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Sanctions Granted Against Oilfield Company in Overtime Dispute

A federal district court in Corpus Christi recently granted sanctions for discovery abuse in an unpaid overtime lawsuit filed by a large number of workers against an oilfield company. In 4JLJ, LLC, the workers filed the case as a collective action under the Fair Labor Standards Act (FLSA), seeking unpaid overtime wages and other damages. J4 claimed as one of its defenses that the workers were exempt under the Motor Carrier Act exemption. Thus, one of the issues was whether the workers exclusively drove vehicles weighing more than 10,000 pounds. If they drove smaller vehicles, they would not be exempt under the MCA exemption. Consequently, any evidence that demonstrates the number of hours the workers worked and whether their work involved one or more smaller vehicles is not only relevant, but critical to the claims and defenses in this case.

J4 had installed in many of its vehicles a system licensed from FleetMatics that included a Global Positioning System (GPS) tracker. This system recorded such things as the identity of the driver, the date and time the vehicle was turned on, the amount of time the vehicle ran, the distance it traveled, and the path it followed. J4 could run reports, including data for activity filtered on a vehicle and/or driver basis. Thus, this data could show how many hours the workers were working, as well as what vehicles they were driving, and how often. Thus, the data was relevant on the issues of both damages and liability.

During the litigation, the workers sought the FleetMatics data from J4. J4 did not preserve it and did not produce it in discovery. Consequently, a large part of the data was lost or destroyed. The workers then sought sanctions against J4 for spoliation.

The Court concluded that “J4 took action that diverted attention from the FleetMatics data long enough for it to be lost or destroyed. Spurious objections, the denial that the evidence existed, blaming Plaintiffs for not seeing through the obfuscation, and offering replacement evidence that contradicts what the FleetMatics data, once recovered, demonstrates are all evidence of a culpable breach of the duty to preserve the evidence.” The Court also found that the FleetMatics data was relevant and that its loss was prejudicial to the workers. The Court determined the appropriate sanctions for this misconduct were: “an adverse inference instruction that instructs the jury that J4 and John Jalufka failed to preserve FleetMatics data after the duty to preserve it had arisen and that a substantial amount of that data has been lost or destroyed as a foreseeable result.” The Court further ordered that “[t]he jury will be further instructed that, if it finds the missing FleetMatics data relevant and its destruction prejudicial to Plaintiffs, the jury may draw an inference that the evidence was favorable to Plaintiffs on both issues: (a) the hours Plaintiffs worked; and (b) whether Plaintiffs fall within the TCA exception.”

4JLJ then moved for reconsideration of the sanctions order. The Court rejected this motion, stating: “Defendants’ briefing reinforces this Court’s conclusion that Defendants have not yet received the message this Court is trying to send. The Court will not tolerate the destruction or concealment of evidence, the failure to respond accurately to discovery requests, and the repeated trial delays caused by Defendants’ resistance to correcting their wrongdoing, all while threatening Plaintiffs with the costs Defendants are having to expend to correct their own failures. Because Defendants’ efforts were willful with the intention of defeating Plaintiffs’ effort to meet their burden of proof on the TCA exception, it is fitting that the Court shift that burden of proof to Defendants.”

This case is an important reminder to employers sued for wage and hour violations that it is imperative that they preserve all time records of their workers, and their failure to do so can have serious implications of their ability to defend the claims.