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Hines v. Key Energy Services, LLC

United States District Court, W.D. Texas, San Antonio Division

May 26, 2017

GREG HINES, MICHAEL HEADRICK, Plaintiffs
v.
KEY ENERGY SERVICES, LLC, Defendant

          Hon Fred Biery, United States District Judge

          REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

          ELIZABETH S. ("BETSY") CHESTNEY, U.S. MAGISTRATE JUDGE

         This Report and Recommendation concerns the Motion for Partial Summary Judgment [#17] filed by Plaintiffs Greg Hines and Michael Headrick (collectively, “Plaintiffs”). All pretrial matters in this case have been referred to the undersigned for disposition pursuant to Western District of Texas Local Rule CV-72 and Appendix C [#28]. The undersigned has authority to enter this recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). The Court federal question jurisdiction over this case filed pursuant to the Fair Labor Standards Act (“FLSA”). See 28 U.S.C. §1331.

         After considering Plaintiffs' Motion [#17], the Response filed by Defendant Key Energy Services, LLC (“Key Energy”) [#27][1], Plaintiffs' Reply [#29], and the case file, the undersigned recommends that the District Court GRANT IN PART Plaintiffs' Motion for Partial Summary Judgment [#17]. Plaintiffs seek summary judgment that the exemptions claimed by Key Energy-the executive, administrative, combination, highly compensated employee (“HCE”), and Motor Carrier Act (“MCA”)-are inapplicable to them as a matter of law. Key Energy has abandoned its argument regarding the applicability of the MCA exemption.[2] In addition, Key Energy's response does not adequately contest the inapplicability of the administrative or combination exemptions, and it has therefore waived those defenses. Thus, Plaintiffs are entitled to summary judgment that the MCA, combination, and administrative exemptions are inapplicable to them. Finally, the evidentiary record establishes that Plaintiff Hines is not exempt under the executive exemption as a matter of law. Material issues of fact preclude granting Plaintiffs' motion for summary judgment with regard to the executive exemption as to Plaintiff Headrick and with regard to the HCE exemption as to both Plaintiffs.

         I. Background

         This is a wage and hour case by oil-services workers against their former employer, Key Energy, a company that provides on-site well production services in various states including in Texas, Oklahoma, and New Mexico. (See Hines Decl. [#17-1] ¶¶ 2-3; Headrick Decl. [#17-2] ¶¶ 2-3.) Plaintiffs Hines and Headrick worked for Key Energy. Hines was employed as a Service Supervisor in Key Energy's pressure-pumping division in Marshall, Texas from approximately April 2009 until August of 2013. (See Hines Decl. ¶ 2, 4; Russell Decl. [#26-1] ¶ 2; Exs. C-1 & C-2 to Resp.) Key Energy terminated Hines for allegedly violating the Company's Drug-Free Workplace policy. (See Ex. C-2 to Resp.) Headrick was employed as a Service Supervisor in Key Energy's coil-tubing services division in Oklahoma from 2014 through early 2015.[3] (See Headrick Decl. ¶¶ 2, 4; Davis Decl. ¶ 2; Ex. C-3 to Resp.) Prior to that, Headrick worked as an Equipment Operator for Key Energy beginning in or around May 2011. (See Davis Decl. ¶ 2; Ex. C-3 to Resp.) In January or February 2015, Key Energy terminated Headrick for allegedly using his company credit card to purchase personal items in violation of company policy. (See Davis Decl. ¶ 2; Ex. C-4 to Resp.)

         There is no dispute about how Plaintiffs were paid: Key Energy paid Plaintiffs salary plus bonuses for their work as Service Supervisors. (See Hines Decl. ¶ 5; Headrick Decl. ¶ 5; Russell Decl. ¶ 3; Davis Decl. ¶ 4.) Plaintiffs' duties, on the other hand, are vigorously contested. Plaintiffs claim that they were required to travel to customers' jobsites to perform well-pressure-pumping work, which they argue consists almost entirely of manual labor. (See Hines Decl. ¶¶ 6-8, 11-21; Headrick Decl. ¶¶ 6-8, 11-21.) Key Energy, on the other hand, argues that Plaintiffs were primarily responsible for training and supervising crew members in the performance of such duties. (See Russell Decl. ¶¶ 4-7; Davis Decl. ¶¶ 5-8.)

         Plaintiffs initiated this litigation on October 20, 2015, alleging that Key Energy improperly classified them as exempt employees and failed to pay them overtime wages in violation of the FLSA [#1]. On October 17, 2016, Plaintiffs filed this Motion for Partial Summary Judgment, arguing that Key Energy cannot raise a genuine issue of material fact from which a reasonable jury could conclude that Plaintiffs were exempt employees under the FLSA.[4]Key Energy opposes summary judgment on the grounds that both Plaintiffs allegedly qualified for the executive and highly compensated employee exemptions.[5]

         II. Summary Judgment Standard

         Summary judgment is appropriate under Rule 56 of the Federal Rules of Civil Procedure only “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); see also Fed. R. Civ. P. 56(c). A dispute is genuine only 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 (1986).

         The party moving for summary judgment bears the initial burden of “informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.” Catrett, 477 U.S. at 323. Once the movant carries its burden, the burden shifts to the nonmoving party to establish the existence of a genuine issue for trial. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Wise v. E.I. Dupont de Nemours & Co., 58 F.3d 193, 195 (5th Cir. 1995). The non-movant must respond to the motion by setting forth particular facts indicating that there is a genuine issue for trial. Miss. River Basin Alliance v. Westphal, 230 F.3d 170, 174 (5th Cir. 2000). The parties may satisfy their respective burdens by tendering depositions, affidavits, and other competent evidence. Topalian v. Ehrman, 954 F.2d 1125, 1131 (5th Cir. 1992). The Court will view the summary judgment evidence in the light most favorable to the non-movant. Rosado v. Deters, 5 F.3d 119, 123 (5th Cir. 1993).

         “After the non-movant has been given the opportunity to raise a genuine factual issue, if no reasonable juror could find for the non-movant, summary judgment will be granted.” Westphal, 230 F.3d at 174. However, if the party moving for summary judgment fails to satisfy its initial burden of demonstrating the absence of a genuine issue of material fact, the motion must be denied, regardless of the nonmovant's response. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (en banc).

         This case involves a somewhat uncommon posture. First, it is Plaintiffs, not the Defendant, who are moving for summary judgment. Second, Plaintiffs are moving for summary judgment on Defendant's affirmative defenses. Because Plaintiffs do not bear the burden of proof at trial, Plaintiffs are entitled to summary judgment if they can point to an absence of evidence to support an essential element on a particular affirmative defense. See Celotex, 477 U.S. at 322-23; Fed. Debt Mgmt., Inc. v. Herbst Res., Inc., 15 F.3d 179 (5th Cir. 1994). Plaintiffs are also entitled to summary judgment if they produce sufficient evidence negating an essential element of Defendant's affirmative defense. Celotex, 477 U.S. at 323.

         III. Analysis

         Plaintiffs contend they are entitled to summary judgment on the affirmative defenses pled by Key Energy-in particular, the five overtime exemptions asserted by Key Energy in its answer. The FLSA “requires an employer to pay overtime compensation to any employee working more than forty hours in a workweek.” Allen v. Coil Tubing Servs, L.L.C., 755 F.3d 279, 282 (5th Cir. 2014) (citing 29 U.S.C. § 207(a)(1)). This requirement, however, does not apply to “any employee employed in a bona fide executive, administrative, or professional capacity.” 29 U.S.C. § 213(a)(1). “Exemptions under the FLSA are construed narrowly against the employer, and the employer bears the burden to establish a claimed exemption.” Songer v. Dillon Res., Inc., 618 F.3d 467, 471 (5th Cir. 2010).

         To prove the applicability of one of the FLSA's white-collar exemptions, an employer must show that the employee meets both the salary and duties tests for the exemption that purportedly applies. Cowart v. Ingalls Shipbldg., Inc., 213 F.3d 261, 262-63 (5th Cir. 2000). “The decision whether an employee is exempt from the FLSA's overtime compensation provisions under 29 U.S.C. § 213(a)(1), is primarily a question of fact[;] . . . [h]owever, the ultimate decision whether the employee is exempt from the FLSA's overtime compensation provisions is a question of law.” Lott v. Howard Wilson Chrysler-Plymouth, Inc., 203 F.3d 326, 330-31 (5th Cir. 2000).

         In this case, the record establishes that the executive exemption is inapplicable to Plaintiff Hines as a matter of law because Key Energy failed to introduce any evidence to support an essential element of this affirmative defense-that Hines's suggestions or recommendations were afforded particular weight. However, material fact disputes preclude the award of summary judgment on the issue of the executive exemption's applicability to Plaintiff Headrick and on the issue of the HCE's applicability to both Plaintiffs. Key Energy has abandoned its MCA exemption defense and has waived its defense under the combination and administrative exemptions.

         A. Executive Exemption

         To qualify for the executive exemption an employee must: (1) be compensated on a salary basis of a rate not less than $455 per week[6]; (2) have a “primary duty” consisting of “management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof”; (3) “customarily and regularly direct the work of two or more employees”; and (4) have “the authority to hire or fire other employees” or the employee's “suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight.” 29 C.F.R. § 541.100(a); see also Chambers v. Sodexo, Inc., 510 Fed. App'x 336, 339 (5th Cir. 2013). “The executive exemption is conjunctive and accordingly, the employer who claims the exemption must meet each element for the exemption to apply.” Mohnacky v. FTS Int'l Servs, LLC, No. SA-13-CV-246-XR, 2014 WL 4967097, at *3 (W.D. Tex. Oct. 2, 2014) (citing 29 C.F.R. § 541.100(a)).

         To be entitled to summary judgment that the executive exemption does not apply to them, Plaintiffs must demonstrate either that the record negates one of the four elements of this exemption or that there is an absence of evidence in the record to support one of these elements. There is no dispute that Key Energy can prove the first element.[7] Material issues of fact exist regarding the second and third. But there is no evidence in the record to support the existence of the fourth element as to Plaintiff Hines; thus, Plaintiffs are entitled to summary judgment that executive exemption is inapplicable to Plaintiff Hines, although a fact issue precludes summary judgment on this exemption as to Plaintiff Headrick.

         1. “Primary duty”

         A genuine issue of material fact exists regarding whether Key Energy can establish that the Plaintiffs' primary duty was the management of ...


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