## Facts

- M-I, L.L.C. (M-I SWACO) provided drilling-fluid systems and related services to oil-and-gas customers.
- Matthew Dewan and William J. Casey worked for M-I as “Drilling Fluid Specialists” (mud engineers) at customer drilling sites and were typically the only M-I employees on site.
- Mud engineers tested drilling-fluid properties (e.g., pH, viscosity, weight) and sought to keep the fluid within specifications set by a “mud plan” designed by M-I project engineers based on historical drilling conditions.
- The work was performed on-site, sometimes using a lab trailer and sometimes from the “tailgate” of a company vehicle; assignments included continuous monitoring of a single well (“sitting”) or short visits to multiple sites (“drive-bys”).
- Dewan testified he provided recommendations to the customer’s representative (“company man”) and those recommendations were often accepted without further inquiry.
- Both plaintiffs contended they lacked authority to deviate from the mud plan and had to obtain approval for changes.
- Plaintiffs were paid more than $455 per week and sued for unpaid overtime under the Fair Labor Standards Act (FLSA).
- M-I asserted the FLSA administrative exemption as an affirmative defense and obtained summary judgment in the district court.

## Issues

1. Whether the record conclusively established that plaintiffs’ primary duty was “directly related to the management or general business operations” of M-I or its customers for purposes of the FLSA administrative exemption.
2. Whether the record conclusively established that plaintiffs customarily and regularly exercised discretion and independent judgment with respect to matters of significance, as required by the exemption.
3. Whether summary judgment was proper given the employer’s burden to prove the exemption and the presence (or absence) of genuine disputes of material fact.

## Decision

- The Fifth Circuit reversed the grant of summary judgment and remanded.
- The court held that the summary-judgment record supported competing inferences about (i) whether plaintiffs’ work was administrative rather than production/field work and (ii) the scope of their discretion and independent judgment.
- Because those disputed facts were material to the administrative-exemption elements, M-I was not entitled to judgment as a matter of law.

## Legal Principles

- The FLSA’s administrative exemption requires the employer to prove: (1) salary-basis compensation at or above the regulatory minimum; (2) a primary duty directly related to management or general business operations of the employer or its customers; and (3) a primary duty that includes discretion and independent judgment on matters of significance.
- FLSA exemptions are affirmative defenses; the employer bears the burden of proof, and exemptions are construed narrowly.
- The administrative/production distinction can be relevant: work focused on producing the service the business sells may fall outside the administrative exemption even if it involves technical skill and customer interaction.
- “Discretion and independent judgment” is fact-intensive; evidence that an employee follows prescribed plans or procedures and must obtain approval for deviations can defeat summary judgment on the exemption, even where recommendations are often followed.
- On summary judgment, courts must draw reasonable inferences in favor of the nonmovant; conflicting evidence about job authority and day-to-day decisionmaking creates triable issues.

## Conclusion

The Fifth Circuit required further proceedings because the evidence did not conclusively show that mud engineers implementing a pre-set drilling-fluid plan exercised the level of administrative responsibility and independent judgment needed for the FLSA administrative exemption.


Dewan v. M-I, L.L.C., 858 F.3d 331 (5th Cir. 2017)