Opinion
Civil Action No. SA-03-CA-0538 OG (NN).
February 28, 2005
MEMORANDUM AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
TO: Hon. Judge Orlando Garcia United States District Judge
I. Introduction
The matters before the court are defendants' motion for summary judgment (docket entry 25), defendants' motion to strike certain of plaintiff's summary judgment evidence (docket entry 29), plaintiff's motion to strike certain of defendants' summary judgment evidence (docket entry 33), and the pleadings in support and opposition thereto (docket entries 26, 31, 35, 37, and 38). After considering the motions and the entirety of the record in this matter, it is my recommendation that: defendants' motion for summary judgement be GRANTED, in part, and DENIED, in part; defendants' motion to strike be GRANTED, in part, and DENIED, in part; and plaintiff's motion to strike be DENIED.I have jurisdiction to enter this Memorandum and Recommendation under 28 U.S.C. § 636(b) and the District Court's Order referring the motions for summary judgment and all related filings in this proceeding to me for disposition by order, or to aid in their disposition by recommendation where my authority as a Magistrate Judge is statutorily constrained.
Docket Entry 27.
II. Jurisdiction
This court has jurisdiction pursuant to 28 U.S.C. § 1331, the statute conferring federal question jurisdiction, and the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201, et seq., the statute establishing the federal question in this matter.III. Statement of the Case
Plaintiff Kari Edwards was employed by defendants from June 1999 to June 2003. Defendants "operate post-secondary education institutions . . . providing career training in certain technical fields such as computer networking, aviation, and computer-aided design."
Docket Entry 25, Appendix, at 9, 84.
Docket Entry 25, ¶ A1, at 4.
During her tenure with defendants, plaintiff held the positions of Field Admissions Representative (FAR) and Assistant Regional Manager (ARM). As a FAR, plaintiff was responsible for selling defendants' educational programs to prospective students. Plaintiff's FAR duties included identifying high schools at which to make presentations, making presentations at those high schools, soliciting interest from prospective students, making in-home presentations to prospective students and their families (the "buying committee"), administering an admissions test, and attempting to insure that the student attended and graduated from defendants' educational institution. For her FAR duties, plaintiff was paid a base salary along with sales or goal related bonuses. Plaintiff was a FAR for the entire duration of her employment.
Docket Entry 25, Appendix, at 44, 173, 183.
Docket Entry 25, Appendix, at 44, 50, 51, 55.
Docket Entry 25, Appendix, at 51, 67.
Docket Entry 25, Appendix, at 68.
From July 2001 to February 2002 and from April 2002 to June 2003, plaintiff was an ARM, in addition to being a FAR. Plaintiff's ARM duties included both sales duties and training of FARs. As part of her training duties, plaintiff would make sales presentations accompanied by her FAR-trainee and she would accompany her FAR-trainee to his or her own sales presentation. Other ARM duties included, but were not limited to, following-up with her FARs by phone and listening in on her FARs' phone calls to prospective students and schools. For her ARM duties, plaintiff was paid a salary in addition to her FAR salary.
Docket Entry 25, Appendix, at 68, 71, 88, 93. Plaintiff testified that she conducted some ARM activities in January or February of 2000. Docket Entry 25, Appendix, at 89. However, she only held the official ARM title for the periods indicated, above.
Docket Entry 25, Appendix, at 73-74, 91, 94a.
Docket Entry 25, Appendix, at 73-74, 77, 78, 80, and 91.
Docket Entry 25, Appendix, at 94a, 94b.
Docket Entry 25, Appendix, at 82. See also Docket Entry 25, Appendix, at 174.
On June 10, 2003, plaintiff submitted her letter of resignation to defendants. Plaintiff filed this action on June 26, 2003, asserting, inter alia, that she was: entitled to overtime compensation, wrongfully denied the same and willfully misclassified as an exempt employee (i.e., an employee not entitled to overtime) by defendants. By way of the instant motion for summary judgment, defendants seek a judgment as a matter of law that plaintiff was an exempt employee and that they did not willfully misclassify her as an exempt employee.
Docket Entry 25, Appendix, at 138.
Docket Entry 1.
Docket Entry 25.
IV. Issues Presented
1. Whether plaintiff was an exempt employee under the Fair Labor Standards Act and, therefore, not entitled to the overtime and minimum wage provisions of the Act as a matter of law?
2. Whether any of defendants' alleged violations of the FLSA were willful such that this action is governed by the FLSA's three year statute of limitations?
V. Applicable Legal Standards
A. Summary Judgment StandardFederal Rule of Civil Procedure 56 governs motions for summary judgment. Rule 56 provides in pertinent part:
The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.
FED. R. CIV. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
Rule 56 requires that there be no genuine issue of material fact. A fact is material if it might affect the outcome of the lawsuit under the governing law. A dispute concerning a material fact is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Therefore, summary judgment is proper if, under governing laws, there is only one reasonable conclusion as to the verdict; if reasonable finders of fact could resolve a factual issue in favor of either party, summary judgment should not be granted.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Thomas v. LTV Corp., 39 F.3d 611, 616 (5th Cir. 1994).
Anderson, 477 U.S. at 248; Wise v. E.I. DuPont De Nemours Co., 58 F.3d 193, 195 (5th Cir. 1995).
Anderson, 477 U.S. at 249.
The movant on a summary judgment motion bears the initial burden of informing the court of the basis for its motion and identifying those portions of the record which it alleges demonstrate the absence of a genuine issue of material fact. To satisfy this burden, the movant must either submit evidentiary documents that negate the existence of some material element of the nonmoving party's claim or defense, or if the crucial issue is one for which the nonmoving party will bear the burden of proof at trial, merely point out that the evidentiary documents in the record contain insufficient proof concerning an essential element of the nonmoving party's claim or defense. Regardless of whether the movant accompanies its summary judgment motion with affidavits or other evidentiary materials, the motion must be granted if the evidence before the court demonstrates that the standard for entry of summary judgment, as set forth in Rule 56(c), is satisfied. Once the movant has carried that burden, the burden then shifts to the party opposing the motion to present affirmative evidence in order to defeat a properly supported motion for summary judgment.
Celotex Corp., 477 U.S. at 323.
Edwards v. Aguillard, 482 U.S. 578, 595 n. 16 (1987); and Celotex Corp., 477 U.S. at 325.
Id.
Anderson, 477 U.S. at 257.
Importantly, the non-moving party cannot discharge this burden by referring to the mere allegations or denials of the non-moving party's pleadings. Rather, the non-movant must, either by submitting opposing evidentiary documents or by referring to evidentiary documents already in the record, set out specific facts showing the existence of a genuine issue for trial. The court will look at the record in the light most favorable to the non-movant drawing all inferences most favorable to that party. Nevertheless, "conclusory allegations, speculation, and unsubstantiated assertions are inadequate to satisfy the non-movant's burden." Summary judgment is mandated if the non-movant fails to make a showing sufficient to establish the existence of an element essential to his or her case on which he or she bears the burden of proof at trial. Accordingly, summary judgment motions permit the court to resolve lawsuits without the necessity of trials if there is no genuine dispute as to any material facts and the moving party is entitled to judgment as a matter of law.
FED. R. CIV. P. 56(e); Anderson, 477 U.S. at 250; State of Texas v. Thompson, 70 F.3d 390, 393 (5th Cir. 1995).
Celotex Corp., 477 U.S. at 324; Fields v. City of South Houston, Texas, 922 F.2d 1183, 1187 (5th Cir. 1991); Neff v. American Dairy Queen Corp., 58 F.3d 1063, 1065 (5th Cir. 1995), cert. denied, 516 U.S. 1045 (1996).
Hibernia Nat'l Bank v. Carner, 997 F.2d 94, 97 (5th Cir. 1993). See also Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (holding that a nonmovant cannot discharge her burden with doubt as to the material facts, by conclusory allegations, unsubstantiated assertions, or by only a scintilla of evidence).
See Douglass v. United Services Auto. Ass'n, 79 F.3d 1415, 1429 (5th Cir. 1996) (citing Forsyth v. Barr, 19 F.3d 1527, 1533 (5th Cir.), cert. denied, 513 U.S. 871 (1994)).
Celotex Corp., 477 U.S. at 322 ("In such situation, there can be `no genuine issue as to any material fact,' since a complete failure of the proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial."). Id. at 323.
See Fields, 922 F.2d at 1187.
VI. Analysis
A. The motions to strikeAs a complement to their respective pleadings in support of, or opposition to, the motion for summary judgment, both plaintiff and defendants have brought motions to strike certain of their opponents' summary judgment evidence.
See Docket Entries 29, 33.
1. Defendants' motion to strike (docket entry 29)
Defendants move to strike and object both to plaintiff's summary judgment evidence in its entirety, as well as to specific exhibits and portions of exhibits. Defendants first object to plaintiff's evidence in its entirety on the basis that plaintiff merely submitted entire, lengthy copies of exhibits "without any direct citation to whatever portions thereof Plaintiff may be relying on." Defendants' first argument is not entirely accurate. Although plaintiff submitted entire copies of exhibits, as opposed to pertinent portions thereof, plaintiff did include some specific citations to the salient excerpts of her larger exhibits. To the extent that plaintiff failed to make specific references to the important portions of her longer exhibits, such practice imposes a burden on the court. However, I recommend that the court overrule this objection.
Docket Entry 29.
Docket Entry 29, at 1.
See Docket Entry 26, ¶ E, at 19, wherein plaintiff cites Exhibit 7, at p. 77. Notably, Exhibit 7 is the deposition of Robert Whitney — the exhibit to which defendants specifically refer in their opening portion of their motion to strike ("Plaintiff offers wholesale and en masse references to entire exhibits. . . . and the entire deposition transcript of Robert Whitney without any direct citation to whatever portions thereof Plaintiff may be rely on.") Plaintiff's citation to page 77 of Mr. Whitney's deposition in her responsive brief undermines defendants' argument.
Next, defendants have moved to strike both portions of exhibits and entire exhibits, specifically: (a) paragraphs 2-8 of plaintiff's affidavit (exhibit 1); (b) exhibits 1-A, 1-B, and 1-C appended to plaintiff's affidavit; (c) paragraphs 5-12 of Denita Williams' affidavit (exhibit 2); (d) the deposition of Robert Whitney (exhibit 7); and exhibit 8 which is represented to be excerpts from defendants' policy manuals.
Defendants object and move to strike certain of the statements contained in the affidavits of plaintiff and Denita Williams on the basis that they are conclusory, make false inferences, are contradicted by other evidence of record and/or fail to give the methodology underlying the mathematical conclusions contained therein. It is my recommendation that those objections be taken to the weight and not the admissibility of the evidence at issue. The statements to which defendants object will be considered in the context of all the evidence before the court and anything which is contradicted or unsupported will be given appropriate weight. For these reasons, I recommend that defendants' motion to strike be DENIED as to paragraphs 2-8 of plaintiff's affidavit (exhibit 1) and paragraphs 5-12 of Denita Williams' affidavit (exhibit 2).
Docket Entry 29, citing Docket Entry 26, Exhibit 1, ¶¶ 2-7, Exhibit 2, ¶¶ 5-12.
Next defendants move to strike plaintiff's exhibits 1-A, 1-B and 1-C on the basis that they are hearsay and are not properly authenticated. Defendants move to strike exhibit 1-C on the additional grounds that the document: is illegible; contradicts certain statements plaintiff made in her deposition; is both conclusory and without foundation; and was not produced during discovery. As previously stated, defendants' attempt to strike documents on the basis that they are conclusory, without foundation, or contradict other evidence of record is unavailing.
Docket Entry 29, at 6. As to this last argument, defendants conceded in their Reply that the document was produced but asserted that it was not produced before the discovery deadline expired. Docket Entry 37, at 4. Because defendants have failed to establish prejudice by plaintiff's late production of the document, this last argument will not be considered further.
Moreover, defendants' arguments that exhibits 1-A through 1-C are not authenticated and are hearsay are incorrect. Plaintiff authenticated said exhibits in her affidavit. To the extent that the documents (notably, exhibit 1-C) merely reflect plaintiff's own timekeeping, they are not hearsay. However, they will be accorded the appropriate weight in light of the fact that they are self-serving, have no indicia of objective, contemporaneous timekeeping and have not been subject to cross-examination. Additionally, as exhibit 1-C is, in fact, illegible, the court is unable to consider the data contained therein. Consequently, it will be accorded little, if any, weight and defendants' illegibility objections are DENIED AS MOOT. For all these reasons, it is my recommendation that defendants' motion to strike be DENIED as to plaintiff's exhibits 1-A, 1-B, and 1-C.
See Docket Entry 26, Exhibit 1, ¶ 3 at 2; ¶ 7, at 3.
Defendants further move to strike plaintiff's exhibit 7, the deposition of Robert Whitney. Defendants urge that said evidence should be stricken because plaintiff "improperly submitted the entire deposition transcript . . . and fails to properly cite to relevant portions thereof on which she is relying in her Response Brief." As previously discussed, plaintiff did include a specific citation to Mr. Whitney's deposition in her responsive pleading. Therefore, defendants' argument is without merit. For this reason, I recommend that defendants' motion to strike be DENIED as to plaintiff's exhibit 7.
Docket Entry 29, at 9.
Docket Entry 26, ¶ E, at 19, wherein plaintiff cites Exhibit 7, at p. 77.
Finally, defendants move to strike plaintiff's exhibit 8 on the basis "that the documents therein are not been ( sic) properly authenticated by the summary judgment record and are hearsay." In the table introducing plaintiff's appendix in support of her response to the motion for summary judgment, exhibit 8 is identified as "excerpts from defendants' policy manuals regarding Field Admissions Representatives and Assistant Regional Managers." Plaintiff asserts that these materials are self-authenticated because they were produced by defendants during discovery. Defendants have argued in response that all documents they produced were bates-labeled. Because exhibit 8 bears no bates label, defendants contend that it does not meet the requirements for self-authentication.
Docket Entry 29, at 9.
Docket Entry 26, Appendix, at 2.
Docket Entry 35, at 3.
Local Rule 26(d) provides:
A party's production of a document in response to written discovery authenticates the document for use against that party in any pretrial proceeding or at trial unless — within ten (10) days or a longer or shorter period ordered by the court or specified by Local Rule CV-16(e), after the producing party has actual notice that the document will be used — the party objects to the authenticity of the document, or any part of it, stating the specific basis for objection. An objection must be either on the record or in writing and must have a good faith factual and legal basis. An objection made to the authenticity of only part of a document does not affect the authenticity of the remainder. If objection is made, the party attempting to use the document should be given a reasonable opportunity to establish its authenticity.
In this case, plaintiff has failed to establish that the documents provided in exhibit 8 were the very same documents that defendants produced through discovery. Consequently, the documents contained in exhibit 8 do not meet the requirements for self-authentication. Because plaintiff failed to include an affidavit or declaration authenticating the documents in exhibit 8, they are not competent summary judgment evidence. Therefore, I recommend that defendants' motion to strike be GRANTED with respect to plaintiff's exhibit 8.
2. Plaintiff's motion to strike (docket entry 33)
Plaintiff brought her own objections and motion to strike, requesting that a portion of the supplemental affidavit of Fabrina Derryberry, submitted by defendants in support of their motion for summary judgment, be stricken. Specifically, plaintiff moves to strike paragraph 3 of Ms. Derryberry's supplemental affidavit on the basis that it is "hearsay from unknown documents that were neither produced during discovery nor furnished to the Court as competent summary judgment evidence." Paragraph 3 of Ms. Derryberry's supplemental affidavit states, in pertinent part:
Docket Entry 33.
Docket Entry 33, ¶ 2.
I was involved with Alta in defending the lawsuit styled Mark Cuvillier, et al. v. Alta Colleges, Inc. and Trav Corporation, cause number SA CV 02-935-GLT (Anx), in the United States District Court for the Central District of California, Southern Division (the ` Alta lawsuit'). I have reviewed Alta's personnel records for each of the named plaintiffs in the Alta lawsuit and can state that each of the named plaintiffs in the Alta lawsuit were Field Admissions Representatives (FARs) and Assistant Regional Managers (ARMs) during their employment with Alta.
Docket Entry 31, Exhibit A.
The parties' responsive pleadings in opposition to, and support of, plaintiff's motion to strike are primarily concerned with the applicability of the Cuvillier case to the instant action. In Cuvillier, a class action, the United States District Court for the Central District of California concluded that the plaintiffs, Admissions Representatives working for defendants, were exempt employees and were not, therefore, entitled to overtime compensation. Plaintiff asserts that the Cuvillier decision is inapplicable to the instant case because the Cuvillier court was not assessing ARM duties to determine if ARM employees were exempt. Defendants have submitted the affidavit of Ms. Derryberry to establish that the Cuvillier plaintiffs were both ARMs and FARs. These arguments do not properly attack the admissibility of paragraph 2 of Ms. Derryberry's affidavit. The court will accord the appropriate weight to the Cuvillier decision in its discussion, below. Because plaintiff has failed to establish that Ms. Derryberry's affidavit is inadmissible, it is my recommendation that plaintiff's motion to strike be DENIED.
See Docket Entries 36, 38.
See Docket Entry 38.
See Docket Entry 31, Exhibit A; Docket Entry 36.
B. The motion for summary judgment
Defendants move for summary judgment, asserting that: (1) all of plaintiff's work activities constituted outside sales activities and, therefore, plaintiff falls under the FLSA's outside sales exemption; (2) in the alternative, any of plaintiff's non-sales work constituted exempt administrative work such that plaintiff falls under the FLSA's combination exemption; and (3) there is no evidence that defendants willfully misclassified plaintiff and, therefore, the FLSA's general two year statute of limitations applies to the instant action.
See Docket Entries 25, 31.
In opposition, plaintiff asserts that: (1) her non-sales, i.e. non-exempt, duties occupied at least 20% of her work time such that she does not fall under the outside sales exemption; (2) defendants failed to plead their combination exemption defense and have, consequently, waived the same; and (3) there is abundant evidence that defendants willfully misclassified plaintiff's position and work activities and, therefore, plaintiff is entitled to the three year statute of limitations for willful violations of the FLSA.
See Docket Entry 26.
C. Overview of the FLSA
The Fair Labor Standards Act (FLSA) was enacted in 1938 to eliminate certain employment conditions that were harmful to workers.
The purpose of the Act is thus remedial, and courts have long held that in light of its humanitarian intent, the Act's coverage should be construed liberally.
29 U.S.C. § 201, et seq.
See Rodriguez v. Township of Holiday Lakes, 866 F. Supp. 1012, 1017 (S.D. Tex. 1994).
Id.
The provisions of the FLSA require, inter alia, that employers subject to the Act pay employees covered by the Act a designated minimum wage, as well as overtime compensation when a covered employee works more than forty hours in one work week. Under the FLSA, "employer,"
includes any person acting directly or indirectly in the interest of an employer in relation to an employee and includes a public agency, but does not include any labor organization (other than when acting as an employer) or anyone acting in the capacity of officer or agent of such labor organization.
In defining the term "employee," the FLSA provides: "Except as provided in paragraphs (2), (3), and (4), the term `employee' means any individual employed by an employer." To "employ" under the FLSA, means, "to suffer or permit to work."
The FLSA outlines several situations in which employers are exempt from the FLSA's wage and hour requirements. When an employer is exempt from the FLSA's provisions, its workers are not entitled to the benefits and protections — including the minimum wage and overtime provisions — afforded by the FLSA. The defendant-employer asserting the exemption bears the burden of establishing that it is entitled to the same. Importantly, "the ultimate determination of employee status is a question of law, whereas the district court's `subsidiary findings are of fact.'"
Dalheim v. KDFW-TV, 918 F.2d 1220, 1225-1226 (5th Cir. 1990) (internal citations omitted).
Several of the FLSA's exemptions are at issue in the instant case. Those exemptions are the outside salesman exemption, the administrative exemption, and the combination exemption.
The exemption on which the parties focus most is the outside salesman exemption. The outside salesmen exemption makes sales work conducted away from the employer's place of business exempt work. The regulations define an outside salesman as any employee
(a) Who is employed for the purpose of and who is customarily and regularly engaged away from his employer's place or places of business in:
(1) Making sales within the meaning of section 3(k) of the Act, or
(2) Obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and
(b) Whose hours of work of a nature other than that described in paragraph (a)(1) or (2) of this section do not exceed 20 percent of the hours worked in the workweek by nonexempt employees of the employer: Provided, That work performed incidental to and in conjunction with the employee's own outside sales or solicitations, including incidental deliveries and collections, shall not be regarded as nonexempt work.
29 C.F.R. § 541.5.
With respect to the twenty percent limitation on nonexempt work, the regulations explain:
Nonexempt work in the definition of `outside salesman' is limited to `20 percent of the hours worked in the work-week by nonexempt employees of the employer.' The 20 percent is computed on the basis of the hours worked by nonexempt employees of the employer who perform the kind of nonexempt work performed by the outside salesman. If there are no employees of the employer performing such nonexempt work, the base to be taken is 40 hours a week, and the amount of nonexempt work allowed will be 8 hours a week.
29 C.F.R. § 541.507.
The other exemptions at issue in the instant case are the administrative exemption and the combination exemption. The administrative exemption renders an employee exempt if he or she, inter alia, primarily performs "office or nonmanual work directly related to management policies or general business operations of his employer or his employers customers . . ." The regulations also permit "combination exemptions," meaning that an individual whose job duties include more than one kind of exempt work may still qualify as an exempt employee so long as he or she meets "the stricter of the [exemption's] requirements on salary and nonexempt work."
See 29 C.F.R. § 541.2(a)(1), et seq.
D. Did all of plaintiff's work activities constitute outside sales such that she is an exempt employee under the FLSA?
Defendants' first argument in support of their motion for summary judgment is that plaintiff's work activities constituted outside sales such that she is an exempt employee under the FLSA. In opposition, plaintiff argues that she "was expected to, and in fact did, spend in excess of 20% of her working hours on non-exempt training activities." Therefore, plaintiff argues that she cannot properly be classified as an exempt outside salesperson. Notably, both parties concede that plaintiff's duties as a FAR constituted outside sales such that said work is exempt. The first issue before the court, then, is whether plaintiff's duties as an ARM constituted outside sales or administrative, e.g. exempt, work and, if not, if they constituted such a small percentage of plaintiff's work (less than 20%) that plaintiff's work can still be properly classified as outside sales work as a matter of law.
Docket Entry 26, at 10.
Id.
Defendants contend that two recent district court decisions — Nielsen v. DeVry, Inc. and Cuvillier v. Alta Colleges, Inc. — held that ARM-type work met all the requisite elements of the outside sales exemption. In Nielsen v. DeVry, Inc., the United States District Court for the Western District of Michigan decided a case similar to, but importantly distinguishable from, the one at bar. The Nielsen plaintiffs, former and then-current field representatives for a company that provided higher education, sued their educational corporation employer, asserting that they were improperly denied overtime compensation.
See Docket Entry 25, at 13-15, citing Nielsen v. DeVry, a.k.a. Devry University, Inc., 302 F.Supp. 2d 747 (W.D.Mich. 2003) and Cuvillier v. Alta Colleges, Inc., SA CV 02-935-GLT (Anx) (C.D. Cal. November 10, 2003, unpublished).
Nielsen v. DeVry, a.k.a. DeVry University, Inc., 302 F.Supp. 2d 747 (W.D.Mich. 2003).
Id.
In determining whether the field representatives' work constituted exempt outside sales work, the Nielsen reviewed the regulatory explanation of the outside sales exemption, discussed, above. The Court then identified the following factors indicative of whether an employee is "engaged in sales," thereby meeting the criteria for the outside sales exemption: (1) "if the job was advertised as a sales position and the employee was recruited based on sales experience and abilities;" (2) if the employer provided the plaintiff-employee with "specialized sales training;" (3) the "employee's compensation structure . . . Compensation based wholly or in significant part on commissions correlates with a finding that the employee does sales work;" (4) "Independently soliciting new business;" and (5) "The nature and scope of an employee's supervision . . . An employee who receives little or no direct or constant supervision in carrying out daily work tasks is more likely to be considered engaged in sales." After reviewing these factors, the court concluded that the Nielsen plaintiffs — field representatives who sold defendant DeVry's educational programs — were engaged in sales. The Nielsen court further concluded that said plaintiffs met the statutory and regulatory definition of outside salespeople. For these reasons, the Nielsen court concluded that those plaintiffs were exempt employees and were not entitled to the overtime protections afforded by the FLSA.
Nielsen, 302 F.Supp.2d., at 756.
Id. , at 757.
Id.
Id. , at 758.
Id.
Id. , at 762.
The Cuvillier court assessed facts virtually identical to those in Nielsen and reached the same conclusion. In Cuvillier, the plaintiffs were all employees of the instant defendants who alleged that there were improperly classified as outside sales personnel. Defendants moved for summary judgment, asserting that plaintiffs met all the requirements for the outside sales exemption and were not, therefore, entitled to overtime compensation. Plaintiffs opposed the motion for summary judgment and moved to certify the class. In granting defendants' motion for summary judgment, the court stated:
See Docket Entry 25, Exhibit A.
Plaintiffs argue they spend more than 20 percent of their time providing non-sales services to students, including ensuring students take the required admissions test, arranging housing for the students, and ensuring the students complete the financial aid process. However, Plaintiffs' services to the students ensure their continued enrollment and tuition payments. All of Plaintiffs' activities are sales, `incidental to and in conjunction with' sales, and sales-related.
Plaintiffs qualify for FLSA's outside salesperson exemption.
Docket Entry 25, Exhibit A, at 3 (Appendix 199).
In this case, defendants assert that the Nielsen and Cuvillier cases are controlling. Defendants argue that plaintiff's primary duties were FAR duties — work that was virtually, if not entirely, identical, even by plaintiff's own admission, to that of the Nielsen and Cuvillier plaintiffs' field representative work. Moreover, defendants contend that plaintiff's ARM duties were primarily FAR sales duties with some training of other sales personnel. Defendants further claim that all the plaintiffs in Cuvillier were FARs as well as ARMs. For all these reasons, defendants urge that two other district courts have already concluded that ARMs met the definition of outside salespersons such that ARMs are exempt employees under the FLSA.
See Docket Entry 31, Exhibit A.
Defendants' contention that the Cuvillier and Nielsen courts concluded that ARM employees were exempt under the FLSA is not accurate. Neither of those courts addressed the training component of ARM work. Rather, they merely adjudicated FAR and FAR-like sales duties. Even if the Cuvillier plaintiffs were both FARs and ARMs, the pleadings in that case make it clear that the plaintiffs were only seeking overtime compensation for, and based on, their FAR activities. Thus, neither Cuvillier nor Nielsen adjudicated the exempt status of the training component of ARM duties — the main issue in the instant case.
See Docket Entry 38, Exhibit C, "ALTA's Admissions Representatives (also referred to as `Field Admissions Representatives' or `FARs') are the putative class members."
The evidence in this case establishes that most of the training component of plaintiff's ARM work was not exempt sales work. For example, when plaintiff attended sales presentations made by her FAR-trainees, any sales made were credited to the trainee's account — not plaintiff's. For the same reason, any work plaintiff did coaching, advising or observing her FAR-trainees either in-person or over the telephone cannot properly be considered sales or work "incidental to or in conjunction" with plaintiff's sales.
Docket Entry 26, Exhibit 4.
In order for defendants to obtain a ruling that plaintiff was an exempt outside salesperson as a matter of law, defendants must prove that plaintiff's training and/or other non-exempt work constituted twenty percent (or less) of her total work activities. Defendants have submitted some evidence — in the form of an affidavit by plaintiff's former Regional Manager, Joel Merriman — that plaintiff spent only 7.8% of her relevant work time performing training activities. Plaintiff, on the other hand, has submitted evidence — in the form of her own affidavit, the affidavits of two former employees (Rodney Williams and Denita Williams), the deposition testimony of defendants' representative (Robert Whitney), defendants' written description of the ARM position, and plaintiff's own time records — to establish that ARMs were expected to spend approximately 20-30% of their time (or approximately ten hours each week) on training duties and that plaintiff did so during the time she was an ARM. There is, therefore, an issue of fact as to whether plaintiff's training activities constituted more than twenty percent of her work activities. This fact issue becomes a genuine issue of material fact, defeating defendants' motion for summary judgment, only if plaintiff's training activities were non-exempt.
Docket Entry 25, ¶ 21, at Appendix 188-189. Defendants also submitted evidence that "most" of an ARM's work is the same as his or her FAR duties (i.e., sales). See Docket Entry 25, Appendix 73-74, 91, 94a, 173, 184. This analysis is not persuasive, as the majority (up to 79%) of an individual's work activities can be sales and that individual will not be exempt under the FLSA.
Docket Entry 26, Exhibit 1.
Docket Entry 26, Exhibits 2 and 3.
Docket Entry 26, Exhibit 7.
Docket Entry 26, Exhibit 4.
Docket Entry 26, Exhibits 1-B and 1-C. As previously discussed, Exhibit 1-C is illegible. Consequently, its presence is noted but its contents are not accorded any weight.
E. Did plaintiff's work activities fall under the administrative and combination exemptions?
Defendants assert that plaintiff's training duties constituted administrative work such that all of plaintiff's duties were either exempt outside sales or exempt administrative work. Consequently, defendants argue that plaintiff is an exempt employee under the regulation's combination of exemptions. In opposition, plaintiff asserts that defendants failed to plead, and thereby waived, the administrative and combination exemptions as an affirmative defense. Plaintiff further contends that her duties do not meet the regulatory definition of administrative work.
The threshold inquiry is whether defendants waived the combination exemption defense. Plaintiff asserts that defendants failed to plead their exemption defense with the requisite specificity in their original answer. Thereafter, defendants' discovery responses indicated that defendants were only asserting the outside sales exemption. On April 19, 2004, twenty days after discovery closed, defendants amended their answers to plaintiff's interrogatories. In that amended response, defendants asserted the administrative exemption for the first time. Two days later, defendants filed their motion for summary judgment.
See Docket Entry 26, at 12-13.
Docket Entry 26, at 13.
Although defendants' actions with respect to the timing of their amended discovery responses are suspicious and ill-advised, nonetheless, defendants raised their affirmative defense before filing their motion for summary judgment. While plaintiff now argues some prejudice by defendants' practice, plaintiff has failed to articulate sufficiently the prejudice she suffered as a result of defendants' late designation of this affirmative defense. Plaintiff has failed to assert any discovery in which she would have engaged had defendants pled their defense earlier. Moreover, plaintiff failed to state an inability to respond properly to the defense, nor did she request additional time to respond to the motion for summary judgment. Thus, defendants' pleading does not comport with ideal practices, but it is not fatal to defendants' assertion of the administrative and combination exemptions defense because plaintiff failed to adequately articulate any prejudice she suffered.
Docket Entry 26, at 14-15.
The next issue, then, is whether plaintiff's training activities constituted administrative work such that she is an exempt employee per the combination of exemptions (administrative and outside sales). Defendants argue that plaintiff's training activities meet the regulatory definition of administrative duties because: (1) plaintiff's activities in training new FARs perpetuated defendants' operations; (2) plaintiff earned more than $250.00 per week; (3) plaintiff's training duties were non-manual, required plaintiff to exercise independent discretion, and were performed with only general supervision after she received specialized training. Defendants further assert that there are cases which held that training constituted administrative work and that held that an employee was exempt under a combination of outside sales and administrative work. Finally, defendants re-urge their argument that plaintiff's non-sales and/or non-administrative duties did not exceed more than 20% of her work time.
Docket Entry 25, at 17.
Docket Entry 25, at 17-18; Docket Entry 31, at 5.
Docket Entry 25, at 18.
In opposition to these arguments, plaintiff asserts that "neither employees classified as FARs nor as ARMs assist in the type of business planning or policy making work that is the touchstone of the administrative exemption." Plaintiff further contends that defendants' reading of work that perpetuates an employer's business operations is so broad that it would render virtually all work exempt administrative work. Finally, plaintiff asserts that defendants failed "to show that Plaintiff Edwards exercised the level of discretion and independent judgment in her daily activities required to qualify for the administrative exemption."
Docket Entry 26, at 16.
Id.
Docket Entry 26, at 17.
In order for an employee to fall under the administrative exemption, the employer bears the burden of proving, inter alia: (1) that the employee's "primary duty consists of . . . the performance of office or non-manual work directly related to management policies or general business operations of his employer or his employer's customers . . ." (2) that the employee "customarily and regularly exercises discretion and independent judgment;" (3) that the employee "performs under only general supervision work along specialized or technical lines requiring special training, experience, or knowledge," (4) that the employee "does not devote more than 20 percent" of the "hours worked in the workweek to activities which are not directly and closely related to the performance of the work described" above.
29 C.F.R. § 541.2 (a-d).
Plaintiff and defendants have both submitted evidence that plaintiff did or did not exercise discretion in her training activities or perform work only under general supervision. In addition, defendants have submitted some case authority which held that training constituted exempt administrative work. Defendants also submitted an unpublished case which held that an employee was exempt under the combination of outside sales and administrative exemptions for his outside sales and administrative office work.
See Docket Entry 25, Appendix 176 (Fingerlin Affidavit), 186 (Merriman Affidavit); Docket Entry 26, Exhibit 1, ¶ 6 (Plaintiff's Affidavit), and Exhibit 2, ¶¶ 6, 8 (Denita Williams Affidavit).
See Marshall v. Security Bank and Trust Co., 572 F.2d 276 (10th Cir. 1978); Hills v. Western Paper Co., 825 F.Supp. 936 (D. Kan. 1993).
Condren v. Sovereign Chemical Co., 142 F.3d 432 (unpublished, 6th Cir. 1998).
However, the most persuasive authority is one not cited by either party. While plaintiff was performing her work training outside salesmen and at the time that this action was filed, there was a regulation in effect which directly addressed the exempt status of sales-training work. Regulation 541.506, which has since been omitted from Part 541, revised with an effective date of August 23, 2004, provided:
See 69 FR 22260.
Nonexempt work is that work which is not sales work and is not performed incidental to and in conjunction with the outside sales activities of the employee . . . the training of other salesmen is not exempt as outside sales work, with one exception. In some concerns it is the custom for the salesman to be accompanied by the trainee while actually making sales. Under such circumstances it appears that normally the trainer-salesman and the trainee make the various sales jointly, and both normally receive a commission thereon. In such instances, since both are engaged in making sales, the work of both is considered exempt work.
29 C.F.R. § 541.506.
Regulation 541.506 makes it clear that for the time relevant to the instant action, the governing legislative intent was that the training of other salesmen for outside sales work was non-exempt work. Consequently, it is my conclusion that plaintiff's activities in training other FARs — attending their sales presentations, listening to their sales phone calls, following-up with them in person or via phone — were not exempt activities in light of the then-applicable regulations. If plaintiff can establish that such activities comprised more than twenty percent of work activities in any given workweek (i.e more than eight hours in a given workweek), then plaintiff cannot be considered an exempt employee.
As previously discussed, there is disputed evidence in the record as to the amount of time plaintiff spent performing such training activities. For all the foregoing reasons, there is a genuine issue of material fact as to whether plaintiff spent twenty percent or more of her time performing non-exempt work and was, therefore, an exempt employee. Thus, I find that defendants are not entitled to judgment as a matter of law on this portion of their motion for summary judgment and recommend that it be DENIED.
F. Did defendants willfully misclassify plaintiff such that the three year statute of limitations applies?
In their third, and final, argument in support of summary judgment, defendants argue that there is no evidence that they willfully mis-classified plaintiff. In opposition, plaintiff argues that there is "abundant" evidence of willfulness. The issue of willfulness is important because it dictates whether the FLSA's two or three year statute of limitations applies to the instant action.
Docket Entries 25, 31.
Docket Entry 26, at 19.
When the FLSA was originally enacted in 1938, it included no statute of limitations and all actions "brought thereunder were governed by state statutes of limitations." Congress amended the FLSA in 1947 through the passage of the Portal-to-Portal Act. Included among the modifications to the FLSA contained in the Portal-to-Portal Act was a two year statute of limitations on actions arising under the FLSA. In 1966, Congress again amended the FLSA and "enacted the 3-year exception for willful violations."
McLaughlin v. Richland Shoe Co., 486 U.S. 128, 131 (1988).
Id. , citing 61 Stat. 84, 29 U.S.C. § 216, 251-262.
Id. , at 131-132.
Id. , at 132.
In 1988, the Supreme Court revisited the definition of "willfulness" in McLaughlin v. Richland Shoe Co. Noting that willful conduct was "generally understood to refer to conduct that is not merely negligent," the Court set forth the following standard for willfulness: "that the employer either knew or showed reckless disregard for the matter of whether its conduct was prohibited by the statute . . ."
Id.
McLaughlin, 486 U.S., at 133.
Id.
In the instant case, plaintiff asserts that the following evidence establishes defendants' willful violations of the FLSA:
The evidence in the case at bar indicates that numerous employees, including the Plaintiff, had complained about the fact that they were being forced to work far in excess of forty hours per work (the number of hours Defendants led them to believe would be required in the FAR and ARM positions). (Exhibits 1-3) The evidence further indicates that the Defendants had specific knowledge of the fact that its ARM employees were spending more than twenty percent of their working hours on nonexempt training activities. (Exhibit 7 at p. 77)
Docket Entry 26, at 19.
Plaintiff submitted her own affidavit, as well as the affidavits of two of defendants' former employees, Denita Williams and Rodney Williams, in an attempt to establish that defendants' employees were promised a forty hour (or less) workweek but were routinely required to work more than forty hours a week. This evidence is insufficient to raise a genuine issue of material fact as to defendants' intentional or reckless disregard for the matter of whether its conduct was prohibited by the FLSA. Even if defendants promised plaintiff a forty hour work week and required her to work more, this does not establish that defendants willfully misclassified plaintiff as an exempt employee. It may be evidence that gives rise to other causes of action, but it is not evidence that defendants intentionally or recklessly misclassified plaintiff.
See Docket Entry 26, Exhibit 1, ¶ 8; Exhibit 2, ¶ 12; Exhibit 3, ¶ 10.
McLaughlin, 486 U.S., at 133.
In support of her position that there is abundant evidence of willfulness, the only other evidence plaintiff submitted is a portion of the deposition testimony of Robert Whitney, an independent contractor who works for defendants as a consultant. Mr. Whitney "was hired . . . to develop a strategy for developing [defendants'] field sales force." Plaintiff asserts that the following deposition testimony establishes defendants' willful misclassification of its employees:
Docket Entry 26, Exhibit 7.
Id. , at 9.
We like to think in terms of the ARMs spending anywhere from 20 percent to 30 percent of the time training and managing, depending on the number of people that are assigned to them.
Docket Entry 26, Exhibit 7, at 77.
Given the overlap between training and sales activities, the above-cited testimony from one of defendants' agents is an insufficient basis upon which to conclude that defendants knowingly violated the FLSA or recklessly disregarded the fact that its actions violated the FLSA. Simply put, plaintiff has failed to submit evidence that raises a genuine issue of material fact as to whether defendants knew or should have known that they were misclassifying their exempt employees. Moreover, the evidence indicates that plaintiff never complained about her classification as an exempt employee nor did she assert an entitlement to overtime at any time during her tenure with defendants. For all the foregoing reasons, it is my conclusion that plaintiff has failed to establish that a genuine issue of material fact exists as to defendants' willfulness. Consequently, I recommend that defendants' motion for summary judgment be GRANTED as to the issue of willfulness and that the court impose the FLSA's general two year statute of limitations on the instant action. As this case was filed on June 26, 2003, plaintiff would only be entitled to recovery for defendants' alleged wrongdoing between June 25, 2001, and June 26, 2003.
See Docket Entry 25, Appendix, at 91, 94a.
See Docket Entry 25, Appendix, at 86, 87, 89, and 94. Notably, plaintiff complained about the number of hours she was required to work. Docket Entry 26, Exhibit 1, ¶ 8. As discussed, above, complaining about one's work load is significantly different than asserting an entitlement to overtime compensation.
Docket Entry 1.
Thus, any ARM duties plaintiff performed in January or February of 2000 would be outside the applicable statute of limitations should the factfinder decide plaintiff is entitled to overtime compensation for any of her ARM activities. See Docket Entry 25, Appendix, at 89.
VII. Recommendation
Based on the foregoing, it is my recommendation that defendants' motion to strike be DENIED with respect to plaintiff's exhibits 1, 1-A, 1-B, 1-C, 2, and 7 but GRANTED with respect to plaintiff's exhibit 8. I further recommend that plaintiff's motion to strike be DENIED. Finally, I recommend that defendants' motion for summary judgment be GRANTED as to the issue of willfulness (e.g., that defendants did not willfully violate the FLSA as a matter of law), but DENIED in all other respects.VIII. Instructions For Service And Notice of Right to Object/Appeal
The United States District Clerk shall serve a copy of this Memorandum and Recommendation on each and every party either (1) by certified mail, return receipt requested, or (2) by facsimile if authorization to do so is on file with the Clerk. According to Title 28 U.S.C. § 636(b)(1) and Federal Rule of Civil Procedure 72(b), any party who desires to object to this report must serve and file written objections to the Memorandum and Recommendation within 10 days after being served with a copy unless this time period is modified by the District Court. A party filing objections must specifically identify those findings, conclusions or recommendations to which objections are being made and the basis for such objections; the District Court need not consider frivolous, conclusive or general objections. Such party shall file the objections with the Clerk of the Court, and serve the objections on all other parties and the Magistrate Judge. A party's failure to file written objections to the proposed findings, conclusions and recommendations contained in this report shall bar the party from a de novo determination by the District Court. Additionally, any failure to file written objections to the proposed findings, conclusions and recommendations contained in this Memorandum and Recommendation within 10 days after being served with a copy shall bar the aggrieved party, except upon grounds of plain error, from attacking on appeal the unobjected-to proposed factual findings and legal conclusions accepted by the District Court.
See Thomas v. Arn, 474 U.S. 140, 149-152 (1985).
Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415, 1428-29 (5th Cir. 1996).