Case Information
*1 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION
TREVER GUILBEAU, individually
and on behalf of all others similarly situated,
and CHRISTOPHER O’MARA, individually
and on behalf of all others similarly situated,
Plaintiffs , v. Case No. SA-21-CV-0142-JKP-ESC SCHLUMBERGER TECHNOLOGY
CORPORATION,
Defendant.
MEMORANDUM OPINION AND ORDER GRANTING INTERLOCUOTORY APPEAL
Before the Court are two motions filed by Defendant Schlumberger Technology Corpora- tion: (1) Motion to Certify an Interlocutory Appeal (ECF No. 146) and (2) Motion to Stay (ECF No. 147). Plaintiffs have filed a combined response (ECF No. 151) to the motions and Defendant has filed a combined reply (ECF No. 153). The Court previously granted a motion to expedite ruling on these motions. See ECF No. 150.
This is the second attempt by Defendant to obtain an interlocutory appeal. ECF No.
102. Defendant previously sought to appeal a Memorandum Opinion and Order Accepting Report
and Recommendation (“R&R”) of United States Magistrate Judge (ECF No. 101). In accepting
the R&R, the Court, among other things, denied Defendant’s Partial Motion for Summary Judg-
ment.
Guilbeau v. Schlumberger Tech. Corp.
,
Defendant contends that
Venable
provides the definitive answer to resolve this case fully
in its favor. This Court, however, declined to apply
Venable
over another intervening Fifth Circuit
opinion,
Gentry v. Hamilton-Ryker IT Sols., LLC [hereinafter Gentry II]
,
Predictably, Defendant has sought interlocutory appellate review. For the reasons stated
herein, the Court finds that the continuing shifting legal landscape warrants granting leave for
Defendant to file an interlocutory appeal. Because granting such leave is ultimately within its
sound discretion, the Court will not belabor the standard for obtaining such leave. It did not reach
this conclusion lightly and found encouragement in multiple principles of law. First, “[t]he propri-
ety of interlocutory appeal may be valid even if the court is ‘confident in its decision.’”
Greinstein
v. Granite Servs. Int’l, Inc.
, No. 2:18-CV-208-Z-BR,
Before delving into specific issues that warrant interlocutory appeal in this case, the Court sets the backdrop for its various rulings and attempts to elucidate the reasons for its chosen path. This is not done to show whether the path is right or wrong. At the end of the day, that determina- tion lies within the capable hands of the Fifth Circuit whether it examines the issues through inter- locutory appeal now or through a later appeal at the conclusion of this case.
A. Background and Shifting Legal Landscape
As readily apparent from decisions of the last few years, the legal landscape has been shift-
ing in this case nearly since Plaintiffs’ initial filing in February 2021. The first monumental shift
occurred in September 2021 when the Fifth Circuit issued an en banc decision, that was later af-
firmed by the Supreme Court in 2023.
Hewitt v. Helix Energy Sols. Grp., Inc. [hereinafter
Hewitt]
,
Hewitt filed this action under the FLSA to recover overtime pay. Helix asserted in response that Hewitt was exempt from the FLSA because he qualified as a bona *4 fide executive. The dispute on that issue turned solely on whether Hewitt was paid on a salary basis; Hewitt conceded that his employment met the exemption’s other requirements (the salary-level and duties tests). The District Court agreed with He- lix’s view that Hewitt was compensated on a salary basis, and accordingly granted the company summary judgment.
The Court of Appeals for the Fifth Circuit, sitting en banc, reversed that judgment, deciding that Hewitt was not paid on a salary basis and therefore could claim the FLSA’s protections. The 12-judge majority first held that a daily-rate employee (like Hewitt) does not fall within § 602(a) of the Secretary’s regulations. That section, the court reasoned, covers only employees whose compensation is paid on a weekly or less frequent basis, without regard to the number of days or hours worked—the very opposite of a paid-by-the-day employee. Such daily-rate workers, the court continued, can qualify as salaried only through the special rule of § 604(b). But Hewitt’s compensation did not satisfy § 604(b)’s conditions; in- deed, the court noted, Helix does not even purport to have met them. The court thus concluded that Hewitt, although highly paid, was not exempt from the FLSA. Six judges dissented in two opinions. The more expansive dissent argued that Hewitt’s compensation satisfied the salary basis test of § 602(a). It further concluded that § 604(b) is not applicable at all to high-income employees—i.e., those falling within the HCE rule because they earn over $100,000.
We granted certiorari, and now affirm.
Helix Energy Sols. Grp., Inc. v. Hewitt [hereinafter Helix]
,
To the extent their reasoning transcends the facts of the case, these cases remain the most
pertinent to the issues before this Court. While neither case is directly on point, this Court has
found that the factual differences do “not make
Helix
distinguishable in all respects” and even
though “nothing in
Helix
. . . directly addresses the type of hybrid compensation structure at issue
in this case . . . [t]hat factual distinction does not eliminate the reasoning of the Supreme Court,
especially given the en banc statements of the Fifth Circuit that were under review.”
Guilbeau
,
Faced with an uncertain area of law, the Magistrate Judge found a Southern District of
Texas case particularly persuasive. R&R at 15-16 & n.3 (recommendation of Mag. J. relying
*5
on
Gentry v. Hamilton-Ryker IT Sols., LLC
, No. 3:19-CV-00320,
Seventeen days after the R&R in this case, “the Fifth Circuit affirmed the judgment of the
[
Gentry
] district court ‘essentially for the reasons stated in the magistrate judge’s thorough and
exhaustive report, adopted by the district court as its opinion.’”
Guilbeau
,
The next month, the Court denied Defendant’s first motion for interlocutory appeal.
Guilbeau v. Schlumberger Tech. Corp.
, No. SA-21-CV-0142-JKP-ESC,
This Court understands the complexities of the regulatory interpretation and re- spects that reasonable minds may differ on the proper interpretation. But as thor- oughly discussed in the order accepting the recommendation of the Magistrate Judge through de novo review, this Court’s interpretation does not render any reg- ulatory language superfluous while simultaneously remaining consistent with Su- preme Court and Fifth Circuit precedent.
Id . The Court also noted that, although “additional Fifth Circuit guidance on the regulatory inter- pretation would be helpful, multiple appeals are already pending before the Circuit that could shed valuable light on the matter. Providing another case upon which the Fifth Circuit can weigh in on the subject does not appear warranted.” Id . At that time, the Fifth Circuit had issued neither of the appellate decisions now vying for supremacy in the context of this case.
Three days after this Court denied the first request for interlocutory appeal, the Fifth Circuit denied a petition for mandamus relief as premature. See ECF No. 112 (copy of judgment issued as the mandate denying mandamus). The Fifth Circuit explained that the mandamus “filings are premature and based on a misunderstanding of the district court’s order.” Id . at 2. The Circuit recognized that this Court’s order required “Plaintiffs to inform the district court whether they desire to move forward with, and incur the potentially significant expense of, issuing notice, or whether they prefer to wait until [the Fifth Circuit] decides pending cases that may directly impact the merits of the Plaintiffs’ claims.” . at 3.
In early May 2024, Plaintiffs notified the Court of their intent to proceed with notice. ECF No. 114. This prompted the Court to return the case to the Magistrate Judge who thereafter
reopened the case, authorized notice, and stayed discovery. ECF No. 118. Two days after the
*7
order of the Magistrate Judge, on May 24, 2024, the Fifth Circuit issued
Gentry II
.
See
102 F.4th
712. As previously noted, this Court has viewed that decision as “fully supportive” of the path
forged in this case.
Guilbeau
,
On June 5, 2024, the Fifth Circuit temporarily stayed the order of the Magistrate Judge pending further order regarding a second petition for writ of mandamus. ECF No. 126 (copy of order). By unpublished order dated June 13, 2024, the Fifth Circuit denied mandamus because Defendant had established no “clear and indisputable” right to the writ. ECF No. 128 at 2 (copy of order). The Fifth Circuit went on to note that “Schlumberger’s petition—and, it appears, this entire case—hinges on which of two alternative regulations applies to determine whether em- ployees like Guilbeau are with the HCE [(highly compensated employees)] exemption.” Id . at 3 (citing as describing the two alternative routes). It identified the parties’ competing ar- guments as whether Plaintiffs were “paid ‘on a weekly, or less frequent basis’ and therefore 29 C.F.R. §§ 561.602(a) and 541.604(a) apply” or whether they were “paid ‘on an hourly, a daily or a shift basis” and therefore 29 C.F.R. § 541.604(b) governs.” Id . The Fifth Circuit found that “the answer to this dispositive question is far from clear or indisputable.” Id .
While recognizing that Defendant’s “position may ultimately prove to be the correct one,”
the Fifth Circuit found “the dispositive question in this case is still up for debate.” . (citing con-
flicting opinions of
Wilson v. Schlumberger Tech. Corp.
,
This Court took appropriate recognition of the cautionary footnote when it stayed this case
the same day the Fifth Circuit denied mandamus.
See Guilbeau v. Schlumberger Tech. Corp.
, No.
SA-21-CV-0142-JKP-ESC,
On September 4, 2024, the Fifth Circuit issued the decision that Defendant main- tains requires this Court to grant summary judgment in its favor. In October 2024, the parties filed notices that the two cases pending at the Fifth Circuit had been resolved. See ECF Nos. 135 and 136. Before the Court issued a written order on the matters then pending in this case, Defendant moved for reconsideration in November 2024. ECF No. 137. The motion became ripe just before the New Year. ECF No. 141 (reply filed December 30, 2024).
Relying on the cautionary footnote in part, Defendant argued that this case is the same as *9 Venable . In denying reconsideration, this Court found:
But Defendant reads too much into the mandamus denial. The same question does not necessarily receive the same answer under different facts or circumstances, i.e., the procedural posture of a case. And the unpublished order does not control this Court’s determination as to whether the later Venable opinion considers the same legal question under the same or similar facts in the same procedural posture. At this point, this Court is in the best position to gauge the similarities and dissimilar- ities between this case and the now rendered Venable decision.
Guilbeau
,
B. Uncertainty in wake of Venable
While Defendant views Venable as the definitive answer in this case as suggested in the denial of the second petition for mandamus, the Venable decision leaves some uncertainty by not distinguishing the earlier Gentry II decision as it affirmed the granting of a motion for summary judgment on the facts presented in the case before it. Gentry II unquestionably has some factual distinctions from the case now before the Court. But its underlying principles and rationales have resonated as lights upon this Court’s chosen path from the district court’s decision through the Fifth Circuit affirmance. With each shift of the legal landscape, the Gentry district and appellate cases remained the guiding light. However, the possibility still existed that Venable would en- lighten the path even further—perhaps providing a definitive answer as to Defendant, because of its affiliation with the defendant in Venable and a pay structure that has been characterized as identical. But while this Court waited for a beacon of enlightenment as to hybrid pay structures through Venable , the published decision left questions as to how it applies in this case given the prior decision in . includes scant details as to comparing the facts of the two cases. The
plaintiffs are reamers, who supervise drillers.
If the compensation plan here is the same or substantially like the one in
Venable
, then a
question left unanswered is how
Venable
fits with
Gentry II
’s focus on the employer paying “a
true weekly rate,” which it defined as a rate that “compensates employees for all work performed
that week.”
Naturally, binding majority opinions guide the lower courts. The preceding paragraphs cre- ate reasonable hesitancy for applying Venable as the definitive answer favoring Defendant. C. Misstatements and Arguments of the Parties
In their response, Plaintiffs make a statement that might be misconstrued. They state that
this “Court also noted that was decided before
Gentry II
and so did not explore the issue
of whether the presumed bonuses were for work within or beyond the normal workweek.” ECF No. 151 at 6–7. To be clear, this Court was noting that the district court decision in
Venable
v. Schlumberger Ltd.
, No. 6:16-CV-00241 LEAD,
It is also sensible for the Court to address two notable misstatements by Defendant in its current motion for leave to appeal. First, Defendant contends: “The Court determined that the Magistrate Judge’s finding that Plaintiffs were paid on a day rate basis was a factual finding subject to clearly erroneous review, and the Court could not say that the conclusion was clearly erroneous.” ECF No. 146 at 2. It submits “that this is actually a conclusion of law subject to de novo review.” . at 2 n.2.
As already recited in this order, the Court accepted the summary judgment R&R after con- ducting a de novo review. In accepting the recommendation of the Magistrate Judge, the Court clearly articulated that its review was de novo as to the recommended disposition of the dispositive summary judgment motion, whereas its review was for clear error or contrary to law for *12 nondispositive matters. ECF No. 102 at 2–6. Because the Magistrate Judge addressed both dispos- itive and nondispositive matters in one filing, the undersigned’s acceptance applied differing stand- ards of review depending on the matter addressed. When considering objections to the recommen- dation, the Court conducted a de novo review. id . at 8–9, 17, 22. It recognized that the parties’ disagreement as to “whether the second component [of the hybrid pay structure] is payment as part of the employees’ base compensation or whether it is for duties outside the normal workweek.” . at 13. As required for purposes of summary judgment, the Court viewed the summary judgment evidence in the light most favorable to Plaintiffs and found a genuine dispute of material fact that precluded entry of summary judgment on Defendant’s affirmative defense that Plaintiffs were ex- empt employees.
The Court described the dispute multiple times. id . at 7 (“The dispute in this case is whether Defendant’s pay structure includes a salary plus a bonus or a salary plus a day rate.”); 7– 8 (“the parties’ dispute essentially boils down to whether the day-rate component of the relevant pay structure comprises part of Plaintiffs’ base compensation for work during the normal work- week. If it does, then the compensation does not qualify as additional compensation in the form of a bonus.”); 13 (“This case involves a hybrid pay structure that has an undisputed salary component along with a second component that may or may not relate to the Plaintiffs’ base compensation— the parties simply disagree whether the second component is payment as part of the employees’ base compensation or whether it is for duties outside the normal workweek.”); 24 (“There remains a dispute as to whether the day-rate portion of Plaintiffs’ compensation was part of the base com- pensation or constituted additional compensation within the scope of § 604(a) and thus outside the purview of § 604(b).”); 24 (“Defendant simply wants to disregard the dispute as to whether the daily rate it paid to Plaintiffs was part of the employees’ base compensation and thus calculated under § 604(b) or whether it was instead additional compensation falling under § 604(a).”); 26 (“A *13 dispute remains as to whether Defendant’s relevant pay structure is a hybrid salary plus bonus, which would not invoke § 604(b), or a hybrid salary plus a daily rate used to calculate the combined base compensation for a normal workweek for Plaintiffs.”). This Court has made no determination as a matter of law regarding the salary basis element of Defendant’s affirmative defense. It instead has found:
Defendant has not carried its burden to establish its affirmative defense. Viewing the facts in the light most favorable to Plaintiffs, a reasonable finder of fact could return a verdict for Plaintiffs despite the asserted affirmative defense. Defendant has not shown that it is entitled to judgment as a matter of law on its affirmative defense. Through the lens of summary judgment, the facts do not show that De- fendant paid Plaintiffs on a salary basis as required for them to be exempt employ- ees. . at 34.
Notably, “the ‘determination as to whether an employee is exempt under the [FLSA] is
primarily a question of fact’ typically better suited for summary judgment.”
White v. U.S. Corr.,
LLC
,
While Defendant labels part of Plaintiffs’ compensation package as a bonus, Plaintiffs pro-
vide evidence that the compensation package includes a salary plus a day rate. Although the nature
of a payment for purposes of FLSA exemptions “is a question of law that relies on how a payment
works in practice, rather than what it is called,”
Taylor v. HD & Assocs., LLC
,
Even with the foregoing factual dispute, Defendant maintains that the facts are undisputed. ECF No. 146 at 4. It contends that “Guilbeau admits receiving both a bi-weekly salary plus job bonuses that accrued for each day billable to a customer.” Id . However, the underlying nature of these “bonuses” as labeled by Defendant appear very much in dispute.
Defendant also quarrels that this Court’s analysis differs from other cases. . at 7. Analysis
often differs based on the facts before a particular court. The Court has recognized and addressed
each of the other cases that Defendant urges the Court to follow. It has declined to do so under the
summary judgment evidence before it. While reasonable minds may certainly differ in their anal-
ysis of the complex issues presented in this case, as Plaintiffs point out, this Court has attempted
to harmonize “all relevant appellate opinions,”
see
ECF No. 151 at 2. Indeed, the Court has en-
gaged an analytical framework that avoids making regulatory language superfluous and unneces-
sary.
Guilbeau
,
For all this Court’s efforts to harmonize various cases, presents a new challenge as a published, binding opinion that Defendant contends involves an identical pay structure to the case now before this Court. Although this Court found the case insufficient to reconsider its prior acceptance of the summary judgment denial, the case involves such a closely related issue that appellate review may materially advance the ultimate termination of this litigation.
In its reply, Defendant states the relevant question for this case as: The relevant question here is if an individual, who is paid a salary that complies in all respects with 29 C.F.R. § 541.602(a), can be paid additional compensation on any basis as allowed by 29 C.F.R. § 541.604(a) and the reasonable relationship test does not apply, as the Fifth Circuit held in , or if that additional compensa- tion must satisfy 29 C.F.R. § 541.604(b)’s reasonable relationship test if the amount of the additional pay is calculated on an hourly, daily, or shift basis (unless it is for work outside the regular workweek), as the Fifth Circuit held in . This question of which decision controls is a question of law and not one of fact.
Reply at 2–3.
Notably, “any basis allowed” by § 604(a) seems to exclude additional compensation for
work within the normal workweek,
see Guilbeau
,
Defendant, furthermore, has adamantly argued that § 604(b) only applies when an em-
ployee is paid solely on an hourly, daily, or shift basis; otherwise, the section is simply immaterial.
Guilbeau
,
Absent binding precedent directly on point, the Court flatly rejects Defendant’s po- sition that § 604(b) applies only when an employee’s compensation consists of a day rate and a day rate only. Similarly, it rejects the notion that § 602(a) alone controls the salary basis issue of this case. This case does not involve a salary only *16 pay structure that necessarily invokes § 602(a). Nor does it involve a day-rate pay structure that necessarily invokes § 604(b). This case involves a hybrid pay struc- ture that has an undisputed salary component along with a second component that may or may not relate to the Plaintiffs’ base compensation—the parties simply dis- agree whether the second component is payment as part of the employees’ base compensation or whether it is for duties outside the normal workweek. And viewing the facts in the light most favorable to Plaintiffs, § 604(b) applies. . Standing alone, Venable could support Defendant’s arguments. In other words, standing alone,
Venable could be the missing binding precedent that is directly on point.
However, because Venable does not stand in isolation, this Court did not view it as suffi- cient of itself to grant reconsideration given potential differences in the evidence presented by the respective defendants—one carrying its burden on its affirmative defense, versus Defendant here who did not. Still, this Court recognized the potential of Defendant carrying its burden through a second summary judgment motion should Defendant present a basis for the Court granting leave for a second motion. The legal landscape has changed since the denial of summary judgment in this case. Has it changed enough to alter course is the crucial question. Although this Court may be in a better position to answer that question than the panel of the Fifth Circuit that denied the second mandamus petition, an interlocutory appeal would provide the best position for gauging the similarities and dissimilarities between this case and the now rendered decision. D. Interlocutory Appeal
Section 1292(b) of Title 28 of the United States Code permits a district court to certify an order for interlocutory appeal when the Court is “of the opinion that [its] order involves a control- ling question of law as to which there is a substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litiga- tion.” Although this Court has found that a genuine dispute of material fact precluded entry of judgment as a matter of law for Defendant, has now presented a potential interpretation of the § 602(a) and § 604(b) dichotomy that could render the factual dispute immaterial.
If
Venable
indeed stands for the proposition that § 602(a), either alone or in conjunction
with § 604(a), provides the relevant regulatory provision when a hybrid pay structure combines a
weekly salary with pay calculated on a day rate for work even if that pay is for work within the
normal workweek, then the factual dispute in this case falls aside. This appears contrary to the
Supreme Court’s finding that § 604(b) “confirms the plain-text, weekly-rate only reading of §
602(a).”
Guilbeau
,
If Venable indeed stands for the proposition that § 604(b) is simply immaterial when an employer utilizes a pay structure like the one used in this case, then the factual dispute in this case does not matter. The factual dispute here concerns whether the compensation provided above the guaranteed salary qualifies as a bonus under § 604(a) or additional base compensation calculated under § 604(b).
Regardless of the timing of any future appeal, this Court is confident that the Fifth Circuit will shed valuable light on the difficult issues of this case, including whether this Court is right or wrong on its focus on the regulatory language appearing to require that additional compensation be for work “beyond the normal workweek.” But at this point, the Court finds all requirements of 28 U.S.C. § 1292(b) satisfied. While a factual dispute appears to exist, this case still involves a controlling question of law presented through ’s potential interpretation of the relevant regulations. One could interpret in a way that renders the factual dispute immaterial. Fur- ther, although hotly disputed by the parties, given the numerous decisions in this case, as well as the shifting legal landscape, there is a substantial ground for difference of opinion. This Court has strived to weave an interpretive path of the regulations in a manner that holds true to their text *18 while not rendering text as superfluous. In this complicated area, reasonable minds may differ on the proper interpretation.
An immediate appeal, furthermore, will materially advance the ultimate termination of this litigation. If, on interlocutory appeal, the Fifth Circuit agrees that provides the proper path despite its own factual differences from this case, then the parties can proceed with full un- derstanding of the legal implications of such agreement. As stated by a sister court:
Furthermore, although an order affirming this Court’s decision would not terminate the litigation, it would provide certainty to the parties. The parties would be pro- ceeding with phase two of this litigation knowing for certain that Plaintiffs’ [ex- empt] status . . . is the law of this case. That undoubtedly would assist in the reso- lution of the remainder of issues in this case and may assist in settlement negotia- tions between the parties.
Hopkins v. Cornerstone Am.
, No. 4:05-CV-332-Y,
Defendant asks the Court to certify its order denying reconsideration for interlocutory ap- peal. While an appeal of that order might provide the needed clarity, appealing a denial of recon- sideration differs from a denial of summary judgment. To provide the Fifth Circuit the opportunity to provide the most comprehensive clarification of the legal issues in this case, the Court hereby certifies both orders (ECF Nos. 101 and 144) for interlocutory appeal. While that certification satisfies § 1292(b), the Court will later identify specific legal questions that it views as proper for review on interlocutory appeal—knowing full-well that the Fifth Circuit is not constrained by any certified question.
E. Stay
Defendant also moves for a stay of this case pending the interlocutory appeal. While the
district courts may certify an order for interlocutory appeal under § 1292(b), the statute also spe-
cifically provides: “That application for an appeal hereunder shall not stay proceedings in the
*19
district court unless the district judge or the Court of Appeals or a judge thereof shall so order.”
One manifest purpose of § 1292(b) is “to assist in the speedy conclusion of litigation.”
Hopkins
,
Courts “consider four factors in deciding whether to grant a stay pending appeal.”
Veasey
v. Abbott
,
(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies. . at 426. Courts have applied these factors in the context of staying a case pending an interlocu-
tory appeal under § 1292(b). , e.g. , Hunt, Gather LLC v. Andreasik , No. 1:23-CV-627-RP, 2023 WL 4853400, at *6 (W.D. Tex. July 27, 2023). Both parties rely on these four factors in this case. ECF No. 147 at 7; ECF No. 151 at 8-9.
“A stay is not a matter of right, even if irreparable injury might otherwise result.”
Nken
,
Defendant seeks a stay to avoid providing a list of putative collective action members and the issuance of notice. See ECF No. 147 at 1. It compares providing such a list to be the same as “the cat is out of the bag” and “cannot be placed back in it.” Id . It argues that in such scenarios, courts issue stays pending the outcome of review. Id . at 1 & n.1 (citing cases involving privileged documents, a deposition transcript, and production of documents). None of its cited cases involve the FLSA or § 1292(b). Furthermore, production of privileged documents or work product differs materially from the circumstances here. Permitting notice to move forward is not a case of letting the cat out of the bag.
Defendant again broadly characterizes the issue of notice as violative of
Swales v. KLLM
Transport Servs., LLC
,
Finding that the employer defendant has not carried its burden on its affirmative defense does not endorse the merits of the case. It merely shows that the employer is not entitled to sum- mary judgment. This case does not present a situation where the court appears to endorse the merits of the litigation by means of facilitating notice. The Court has not broadly defined the collective action to include workers who are not similarly situated to the named Plaintiffs in that some may not be potential participants in the defined collective action. Both the named Plaintiffs and the putative members of the collective action stand or fall on the same basis. That “notice can only go to potential participants,” see id . at 441 (citation and internal quotation marks omitted), is not violated when all members of the collective action, both named Plaintiffs and putative members, may be merely potential participants in that an affirmative defense may at some future time pre- clude the collective action as a whole from having a viable claim. The Court did not refuse to consider evidence regarding Defendant’s affirmative defense—Defendant simply did not carry its burden. This is not a case where “alerting those who cannot ultimately participate in the collective merely stirs up litigation.” id . This is so, because all noticed putative members can participate in the collective but their participation, like those of the named Plaintiffs and every putative mem- ber, may be contingent on surviving the employer’s affirmative defense. This is not a case where the Court ignored any evidence of an asserted threshold matter. Swales stated the distinction suc- cinctly:
Considering, early in the case, whether merits questions can be answered collec- tively has nothing to do with endorsing the merits. Rather, addressing these issues from the outset aids the district court in deciding whether notice is necessary. And it ensures that any notice sent is proper in scope—that is, sent only to potential plaintiffs. When a district court ignores that it can decide merits issues when con- sidering the scope of a collective, it ignores the “similarly situated” analysis and is likely to send notice to employees who are not potential plaintiffs. In that circum- stance, the district court risks crossing the line from using notice as a case-manage- ment tool to using notice as a claims-solicitation tool.
Even if the Fifth Circuit ultimately agrees with Defendant as to the legal interpretations of the relevant regulatory provisions, Defendant has not shown that it will be prejudiced by the issu- ance of notice. It essentially argues prejudice because it believes the interlocutory appeal will ter- minate this case and it is a waste of time and money to continue with the case in the interim.
That’s a risk, however, inherent in any litigation. The district courts are routinely called upon to issue rulings on motions that involve questions of law that could result in the setting aside of a judgment if reversed on appeal. The fact that the court of appeals may reverse this Court is not a sufficient reason to delay the litigation of this case under section 1292(b).
Hopkins
,
Defendant argues that the public interests support a stay. It premises the argument on main- taining “judicial neutrality” as it relates to issuing notice to putative collective action members and avoidance of “stirring up litigation,” as mentioned in Swales . The Court is not swayed by these arguments for the reasons already stated. Plaintiffs, on the other hand, argue that allowing the case to proceed promotes the public interest in prompt resolution of civil cases. Given the substantial delays and stays to date, the Court might find that the public interests lie with denying another *23 stay. The public interests otherwise appear neutral as to staying this case pending interlocutory appeal.
With prejudice and public interests perhaps slightly favoring Plaintiffs’ position, the bal- ance of the four factors depends on the strength of Defendant’s showing that it is likely to succeed on the merits. As this is one of the two most critical factors, this factor could be the tipping point for granting or denying a stay. If Venable is interpreted as Defendant interprets it, then Defendant’s appeal has a stronger likelihood of success. Prejudice to Defendant, furthermore, is greater the more likely it is that Defendant will succeed on the merits, albeit still not reaching a level of irrep- arable injury. At this point, it is difficult for the Court to say that Defendant has made a strong showing that it will likely succeed on its appeal. The Court sees the potential in Defendant’s argu- ment while also seeing a path fully supported by Gentry II . If were the only intervening Fifth Circuit case, the likelihood of success would be increased. But also arrived on the scene, and it arrived before . While there is possible success on the merits, the balance of factors does not tilt in favor of a stay. Of course, the Fifth Circuit may view the prospects for success on appeal more favorably to Defendant and such a difference could tilt the balance in favor of staying this case. Moreover, § 1292(b) specifically recognizes that a stay may be entered by the Fifth Circuit. That might be the better avenue under these circumstances.
The Court also finds the following matters relevant to whether to stay this action entirely pending the interlocutory appeal. Plaintiffs filed this case more than four years ago. They are about to embark on sending notice for this collective action. The Magistrate Judge has already informed the parties that the Court will “wait until after the close of the opt-in period to enter a scheduling order” to control the remainder of this case. ECF No. 152 at 1. Defendant has a June 9, 2025 deadline to disclose contact information for putative collective action members. id . at 2. The only other current deadline concerning Defendant is one set for October 6, 2025, where the parties *24 jointly need to file proposed scheduling recommendations, including deadlines for experts, dis- covery, dispositive motions, and mediation. id . at 3. Further, as recognized in Hopkins :
While a reversal of this Court’s [denial of summary judgment] would eliminate the vast bulk of the litigation in this case, a stay would operate to delay the termination of this litigation if the Court’s order is affirmed. An interlocutory appeal will take some time to complete, and while that appeal is pending, the parties could continue to prepare and litigate this case in light of the Court’s order. Should the court of appeals affirm this Court, valuable time would not have been wasted while awaiting a decision from that court. Although it would seem that resources would have been wasted should the court of appeals reverse, as mentioned above, that’s a risk inher- ent in all litigation and not a reason to stay this case.
At this point, the Court sees no reason why the parties cannot continue to litigate this case at least through the end of September 2025. Defendant should already have the list of putative collective action members and their contact information. Providing such information to Plaintiffs for the issuance of notice does not constitute irreparable injury. Plaintiffs bear the cost of notice and oppose the current requested stay even though there may be some possibility of reversal on interlocutory appeal. The Court is open to revisiting the issue of a stay should the parties jointly agree that a stay is warranted. Defendant is of course able to seek a stay directly through the court of appeals. If the Fifth Circuit issues a stay, then there will be no need to revisit the matter. And if the Fifth Circuit denies a requested stay, such denial would be pertinent to any attempt to revisit the matter in this Court.
F. Conclusion
For these reasons, the Court GRANTS the Motion to Certify an Interlocutory Appeal (ECF No. 146) but DENIES the Motion to Stay (ECF No. 147) without prejudice to Defendant filing a similar motion with the Fifth Circuit or later in this case. The Magistrate Judge’s recent order (ECF *25 No. 152) setting various deadlines starting with the June 9, 2025 deadline for disclosure of infor- mation of putative collective action members continues to control this case unless modified by further order of the Court.
As previously stated, the Court certifies both orders (ECF Nos. 101 and 144) for interloc- utory appeal. As phrased by Defendant, the pertinent question is
whether, under the applicable federal regulations, a pay practice that is comprised of a salary that meets the minimum compensation and frequency requirements of 29 C.F.R. § 541.602(a), that does not vary based on the quantity or quality of work, and in addition to which the employee receives additional compensation in the form of a bonus that accrues when he/she worked at a customer’s location and was charged to a customer (in other words, revenue generating), satisfies the white col- lar salary exemption test pursuant to 29 C.F.R. §§ 541.602(a) and 604(a) or whether that practice must satisfy the reasonable relationship test of 29 C.F.R. § 541.604(b).
ECF No. 146 at 11. Restated, Defendant states: “The legal question is whether or not the reasonable relationship test applies to a compensation practice that includes a true salary plus additional com- pensation.” . As already discussed, however, these characterizations ignore potentially important elements discussed at length in Gentry II . The Court, therefore, views the following interrelated legal questions as proper for review on interlocutory appeal:
(1) Does an employer pay a true salary if the salary does not constitute a true weekly rate, defined by as a rate that compensates employees for all work per- formed that week?
(2) Does compensation qualify as additional compensation within the meaning of 29 C.F.R. § 561.604(a) when it is for work within the normal workweek?
(3) If the compensation identified in question 2 does not qualify as additional com- pensation, does 29 C.F.R. § 561.604(b) control the salary basis issue in this case? (4) Is § 604(b) only applicable to employees paid solely on an hourly, daily, or shift basis? In other words, is § 604(b) limited only to circumstances when all earnings of an employee are computed on an hourly, daily, or shift basis? If so, how does that fit with the “weekly-rate-only reading of § 602(a) espoused in Helix ?
(5) Does 29 C.F.R. § 561.602(a) alone control the salary basis issue in this case? (5) Because there is no overlap between § 602(a) and § 604(b), as held in Helix , does § 604(b) provide the regulatory path for determining salary basis when a hy- brid pay structure combines a weekly salary with pay calculated on a day rate for *26 work within the normal workweek?
(6) Assuming that the compensation plan in this case is the same or substantially like the one in Venable , then how does Venable fit with Gentry II ’s focus on the employer paying a true weekly rate, as defined above.
(7) Does or Gentry II govern this case?
(8) Did this Court err in denying reconsideration?
(9) Did this Court err in denying summary judgment?
(10) Were Plaintiffs paid on a salary basis in this case?
(11) Is the distinction between and Gentry II crystalized in the fact that the salary component in Gentry II was exactly equal to eight hours of pay followed by hourly pay for all additional hours? If that distinction is adequate to distinguish Gentry II , is its analysis of beyond and within a normal workweek immaterial to this case?
(12) Why would ’s focus on employers paying a true weekly rate not apply in this case?
(13) Does an employer fail § 604(a) when additional monetary compensation is for work in the normal workweek; thus, requiring consideration of § 604(b) and its reasonable relationship test?
(14) Is the dispositive question in this case (a) whether Defendant paid Plaintiffs “on a weekly, or less frequent basis,” thus making 29 C.F.R. §§ 561.602(a) and 541.604(a) controlling or (b) whether Defendant paid them on an hourly, daily, or shift basis, thus making 29 C.F.R. § 541.604(b) controlling?
(15) As a matter of law, does it matter that the hybrid pay structure in this case consists of an undisputed salary component along with a second component that may or may not relate to the Plaintiffs’ base compensation?
As already mentioned, listing these potentially pertinent legal questions does not constrain the Fifth Circuit should it accept the interlocutory appeal. The Court lists them to provide various matters that may need additional clarification on appeal.
IT IS SO ORDERED this 2nd day of June 2025.
JASON PULLIAM
UNITED STATES DISTRICT JUDGE