Roeder et al v. Directv, Inc et al

MOTION for Partial Summary Judgment

N.D. IowaAugust 19, 2016

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF IOWA WESTERN DIVISION JEFF ROEDER and CHRISTOPHER GRILL Plaintiffs, vs. DIRECTV, INC., and DIRECTV, LLC, Defendants. No. 14-CV-4091-LTS ORAL ARGUMENT REQUESTED PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT Pursuant to Fed. R. Civ. P. 56, Plaintiffs Jeff Roeder and Christopher Grill respectfully move this Court for an order concluding as a matter of law on the issue of liability; leaving only the extent of liability and DIRECTV’s good faith or willfulness to be determined by a finder of fact. On the undisputed facts set forth in Plaintiffs’ attached Statement and Appendix and as explained in the accompanying Memorandum of Law, Plaintiffs have established the following: Failure to Pay for All Hours Worked or Pay an Overtime Premium Plaintiffs were classified as so-called independent contractors and were not paid an overtime premium for hours worked over 40 in a workweek. Plaintiffs were routinely scheduled for, and did, work more than 40 hours per week during their tenure working as DIRECTV technicians. Plaintiffs were not paid a premium for all hours worked over forty in a week. And Plaintiffs performed myriad tasks that were entirely unpaid under the piece rate compensation system under which Plaintiffs were paid. DIRECTV, for its part, disavows any knowledge of how Plaintiffs were paid and, as a result, cannot dispute the testimony Case 5:14-cv-04091-LTS Document 67 Filed 08/19/16 Page 1 of 3 2 provided by Plaintiffs and the subcontractors through which they worked. Accordingly, if the Fair Labor Standards Act (FLSA) applies to the relationship between Plaintiffs and DIRECTV, then liability under that Act has been established on undisputed evidence and as a matter of law. See 29 U.S.C. § 201 et seq.; 29 C.F.R. § 778.111; 29 C.F.R. § 778.318(a). DIRECTV was an Employer of Plaintiffs Under the FLSA The FLSA applies to any company “acting directly or indirectly in the interest of an employer in relation to an employee.” 29 U.S.C. § 203(d). DIRECTV acted in the interest of the employer of Plaintiffs, both directly and indirectly. The test of whether an employment relationship exists between the parties is evaluated by looking to the “economic reality” of the arrangement. See United States v. Silk, 331 U.S. 704, 716 (1947). If workers are economically dependent on a company, rather than free to independently ply their wares, then the nature of the relationship is that of an employer and employee. See Tobin v. Anthony- Williams Mfg. Co., 196 F.2d 547 (8th Cir. 1952). Courts look to a variety of factors to evaluate the economic realities of a particular relationship, but under any relevant factor, Plaintiffs have established that—despite the label placed on them—they were the employees of DIRECTV within the meaning of the FLSA. Plaintiffs are therefore entitled to summary judgment on the question of whether they were covered under the Act. DIRECTV Cannot Meet the Requirements of the Retail Commission Exemption DIRECTV has asserted, as an affirmative defense, that Plaintiffs fall within an exemption to the FLSA reserved for retail commission employees. See 29 U.S.C. § 207(i). To meet its burden on this affirmative defense, DIRECTV must prove that it comes plainly and unmistakably within the exemption’s terms and spirit. Spinden v. GS Roofing Prods. Co., Inc., 94 F.3d 421, 426 (8th Cir. 1996). DIRECTV cannot carry that burden because it cannot demonstrate, as it must, that Plaintiffs worked in retail establishments. Plaintiffs worked out of warehouses where no sales were made, no payments were collected, and no customers were welcome. As a result, on the basis of those facts alone, Plaintiffs are not exempt under Case 5:14-cv-04091-LTS Document 67 Filed 08/19/16 Page 2 of 3 3 29 U.S.C. § 207(i). See A.H. Phillips, Inc. v. Walling, 324 U.S. 490 (1945). Accordingly, the Court should grant Plaintiffs’ motion for summary judgment on that defense. WHEREFORE Plaintiffs ask this Court to grant their motion for partial summary judgment and provide such other and further relief as the Court deems appropriate under the circumstances. Dated: August 19, 2016 LEAR WERTS LLP By: /s/ Todd C. Werts ______________ Todd C. Werts, Pro Hac Vice Bradford Lear, Pro Hac Vice 2003 W. Broadway, Ste. 107 Columbia, Missouri 65203 Telephone: 573-875-1991 Facsimile: 573-875-1985 Email: werts@learwerts.com Email: lear@learwerts.com STUEVE SIEGEL HANSON LLP George A. Hanson, Pro Hac Vice MO Bar No. 43450 460 Nichols Road, Suite 200 Kansas City, Missouri 64112 Telephone: 816-714-7100 Facsimile: 816-714-7101 Email: hanson@stuevesiegel.com ATTORNEYS FOR PLAINTIFFS CERTIFICATE OF SERVICE The undersigned hereby certifies that the foregoing was filed with the Court’s CM/ECF system on August 19, 2016 and that system provides notice to all parties requesting it. /s/ Todd C. Werts Attorney for Plaintiffs Case 5:14-cv-04091-LTS Document 67 Filed 08/19/16 Page 3 of 3 i IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF IOWA WESTERN DIVISION JEFF ROEDER and CHRISTOPHER GRILL Plaintiffs, vs. DIRECTV, INC., and DIRECTV, LLC, Defendants. No. 14-CV-4091-LTS ORAL ARGUMENT REQUESTED PLAINTIFFS’ MEMORANDUM IN SUPPORT OF MOTION FOR PARTIAL SUMMARY JUDGMENT STUEVE SIEGEL HANSON LLP George A. Hanson, Pro Hac Vice 460 Nichols Road, Suite 200 Kansas City, Missouri 64112 Telephone: 816-714-7100 Facsimile: 816-714-7101 Email: hanson@stuevesiegel.com LEAR WERTS LLP Bradford Lear, Pro Hac Vice Todd C. Werts, Pro Hac Vice 2003 W. Broadway, Ste. 107 Columbia, Missouri 65203 Telephone: 573-875-1991 Facsimile: 573-875-1985 Email: lear@learwerts.com Email: werts@learwerts.com Case 5:14-cv-04091-LTS Document 67-1 Filed 08/19/16 Page 1 of 27 ii TABLE OF CONTENTS INTRODUCTION ..................................................................................................................................................... 1 ARGUMENT ............................................................................................................................................................. 2 I. The summary judgment standard .................................................................................................... 2 II. Plaintiffs were not paid for all work and were not paid any overtime premium .......... 3 III. Undisputed facts establish the economic reality: DIRECTV is Plaintiffs’ “employer” under the FLSA ................................................................................................................ 3 A. The Supreme Court’s “Economic Realities” Test ............................................................... 4 B. Applying the economic realities test to the undisputed facts here ............................ 5 1. DIRECTV had the right to control the manner of Plaintiffs’ work .................. 6 2. Plaintiffs exercised no managerial skill that would translate to a meaningful opportunity for profit or loss ................................................................ 7 3. Although Plaintiffs invested in tools and supplies, they did not own the systems they installed and were required to use only those tools and supplies specifically approved by DIRECTV ................. 7 4. Plaintiffs’ work did not require a special skill; just compliance with DIRECTV’s exacting performance requirements .................................................. 8 5. Plaintiffs had a consistent work relationship with DIRECTV ........................... 9 6. Plaintiffs were an integral part of DIRECTV’s business...................................... 9 Case 5:14-cv-04091-LTS Document 67-1 Filed 08/19/16 Page 2 of 27 iii C. Application of other relevant factors confirm the existence of an employment relationship .........................................................................................................10 1. DIRECTV employed acknowledged W-2 workers to perform the same work as Plaintiffs .............................................................................................................10 2. DIRECTV set and enforced prerequisites for hiring and DIRECTV had authority to terminate Plaintiffs’ employment ...........................................11 3. DIRECTV had authority to, and did, promulgate work rules and schedule work assignments; DIRECTV set conditions of employment; and DIRECTV set the method of compensation ...................................................12 4. DIRECTV was heavily involved in the day-to-day supervision of Plaintiffs, including disciplinary decisions ............................................................15 5. To the extent personnel records were kept, they were primarily maintained by DIRECTV ...............................................................................................16 D. On balance, the economic reality factors, taken together, point to the existence of an employment relationship...................................................................17 IV. Plaintiffs are not covered by the § 207(i) commissioned employee exemption because DIRECTV is not a retail establishment ........................................................................17 A. The burden is on Defendants to demonstrate that employees come plainly and unmistakably within the retail commission exemption ......................................18 B. DIRECTV cannot establish that Plaintiffs worked in retail establishments ..........19 CONCLUSION ........................................................................................................................................................20 Case 5:14-cv-04091-LTS Document 67-1 Filed 08/19/16 Page 3 of 27 iv TABLE OF AUTHORITIES UNITED STATES SUPREME COURT CASES A.H. Phillips, Inc. v. Walling, 324 U.S. 490 (1945) ....................................................................................19 Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) ............................................................................... 2 Arnold v. Ben Kanowsky, Inc., 361 U.S. 388 (1960) .................................................................................18 Barrentine v. Arkansas–Best Freight Sys., Inc., 450 U.S. 728 (1981) ................................................18 Bartels v. Birmingham, 332 U.S. 126 (1947) ............................................................................................... 5 Goldberg v. Whitaker House Co-op., Inc., 366 U.S. 28 (1961) ................................................................ 1 Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318 (1992)........................................................................ 3 NLRB v. Hearst Publ’ns, 322 U.S. 111 (1944) .............................................................................................. 4 Rutherford Food Corp. v. McComb, 331 U.S. 722 (1947) .................................................... 1, 4, 5, 7, 17 Tony & Susan Alamo Found. v. Sec’y of Labor, 471 U.S. 290 (1985) ...............................................1, 9 United States v. Rosenwasser, 323 U.S. 360 (1945) .................................................................................. 3 United States v. Silk, 331 U.S. 704 (1947) ..................................................................................................... 4 EIGHTH CIRCUIT COURT OF APPEALS CASES Ash v. Anderson Merchandisers, LLC, 799 F.3d 957 (8th Cir. 2015) ................................................... 1 Blair v. Wills, 420 F.3d 823 (8th Cir. 2005) ................................................................................................. 5 Gilreath v. Daniel Funeral Home, 421 F.2d 504 (8th Cir. 1970) ........................................................19 Hertz v. Woodbury Cnty., Iowa, 566 F.3d 775 (8th Cir. 2009) ............................................................18 Hodgson v. Taylor, 439 F.2d 288 (8th Cir. 1971) ....................................................................................10 Jarrett v. ERC Props., Inc., 211 F.3d 1078 (8th Cir. 2000) ....................................................................18 Lucas v. Jerusalem Cafe, LLC, 721 F.3d 927 (8th Cir. 2013) .................................................................. 4 Marshall v. Truman Arnold Distrib. Co., 640 F.2d 906 (8th Cir. 1981) ....................................... 7, 12 Mitchell v. Birkett, 286 F.2d 474 (8th Cir. 1961) .....................................................................................19 Price v. N. States Power Co., 664 F.3d 1186 (8th Cir. 2011) ................................................................19 Case 5:14-cv-04091-LTS Document 67-1 Filed 08/19/16 Page 4 of 27 v Reich v. Delcorp, Inc., 3 F.3d 1181 (8th Cir. 1993) ..................................................................................18 Tobin v. Anthony-Williams Mfg. Co., 196 F.2d 547 (8th Cir. 1952) ......................................... 5, 6, 10 Spinden v. GS Roofing Prods. Co., Inc., 94 F.3d 421 (8th Cir. 1996) ...................................................18 OTHER COURT OF APPEALS CASES Barfield v. New York City Health and Hosps. Corp., 537 F.3d 132 (2nd Cir. 2008) ......................13 Bonnette v. California Health & Welfare Agency, 704 F.2d 1465 (9th Cir. 1983) ................ 13, 16 Donovan v. DialAmerica Mktg., Inc., 757 F.2d 1376 (3d Cir. 1985) .................................................... 9 In re Enterprise Rent–A–Car, 683 F.3d 462 (3d Cir. 2012) ............................................ 11, 13, 15, 17 Martin v. Selker Bros., 949 F.2d 1286 (3rd Cir. 1991) ................................................................. 7, 9, 16 Robicheaux v. Radcliff Material, Inc., 697 F.2d 662 (5th Cir. 1983) ................................................... 8 Safarian v. Am. DG Energy Inc., 622 F. App'x 149 (3d Cir. 2015). ....................................................... 9 Scantland v. Jeffry Knight, Inc., 721 F.3d 1308 (11th Cir. 2013) .......................................................... 9 Torres-Lopez v. May, 111 F.3d 633 (9th Cir. 1997) ..................................................... 8, 12, 13, 15, 16 Zheng v. Liberty Apparel Co. Inc., 355 F.3d 61 (2d Cir. 2003) .............................................................17 DISTRICT COURT CASES Childress v. Ozark Delivery of Mo. L.L.C., 95 F. Supp. 3d 1130 (W.D. Mo. 2015) ............................. 4 Ely v. Dolgencorp, LLC, 827 F. Supp. 2d 872 (E.D. Ark. 2011) ............................................................18 In re McAtee, 126 B.R. 568 (N.D. Iowa 1991) ............................................................................................. 8 Mitchell v. Am. Republic Ins. Co., 151 F. Supp. 529 (S.D. Iowa 1957) ................................................. 7 Perez v. DIRECTV, 2015 WL 3451268 (W.D. Wash. May 29, 2015) ....................................... passim Solis v. Hill Country Farms, Inc., 808 F. Supp. 2d 1105 (S.D. Iowa 2011) .....................................2, 5 Solis v. A-1 Mortg. Corp., 934 F. Supp. 2d 778 (W.D. Pa. 2013) ........................................... 12, 14, 16 Wessling v. Carroll Gas Co., 266 F. Supp. 795 (N.D. Iowa 1967) ........................................................20 Yu G. Ke v. Saigon Grill, Inc., 595 F. Supp. 2d 240 (S.D.N.Y. 2008) .....................................................14 Case 5:14-cv-04091-LTS Document 67-1 Filed 08/19/16 Page 5 of 27 vi STATUTES 29 U.S.C. § 203 ..................................................................................................................................... 1, 3, 17, 19 29 U.S.C. § 207 .............................................................................................................................. 2, 3, 17, 18, 19 REGULATIONS 29 C.F.R. § 516.2...................................................................................................................................................18 29 C.F.R. § 516.16 ................................................................................................................................................18 29 C.F.R. § 778.111 ............................................................................................................................................... 3 29 C.F.R. § 778.318 ............................................................................................................................................... 3 29 C.F.R. §§ 779.303 ..........................................................................................................................................20 29 C.F.R. §§ 779.310 ..........................................................................................................................................20 Case 5:14-cv-04091-LTS Document 67-1 Filed 08/19/16 Page 6 of 27 1 INTRODUCTION Plaintiffs bring this motion for partial summary judgment to resolve the issues that can be decided on undisputed facts and clear the path for the jury to focus on only those matters genuinely in dispute. Namely, there is no dispute that Plaintiffs were denied overtime premium pay and were not paid for all their work. And there is no dispute that Defendant DIRECTV did nothing to ensure that Plaintiffs were paid in accordance with the requirements of the Fair Labor Standards Act (“FLSA”). DIRECTV claims that Plaintiffs are not entitled to those statutory protections by virtue of their “independent contractor” title, it is the economic reality of the relationship—rather than the label applied to it—that is the test of employment. See Ash v. Anderson Merchandisers, LLC, 799 F.3d 957, 961 (8th Cir. 2015) (noting that “the test of employment under the FLSA is one of economic reality”) (internal quotations and citations omitted). “Where the work done, in its essence, follows the usual path of an employee, putting on an ‘independent contractor’ label does not take the worker from the protection of the Act.” Rutherford Food Corp. v. McComb, 331 U.S. 722, 729 (1947) As show below, Plaintiffs have compiled a significant record of undisputed facts that, when taken together, establish that the “real economic relationship” between DIRECTV on the one hand and each Plaintiff on the other is an employer-employee relationship, as defined by the FLSA. See Tony & Susan Alamo Found. v. Sec’y of Labor, 471 U.S. 290, 301 (1985) (quoting Goldberg v. Whitaker House Co-op., Inc., 366 U.S. 28, 33, for the proposition that employment status is defined by “the real economic relationship” between the employers and the employees). Because DIRECTV exercises significant control over the essential conditions of Plaintiffs’ employment, DIRECTV “suffer[s] or permit[s]” Plaintiffs to work, 29 U.S.C. § 203(g), and no reasonable jury could conclude otherwise. In a related vein, based on the undisputed facts in the record, no reasonable jury could conclude that DIRECTV can demonstrate that Plaintiffs are exempt from coverage of the FLSA as commissioned employees working in retail establishments. Setting aside the fact Case 5:14-cv-04091-LTS Document 67-1 Filed 08/19/16 Page 7 of 27 2 that Plaintiffs were paid piece rate—not commission—there is no dispute that Plaintiffs worked through establishments that were costs centers to DIRECTV; were not open to visits from DIRECTV’s customers; and were not even set up to receive payments of any kind. Hence, as explained below, Plaintiffs did not work in retail establishments and are, therefore, not covered by DIRECTV’s claimed exemption under 29 U.S.C. § 207(i). Thus, to streamline the issues that will remain for trial, Plaintiffs respectfully move this Court to conclude as a matter of law that DIRECTV employed Plaintiffs and has thus failed in its obligation to ensure that Plaintiffs were paid overtime and for all the work they performed. Plaintiffs also move this Court to conclude that DIRECTV’s affirmative defense under the § 207(i) retail commission exemption fails as a matter of law. After those rulings, the jury would then decide at trial the extent of Plaintiffs’ unpaid work and whether DIRECTV acted in good faith or, instead, that it willfully violated the FLSA. ARGUMENT I. The summary judgment standard Under the familiar language of Rule 56, summary judgment is appropriate “if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). A fact is “material” if proof of its existence or non- existence might affect the outcome of the litigation, and a dispute 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). In deciding whether to grant summary judgment, “the district court should not weigh the evidence, make credibility determinations, or attempt to determine the truth of the matter.” Solis v. Hill Country Farms, Inc., 808 F. Supp. 2d 1105, 1108 (S.D. Iowa. 2011), citing Liberty Lobby, 477 U.S. at 249. “Instead, the court’s function is to determine whether a reasonable jury could return a verdict for the nonmoving party based on the evidence.” Id. Case 5:14-cv-04091-LTS Document 67-1 Filed 08/19/16 Page 8 of 27 3 II. Plaintiffs were not paid for all work and were not paid any overtime premium. The FLSA provides, among other things, that employers pay a premium for hours worked over forty in a week “not less than one and one-half times the regular rate at which he is employed.” 29 U.S.C. § 207(a)(1). The FLSA also provides that an employer may pay on a piece-rate basis, so long as the employer pays for all hours worked, including non- productive hours, and pays a premium for hours worked over forty in a week, based on the employee’s regular rate. See 29 C.F.R. § 778.111; 29 C.F.R. § 778.318(a). Both Plaintiffs were paid a set amount for each closed line item that they completed on their DIRECTV work orders. SOF ¶ 14. But they were not paid for a number of other tasks they were required to perform as technicians, but that were not assigned a piece rate. SOF ¶ 16. In addition, Plaintiffs were not paid an overtime premium for work performed beyond 40 hours in a week. SOF ¶ 17. Because DIRECTV treated Plaintiffs as “independent contractors,” it did not track Plaintiffs’ hours such that it could ensure that Plaintiffs were paid in accord with the requirements of the FLSA. SOF ¶ 15. Indeed, because Plaintiffs were not paid any overtime at all and were not paid for all work, DIRECTV’s liability under the FLSA is a foregone conclusion if the Act applies, that is, if DIRECTV is an “employer” of Plaintiffs and if DIRECTV’s exemption defense fails. So it is on these critical inquiries that we must focus our attention. III. Undisputed facts establish the economic reality: DIRECTV is Plaintiffs’ “employer” under the FLSA. Under the FLSA, an “employer” includes “any person acting directly or indirectly in the interest of an employer in relation to an employee.” 29 U.S.C. § 203(d) (emphasis added). To “employ” is “to suffer or permit to work.” 29 U.S.C. § 203(g). This is “the broadest definition [of ‘employ’] that has ever been included in any one act.” United States v. Rosenwasser, 323 U.S. 360, 363 n.3 (1945); see also Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 326 (1992) (noting that the FLSA defines the employment relationship “expansively” and with “striking breadth”). Accordingly, the FLSA “stretches the meaning of ‘employee’ to cover some parties who might not qualify as such under a strict application of Case 5:14-cv-04091-LTS Document 67-1 Filed 08/19/16 Page 9 of 27 4 traditional agency law principles.” Childress v. Ozark Delivery of Missouri L.L.C., 95 F. Supp. 3d 1130, 1139 (W.D. Mo. 2015); see also Lucas v. Jerusalem Cafe, LLC, 721 F.3d 927, 934 (8th Cir. 2013) (discussing breadth of the FLSA’s definition of “employee”). A. The Supreme Court’s “Economic Realities” Test A series of seminal Supreme Court decisions on the FLSA established that the economic realities determine whether an employer-employee relationship exists, with the focus being on the workers’ dependence on the business to which they render service. In NLRB v. Hearst Publications, the Supreme Court found that employee status should be determined by “the economic facts of the relation.” 322 U.S. 111, 128 (1944). Three years later in United States v. Silk, the Court identified several factors that define an employment relationship, including “degrees of control, opportunities for profit or loss, investment in facilities, permanency of relation and skill required in the claimed independent operation,” and to what extent the workers “depend upon their own initiative, judgment and energy for a large part of their success.” 331 U.S. 704, 716 (1947). In Silk, the Court did not announce a bright-line test for establishing an employment relationship, rather it listed a series of relevant facts and noted that “[n]o [factor] is controlling nor is the list complete.” Id. In Rutherford Food Corp. v. McComb, decided the same day as Silk, the Supreme Court addressed whether a slaughterhouse employed workers in a joint employer context under the FLSA. 331 U.S. 722 (1947). There, a slaughterhouse contracted with an individual to de- bone beef. That contract called for the individual to hire workers as his “employees,” and paid him a flat amount per hundredweight for the beef his employees de-boned. Id. at 724- 25. In addition to hiring, the individual would have “complete control” over his employees who did the de-boning. Id. Regardless, the Court held that the de-boners were employees of the slaughterhouse, not just the individual who hired them, because the work involved was completed under the watchful eye of the slaughterhouse and did not require the workers to exercise their own discretion as typifies a true independent contractor: Case 5:14-cv-04091-LTS Document 67-1 Filed 08/19/16 Page 10 of 27 5 The managing official of the plant kept close touch on the operation. While profits to the boners depended upon the efficiency of their work, it was more like piecework than an enterprise that actually depended for success upon the initiative, judgment and foresight of the typical independent contractor. Id. at 730. Even though another individual hired and had “complete control” over the workers per the contract, because the slaughterhouse exercised its own significant control over the workers at issues, it was an “employer” under the FLSA. Id. at 725. The Court put a finer point on the issue in Bartels v. Birmingham, noting that, under legislation such as the FLSA, “employees are those who as a matter of economic reality are dependent upon the business to which they render service.” Bartels v. Birmingham, 332 U.S. 126, 130 (1947). B. Applying the economic realities test to the undisputed facts here. Following the Supreme Court’s guidance, the Eighth Circuit has not specifically adopted a rigid set of factors for use in evaluating the economic reality of an alleged employment relationship under the FLSA, but has recognized that the economic reality is the critical inquiry. See Blair v. Wills, 420 F.3d 823, 829 (8th Cir. 2005) (“In determining whether an entity functions as an individual's employer, courts generally look to the economic reality of the arrangement.”); Tobin v. Anthony-Williams Mfg. Co., 196 F.2d 547 (8th Cir. 1952) (affirming district court’s application of six-factor test from Silk, concluding workers were employees rather than independent contractors). Because the determination of whether a party is an employer is a question of law, this Court must determine whether the only reasonable conclusion that can be drawn from this undisputed evidence is that DIRECTV employs Plaintiffs. See Hill Country Farms, 808 F. Supp. 2d 1105, 1113 (S.D. Iowa 2011), aff'd, 469 F. App'x 498 (8th Cir. 2012) (“Under the FLSA, the determination of whether a party is an employer is a question of law for the court.”). In addressing the question, this Court is not in uncharted territory: another federal court has recently grappled with and resolved the very issue presented here on an analogous—albeit slimmer—factual record, concluding that DIRECTV’s relationship with Case 5:14-cv-04091-LTS Document 67-1 Filed 08/19/16 Page 11 of 27 6 the technicians of its contractual partners is one of an employer. See Perez v. DIRECTV, 2015 WL 3451268, *18 (W.D. Wash. May 29, 2015) (considering four factors and other relevant facts, granting DOL’s motion for summary judgment on joint employment). This Court’s analysis under the Silk economic realities factors—indeed under any application of the economic reality—should similarly conclude that DIRECTV’s relationship to the Plaintiff technicians is one of an employer. As noted earlier, in Silk the Court found the following factors to be relevant considerations in determining employee status: (1) the degree of the alleged employer's right to control the manner in which the work is to be performed; (2) the alleged employee's opportunity for profit or loss depending upon his managerial skill; (3) the alleged employee's investment in equipment or materials required for his task, or his employment of helpers; (4) whether the service rendered requires a special skill; and (5) the degree of permanence of the working relationship. See Silk, 331 U.S. at 716. Most courts use these or similar factors, with several adding: (6) whether the service rendered is an integral part of the alleged employer’s business. See Tobin v. Anthony-Williams Mfg. Co., 196 F.2d 547, 549-50 (8th Cir. 1952) (affirming district court’s application of Silk factors, concluding wood haulers were employees rather than independent contractors, particularly where admitted employees performed identical work). Consideration of evidence in light of these factors leads to only one reasonable conclusion: DIRECTV is Plaintiffs’ employer under the FLSA. 1. DIRECTV had the right to control the manner of Plaintiffs’ work. Plaintiffs have offered substantial, undisputed evidence of the significant control exercised by DIRECTV over the manner in which their work is performed. DIRECTV’s mandatory rules and instructions leave effectively no room for independent judgment. SOF ¶¶ 28-31. This factor weighs decidedly in favor of concluding Plaintiffs are employees. Compare Tobin, 196 F.2d at 549-50 (“Applying that general test, we think that the haulers and woods workers in this case must be held to be employees. Defendant, in effect, Case 5:14-cv-04091-LTS Document 67-1 Filed 08/19/16 Page 12 of 27 7 controls their activities. They are directed where and what to cut. . . . The haulers and woods workers here are such an integrated part of defendant's production set-up that it would take a much clearer showing than anything indicated by the testimony in this case to remove these [ ] workers from the category of employees.”). When a worker is not “permitted to exercise independent judgment or discretion” because “[s]uch matters were controlled entirely by the instructions” handed down by an overseer, those workers “followed the ‘path’ of employees and not that of independent contractors.” Mitchell v. Am. Republic Ins. Co., 151 F. Supp. 529, 531 (S.D. Iowa 1957), quoting Rutherford Food Corp., 331 U.S. at 729. 2. Plaintiffs exercised no managerial skill that would translate to a meaningful opportunity for profit or loss. Like other workers that are considered to be employees, Plaintiffs exercised no managerial skill that would translate into an opportunity for profit or loss. The managerial skill exercised over the Plaintiffs’ work was the province of DIRECTV, which carefully tracked and managed nearly every aspect of the work performed by Plaintiffs. SOF ¶¶ 44-53, 57-66. Plaintiffs did not set the profit margins for their work and, in fact, were compelled to complete tasks for which they were not paid at all. SOF ¶¶ 13-14, 16. When “[t]he risk of profit or loss, as well as managerial discretion, remained in the control of the company[, t]he District Court [will] not err in finding an employer-employee relationship.” Marshall v. Truman Arnold Distrib. Co., 640 F.2d 906, 909 (8th Cir. 1981). 3. Although Plaintiffs invested in tools and supplies, they did not own the systems they installed and were required to use only those tools and supplies specifically approved by DIRECTV. While Plaintiffs were required to purchase particular tools and supplies necessary to complete their work, DIRECTV owned the systems Plaintiffs were installing and Plaintiffs were required to use only those tools and supplies specifically approved by DIRECTV. SOF ¶¶ 6, 31. Courts considering similar facts have found that mixed evidence of this type renders this factor neutral and insufficient to support independent contractor status. Compare Martin v. Selker Bros., 949 F.2d 1286, 1294 (3rd Cir. 1991) (finding an employment Case 5:14-cv-04091-LTS Document 67-1 Filed 08/19/16 Page 13 of 27 8 relationship although defendant required “independent contractor” station operators to obtain an inventory of supplies and equipment, operators had no capital investment in the defendant’s gasoline they sold; defendant had complete investment); see also Robicheaux v. Radcliff Material, Inc., 697 F.2d 662, 667 (5th Cir. 1983) (holding that workers were employees because “the fact that [workers] provided their own insurance coverage, listed themselves as self-employed on their tax returns, and had their own business cards and letterheads, does not tip the balance in favor of independent contractor status where, as here, the economic realities of the situation indicate that the employee depended upon the employer for his livelihood”). 4. Plaintiffs’ work did not require a special skill; just compliance with DIRECTV’s exacting performance requirements. Plaintiffs were not engaged to exercise independent judgment in fulfilling DIRECTV work orders; they were required to follow DIRECTV’s exacting specifications and evaluated on how well they met that charge. SOF ¶¶ 28-31, 44-53. “[A] special skill pertains to services which are outside the ordinary course of the [alleged employer’s] business or beyond the training capabilities of the employer.” In re McAtee, 126 B.R. 568, 572 (N.D. Iowa 1991) (applying the Silk factors in the context of determining employment tax liability and finding that purported independent contractors were, as a matter of law, employees of the debtor company). Here, the work performed by Plaintiffs was squarely in the ordinary course of DIRECTV’s business. SOF ¶ 2. And the skills necessary to perform that work were not beyond DIRECTV’s training capabilities, to the contrary, DIRECTV created and distributed ongoing training related to Plaintiffs’ work. SOF ¶¶ 32-33. Indeed, on the same facts, the Perez court found “the work to be skillfully performed by well-trained Installers, but piece-work requiring no initiative, judgment or foresight for its success, nonetheless.” Perez, 2015 WL 3451268 at *15; citing Torres-Lopez v. May, 111 F.3d 633, 644 (9th Cir. 1997). Because Plaintiffs were not engaged to bring their own unique skills to the job, but rather expected to perform their work in a manner that was dictated Case 5:14-cv-04091-LTS Document 67-1 Filed 08/19/16 Page 14 of 27 9 by—and fungible to—DIRECTV, this factor weighs in favor of finding that DIRECTV employed Plaintiffs. 5. Plaintiffs had a consistent work relationship with DIRECTV. Plaintiffs’ work installing DIRECTV spanned the course of months for Plaintiff Grill and for nearly two years for Plaintiff Roeder. SOF ¶¶ 8, 11. This degree of permanence is indicative of an employment relationship. See Donovan v. DialAmerica Mktg., Inc., 757 F.2d 1376, 1385 (3d Cir. 1985) (where workers “did not transfer their services from place to place, as do independent contractors” but instead “worked continuously for the defendant, and many did so for long periods of time . . . the permanence-of-working-relationship factor indicates that the [workers] were ‘employees’ of the defendant.”). As stated by the Eleventh Circuit, “long tenure, along with control, and lack of opportunity for profit, point strongly toward economic dependence.” Scantland v. Jeffry Knight, Inc., 721 F.3d 1308, 1319 (11th Cir. 2013). This factor weighs in favor of finding an employment relationship. See Tony & Susan Alamo Found. v. Sec’y of Labor, 471 U.S. 290, 301 (1985) (holding workers—who testified that they were not employees, did not work for material rewards, and volunteered for ministry purposes—were employees within the meaning of the FLSA because they were “dependent upon the [defendant] Foundation for long periods, in some cases several years). 6. Plaintiffs were an integral part of DIRECTV’s business. DIRECTV is in the business of providing satellite television service to its customers. SOF ¶ 1. Integral to this business is the technician who actually performs the work. SOF ¶¶ 2-3. Plaintiffs were typically the only “DIRECTV representative to have direct and personal contact with [its] customer[s],” all while displaying DIRECTV credentials, a DIRECTV uniform, and driving a DIRECTV-branded vehicle. SOF ¶¶ 3, 35. See Safarian v. Am. DG Energy Inc., 622 F. App’x 149, 150 (3rd Cir. 2015) (Defendant referred to plaintiff, an engineer who serviced and installed defendant’s machines, “a face of the company” and its “boots on the ground”); Martin, 949 F.2d at 1295 (finding factor weighed in plaintiffs’ favor where the primary business and economic purpose of the stations was to transact sales of gasoline, sale Case 5:14-cv-04091-LTS Document 67-1 Filed 08/19/16 Page 15 of 27 10 of gasoline was integral part of defendant’s business, and operators’ work was an “essential part” of that business). Plaintiffs were part of DIRECTV’s network of technicians fulfilling the day-to-day needs of DIRECTV’s customers. It is undisputed that that Plaintiffs’ work was an integral part of DIRECTV’s business. This factor weighs distinctly in favor of employment. C. Application of other relevant factors confirm the existence of an employment relationship. Considering the weight of the undisputed evidence on the six Silk factors—a test that the Eighth Circuit has itself utilized in determining employment under the FLSA—the Court could stop there and find that DIRECTV employed Plaintiffs as a matter of economic reality. That said, some courts—including the Eighth Circuit—have looked at additional factors beyond those attributed to Silk to flesh out the employment analysis. As described below, applying the undisputed facts in this case to those additional factors leads to one conclusion: DIRECTV employed Plaintiffs. 1. DIRECTV employed acknowledged W-2 workers to perform the same work as Plaintiffs. As a threshold matter, under Eighth Circuit jurisprudence, this Court need look no further than the fact that DIRECTV admittedly employs technicians as W-2 employees who have the same job, subject to the same policies and procedures, as the contractor technicians it denies employing. SOF ¶¶ 82-89. The Eighth Circuit has repeatedly concluded that an employer’s treatment of some workers as employees is evidence of an employer-employee relationship with similar workers classified as independent contractors. See Tobin, 196 F.2d 547, 549-50 (emphasizing the fact that “[a]dmitted employees perform identical work” in finding that independent contractors are properly considered employees under the FLSA). In Hodgson v. Taylor, 439 F.2d 288, 290 (8th Cir. 1971), the Eighth Circuit reversed a district court that found certain workers to be independent contractors; when the evidence established that the work “was the typical responsibility of employees[,] labeling them as independent contractors does not affect this job status[.]” Because “identical work” was Case 5:14-cv-04091-LTS Document 67-1 Filed 08/19/16 Page 16 of 27 11 performed by the company’s acknowledged employees, other workers performing the same tasks were entitled to the full protection of the FLSA. Id. Here, DIRECTV directly employs W-2 technicians who install the same DIRECTV systems under the same DIRECTV policies and procedures. SOF ¶¶ 4, 82-89. Indeed, DIRECTV’s computer database, which manages workflow, assigns work orders, tracks technicians, and contains personnel files, makes no distinction between whether a technician is DIRECTV’s own acknowledged W-2, or the “independent contractor” of a contractual partner. SOF ¶ 69. Under Eighth Circuit precedent, these undisputed facts alone establish that DIRECTV was Plaintiffs’ employer under the FLSA. 2. DIRECTV set and enforced prerequisites for hiring and DIRECTV had authority to terminate Plaintiffs’ employment. Another commonly-cited economic reality factor, particularly in the context of joint- employment allegations, directs the Court to consider the “authority” of the putative employers to “hire and fire the relevant employees.” In re Enterprise Rent–A–Car, 683 F.3d 462, 469 (3d Cir. 2012). Under the definition at 29 U.S.C. § 203(d), this factor looks not to “direct” or “ultimate” authority, but to whether a putative employer’s authority, even if “indirect,” was “significant.” Id. at 468. Here, DIRECTV set the prerequisites for hiring Plaintiffs. SOF ¶¶ 18-25. Specifically, DIRECTV authorized subcontracting principals to hire Plaintiffs to perform DIRECTV work only if they met DIRECTV’s non-discretionary pre-hire conditions, including that Plaintiffs (1) complete the SBCA Certified Installer Training, (2) pass a criminal background check, (3) pass a drug screen, and (4) submit to a motor vehicle record review. SOF ¶¶ 20-23. DIRECTV required Plaintiffs to submit to its chosen vendor for the background check, drug screen, and review of their driving record. SOF ¶ 24. And Plaintiffs were required to give DIRECTV unfettered access to this sensitive personal information—access that DIRECTV required to be ongoing throughout Plaintiffs tenure with the company. SOF ¶ 25. With respect to firing, DIRECTV’s authority was categorical. DIRECTV had the authority to unilaterally prohibit Case 5:14-cv-04091-LTS Document 67-1 Filed 08/19/16 Page 17 of 27 12 Plaintiffs or any other subcontractor technician from continuing to receive work orders, effectively ending their employment. SOF ¶ 27. The Eighth Circuit has held that DIRECTV cannot avoid application of the FLSA on the grounds that it outsourced the hiring of Plaintiffs to its subcontractors. See Marshall, 640 F.2d at 909 (“the company’s use of an intermediary to employ workers does not insulate the company from the provisions of the FLSA”). In Perez v. Lantern Light, Judge Martinez concluded that DIRECTV’s power to hire and fire favored joint employment because, although “AIS [the subcontracting entity] had the authority to hire and fire its employee[s],” DIRECTV “unquestionably play[ed] a role in hiring and firing” through mandated eligibility requirements, certification requirements, and exclusivity provisions. Perez, 2015 WL 3451268 at *5-7; see also Solis v. A-1 Mortg. Corp., 934 F. Supp. 2d 778, 791 and 795 (W.D. Pa. 2013) (accepting that defendant himself “did not have the ultimate authority to make hiring decisions,” but nevertheless concluding that ‘[t]he role he played in the hiring process . . . was significant”; holding this degree of control “tips in favor of finding that [defendant] is a joint employer”). Here, although DIRECTV did not physically accept applications or interview potential candidates, it effectively determined who could—and who could not—be hired to install DIRECTV systems. And although subcontracting entities could fire their technicians, DIRECTV retained the ultimate and unilateral authority to terminate subcontractor technicians, including Plaintiffs. In sum, DIRECTV had “[t]he right, directly or indirectly, to hire, fire, or modify the employment conditions of the workers.” Torres-Lopez, 111 F.3d at 640. The economic reality was that Plaintiffs’ jobs depended on DIRECTV continuing to route work to them. These undisputed facts place this factor squarely in favor of employment. 3. DIRECTV had authority to, and did, promulgate work rules and schedule work assignments; DIRECTV set conditions of employment; and DIRECTV set the method of compensation. Another factor commonly considered is “the alleged employer's authority to promulgate work rules and assignments and to set the employees’ conditions of Case 5:14-cv-04091-LTS Document 67-1 Filed 08/19/16 Page 18 of 27 13 employment: compensation, benefits, and work schedules, including the rate and method of payment.” Enterprise, 683 F.3d at 469. There is no genuine dispute that DIRECTV exercised substantial control of Plaintiffs’ day-to-day work. SOF ¶¶ 44-62. Evidence that a company can direct, control, or supervise the work performed by a group of workers weighs in favor of finding employment under the FLSA. Perez, 2015 WL at *8; Bonnette v. California Health & Welfare Agency, 704 F. 2d 1467, 1470 (9th Cir. 1983); see Torres-Lopez, 111 F.3d at 642. By design, DIRECTV did not cut checks to Plaintiffs. DIRECTV offloaded that responsibility to the subcontracting entities. But as a matter of economic reality, DIRECTV set the method of payment. It dictated that it would only pay a set piece rate for closed line items. SOF ¶ 13. That is the method by which DIRECTV paid the subcontractors. Id. The subcontractors, in turn, used that method to pay Plaintiffs. SOF ¶ 14. Plaintiffs’ compensation method was thus set by—and ultimately funded by—DIRECTV.1 On the same facts, the Perez court found that DIRECTV’s influence over the rate and method of payment weighed “heavily in favor of joint employment” where the technicians’ pay was simply an amount of the piece- rate paid by DIRECTV passed on by the subcontractor. See Perez, 2015 WL 3451268 at *8-9. As to work rules, assignments, and schedules, DIRECTV retained authority to control all meaningful conditions of Plaintiffs’ employment. DIRECTV promulgated mandatory rules, policies, and practices regarding the manner and method by which installations were to be performed, summarized in DIRECTV’s Standard Professional Installation Guide. SOF ¶¶ 28- 31. DIRECTV also passed down ongoing communications to Plaintiffs on DIRECTV’s policies and procedures. SOF ¶ 32. DIRECTV developed and provided training, which it required of technicians it acknowledged as “employees” as well as subcontractor technicians like 1 In Barfield v. New York City Health and Hospitals Corp., a nursing assistant worked exclusively at a hospital but was directly employed and paid by a referral agency; the hospital reimbursed the agency for the nurse’s work, and the agency paid the nurse. 537 F.3d 132 at 135. 144-45 (2nd Cir. 2008). The Second Circuit ruled that Barfield still “exerted some control over [the nursing assistant’s] pay” because “the hourly rate Bellevue paid the referral agencies effectively set a cap on the hourly rate that the agencies would pay” the nursing assistant. Id. Case 5:14-cv-04091-LTS Document 67-1 Filed 08/19/16 Page 19 of 27 14 Plaintiffs. SOF ¶ 33. DIRECTV maintained an online scheduling and management system called Siebel to schedule, track, and manage all DIRECTV installation work performed by Plaintiffs. SOF ¶ 38. DIRECTV retained full connectivity to that system, which did not distinguish between W-2 technicians and 1099 technicians for fulfillment purposes. SOF ¶ 69. The subcontractor companies, in contrast, had no connectivity to the Siebel system. SOF ¶ 43. DIRECTV created daily work orders and assigned these work orders to Plaintiffs. SOF ¶ 37. DIRECTV required all technicians, including Plaintiffs, to wear a DIRECTV uniform, drive a DIRECTV-branded vehicle, and display DIRECTV-marked credentials. SOF ¶ 35. Technician clothing, grooming and appearance was meticulously dictated by DIRECTV, including hair color, the number and location of body piercings and the visibility of tattoos. SOF ¶ 36. The Perez Court found that DIRECTV’s control over and supervision of the technicians favored joint employment on analogous facts—albeit less robust than those marshalled for the Court here— finding that DIRECTV designated technician IDs and daily schedule assignments, controlled uniforms and signage and representations, and engaged in “precise, computer-assisted supervision.” 2015 WL 3451268 at *7-8. Defendants that heavily involve themselves in coordinating and determining employees’ schedules have been found to be employers under the FLSA. See A-1 Mortg. Corp., 934 F. Supp. 2d at 792 (finding factor favored employment where defendant handled scheduling issues such as vacations and dealt with the employees' hours, their start times, and the lengths of their workdays); Yu G. Ke v. Saigon Grill, Inc., 595 F. Supp. 2d 240, 265 (S.D.N.Y. 2008) (finding joint employment where one defendant, a restaurant owner's wife, controlled assigned work hours and controlled the employees' schedule). Here, DIRECTV promulgated mandatory rules governing the technical specifications of the work, as well as the appearance and “branding” of the technicians and DIRECTV retained ultimate control over assignments and scheduling. The Court should conclude that this factor on the whole, as in Perez, Saigon Grill, and A-1 Mortgage, tips toward the existence of an employment relationship in light of the significant control exercised by DIRECTV. Case 5:14-cv-04091-LTS Document 67-1 Filed 08/19/16 Page 20 of 27 15 4. DIRECTV was heavily involved in the day-to-day supervision of Plaintiffs, including disciplinary decisions. An additional factor for consideration is “the alleged employer's involvement in day- to-day employee supervision, including employee discipline.” Enterprise, 683 F.3d at 469. Supervision has been characterized as “substantial” where the putative joint employer “had the right to inspect all the work performed … both while it was being done and after[.]” Torres-Lopez, 111 F.3d at 642 (emphasis added). On that score, DIRECTV maintained pervasive control over—and supervision of—Plaintiffs’ day-to-day work activities, including monitoring and evaluating their performance against certain metrics in order to identify bottom-performers. SOF ¶¶ 44-59. All technicians installing DIRECTV systems—whether they be W-2 employees or subcontractor technicians—were required to be able to communicate directly with DIRECTV. SOF ¶ 48. And as noted above, DIRECTV also maintained ongoing written communication with Plaintiffs by distributing Blast Facts, which contained updates on DIRECTV’s policies and procedures. SOF ¶ 32. DIRECTV personnel monitored Plaintiffs’ work. Plaintiffs were required to check-in with DIRECTV when they arrived on site at a customer’s location. SOF ¶ 49. And when the installation was completed, DIRECTV used post-installation customer surveys to rate Plaintiffs’ work. SOF ¶ 57. DIRECTV personnel conducted on-site inspections and audits of the technical proficiency of Plaintiffs’ work. SOF ¶ 53. DIRECTV measured Plaintiffs’ work performance against metrics it developed; circulated reports identifying low-performing technicians, and held regular meetings with subcontractor principals regarding bottom performing technicians. SOF ¶ 61. Indeed, DIRECTV provided site managers and subcontractor principals with technician scorecards identifying how each technician was performing based on performance metrics established by DIRECTV and held meetings to review their performance. SOF ¶¶ 58-61. DIRECTV could Case 5:14-cv-04091-LTS Document 67-1 Filed 08/19/16 Page 21 of 27 16 reroute work to other technicians, and DIRECTV retained the ultimate authority to cease sending work orders to individual technicians. SOF ¶¶ 27, 67-68. Courts have found that conduct “consistent with a supervisory role . . . weighs in favor of the determination that defendant was an employer” where the defendant “regularly interacted” with workers to assist with work-related problems and “had at least some influence over the decision to discipline employees.” A-1 Mortg., 934 F. Supp. 2d at 796; see also Martin, 949 F.2d at 1294 (finding “pervasive ... control over the day-to-day operations” where, among other factors, the alleged employers regularly visited their “independent contractor” gas stations for the purpose of overseeing them). And as noted in Perez, DIRECTV’s “precise, computer-assisted supervision far exceeds that in Torres-Lopez, where a supervisor’s mere ‘presence in the fields helped ensure that the farm workers performed satisfactorily.’” Perez, 2015 WL 3451268, at *8, citing Torres-Lopez, 111 F.3d at 642. The facts here tip this consideration decidedly toward the existence of an employment relationship. 5. To the extent personnel records were kept, they were primarily maintained by DIRECTV. Another factor directs the Court to consider the putative employer’s maintenance and control of employee records, including payroll, insurance, taxes, and the like[.]” See Bonnette, 704 F.2d at 1470. DIRECTV assigned Plaintiffs and all other subcontractor technicians a unique identification number. SOF ¶ 71. DIRECTV required its contractual partners to maintain hiring packages on Plaintiffs; DIRECTV audited those hiring packages to confirm compliance with DIRECTV’s policies. SOF ¶ 72. DIRECTV maintained within its Siebel system record of the work orders completed by Plaintiffs, their work schedules and requested days off, their telephone numbers, record of the trainings and certifications they completed, and numerous metrics tracking Plaintiffs’ work performance. SOF ¶¶ 60, 73-76. Faced with similar facts, the Perez Court found that recordkeeping favored a finding of employment because DIRECTV’s records—specifically including work order information—were not related merely to “quality control” but were, “for all intents and Case 5:14-cv-04091-LTS Document 67-1 Filed 08/19/16 Page 22 of 27 17 purposes, payroll information” of the sort kept by employers. 2015 WL 3451268, at *9-12. Far from eschewing any control over Plaintiffs’ records, DIRECTV dictated what records needed to be kept and either maintained that information in its own computer system or required its contractual partners to keep records subject to inspection. The record evidence on this factor supports determining that DIRECTV is an employer. D. On balance, the economic reality factors, taken together, point to the existence of an employment relationship. In this case, nearly every one of the many relevant factors point toward DIRECTV’s status as an “employer,” a conclusion bolstered by the readily apparent fact that it exercised “significant control” over the Plaintiffs. See Enterprise, 683 F.3d at 468. The fact that DIRECTV engaged other entities to directly administer certain aspects of the hiring, firing, and payroll of its workforce does not change the economic reality. “[A]n entity can be a joint employer under the FLSA even when it does not hire and fire its joint employees, directly dictate their hours or pay them.” Zheng v. Liberty Apparel Co. Inc., 355 F.3d 61, 70 (2d Cir. 2003), citing Rutherford Food, 331 U.S. at 724–25, 730. And the broad language of the FLSA is expressly designed to cover such indirect employment arrangements. See 29 U.S.C. § 203(d) (“‘Employer’ includes any person acting directly or indirectly in the interest of an employer in relation to an employee . . .”) (emphasis added). In sum, any analysis of the undisputed facts under all the relevant factors permits only one reasonable conclusion: DIRECTV “employs” Plaintiffs within the meaning of the FLSA. No reasonable jury could conclude otherwise. Plaintiffs are entitled to judgment as a matter of law on this issue. IV. Plaintiffs are not covered by the § 207(i) commissioned employee exemption because DIRECTV is not a retail establishment. To further streamline the issues for trial, Plaintiffs also seek partial summary judgment on DIRECTV’s affirmative defense that, if the FLSA applies, Plaintiffs are exempt as commissioned employees under 29 U.S.C. § 207(i). As a threshold matter, DIRECTV’s defense is suspect: As an exception to the mandatory overtime requirements of the FLSA, 207(i) permits an employer to take certain measures, including recordkeeping efforts not taken Case 5:14-cv-04091-LTS Document 67-1 Filed 08/19/16 Page 23 of 27 18 here, to exclude certain retail employees paid on commission from the otherwise mandatory overtime requirements. See 29 C.F.R. § 516.2(a); 29 C.F.R. § 516.16. DIRECTV, however, has consistently denied any employment relationship whatsoever with Plaintiffs. Nevertheless, for DIRECTV to succeed on this defense, it must carry its burden to prove that it satisfies each prong of this narrowly-construed exception. This it cannot do. Section 207(i) exempts from the overtime provisions of the Act employees of (1) retail or service establishments whose compensation consists of (2) at least fifty percent commissions on goods or service for a representative period (not less than one month) and (3) who are paid at least one and one-half times the minimum wage. See 29 U.S.C. § 207(i); see also Reich v. Delcorp, Inc., 3 F.3d 1181, 1182 (8th Cir. 1993). But it is undisputed that Plaintiffs did not work in “retail establishments.” So while Plaintiffs do not concede the other two factors are met, because DIRECTV cannot meet even the first prong of the test, the Court should grant summary judgment on this issue. A. The burden is on Defendants to demonstrate that employees come plainly and unmistakably within the retail commission exemption. Whether an employee is exempt under the FLSA is an issue of law. See Jarrett v. ERC Props., Inc., 211 F.3d 1078, 1081 (8th Cir. 2000). The FLSA is construed liberally in favor of employees, and statutory exemptions are thus construed narrowly. See, e.g., Barrentine v. Arkansas–Best Freight Sys., Inc., 450 U.S. 728, 739 (1981); Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392 (1960); Hertz v. Woodbury Cnty., Iowa, 566 F.3d 775, 783 (8th Cir. 2009). An employer seeking to apply an exemption to the FLSA must prove that the employee and employer comes “plainly and unmistakably within the exemption’s terms and spirit.” Ely v. Dolgencorp, LLC, 827 F. Supp. 2d 872, 880 (E.D. Ark. 2011), citing Spinden v. GS Roofing Prods. Co., Inc., 94 F.3d 421, 426 (8th Cir. 1996). Case 5:14-cv-04091-LTS Document 67-1 Filed 08/19/16 Page 24 of 27 19 B. DIRECTV cannot establish that Plaintiffs worked in retail establishments. The first requirement of an employer seeking cover under § 207(i) is that the “establishments” where the employees work have a “retail concept.”2 Under the FLSA, an “enterprise” describes the overall business of an employer. See 29 U.S.C. § 203(r). Whereas an “establishment” is a component part of an enterprise, the physical sites of the enterprise’s work. Said another way, “[a]n ‘establishment’ is generally defined as ‘a distinct physical place of business’ instead of a business enterprise.” Price v. N. States Power Co., 664 F.3d 1186, 1194 (8th Cir. 2011) (affirming a district court’s finding that two separate locations of the defendant were separate “establishments” under the FLSA in a case brought under the Act’s equal pay provisions) (internal citations omitted); see also Mitchell v. Birkett, 286 F.2d 474, 477‐78 (8th Cir. 1961) (finding that two locations of the same business located nine miles away who served different clientele were not a single “establishment” under the FLSA). Even assuming arguendo that DIRECTV is able to demonstrate its overall enterprise is retail in nature, to succeed on its § 207(i) defense, it must then prove that the establishments where the Plaintiffs worked themselves had a retail concept. As the Supreme Court has explained, even when the overall nature of a company’s enterprise is clearly retail in nature, only those employees working in a retail “establishment” qualify for the exemption. See A.H. Phillips, Inc. v. Walling, 324 U.S. 490 (1945). In A.H. Phillips, the employer was a chain of 49 grocery stores that also operated a combined warehouse/central office. Id. at 491‐92. The employer claimed that because a grocery store chain is clearly a retail business, all of its employees were eligible for the retail 2 This first element of the § 207(i) defense, that the employees worked in retail establishments, itself has three requirements. First, the establishments where the employees work must have a retail concept. Second, the work performed at the establishments must be recognized as retail within DIRECTV’s own industry. And third, 75 per centum of the dollar volume of the retail goods or services of the establishments must not be for resale. See A.H. Phillips, Inc. v. Walling, 324 U.S. 490 (1945) (discussed infra); Gilreath v. Daniel Funeral Home, 421 F.2d 504, 508 (8th Cir. 1970) (citing 29 C.F.R. §§ 779.316‐.317). Because it is undisputed that the establishments where Plaintiffs worked did not have a retail concept, DIRECTV cannot make out this defense and Plaintiffs need not address the other requirements. Case 5:14-cv-04091-LTS Document 67-1 Filed 08/19/16 Page 25 of 27 20 commission exemption, including those who worked in the warehouse and office. Id. at 492. Crediting the Department of Labor’s administrative interpretation, the Supreme Court found that the employer was made up of 50 separate establishments, one of which was not a retail or service establishment. Id. at 496, 498. Accordingly, the employees of the non‐retail establishment were not exempt. Id. at 498; see also 29 C.F.R. §§ 779.303, .310 (codifying this concept into the Department of Labor’s published interpretations of the FLSA). Here, the undisputed facts establish conclusively that Plaintiffs did not work in retail establishments. The sites through which they worked were warehouse facilities not open to the general public. SOF ¶¶ 94, 96, 99. They were did not receive money from DIRECTV’s customers, nor were they even set up to do so. SOF ¶ 97. Indeed, DIRECTV considered the establishments where Plaintiffs worked to be cost centers—not revenue centers. SOF ¶ 98. Under these undisputed facts, DIRECTV cannot meet its burden to show that Plaintiffs worked in establishments with a retail concepts. See Wessling v. Carroll Gas Co., 266 F. Supp. 795, 800 (N.D. Iowa 1967) (finding workers who routinely reported to a company’s warehouse facility, where no sales took place, did not work in a “retail establishment”). CONCLUSION The only conclusion supported by the undisputed evidence is that Plaintiffs were dependent on DIRECTV and the true economic reality of the relationship between the parties was that of employer and employee. For that reason, DIRECTV falls within the broad, remedial scope of the FLSA. No reasonable jury could conclude otherwise. Plaintiffs are entitled to judgment as a matter of law on the issue of employment. And DIRECTV cannot escape this result by attempting to rely on an exemption applicable only to employees working in retail establishments. Because there is no dispute that Plaintiffs were not paid overtime or otherwise treated in accord with the protections of the FLSA, and because Plaintiffs are not subject to any exemption, including that contained in 29 U.S.C. § 207(i), Plaintiffs are entitled to judgment as a matter of law on the issue of liability under the Act. Case 5:14-cv-04091-LTS Document 67-1 Filed 08/19/16 Page 26 of 27 21 Dated: August 19, 2016 LEAR WERTS LLP By: /s/ Todd C. Werts ______________ Todd C. Werts, Pro Hac Vice Bradford Lear, Pro Hac Vice 2003 W. Broadway, Ste. 107 Columbia, Missouri 65203 Telephone: 573-875-1991 Facsimile: 573-875-1985 Email: werts@learwerts.com Email: lear@learwerts.com STUEVE SIEGEL HANSON LLP George A. Hanson, Pro Hac Vice MO Bar No. 43450 460 Nichols Road, Suite 200 Kansas City, Missouri 64112 Telephone: 816-714-7100 Facsimile: 816-714-7101 Email: hanson@stuevesiegel.com ATTORNEYS FOR PLAINTIFFS CERTIFICATE OF SERVICE The undersigned hereby certifies that the foregoing was filed with the Court’s CM/ECF system on August 19, 2016 and that system provides notice to all parties requesting it. /s/ Todd C. Werts Attorney for Plaintiffs Case 5:14-cv-04091-LTS Document 67-1 Filed 08/19/16 Page 27 of 27