United States District Court, S.D. Texas, Houston Division
CASEY KITAGAWA and BRANDON SHELDON, individually and on behalf of all others similarly situated,
DRILFORMANCE, LLC, Defendant.
MEMORANDUM AND ORDER
Rosenthal Chief United States District Judge
Kitagawa and Brandon Sheldon, the named plaintiffs in this
putative class action, work for Drilformance, LLC as
applications engineers. Drilformance designs, manufactures,
and rents drill bits to companies in the oil and gas
industry. The plaintiffs, salaried employees, allege
violations of the Fair Labor Standards Act, 29 U.S.C. §
201 et seq., based on a 10 percent across-the-board
prices dropped in 2015, and so did drilling operations
throughout the industry. The demand for drill bits also
dropped. Drilformance's revenue followed suit, dropping
80 percent between December 2014 and June 2016.
2015, Haley Kitagawa, Drilformance's global-operations
director, sent an email to all Drilforma nce employees
announcing changes to Drilformance's human-resources
policies based on the market downturn. The email stated:
We are in a dynamic market with the U.S. land rig count
dropping 58% from November 2014. Drilformance is in a strong
financial position and has fared better than most service
companies in our industry the first quarter of 2015. However,
every oilfield service company will feel the effect of the
downturn. There are indications we are reaching a bottom with
activity beginning to improve the later part of this year.
Our entire team is working hard to grow our customer base and
offset the rigs lost due to reduced customer activity. There
are still over 800 rigs operating in the U.S. providing
plenty of opportunity for us to make up for lost activity and
continue our growth.
We are a strong team and have a knack of always doing more
with less when it comes to our people. The company recognizes
and thanks each and every one of you for this. Our goal of
keeping our strength intact, which is our people, and
maintain a strong balance sheet has forced us to come up with
ways of reducing cash outflows without altering the core of
One of the ways of accomplishing this is through Furloughs
whereby each employee takes a day off, typically a Friday,
every other week. Many of our competitors and suppliers, such
as Smith Bits and U.S. Synthetic, implemented this system
earlier in the year.
We have also decided to take this approach for personnel to
take off one day every other week beginning with the payroll
period beginning June 13, 2015 until further notice. Your
supervisor will discuss with you an optimal schedule to
ensure we can maximize the growth of our operations to reach
activity levels enabling the suspension of a reduced work
Traditionally the company has enabled personnel to carry
forward as mush as a years worth of unused vacation. This
year no more than 3 days or 24 hours of unused vacation may
be carried forward at the end of 2015. Please arrange with
your supervisor to utilize your vacation balances if at all
possible during this slower period. If you choose to
voluntarily surrender your vacation balance, please let me
. . . We appreciate your hard work, dedication, and
understanding through this down cycle. We are all doing
everything possible to increase revenue and reach
profitability that enables a suspension of the reduction in
(Docket Entries No. 32, Ex. D; No. 34, Ex. A).
policy reduced the plaintiffs' salaries by 10 percent.
Although the email stated that all employees would receive a
furlough day every other week, the plaintiffs allege that
they were not able to take the furlough days, and instead
continued to work their regular schedules. The plaintiffs
also allege that Drilformance did not ensure that employees
refrained from working on the furlough day.
parties agree on the material facts and cross-moved for
summary judgment on the effect of the salary reduction. The
plaintiffs argue that the salary reduction removed them from
the status of salaried professional employees, exempt from
the Fair Labor Standards Act's overtime requirements.
They base this on the argument that their compensation
declined based on “variations in the quality or
quantity of the work performed” and on “absences
occasioned by the employer or by the operating requirements
of the business, ” 29 C.F.R. § 541.602(a), making
their salaries the “functional equivalent of an hourly
wage.” (Docket Entry No. 34). Drilformance seeks
summary judgment that the plaintiffs remained exempt because
the prospective salary reduction based on the economic
downturn did not violate the Department of Labor's
salary-basis regulation, § 541.602, and did not change
the plaintiffs' exempt status. (Docket Entry No. 32).
on the pleadings, motions, responses, replies, the record,
and the applicable law, Drilformance's motion for summary
judgment, (Docket Entry No. 32), is granted, and the
plaintiffs' motion for summary judgment, (Docket Entry
No. 34), is denied. The reasons for these rulings are
The Summary Judgment Legal Standard
judgment is appropriate only if ‘there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.'” Vann v. City of
Southaven, Miss., 884 F.3d 307, 309 (5th Cir. 2018)
(citations omitted); see also F ed. R. Civ. P.
56(a). “A genuine dispute of material fact exists when
the ‘evidence is such that a reasonable jury could
return a verdict for the nonmoving party.'”
Burrell v. Prudential Ins. Co. of Am., 820 F.3d 132,
136 (5th Cir. 2016) (quoting Anderson v. Liberty
Lobby, 477 U.S. 242, 248 (1986)). “The moving
party ‘bears the initial responsibility 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.'” Brandon v. Sage Corp., 808 F.3d
266, 269-70 (5th Cir. 2015) (quoting Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986)).
the non-movant bears the burden of proof at trial, ‘the
movant may merely point to the absence of evidence and
thereby shift to the non-movant the burden of demonstrating .
. . that there is an issue of material fact warranting
trial.'” Kim v. Hospira, Inc., 709
Fed.Appx. 287, 288 (5th Cir. 2018) (quoting Nola Spice
Designs, L.L.C. v. Haydel Enters., Inc., 783
F.3d 527, 536 (5th Cir. 2015)). While the party moving for
summary judgment must demonstrate the absence of a genuine
issue of material fact, it does not need to negate the
elements of the nonmovant's case. Austin v. Kroger
Tex., L.P., 864 F.3d 326, 335 (5th Cir. 2017) (quoting
Little v. Liquid Air Corp., 37 F.3d 1069, 1076 n.16
(5th Cir. 1994)). A fact is material if “its resolution
could affect the outcome of the actions.” Aly v.
City of Lake Jackson, 605 Fed.Appx. 260, 262 (5th Cir.
2015) (citing Burrell v. Dr. Pepper/Seven UP Bottling
Grp., Inc., 482 F.3d 408, 411 (5th Cir. 2007)).
“If the moving party fails to meet [its] initial
burden, the motion [for summary judgment] must be denied,
regardless of the nonmovant's response.”
Pioneer Exploration, LLC v. Steadfast Ins. Co., 767
F.3d 503 (5th Cir. 2014).
the moving party has met its Rule 56(c) burden, the nonmoving
party cannot survive a summary judgment motion by resting on
the mere allegations of its pleadings.” Bailey v.
E. Baton Rouge Par. Prison, 663 Fed.Appx. 328, 331 (5th
Cir. 2016) (quoting Duffie v. United States, 600
F.3d 362, 371 (5th Cir. 2010)). The nonmovant must identify
specific evidence in the record and articulate how that
evidence supports that party's claim. Willis v. Cleco
Corp., 749 F.3d 314, 317 (5th Cir. 2014). “This
burden will not be satisfied by ‘some metaphysical
doubt as to the material facts, by conclusory allegations, by
unsubstantiated assertions, or by only a scintilla of
evidence.'” Jurach v. Safety Vision, LLC,
642 Fed.Appx. 313, 317 (5th Cir. 2016) (quoting Boudreaux
v. Swift Transp. Co., 402 F.3d 536, 540 (5th Cir.
2005)). In deciding a summary judgment motion, the court
draws all reasonable inferences in the light most favorable
to the nonmoving party. Darden v. City of Fort
Worth, 866 F.3d 698, 702 (5th Cir. 2017).
The Summary Judgment Record
• an affidavit of Rusty Petree, Drilformance's
corporate representative, (Docket Entry No. 32, Ex. A; Docket
Entry No. 34, Ex. 4);
• deposition testimony of Brandon Sheldon, (Docket Entry
No. 32, Ex. B; Docket Entry No. 34, Ex. 3);
• deposition testimony of Casey Kitagawa, (Docket Entry
No. 32, Ex. C; Docket Entry No. 34, Ex. 2);
• an email, dated June 11, 2015, from Haley Kitagawa to
all Drilformance employees, (Docket Entry No. 32, Ex. D;
Docket Entry No. 34, Ex. 1);
• the plaintiffs' pay records, (Docket Entry No. 32,
Exs. E-J); and • Drilformance's responses to the
plaintiffs' interrogatories, (Docket Entry No. 34, Ex.
Whether the Salary Reduction Violated the Salary-Basis
Fair Labor Standards Act requires employers to pay overtime
to nonexempt employees who work more than 40 hours in a
workweek. 29 U.S.C. § 207(a)(1). Employees who perform
executive, administrative, sales, or professional duties, and
who are paid at least $455 per week on a salary basis, are
exempt. 29 U.S.C. § 213(a)(1). The parties do not
dispute that the plaintiffs performed exempt duties and were
paid more than $455 per week. The disputed ...