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S.D.Ind.: Court Erred In Resolving MCA Exemption Issues on Motion for Conditional Certification; On Reconsideration Motion Granted
Thompson v. K.R. Drenth Trucking, Inc.
This case was before the court on plaintiffs’ motion for reconsideration of the court’s order denying their motion for conditional certification of a collective action. The case arose out of allegations that defendants violated the Fair Labor Standards Act (“FLSA”) by failing to pay a certain group of truck drivers (“plaintiffs”) overtime premiums. Initially, the court denied Plaintiffs’ Motion. In doing so, “the Court held that the Motor Carrier Act exemption applied to [the] named Plaintiffs… thus rendering them ineligible for overtime pay and unsuitable collective action representatives.” In their motion for reconsideration, the plaintiffs asserted that the court had previously erred by inappropriately resolving the merits of the Motor Carrier Act exemption, with respect to the named-plaintiffs at the conditional certification stage. The court agreed, and upon reconsideration granted conditional certification.
The court explained:
“In the February 11, 2011 Entry (Dkt.68), this Court acknowledged that the issue of whether Thompson and Hayden engaged in interstate commerce was “hotly contested.” Plaintiffs emphasized that both Thompson and Hayden were Non–Recyclable Drivers who regularly transported non-recyclable materials within the State of Indiana. Plaintiffs argued that since they never engaged in interstate commerce as part of their “regular” or “normal” duties, Thompson and Hayden are suitable collective action representatives. KRD counters that any of its drivers, including Thompson and Hayden, “could be called upon at any time to carry any load, whether intrastate or interstate,” meaning the MCA exemption applies. (Dkt. 71 at 4). And, indeed, Thompson and Hayden each crossed Indiana state lines on one occasion to transport KRD equipment to South Carolina.
In its prior entry, the Court found KRD’s argument persuasive, determining that the MCA exemption applied to Thompson and Hayden. In other words, even if Thompson and Hayden rarely crossed state lines (or, for that matter, hauled recyclable material destined for out-of-state purchasers), they could have been called upon to do so in their regular course of work. For this reason, the Court denied Plaintiffs’ motion for conditional certification.
Having now reviewed a more thorough body of case law, the Court finds that it erred by, in effect, making a merits determination at this early stage. As Plaintiffs emphasize, they have a “lenient” burden at this stage of the proceedings and, as such, courts do not reach the merits of Plaintiffs’ FLSA claims. Fravel v. County of Lake, 2008 WL 2704744, at *2 (N.D.Ind. July 7, 2008) (citations omitted). However, it is worth noting that even at this early stage, a court must also ensure that the proposed class representatives are adequate.”
Luckily for the plaintiffs here, the court recognized its initial error and corrected it almost immediately. The court’s decision serves as a reminder that courts simply do not resolve the merits of an FLSA case at the conditional certification stage.
Click Thompson v. K.R. Drenth Trucking, Inc. to read the court’s Entry on Plaintiffs’ Motion to Reconsider.
S.D.Tex.: Upon Reconsideration, Pharmaceutical Reps Nonexempt; Court Elects To Adopt Second Circuit’s Reasoning
Harris v. Auxilium Pharmaceuticals, Inc.
This case was before the court on Plaintiff’s Motion for Reconsideration of the court’s prior decision granting Defendant’s Motion for Summary Judgment. The court had previously held that the Plaintiff’s, pharmaceutical representatives were exempt from the overtime provisions of the Fair Labor Standards Act (FLSA) under both the administrative and outside sales exemptions. Plaintiff sought reconsideration in light of the United States Secretary of Labor’s amicus curiae brief filed in In re Novartis Wage and Hour Litigation. Granting the Plaintiff’s Motion, the court reversed itself, finding that the Second Circuit’s recent opinion was more persuasive than the contrary jurisprudence.
Discussing the exemption issues, the court reasoned:
“In its previous order, this Court determined that Harris could not bring a FLSA claim because her position as a Medical Sales Consultant (“MSC”), or pharmaceutical representative, took her out of FLSA’s purview. This Court found that the MSC position was exempt from FLSA under the “administrative” and “outside sales” exemptions.
Shortly after this Court’s order came out, the Department of Labor (“DOL”) filed an amicus curiae brief in a case then pending before the Second Circuit, In re Novartis Wage & Hour Litigation, 611 F.3d 141 (2010). In Novartis, The DOL argued that, under its regulations, pharmaceutical representatives “do not meet the requirements for either the outside sales or administrative exemption.” (Br. for the Secretary of Labor as Amicus Curiae in Supp. of Pls.-Appellants, Doc. No. 106-2, at 5.) Regarding the outside sales exemption, the DOL noted that, “[b]ecause the [pharmaceutical representatives] do not sell any drugs or obtain any orders for drugs, and can at most obtain from the physicians a non-binding commitment to prescribe NPC’s drugs to their patients when appropriate, [they] do not meet the regulation’s plain and unmistakable requirement that their primary duty must be ‘making sales.’ “ (Id. at 10.) Under the administrative exemption, the DOL noted that, although pharmaceutical representatives work independently, that “does not suffice to qualify for the administrative exemption; [the representatives] do not perform any primary duties that are largely comparable to those found in 29 C.F.R. § 541.202(b), such as formulating or implementing management policies, utilizing authority to deviate from established policies, providing expert advice, or planning business objectives.” (Doc. No. 106-2, at 21.)
While this motion for reconsideration was pending at this Court, the Second Circuit concluded that under the DOL’s regulations, pharmaceutical representatives are not outside salesmen or administrative employees for the purposes of FLSA’s overtime pay requirements. Novartis, 611 F.3d at 149. The Novartis court determined that the DOL’s interpretations were “entitled to ‘controlling’ deference,” id., under the Supreme Court’s decision in Auer v. Robbins, 519 U.S. 452, 461 (1997).
After a review of the applicable authority, this Court adopts the reasoning of the Second Circuit and holds that Plaintiffs are not outside salesmen or administrative employees under FLSA. This Court recognizes that district courts are split on the issue, and that some courts have specifically rejected the DOL’s reasoning as set forth in its Novartis amicus brief. See, e.g., Christopher v. SmithKlein Beecham Corp., 2010 WL 396300, at *1-2 (D.Ariz. Feb. 1, 2010). In this Court’s opinion, however, the Novartis court sets forth a persuasive and reasoned analysis for its deference to the DOL’s interpretation of its regulations. As the Novartis court pointed out, the DOL’s interpretations “do far more than merely parrot the language of the FLSA,” and are therefore “entitled to ‘controlling’ deference unless those interpretations are ‘plainly erroneous or inconsistent with the regulation.’ “ 611 F.3d at 153 (quoting Auer v. Robbins, 519 U.S. 452, 461 (1997)). This Court further agrees that no such error or inconsistency exists. Id.
Auxilium points this Court to two opinions in the Third Circuit that came to the opposite conclusion on this question: Smith v. Johnson & Johnson, 593 F.3d 280 (3d Cir.2010), and Baum v. AstraZeneca LP, 372 F. App’x 246 (3d Cir.2010). Neither of these cases, however, considers the impact of the DOL’s amicus brief on their decisions. Therefore, they do not provide a reasoned counterweight to the Second Circuit’s analysis.”
EDITOR’S NOTE: There continues to be a split of authority with respect to whether pharmaceutical representatives are exempt or nonexempt under the FLSA. Within the last week, another court, analyzing the very same issue–whether reconsideration (of an order granting defendant summary judgment) in light of the Novartis ruling and the DOL’s amicus brief(s) was warranted–another court held that the decision was not due to be reconsidered and allowed its prior decision to stand. Schaefer-Larose v. Eli Lilly and Co., 2010 WL 3892464, at *1 (S.D. Ind. Sept. 29, 2010).