The Fifth Circuit’s Dissenting Judge James Ho Is Spot On with His Summary Analysis in Faludi’s FLSA Case.

Jeff Faludi v US Shale Solutions L.L.C.

Appellant Jeff Faludi, a former practicing attorney, took a consulting job at an oil and gas services company:-

US Shale Solutions, LLC filed as a Foreign Limited Liability Company (LLC) in the State of Texas on Tuesday, April 5, 2016 and is approximately three years old, according to public records filed with Texas Secretary of State. A corporate filing is called a foreign filing when an existing corporate entity files in a state other than the state they originally filed in. This does not necessarily mean that they are from outside the United States.

HIGGINBOTHAM

ELROD (AUTHORED OPINION)

HO (DISSENTING)

Jeremy Jackson is Chief Financial Officer of US Shale and Not Without Other Legal Woes

When Faludi left the company, he filed this lawsuit under the Fair Labor Standards Act (FLSA), seeking to recover unpaid overtime wages. Because Faludi was exempt from the FLSA, we AFFIRM the district court’s summary judgment in favor of his former employer. However, because the district court did not state its reasons for declining to award costs to the prevailing party, we VACATE the award of costs and REMAND that issue to the district court.

Why Courts Should Demand Tax Accountants as Expert Witnesses in Cases Like These, Or the IRS

Besides judges and lawyers, accountants probably have the most challenging job when it comes to legislation and interpretation of the law. They are relied upon in matters of complex accounting and taxation, to legally reduce tax –  or, if you are the IRS, demand tax where the tax and accounting laws have allegedly been misapplied, intentionally or otherwise.

As citizens, for a judge to be a qualified tax accountant, a specialized field which takes years of study to achieve top qualifications, seems far reaching – yet on perusal, we see many decisions which are reached without the reliance from an expert witness at the lower court. This is such a case.

While it is Grandiose to Quote the Superior Law of the Constitution, the Simple Fact is the Decision to Render Judgment was Premature

Judge Ho went into great lengths about the constitution and while that is heart-warming to read that [some] Judges will fall back and rely upon the superior words, what is more disturbing about the majority decision is the failure again to apply ‘common sense’ to the case.

In Faludi’s case the facts appear clear from the opinion; Faludi signed a contract as an “Independent Contractor”, yet now sues US Shale and claims he is an “employee”. That issue is material and substantial to any decision in this case and no decision should have been rendered until the following was determined at the lower court, as stated by Judge Jim Ho:

“Accordingly, I would reverse and remand for further proceedings, to allow the district court to address in the first instance whether Faludi is an independent contractor and therefore not entitled to overtime.”

An expert witness in the field of taxation and/or accounting along with a review of the percentage of work Faludi performed for other businesses (as an independent contractor) during the periods in question will help determine his ’employee’ or ‘independent contractor’ status along with his tax filings.

Judge Elrod Authored the Opinion in Which Higginbotham Joined

The case needs more discovery and yet the majority erroneously claim it can be determined by relying on law;

“[T]he ultimate decision whether [an] employee is exempt from the FLSA’s overtime compensation provisions is a question of law. Lott, 203 F.3d at 331.”

But this is not an employee versus employer case. Faludi came to court armed with an “independent contractor” agreement. Hence, the law – in this case- and applying common sense, one cannot clearly ascertain if Faludi is an “employee” or an “independent contractor” based on the scant discovery.

Judge Elrod and Higginbotham cannot decide this in law, it should, as Ho suggests, have been remanded and relying upon Common Sense.

Disclaimer; We have not reviewed the briefs or the lower court case, so we rely upon the facts as summarized in the Opinion, which makes no reference of an ‘expert witness’ from the field of accounting/taxation.