Tag Archives: Sales Representative

U.S.S.C.: Pharma Reps Outside Sales Exempt

In an anxiously awaited decision the Supreme Court handed down a 5-4 decision today holding that Pharmacy Reps are not entitled to overtime.  Affirming the Ninth Circuit’s decision holding pharma reps to be outside sales exempt the conservative majority’s decision was delivered by Justice Alito.

Click Christopher v. Smithkline Beecham Corp. to read the entire decision.

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S.D.Fla.: Defendant May Not Seek SJ Against Individual Plaintiffs Where Case Remains Certified At Stage 2

Hernandez v. Starbucks Coffee Co.

In this case plaintiffs, “store managers” at Starbucks claimed they had been uniformly misclassified as exempt employees and wrongly denied overtime as a result.  The case was before the court on defendant’s motion for summary judgment regarding 4 individual plaintiffs in the (certified) class—on the ground that these Plaintiffs offered generally consistent testimony that compels the conclusion that they are exempt “executive” employees as a matter of law.  Significantly, prior to defendant filing its motion for summary judgment, the court had denied defendant’s motion to decertify the class.  The court denied defendant’s motion, largely on the ground that it is inappropriate for a defendant to attempt to target individual plaintiffs for summary judgment, where the class is proceeding as a whole and liability will therefore be determined on a classwide rather than individual basis.

The court explained:

“Before reaching the merits of this argument, the Court must first consider whether it is even proper for Defendant to move for summary judgment as to selected individual Plaintiffs when the Court is presented with a collective action. Relying upon Hogan v. Allstate Ins. Co., 361 F.3d 621, 623 (11th Cir.2004), Defendant argues that where a “FLSA collective action has been conditionally certified but no ruling has been made as to whether the case will proceed to trial as a collective action, the district court may entertain summary judgment motions as to individual plaintiffs.” [DE–241, pg. 12]; see also Lindsley v. Bellsouth Telecomm., Inc., Case No. 07–6569, 2009 WL 322144, at *2 (E.D.La. Feb.9, 2009) (denying motion to strike motion for summary judgment against an individual, named plaintiff, finding it “appropriate to choose [the individual plaintiff] as a test plaintiff to resolve the issue of employee versus independent-contractor status.”).

In response, Plaintiffs argue that the Court should reject Defendant’s attempt to have its motion treated as one directed to only certain individuals, as opposed to the class as a whole, pointing to Judge Marra’s conclusion in Pendlebury v. Starbucks Coffee Company, Case No. 04–80521–CIV–KAM, DE–495 (S.D. Fla. filed Jan. 8, 2008). Plaintiffs point out that unlike Hogan, 361 F.3d at 623, neither this Court nor Plaintiffs have consented to a “test plaintiff” procedure, and Defendant cannot randomly select certain individual Plaintiffs and at the same time seek to prohibit Plaintiffs from using testimony from other Plaintiffs in order to oppose the entry of summary judgment. Defendant attempts to refute this argument by contending that Rule 56(a) permits it to seek summary judgment as to a claim or defense, or part of a claim or defense, and reiterates the holding in Hogan. Defendant also argues that Plaintiffs have not cited to any authority prohibiting the Court from considering such a motion where as here the Court has not yet conducted a stringent review of the propriety of collective treatment.

Importantly, subsequent to Defendant filing the instant motion for summary judgment, on June 28, 2011, this Court denied Defendant’s motion for decertification [DE–300], concluding that Plaintiffs are similarly situated and can proceed as a class. As such, the Court has now conducted a stringent review of the propriety of collective treatment and found collective treatment to be appropriate. Defendant’s reliance on Hogan as its basis for moving for summary judgment as to only four (4) individual Plaintiffs is misplaced. Defendant similarly attempted to raise this argument and rely on Hogan in filing its motion for partial summary judgment in Pendlebury. The Pendlebury court rejected Defendant’s argument, pointing out that in Hogan the court had specifically authorized the selection of test plaintiffs for purposes of discovery and motions for summary judgment. Case No. 04–80521–CIV–KAM, DE–495 at pg. 3. The court concluded that “allowing Defendant to move for summary judgment against particular individuals who are indistinguishable from other members of the class defeats the entire purpose of a collective action.” Id. at 5. Instead, the court held that since the action was certified as a collective action, the court would “only address dispositive motions that resolve common issues of law or fact as to the entire class or an identifiable subclass.” Id.

Similarly here, the Court has already concluded that collective treatment is appropriate and has not authorized the use of “test” plaintiffs. Instead it appears that Defendant unilaterally selected individuals as its “test” plaintiffs. Notably, Defendant does not argue that these Plaintiffs somehow represent a “subclass” or otherwise address the Pendlebury court’s ruling on this issue in any manner. Consequently, the Court finds that it is not proper for Defendant to move for summary judgment as to individual Plaintiffs given the Court’s recent conclusion that Plaintiffs shall proceed as a class.”

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D.Idaho: “Sales Representative” Who Educated Retailers, But Did Not “Sell” To Customers, Not Subject To Outside Sales Exemption Under FLSA

Burling v. Real Stone Source, LLC

The case was before the Court on the parties’ respective motions for summary judgment on exemption issues. The Court agreed with Plaintiff that he was not subject to the outside sales exemption, and further held that issues of fact precluded a finding regarding the applicability of the administrative exemption. Here, we discuss only the portion of the decision pertaining to the outside sales exemption.

The Court first recited the relevant facts, “Mr. Burling, was employed as a sales representative from March 15, 2006 to November 29, 2007 by Defendant Real Stone Source, LLC, d/b/a Rox Pro. Real Stone is a distributor of Rox Pro products which is a natural modular stone system used in construction. (Dkt. No. 28,Dkt. No. 27-3, p. 37). Real Stone products are distributed exclusively through a network of local dealers from whom the ultimate consumer buys the product. (Dkt. No. 26, Ex. E). Mr. Burling was hired as a Real Stone sales representative for a seven state area comprised of Washington, Oregon, Idaho, Montana, Wyoming, Utah, and Colorado. Mr. Burling was tasked with contacting existing and potential local dealers and pitching Real Stone’s products to them. For prospective local dealers, Mr. Burling’s pitch was in an effort to get them interested in serving as a local dealer of Real Stone products. Once interested, Real Stone would determine whether the prospective dealer met its qualifications and, if so, approve them as a local dealer. For existing dealers, Mr. Burling continued to educate them on Real Stone Products and also aided them in selling Real Stone products through various efforts including promotions and outreach to consumers.”

Agreeing with Plaintiff, and the cases holding that the outside sales exemption can only apply where an employee makes actual sales, the Court said, “This Court finds the cases cited by Mr. Burling to be the correct analysis to apply here. See Kuzinski v. Schering Corp., 604 F.Supp.2d 385 (D.Conn. March 30, 2009). Although the California District Court cases cited by Real Stone discuss the FLSA, they were applying California Labor Law. Notably, the Barnick court recognized that there is a distinction between the FLSA and California Labor Law. There, the court stated that the employee’s argument that he was only promoting, not selling, because he never received commitments from the physicians was “likely a correct application of the distinction between promotion and sales laid down by the Department of Labor and several federal courts with regard to the FLSA” but that it did not apply to the California Labor Law. Barnick, 522 F.Supp.2d at 1264.FN2Where, as here, the case does not raise claims of California Labor Law but, instead, the FLSA, the analysis from cases applying the FLSA are more appropriately used. As such the Court will first consider whether Mr. Burling made sales as defined by the FLSA. See Kuzinski v. Schering Corp., 604 F.Supp.2d 385 (D.Conn. March 30, 2009).”

The Court adopted the reasoning of several of the pharmaceutical sales representative cases, stating, “[t]he Court finds Real Stone has failed its burden of demonstrating that, as a matter of law, Mr. Burling was an exempt outside salesperson. The facts in the record demonstrate that Mr. Burling did not make any sales. The Court rejects Real Stone’s theory that its sales representatives were a part of every sale in their territory. (Dkt. No. 27-3, pp. 109-111), (Dkt. No. 27-4, pp. 24, 51-52), (Dkt. No. 31-2, p. 103). Mr. Burling’s job was to create a network of local dealers, educate the local dealers and contractors about the product, and bolster consumer desire to purchase the product from the local dealers who in turn bought from Real Stone. (Dkt. No. 27-3, pp. 94-96). This is consistent in the depositions of both Mr. Burling and Mr. Motarex as well as Real Stone’s “Sales Philosophy and Market Strategy” document. (Dkt. No. 26-2, Ex. E), (Dkt. No. 27-3, pp. 96-111, Motarex Depo.), (Dkt. No. 27-3, pp. 54-66, Burling Depo.). Both Mr. Burling and Mr. Motarex testified that Real Stone sales representatives were hired to establish a network of dealers in their territory, provide sales support to those dealers by promoting the products and educating the consumers, and engaging in further advanced marketing strategies to “create buzz” for the products and increase consumer purchases from the dealers. (Dkt. No. 26-2, Ex. E). In sum, to “generate” and/or “drive” sales to the local dealers. (Dkt. No. 27-3, pp. 25-28), (Dkt. No. 31-2, pp. 93, 95-96).”

Ultimately, the Court concluded, “[b]ecause the facts here do not demonstrate that Mr. Burling actually made sales, the Court finds the outside salesperson exemption does not apply. Instead the facts show that Mr. Burling’s primary duty was to promote and market the Real Stone brand in such a way so as to create a network of local dealers in his territory and to bolster a market for the products such that consumers were continually buying the products from the local dealers. Accordingly, the Court will grant Mr. Burling’s motion for partial summary judgment on this point.”

Although not discussed at length here, the Court also analyzed the applicability of the claimed administrative exemption, before ultimately deciding issues of fact precluded a finding one way or another.

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