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Whitlow v. Crescent Consulting, LLC

United States District Court, W.D. Oklahoma

August 14, 2017

TOMMY WHITLOW, on behalf of himself and all other similarly situated individuals, Plaintiff,
v.
CRESCENT CONSULTING, LLC. Defendant.

          ORDER

          DAVID L. RUSSELL, UNITED STATES DISTRICT JUDGE

         Before the Court is Whitlow's Motion for Conditional Certification. [Doc. 30]. The matter is fully briefed. For the reasons set forth herein, Plaintiff's Motion is GRANTED IN PART and DENIED IN PART. The Court will conditionally certify a class consisting of all persons that served as drilling consultants for Crescent Consulting, LLC, and were paid as independent contractors, that were provided a 1099 rather than a W-2, and paid a “day-rate” without overtime at any time since April 29, 2014.[1]

         The Fair Labor Standards Act (“FLSA”) ensures that certain employers pay their employees overtime compensation if earned. See 29 U.S.C. § 207. The Act creates a private right of action for “one or more employees” to bring an action against their employer to recover unpaid wages or overtime compensation on “behalf of himself or themselves and other employees similarly situated.” 29 U.S.C. § 216(b). Unlike a class action under Rule 23, an action on behalf of similarly situated employees under the FLSA is denoted a collective action, and putative plaintiffs must “opt in” rather than “opt out.” See 29 U.S.C. § 216(b)(“No employee shall be a party plaintiff to any such action unless he gives his consent in writing to become a party and such consent is filed in the court in which such action is brought.”) Pursuant to these provisions, Tommy Whitlow challenges the pay he received from Defendant Crescent Consulting LLC.'s in his capacity as a drilling consultant. He seeks to pursue this action on behalf of all “drilling consultants employed by, or working on behalf of, Crescent Consulting, LLC as independent contractors and paid on a day rate any time between three years prior to the date of [any order certifying a collective action] and the present.” [Doc. No. 30, pp. 13-14]. As noted above, § 216(b) permits similarly situated employees to pursue a collective action; however, the term “similarly situated” is not defined by the FLSA. See Thiessen v. Gen. Elec. Capital Corp., 267 F.3d 1095, 1102 (10th Cir. 2001).

         In Thiessen, the Tenth Circuit discussed three approaches to assessing whether putative plaintiffs are similarly situated and therefore certification of a collective action is appropriate: the ad hoc approach, the Rule 23 approach, and the spurious approach. Id. at 1102-03. The court was called upon to consider whether, in the context of an action under the Age Discrimination in Employment Act (“ADEA”), the district court erred in utilizing the ad hoc approach. Under this approach, the district court undertakes a two-step inquiry, the first of which utilizes a lenient standard for assessing whether putative plaintiffs are similarly situated. Step one, known as the notice step, mandates “nothing more than substantial allegations that the putative class members were together the victims of a single decision, policy, or plan.” Id. at 1102 (internal quotation marks omitted). Step one certification is the vehicle by which the Court authorizes the named plaintiff to give notice to the other similarly situated persons, granting them the opportunity to opt in by filing a consent with the Court. Step two, which occurs after discovery, invokes a stricter level of review, the Court considering “(1) disparate factual and employment settings of the individual plaintiffs; (2) the various defenses available to defendant which appear to be individual to each plaintiff; (3) fairness and procedural considerations; and (4) whether plaintiffs made the filings required . . . .” Id. at 1103 (internal quotation marks omitted). The second stage is commonly referred to as the decertification stage. In Thiessen the T enth Circuit approved reliance on the ad hoc approach, although it noted that all three approaches generally call for consideration of “the same or similar factors.” Id. at 1105. Since Thiessen, the undersigned has applied the two-step approach in FLSA actions, despite the fact that Thiessen arose under the ADEA.[2] See Hart v. Sandridge Energy, Inc., Case No. 14-cv-00178-R (Doc. No. 76); Foust v. CPI Security Services Inc., Case No. 16-cv-1447-R (Doc. No. 54); Benson v. Plaster & Wald Consulting Corp., Case. No. 16-cv-801-R (Doc. No. 37). Nothing in Defendant's brief convinces this Court that its prior holdings were inappropriate or that it should deviate from application of the ad hoc approach to certification in this FLSA action.

         As such, at this first step the Court is concerned with whether Mr. Whitlow has made substantial allegations that the drilling consultants were the victims of a single decision, policy or plan. Mr. Whitlow alleges in his November 21, 2016 Complaint that he was employed by Crescent Consulting as an oilfield contractor and/or consultant. [Complaint, ¶ 6]. He contends he and other drilling consultants were improperly classified by Defendant as independent contractors, and paid a day rate^72;that is a set amount of compensation for each day worked irrespective of the number of hours worked^72;without overtime for hours worked in excess of forty in any given workweek. Plaintiff Whitlow contends he worked in excess of forty hours each week while engaged by Crescent Consulting, and that Defendant's failure to compensate him for these hours violated the FLSA. See 29 U.S.C. § 207(a)(1).

         As set forth above, because the Court is at the “notice stage, ” it limits inquiry to whether Mr. Whitlow makes substantial allegations that the putative members of the class were victims of a single policy or plan. Mr. Whitlow alleges and presents evidence that Defendant retained persons it identified as independent contractors to serve as drilling consultants for third parties, such as Sandridge Energy and Chesapeake Energy. These persons were allegedly paid a set day rate, regardless of the number of hours worked in a day, and more importantly, without regard to whether the drilling consultant worked more than forty hours in a given workweek. Plaintiff alleges the putative plaintiffs were subject to a compensation-scheme that violates the FLSA because they are not properly considered exempt from the overtime provisions of the Act, but yet received no overtime pay.[3] Plaintiff also submits affidavits from other drilling consultants that support his contention that they were similarly situated in that they were paid according to the same structure and performed similar duties on well sites. The Court finds that the allegations and evidence submitted are sufficient to establish that the putative plaintiffs are similarly situated so as to permit conditional certification.

         Defendant contends conditional certification is inappropriate in this misclassification case in part because the issue of whether any particular Plaintiff was an employee of Defendant, rather than an independent contractor, will require an individual analysis under the economic realities test. See e.g. Baker v. Flint Engineering and Const. Co., 137 F.3d 1436, 1440 (10th Cir. 1998)(noting that in light of the breadth of the definition of “employ” under the FLSA, that the status of a person under the FLSA is not limited to common law concepts of employees or independent contractors, but rather focuses on the economic realities of the relationship). Adopting district court authority from outside the Tenth Circuit, Defendant argues that the Court should consider the economic realities test in conjunction with evidence it submitted and conclude that the putative plaintiffs are not similarly situated and therefore conditional certification is appropriate.[4]

Courts are split as to whether the economic realities test should be utilized when determining whether to conditionally certify a class in an FLSA action concerning an allegedly wrongful independent contractor designation. . . . Some courts have held that the economic realities inquiry is only appropriate at the decertification stage. . . . Other courts have held that the economic realities test ought to inform the assessment of whether class members are similar enough to warrant conditional certification. . . .

Tamez v. GHP Billiton Petroleum (Americas), Inc., 2015 WL 7075971 (W.D.Tex. Oct. 5, 2015)(collecting cases). The undersigned agrees with those courts that have concluded the economic realities inquiry is appropriate at step two of the ad hoc approach, that is in addressing a motion for decertification. As noted by the court in Carter v. XPO Last Mile, Inc., 2016 WL 5680464 (N.D.Cal. Oct. 3, 2016):

I am also not persuaded by the analyses of courts that reject conditional FLSA certification in independent contractor misclassification cases solely because the independent contractor analysis is fact intensive and because there are alleged differences between class members (e.g., hours worked, investments made). If that were the test, no independent contractor misclassification case could be certified under FLSA. See Demauro v. Limo, Inc., No. 8:10-CV-413-T-33AEP, 2011 WL 9191, at *3 (M.D. Fla. Jan. 3, 2011) (“the individualized analysis needed to determine whether each driver is an independent contractor or employee for FLSA purposes precludes class certification.”); In re FedEx Ground Package Sys., Inc., Employment Practices Litig., 662 F.Supp.2d 1069, 1083 (N.D. Ind. 2009) (denying conditional certification because “the court must take into consideration the actual history of the parties' relationship, necessitating an individualized examination of the multiple factors relating to each drivers' employment.”). Whether there are materially significant differences is best tested at the “second step” of the FLSA certification process. See, e.g., Gilbert v. Citigroup, Inc., C-08-0385 SC, 2009 U.S. Dist. LEXIS 18981, * 10, 2009 WL 424320 (N.D. Cal. Feb. 18, 2009) (“Defendants' concern about individualized inquiries does not require the Court to deny conditional certification....Under the two-stage certification procedure, Defendants can present this evidence and make these arguments as part of a motion to decertify the class once discovery is complete.”).

Id. at *5. The Court finds here that Plaintiff has sufficiently alleged and presented evidence to support his burden at step one. Each of the identified plaintiffs allege payment at a day rate, regardless of the number of hours worked in a week. Each putative plaintiff was engaged by Defendant Crescent Consulting, LLC to serve as drilling consultant and assigned to the jobsite of a Crescent client. The putative plaintiffs describe their job duties similarly. Furthermore, as noted in Tamez, “[w]hereas here, Plaintiffs allege that the compensation scheme is in of itself a violation of the FLSA. No further factual inquiry is necessary. . . . [L]iability can be determined collectively without limiting the class to a specific job position.” 2015 WL 7075971, at * 3. Having rejected Defendant's contention that the Court should delve into the economic realities test at step one, the Court concludes that conditional certification is appropriate with regard to those persons engaged as drilling consultants by Defendant and whose pay is reported via 1099^72; that is the consultant was treated by Defendant as independent contractor. The remaining issues are how broadly defined the conditional class should be and the timing, content, and method of notice to be given to putative plaintiffs.

         With regard to the breadth of the class, Plaintiff Whitlow contends notice should be extended to all drilling consultants engaged by Defendant Crescent Consulting, LLC at its various locations across the United States. Defendant's alternative to challenging conditional certification is to argue that the class should be limited to drilling consultants who worked for Chesapeake, SandRidge, or Samson in Alfalfa, Beckham, Major, Roger Mills, or Woods County, Oklahoma, or in Barber, Clark, Comanche, Finney or Harper County, Kansas. Defendant contends this limitation is appropriate because the Plaintiffs that have thus far opted in worked for Chesapeake, Samson, and Sandridge in those locations during the alleged statutory period. Crescent Consulting contends that “Plaintiffs offer no substantial basis in their brief or their declarations that support the conclusion that drilling consultants who worked for these operators in other locations or for other operators in any locations are similarly situated and, thus, should be included among the putative class.” [Doc. No. 72, p. 21].

         In his Reply in support of certification Plaintiff Whitlow attaches excerpts from the deposition of Colley Andrews, Defendant's corporate representative. Mr. Andrews testified that consultants for Crescent Consulting, LLC do not have the option of being W-2 employees, but rather must agree to be treated as independent contractors. [Doc. No. 74-5, p. 63].[5" name="FN5" id= "FN5">5] Defendant identified one client, BP, Lower 48, that required drilling consultants be employees of the company supplying the workers. As a result those persons were employed by a different entity under the same umbrella of entities. [Id. at 73-74]. Based on the testimony of Mr. Andrews as well as the opt-in of Larry Henry who worked in Ohio and West Virginia, the Court finds that Plaintiff has established that the same independent contractor's policies were utilized company-wide. “[G]eographic commonality is not necessary to satisfy the FLSA collective action's ‘similarly situated' requirement, so long as the employees were impacted by a common policy.” McCloud v. McClinton Energy Grp., L.L.C. 2015 WL 737024, *8 (W.D. Tex. Feb. 20, 2015)(quotation marks omitted quoting Vargas v. Richardson Trident Co., 2010 WL 370155, at *8 (S.D.Tex. Feb. 22, 2010)). Thus, “‘if there is reasonable basis to conclude that the same policy applies to multiple locations of a single company, certification is appropriate.'” Id. (brackets omitted)(quoting Rueda v. Tecon Servs., 2011 WL 2566072, at *4, 2011 U.S. Dist. LEXIS 69356, at *4 (S.D. Tex. 2011)). The Court finds a reasonable basis to conclude a singular policy with regard to drilling consultants and a lack of overtime pay, and accordingly, concurs with Plaintiff's request for conditional certification of drilling consultants working on behalf of Crescent Consulting, LLC as independent contractors.

         Once a collective action is conditionally approved, “the court has managerial responsibility to oversee the joinder of additional parties to assure that the task is accomplished in an efficient and proper way.” Hoffmann-LaRoche v. Sperling, 5');">493 U.S. 165, 170-71, 110 S.Ct. 482 (1989). “The overarching policies of the FLSA's collective suit provisions require that the proposed notice provide accurate and timely notice concerning the pendency of the collective action, so that [putative collective action members] can make informed decisions about whether to participate.” Whitehorn v. Wolfgang's Steakhouse, Inc., 5');">767 F.Supp.2d 445, 450 (S.D.N.Y. 2011) (internal citations and quotations omitted).Defendant makes objections to both the substance of Plaintiff's ...


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