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hebron_v._directv__llc.__n.d._ill.__2016_.pdf
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Hebron v. Directv, LLC. (N.D. Ill., 2016)
ROBERT HEBRON, et al., Plaintiffs,
v.
DIRECTV, LLC.; MULTIBAND CORP.;
and DIRECTSAT USA, LLC,
Defendants.
BACKGROUND
DIRECTV is a Delaware corporation with
its principal place of business in El Segundo,
California. (SAC ¶ 16.) Multiband Corp. is a
Minnesota corporation, with its principal
place of business in New Hope, Minnesota.
(Id. at ¶ 17.) DirectSat is a Delaware limited
liability company with its principal place of
business in King of Prussia, Pennsylvania.
(Id. at ¶ 18.) Robert Hebron is an individual
residing in Missouri. (Id. at ¶ 6.) The
remaining Plaintiffs are individuals residing
in Illinois. (Id. at ¶¶ 7-15.) Plaintiffs worked
as satellite television installation technicians
whose principal duty was to install and repair
DIRECTV satellite television service. (Id. at ¶
22.)
Case No. 14-cv-8155
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
April 7, 2016
Judge John W. Darrah
MEMORANDUM OPINION AND
ORDER
On March 24, 2015, Plaintiffs filed a First
Amended
Complaint
(“FAC”)
against
Defendants DIRECTV, LLC; Multiband Corp.;
and DirectSat USA, LLC., (hereinafter,
“Defendants”)1. The FAC alleged violations of
the Fair Labor Standards Act of 1938 (the
“FLSA”), 29 U.S.C. § 201, et seq.; the Illinois
Minimum Wage Law; the Illinois Wage
Payment and Collection Act; and the Illinois
Employee Classification Act. Defendants filed
Motions to Dismiss [62, 76], pursuant to
Federal Rule of Civil Procedure 12(b)(6), for
failure to state a claim for which relief can be
granted. On October 13, 2015, this Court
granted Defendants’ Motion to Dismiss in
part, and denied in part. On November 12,
2015, Plaintiffs filed a Second Amended
Complaint (“SAC”) against Defendants. The
SAC alleges one count under the FLSA,
alleging minimum wage and overtime wage
violations.2 Defendants have filed Motions to
DIRECTV controls and manages their
service technicians by either employing them
directly (“W-2 Employees”) or through an
employment network of service providers (the
“Provider Network”) consisting of Home
Service
Providers
(“HSPs”),
including
DirectSat, Secondary Services Providers
(“Secondary Providers”), subcontractors, and
service technicians. (Id. at ¶ 23.) DIRECTV
was the primary client of the HSPs and
Secondary Providers and was the source of
substantially all of their income. (Id. at ¶ 26.)
DIRECTV gives Providers advance payments
in order to keep Providers afloat. (Id. at ¶ 48.)
DIRECTV has absorbed several Providers
through acquisition. (Id. at ¶ 49.) Currently,
there are only three independent HSPs in
operation, including DirectSat. (Id.)
Page 3
DIRECTV controls the Provider Network
through contracts with HSPs and Secondary
Providers; the HSPs and Secondary Providers
then enter into contracts with largely captive
entities that DIRECTV refers to as
subcontractors; and those subcontractors
then enter into contracts with the technicians
who install the satellite television equipment.
(Id. at ¶ 28.) In some cases, the HSPs and
Page 2
Dismiss [112, 116] pursuant to Federal Rules
of Civil Procedure 8 and 12(b)(6). For the
reasons
discussed
below,
Defendants’
Motions to Dismiss [112, 116] are granted in
part and denied in part.
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Hebron v. Directv, LLC. (N.D. Ill., 2016)
Secondary Providers contract directly with
technicians. (Id.). DirectSat passed along
scheduling from DIRECTV and provided
supervision of some technicians. (Id. at ¶ 30.)
DirectSat maintained a contractor file for
each technician working for them. (Id. at ¶
31.) The files were regulated and audited by
DIRECTV. (Id.) The technicians were called
1099 technicians or independent contractors.
(Id.) DirectSat had the ability to enter into
and terminate contracts with the 1099
technicians. (Id. at ¶ 33.) DirectSat also
maintained
warehouses
where
1099
technicians had to pick up some equipment
and take some training. (Id. at ¶ 34.)
details of Plaintiffs’ day-to-day work and
compensation. (Id. at ¶ 65.)
Plaintiffs were required to purchase and
wear uniforms with DIRECTV insignia on
them and to display DIRECTV insignia on
vehicles driven to customers’ homes. (Id. at ¶
39.) Plaintiffs were also made to hold
themselves out as agents of DIRECTV. (Id. at
¶ 86.) DIRECTV also requires that all
technicians
pass
pre-screening
and
background checks and obtain a certification
from
the
Satellite
Broadcasting
&
Communications Association before they
could be assigned work orders. (Id. at ¶ 76.)
Independent Contractor Plaintiffs were also
required to purchase supplies necessary to
perform installations and required to provide
all maintenance and purchase all gas for the
vehicles they drove between customers’
homes. (Id. at ¶ 113.)
Technicians installed DIRECTV’s satellite
television equipment according to the same
policies,
procedures,
practices,
and
performance
standards
required
by
DIRECTV. (Id. at ¶ 36.) DIRECTV uses
Provider Agreements to ensure that
technicians perform their work as specified,
and
Subcontractor
Agreements
and
Technician Agreements incorporate the
provisions of the Provider Agreements. (Id. at
¶ 38.) The Provider Agreements control
almost all facets of the technicians’ work. (Id.
at ¶ 39.) Each technician is assigned a work
order through a centralized computer
software system that DIRECTV controls. (Id.
at ¶ 40.) DIRECTV mandates certain methods
and standards of installation. (Id. at ¶37.)
Because of this, each technician’s job duties
are virtually identical. (Id.) DIRECTV used a
database program known as SIEBEL to
coordinate the assignment of work orders to
technicians using a unique “Tech ID Number”
for
Plaintiffs were compensated on a piecerate payment scheme that is utilized
throughout DIRECTV’s network. (Id. at ¶
102.)
Under
the
piece-rate
system,
technicians are paid on a per-task basis for
certain enumerated “productive” tasks. (Id. at
¶ 107.) Plaintiffs were not compensated for
assembling satellite dishes, transportation to
and from assignments, reviewing and
receiving schedules, contacting customers to
confirm installations, obtaining required
supplies,
assisting
other
technicians,
performing required customer education,
contacting DIRECTV to report in or activate
service, working on installations that were not
completed, and working on installations
where Plaintiffs had to return and perform
additional work on
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Page 5
each technician. (Id. at ¶42.) Upon arriving at
each work site, technicians were required to
check-in with DIRECTV. (Id. at ¶ 44.) After
an assigned job, technicians were required to
report to DIRECTV that the installation was
complete. (Id.) Through the SIEBEL system,
DIRECTV and the Providers control the
previously
completed
installations
(“chargebacks”). (Id. at ¶¶ 108-112) There was
no contract, memorandum, or other
document between Plaintiffs and Defendants,
memorializing or explaining the pay system.
(Id. at ¶ 105.)
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Hebron v. Directv, LLC. (N.D. Ill., 2016)
DIRECTV and Providers’ quality-control
personnel reviewed Plaintiffs’ work and
imposed “chargebacks” and/or “rollbacks”
based on those reviews. (Id. at ¶ 112.)
Chargebacks
were
deductions
from
technicians’ pay if there were issues with an
installation or questions from a customer.
(Id.) Some issues included: faulty equipment,
improper installation, customer calls on how
to operate their remote control, and
customers’ failure to give greater than a
ninety-five percent satisfaction rating for the
services provided. (Id.)
defendant “with ‘fair notice’ of the claim and
its basis.” Tamayo v. Blagojevich, 526 F.3d
1074, 1081 (7th Cir. 2008) (quoting Fed. R.
Civ. P. 8(a)(2) and Twombly, at 544-555).
Under Rule 12(b)(6), the court accepts the
complaint’s well-pleaded factual allegations
as true, and all reasonable inferences are
construed in the plaintiff’s favor. Twombly, at
555-56.
ANALYSIS
FLSA
Plaintiffs allege that Defendants violated
the FLSA by failing to pay overtime wages and
failing to pay minimum wage. Defendants
argue that Plaintiffs have not shown that an
employer-employee relationship existed for
the purposes of the FLSA. Employer is
defined as including “any person acting
directly or indirectly in the interest of an
employer in relation to an employee . . . .” 29
U.S.C. § 203(d). The “FLSA contemplates
several simultaneous employers who may be
responsible for compliance with the FLSA.”
Villareal v. El Chile, Inc., 776 F. Supp. 2d 778,
784 (N.D. Ill. 2011) (citing Falk v. Brennan,
414 U.S. 190, 191 (1973)). “Two or more
employers may jointly employ someone for
the purpose of the FLSA.” Karr v. Strong
Detective Agency, Inc., 787 F.2d 1205, 1207
(7th Circ. 1986); see also 29 C.F.R. § 791.2.
For a joint-employer relationship to exist,
each alleged employer must exercise control
over the working conditions of the employee.
See Moldenhauer v. Tazewell-Pekin Consol.
Commc’ns Ctr., 536 F.3d 640, 644 (7th Cir.
2008) (quoting Moreau v. Air France, 343
F.3d 1179, 1182 (9th Cir. 2003)).
Plaintiffs allege that they were routinely
required to work more than forty hours per
week, while being denied overtime pay and
being subjected to an effective wage rate
below that required by law. (Id. at ¶ 115-116.)
LEGAL STANDARD
To properly state a claim, the plaintiff
must present “a short and plain statement of
the claim showing that the pleader is entitled
to relief; and . . . a demand for the relief
sought . . . .” Fed. R. Civ. P. 8. Rule 8 “does
not require ‘detailed factual allegations,’ but it
demands more than an unadorned, the
defendant-unlawfully-harmed-meaccusation.” Ashcroft v. Iqbal, 129 S. Ct. 1937,
1949 (2009) (quoting Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 555 (2007)). In order
to withstand a 12(b)(6) motion, a plaintiff
must plead sufficient factual matter to state a
claim for relief that is “plausible on its face.”
Iqbal, 129 S. Ct. at 1949 (citing Twombly, 550
U.S. at 570). “While legal conclusions can
provide the complaint’s framework, they must
be supported by factual allegations.” Iqbal, at
1939. Plaintiffs are not required to “plead the
Page 7
Page 6
Under the
regulations:
elements of a cause of action along with facts
supporting each element.” Runnion ex rel.
Runnion v. Girl Scouts of Greater Chicago &
Nw. Indiana, 786 F.3d 510, 517 (7th Cir.
2015). The complaint must provide a
Department
of
Labor’s
Where the employee performs
work which simultaneously
benefits two or more employers,
or works for two or more
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Hebron v. Directv, LLC. (N.D. Ill., 2016)
employers at different times
during the workweek, a joint
employment
relationship
generally will be considered to
exist in situations such as: (1)
where there is an arrangement
between the employers to share
the employee’s services, such as
to interchange employees; or (2)
where one employer is acting
directly or indirectly in the
interest of the other employer
(or employers) in relation to the
employee; or (3) where the
employers are not completely
disassociated with respect to the
employment of a particular
employee and may be deemed
to share control of the
employee, directly or indirectly,
by reason of the fact that one
employer controls, is controlled
by, or is under common control
with the other employer.
whether the FLSA applies. See Goldberg v.
Whitaker House Co-op., Inc., 366 U.S. 28, 33
(1961).
Page 8
Power to Hire and Fire Employees
Defendants contend that Plaintiffs have
not sufficiently alleged Defendants had the
power to hire or fire them. Plaintiffs allege
Defendants
authorized
subcontracting
principals to hire Plainitffs to perform
DIRECTV work only if they met DIRECTV’s
non-discretionary
pre-hire
conditions,
including that Plaintiffs: (1) complete
DIRECTV’s New Hire training and the
Satellite Broadcasting & Communications
Association Certified Installer Training, (2)
pass a criminal background check, and (3)
pass a nine-panel drug screen. (SAC ¶ 76.)
But Plaintiffs concede that DIRECTV and the
HSP Defendants did not accept applications
or interview potential candidates. Plaintiffs
contend Defendants nonetheless determined
who could and could not be hired to install
DIRECTV systems. (Id. ¶¶ 74-76.) Plaintiffs
also allege Defendants retained the ultimate
and unilateral authority to terminate their
employment
by
de-authorizing
their
technician ID number and prohibiting
Plaintiffs from continuing to receive work
orders. (Id. ¶¶ 70, 77-78.)
29 C.F.R. § 791.2(b); see also Cuff v. Trans
States Holdings, Inc., 768 F.3d 605, 608 (7th
Cir. 2014).
Courts look at several factors to
determine whether an entity is a joint
employer, including whether the alleged
employer: “(1) had the power to hire and fire
employees, (2) supervised and controlled
employee work schedules or conditions of
payments, (3) determined the rate and
method of payment, and (4) maintained
employment records.” Moldenhauer, 536
F.3d at 644. The FLSA “has been construed
liberally to apply to the furthest reaches
consistent with congressional direction.”
Mitchell v. Lublin, McGaughy & Associates,
358 U.S. 207, 2011 (1959). “A determination
of whether the employment by the employers
is to be considered joint employment or
separate and distinct employment for
purposes of the act depends upon all the facts
in the particular case.” 29 C.F.R. § 791.2(a).
The economic reality of the situation controls
As pled, DIRECTV “unquestionably plays
a role in hiring and firing technicians.”
Jacobson v. Comcast Corp., 740 F. Supp. 2d
683, 689 (D. Md. 2010). DIRECTV does set
some standards for the hiring of technicians
and maintains and distributes lists of poorly
performing technicians. (SAC, ¶¶ 82-83).
Plaintiffs also allege that DirectSat and
Multiband had the power to enter into and
terminate contracts with technicians. (Id. ¶
33.) Plaintiffs have sufficiently pled that
Defendants had influence over the hiring
and/or firing process.
Supervision and Control
-4-
Hebron v. Directv, LLC. (N.D. Ill., 2016)
Defendants
argue
that
Plaintiffs’
assertions that DIRECTV “directly and
indirectly” supervised their “work schedules
and conditions of employment” are
insufficient to establish a
measures.” (Dkt. 113 at 14.) “[D]etailed
instructions and a strict quality control
mechanism will not, on their own, indicate an
employment relationship.” Jacobson v.
Comcast Corp., 740 F. Supp. 2d 683, 690
Page 9
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joint-employer relationship. Plaintiffs allege
Defendants retained authority to control and
did control all meaningful conditions of
Plaintiffs’
employment.
Specifically,
DIRECTV promulgated mandatory rules,
policies, and practices regarding the manner
and method by which installations were to be
performed. (Id. ¶¶ 35-37, 87.) DIRECTV
contractually
obligated
DirectSat
and
Multiband to hand down these rules and
policies to all technicians. (Id. at ¶ 38.)
DIRECTV developed and provided mandatory
training, which it required of all technicians,
including Plaintiffs. (Id. at ¶¶ 42, 84.)
(D. Md. 2010). However, the conduct
Plaintiffs allege goes beyond quality control.
Plaintiffs allege that they were given work
orders by Defendants, who then monitored
and tracked Plaintiffs and evaluated that
work. Plaintiffs have plausibly alleged control
and supervision by Defendants.
Rate and Method of Payment
Plaintiffs admit that Defendants did not
pay the Plaintiffs but argue that the
compensation method was set by and
ultimately funded by DIRECTV. There are no
specific allegations that DIRECTV or
DirectSat set Plaintiffs’ rate and method of
payment. Rather Plaintiffs allege that
DIRECTV “sets an amount it is willing to pay
for certain defined tasks.” (SAC ¶ 91.) These
allegations remain substantively unchanged
from the FAC. While DIRECTV determined
what tasks were compensable and what tasks
were not, there is no allegation that they
determined the rate for compensation.
Further, Plaintiffs admit that Providers, and
not DIRECTV, paid Plaintiffs using their own
payroll and paycheck systems. Plaintiffs have
not sufficiently alleged that DIRECTV and
DirectSat determined the rate and method of
payment.
DIRECTV
maintained
an
online
scheduling and management system to
schedule, track, and manage all DIRECTV
installation work performed by Plaintiffs. (Id.
¶¶ 42, 84.) DIRECTV created daily work
orders and assigned them to Plaintiffs. (Id. ¶
42.) Furthermore, DIRECTV required all
technicians, including Plaintiffs, to wear
DIRECTV uniforms, drive the DIRECTVbranded vehicles and display DIRECTVmarked credentials. (Id. ¶ 45.) Plaintiffs also
allege Defendants supervised and controlled
them through personnel monitoring and postinstallation customer surveys. (Id. ¶¶ 44, 82,
84.) DirectSat and DIRECTV personnel
conducted on-site inspections and audits of
the technical proficiency of Plaintiffs’ work.
(Id. ¶ 80.) Defendants measured Plaintiffs’
work performance against metrics they
developed, circulated reports identifying lowperforming technicians, and demanded
improvement from bottom performing
technicians. (Id. ¶¶ 82-83.)
Employment Records
Plaintiffs admit that DIRECTV does not
keep employment-related records. (Id. ¶ 96.)
DIRECTV does require HSPs to retain
paperwork on technicians, which is subject to
inspection by DIRECTV. (Id.) DIRECTV
assigned Plaintiffs and all other subcontractor
technicians a unique identification number.
(Id. ¶¶ 42-43.) DirectSat and Multiband
Defendants
argue
that
these
requirements
are
“quality
assurance
-5-
Hebron v. Directv, LLC. (N.D. Ill., 2016)
maintained records for their own W-2
technicians, including Plaintiffs Anthony
Harris,
Rodney
Meeley,
and
Terry
Weatherman. (Id. ¶ 32.) Through the SIEBEL
system, DIRECTV maintained records of the
work orders completed by Plaintiffs, as well
as Plaintiffs’ work schedules, and metrics that
track
the matter of whether its conduct was
prohibited by the statute.” McLaughlin v.
Richland Shoe Co., 486 U.S. 128, 133 (1988).
“[A]n employer’s mere negligence or a good
faith – but incorrect – belief that they were in
compliance with the FLSA, are not sufficient
to rise to the level of a willful violation.”
Difilippo v. Barclays Capital, Inc., 552 F.
Supp. 2d 417, 425 (S.D.N.Y. 2008).
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Plaintiffs’ work performance. (Id. ¶ 82-84.)
Plaintiffs have sufficiently alleged that
DirectSat and Multiband kept records on
their W-2 employees but have not sufficiently
alleged that any Defendant kept records for
non-W-2 employees.
Defendants claim that Plaintiffs have not
sufficiently alleged willfulness to allow for a
three-year limitations period. Plaintiffs have
alleged that “Defendants’ unlawful conduct
was willful because . . . DIRECTV and other
members of the Provider Network knew, or
should have known, that the fissured
employment scheme utilized a piece-rate
system(s) that unlawfully denied Plaintiffs
minimum wage, overtime wage, and other
employment benefits.” (SAC ¶ 193.) Plaintiffs
have sufficiently alleged willfulness to extend
the limitations period to three years.
Joint Employer
Plaintiffs have alleged that Defendants
had some control over hiring and firing and
exerted substantial control and supervision
over Plaintiffs’ work schedules and conditions
of employment. Taking all well-pleaded
factual allegations as true, making all
reasonable inferences in Plaintiffs’ favor, and
considering the liberal scope of the FLSA,
Plaintiffs have plausibly alleged that
Defendants were joint employers for the
purposes of the FLSA.
Overtime
Defendants incorporate their previous
arguments, from the first Motions to Dismiss,
regarding overtime wages. “Under the FLSA,
a nonexempt employee who works more than
forty hours in a given week must be
compensated for those excess hours.”
Caraballo v. City of Chicago, 969 F. Supp. 2d
1008, 1014 (N.D. Ill. 2013) (citing 29 U.S.C. §
207(a)(1)). As several appellate courts have
found, Plaintiffs’ allegations that they
typically worked for more than forty hours a
week and were not compensated for all time
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