United States District Court, W.D. North Carolina, Charlotte Division
CATHERINE E. SHARKEY and RON SEAVAN, Plaintiff,
FORTRESS SYSTEMS INTERNATIONAL, INC., d/b/a FORTRESS MOBILE, and ZHONG SU, individually, Defendants.
ORDER AND NOTICE OF HEARING
D. WHITNEY, CHIEF UNITED STATES DISTRICT JUDGE
MATTER is before the Court on Plaintiffs' Motion for
Judicial Settlement Conference filed on May 8, 2019 (Doc. No.
31), Defendants' Motion for Summary Judgment filed on
June 7, 2019 (Doc. No. 34), Plaintiffs' Motion for
Partial Summary Judgment filed on June 7, 2019 (Doc. No. 36),
and Plaintiffs' Motion to Strike and/or Objection (Doc.
No. 42) to Defendants evidence submitted in support of
Defendants Motion for Summary Judgment filed on June 21,
2019. For the reasons below, Plaintiffs' Motions (Docs.
Nos. 31, 36, 42) are DENIED and Defendants' Motion for
Summary Judgment (Doc. No. 34) is GRANTED IN PART and DENIED
IN PART as set forth herein.
Catherine Sharkey, filed its initial Complaint on January 10,
2018 on two counts: (1) Defendants violated the Fair Labor
Standards Act (“FLSA”) by failing to pay
employment taxes, keep accurate records of all hours worked
by employees, and properly calculate and pay overtime to
Plaintiff and similarly situated members; (2) Defendants
willfully violated N.C. Gen. Stat. §§ 95-25.6 by
failing to pay Plaintiffs and similarly situated hourly
employees all promised and earned wages and overtime payments
on the employees' regular payday for all hours worked.
(Doc. No. 1). Plaintiff brought the first cause of action as
an “opt-in” collective action under 29 U.S.C.
§ 216(b). (Doc. No. 1). Plaintiff subsequently filed a
Motion to conditionally certify a collective action and
facilitate notice under 29 U.S.C. § 216(b) on July 27,
2018. (Doc. No. 17). The Court denied Plaintiff's motion
for conditional certification on August 1, 2018. (Doc. No.
Plaintiff filed an amended Complaint on March 11, 2019 with
Plaintiff, Ron Sevean joining the collective action against
Defendants on Counts I and II. (Doc. No. 29 at p. 1). Under
the Amended Complaint, Plaintiff Sharkey also alleged: (1)
Defendants violated the Equal Pay Act by providing Sharkey
with lower pay and compensation than similarly situated male
employees on the basis her gender (“Count III”);
(2) Defendants violated Title VII of the Civil Rights Act by
providing Sharkey with lower pay and compensation than
similarly situated male employees based on her gender
(“Count IV”); and (3) Defendants' termination
of Sharkey was an act of retaliation as defined under Title
VII of the Civil Rights Act (“Count V”).
Defendants filed a Motion for Summary Judgment on all five
Counts. Plaintiffs filed a Motion for Partial Summary
Judgment on Counts I and II.
Fortress Systems, International, Inc. (“FSI”) is
a provider of mobile surveillance and smart fleet management
solutions for pupil transit, mass transit, and commercial
vehicle fleet and equipment management industries, and is
headquartered in Charlotte, North Carolina. (Doc. No. 29 at
p. 7). Defendant Zhong “Jack” Su has owned and
operated FSI since 1991. (Doc. No. 37 at Ex. A). Plaintiffs,
Catherine Sharkey and Ron Sevean worked at FSI and were
classified as independent contractors during the relevant
time period and both Plaintiffs signed Sales Agent Agreements
(“SSAs”) with FSI. (Doc. No. 29 at p. 2); (Doc.
No. 34-5 at p.1-3).
Catherine Sharkey was contracted to work for FSI in a sales
position from April 1, 2017 through October 3, 2017. (Doc.
No. 34-5 at p. 2). Under the initial SSA, Plaintiff Sharkey
earned a 0.4% commission, a monthly salary of $6, 000 and
received a monthly draw of $666.66 per month for the first
twelve months. Id. On October 2, 2017, Plaintiff
received an email from John Emory, FSI's SVP of Strategic
Partnerships and Sharkey's direct supervisor, with a new
Compensation Plan to become effective on that date. (Doc. No.
38-2 at p. 56). The new Compensation Plan reduced
Plaintiff's Sharkey's base salary from $6, 666 per
month to $3, 560 per month and increased her commission from
0.4% to one percent. (Doc. No. 34-5 at Ex. K). Plaintiff
Sharkey was initially required to sign and accept the offer
or resign by October 3, 2017, at 6 p.m. Id. The
deadline to accept was extended to October 4, 2017, at 9 a.m.
Id. Plaintiff Sharkey refused the offer and was
terminated. (Doc. No. 29 at p. 13).
Ronald Sevean, was contracted to work for FSI in a sales
position from February 1, 2017 to March 21, 2017. (Doc. No.
34-5 at p. 3). Under the SSA, Plaintiff Sevean was paid two
percent commission on total invoice sold, a monthly salary of
$6, 933, and a monthly draw of $400 per month for the first
twelve months. (Doc. No. 38-2 at p. 63). Plaintiff Sevean was
terminated on March 21, 2017, purportedly for poor
performance. (Doc. No. 34-1 at p. 121).
support of its Motion for Summary Judgment on Counts I and
II, Plaintiffs rely on Zhong “Jack” Su's
Deposition, documentary evidence produced in Discovery,
Catherine Sharkey's Deposition, Ronald Sevean's
Deposition, and Defendant's responses to Interrogatories.
Su's Deposition, he testifies he did not know the
difference between a 1099 and a W-2 prior this lawsuit and he
did not consult an attorney as to whether those hired as
contractors should have been hired as employees. (Doc. No.
38-1 at p. 20-31). He claims he hired sales agents as
independent contractors because that was their preference
(Doc. No. 38-1 at p. 41-44). Defendants converted all
independent contractors to employees as a result of this
lawsuit (Doc. No. 38-1 at p. 97). FSI employed 21
“independent contractors” from 2015 through 2018.
(Ex. B at Fortress Document Production - 1). FSI did not pay
employment taxes for those hired as independent contractors,
(Doc. No. 38-1 at p. 171), and did not pay back wages to any
of the converted W-2 employees. (Doc. No. 38-1 at p. 33).
further testifies in his Deposition that he did not keep
track of Sales Agent's work hours and continues to not
track their hours because they are now salaried employees.
(Doc. No. 38-1 at p. 84-85). He claims to not know whether
current sales team members work overtime or not, and their
payment remains the same regardless of the number of hours
worked. (Doc. No. 38-1 at p. 88). In response to Plaintiff
Sharkey's request for all documents evidencing the number
of hours worked, number of hours present on the job, number
of hours required to be present on the job, any adjustments
made to hours recorded, compensation paid, overtime paid,
commissions paid, or bonuses paid, FSI responded,
“[t]he only responsive documents regarding the named
Plaintiff would be invoices submitted and emails originated
by her and information contained on [FSI's] Zoho system,
which will be produced.” (Doc. No. 38-5 at p. 4).
Plaintiff Sharkey testified in her Deposition that she worked
five to fifteen hours of overtime per week. (Doc. No. 38-3 at
p. 9-11). Plaintiff Sevean testified in his Deposition that
he typically began work at 8:00 a.m. and was still doing
paperwork until 10:00 p.m. (Doc. No. 38-4 at p. 10-11).
and Sevean's “Sales Agent Agreements”
produced in Discovery show FSI hired Sharkey and Sevean as
“Sales Agents” and had them sign “Sales
Agent Agreements” with nearly identical terms. (Doc.
No. 38-2 at 62-75; 272; 331-346). Su claims in his Deposition
that he relied on Sophie Oyuang, FSI's CFO, to write the
SSAs and he trusted her to get it right even though he knew
she did not consult legal counsel when writing them. (Doc.
No. 38-1 at p. 98-99). Per the SSAs, “independent
contractors” were provided a company credit card to pay
for mileage and business expenses, a laptop and an ADSL
hardline connection with a wireless router. (Doc. No. 38-2 at
p. 64-66). Both SSAs bound Plaintiffs to confidentiality,
copyright, non-disclosure, and proprietary information
provisions. (Doc. No. 38-2 at p. 66-67). The SSAs also
instructed Plaintiffs on policies and procedures for
communication and handling of company records and data (Doc.
No. 38-2 at p. 69-70). The SSAs listed several activities
that Sharkey and Sevean were responsible for, including but
not limited to, achieving a sales quota, making daily sales
phone calls, sales appointments, attending trade shows and
company trainings, and recording sales activities in the
company's Zoho CRM. (Doc. No. 38-2 at 61). According to
Su's Deposition, Su also set the number of customers
sales agents were required to call, required them to log all
calls and required them to report to him every day. (Ex. A at
99:17-102:10; 115:15-116:3). The SSA's included a
termination clause, which provided that either the sales
agent or the company could terminate the agreement with
thirty days written notice. (Doc. No. 38-2 at 62).
also cite Ron Sevean's Complaint to the New Jersey
Department of Labor and Workforce Development
(“NJDOL”) following his termination, alleging
that FSI failed to pay him his last paycheck and was owed $5,
604.50 in unpaid wages. (Doc. No. 38-2 at 109). NJDOL sent a
letter to Defendant Su directly to notify him of the claim.
(Doc. No. 38-2 at 109). FSI paid Plaintiff Sevean $5, 629.50
to settle the claim. (Doc. No. 38-2 at p. 116).
support of its Motion for Summary Judgment on Counts I
through V, Defendants rely on, Catherine Sharkey's
Deposition, Ronald Sevean's Deposition, Zhong
“Jack” Su's Deposition, Plaintiffs'
Responses to Interrogatories, Sophia Oyuang's Declaration
and its attached exhibits, and Mark Cotton's Declaration.
Declaration, Sophia Oyuang testifies that FSI hired Plaintiff
Sharkey in early 2017 for a newly created position to support
the outside sales team by making calls and setting up
appointments for Mark Cotton and other outside sales
personnel. (Doc. No. 34-5 at p. 1). In her Deposition,
Plaintiff Sharkey testifies, “my understanding was that
I was to support the sales team in the various activities
that the outside salespeople had to do.” (Doc. No. 34-1
at p. 20). Oyuang testifies Plaintiff Sharkey worked from
home and was classified as an independent contractor. (Doc.
No. 34-5 at p. 1).
to Oyuang, Plaintiff Sevean worked for FSI as an outside
salesperson from February 1, 2017 to March 21, 2017 and was
also classified as an independent contractor. (Doc. No. 34-5
at p. 3). Plaintiff Sevean testifies that his typical day was
spent calling as many customers as possible by phone. (Doc.
34-2 at 6). He also went out and visited potential customers,
estimating that he spent approximately seventy percent of his
time at his home office and thirty percent of his time on the
road. Id. at 8-11.
not keep track of either Sharkey's or Sevean's hours,
nor pay them overtime. (Doc. No. 34-5 at p. 1-3). Oyuang
further testifies that FSI contractors were expected to work
eight hours per day, and the SSAs stipulated contractors
“will occupy a home office on Monday to Friday from
approximately 9:00 a.m. to 6:00 p.m.” to allow
contractors flexibility to plan their day and leave room for
a one-hour lunch break. Id. Furthermore, FSI's
published overtime policy prohibits overtime work without
preapproval. (Doc. No. 34-5 at Ex. B). FSI also published
Paycheck Problem Complaint Procedures that provided reporting
instructions to workers who had questions about their
paychecks, including questions about overtime. (Doc. No. 34-5
at Ex. I). According to Ouyang's testimony, neither
Plaintiff questioned unpaid overtime pursuant to these
procedures. (Doc. No. 34-5 at p. 4).
testifies Plaintiff Sharkey and Plaintiff Sevean regularly
invoiced FSI for their work and never requested payment in
their invoices for overtime work. (Doc. No. 34-5 at p. 3).
Included as Exhibits with Oyuang's Declaration are copies
of invoices that Plaintiffs submitted to FSI for their work,
and none of them make any claim for overtime payment. (Doc.
No. 34-5 at Ex. F). Oyuang also testifies that Plaintiffs
never otherwise communicated with FSI that they were working
overtime or believed that they should be compensated for
overtime work. (Doc. No. 34-5 at p. 3). She further states
Plaintiffs never made a request for preapproval to work
overtime and FSI was not aware that either Plaintiff claimed
to have worked any overtime. Id.
testifies Plaintiff Sharkey was not a particularly good
performer as she was absent from 20.5 days of the 128 days
she was contracted with FSI and attended fourteen customer
meetings while at FSI. (Doc. 34-5 at p.2; Ex. E).
Furthermore, FSI's call logging systems shows that
Plaintiff Sharkey averaged 9.56 phone calls per day and
FSI's Zoho CRM system shows that Plaintiff Sharkey
averaged 33.16 minutes of calls per working day. (Doc. No.
34-5 at Ex C and Ex. D). Plaintiff Sharkey's minimum call
volume under her SSA was twenty calls per day. (Doc. No. 34-5
at p. 2). Mark Cotton also testified Plaintiff Sharkey
“was not engaged as a salesperson” and
“generated few useful appointments” for him.
(Doc. No. 34-5 at p. 2). Furthermore, according to Oyuang,
Plaintiff Sharkey only had three years of experience and few
industry connections when she came to FSI as compared to
Cotton who has over thirty-five years of experience and
extensive industry connections that are valuable to FSI.
(Doc. No. 34-5 at p. 4).
October 2017, FSI restructured the compensation plans for
three salespeople, Mr. Lonon, Mr. Meyer and Plaintiff
Sharkey, thereby reducing each's monthly salary. (Doc.
No. 34-5 at Ex. K). As part of the restructuring, Plaintiff
Sharkey's commission was increased from 0.4% to one
percent. Id. On October 2, 2017, John Emory sent an
email to Plaintiff Sharkey, notifying her of the change in
her compensation plan. (Doc. No. 34-1 at Ex. 16). Emory
explained in the email the change in Plaintiff Sharkey's
compensation plan was due to Plaintiff Sharkey not being able
reach assigned sales activity goals and quota. Id.
The next day, Plaintiff Sharkey responded to Emory's
email requesting clarification on the decision to reduce her
salary as she was under the impression that certain data
regarding her sales performance was incorrect. Id.
Emory responded that day at 4:51 p.m., explaining the offer
was not negotiable, that Plaintiff Sharkey must sign and
accept the offer or resign by 6 p.m., and failure to do so
would result in termination. Id. In response,
Plaintiff Sharkey again requested clarification and expressed
she felt she was being “singled out, ”
referencing Mark Cotton,  another salesperson, for purposes of
comparison. Id. At 6:29 p.m., Emory replied with a
more detailed explanation for the change in compensation and
refuted Plaintiff Sharkey was being “singled out”
as FSI restructured the compensation plans of others on the
sales team on September 25, 2017. (Doc. No. 34-1 at Ex. 16).
Emory also stated in this reply, “[w]e require your
decision by 9:00am tomorrow, Wednesday October 04, 2017. If
no response by 9:00am, your relationship with Fortress Mobile
is officially terminated.” Id. Eventually,
Plaintiff Sharkey refused to sign the restructured contract
and was terminated. (Doc. No. 34-5 at p. 5).
his termination, Plaintiff Sevean filed a complaint with the
NJDOL, claiming he was owed additional money because FSI did
not provide proper notice of termination of his contract.
(Doc. No. 34-5 at Ex. I). In his complaint, Plaintiff Sevean
made no claims for overtime payment, ...