Hanson ex rel. Situated v. Camin Cargo Control, Inc.

• Decision Date: 16 April 2015
• Docket Number: CIVIL ACTION H-13-0027
• Parties: JAMES R. HANSON, RONALD JONES, AND LUIS E. FERNANDEZ, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, Plaintiffs, v. CAMIN CARGO CONTROL, INC., Defendant.
• Court: U.S. District Court — Southern District of Texas

JAMES R. HANSON, RONALD JONES,AND LUIS E. FERNANDEZ, ON BEHALF OF THEMSELVES ANDALL OTHERS SIMILARLY SITUATED, Plaintiffs, v. CAMIN CARGO CONTROL, INC., Defendant.

CIVIL ACTION H-13-0027

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION

April 16, 2015

SUMMARY JUDGMENT OPINION AND ORDER

This Fair Labor Standards Act case is before the court on the parties' cross-motions for summary judgment. The motions have been fully briefed and were argued at a hearing on February 18, 2015. For reasons explained below, defendants' motion (Dkt. 119) is denied in part and granted in part; plaintiffs' motion regarding inspectors (Dkt. 126) is granted; plaintiffs' cross-motion on calculation of damages (Dkt. 139) is denied; plaintiffs' motion regarding dispatchers is granted (Dkt. 128); and plaintiffs' motion regarding the good faith defense (Dkt. 127) is granted.

BACKGROUND¹

Defendant Camin Cargo Control, Inc. is an oil and petrochemicals inspection company with over 30 locations, operating in more than 15 countries throughout the Americas and the Caribbean. Camin employs inspectors to collect samples and gauge thequality of petroleum, crude oil, and distillate product shipments to ensure they meet customer requirements. Until recently, inspectors generally worked a six-day on, three-day off schedule -- i.e., they were available to receive assignments for six consecutive days and then off duty for three days. At times relevant to this case,² inspectors received a bi-weekly salary, plus extra payments for (1) a car allowance and mileage; (2) meals; and (3) offshore duty. Camin paid inspectors overtime according to the fluctuating work week method set forth in 29 C.F.R. § 778.114(a). Camin did not include the extra payments when calculating the inspectors' regular rate of pay.

Camin also employs inspector coordinators, or dispatchers.³ The dispatchers coordinate the inspection and testing operations by, among other things, assigning inspectors to jobs as needed. Camin classifies the dispatchers as exempt employees not entitled to overtime pursuant to the FLSA's administrative and executive exemptions. Plaintiffs contend that the dispatchers' primary duties do not qualify them for either exemption.

The parties have filed cross-motions for summary judgment as to the fluctuating workweek method of paying inspectors and the exemptions for dispatchers. Plaintiffs also move for summary judgment on Camin's affirmative defense of good faith.⁴

SUMMARY JUDGMENT STANDARDS

Summary judgment is appropriate if no genuine issues of material fact exist, and the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c). The party moving for summary judgment has the initial burden to prove there are no genuine issues of material fact for trial. Provident Life & Accident Ins. Co. v. Goel, 274 F.3d 984, 991 (5th Cir. 2001). Dispute about a material fact is "genuine" if the evidence could lead a reasonable jury to find for the nonmoving party. In re Segerstrom, 247 F.3d 218, 223 (5th Cir. 2001). "An issue is material if its resolution could affect the outcome of the action." Terrebonne Parish Sch. Bd. v. Columbia Gulf Transmission Co., 290 F.3d 303, 310 (5th Cir. 2002).

A summary judgment movant who bears the burden of proof on a claim must establish each element of the claim as a matter of law. Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986). If the movant meets this burden, "the nonmovant must go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial." Littlefield v. Forney Indep. Sch. Dist., 268 F.3d 275, 282 (5th Cir. 2001) (quoting Tubacex, Inc. v. M/V Risan, 45 F.3d 951, 954 (5th Cir. 1995)).

If the evidence presented to rebut the summary judgment is not significantly probative,summary judgment should be granted. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986). In determining whether a genuine issue of material fact exists, the court views the evidence and draws inferences in the light most favorable to the nonmoving party. Id. at 255.

ANALYSIS

1. Inspectors

The FLSA is a remedial statute that requires employers to pay non-exempt employees overtime at an hourly rate "not less than one and one-half time the regular rate at which he is employed." 29 U.S.C. § 207(a). The employee bears the burden to prove all the elements of his overtime claim, including a claim that the employer improperly applied the so-called fluctuating workweek method of payment. See Samson v. Apollo Resources, Inc., 242 F.3d 629, 636 (5th Cir. 2001).

To resolve any unpaid overtime claim, it is necessary first of all to determine the employee's "regular rate" of pay. This key term is not defined in the statute. The Supreme Court early on declared that it means "pay by the week, to be reduced by some method of computation to hourly rates." Overnight Motor Transp. Co. v. Missel, 316 U.S. 572, 579 (1942). The Missel Court also declared that, as a general rule, "[w]age divided by hours equals regular rate." Id. at 580 n.16. In line with that guidance, the Department of Labor has issued interpretive bulletins setting out the principles for computing the regular rate of pay. Their basic formula is an elaboration of the Missel rule:

The regular hourly rate of pay of an employee is determined by dividing his total remuneration for employment (except statutory exclusions) in anyworkweek by the total number of hours actually worked by him in that workweek for which such compensation was paid.

29 C.F.R. § 778.109.

The parties dispute both the numerator ("total remuneration") and the denominator ("hours actually worked") of the regular rate formula as it applies to the inspectors. Camin contends that certain extra payments in addition to the bi-weekly salary should not be considered as part of his wages for that workweek. On the other hand, plaintiffs contend that only non-overtime hours (i.e., 40) should be counted in the divisor, rather than all hours actually worked that week. For reasons explained below, both contentions are rejected.

a. Wages v. Reimbursement

Camin contends that the extra payments for offshore duty, car allowance, mileage, and meals are reimbursements for expenses; plaintiffs contend they are wages. According to the DOL,

Where an employee incurs expenses on his employer's behalf or where he is required to expend sums solely by reason of action taken for the convenience of his employer, [this section] is applicable to reimbursement of such expenses. Payments made by the employer to cover such expenses are not included in the employee's regular rate (if the amount of the reimbursement reasonably approximates the expenses incurred). Such payment is not compensation for service rendered by the employees during any hours worked in the work week.

29 C.F.R. § 778.217(a). Thus, the key issues are (1) whether the payment is solely for the benefit or convenience of the employer, and (2) whether the payment reasonably approximates actual expenses. Any amount in excess of actual or reasonably approximateexpenses must be included in the regular rate. 29 C.F.R. § 778.217(c).

Offshore duty pay. Inspectors on offshore assignment were paid $75.00 per day, unless the vessel was in harbor, in which case the rate was $30.⁵ Inspectors were required to stay on an offshore vessel as long as necessary to complete the assignment, which could be a matter of hours or days. According to CEO Claudio Camin, the offshore payment was intended to reimburse inspectors for hygiene products, medication, food, water, soap, and small gifts.⁶ Camin argues that this type of payment was primarily for the employer's benefit because the employee would need these items when away from home.

But, as plaintiffs point out, these items would be needed by an employee no matter where he was stationed, onshore or offshore. Nor is there any reason to believe that an offshore assignment would cause the employee to spend more on hygiene products and soap than normal. Even a former manager of Camin's Pasadena branch conceded that offshore pay could not reasonably be called an expense reimbursement, and that it was more properly characterized as compensation for employee inconvenience.⁷ The Court concurs. This type of payment more closely resembles a "shift differential" than a reimbursement for expenses incurred solely for the employer's benefit. See, Ayers v. SGS Control Servs., No. Civ. A. 03-9077, 2007 WL 646326 *10 (S.D.N.Y. Feb. 27, 2007); Adeva v. Intertek USA, Inc., No. Civ.A. 09-1096, 2010 WL 97991 *2 (D.N.J. Jan. 11, 2010). In addition, Camin has offered no competent evidence the offshore payment reasonably approximates the inspectors' actual expenses.⁸ In contrast, plaintiffs have presented evidence that inspectors incurred no expenses at all when working offshore.⁹ The court concludes the offshore duty pay constitutes wages that must be included in the regular rate of pay for purposes of overtime.

Car allowance and mileage. There is no dispute that driving was required as part of an inspector's everyday job. Inspectors were "required to own and maintain a vehicle, in good working order in order to complete their necessary job functions."¹⁰ Camin paid inspectors a car allowance of $175 (Gulf Coast) or $184 (East Coast) per pay period.¹¹ The car allowance appeared on every bi-weekly pay check whether the inspectors worked during the pay period or not and without the need to submit any evidence of their expenses.¹² In addition, Camin paid what it termed a "mileage reimbursement." From 2010 until 2012, Gulf Coast inspectors received $10.00 per job, and East Coast inspectors received $9.00 per job.¹³ Beginning in 2012, Camin instituted a system (called FIT) that paid inspectors an amountbased on the distance between the office and the terminal where the job was located.¹⁴

Car and mileage payments may in some cases constitute a reimbursement that does not affect an employee's regular wage rate. See Berry v....