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Acosta v. Five Star Automatic Fire Protection, LLC

United States District Court, W.D. Texas, El Paso Division

July 24, 2017

R. ALEXANDER ACOSTA, Secretary of Labor, United States Department of Labor, Plaintiff,



         On this day, the Court considered Defendant Five Star Automatic Fire Protection's ("Five Star") "Motion for Summary Judgment" (ECF No. 22) [hereinafter "Motion"], filed on April 28, 2017, Plaintiff R. Alexander Acosta, Secretary of Labor, United States Department of Labor's ("DOL"), "Response to Defendant's Motion for Summary Judgment" (ECF No. 35) [hereinafter "Response"], filed on May 19, 2017, and Five Star's "Reply to [DOL's] Response in Opposition to [Five Star's] Motion for Summary Judgment" (ECF No. 40) [hereinafter "Reply"], filed on May 22, 2017, in the above-captioned cause.[1] After due consideration, the Court is of the opinion that Five Star's Motion should be denied for the reasons set forth below.


         This case stems from the DOL's allegations that Five Star did not properly compensate some of its current and former employees from 2013 to 2015, and failed to maintain accurate payroll records in violation of the Fair Labor Standards Act ("FLSA"). Compl. 1-2, July 7, 2016, ECF No. 1. Specifically, the DOL attaches a list to its Complaint ("DOL List") containing the names of fifty-four current and former employees for whom back wages are sought. Compl. Ex. A. The DOL alleges that the employees did not include pre- and post-shift time that they worked on their time cards and that the employees were not properly compensated for this time. Compl. 2. Five Star denies that it failed to properly compensate any of its employees. Mot. 2.

         A. Five Star

         Five Star is a business located in El Paso, Texas that designs and installs fire sprinkler systems. Mot. Factual App. 1 (ECF No. 22-1) [hereinafter "Motion Appendix"]; Resp. Factual App. 2 (ECF No. 35-1) [hereinafter "Response Appendix"]. Luis Palacios is the owner and President of Five Star, [2] Veronica Palacios is Luis Palacios's wife and Vice-President of Five Star, [3] Jorge Cobian is a "Construction Supervisor, "[4] and Mary Ann Morales is the Payroll Clerk.[5]

         Five Star employs the following categories of "construction employees:"[6] (1) foremen; (2) helpers, and (3) sprinkler-fitter apprentices. Mot. App. 2; Resp. App. 2. These construction employees perform most of their installation work away from Five Star's headquarters at project sites and are paid on an hourly basis. Mot. App. 2; Resp. App. 2. Five Star generally uses "two-man crews" consisting of a foreman and a helper to perform work at project sites in El Paso County. Mot. App. 3; Resp. App. 2.

         During the relevant time period, Five Star required that construction employees record the total number of hours they worked on time cards, but did not require that employees include the start or end time on the time cards. Mot. App. 6; Morales Dep. 25-26

         B. The DOL Investigation and Report

         The DOL assigned its investigator Sandra Alba ("Investigator Alba") to conduct an investigation into Five Star's company practices to determine whether Five Star had violated the FLSA. Resp. Ex. Dep. of Sandra Alba, at 13 (ECF No. 35-3) [hereinafter "Alba Deposition"].[7] During her investigation, Investigator Alba visited the Five Star facility on four separate occasions and also visited some of the project work sites. Alba Dep. 22, 84-85. While at the Five Star facility, Investigator Alba interviewed various employees. Alba Dep. 24: 14-18. Investigator Alba also interviewed current and former employees outside of the Five Star facility via telephone and in person on multiple occasions. Id., at 22-23.

         During her first visit to the Five Star facility, Investigator Alba met with Mrs. Palacios. Alba Dep. 39-42; VP Dep. 19-20. During this initial visit, Mrs. Palacios provided Investigator Alba with general information regarding company practices and the employees' day-to-day activities. Alba Dep. 41-42. Mrs. Palacios also gave Investigator Alba a tour of the Five Star facility, id. at 42, after which Investigator Alba also requested time and payroll records for the previous two years for all Five Star employees. Alba Dep. 42; VP Dep. 20.

         During her second visit to the Five Star facility, Investigator Alba met briefly with Mrs. Palacios again and was provided with a list of employees and dates of employment for the relevant time period but was not provided with complete payroll records for all employees. Alba Dep. 32-33. Instead, Investigator Alba was provided with the two most recent payroll records. Id. Investigator Alba avers that she never received the complete payroll records that she requested. Id. at 32. During that same visit, Investigator Alba also began conducting employee interviews at the Five Star facility. Id. at 32-33; VP Dep. 20.

         During her third visit to the Five Star facility, which Investigator Alba referred to as the "preliminary final conference, " Investigator Alba met with both Mr. and Mrs. Palacios to inform them that she had determined, from her investigation, that Five Star had violated the FLSA. Alba Dep. 30-31; VP Dep. 22-23. Mr. and Mrs. Palacios denied that any employees were owed any money. LP Dep. 172; VP Dep. 23; Alba Dep. 30. According to Investigator Alba, she also informed Mr. and Mrs. Palacios that back wages would need to be calculated for all construction employees for the relevant time period, and Mr. Palacios requested additional time to consult with his attorney. Alba Dep. 30-32.

         During her fourth and final visit to the Five Star facility, which Investigator Alba referred to as the "final conference, " Investigator Alba met with Mr. and Mrs. Palacios again to ascertain whether Mr. Palacios had computed the back wages and to discuss her computation of back wages with them. Id. at 31-32. Investigator Alba claims that Mr. Palacios indicated that he was not in agreement with the findings, and therefore, had not computed back wages. Id. at 34. Investigator Alba asked Mr. Palacios whether he wanted her to show him the documentation but he refused to review it because he was not in agreement that any of the employees were entitled to back wages. Id. at 34-35.

         Ultimately, Investigator Alba created a document detailing her findings and conclusions as a result of her investigation. See Resp. Ex. Certified Narrative and Addendum (ECF No. 35-2) [hereinafter "Report"]. The DOL has provided Investigator Alba's Report as primary evidence of its FLSA overtime claims on behalf of Five Star's employees. See generally Resp.

         The DOL's Authentication Officer certified the Report as a "true copy of a document in the DOL." Report DL 1-126. The Report details Investigator Alba's conclusion that Five Star did not properly compensate its construction employees for overtime hours worked from September 23, 2013 through September 20, 2015. Report 77-78.[8] Specifically, Investigator Alba included the following findings in her Report.

         During the relevant time period, Cobian required that construction employees report to the Five Star facility at 6:30 a.m. (or 6:45 a.m. at the latest) to gather materials needed for the day and load the company vehicles with these materials. Id. at 77. Construction employees then reported to job sites at 7:00 a.m. Alba Dep. 34. After construction employees left the project sites at 3:30 p.m. each day, they were required to return the company vehicles to Five Star's facility and would arrive at the Five Star facility anytime between 3:30 p.m. and 4:00 p.m. Report 77.

         Construction employees did not include their pre-shift work loading materials into company vehicles or their post-shift work returning the vehicles to the Five Star facility on their time cards. Id.; Alba Dep. 90. Consequently, construction employees were not properly compensated for this time. Report 77; Alba Dep. 90. Specifically, Investigator Alba concluded that Five Star did not compensate employees on the DOL List for 3.75 hours of overtime per week. Report 78.

         Investigator Alba explained during her deposition testimony that she computed back wages in the following manner. In the absence of records, Investigator Alba reconstructed the construction employees* hours based on information that she gathered during her investigation. Alba Dep. 53. Specifically, Investigator Alba determined, based on information that Mrs. Palacios and employees provided to her, that construction employees worked from 7:00 a.m. to 3:30 p.m., five days a week. Id. at 34. Consequently, Investigator Alba calculated additional uncompensated time as overtime. Id.; 29 U.S.C. § 207(a) (providing that hours worked in excess of forty per week is compensable overtime).

         Based on employee interviews, Investigator Alba also used a conservative average for the amount of uncompensated overtime spent pre- and post-shift. For example, employee interviews revealed that employees engaged in uncompensated pre-shift time lasting anywhere from fifteen to thirty minutes each work day; Investigator Alba applied the fifteen-minute figure in computing back wages. Id. at 50. Similarly, employee interviews revealed that employees engaged in uncompensated post-shift time lasting anywhere from thirty minutes to an hour; Investigator Alba applied the thirty-minute figure in her back wages computation. Id. at 53.

         C. Mr. Palacio's Affidavit and Deposition Testimony and Cobian's Deposition Testimony

         As primary evidence in support of its Motion, Five Star has submitted Mr. Palacios's affidavit along with forms from sixteen current and former employees asserting that they have been properly compensated.[9] First LP Aff.

         Mr. Palacios asserts the following in his affidavit:

• Five Star construction employees use an honor system to record all of their time on a company time card. First LP Aff. ¶ 12.
• The construction employees are instructed to include all work time on their time cards. Id. at ¶ 13.
• Construction employees are "on-the-clock" when they start actual work at Five Star's facility, if any. Id. at ¶I4.
• "Shop employees" deliver the materials that construction employees need to complete projects directly to project sites in advance. The materials are then stored at the site. Id. at ¶ 24.
• It is not normally the construction employees' responsibility to load company vehicles with project materials and deliver the materials to the project sites. Id. at ¶ 25.
• On rare occasions construction employees might need to load materials needed for projects, which takes between one and two minutes. Id.
• Any material amount of time (i.e., over two minutes) that construction employees spend loading, unloading, and delivering materials is considered paid time and the construction workers are paid for all their loading and unloading time. Id. at ¶ 15.

         Similarly, Cobian asserted during his deposition testimony that construction employees are compensated for time spent returning company vehicles to the Five Star facility, Cobian Dep. 64, and that the majority of time the materials are already at the project sites, id. at 28.


         A. Summary Judgment

         Pursuant to Federal Rule of Civil Procedure 56(a), a court "shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." A genuine dispute will be found to exist "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Rogers v. Bromac Title Servs., LLC, 755 F.3d 347, 350 (5th Cir. 2014) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)) (internal quotation marks omitted).

         "Under Federal Rule of Civil Procedure 56(c), the party moving for summary judgment bears the initial burden of. . . 'identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.'" Norman v. Apache Corp., 19 F.3d 1017, 1023 (5th Cir. 1994) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)).

         "Rule 56(c) mandates the entry of summary judgment... upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which the party will bear the burden of proof at trial." Celotex Corp., 477 U.S. at 323. Where this is the case, "there can be 'no genuine issue as to any material fact, ' since complete failure of proof concerning an essential element of ...

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