Rosales v. Indus. Sales & Servs.

• Decision Date: 30 September 2022
• Docket Number: Civil Action 6:20-CV-00030
• Parties: ROSENDO JOSEPH ROSALES, III, Individually and On Behalf of All Others Similarly Situated, Plaintiffs, v. INDUSTRIAL SALES & SERVICES, LLC, et al., Defendants.
• Court: U.S. District Court — Southern District of Texas

ROSENDO JOSEPH ROSALES, III, Individually and On Behalf of All Others Similarly Situated, Plaintiffs, v. INDUSTRIAL SALES & SERVICES, LLC, et al., Defendants.

Civil Action No. 6:20-CV-00030

United States District Court, S.D. Texas, Victoria Division

September 30, 2022

MEMORANDUM OPINION AND ORDER

DREW B. TIPTON, UNITED STATES DISTRICT JUDGE

Between 2017 and 2019, Plaintiffs Rosendo Rosales and Leo Cornelius Butler, Jr. worked as welders for Industrial Sales &amp Services, LLC (“ISS”). ISS was formed from its sister company, Alpine Site Services Inc. (“Alpine”) in 2009. During their employment with ISS, the Plaintiffs were not paid overtime, so they sued ISS and Bernard Gochis, a corporate officer of both Alpine and ISS, for violating the Fair Labor Standards Act (“FLSA”). The Defendants argue that the Plaintiffs were not entitled to overtime because of the Motor Carrier Act (“MCA”) exemption to the FLSA.

Pending before the Court are three motions for summary judgment. First is Rosales's Motion for Partial Summary Judgment on the FLSA MCA exemption-an affirmative defense invoked by the Defendants. (Dkt. No. 84). Gochis and ISS filed a cross motion requesting summary judgment on the MCA exemption. (Dkt. No. 85). And the third is a motion for partial summary judgment by the Defendants on the willfulness and good faith issues under the FLSA. (Dkt. No. 86).

For the following reasons, the Court DENIES the Plaintiffs' Motion for Partial Summary Judgment as to the Motor Carrier Exemption. (Dkt. No. 84). Further, the Court GRANTS in part and DENIES in part the Defendants' Renewed Motion for Summary Judgment on the Merits of Defendants' Motor Carrier Act Exemption Defense. (Dkt. No. 85). The Court DISMISSES the claims against Bernard Gochis. (Dkt. No. 26). Finally, the Court DENIES the Defendants' Renewed Motion for Partial Summary Judgment on the Issues of Willfulness and Good Faith. (Dkt. No. 86).

I. BACKGROUND

ISS is a Colorado corporation, (Dkt. No. 26 at 3); (Dkt. No. 30 at 2), that “fabricates engineered screwpiles for commercial construction projects, including power stations, oil and gas refineries and natural gas power plants.” (Dkt. No. 26 at 3); (Dkt. No. 30 at 3). Gochis is a corporate officer and the sole member of ISS. (Dkt. No. 90-4 at 11:24-12:10). He is also a corporate officer for Alpine, (id. at 11:11-19), which is the “sister company” of ISS, (Dkt. No. 90 at 10); (Dkt. No. 86 at 7).

Rosales was employed by ISS from late 2017 to mid-2019^[1] first as a laborer and later as a welder.^[2] (Dkt. No. 26 at 3-4); (Dkt. No. 30 at 3). During that time, Rosales regularly worked more than 40 hours a week but was only paid his regular hourly rate for all hours worked. (Dkt. No. 26 at 5); (Dkt. No. 30 at 4).

On May 15, 2020, Rosales brought suit against the Defendants for failure to pay overtime in violation of 29 U.S.C. § 207(a). (Dkt. No. 1 at 6-7). The Parties dispute whether Rosales is exempt from the FLSA's overtime requirement, which requires employers to pay nonexempt employees “at a rate not less than one and one-half times the regular rate at which he [was] employed[]” for the hours worked exceeding 40 hours. 29 U.S.C. § 207(a)(1). Both Parties request summary judgment on the issue of whether Rosales and Butler,^[3] as employees of ISS, are exempt from the FLSA's overtime requirement under the MCA. (Dkt. No. 84); (Dkt. No. 85). The Defendants also ask the Court to grant summary judgment on the issues of good faith and willfulness, which affect the FLSA's provision regarding liquidated damages and the statute of limitations, respectively. (Dkt. No. 86).

II. LEGAL STANDARD

Summary judgment is appropriate when there is “no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “A material fact is one that might affect the outcome of the suit under governing law,” and “a fact issue is genuine if the evidence is such that a reasonable jury could return a verdict for the non-moving party.” Renwick v. PNK Lake Charles, L.L.C., 901 F.3d 605, 611 (5th Cir. 2018) (quotations omitted). The moving party “always bears the initial responsibility of informing the district court of the basis for its motion,” and identifying the record evidence “which it believes demonstrate[s] the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). “If the moving party fails to meet [its] initial burden, the motion [for summary judgment] must be denied, regardless of the nonmovant's response.” Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (per curiam). If a defendant is seeking to obtain summary judgment on an affirmative defense, the moving party “must establish beyond dispute all of the defense's essential elements.” Bank Of La. v. Aetna U.S. Healthcare Inc., 468 F.3d 237, 241 (5th Cir. 2006).

If the movant meets this burden, the nonmovant must then come forward with specific facts showing there is a genuine issue for trial. Fed.R.Civ.P. 56(c); Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). The nonmovant must “go beyond the pleadings and by [the nonmovant's] own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial.” Nola Spice Designs, L.L.C. v. Haydel Enters., Inc., 783 F.3d 527, 536 (5th Cir. 2015). “The nonmovant must identify specific evidence in the record and articulate the precise manner in which that evidence supports his or her claim.” Carr v. Air Line Pilots Ass'n Int'l, 866 F.3d 597, 601 (5th Cir. 2017) (cleaned up). “If the evidence is merely colorable, or is not significantly probative,” summary judgment is appropriate. Parrish v. Premier Directional Drilling, L.P., 917 F.3d 369, 378 (5th Cir. 2019).

In reviewing a motion for summary judgment, the district court must view the evidence in the light most favorable to the nonmovant. Coleman v. Hous. Indep. Sch. Dist., 113 F.3d 528, 533 (5th Cir. 1997). This means that factual controversies are to be resolved in the nonmovant's favor, “but only when . . . both parties have submitted evidence of contradictory facts.” Little, 37 F.3d at 1075.

III. DISCUSSION

A. Motor Carrier Act Cross Motions

Section 31502 empowers the Secretary of Transportation to regulate motor carriers and motor private carriers. 49 U.S.C. § 31502(b). The maximum hours requirement established by the FLSA does not apply to “any employee with respect to whom the Secretary of Transportation has power to establish qualifications and maximum hours of service pursuant to the provisions of Section 31502 of Title 49.” 29 U.S.C. § 213(b)(1).

Pursuant to these statutes, the Secretary of Transportation has exempted from the FLSA's maximum hours requirement,

those classes of employees and those only who: (1) are employed by carriers whose transportation of passengers or property by motor vehicle is subject to his jurisdiction under section 204 of the Motor Carrier Act, . . . and (2) engage in activities of a character directly affecting the safety of operation of motor vehicles in the transportation on the public highways of passengers or property in interstate or foreign commerce within the meaning of the Motor Carrier Act.

29 C.F.R. § 782.2(a) (citations omitted); White v. U.S. Corr., L.L.C., 996 F.3d 302, 308 (5th Cir. 2021). For the motor carrier exemption to apply, “the employees must meet both of these requirements.” Amaya v. NOYPI Movers, L.L.C., 741 Fed.Appx. 203, 205 (5th Cir. 2018) (per curiam) (cleaned up) (citation omitted). Ultimately, “whether an employee is exempt [from the FLSA] is a question of law.” Smith v. City of Jackson, Miss., 954 F.2d 296, 298 (5th Cir. 1992); Lott v. Howard Wilson Chrysler-Plymouth, Inc., 203 F.3d 326, 331 (5th Cir. 2000). In applying the MCA exemption, the Fifth Circuit “has long noted [that] this definition comprises qualifications for both the employer and employee.” Amaya, 741 Fed.Appx. at 205. The regulation itself makes clear that the elements of the exemption “depend[] both on the class to which [the employee's] employer belongs and on the class of work involved in the employee's job.” White, 996 F.3d at 308 (citing 29 C.F.R. § 782.2(a)). The word “carriers” in the regulation includes “private carriers of property by motor vehicle,” in addition to common and contract carriers. 29 C.F.R. § 782.2(b)(1); White, 996 F.3d at 308.

Exemptions to the FLSA are not interpreted narrowly but are instead given a fair reading by courts. Encino Motorcars, LLC v. Navarro,__ U.S.__,___, 138 S.Ct. 1134, 1142, 200 L.Ed.2d 433 (2018). Prior to 2018, the Fifth Circuit employed a narrow interpretation of the FLSA's list of exemptions, a “now-erroneous principle of construction.” Amaya, 741 Fed.Appx. at 204-05 n.2. Despite this change from a narrow interpretation, the Fifth Circuit has stated that it continues to rely on its “prior opinions^[4] on the MCA exemption” since “the central analyses of these decisions remain unaffected because they concern the interpretation and application of FLSA-implementing regulations, not the statute itself.” Id.

1. Defendants' Renewed Motion for Summary Judgment on the Motor Carrier Act

The Defendants argue that Rosales and Butler were not entitled to overtime pay because of the MCA exemption from the FLSA. (Dkt. No. 85 at 10-21). The MCA exemption has two elements and Rosales argues that ISS has failed to establish beyond dispute both “essential element[s][.]” (Dkt. No. 90 at 23). Rosales argues that the exemption does not apply because (1) ISS is not a motor carrier and (2) Rosales did not...