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Dean v. Newsco International Energy Services, USA, Inc.

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

August 6, 2019

DAVID DEAN, et al, Plaintiffs,
v.
NEWSCO INTERNATIONAL ENERGY SERVICES, USA, INC., Defendant.

          ORDER

          ANDREW S. HANEN UNITED STATES DISTRICT JUDGE

         Before the Court are Plaintiffs' Notice of Motion for Partial Summary Judgment [ECF No. 58], their Memorandum in Support [ECF No. 58-1], and Defendant's Response [ECF No. 62]. Also before the Court are Defendant's Motion for Summary Judgment and, in the Alternative, Motion for Partial Summary Judgment [ECF No. 48], Plaintiffs' Memorandum in Opposition [ECF No. 56], and Defendant's Supplement to its Motion for Summary Judgment and Supplement to its Response in Opposition to Plaintiffs' Motion for Partial Summary Judgment [ECF No. 66].

         Having considered the Motions, the responses, the replies, the summary judgment evidence, the applicable law, and the supplemental briefing from the Parties, the Court decides, for the reasons set forth below, that Plaintiffs' Motion for Partial Summary Judgment [ECF No. 58] be DENIED and that Defendant's Motion for Summary Judgment and, in the Alternative, for Partial Summary Judgment [ECF No. 48] be DENIED.

         I. Background Facts

         Plaintiffs David Dean ("Dean"), Bennett Joerger ("Joerger"), and Larry Dore ("Dore") are Directional Drillers that worked for Newsco International Energy Services, USA, Inc. (hereinafter "Newsco" or "Defendant").[1] As such it was their job on various oil well drill sites to perform directional drilling services. Plaintiffs brought this action seeking unpaid overtime under the Fair Labor Standards Act ("FLSA"), claiming they worked 12-hour days for weeks at a time and were not paid overtime wages.

         Defendant concedes that Plaintiffs were not paid overtime and, while it differs with Plaintiffs significantly regarding how frequently Plaintiffs worked overtime, it also concedes that there were occasions when Plaintiffs worked in excess of 40-hour weeks. Defendant claims that Plaintiffs were not entitled to overtime because, among other defenses, they are exempt from the FLSA as highly compensated executive and/or administrative employees. More specifically, Defendant claims the following:

         The undisputed evidence establishes that Plaintiffs were exempt employees who, among other things:

• Made over $ 100, 000 pro rata compensation during each year they worked for Newsco;
• Did not perform any significant manual labor;
• Supervised the work of all field personnel on every single job site;
• Performed primary duties that included performance of office or non-manual work; and
• Performed primary duties that required them to exercise discretion and independent judgment with respect to matters of great significance both to Newsco, and to its clients.

         The undisputed evidence further establishes that, even if Plaintiffs were not exempt employees, their damages, if any, should be calculated using the fluctuating workweek method of calculating damages because:

• Their hours fluctuated from week to week;
• They received a fixed salary that did not vary with the number of hours worked during the week;
• Their fixed salary was sufficient to provide compensation for each week at a regular rate that at least equaled the minimum wage; and
• They had a "clear and mutual understanding" that Newsco would pay the fixed salary regardless of the number of hours worked.

[ECF No. 48, p. 2].

         Plaintiffs counter:

First, Defendant's administrative exemption fails as a matter of law because Defendant cannot prove either one of the "job duties" prongs of the defense. To satisfy the first primary duty prong of the administrative exemption, Defendant must prove that Plaintiffs' directional drilling duties are directly related to running Newsco's business itself or determining its overall policies rather than producing the commodity Newsco provides to the marketplace. Newsco cannot meet its burden of proof, however, because it is in the business of providing directional drilling services, and Plaintiffs are the ones actually performing this service to the marketplace. Plaintiffs are exactly the type of "front-line" employee who is outside the scope of the administrative exemption. Newsco cannot establish the second prong of the administrative exemption defense either because this record establishes that Plaintiffs' primary job duty-while important to Newsco-does not require them to exercise discretion and independent judgment with respect to matters of significance.
Second, Defendant's executive exemption defense fails as a matter of law as well. Despite the well-developed factual record establishing that directional drilling is Plaintiffs' primary job duty, Defendant remarkably contends that Plaintiffs were high-level managers and that their primary job duty is management. This argument is unsupported by the facts. Defendant incorrectly attributes managerial duties to Plaintiffs that the undisputed record confirms they simply did not have. Because of this, Defendant cannot meet its heavy burden of proof on its executive exemption defense.
Defendant also claims the highly-compensated and/or combination exemption applies, but because Defendant cannot prove as a matter of law that Plaintiffs' primary duty of directional drilling and executing the well plan satisfies any of the primary duty requirements of the executive or administrative exemptions, it cannot satisfy the requirements of these exemptions either. 29 C.F.R. § 541.601; 29 C.F.R. §541.708.

[ECF No. 58-1, pp. 1-2] (emphasis in original).

         The Court first presents the relevant facts agreed to by the Parties before turning to their respective factual contentions and the Court's analysis.

         A. Agreed Factual Background: Newsco's Business

         Newsco is a drilling services company that provides directional drilling expertise and services to oil and gas companies. It operates as a third party on drill sites that are owned or operated by its clients. Part of its services to clients includes providing equipment and personnel to perform directional drilling.

         Directional drilling is steering a well bore to drill a well, usually at some kind of non-perpendicular angle. In order to steer the drill toward oil underground, the directional drilling team follows a "well plan," which consists of the location of the target oil reservoir and plans to reach it by drilling. The process involves techniques called "rotating" and "sliding." "Rotating" is drilling while the drill pipe spins. "Sliding" is steering the direction of the drill bit and pipe. As one of the Plaintiffs described it, what the Directional Driller is "doing at the end is making sure that that bit is going . . . [in] the right direction to get you closer to where you need to be." [ECF No. 58-1, Ex. E, Joerger Dep. 112:8-23].

         The process of directional drilling involves two primary types of employees which Newsco provides to its clients at the drilling site: Directional Drillers and Measurement While Drilling ("MWD") operators. Directional Drillers are the employees responsible for steering the drill underground toward the oil and making sure that it is following the well plan. [ECF No. 58-1, Ex. B, Newsco0000243, -286]. MWDs assemble, install, and monitor survey equipment used to generate data, such as well bore direction and angle, which, in turn, is provided to the Directional Drillers to aid them in steering underground. [Id. at -287]. Directional Drillers use the data provided by MWDs to compare the survey data to the client's well plan to determine where the drill is located underground and where it needs to go to reach the target. [Id. at -286].[2]

         B. Background of the Plaintiffs

         As one might gather from the foregoing, the Plaintiffs and the Defendant agree on very little. They both agreed that Plaintiffs, during the time in question, made more than $100, 000 annually (on a pro rata basis), and they both appear to agree that the job of a Directional Driller is not one that should be characterized as manual labor. The majority of the remaining case-controlling facts are disputed. In fact, one wonders how the daily work of directional drilling ever got done given the contrary views that the Parties hold about the duties of a Directional Driller.

         1. Larry Dore

         Plaintiff Dore started working on a drilling rig the day after he graduated from high school in 1974. He worked his way up the drilling rig hierarchy until after five years, he was a drilling operator. In the following years, depending on the shape of the oil industry, he either worked on rigs or in unrelated industries. In 2009, after years of being a drilling operator, he applied with and was hired by Halliburton to be a Directional Driller. He went through its training program which included, among other things, months of "on the job" training.

         Sometime later Dore was recruited by Newsco. He made $100, 00 per year (at least on a pro rata basis) while working for Newsco.

         2. Bennett Joerger

         Bennett Joerger went to the University of Oklahoma from which he graduated in 2010. After his formal education, he was hired by Weatherford as an MWD. He remained there until 2012 when he jumped both companies and job responsibilities to take a job at Archer Drilling Services as a Directional Drilling trainee. As Halliburton did with Dore, Archer prepared Joerger through an in-house training program until he was deemed sufficiently proficient to work on his own. Unfortunately for Joerger, a few months after being trained, Archer went out of business.

         Joerger then returned to Weatherford where after a brief training period he operated as a Directional Driller. Eventually, he was recruited to Newsco by some of his former co-workers. Being sufficiently trained by Archer and Weatherford, he jumped directly into the field as a Directional Driller at Newsco. He, too, made $100, 000 per year on a pro rata basis.

         3. David Dean

         Dean worked in the oil patch for a good part of his life. In 1999, he was a Pump Operator, and three years later he became a hydrostatic tester. He left the oil business for a year or so but returned soon thereafter as a floor hand. He then became an MWD at Scientific Drilling. Thereafter he jumped to Nevis Energy as a Directional Driller trainee. He described this period as almost entirely consisting of on-the-job training.

         He worked as a Directional Driller for five more companies before landing at Newsco. Like Dore and Joerger, he made $100, 000 (on a pro rata basis) annually at Newsco.

         C. Contentions of the Parties

         Simply put, Plaintiffs complain that they worked over 40 hours per week and were not paid overtime. That being the case, Plaintiffs claim Newsco violated the FLSA and is obligated to pay damages to remedy the situation.

         Newsco contends that Plaintiffs were exempt employees and thus, it was not required to pay Plaintiffs overtime. It claims that all three Plaintiffs knew at the time they were hired that they would be making a salary ($4, 000 per month) plus a day rate ($750 for Dean, $600 for Joerger and Dore) regardless of the number of hours they worked. As such, Newsco maintains that the Plaintiffs were highly compensated and were therefore exempt from the overtime protections of the FLSA. Further, Defendant claims that all three Plaintiffs were covered by the administrative, executive, highly compensated, and/or combination exemptions as provided for by the FLSA. If an individual is exempt, his/her employer need not pay that employee overtime.

         II. Legal Standard

         Summary judgment is warranted "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." Fed.R.Civ.P. 56(a). Once a movant submits a properly supported motion, the burden shifts to the nonmovant to show that the court should not grant the motion. Celotex Corp. v. Catrett, 477 U.S. 317, 321-25 (1986). The nonmovant then must provide specific facts showing that there is a genuine dispute. Id. at 324; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). A dispute about a material fact is genuine 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 court must draw all reasonable inferences in the light most favorable to the nonmoving party in deciding a summary judgment motion. Id. at 255. The key question on summary judgment is whether a hypothetical, reasonable factfinder could find in favor of the nonmoving party. Id. at 248.

         "When summary judgment is sought on an affirmative defense, as here, the movant 'must establish beyond peradventure all of the essential elements of the claim or defense to warrant judgment in his favor.'" Dewan v. M-I, L.L.C., 858 F.3d 331, 334 (5th Cir. 2017) (quoting Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986)). "Once the movant does so, the burden shifts to the nonmovant to establish an issue of fact that warrants trial." Smith v. Reg'I Transit Auth., 827 F.3d 412, 420 n.4 (5th Cir. 2016). The burden of proof regarding exempt status is on the employer. Owsley v. San Antonio Indep. Sch. Dist., 187 F.3d 521, 523 (5th Cir. 1999). In a case involving FLSA exemptions, those exemptions must be given a '"fair reading,' as opposed to the narrow interpretation previously espoused by [the Fifth Circuit] and other circuits." Carley v. Crest Pumping Techs., L.L.C., 890 F.3d 575, 579 (5th Cir. 2018) (quoting Encino Motorcars, LLC v. Navarro, __U.S. __, 138 S.Ct. 1134, 1142 (2018); see also Amaya v. NOYPI Movers, L.L.C., 741 Fed.Appx. 203, 204-05 (5th Cir. 2018).[3]

         In considering the evidence presented by the parties, the Fifth Circuit has made clear that "unsubstantiated assertions are not competent summary judgment evidence" and that "[s]ummary judgment. . . may be appropriate, even in cases where elusive concepts such as motive or intent are at issue, ... if the nonmoving party rests merely upon conclusory allegations, improbable inferences, and unsupported speculation." Forsyth v. Barr, ...


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