good morning may it please the court and that a doll ski on behalf of premier directional drilling this case should be reversed and rendered in favor of premier based on the overwhelming record evidence that these highly skilled and highly paid directional drillers were independent contractors and while the five still factors do favor for me are there of died and the key question here is as a matter of economic reality are these directional drillers in business for themselves this is an important f l s a case to this industry who relies on independent contractors and also to the a miki who are concerned about the viability of their small businesses this case is similar to carroll vs sun land construction and herman express sixty minutes delivery which judge barksdale and judge smith considered but it's most similar to gate guard services versus paradis where this court awarded over a million dollars in attorney's fees because judge jones said during oral argument and minute eleven that it was so obvious to the casual observer that the gate attendants were contractors that the deal well should have never pursued that case and the facts here are even stronger what what is the record evidence ok first number one premier did not control these contractors just like in her mitigate guard they had the freedom to turn down work and there's been a lot of back and forth in the briefing about this without repercussion mr parrish testified that he turned down work records thirty two zero one to thirty two o two mr mr al pharo said he didn't turn on work turn down work but he knew of others that did and there was no repercussion they still got called back for other jobs employees of premier couldn't do this who were directional drillers and encouragement care geralyn gate carolyn gate guard just like it is here they didn't have non competes they could go work for anybody they were wanted to the fact that they just wanted to work for premier it's a free country they can do that what did premier do to to and to tell them they couldn't work for other companies nothing and the district court simply you know didn't consider didn't this bypass this very significant evidence the district court dictated knowledge that these directional drillers who were getting paid up to three hundred thousand dollars a year had no day to day supervision so we can all agree on that they were so skilled talk about economic reality that they could command up to fourteen hundred dollars a day and make three hundred thousand dollars a year on the open market and they did that and they opened up their standalone businesses they took all of these write offs on their tax returns for travel for meals for vehicles for repair for office space and they paid a fraction in taxes as a result and one of them  deductions for businesses or were some of the point of suffer losses one of the plaintiffs suffered a loss and that's a very good question but i think that all the words your point is it's not just an opportunity for loss there was actual los paid zero in taxes and this was exactly like t ball i'm sorry he suffered loss from this business or from a from the goat farm ok so you don't have any planners losing money on what we're talking about in this group who wrecked but this was similar to what this do court considered in te vault that mr t ball had realized tax advantages from drag racing and his picnic table businesses that he did ducted from the splicing work that he did for bell south so this court has considered that if you have other weird you have other businesses and it's under their umbrella you can you're the businessman you make decisions as to what you're deducting and what you're you're not deducting on your on your  taxes in addition these directional drillers were working project to project with several works and the weeks in between they weren't guaranteed additional work the employee directional drillers were guaranteed additional work  at their depositions testified they were contractors that they liked being contractors mr back i like being contract mr are far i was a contractor for premier this matters this court has considered if it's if it's a truly economic reality and it mirrors economic reality what they think and what premier think as to the relationship really matters and in fact getting back to the to the miki of the ninety three contract directional drillers that received notice of this class action who are all supposed to be similarly situated to mr parrish eighty nine of them chose not to participate four of them are participating that that's telling the independent contractors here testified their depositions they wanted to go in business for themselves because they would make additional money they had freedom and tax benefits and that's in the record at thirty one twenty eight forty three forty seven and fifty two ninety six but yet we're here talking about whether or not these these highly skilled and highly paid individual should should get overtime they actually earn more money than the employees did so they earned through thirteen to fourteen hundred dollars a day the employees were earning seven hundred fifty dollars a day these  paid significantly less in taxes but yet they're here demanding overtime it's customary in the oil field industry in and is important to this industry to be able to use independent contractors and that's why this case is so important because what is it saying that the oil industry can use independent contractors and and here we were up to that this is a situation that this court really hasn't considered you've looked at blue collar workers you've looked at delivery drivers and dry cleaners and people that sell fireworks but this court has never considered real sophisticated businessmen that can command three hundred thousand dollars a year and actually have a skill and the judge judge as rosen was a very careful judge i'm sure you'll agree with with with that he's very he's very don't you know obviously you're you're you're challenging his judgment you're entitle to where in your view do you think he went wrong think he made a mistake this is a very large record if you don't go back and review the record very specifically and sometimes rely on briefing you can get confused and he also he analyze these factors too technically we have to look at the big picture here are these gentlemen in business for themselves all right so let me talk about some of the mistakes you made he said what weighed most in his analysis where the most heavily was that there were no appreciable differences between the employees and the directional drillers an independent contractor directional drillers and as i just articulated there were significant differences here's what he did so with respect to the skill factor which heap which he found neutral he said that the contractors are not more skilled than the employees we all agree on fortunately that is not the standard comparing job duties between employees as you know from herman versus sixty minute express or express sixty minutes delivery comparing job duties is contrary to so common and talbert it's the wrong analysis the question is not whether you're the same as the employee you're working next to but do you have a portable skill set that you can go sell on the open market guess what mr who claims he was switched and swapped a contractor actually speak louder than words you know what he did he went out and opened up his own business he ousted his renters when he became contract opened up an independent office space took all of the d and then left pony and went to m s n or g m did contract work for them there's no such thing as a switched or swap to mean that but that was pounded upon in the briefing in the argument and i think judge judge as were just he got confused he got he he he was looking at the these technical aspects he used the wrong analysis i mean look at it he's comparing this case to to brock to brock in that case you have unskilled workers they can't take a fireball fireworks business it's go sell fireworks somewhere else but these directional drillers this is so complicated that they're charging fourteen hundred dollars a day too if you're if you're in houston you're at the top of the bank of america building you have to steer and consult you don't do the drilling and steering that drill to a door and minute maid park yes there is a well planned with the well planned doesn't tell you how to do that so you have to understand the job you have to understand the business and you have to look at the context of the cases the fifth circuit has looked at really low wage blue collar workers and they found that some of them were contractors what about the out of out of pocket expenses the investment sure the tax return the proof is in the pudding with respect to the tax returns the tax returns show us all of the expenses that these individuals took so what was the only one that opened a standalone office all of them had business names j d alstead parrish consulting and it's like six figures or five figures a year that they're spending on a program they were spending on average one hundred twenty thousand dollars a year in expenses and deducting all of those from their tax returns so they vehicles repair for vehicles they have to travel to these sites that they wrote their vehicles off and wrote the repair they wrote off lodging they stayed in hotels sometimes sometimes they stayed onsite there for their food their calipers and here's where the court also went wrong which which is it would be great to have some guidance from the circuit because it's happening a lot in these cases that there's this dispute about should you compare the investments over all other words should we look at target and say ok how much does target's man not all of it's land and companies versus a window washer that that that's a contractor the companies would never be able to hire contractors if we compare the overall investments of of the company and the workers so what what the fifth circuit another court started do is say ok well let's compare just the job so if we look just at the job at issue like in brock how much is it let's compare how much the company and the employees spending but here that's hard to do and that's another place that judge as or i think went wrong because he said ok premier has a massive investment they're buying the eight hundred thousand dollar a downhill come down whole computer that the drillers using but but that didn't make sense so that a tennis player at the u s open to we look at how much they're paying the tennis players and the courts and the net he's there just he's got it in his head so he really doesn't need anything to do that you don't have the point if you're spending hundreds of thousand dollars a year if you have a bad that's a loss you mention that there are parallel actual employees yet how much are they spending they are first of all they're getting reimbursed for their expenses whereas the contractors are not getting growing most employees are getting there getting the computers they're getting the software you know premier supplies a computer and a software so you can report it to the oil company what's going on now parish that i used my own computer and had my own software some of the plaintiffs just to be really technically correct that they used premiers computer because it was on the rig they didn't always use their own computer the used premier software so at the most let's just give that to premiere they provide the software they provide the computer that's it you can't stick premier with mud loaders and all these equipment at the rig because these directional drillers that they're consultants they don't need that they don't get dirty they're not you know getting down there and  dealing with that's the driller they stand behind the driller and tell the driller what to do these are highly sophisticated guys on the you know on site so you have to have an understanding of the job the facts are really important in this case  of is is mileage they got mileage reimbursed and actually so did the contractors contractors did get their mileage reimbursed from premier but i'm not aware of any expenses that any employee incurred and they certainly weren't writing them off on their treated they weren't supervised so course nobody was supervised out there they had these directional driller coordinators of course they got to tell them where to go and here's a job packet you don't know what you're doing and here's the well plan but they're not the testimony from m very occasionally in that they weren't out there but before i see my time is coming to a close i need to address one issue and that is with respect to willfulness there was a glaring error by judge straw and again not his fault because i think it slipped by on the pelleas did not move for willful on the willful claim what they it's their burden of proof they have to show that premier recklessly in no way and or knowingly miss a class by these workers in order to extend the statu move for it there is nothing in the brief that says anything about willful nothing in the brief that says anything about  please the court wasn't posting on behalf of the apple lease this case is not a referendum on the use of independent contractors as directional drillers as for me or would have you believe it is a fact down determination in which judges were carefully made a determination about the record as it applies to these five at the least and a narrow of formants based on the facts that apply to the individuals who opted into this collective action and no other directional drilling is the appropriate disposition in the right way to deal with the evidence in the record but let's let's just take care rydberg quickly the claim that the judge erred in awarding three years damages which requires willfulness yes or in the point that you did not simply request it in the summary judgment proceeding your honor i think that we can agree on the state of the record the motion for summary judgment sought three years of damages set forth the claim for three years of damages did not explicitly move for summary judgment on willfulness and if the court holds it was our obligation to move on w acknowledge we did not and judge parrish i'm sorry dr jones were didn't didn't even address willfulness or anything else any basis in his order for why he was giving three years he did not your honor and i submit that the reason for that is that the summ motion requested an award of damages set forth the damage calculation and premier did not object that there was a failure to establish well as i understand it all you presented was a mathematical figure did you explicitly in your summary judgment motion say we are entitled to three years your honor i can't recall whether we explicitly said in the motion we are entitled to three years i will certainly concede that we did not affirmatively make any argument regarding willfulness on it so i think the answer here is where the burden falls if that was our burden then i concede that we don't carry it if they have the burden to object then i think they have to concede they did not object turning to the analysis of the facts of this case i want to focus on the various factors that counsel has identified i will not take them necessarily in the same order that she addressed them but of course the court can take me in any order it wishes but i want to begin with the assertion made by counsel that there is no authority in this circuit for judge as it is determination that there are no appreciable differences between these directional driller classify contractors and employees that is not correct the court held in donovan versus take that evidence that an individual who had been a contractor and was now a ploy employee was doing basically the same job was evidence that supported the employee classification for the entire period likewise in the usury case this court recognized the fact that there was no distinction between the work done by the employee classified workers and contractor classified workers was a basis to hold that the workers were as a matter of economic reality employees so i think that circuit precedent gave judge ezra solid grounds to reach the conclusion that he did and i provided the court of bench exhibit this morning i to make sure that i can provide in context an explanation of some of the evidence that we've been discussing when you turn to tab one at this exhibit these are the terminations of arms for the two former employees who the record supports were swapped out from employee to contractor status the first document is for mr l four oh and is this the same mr all opposing counsel spoke about it is your honor and mr al forro after he was unilaterally swapped over his resistance to contractor status was then in a position that he had to set himself up as a contractor to continue doing the same work that he had done previously so it's not as if he made a voluntary decision to opt into that status the same document appears with respect to mr robbins issue just to use an analogy you know there are companies throwing the difference a special class since they're exempted butterfinger i said you know i get that national exemption but just conceptually you have to give an sat so i agree and i would make the point that it's the economic reality of the working relationships and law firm if we put aside the professional exemption could not treat the workers lawyers identically if they were employees and contractors except for the way in which they were compensated and then defend the classification there has to be a meaningful economic difference and there is not here and so let me turn specifically to you know what you can and in source or outsource and toggle back and forth with the exact same legal work can your honor but it had there have to be meaningful economic differences between the two that's my only point and so that's what i wanted to drill down on here is there are many ways to look at these factors but i w sort of ultimate inquiry is does the individual have entrepreneurial freedom and initiative to create profit to take risks etc the opposing counsel submitted that these of undertake roughly six figures and out of pocket expenses per year do you dispute that brought out i don't dispute the numbers reflected in the tax returns but there are two important caviar's number one in many respects those tax returns do not attribute expenses to any particular activity not to directional drilling certainly not to work on behalf of premier so i think counsel is drawing some ambitious inferences but second and i think more important conceptually that argument begs the question because when premier says we will compensate you as a contractor for mel and not formally as employees they change their labor costs they change the structure of the labor capital investment and they do pay more to the contractors than they paid employees but that they shift expenses the economic reality th is no different but isn't the shifting around precisely changing the economic around now your honor i'm sure you need a full time lawyer if you're going to shift it out not with respect to the f l a side because the question is are the who spends that much money out of pocket and puts that much personal money at raf i'm sorry i don't you may have an example but to me i've never heard of an employee who spends that much money out of pocket and puts that much personal capital at business expenses incurred by the employer in the ordinary circumstances what you're pointing out to me as an employee doesn't typically incur these expenses i agree but the economic reality here is that all this income was coming from  to these individuals and by the way i want to speak to the suggestion that there was competition there is no evidence in this record that any of these five individuals work for any competitor for me or at any time during their relationship wit so all of the expenses are actually being covered by the compensation that premier is pain and premier is just shifting the tax reporting obligation over to the contractors but the economic reality is the sa and in fact counsel suggest that in some way the industry is looking to what happens in this case because the industry is concerned about this i would submit the most common manner of employing directional drillers in this industry as premier itself is to treat them as employees and to treat them as exempt employees and premier could have classified these five gentleman as salaried employees paying them a salary and treated them as exempt and had no liability in the v f l as a premier made a choice for its own labor cost reasons to classify them with no economic substance and if i may just because i think it's helpful to be able to see this visually tab three of my exhibit is the compensation scale that's applied so when we talk about swapping this is what we're talking about changing from and you see it's an experience based compensation scale there are tears for the employees and there are tears for the contract classified individuals but there is the same experience classifications for both an employee has a different compensation structure in that they receive a salary per month and then a day rate per job the contractors receive no salary a larger day rate the business expenses are shifted to the contractors reporting but the economic substance is the same and in the reality for these five individuals perhaps not for others who are not parties to this case but for these five individuals they were simply paid according to this compensation scale premier made the decision what it would pay there was no negotiation there was no contract that there was no situation where any of these individuals bid for jobs they did not negotiate over the they vary based on what premier chose to pay these individuals according to their scale there is also argument from premier that some directional drillers quoted different prices for different jobs but that's not these plaintiffs so i want to embrace your one of the hypothetical you gave me earlier about how law firms might engage lawyers not all the lawyers are created equal some lawyers in days on those terms might have to take exactly the terms that the law firm offers because they don't have the market power to negotiate a different term others may be able to bargain for a specific task in a specific engagement and the reality economically for these five individuals is that they definitely so explain to me your understanding of and i understand these were these were premier's exhibits but what but what what's the meaning of that as it affected these employees the economic meeting and i don't want to get caught up in the semantics of the language that the economic meeting is that premier made a determination that it would transfer these individuals from an employee status being paid under tab three on the compensation scale as employees to contract status being paid on a contract basis but nothing else changed and in ten four i will bring the court with walking through the details but in tab for we have the testimony from one of the of there certainly is a change in compensation i don't think there is a change in rest because these individuals and work repeatedly undertaking assignments for premier and so the reality of their relationship for the period within which they were working for premier of course at some point for each of them that were concluded but at the period in which they were working for premier the reality is they were still continuing to receive assignments and they had very brief windows of time between job assigned we you rely on a regular wage you don't have out of pocket expenses at least not six figure ones if there are you know a lag in work for whether or for whatever reason you continue to get paid whereas if you're off on your own you take the expense if the industry changes you take the loss is not a pretty substantial difference it would be your honor if the economic reality were that these individuals were not uniformly working for premier independent premier and to be continued to provide the work why does it matter that they have one client or twelve clients what matters your honor and i think this is matters critically because in the in the cases that this court has held in close cases the workers were contractors and not employees the cases to which council ludes carol t bo in each of those cases there was evidence that the worker accepted work from another enterprise other than the defendant so they were genuinely independent actors in the marketplace excepting competing work substituting work that is not the case here there is no evidence of competing war during the period of these claims for these five individuals and there is a hint in the briefing that one of the planets mr beckett accepted competing work during the term of his engagement with premier but the record citations do not bear that out but let's go back to ted one just a minute yes your honor i noticed that only from mr robbins not mr all far off the box is checked it says lack of work i'm not asking you to speculate is there anything in the record that tells us  that box was checked or whether there was anything in regard to mr robinson but not mr off are all that had to do with lack of work your honor i don't believe that the record speaks to the difference between the way these two forms were filled out in that respect i do believe the record suggests and i'm sure counsel will make this point that it was a change in economic circumstances that lead to less work for directional drillers and a determination for these individuals to move them to contract status but the point is that their economic relationship to the enterprise then did not change in any respect except the compensation if the judge how you ask me isn't it a meaningful economic change when you change from employee to contractor status but that's respectfully begging the question because the whole point of misclassification liability is to determine whether there is in fact a legitimate basis for that economic change if there's no meaningful difference in the economic reality other than the compensation structure then the f l a c penalizes an employer for seeking to create the illusion of a contract relationship when in fact there is an employment relationship i had alluded earlier to what i consider to some extent a rosetta stone here for whether the workers are actually independent businessmen whether they're in a position to exercise initiative to earn profits take losses this is i think one of the most important factors in the case because as i've said these workers as a matter of fact not as a matter of theoretical possibility but as a matter of fact these workers did not bid for potential contracts and were not given the opportunity to bed they did not negotiate over compensation they paid what they were assigned by the directional drilling coordinator on that compensation scale they did not have a right to subcontract the work in order to leverage any expertise they did not have a right to select their preferred assistance or to select the equipment this equipment is of great significance you notice council never talked about their relative investment that premier makes because these directional drillers cannot do their job without the measurement while drilling assistant and the tool that monitors it they have no function in this industry without the assistant and that technology the tool costs eight hundred thousand dollars the assistant is treated as an employee by premier ones premier classified assistants as just disputed issues of material fact your honor i've spent a great deal of time thinking about this question because as a lawyer who doesn't practice routinely in the f l s a area it seems to be a surprising resolution to me but i think what judge as well was doing was trying to faithfully followed the course laid out by this court's precedent i think there's multiple answers to the court's question the first answer i would submit is i don't think there are genuinely any disputes about the historical facts there are some disagreements about the conclusions to be drawn from those facts but i don't believe judge edward actually resolved any disputed historical facts what he did then was to say with respect to certain historical facts some of these facts point both ways on a particular factor so let me take one illustration that the reply from points out the reply brief says judge and sort of said the directional drillers control their schedules and it said premier control their schedules how can you make that conclusion that's a conflict in the evidence but it's not because the control the directional drillers exercised to which he was referring was the decision theoretically whether or not to accept a job the evidence is they accepted every job they were ever offered by premier there's this record establishes they never refused any job but that was the control of the drillers exercise the control you're always saying the directional drill or have some control in the sense that theoretically they have autonomy about whether to accept a job or not and my point as a practical matter is they did in every instance here so i want the facts to be clear on this may i would just point to a consistent line of this court's authorities that what an employee could have done is not legal immaterial it's what he did that counted and what he did in every instance was to accept war judgment i haven't quite completed my answer your question i'm happy to answer or if you'd like me to sit down and go and go ahead and answer it and then i'll give mr and thank you and i'll be this as a sink as possible the point that i was making was that judge as a didn't resolve any dispute of historical facts he simply determined that when he looked at all the facts historically as undisputed there are certain factors that he considered to be neutral or in ecuador ways but the ultimate economic reality dictated employee status the cromwell decision from this court which i acknowledge is a non presidential decision but i think illustrates this situation where this court looked at a situation where several of the factors were in ecuador ways but said nonetheless the economic reality supports th determination of employees status as a matter of law and i think that that's what judges for it did here are thank you mr president i think the court thank you your honor i have quite a few things to address here the two factors the court found employee status and with two out of five factors there is not a district court case or a fifth circuit case where a court has found employee status with only two out of five factors that that's a that is a major problem where we are really weighted to like arithmetically adding up the factors are we really but the methodology we w look at the entire picture of him breaking it down factor by a factor exactly your honor i agree with that it's the key question that we're most concerned about but but the truth of the matter is no court has ever done that so the factors do matter i want to talk about the error of that the judge we talked about the skill factor that the judge found neutral and and i think i've already established where the error was there from our standpoint and then i want to talk now about the control factor being neutral which it really wasn't the district judge was very clear that he relied on three things and finding that the control factor was neutral three things that were argued by the  one was he said that it was neutral because the contractors had to go under undergo safety training and drug testing this this gate guard judge rating dealt with the same thing this has nothing to do with control over the details of the work and that's not what congress intended by the f l a say is that we're going to turn someone into an employee simply because we're following the law osha on the law and making a safe work environment so one of the things he relies on one of the three is simply not even part of the analysis he also found that the non disclosure agreements showed control by premier and talbert the court specifically said confidentiality has nothing to do with control over the employees work or their freedom to earn a living or anything like that and as an aside that that disclosure agreement was not even with premier was with the staffing company so the judge cared and considering any reference to the consulting agreement in the order was not even with  so all of that is error it's just it's a it's not in the record and then finally he said that premier had control over the work schedules well you know potential issue of act which we don't think there is one is that base these contractors have the ability to accept or reject jobs and the judge says repeatedly in his order but they feared if they rejected that they wouldn't get other jobs well that's speculation but if we if you don't agree with me then it's at least an issue  fact whether or not they could of whether or not they could agree reject or accept jobs the reality is mr parrish testified it's in the record that he had he rejected a handful of jobs so this chart that you're being shown by by my friend it actually cuts off the last sentence which says the question to to premier was list all the jobs that these individuals accepted it didn't say list all the jobs these true in the supplement and it's it was in the briefing and that's true we have parish saying that he did reject jobs and all far are saying that that indeed he heard of others rejecting jobs so that all goes to control those are the only three things the court looked at when it decided the control factor was neutral and it disregarded everything else all of the evidence that premier put forward and that regard there is no evidence that in this industry directional drillers are employees that was a statement made by counsel it's not in the records that it's not in the record and where and and carol and herm none of the done of these individuals had to bid on jobs that is not a requirement the pay scale or the charts that you were talking about there's one for contractors and there's one for employees they don't use the same chart and it's absolutely negotiable again just because these guys decided they wanted to work for premier and work for one employer doesn't mean that the premier controlled them are somehow discouraged like in brock versus mr fireworks where they had a contract that said hey guys here's the prices make sure you know hint hint make sure you follow our guidelines premier did none of that premier never said you can't work for anyone else there's no competition no non compete agreement  and so when we look at control we have to consider those things and that's what carroll tells us that's what t paul tells us that's what herman told us or didn't didn't consider any of those things and so as a matter of economic reality were not shifting taxes i mean the issue here with the guarantee for example the employee directional drillers were guaranteed pay they receive that salary whereas the contractors never received a salary they were never if they didn't get called for a job they didn't they didn't they didn't earn any money they didn't work mr ellis stad again opposing my friend says that look these are just part of the shifting of the expenses while mr ellis to have paid his wife fifty percent of the company's business these companies these these individuals are the plaintiffs testified that they they only worked for premier and they set up these companies so what else could these expenses be attributed to so at the end in closing your honor these highly skilled directional drillers who are commanding three hundred thousand dollars a year had didn't have not complaints could reject or take work  that they wanted actually work just contractors at least two of them off borrow and mr beckett after they left premier in that matters if you look at carol the same thing happening carol they looked at did you did you work as a contractor anywhere else doesn't have to be the same time as premier they swore to the i r s under oath they were independent contractors and in doing so they took advantage of it they say tens of thousands of dollars mr ellis to every member paid zero you