% stake in the
company, are owners or employees of Pioneer. Brian Boettcher, defendant’s managing
member and president, is a member of Metal Systems.
However, Mark Staven, the
managing member of Metal Systems, is not an owner of defendant or involved in its
management.
When Metal Systems performs subcontracted work on a project for defendant, it
typically does so within the scope of work as defined by a prime contract between defendant
and the property owner or original project general contractor. Between November 2014 and
December 2016, defendant used Metal Systems as a subcontractor for 110 projects. Most
of defendant’s projects during that time did not involve any subcontracting work by Metal
Systems.
(The parties dispute exactly how much of defendant’s work involved Metal
Systems, but they appear to agree that defendant engaged Metal Systems on something less
than 22% of its total number of projects during that time period. Dft.’s Reply to Plts.’ Resp.
to Dft.’s PFOF, dkt. #54 ¶¶ 15 and 40.)
Defendant estimates that Metal Systems works on between 40% and 60% of
defendant’s projects that require sheet metal work. Typically, Metal Systems provides its
own personnel, equipment and materials when performing work for clients, even when
working on the job sites of clients.
(Plaintiffs say that they and other Metal Systems
employees would use defendant’s lifts and other equipment while working on one of
defendant’s jobs sites, but defendant disputes this. Both Metal Systems and defendant agree
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that defendant’s personnel were present on job sites where plaintiffs and other Metal Systems
employees were installing sheet metal and would oversee, direct or provide particular
instructions or feedback on the sheet metal work, but the parties dispute the scope and details
of this supervision. Id. ¶ 44; Dft.’s Resp. to Plts.’ Addl. PFOF, dkt. #53 ¶¶ 11-15.)
Under the subcontracts between the two companies, defendant does not have the
authority to hire, fire or discipline any individual employed by Metal Systems. Defendant’s
managing member and president, Brian Boettcher, is also a member of Metal Systems, but
he does not determine or participate in the development of Metal Systems’ work rules or
policies and was not involved in any decisions relating to Metal Systems’ employment
matters, such as hiring, firing or compensation.
Under Metal Systems’ operating agreement, only managing member Mark Staven or
his designee has the authority to perform a range of customary business activities, including
hiring and firing officers, employees or other personnel. Neither Staven nor fellow member
Robert Epping is an owner or employee of defendant and neither is responsible for hiring and
screening Metal Systems employees or determining their rate of pay. Defendant is not
involved in hiring, screening or reviewing candidates for employment with Metal Systems.
(Defendant and Metal Systems say that Staven and Epping are the only members involved
in Metal Systems’ management and operation.
Plaintiffs dispute this.
They say that
accountant Brian Monogue was an owner and employee of defendant and also performed
some management, operating and accounting functions for Metal Systems, including
calculating and determining employee compensation. Dft.’s. Reply to Plts.’ Resp. to Dft.’s
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PFOF, Dkt. #54 ¶¶ 6-9.)
Staven, Epping and other Metal Systems employees are responsible for monitoring,
tracking and recording the hours worked by Metal Systems’ employees on work sites and the
rate of pay for the work. Defendant has never been involved in the recording, reviewing,
verifying or approving time worked by plaintiffs or any other Metal Systems employees.
Metal Systems does not provide defendant names or other identifying information about the
individual employees who will be working on particular projects or job sites worked on by
defendant. Defendant does not maintain any employment or personnel records for plaintiffs
or any other Metal Systems employees. Defendant does not provide any compensation or
benefits to Metal Systems employees who work on Metal Systems’ job sites.
Depending on the time of year, Metal Systems employs between three and eight full
or part-time employees. During their employment with Metal Systems, plaintiffs Flecha and
Acevedo spent what they call a significant amount of their time working on defendant’s
projects and job sites. (The parties dispute the proportion of time plaintiffs devoted to
defendant’s projects, but each plaintiff estimates he spent at least 80% of his time on
defendant’s projects. Dft.’s. Resp. to Plts.’ Add’l PFOF, Dkt. #53 ¶ 1.)
Neither defendant nor any of its personnel were involved in Metal Systems’ decisions
to hire plaintiffs Flecha or Acevedo, to set their rate of pay or determine the jobs they worked
on. Plaintiffs each quit their jobs with Metal Systems in December 2016; Acevedo informed
a Metal Systems foreman that he was quitting and Flecha informed Staven directly. Neither
Staven nor anyone else at Metal Systems notified defendant of the resignations.
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(Defendant says that it has never directed nor influenced Metal Systems to terminate,
discipline or replace any Metal Systems employees working on one of defendant’s projects
or job sites. Plaintiffs attempt to dispute this with a single example: Flecha says that in early
2017, after he had quit his employment with Metal Systems, he contacted Staven about
getting his job back and “Mr. Staven told [Flecha] that Metal Systems had plenty of available
work, but that he was not sure whether ‘they’ would work with [Flecha]. [Flecha] understood
that by ‘they,’ Mr. Staven was referring to [defendant].” Id. ¶ 53; Flecha Decl., Dkt. #48 ¶
14.)
OPINION
Defendant Pioneer Roofing, LLC moved for summary judgment on the ground that
it did not employ the named plaintiffs or any other Metal Systems employees, either directly
or through a joint employment relationship. The Fair Labor Standards Act and Wisconsin’s
analog laws regulate and prohibit a number of wage and pay practices, but these are generally
applicable only to employers. 29 U.S.C. §§ 201-219; Wis. Stat. §§ 109.01-12. (As discussed
below, Wisconsin’s prevailing wage law is the exception to that general rule.) Accordingly,
defendant contends in its motion that it cannot be liable for any of plaintiffs’ claims because
it was not their employer under federal or state law.
A. Claims Under the Fair Labor Standards Act
The Fair Labor Standards Act defines an employer as “any person acting directly or
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indirectly in the interest of an employer in relation to an employee.” 29 U.S.C. § 203(d).
It is undisputed that during the relevant time period, plaintiffs Flecha and Acevedo each
worked for Metal Systems, LLC, and that Metal Systems was their direct employer. The core
issue on which the parties disagree is simply whether defendant also exercised sufficient
control over plaintiffs’ working conditions that the law should treat defendant as plaintiffs’
employer as well.
Under the Fair Labor Standards Act, whether a party is an “employer” is a question
of law that requires a context-specific review of the facts of each particular case and work
relationship, the ultimate focus of which is on the “economic reality” of the situation. Karr
v. Strong Detective Agency, Inc., 787 F.2d 1205, 1206-07 (7th Cir. 1985) (quoting Goldberg
v. Whitager House Co-op, Inc., 366 U.S. 28, 33 (1961)). Where, as here, plaintiffs allege
that two different parties are their employers, it is necessary to determine the nature of the
alleged employment relationship. “[F]or a joint-employer relationship to exist, each alleged
employer must exercise control over the working conditions of the employee.” Moldenhauer
v. Tazewell-Pekin Consolidated Communications Center, 536 F.3d 640, 644 (7th Cir. 2008).
No simple or rigid test exists that allows a court to determine conclusively when such control
is present in any given case. Rather, “[t]he joint-employment analysis turns—as does any
assessment of a putative employment relationship—on the totality of the circumstances, with
a particular focus on the control exercised by the alleged employer over a person’s working
conditions.” Bridge v. New Holland Logansport, Inc., 815 F.3d 356, 363 (7th Cir. 2016).
In Moldenhauer, 536 F.3d at 644, the Court of Appeals for the Seventh Circuit
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identified several relevant factors to consider in assessing an alleged employer’s level of
control over a worker for purposes of the Fair Labor Standards Act, including whether the
purported employer (1) had the power to hire and fire employees; (2) supervised and
controlled employee work schedules or conditions of payments; (3) determined the rate and
method of payment; and (4) maintained employment records. Although the court of appeals
cautioned against a view that “these are the only relevant factors, or even the most
important,” it suggested them as a helpful guide in applying an otherwise nebulous standard
for employer “control.” Id.
It is undisputed that defendant had no involvement in Metal Systems’ decisions to
hire plaintiffs and that it lacked the general power to hire and fire Metal Systems employees.
Plaintiffs have not adduced any evidence that defendant supervised or controlled their
individual work schedules or any of the conditions of their employment, or that it determined
the rate or method of payment for any employee of Metal Systems. It is further undisputed
that defendant kept no records whatsoever related to any individual Metal Systems
employees and that defendant was not notified when plaintiffs resigned their employment
with Metal Systems.
Although the Moldenhauer factors weigh strongly against a finding that defendant was
plaintiffs’ employer, plaintiffs highlight several other factors that they contend show that
defendant exercised the requisite control over their employment. Plaintiffs emphasize the
two companies’ close business cooperation, both contractual and de facto, contending that
Metal Systems is substantially dependent on defendant for its economic viability. This
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argument is not very persuasive in light of the undisputed facts that Metal Systems has
worked on 811 projects for approximately 50 different clients throughout Wisconsin since
December 2013, and that since November 2014, only 110 of those projects were for
defendant.
Similarly, plaintiffs emphasize the companies’ overlapping ownership and
management, seeking to show that acting either directly or through Boettcher and Monogue,
defendant exercises more power and influence over Metal Systems’ business operations than
meets the eye. This may be true, but these facts are relevant only to the extent that they
demonstrate defendant’s control over the terms and conditions of plaintiffs’ employment, as
opposed to Metal Systems’ general business operations. Bridge, 815 F.3d at 363.
Plaintiffs point to evidence that Staven consulted with Monogue regarding employee
compensation and that Monogue had some role determining, calculating or accounting for
the way plaintiffs’ work hours would be compensated. Plaintiffs cite Espenscheid v. DirectSat
USA, LLC, 09-cv-625-bbc, 2011 WL 10069108 (W.D. Wis. 2011), for the proposition that
“a joint employment relationship may exist where one employer controls the day to day work
activities of the employees, while the other performs human resources functions such as
hiring, discipline, and termination.” Plts.’ Opp. Br., Dkt. #44 at 14-15. The problem for
plaintiffs is that Metal Systems’ status as their employer is entirely undisputed, whereas the
evidence relating to Monogue does not give rise to any reasonable inference that he was
performing any accounting or compensation duties as an agent or representative of defendant,
rather than in his capacity as a member of Metal Systems.
Plaintiffs also contend that their evidence shows that defendant’s personnel exercised
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specific on-site authority and control over their sheet metal installation work on defendant’s
job sites. Defendant points out that much of plaintiffs’ testimony on this issue is vague and
nonspecific, but I agree with plaintiffs that it creates a factual dispute as to the level of
defendant’s control over plaintiffs’ day-to-day work activities while engaged on defendant’s
projects. The critical question is how relevant this narrower dispute is to the broader
question of defendant’s control over the terms and conditions of plaintiffs’ employment with
Metal Systems generally.
As defendant notes, the day-to-day supervision of Metal Systems employees’ sheet
metal work at its job sites has nothing to do with the issues that give rise to plaintiffs’ claims
(that is, improper wage and pay practices). As another district court has noted, for control to
matter, “[t]he authority exercised must be related to the violation.” Schneider v. Cornerstone
Pints, Inc., 148 F. Supp. 3d 690, 697-98 (N.D. Ill. 2015). Plaintiffs are correct that no
controlling authority holds specifically that it is necessary to show a relationship between the
employer’s control and the violation at issue in order to demonstrate employer control under
the Fair Labor Standards Act. However, there is a certain logic to defendant’s argument,
especially because almost all of plaintiffs’ specific evidence relates to defendant’s control over
the particulars of the sheet metal work performed by Metal Systems as a subcontractor on
defendant’s construction sites, rather than to defendant’s control over the general parameters
of plaintiffs’ employment.
Plaintiffs rely heavily on the Supreme Court’s decision in Rutherford Food Corp. v.
McComb, 331 U.S. 722 (1947), but I agree with defendant that Rutherford Food does not
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apply in this case. In that case, the Supreme Court concluded that a slaughterhouse was a
joint employer of meat workers who worked directly for an independent contractor providing
hired labor to the slaughterhouse. Id. at 726. The holding in Rutherford Food was that, “in
certain circumstances, an entity can be a joint employer under the FLSA even when it does not
hire and fire its joint employees, directly dictate their hours, or pay them.” Zheng v. Liberty
Apparel Co. Inc., 355 F.3d 61, 70 (2d Cir. 2003). However, the primary factors that led to
that conclusion are not present in this case or applicable to it.
The Supreme Court
emphasized that the meat workers in Rutherford Food “did a specialty job on the production
line,” and their work was “a part of the integrated unit of production” at the slaughterhouse.
Rutherford Food, 331 U.S. at 729-30. Even more important to the outcome was the Court’s
finding that the meat workers “had no business organization that could or did shift as a unit
from one slaughterhouse to another,” and their employment took place entirely on the
production line at the same slaughterhouse, whose manager closely monitored their
productivity. Id.
The Court of Appeals for the Seventh Circuit has held that the rationale of Rutherford
Food applies where similar circumstances are present. Reyes v. Remington Hybrid Seed Co.,
Inc., 495 F.3d 403, 408 (7th Cir. 2007). In Reyes, the court concluded that an agricultural
company was a joint employer under the Fair Labor Standards Act because
Zarate [a recruiter of migrant laborers for seasonal farm work] had no business
organization that he could shift from one place to another; he put together a
crew for Remington [a seed company] alone. . . . Just as in Rutherford Food, a
firm hired a single person to supply a labor force rather than a defined product
(such as a working elevator or a legal brief). And the result, as in Rutherford
Food, was a single operation under “common control” (§ 203(s)) rather than a
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distinct activity—for example, plumbing repairs—conducted by an independent
contractor who appears, does a discrete job, and leaves again.
Reyes, 495 F.3d 403, 408 (7th Cir. 2007).
Here, by contrast, it is undisputed that plaintiffs worked for Metal Systems, which is
a company that provides sheet metal fabrication and installation services to many different
clients other than defendant, and has a business organization that could and did shift as a unit
from one construction project or job site to another. Id.; Rutherford Food, 331 U.S. at 72930. The evidence in this case would not permit a conclusion that Metal Systems was merely
an agent providing labor to defendant, as in Reyes and Rutherford Food.
Plaintiffs argue that defendant’s project supervision on its job sites makes it a joint
employer of Metal Systems employees like themselves, but I agree with defendant that this is
not enough. As the court held in Zheng,
Rutherford indicates also that such extensive supervision weighs in favor of joint
employment only if it demonstrates effective control of the terms and
conditions of the plaintiff’s employment. . . . By contrast, supervision with
respect to contractual warranties of quality and time of delivery has no bearing
on the joint employment inquiry, as such supervision is perfectly consistent with
a typical, legitimate subcontracting arrangement.
Zheng, 355 F.3d at 75. The weight of the undisputed evidence here suggests strongly that
defendant’s supervision of Metal Systems’ sheet metal work on its job sites was in the nature
of inspection for quality, in accordance with the companies’ subcontracting arrangement. In
such a situation, a general contractor may possess control over the subcontractor’s work and
work product on a given project, but it does not follow necessarily that the general contractor
possesses control over the working conditions of the subcontractor’s employees. Zheng, 355
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F.3d at 75; Moreau v. Air France, 343 F.3d 1179, 1188 (9th Cir. 2003) (noting lack of
authority that correlates specific instructions to service provider with “control” over service
companies’ employees or their working conditions), amended and superseded on other
grounds by Moreau v. Air France, 356 F.3d 942 (9th Cir. 2004). “[I]t would be a foolish
business practice to contract with a company to perform a service, but provide it with little or
no guidance on exactly what services are to be performed.” Moreau, 343 F.3d at 1188.
In sum, considering Moldenhauer and the additional relevant factors plaintiffs have
identified, I conclude that plaintiffs’ evidence would not permit a rational fact finder to
conclude that defendant had sufficient control over the terms and conditions of plaintiffs’
employment to make it their employer under the Fair Labor Standards Act. Accordingly,
defendant’s motion for summary judgment will be granted as to that claim.
B. Claims Under Wisconsin State Law
To prevail on their state-law overtime and straight time pay claims, plaintiffs must show
that they are employees who are “employed by an employer” that is “engaged in any activity,
enterprise or business employing one or more persons within the state.”
Wis. Stat. §
109.01(2). This again raises the question about defendant’s status as plaintiffs’ purported
“employer.” Other judges in this court have treated the inquiry under Wisconsin wage and
hour law as substantially similar to the inquiry under the Fair Labor Standards Act. Pope v.
Espeseth, Inc., 228 F. Supp. 3d 884, 891 (W.D. Wis. 2017) (Wisconsin wage statutes’
employer “definitions are similar to the definition of employer under the FLSA,” and “require
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at least as much of a showing of control as the FLSA”) (citing Mays v. Grand Daddy’s, LLC,
No. 14-cv-461-slc, 2015 WL 4373565 (W.D. Wis. July 15, 2015)). See also Montana v. JTK
Restorations, LLC, No. 14-cv-487, 2015 WL 5444945 at *2 (E.D. Wis. Sept. 14, 2015).
Because plaintiffs have failed to show that defendant would be treated as an employer
of Metal Systems’ employees under the Fair Labor Standards Act, it follows that they also have
failed to satisfy the definition of employer under the Wisconsin wage statutes. Therefore, I
am granting defendant’s motion for summary judgment as to plaintiffs’ Wisconsin overtime
and straight time pay claims. Pope, 228 F. Supp. 3d at 891 (“The evidence plaintiffs adduce
in support of their contention that Fish is an employer under the FLSA does not support a
finding that Fish is an employer under Wisconsin law, either. . . . So the court will grant
summary judgment that Fish is not plaintiffs’ employer under Wisconsin wage and hour
law.”); Mays, 2015 WL 4373565 at *2-4 (dismissing claims under both the FLSA and
Wisconsin wage law because defendant was not an “employer” as defined by the FLSA).
However, plaintiffs’ prevailing wage claim under Wis. Stat. §§ 66.0903 and 779.14 is
different because a party such as defendant can still be found liable for a violation of that
provision even if it is not plaintiffs’ “employer.” Under Wisconsin’s prevailing wage law, even
a general contractor “has a duty to ensure that all workers on the job—including those
employed by subcontractors—are paid the prevailing wage.” Building and Construction
Trades Council of South Central Wisconsin v. Waunakee Community School District, 585
N.W.2d 726, 728, 221 Wis. 2d 575, 580 (Wis. App. 1998) (citing Strong v. C.I.R., Inc., 184
Wis. 2d 619, 624, 516 N.W.2d 719, 721-22 (1994)). Although defendant is not liable to
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plaintiffs on their claim that it was plaintiff’s employer, I cannot say that it could not be liable
as a general contractor for Metal Systems’ alleged violations.
Finally, defendant argues that the court should relinquish supplemental jurisdiction
over plaintiffs’ remaining state law claim, but I decline to do so. Plaintiffs are already pursuing
federal and state claims against defendant Metal Systems, and they will presumably be moving
to certify a class and FLSA collective action as well, so it makes sense for the court to retain
supplemental jurisdiction over plaintiffs’ Wisconsin prevailing wage claim against defendant,
which arises out of the same set of facts as the other remaining claims. Ervin v. OS Restaurant
Services, Inc., 632 F.3d 971 (7th Cir. 2011); Rigsby v. American Family Mutual Insurance
Co., 14-cv-23-bbc, 2014 WL 1515493, at *2 (W.D. Wis. 2014).
Accordingly, defendant Pioneer will remain a defendant only with respect to plaintiffs’
Wisconsin prevailing wage claim. That claim will go forward as scheduled, along with all
claims against defendant Metal Systems.
ORDER
IT IS ORDERED that
1. The motion for leave to file a sur-reply brief filed by plaintiffs Joshua Flecha and
Luis Acevedo, dkt. #55, is GRANTED.
2. Defendant Pioneer Roofing, LLC’s motion for summary judgment, dkt. #30, is
GRANTED with respect to plaintiffs’ Fair Labor Standards Act and Wisconsin straight time
and overtime pay claims against defendant Pioneer Roofing, LLC, and those claims are
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DISMISSED. The motion is DENIED in all other respects.
Entered this 16th day of October, 2017.
BY THE COURT:
/s/
__________________________________
BARBARA B. CRABB
District Judge
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