United States District Court, N.D. Texas, Dallas Division
DALLA DON MALLORY and TY FARRELL, Individually and on Behalf of All Others Similarly Situated, Plaintiffs,
LEASE SUPERVISORS, LLC, Defendant.
MEMORANDUM OPINION AND ORDER
A. FITZWATER SENIOR JUDGE
a collective action seeking unpaid overtime pay pursuant to
the Fair Labor Standards Act of 1938 (“FLSA”), 29
U.S.C. § 201 et seq., brought by plaintiffs Don
Mallory (“Mallory”) and Ty Farrell
(“Farrell”), individually, and on behalf of all
others similarly situated under 29 U.S.C. § 216(b). The
court must decide whether defendant Lease Supervisors, LLC
(“Lease Supervisors”) or plaintiffs Mallory and
Farrell are entitled to summary judgment on the question
whether Mallory and Farrell were employees of Lease
Supervisors. Concluding that genuine issues of material fact
preclude summary judgment, the court denies Lease
Supervisors' motion for summary judgment and denies
Mallory and Farrell's cross-motion for summary judgment.
Supervisors is a closely held limited liability company whose
members manage the day-to-day operations of oil wells and gas
plants owned by O'Ryan Oil & Gas
(“O'Ryan”). Lease Supervisors invoices
O'Ryan for the services its members provide, and
O'Ryan pays Lease Supervisors for its members' work
based on a rate negotiated between Lease Supervisors and
O'Ryan. The revenue generated by the members'
services to O'Ryan is distributed to the members as a
“guaranteed payment.” Ps. Br. 9.
its inception, Lease Supervisors has had 20 members or fewer,
with membership interest equally distributed among its
members. Mallory became a member of Lease Supervisors in
2007, and Farrell became a member in 2009. As members,
Mallory and Farrell owned an interest equal to the interest
owned by all other members and had the right, under the
Regulations of Lease Supervisors, LLC
(“Regulations”), to participate in the management
and control of the company's affairs and
and Farrell, individually, and on behalf of all others
similarly situated under 29 U.S.C. § 216(b), sue Lease
Supervisors to recover unpaid overtime pay under the FLSA.
Supervisors moves for summary judgment, contending that
Mallory and Farrell were not employees of Lease Supervisors
but were, instead, members or partners in business for
themselves. Mallory and Farrell oppose the motion and
cross-move for summary judgment, contending that the court
should conclude as a matter of law that they were employees
of Lease Supervisors.
party moves for summary judgment on claims on which the
opposing parties will bear the burden of proof at trial, the
moving party can meet its summary judgment obligation by
pointing the court to the absence of admissible evidence to
support the nonmovants' claims. See Celotex Corp. v.
Catrett, 477 U.S. 317, 325 (1986). Once the moving party
does so, the nonmovants must go beyond their pleadings and
designate specific facts showing there is a genuine issue for
trial. See Id. at 324; Little v. Liquid Air
Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (per
curiam). An issue is genuine if the evidence is such that a
reasonable jury could return a verdict in the nonmovants'
favor. Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248 (1986). The nonmovants' failure to produce proof
as to any essential element of a claim renders all other
facts immaterial. See TruGreen Landcare, L.L.C. v.
Scott, 512 F.Supp.2d 613, 623 (N.D. Tex. 2007)
(Fitzwater, J.). Summary judgment is mandatory if the
nonmovants fail to meet this burden. Little, 37 F.3d
entitled to summary judgment on a claim or defense on which
the moving parties will bear the burden of proof at trial,
the movants “must establish ‘beyond peradventure
all of the essential elements of the claim or
defense.'” Bank One, Tex., N.A. v. Prudential
Ins. Co. of Am., 878 F.Supp. 943, 962 (N.D. Tex. 1995)
(Fitzwater, J.) (quoting Fontenot v. Upjohn Co., 780
F.2d 1190, 1194 (5th Cir. 1986)). This means that the movants
must demonstrate that there are no genuine and material fact
disputes and that they are entitled to summary judgment as a
matter of law. See Martin v. Alamo Cmty. Coll.
Dist., 353 F.3d 409, 412 (5th Cir. 2003). “The
court has noted that the ‘beyond peradventure'
standard is ‘heavy.'” Carolina Cas. Ins.
Co. v. Sowell, 603 F.Supp.2d 914, 923-24 (N.D. Tex.
2009) (Fitzwater, C.J.) (quoting Cont'l Cas. Co. v.
St. Paul Fire & Marine Ins. Co., 2007 WL 2403656, at
*10 (N.D. Tex. Aug. 23, 2007) (Fitzwater, J.)).
FLSA provides that “no employer shall employ any of his
employees . . . for a workweek longer than forty hours unless
such employee receives compensation for his employment in
excess of the hours above specified at a rate not less than
one and one-half times the regular rate at which he is
employed.” 29 U.S.C. § 207(a)(1). Employee status
is based on the economic realities of the relationship; the
subjective beliefs of the alleged employees or employers are
irrelevant to a worker's status. See Brock v. Mr. W
Fireworks, Inc., 814 F.2d 1042, 1049 (5th Cir. 1987).
“The definition of employee under the FLSA is
particularly broad, ” and the contractual designation
of the worker as an independent contractor is not necessarily
controlling. Hopkins v. Cornerstone Am., 545 F.3d
338, 343, 346 (5th Cir. 2008) (citing Nationwide Mut.
Ins. Co. v. Darden, 503 U.S. 318, 326 (1992) (noting
that the FLSA “stretches the meaning of
‘employee' to cover some parties who might not
qualify as such under a strict application of traditional
agency law principles”)). Instead, to determine whether
a worker qualifies as an employee under the FLSA, this court
focuses on “whether the alleged employee so
economically depends upon the business to which he renders
his services, such that the individual, as a matter of
economic reality, is not in business for himself.”
Thibault v. BellSouth Telecomms., Inc., 612 F.3d
843, 845 (5th Cir. 2010) (citing Carrell v. Sunland
Constr., Inc., 998 F.2d 330, 332 (5th Cir. 1993)).
in this inquiry, the court considers five non-exhaustive
(1) the degree of control exercised by the alleged employer;
(2) the extent of the relative investments of the worker and
the alleged employer; (3) the degree to which the
worker's opportunity for profit or loss is determined by
the alleged employer; (4) the skill and initiative required
in performing the job; and (5) the permanency of the
relationship. No single factor is determinative. Rather, each
factor is a tool used to gauge the economic
dependence of the alleged employee, and each must be
applied with this ultimate concept in mind.
Hopkins, 545 F.3d at 343 (citations omitted). The
ultimate determination of whether an individual is an
employee under the FLSA is a legal, not factual, one.
Brock, 814 F.2d at 1045. But application of the
five-factor test of economic dependence “will require a
factual inquiry and a full record of the applicable
facts.” Gate Guard Servs. L.P. v. Solis, 2011
WL 2784447, at *10 (S.D. Tex. July 12, 2011).
Supervisors relies heavily on the Regulations to argue that
Mallory and Farrell, as members in the company, do not fit
the FLSA definition of an employee. Employee status, however,
is not determined by the parties' agreements, including
the Regulations. “The touchstone for determining
whether an individual is an ‘employee' under the
FLSA is economic dependence.” Floridia v. DLT 3
Girls, Inc., 2013 WL 127448, at *4 (S.D. Tex. Jan. 9,
2013) (noting that “[i]f Defendants are correct that
Plaintiff held a role such that he was essentially a partner
or owner of the company, Plaintiff may not be able to recover
under the FLSA, ” but reciting five-factor economic
realities test and ultimately concluding that fact issue
precluded summary judgment on question whether plaintiff was
an investor/owner in the company). Although the rights of
Mallory and Farrell under the Regulations may be relevant to
the jury's determination of whether they were
economically dependent on Lease Supervisors, see, e.g.,
Godoy v. Restaurant Opportunity Center of New York, 615
F.Supp.2d 186, 195 (S.D.N.Y. 2009) (weighing “economic
realities” of partnership agreement in determining
employee status under FLSA, including plaintiffs'
assumption of risks of loss and liabilities, opportunity to
share in profits upon success, capital contribution in the
form of “sweat equity, ” and right to share in
management of company), they do not alone dictate whether
Mallory and Farrell are employees of Lease Supervisors.