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Wade v. Furmanite America, Inc.

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

May 4, 2018

JAMES WADE, individually and on behalf of all others similarly situated Plaintiff.
v.
FURMANITE AMERICA, INC. Defendant.

          MEMORANDUM OPINION AND ORDER

          ANDREW M. EDISON UNITED STATES MAGISTRATE JUDGE

         Pending before this Court is Plaintiffs Motion for Conditional Certification Under the Fair Labor Standards Act ("Motion"). (Dkt. 18). This Court has authority to enter this order pursuant to 28 U.S.C. § 636(b)(1)(A).

         Having considered the parties' briefing, the applicable legal authorities, and all matters of record, the Court GRANTS the Motion.

         I. BACKGROUND

         Furmanite America, Inc. ("Furmanite") is a pipeline inspection and maintenance company with employees working from coast-to-coast.

         Plaintiff James Wade ("Wade") brought this lawsuit against Furmanite for alleged violations of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201, et seq., on behalf of himself and similarly situated pipeline inspectors. He has requested that this Court certify a class consisting of all inspectors that were employed out of Furmanite's Tulsa branch office ("Tulsa Group Inspectors")[1] Wade claims that Furmanite required him and all Tulsa Group Inspectors to work in excess of 40 hours per workweek without any overtime compensation. Specifically, Wade alleges that Furmanite pays its Tulsa Group Inspectors a day rate, but disguises this fact by maintaining pay records that artificially divide the day rate compensation into straight time pay and overtime pay. Wade contends that a close inspection of his time records reveals the subterfuge because, for example, when he "worked five days, he was always paid, supposedly, for 40 hours of straight time pay and for 12.22 overtime hours, " and a substantially similar pattern holds for six and seven day work weeks. (Dkt. 24 at 4-7). [2]Wade seeks conditional certification of Tulsa Group Inspectors, arguing that Tulsa Group Inspectors are similarly situated because they have been subjected to Furmanite's disguised day rate pay scheme.

         In response, Furmanite vociferously argues that it has fully complied with the FLSA. At oral argument, Furmanite's counsel explained that it paid Wade an hourly rate. However, because Wade worked on a project where Furmanite's client paid a day rate, Furmanite calculated and set Wade's hourly rate based on a function of the day rate pay it received from its client and its desired daily profit. For example, if Company X contracted with Furmanite to provide inspection services for a 10 hour workday, at a rate of $1, 000 a day, Furmanite would first determine the amount of profit it wanted to make per day. If Furmanite decided it wanted to make, say, $400 per day in profit, the remaining $600 would become its staffing budget. Furmanite would then perform a backward calculation based on the $600 staffing budget and the 10 hour workday requirement to determine the hourly rate that would allow it to pay its employee straight time and overtime all within the $600 budget. Furmanite contends that although this practice is somewhat related to its receipt of a day rate payment from a client, it is not the same as paying its own employees a day rate.

         In support of his Motion, Wade has submitted a declaration stating that he worked for Furmanite as an inspector in Arkansas from September 2015 to February 2016. Wade has also submitted the declaration of Jeff Boyd, who states that he worked for the company as an inspector in New York and Connecticut from April 2015 to March 2016. Both Wade and Boyd claim that they worked more than 40 hours per week, but were not paid for the overtime they worked. Furmanite acknowledges that both Wade and Boyd worked for the company during the periods of time that they respectively declare, but disputes the specific job titles and corresponding job duties that they identify in their sworn declarations.[3] Furmanite also rejects Wade and Boyd's claim that they were paid anything other than straight time and overtime when appropriate. The parties agree that Wade and Boyd were Tulsa Group Inspectors.

         II. APPLICABLE LAW

         The FLSA requires employers to pay certain employees one and one-half times the employee's regular rate of pay for hours worked in excess of 40 hours per week. The FLSA further authorizes an employee to bring a "representative" or "collective action" against his employer for unpaid overtime wages on behalf of himself and other employees "similarly situated." 29 U.S.C. § 216(b). Unlike class actions in which potential class members may choose to opt-out of the lawsuit, FLSA collective actions require potential class members to notify the court of their desire to opt-in to the action. Id. Although the FLSA does not expressly require certification for a collective action to proceed, certification has been recognized as a useful case management tool for district courts to employ in appropriate cases. See Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165, 170 (1989) ("A collective action allows ... plaintiffs the advantage of lower individual costs to vindicate rights by the pooling of resources. The judicial system benefits by efficient resolution in one proceeding of common issues of law and fact arising from the same alleged ... activity.").

         The decision on whether to certify a suit as a collective action under the FLSA and approve notice to potential plaintiffs is committed to the sound discretion of the court. See Mooney v. Aramco Servs. Co., 54 F.3d 1207, 1213 (5th Cir. 1995). Notice to potential plaintiffs will not issue unless a court conditionally certifies the case as a collective action. See Shaw v. Jaguar Hydrostatic Testing, LLC, No. 2T5-CV-363, 2017 WL 3866424, at *3 (S.D. Tex. Sept. 5, 2017) ("[T]he sole consequence of conditional certification is the sending of court-approved written notice to employees, who in turn become parties to a collective action only by filing written consent with the court. District courts have discretion in deciding whether to order notice to potential plaintiffs.") (internal quotation marks and citations omitted).

         The Fifth Circuit has declined to adopt a particular test to determine when a court should certify a collective action or authorize notice in a FLSA action. That being said, most federal courts in this District have adopted the two-step approach set forth in Lusardi v. Xerox Corp., 118 F.R.D. 351 (D.N.J. 1987). This Court is no exception. See Freeman v. Progress Residential Prop. Manager, LLC, No. 3.T6-CV-00356, 2018 WL 1609577, at *2 (S.D. Tex. Apr. 3, 2018) (Edison, J.) (applying the two-step Lusardi test).

         The two stages of the Lusardi test are the "notice stage, " followed by the "decertification stage." See Mooney, 54 F.3d at 1213-14. At the notice stage, the court conducts an initial inquiry into "whether the putative class members' claims are sufficiently similar to merit sending notice of the action to possible members of the class." Acevedo v. Allsup's Convenience Stores, Inc., 600 F.3d 516, 519 (5th Cir. 2010) (citation omitted). Courts usually base this decision upon "the pleadings and any affidavits [that] have been submitted ...." Mooney, 54 F.3d at 1214. Because of the limited evidence available at this stage, "this determination is made using a fairly lenient standard, and typically results in 'conditional certification' of a representative class." Id. In fact, courts "appear to require nothing more than substantial allegations that the putative class members were together the victims of a single decision, policy, or plan." Id. at 1214 n.8 (quoting Sperling v. Hoffmann-La Roche, Inc., 118 F.R.D. 392, 407 (D.N.J. 1988)). At no point during the conditional certification stage should a court look to the merits of the lawsuit's allegations. See Vaughn v. Document Grp. Inc., 250 F.Supp.3d 236, 239 (S.D. Tex. 2017) ("Neither stage of certification is an opportunity for the court to assess the merits of the claim by deciding factual disputes or making credibility determinations.") (quotation marks and citation omitted). If the court conditionally certifies the class, putative class members are given notice and the opportunity to opt-in. See Mooney, 54 F.3d at 1214. The case then proceeds through discovery as a representative action. Id.

         At this initial stage of the Lusardi approach, courts in this District are split on the appropriate test to apply. Some courts require a plaintiff to establish three elements: (1) there is a reasonable basis for crediting the assertion that aggrieved individuals exist; (2) those aggrieved individuals are similarly situated to the plaintiff in relevant respects given the claims and defenses asserted; and (3) those individuals want to opt-in to the lawsuit. See Moreno v. Nat'l Oilwell Varco, L.P., No. 4.T7-CV-782, 2018 WL 1932550, at *7 (S.D. Tex. Apr. 23, 2018) (Palermo, J.) (applying third element); Ridley v. Regency Village, Inc., No. CV H-17-974, 2018 WL 1334813, at *8 (S.D. Tex. Mar. 15, 2018) (Miller, J.) (same); Heeg v. Adams Harris, Inc., 907 F.Supp.2d 856, 861 (S.D. Tex. 2012) (Rosenthal, J.) (same). On the other hand, a number of courts in this District have rejected the third element because it is not statutorily required. See Williams v. Guardian Living Servs., Inc., No. 4T7-CV-1901, 2018 WL 1251927, at *2 (S.D. Tex. Mar. 12, 2018) (Ellison, J.) (declining to apply the third element); Hernandez v. Robert Bering Constr., LLC, 191 F.Supp.3d 675, 681 (S.D. Tex. 2016) (Hanks, J.) (same); Jones v. Cretic Energy Servs., LLC, 149 F.Supp.3d 761, 768 (S.D. Tex. 2015) (Lake, J.) (same). This Court has previously considered the issue, determining that the two element approach is appropriate and that "[p]laintiffs need not present evidence that other individuals want to join the lawsuit to obtain conditional certification." Freeman, 2018 WL 1609577, at *6.

         The second step of the Lusardi approach-the decertification stage-is triggered if a defendant files a motion for decertification after the opt-in period has concluded and discovery is largely complete. See Mooney, 54 F.3d at 1214. The Fifth Circuit has explained:

At this [decertification] stage, the court has much more information on which to base its decision, and makes a factual determination on the similarly situated question. If the claimants are similarly situated, the district court allows the representative action to proceed to trial. If the claimants are not similarly situated, the district court decertifies the class, • and the opt-in plaintiffs are dismissed without prejudice. The class representatives-i.e., the original plaintiffs-proceed to trial on their individual claims.

Id.

         III. DISCUSSION

         A. Conditional Certification is Proper

         "As noted above, a plaintiff seeking to obtain conditional certification must make I a minimal showing that: (1) there is a reasonable basis for crediting the assertion that aggrieved individuals exist; and (2) those aggrieved individuals are similarly situated to the plaintiff in relevant respects given the claims and defenses asserted." Freeman, 2018 WL 1609577, at *4 (internal quotation marks, alteration, ellipses, and citation omitted). This Court will evaluate the request for conditional certification in light of these two factors.

         1. Whether Aggrieved Individuals Exist

         Wade "need only show that it is reasonable to believe that there are other aggrieved employees who were subject to an allegedly unlawful policy or plan." Austin v. Onward, LLC, 161 F.Supp.3d 457, 464 (S.D. Tex. 2015) (quotations marks and citation omitted). Here, in addition to Wade, one other individual-Boyd-has submitted a declaration stating that he also worked as a pipeline inspector for Furmanite, and he attests to having similar job duties and a similar compensation structure (day rate) as other inspectors such as Wade. Furmanite acknowledges that Wade and Boyd were both Tulsa Group Inspectors and that approximately 250 Tulsa Group Inspectors work throughout the country. As a result, the Court finds that Wade has provided more than sufficient proof that other aggrieved individuals exist, especially since Wade's burden is so low at this stage. See Heeg, 907 F.Supp.2d at 862.

         2. Whether the Aggrieved Individuals are ...


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