United States District Court, W.D. Tennessee, Western Division
R JOHN DOUCETTE III, FARRELL FLOWERS, JAMES MADDOX, SCOTT MEDFORD, SCOTT MORLEY, JAMES PARKS, RALPH PEEVYHOUSE, REGINALD SMITH, ANTHONY VITIER, JAMES BLACK, DON CARPENTER, JEREMY JONES, and ANDRICO WOODS, Plaintiffs,
DIRECTV, INC., DIRECTV, LLC, and MULTIBAND CORP., Defendants.
ORDER GRANTING IN PART AND DENYING IN PART DIRECTV'S MOTION TO DISMISS AND DENYING MULTIBAND'S MOTION TO DISMISS
THOMAS ANDERSON, District Judge.
Before the Court are two Motions to Dismiss. First, Defendant Multiband Corporation ("Multiband") filed its Motion to Dismiss on January 5, 2015. (ECF No. 29). The same day, DIRECTV, Inc. and DIRECTV, LLC (collectively, "DIRECTV") filed their Motion to Dismiss. (ECF No. 31). After the Court granted an extension of time to respond, the thirteen Plaintiffs filed their combined Response in Opposition to the Motions on February 12, 2015. (ECF No. 37). Multiband and DIRECTV both filed replies on March 2, 2015. (ECF Nos. 39, 40). For the reasons stated below, DIRECTV'S Motion to Dismiss is GRANTED IN PART and DENIED IN PART, while Multiband's Motion to Dismiss is DENIED.
The Plaintiffs filed their Complaint on October 19, 2014, alleging violations of the Fair Labor Standards Act ("FLSA"). For the purposes of ruling on the Motions to Dismiss, the Court assumes the truth of the factual allegations in the Plaintiffs' Complaint. According to the Complaint, Plaintiffs were technicians who installed and repaired DIRECTV satellite television services. (Pls.' Compl. ¶ 1, ECF No. 1). Each Plaintiff worked directly for a Home Service Provider ("HSP"). (Id. ¶¶ 24-26). Five Plaintiffs in this action bring claims against one of those HSPs, Multiband. During all relevant times, each HSP contracted primarily, if not exclusively, with DIRECTV for technician services. (Id. ¶ 27).
DIRECTV issues each HSP a Provider Agreement describing the policies, procedures, performance standards, and payment methods that DIRECTV requires the HSPs to follow. (Id. ¶¶ 29-30). The policies found in the Provider Agreements mandate that technicians wear DIRECTV shirts, display the DIRECTV insignia on their vehicles, and present customers with DIRECTV ID cards. (Id. ¶¶ 31, 34). For each job, DIRECTV assigns technicians a scope of work through a work order, delivered electronically to technicians by DIRECTV's dispatch system. (Id. ¶ 32). DIRECTV requires technicians to follow particularized methods and standards of installation to ensure that all work is done uniformly and to DIRECTV's desired level of quality. (Id. ¶ 31). Technicians were also required to call DIRECTV at the beginning and upon completion of each assigned job. (Id. ¶ 33). Thus, Plaintiffs assert that, due to the amount of control asserted by DIRECTV on the technicians' work, Plaintiffs are employees under the FSLA and not, as DIRECTV claims, independent contractors. (Id. ¶¶ 35-36). Plaintiffs allege that DIRECTV purposely established the HSP network to exercise the right of control over Plaintiffs while avoiding any responsibilities as an employer under the FLSA. (Id. ¶ 36).
Plaintiffs' complaint states that Defendants, through a "piece-rate" pay system and "chargebacks" mandated in the DIRECTV Provider Agreement, willfully failed to pay minimum wage and overtime compensation to Plaintiffs. (Id. ¶ 59). Under the piece-rate system, Plaintiffs were not paid for the hours they worked but only for the completion of certain enumerated, "productive" tasks. (Id. ¶ 63). Plaintiffs claim that the piece-rate system does not compensate technicians for other tasks that are necessary to successfully perform their jobs (Id. ¶ 63-65), and because of the unpaid work they performed each week, they consistently worked more than forty hours per week. (Id. ¶ 71). Plaintiffs also state that they were never paid the premium overtime payment required under the FLSA for work performed beyond forty hours in a given workweek. (Id. ¶ 67, 70-71).
Plaintiffs also allege that technicians' pay was subject to chargebacks-amounts deducted from their pay if there were any issues with an installation or questions from customers. (Id. ¶ 66). DIRECTV required technicians to buy many of the supplies necessary to perform their tasks but were never compensated for these purchases. (Id. ¶ 67). Plaintiffs allege that the combination of the failure to compensate Plaintiffs for overtime performed, the imposition of chargebacks, and the failure to reimburse Plaintiffs for necessary business expenses resulted in an effective wage rate below minimum wage. (Id. ¶ 71).
STANDARD OF REVIEW
A defendant may move to dismiss a claim "for failure to state a claim upon which relief can be granted" under Federal Rule of Civil Procedure 12(b)(6). When considering a Rule 12(b)(6) motion, the Court must treat all of the well-pleaded allegations of the pleadings as true5> and construe all of the allegations in the light most favorable to the non-moving party. Legal conclusions or unwarranted factual inferences, however, need not be accepted as true. "To avoid dismissal under Rule 12(b)(6), a complaint must contain either direct or inferential allegations with respect to all material elements of the claim." Under Rule 8, a complaint need only contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Although this standard does not require "detailed factual allegations, " it does require more than "labels and conclusions" or "a formulaic recitation of the elements of a cause of action." In order to survive a motion to dismiss, the plaintiff must allege facts that, if accepted as true, are sufficient "to raise a right to relief above the speculative level" and to "state a claim to relief that is plausible on its face." "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."
In support of their Motions, the Defendants argue three bases upon which the Complaint should be dismissed. First, DIRECTV argues that it is not an "employer" as defined by the FLSA, and therefore it cannot be liable. Second, both DIRECTV and Multiband argue that at least some of the Plaintiffs' claims are barred by the FLSA's statute of limitations. Finally, both DIRECTV and Multiband contend that the Plaintiffs have not alleged facts stating a plausible claim under the FLSA.
I. "Employers" and "Employees" Under the FLSA
DIRECTV argues that Plaintiffs were not employees of DIRECTV, but rather independent contractors, and therefore do not have a valid claim under the FLSA. The FLSA defines "employer" as "any person acting directly or indirectly in the interest of an employer in relation to an employee" and "employee" as "any individual employed by an employer." The Act also defines "employ" as "to suffer or permit to work." First, the Court notes that "[t]he FLSA's definition of employee' is strikingly broad and stretches the meaning of "employee" to cover some parties who might not qualify as such under a strict application of traditional agency law principles.'" When determining whether workers are employees under the FLSA, the Court must look beyond mere labels and contractual agreements: "employees are those who as a matter of economic reality are dependent upon the business to which they render service." In applying this economic-reality test, the Court must analyze the following factors:
"1) the permanency of the relationship between the parties; 2) the degree of skill required for the rendering of the services; 3) the worker's investment in equipment or materials for the task; 4) the worker's opportunity for profit or loss, depending upon his skill;... 5) the degree of the alleged ...