Court denies RigUp’s Attempt to Intervene in OT Suit

A federal district court in Houston has denied an attempt by RUSCO Operating, LLC and Planning Thru Completion, LLC (collectively, ”RigUp”) to intervene in an overtime lawsuit.  The lawsuit was filed against Anadarko Petroleum Corporation, alleging that Anadarko misclassified the plaintiff and others similarly situated as independent contractors and paid them a day rate without overtime compensation in violation of the Fair Labor Standards Act (“FLSA”). On October 15, 2020, the court issued an order allowing notice to be sent to putative class members, after which dozens of opt-in plaintiffs consented to join the collective action.

RigUp is in the business of facilitating relationships in the oil-and-gas industry. More specifically, RigUp operates an online platform through which skilled professionals can market their services to oil-and-gas operators.

According to RigUp, workers must sign an “independent professional” agreement, which includes an arbitration clause, before they can access RigUp’s online platform. Anadarko is one of RigUp’s clients. RigUp seeks to intervene in this action, insisting that 11 of the opt-in plaintiffs agreed to arbitrate the claims at issue in this lawsuit. 

The plaintiff opposed RigUp’s motion to intervene, arguing that it was untimely and that RigUp did not have a sufficient interest to allow intervention.  The Court found that while RigUp’s motion was timely, RigUp did not have a sufficient, legally protectable interest for intervention.  The Court’s analysis was as follows: 

The United States District Court for the Western District of Texas has twice addressed near-identical arguments, holding both times that “any attempt by [RigUp] to enforce an arbitration agreement on behalf of a non-signatory [Anadarko] against a signatory [Opt-in Plaintiffs] does not constitute direct, substantial, and legally protectable interest sufficient to give [RigUp] an interest to intervene as of right.” Kennedy v. Pioneer Nat. Res. Co., No. MO20CV00086DCRCG, 2021 WL 2843837, at *3 (W.D. Tex. Mar. 15, 2021); Lindsey v. ONEOK, Inc., MO19CV00284DCRCG, 2021 WL 2934503, at *3 (W.D. Tex. Mar. 12, 2021).
In an effort to blunt the force of this reasoning, RigUp directs me to a handful of decisions from outside this circuit, in which district courts have found that an intervenor in RigUp’s shoes does have a legitimate interest in pursuing what it views as the benefit of its bargain under an arbitration agreement. See Becker v. Delek US Energy, Inc., 3:20-CV-00285, 2020 WL 4604544, at *8 (M.D. Tenn. Aug. 11, 2020) (finding intervenor’s interest in resolving the question of whether the arbitration clause extended to the plaintiff’s claims against a non-signatory may be impaired if the court denied intervention); Bock v. Salt Creek Midstream LLC, No. CV 19-1163 WJ/GJF, 2020 WL 3989646, at *4 (D.N.M. July 15, 2020) (finding intervenor’s “seeking to vindicate its [arbitration agreement] with Plaintiffs [was] a legitimate interest”); Altenhofen v. S. Star Cent. Gas Pipeline, Inc., No. 4:20-CV-00030-JHM, 2020 WL 3547947, at *4 (W.D. Ky. June 30, 2020) (finding intervenor’s interest in enforcing the arbitration agreement, when coupled with its status as a potential joint employer, constituted a legally sufficient interest for intervention).
RigUp is readily distinguishable from the intervenors in Becker, Bock, and Altenhofen, as those intervenors claimed they: (1) were the plaintiffs’ employer; (2) set the plaintiffs’ salaries and duties; (3) determined whether the plaintiffs’ duties and pay qualified them for the administrative overtime exemption; and (4) were subject to potential liability under either a joint-employer theory or an indemnity agreement with the defendant. In contrast, RigUp claims that it merely “handled . . . Plaintiffs’ payments for the work they performed for Anadarko,” for which Anadarko would later reimburse RigUp…Moreover, RigUp does not argue that it faces potential liability under either a joint-employer theory or an agreement to indemnify Anadarko.
This case lacks the hallmarks underlying the district court’s decisions in Becker, Bock, and Altenhofen. Accordingly, I find that RigUp has failed to demonstrate it possesses a sufficient interest in the subject of this lawsuit to justify intervention as of right under Rule 24(a)(2). Without making this threshold demonstration, the remaining considerations of practical harm and adequacy of representation become irrelevant. (citations and quotations omitted).  

The Court also denied RigUp’s request for permissive intervention.  Production companies like Anadarko use staffing companies to try to create a buffer between them and workers who are denied overtime pay.  These staffing companies such as RigUp in turn have used arbitration agreements to try to shield themselves from collective and class actions for denying workers unpaid overtime.  But this case demonstrates that “staffing companies” must meet a fairly rigorous standard in federal courts in Texas if they wish to intervene to try to enforce an arbitration agreement.  

KNOW YOUR RIGHTS! If you or a friend or loved one have been paid a day rate or straight time and classified as an independent contractor within the past three years, contact an experienced overtime pay attorney as soon as possible to learn of your legal rights.  You may have a claim for unpaid overtime.  Josh Borsellino represents workers on claims for unpaid overtime.  For a free, no-obligation, confidential consultation, call Josh Borsellino today at 817.908.9861 or email him here.