Dewan v. M-I, L.L.C.

• Decision Date: 30 May 2017
• Docket Number: No. 16-20182,16-20182
• Citation: 858 F.3d 331
• Parties: Matthew DEWAN, Individually and On Behalf of All Others Similarly Situated; William J. Casey, Plaintiffs-Appellants v. M-I, L.L.C., doing business as M-I SWACO, Defendant-Appellee
• Court: U.S. Court of Appeals — Fifth Circuit

858 F.3d 331

Matthew DEWAN, Individually and On Behalf of All Others Similarly Situated; William J. Casey, Plaintiffs-Appellants

v.M-I, L.L.C., doing business as M-I SWACO, Defendant-Appellee

No. 16-20182

United States Court of Appeals, Fifth Circuit.

Filed May 30, 2017

Melissa Ann Moore, Esq., Curt Christopher Hesse, Moore & Associates, Houston, TX, for Plaintiffs-Appellants.

Robert Peter Lombardi, Esq., Samuel Zurik, III, Attorney, Kullman Firm, New Orleans, LA, Martin Joseph Regimbal, Esq., Kullman Firm, Columbus, MS, for Defendant-Appellee.

Before DAVIS, DENNIS, and SOUTHWICK, Circuit Judges.

LESLIE H. SOUTHWICK, Circuit Judge:

Two oilfield workers sued their employer for unpaid overtime wages. The district court granted summary judgment on the defendant's affirmative defense that the plaintiffs fell under the administrative exemption of the Fair Labor Standards Act. Finding there to be genuine disputes of material fact that affect whether the exemption applies, we REVERSE and REMAND.

FACTUAL AND PROCEDURAL BACKGROUND

Defendant M-I SWACO is an oilfield service company that specializes in engineering drilling-fluid systems and additives designed to improve performance for oil and gas well drilling operations. As part of its business, M-I employs Drilling Fluid Specialists, or "mud engineers," who work at M-I customer locations to manage the drilling-fluid system and interact directly with the customers by providing advice and other support.

The minimum educational requirement for a mud engineer is a high-school diploma. Once hired, mud engineers undergo an eight-week training program at M-I's office in Houston, Texas. During the program, trainees receive basic instruction on the functions of drilling fluids, their physical and chemical properties, mathematics, and training on the proper use of testing equipment and computer software.

A mud engineer works to ensure the properties of the drilling fluid, also known as drilling mud,¹ are within designed specifications as set forth in the mud plan, which is created by a project engineer at M-I's headquarters and is based on historical drilling in the area. Both plaintiffs claimed that they did not have authority to deviate from the mud plan. Mud engineers perform their duties either by "sitting" on the customer's well (an extended, round-the-clock monitoring of one drill site) or doing a "drive-by" (quick visits to multiple drill sites).

To ensure the drilling mud is performing adequately² and within its designated parameters, mud engineers test the mud's pH, rheology, weight, and viscosity. The tests are generally conducted either in a lab trailer at the customer's site or on the tailgate of the mud engineer's assigned company vehicle. Plaintiff Dewan testified at his deposition that, after testing was complete, he would provide recommendations to the "company man." These recommendations were largely accepted without further inquiry. The plaintiffs were typically the only M-I employees or mud engineers on site.

M-I employed Plaintiffs Matthew Dewan and William Casey as mud engineers until December 2012. On December 14, 2012, Dewan filed a putative class-action suit against M-I, alleging violations of the overtime provisions of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201 –19. That same day, Casey consented to join the suit pending collective or class-action certification. After discovery closed, M-I moved for summary judgment on various grounds, including that the plaintiffs were exempt from the FLSA's overtime requirements under 29 U.S.C. § 213(a)(1). The plaintiffs separately moved for judgment on the pleadings under Federal Rule of Civil Procedure 12(c).

The district court (1) denied the plaintiffs' motion for judgment on the pleadings; (2) denied M-I's motion for summary judgment as to the claim that Casey was not a party to the lawsuit; (3) denied M-I's motion as to the FLSA's outside sales and combination exemptions; and (4) granted M-I's motion on the grounds that the plaintiffs fell under the FLSA's administrative exemption. The plaintiffs timely appealed.

DISCUSSION

In 1938, Congress enacted the FLSA in an effort to ensure each employee covered by the Act would receive "[a] fair day's pay for a fair day's work and would be protected from the evil of overwork as well as underpay." Barrentine v. Arkansas-Best Freight Sys., Inc ., 450 U.S. 728, 739, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981). One way the FLSA effectuates these goals is through its overtime provision, which requires an employer to compensate any covered employee who works in excess of 40 hours in a workweek "at a rate not less than one and one-half times the [employee's] regular rate...." 29 U.S.C. § 207(a)(1). Relevant here, the FLSA excludes from its overtime requirement those employees working "in a bona fide executive, administrative, or professional capacity...." Id. § 213(a)(1).

The district court granted summary judgment for M-I, holding that these employees were exempt from the overtime rules. In our de novo review, we use the same standards as did the district court in considering facts and analyzing law. Owsley v. San Antonio Indep. Sch. Dist. , 187 F.3d 521, 523 (5th Cir. 1999). Summary judgment is proper when the movant shows there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law. FED. R. CIV. P . 56(a).

When summary judgment is sought on an affirmative defense, as here, the movant "must establish beyond peradventure all of the essential elements of the claim or defense to warrant judgment in his favor." Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986). "Once the movant does so, the burden shifts to the nonmovant to establish an issue of fact that warrants trial." Smith v. Reg'l Transit Auth ., 827 F.3d 412, 420 n.4 (5th Cir. 2016). The burden of proof on exempt status is on the employer. Owsley, 187 F.3d at 523. Because of the Act's remedial nature, we narrowly construe its exemptions in favor of the employee. Id.

To all these statements we add something further. There is no dispute about what these two engineers did from day to day. Even so, more is involved of relevance here than just a record of the plaintiffs' daily activities. Those facts must be interpreted based on the regulations. For the administrative exemption to apply, the employee must be one (1) who is "[c]ompensated on a salary or fee basis at a rate of not less than $455 per week;" (2) "[w]hose primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers;" and (3) "[w]hose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance." 29 C.F.R. § 541.200. The compensation of the plaintiffs is clearly sufficient. The second and third criteria, though, require a fact-finder to analyze the facts to determine the employee's primary duty, how the work directly relates to certain parts of the employer's business, and whether the duty involves some discretion and independence.

We choose two examples to make the point. Even if the evidence is undisputed about the mud engineers' activities, a fact-finder might also need to decide if what they do is the equivalent of "perform[ing] specialized work along standardized lines involving well-established techniques and procedures [.]" § 541.203(g). Further, would a fact-finder believe the mud engineers are exercising "discretion and independent judgment" when they perform their tasks, with that quoted phrase requiring consideration of "all the facts involved in the particular employment situation" as further explained by a lengthy list of nonexhaustive factors? See § 541.202(b). Most of that is fact-finding, not legal analysis.

It is with these considerations that we unpack the legal question we must answer—namely, do the plaintiffs fall within the FLSA's administrative exemption? "That ultimate determination, however, relies on many factual determinations that can be resolved by a jury." Singer v. City of Waco , 324 F.3d 813, 818 (5th Cir. 2003).

We agree with one of this court's unpublished opinions that we should consider "the amount of time the employee devotes to particular duties, as well as the significance of those duties...." Zannikos v. Oil Inspections (U.S.A.), Inc ., 605 Fed.Appx. 349, 352 (5th Cir. 2015). A check on any finding that facts are undisputed is that "the drawing of legitimate inferences from the facts are jury functions, not those of a judge, whether he is ruling on a motion for summary judgment or for a directed verdict." Andersonv. Liberty Lobby, Inc ., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

We conclude that there remain genuine disputes of material fact, as we will explain. In summary now, factual issues such as identifying these employees' primary duties, or deciding if they exercised independent judgment and discretion, cannot be resolved without making inferences from the evidence that are subject to genuine dispute. Those interpretations cannot be said on this record to be resolvable on summary judgment.

All this review-standard throat-clearing out of the way, we turn to the issues before us. As we note above, the first criterion of the administrative exemption, which concerns the plaintiffs' weekly earning, is clearly satisfied. Plaintiffs argue, however, that genuine issues of material fact exist as to the second and third criteria. Additionally, the plaintiffs argue the district court placed the burden on them to negate the affirmative defense while allowing M-I to rely on the absence of evidence of any element of the plaintiffs' case. We will address the two contested criteria separately. We conclude there is error as to both criteria and find it necessary to examine each individually to show the extent of the fact-finding still needed on remand.

I. Work "Directly Related" to "Management or General Business...