Hines v. State Room Inc. , 665 F.3d 235 ( 2011 )

United States Court of Appeals
For the First Circuit
No. 10-2298
CHRISTINE HINES; MARY A. O’CONNOR;
JESSICA LEPORACCI,
Plaintiffs, Appellants,
v.
STATE ROOM, INC.; LONGWOOD EVENTS, INC.;
BELLE MER, INC.; JAMES APTEKER,
Defendants, Appellees,
VERONIQUE CORPORATION,
Defendant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Patti B. Saris, U.S. District Judge]
Before
*
Howard, Ripple, and Selya, Circuit Judges.
John F. Tocci, with whom Cary Gianoulis and Tocci, Goss & Lee,
P.C. were on brief, for appellants.
Colleen C. Cook, with whom Jack I. Siegal and Nystrom Beckman
& Paris LLP were on brief, for appellees.
November 28, 2011
*
Of the Seventh Circuit, sitting by designation.
RIPPLE, Circuit Judge. Christine Hines originally
brought this action in Massachusetts state court against the State
Room, Inc., where she formerly was employed.1 In the amended
complaint, which was before the district court following removal,
Ms. Hines and her coplaintiffs sought unpaid overtime wages that
they claimed were due under the Fair Labor Standards Act (“FLSA”),
29 U.S.C. §§ 201-219, and related state statutes. In addition to
the State Room, Longwood Events, Inc., Belle Mer, Inc. and James
Apteker were named as defendants. After various further
amendments, including the addition of counterclaims, and following
discovery, the defendants sought summary judgment on the wage
claims. The defendants asserted that the plaintiffs were exempt
from the overtime requirement because they were administrative
employees under the FLSA, 29 U.S.C. § 213(a)(1). The plaintiffs
countered that their work did not involve sufficient discretion to
satisfy the exemption. The district court determined that the
duties of the employees did involve substantial discretion and,
under our precedent, the exemption was applicable; accordingly,
partial summary judgment was entered for the defendants. The
plaintiffs now appeal. They continue to contend that their
employers have failed to demonstrate that they acted with any
1
Ms. Hines’s original complaint also listed Veronique
Corporation as a defendant and claimed that it was the State Room’s
corporate parent. Veronique Corporation was dropped as a defendant
in the amended complaint and terminated from the action in 2009.
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meaningful discretion and, therefore, to carry the burden of
demonstrating the applicability of the exemption. Because the
district court correctly applied governing legal principles, we
affirm the judgment of the district court.
I
BACKGROUND
A. Facts
The State Room and Belle Mer are affiliated banquet
facilities that “host high-end wedding receptions and other social
functions” in Boston, Massachusetts, and Newport, Rhode Island,
respectively. R.78 at 2. Individual defendant James Apteker is
the founder and president of the State Room and Belle Mer.
Longwood Events is an affiliated management company that provides
accounting and record-keeping services for the banquet facilities.
According to the complaint, Longwood is the corporate parent for
the State Room and Belle Mer, and the companies share common
management.
The plaintiffs are former sales managers2 at one or both
2
According to their deposition testimony and their resumes,
the plaintiffs held different titles at various points in their
tenures with the defendant facilities. See, e.g., R.68-4 at 14-15
(Leporacci Dep. 61-62) (stating that she was given “a few different
titles . . ., but continued to perform the same duties no matter
what the title was” for the majority of her time working for the
defendants). However, the plaintiffs themselves use the more
generic term “sales manager” in structuring their arguments in this
case. The plaintiffs’ titles do not affect our analysis, and,
therefore, for ease of reading, we employ the plaintiffs’
terminology. See Reich v. John Alden Life Ins. Co., 126 F.3d 1, 10
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of the defendant facilities: Ms. Hines was employed from 2006 to
2008 at the State Room; Mary O’Connor, at Belle Mer from 2007 to
2008; and Jessica Leporacci, at Belle Mer for several months in
2006, then at the State Room through 2008. As sales managers, the
plaintiffs were the primary client contacts on behalf of the event
venues. Principally, their role was to secure event business for
the company, either by use of a cold-call list kept by management
or in response to inquiries by potential clients. When given a
cold-call list, the plaintiffs would assess which calls were likely
to generate business and would not make calls they determined would
be unproductive. See R.68-3 at 7 (O’Connor Dep. 34-35) (explaining
that, after researching a list of law firms to cold call, she would
not contact a firm of three attorneys to offer to host a holiday
party and agreeing that the research she did would help her
determine “whether to call or not”). As part of their regular
tasks, plaintiffs spoke by phone and in person with potential
clients; they toured the facility with potential clients to sell
events; and they assisted clients in determining which venue and
time might be appropriate for an event and what minimum charges
would apply. The goal behind this work was to commit a prospective
client to a contract for an event. In addition to the efforts with
individual clients and prospective clients, the plaintiffs engaged
(1st Cir. 1997) (“[T]he particular title given to an employee is
not determinative[ of] an employee’s exempt status . . . .”).
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in broader sales efforts. For example, Ms. O’Connor testified that
she marketed Belle Mer by attending Chamber of Commerce or
Convention and Visitors Bureau events as the company’s
representative, again with the goal of “bring[ing] events to Belle
Mer.” Id. (O’Connor Dep. 36). To bring in business from within
her assigned nonprofit sector, Ms. Hines suggested to her
supervisor that she could develop a lunch presentation on “‘how to
plan a gala fundraiser for [a] non[]profit’” as a marketing tool.
R.68-20 at 2 (email from Hines to a supervisor).
For the majority of the plaintiffs’ tenure with the
defendant facilities, their duties extended beyond securing the
basic sale and event contracts. They were required to work with
clients to design details and menus that would meet each client’s
expectations;3 they prepared internal order forms that explained
every detail of the event for the operations staff; and from time
to time, they attended events to ensure that the client’s wishes
were carried out. As Ms. O’Connor stated in her deposition, “Soup
to nuts is what I was doing back then. You didn’t have any events
managers. You ran the whole thing.” R.68-3 at 14 (O’Connor Dep.
69); id. at 12 (O’Connor Dep. 59) (confirming that her duties
included “[c]oordinat[ing] the setup, design, [and] execution of
the wedding”); see also R.68-4 at 15 (Leporacci Dep. 63)
3
See, e.g., R.68-4 at 13 (Leporacci Dep. 55) (explaining
that she would make suggestions for an event and “could create a
custom menu with the chef”).
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(describing her work as an events manager as including organizing
“tastings, menu selection, . . . linen selection, design of the
space, [and] everything else that goes into planning an event”);
R.68-2 at 8 (Hines Dep. 44-45) (answering affirmatively when asked
if she “work[ed] closely with nonprofit board committees in
researching, designing and executing events”). The plaintiffs were
responsible for maintaining a relationship with clients and
satisfying client needs in the course of their event planning with
the defendant venues. See R.68-15 (contemporaneous email from
supervisor to sales and events management staff stating, “[I]t is
your responsibility to proactively manage client expectations and
obligations. You are accountable for the ‘life’ of this client
while they book, and then plan and execute their event with us.”);
R.68-2 at 18 (Hines Dep. 123) (agreeing that her job was to “keep
the client happy” from the initial contact through the actual
event).
Indeed, the picture that emerges from the record is one in
which the primary role of sales managers was to secure a steady
stream of business by selling each prospective client on a package
of options--location, timing, atmosphere, design, food and the
like, all within the client’s budget--and by ensuring that each
event so planned was a success. See R.68-3 at 10 (O’Connor Dep.
51-52) (explaining the process of creating an event within a
client’s budget); id. (O’Connor Dep. 50-51) (“[T]his is a one-time
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event, let’s make it the most incredible thing you will ever have
in your life. Even if you have a small budget, let’s still make it
the most breathtaking thing that could ever happen to you, and how
that is going to happen is customer service. You have got to
believe in me.”). In so doing, the sales managers secured clients
one at a time, but also worked to maintain and enhance the
reputation of their venues as a desirable location for custom,
high-end events for private and nonprofit clients. See R. 68-2 at
21 (Hines Dep. 145) (confirming that her tasks included
“develop[ing] relationships with” clients and “encourag[ing] repeat
business”); see also R.72-8 at 8 (Longwood Events Sales Handbook)
(instructing sales staff to “[c]apitalize on re-booking
opportunities immediately” while clients “have positive feelings
about their event”).4
The record also establishes some things that the
plaintiffs did not do in the course of their daily work.
Specifically, the plaintiffs had virtually no authority to make any
financial decisions. When working with a potential client to
secure an event contract, the sales managers were bound by price
schedules controlled by management that dictated minimum charges
for particular rooms based on the times and dates of the event.
4
See also R.68-21 at 2-3 (email chain in which Ms. Hines’s
supervisor congratulates her on a successful event in which a
nonprofit raised $200,000 and instructs her to “quote these numbers
when wooing the big non[]profits,” a suggestion with which
Ms. Hines agrees).
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R.68-3 at 5 (O’Connor Dep. 28) (noting that the prices and minimums
“don’t change” and that “[t]here is no wavering unless you want to
marry in the winter”). Beyond the event minimum, each option a
client might select for a particular event carried a price already
fixed by management, the sum of which defined the total cost for
the entire event, and sales managers were not permitted to deviate
or discount in any way without management’s approval. See, e.g.,
R.72-8 at 6 (Longwood Events Sales Handbook) (“Do not provide
discounts or lower [food and beverage] minimums without Sales
Director approval.”); id. at 7 (“[A]ny discounts are with a Sales
Director’s approval only.”). Further, although they signed final
event contracts as representatives of the defendant businesses,
they were permitted to do so only when management had approved the
terms. R.72-9 at 4 (Gullins Aff.). Indeed, they were prohibited
expressly from creating any financial obligations for the
businesses without management approval. R.72-8 at 3-4 (emails from
supervisor forbidding the staff from creating “obligation[s]” for
the company without prior approval); see also R.72-9 at 4 (Gullins
Aff.). They did not generate the form contracts or intake forms
that they used to structure their interactions with clients and to
forward client information to management. Id. at 3. They were not
supervisors and had no direct authority over any other staff. Id.They were not policy-makers for their respective businesses. See
id. at 4.
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The plaintiffs were guided by the Longwood’s Events Sales
Handbook, which presents “[t]he Longwood Events Way of Selling.”
R.72-8 at 6. Some of the instructions provided are specific and
directive, such as “do not hold dates beyond the 7-day timeframe,”
id., or “[n]ever match a deal from last year,” id. at 7. Equally
often, however, the handbook’s instructions are generalized,
strategic or aspirational. See id. at 6 (“Always take the
customer[’s] perspective. Anticipate what they would want and
listen to what they are asking for. Roll up your sleeves and do
whatever it takes to ensure the customer has a great impression of
[Longwood Events] and the venue, enlisting operations and kitchen
where necessary.”); id. at 7 (“Always make a concerted effort to
up[]sell . . . .”); id. (“Make sure the menu fits the event. Are
we selling something requiring a knife and fork for an event which
is intended to have a cocktail feel and light seating?”). In
addition to the directions provided by the handbook, the defendant
businesses provided a scripted response to one specific question
that sales managers sometimes received regarding an affiliated
venue, the development of which the defendants had abandoned. The
vast majority of the plaintiffs’ work as sales managers, however,
involved unscripted conversations with clients and potential
clients.
Ms. Hines earned $77,000 a year in her role, second in
the department only to the director of sales; Ms. O’Connor earned
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$48,000; Ms. Leporacci earned between $28,000 and $36,000.
Although the plaintiffs claimed to have worked more than forty
hours per week on a consistent basis--indeed, the offer letters
that they received expressly stated that they would work forty-five
to fifty-five hours per week5--they did not receive overtime pay
during their tenure as sales managers because the defendant
businesses designated them as “exempt” employees for purposes of
overtime laws. Although they were required to punch-in for some
portion of their tenure, they were not required to keep specific
hours.
All of the plaintiffs had left the defendants’ employ by
the time this action was commenced. When Ms. Hines resigned in
2008, she requested a severance, which was denied. Mr. Apteker
claims that, when Ms. Hines was informed that severance was
unavailable, he heard her mumble something that he understood to be
a threat that she would go after the company and “find a way” to
get the denied severance. R.76-8 at 4 (Apteker Dep. 125).
B. District Court Proceedings
After being granted leave by the Massachusetts Attorney
General’s Office, Ms. Hines filed a class action complaint in the
Massachusetts state courts alleging violations of the Massachusetts
and federal overtime laws on behalf of herself and a putative
5
R.68-2 at 11 (Hines Dep. 84); R.68-4 at 11 (Leporacci Dep.
46).
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class. She alleged that the State Room improperly had classified
her as an exempt employee in order to avoid its overtime
obligations. The State Room removed the action to the district
court.
In an amended complaint filed in federal court, Ms. Hines
removed her class action allegations, added Ms. O’Connor and
Ms. Leporacci as plaintiffs and added Belle Mer, Longwood and
Mr. Apteker6 as defendants. The amended complaint included seven
claims under the FLSA and related Massachusetts and Rhode Island
wage and hour laws.
In response, the defendants filed a state tort
counter-claim for abuse of process. They claimed that the overtime
suit was in retaliation for the denial of Ms. Hines’s requested
severance. Ms. Hines, in turn, counter-claimed that the abuse of
process allegation was made in retaliation for filing the initial
suit, relying on the anti-retaliation provision in the FLSA, 29
U.S.C. § 215(a)(3).
Following discovery, the defendants moved for summary
judgment on the original wage claims. Ms. Hines sought summary
judgment on her retaliation claim. The district court granted the
defendants’ motion for summary judgment and denied Ms. Hines’s
motion. The court set forth the relevant portion of the FLSA and
6
Mr. Apteker was added pursuant to a state statute that
deems corporate principals “employers” responsible for wage and
hour violations. See Mass. Gen. Laws ch. 149, § 148.
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the regulations and noted that the central issue in the case was
whether the plaintiffs had exercised sufficient discretion and
independent judgment in their work to be classified properly as
administrative employees exempt from the overtime requirement. The
court acknowledged that the FLSA places the burden on the employer
to establish the applicability of the exemption and that the courts
have required that the exemption be drawn narrowly against the
employer. However, the court found this circuit’s decisions in
Cash v. Cycle Craft Co., 508 F.3d 680 (1st Cir. 2007), and Reich v.
John Alden Life Insurance Co., 126 F.3d 1 (1st Cir. 1997),
instructive and determined that they were strong support for the
defendants’ position in the present case. The court concluded
that, like the plaintiffs in Cash and John Alden, the plaintiffs
here had a primary task of communicating with clients and assessing
client needs. Although a handbook guided these important
interactions, it did not script them; instead, the plaintiffs’ work
required a significant measure of judgment in all of their daily
interactions. The plaintiffs were “the primary conduit between
defendants and their clients,” and their “efforts constituted major
assignments . . . affecting a substantial portion of defendants’
business.” R.78 at 18. Further, although the options that the
plaintiffs presented to clients for various services were pre-
priced by management, the plaintiffs “determined for themselves how
best to fit those options to the needs of each individual client.”
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Id. That plaintiffs’ supervisors had the authority to review and
approve, noted the court, was not dispositive under the
regulations. After reviewing the evidence, including the
plaintiffs’ own descriptions of their work for the defendants on
their personal resumes, which the opinion set forth in full, the
court concluded that the employers had established that the
plaintiffs fell properly within the administrative exception.
The court did acknowledge that, with respect to many of
the factors identified in the regulations as relevant to the
application of the administrative exemption, the plaintiffs had
demonstrated questions of fact. The court, moreover, noted that
the plaintiffs had produced evidence that weighed against
determining that they were properly classified within the
administrative exemption: They did not shape (indeed, they were
required to follow) management’s policies, and they did not
negotiate or obligate financially the defendants. Further, the
district court concluded that, in its view, taking the evidence in
the light most favorable to the plaintiffs, they did not have
meaningful discretion regarding the selection of potential clients
to approach. Nevertheless, the court found that the evidence
clearly demonstrated that the plaintiffs “exercised discretion and
independent judgment in determining how to assemble an event to
suit each client’s taste.” Id. at 19. Accordingly, summary
judgment was entered for the defendants on the wage claims.
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The district court further ruled that disputed issues of
fact remained on the abuse of process claim against Ms. Hines, and
therefore denied summary judgment on that counter-claim. The
parties then jointly moved for entry of a separate judgment under
Rule 54(b), which the district court entered upon concluding that
the ruling on the wage claims was final and that there was no
persuasive reason for delay.7 Proceedings on the counterclaims
were stayed pending the outcome of this appeal.
II
DISCUSSION
A. Standard of Review
We review a district court’s grant of summary judgment de
novo. Hunt v. Golden Rule Ins. Co., 638 F.3d 83, 86 (1st Cir.
2011). Summary judgment is proper where there is no genuine
dispute of material fact and the moving party is entitled to
judgment as a matter of law. Fed. R. Civ. P. 56(a). “In the
typical case, we will reverse a grant of summary judgment only if,
making all factual inferences in favor of the non-moving party, a
7
Consistent with the duties prescribed in Spiegel v.
Trustees of Tufts College, 843 F.2d 38, 43 (1st Cir. 1988), and its
progeny, we independently have examined the propriety of a Rule
54(b) certification in the present case and are satisfied that the
district court acted within its sound discretion. Specifically, we
agree that the ruling upon which judgment was entered was final.
Further, we agree that, given the separate factual bases for the
claims at issue here and those still unadjudicated in the district
court, the court was entitled to conclude that there was “‘no just
reason for delay.’” Id. (quoting Fed. R. Civ. P. 54(b)).
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rational factfinder could resolve the legal issue for either side.”
D & H Therapy Assocs., LLC v. Boston Mut. Life Ins. Co., 640 F.3d
27, 34 (1st Cir. 2011).8
B. The FLSA and the Department of Labor’s Regulations
The FLSA of 1938, as amended, establishes a federal
minimum wage and restricts youth labor. See 29 U.S.C. §§ 201-219.
In addition, the Act requires overtime pay--payment at the rate of
one and one-half of the regular rate--for all hours worked in
excess of a forty-hour work week. Id. § 207(a)(1). The statute
also sets forth various exemptions from the overtime requirement.
Relevant to the present case, the overtime requirement in § 207
does not apply to “any employee employed in a bona fide executive,
administrative, or professional capacity . . . (as such terms are
defined and delimited from time to time by regulations of the
Secretary . . .).” Id. § 213(a)(1).
Pursuant to the statute’s express delegation of
rulemaking authority, the Secretary has issued detailed
regulations, following notice-and-comment procedures, defining each
8
We note the plaintiffs’ objections to the district court’s
factual conclusions at summary judgment and, in particular, to the
use of the plaintiffs’ resumes in determining their job duties.
The plaintiffs would have us disregard the resumes because, in
their view, it is common practice to include puffery about one’s
own importance or achievements within any given position. We see
no reason to set forth a categorical rule regarding the use of
resumes in FLSA litigation. Our obligation on review of summary
judgment dictates the manner in which we view all of the evidence
of record, including the plaintiffs’ resumes.
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of the exemptions in § 207. See generally 29 C.F.R. Part 541; see
also 29 U.S.C. § 213(a)(1) (providing authority); John Alden, 126
F.3d at 7-8 (discussing the regulations).
The regulations in effect at the time of the plaintiffs’
employment provide a single three-prong test9 for determining
whether an employee qualifies for the administrative exemption:
(a) The term “employee employed in a bona fide
administrative capacity” in section 13(a)(1)
of the Act shall mean any employee:
(1) Compensated on a salary or fee
basis at a rate of not less than
$455 per week (or $380 per week, if
employed in American Samoa by
employers other than the Federal
Government), exclusive of board,
lodging or other facilities;
(2) Whose primary duty is the
performance of office or non-manual
work directly related to the
management or general business
operations of the employer or the
employer’s customers; and
9
In 2004, the Department of Labor amended the regulations
governing administrative employees. Prior to the amendment, the
regulations allowed employers to demonstrate an employee’s
qualification for the exemption under one of two tests, the “long
test” and the “short test.” The long test covered lower-income
employees; within a certain salary range, an employer was required
to demonstrate that more stringent requirements were satisfied to
establish an exemption. When an employee earned above the range
included in the long test, the exemption could be demonstrated
using the simpler short test. The long test no longer exists; the
short test was modified in the new regulations and is now called
the “standard test.” It applies to all employees that an employer
seeks to designate as exempt administrative staff. See generally
Defining and Delimiting the Exemptions for Executive,
Administrative, Professional, Outside Sales and Computer Employees;
Final Rule, 69 Fed. Reg. 22122 (Apr. 23, 2004).
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(3) Whose primary duty includes the
exercise of discretion and
independent judgment with respect to
matters of significance.
29 C.F.R. § 541.200(a). The sections that follow provide
substantial further direction regarding the implementation of this
standard test for the administrative exemption, and we shall
address them in significant detail below as we analyze the
application of the regulatory mandate to the case before us.
At the outset, we note that we are guided by a general
interpretive principle. Because of the remedial nature of the
statute, the Supreme Court has emphasized that the exemptions
should be “narrowly construed” and “limited to those establishments
plainly and unmistakably within their terms and spirit.” Arnold v.
Ben Kanowsky, Inc., 361 U.S. 388, 392 (1960); see also John Alden,
126 F.3d at 7 (quoting Arnold).
The parties concede, and the record is clear, that the
sales managers were compensated on a salary basis at a level in
excess of the required $455 per week. The parties also agree that
the second prong, see 29 C.F.R. § 541.200(a)(2), which requires
that the qualifying employee’s “primary duty [must be] the
performance of . . . work directly related to the management or
general business operations of the employer or the employer’s
customers,” is met. The regulations further provide:
The phrase “directly related to the management
or general business operations” refers to the
type of work performed by the employee. To
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meet this requirement, an employee must
perform work directly related to assisting
with the running or servicing of the business,
as distinguished, for example, from working on
a manufacturing production line or selling a
product in a retail or service establishment.
Id. § 541.201(a).
We agree with the parties that the second prong is met.
As our decisions in John Alden, 126 F.3d 1, and Cash, 508 F.3d 680,
make clear, the work performed by Ms. Hines, Ms. Leporacci and
Ms. O’Connor properly is considered administrative. The principal
business of the defendant employers is providing banquets. The
sales aspect of the defendants’ businesses, although necessary to
their success, is clearly ancillary to the principal function of
actually providing the banquet services themselves. The
plaintiffs’ own descriptions of their duties further make clear
that they were focused on more than simple individual sales
transactions. With respect to each individual transaction, the
sales managers’ own testimony indicates that they did not simply
close contracts. Instead, they worked with each client to create
a custom event in all of the particulars. Further, they worked to
establish long-term relationships, to keep clients happy and to
maintain the overall reputation of their employers. Accordingly,
the second prong of the administrative exemption is satisfied.
C. Discretion Regarding Matters of Significance
The parties’ real dispute in this case concerns the third
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prong of the administrative exemption, whether the employees’
“primary duty include[d] the exercise of discretion and independent
judgment with respect to matters of significance.” 29 C.F.R.
§ 541.200(a)(3). The regulation itself provides substantial
further guidance on this point:
(a) To qualify for the administrative
exemption, an employee’s primary duty must
include the exercise of discretion and
independent judgment with respect to matters
of significance. In general, the exercise of
discretion and independent judgment involves
the comparison and the evaluation of possible
courses of conduct, and acting or making a
decision after the various possibilities have
been considered. The term “matters of
significance” refers to the level of
importance or consequence of the work
performed.
(b) The phrase “discretion and independent
judgment” must be applied in the light of all
the facts involved in the particular
employment situation in which the question
arises. Factors to consider when determining
whether an employee exercises discretion and
independent judgment with respect to matters
of significance include, but are not limited
to: whether the employee has authority to
formulate, affect, interpret, or implement
management policies or operating practices;
whether the employee carries out major
assignments in conducting the operations of
the business; whether the employee performs
work that affects business operations to a
substantial degree, even if the employee’s
assignments are related to operation of a
particular segment of the business; whether
the employee has authority to commit the
employer in matters that have significant
financial impact; whether the employee has
authority to waive or deviate from established
policies and procedures without prior
approval; whether the employee has authority
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to negotiate and bind the company on
significant matters; whether the employee
provides consultation or expert advice to
management; whether the employee is involved
in planning long- or short-term business
objectives; whether the employee investigates
and resolves matters of significance on behalf
of management; and whether the employee
represents the company in handling complaints,
arbitrating disputes or resolving grievances.
(c) The exercise of discretion and independent
judgment implies that the employee has
authority to make an independent choice, free
from immediate direction or supervision.
However, employees can exercise discretion and
independent judgment even if their decisions
or recommendations are reviewed at a higher
level. Thus, the term “discretion and
independent judgment” does not require that
the decisions made by an employee have a
finality that goes with unlimited authority
and a complete absence of review. The
decisions made as a result of the exercise of
discretion and independent judgment may
consist of recommendations for action rather
than the actual taking of action. The fact
that an employee’s decision may be subject to
review and that upon occasion the decisions
are revised or reversed after review does not
mean that the employee is not exercising
discretion and independent judgment. . . .
. . .
(e) The exercise of discretion and independent
judgment must be more than the use of skill in
applying well-established techniques,
procedures or specific standards described in
manuals or other sources. . . . The exercise
of discretion and independent judgment also
does not include clerical or secretarial work,
recording or tabulating data, or performing
other mechanical, repetitive, recurrent or
routine work. . . .
Id. § 541.202.
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The plaintiffs contend that they perform virtually none
of the duties outlined as “[f]actors to consider” in subsection
541.202(b), that they do not have “authority to make an independent
choice, free from immediate direction or supervision,” id.
§ 541.202(c), and that their work, properly characterized, involved
more skill than discretion, see id. § 541.202(e). In particular,
the plaintiffs focus on their lack of any authority to make any
decisions of financial consequence to their employers, their lack
of supervisory authority and their lack of policy-making authority.
Again, we begin with our own precedents in John Alden and
Cash. In John Alden, 126 F.3d 1, we evaluated a claim by marketing
representatives who alleged that John Alden Insurance Co. had
misclassified them as exempt and denied overtime in violation of
the FLSA. The marketing representatives each worked with a list of
independent field agents, not employed by John Alden, who worked
directly with end customers seeking insurance. Those agents, in
turn, would recommend a variety of insurance products to consumers,
including those offered by John Alden’s competitors. The marketing
representatives, who were charged with presenting their employer’s
insurance products to the field of independent agents, did so
primarily through “maintain[ing] constant contact with [the]
agents.” Id. at 3. In an individual sales call, the
representative attempted to engage the agent in an unscripted
conversation about John Alden’s product offerings in the way they
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determined would market most successfully those offerings ahead of
those offered by the competition. Although there were weekly sales
meetings at which the representatives were presented with suggested
points of emphasis, it was left to an individual representative to
determine which particular products to present and discuss in any
given conversation, drawing on his own knowledge of the agent’s
customer base as well as John Alden’s new offerings. Id. at 13.
Beyond the marketing aspect of representatives’ daily work, they
also continued to follow sales that already had been made.
Specifically, once an agent’s customer elected to purchase a
John Alden product, the representative would “act[] as a conduit”
between the purchasing party and John Alden’s own underwriting
department. Id. at 4. Their role in actually processing a
transaction, however, was limited. They “d[id] not set or
negotiate prices or terms of insurance, nor d[id] they have any
authority to approve or deny an application, as [that was] done
solely by the underwriting department.” Id. We concluded that, on
those facts, the representatives exercised sufficient discretion to
warrant the exemption and, therefore, affirmed the grant of summary
judgment to the employer.
In Cash, the plaintiff customer service manager was
responsible for ensuring that motorcycles were “outfitted and
delivered . . . according to the particular purchase order.” 508
F.3d at 682. Following delivery, he would “stay in touch with the
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customers and make sure that they were satisfied.” Id. On these
facts, we also concluded that the customer service manager was
required to use discretion and independent judgment in performing
his primary duties of communicating with customers concerning their
orders. Again, we focused on the fact that he was required to
“react[] to the unique needs of [the employer’s] customers.” Id.
at 686.
Even when the record in the present case is evaluated in
a light most favorable to the plaintiffs, as we must on summary
judgment, the work performed by Ms. Hines, Ms. O’Connor and
Ms. Leporacci exhibits a similar level of discretion and
independent judgment to the discretion that we already have
determined to be sufficient for the exemption. Like the plaintiffs
in John Alden and Cash, the plaintiffs here had a primary duty of
engaging potential clients and assisting them in selecting from
various options from the employers’ offerings. Indeed, although
the options from which a client could select in any given category
were finite, the goal of the sales team was to create a truly
custom event for each client. In our view, working with a client
to create a custom product, personalized to individual tastes and
budgets, exhibits at least as much creative freedom as the John
Alden plaintiffs had in marketing insurance plans that they had no
authority to create, modify or repackage to suit an individual
client. In proposing options for an event within a budget, the
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sales managers did not operate within “a prescribed technique or
‘sales pitch.’” See John Alden, 126 F.3d at 14. Instead, they
were guided by the instructions in the Longwood Events Sales
Handbook. That handbook contained certain limited iron rules, but
largely provided guidelines. The rules were not so numerous nor
the guidelines--to upsell where possible, to make sure menus fit
the tone of an event and the like--so specific as to cabin the
judgment that the plaintiffs were required to exercise in engaging
with clients and prospective clients. Such work requires a
significant degree of “invention, imagination and talent,” id. at
7 (internal quotation marks omitted). See id. at 14 (“[T]o the
extent that the marketing representatives receive guidance about
products to emphasize and suggested points to make with agents,
they nonetheless exercise discretion in applying this instruction--
for instance, in determining which agent may have an interest in [a
particular] product, or in fashioning bid proposals that meet the
needs of the agent’s customers.”); Renfro v. Indiana Michigan Power
Co., 497 F.3d 573, 577 (6th Cir. 2007) (noting, in the course of
finding adequate discretion among nuclear power plant employees,
that the technical manual they used “provide[d] a guideline on how
to develop a procedure, not an encyclopedia of strict
requirements”); Kennedy v. Commonwealth Edison Co., 410 F.3d 365,
374 (7th Cir. 2005) (noting that the plaintiffs’ discretion may be
channeled by applicable regulations without defeating the existence
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of sufficient discretion).
The plaintiffs repeatedly have emphasized all of the
matters about which they had no authority and exercised no
discretion, primarily those involving their employers’ finances and
contractual obligations. In both John Alden and Cash, however, the
respective plaintiffs had similar restrictions. “[W]hether the
employee has authority to commit the employer in matters that have
significant financial impact” is a factor that the regulations
instruct us to consider, 29 C.F.R. § 541.202(b); it is not,
however, a requirement that must be satisfied to demonstrate that
an employee exercises independent judgment. The regulations
likewise provide that an employee’s discretionary actions need not
“have a finality that goes with unlimited authority and a complete
absence of review.” Id. § 541.202(c). The fact that, after
engaging a potential client and arriving at a proposed agreement
for a banquet, the sales managers submitted the proposal to
management for approval does not, therefore, detract from the
judgment that was exercised in arriving at the proposal in the
first instance.10
10
For this reason, we are not persuaded by the plaintiffs’
arguments that the district court failed to consider “powerful,
uncontroverted evidence,” Appellants’ Br. 33, in their favor in the
form of the affidavit of a former supervisor, Jennifer Gullins. As
with much of the plaintiffs’ argument before this court, the
Gullins affidavit tells the court much of what the plaintiffs did
not do, but does not provide substantial assistance in determining
what the plaintiffs daily activities included and whether, in
performing those duties, the plaintiffs exercised discretion.
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The plaintiffs rest their argument in large part on the
recent decision of the Second Circuit in In re Novartis Wage &
Hour Litigation, 611 F.3d 141 (2d Cir. 2010). According to the
plaintiffs, Novartis establishes that the function of a court
reviewing the discretion prong is to “analyz[e] all ten factors set
forth in 29 C.F.R. § 541.202(b).” Appellants’ Br. 36. We disagree
that Novartis suggests broadly that a simple evaluation of the
regulation’s exemplary list of factors to be considered among “all
the facts involved in the particular employment situation in which
the question arises” provides a determinative answer to the
ultimate question whether an employee exercises discretion. See 29
C.F.R. § 541.202(b); id. (noting that the “[f]actors to consider
. . . include, but are not limited to” the ten listed items). In
our view, Novartis did not suggest a new methodology; it simply
emphasized that, on the facts before it, the employer had not shown
that the employees exercised meaningful discretion. Although it
identified the factors specifically listed in the regulation, the
court went on to evaluate the specific tasks identified by the
employer as discretionary and found none sufficient to warrant the
application of the administrative exemption. Indeed, the preamble
to the current regulations identifies a host of factors, other than
those listed in the regulations themselves, that courts have found
sufficient to demonstrate that employees exercise independent
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judgment.11 We decline to impose an unnecessary rigidity on the
circumstance-specific analysis called for in the regulations.
Finally, we conclude that the record firmly establishes
that the matters about which the sales managers exercised
discretion are matters of significance to the employer. See 29
C.F.R. § 541.200(a)(3). As was the case in John Alden, the sales
and customer service position that each plaintiff occupied is
integral to the functioning of the employers’ businesses. The
sales managers were the face of the businesses to prospective
clients, and the judgment that they exercised concerned how best to
represent the employers and to develop a proposal that would
attract the prospective clients to a contract with the venues.
In sum, the record in this case reveals that the
plaintiffs exercised adequate discretion to come within the
boundaries of our precedents and the guidance from the Department
of Labor. The district court properly concluded that, under the
law of this circuit, the plaintiffs were exempt administrative
11
See 69 Fed. Reg. at 22144 (identifying as other relevant
considerations an “employee’s freedom from direct supervision,
personnel responsibilities, troubleshooting or problem-solving
activities on behalf of management, use of personalized
communication techniques, authority to handle atypical or unusual
situations, authority to set budgets, responsibility for assessing
customer needs, primary contact to public or customers on behalf of
the employer, the duty to anticipate competitive products or
services and distinguish them from competitor’s products or
services, advertising or promotion work, and coordination of
departments, requirements, or other activities for or on behalf of
employer or employer’s clients or customers”).
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employees.
D. State Causes of Action
The plaintiffs acknowledge that their state law claims
are “dependent upon and derivative of” their FLSA claims.
Appellants’ Br. 15 n.5. Our disposition of their FLSA claims on
the merits resolves the state claims as well. See Cash, 508 F.3d
at 686-87; Valerio v. Putnam Assocs. Inc., 173 F.3d 35, 40 (1st
Cir. 1999).
Conclusion
We conclude that the plaintiffs appropriately were
classified as exempt administrative employees for the purposes of
the FLSA and relevant state overtime laws. We therefore affirm the
district court’s entry of summary judgment on the wage claims for
the defendant.
AFFIRMED.
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