United States District Court, D. Minnesota
Eric D. Satre and Jarvis C. Jones, Jones Satre & Weimer PLLC, for Plaintiff.
Patrick V. Johnson and Emily J. Streier, Speeter & Johnson, for Defendants.
MEMORANDUM OPINION AND ORDER
SUSAN RICHARD NELSON, District Judge.
This matter is before the Court on Plaintiff's Motion for Partial Summary Judgment [Doc. No. 41]. For the reasons that follow, Plaintiff's Motion is granted in part and denied in part.
A. Parties and Plaintiff's Claims
On August 23, 2013, Plaintiff Robert Johnson ("Plaintiff" or "Johnson") filed this action against Derhaag Motor Sports, Inc. and James Edward Derhaag (collectively "Defendants") to recover for alleged unpaid off-the-clock and overtime work-related activities pursuant to the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq. (Compl. ¶ 1 [Doc. No. 1].)
Defendant Derhaag Motor Sports "builds and maintains race cars at its shop in Shakopee[, Minnesota]." (Id. ¶ 12.) The company also rents out its race cars to drivers who compete in racing events across the country. (Derhaag Dep. 14:18-19, Mar. 28, 2014 [Doc. No. 48-1].) These events are hosted by racing clubs, such as TRANS-AM, HSR, and SCCA GT1. (Compl. ¶ 11 [Doc. No. 1].) Although the racing team members, who assist the drivers, are employed by Derhaag Motor Sports (Compl. ¶ 11 [Doc. No. 1]), the drivers are "customer[s]" of the business who rent out race cars (Derhaag Dep. 14:18-19, Mar. 28, 2014 [Doc. No. 45-4]). Simon Gregg is one of Defendants' primary race car driving customers. (Id. at 70.) In fact, Gregg is responsible for producing one to two million dollars of Derhaag Motor Sports' annual revenue. (Id.)
Defendant James E. Derhaag is the owner and Chief Executive Officer of Derhaag Motor Sports. (Compl. ¶ 13 [Doc. No. 1]; Derhaag Dep. 9:22-24 [Doc. 48-1].) "Defendant Derhaag was Plaintiff's manager and was responsible for implementing, managing, scheduling, and enforcing Defendant Motor Sports' [...] employee policies and practices[, ] and for directly requiring Plaintiff to [allegedly] perform uncompensated off-the-clock work and overtime." (Id. ¶ 15.)
1. Plaintiff's First Period of Employment with Defendants, 1997-2000
Robert Johnson worked for Defendants on two separate occasions. He was first employed by Defendants from June 1997, until October 2000. (Johnson Dep. 12-13, Mar. 21, 2014 [Doc. No. 48-3].) During that period of time, Johnson was a salaried employee making $750 a week. (Id. at 13.) Johnson contends that he was hired in 1997 as a "car chief." (Id. at 12-13.) However, Derhaag explains that Johnson was hired as a "crew person." (Derhaag Dep. 91:12-19 [Doc. No. 48-1].)
Regardless of Plaintiff's job title during this period of employment, Johnson's responsibilities consisted of building the car, putting it in the truck, maintaining it at the racetrack, and re-building the car after each race. (Id. at 91:7-10.) Although Derhaag could not recall Johnson's exact tasks during this period of employment, Derhaag stated that Plaintiff likely would have had to perform mechanical work such as changing engines, rebuilding transmissions, changing rear ends, putting wheels and tires on, putting gas in the car, and "whatever [else] it [took] to make the race car run." (Id. at 59:9-13, 60:6-8.)
2. Plaintiff's Second Period of Employment with Defendants, 2010-2013
Johnson's second period of employment with Defendants was from November 2010, until June 2013. (Johnson Dep. 77:6-7 [Doc. No. 48-3].) This is the period of employment that is at issue in this case. During this time period Defendants classified Johnson as a salaried exempt employee, as opposed to an hourly employee, under the FLSA. (Compl. ¶ 3 [Doc. No. 1].) Plaintiff was Defendants' sole employee who was an "exempt" non-hourly employee. (Derhaag Dep. 35-36, 39-40 [Doc. No. 48-1].) In June 2013, Derhaag terminated Plaintiff claiming he engaged in direct insubordination. (Id. at 161:17-18.)
The parties disagree about the job title Johnson held and the duties for which he was responsible from 2010 to 2013. As to Plaintiff's job title, Defendants contend that Johnson was hired as a "crew person" and was later promoted to "crew chief." (Id. at 28:6-11.) When Derhaag changed Johnson's title to "crew chief, " he also classified Plaintiff as an exempt employee under the FLSA. (Id. at 83:17-18.) Derhaag explained that Johnson was classified as exempt as crew chief because he thought that "[a]n exempt employee is someone in a management position that's not an hourly employee." (Id. at 30:22-24.) Johnson's position was listed as "crew chief" in at least three distinct locations. First, Plaintiff was listed as "crew chief" on the Derhaag Motor Sports website. (Johnson Dep. 15-16 [Doc. No. 48-3].) Johnson contends that he had no input about his job title listed on the website, and no one consulted him about whether "crew chief" accurately described his position. (Id. at 83:9-21.) Johnson was also listed as "crew chief" on Simon Gregg's hero card. (Id. at 15:1-7.) "A hero card is passed out to fans or people at the racetrack who just wanted some information about the driver or the race team." (Id.) Again, Johnson contends that he had no input on what his title was on this document, nor did he have any knowledge of who drafted the document. (Id. at 82:12-24.) Finally, even Plaintiff used the title "crew chief" when describing his position at Derhaag Motor Sports in his application for unemployment benefits. (Id. at 91:8-11.)
While Plaintiff admits that his job title formally changed to "crew chief" in 2011, he claims that the change was merely nominal because he did not in fact act as "crew chief." (Id. at 15:8-17, 79.) Instead, Johnson alleges that he was hired as a mechanic and remained a mechanic throughout his employment at Derhaag Motor Sports, until he was terminated. (Id. at 14:12-17.) Plaintiff's allegation is bolstered by the fact that his job title was listed as "mechanic" on several documents. First, in Johnson's application for employment with Derhaag Motor Sports in 2010, Johnson wrote that he was applying for the "mechanic" position. (Jones Aff., Ex. 5 "Application for Employment" [Doc. No. 45-5].) Additionally, on Plaintiff's resume, which was last updated while he was still working for Derhaag Motor Sports, Johnson describes his position with Derhaag as "chief mechanic and engineer." (Id. at 92-93.) During his deposition, Derhaag denied giving Johnson the job title "mechanic."(Derhaag Dep. 53:5-12 [Doc. No. 48-1].) However, in the Separation Report that Derhaag completed when he fired Johnson, Derhaag listed Johnson's position as "mechanic." (Jones Aff., Ex. 5 [Doc. No. 45-5].) Finally, since Plaintiff was fired, Defendants have sought to hire a replacement employee for the position of "crew member/mechanic." (Jones Aff., Ex. 18 [Doc. No. 50-9].)
Despite the parties' active debate about Johnson's title, "[a] job title alone is insufficient to establish the exempt status of an employee." 29 C.F.R. § 541.2. Rather, "[t]he exempt or nonexempt status of any particular employee must be determined on the basis of whether the employee's salary and duties meet the requirements" of each specific exemption. See id.
Here, the parties also disagree about the substance of Plaintiff's duties and responsibilities. Johnson claims that his responsibilities and duties as a mechanic were identical to his duties and responsibilities when his title was changed to "crew chief." (Johnson Dep. 81:6-10 [Doc. No. 48-3].) These job duties included cleaning, maintaining, and inspecting the race cars, replacing broken worn-out parts, and installing engines in order to "keep the car on all four wheels and going down the road." (Id. at 33:3-7, 78:1-10.) Both parties agree that Plaintiff was responsible for completing detailed maintenance preparation checklists while working on Defendants' race cars. (See Jones Aff., Ex. 4 [Doc. No. 45-5]; Derhaag Dep. 140-52 [Doc. No. 48-1].)
Derhaag contends that Plaintiff's responsibilities were much more expansive. He explains that Johnson had four main duties, including: (1) completing mechanical work; (2) managing Simon Gregg; (3) managing other employees in the racing shop and running the business when Derhaag was out of the country; and (4) helping to hire employees. The mechanical work that Derhaag recalls Johnson completed involved calling to arrange painting work for the cars, managing an inventory of the supplies and parts necessary for the race cars, recording mileage, lap times, and data from weekend events or races, and purchasing inexpensive car parts without authorization from Derhaag. (Derhaag Dep. 23:22-25, 24:1-2, 27:3-11, 27:17-23, 203:15-19 [Doc. No. 48-1].)
While Derhaag concedes that Johnson completed mechanical work during his 2010-2013 tenure as an employee, he argues that Johnson was not solely a mechanic. For example, Derhaag contends that Johnson coached and personally managed driver Simon Gregg. (Id. at 201:17-22.) According to Derhaag, managing Gregg involved interfacing with him, talking him into sitting in the race car because Gregg is claustrophobic,  taking care of Gregg's laundry and cleaning his racing underwear, and generally "babysit[ting] and manag[ing] all aspects of Mr. Gregg." (Id. at 66-67.) Derhaag described Johnson as "Simon's valet, " taking care of all of Gregg's wants and needs. (Id. at 69:10-14.) Defendants claim that Plaintiff also attended the crew chief meetings on behalf of Derhaag Motor Sports when Gregg raced. (Defs.' Resp. at 4-5 [Doc. No. 47].) Additionally, Defendants explain that Johnson was responsible for driving and coordinating logistics with Gregg's coach motor home. (Derhaag Dep. 26:9-17 [Doc. No. 48-1].) Gregg requested that an employee drive his motor home to each race for Gregg's personal use during the event. (Id.) Johnson would "fly to Jacksonville[, Florida, ] and pick up the motor home and then drive it to an event somewhere else." (Johnson Dep. 57:17-20 [Doc. No. 48-3].) As compensation for transporting Gregg's motor home, Johnson received an additional $200 a week in his paycheck. (Derhaag Dep. 55:6-16 [Doc. No. 48-1]; Defs.' Answer ¶ 14 [Doc. No. 7].) Plaintiff agrees that he was responsible for transporting Gregg's motor home, but Plaintiff disagrees with Derhaag's characterization of the relationship between Johnson and Gregg. Johnson claims that he was not Gregg's "manager, " but instead merely encouraged Gregg before and after races. (Johnson Dep. 64-65 [Doc. No. 48-3].)
In addition to managing Simon Gregg, Derhaag also contends that Plaintiff's responsibilities included managing employees in Derhaag Motor Sports' racing shop and managing the business when Derhaag traveled out of the country. Derhaag explained that Johnson took care of the shop and managing the people in the shop. (Id. at 63:2-4.) Plaintiff, however, denies supervising other mechanics in the shop while his job title was "mechanic" or "crew chief." (Johnson Dep. at 85-86 [Doc. No. 48-3].) Rather, Johnson claims that he would simply help other mechanics if they had "issues or if something wasn't right." (Id. at 30:15-18.) Derhaag additionally contends that when he would leave the country for international travel, Johnson "was in charge." (Derhaag Dep. 76:4-10 [Doc. No. 48-1].) In fact, sometimes Derhaag would leave the country for two or three weeks at a time, ostensibly leaving Johnson responsible for daily operations. (Id. at 76-77.) During these time periods other employees would report to Plaintiff and receive their assignments from him. (Id. at 77:11-13.) Johnson was also allegedly "in charge" at the racetrack if Derhaag was not present and others wanted to borrow a car part or tool. (Id. at 78:6-14.)
Finally, Derhaag claimed in his deposition that Johnson had input on who was hired "to touch race cars" at Derhaag Motor Sports. (Derhaag Dep. 63:7, 79:17-20 [Doc. No. 48-1].) Derhaag specifically remembers consulting Johnson when he hired Emrah Oruc, Cody Geiser, Tim Coudron, and Robert Gustafson. (Id. at 80-81.) Derhaag explained that while Johnson could not hire anyone himself, he could fire employees. (Id. at 106:21-22.) However, Johnson's alleged authority to terminate employees was not documented in any company policies or job descriptions. (Id. at 106:23-25.) Moreover, Johnson never exercised this alleged authority because no one was fired from the company while Johnson worked for Defendants from 2010 to 2013. (Johnson Dep. 83:9-21 [Doc. No. 48-3].)
Pursuant to the FLSA, Defendants are considered "employers, " and Plaintiff was Defendants' "employee." See 29 U.S.C. § 203(d), (e). Therefore, Defendants are subject to the FLSA minimum wage and overtime provisions. The FLSA requires that Defendants compensate its employees at a rate not less than minimum wage for the first forty hours worked in a workweek. 29 U.S.C. § 207(a)(1). For every hour worked in addition to the forty hour workweek, the FLSA requires Defendants to pay its employees "one and one-half times the regular rate at which [they] are employed." See 29 U.S.C. § 207(a)(1). Plaintiff claims that Defendants failed to compensate Plaintiff according to these provisions. (Compl. ¶ 33 [Doc. No. 1].)
3. Parties' Pleadings
On August 23, 2013, Plaintiff filed his Complaint [Doc. No. 1]. Plaintiff alleges that Defendants failed to properly classify Plaintiff as non-exempt, and thus, failed to pay Plaintiff off-the-clock and overtime wages that he was due. (Compl. ¶¶ 44-48, 52 [Doc. No. 1].) Moreover, Plaintiff claims that Defendants willfully violated the FLSA within the meaning of 29 U.S.C. § 255; and thus, the statute of limitations should be extended from two years to three years. (Id. ¶ 49.) As evidence of Defendants' allegedly willful violation, Johnson contends that "Defendants have failed to make, keep, and preserve records with respect to each of their employees sufficient to determine such employees' wages, hours, and other conditions and practice of employment." (Id. ¶ 53.) Johnson seeks damages in the amount of his unpaid off-the-clock and overtime work, and liquidated damages from three years immediately preceding the filing of this action, plus interest and other damages as allowed by law. (Id. ¶ 54.)
Defendants filed an Answer on September 12, 2013 [Doc. No. 7]. Defendants claim that Plaintiff's Complaint fails to state a claim upon which relief may be granted; and that some or all of Plaintiff's claims may be barred by the statute of limitations. (Defs.' Answer ¶¶ 1-2 [Doc. No. 7].) They claim that they did not fail to compensate Plaintiff because he was an exempt employee pursuant to the FLSA. (Id. ¶ 4.) Specifically, they state that "for all times relevant in the Complaint, Plaintiff was a TRANS-AM race team crew chief and as such performed managerial and administrative duties and was an exempt employee." (Id. ¶ 4; see id. ¶ 11.) Section 13 of the FLSA exempts certain categories of employees from overtime pay obligations. See 29 U.S.C. § 213. In relevant part, 29 U.S.C. § 213(a)(1) exempts employees who are employed "in a bona fide executive, administrative, or professional capacity." Two regulations, which are discussed in detail below, further define the "executive" and "administrative" exemptions. See 29 C.F.R. § 541.100 (general rule for executive employees); id. § 541.200 (general rule for administrative employees).
On June 2, 2014, Plaintiff filed a Motion for Partial Summary Judgment [Doc. No. 41] with supporting memorandum [Doc. No. 43] and several exhibits [Doc. No. 45]. Defendants filed their Response Memorandum on June 27, 2014 [Doc. No. 47], accompanied by several exhibits [Doc. No. 48]. Plaintiff filed his Reply brief on July 14, 2014 [Doc. No. 49], and oral argument was held on August 28, 2014 [Doc. No. 52]. During the hearing, the Court directed counsel to file supplemental briefing regarding case law on waiver of affirmative defenses in FLSA actions from the United States Court of Appeals for the Eighth Circuit. (Mins., Aug. 28, 2014 [Doc. No. 52].) Plaintiff filed his Supplemental Memorandum on August 29, 2014 [Doc. No. 54], and Defendants filed their Supplemental Memorandum on September 9, 2014 [Doc. No. 56].
B. Legal Opinion by Defense Counsel
In July 2012, at Derhaag's request, Defense counsel Speeter & Johnson prepared a legal memorandum about several issues pertaining to Derhaag Motor Sports' business practices. (Derhaag Aff. ¶ 3 [Doc. No. 27].) Plaintiff argues that this legal memorandum supports his claim that Defendants willfully failed to pay him overtime. (Pl.'s Mem. at 16 [Doc. No. 43].)
The memorandum contained: (1) a recommended substance abuse policy for Derhaag Motor Sports to implement; (2) legal advice about whether employees are required to have breaks under Minnesota state law; (3) legal advice about whether Derhaag Motor Sports is obliged to provide a reasonable accommodation for Johnson under the Americans with Disabilities Act ("ADA"); and (4) legal advice about whether mechanics at Derhaag Motor Sports are considered exempt employees under the FLSA. (Jones Aff., Ex. 8 [Doc. No. 45-8].) In the memorandum, Defense counsel concluded that it is "likely" that mechanics who work for Derhaag Motor Sports do not qualify for the motor carrier or professional FLSA exemptions; and therefore, the mechanics must be paid at an hourly rate and paid overtime. (Id. at 1-2.) Defense counsel encouraged Derhaag to review the Hendrick Motor Sports case, in which a different motor sports company faced a "similar issue" by misclassifying its "mechanics" as exempt employees. (Id. at 2.) Plaintiff alleges that Speeter & Johnson definitively declared in this document that Derhaag Motor Sports' mechanics are not subject to FLSA exemptions and must be paid one and one half times their regular rate for overtime hours worked. (Pl.'s Mem. at 16 [Doc. No. 43].) Plaintiff further alleges that Johnson was employed by Derhaag Motor Sports as a "mechanic." (Id.) Therefore, Plaintiff claims that Defendants not only knew that Johnson was a mechanic, but that they also willfully misclassified Johnson as exempt after reading this memorandum. (Id.)
Derhaag admitted during his second deposition that his legal questions about the substance abuse policy, the necessity of employee breaks, and the applicability of the ADA were all related to his concerns about Johnson. (Derhaag Dep. 251-256, June 5, 2014 [Doc. No. 48-2].) Given Derhaag's concession that three of the four sections of the legal memorandum explicitly concern Johnson, Plaintiff believes that the remaining section about exempt employees under the FLSA also pertains to Johnson. Plaintiff's belief is supported by the fact that, at the time the legal memorandum was written, Johnson was the only employee who was classified as exempt and was paid on a salary, as opposed to hourly, basis. (Id. at 291:2-6.)
Derhaag contends that his request for legal advice about the exemption status of mechanics under the FLSA was unrelated to Johnson. (Derhaag Dep. 283:1-13 [Doc. No. 48-2].) Nonetheless, during his deposition, Derhaag stated that "when [he was] asking [his lawyer] about whether mechanics or people who do mechanical work are exempt, " he "wasn't specifically talking about only [Johnson]." (Id. at 283:4-9) (emphasis added). Therefore, Derhaag arguably implied that although the FLSA exemption question was not limited to Johnson, Johnson was included in the pertinent category of employees.
Besides disagreeing about the relevance of the contents of the memorandum, the parties also disagreed about whether this document was privileged. Plaintiff disclosed that he had possession of a copy of the document during initial discovery exchanges in February 2014. (Johnson Aff. ¶ 4, [Doc. No. 28].) The following month, Defense counsel used this memorandum as an exhibit while deposing Plaintiff on March 18, 2014. (Pl.'s Mem. in Opp'n to Defs.' Mot. in Limine at 11 [Doc. No. 34].) During Derhaag's deposition a few weeks later, Defendants argued that the document was protected by attorney-client privilege. (Derhaag Dep. 190-93 [Doc. No. 48-1].) On May 21, 2014, Magistrate Judge Franklin L. Noel held that Defendants had waived attorney-client privilege "when [D]efense counsel used the memorandum as an exhibit during Plaintiff's deposition." (5/21/14 Order at 2 [Doc. No. 40].) Derhaag was subsequently deposed about the contents of the legal memorandum on June 5, 2014. (Derhaag Dep. 250 [Doc. No. 48-2].) Because this document in not protected by attorney-client privilege, the Court considers it insofar as it is helpful to determine whether to grant Plaintiff's motion in regards to Defendants' alleged willfulness in violating the FLSA.
C. Defendants' Answer to Plaintiff's Complaint and Defendants' Answers to Plaintiff's Interrogatories
In addition to seeking partial summary judgment, in Plaintiff's Reply brief, Johnson also moved to strike two documents that were used as evidentiary support in Defendants' Opposition Memorandum. Plaintiff moved to strike Defendants' Answer to Plaintiff's Complaint (Johnson Aff., Ex. 4 [Doc. No. 48-5]) and Defendants' Answers to Plaintiff's Interrogatories (Johnson Aff., Ex. 3, [Doc. No. 48-4]) because he alleges that the documents were not properly verified. (Pl.'s Reply at 3-4 [Doc. No. 49].) Johnson argues that because the documents were signed, but not notarized, they violate the Federal Rules of Civil Procedure. However, Johnson does not specify which rules or provisions were allegedly violated.
A. Verification of Answer to Complaint and Answers to Interrogatories
Usually, a court determines if summary judgment is proper based on the " pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any..." Fed.R.Civ.P. 56(c) (emphasis added); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). In order for a party to rely on these documents during summary judgment, they must be properly executed. As noted above, Plaintiff moved to strike Defendants' Answer to Plaintiff's Complaint (Johnson Aff., Ex. 4 [Doc. No. 48-5]) and Defendants' Answers to Plaintiff's Interrogatories (Johnson Aff., Ex. 3, [Doc. No. 48-4]) because he alleges that the documents were not properly verified. (Pl.'s Reply at 3-4 [Doc. No. 49].)
1. Answer to Complaint
Federal Rule of Civil Procedure 11 governs the signatures and verification required for a party's pleadings. Pursuant to Rule 11:
Every pleading, written motion, and other paper must be signed by at least one attorney of record in the attorney's name-or by a party personally if the party is unrepresented. The paper must state the signer's address, e-mail address, and telephone number. Unless a rule or statute specifically states otherwise, a pleading need not be verified or accompanied by an affidavit. The court must strike an unsigned paper unless the omission is promptly corrected after being called to the attorney's or party's attention.
Fed. R. Civ. P. 11(a) (emphasis added). The Local Rules for the District of Minnesota do not require that every pleading be "verified or accompanied by an affidavit."
Plaintiff claims that a non-notarized Answer to a Complaint "cannot be used for evidentiary purposes during summary judgment." (Pl.'s Reply at 4 [Doc. No. 49].) The Court disagrees. Rule 11 and the Local Rules for the District of Minnesota do not require parties to verify an Answer to a Complaint in order to rely upon it for evidentiary purposes. See Fed.R.Civ.P. 11(a). In order to satisfy Rule 11, Defendants' Answer must only be signed by one attorney of record and include the attorney's contact information. See id. Defendants' Answer is signed by Defense attorney Patrick V. Johnson and the signature block includes his mailing, telephone, and email contact information. (Johnson Aff., Ex. 4 at 3 [Doc. No. 48-5].) Therefore, Defendants' Answer satisfies ...