Esi/Employee Solutions, L.P. v. City of Dall.
| Decision Date | 31 March 2021 |
| Docket Number | CIVIL NO. 4:19-CV-570-SDJ |
| Citation | 531 F.Supp.3d 1181 |
| Parties | ESI/EMPLOYEE SOLUTIONS, L.P., et al. v. CITY OF DALLAS, et al. |
| Court | U.S. District Court — Eastern District of Texas |
Joseph Aaron Barnes, Sr., Ryan Daniel Walters, Robert Earl Henneke, Texas Public Policy Foundation, Austin, TX, for ESI/Employee Solutions, LP, Hagan Law Group LLC.
William Thomas Thompson, Anne Marie Mackin, Office of the Attorney General of Texas, Austin, TX, for State of Texas.
Kathleen MacInnes Fones, Charles Steven Estee, Stacy Jordan Rodriguez, Dallas City Attorney's Office, Dallas, TX, for Dallas City of, T.C. Broadnax, Beverly Davis.
In recent years, several Texas cities, including the City of Dallas, enacted paid-sick-leave ordinances requiring employers to pay employees who use earned sick leave for hours spent not working. Two Texas intermediate appellate courts have now concluded that paid-sick-leave ordinances enacted by the City of Austin and the City of San Antonio, which mirror Dallas's paid-sick-leave ordinance, are preempted by the Texas Minimum Wage Act ("TMWA") and therefore unenforceable. See Tex. Ass'n of Bus. v. City of Austin. 565 S.W.3d 425 (Tex. App.—Austin 2018, pet. denied) ; Washington v. Associated Builders & Contractors of S. Tex. Inc. , No. 04-20-00004-CV, 621 S.W.3d 305 ().
After the City of Dallas (the "City")1 passed such an ordinance, mandating that employers provide Dallas-based employees one hour of paid sick leave for every thirty hours worked, Plaintiffs ESI/Employee Solutions, L.P. ("ESI") and Hagan Law Group L.L.C. ("Hagan") (together, the "Employer-Plaintiffs"), two employers subject to the ordinance, challenged its validity. The Employer-Plaintiffs filed suit alleging violations of the First, Fourth, and Fourteenth Amendments to the United States Constitution. They also joined the State of Texas (collectively, "Plaintiffs") in alleging that Dallas's paid-sick-leave ordinance is preempted by the TMWA. Following the Court's dismissal of the federal constitutional claims, only the state preemption claim remains.2
Before the Court is Texas and the Employer-Plaintiffs’ summary-judgment motion requesting that the Court hold that Dallas's paid-sick-leave ordinance is preempted by the TMWA and therefore violates the Texas Constitution and that the Court render judgment permanently enjoining the City from enforcing the ordinance. (Dkt. #66).3 The City has responded, (Dkt. #70), asserting that the TMWA's definition of "wages" does not encompass paid sick leave. Plaintiffs have replied, (Dkt. #74), as well as filed a notice of supplemental authority, (Dkt. #84).
Having reviewed the motion, the parties’ briefing, and the relevant law, the Court concludes that the motion should be GRANTED in part and DENIED as moot in part.
A complete history of Dallas's paid-sick-leave ordinance and the events giving rise to this case is set forth in the Court's Memorandum Opinion and Order granting Plaintiffs’ Motion for Preliminary Injunction, (Dkt. #64), and the Court's Memorandum Opinion and Order granting in part and denying in part Defendants’ Motion to Dismiss, (Dkt. #85). See also ESI/Emp. Sols., L.P. v. City of Dallas , 450 F.Supp.3d 700, 709–12 (E.D. Tex. 2020) (" ESI"). Accordingly, the Court will describe here only the facts most germane to the resolution of the summary-judgment motion.
The City enacted its Paid Sick Leave Ordinance (the "Ordinance") on April 24, 2019. Dallas, Texas, Ordinance No. 31181; Municipal Code § 20–1—20–12. The Ordinance, which became effective for "medium or large employers" on August 1, 2019, and which will become effective for "small employers" on August 1, 2021, requires employers to grant one hour of paid sick leave for every thirty hours worked by an employee within Dallas, regardless of the employer's location. DALL ., TEX ., CODE § 20–4(a), (b). The Ordinance allows employees working in Dallas to earn up to sixty-four hours of sick-leave time per year for medium or large employers and forty-eight hours of sick-leave time per year for small employers. Id. § 20–4(c)(1), (2).4
When an employee uses accrued paid-sick-leave time, employers are directed to pay employees their normal rate, exclusive of overtime premiums, tips, and commissions, for each hour the employee is absent from work for reasons that are authorized under the Ordinance. Id. § 20–5(a). Authorized reasons include absence arising from mental or physical illness and preventative care for the employee or his or her family members. Id. § 20–5(c).
Texas and the Employer-Plaintiffs seek declaratory and injunctive relief, and have now moved for summary judgment, asserting that they have established as a matter of law that the Ordinance is preempted by the TMWA and therefore violates the Texas Constitution. The City has responded that Plaintiffs have failed to show that they have standing to pursue their claim and that the Court should not read the TMWA to preempt the Ordinance. The Court previously granted a preliminary injunction and entered an order enjoining the City from enforcing the Ordinance pending resolution of this case. ESI , 450 F.Supp.3d at 732–38.
When a party moves for summary judgment on an issue for which it bears the burden of proof, that party "must establish beyond peradventure all of the essential elements of the claim or defense to warrant judgment in [its] favor." Fontenot v. Upjohn Co. , 780 F.2d 1190, 1194 (5th Cir. 1986). Summary judgment is appropriate "only when ‘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.’ " Shepherd ex rel. Estate of Shepherd v. City of Shreveport , 920 F.3d 278, 282–83 (5th Cir. 2019) (quoting FED. R. CIV. P. 56(a) ). A "dispute about a material fact is ‘genuine,’ ... if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
Texas and the Employer-Plaintiffs cite two declarations in support of their summary-judgment motion: (1) the declaration of ESI's Chief Executive Officer, David F. Bristol, ("Bristol Declaration"); and (2) the declaration of Hagan Law Group, L.L.C.’s Founder, John P. Hagan, ("Hagan Declaration"). Bristol's and Hagan's Declarations purport to establish, among other things, the confidential nature of the companies’ business records and the harm to the Employer-Plaintiffs associated with complying with the Ordinance, including cost estimates. The City objects to several portions of these declarations. The objections fall into three categories: (1) objections that testimony regarding the confidential nature of the Employer-Plaintiffs’ business records contain impermissible legal conclusions; (2) objections that Bristol's testimony that ESI will suffer a unique and particularized injury is an impermissible legal conclusion; and (3) objections that testimony regarding the estimates of costs to the Employer-Plaintiffs is irrelevant, unsupported by documents, speculative, or misleading. For the reasons stated below, the Court hereby OVERRULES each of the City's objections.
As to the first category, the testimony to which the City objects relates solely to the Employer-Plaintiffs’ Fourth Amendment claim. See (Dkt. #3-1 ¶ 6) (Bristol Decl.); (Dkt. #3-2 ¶ 5) (Hagan Decl.). Because the Court has since dismissed the Fourth Amendment claim, that objection is now moot. The Court has not considered the cited testimony in rendering its summary-judgment decision and the City's objections to this testimony are OVERRULED .
As to the second category of objections, the City asserts that Bristol's testimony that ESI will suffer unique and particularized injuries is a legal conclusion. See (Dkt. #3-1 ¶¶ 4, 7) (Bristol Decl.). If Bristol's statements were divorced from any other factual testimony, the City would be correct. But the Court concludes that Bristol's complained-of statements serve merely to introduce the specific, non-conclusory testimony that follows, which details the kinds of harm that ESI will incur. See, e.g. , (Dkt. #3-1 ¶¶ 7, 11–12) (). Thus, the City's legal-conclusion objections are OVERRULED .
As to the third category of objections, the Court understands the cost estimates provided in the declarations to merely reflect that the Ordinance will cause the Employer-Plaintiffs some harm for the purpose of establishing standing—not to precisely calculate losses—and the estimates are relevant for that purpose. This conclusion is bolstered by the fact that the Employer-Plaintiffs do not seek money damages in this case and, therefore, the cost estimates can serve only to establish de minimis harm for standing purposes. Thus, the Employer-Plaintiffs need not supplement the cost estimates with documents showing the exact figures of losses. Further, Bristol and Hagan, as executives at their respective companies, have personal knowledge of their companies’ business models, operations, and finances, and thus their cost estimates are not speculative for the purpose of showing de minimis harm. Because the Court has considered this evidence only for the purpose of determining whether Plaintiffs have established de minimis harm, the City's objections to the cost estimates are hereby OVERRULED .
The City also requests that, if the Court concludes that Texas and the Employer-Plaintiffs have presented sufficient evidence for summary judgment, the Court allow the City to conduct additional...
To continue reading
Request your trial