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Doe v. Conrad Industries, Inc.

United States District Court, W.D. Louisiana, Lafayette Division

December 21, 2017

Doe #1 et al
v.
Conrad Industries Inc

          REPORT AND RECOMMENDATION

          CAROL B. WHITEHURST, UNITED STATES MAGISTRATE JUDGE

         Before the undersigned, on referral from the district judge, is a Rule 12(b)(6) Motion To Dismiss filed by Defendant Conrad Industries Inc. (“Conrad”) [Rec. Doc. 14], an Opposition filed by Plaintiffs, Luis Vasquez Sanchez (“Sanchez”) and Jesus Elias Sanchez Escobar (“Escobar”), on behalf of themselves and other persons similarly situated [Rec. Doc. 16], and Conrad's Reply thereto [Rec. Doc. 19]. Defendants move the Court for dismissal of Plaintiffs claims under the Fair Labor Standards Act, 29 U.S.C. § 201, et seq. (“FLSA”). For the reasons set out below, it is recommended that Defendant's Motion To Dismiss be denied.

         BACKGROUND

         This case involves two Plaintiffs' allegations of unpaid wages in violation of the Fair Labor and Standard Act, (“FLSA”), 29 U.S.C. § 203. Plaintiffs both allege that they were hired by Conrad as “employees” as that term is defined in the FLSA, 29 U.S.C. § 203(e). Conrad is a corporation in the business of boat construction and the owner and/or operator of shipyards. R. 1, ¶¶ 23, 24. Plaintiffs were hired to work as painters and blasters on Conrad's ships located in its shipyards in St. Mary Parish, Louisiana. Id. at ¶¶ 14, 15, 17, 19, 20, 22. Plaintiffs allege that Sanchez was employed from approximately June 2012 to February 2015 and Escobar from approximately September 2013 to July 2015. Id. at ¶¶ 14-19.

         Plaintiffs allege they were paid $18.00 per hour at the beginning of their employment and then $20.00 per hour for the remainder of their employment. They further allege they were paid a rate of $20.00 at the beginning and then $22.00 for every hour worked in excess of 40 in a work week-rather than overtime of one and one half times their hourly rate. Id. at ¶¶ 16, 21. They allege they worked on average 70 hours per week. Id. at ¶ 32. Plaintiffs further allege that Conrad specifically issues identification cards to all workers and supervised and documented their hours of work at its shipyards, but uses third party labor brokers to avoid paying them overtime of one and one half times their hourly rate for hours they work over 40 per week. Id. at ¶¶ 25, 26, 31, 33.

         They maintain that Conrad willfully violated their rights under the FLSA because it knew or showed reckless disregard for the fact that Conrad's use of third-party labor brokers to avoid paying them overtime violated the FLSA. Id. at ¶ 33. Further, Plaintiffs contend that Conrad wrongly treated other similarly situated employees as exempt from the FLSA's overtime requirements by paying them through third party labor brokers. Id. at ¶¶ 34-36. Accordingly, Plaintiffs filed this action on August 20, 2017, seeking to recover unpaid overtime wages, interest, liquidated damages, and attorneys' fees and costs on behalf of themselves and other similarly situated employees who worked for Defendants.

         CONTENTIONS OF THE PARTIES

         Conrad contends that Plaintiffs have not provided factual support sufficient under the “economic reality” test to show that an employer-employee relationship existed between Plaintiffs and Conrad. In particular it contends that Plaintiffs have failed to sufficiently allege Conrad was their employer; that Plaintiffs' activities were covered by the FLSA; that Conrad violated the FLSA; and the amount of overtime compensation due. Conrad states that it has no record of Plaintiffs ever working on their shipyards. Conrad further contends that Plaintiff's allegations of the use of unnamed labor brokers is beyond the scope of the FLSA.

         Plaintiffs argue that their Complaint meets each of the “economic reality” test's requirements for alleging a claim for unpaid overtime wages under the FLSA. Plaintiffs further argue that Conrad's attempt to have the collective action dismissed is premature, as certification has not yet occurred. Finally, Plaintiff's assert that their allegations as to the third party labor brokers is support for their claims of repeated violations of the FLSA, and not a separate cause of action as Conrad suggests.

         RULE 12(B)(6) STANDARD

         The Federal Rules of Civil Procedure permit a defendant to seek dismissal of a complaint based on the "failure to state a claim upon which relief can be granted." FED. R. CIV. P. 12(b)(6). However, a motion to dismiss under Rule 12(b)(6) "is viewed with disfavor and is rarely granted." Turner v. Pleasant, 663 F.3d 770, 775 (5th Cir. 2011). Dismissal is appropriate only if the complaint fails to plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). To satisfy this standard, the complaint must provide more than conclusions, but it "need not contain detailed factual allegations." Colony Ins. Co. v. Peachtree Constr., Ltd., 647 F.3d 248, 252 (5th Cir. 2011). Yet, it must allege enough facts to move the claim "across the line from conceivable to plausible." Twombly, 550 U.S. at 570. Determining whether the plausibility standard has been met is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Ashcroft v. Iqbal, 556 U.S. 662, 664 (2009).

         LAW AND ANALYSIS

         The FLSA provides that “[a]ny employer who violates the provisions of section 6 or section 7 of the Act ... shall be liable to the employee or employees affected in the amount of ... their unpaid minimum wages, or their unpaid overtime compensation.” 29 U.S.C. § 216(b). “An employee bringing an action for unpaid overtime compensation must first demonstrate by a preponderance of the evidence: (1) that there existed an employer-employee relationship during the unpaid overtime periods claimed; (2) that the employee engaged in activities within the coverage of the FLSA; (3) that the employer violated the FLSA's overtime wage requirements; and (4) the amount of overtime compensation due.” Johnson v. Heckmann Water Res. (CVR), Inc., 758 F.3d 627, 630 (5th Cir. 2014). Here, Conrad essentially argues that Plaintiffs have failed to sufficiently state a claim for relief under the FLSA as to (1) the existence of an employer-employee relationship and (2) violation of FLSA's overtime wage requirements. The Court will address these issues as follows.

         A. The Employer-Employee ...


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