RGV Concepts, Ltd. and New Concept, LLC v. Texas Workforce Commission and Eloy Cavazos ( 2021 )

NUMBER 13-20-00087-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI – EDINBURG
RGV CONCEPTS, LTD. AND
NEW CONCEPT, LLC, Appellants,
v.
TEXAS WORKFORCE COMMISSION
AND ELOY CAVAZOS, Appellees.
On appeal from the 206th District Court
of Hidalgo County, Texas.
MEMORANDUM OPINION
Before Chief Justice Contreras and Justices Hinojosa and Silva
Memorandum Opinion by Chief Justice Contreras
In this appeal, appellants RGV Concepts, Ltd. and New Concept, LLC (collectively
RGV) argue the trial court erred by affirming an award of unpaid wages by appellee Texas
Workforce Commission (TWC) to appellee Eloy Cavazos. RGV contends by four issues,
which we construe as two, that summary judgment in favor of appellees was improper.
We reverse and remand.
I. BACKGROUND
RGV is a commercial construction company. For several months beginning in
September 2017, Cavazos worked for RGV as a “supervisor” on four Burger King
remodeling projects in Laredo. Subsequently, Cavazos filed a wage claim with TWC
under the Texas Payday Law, arguing RGV owed him additional regular and overtime
pay pursuant to the federal Fair Labor Standards Act (FLSA). See 29 U.S.C. § 207(a)(1);
TEX. LAB. CODE ANN. § 61.051(a). A TWC examiner made a preliminary determination
denying Cavazos relief; however, an appeal tribunal of the TWC reversed that ruling in a
decision issued on August 20, 2018. See TEX. LAB. CODE ANN. § 61.054. The TWC later
issued a final order on January 15, 2019, finding: (1) Cavazos’s regular rate of pay was
$25 per hour; (2) his overtime rate of pay was $37.50 per hour; (3) he earned $29,787.50
in gross wages, including both regular and overtime hours worked; and (4) RGV paid him
only $16,100. RGV was therefore ordered to pay Cavazos $13,687.50 in unpaid wages.
RGV filed suit against both appellees seeking judicial review of the TWC’s order.
See id. § 61.062. It argued that Cavazos was an independent contractor and that he
agreed on a flat pay rate of $1,100 per week. Appellees answered the suit and filed a joint
motion for summary judgment, arguing that more than a mere scintilla of evidence
supported the TWC’s findings that Cavazos was an “employee” of RGV and that he was
therefore entitled to time-and-a-half overtime pay under the Texas Labor Code and the
FLSA. Appellees’ summary judgment evidence included an affidavit by Cavazos, stating
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in relevant part as follows:
2. I was employed as a supervisor by [RGV] from September 4, 2017, to
January 11, 2018. I was hired by Norberto De La Garza (“de la Garza”) to
work for RGV for 44 hours per week, 8 hours daily, Monday through Friday,
and 4 hours on Saturdays at an hourly rate of $25 per hour. I was paid
$1,100 weekly for fourteen weeks.
3. I worked on four different Burger King construction sites during this time.
My general job duties including [sic] picking up and delivering materials to
the job sites, make sure all job sites were open, making sure that necessary
materials were on site, and making sure the work was started and finished
as scheduled.
4. I poured concrete and assisted with leveling; hanging signs; removing
grease traps; removing intercom and speakers; removing and installing
tiles; getting permits from the city and fire marshal’s office; painting
windows; ordering containers for the construction trash; and coordinating
with plumbers, stucco contractors, electricians, and air conditioning
companies.
5. I received instructions from De La Garza about when, where, and how I
was to perform my job. Since I was hired as a supervisor, I assisted De La
Garza on the job.
6. I did not participate in hiring. I did not have the authority to discipline[,] to
discharge workers[,] or [to] assign my tasks as a supervisor to other
workers. All materials, tools, and supplies were purchased by RGV.
7. I did not employ any of my own workers to assist me in completing work
for RGV. I did not participate in RGV’s management. I did not have a written
contract with RGV or Norberto de la Garza stating the terms and scope of
the work I was to complete in exchange for a specific amount of pay.
The summary judgment evidence also included several invoices allegedly showing
purchases made by Cavazos as part of his work for RGV.
RGV filed a response to the summary judgment motion, arguing in part that “there
is a genuine issue as to whether Cavazos was a salaried worker or if he was hourly” and
that, even if Cavazos was not salaried, he “failed to support his hours with substantial
evidence” before the TWC. RGV later filed a supplemental response additionally arguing
that Cavazos is not covered by the FLSA because he did not “engage[] in commerce or
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in the production of goods for commerce” as defined in the statute. See 29 U.S.C.
§ 207(a)(1). 1
The trial court granted the joint summary judgment motion and dismissed RGV’s
suit, thereby affirming the TWC’s decision. The final judgment ordered that each party
bear its own attorney’s fees and costs. This appeal followed.
II. DISCUSSION
A. Standard of Review
Chapter 61 of the Texas Labor Code governs administrative claims for unpaid
wages before the TWC. If, after exhausting its administrative remedies, a party is
unsatisfied with the TWC’s decision, it may file suit for judicial review. TEX. LAB. CODE
ANN. § 61.062(a). The trial court then reviews the TWC’s decision by trial de novo under
the substantial evidence rule. Id. § 61.062(e); see TEX. GOV’T CODE ANN. § 2001.174
(describing substantial evidence review for agency decisions). A ruling is supported by
substantial evidence when the evidence introduced before the trial court shows facts in
existence at the time of the TWC’s decision that “reasonably support” that decision. Tex-
Fin, Inc. v. Ducharne, 492 S.W.3d 430, 439 (Tex. App.—Houston [14th Dist.] 2016, no
pet.); JMJ Acquisitions Mgmt., LLC v. Peterson, 407 S.W.3d 371, 373 (Tex. App.—Dallas
2013, no pet.); see Collingsworth Gen. Hosp. v. Hunnicutt, 988 S.W.2d 706, 708 (Tex.
1998).
Substantial evidence means more than a mere scintilla but need not amount to a
preponderance. Tex-Fin, Inc., 492 S.W.3d at 439; JMJ Acquisitions, 407 S.W.3d at 371;
Blanchard v. Brazos Forest Prods., L.P., 353 S.W.3d 569, 572 (Tex. App.—Fort Worth
1 RGV did not file a motion for summary judgment.
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2011, pet. denied); see also Tex. Health Facilities Comm’n v. Charter Med.–Dallas, Inc.,
665 S.W.2d 446, 452 (Tex. 1984). Evidence is less than a scintilla is if it is “so weak as to
do no more than create a mere surmise or suspicion that the fact exists.” Regal Fin. Co.
v. Tex Star Motors, Inc., 355 S.W.3d 595, 603 (Tex. 2010).
Whether substantial evidence exists to support the TWC’s decision is a question
of law. See Tex. Dep’t of Pub. Safety v. Alford, 209 S.W.3d 101, 103 (Tex. 2006);
Blanchard, 353 S.W.3d at 572. The trial court may not set aside the TWC’s decision
merely because it would have reached a different conclusion. See Mercer v. Ross, 701
S.W.2d 830, 831 (Tex. 1986); JMJ Acquisitions, 407 S.W.3d at 374. Nor may the trial
court set aside the decision because the testimony was conflicting or disputed or because
it did not compel the result reached by the agency. Firemen’s & Policemen’s Civil Serv.
Comm’n v. Brinkmeyer, 662 S.W.2d 953, 956 (Tex. 1984); JMJ Acquisitions, 407 S.W.3d
at 374. The TWC’s decision carries a presumption of validity and may be set aside only
if it was made without regard to the law or the facts and, therefore, was unreasonable,
arbitrary, or capricious. Tex-Fin, Inc., 492 S.W.3d at 439; JMJ Acquisitions, 407 S.W.3d
at 371; see Collingsworth, 988 S.W.2d at 708; see also TEX. GOV’T CODE ANN.
§ 2001.174(2)(e).
When reviewing a summary judgment granted by the trial court in its de novo
review of a TWC decision, we decide whether the evidence presented established, as a
matter of law, that substantial evidence existed to support the TWC decision. Blanchard,
353 S.W.3d at 573; JMJ Acquisitions, 407 S.W.3d at 374; see TEX. R. CIV. P. 166a(c).
B. Applicable Law
Under the FLSA, an employer must pay a covered employee who works in excess
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of forty hours per week at least one-and-one-half times the employee’s regular rate of pay
for the overtime hours. 29 U.S.C. § 207(a)(1); see 40 TEX. ADMIN. CODE § 821.6(b) (stating
that the TWC “shall look to the [FLSA]” and its accompanying regulations in determining
an employee’s entitlement to overtime pay). The statute covers any individual employee
who “in any workweek is engaged in commerce or in the production of goods for
commerce.” 29 U.S.C. § 207(a)(1). “Commerce” is defined as “trade, commerce,
transportation, transmission, or communication among the several States or between any
State and any place outside thereof.” Id. § 203(b).
Section § 213(a)(1) of the FLSA provides that any employee employed in a “bona
fide executive, administrative, or professional capacity” is exempt from the statute’s
provisions. Id. § 213(a)(1).
C. Analysis
In its August 20, 2018 decision, the TWC appeal tribunal found, in relevant part,
as follows:
The evidence in the present matter demonstrates that the claimant is
covered under the FLSA based on his individual services. As the claimant
job duties included handling the employer’s work materials, which were
involved in interstate commerce. The claimant was responsible for picking
up the materials from major retailers and delivering the materials to the
employer’s job sites. Although the claimant’s job title was supervisor, the
evidence demonstrates that he had no authority to govern, hire, or fire other
workers. Thus, under the FLSA such non-management construction
workers are covered and entitled to overtime pay under the Act. The
employer provided no evidence to refute that the claimant is covered under
the FLSA and not exempt. Given such, this Wage Claim Appeal Tribunal
finds that the employer owes the claimant for all the hours he worked in
excess of a regular forty-hour workweek during the weekly pay periods of
September 4, 2017 through January 13, 2018.
RGV argues by two issues that substantial evidence does not support the TWC’s
conclusions that: (1) Cavazos was covered by the FLSA based on the type of work he
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did; and (2) Cavazos is not exempt from the FLSA as a “bona fide executive employee.”
As to its first issue, RGV contends that Cavazos was not covered by the FLSA
because he was not “engaged in commerce or in the production of goods for commerce.”
See id. § 207(a)(1). 2 For an employee to be “engaged in commerce” under the FLSA, he
must be “directly participating in the actual movement of persons or things in interstate
commerce by . . . regularly using the instrumentalities of interstate commerce in his work,
e.g., regular and recurrent use of interstate telephone, telegraph, mails, or travel.” Thorne
v. All Restoration Servs., Inc., 448 F.3d 1264, 1266 (11th Cir. 2006) (citing McLeod v.
Threlkeld, 319 U.S. 491, 493–98 (1943)); see Josendis v. Wall to Wall Residence
Repairs, Inc., 662 F.3d 1292, 1315–16 (11th Cir. 2011) (“An employee is subject to
individual coverage only if he is directly and regularly engaged in interstate commerce.”).
Indirect or sporadic involvement in commerce is insufficient. Josendis, 662 F.3d at 1315–
16; Thorne, 448 F.3d at 1266.
RGV argues that Cavazos “was engaged in purely local activity” that was not
connected to interstate commerce. See Williams v. Henagan, 595 F.3d 610, 621 (5th Cir.
2010) (“Work that is purely local in nature does not meet the FLSA’s requirements.”); Barr
v. Custom Design & Installation, Inc., No. 3:13-CV-04925-M, 2015 WL 1255870, at *3
2 The FLSA also covers any employee who “is employed in an enterprise engaged in commerce or
in the production of goods for commerce.” 29 U.S.C. § 207(a)(1). As relevant here, “[e]nterprise engaged
in commerce or in the production of goods for commerce" means an enterprise that:
(i) has employees engaged in commerce or in the production of goods for commerce,
or that has employees handling, selling, or otherwise working on goods or
materials that have been moved in or produced for commerce by any person; and
(ii) is an enterprise whose annual gross volume of sales made or business done is not
less than $500,000 (exclusive of excise taxes at the retail level that are separately
stated)[.]
Id. § 203(s)(1)(A). In an affidavit attached to its summary judgment response, RGV’s representative Adriana
De La Garza testified that RGV’s annual gross sales did not equal or exceed $500,000. TWC concedes
that FLSA enterprise coverage is not applicable here.
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(N.D. Tex. Mar. 19, 2015) (mem. op. & order) (“[E]mployees have not engaged in
commerce when they merely use interstate products to operate an intrastate business.”).
Alternatively, RGV argues that, even if some of Cavazos’s duties could be considered as
interstate commerce, there was no substantial evidence that he “directly and regularly”
engaged in such activity.
In arguing that substantial evidence existed to support a finding that Cavazos was
subject to individual coverage under the FLSA, TWC points to: (1) Cavazos’s testimony
that his duties for RGV included “picking up and delivering materials to the job sites” and
“making sure that necessary materials were on site”; and (2) two invoices attached as
summary judgment evidence purportedly demonstrating that some of the building
materials he picked up were transported from outside of Texas. TWC posits that, when
considered together, these exhibits constitute more than a scintilla of evidence to show
that Cavazos regularly and directly engaged in interstate commerce. It argues that “a
purchase and transportation of materials across state lines most certainly is ‘commerce’
under the FLSA, and an employee engaged in such transactions will be considered
‘engaged in commerce’ and individually covered by the FLSA.” In support of this
argument, RGV cites Thorne, 448 F.3d at 1266, as well as a regulation providing that,
[a]lthough employees doing work in connection with mere isolated,
sporadic, or occasional shipments in commerce of insubstantial amounts of
goods will not be considered covered by virtue of that fact alone, the law is
settled that every employee whose engagement in activities in commerce
or in the production of goods for commerce, even though small in amount,
is regular and recurring, is covered by the [FLSA].
29 C.F.R. § 776.3. 3
TWC also cites its own website, which states without reference to authority that “an individual
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whose work affects interstate commerce is covered as an individual” under the FLSA and that “‘interstate
commerce’ is defined so broadly that practically anything fits, such as ordering, loading, or using supplies
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We disagree that this evidence supports a finding that Cavazos engaged in
interstate commerce. Cavazos stated in his affidavit that his “general job duties” included
“picking up” construction materials to bring to RGV’s job sites, but he did not identify
where he picked up the materials from, nor did he state or imply that the materials he
picked up were ever transported across state lines. And, contrary to TWC’s
representations, the invoices attached as summary judgment evidence do not show that
Cavazos, as part of his duties with RGV, ever handled materials that had been
transported from out-of-state. The invoices both show small purchases from a PPG
Architectural Coatings store in Laredo. One of the invoices, for a $22.16 purchase,
contains Cavazos’s signature and indicates that RGV was the purchaser; the other
invoice, for a $192.51 purchase, contains a “Shipping Contact” address in Kentucky but
does not include the name of the purchaser or any signature. Even when combined with
Cavazos’s affidavit testimony, these invoices support no more than a “mere surmise or
suspicion” that Cavazos himself “directly participat[ed] in the actual movement” of goods
in interstate commerce. See Thorne, 448 F.3d at 1266; Regal Fin. Co., 355 S.W.3d at
603.
TWC emphasizes that “any regular contact with commerce, no matter how small,
will result in coverage.” Sobrinio v. Med. Ctr. Visitor’s Lodge, Inc., 474 F.3d 828, 829 (5th
Cir. 2007). And it notes that, in finding that individual FLSA coverage did not apply, the
Thorne court observed that the appellant did not “produce evidence that he made
from out of state, accepting payments from customers based on credit cards issued by out-of-state banks,
and so on.” FLSA Coverage, TEX. WORKFORCE COMM’N, https://www.twc.texas.gov/news/efte/
coverage_under_the_flsa.html (last visited Feb. 22, 2021). This statement is arguably misleading because
it does not reflect the well-established law that an employee’s engagement in interstate commerce must be
“regular and recurrent” in order for individual coverage to apply. See McLeod v. Threlkeld, 319 U.S. 491,
493–98 (1943); Josendis v. Wall to Wall Residence Repairs, Inc., 662 F.3d 1292, 1315–16 (11th Cir. 2011).
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purchases of goods from out-of-state vendors.” Thorne, 448 F.3d at 1267. But this does
not mean that any evidence of any out-of-state purchases will suffice to establish
individual FLSA coverage. Instead, the case law firmly establishes that such purchases
must be “regular and recurring” if they are to support coverage. See id. at 1266; see also
McLeod, 319 U.S. at 493–98; Josendis, 662 F.3d at 1315–16.
Here, the invoices in evidence show purchases from a store in Laredo, not from
an out-of-state vendor. See Thorne, 448 F.3d at 1267 (“[T]he fact that some of the tools
[appellant] purchased may have crossed state lines at a previous time does not in itself
implicate interstate commerce. When goods reach the customer for whom they were
intended, the interstate journey ends and employees engaged in any further intrastate
movement of the goods are not covered under the [FLSA].”). Even if the invoices
somehow showed that Cavazos purchased materials from outside Texas, they did not
show that such engagement was “regular” so as to support individual coverage under the
FLSA. Instead, at most, they showed indirect and sporadic involvement. This is not
enough to establish coverage. See Josendis, 662 F.3d at 1315–16; Thorne, 448 F.3d at
1266.
There was not more than a scintilla of evidence that Cavazos “directly and
regularly” engaged in interstate commerce while working for RGV. Therefore, the TWC’s
decision was contrary to law, and under the substantial evidence rule, the trial court
should have denied the joint motion for summary judgment. See TEX. GOV’T CODE ANN.
§ 2001.174(2)(D); Tex-Fin, Inc., 492 S.W.3d at 439. RGV’s first issue is sustained. In light
of this conclusion, we do not address RGV’s second issue, arguing that Cavazos was
exempt from the FLSA as a “bona fide executive” employee. See TEX. R. APP. P. 47.1.
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III. CONCLUSION
We reverse the trial court’s summary judgment. The cause is remanded with
instructions to deny appellees’ motion for summary judgment and for further proceedings
consistent with this opinion.
DORI CONTRERAS
Chief Justice
Delivered and filed on the
25th day of February, 2021.
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