Case 5:21-cv-00142-JKP-ESC Document 66 Filed 01/25/23 Page 1 of 26

IN THE UNITED STATES DISTRICT COURT

FOR THE 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 §
§
Plaintiff. § Case No.: 5:21-CV-00142
§
v. §
§
SCHLUMBERGER TECH CORP §
§
Defendant. §
§

DEFENDANT’S OPPOSITION TO PLAINTIFFS’ MOTION

FOR NOTICE UNDER SWALES

NOW INTO COURT COMES Defendant Schlumberger Technology Corporation

(hereinafter “STC”), through undersigned counsel, who respectfully submits this Opposition to

Plaintiffs’ Motion for Notice Under Swales.

_______________________________
Samuel Zurik III (Texas Bar No. 24044397)
Robert P. Lombardi (admitted pro hac vice)
Bryan Edward Bowdler (admitted pro hac vice)
Mina R. Ghantous (admitted pro hac vice)
THE KULLMAN FIRM, P.L.C.
1100 Poydras Street, Suite 1600
New Orleans, LA 70163
Telephone: (504) 524-4162
Facsimile: (504) 596-4189
COUNSEL FOR DEFENDANT,
SCHLUMBERGER TECHNOLOGY
CORPORATION
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TABLE OF CONTENTS

INTRODUCTION .......................................................................................................................... 1

CERTIFICATION STANDARD ................................................................................................... 2

ARGUMENT .................................................................................................................................. 4

I. GUILBEAU’S ADMISSION THAT THE DDs MEET THE DUTIES TEST IS

DISPOSITIVE AS TO THE DD CLASS. ........................................................................ 5

II. PLAINTIFFS’ REASONABLE RELATIONSHIP ARGUMENT IS CONTRARY TO

THE REGULATIONS. ..................................................................................................... 6

III. WHEN AN EMPLOYEE SATISFIES THE EXEMPTION TEST UNDER 29 C.F.R.

§541.601, FURTHER ANALYSIS UNDER 29 C.F.R § 541.604 IS ERROR. ................ 9

IV. PLAINTIFFS ARE NOT SIMILARLY SITUATED. ................................................... 11

V. THE REQUIREMENTS FOR OFFENSIVE COLLATERAL ESTOPPEL ARE NOT

SATISFIED AND ITS ALLOWANCE WOULD BE UNFAIR. ................................... 16

a. The Issues in This Case Are Not Identical to Those in Gilchrist and Were Not
Actually Litigated. ..................................................................................................... 17

b. There Has Not Been a Full and Fair Opportunity to Litigate the Relevant Issue in
Gilchrist and the Court’s Findings and Order Is Not a Final Judgment. ................... 18

c. Inconsistent District Court Rulings Preclude Collateral Estoppel............................. 18

CERTIFICATE OF SERVICE ..................................................................................................... 21

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TABLE OF AUTHORITIES

Cases
Anani v. CVS RX Serv., Inc.,
730 F.3d 146 (2d Cir. 2013),....................................................................................................... 8

Boudreaux v. Schlumberger Tech. Corp., U.S.D.C. W.D. La. No. 6:14-2267 ....................... 2, 8, 9

Boudreaux, 2022 WL 885203. ........................................................................................................ 8

Canyon Food Co., LLC v.

Secretary of Labor, 894 F.3d 1279 (10th Cir. 2018) .................................................................. 8

Faulkner v. Nat’l Geographic Enters. Inc.,

409 F.3d 26 (2d Cir. 2005)....................................................................................................... 17

Flood v. Just Energy Mkt. Corp.,

904 F.3d 219 (2d Cir. 2018)................................................................................................ 18, 20

Gelb v. Royal Globe Ins. Co.,

798 F.2d 38 (2d Cir. 1986),
cert. denied, 480 U.S. 948 (1987) ............................................................................................. 18

Gilchrist v. Schlumberger Tech. Corp.,

575 F.Supp. 3d 761 (W.D. Tex. 2022),
appeal filed, Dkt. No. 22-50257 (5th Cir. Apr. 8, 2022) ...................................................... 1, 13

Hamm v. Acadia Healthcare Co.,

2022 WL 2713532 (E.D. La. July 13, 2022) ............................................................................. 5

Harrison v. Celotex Corp.,

583 F.Supp. 1497 (E.D. Tenn. 1984) ........................................................................................ 20

Hewitt v. Helix Energy Sol. Grp., Inc,

15 F.4th 289 (5th Cir. 2021), cert. granted, 142 S.Ct. 2647 (2022) ................................... 2, 8, 9

Holladay v. Burch, Oxner, Seale Co., CPAs, P.A,

2009 WL 614783 (D.S.C. Mar. 6, 2009), ................................................................................... 9

Hoppe v. G.D. Searle & Co.,

779 F. Supp. 1425 (S.D.N.Y. 1991).......................................................................................... 20

Jack Faucett Assoc. v. Am. Tel. & Tel. Co.,

744 F. 2d 118 (D.C. Cir. 1984) ................................................................................................. 20

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Litz v. Saint Consulting Grp., Inc.,

(1st Cir. 2014) ............................................................................................................................. 8

Loy v. Rehab Synergies, LLC,

2021 WL 39331926 (S.D. Tex. Sept. 2, 2021) ........................................................................... 5

McLendon v. Schlumberger
Tech. Corp., U.S.D.C.
E.D. Ark, No. 4:15-cv-00752.................................................................................................... 19

Nevada v. U.S. Dept. of Labor,

275 F.Supp. 3d 795 (E.D. Tex. 2017) ......................................................................................... 5

Parklane Hosiery Co. v. Shore,

439 U.S. 322 (1979) ............................................................................................... 16, 17, 19, 20

Setter v. A.H. Robins Co.,

748 F.2d 1328 (8th Cir. 1984) .................................................................................................. 20

Sonnier v. ReCon Mgmt. Serv. Inc.,

2021 WL 4067224 (W.D. La. Sept. 7, 2021) ............................................................................ 11

Strait v. Belcan Engr. Grp., Inc.,

911 F.Supp. 2d 709 (N.D. Ill. 2012) .......................................................................................... 4

Strait v. Belcan Engr. Grp., Inc.,

911 F. Supp. 2d 709 (N.D. Ill. 2012) .................................................................................. 14, 15

Time Warner Entertainment Co. v

Everest Midwest Licensee, LLC,
381 F.3d 1039 (10th Cir. 2004) .................................................................................................. 8

Tretter v. Johns-Manville Corp.,

88 F.R.D. 329 (E.D. Mo. 1980) ............................................................................................... 20

University of California v. Shalala,

82 F.3d 291 (9th Cir. 1996) ........................................................................................................ 7

Venable v. Smith Inter’l, Inc.,

No. 6:16-cv-00241, 2022 WL 895447,
(W.D. La. Mar. 25, 2022) ..................................................................................................... 9, 10

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Statutes
29 U.S.C. § 213(a)(1) .................................................................................................................. 1, 5
Regulations
29 CFR § 541.601(b) ..................................................................................................................... 9

29 CFR § 541.601(b)(1) ................................................................................................................ 10

29 CFR § 541.601(c)..................................................................................................................... 11

29 CFR § 541.602(a)................................................................................................................. 2, 10

29 CFR § 541.604 ..................................................................................................................... 6, 11

29 CFR § 541.604(a)................................................................................................................... 7, 8

29 CFR § 541.604(b) ............................................................................................................ 1, 7, 10

Other
69 Fed. Reg. 22122 (April 23, 2004) .................................................................................. 6, 10, 11

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INTRODUCTION

Plaintiffs seek notice for two classes, one composed of Directional Drillers (“DD”), and

one composed of Measurement While Drilling Specialists and Engineers (“MWD”). Plaintiffs do

not dispute that they receive a salary and total compensation that meet the Highly Compensated

Employee exemption (“HCE”). Instead, they argue their overall compensation does not satisfy the

reasonable relationship test stated at 29 CFR § 541.604(b), and therefore cannot be exempt.

Plaintiffs concede that DDs satisfy the duties test for exempt employees. Plaintiffs argue

that the MWDs do not satisfy the duties test, citing Plaintiff O’Mara’s deposition testimony and

transcript excerpts from the trial in Gilchrist v. Schlumberger Tech. Corp., 575 F.Supp. 3d 761

(W.D. Tex. 2022), appeal filed, Dkt. No. 22-50257 (5th Cir. Apr. 8, 2022). Plaintiffs further argue

that MWDs are similar enough to certify a class and that the district court’s judgment in Gilchrist

should be binding on STC here.

Plaintiffs’ arguments as to the proposed DD class, and their reasonable relationship

arguments overall, are legally flawed and fail for several reasons to even meet the Lusardi

standard, let alone Swales. First, Plaintiffs’ admission that the DDs satisfy the duties test is

dispositive as to that proposed class. The controlling statute, 29 U.S.C. § 213(a)(1), does not

include a salary requirement. The DOL has long admitted that its salary test for the exemptions is

merely a proxy for the responsibility and judgment exercised by exempt employees. Here, as

Plaintiffs admit that DDs perform exempt duties, there is no need to refer to a proxy.

Second, and most critically, the reasonable relationship test does not apply to exempt

employees who are paid a salary. Guilbeau, O’Mara, and the putative collective action members

are all paid a flat salary that significantly exceeds the salary threshold listed in the regulations, and

Plaintiffs admit that both classes receive overall compensation that qualifies them for the HCE.

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Plaintiffs mistakenly rely on Hewitt v. Helix Energy Sol. Grp., Inc, 15 F.4th 289 (5th Cir.

2021), cert. granted, 142 S.Ct. 2647 (2022). Hewitt was paid a straight day rate of at least $963

per day for every day that he worked and no other compensation. Helix argued that his

“predetermined minimum amount” of $963 (one day’s pay), satisfied the salary basis test in 29

CFR § 541.602(a). The en banc Fifth Circuit disagreed but recognized that it would have reached

a different conclusion if Hewitt had been paid a salary like the DDs and MWDs here.

Regardless, even if the Court were to accept the reasonable relationship argument as valid,

(it is not), determining the reasonable relationship requires an individual analysis of each plaintiff’s

compensation. Thus, such an allegation does not support certification.

Plaintiffs’ MWD class fairs no better. Even though Plaintiffs allege that MWDs are

“similar”, they are not. Plaintiffs identified ten different position titles as falling under the MWD

label. O’Mara worked at a remote operations center (“ROC”). During his time there, he performed

no manual work; instead, he monitored, analyzed, and performed quality control functions for up

to four oil rigs at a time. In contrast, the Gilchrist MWDs, who worked at rigs, claimed their

primary duty was manual work as they spent 3-6 hours performing manual work at every rig up

and rig down. Further, Gilchrist cannot be dispositive as it is on appeal and not final. Finally, a

number of MWDs were deposed in Boudreaux v, Schlumberger Tech. Corp., U.S.D.C. W.D. La.

No. 6:14-2267, and their testimony, as compared to O’Mara and the Gilchrist plaintiffs, show

MWD duties were quite diverse.

CERTIFICATION STANDARD

The Fifth Circuit set the standard for reviewing a motion for FLSA certification or notice

in Swales v. KLLM Transp. Serv., LLC, 985 F.3d 430 (5th Cir. 2021). The first step is for the

district court to identify “at the outset of the case, what facts and legal considerations will be

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material in determining whether a group of ‘employees’ is ‘similarly situated.’ And then it should

authorize preliminary discovery accordingly.” Id. at 441. STC has raised a threshold issue to be

resolved before a class can be certified. Plaintiffs’ reasonable relationship argument does not state

a valid cause of action and as such, there is no alleged common unlawful conduct to be certified.

Swales is dispositive on this issue.

But the merits issue here – whether Plaintiffs were misclassified as independent
contractors – resembles the issue of arbitration agreements in J.P.Morgan. Both
are potentially dispositive, threshold matters. Just as the existence of a valid
arbitration agreement bars an employee from brining a lawsuit in general, a valid
independent – contractor classification bars application of the FLSA. The fact that
a threshold question is intertwined with the merits question does not itself justify
deferring those questions until after notice is sent out. Just as we held it was
improper to ignore evidence of the arbitration agreements in J.P.Morgan, it’s
improper to ignore evidence of other threshold matters, like whether the Plaintiffs
are “employees” such that they can bring an FLSA claim.

Swales, 585 F.3d at 441.

Plaintiffs note the Court’s Order on STC’s motion to dismiss in their motion (Doc. No. 62

at 3), inferring that the order decides this issue. It does not as shown below.1 Swales requires a

decision on the merits on threshold issues. Whether Plaintiffs’ reasonable relationship theory

states a viable claim is a threshold issue. The Court has not addressed that issue to date.

1
STC stated in the proposed joint discovery/case management plan that “[a]s an initial matter,” Plaintiffs’
reasonable relationship argument did not state a viable cause of action. (Doc. No. 20 at 2.) STC also filed a motion
to dismiss that sought to dismiss both Guilbeau’s individual claims and the class claims as the reasonable relationship
test is not a viable cause of action. (Doc. No. 12 at 2-10.) The Court characterized STC’s motion as seeking “dismissal
of Plaintiff’s individual claims based on insufficient factual allegations [and] dismissal of the collective claims because
other proposed members are not similarly situated.” (Doc. No. 27 at 4.) STC disagrees with this characterization.
Because the Court did not treat the motion as challenging the viability of the reasonable relationship theory, the Court
did not apply the Swales standard, but used a standard that was even more relaxed than Lusardi. which was error. (Id.
at 12.) (“Because the first amended complaint provides Defendant with fair notice of the putative class, the collective
action claim survives.”).
Pursuant to the scheduling order, the Parties submitted joint scheduling recommendations after the Court
decided the pending motion to dismiss. (Doc. No. 30.) Plaintiffs recommended a 90-day discovery period prior to
moving for certification. Contrary to Swales, they did not identify facts or legal considerations that would be material
to the similarly-situated analysis. (Id. at 1.) STC again identified Plaintiffs’ reliance on the reasonable relationship
test as a threshold issue and asked the Court to resolve that issue on summary judgment before proceeding to class
discovery. (Id. at 3-4.) Per Swales, STC also identified relevant topics and appropriate limits on pre-certification
discovery. (Id. at 5-6.) The Magistrate Judge accepted Plaintiffs’ recommendations over STC’s.

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ARGUMENT

Plaintiffs seek certification of the DD and MWD classes. Plaintiffs argue that their

reasonable relationship argument applies to both classes. Plaintiffs stipulate that the DDs perform

exempt duties (Ex. A (Guilbeau Dep.) at 5˗6), but assert that the MWD are, alternatively, entitled

to certification as their duties do not qualify them for exempt status.

Per Swales, STC begins with threshold issues. Plaintiffs are not entitled to certification if

their legal theories are contrary to law. The issues Plaintiffs raise regarding their pay are no

different than threshold issues such as arbitration agreements or independent contractor status

specifically identified in Swales. If Guilbeau admits that he performs exempt duties, he has met

the statutory requirement for the exemption and there is no need to certify a class or conduct

discovery to consider that issue. In that same light, if as a matter of law, the reasonable relationship

test does not apply to employees paid a traditional salary, certifying a class would be contrary to

Swales and a waste of both the Court’s and the Parties’ time and resources. STC will conclude its

opposition by showing that the reasonable relationship argument also raises individual issues, the

MWDs are not similarly situated, and Plaintiffs’ collateral estoppel assertion is misplaced.

Although not always explicitly stated, perhaps because of its obviousness, the common

policy or practice that the Plaintiffs allege as the basis for their class claim must state some policy

or practice that actually violates the FLSA. See Strait v. Belcan Engr. Grp., Inc., 911 F.Supp. 2d

709, 722 (N.D. Ill. 2012) (A FLSA claim requires “an identifiable nexus that binds the plaintiffs

together as victims of a particular violation of the overtime laws . . . .”); Hamm v. Acadia

Healthcare Co., 2022 WL 2713532 at *3 (E.D. La. July 13, 2022) (“Plaintiff submits that hourly,

non-exempt employees . . . were all subject to a common and violative policy whereby their meal

periods were subject to interruption at any time and were therefore ‘predominantly or primarily

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for the benefit of the employer.’”); Loy v. Rehab Synergies, LLC, 2021 WL 39331926 at *10-11

(S.D. Tex. Sept. 2, 2021) (Productivity requirements led to an unwritten practice of widespread

off-the-clock work to meet its demands.). The requirement that plaintiff identify an unlawful

policy is obvious. It would be a tremendous waste of time and the parties’ resources for a Court

to certify a class where the only allegation was that the defendant behaved lawfully.

I. GUILBEAU’S ADMISSION THAT THE DDs MEET THE DUTIES TEST IS

DISPOSITIVE AS TO THE DD CLASS.

29 U.S.C. § 213(a)(1) states that the white-collar exemptions are defined by the duties

performed by the employee.

The provisions of [the minimum wage section and the maximum hour section] of
this title shall not apply with respect to . . . any employee employed in a bona fide
executive, administrative, or professional capacity . . . .

Id. There is no reference to, or requirement for any specified method or level of pay in the statute.

It is purely a duties requirement.

The FLSA authorizes the Department of Labor to define and delimit the white-collar

exemptions through regulations. But there are limits on the DOL’s authority.

However, the Department’s authority is limited by the plain meaning of the words
in the statute and Congress’ intent. Specifically, the Department’s authority is
limited to determining the essential qualities of, precise signification of, or marking
the limits of those “bona fide executive, administrative, or professional capacity”
employees who perform exempt duties and should be exempt from overtime pay .
. . . nor does the Department have the authority to categorically exclude those who
perform “bona fide executive, administrative, or professional capacity” duties
based on salary level alone. In fact, the Department admits “[T]he Secretary does
not have the authority under the FLSA to adopt a ‘salary only’ test for exemption.
81 F.3d 446 (citing Defining and Delimiting the Exemptions for Executive,
Administrative, Professional, Outside Sales and Computer Employees; Final Rule,
69 Fed. Reg. 22122, 22173 (April 23, 2004)).

Nevada v. U.S. Dept. of Labor, 275 F.Supp. 3d 795, 805-06 (E.D. Tex. 2017).

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In recognition of this limitation, the DOL’s position is that the salary test is just a proxy

for the level of responsibility of the position.

[T]he law does not give the Department authority to set minimum wages for
executive, administrative, and professional employees. These employees are
exempt from any minimum wage requirements. The salary level test is intended
to help distinguish bona fide executive, administrative, and professional
employees from those who were not intended by Congress to come within these
exempt categories.

***
Salary levels “furnish a practical guide to the investigator as well as the employers
and employees in borderline cases and simplify enforcement by providing a ready
method for screening out obviously nonexempt employees.”

69 Fed. Reg. 22122, 22165 (April 23, 2004) (emphasis added).

Here, there is no need to rely on a proxy as Guilbeau concedes that he performs exempt

duties. (Ex. A at 5-6.) As Guilbeau admits he performs the duties of an exempt employee, he

meets the statutory requirement and is exempt.

II. PLAINTIFFS’ REASONABLE RELATIONSHIP ARGUMENT IS

CONTRARY TO THE REGULATIONS.

Plaintiffs themselves note that the reasonable relationship theory is questionable. “This

pay practice can potentially violate the FLSA, . . .” (Motion at 4 (emphasis added).)

29 CFR § 541.604 addresses additional payments to exempt employees. It has two

subsections. The first is the general rule that provides that exempt employees can receive

additional compensation in any form and in any amount without altering their exempt status. The

second subsection carves out an exception for employees paid on an hourly, daily, or shift basis.2

2
These employees ordinarily would not qualify as exempt as they are not paid a salary. This exception allows
these employees to qualify for the exemption if they also have a “guaranteed” weekly pay that meets or exceeds the
weekly exempt salary amount. However, the DOL limited the amount of extra compensation for these employees to
a reasonable relationship to the guaranteed amount. The use of the term guarantee is significant as it divided the
employee’s compensation between the “guaranteed amount” and the “extra compensation”.

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By its plain language, § 541.604(b) addresses those employees whose pay is computed on

an hourly daily or shift basis with a guarantee as to those payments. If they have a guarantee as to

those payments (and otherwise meet the exemption test), they may still qualify as exempt and

receive additional compensation as long as there is a reasonable relationship between the

guaranteed payments and the extra compensation.

Plaintiffs argue that because their extra compensation is allegedly tied to days worked,

§541.604(b) applies. That, however, is not what the subsection says. Rather, it says that their total

compensation must be reasonably related to their time-based “guaranteed” compensation.3

The DDs and MWDs here do not have any time-based guaranteed compensation. The

guaranteed portion of their compensation is their salary, which is a set bi-weekly amount that stays

the same from week to week. (Ex. R (Maxwell Decl.) and attached Ex. 1.) As such, it is clear that

their additional compensation is governed by § 541.604(a), which allows additional payments

without regard to characterization or amount for exempt employees.

The Court is required to interpret a regulation consistent with its governing statute.

Review of an agencies’ interpretation of its regulations involves a two-pronged

analysis. First, we look to the plain language at the regulation. The words of the
regulation must be “reasonably susceptible to construction placed upon them by the
Secretary, both on their face and in light of their prior interpretation and
application.” Second, “The Secretary’s construction must be reviewed in relation
to the governing statute.” “Agency regulations must be consistent with and in
furtherance of the purposes and policies embedded in the Congressional statute
which authorized them.”

University of California v. Shalala, 82 F.3d 291, 294 (9th Cir. 1996) (citations omitted).

“[F]inally, ‘a regulation must be interpreted in such a way as to not conflict with the objective of

3
Plaintiffs engage in bait and switch/slight of hand. The regulation separates the base, “guaranteed” amount
from the “additional compensation” used to measure the reasonable relationship. Plaintiffs point to their bonus
amounts, which are not guaranteed, in arguing that “the compensation” is time-based. They then switch their
characterizations of those same amounts to “additional compensation” to be compared to the base.

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its organic statute.” Canyon Food Co., LLC v. Secretary of Labor, 894 F.3d 1279, 1288 (10th Cir.

2018) (quoting Time Warner Ent’t Co. v. Everest Midwest Licensee, LLC, 381 F.3d 1039, 1050

(10th Cir. 2004)).

In two recent cases, the Western District of Louisiana analyzed the very same pay practice

as here and held that the practice is governed by § 541.604(a). In Boudreaux, STC’s DD pay was

at issue. The Boudreaux plaintiffs moved for summary judgment arguing plaintiffs’ total weekly

compensation did not bear a reasonable relationship to their weekly salary; STC moved for

summary judgment on the claims of seven individual plaintiffs asserting they were exempt from

overtime pursuant to the HCE. 2022 WL 992670, at *5-*18 (attached hereto as Ex. C).

The Boudreaux plaintiffs argued that because part of the DDs’ compensation was

calculated using the days the plaintiffs worked, the reasonable relationship test applied. Id. at *4.

The Court quickly dispensed with the plaintiffs’ argument that Hewitt was “dispositive”: the

plaintiff in Hewitt was paid solely on a day rate method and, therefore, the reasonable relationship

test applied. The Boudreaux plaintiffs were “paid under a hybrid compensation structure,” and

“[t]he distinction between the compensation structure in [Boudreaux] and that . . . in Hewitt is

significant.” Id. (emphasis in original). Because the plaintiffs were paid an annual salary that was

not subject to reduction regardless of the number of hours or days worked, their “pay [was]

calculated ‘on a weekly, or less frequent basis’ and is not pay ‘computed on . . . a daily . . . basis.’”

Id. The court also noted that Hewitt addressed the significance of this distinction when the Fifth

Circuit stated that its decision in Hewitt does not conflict with decisions from the Second and First

Circuit because those cases “involve[d] pay calculated ‘on a weekly, or less frequent basis’ . . .

and not pay ‘computed on . . . a daily . . . basis.’” Id. (quoting Hewitt, 15 F.4th at 297).4

4
The Fifth Circuit was addressing Anani v. CVS RX Serv., Inc., 730 F.3d 146 (2d Cir. 2013), and Litz v. Saint
Consulting Grp., Inc., (1st Cir. 2014), which both apply to these facts.

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“The Boudreaux court . . . conclude[d] that [STC’s] compensation structure does not

require application of the ‘reasonable relationship’ test.” Id. The court denied the plaintiffs’

motion for summary judgment and granted STC’s motions for summary judgment. Id. at *18.

The same court in Venable v. Smith Inter’l, Inc., No. 6:16-cv-00241, 2022 WL 895447, at

*5˗*6 (W.D. La. Mar. 25, 2022) (attached hereto as Ex. D), reached the same conclusion based on

the same reasoning, and same pay practice. Further, Boudreaux and Venable are not the only

courts to reach this conclusion with respect to pay practices such as the one at issue here: in

Holladay v. Burch, Oxner, Seale Co., CPAs, P.A, 2009 WL 614783 (D.S.C. Mar. 6, 2009), and

Herbert v. Technipfmc USA, Inc., 2021 WL 1137256 (S.D. Tex. Feb. 8, 2021), those courts held

that when an employee is paid a salary (not otherwise calculated on a daily, hourly or shift basis),

29 C.F.R. § 541.604(a), and not (b), applies.

III. WHEN AN EMPLOYEE SATISFIES THE EXEMPTION TEST UNDER 29 C.F.R.

§ 541.601, FURTHER ANALYSIS UNDER 29 C.F.R § 541.604 IS ERROR.

Here, Plaintiffs have asserted that the proposed classes consist of DDs and MWDs

classified as exempt under the HCE. The text of the HCE regulation supports the conclusion that

it is not subject to the reasonable relationship test.5 The regulation requires total annual

compensation of at least $107,432, of which $684 per week is paid on a salary or fee basis. Id. at

§ 541.601(b). $684 per week equates to an annual salary of $35,568.

The language of the regulation repudiates the application of the reasonable relationship

test. By its own terms, it sets the acceptable threshold between total compensation and salary at

an over three-to-one ratio. The reasonable relationship test does not and cannot apply as it would

5
The en banc Fifth Circuit in Helix found that the reasonable relationship test would apply to HCE employees
paid on an hourly, daily, or shift basis as the day rate would not satisfy the “salary basis” requirement. As the DDs
and MWDs were paid a straight salary plus bonuses, that is not an issue here.

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invalidate the minimum salary level allowed by § 541.601. This is supported by use of the term

“salary basis”, which is a predetermined, but not exclusive, amount. 29 CFR § 541.602(a).

The DOL’s regulatory guidance for § 541.601 makes clear that the base salary requirement

is that it be no more than the amount required for any other exemption. The DOL explained:

[S]ub-section 541.601(b)(1) contains a new safeguard against possible abuses that

are of concern to some commenters, including the AFL-CIO: the “total annual
compensation” must include at least $455 per week paid on a salary or fee basis.
This change will ensure that highly compensated employees will receive at least
the same base salary throughout the year as required for exempt employees under
the standard tests, while still allowing highly compensated employees to receive
additional income . . . .

Fed. Reg. at 22175.

The DOL never intended, or even contemplated, that the weekly salary basis for highly

compensated employees must bear a reasonable relationship to the total compensation. Rather,

the DOL intended that the regulatory requirement would be met as long as the base guaranteed

amount was at least the $455 required for other exemptions, regardless of the total compensation.

This conclusion is further supported by applying the reasonable relationship test to the

minimum requirements of the regulation. The DOL has recently explained that the § 541.604(b)

reasonable relationship is satisfied if the additional amounts do not exceed approximately 50% of

the guaranteed amount (in other words, the base salary). See DOL Opinion Letter FLSA2018-25

(Nov. 8, 2018). According to that guidance, the reasonable relationship test would require that an

employee, whose total compensation is $107,432, have a guaranteed annual “base salary” of

$71,614.17 per year, or $1,377.20 per week. Adopting this requirement for the highly

compensated employee regulation would be a significant judicial rewriting of § 541.601(b)’s

requirement for a base salary of only $684 per week (or $455 per week at that time).

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Section 541.604 reflects longstanding interpretations found in opinion letters and the Field

Operations Handbook. That regulation was designed to protect lower paid employees from

schemes where employees are paid by the hour and the guarantee is no more than an illusion. See

69 Fed. Reg. at 22183. On the other hand, the DOL has noted that it makes sense to treat employees

whose compensation is above $107,432 under more relaxed rules.

The Department continues to find that employees at higher salary levels are more
likely to satisfy the requirements for exemption as an executive, administrative, or
professional employee. The purpose of § 541.601 is to provide a “short-cut test”
for such highly compensated employees who “have almost invariably been found
to meet all the other requirements of the regulations for exemption.”

69 Fed. Reg. at 22174 (quoting the 1949 Weiss report at 22). As § 541.601(c) notes, “[a] high

level of compensation is a strong indicator of an employee’s exempt status.”

IV. PLAINTIFFS ARE NOT SIMILARLY SITUATED.

Plaintiffs acknowledge that they are not similarly situated in seeking two separate classes.

Plaintiffs’ Motion further acknowledges that STC uses different “job categories” for the “field

engineer” or “field specialist” that fit within their overall MWD grouping. (Motion at 2 n. 2.)

However, Plaintiffs’ Second Amended Notice for 30(b)(6) Deposition is more telling as it lists ten

separate job titles falling under the MWD umbrella without even addressing the DDX’s who may

or may not perform MWD duties. (Ex. E (Notice of Dep. at P.7); (Ex F. (Salomon Dep.) at 145-

46.)

This is similar to the facts presented in Sonnier v. ReCon Mgmt. Serv. Inc., 2021 WL

4067224 (W.D. La. Sept. 7, 2021). In that case, ReCon moved to decertify a conditionally certified

FLSA collective. Like here, plaintiffs defended the class saying that their general allegation of

paying straight time for overtime meant that all the class members were similarly situated. ReCon

noted differences such as grade level, different specific job titles, and that ReCon was asserting

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three separate white-collar exemptions, including employees qualifying for those exemptions

under the HCE, meant that the class members would all have to be examined individually for

whether they qualified for the various exemptions. ReCon further pointed out that those same

class members could fall within either “in-plant” or “in-house” or “in-plant” and “in-house” as far

as their work locations. If they were working in-plant, the court would also have to consider their

interactions with customers and the requirements and policies that they followed at the customer’s

policies.

Plaintiffs then changed tack and argued that defendant ReCon made improper deductions

which eliminated the need to individually assess the exemption defenses. ReCon responded by

arguing that it would still be an individual analysis to determine if there were any improper

deductions.

The court rejected the plaintiffs’ argument:

In their Motion to Compel, Opt-in Plaintiffs maintain that [70,000 pages of payroll
records] are relevant to show that they were subject to improper deductions, or as
Opt-in Plaintiffs explained – “to test the merits of its [ReCon’s] pay practices
against the salary basis requirements of the FLSA.” This alone persuades the Court
that there are significant and highly individualized inquiries as to each Opt-in
Plaintiff’s salary and any alleged impermissible deductions.

Id. at *5.

The differences among MWDs here are even more daunting. O’Mara was a Grade 11,

remote operations engineer, who worked at the remote operations center performing ROE duties

and occasionally serving as an operations support center (“OSC”) specialist. (Ex. G (O’Mara

Dep.) at 11˗12, 65 and Ex. 6 attached thereto.) He performed no manual work. (Id. at 14.) He

did not train or evaluate other MWDs. (Id. at 124, 143˗44.) He reviewed the data from 3˗4 wells

at a time to determine if it was accurate before it went to the customer. (Id. at 100˗01.) His data

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ensured the drilling remained on the well path. (Id. at 148.) He also occasionally functioned in

the OSC role in which he corrected and advised MWDs in the field. (Id. at 14.)

By contrast, the two Gilchrist plaintiffs were mid-level MWDs working less complex jobs

where they solely collected surveys and gamma logging, basically, the simplest MWD operation.

(Ex. H Gilchrist Trial Transcript, Vol. 1 at 21˗27, 29, 134,147, 153˗54.) Their testimony was that

they spent 3-6 hours performing manual work and rig-up operations in which they physically set

up computers, cabling, linking sensors to the rig, and assembling and programming MWD tools.

(Id. at 21˗27, 134˗35.) They would spend an additional 3˗6 hours rigging down at the end of the

runs. (Id. at 28.) In fact, the Gilchrist Complaint specifically alleges “Plaintiffs’ job duties (1)

were primarily manual, non-office, labor and were technical in nature, (2) required no official

training or college degree, and (3) did not involve supervisory or managerial functions.” (Ex. I.)

Further, they always worked in four-man crews (2 DDs and 2 MWDs) at the one rig at which they

were working. (Ex. H at 145.) They were regularly assigned trainees. (Id. at 49, 154˗56.)

The Gilchrist plaintiffs also testified about their relationship with the ROC (where O’Mara

worked) and the OSC. They would send their work to the ROC to be checked and to solve

problems they could not solve at the rig. (Id. at 38˗41.) The MWDs at the ROC were selected for

that job as they were the most knowledgeable MWDs. (Id. at 39˗41.) The “remote people” would

direct him what to do if is survey came up bad. (Id.) The OSC people were the go-to people who

quality controlled everything. (Id. at 42˗43,46˗47, 137˗38, 140˗41, 148.)

Other MWDs performed other duties. For example, Richard Lovelace worked at the rig

and provided the same services as the Gilchrist plaintiffs (surveys and gamma) plus resistivity,

dynamic pressure monitoring, nuclear services and pay zone steering. (Ex. J Lovelace Dep. at

30˗31.) Nuclear services involved an active radiation source and Lovelace was specially trained

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for the regulatory and safety requirements for that service. (Ex. B Salomon Decl. at ¶ 4.) He was

fully in charge of the rig floor when the nuclear source was at the surface. (Id.) When pay zone

steering, he effectively performed as a DD as he was directing the steering the BHA and making

judgment calls on the directions based on real-time data that he interpreted. (Ex. J at 101, 110.)

He constantly monitored trainees, evaluated junior MWDs, and made recommendations regarding

promotion. (Id. at 51, 54˗55.) He would also fill in for his supervisor, created about 50 training

files, and would submit required legal survey reports to state agencies. (Id. at 37˗38, 50.)

Majid Ibriham claimed to be a specialist in troubleshooting. (Ex. K Ibriham Dep. at 12.)

He solved problems himself instead of sending them to the OSC. (Id. at 119˗20.) He made pay-

zone steering decisions on his own. (Id. at 154˗55.) He provided BHA design recommendations

and pre-job planning and support. (Id. at 140.)

Plaintiffs’ attempt to rely on the reasonable relationship test for both classes fares no better

than relying on the MWDs’ duties. STC has attached selected pay statements for O’Mara. (Ex.

R.) They document that he received thirteen different line items of pay.6 Plaintiffs make no offer

as to which bonuses other potential class members received or whether payments should be

considered as part of the guaranteed compensation, extra compensation that is time-based, or extra

compensation that is not time˗based.

Strait v. Belcan Engr. Grp., Inc., 911 F. Supp. 2d 709 (N.D. Ill. 2012), addressed a similar

complex fact pattern. There, plaintiffs sought a national class of all full-time exempt employees

alleging Belcan made improper deductions from their salaries. The Court noted Belcan’s response

that the FLSA permits some but not other deductions and that local managers made the final

6
They are Base Salary, Bi-Weekly, 30% gross up, TN1A NGC, TN2A NGC, TN3A NGC, TN3B NGC, rig bonus
holiday, offshore rig, day rate bonus, well site bonus, salaried vacation, salary pat leave, and manual bonus. Only one
on its face says day-rate.

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decisions on whether there should be deductions from salary exempt employees pay. The Court

framed the issue as “whether the Plaintiffs are similarly situated – whether a common question

exists that can be answered without individualized inquiries.” Id. at 720. It then concluded:

The Court in its discretion, finds that Plaintiffs are situated differently enough that
the Court would need to undertake individualized factual assessments to determine
whether Belcan pays all FTDE employees a salary, as defined by the FLSA. As
such, proceeding as a collective action is not appropriate.

Id. at 721.

The same reasoning applies to Plaintiffs here. Even accepting that the reasonable

relationship issue states a claim, the mere fact that STC has a bonus policy that rewards employees

for billing customers, does not mean that all DDs and MWDs receive sufficient bonus amounts to

put the reasonable relation test at issue. That would require individual assessments of each element

of STC’s various additional payments to see whether they should fall on the guaranteed or day rate

side of the reasonable relationship test. Then it would involve a highly individualized analysis of

each Plaintiff to see how many of which bonus he/she received and whether the overall outcome

survived the “reasonableness” test. That is clearly highly individualized.

The same flaws apply to Plaintiffs’ MWD duties assertions. The record shows a whole

range of different duties. O’Mara was clearly on the high end sitting in the ROC monitoring four

wells at once and making determinations whether the data was accurate and should be passed to

the customer so that the well could be drilled according to plan. Gilchrist and Brockman were at

the lower to middle end of that continuum working as part of a four-man cell at the rig, serving as

either a lead or second hand and performing hours of manual work regardless of that status. (Ex.

B at ¶¶ 2, 7-8.) MWDs conducting pay zone steering fall into their own category as they are

essentially performing as directional drillers receiving data and making decisions as to how to steer

the well to remain within the pay zone. (Id. at ¶5.) Plaintiffs’ attempt to include DDXs in the

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collective but do not discuss them at all. The undisputed testimony is that a DDX can perform

either one hundred percent DD work, one hundred percent MWD work, or something in between.

(Ex. F at 145-46.) Only an individualized analysis will reveal where in that spectrum they stand.

V. THE REQUIREMENTS FOR OFFENSIVE COLLATERAL ESTOPPEL ARE NOT

SATISFIED AND ITS ALLOWANCE WOULD BE UNFAIR.

Plaintiffs wrongly assert that the district court’s finding in Gilchrist should bar STC

from relitigating the issue of whether its MWD employees are exempt based upon the

doctrine of offensive collateral estoppel. This is absurd.7

Like this case, the Gilchrist plaintiffs sought certification of the case as a collective

action arguing that they were similarly situated to other MWDs in terms of duties and pay

practices. (Ex. L, Gilchrist Doc. No. 32.) After Schlumberger filed its opposition to

conditional certification, the plaintiffs withdrew their motion. (Ex. M, Gilchrist Doc. No.

37.) In Gilchrist, a bench trial, the court never issued any ruling as to whether the named

plaintiffs were similarly situated to the other MWDs they sought represent.

The Gilchrist case is currently on appeal before the Fifth Circuit. On appeal,

Schlumberger is challenging whether the court’s finding that the plaintiffs were non-

exempt was adequately supported by the evidence and whether it applied the correct

standard in analyzing their exempt status. (Ex. N (Excerpt from Appellants Brief).)

Offensive collateral estoppel potentially precludes a defendant from relitigating an

issue that has been previously decided against it. See Parklane Hosiery Co. v. Shore, 439

U.S. 322, 329 (1979). This requires a plaintiff to show: (1) the issues in both proceedings

7
If the Court accepted Plaintiffs’ premise, it should also determine that Plaintiffs’ reasonable relationship issue has
already been resolved by its sister-court’s holdings in Boudreaux and Venable.

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are identical; (2) the issue in the prior proceeding must have been actually litigated; (3)

there must have been a full and fair opportunity for litigation in the prior proceeding; and

(4) the issue previously litigated must have been necessary to support a valid and final

judgment on the merits. Faulkner v. Nat’l Geographic Enters. Inc., 409 F.3d 26, 37 (2d

Cir. 2005). In addition, a court must satisfy itself that the application of offensive collateral

estoppel is fair. Further, a court has broad discretion in determining whether collateral

estoppel should apply in a given case. Parklane Hosiery, 439 U.S. at 331.

a. The Issues in This Case Are Not Identical to Those in Gilchrist and Were
Not Actually Litigated.
Plaintiffs’ motion for conditional certification is based upon two separate premises:

(1) the pay practices at issue are illegal because there is no reasonable relationship between

the guaranteed salary and the total compensation received, and (2) MWDs job duties do

not meet the requirements of any exemption under the FLSA.

First, the reasonable relationship test was not raised in Gilchrist. Consequently,

collateral estoppel cannot apply to this issue as it was not an “identical issue” or “litigated.”

Second, the Gilchrist court based its findings almost entirely upon its

“observat[ion]” and “evaluat[ion]” of the credibility and demeanor of the plaintiffs. (Ex.

O, Findings of Fact and Conclusions of Law at 3.) The Gilchrist court limited its findings

to the duties each plaintiff claimed to perform without any global determination concerning

whether MWDs everywhere are always non-exempt under the FLSA.

Further, as discussed supra, the positions at issue in Gilchrist and this case are not

the same and thus any analysis tied to duties will necessarily be different. For example,

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Plaintiff O’Mara was a very senior MWD working at the ROC. Plaintiffs Gilchrist and

Brockman worked in the field and monitored only one rig per assignment.

b. There Has Not Been a Full and Fair Opportunity to Litigate the Relevant
Issue in Gilchrist and the Court’s Findings and Order Is Not a Final
Judgment.
The Gilchrist case in on appeal and that appeal involves the issues of whether the

court applied the proper standard in determining whether an exemption applied to plaintiffs

and whether there was sufficient evidence to support the court’s factual findings. A “final

judgment” for purposes of collateral estoppel requires an adequate opportunity for

appellate review.” Flood v. Just Energy Mkt. Corp., 904 F.3d 219, 237 (2d Cir. 2018). It is

unfair to preclude litigation if the party who would be bound by the prior determination

had no opportunity for appellate review. Gelb v. Royal Globe Ins. Co., 798 F.2d 38, 45 (2d

Cir. 1986), cert. denied, 480 U.S. 948 (1987). The Gilchrist case is not yet concluded and,

therefore, cannot fairly collaterally estop STC from litigating its exemption defenses in this

case. See Flood, 904 F.3d 219 (declining to allow plaintiff to use offensive collateral

estoppel noting that pending appeal precludes same).

c. Inconsistent District Court Rulings Preclude Collateral Estoppel.

Offensive collateral estoppel should be applied only in limited circumstances:

[O]ffensive use of collateral estoppel does not promote judicial economy in

the same manner as defensive use does. . . . [With offensive collateral
estoppel] . . . a plaintiff will be able to rely on a previous judgment against a
defendant but will not be bound by that judgment if the defendant wins, [so]
the plaintiff has every incentive to adopt a “wait and see” attitude, in the hope
that the first action by another plaintiff will result in a favorable judgment.
Thus offensive use of collateral estoppel will likely increase rather than
decrease the total amount of litigation, since potential plaintiffs will have
everything to gain and nothing to lose by not intervening in the first action.

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Parklane Hosiery, 439 U.S. at 329-330.

Even if Gilchrist were a final decision, the conflict among district courts on STC’s

classification of STC field engineers and specialists as exempt prevents application of

collateral estoppel. STC has successfully defended its exemption classification of DDs

(the other position at issue in this case) as well as other individual employees providing

administrative services at customer well sites with little manual work and without onsite

supervision.

In Boudreaux, the court granted summary judgment in favor of STC, holding that

the DDs whose claims were the subject of individual motions for summary judgment were

properly classified as exempt under the HCE, after the court’s careful and individualized

consideration of compensation and duties performed at the well site by those DDs.8 (Ex.

P, Boudreaux Doc. No. 629 (finding that DDs Anklis, Ainsworth, Ogbogu, Naron,

Dankowski, and Eaton, were exempt under the HCE.) Similarly, in McLendon v.

Schlumberger Tech. Corp., No. 4:15-cv-00752 (U.S.D.C. E.D. Ark), the court found that

the plaintiff, a TCP (Tubing Conveyed Perforation) specialist who primarily worked at

client well sites with no onsite supervision, was properly classified as exempt under the

HCE. (Ex. Q, Transcript Doc. Nos. 57 & 58.)

Allowing Plaintiffs to invoke collateral estoppel and “cherry-pick” among

conflicting decisions would not serve judicial economy and would be unfair and prejudicial

to STC. Courts consistently disallow this type of “cherry-picking.” See Parklane Hosiery,

8
The court found that all were exempt under the HCE but relied on different facts as to each DD.

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439 U.S. at 330; Flood, 904 F.3d at 237; Hoppe v. G.D. Searle & Co., 779 F. Supp. 1425,

1427 (S.D.N.Y. 1991) (finding collateral estoppel inappropriate in light of inconsistent

prior rulings); Jack Faucett Assoc. v. Am. Tel. & Tel. Co., 744 F. 2d 118, 126 (D.C. Cir.

1984) (overturning district court and finding collateral estoppel does not apply because

prior courts applied inconsistent analysis and reached opposite results in determining

liability); Setter v. A.H. Robins Co., 748 F.2d 1328, 1330 (8th Cir. 1984) (upholding trial

court’s refusal to apply offensive collateral estoppel because defendant had prevailed in 12

of 21 prior cases); Harrison v. Celotex Corp., 583 F.Supp. 1497, 1503 (E.D. Tenn. 1984)

(refusing collateral estoppel where there were prior inconsistent judgments); Tretter v.

Johns-Manville Corp., 88 F.R.D. 329, 333 (E.D. Mo. 1980) (refusing to invoke offensive

collateral estoppel because it found that inconsistent judgments had been obtained with

respect to defendant).

SUMMARY

Plaintiffs do not meet Lusardi’s relaxed standards, let alone Swales heightened

standard. Plaintiffs’ superficial arguments rely heavily on conclusions, not facts and

analysis. They avoid key points by asserting those matters are decided by Gilchrist and

the Order on the motion to dismiss, which are incorrect legal argument. And they cannot

avoid the fact that their primary legal argument, filed soon after the Fifth Circuit’s Helix

decision, is based on inapposite facts. Neither the law nor the facts support certification.9

9
If the Court does choose to certify this case, STC notes a few minor issues in Plaintiffs’ proposed notice,
such as the vagueness in the definition of those to receive notice. STC believes the Parties can confer and resolve
these concerns and respectfully asks the Court to give the Parties two weeks to present the court with an agreed notice
if certification is issued.

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/s/ Samuel Zurik, III

_______________________________
Samuel Zurik III (Texas Bar No. 24044397)
Robert P. Lombardi (admitted pro hac vice)
Bryan Edward Bowdler (admitted pro hac vice)
Mina R. Ghantous (admitted pro hac vice)
THE KULLMAN FIRM, P.L.C.
1100 Poydras Street, Suite 1600
New Orleans, LA 70163
Telephone: (504) 524-4162
Facsimile: (504) 596-4189
E-Mail: sz@kullmanlaw.com
E-Mail: rpl@kullmanlaw.com
E-Mail: beb @kullmanlaw.com
E-Mail: mrg@kullmanlaw.com

COUNSEL FOR DEFENDANT,

SCHLUMBERGER TECHNOLOGY
CORPORATION

CERTIFICATE OF SERVICE

I certify that on January 25, 2023 I electronically filed the foregoing with the Clerk of

Court by using the CM/ECF system, which will send a notice of electronic filing to:

Ricardo J. Prieto
Melinda Arbuckle
The Wage and Hour Firm
[ ]
Counsel for Plaintiff Trever Guilbeau

Katherine Serrano
Forester Haynie PLLC
400 N St. Paul St., Ste. 700
Dallas, TX 75201
Counsel for Plaintiff Christopher O’Mara

21