Kelly v. Healthcare Services Group, Inc.

106 F. Supp. 3d 808, 2015 U.S. Dist. LEXIS 64258, 2015 WL 2379133
CourtDistrict Court, E.D. Texas
DecidedMay 18, 2015
DocketCase No 2:13-cv-00441-JRG
StatusPublished
Cited by1 cases

This text of 106 F. Supp. 3d 808 (Kelly v. Healthcare Services Group, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kelly v. Healthcare Services Group, Inc., 106 F. Supp. 3d 808, 2015 U.S. Dist. LEXIS 64258, 2015 WL 2379133 (E.D. Tex. 2015).

Opinion

MEMORANDUM OPINION AND ORDER

RODNEY GILSTRAP, District Judge

Before the Court is the Motion to Decertify Collective of Salaried Account Managers filed by the Defendant Healthcare Services Group (HSG) (Dkt. No. 235, “Mot.”). The Plaintiffs oppose the Motion (Dkt. No. 243, “Resp.”). For the reasons set forth below, the Motion is DENIED.

OVERVIEW OF MOTION

This is a motion to decertify the class in a class action lawsuit brought under the Fair Labor Standards Act (FLSA). In this suit, a category of HSG employees called “account managers” assert that they have been improperly characterized as exempt employees (thereby being excluded from receiving overtime compensation) by HSG. The opt-in account managers assert that their job is actually that of non-exempt, manual labor cleaning staff. HSG asserts that the account manager job is that of an exempt supervisor and trainer. This Motion to Decertify, generally, determines whether the opt-in account managers are “similarly situated” in their collective action and consequently whether their case can properly proceed as a class action.

The case has an extensive history. On October 17, 2013, the Court denied without prejudice the Plaintiffs first request to certify the class. (Dkt. No. 38). After six months of further discovery and a narrowing of the claims, the Court conditionally certified the class on May 2, 2014. (Dkt. No. 65). After nearly a year of discovery, HSG now moves to decertify the class in light of the evidence gathered.

The evidence that has been gathered by both sides is substantial. The opt-in Plaintiffs present 2,964 pages of-deposition testimony, 159 pages of corporate documents and emails, and a 20 page rebuttal expert report. HSG presents 3,332 pages of deposition testimony, 314 pages of declarations, and 118 pages of expert reports. Collectively, the Court has considered 6,934 pages of arguments, documents, emails, depositions, declarations, and expert statements on this subject, spanning a total of 273 exhibits. The Court held a hearing concerning the motion to decertify on April 17, 2015.

[811]*811In all, a representative sample constituting 88 of the approximately 900 opt-in Plaintiffs have been deposed. To ensure this sample was thereby representative, counsel for each side picked half of the deponents from the total field of opt-ins. (Discovery Order at 6, Dkt. No. 123).1 In addition to the opt-in Plaintiffs, Dave Hurlock, HSG’s senior vice president, and John Kelly, a divisional vice president, were also deposed.

BACKGROUND

Defendant Healthcare Services Group is a publicly traded corporation whose nationwide business is the overall management of housekeeping departments in nursing homes and similar facilities. (John Kelly Depo. 178:20-179:13, 236:2-17, Mot. Ex. 115). To oversee its business HSG employs a common hierarchical corporate structure: a president, vice presidents, divisional vice presidents, regional managers, and district managers. (Id. 226:13-228:3). HSG divides the United States into nine districts, which are each overseen by a divisional vice president. (Id.) Those nine divisions are subdivided into sixty-five regions that are overseen by the regional managers. (Id.) The sixty-five regions are further subdivided into four hundred total districts, which are each headed by a district manager. (Id.) Each district has an average of eight to twelve facilities, or “accounts,” located within its bounds. (Id.) Each facility has an “account manager” that works at the facility.2 (Id.) These salaried account managers are the employees at issue in the conditional class.

The facilities in question are not owned or operated by HSG but, instead, are owned and operated by independent third parties. In most instances, HSG’s business is to supply labor, primarily in the form of a cleaning staff, to the facilities.3 (Id. 34:2-35:10). In most facilities, HSG hires housekeepers, light laundry workers, heavy laundry workers, and sometimes floor specialists to keep- each facility clean. In facilities where HSG supplies the labor, it is undisputed that HSG’s account managers also provide labor to help keep the facilities clean. (See Account Manager Job Description at 3, Dkt. No. 250-6 (listing manual labor tasks as “Essential Functions of the Job”)).

It is undisputed that there are two different types of account managers: “exempt” (salaried) or “non-exempt” (hourly). The exempt or nonexempt status of an account manager is not determined based on the individual account manager’s actual day-to-day duties. It is also not based on the amount of manual labor performed by the individual account manager. Instead, as Dave Hurlock, senior vice president of HSG stated, the exempt or non-exempt status of an account manager is based on “the dollars available to perform the management functions” at each facility, which [812]*812is determined when the third party owner of a facility contracts directly with HSG. (Hurlock Depo. 87:7-15, Resp. Ex. 51).

Each facility has a “labor budget” or “payroll budget” that is determined at the time the facility contracts with HSG. (Id. 47:17-19). This budget determines the number of hours that hourly workers are scheduled to work. Eighty cents of every dollar spent at HSG goes to pay for labor. (John Kelly Depo. 99:10-12, Mot. Ex. 115 & Resp. Ex. 53). Therefore, in the words of HSG’s 30(b)(6) witnesses, “the payroll budgets are especially important.” (Id. 97:16-18).

Plaintiffs point to an overarching theme that unites their contentions: All salaried account managers are required “to complete the remaining work” at a facility (Resp. at 2), which requires the account managers “to perform the job assignments of the Light Housekeeper, Heavy Housekeeper and Laundry Worker,” (Account Manager Job Description at 3). According to the Plaintiffs, this saves money for HSG because the salaried account manager is a fixed cost, while the hourly laborers (e.g., housekeepers) are variable costs. By using a fixed cost source instead of a variable cost source to supply extra hours of manual labor, a facility can stay within the established labor budget for that facility even if extra labor hours are needed. Since controlling payroll — HSG’s biggest cost — is HSG’s primary objective, HSG requires that the district managers (who oversee the account managers) keep “all facilities under budgeted hours every month.” (District Manager General Goals/Responsibilities at 1, Resp. Ex. 6). John Kelly, HSG’s 30(b)(6) witnesses, confirms this mentality: “The correct number for overtime is zero.” (John Kelly Depo. 100:18-22, Resp. Ex. 53).

Believing that account managers were wrongly classified as “exempt” employees because of the extent of the manual labor they perform, the named Plaintiffs filed this lawsuit. The question for the Court at this stage is whether the ease can prop-. erly proceed as a class action.

LEGAL STANDARD

Under the FLSA, employees who bring suit may do so individually or as a collective action on behalf of “themselves and other employees similarly situated.” 29 U.S.C. § 216(b). FLSA collective actions operate on an “opt-in” basis in which potential class members must give affirmative notice of their consent to join the suit. Mooney v. Aramco Servs. Co.,

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
106 F. Supp. 3d 808, 2015 U.S. Dist. LEXIS 64258, 2015 WL 2379133, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kelly-v-healthcare-services-group-inc-txed-2015.