Hall v. DirecTV, LLC

• Decision Date: 25 January 2017
• Docket Number: No. 15-1857, No. 15-1858,15-1857
• Citation: 846 F.3d 757
• Parties: Marlon HALL ; John Wood; Alix Pierre ; Kashi Walker, Plaintiffs–Appellants, and John Albrecht, Plaintiff, v. DIRECTV, LLC; DirectSat USA, LLC, Defendants–Appellees, and DIRECTV, Inc.; DIRECTV Home Services; DTV Home Services II, LLC, Defendants. Jay Lewis; Kelton Shaw; Manuel Garcia, Plaintiffs–Appellants, and June Leftwich, Plaintiff, v. DIRECTV, LLC; DirectSat USA, LLC, Defendants–Appellees, and DIRECTV, Inc., Defendant.
• Court: U.S. Court of Appeals — Fourth Circuit

846 F.3d 757

Marlon HALL ; John Wood; Alix Pierre ; Kashi Walker, Plaintiffs–Appellants,

and

John Albrecht, Plaintiff,

v.DIRECTV, LLC; DirectSat USA, LLC, Defendants–Appellees,andDIRECTV, Inc.; DIRECTV Home Services; DTV Home Services II, LLC, Defendants.

Jay Lewis; Kelton Shaw; Manuel Garcia, Plaintiffs–Appellants,

and

June Leftwich, Plaintiff,

v.DIRECTV, LLC; DirectSat USA, LLC, Defendants–Appellees,andDIRECTV, Inc., Defendant.

No. 15-1857

No. 15-1858

United States Court of Appeals, Fourth Circuit.

Argued: October 27, 2016

Decided: January 25, 2017

ARGUED: Larkin E. Walsh, STUEVE SIEGEL HANSON LLP, Kansas City, Missouri, for Appellants.

Colin David Dougherty, FOX ROTHSCHILD LLP, Blue Bell, Pennsylvania, for Appellees. ON BRIEF: George A. Hanson, Kansas City, Missouri, Ryan D. O'Dell, STUEVE SIEGEL HANSON LLP, San Diego, California, for Appellants. Nicholas T. Solosky, FOX ROTHSCHILD LLP, Washington, D.C., for Appellees.

Before WYNN, FLOYD, and HARRIS, Circuit Judges.

Reversed and remanded by published opinion. Judge Wynn wrote the opinion, in which Judge Floyd and Judge Harris joined.

WYNN, Circuit Judge:

The Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201 et seq. , requires covered employers to pay their employees both a minimum wage and overtime pay, id. §§ 206, 207. In these consolidated cases, two groups of satellite television technicians ("Plaintiffs") allege that DIRECTV and DirectSat (collectively, "Defendants"), through a web of agreements with various affiliated and unaffiliated service providers, jointly employed Plaintiffs,¹ and therefore are jointly and severally liable for any violations of the FLSA's substantive provisions. See 29 C.F.R. § 791.2(a).

The district court dismissed Plaintiffs' action on the pleadings, holding that Plaintiffs failed to adequately allege that DIRECTV and DirectSat jointly employed Plaintiffs. In so doing, the district court relied on out-of-circuit authority that we have since rejected as unduly restrictive in light of the broad reach of the FLSA. Analyzing Plaintiffs' allegations under the legal standard adopted by this Circuit and construing those allegations liberally, as we must when ruling on a motion to dismiss, Wright v. North Carolina , 787 F.3d 256, 263 (4th Cir. 2015), we conclude that Plaintiffs' factual allegations state a claim under the FLSA. Accordingly, we reverse.

I.

A.

Plaintiffs appeal from an order granting Defendants' motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). Accordingly, we recount the facts as alleged by Plaintiffs, accepting them as true and drawing all reasonable inferences in Plaintiffs' favor. See E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc. , 637 F.3d 435, 440 (4th Cir. 2011).

As the nation's largest satellite television provider, DIRECTV engages thousands of technicians to install and repair satellite systems for customers throughout the country. In addition to employing some technicians directly, DIRECTV controls and manages many technicians through the DIRECTV "Provider Network." J.A. 93. According to the Amended Consolidated Complaint ("Complaint"), this network is organized as a pyramid, with DIRECTV contracting with certain intermediary entities known as "Home Service Providers" and "Secondary Service Providers." J.A. 93–94. These intermediary entities generally contract with "a patchwork of largely captive entities"—referred to in the Complaint as "subcontractors"—which in turn contract directly with individual technicians throughout the country. J.A. 94.

Following DIRECTV's acquisition of numerous Home and Secondary Service Providers, Defendant DirectSat was one of three "independent" Home Service Providers remaining in the DIRECTV Provider Network at the time this action was initiated.² In this capacity, DirectSat served as a middle-manager between DIRECTV and individual technicians who contracted directly with DIRECTV, as well as between DIRECTV and various subcontractors that hired individual technicians. Specifically, DirectSat, like the other Home and Secondary Service Providers, implemented and enforced DIRECTV's hiring criteria for technicians, relayed scheduling decisions from DIRECTV to technicians using DIRECTV's centralized work-assignment system, and otherwise supervised technicians under its purview. DirectSat also maintained a "contractor file" for each of its technicians, which Plaintiffs describe as "analogous to a personnel file" and which were "regulated and audited by DIRECTV." J.A. 94–95. And, in accordance with its agreement with DIRECTV, DirectSat required technicians to obtain DIRECTV equipment and attend DIRECTV-mandated trainings at DirectSat facilities.

Each Plaintiff alleges that, between 2007 and 2014, he worked as a technician for DIRECTV, an intermediary provider, a subcontractor, or some combination of those entities. Plaintiffs Lewis and Wood allege that they were employed by DirectSat, while the five remaining Plaintiffs allege that they worked for other providers not named as defendants in this action. During their respective periods of employment, Plaintiffs were each generally classified by their employer or employers as an independent contractor.³ In all instances, each Plaintiff's principal job duty was to install and repair DIRECTV equipment.

Regardless of the identity of Plaintiffs' nominal employers, DIRECTV primarily directed and controlled Plaintiffs' work. In particular, Plaintiffs allege that DIRECTV was the "primary, if not the only" client of each of the providers who served as Plaintiffs' direct employers and was the "source of substantially all of each [p]rovider's income." J.A. 93–94. At the same time, DIRECTV dictated nearly every aspect of Plaintiffs' work through its agreements with the various providers that directly employed technicians. Among other provisions, these agreements required that all technicians—and therefore Plaintiffs—pass pre-screening checks and background checks, review training materials published by DIRECTV, and become certified by the Satellite Broadcasting & Communications Association. The agreements likewise required technicians to purchase and wear DIRECTV shirts, carry DIRECTV identification cards, and display the DIRECTV logo on their vehicles. Those who did not satisfy DIRECTV's eligibility requirements could not carry out a technician's primary task: installing and repairing DIRECTV satellite equipment.

In addition to these eligibility requirements, DIRECTV, through its provider agreements, required technicians to receive their work assignments through a centralized system operated by DIRECTV. DIRECTV also mandated that technicians check in with DIRECTV before and after completing each assigned job, conduct installations and repairs strictly according to DIRECTV's standardized policies and procedures, and interact with DIRECTV employees to activate satellite television service during each installation. The provider agreements also authorized DIRECTV employees to exercise quality control oversight over technicians, categorizing technicians' work as either compensable or noncompensable and imposing various compensation-related penalties for unsatisfactory service. Finally, the provider agreements allowed DIRECTV to effectively terminate technicians by ceasing to assign them work orders through the company's centralized work-assignment system.

B.

Claiming that they each regularly worked in excess of forty hours per week without receiving overtime pay while serving as DIRECTV technicians, Plaintiffs initiated this action in November 2013.⁴ Specifically, Plaintiffs alleged that Defendants qualified as their joint employers during the relevant period, such that Defendants' failure to provide overtime pay for these additional hours violated the FLSA's overtime and minimum wage requirements. In addition to their claims under the FLSA, Plaintiffs allege that Defendants violated three Maryland wage and hour statutes: (1) the Maryland Wage and Hour Law, Md. Code Ann., Lab. & Empl. §§ 3–401 et seq. ; (2) the Maryland Wage Payment and Collection Law, Md. Code Ann., Lab. & Empl. §§ 3–501 et seq. ; and (3) the Maryland Workplace Fraud Act, Md. Code Ann., Lab. & Empl. §§ 3–901 et seq.

Defendants each moved to dismiss Plaintiffs' Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). On June 30, 2015, the district court granted Defendants' motions and dismissed Plaintiffs' claims in their entirety. See Hall v. DIRECTV , Nos. JFM–14–2355, JFM–14–3261, 2015 WL 4064692, at *1 (D. Md. June 30, 2015).

In so doing, the district court devised and applied a two-step inquiry to determine whether Plaintiffs alleged a plausible FLSA joint employment claim. The court reasoned that the "first question that must be resolved is whether an individual worker is ‘an employee’ " of each putative joint employer within the meaning of the statute. Id. at *2. Only if Plaintiffs qualified as employees—and not independent contractors—could the court reach what it deemed the second step of the inquiry: "whether an entity other than the entity with which the individual [plaintiff] had a direct relationship is a ‘joint employer’ of [the plaintiff]." Id.

The district court looked to Schultz v. Capital International Securities Inc. , 466 F.3d 298 (4th Cir. 2006), to determine whether a worker qualifies as an "employee" within the meaning of the FLSA. Hall , 2015 WL 4064692, at *2. Schultz , relying on United States v. Silk , 331 U.S. 704, 67 S.Ct. 1463, 91 L.Ed. 1757 (1947), applied six factors to determine whether a worker falls within the definition of an "employee" under the FLSA and, thus, benefits from the statute's protections. Schultz , 466 F.3d at 304–05. These factors include: "(1) the degree of control that the putative employer has over the manner in which the work is performed; (2) the worker's opportunities for profit or loss dependent on his managerial skill; (3) the worker's investment in equipment or material, or his employment of other workers; (4) the degree...