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Schmidt v. Directv, LLC

United States District Court, D. Minnesota

August 17, 2017

GEORGE SCHMIDT, JR., TIMOTHY HANGGI, DAN BENJEGERDES, ROBERT KIEKBUSCH, JR., JAMES NORD, MITCHELL FINWALL, DYLAN MONROE, JOHN KOZIOL, TANNER PORISCH, NEILL JERRY, JEFFERY ENGELKE, DENNIS GREGORSON, CRAIG WEMPLE, VACHEE YANG, Plaintiffs,
v.
DIRECTV, LLC, and DIRECTSAT USA, LLC, Defendants.

          GEORGE A. HANSON, STUEVE SIEGEL HANSON, LLP, AND PAUL J. LUKAS, NICHOLS KASTER, PLLP, FOR PLAINTIFFS.

          COLIN D. DOUGHERTY, FOX ROTHSCHILD LLP, AND AARON MILLS SCOTT, FOX ROTHSCHILD LLP, FOR DEFENDANTS.

          MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTIONS FOR SUMMARY JUDGMENT AND SANCTIONS

          JOHN R. TUNHEIM CHIEF JUDGE

         Defendants DIRECTV, LLC (“DIRECTV”) and DirectSat USA, LLC (“DirectSat”) (together “Defendants”) sell satellite subscription services to the general public. DIRECTV contracts with DirectSat to perform installations, and DirectSat, in turn, subcontracts with entities (“Subordinate Entities”)[1] to perform that work. Plaintiffs George Schmidt, Jr., Timothy Hanggi, Dan Benjegerdes, Robert Kiekbusch, Jr., James Nord, Mitchell Finwall, Dylan Monroe, John Koziol, Tanner Porisch, Neill Jerry, Jeffery Engelke, Dennis Gregorson, Craig Wemple, and Vachee Yang (collectively, “Plaintiffs”) were Minnesota satellite installation technicians who installed DIRECTV satellite systems for customers.

         Plaintiffs instituted this action under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., seeking to obtain overtime compensation from Defendants for uncompensated work performed in excess of forty hours per week. Plaintiffs assert that Defendants retained control and management over Plaintiffs but attempted to avoid FLSA overtime requirements by treating Plaintiffs solely as independent contractors or employees of Subordinate Entities.

         Defendants move for summary judgment on several grounds and also move for sanctions relating to a declaration report filed by Plaintiffs' counsel. The Court will grant in part and deny in part Defendants' motions for summary judgment. Specifically, the Court will grant summary judgment with respect to Plaintiffs' FLSA claims falling outside of a two-year limitations period because the record does not support a finding of Defendants' willfulness. In all other respects, the Court will deny summary judgment because there are genuine and material factual disputes relating to the FLSA claims and defenses. The Court will also deny the Defendants' motion for sanctions because the report at issue need not comply with Fed.R.Evid. 1006 at this stage of the proceedings.

         BACKGROUND [2]

         I. FACTUAL BACKGROUND

         DIRECTV, a California limited liability company, (Second Decl. of Colin D. Dougherty (“Second Dougherty Decl.”), Ex. 126 at 1, Feb. 1, 2017, Docket No. 187), is a “leading provider of digital television entertainment, ” that sells “digital entertainment programming” to consumers via satellite, (First Decl. of Colin D. Dougherty (“First Dougherty Decl.”), Ex. 79 at 5, Feb. 1, 2017, Docket No. 186). After a customer agrees to purchase a DIRECTV satellite system, technicians receive a work order to install the necessary DIRECTV equipment in the customer's home or business. (Id. at 6; Second Dougherty Decl., Ex. 148 at 65:22-66:4, 69:13-23.)

         DIRECTV contracts with home service providers (“HSPs”), like DirectSat, to perform work orders for installations. (Second Dougherty Decl., Ex. 148 at 16:25-17:22; 45:20-46:4.) DirectSat is a Delaware limited liability company with its principal place of business in Pennsylvania. (First Dougherty Decl., Ex. 3 ¶ 21; id., Ex. 5 ¶ 21.) DirectSat does not share a board of directors, officers, or offices with DIRECTV. (Second Dougherty Decl., Ex. 156 ¶ 6.)

         DirectSat, in turn, contracts with Subordinate Entities to perform the installation work that DirectSat agreed to provide DIRECTV. (Second Dougherty Decl., Ex. 151 at 25:17-26:7.) It is undisputed that Plaintiffs were Minnesota satellite installation technicians who installed DIRECTV satellite systems for customers while Plaintiffs were classified as either W-2 employees or independent contractors of Subordinate Entities.

         The relationships between DIRECTV and DirectSat, as well as DirectSat and Subordinate Entities, are delineated in the contractual agreements detailed in part below.

         A. DIRECTV and DirectSat: Home Services Provider Agreement (“HSP Agreement”)

         The relationship between DIRECTV and DirectSat is governed by an HSP Agreement. (See Second Dougherty Decl., Ex. 126 (“HSP Agreement”).)[3] The HSP Agreement states that DirectSat is as an “independent contractor” (id. at 11), and explains that DirectSat will install and maintain DIRECTV's satellite system based on DIRECTV's work orders, (id. at 1). To compensate DirectSat for its services under the agreement, DIRECTV pays DirectSat according to a rate matrix for certain services and according to a schedule for certain service calls. (Id. at 5-6.)

         In pertinent part, the HSP Agreement places certain restrictions on DirectSat when it dispatches a subcontractor technician to perform the installation and maintenance services contemplated in the HSP Agreement. (See Id. at 4 (incorporating Exhibit 2.c).) First, it requires any DirectSat subcontractor technician to be “qualified, able and suitable to perform the duties assigned in a good, professional and workmanlike manner and with care and concern for DIRECTV” and have “successfully completed the applicable DIRECTV-approved training program.” (Id. at 25.) Additionally, the HSP Agreement requires that any DirectSat subcontractor technician pass a background check and drug test, (id.), wear a DIRECTV uniform (id. at 27), adhere to DIRECTV personal grooming standards, (id.), and obtain specific technician certifications, (id.). DIRECTV also has the sole ability to approve or terminate any subcontractor technician. (Id. at 25.)

         B. DirectSat and Subordinate Entities: Independent Contractor Agreement (“ICA”)

         Similarly, the relationship between DirectSat and Subordinate Entities is governed by an ICA. (See Second Dougherty Decl., Ex. 135 (“ICA”).)[4] The ICA provides that the respective Subordinate Entity is an “independent contractor” or “Contractor, ” that will perform satellite installation services in accordance with DIRECTV's quality assurance guidelines. (Id. at 2.) Under the ICA, DirectSat pays the Subordinate Entity a predetermined amount per task, and the amount paid varies based on the type of task. (Id. at 1, 11-12.)

         In pertinent part, the ICA requires a Subordinate Entity to conduct drug tests and background checks of its technicians in accordance with DIRECTV's guidelines, and to provide those results to DirectSat. (Id. at 2.) The ICA also requires that a Subordinate Entity provide written notification to DirectSat of technicians who resign or are terminated shortly after a personnel change, (id. at 2); submit to DirectSat a motor vehicle record review of technicians before they begin working, (id. at 3); and clear each technician with DirectSat's risk management department, (id. at 2-3).

         C. SIEBEL

         Defendants also maintain a software called SIEBEL to schedule installation and service call work orders for technicians, regardless of whether that technician is affiliated with DIRECTV, DirectSat, or a Subcontracting Entity. (Decl. of Todd C. Werts (“Werts Decl.”), Ex. 19 at 34:5-11, Mar. 3, 2017, Docket No. 198); see also Id. at 37:15-38:19 (explaining that both DirectSat and DIRECTV use SIEBEL to manage work orders); HSP Agreement at 26 (providing SIEBEL maintains subcontractor technicians' identities). While either Defendant can access SIEBEL, the Subordinate Entities cannot. (Werts Decl., Ex. 19 at 34:16-25; id., Ex. 21 at 43:1-7; id., Ex. 29 at 36:7-37:20.) SIEBEL maintains contact information, work-day starting addresses, skill sets, professional certifications, and work order history for all technicians. (Werts Decl., Ex. 30 at 121:16-122:5, 124:25-125:9, 141:12-143:12, 270:23-271:8; Second Doughtery Decl., Ex. 148 at 216:5-217:29.)

         There is conflicting evidence on whether SIEBEL accurately recorded or had the ability to accurately record the hours Plaintiffs worked. (Compare Werts Decl., Ex. 29 at 151:16-24 (suggesting SIEIBEL could track the actual start and stop times, travel times, and planned duration times for work orders), with Doughtery Decl., Ex. 150 at 275:7-12 (providing SIEBEL does not accurately reflect the hours Plaintiffs worked), and id., Ex. 151 at 67:17-68:15 (explaining SIEBEL only “soft books” work orders to technicians “because [DirectSat or a Subcontracting Entity] could end up [scheduling] any different technician.”).)

         II. PROCEDURAL BACKGROUND

         Plaintiffs filed the initial Complaint against Defendants on November 1, 2013, and the Second Amended Complaint on March 12, 2015. Plaintiffs asserted two claims: (1) violation of the FLSA for uncompensated work performed in excess of forty hours a week; and (2) state-law claims for damages.

         On April 3, 2015, Defendants moved to dismiss the action in its entirety. On February 9, 2016, the Court granted Defendants' motion to dismiss the state-law claim, but denied the motion to dismiss the FLSA claim. Schmidt v. DIRECTV, LLC, No. 14-3000, 2016 WL 519654 (D. Minn. Jan. 22, 2016), adopted by 2016 WL 526210 (D. Minn. ...


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