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Perez v. Off Duty Police Services, Inc.

United States District Court, W.D. Kentucky, Louisville Division

July 2, 2015

THOMAS E. PEREZ, Secretary of Labor, United States Department of Labor, Plaintiff,
v.
OFF DUTY POLICE SERVICES, INC., et al., Defendants.

MEMORANDUM OPINION AND ORDER

DAVID J. HALE, District Judge.

Defendant Off Duty Police Services, Inc. ("ODPS") and its owners Darrell and Bonnie Spurgeon (collectively, "Defendants") provide security and traffic-control services in and around Louisville, Kentucky. The Department of Labor ("DOL") claims that Defendants failed to pay their employees proper overtime wages in compliance with the Fair Labor Standards Act of 1938, 29 U.S.C. § 201, et seq. ("FLSA"). DOL requests summary judgment on this claim and seeks to recover back wages, liquidated damages, and a prospective injunction to ensure Defendants' future compliance with the FLSA. (Docket Number 18) Because there are genuine disputes of material fact as to whether the security and traffic-control officers were independent contractors-not employees subject to FLSA requirements-the Court will deny DOL's motion for summary judgment.

I. BACKGROUND

Darrell Spurgeon formed ODPS in 1997 to provide security and traffic-control services to companies and individuals in and around Louisville, Kentucky. (DN 18-3, PageID # 115) From the time he formed ODPS until 2010 or 2011, Mr. Spurgeon was the sole stockholder and served as president of the company. ( Id. PageID # 112-113) During either 2010 or 2011, Mr. Spurgeon's wife, Bonnie Spurgeon, acquired 51% of ODPS's stock and succeeded her husband as president of the company. From that point forward, Mr. Spurgeon has continued to own 49% of ODPS's stock and serve as vice president. ( Id. PageID # 111, 113, 115; DN 18-5, PageID # 191) Mr. Spurgeon has always handled the day-to-day operations of ODPS, while Ms. Spurgeon handles the accounting functions. (DN 18-3, PageID # 111, 113, 130; DN 18-5, PageID # 191)

The Spurgeons are the only two individuals to ever be identified as employees of ODPS. (DN 18-3, PageID # 119) Other individuals who have worked with ODPS have always been classified as independent contractors. ( Id. PageID # 117) In fact, all workers, other than the Spurgeons, sign contracts classifying them as independent contractors. ( Id. PageID # 142-143) ODPS mostly paid its workers on a per hour basis but occasionally paid them per project. ( Id. PageID # 124-125, 127) Many of these individuals are or were sworn law enforcement officers who received increased pay because of their credentials. ( Id. PageID # 127, 141)

Typically, individuals working on an ODPS project were assigned shifts the night before an ODPS customer required the work. (DN 18-3, PageID # 157) After an ODPS customer requested a security guard or traffic-control officer, Darrell Spurgeon would call workers listed in ODPS's database or send out an email or text message to members of the database. (DN 18-3, PageID # 116-117) Once a guard or officer completed a job, that worker provided Mr. Spurgeon with an invoice indicating the number of hours worked. (DN 18-3, PageID # 117, 138) Mr. Spurgeon would pay the worker upon receipt of the invoice, and then bill the ODPS customer for the work performed. (DN 18-3, PageID # 117, 125) Mr. Spurgeon concedes that workers who performed greater than forty hours of labor during a week were not paid at an increased rate for overtime. (DN 18-3, PageID # 120)

On September 30, 2013, DOL filed the present lawsuit alleging that Defendants' failure to pay its workers overtime wages is a violation of the FLSA. On February 5, 2015, DOL filed its motion for summary judgment, asking this Court to find-as a matter of law-that Defendants violated the FLSA. For the following reasons, DOL's motion for summary judgment will be denied.

II. STANDARD

To grant a motion for summary judgment, this Court must find that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). The moving party bears the initial burden of identifying the basis for its motion and the parts of the record that demonstrate an absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). If the moving party satisfies this burden, the non-moving party must show specific facts demonstrating a genuine issue of fact for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986).

While the Court must review the evidence in the light most favorable to the non-moving party, the non-moving party must do more than "simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The non-moving party must show specific facts demonstrating that a genuine issue of fact exists by "citing to particular parts of materials in the record" or by "showing that the materials cited do not establish the absence... of a genuine dispute." Fed.R.Civ.P. 56(c)(1). The non-moving party must establish a genuine issue of material fact with respect to each element of each of its claims. Celotex, 477 U.S. at 322-23. The mere existence of a scintilla of evidence in support of the non-moving party's position will be insufficient. Instead, there must be evidence upon which a jury could reasonably find for the non-moving party. Anderson, 477 U.S. at 252.

III. STATUTORY FRAMEWORK

Congress passed the Fair Labor Standards Act in 1938 to ensure a "minimum standard of living necessary for health, efficiency, and general well-being of workers." 29 U.S.C. § 202(a). The FLSA requires employers to pay covered employees who work more than 40 hours in one workweek a rate of one and one-half times their regular rate of pay. Id. § 207(a)(1). "Employee" is defined as "any individual employed by an employer." Id. § 203(e)(1). "Employees are those who as a matter of economic reality are dependent upon the business to which they render service." Donovan v. Brandel, 736 F.2d 1114, 1116 (6th Cir. 1984).

The statute defines an "employer" as "any person acting directly or indirectly in the interest of an employer in relation to an employee." 29 U.S.C. § 203(d). Courts have defined "employer" broadly in light of the remedial purposes of the FLSA, basing the determination more on "economic realities" than on common law concepts of agency. Dole v. Elliott Travel & Tours, Inc., 942 F.2d 962, 965 (6th Cir. 1991). In Dole, the Sixth Circuit held that more than one employer can be jointly liable for FLSA violations. Id. Additionally, "a corporate officer with operational control of a corporation's covered enterprise is an employer along with the corporation, jointly and severally liable under the FLSA for unpaid wages." Id. (quoting Donovan v. Agnew, 712 F.2d 1509, 1511 (1st Cir. 1983)).

Employers in violation of § 207 are liable to affected employees for the amount of unpaid overtime compensation, as well as for an equal amount in liquidated damages, reasonable attorney's fees, and costs for the action. 29 U.S.C § 216(b). Courts can, at their discretion, deny or decrease the liquidated-damages award if the employer shows that it acted in good faith and that it "had ...


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