Hernandez v. Arc Trading Co.

          MEMORANDUM OPINION AND ORDER

          DAVID L. HORAN UNITED STATES MAGISTRATE JUDGE.

         Defendants ARC Trading Company (“ARC”) and Wenru You a/k/a Ann You (collectively, the “ARC Defendants”) have filed a motion for partial summary judgment. See Dkt. No. 79. Plaintiffs Luis Manuel Hernandez (“Luis”) and Gilberto Hernandez (“Gilberto) have filed a response, see Dkt. No. 88, and the ARC Defendants have filed a reply, see Dkt. No. 91.

         Defendants Harvest Grande International, LLC (“Harvest Grande”) and Yongfeng Li a/k/a Vincent Li (“Li”) (collectively, the “Harvest Grande Defendants”) have filed a motion for summary judgment. See Dkt. No. 82. Plaintiffs have filed a response, see Dkt. No. 86, and the Harvest Grande Defendants have filed a reply, see Dkt. No. 92.

         For the following reasons, the Court GRANTS in part and DENIES in part the ARC Defendants' motion for partial summary judgment and GRANTS in part and DENIES in part the Harvest Grande Defendants' motion for summary judgment.

         Background

         Plaintiffs assert claims for overtime pay violations under the Fair Labor Standards Act (“FLSA”), see 29 U.S.C. §§ 201-219, against the ARC Defendants and for successor liability against the Harvest Grande Defendants.

         Luis worked for ARC as a warehouseman/driver from December 15, 2011 until August 2014 and from December 2014 until July 15, 2017. See Dkt. No. 49 at 3, 6; Dkt. No. 81 at 6-10. He alleges that he worked an average of 67 hours per week, for which he was paid an average straight time rate of $11.75 per hour, but that he was never paid any overtime wages. See Dkt. No. 49 at 6 (Second Amended Complaint); Dkt. No. 81 at 2-5, 11-16.

         Gilberto worked for ARC as a warehouseman from January 2013 until March 2015. See Dkt. No. 49 at 4, 6; Dkt. No. 81 at 20-23. He alleges that he worked an average of 60 hours per week, for which he was paid an average straight time rate of $7.80 per hour, but that he was never paid overtime wages. See Dkt. No. 49 at 6; Dkt. No. 81 at 24-25.

         Luis filed his original complaint on August 3, 2017 seeking overtime wages from the ARC Defendants under the FLSA for himself and all other similarly-situated individuals. See Dkt. No. 1. Gilberto filed his Notice of Filing Opt-In Consent Form on September 29, 2017. See Dkt. No. 8. The Court granted Luis's motion to ratify the opt-in notice on December 22, 2017. See Dkt. No. 29.

         On February 1, 2018, You transferred 100% of the shares of ARC to Harvest Grande. See Dkt. No. 84 at 28-30. The Shareholder Interest Transfer Agreement contains a liability and indemnification clause in which You agrees to be liable for any claims arising prior to the sale. See Dkt. No. 84 at 28-29.

         Plaintiffs amended their complaint to add the Harvest Grande Defendants under the doctrine of successor liability. See Dkt. No. 49.

         The ARC Defendants seek partial summary judgment limiting Plaintiffs' damages to the maximum amount allowed under the FLSA's three-year statute of limitations under a formula based on a monthly average of wages instead of the traditional weekly-average formula.

         The Harvest Grande Defendants seek summary judgment under the liability and indemnification clause of the purchase agreement.

         The Court now determines that the ARC Defendants' motion for partial summary judgment should be granted in part and denied in part and the Harvest Grande Defendants' motion for summary judgment should be granted in part and denied in part.

         Legal Standards

         Under Federal Rule of Civil Procedure 56, summary judgment is proper “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). A factual “issue is material if its resolution could affect the outcome of the action.” Weeks Marine, Inc. v. Fireman's Fund Ins. Co., 340 F.3d 233, 235 (5th Cir. 2003). “A factual dispute is ‘genuine,' if the evidence is such that a reasonable [trier of fact] could return a verdict for the nonmoving party.” Crowe v. Henry, 115 F.3d 294, 296 (5th Cir. 1997).

         If the moving party seeks summary judgment as to his opponent's claims or defenses, “[t]he moving party bears the initial burden of identifying those portions of the pleadings and discovery in the record that it believes demonstrate the absence of a genuine issue of material fact, but is not required to negate elements of the nonmoving party's case.” Lynch Props., Inc. v. Potomac Ins. Co., 140 F.3d 622, 625 (5th Cir. 1998). “Summary judgment must be granted 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 it will bear the burden of proof at trial. If the moving party fails to meet this initial burden, the motion must be denied, regardless of the nonmovant's response.” Pioneer Expl., L.L.C. v. Steadfast Ins. Co., 767 F.3d 503, 511 (5th Cir. 2014) (internal quotation marks and footnote omitted).

         “Once the moving party meets this burden, the nonmoving party must set forth” - and submit evidence of - “specific facts showing a genuine issue for trial and not rest upon the allegations or denials contained in its pleadings.” Lynch Props., 140 F.3d at 625; Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc); accord Pioneer Expl., 767 F.3d at 511 (“[T]he nonmovant cannot rely on the allegations in the pleadings alone” but rather “must go beyond the ...