Smith v. Ideal Towing, LLC
| Decision Date | 13 November 2017 |
| Docket Number | CIVIL ACTION FILE NO. 1:16-CV-1359-TWT |
| Court | U.S. District Court — Northern District of Georgia |
| Parties | JAWANZA SMITH, et al., Plaintiffs, v. IDEAL TOWING, LLC, et al., Defendants. |
This is an FLSA overtime action. It is before the Court on the Defendants' Motion for Partial Summary Judgment [Doc. 66]. For the reasons set forth below, the Defendants' Motion for Partial Summary Judgment [Doc. 66] is GRANTED in part and DENIED in part.
The Plaintiffs in this case are former tow truck drivers for the Defendant Ideal Towing, LLC, which was owned and operated by the Defendant Michael James. The Defendants also include Tishja James, Michael James's wife, who is also alleged to have been a co-owner of Ideal Towing with managerial duties in the company, and I-Tow & Transport LLC, which is alleged to be a successor to Ideal Towing. The Plaintiffs allege that the Defendants misclassified them as independent contractors, and consequently violated the minimum wage and overtime requirements of the Fair Labor Standards Act ("FLSA").1 The Plaintiffs also claim that the Defendants violated 26 U.S.C. § 7434 by fraudulently classifying the Plaintiffs as independent contractors on forms filed with the IRS.2
The Defendants now move for partial summary judgment on five issues. First, the Defendants argue that Tishja James cannot be held liable as an "employer" under the FLSA. Second, they argue that the Plaintiffs' waiting time is not compensable under the FLSA. Third, they contend that I-Tow cannot be held liable as a successor to Ideal Towing. Fourth, they argue that the Plaintiffs are not entitled to liquidated damages under the FLSA because the Defendants acted with good faith. Finally, they move for summary judgment on the Plaintiffs' claim for fraudulent filing of tax information under 26 U.S.C. § 7434.
Summary judgment is appropriate only when the pleadings, depositions, and affidavits submitted by the parties show no genuine issue of material fact exists andthat the movant is entitled to judgment as a matter of law.3 The court should view the evidence and any inferences that may be drawn in the light most favorable to the nonmovant.4 The party seeking summary judgment must first identify grounds to show the absence of a genuine issue of material fact.5 The burden then shifts to the non-movant, who must go beyond the pleadings and present affirmative evidence to show that a genuine issue of material fact exists.6 "A mere 'scintilla' of evidence supporting the opposing party's position will not suffice; there must be a sufficient showing that the jury could reasonably find for that party."7
The Plaintiffs claim that Tishja James, the wife of Michael James, should be held individually responsible because she is an "employer" within the meaning of the FLSA. The Defendants move for summary judgment on this issue, arguing that TishjaJames did not have the type of role in the company necessary to be considered an "employer" under the FLSA.8
A company officer "cannot be held individually liable for violating the . . . [provisions] of the FLSA unless he is an 'employer' within the meaning of the Act."9 To be considered an "employer" under the FLSA, "an officer must either be involved in the day-to-day operation or have some direct responsibility for the supervision of the employee."10 For example, in Patel v. Wargo, the Eleventh Circuit concluded that the defendant, who was the company's president, director, and principal stockholder, was not an employer under the FLSA.11 This was because he "did not have operational control of significant aspects of [the company's] day-to-day functions, including compensation of employees or other matters in relation to an employee."12
The Defendants argue that Tishja James is not an "employer" within the meaning of the statute because she was not involved in the day-to-day operation of Ideal Towing and did not have direct supervisory authority. They argue that, instead,Michael James was the sole owner of Ideal Towing who made all of the managerial decisions.13 The Defendants contend that Tishja only assisted Michael in a clerical capacity,14 and that she had no authority over many aspects of the business, such as "compensation, rate, method of payment, hiring, firing, work schedules, conditions of employment, or supervisory matters."15 They further argue that "Michael James, not Tishja, signed all checks, maintained personnel records, and supplied the company equipment and facilities."16
However, the Plaintiffs have provided enough evidence to allow a reasonable jury to infer that Tishja James was involved in the day-to-day operations of the company and that she had some direct responsibility for supervision of the employees. The Plaintiffs have offered evidence showing that Ms. James shared part of the ultimate decisionmaking authority in the company.17 They have also produced evidence that she signed the paychecks,18 mediated employee conflicts,19 reducedemployee pay for damage to the vehicles,20 and made payroll,21 scheduling,22 and disciplinary decisions.23 Furthermore, Ms. James represented to some of the drivers that she was a "co-owner" of Ideal Towing along with Mr. James,24 and some documents also referred to her as a "supervisor" and as a "manager."25 From this evidence, a reasonable jury could conclude that Ms. James was involved in the day-to-day operations of the company and maintained a supervisory role over the employees. Therefore, a genuine issue of material fact exists as to Ms. James's role in the company.
The Defendants argue that the Plaintiffs "rely upon their own deposition testimony" and that the evidence produced is "insufficient to establish actual involvement."26 However, these are disputes of fact that the jury should resolve. Given this evidence, a reasonable jury could find that Ms. James was involved in the day-to-day operations of the business, and that she had a supervisory role in the company.Accordingly, the Defendants are not entitled to summary judgment as to the question of Tishja James's status as an "employer" under the FLSA.
Next, the Defendants argue that the Plaintiffs' waiting time is not compensable under the FLSA. First, the Defendants argue that the Plaintiffs were "waiting to be engaged," which is not compensable under the FLSA.27 Second, the Defendants argue that the "homeworkers' exception" applies here, which precludes the Plaintiffs' waiting time from being compensable.28 The Court holds that the Defendants are not entitled to summary judgment on this issue.
First, the Defendants argue that the Plaintiffs' waiting time is not compensable because the Plaintiffs were "waiting to be engaged," as opposed to being "engaged to wait," which is not compensable under the FLSA.29 The Court finds that summary judgment is not appropriate. Based on the evidence provided, a reasonable jury could conclude that the Plaintiffs' waiting time is compensable.
Time employees spend waiting to be called to duty by an employer can be compensable under the FLSA.30 The key distinction between compensable and non-compensable waiting time is whether the employee is "engaged to be waiting" or "waiting to be engaged."31 "When employees are engaged to wait for the employer's call to duty, this time may be compensable under the FLSA."32 "The question of whether the employees are working during this time for purposes of the FLSA depends on the degree to which the employee may use the time for personal activities."33 If the time is spent predominately for the benefit of the employer, then it is compensable under the FLSA.34 Whether waiting time constitutes compensable working time within the meaning of the FLSA is a question of fact and dependent upon all of the circumstances of the case.35
An employee's use of time must be severely restricted to be considered spent predominately for the benefit employer. "The FLSA requires employers to compensate an employee for on-call time only where the employee's on-call duties severely restrict the employee's use of his or her personal time."36 "The 'severely restricted' standard is a stringent one and employees are not entitled to on-call pay under the FLSA absent unusually onerous on-call duties."37 The Eleventh Circuit has noted that "undesirable and perhaps oppressive" on-call requirements do not necessarily reach this level.38 "When deciding whether on-call time is covered by the FLSA, the court should examine 'the agreements between the particular parties, appraisal of their practical construction of the working agreement by conduct, consideration of the nature of the service, and its relation to the waiting time, and all of the surrounding circumstances.'"39
In Birdwell, the Eleventh Circuit applied the predominant benefit test to determine that on-call time for the city's police detectives was not compensable. Thedetectives were not required to stay at the police station, but they also could not leave town, participate in outdoor activities, go on vacation, or take compensatory time off.40 They could not drink alcohol, and must have been able to respond promptly and sober when called.41 However, the detectives usually worked second jobs during this time.42 They could use their time at home as they pleased, and they could leave home whenever they desired as long as they left a forwarding number or carried a beeper.43 The Eleventh Circuit reversed a jury verdict finding that the plaintiffs were entitled to compensation for their on-call time, and concluded that the plaintiffs' on-call time was not compensable as a matter of law.44 The court noted that an employee's time must be "severely restricted," and that the detectives there could use the time how they wanted as long as they arrived promptly and sober when called to work.45
However, the court in Birdwell also distinguished a Tenth Circuit case, ...
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