     Case: 13-20081      Document: 00512520391         Page: 1    Date Filed: 02/03/2014




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                            United States Court of Appeals
                                                                                     Fifth Circuit

                                                                                   FILED
                                      No. 13-20081                           February 3, 2014
                                                                              Lyle W. Cayce
VERA CHAPMAN; KRYSTAL HOWARD,                                                      Clerk


                                                 Plaintiffs-Appellees
v.

A.S.U.I. HEALTHCARE AND DEVELOPMENT CENTER; DIANN SIMEN,

                                                 Defendants-Appellants




                   Appeal from the United States District Court
                        for the Southern District of Texas
                             USDC No. 4:11-CV-3025


Before REAVLEY, PRADO, and OWEN, Circuit Judges.
PER CURIAM:*
       The principal issue in this Fair Labor Standards Act (“FLSA”) case is
whether Plaintiff-Appellees Vera Chapman and Krystal Howard were
employees of Defendants-Appellants A.S.U.I. Healthcare and Development
Center and Diann Simien 1 (collectively “ASUI”). The district court held on
summary judgment that they were employees, rather than independent



       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
       1Although Simien’s name is spelled “Simen” on the district court docket sheet, we
adopt the spelling used in the Appellant’s brief.
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                                 No. 13-20081
contractors, and therefore entitled to be paid for overtime. The court conducted
a bench trial as to damages. We AFFIRM.
      Chapman and Howard worked as direct caregivers in group homes for
persons with mental disabilities. ASUI contracted with the state to provide
the assistive services, and it leased the homes. Chapman and Howard’s duties
included cooking, cleaning, and assisting the clients with medication. The
plaintiffs began their shifts at approximately 3:00 p.m. and worked until 9:00
a.m. the next morning. Although they stayed at the group homes overnight,
they were not paid for all of the hours on duty, specifically the “downtime” from
10:00 p.m. to 6:00 a.m. They filed the instant suit against ASUI to recover for
unpaid overtime wages in excess of forty hours worked per week. See 29 U.S.C.
§§ 206(a), 207(a).
      ASUI contends first that the instant suit is barred by collateral estoppel
because of a similar suit filed in the Southern District of Texas that resulted
in a take nothing judgment against the plaintiff. The plaintiff in that case
made a claim not only for overtime pay but also for personal injuries. The
record shows that the plaintiff subsequently abandoned the FLSA overtime
claim. The final judgment therefore was not an adjudication of the issues
presented in the instant case. See Matter of Braniff Airways, 783 F.2d 1283,
1289 (5th Cir. 1986) (party seeking to apply collateral estoppel must prove that
an issue was actually litigated in a prior action); see also Nichols v. Anderson,
788 F.2d 1140, 1141-42 (5th Cir. 1986).
      ASUI next contends that the district court erroneously found that the
plaintiffs were employees because, inter alia, Simien testified that the
plaintiffs were hired as independent contractors, and they signed contracts
acknowledging that status.     Neither a defendant’s subjective belief about
employment status nor the existence of a contract designating that status is
dispositive. See Robicheaux v. Radcliff Material, Inc., 697 F.2d 662, 667 (5th
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                                  No. 13-20081
Cir. 1983). Rather, we look to multiple factors to assess the “economic reality”
of whether the plaintiff is so dependent on the alleged employer that she is an
employee or is so independent that the plaintiff essentially is in business for
herself. See Donovan v. Tehco, Inc., 642 F.2d 141, 143 (5th Cir. 1981); Usery v.
Pilgrim Equip. Co., 527 F.2d 1308, 1311-12 (5th Cir. 1976). The factors include
the “degree of control, opportunities for profit or loss, investment in facilities,
permanency of relation, and skill required.” Pilgrim Equip., 527 F.2d at 1311.
      The record shows that ASUI controlled all the meaningful aspects of the
employment relationship. ASUI hired Chapman and Howard, assigned them
to their respective group homes, set their work schedule, and determined how
much to pay them on an hourly basis and when to increase their hourly rate.
There was no opportunity for the plaintiffs to profit beyond their hourly wage,
and they were not at risk to suffer any capital losses. Both plaintiffs worked
for ASUI for multiple years, although Chapman had two short gaps in her
employment. The plaintiffs’ only investment in the business was the purchase
of their uniforms. ASUI, on the other hand, contracted with the state to
provide the services; operated a dayhab facility for the clients’ day time use;
and maintained a central office headquarters. Any lack of supervision by ASUI
as to how Chapman and Howard should go about cooking and cleaning does
not transform the plaintiffs into independent contractors. See Hopkins v.
Cornerstone Am., 545 F.3d 338, 343 (5th Cir. 2008). The economic reality test
does not show that the plaintiffs were so independent of ASUI that they were
in business for themselves. See Pilgrim Equip., 527 F.2d at 1311-14. The
district court did not err by concluding that they were employees.
      We also conclude that under a similar economic reality test for
determining employer status, the district court did not err by concluding that
Diann Simien, ASUI’s vice president and program manager, was a statutory
employer for purposes of the FLSA. See 29 U.S.C. § 203(d); Martin v. Spring
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                                 No. 13-20081
Break ’83 Productions, L.L.C., 688 F.3d 247, 251 (5th Cir. 2012). To determine
whether an individual or entity is an employer, we look to who has operating
control over the employees, and we consider “whether the alleged employer:
‘(1) possessed the power to hire and fire employees; (2) supervised or controlled
employee work schedules or conditions of employment; (3) determined the rate
or method of payment; and (4) maintained employee records.’” Gray v. Powers,
673 F.3d 352, 354-55 (5th Cir. 2012) (citation omitted).
      The district court correctly determined that Simien exercised substantial
control over management of the plaintiffs’ employment, set the plaintiffs’ rate
of pay, and personally reviewed their hours and compensation. Chapman and
Howard testified that Simien hired them both, assigned them to their group
homes, and decided when to raise their hourly pay. She also scheduled them
to work when needed to cover for employees who did not show up. Howard
testified that Simien told her she would not be paid for certain hours. Simien’s
own testimony showed that on various occasions she exercised authority and
control by authorizing the billing specialist to pay the direct caregivers for
certain time. Simien also testified that she ensured criminal background
checks were performed on new hires and that letters of reference were
obtained. Based on the economic realty test, the record supported the district
court’s finding that Simien exercised operating control over the plaintiffs.
      We are not persuaded by ASUI’s argument that the FLSA’s
companionship services exemption applies in this case.           See 29 U.S.C.
§ 213(a)(15). ASUI offered no evidence as to this exemption in opposition to
the plaintiff’s summary judgment motion, which ordinarily precludes review.
See Colony Creek, Ltd. v. Resolution Trust Corp., 941 F.2d 1323, 1326 (5th Cir.
1991); see also Bell v. Thornburg, 738 F.3d 696, 702 (5th Cir. 2013); Fed. R.
Civ. P. 56(c)(1). ASUI’s further attempt to incorporate by reference arguments
it made in its motion to dismiss is also impermissible. See Yohey v. Collins,
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                                  No. 13-20081
985 F.2d 222, 225 (5th Cir. 1993); Fed. R. App. P. 28(a)(9). Moreover, the record
shows that the exemption does not apply because the plaintiffs were not
working in private homes within the meaning of the FLSA. See 29 C.F.R.
§ 552.3; see also Welding v. Bios Corp., 353 F.3d 1214, 1219-20 (10th Cir. 2004).
Although the clients do reside in the living units, albeit in groups of three,
these group homes are maintained primarily to facilitate provision of the
assistive services. See Welding, 353 F.3d at 1219. But for their receipt of
assistive services from ASUI, the clients would not necessarily be living in
these units. ASUI’s reliance on Long Island Care at Home, Ltd. v. Coke, 551
U.S. 158, 127 S. Ct. 2339 (2007), is inapposite as that case provides no
assistance for determining what is a “private home” for purposes of the
companionship services exemption.
      ASUI next challenges the district court’s admission in the bench trial of
summary exhibits used to determine damages.           Summaries are generally
admissible when “(1) they are based on competent evidence already before the
jury, (2) the primary evidence used to construct the charts is available to the
other side for comparison so that the correctness of the summary may be
tested, (3) the chart preparer is available for cross-examination, and (4) the
jury is properly instructed concerning use of the charts.” United States v.
Bishop, 264 F.3d 535, 547 (5th Cir. 2001); see Fed. R. Evid. 1006.           The
summaries here were based on ASUI’s own records and/or the plaintiffs’
testimony. The district court was fully able to compare the summaries with
the primary evidence. Although ASUI correctly argues that the chart preparer
was not available for cross-examination, this was a bench trial, not a jury trial.
ASUI was able to argue about claimed inaccuracies in the evidence, and the
district court expressly took those claims into account. ASUI fails to show that
the district court abused its discretion. See Triple Tee Golf, Inc. v. Nike, Inc.,


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                                  No. 13-20081
485 F.3d 253, 265 (5th Cir. 2007) (evidentiary rulings are reviewed for abuse
of discretion).
      ASUI further argues that the district court erroneously declined to
exercise its discretion to omit an award of liquidated damages. See 29 U.S.C.
§ 216(b); Reich v. Tiller Helicopter Servs., Inc., 8 F.3d 1018, 1030 (5th Cir. 1993)
(Section 216(b) “mandates the award of liquidated damages in an amount
equal to actual damages following a determination of liability.”). Although the
district court has discretion not to award liquidated damages, the employer
must first satisfy the court that it acted in good faith and with a reasonable
ground for believing it was not violating the FLSA. See 29 U.S.C. § 260;
LeCompte v. Chrysler Credit Corp., 780 F.2d 1260, 1263 (5th Cir. 1986). ASUI
has not met this “substantial burden.” Barcellona v. Tiffany English Pub, Inc.,
597 F.2d 464, 468 (5th Cir. 1979). The only evidence bearing on ASUI’s good
faith was Simien’s bare agreement with counsel that ASUI had spoken to an
attorney and an unnamed consultant when forming its opinion that the
plaintiffs were not employees.      No further explanation or discussion was
provided about any investigation by ASUI into the plaintiffs’ employment
status. We conclude that the district court did not abuse its discretion by
refusing to omit a liquidated damages award. See, e.g., Mireles v. Frio Foods,
Inc., 899 F.2d 1407, 1415 (5th Cir. 1990).
      AFFIRMED.




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