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Acosta v. Team Environmental LLC

United States District Court, S.D. West Virginia, Charleston

December 29, 2017

R. ALEXANDER ACOSTA, SECRETARY OF LABOR, UNITED STATES DEPARTMENT OF LABOR, Plaintiff,
v.
TEAM ENVIRONMENTAL, LLC, Defendant.

          MEMORANDUM OPINION AND ORDER

          JOHN T. COPENHAVER, JR. UNITED STATES DISTRICT JUDGE

         Pending are four motions: (1) plaintiff R. Alexander Acosta's, Secretary of Labor, United States Department of Labor, (the “Secretary”) motion to exclude the expert report and testimony of Donald Nestor (“Mr. Nestor”), filed June 16, 2017; (2) the Secretary's motion to exclude the expert report and testimony of Kevin A. Highlander (“Mr. Highlander”), filed October 5, 2017; (3) the Secretary's motion for partial summary judgment, filed September 21, 2017; and (4) defendant TEAM Environmental, LLC's (“Team”) motion to defer consideration of the Secretary's motion for partial summary judgment or, alternatively, to stay, filed October 5, 2017.

         I. Factual and Procedural Summary

         The following summary is taken from the record, read in the light most favorable to the nonmoving party, Team. Team is a West Virginia corporation with its principal place of business at 50 Simmons Drive, Millwood, West Virginia. (Mot. Partial Summ. J., Ex. E ¶¶ 1-2.) Team provides inspection services for companies in the natural gas industry. (Id. ¶ 4.) Gas companies typically do not have enough inspection work to justify hiring inspectors of their own, so they contract with Team to supply inspectors for specific jobs. (Deposition of Dennis Weekley (“Weekley Dep.”) 13-16, 18, 32; Mot. Partial Summ. J., Ex. E ¶ 1.) Team's inspectors ensure that its clients' projects comply with the clients' specifications as well as government regulations, such as those promulgated by state departments of transportation. (Weekley Dep. 50.) It employs between 80 and 110 people depending on job demand, (Id. 23, 31-32), and has job sites in West Virginia, Ohio, and Pennsylvania. (Id. 53-54, 62.) From 2012 to 2016, its gross annual income increased from about $10 million to about $25 million. (Deposition of Randy Heatherington (“Heatherington Dep.”) 38-39.)

         The wages that Team paid its inspectors for a specific job were governed by bidding contracts called requests for quotes or requests for pricing (together, “RFP”). (Weekley Dep. 36-37.) Gas companies send RFPs to contractors like Team that then bid on how much its inspectors will get paid for a particular job. (Id. 37-38; see id. 143.) Team's practice was to pay its employees a flat “day rate, ” which means it paid its inspectors a set amount each day. (Id. 140, 142.) Generally, RFPs permitted Team to pay an inspector the day rate even if the inspector did not work the full day for reasons such as inclement weather, personal issues, and holidays. (Id. 44, 53-44, 81-81, 226-28; Deposition of Guy Sayre, Jr. (“Sayre Dep.”) 63-64.) Under some RFPs, Team's inspectors were guaranteed payment of the day rate regardless of whether they actually worked at all on a given day. (Id. 80, 82, 158, 168-69, 225-26; Sayre Dep. 96.)

         Team's inspectors consistently worked over forty hours each week, and most inspectors worked at least fifty or sixty. (Weekley Dep. 80, 199-200; see Mot. Partial Summ. J., Ex. D.) The common theme under most RFPs was that Team did not pay any overtime. (Weekley Dep. 92-93, 200, 202-03; see Affidavit of Dennis Weekley (“Weekley Aff.”) ¶¶ 20-27.) Only one gas company occasionally permitted Team to pay overtime for hours worked over ten per day for a fifty or sixty hour work week. (Weekley Dep. 105-06, 148-49, 156-59, 176-79.) At any rate, many of Team's employees earned over $100, 000 per year. (Resp. Opp'n Partial Summ. J., Ex. E.)

         A complaint concerning Team's overtime policy prompted the Department of Labor to open an investigation in 2014. (See Resp. Opp'n Mot. Partial Summ. J., Ex. B; Weekley Dep. 92, 100.) Prior to the investigation, Team had no knowledge of whether any of its inspectors should have received overtime pay or whether they were exempt from overtime. (Weekley Dep. 100-03, 179-80; see Heatherington Dep. 24-25) Further, Team had never consulted an attorney or an accountant concerning compliance with the Fair Labor Standards Act (“FLSA”). (Weekley Dep. 100-03, 179-80; Deposition of Carson Chenoweth (“Chenoweth Dep.”) 29.) Nevertheless, Team was party to at least two third-party service contracts requiring it either to pay “overtime as legally required, ” (Mot. Partial Summ. J., Ex. G), or to “comply . . . with . . . the Fair Labor Standards Act, ” (id., Ex. H).

         The Secretary filed suit against Team in this court on April 8, 2016, invoking the court's federal question jurisdiction. On June 22, 2017, the Secretary filed an amended complaint. The Secretary alleges that Team failed to pay its inspectors overtime for hours worked over forty in a week in violation of section 7 of the FLSA, 29 U.S.C. § 207 (2016). (Am. Compl. ¶ IV.2.) Section 7(a)(1) states 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.

         Those found in violation of section 7 “shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages.” 29 U.S.C. § 216(b). The Secretary seeks, inter alia, payment of unpaid overtime compensation, liquidated damages pursuant to the FLSA, and injunctive relief.

         II. Motion to Defer Consideration and, Alternatively, to Stay

Federal Rule of Civil Procedure 56(d) provides that
[i]f a nonmovant shows by affidavit or declaration that, for specified reasons, it cannot present facts essential to justify its opposition [to a motion for summary judgment], the court may . . . defer considering the motion . . . .

         Rule 56(d) motions should be granted with liberality. McCray v. Md. Dep't of Transp., 741 F.3d 480, 484 (4th Cir. 2014). “Generally speaking, ‘summary judgment [must] be refused where the nonmoving party has not had the opportunity to discover information that is essential to his opposition.'” Harrods Ltd. v. Sixty Internet Domain Names, 302 F.3d 214, 244 (4th Cir. 2002) (alteration in original) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 n.5 (1986)).

         Team asks the court to defer consideration of the Secretary's motion for partial summary judgment so it can complete discovery related to the gas industry standard of using the day rate method of compensation. (See Mem. Supp. Defer or Stay 5.) Team argues that compliance with industry standards is relevant to defending against the imposition of liquidated damages under the FLSA. (See id.) As later noted herein during the discussion of the proposed testimony of defendant's expert, Donald Nestor, additional evidence of an industry standard of pay methods would not change the court's decision to grant the Secretary's motion for summary judgment on the issue of liquidated damages. Thus, the discovery Team seeks to complete is not “essential to [its] opposition.” Harrods Ltd., 302 F.3d at 244.

         Alternatively, Team moves for a stay of this action. “[T]he power to stay proceedings is incidental to the power inherent in every court to control . . . its docket.” Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). This power is not unlimited: “proper use of this authority calls for the exercise of judgment which must weigh competing interests and maintain an even balance. The party seeking a stay must justify it by clear and convincing circumstances outweighing potential harm to the party against whom it is operative.” Williford v. Armstrong World Indus., Inc., 715 F.2d 124, 127 (4th Cir. 1983) (internal quotations and citations omitted).

         Team insists that this action should be stayed pending the Supreme Court's grant or denial of the petition for a writ of certiorari in E.I. DuPont de Nemours & Co. v. Smiley, docket number 16-1189. That petition presents the following question:

Does the FLSA prohibit an employer from using compensation paid to employees for non-compensable, bona fide meal breaks that it included in their regular rate of pay as a credit against compensation owed for work time?

         Petition for Writ of Certiorari at ii, Smiley, No. 16-1189. Team argues that, although the present action “does not involve the issue of credit for meal breaks, it does involve the issue of whether [Team] is entitled to a credit for payments to employees . . . for idle and weather days not worked.” (Mem. Supp. Defer or Stay 9; accord Reply Supp. Defer or Stay 11.) Thus, according to Team, its liability “hinge[s] on the same exact determination of law under Section 7(h)(1) of the FLSA” as the employer's liability in Smiley. (Reply Supp. Defer or Stay 11; accord Mem. Supp. Defer or Stay 10.) The Secretary responds that the question presented in Smiley is constrained to meal breaks. (Resp. Opp'n Defer or Stay 6.) Even if the court finds that Smiley is apposite here, the Secretary argues that the outcome of Smiley pertains to damages, which is not at issue in the pending motion for partial summary judgment. (Id. 7.)[1]

         The court agrees with the Secretary: Smiley bears on the present case, if at all, only to the extent of calculating overtime compensation owed, i.e. damages. The pending issue on the Secretary's motion for partial summary judgment is limited to liability. Team has consequently failed to produce “clear and convincing circumstances” that a stay is warranted. The motion for a stay is denied.

         III. Motion for Partial Summary Judgment

         A. Applicable Standard

         Pursuant to Federal Rule of Civil Procedure 56(a), summary judgment is appropriate only “if 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.”

         “As to materiality, . . . [o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) (citing 10A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2725 (2nd ed. 1983)).

         Regarding genuineness, “summary judgment will not lie if the dispute about a material fact is ‘genuine, ' that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. The moving party has the initial burden of “‘showing' - that is, pointing out to the district court - that there is an absence of evidence to support the nonmoving party's case.” Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986); see also Dash v. Mayweather, 731 F.3d 303, 311 (4th Cir. 2013). If the movant carries its burden, the non-movant must demonstrate that “there is sufficient evidence favoring [it] for a jury to return a verdict” in its favor. Anderson, 477 U.S. at 249 (citation omitted); see also Dash, 731 F.3d at 311. “Although the court must draw all justifiable inferences in favor of the nonmoving party, the nonmoving party must rely on more than conclusory ...


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