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Hobbs v. EVO Inc.

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

August 28, 2019

JEROD HOBBS, et al, Plaintiffs,
v.
EVO INCORPORATED, et al, Defendants.

          ORDER

          ANDREW S. HANEN, UNITED STATES DISTRICT COURT.

         The Parties and their counsel appeared before this Court for a bench trial for the determination of their claims in the above-styled and numbered case. Each side presented evidence during trial, produced briefing, and made their respective arguments as to the effects of the evidence, and the Court hereby issues its findings of fact and conclusions of law. The Court will first give a brief background and set out the facts to which the Parties have agreed. Next the Court will recount in detail the relevant testimony and other evidence adduced at trial. Finally, the Court sets out its findings of fact and conclusions of law.

         I. Background Facts

         Plaintiffs Jerod Hobbs ("Hobbs"), Ronald Lee ("Lee"), Arlen Jones ("Jones"), and Jordan Arroyo ("Arroyo") were field engineers that worked for E.V. Incorporated (hereinafter "EVO").[1]Plaintiffs filed suit against EVO, Maurice McBride ("McBride"), [2] Francis Neill ("Neill"), and Sam Copeman ("Copeman"). The Plaintiffs brought this action seeking unpaid overtime and liquidated damages under the Fair Labor Standards Act ("FLSA"), claiming they worked more than 8-hour days/40-hour weeks during the course of their employment with EVO and were not paid overtime wages as required by the FLSA.

         Defendants concede that Plaintiffs were not paid overtime, but they differ with Plaintiffs on whether Plaintiffs are owed overtime and differ significantly on the frequency that overtime pay might be due, if indeed any is due. They also concede that there were occasions when the Plaintiffs worked in excess of 40-hour weeks, but they claim that Plaintiffs were not entitled to overtime wages because they are exempt from the requirements of the FLSA under the administrative, highly compensated, and outside sales exemptions.

         A. Agreed Findings of Fact Submitted by the Parties

         i. EVO's Business

         EVO is a company that provides downhole video camera services for the oil and gas industry. (Doc. No. 98 "Joint Pretrial Order" ¶ 6.1). EVO has specialized and proprietary camera technology which allows it to assist its customers in reviewing well conditions, such as to identify, diagnose, or photograph conditions that interrupt operations at a wellsite. EVO is an enterprise in commerce within the meaning of 29 U.S.C. § 203(s)(1) and § 203(r). (Id. ¶ 6.2-6.3). EVO has and had an annual gross volume of sales made or business done of not less than $500, 000. (Id. ¶ 2). EVO is a domestic for-profit corporation incorporated under the laws of the State of Texas with its principal place of business in Harris County, Texas. (Id. ¶ 6.4). The other individual defendants-Copeman and Neill-are citizens of the United Kingdom. (Id. ¶ 6.6-6.8). The Parties agreed that EVO and Neill are employers under the FLSA. (Id. ¶ 6.9-6.10).

         The two individual Defendants were executives at EVO or one of its affiliates. (McBride acted as interim CEO of EVO from June or July 2015 until April 2016).[3] (Id. ¶ 6.11). Copeman served as Director of EVO, Corporate Officer of EVO, and acted as President of EVO. (Id. ¶ 6.12). The time frame in which Copeman held these positions is discussed in more detail below. Since the Parties conceded Neill was an employer as that term is defined in the FLSA and since the Court directed a verdict on that issue in favor of McBride at trial, it will concentrate any discussions of individual liability on Copeman.

         ii. Plaintiffs Employment with EVO

         EVO employed the four Plaintiffs as field engineers. (Id. ¶ 6.18). Hobbs, Lee, Jones, and Arroyo were EVO's employees within the meaning of the FLSA. (Id. ¶ 6.13). The Plaintiffs worked for EVO for the following periods of time:

• Hobbs: September 1, 2011 until August 6, 2018
• Lee: September 4, 2014 until May 4, 2018
• Jones: April 2011 through October 5, 2014
• Arroyo: January 1, 2013 to January 26, 2016

(Id. ¶ 6.14-6.17). As field engineers, the Plaintiffs would travel to customers' wellsite locations where they would obtain downhole video and provide EVO's customers with a thumb drive containing the downhole video, the job log, and individual pictures as requested by the customer that the field engineer collected throughout the job. (Id. ¶ 6.20-6.22). The job logs and summaries were prepared on location by the field engineers, as well as real-time annotations of the downhole video for the customers. (Id. ¶ 6. 33). At the job site, field engineers interfaced with wireline operators, engineers, and company representatives-often called the "company man." (Id. ¶ 6.32).

         During the course of their employment with EVO, the Parties agree that Plaintiffs were typically the sole EVO representative at a customer's site. (Id. ¶ 6.31). As field engineers, the Plaintiffs did not handle employee grievances or complaints (id. ¶ 6.24), did not discipline other employees (id. ¶ 6.25), and did not and could not set or adjust the rate of pay of other employees (id. ¶ 6.23).

         During their employment, the Plaintiffs were located in different states. Hobbs, whose original title was "West Virginia Base Manager," was initially located in West Virginia and then was transferred to Oklahoma as a field engineer. (Id. ¶ 6.26-6.27). Lee was based in Colorado. (Id. ¶ 6.30). Jones was based in Oklahoma. (Id. ¶ 6.28). Arroyo was based in California. (Id. ¶ 6.29).

         As field engineers, Plaintiffs earned a salary of at least $455.00 per week. (Id. ¶ 6.19).

         The agreed recovery period for Hobbs is March 24, 2014 to August 6, 2018. (Id. ¶ 6.36). Hobbs' compensation during those time periods was as follows:

• 2014: $163, 392.01
• 2015: $164, 750.00
• 2016: $110, 576.50
• 2017: $125, 140.33
• 2018: $85, 393.19

(Id. ¶ 6.37). The agreed recovery period for Lee is September 2, 2014 to May 4, 2018. (Id. ¶ 6.38). Lee's compensation during the time period was as follows:

• 2014: $24, 783.25
• 2015: $100, 839.46
• 2016: $72, 541.51
• 2017: $75, 150.80
• 2018: $29, 972.33

(Id. ¶ 6.39). The agreed recovery period for Jones is March 24, 2014 to October 5, 2014. (Id. ¶ 6.42). Jones' compensation during the time period was as follows:

• $122, 932.07

(Id. ¶ 6.43). The agreed recovery period for Arroyo is March 24, 2014 to January 26, 2016. (Id. ¶ 6.40). Arroyo's compensation during the time period was as follows:

• 2014: $58, 752.00
• 2015: $60, 530.88
• 2016: $9, 875.00

(Id. ¶ 6.41). During their employment with EVO, Defendants treated Plaintiffs as exempt employees for overtime purposes. (Id. ¶ 6.44).

         B. The Testimony and Other Evidence Adduced at Trial

         i. General Background Information about EVO

         EVO is a wholly owned subsidiary of E.V. Holdings. (EVO Ex. 93 at 14:17-15:7) ("E.V. Holdings owns ... E.V. Offshore Limited in the U.K. and E.V. Offshore owns E.V., Inc. [EVO].") The related companies in this corporate family include E.V. Holdings, E.V. Finco, and E.V. Offshore, but these entities are not at issue in this case. Although some of the chief executives at issue in this case were on the board of E.V. Holdings, such as Copeman and McBride, in those positions they nonetheless maintained executive responsibilities over EVO.

         This case involves a large number of non-party individuals who are repeatedly mentioned in the testimony and exhibits. Accordingly, the Court will briefly address the names and titles of the most frequently mentioned persons:

• Francis Neill: Former CEO of EVO.
• Maurice McBride: Acted as interim CEO of EVO from June or July 2015 until April 2016.
• Fraser Louden ("Louden"): The replacement CEO of EVO after Neill left.
• Sam Copeman: CFO of EVO.
• Jonathan Thursby ("Thursby"): Developed the downhole video technology and vision for the company. He served on the executive board as Chief Technical Officer ("CTO").
• Troy Sutherlin: VP U.S. Lands of EVO. In this capacity, he directly or indirectly supervised Plaintiffs.
• Arthur White ("White"): Rockies District Manager / Technical Manager. In this capacity, he reported to Sutherlin and supervised Lee. He later replaced Sutherlin in 2016 as the VP U.S. Lands.
• Gregg Linville ("Linville"): California Manager (Consultant). He supervised and trained Arroyo.
• Monica Flores ("Flores"): Another Financial Controller for EVO.

         Additionally, EVO produced an organizational of its company in Plaintiffs' Exhibit 5, which the Court now describes in relevant part. The executive management sector was made up of a first tier-the CEO (Neill, McBride, and later Louden)-then a tier consisting of the CFO (Copeman), Chief Technical Officer (Thursby), VP Marketing, Engineering and Manufacturing Manager, President Americas, Europe/Asia Region Manager, and "MENA" Asia Region Manager. Under President Americas was a third tier, consisting of the "GOM" Manager, VP U.S. Land (Sutherlin), and VP Canada. (Plaintiffs' Ex. 5 at l).[4] Copeman directly supervised three Financial Controllers (Trudi O'Brien, Alan Hardingham, and Monica Flores) and an IT Support Engineer. (Id. at 2).

         Within the North American region, the three regions (GOM, U.S. Land, and Canada) each had similar divisions with slight differences in nomenclature. In particular, the regions had supervisors over the field engineers and a separate sales engineer or sales manager. (Id. at 7-9). The U.S. Land chain of command at one point in time appeared as follows:

         (Image Omitted)

(Id. at 9). As the chart shows, Sutherlin oversaw the entire U.S. region. There were three specifically designated salespersons, one in Houston, one in Dallas, and one in the Rockies District. Several field engineers reported directly to Sutherlin, including Hobbs. Others in the Rockies District, such as Ron Lee, reported to White, who in turn reported to Sutherlin. The California prong consisted only of Arroyo reporting to Linville. (Id.). Jones is not listed in any organizational charts in evidence but was directly supervised by Sutherlin.

         ii. Copeman 's Role as a Purported Employer

         The Court now turns to the relevant factual findings regarding Copeman's role with EVO as it relates to the Plaintiffs. Some of the more relevant evidence includes the following:

• The Parties provided designated excepts from Copeman's deposition in lieu of live testimony. In those designations, Copeman testified to the following facts:
o Copeman held positions as both the director of EV Holdings and as the Chief Financial Officer ("CFO") of E.V. Holdings and CFO of E.V. Finco. (Plaintiffs Ex. 94 at 9:3-15; 7:15-18).
o Copeman's responsibilities as CFO of E.V. Holdings were as follows: "There were several key facets to that job. One was to be a part of the - or to help formulate the business plan for the company and produce annual budgets. Then during the year to then be able to understand and explain variances against that budget in our actual performance, to ensure we had sufficient financing to deliver that business plan, to directly supervise the financial controllers of the business, and that's all I can remember at this point." (Id. at 9:16-25).
o In the capacity of CFO of E.V. Holdings, Copeman worked as the direct supervisor of the financial controller of EVO. (Id. at 11:15-19).
o In 2015, Copeman held the position of president of EVO. During that time, his responsibilities were still of those of CFO of E.V. Holdings, which were to supervise the financial controller of EVO. (Id. at 19:2-12; 15:1-20).
o As the president of EVO, Copeman lacked power to hire or fire employees or to set wages, did not have the responsibility of maintaining employment records or supervising employee schedules, and did not determine rate and method of payment for employees. (Id. at 19:13-21:17; 38:6-25).
o Copeman was not involved in the decision whether to classify field engineers as exempt or non-exempt employees under the FLSA. (Id. at 67:18-21).
• On February 26, 2016, Copeman signed letters to both Hobbs and Lee indicating that due to an economic downturn, their terms of employment and salaries would be changed. The letter indicated that it was an offer to continue employment under the new terms, which would be withdrawn if not accepted within three days. (Plaintiffs Exs. 52, 73).
• The Statement of Employee Particulars, which detailed the terms of employment for Lee, was signed by Copeman in March 2016 on behalf of the company. (Plaintiffs Ex. 53).[5]
• In Defendant's Supplemental Objections and Answers to Plaintiffs' First Set of Interrogatories, EVO was asked to identify "each person involved in job classifications as exempt or non-exempt and/or decisions to pay or not pay overtime wages to these employees." (Plaintiffs' Ex. 3, ROG 1). In response, EVO averred that "Troy Sutherlin made recommendations regarding job classification, compensation, and salaries . . . Sam Copeman participated in some discussions regarding EVO employees' salaries and compensation. Francis Neill approved certain salary and compensation recommendations made by Sutherlin and/or Copeman." (Id.).
• At trial, Louden confirmed his response to a prior interrogatory in which he stated that the decision regarding exempt v. non-exempt determinations was made between McBride and Copeman.
• Neill testified that Copeman was the CFO, in which position he produced letters of employment, put employees on payroll, and maintained employment records.
• Sutherlin testified to the following regarding Copeman:
o Sutherlin testified that he explained to Copeman how the pay schemes had worked at ExPro, his previous employer, but that the structure for pay was already set by the time Sutherlin joined EVO.
o He testified that EVO had an executive compensation committee, consisting of Copeman, Neill, and Thursby, amongst others. He averred that the committee met once annually after conducting appraisals and the committee would adjust rates of pay accordingly.
o He testified that Copeman wrote the employee manual for EVO.
o Sutherlin made recommendations regarding salaries and bonuses to the executive committee, which included Copeman.
o Sutherlin also testified that Copeman was not involved in the day-to-day operations of EVO.
• Plaintiffs were required to fill out self-appraisal forms to evaluate their performance prior to an appraisal meeting, revisions to the appraisal form were reviewed and approved by "SC." (EVO Ex. 51).
• Plaintiffs testified that they did not know Copeman but did receive communications from him during their employment with EVO:
o During the trial, Hobbs testified that he did not interact with Copeman but had a couple of letters signed by him. Hobbs testified that he never met Copeman but when his salary was cut, Copeman was the one who signed the letter as EVO's corporate secretary notifying him of the change.
o Lee testified that he did not know Copeman. He also testified to receiving a letter telling him his pay would be cut from Copeman, but said he had only ever seen the name on EVO organizational charts but did not interact with him. Lee also explained that he had no personal interactions with Copeman and did not know what the extent of Copeman's involvement in his employment conditions were.
o Jones testified that he did not know Copeman. He acknowledged that in his employment agreement, all notices were supposed to be sent to Copeman.
o Arroyo testified that he only knew of Copeman through the documents he had signed relating to Arroyo. He did not recall interacting with Copeman.

         iii. Plaintiff's Employment with EVO

         As the Court already noted, Plaintiffs were employed by EVO as field engineers. Their primary duty in that role is a point of significant contention between the Parties. Plaintiffs were not trained or licensed professional engineers but learned their skills either through on-the-job training or employer-provided training courses. The Court will describe what the evidence submitted to the Court shows about their employment with EVO: their qualifications, job descriptions, and the day-to-day activities of their job.

         a. Initial Hires and Plaintiffs' Employment Backgrounds

         Plaintiffs arrived at EVO at different times and with different professional and educational backgrounds. Hobbs was hired to work at EVO in 2011, and he had previously worked in a similar capacity at ExPro, a competitor of EVO's. Hobbs initially held the title of "West Virginia Regional Manager" when he was first hired at EVO in September 2011. (Plaintiffs' Ex. 71). He testified that he had no particular managerial responsibilities in that position, but rather worked as a field engineer and tried to find new jobs whenever he was not in the field. Hobbs' title was formally changed in 2016 to "Senior Field Engineer," but he testified that he moved to Oklahoma in 2013 and began working only as a field engineer at that time.

         Lee was employed as a field engineer by EVO and was based in Colorado under the direct supervision of White. He testified that in his previous positions, he was "a missile facility specialist" with the United States Air Force.

         Jones was hired in 2011 and had been previously employed by DHV International where he started running similar video equipment back in 1989. His initial employment agreement as of June 2011 shows that he was hired as "Lead Field Engineer." (Plaintiffs Ex. 29).

         Arroyo was also employed as a field engineer by EVO. His immediate supervisor was Greg Linville, the California Regional Manager. As was stated in his job description, which Linville and Arroyo agreed to as of June 11, 2013, Arroyo was a "trainee field engineer" and his purpose of the job was to "operate EV Downhole video equipment, on location, in a professional, competent and safe manner in order to satisfy the clients [sic] requirements." (Plaintiffs' Ex. 14 at 2). His job description listed the following relevant components: "to successfully operate and to have sufficient working knowledge of EV Downhole Video (Electrical) equipment that you are required to use"; "to pack and load out equipment in a correct and efficient manner"; establish good rapport with onsite client engineers"; "assist in the base duties, making reports, packing kits etc. when required"; "to remain alert to onsite opportunities for providing other group services"; and "to be available for work at short notice when required." (Id.).

         Arroyo had approximately one year of "oilfield-related" experience prior to beginning his employment as a field engineer as a chemical inventory employee with GT Analytical. (EVO Ex. 15). Arroyo's resume indicates that before then, he was employed as a pusher/hydro-tester/maintenance employee with Brinderson Construction; maintenance at a different construction company; wait staff at a restaurant; and an after-school program coordinator. His educational background consisted of an Associate Degree in Science from Ventura Community College. (Id.).

         Arroyo testified that his understanding when he was hired to be a field engineer trainee was somewhat different than the other Plaintiffs. He testified that he was hired to assist Greg Linville with a lot of the physical tasks that Linville could not handle since he was a little bit older in age. Arroyo explained that these tasks included carrying the tools, cleaning up the tools, picking up the tools, and the other physical activity involved in the job.

         Only Arroyo had an extended job description included in the record. Arroyo's signed job description included ...


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