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S.D.N.Y.: Email From Employer’s “Management Team” Regarding FLSA Classification Not Attorney-Client Privileged
Clarke v. J.P. Morgan Chase & Co.
Before the Court in this FLSA/Overtime Law case was an application by defendant, J.P. Morgan Chase & Co. for an order compelling plaintiffs to return or destroy all copies of an e-mail message, dated December 3, 2007, allegedly sent from Defendant’s Global Technology Infrastructure Management Team (the “GTI Management Team”) to “all those in GTI who manage employees impacted by upcoming FLSA changes.” Defendants contended that the e-mail is protected by the attorney-client privilege and the work product doctrine and that the email, intended solely for senior management, was errantly forwarded to Plaintiffs, who it was not intended for. After considering arguments from both parties, the Court denied Defendant’s application, finding that the email lacked confidentiality and was not an attorney-client communication either.
First the Court addressed whether the email was in fact an “attorney-client communication”:
“Here, when distributed to management employees, the e-mail in question did not state that it was prepared by or was being sent from Gutfleisch; rather, the “sender” of the e-mail was identified only as the GTI Management Team. (Defendant’s 3/3/09 Letter, at Ex. A2.) Nor did the e-mail state that it contained privileged information. (Id.) Nor did it state that any of the information incorporated therein had been obtained from counsel, or was based on communications from counsel, or even that counsel had been consulted.(Id.) Nor did it state that the policy change reflected in the e-mail was intended to implement a recommendation of counsel. (Id.)
Defendant has the burden of establishing that the e-mail is privileged, see Mercator Corp. v. United States, 318 F.3d 379, 384 (2d Cir.2002), and, as a threshold matter, this includes showing that the recipients of the e-mail would have understood that it contained or referenced a communication from counsel. On this point, Defendant essentially asks the Court to assume that the recipients of the e-mail would have understood that the e-mail incorporated the advice of counsel because (1) the e-mail addressed the issue of FLSA compliance, (2) it noted facts regarding the IT employees’ job duties on which, according to Defendant, “no non-lawyer manager could ever have been expected to focus” (Defendant’s 3/3/09 Letter, at 4), and (3) it referenced litigation against other companies. Yet none of these aspects of the e-mail necessarily signaled to the recipients that the e-mail contained legal advice. Cf. Baptiste, 2004 U.S. Dist. LEXIS 2579, at *7 (finding that it was “of no moment that the e-mail was not authored by an attorney or addressed to an attorney” where the e-mail at issue “was clearly conveying information and advice given to [its author] by … outside counsel”); see also id. at *2 (noting that the e-mail at issue specifically referenced the author’s having spoken with counsel).)
Indeed, all of the information in the e-mail could easily have been understood to have come from senior management, working in conjunction with Defendant’s human resources (“HR”) department, as can be seen from the follow-up memorandum that was apparently sent out by the HR department on or about December 11, 2007. (See Letter to the Court from Sam S. Shaulson, Esq., dated April 1, 2009 (“Defendant’s 4/1/09 Letter”) (enclosing the follow-up memorandum), and attachment thereto; Defendant’s 3/3/09 Letter, at Ex. A2 (noting that follow-up would be sent on December 11 from “Corporate Sector HR”).). Not only does that second communication also fail to mention any involvement of counsel, but it suggests that the recipients tell the reclassified employees that “Human Resources and technology management partnered to conduct a review of Technology jobs to ensure they are classified consistently from an overtime eligibility standpoint.”(Defendant’s 4/1/09 Letter, attached exhibit, at TG00003.). Further, this follow-up memorandum explains that the reclassification was being made because, “[a]s a normal practice, we periodically review our jobs to ensure we have them classified consistently.” (Id. at TG00006). There is no implication that this particular compliance review was actually conducted by counsel and that the upshot of the review was a recommendation by counsel to implement a reclassification. On the contrary, the plain implication of the communications, especially when read together, was that the determination to reclassify certain employees was made by HR and “management,” as part of their “normal practice.” (Id. at TG00003, TG00006).”
The Court then addressed the separate issue of confidentiality:
At bottom, Defendant has not satisfied its burden of demonstrating that the recipients of the e-mail would have reasonably understood that its contents, or any specific portion of those contents, contained legal advice that was being communicated in confidence.”
S.D.N.Y.: Undocumented Immigrant FLSA Plaintiffs Failed To Plead Civil RICO Claim Based On Defendants’ Wage Violations
Nichols v. Mahoney
In this case, the Plaintiffs pled Civil RICO in addition to typical FLSA violations, and other relatively unique claims under the Sherman Act and the Donnelly Act. Specifically, the Plaintiffs claimed that the Defendants regularly paid substandard wages, and the practice resulted from their employment of undocumented immigrants in violation of federal laws. In dismissing the portion of Plaintiffs’ claims pertaining to Civil RICO, the Court found that the Plaintiffs had not properly alleged proximate cause of Defendants’ pattern of criminal activity and their damages due to wage violations.
“In evaluating whether the plaintiffs have adequately alleged proximate cause in this case, the Court focuses on the proposed amended complaint, because it adequately alleges the commission of a pattern of racketeering activity, to wit: two or more violations of the harboring statute. The question to be answered is whether the plaintiffs’ injury-the depression of their wages-was proximately cause by defendants’ hiding their illegal alien employees from the Government. The answer to that question is no.
There is no direct relationship between the harboring of illegal aliens and the plaintiffs’ depressed wages. Indeed, plaintiffs do not so allege. Rather, they contend that they were paid below-market wages because the defendants knowingly hired undocumented workers, who would and did work for wages that were lower than the prevailing rate. That act-the knowing hiring of illegal aliens-is specifically alleged to be the proximate cause of plaintiffs’ lower wages. (Am.Compl.¶¶ 45, 94, 109, 119, 128, 132.) As explained above, that act is not a RICO predicate act.
If plaintiffs had managed to plead that defendants knowingly hired 10 or more illegal aliens who defendants knew had been “brought into” the country-that is, if plaintiffs had successfully pled a violation of section 274(a)(3), which is a RICO predicate act-their proposed amended complaint might well plead proximate cause, as the Second Circuit found in analogous circumstances in Commercial Cleaning, 271 F.3d at 381-385. Of course, Commercial Cleaning is a pre-Anza case, so if plaintiffs had managed to plead that defendants knew some of their illegal employees had been “brought into” the country by others, this Court would have to consider whether Commercial Cleaning remains good law on this point. But plaintiffs’ failure to allege the requisite specific facts moots any such inquiry.
Because hiring illegal aliens without knowing they were “brought in” is not racketeering activity, plaintiffs’ allegation that hiring illegal aliens depressed wages-a correlation long recognized by courts, including the Supreme Court, see, e.g., DeCanas v. Bica, 424 U.S. 351, 356-357 (1976)-does not satisfy the requirement that plaintiffs plead injury caused by a pattern of racketeering activity. To clear that hurdle, plaintiffs need to plead facts tending to show that defendants’ harboring of illegal aliens proximately caused the drop in their wages. This they have not done.
Reading the plaintiffs’ proposed amended complaint in the most favorable light, they do allege that the defendants were able to keep their “scheme” to employ illegal aliens going by hiding the aliens from the Government-by “harboring” them. (See Am. Compl. ¶¶ 25-45, 64, 67-73, 76.) But the fact that harboring may have allowed the alleged injury to persist for a longer period does not mean that harboring caused the injury.
Furthermore, that the only allegation in the amended complaint connecting harboring and wages concerns the duration of the harm rather than its cause underscores another critical point. “The key reasons for requiring direct causation include avoiding unworkable difficulties in ascertaining what amount of the plaintiff’s injury was caused by the defendant’s wrongful action as opposed to other external factors.” First Nationwide Bank v. Gelt Funding Corp., 27 F.3d 763, 770 (2d Cir.1994). Any effort to quantify how much of plaintiffs’ depressed wages was caused by the harboring of illegal aliens, as opposed to hiring them or some other factor at work in the marketplace, would be even more inherently speculative than the proceeding anticipated (and condemned) by the Supreme Court in Anza.
Finally, because harboring is a direct affront to the Government, there is no need for private attorneys general like plaintiffs to bring damages actions in order to redress it. Just as the State of New York could be expected to pursue a corporation that was failing to pay state income tax, the Government can be expected to vindicate the laws against hiding aliens from the Government. This is not to say that proximate cause will be lacking every time a governmental entity has an interest in vindicating its laws. Indeed, any such result would effectively wipe the civil RICO statute off the books, since every RICO violation is predicated on a violation of some federal criminal statute-a violation that the United States, a “victim” whenever its laws are violated, has an incentive to remedy. However, in this case, where there is no direct or obvious connection between the racketeering activity alleged (harboring) and the harm to the plaintiffs (depressed wages), the fact that the direct victim of the harboring has the incentive to redress the harm (by capturing and deporting the aliens and by prosecuting the harboring employer) fatally undermines any contention that these plaintiffs have suffered injury by virtue of the alleged racketeering activity.
The amended complaint thus fails to state a claim under 18 U.S.C. § 1962(c). Because plaintiffs fails to plead any RICO violation, they also fail to plead any violation of 18 U.S.C. § 1962(d), the RICO conspiracy statute. All three RICO counts-Counts I, II and III-are dismissed.”
E.D.La.: Big Lots’ Assistant Store Managers Not Subject To The Executive Exemption
Johnson v. Big Lots Stores, Inc.
This case presented the issue of whether salaried “Assistant Store Managers” (ASM’s) were exempt pursuant to the FLSA’s executive exemption. In deciding that they were not, because their primary duty was not management, the Court went through a detailed analysis of the test required by the CFR.
E.D.La.: FLSA Plaintiffs’ Immigration Status Not Discoverable
David v. Signal Intern., LLC
Among their claims in this case, the undocumented immigrant Plaintiffs alleged various FLSA violations. The Defendants moved to compel information pertaining to Plaintiffs’ immigration status and the Court granted Plaintiffs request for a protective order, citing the in terrorem effect such a disclosures would likely have. The Court cited the other Courts who had held the same way and discussed the issue at great length.
The Defendants addressed the relevance of the information sought and contended that plaintiffs must demonstrate that the issues are not relevant to any claim or issue in the case, including plaintiffs’ civil rights or tort claims. Plaintiffs contended that the damage and prejudice which would result if discovery into their current immigration status were permitted far outweighs its probative value with respect to their discrimination and tort claims.
In discussing the issue the Court stated, “[t]his Court finds plaintiffs’ argument persuasive. Even if current immigration status were relevant to plaintiffs race/national origin discrimination, contract and tort claims, discovery of such information would have an intimidating effect on an employee’s willingness to assert his workplace rights. Plaintiffs’ claims and allegations of fact supporting same in the case at bar find no parallel in reported federal decisions reviewed by the undersigned. See, e.g., Rivera v. NIBCO, Inc., 364 F.3d 1057, 1065 (9th Cir.2004) (“[W]ere we to direct district courts to grant discovery requests for information related to immigration status in every case involving national origin discrimination under Title VII, countless acts of illegal and reprehensible conduct would go unreported.”).
As stated above, this is also an action for unpaid wages and overtime for work actually performed for Signal. Courts have recognized the in terrorem effect of inquiring into a party’s immigration status and authorization to work in this country when irrelevant to any material claim because it presents a “danger of intimidation [that] would inhibit plaintiffs in pursuing their rights.” Here, plaintiffs’ current immigration status is a collateral issue. The protective order becomes necessary as “[i]t is entirely likely that any undocumented [litigant] forced to produce documents related to his or her immigration status will withdraw from the suit rather than produce such documents and face … potential deportation.”
Liu v. Donna Karan International, Inc., 207 F.Supp.2d 191, 193 (S.D.N.Y.2002) (citations omitted).
Topo v. Dhir, 210 F.R.D. 76, 78 (S.D.N.Y.2002) (quoting Flores v. Albertsons Inc., 2002 WL 1163623, *6 (C. D.Cal. Apr. 9, 2002)); see also EEOC v. First Wireless Group, Inc., 225 F.R.D. 404 (E.D.N.Y.2004) (good cause shown for protective order where disclosure of immigration status would cause embarrassment, potential criminal charges, or deportation if status was discovered to be illegal).”
W.D.Ky.: “Plant Engineering-Facilities Support Group-Business Professional” For UPS Is Administrative Exempt
Hubbuch v. United Parcel Service, Inc.
This case was before the Court on Defendant’s Motion for Summary Judgment, seeking a finding that Plaintiff, a “plant engineering-facilities support group-business professional” was administratively exempt from the FLSA, and therefore not entitled to overtime pay. In reaching its decision the Court discussed the factual background of Plaintiff’s job duties:
“It is undisputed that Hubbuch is a salaried employee. Hubbuch does not dispute that his primary duty is directly related to the management or general business operations of UPS or its customers and includes the exercise of discretion and independent judgment with respect to matters of significance. However, Hubbuch argues that he does not perform office or non-manual work. Hubbuch argues that his job is “comparable to that of a maintenance mechanic, troubleshooting alarm systems, performing hands on investigations, solve [sic] problems with mechanical, electrical, plumbing and sprinklers, overhead door, etc.” UPS argues that Hubbuch performs exempt work.
Upon review of the facts, the court finds that Hubbuch performs a variety of non-manual work. The Job Description for engineering specialist at UPS identifies a host of responsibilities and activities that are fairly characterized as non-manual. The General Summary provides an overview:
The Business Professional is responsible for solving day-to-day problems inherent in keeping the physical facility in good working order, so as to enhance the hub operations. Activities performed include but are not limited to responding to internal customer requests, responding to facility alarms and emergencies, troubleshooting problems that arise, and coordinating repair work with outside vendors.
Each of the responsibilities and activities listed above have non-manual components. Other of Hubbuch’s enumerated Job Responsibilities, including developing training resources for other team members, working with vendors, and performing facility audits are non-manual in nature, as well. See Id. In addition, Hubbuch’s very basis for a claim here is that he has not been paid for the performance of non-manual work-troubleshooting by phone-while on call. Hubbuch has submitted an affidavit stating that, “The work performed while “on call” was the same work that Affiant performed on site.”
Hubbuch is not simply a mechanic. Hubbuch may perform substantial manual labor as part of his job; nonetheless his primary duty is the performance of non-manual work directly related to the management or general business operations of UPS or its customers. Hubbuch meets the definition of an exempt administrative employee and thus is exempt from FLSA’s overtime requirements.”
New Jersey Labor Department Investigator Admits To Taking $1.8 Million In Bribes From Owners Of Temporary Labor Firms He Was Hired To Investigate
As reported in The Star-Ledger on March 31, 2009:
“A New Jersey Labor Department investigator from Camden County admitted on Monday to taking some $1.8 million in bribes from owners of temporary labor firms he was hired to investigate.
A second investigator, who lives in Salem, was also charged in the scheme that allegedly involved these men looking the other way when these agencies broke the law.
Joseph Rivera, 53, of Winslow, a senior investigator for the state, pleaded guilty to soliciting and accepting a bribe, and tax evasion.
Also charged in this scandal was 71-year-old James Peyton, a field investigator with the Department of Labor. Police believe the Salem man began accepting cash bribes in 2005 and took as much as $8,000 in cash each quarter.
“The conduct described by two of these defendants … was driven by pure greed,” said Acting U.S. Attorney Ralph Marra. “Mr. Rivera’s corrupt actions lined his own pockets, and provided temporary labor firms with an unwarranted advantage against those employers who operate lawfully.”
The owner of one of these temp businesses also pleaded guilty Monday, and two others were charged for their alleged involvement.
As a senior investigator, Rivera was responsible for inspecting temporary labor firms with workers in southern New Jersey to verify their compliance with state wage and hour laws.
Federal prosecutors said in a court document that Rivera charged temporary employment agencies 25 cents per hour their employees worked not to notice irregularities with their tax withholdings and other payroll violations. He also would recommend these temp agencies to companies looking for workers.
Between 2002 and 2008, Rivera said he raked in $1.86 million from 20 firms.
He also admitted to trying to cover up this scheme by filing false tax returns.
For tax year 2007, Rivera claimed on a tax return that he had $89,696 in taxable income, when, in fact, his total taxable income was nearly $500,000.
These companies provide workers to other firms for a flat hourly rate with the agreement they are responsible for making sure the workers are documented, withholding payroll taxes, and covered with worker’s compensation insurance.
By getting these investigators to look the other way on some of these responsibilities, these companies make bigger profits.
At least one of the alleged bribe payments was made at the Deptford Mall, authorities said, adding the conversation was caught on tape. On Feb. 13, Peyton allegedly met with one of these temp agency owners at the mall, received $800 in cash, and said he would help the firm “stay out of trouble,” court documents indicate.
Another time, he also reportedly told the firm’s manager that the temp agency would only have to report 70 percent of the hours worked by these employees. For his services, Peyton allegedly received $700.
Although he has not pleaded guilty, Peyton Ð who was charged on Monday with bribery Ð has reportedly spoken with an IRS agent and admitted to receiving such payments.
Peyton was responsible for auditing employer records, reviewing quarterly tax filings and other duties related to making sure companies complied with tax laws.
The three managers of these temporary labor firms all live in Philadelphia and were charged with paying bribes.
They are: Yohan Wongso, 27; Channavel “Danny” Kong, 37; and Thuan Nguyen, 37.
Wongso pleaded guilty Monday and faces 18 to 24 months in prison.
As part of his plea agreement, Rivera will forfeit two homes, a 2008 Lexus, $120,000 in cash and a collection of valuable coins. He also will turn over five gold plates and four silver bars.
Rivera faces up to 15 years in prison when he is sentenced on July 6. Although the judge has final say, the two sides agreed on Monday to not object to Rivera receiving a sentence of between eight and 10 years.”
To read the full original article go to http://www.nj.com/sunbeam/index.ssf?/base/news-4/1238476203173240.xml&coll=9
M.D.Fla.: Magistrate Judge Overruled; Plaintiff’s Attorney Need Not Wait Until Plaintiff Paid All Proceeds Of Settlement To Receive Fees And Costs
Maya v. Green Thumb Landscaping, Inc.
As the economy has worsened, everyone across the board has felt the pinch. As a result, many smaller employers wishing to settle FLSA cases seeking unpaid wages and/or unpaid overtime, have sought to enter into settlement agreements, whereby they payout the agreed upon settlement proceeds in installment payments. In this case, the Magistrate Judge attempted to modify such an agreement, to prevent Plaintiff’s attorney from receiving any attorneys’ fees or costs, until Plaintiff had received his entire settlement proceeds. Although the settlement agreement stated that Plaintiff and his counsel were to receive proportional payments from the installments, the Magistrate issued a Report and Recommendation attempting to modify the settlement agreement’s terms, so that Plaintiff would receive his entire settlement proceeds prior to his attorney receiving any fees or costs.
In a matter of first impression, the Judge, reviewing the Report and Recommendation of the Magistrate, agreed with Objections filed by Plaintiff’s counsel, and found that the Court lacked the power to modify the terms of the settlement agreement at the fairness determination stage. Specifically, the Judge noted, “[a]s best as the Court can determine, whether attorneys’ fees and costs must be paid only after an FLSA plaintiff has been paid all of his settlement proceeds is a question of first impression… the Court concludes that the FLSA does not require counsel to subordinate the payment of his fees and costs to his client’s recovery where the Court has determined that the overall recovery provided to the plaintiff is fair and the amount of fees and costs awarded to the plaintiff’s counsel is reasonable.”
N.D.Ga.: Conditional Certification Granted Although Defendants In Default; Same Framework Applicable To Court’s Stage 1 Determination
Davis v. Precise Communication Services, Inc.
Following Plaintiffs’ request for notice, defense counsel withdrew. This court issued an order in November 2008 informing Defendant PCS that it could not proceed pro se under Local Rule 83.1. The court directed Defendant PCS to obtain counsel or risk default and directed Defendant Hinton to inform the court if she intended to proceed pro se. Neither defendant complied with the court’s order and is therefore in default. On January 7, 2009, Plaintiffs filed the instant Motion for Default Judgment. Notwithstanding Defendants’ default, the Court granted Plaintiffs’ Motion for Conditional Certification, following the same framework as if the Defendants had not been in default:
As an initial matter, the court notes the unusual procedural posture of this matter. However, the court finds that PCS’s default does not fundamentally change the analysis the court must undertake in deciding whether to conditionally certify Plaintiffs’ class. See Sniffen v. Spectrum Indust. Servs., No. 2:06-CV622, 2007 WL 1341772 (S.D.Ohio Feb. 13, 2007) (addressing FLSA conditional certification and notice in conjunction with motion for default judgment); c.f. Hoxworth v. Blinder, Robinson & Co., Inc., 980 F .2d 912 (3d Cir.1992) (finding that default did not preclude defendants from challenging class certification in Rule 23 context). By defaulting, PCS has foregone its right to challenge any of the well-pleaded factual allegations in Plaintiff’s complaint. Nishimatsu Constr. Co., Ltd. v. Houston Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir.1976). PCS has not conceded, however, that Plaintiffs have satisfied the legal standard for conditional class certification under the FLSA. See McCoy v. Johnson, 176 F.R.D. 676, 679 (N.D.Ga.1997) (Forrester, J.) (explaining that a court may only grant default judgment on those claims which are legally sufficient and supported by well-pleaded allegations); c.f. Trull v. Plaza Assoc., No. 97 C 0704, 1998 WL 578173 (N.D.Ill. Sept. 3, 1998) (explaining that default cannot substitute for court’s analysis of four legal requirements for class certification under Rule 23).
Further, the court must address the certification issue at this time, despite PCS’s default, for issues of judicial economy. If the court were to grant the Plaintiffs’ forthcoming motion for default judgment without resolving the issue of conditional certification, only the named plaintiffs would be able to enforce it. Numerous potential plaintiffs would not receive any redress for their claims and would likely file separate suits resulting in an additional burden on the court. See Partington v. American Intern. Specialty Lines Ins. Co., 443 F.3d 334 (4th Cir.2006) (finding default judgment unenforceable by putative class without formal class certification).”
W.D.Pa.: Pharmaceutical Sales Representatives Are Exempt “Outside Salesmen” Notwithstanding The Fact That They Do Not Consummate Sales
Baum v. AstraZeneca LP
Addressing the oft-raised (recently) issue of whether pharmaceutical sales representative employees are subject to the Outside Sales exemption, the District Court answered the question in the affirmative and granted Defendant’s Motion for Summary Judgment on the issue. The Court went through a strained analysis of the pharmaceutical industry to reach this conclusion, and ultimately, seems to have refused to follow the long-standing mandate of FLSA construction that exemptions be narrowly construed against employers asserting them. The Court ultimately determined that the promotional work that sales reps do as their primary duty represents “sales” within the meaning of the FLSA, despite the fact that the sales reps do not actually obtain sales from anyone.
“The Court now returns to the definition of “sale”, and the somewhat related question of when a sale actually occurs. Obviously, a pharmaceutical sale is not exactly final until the patient herself completes a transaction by taking the physician permission slip (prescription) to a pharmacist for completion of the sale. However, the statutory language does not require a final sale, complete and consummated. Thus, pursuant to the above industry specifics, the Court believes that a “sale” may be defined as substantially occurring at the moment a physician commits to prescribing a particular pharmaceutical when treating a particular patient. In Clements v. Serco, in considering this question under the FLSA, the Tenth Circuit explained: “the touchstone for making a sale, under the Federal Regulations, is obtaining a commitment.” 530 F.3d 1224, 1227 (10th Cir.2008). Importantly, the facts of the case sub judice illustrate that the PSS’s were trained and employed for the purpose of obtaining a commitment, which is the “touchstone” for making a sale.
The Court concludes that in the pharmaceutical industry, the strongest evidence for sales activity and being employed for the purpose of making sales, is that the employee obtains commitments from physicians. Ms. Baum did precisely that: after carefully preparation and planning, she skillfully asked physicians for commitments to prescribe AstraZeneca products in appropriate situations. The capacity of a salesperson to obtain such commitments, in any field, is rare, and consequently well-compensated by private industry; the effort and charisma required to successfully close, as will be discussed infra, is a hallmark of professional sales activity.
This Court believes that other courts, and perhaps regulatory agencies, underestimate the significance of this oral commitment from physicians. In part, this error emerges from a misunderstanding of the ways in which human beings are socially and informally motivated. Sometimes lawyers and judges forget that a person’s word means something; remarkably, many people do not actually need a 400-page contract to bind themselves to their word. Yale’s Yochai Benklar, a thinker with incisive prescience, explains that non-market intrinsic factors can serve as a more powerful motivating force than typical extrinsic economic incentives; applying such a theory to this situation, it is possible to imagine one business that thrives over time, enjoying ongoing, non-contractual relationships with its clientele, while a nearly identical business falters, its obsession with formalized contracts driving away a clientele socially frustrated with the non-trusting relationship. In short, this Court believes that one professional’s commitment may be worth more in sales volume than a hundred firm orders from a insolvent or dishonest source. A proper critique of this interpretation of “sale” is that such reasoning, if applied in a broader sense across industries, would quickly arrive at an unsustainable breaking point. However, this Court is not broadening the definition of “sale”, but simply seeking to understand and apply the definition within this particular industry. See In Re Novartis Wage and Hour Lit., 593 F.Supp.2d 637, 659 (“Reps make sales in the sense that sales are made in the pharmaceutical industry.”). For all of the above reasons, this Court, in performing its own construction and application of this statutory exemption, finds that in the pharmaceutical context, where a representative asks for a commitment from a physician, such activity is sales activity for the purposes of the Pennsylvania outside sales exemption.
Admittedly, this construction and application has its weaker points: obviously, not every sale defined this way will actually result in the delivery of a pharmaceutical in exchange for legal tender. Furthermore, other courts, assessing different industries, have held that individuals seeking to obtain commitments are not necessarily performing exempt sales activity. See, e.g., Clements v. Serco, 530 F.3d 1224, 1227 (10th Cir.2008). Ms. Baum’s briefing hopes to capitalize upon this particular weak point, arguing that even when a physician commits to writing a prescription for AstraZeneca’s pharmaceuticals, this commitment is certainly not binding upon either the physician or a patient. However, the rationale of such a critique could be equally applied to sales transactions in simpler fields. For instance, where a hypothetical Mr. Loman sells a widget, but the widget is ultimately returned six months later under a warranty claim, did a sale actually occur? Was the sale binding? Given this country’s aggressive implied warranty laws, is any sale ever binding? While the Court is certain that Mr. Loman engaged in the process of making sales or obtaining orders, the question presents itself: is any traditional sale more or less binding than a commitment sought and obtained from a honest and thoughtful physician? Admittedly, in the pharmaceutical context, obtaining a commitment from a doctor may not be a formal, binding contract that inexorably leads to the exchange of goods and services. However, the Court believes such formalities are simply not necessary for a “sale” to occur. The Court notes that private companies perhaps have a wiser approach to discerning what constitutes a sale: rather than wasting effort and energy arguing about how to apply abstract and reduced definitions to diverse industries, such companies simply find and execute the methods that work to increase sales; notably, pharmaceutical companies have all decided to employ large, direct sales forces to visit physicians.
The Court also acknowledges that physicians are not the only customer involved in the sale of pharmaceuticals. However, it cannot be argued that physicians are not an integral and essential gatekeeper within this sales process. In some, likely most, instances, physicians will be the dispositive force behind a sale. Furthermore, in all instances, a physician’s approval and consent to the sale is ultimately necessary. Other courts, in expressing their analyses of this pharmaceutical sales dynamic, have similarly stated the integral role of physicians in the sale of a pharmaceutical. See Barnick v. Wyeth, 522 F.Supp.2d 1257, 1264 (C.D.Cal.2007)(explaining that because physicians “determine whether or not a patient will buy a prescription product”, the physicians themselves are the appropriate target of sales efforts); see also D’Este v. Bayer Corp., No. 07-cv-3206, 2007 U.S. Dist. LEXIS 87229, at *14 (C.D.Cal. Oct. 9, 2007) (emphasizing that the doctor places the order for the prescription product by writing a prescription).
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