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Dewan v. M-I, L.L.C.

United States Court of Appeals, Fifth Circuit

May 30, 2017

MATTHEW DEWAN, Individually and On Behalf of All Others Similarly Situated; WILLIAM J. CASEY, Plaintiffs - Appellants
v.
M-I, L.L.C., doing business as M-I SWACO, Defendant-Appellee

         Appeal from the United States District Court for the Southern District of Texas

          Before DAVIS, DENNIS, and SOUTHWICK, Circuit Judges.

          LESLIE H. SOUTHWICK, Circuit Judge

         Two oilfield workers sued their employer for unpaid overtime wages. The district court granted summary judgment on the defendant's affirmative defense that the plaintiffs fell under the administrative exemption of the Fair Labor Standards Act. Finding there to be genuine disputes of material fact that affect whether the exemption applies, we REVERSE and REMAND.

         FACTUAL AND PROCEDURAL BACKGROUND

         Defendant M-I SWACO is an oilfield service company that specializes in engineering drilling-fluid systems and additives designed to improve performance for oil and gas well drilling operations. As part of its business, M-I employs Drilling Fluid Specialists, or "mud engineers, " who work at M-I customer locations to manage the drilling-fluid system and interact directly with the customers by providing advice and other support.

         The minimum educational requirement for a mud engineer is a high-school diploma. Once hired, mud engineers undergo an eight-week training program at M-I's office in Houston, Texas. During the program, trainees receive basic instruction on the functions of drilling fluids, their physical and chemical properties, mathematics, and training on the proper use of testing equipment and computer software.

         A mud engineer works to ensure the properties of the drilling fluid, also known as drilling mud, [1] are within designed specifications as set forth in the mud plan, which is created by a project engineer at M-I's headquarters and is based on historical drilling in the area. Both plaintiffs claimed that they did not have authority to deviate from the mud plan. Mud engineers perform their duties either by "sitting" on the customer's well (an extended, round-the-clock monitoring of one drill site) or doing a "drive-by" (quick visits to multiple drill sites).

         To ensure the drilling mud is performing adequately[2] and within its designated parameters, mud engineers test the mud's pH, rheology, weight, and viscosity. The tests are generally conducted either in a lab trailer at the customer's site or on the tailgate of the mud engineer's assigned company vehicle. Plaintiff Dewan testified at his deposition that, after testing was complete, he would provide recommendations to the "company man." These recommendations were largely accepted without further inquiry. The plaintiffs were typically the only M-I employees or mud engineers on site.

         M-I employed Plaintiffs Matthew Dewan and William Casey as mud engineers until December 2012. On December 14, 2012, Dewan filed a putative class-action suit against M-I, alleging violations of the overtime provisions of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201-19. That same day, Casey consented to join the suit pending collective or class-action certification. After discovery closed, M-I moved for summary judgment on various grounds, including that the plaintiffs were exempt from the FLSA's overtime requirements under 29 U.S.C. § 213(a)(1). The plaintiffs separately moved for judgment on the pleadings under Federal Rule of Civil Procedure 12(c).

         The district court (1) denied the plaintiffs' motion for judgment on the pleadings; (2) denied M-I's motion for summary judgment as to the claim that Casey was not a party to the lawsuit; (3) denied M-I's motion as to the FLSA's outside sales and combination exemptions; and (4) granted M-I's motion on the grounds that the plaintiffs fell under the FLSA's administrative exemption. The plaintiffs timely appealed.

         DISCUSSION

         In 1938, Congress enacted the FLSA in an effort to ensure each employee covered by the Act would receive "[a] fair day's pay for a fair day's work and would be protected from the evil of overwork as well as underpay." Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 739 (1981). One way the FLSA effectuates these goals is through its overtime provision, which requires an employer to compensate any covered employee who works in excess of 40 hours in a workweek "at a rate not less than one and one-half times the [employee's] regular rate . . . ." 29 U.S.C. § 207(a)(1). Relevant here, the FLSA excludes from its overtime requirement those employees working "in a bona fide executive, administrative, or professional capacity . . . ." Id. § 213(a)(1).

         The district court granted summary judgment for M-I, holding that these employees were exempt from the overtime rules. In our de novo review, we use the same standards as did the district court in considering facts and analyzing law. Owsley v. San Antonio Indep. Sch. Dist., 187 F.3d 521, 523 (5th Cir. 1999). Summary judgment is proper when the movant shows there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a).

         When summary judgment is sought on an affirmative defense, as here, the movant "must establish beyond peradventure all of the essential elements of the claim or defense to warrant judgment in his favor." Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986). "Once the movant does so, the burden shifts to the nonmovant to establish an issue of fact that warrants trial." Smith v. Reg'l Transit Auth., 827 F.3d 412, 420 n.4 (5th Cir. 2016). The burden of proof on exempt status is on the employer. Owsley, 187 F.3d at 523. Because of the Act's remedial nature, we narrowly construe its exemptions in favor of the employee. Id.

         To all these statements we add something further. There is no dispute about what these two engineers did from day to day. Even so, more is involved of relevance here than just a record of the plaintiffs' daily activities. Those facts must be interpreted based on the regulations. For the administrative exemption to apply, the employee must be one (1) who is "[c]ompensated on a salary or fee basis at a rate of not less than $455 per week;" (2) "[w]hose primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers;" and (3) "[w]hose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance." 29 C.F.R. § 541.200. The compensation of the plaintiffs is clearly sufficient. The second and third criteria, though, require a ...


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