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Stacy L. Dennis; Michael Hill v. Watco Companies

January 21, 2011

STACY L. DENNIS; MICHAEL HILL, FOR THEMSELVES AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS - APPELLANTS,
v.
WATCO COMPANIES, INC., A CORPORATION;
RICHARD B. WEBB, AN INDIVIDUAL, DEFENDANTS - APPELLEES.



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF OKLAHOMA (D.C. No. 5:08-CV-00469-C)

The opinion of the court was delivered by: Kelly, Circuit Judge.

PUBLISH

FILED

United States Court of Appeals Tenth Circuit

Elisabeth A. Shumaker Clerk of Court

Before KELLY, EBEL, and GORSUCH, Circuit Judges.

Plaintiffs-Appellants Stacy L. Dennis and Michael Hill appeal from the district court's dismissal of their complaint for overtime pay for hours worked in excess of forty per week. Dennis v. Watco Cos., No. CIV-08-469-C, 2010 WL 680882, at *2 (W.D. Okla. Feb. 25, 2010). The issue is whether a corporate parent of a railroad subsidiary may be required to pay overtime wages to the railroad's employees under the Fair Labor Standards Act (FLSA) as a consequence of its alleged joint employer status with the railroad. Our jurisdiction arises under 28 U.S.C. 1291. We answer the question in the negative and affirm.

Background

The FLSA, 29 U.S.C. 201-219, generally requires payment of overtime after forty hours of work per week. 29 U.S.C. 207(a)(1). But the FLSA expressly exempts "any employee of an employer engaged in the operation of a rail carrier." 29 U.S.C. 213(b)(2); see Tews v. Renzenberger, Inc., 592 F. Supp. 2d 1331, 1337-39 (D. Kan. 2009) (providing an overview of the legislative history of the Rail Carrier Exemption).

Plaintiffs are (or have been) employed by nonparty railway carriers, both of which are owned and operated by Watco Transportation Services, which in turn is owned by Defendant-Appellee Watco Companies, Inc. ("Watco"). Aplt. App. at 14 (Complaint). Watco is a privately held company with no corporate shareholders. Defendant-Appellee Richard B. Webb is one of its owners.

Plaintiff Stacy L. Dennis was a track inspector for Stillwater Central Railroad ("SLWC"), and Plaintiff Michael Hill is a track foreman for the South Kansas and Oklahoma Railroad ("SKOR"). Aplt. Br. at 3-4. Plaintiffs sought declaratory and injunctive relief and damages in their own right as well as for members of a putative class of track inspectors and track foremen. Aplt. App. at 11, 23-24 (Complaint).

Plaintiffs assert that Watco is responsible for payment of overtime wages pursuant to the FLSA. Plaintiffs do not claim that they engage in "nonexempt" work. See 29 C.F.R. § 786.150. Rather, they claim that because Watco is "directly involved in employment decisions of SKOR and SLWC"; is "involved in policy-making; decision-making; directions; assignment; scheduling of work; and work practices"; and "jointly carr[ies] out rail service and related operations," Aplt. App. at 15, 19 (Complaint), Watco qualifies as a joint employer, individually and jointly liable for nonpayment of overtime wages to Plaintiffs. This argument can be parsed as follows: (1) Watco is not a rail carrier; (2) as a non-rail carrier Watco is not exempt under 29 U.S.C. § 213(b)(2) from payment of overtime wages; (3) Watco is a joint employer of Plaintiffs; (4) therefore Watco is liable for overtime wages under the FLSA.

The district court granted Watco's motion to dismiss, concluding that the plain language of the exemption precluded FLSA claims. Dennis, 2010 WL 680882 at *1. Because SKOR and SLWC were rail carriers, the court reasoned, it was clear the Defendants were "engaged in the operation of a rail carrier." Id. Plaintiffs' assertions regarding Watco's involvement in the management of the railroads simply evidenced this fact, and, thus, the court concluded, Watco was exempt from the FLSA's overtime provisions. Id. On appeal, Plaintiffs argue that Watco, as a noncarrier joint employer, is not entitled to the exemption.

Discussion We review the grant of a motion to dismiss a complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) de novo. Howard v. Waide, 534 F.3d 1227, 1242-43 (10th Cir. 2008) (citation omitted). To withstand a motion to dismiss, Plaintiffs must include enough facts to "nudge[] their claims across the line from conceivable to plausible." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). In making this determination we accept as ...


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